Mexico agrees to assemble helicopters for Russian military
ByLine: By JOHN AUTHERS
The leaders of Mexico and Russia have struck a deal to assemble helicopters
for Russia's military, giving an unexpected boost to Mexico's
ailing maquiladora sector.
The announcement followed a day of meetings in Mexico City between Vladimir
Putin, the Russian president, and Mexican President Vicente Fox.
Manufacturing helped bring Mexico out of recession during the 1990s, but the
country is now losing ground to China and other lower-wage competitors.
Mr Fox said the manufacturing venture would be limited to assembling military
equipment such as helicopters, rather than weapons. It will use a factory in
Ciudad Sahagun, in Hidalgo, one of Mexico's poorest states, which does
not traditionally have a strong manufacturing sector.
Mr Putin said the project, which is still being negotiated, was
"concrete and interesting, but small" and that Russia would support
it.
Mr Fox said the project "could open the market to heavy vehicles which
have multiple uses - both by the army and in construction, and in rescue work
after natural disasters". If successful, it will be the first such deal
that Mexico has reached with a foreign government.
The project could help Mexico move its "maquiladora" sector, which
uses imported parts to assemble goods for export, towards new sectors that
are easier to defend from lower-wage competition, a long-term aim of Mr
Fox's government.
Mr Putin also offered Russian investment and expertise in developing liquid
natural gas plants in Baja California. Mexico's constitution requires
that all natural resources are the property of the state, which has
restricted the government's efforts to attract foreign investment.
However, there is a recent precedent for using foreign investment in liquid
natural gas, as Shell is involved in a project to build a new plant in
Altamira, on Mexico's Gulf coast. Several private companies are also
involved in the distribution of gas within Mexico.
It should therefore be possible to arrange for Russian help in building new
plants without requiring the approval of Congress. However, there is strong
political opposition to any foreign involvement in Mexican energy, and such a
move would be unlikely to escape controversy.
Mr Fox also used the meeting with Mr Putin to make a strong call for
Mexico's investment rules to be liberalised. "Really, it is Mexico
which is the exception in this area, as Chile, Brazil, Argentina, Cuba,
Russia, the US, Canada, all of Europe and all the other countries operate
under a system of total openness to investment, always maintaining control
and sovereignty over resources," he said.
Mr Fox was wounded last week by the resignation of his energy secretary,
Felipe Calderon. His replacement, Fernando Elizondo, has pledged to look for
consensus on energy investment.
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