Donald Trump and the Yankee Imperialists of Yesteryear
Oil Launches NAFTA
Many conservatives in the United States like to channel Ronald Reagan as the image of the America First doctrine and true U.S.-centric conservatism. This narrative is part of the fiction that is driving today’s far right-wing conservatism that put Donald Trump into office. The problem, though, is that it is all based on a lie. Ronald Reagan dreamt of a future where Canada, México and the United States not only shared a common market to challenge the rest of the world, but also open borders between all three countries. In short, Ronald Reagan wanted open borders between México and the United States.
When conservatives talk about the North American Free Trade Agreement, or NAFTA, the false narrative is that it was the Democrats that destroyed U.S. jobs by imposing NAFTA on the country. They point to Bill Clinton signing NAFTA into law. Yet, the inconvenient fact about NAFTA is that it was Ronald Reagan’s dream and it was substantially negotiated by George H. W. Bush, a Republican, on the U.S. side.
On January 5, 1981, then president-elect Ronald Reagan met with Mexican president José López Portillo to discuss Reagan’s vision. Jimmy Carter, the outgoing president, had kept the relationship between Canada and México with the United States friendly, but distant. Reagan, on the other hand, opened his presidential ambitions in November 13, 1979 by announcing that he wanted a “North American accord”. During his presidential announcement speech, Reagan stated that he wanted in North America an atmosphere where “peoples and commerce of its three strong countries flow more freely across their present borders than they do today.”
Reagan’s quest was to have open borders between Canada, México and the United States.
Interestingly and forgotten by most, it was Canada’s Prime Minister, Pierre Trudeau and Mexican president José López Portillo that expressed fear in Reagan’s bold move. Both leaders felt that their economies would be overwhelmed by the giant economy of the United States. Reagan persisted, although he acknowledged that the true flow of commerce and people may take “100 years” to accomplish.
The reality is that Reagan wasn’t looking out for Canada, or México. It was the height of the Cold War and the United States and its allies were looking to strengthen their energy resources against Soviet influence in the Middle East.
The investment bank Blyth, Eastman, Dillon & Co. issued a report in 1979 arguing for a North American Common Market to give the United States access to Mexican oil. It created panic in México because the scheme was seen as an attempt to take control of México’s oil reserves.
The narrative today is that the Democrats imposed NAFTA on the United States and they are to blame for the lost jobs and immigration issues facing the country. Contrary to that notion, the fact is that the Democrats fought NAFTA every step of the way. The base of the Democrats, the trade unions, wanted nothing to do with competing against Mexican labor. It is true that Bill Clinton signed NAFTA into law, but he did so reluctantly. NAFTA was negotiated and implemented by the Republicans. Had the Republicans had their way, it is very likely that today we would have open borders between Canada, México and the United States. It was the Democrats and their union base that kept the open border debate out of the negotiations because of the fear of competing against Mexican labor.
The United States will go to war for oil rang the headlines across México and much of the world throughout the late 1970’s and early 1980’s. On February 14, 1979, then-president Jimmy Carter, a Democrat, was set to meet with Mexican president José López Portillo. Both heads of state were meeting in Mexico City for three days starting on February 14. The United States was emerging from the chaos of oil shortages across the country because of the Oil Embargo of 1973 that lasted well into 1974. México, on the other hand, was amid modernizing its economy while recovering from a devastating Peso devaluation.
The Good Neighbor Policy
Franklin Roosevelt made it the policy of the United States to not intervene in Latin America. It became known as the Good Neighbor policy. However, the term was previously used by Woodrow Wilson, right before he invaded México. The Good Neighbor policy sounded pleasant and reasonable to the ears of U.S. citizens, but for Mexicans, it carried with it the broken promise of Wilson to stay out of Mexican affairs only to invade it shortly after.
The U.S. government’s policy of non-intervention in Latin America ended when the United States foreign policy shifted towards containing the expansion of Communism that resulted in the Cold War.
Yankee imperialism
Yankee imperialism denotes the notion that the United States’ policy is to intervene in other country’s affairs for its own security and prosperity. The actual term was American imperialism. The term defined the notion that the United States affects and controls the affairs of other countries through overwhelming cultural, economic and military intervention. The American Empire doctrine, which is the expansion of the United States, was cemented in México when James K. Polk invaded México. The invasion resulted in the loss of almost half of México’s national territory. The belief that the United States can intervene in Mexican affairs on a whim was further demonstrated by the occupation of the Port of Veracruz, ordered by Woodrow Wilson in 1914.
Over time, Yankee imperialism evolved into imposing the U.S. value system upon México through overwhelming economic pressure.
During Jimmy Carter’s term, the Mexican trade portfolio with the United States consisted of nearly 70% of México’s total exports and almost 60% of its imports. Today, México exports about 80% of its products to the United States and imports about 50% of its imports from the U.S. The trade balance hasn’t significantly changed since NAFTA was enacted. What has changed is the volume of trade.
The U.S. economy engulfed México. Shortly after México lost almost half of its territory to the United States — in Mexican political and elite circles — the overwhelming reliance on the U.S. became the latest version of Yankee imperialism. Mexico’s foreign investment portfolio increased to over $3 billion by the 80’s, up from $1.2 billion in 1970. U.S. private banks carried $11.5 billion in Mexican debt by 1976, an increase from $2.5 billion from the previous year. México’s political agenda, because of the new oil reserves (in the 1970’s it was thought México’s oil reserves were only second to Saudi Arabia’s), was to attempt to modernize by borrowing to build the infrastructures needed to leverage the oil for national prosperity.
As the Mexican export economy grew, it wanted freer access, i.e. lower tariffs, for its goods in the United States. However, U.S. industrialists continually resisted the liberalized policies of opening the U.S. markets to Mexican goods by lowering tariffs. That is the Mexican mindset under which the Mexican government viewed the United States when the idea of NAFTA was first floated.
Although Jimmy Carter tried to reassure México that it could count on the United States was a friend, generally, México continued to fear the goliath to the north.
The Oil Embargo
The Arab nations, who were members of OPEC, imposed an oil embargo against the United States in retaliation for the United States resupplying the Israeli military during the Arab-Israeli War. The oil embargo exposed the U.S. dependence on Arab oil. It was a vulnerability that the U.S. could ill-afford.
In response, Richard Nixon launched an energy policy, Project Independence, dictating that the United States would boost internal oil production. The U.S. government also created the Strategic Oil Reserve to thwart the threat of a lack of oil resources for military operations.
During this time México, which had been steadily expanding its oil exports at six percent annually, suddenly announced the discovery of new reserves in 1974.
Although Nixon attempted to negotiate greater access to the Mexican oil, México continued to keep its distance from the goliath to the north. México continued to fear that the United States would engulf it.
In addition to the politics of oil and the unrelenting support for Israel, the United States was geopolitically bolstering its alliances to counter Soviet influence in the Arab world as the Cold War intensified.
Common Market
Against this political background, the investment bank Blyth, Eastman, Dillon & Co. published a report arguing for a North American Common Market so that the United States could access the Mexican oil reserves. The report proposed establishing a “security umbrella” over México. However, the report went further than that.
Besides placing México under a “security umbrella” and giving the United States unfettered access to Mexican oil, the investment bank argued for eliminating tariff protection over Mexican products, supply the US with “cheap” Mexican labor and remove México sovereign control over its own currency — the Mexican Peso.
The report argued that Washington should go to any means to protect itself against its oil dependence on the Middle East, even it meant a military invasion of México.
If the United States had control of México’s oil reserves it would have a strong “security posture during a conventional war.”
The report, intended to influence the U.S. political agenda, was leaked to the public shortly before Jimmy Carter was to meet with his counterpart in México.
The U.S. political agenda is driven by private think-tanks that create reports on various topics. They are extraofficial policy statements meant to persuade official U.S. policy. Today, it is the lobbyists and the Breitbart’s, funded by wealthy benefactors, that influence U.S. policy. For México, the report brought back memories of the last time the goliath to the north felt it needed to control México for its prosperity at the cost of Mexican sovereignty. It harkened back to the days when James K. Polk saw Mexican territory as the right of the United States under the notion of Manifest Destiny. Although mischaracterized commonly as the Mexican-America War in the United States, the fact is that the United States invaded México to take its land to expand the U.S. territory.
Now, under the common market theme, rather than land, México was now a resource for the United States to curtail the activities of its arch enemy, the Soviet Union, better known today as Russia. Oil, was the new land the U.S. goliath wanted.
As a matter of fact, then-United States Defense Secretary Harold Brown and Energy Secretary James Schlesinger issued a statement on February 25, 1979 declaring that the United States was prepared to intervene anywhere in the world militarily to secure its oil supplies.
On the agenda, during Jimmy Carter’s visit to México, was access to Mexican oil.
The investment bank report argued that a “common market” would “integrate the vast energy resources” of North America, mainly Mexican oil. If “nationalistic differences” could be cured, a “very large crude oil pipeline to the nearest crude trunk lines in Texas could be built to carry several million barrels daily.”
Jimmy Carter offered México access for Mexican workers to work in the United States in return for México dropping tariffs on its industrial sector. Carter also demanded that México relinquish sovereignty over the Peso by linking it to a common U.S.-Canada-México currency.
As today, currency manipulation is seen by U.S. industrialists as an impediment for access to foreign markets for their U.S. goods. During the presidential campaign, Donald Trump argued that China was manipulating its currency unfairly to the detriment of the United States. Instead of labelling China a “currency manipulator,” as he promised to during the election, Trump instead declined to say that China was manipulating its currency after meeting with the Chinese premiere in April, 2017.
The North American Common Market, outlined by the report, envisioned a marketplace with the “free movement across the borders of all commodities, particularly oil and gas, but people as well.” The effort would strengthen the United States against oil manipulation by the Arab nations and protect it from Soviet aggression across the globe. The plan had to be in place by 1990, according to the proponents of the common market.
Proponents of the plan were also aware of the Mexican government’s unwillingness to allow itself to be dominated by the United States. At the time, México’s population was growing at an uncontrolled rate.
To entice México to join the common market alongside Canada, México would be allowed “free immigration of Mexicans” to work in Canada and the United States. The United States would benefit from a “large, low cost labor force” that was legitimate and recognized by the U.S. government.
“It would prove an outlet to the millions of unemployed, under-utilized Mexicans” who could not get jobs in México.
Additionally, the United States offered to extend a “security umbrella” over Canada and México.
Meanwhile, the Mexican government was dealing with the new access to vast oil reserves and how to capitalize on them. Aware of the common market concept, the Mexican government made it clear that its oil would not become an anti-OPEC commodity. México did not want the money, nor the protection of the United States.
What México wanted was capital intensive investment in México to help move the country away from an agrarian and oil-based economy to a manufacturing one. México wanted to industrialize.
Officials within the U.S. government embraced Kenneth Hill’s argument that what México really had was “labor” and that is what would make the common market successful for the United States. Hill, a former director of Chase Manhattan’s Petroleum Division, was the lead author of the Blyth, Eastman, Dillon & Co. report.
The Cold War
The Cold War was the undercurrent to the geopolitics driving the sudden willingness by the United States to open its border to México. Saudi Arabia and OPEC, by extension, was likely to fall victim to the same political disaster as Iran’s sudden turn towards Islamic religious rule, was the common fear in Washington. “Cubans are running all over” México was another common theme in U.S. news media outlets augmenting the fear that the Soviets were establishing a foothold on the United States’ doorstep.
Canada, meanwhile, enthusiastically embraced the common market theme. The promised U.S. security umbrella strengthened NATO allowing Canada greater latitude to focus on its domestic issues.
México remained ambivalent to the U.S. promises out of fear that it would be absorbed by the United States. The Mexican military kept a firm distance from the U.S. military relying on domestic arms production and a mixture of foreign arm sales that included German rifles, Israeli weapons and even soviet aircraft. Although the Mexican military, most notably, the navy bought U.S. weapons to deploy, it tended to avoid U.S. weapons whenever possible.
México was not interested in a “security umbrella” from the United States.
After the oil discoveries, the Mexican government started to think about upgrading its military to protect the oil reserves. There was also the unresolved issue of México’s limited aerial capability to respond to a Guatemalan aggression in 1958. In the late 1970’s, the Mexican Army received permission to purchase supersonic air defense aircraft to provide México with an air defense capability. México settled on the Kfir C2 fighter from Israel as its air superiority aircraft to replace the aging Lockheed T-33 fleet. It attempted to purchase 24 fighters from Israel, but was stymied by the U.S.
The Jimmy Carter administration blocked the sale because Israel needed approval for the U.S. engines, the GE J79, in the aircraft. Carter also embarked on a global pacification plan by attempting to limit U.S. weapons exports to other countries. Eventually, México purchased a dozen U.S. Northrup F5 Tiger IIs. The first of the aircrafts were delivered in 1982. México paid $110 million for the fleet. (For more information on the Mexican F5e program, please visit this website.)
The Mexican F5’s gave México the ability to safeguard the oil fields, although it relied heavily on U.S. radar coverage to direct air intercept operations. However, the fighters allowed México the outward appearance that it could safeguard its own sovereignty.
México quietly retired its F5 Tiger II fleet on September 16, 2016.
Today, México relies on the U.S. Air Force and to a much lower extent, NATO for sovereignty interception missions while relying on its PC-7, PC-9 and Texan T-6C’s for drug interdiction and COIN (counterinsurgency and drug interdiction) operations.
This brought México full circle to the Blyth, Eastman, Dillon & Co. report of a common market, led by NAFTA, under a security umbrella offered by the United States.
The Western Hemisphere Energy Workshops
The proponents of the common market scheme knew of México’s continued resistance to the common market plan. They softened up the approach towards México by moving away from the loss of sovereignty issue to a more palatable agreement of sharing resources, including financial assistance and private investment. Private investment was something that the Mexican government was after.
As for the Kenneth Hill scheme, the Mexican government referred to it as a sophisticated “Kissingerian” scheme concocted by think tanks, like the Rand Corporation, to control the Mexican oil reserves.
In 1978 and again 1979, several conferences were held in McLean, Virginia, Bogota, Colombia and in Japan. The purpose of Western Hemisphere Energy Workshops was to develop a policy of “supranational energy” policies for the western hemisphere.
The conferences advocated for countries, like México, to give up control over their energy supplies to a global cabal that would manage it for them.
Project 1980s
Meanwhile, the New York Council on Foreign Relations had been peddling the British goal of creating an energy bloc in North American to curtail the threat of Arab and Soviet threats over energy resources. The so-called Project 1980s, envisioned the pooling of the energy resources of Canada, México and the United States. The project dovetailed perfectly into the Blyth, Eastman, Dillon & Co. report.
Britain was attempting to fulfill its goal of an energy alliance through three avenues. One was to use the “nuclear-free zone” plan that México, through the Treaty of Tlatelolco, had undertaken a lead on to lynchpin energy policy as an integrated part of the plan to keep nuclear weapons out of Latin America. The other strategy was to negotiate case-by-case energy pacts with Canada and México. This strategy was preferred by both Canada and México.
The third option was the one preferred by Britain. It called for the formation of a common market between Canada, México and the United States. It is exactly what the Blyth, Eastman, Dillon & Co. report had envisioned.
Ronald Reagan Embarks on NAFTA
On November 13, 1979, Ronald Reagan invoked the North American accord as a major plank to his presidential ambitions. The language came directly from the Blyth, Eastman, Dillon & Co. report. Reagan promised that if he was elected he would open trade and borders between Canada, México and the United States.
Reagan had embraced the common market strategy.
Under Reagan, the path towards the North American Free Trade Agreement (NAFTA) was launched. Initially, it embraced the Blyth, Eastman, Dillon & Co. report concept of border-free commerce and people. However, the goal of the scheme was to gain control of the Canadian and Mexican energy resources under a United States security umbrella. México was expected to open its energy sector as well as its production sector while relinquishing control over its currency. In return, México would gain access to trade with the United States and an open border for its citizens to work freely and legally in Canada and the United States.
What the drivers of the Blyth, Eastman, Dillon & Co. report did not anticipate was the Harvard technocrats, led by Carlos Salinas de Gortari, who took the idea of the North American common market and molded it into the neoliberalism-led economic policy of multiple free trade agreements that México embarked upon as NAFTA took shape. By opening its market to as many countries as possible and keeping the energy sector under Mexican control, the original goal of the common market did not make it into the NAFTA agreement, but neither did the goal of open borders.
NAFTA created the common market that the Blyth, Eastman, Dillon & Co. had proposed but with México retaining dominance over its currency. Although NAFTA did include open borders for certain professionals like doctors and lawyers, it did not open the borders for people. People were put on the backburner due mostly to U.S. union lobbying efforts to keep Mexican workers out of the United States and Mexico’s unwillingness to give up control over its oil and currency.
The open border dream was kept alive, however. As late as 2004, Mexican president Vicente Fox pushed forth the idea of the free-flow of people between México and the United States. George W. Bush, by many accounts, was open to liberalizing the borders for people, although not completely opening the borders. George W. Bush had initially signaled to the Mexican government that he would undertake an agenda of substantial immigration reform.
However, Bush’s invasion of Iraq opened old-wounds in U.S.-México relations. As México’s economy grew from its industrialization efforts, it started to assert itself on the international front. Although a founding member of the United Nations, and a significant contributor to its budget over the years, México had kept itself out of the foreign affairs of other nations. As México’s economy grew, so did its ambition to involve itself on global affairs.
The United Nations, in addition to the five permanent members on the Security Council, keeps a rotating elected membership of ten additional countries. México has been elected to the UN Security Council four times, with 2002–2003 cycle being its third.
During the third-cycle, the Mexican government, under Fox, refused to support Bush’s attack on Iraq through the United Nations Security Council, even though the Bush administration put much pressure on Fox. There is much debate as to the legality of George W. Bush’s invasion of Iraq with much if it driven by the lack of a UN resolution specifically authorizing the invasion.
In his book, Revolution of Hope: The Life, Faith, and Dreams of a Mexican President, Vicente Fox writes that the failure to pass immigration reform was Bush’s unforgiven anger towards Fox for not supporting the invasion of Iraq at the United Nations.
Donald Trump Destroyed the Trust
Although México strengthened its sovereignty and economy, it was nonetheless still fully dependent on the goodwill of the United States for its future. Although México kept sovereignty over its currency, the Mexican Peso is irrevocably tied to the U.S. dollar. The Mexican oil industry helped the United States through the Cold War, it nonetheless was mostly kept under the control of the Mexican state. México kept its energy resources strictly under Mexican control even after NAFTA was implemented.
However, the vast Mexican oil resources dwindled much faster than anticipated because of various factors, among them increased consumption because of the significant economic growth of the NAFTA economy.
Today, oil is México’s sixth-largest export, after manufactured products such as automobiles and computers. The Blyth, Eastman, Dillon & Co. report envisioned a subservient México under NAFTA. In some ways, México continues to be dominated by the goliath to the north as 80% of its exports go to the United States. However, the neoliberalism policies that México adopted has given it the tools to limit unfettered Yankee imperialism.
This brings us back full circle to today. Donald Trump wants to close off access for Mexican products to the U.S. market. At the same time, the Enrique Peña Nieto administration has begun to open the Mexican energy sector to foreign investment, much to the chagrin of the Mexican populace.
The energy sector is different now. The Mexican oil reserves are no longer México’s major export and the supply has steadily declined. Although México exports almost 80% of its products to the United States, the number of free trade agreements it has with other countries has given it considerable leverage.
More importantly, immigration from México to the United States has been declining since 2009 as higher wages and better job access keeps Mexicans from immigrating to the United States. (Pew Research, 2016) The Soviet Union ceased to exist in 1991 and OPEC has been marginalized by Saudi Arabia’s and other Arab nation’s dependence on U.S. protection from radical Islamic terrorism and new technology, such as shale gas, giving the U.S. better access to domestic energy supplies.
The only goal from the Blyth, Eastman, Dillon & Co. report that México relies on is the “security umbrella” it never wanted nor pursued officially.
México slowly and carefully began to move away from the Yankee imperialism fear by placing more trust in a U.S. political system that started to accept México as an equal neighbor. The proof of moving away from the fear of Yankee imperialism lies in Mexico’s military starting to integrate its military into the United States’ security umbrella.
When the time to address the impending retirement of the F5 Tiger fleet came about, the Mexican Army looked to replace them with offerings from various countries. Among them were Russian fighters. The United States F16 was seriously considered by the Mexican military. Economic necessities and the opening of trust between the U.S. and Mexican militaries allowed México to retire its interceptor force without replacing them. It took decades to get to this point and only the election of Donald Trump to bring back the fears of Yankee imperialists that those that voiced caution against U.S.-México integration continuously feared.
In the end, the Blyth, Eastman, Dillon & Co. created a stronger México better equipped to deal against Yankee imperialism and the likes of Donald Trump.
