Facing a diplomatic test, Condoleezza Rice (search) said Thursday she hoped to begin a dialogue on border issues and immigration with the United States' "close neighbor and friend" during her first trip to Mexico as secretary of state.

"There's an awful lot this hemisphere can do and we're always better when we're working together on matters of trade, on matters of security and especially on matters of democracy," Rice told reporters before landing in Mexico City.

She was to announce a $10 million grant to support the expansion of Mexico's micro-financing program that provides Mexicans with banking services and small business loans. Congressional sources and Texas officials said Rice also would announce that the two countries have reached an agreement over water that Texas has claimed its southern neighbor owes under a decades-old treaty.

Her one-day trip to meet with President Vicente Fox (search) and Foreign Secretary Luis Ernesto Derbez comes at a fragile period for U.S. relations with its southern neighbor.

Mexico already differed with the United States over President Bush's policy in Iraq. But politicians there now accuse the Bush administration of interfering with Mexico's internal affairs. They have denounced U.S. comments about human rights abuses, drug trafficking, and possible election-related instability, and were angered recently about a U.S. travel warning for Americans along Mexico's northern border.

Rice said progress has been made in securing the border since the Sept. 11, 2001 terrorist attacks. But she also said the United States is obligated to alert its citizens of concerns.

"We and the Mexicans have a robust dialogue about border security, and I believe we're going to continue to have that," she said. "This is not a matter of pointing fingers. This is a matter of really trying to get the best possible coordination and work that we can so that there's safety for citizens in both countries, on both sides of the border."

She said the U.S. government does not support vigilante groups that are recruiting volunteers to patrol the border for undocumented Mexican crossers.

Mexico and the United States also are divided over the treatment of Mexicans convicted of crimes punishable by death in the United States.

The administration has instructed state courts to give 51 Mexicans facing the death penalty new hearings on claims that they were not allowed to see their diplomats. The International Court of Justice in the Hague ruled last year that the convictions violated the Vienna Convention — ratified by the United States in 1969 — by not providing the Mexican detainees with consular access.

Just this week, the Bush administration pulled out of a part of the Vienna Convention that death penalty opponents have used to fight the capital sentences for foreigners.

Rice said the protocol was optional. "We will continue to live up to our obligations under the Vienna convention. We will continue to believe in the importance of consular notification. But this particular optional protocol was in our federal system being interpreted in ways that we thought were inappropriate," she said.

Bush's former national security adviser also likely will face frustration by Mexican leaders over Bush's stalled proposals to reform U.S. immigration laws.

Since taking office in 2000, Fox has made migration reform a top foreign policy. He believes that millions of Mexicans who live across the U.S. border should be allowed to stay in the United States legally.

Bush, too, has put immigration issues toward the top of his agenda. Its centerpiece is a guest-worker program that would allow migrants to work in the United States for a limited time as long as they have a job lined up.

In 2001, Bush and Fox agreed to press for immigration reform. But the Sept. 11 terrorist attacks derailed that progress. Congress, wary of doing favors for those who enter in the Unites States illegally, focused instead on border security in relations with Mexico.