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Cablegate: President Calderon Seeks Investment for Mexico,S

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PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1020/01 0591925
ZNR UUUUU ZZH
P 281925Z FEB 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 5593
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RHMFIUU/CDR USNORTHCOM PRIORITY
RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
RUEAHLA/DEPT OF HOMELAND SECURITY PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 MEXICO 001020

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL PINR ECON EFIN MX
SUBJECT: PRESIDENT CALDERON SEEKS INVESTMENT FOR MEXICO,S
HIGH MIGRATION AREAS AND REFORMULATION OF NADBANK

1. (SBU) Summary: Speaking three months after taking office,
President Calderon offered his perspective of why Mexico is
uniquely positioned to become one of the world's leading
investment destinations and gave an overview of progress on
his three priorities: security and the rule of law, poverty
reduction, and job creation. He specified the need to make
the NADBank (NADB) more responsive to the needs of both
Mexico and the U.S., and stated that he will approach
President Bush in the near future with a proposal to expand
the Bank's mandate. End summary.

2. (SBU) President Calderon on February 27 congratulated the
American Chamber of Commerce in Mexico on its 90th
anniversary and expressed gratitude for the contribution
member companies have made to the country's development. He
noted that 63 percent of Mexico's USD 19 billion in foreign
direct investment last year came from U.S. companies, and
said he perceived a growing international trust in Mexico's
institutions and public policies.

3. (SBU) Marketing his country, Calderon identified Mexico's
economic advantages: macroeconomic stability, including low
interest rates, a strong stock market and low country risk;
its strategic location next to the world's largest economy;
its network of international trade agreements; its vast
natural resources, including oil and diverse agricultural
products; and positive trends in public finances resulting
from surplus oil revenues. Calderon added that Mexico's
attractiveness as a leading country for investment is
bolstered by the country's sound democracy and strong
institutions, its vibrant culture rooted in Latin America and
connected to North America, and a "demographic bonus," with a
young, economically active population that averages 27 years
of age.

4. (SBU) Calderon offered an overview of progress on his
government's three priorities: establishing security and the
rule of law; fighting poverty; and creating jobs. He
explained that the GOM has significantly increased the
security budget and initiated surge operations in some of
Mexico's most lawless states, using the strength of the
federal government to recover control from drug traffickers
and organized crime (septel). Cautioning that this will be a
long struggle that will cost lives and money, the president
said "it's a fight we have to fight" and promised to be
relentless in enforcing Mexico's laws and giving
Mexicans--and investors--the security and confidence they
deserve.

5. (SBU) With regard to attacking poverty, Calderon listed a
number of policy proposals and thanked the congress for its
work to increase the number of health insured families from
five million to seven million. Accepting that the government
does not have the resources to give all Mexicans adequate
medical insurance, he reiterated his pledge to ensure health
coverage for all children born during his administration.
Calderon added that the GOM is working on programs to help
women join the workforce, by creating day care centers and
other support projects. In addition, it will pay the social
security premium for the first year of employment of all new
employees brought into the formal sector.

6. (SBU) Calderon hailed the February 23 announcement of a
pilot program for cross-border trucking as a firm step to
replace the current inefficient and costly system for
U.S.-Mexico truck traffic. He noted that within two months,
the first Mexican companies would start transporting products
directly from Mexico to their U.S. customers. He hailed this
opening as a historic step to improve U.S.-Mexican trade,
benefiting producers and consumers. (Note: The pilot program
for 100 U.S. and 100 Mexican companies will allow Mexican and
U.S. trucks to travel past the 25-mile commercial zone along
the border for the first time since 1982. Estimated savings
are USD 400 million a year. End note.)

7. (SBU) The president emphasized the need to channel
investment toward the regions of highest migration, linking
job creation with curbing migration, and spelling out his
vision of a country where all Mexican men and women have
their own jobs and don't need to leave in search of
employment. He praised the opening of avocado exports from
Michoacan, his home state, to California and Florida,

MEXICO 00001020 002 OF 002


boasting that a state that has been among the biggest
exporters of migrants is now the world's largest exporter of
avocados. While offering his respect for U.S. autonomy, the
president also took a swipe at the border "wall" by saying he
believed investing in one kilometer of road in a poor state
like Zacatecas, Guanajuato, or Michoacan, would have more
impact on reducing migration than investing in 10 kilometers
of border fencing in Texas or Arizona.

8. (SBU) President Calderon then offered his proposal for a
reformulation of the North American Development Bank (NADB)
that would expand its mandate to go beyond environmental
projects and include infrastructure in general and other
projects in areas experiencing the largest migration. He
also called for increasing the limit on the total amount of
loans available to a single debtor. Calderon turned to
Ambassador Garza and asked him to take the message to
President Bush that the GOM will be proposing this
reformulation, acknowledging that he understands that
changing the NADB's mandate would require congressional
approval in the U.S. and Mexico. Calderon also hailed
Mexico's February 26 signing of a Memorandum of Understanding
with the Inter-American Development Bank (IDB) for IDB
guarantees and possible financing for up to USD 2.5 billion
for infrastructure projects.

9. (SBU) Calderon noted that a study completed by Goldman
Sachs indicates that Mexico could become the world's fifth
largest economy by 2040 if the GOM makes the right decisions
now. He pledged to make those right decisions, saying he
wants Mexico to be among the top investment destinations in
the world. The president concluded by affirming his
commitment to the rule of law, and assured his audience that
Mexico is on the right path.


Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity
GARZA

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