Mexicans Get Less Aid From Migrants

In Lo de Luna, Ernesto Hernández, 80, has been unable to afford his medicine since his son lost his home in the United States to foreclosure.
In Lo de Luna, Ernesto Hernández, 80, has been unable to afford his medicine since his son lost his home in the United States to foreclosure. (By Manuel Roig-franzia -- The Washington Post)
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By Manuel Roig-Franzia
Washington Post Foreign Service
Friday, April 18, 2008

LO DE LUNA, Mexico -- The effects of the subprime mortgage crisis and the downturn in the U.S. economy have cascaded into Mexico, causing a sudden, precipitous drop in the flow of money sent home by Mexican immigrants and highlighting this country's dependence on its wealthier northern neighbor.

In January, the cash transfers, known as remittances, sagged almost 7 percent compared with a year earlier, the steepest monthly dip in at least 13 years, according to Mexican government statistics. Economists here believe the decline in remittances is already pushing thousands into extreme poverty and could lead to a significant increase in migration as desperate Mexicans, deprived of support from abroad, flee to an ever more difficult U.S. job market.

"It is a vicious, perverse circle," Juan Manuel Padilla, a demographer in the economics school at the University of Zacatecas, said in an interview. "Work opportunities here are nonexistent, so this is going to cause more migration to the United States, even though it is getting harder to find work over there."

Other parts of the region, including El Salvador and Guatemala, are bracing for similar declines, but for now they are holding steady or seeing small gains. Economists believe Central American nations are faring a bit better than Mexico because their migrants are concentrated in areas such as Washington and the Maryland suburbs, which have withstood the foreclosure crisis better than places such as Los Angeles and California's San Joaquin Valley, both of which have long been major destinations for Mexican migrants.

The drop-off in remittances to Mexico, which economists believe could accelerate this summer if the U.S. economy continues to falter, is swelling into a catastrophe here in the central Mexican state of Zacatecas, which has Mexico's highest migration rate. Hit with particular ferocity are small villages that have been virtually abandoned by all but the elderly parents of migrants. In the Zacatecan village of Lo de Luna, a collection of crudely built brick homes six miles from the nearest paved road, seniors such asErnesto Hernández have been left nearly destitute.

Hernández, 80, doesn't take his diabetes medicine anymore. It costs too much, and he'd rather buy food than pills.

Ever since his son, Alfonso, lost his home in the United States to foreclosure a few months ago and stopped sending money for medicine and farm supplies, life has been "a disaster, a total disaster," Hernández said.

Buoyed by increased migration and lower money-transfer costs, remittances to Mexico peaked last year at just under $24 billion, more than 5 1/2 times the amount sent a decade earlier. Remittances recently vaulted over tourism to become the second-largest source of foreign currency in Mexico, topped only by oil exports.

The money has transformed the landscape of many small towns, paying for new houses and new kitchens, cars and childcare, medical care and clothes. But some economists also say the giant sums sent to Mexico have created a sense of complacency, especially among government officials who have failed to right the country's wobbly economy.

"This is demonstrating that there is an increased dependence on remittances and a great vulnerability for the country," said Rodolfo García Zamora, an economics professor at the University of Zacatecas and one of Mexico's leading authorities on remittances. "Neither the government nor the families who are affected have a good alternative to remittances."

President Felipe Calderón, who began his term in December 2006 promising to be "the employment president," boasted recently that 800,000 new jobs were created during his first year in office. Still, an estimated 400,000 to 650,000 Mexicans -- three-quarters of whom are undocumented -- cross the border each year to look for work in the United States, according to Mexican government estimates.

Many who migrate to the United States buy homes in Mexico, hoping to retire in their native country. But there is growing evidence that economic problems are forcing migrants now living in the United States to sell their Mexican homes after being laid off or losing their U.S. homes to foreclosure. At least 149 properties in the historic district of Jerez de García Salinas, a retail town in Zacatecas state, have gone on the market at fire-sale prices in the past few months, said Encarnacion Buñuelos, a businessman and consultant to the city government. The owners, mostly migrants, "will stay in the United States for sure; they're never coming back," he said.

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