A National Security Council draft study describes Mexico as "the most promising new source" of oil in the 1980s and suggests that the president consider a serious upgrading in that country's priority among U.S. foreign policy interests.
The memorandum, designated as Presidential Review Memorandum (PRM) 418 says the United States could view Mexico as a world-scale partner and accord it significant concessions on winter export of farm products as well as quotas for legal immigration of workers to the United States. A copy of the draft was obtained yesterday by The Washington Post.
Yet another option outlined in the draft would be for Washington to maintain its traditional view of Mexico as an "emerging power" in the Third World.
Last week President Carter said PRM-41 could serve as the basis for his impending negotiations in February in Mexico City with President Jose Lopez Portillo.
"For the United States, Mexico represents a major new energy source, presently outside OPEC [Organization of Petroleum Exporting Countries]. Mexico could fill 30 percent of U.S. import needs by the mid-1980s, thus enhancing security of supply, and more than compensating for the decline of Venezuelan and Canadian supplies," the draft study asserts.
More important, however, the outcome of PRM-41 (as the classified study is known within the foreign policy bureaucracy) could shape a new generation of U.S. Mexican relations.
A draft of the Mexico PRM sets forth these possible results that could come from a redirection of Washington's policy toward Mexico:
It could provide an alternative to increased dependence on Arab oil, and access to some of what the CIA estimates could be as much as 10 million barrels of Mexican oil production a day by 1990.
It could result in a sanctioned program for Mexican aliens immigrating illegally to the United States at the rate of hundreds of thousand a year; a proposal that many U.S. labor leaders view as nothing short of chilling.
It could result in lowering tariff and other trade barriers to Mexican exports, such as vegetables and textiles, that are vigorously opposed by politically powerful U.S. business interests.
And it could result in the creation of a special negotiator for Mexican affairs reporting directly to the president of Secretary of State Cyrus R. Vance, that at the least would touch off regional political jealousies.
At the same time the United States could do nothing about any of these and, as a draft of the PRM says, "follow general U.S. foreign policy directions without according Mexico special or preferential status."
Carter has yet to make a choice, though senior administration officials say he has taken a keen personal interest in PRM-41
Last week at a breakfast meeting with reporters in the White House's State Dining Room, Carter said, "I consider our relationships with Mexico to be as important as any other that we have, and my relationship with President Lopez Portillo has been very good."
Washington observers are long accustomed to Carter's effusive good will and praise about any country or head of state. What is different about Mexico, however, is that senior administration officials say in private that by all indications Carter attaches a high priority to Mexico's emerging oil prowess and to turning around the suspicions and ill will that have marked relations between the two countries over the last 40 years. (Carter, one also is reminded, has been taking private Spanish lessons since moving into the White House.)
Elsewhere in the administration the Mexico PRM has been the focus of Cabinet-level hagging, and the bureaucratic territorial battles that mark any potential major foreign policy switch.
Energy Secretary James R. Schlesinger Jr. was reproved in a sharly worded letter last Nov. 8, from National Security Council head Zbigniew Brzezinski last month or trying to end-run the council's PRM process by going directly to the president of negotiating directly with Mexico's national oil company.
And within the State Department, there has been cordial competition between Latin American policymakers who favor an open-handed approach towards Mexico, and State's energy experts who favored a hard-nosed posture until recently on energy negotiations with Mexico.
The Labor and Justice Departments, which both have an institutional interest in stemming the flow of Mexican illegal aliens into the U.S. labor market, were briefly at odds with a State Department-favored proposal for an official U.S. program to allow Mexicans to immigrate to the United States.
While the details have yet to be worked out, and the final PRM-41 document has not gone to the president, the outlines of the administration's options were agreed upon at a Cabinet-level meeting last week held in the Situation Room in the basement of the White House's West Wing.
The PRM begins with a statement that Mexico is emerging as "an economic power of strategic value to the United States," adding that Mexico clearly could produce as much oil as Saudi Arabia, the world's leading exporter, does today.
It goes on the say that there are four major issues that need to be addressed: energy, trade, migration, and relations affecting the communities strung along both sides of the 1,950 mile U.S. Mexico border.
Among the obstacles to improving relations between the two countries, the PRM notes, is that "important elements in both societies regard the other with suspicion and even fear." These include Mexican fears that the United States will exploit its resources, especially oil and gas, and U.S. fears that illegal Mexican immigration will swell domestic labor markets as the economy appears headed toward a slowdown.
The PRM says that "influence, leverage, and bargaining potential - once overwhelmingly in favor of the United States - are shifting somewhat in Mexico's direction."
As for the goal of U.S.-Mexican relations, the draft PRM says the United States should press for "a stable, humane, and cooperative Mexico."
It is Mexico's growing oil power, however, that is at the heart of the policy evaluation. The first priority of Carter's February visit to Mexico will be to unsnarl embarrassing loose ends from a natural gas sale, approved by Mexican President Lopez Portillo, that was killed last year by Energy Secretary Schlesinger.
If the United States adopts a posture essentially treating Mexico as "an emerging power," the draft PRM says that U.S. interest in Mexican oil and gas would be seen "in global rather than U.S. security terms,? a position which Schlesinger has continued to argue privately.
If the United States adopts a posture treating Mexico as "a partner" sharing advantages equally, the PRM suggests that a North American community, including Canada, could eventually evolve. This also would imply increased Mexican energy production, without any loss of Mexico's national sovereignty.
The rationale for a carefully stitched Mexico policy, the draft PRM says, is that "while there is little danger that-unless we attempt to seal the border-Mexico will become overtly hostile, the cumulative impact of unmanaged tension could end the conditions that have enabled the United States to discount Mexico's nearness" in favor of some other part of the world community.
The PRM argues in part for completing the natural gas negotiations aborted last year, saying that "this now appears reasonable on opportunity cost grounds, and would reinforce higher Mexican oil production and exports."
Schlesinger has continued to express private reservations about signing the gas deal, which would increase domestic gas supplies by about 4 percent. If the United States buys Mexican gas, Schlesinger argues, gas from the proposed Alaskan gas pipeline through Canada would become less competitive and could threaten completion of the pipeline.
One set of estimates, offered out side of the PRM, projects that the cost of Mexican gas would be about $4.20 per thousand cubic feet by 1985, while Alaskan gas would cost from $1.50 to $2 more. Last year, however, Schlesinger moved to kill the gas deal because the Mexicans' price - which would have been indexed to oil product prices-was higher than what the administration would give the domestic industry.
Carter has said that he wants to try to resolve the gas impasse, although the draft PRM suggests that one option would be to forgo negotiations with Mexico on gas.
As for the long term, the draft PRM says that "trade-offs such as barter agreements or explicit concessions in other areas would be very difficult to negotiate and implement." So far, however, this has been the path Mexico has followed with other nations.