Baja California's prospects for long-term prosperity and an improved quality of life have brightened dramatically in the last few months. For the first time since I began watching 10 years ago, I can begin to see the outlines of a post-maquiladora society where the cities are orderly and beautiful, the environment protected, the police well paid and honest, and the opportunities for education and upward mobility abundant.

What has happened? Here are three clues: bonds, energy and bold political leadership.

In April, Mexico's Congress passed legislation permitting Mexican states and cities to issue municipal bonds. This is the beginning of a long-awaited revolution in public finance. It will make an enormous difference to border cities like Tijuana, where the maquiladora-inspired growth of population and industry has overwhelmed a hitherto very limited governmental capacity to provide basic urban infrastructure, such as electricity, sewage, and paved roads and sidewalks, as well as parks, recreation centers and libraries.

The new legislation requires the bonds to be issued in pesos, but there is a movement afoot in Congress to amend the law to permit access to the international bond market. This would mean the possibility of financing on longer terms and at lower interest rates than can be obtained with peso-denominated bonds.

Bright prospects are also rising out of the energy sector. At San Diego Dialogue's recent Forum Fronterizo, Ambassador Paul Boeker, president of the Institute of the Americas, pointed out that Baja California is experiencing a boom in projects to generate electric power and import natural gas. Boeker, who is as knowledgeable on this subject as anyone, believes that over the coming decade Baja California may well be the state in Mexico with the most reliable source of ample, reasonably priced natural gas and electric power for all kinds of industrial development. A summary of his position is presented in this issue of the Report.

The implications are breathtaking. With abundant energy will come the power to transport more water into Baja California and even to desalinate seawater. And with a reliable supply of both energy and water, Baja California will have for the first time the kind of infrastructure attractive to heavy industry, including a very large part of the high-tech manufacturing sector.

As Boeker has put it, "The calling card of Baja California's economic development officials could increasingly say, not cheap labor just across the border, but great infrastructure to [supply] your business for a secure future and great connections to the largest market in the world."

Of course, nothing much might come of these opportunities without bold political leadership. Fortunately, the statewide elections in July seem to have led to just the kind of leadership that is needed.

As soon as the votes were counted, Tijuana's Mayor-elect Jesus Gonzalez Reyes was hard at work developing a municipal bond package to take advantage of Standard & Poor's AA rating for the city, the highest of any municipality in Mexico. An interview with Gonzalez is found in this Report.

Most encouraging of all was the election of Eugenio Elorduy Walther as the next governor. For vision, courage and intelligence in politics, few can approach him. At San Diego Dialogue, we have been fortunate to work with him for the past three years as a member and now this year as the co-chair of our Forum Fronterizo program.

As an early leader of the political opposition in the state, Elorduy has already had a remarkable career in the service of good, honest government. As mayor of Mexicali, he was tireless in going door-to-door to hear the concerns of the citizens. Once, outraged at the way one nation's maquiladora managers were treating female Mexican workers, he threatened to expel them from the city. To show his seriousness, he actually had one of them put on a plane and sent home.

An interview with Elorduy begins is also available in this Report.

So there you have it: bonds, energy, and bold political leadership. It has all the makings of a golden era for Baja California.