Welles unmistakably plays on the ideas of the Border, racial and sexual, in _Touch of Evil_. As you note, the Grandi family do international business, and Uncle Joe Grandi is a Mexican-American, not a Mexican (and his last name suggests an Italian heritage).
Nonetheless, consider the effects on the audience of having Charleton Heston (who remains Charleton Heston, notwithstanding his 'brown face' act) cast as a 'good' cop-hero while having those who assault Susan look more stereotypically Latin. Earlier in the film, Susan calls one of them 'Pancho,' displaying her class- and race-based contempt toward a dark young man, despite the fact that she is married to a Mexican man. Perhaps the film can be read in this regard as a gloss on the adage "money whitens," but most of the audience may leave the film having their views on race + class reinforced: 'good' Mexicans are white professionals while 'bad' Mexicans are dark, deal drugs, and violate a white woman.
Also, while Welles challenges the most obviously bigoted views on inter-racial relationships by making the fascist Quinlan invidiously question the relationship between Vargas and Susan, interracial relationships in the film do not fare well. For instance, as soon as Vargas and Susan cross the border and kiss, the bomb explodes, interrupting their kiss. Nearly throughout the film, the plot separates Vargas from Susan; in doing so, the plot sets Susan up as a damsel in distress in need of Vargas's rescue later by reducing her progressively to the object of the white male audience's voyeuristic desire to enjoy the sexual violation of a white woman while projecting their rape fantasy upon the Dark Others (among whom, to top it all off, Welles includes a butch-looking leather-clad woman who says, "let me stay. I wanna watch," while the boys are grabbing the screaming Susan by her arms and legs).
In other words, various strands of the narrative seem to defeat Welles's anti-racist intentions.
> > Though as a cop he is 'honest,' he becomes violent and disregards
> > legal limits of police power (not unlike his antagonist Quinlan)
> > when he is acting as husband & 'protector' of his wife and her
> > 'reputation.'
>
> I think both Vargas and Quinlan are in this bizarre, extra-moral,
> extra-legal space at the end of the movie, and the crazy shifts in the
> camera's point of view reflect this. Quinlan has gone beyond framing
> the guilty to becoming a murderer himself, while Vargas puts Menzies
> in harm's way by having him wear what has to be an unauthorized bug to
> catch Quinlan incriminating himself. And, just as the murderer
> Quinlan protests that he never framed anyone who wasn't "Guilty --
> GUILTY", Vargas uses his official power in a personal vendetta to
> insure that his wife's name is "Clean -- CLEAN!"
>
> And irony accumulates, as if it were compound interest.
I agree with you on the above, except that I would say what accumulates with compound interest is paranoia, not irony. A film about panopticon, where everyone is caught in a web of conspiracy and surveillance, while capital continues to do its business as usual.
Yoshie