BY JAMES KUHNHENN
                      Herald World Staff

                      MONTERREY, Mexico - President Bush and Mexican President Vicente Fox agreed Friday on U.S. aid for Mexico
                      and improved border controls, but they stopped short of setting a firm deadline to overhaul an immigration
                      system that has vexed the two countries for years.

                      The absence of a timeline was a setback for immigration advocates, who had hoped talks would lead to action by
                      the end of the year.

                      Bush and Fox reached a new agreement to promote U.S. investment and economic development in Mexico and
                      approved new ''smart border'' security agreements, rekindling a developing relationship interrupted by the Sept.
                      11 terrorist attacks.

                      The two leaders met privately first and then with top aides in this northern industrial city, which was hosting scores
                      of world leaders for a United Nations conference on aid to undeveloped countries.

                      In remarks to the conference, Bush prodded rich nations to make foreign assistance contingent on efforts by
                      impoverished nations to open their markets and democratize their governments.

                      HELP SOONER?

                      He has promised to increase U.S. development assistance by 50 percent over three years starting in 2004 -- from
                      $10 billion to $15 billion -- to countries that meet certain economic, government and social improvement criteria.
                      On Friday, Bush told the conference that he intends to provide some money even sooner.

                      ''To jump-start this initiative, I'll work with the United States Congress to make resources available over the next
                      12 months for qualifying countries,'' he said.

                      An administration official, speaking on the condition of anonymity, said Bush was considering aid in the millions of
                      dollars, not billions. The new pledge came after several aid groups applauded Bush's initiative but questioned why
                      he was putting off the effort for two years.

                      ADVANCEMENTS

                      The border agreement, which uses technology to expedite legal immigration while tightening security, and the
                      investment plan represented advancements in cross-border relations.

                      The investment plan is designed to stem the flow of immigrants by creating jobs in Mexico.

                      But a broader solution to the fate of the undocumented workers in the United States remains unresolved.

                      Bush has emerged as a leading advocate in the Republican Party for liberalized immigration policies that don't
                      punish immigrants who come to the United States to work. Bush and Fox were expected to issue a communique
                      encouraging continued talks on immigration at the highest levels of both governments, but without a timeline for
                      completion.

                      ''The Republican Party is conflicted on immigration,'' said Frank Sharry, executive director of the
                      Washington-based National Immigration Forum.

                      The lack of a deadline, he said, ``allows those within the party who want to thwart the president more opportunity
                      to make mischief.''

                      OFF TO PERU

                      Today, Bush will fly to Peru, where he will encounter a state of heightened security in the aftermath of a deadly
                      bomb blast Wednesday night outside the U.S. embassy in Lima. Though trade was high on the agenda, the blast
                      was expected to lend new urgency to the underlying anti-terrorism message Bush is promoting on a three-country
                      tour that also takes him to El Salvador.

                      But Bush was likely to raise the subject of Lori Berenson, an American convicted in Peru of terrorism charges for
                      helping Marxist guerillas. Berenson is serving a 20-year sentence.

                      ''It is an issue. It's on the agenda,'' the administration official said.