Presentation by Dr Charles e nathanson

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PRESENTATION by Dr Charles E Nathanson: An Overview of the US/Mexico Experience

Thank you. It’s a pleasure to be here for this topic of worldwide importance, as we’ve learnt. I am going to do it the real old-fashioned way, I’m just going to talk with you. I have a complicated human and political story to tell and I wouldn’t want you to be confused by looking at pictures.

I am an academic observer as well as a promoter of cross-border regional development. I am a sociologist by training and I am going to try to wear my sociology hat in describing the San Diego–Baja California region. It will be a test to see whether I can go back to that hat.

I will start with an overview of the last 20 years of salient features of this very dynamic region. First, you should know, and you probably do know, that the Baja-California border, i.e. California’s border with Mexico – Baja- California is the northern state of Mexico on the west – is one of the most contested and policed borders in the world because of the flow of illegal immigrants and smuggled narcotics across that border.
Before 1994, if you went down to the border in the evening it looked like a war zone, with the helicopters and floodlights and hundreds of people, sometimes thousands of people, streaming across the little bit of open space there, being arrested by the border patrol – hundreds a night – then being deported across the border the next day. And then flooding the border again the day after in a continual circus of what must have been one of the least satisfying jobs in the United States, being a border patrol agent. It was a fairly hostile environment, with kids lined up along the Mexican side of the border throwing rocks at border patrol agents.
That situation changed in 1994 with ‘Operation Gatekeeper’ which tended to reinforce the border all along, first the California-Mexico border and then Arizona and then Texas, with a couple of consequences. One is that it has put enormous pressure on the ports of entry for fraudulent crossing of the border with fraudulent documents and that pressure has increased the wait times as inspectors try to deal with, now, the flow of fraudulent documents. It also slows up the commercial traffic. Last week, in San Diego, in a unique event but probably it won’t be unique, tons of marijuana were discovered packed into television sets in trucks coming across the border. They try to keep that relatively free of smuggling because of the importance of ‘just in time’ in that industry.
Another consequence has been the number of deaths occurring to illegal immigrants being smuggled through the desert regions. The reason that the San Diego Border is so contested and policed is that it is the easiest spot along the border to merge into an urban environment and head all the way up the coast to Los Angeles, where you blend in to a very concentrated Latino population. As you go east along that border its more desert, it’s more open space. It is much more hostile to crossings and there are about 500 deaths a year just in the California-San Diego area, which causes problems politically for cross-border region building.
But these are matters of popular political passions and any effort at cross-border integration has to deal with these passions. Also, matters of high political passion, since it was President Clinton’s efforts to be re-elected in 1996 that led to the ‘Operation Gatekeeper’ and the strong enforcement of the border, since he didn’t want to lose the state of California at a time when the then Governor was beating on this immigration and drug smuggling issue quite a lot.
The second major feature of this border region is the rapid growth of population on both sides of the border. This also has been transformed in the last 20 years, as San Diego has drawn population not only because of its climate as a retirement place, as a tourist place, but also for its growth of the high technology industry. And the southern side of the border, Tijuana, has been the most successful place for jobs in all of Mexico.
So it draws people from all over the country, from the interior to the border for employment, as well as from Central America. It also draws people to it as a jumping-off place for getting up to Los Angeles or coming into the United States. And now the population increase that has been due to this migration in, is now also due to a high birthrate amongst the Latino population. So we are becoming, because of this population, sort of one contiguous city divided by an international border.
It is unusual, I think, to have this much – at least in the United States and Europe – to have this much population piled up right against a border on both sides of it. Borders used to be frontiers, sparsely populated and there are, for example, five to six million northbound crossings at San Sedro and Otamissa border crossings a month, made by about 300,000-350,000 people who cross, on average, 14 times a month. People who are normally going to the other side to shop, to work, to visit with family and friends, to go to school, to go to church, both ways, but in this case, going to the other side of town means going to a foreign country. And this is the core of the problem of regionalism in our area. It’s how to plan and develop a bi-national city at a contested border. And then there is the larger region around it that extends all the way to Imperial Valley and Mexicali in the east. And there is what we call the sort of international zone of the international region of the Californians but the core of it is the San Diego-Tijuana relationship.
A third important feature of this area, in the economic dimension, is the rapid growth of export oriented consumer electronic manufacturing in Baja-California, but with little backward integration into local Mexican suppliers, i.e. this industry has really grown up in the last 20 years. It owes an enormous amount to Asian, primarily Japanese and Korean but increasingly Taiwanese and other investment. In that sense, you have put this region on the map as a global cross-border region by your investments there. But unlike the Asian Tigers that use export production for domestic integration into those industries, Mexico has failed to do that.
By and large this industry has grown up for the US market. It imports raw materials and supplies through the ports of Los Angeles, trucks them down through San Diego to Baja California, assembles whatever it is, and trucks them back into the United States for the market. That particular logistics is important for what we don’t have as well as for what we do have. There is the beginning of an export market to Latin America. I’m not sure it will last as these companies find a way to set up production deeper into Latin America for the market they want to go to.
NAFTA has encouraged these companies to bring their own suppliers inside the tariff barrier but it has not encouraged Mexico, as of yet, to figure out a way to build up an indigenous supplier base. And the reason seems to be the absence of technical assistance and credit to small and medium size businesses - a theme that I will return to frequently.
On the San Diego side, also within the last 20 years, there has been the rapid growth of high technology clusters - telecommunications, especially wireless, software, bio-technology, with links to the University of California, San Diego and other research centres in San Diego - but with few links to manufacturing in the region and few cross-border linkages. So, unlike Hong Kong and Shenzhen where there has been a very large investment of Hong Kong companies in production in Shenzhen, San Diego, by and large, has not done that. There are some twin plants – Sony, Sanyo are the striking ones, Samsung a little bit – but by and large the cross-border production linkages are few and far between.
Now, the dream and other characteristics of this region, in the last 10 years anyway, has been the dream of a transition from being a cul de sac to a global trading region we never have been. We’ve been the end of the line. San Diego was a retirement place, a tourist place, a place where the Pentagon was the major buyer for our defence goods, but not a centre of global trading. And Tijuana, before it developed consumer electronics, was a parasite on the San Diego economy.
So, this dream is a relatively new dream but it faces a couple of major difficulties. A very poor trade infrastructure when it comes to airports, ports and railroads, largely because the industry is there to truck things into the United States; an uncertain water and energy supply; great differences in political culture. Mexico, as you know, is in transition, a significant transition from a one-party state to a multi-party democracy, and that is changing habits. But those habits of a one-party state were deeply integrated into the social and political fabric of the whole country. It’s been said that the PRI, Mexico’s ruling party for 70 years, created a nation of beggars rather than a nation of citizens; and people with handouts to the government which is how they kept their political power.
There are also big weaknesses in government in the state of Baja-California and Tijuana. These are weak state governments, strong Federal Government, and in some ways a weak government for region building in the San Diego area because of the fragmentation of government. The current trends are for the devolution of authority to the state and local governments in Mexico and for greater regional co-ordination in the San Diego area, but with uncertain outcomes as yet.
And finally, as a challenge to this dream, enormous environmental and quality of life issues on the Mexican side, largely because there hasn’t been credit. No municipal bond system, no system of loans for small and medium size businesses, no home mortgages to speak of. I was explaining, at lunch, that a mortgage in Tijuana is 75% down and the rest in 5 years; very little in the way of loans for going to college and higher education. Thus very little capacity to give a sense of upward mobility to a population through long term low interest credit, and very little capacity of the municipal government to keep up with the pace of growth. So, enormous challenges to quality of life and the environment.
And on the San Diego side, increasing congestion, unaffordable housing, diminished open space. It doesn’t look as bad as Silicon Valley yet but you can see Silicon Valley on the San Diego horizon. And with that a hatred of high density, though the only way out of the problem of congestion is to begin to build up and limit urban sprawl. So, we have a very improbable region, filled with contradictions and lacking strong local governmental leadership. There are tensions between policing a border and greater regional integration, tensions between environmental protection and growth as a trading region.
I now want to shift to the role of San Diego Dialogue as a civic organization in promoting and facilitating cross-border co-operation. The formation of the Dialogue was in 1990, through the University of California, San Diego. And one might ask, why did anyone in San Diego care about cross-border co-operation given the picture that I’ve painted. And I would say, quickly, that this was a civic not a governmental or politician’s vision. It came about as a result of twin crises in the San Diego economy with the vision of the end of the Cold War, declining defence spending, people wondering what would be the engine of economic development in San Diego in the future. And the ability to look across the border and see all this multinational Asian investment inspired visions of greater co-operation with Baja-California to become a trading region.
And a crisis of civic leadership in which a relatively small group that ran San Diego out of banking and the navy and the newspapers, collapsed with the Savings and Loan crisis in America. Some of them went to jail, others of them retired. And there was a vacuum of civic leadership, which in some sense the university was looked to as a place to convene and do research that would help a broader based leadership deal with the future.
And one of its first steps was to identify the future with a bi-national metropolitan region and to talk about how co-operation could help bring us the trade infrastructure for participating in a larger global economy for the first time in our history, really. And also would give a future to the growing Latino population in the region that had currently the choice between being PhDs and going into the high tech research and development business from unpromising roots, or cleaning tables and washing dishes and turning down bedsheets in the tourist industry in San Diego. And so the prospect of creating a middle class out of the kinds of jobs that come with a trading environment was attractive.
The Dialogue is a unique structure; it is a partnership between the University of California, a major research university, and civic leadership from both sides of the border. It has an invited membership. And the cache of a major research university and an invited civic leadership of prominent individuals from both sides of the border created a lot of mystique and a lot of presumed credibility and legitimacy, or at least interest in what in the world this group was going to do and come up with for the region.
One of the first things we did was some research that put the notion of a bi-national region on the map. We did a survey of who crosses the border - not unlike the survey that was done here last year – and one of the things that it showed was what I said earlier, that people thought that people crossing the border were tourists who came once and went home, and didn’t realize how much that traffic was made up of frequent crossers. And that led Congress to establish something called a ‘Dedicated Commuter Lane’ at the border. But it also showed the sociology of the region and showed how inter-dependent we had become as a city whose quality of life depended upon making crossing the border easier for those who crossed it legally.
We then did research on the transportation infrastructure in the region and (produced) a demographic atlas. I brought some copies of it along with me but I couldn’t carry too many because it is heavy. So if anyone is interested, there are a few copies said to be floating around here somewhere. We also were able to convene - because of this aura, I guess, of elite dedication to a region – we were able to convene pretty much anybody that we needed to on both sides of the border, including the Federal Agencies at the border and mayors and governors and other people, to get this issue on the agenda. This was not an issue that politicians wanted to lead on. They wanted the business and civic community to lead on it and we tried to do that. We have subsequently created a major luncheon forum for these kinds of issues, and a Leadership Council on these issues.
I want to mention, briefly, a couple of our cross-border initiatives. The first was reconciling law enforcement at the border with commerce at the land ports of entry. We showed, I think, in this study, that you could use technology to both improve law enforcement and increase the efficiency of crossing the border. It took about a year for the customs and immigration officials to trust the idea and to sit down with industry people and design a transponder system that would give them the security they were looking for and that allows people now to cross the border in three minutes or less.
We experimented with it for several years at Otimassa, which was less busy than San Sedro, and it has now been installed, in September, at San Sedro. The problem is that the immigration service hasn’t quite figured out how to process applications for it rapidly enough, so it is going a little under-utilized at the moment. But it is, for those who can pass the criminal background check, a way around this problem of an increasingly congested border.
We have sought stronger institutions for cross-border planning, of which there were practically none when we started and of which there are now almost none, still. The problem is to create some symmetry in a very asymmetrical governing situation, and capacity for financing. We were proposing something like the New York-New Jersey Port Authority, which would be able to do long term finance and development of projects somewhat insulated from politics. It wasn’t an idea that made local governments very happy and it sort of sat on the shelf, but it is re-circulating now. It brings to the fore many of the issues about sovereignty that previous speakers have talked about.
We also, relatively early on, threw our support behind the notion of a bi-national airport at the border, which went nowhere because it was not particularly in Mexico’s interests. It was very much in San Diego’s. We have been trying for 35 years to find a solution to a 400 acre postage stamp airport in the middle of the city that is about now out of capacity, and the opportunity to build such a new airport seemed irresistible. Well, we probably hadn’t thought about it as closely as we should and we are now talking about an international terminal at the border for Tijuana’s Airport which is situated exactly on the border and would allow us increased capacity. It has the only under-utilized runway south of Los Angeles International Airport and is probably the cheapest and most efficient way for us to get some increased runway capacity without building a new multi-billion dollar airport, which is almost impossible in southern California.
And most exciting, and probably likely to happen within the next year or so, is the idea of building a joint water aqueduct between Baja-California and San Diego County Water Authority. Tijuana is running out of water. It will be short of water within two years because of its inadequate pipeline coming from the east. It is entitled to water, by treaty, from the Colorado River. San Diego wants to secure its own long term water supply, since water figures prominently in these cross-border regional efforts, by buying water from the imperial irrigation district to the east, and it wants not to rely upon the Metropolitan Water District of Southern California, which controls the Colorado River Aqueduct, to transport that water. It wants an aqueduct of its own.
The trouble is that neither Baja-California nor San Diego has the amount of money to build that aqueduct easily - it is probably a $3 Billion enterprise -and so they are doing feasibility studies for building a joint aqueduct, probably in the same trench that is being used to build a natural gas pipeline. And the same energy plant that pumps the water will also probably provide Southern California with energy.
And there is talk of a third pipeline that would return the used water for use in agriculture in eastern Baja-California and the Imperial Irrigation District, which would make the farmers there a little happier than if we just took their water – paying for it but taking it out of agriculture. That probably will be the first major infrastructure project that ties these two sides of the border together, and probably will set a precedent for future efforts.
Briefly now, I was asked to talk about what are the determining factors of successful cross-border co-operation, at least in our area, and I will mention five, quickly.

  1. I think continued democratization of Mexico is a very important

feature of making cross-border projects work because it leads to greater devolution of authority to state and local governments and to increased administrative and financial capacity in the state and local governments. It is almost impossible for San Diego to negotiate deals with the Federal Government of Mexico and for them to make sense for the region over the heads of Baja-California. This has to be done on the ground and it can’t be done that way when the financing and the administrative capabilities are not there.

  1. Probably the highest priority would be for Baja-California to

develop long term low interest financing in all forms, for municipal government, for business and for home mortgages. This would truly begin to create, in only a relatively short time of 10-15 years, a greater parity between the two sides of the border, in standards of living, in entrepreneurship, in upward mobility, in business development. It might, however, end the asymmetries that produce some of the comparative advantages of the region in the international economy. So it is an interesting tension in this wish to build a bi-national region that serves the systems of the region and the quality of life of a region.

  1. Success is conditioned upon these projects really having mutual benefits. It is easy to think from one side of the border that a project will have mutual benefits, until you talk to the other side of the border about it. And many projects fail simply because they got off on the wrong foot, as our initial airport project did.

  1. And then, I believe, these projects are aided, at least in our region, by having a credible convenor who is not government. Government is so slow and cautious to act and in a politically charged environment, as our border is, it is very difficult for government to lead. It is much easier for an institution that can combine the merits of a research university with a citizen elite, insofar as those still have credibility in the world, to take some leadership role in this area and break through some of the crust and bring some new ideas to the surface.

  1. And finally, we have found, as I know you have found in Hong Kong, that good, credible research that breaks down stereotypes of the “other” and identifies real cross-border benefits, is terribly important to getting ideas into circulation; even ideas that people find improbable at first, come back around the second time or the third time and have a better chance. So probably the best ingredient in trying to do this sort of thing, for success, is patience. Thank you.

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