The next day, January 31, we announced the aid package with money from the Exchange Stabilization Fund. The loan agreement was signed a couple of weeks later at the Treasury Building, to howls of protest in Congress and grumbles among our G-7 allies, who were upset that the IMF director had made the $18 billion commitment to Mexico, and to us, without their prior approval. The first money was released in March, after which we continued to make regular disbursements, even though things didn’t really get better in Mexico for several months. By the end of the year, however, investors had entered the Mexican markets again and foreign exchange reserves had begun to build up. Ernesto Zedillo had also instituted the reforms he had promised.
Though it was tough at first, the aid package worked. In 1982, when the Mexican economy collapsed, it had taken almost a decade for growth to return. This time, after a year of severe recession, the Mexican economy started to grow again. After 1982, it had taken seven years for Mexico to regain access to the capital markets. In 1995, it took only seven months. In January 1997, Mexico repaid its loan in full, with interest, more than three years ahead of schedule. Mexico had borrowed $10.5 billion of the $20 billion we made available, and it paid a total of $1.4 billion in interest, almost $600 million more than the money would have earned had it been invested in U.S. Treasury notes, as other Exchange Stabilization Fund monies were. The loan turned out to be not only good policy but also a good investment.
On February 9, Helmut Kohl came to see me. He had just been reelected, and he confidently predicted that I would be as well. He told me we were living in turbulent times, but the end would bring me out all right. At the press conference after our meeting, Kohl paid a moving tribute to Senator Fulbright, who had died shortly after midnight at the age of eighty-nine. Kohl said he came from a generation who, when they were students, “wanted nothing more than to obtain a Fulbright scholarship,” and that, across the world, Fulbright’s name was associated “with openness, with friendship, and with people striving together.” At the time of his passing, more than 90,000 Americans and 120,000 students from other countries had been Fulbright scholars.
I had gone to Senator Fulbright’s home to visit him not long before he died. He had had a stroke and his speech was somewhat impaired, but his eyes were bright, his mind was working, and we had a good last visit. Fulbright would loom large in American history—as I said at his memorial service, “Always the teacher and always the student.”
On February 13, Laura Tyson and the other members of the Council of Economic Advisers, Joe Stiglitz and Martin Baily, gave me a copy of the latest
cents over two years, from $4.25 to $5.15 an hour. The raise would benefit 10 million workers, adding
