Politics Is Twice as Complicated along Border ; in US Border Towns, Interest Is High in Mexico's July 2 Election - a Result of Closer Economic Ties

Article excerpt

With presidential elections just around the corner, shopkeeper Michael Begum is keeping informed. He reads the newspaper. He watches the nightly news. He's not sure there's a dime's bit of difference between the two main candidates - neither of whose name is Bush or Gore.

Mr. Begum's fascination with another country's politics is more than academic. What happens in Mexico's July 2 elections may have more immediate economic impact on his high-end dress shop - and businesses all along the US-Mexico border - than the changing of the guard in Washington.

Denizens of the 2,000-mile US-Mexico divide are forced to take a keen interest in the political scene next door: Even though they can't vote, they have a lot riding on the election. The intertwined nature of the Southwest is just one example of the globalization of modern markets, in which no country can remain unaffected by its neighbors' business.

Brownsville residents' unease stems from a range of causes, from countries like Japan threatening to pull its investment dollars if the elections aren't clean, to recent history: The peso has suffered a devaluation in each of the past five elections. What a devaluation would mean for Begum and his fellow residents is fewer Mexicans coming to town on shopping trips, playing havoc with border businesses' bottom lines.

"I've seen seven presidential elections, and five peso devaluations," smiles Begum, a dapper Russian veteran of World War II, who bears an uncanny resemblance to the author Gore Vidal. "It's emotional, but I survive it."

But this year's election could be a turning point for Mexico, and to the US towns that depend on its stability. Mexico's ruling party, the PRI, could lose its first national election in 71 years.

And the country's international-trade-driven economy is widely thought to be strong enough to weather any political storm.

Smaller pinch on pocketbooks

That's partly because Mexico's economy - and, by extension, that of the border - is less tied to the vagaries of politics than in the past, experts say.

"The economy is a totally different arena than it used to be," says Arturo Farias, senior vice president for international trade at the International Bank of Commerce in Brownsville.

The single biggest driver in this new economy is NAFTA, the North American Free Trade Agreement, enacted in 1995. Designed to encourage the flow of goods and services among the US, Mexico, and Canada, NAFTA has reduced regulations in all three nations and increased overall trade. Before NAFTA, total trade between United States and Mexico in 1994 was about $40 billion. Last year, it was $180 billion. The effect on the border, proponents say, has been increased jobs on both sides.

In addition, Mexico has been working to lower its debt and reduce its spending, to please its lenders from the International Monetary Fund, which gives less room for the sort of mismanagement or corruption that has weakened Mexico's currency in past elections. "Overall," says Mr. Farias, "the economy is at a very stable place."

Signs of that stability are everywhere in this border town.

Drive to the Wal-Mart or the Circuit City, just a minute away from one of Brownsville's three ports of entries, and you'll see busloads of Mexican shoppers from Monterrey or Tampico crowding the aisles, checking out the latest fashions or DVD players. …