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 Business News | September 2006 
Squeezing Border Business (Snivling from the Left)
 Brady McCombs - Arizona Daily Star
| | Cost of Security: A sealed border would cost billions to fence and patrol, and would threaten economies that depend on customers crossing from Mexico. |
The nation's pursuit of a sealed border would cost taxpayers and businesses tens of billions of dollars. It would require new fencing, technology and additional agents, and would mean lost revenue for border businesses.
It would require new fencing, technology and additional agents, and would mean lost revenue for border businesses.
Border cities such as San Diego and El Paso and Laredo, Texas, already have lost millions since officers began more rigid checks after Sept. 11. The Silva Super Market in El Paso has survived, like most businesses on the border, but makes less than it used to because customers stay home rather than endure lines to get across that can be hours long, owner Martin Silva says. "This type of security affects both economies," Silva says. "I think you'll find that all along the California to Texas border."
The government could find and allocate the money required to attempt a border seal but historically has made such major priority shifts only for national-security threats or programs to keep the economy afloat, says Michael O'Hanlon, a senior fellow in foreign-policy studies at the Brookings Institution, a nonprofit public-policy think tank in Washington, D.C. "We could actually shut that border and we wouldn't have to bankrupt ourselves," he says. "You could if you decided it's your top priority."
That's very unlikely, a Star investigation found. While some experts and politicians rank sealing the border as the top U.S. policy priority, the nation as a whole doesn't agree, O'Hanlon says.
Unless terrorists begin pouring in through the southern border, politicians and citizens probably will balk at the costs, he says: "My guess is that we'll come to the conclusion that it's just not worth it."
Costs of border seal
The complexity and enormity of the proposed solutions make it difficult to pin down an exact price tag for an attempted border seal.
Even if natural barriers such as canyons, rivers and shifting sand didn't make a full-border wall impossible, fencing the nearly 2,000 miles simply would cost too much, Homeland Security Secretary Michael Chertoff already has said.
At $3.2 million per mile — the estimate used by the office of U.S. Rep. Duncan Hunter, R-Calif. for the 700 miles of fencing the House of Representatives wants to build — a borderlong fence would cost $6.4 billion. The 700 miles of double fencing supported by the House would cost an estimated $2.2 billion plus maintenance. The Senate approved a proposal for less fencing and more vehicle barriers, but last week decided to consider supporting the 700-mile fence as well.
A "virtual fence" of cameras, sensors, aerial drones and other technology would cost an estimated $5.5 billion or more, says U.S. Rep. Harold Rogers, R-Ky. Costs for those projects could double if they encounter the environmental and logistical problems that plagued construction of 14 miles of secondary fence in San Diego in the mid-1990s.
Fences, barriers and other equipment to seal the border would require agents to monitor them, too. The U.S. Border Patrol has about 10,500 agents on the southern border, more than five per mile, agency officials say. In his 2007 fiscal year budget, President Bush requested $454 million for 1,500 new agents and associated costs including relocations, information-technology upgrades, and training and construction costs to update agency facilities, a U.S. Customs and Border Protection press release says.
That's part of his larger plan to add 6,000 agents by 2008.
Using that figure — $302,806 per agent — it would cost $4.2 billion to hire the 14,000 agents the Senate has proposed hiring. It would cost an additional $21.8 billion to hire 72,000 more and reach a total of 100,000, which would provide the same coverage that proved successful when the Border Patrol slowed traffic in El Paso in the mid-'90s.
The government would have a better shot at stopping illegal immigration if it invested those billions in developing the Mexican economy and eliminated backlogs for legal entry, says Deborah Meyers, senior analyst for the Migration Policy Institute, a nonpartisan think tank in Washington, D.C.
The money also could fund a program to help employers verify that applicants are legally able to work in the United States, says Judy Gans, immigration policy program manager at the University of Arizona's Udall Center for Studies in Public Policy.
Those concepts have support from some analysts and politicians, but an expanded border fence has garnered much more.
Actual costs
The cost of a 14-mile steel mesh fence under construction in San Diego offers a reminder that projects can go over budget.
In the early '90s, officials estimated the secondary fence would cost $14 million — $1 million per mile, says John Pike, director of Virginia-based GlobalSecurity.org, a nonpartisan security-information Web site.
The first nine miles rang up at $39 million, or about $4.3 million per mile, with all associated costs. Last year, the Department of Homeland Security approved an additional $35 million to complete the final five miles, 3 1/2 of which were delayed by rugged terrain and legal wrangling about environmental concerns. The president requested another $30 million in his 2007 budget.
All that would push the total cost for the 14-mile fence to $104 million, or $7.4 million per mile. With steep cliffs, rugged mountains, sand dunes, deserts and large stretches of private land in Texas where some of the 700 miles of new fencing would go, that project could encounter similar setbacks.
"The San Diego precedent demonstrates that this is clearly more complicated than it sounds at first blush," Pike says. "It's not like fencing in your backyard so your dog doesn't get out."
Border businesses hit hard
The economic ramifications of increased border security hit businesses on the border, too.
When the Silva Super Market opened in 1920 on the northern bank of the Rio Grande, a single wooden bridge connected El Paso and Ciudad Juarez. The U.S. Border Patrol didn't exist.
Today, four concrete bridges arch above the concrete-funneled Rio Grande, connecting the two cities. Customs and Border Protection officers check everyone who crosses.
For nearly 11 miles, three layers of steel-mesh fence stand between the river and El Paso. Hundreds of Border Patrol agents monitor the area day and night on dirt roads between them.
For all the changes, one constant remains: Nearly half of the customers at the Silva Super Market are from Juarez.
"We are one economy. I can't stress it enough. Any border town will probably tell you that," says Martin Silva, whose grandfather founded the store. "You have both American and Mexican nationals shopping in Juarez and El Paso, and that just contributes to the overall health of both country's economies."
Money in the borderlands is fluid. Mexicans come to the United States to buy clothes, shoes, toilet paper and groceries. Americans head south for tequila, medicine and souvenirs, and to visit dentists and bars.
About 960,000 people cross from one country to the other every day, the U.S. Embassy in Mexico reports. From the late 1970s to 2001, Mexicans accounted for $2.3 billion a year in retail spending in Laredo, Brownsville, McAllen and El Paso, a 2006 study from the Federal Reserve Bank of Dallas showed. That's about 26 percent of total retail trade in the four Texas border cities and 2 percent of overall Texas retail sales, Fed economist Roberto Coronado says.
Mexican visitors have a $3 billion impact on the Rio Grande Valley of south Texas, says Suad Ghaddar, an economist with the Center for Border Economic Studies at the University of Texas-Pan American. That spending supports more than 64,000 jobs, Ghaddar says.
The impact in California is about $4.5 billion, she says, supporting 67,000 jobs.
Direct spending by Mexican visitors to Arizona hit $963 million in 2001, a study by the UA Economic and Business Research Center showed.
After Sept. 11, the government instructed Customs officers to run more background checks and ask more questions of border crossers.
Subsequently, the number of people passing into the United States fell by 16.5 percent, from 290 million in 2000 to 242 million in 2004, the most recent data available, the Federal Reserve Bank study says.
Longer wait times discouraged many from making the trip to El Paso, Silva says.
Increased waits in San Diego — about 45 minutes per vehicle — cost the county 8.4 million trips a year that would yield nearly $1.3 billion, a 2006 study by the San Diego Association of Governments shows. Two-hour waits for semitrailers carrying goods cost the county $455 million in annual revenue, the study says. The losses will continue if wait times continue to rise, the study says.
But while the wait times discourage border crossers, they don't stop them from somehow buying the goods they can't get south of the border, the Federal Reserve bank study reported.
Despite longer waits, retail trade along the border has grown since 2001, suggesting Mexicans spend more in fewer trips, says Tom Fullerton, an economics professor at the University of Texas-El Paso.
The crackdown after Sept. 11 had a short-lived negative impact, Nogales Mayor-elect Ignacio Barraza says. Sales taxes have held steady since, he says.
"They are prepared, rather reluctantly, to wait in line as long as they have to in order to come and make their purchases," Barraza says.
Downtown El Paso has lost about a quarter of all business since Sept. 11, but few stores have shut their doors, Silva says. Border shoppers and store owners from San Diego to Brownsville echo that theme: Business hasn't recovered since Sept. 11, but as long as the ports of entry remain open, enough Mexicans will cross to keep businesses afloat.
Silva tells a story to explain. In the late 1990s, after the Border Patrol launched Operation Hold the Line to cut down on illegal crossing, a Juarez maquiladora bought 1,500 gift certificates as employee Christmas gifts. He wondered how many would be redeemed considering most maquiladora workers didn't have visas to cross into the United States.
By the end of the holiday season, 1,350 had been redeemed. Whether the workers crossed illegally or gave the certificates to relatives, it showed cross-border commerce can survive border enforcement, Silva says.
Inefficiency equals losses
It's not border enforcement programs, but inefficient implementation that causes problems, says Maria O'Connell, president of the Border Trade Alliance, a Phoenix-based group that promotes free and efficient trade.
For instance, she says, the requirement that U.S. citizens carry their passports when crossing the border starting in 2008 won't affect commerce if there are enough agents and sufficient technology. If not, she says, "that can create economic chaos at the border." As a resident of El Paso, Silva, the market owner, respects the extra time customs officers spend questioning crossers to keep out terrorists and criminals. But he can't deny it strains the symbiotic relationship between Juarez and El Paso.
"When people feel they have a two-hour wait to cross a bridge that should normally take five minutes, they tend to stay away," he says.
Contact reporter Brady McCombs at 573-4213 or at bmccombs@azstarnet.com. |
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