- The Washington Times - Wednesday, January 28, 2009

CHICAGO

Marilu Vargas digs through bargain meats at a Mexican grocery store, trying to slash the budget for her family of seven while considering how much she can spare for relatives back home in Mexico.

Nine months ago, the 36-year-old lost her job at a mortgage company that folded in the dismal housing market. Drastic cutbacks have followed as her family struggles to live on her husband’s $30,000 salary.

Mrs. Vargas’ parents and other relatives await whatever stipend she can afford to send from the United States. But lately they have been waiting longer for less.

As the U.S. recession deepens, Ms. Vargas is among a wave of immigrants who have cut back on what they send home — resulting in the first annual decline in “remittances” to Mexico since the country’s central bank began keeping track of payments 13 years ago.

Remittances, Mexico’s second-largest source of foreign income after oil, plunged 3.6 percent to $25 billion in 2008 compared with $26 billion for the previous year, the central bank said Tuesday.

The percentage drop is nearly twice what the government had expected for the year, and central bank official Jesus Cervantes said the decline will likely continue this year.

Experts blame a crackdown on illegal immigration that has stemmed the flow of those heading north to seek work, as well as the U.S. recession, during which many Mexicans, especially construction workers, have been laid off.

The thousands of dollars Mrs. Vargas has sent to Iguala, Mexico, during the past 17 years have allowed her parents to finish building their three-bedroom house and her mother to see a private doctor instead of going to one of Mexico’s crowded and often inept public clinics.

Mrs. Vargas remembers a time when she could send up to $500 a month. Lately, it’s just $50 to $80 here and there.

Her mother never complains. “She accepts it,” Mrs. Vargas said. “She watches television and sees how difficult the situation is.”

But it weighs on Mrs. Vargas, who knows times are tough in Mexico as well.

“The U.S. economy is affecting them there,” she said. “Life is more difficult.”

Mango, orange and other fruit trees grow in abundance in the lush mountain city of Iguala, but people struggle to make ends meet.

Mrs. Vargas’ father, Alberto Rodriguez, 56, has not been able to find a job in more than two months.

The construction worker used to have steady work in the city, where reinforcing steel bars protrude from the tops of cinderblock homes that are built in stages as money arrives from family members in the U.S.

But clinking hammers and cement-mixing machines have gone silent. Half-built structures loom as victims of a faltering economy, rather than works in progress.

Long lines of families waiting to pick up remittances at Western Union have all but disappeared.

“The migrants used to send back money to their families, who would hire someone to build a second floor or paint their houses,” Mr. Rodriguez said. “But now everyone over there is losing their jobs, and down here the jobs are disappearing as a result.”

“Remittances are the single-strongest poverty-reduction tool that many countries have,” said Robert Meins of the Inter-American Development Bank. “This could translate into a great deal of hardship for a lot of people, which I think is underappreciated.”

In Mexico, reduced remittances are combining with a slide in exports to slow the economy, which the central bank Tuesday predicted will contract between 0.8 percent and to 1.8 percent in 2009. Mexico sends 80 percent of its exports to the United States. The government has forecast zero growth.

“It’s definitely another sign that Mexico is receiving a shock from the U.S. recession through its trade ties to it, and we expect the economy to be in recession this year,” said Jimena Zuniga, an economist at Barclay’s Capital in New York.

Mexico receives the largest amount of remittances in Latin America and the third largest in the world, after India and China - where remittances have only slowed but not dropped because they have many skilled professionals working abroad who haven’t been hit as hard.


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