April 13, 2016

Donald Trump threatens to cut off remittances to Mexico

US presidential candidate Donald Trump has said he would threaten to cut off remittance payments from Mexican migrants in the US, in order to coerce Mexico to fund a border wall.

The governor of Mexico’s central bank has criticized the proposal, saying it is a violation of migrants’ rights.

In a memo to the Washington Post, Trump outlined how if elected he would amend provisions in the US Patriot Act to prevent wire transfers via services such as Western Union, unless the Mexican government agrees to fund a wall along the US–Mexico border.

The Trump memo claims that Mexican migrants in the US send $24 billion home in remittances each year. It estimates the cost of funding a border wall would be between $5 billion and $10 billion.

Other proposals contained in the memo for compelling Mexico to fund a wall are imposing trade tariffs, raising visa fees, and threatening to cancel existing visas.

Agustin Carstens, governor of the Bank of Mexico, told reporters: “The remittances are the property of the people that make them, and they have every right to be able to carry out international transfers. So it would be a serious violation of the property rights of our fellow citizens abroad, and this measure would be completely unjust.”

The proposal was also criticized by President Barack Obama, who commented: “This is just one more example of something that is not thought through and is primarily put forward for political consumption. The notion that we’re going to track every Western Union bit of money that’s being sent to Mexico, good luck with that.”

Catalina Amuedo-Dorantes has written about the advantages and disadvantages of remittances to developing countries, which have increased sharply in recent decades. She writes that: “Remittances can improve the well-being of family members left behind and boost the economies of receiving countries. They can also create a culture of dependency in the receiving country, lowering labor force participation, promoting conspicuous consumption, and slowing economic growth. A better understanding of their impacts is needed in order to formulate specific policy measures that will enable developing economies to get the greatest benefit from these monetary inflows.”

Related articles:
The good and the bad in remittance flows by Catalina Amuedo-Dorantes
Migration and families left behind by Sylvie Démurger
Impact of remittances on fertility by George S. Naufal
Feminization of migration and trends in remittances by Maelan Le Goff