As a step toward reducing illegal immigration into the United States, the Carter administration is considering an aid program for Mexico that could include U.S. participation in a $2 billion fund to create new jobs below the border.
The aim would be to help President Jose Lopez Portillo's government combat the severe economic crisis that has aggravated Mexico's endemic unemployment and created new pressures or jobless Mexicans to cross the border in search of work.
Administration sources stress that the question of aid for Mexico, which currently does not receive U.S. financial assistance, is still in an exploratory stage. They add that, while several possibilities are under study by the State and Treasury departments, no decisions have been made about the form that an aid package might take.
However, many sources say, the idea being looked at most closely would involve creating a joint industrial development fund of $2 billion or more, with the United States and Mexico putting up equal amounts of the money.
Such a fund would help to provide Mexican entrepreneurs with low-interest, long-term financing to establish light industry and labor-intensive agricultural projects in those areas of northern and central Mexico where unemployment is highest.
The development fund concept is getting special attention, the sources say, because it appears to offer the best chance for making a quick impact on unemployment and is the kind of program that the administration thinks it could realistically sell to Congress.
In addition, the sources add, such a program, with its emphasis on cosponsorship and equality, seems most likely to appeal to the Lopez Portillo government, which would be inhibited by Mexico's strong nationalistic sensitivities from accepting any form of aid that appears to be an "American handout."
These political aspects are especially delicate at the moment because of widespread hostility within Mexico toward the Carter administration's recently announced plans to crack down harder on illegal immigration.
However, Mexico, for reasons of both pride and suspicion, traditionally has been reluctant to accept U.S. aid. Even in the period just before the Vietnam war when the Alliance for Progress made Latin America the principal focus of U.S. foreign assistance. Mexico limited itself to accepting only relatively small technical-assistance programs.
In recent years, U.S. aid has dwindled almost to the vanishing point. That the Mexican government now appears willing to seriously consider a dramatically stepped-up increase in U.S. help is regarded by most observers as a telling sign of the economic difficulties that have gripped Mexico in the past year.
These difficulties are rooted in the fact that Mexico, with 62.3 million people the most populous Spanish-speaking country in the world, has a galloping birth rate of at least 3.5 per cent a year. By contrast, it has neither sufficient arable land nor a large enough industrial base to provide work for this constantly expanding population.
The result is that one-third of the work force is chronically unemployed or underemployed. For many, the traditional way out has been to cross the 2,000-mile-long border illegally - a situation that makes Mexico the homeland of roughly 60 per cent of the 6 million to 12 million illegal aliens that the Carter administration estimates are in the United States.
The situation reached crisis proportions as the result of former President Luis Echeverria's efforts, through one great burst of public spending, to narrow the gulf between his country's haves and have-nots. However, such massive spending in the face of the world wide recession forced Mexico to increase its borrowing abroad heavily.
That, in turn, caused a loss of confidence by the investment community that culminated last year in a massive flight of capital from the country and pressures that forced the once-stable peso to plummet in value.
Since taking office in January, Lopez Portillo has put special stress on recapturing the confidence of the U.S. banking and business communities. In recent weeks, though, he has had to walk a fine line in his relations with the United States, largely because of the anger that President Carter's illegal-immigrant policy - amnesty for many already in the United States, but a tougher line toward those who come in the future - has stirred in Mexico.
Administration sources said there is strong feeling within the administration that the new policy on illegal immigration has added to Lopez Portilo's difficulties and that Washington has both an obligation and self-interest reasons to help him out.
"What we're trying to find," said one source, "is a plan that will be economically effective and politically acceptable. It could be a development fund, or it could be something else. But there is agreement that we've got to come up with something."