Cablegate: President Calderon Speaks to Achievements,

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1. Summary. In a series of interviews commemorating his
first year in office, President Calderon touted the creation
of 800,000 jobs and singled out narco-trafficking as one of
Mexico's biggest challenges. The U.S. was assuming greater
responsibility on drugs but needed to do more to reduce
demand and tackle arms smuggling. Calderon was pleased with
Congress for having adopted pension, tax, and election reform
and stressed the need for judicial, energy, and education
reform. He expressed concern about the emergence of
personalistic regimes in Latin America and considered
Venezuela's recent rejection of Chavez's referendum a "good
sign." At the same time, he worried about the animosity
directed toward Mexicans in the U.S. electoral campaign. He
anticipated a slow down in the Mexican economy as a product
of economic problems in the U.S. but was not fearful of an
"economic crisis." End Summary.

800,000 More Jobs and Counting

2. Calderon was proud of his administration's record on the
economy. Notwithstanding a slowdown in the U.S., his
government had created 800,000 new jobs in the formal economy
in his first year ) the second highest number of jobs ever
created in one year. International reserves exceed external
debt. Fiscal reform passed earlier this year will allow
Mexico to keep its public finances in equilibrium for the
short term future. As the U.S. remains the primary motor for
the Mexican economy, Calderon allowed that Mexico faced an
economic slowdown in the coming year but was not worried
about a crisis. Instead, he identified three alternative
"motors" Mexico would rely on to generate economic growth in
the coming year.

-- Infrastructure Investment: Mexico will increase private
and public sector investment in infrastructure from 3 percent
of GDP to upwards of 5 percent, suggesting Mexico would
invest over $50 million more in the coming year to improve
airports, highways, telecommunications, ports, etc.

-- Housing and Tourism: Mexico would seek to develop sectors
that don't depend as much on the U.S. economy such as
housing. It would also seek to tap more fully the potential
tourism offers.

-- Export Diversification: Exports to the U.S. grew by 6
percent last year and the U.S. remains Mexico's primary
market. However, Mexico needs to export to other markets
including Europe, Asia, Latin America and the Middle East.

Drug Trafficking: One of Mexico's Greatest "Dangers"
--------------------------------------------- -------

3. Upon taking office, Calderon remarks that he discovered
the drug trafficking problem was far worse than he had
anticipated. Cartels operated with almost complete impunity
and controlled territory throughout the country. Whereas in
the past traffickers had focused almost exclusively on moving
drugs to the U.S. market, today, they target students
providing them marijuana, cocaine, and methamphetamine for
free as part of an effort to create a new generation of
addicts. There are reports that in some cities in the state
of Veracruz drugs are sold in over 600 places. And organized
crime has diversified into other areas including kidnapping,
extortion, robbery, and collecting fees from legitimate
businessmen. To facilitate their activities, criminal
leaders work to displace the state including local government
leaders and the police so they can effectively and
strategically control territory.

4. How has Calderon responded? He deployed joint operations
made up of the military, police and prosecutors to go after
traffickers, reclaim the upper hand and begin to recover the
confidence of most citizens. He claimed that his
administration had placed over 15,000 individuals linked to
organized crime behind bars and captured some 20 major drug
lords controlling the cartels around the country including
Nuevo Leon, Campeche, and Veracruz. Government operations
have also produced world record seizures of cocaine and cash.
In the future, he said that he intends to reach out to
governors and mayors in developing a strategy to avail them
greater support from federal security forces and expanded
authorities to remove corrupt police officials. Judicial
reform would also assume an important role, giving judicial
authorities the necessary tools to process cases more
expeditiously and providing police the training they need to
assume a wider role in investigating cases so prosecutors

MEXICO 00006184 002.2 OF 003

would have more time to convict criminals. Attacking police
corruption and establishing a platform for coordination
amongst Mexico's security forces at all levels were essential
to success.

U.S. Needs To Do Its Part

5. Calderon remarked that he felt the U.S. had begun to
demonstrate a greater appreciation for its role in combating
drug trafficking and was hopeful the U.S. and Mexico would
soon be able to implement a joint strategy to tackle this
problem together. He thought that the U.S. could do more
particularly on its own side of the border. The U.S. remains
the largest consumer of drugs and needed to do more reduce
drug consumption. He acknowledged corruption on the Mexican
side that facilitated the movement of drugs but corruption
was also a problem on the U.S. side and the U.S. needed to do
more to fight it. Weapons are sold in some 12,000 places in
the U.S. along the border. Enormous quantities are entering
Mexico, many times traveling in conveys on highways. The
U.S. has the technology to detect these weapons both at the
border and from airplanes. Calderon said he wanted the U.S.
to provide this technology to Mexico and without conditions.

Reforms Transforming Mexico

6. Calderon described reform efforts as first steps in a
process that aims to transform Mexico. He applauded the
Congress for its work on reform bills, singling out leaders
from his own party PAN but also the PRI. He spoke to the
following reforms:

-- Fiscal Reform: Calderon expressed confidence the fiscal
reform Congress passed in September would strengthen Mexico's
fiscal base.

-- Election Reform: Calderon described the election reform
Congress also passed last September as an effort to foster
reconciliation among Mexico's political parties. He hadn't
favored replacing members of the Federal Electoral Institute
but considered it a concession worth making to "establish
some consensus with respect to the rules for arbitrating

-- Judicial Reform: As noted prior, he hoped the reform bill
would give judges wider authorities to issue arrest warrants,
facilitate the transition to oral trials, expand the
investigatory capacity of the police, and contribute to the
creation of databases on cars, fingerprints, and weapons used
in the commission of crimes to facilitate thorough

-- Energy Reform: Mexico produces 200 million barrels of
petroleum fewer than just a few years ago and is at risk of
becoming a net petroleum importer. He hoped Congress would
move on legislation that would give PEMEX greater freedom to
access the kind of technology and financing it needs to tap
undersea reserves and expand production.

-- State Reform: Calderon thought this reform bill should
facilitate legislative work. He conveyed his support for
consecutive reelection of legislators and local officials
which he thought would strengthen Congress and make them more
responsive to the voters.

-- Education Reform: While we are not aware of a formal bill
under consideration, Calderon spoke to the need for a
fundamental transformation of Mexico's education system.
Many powerful interests resist change and any reform would
require collaboration with Mexico's teachers. He signaled
his support for awarding teachers whose students perform
higher on standardized tests.

Dealing with the EPR

7. In response to a question about how to deal with the EPR
in the face of two attacks on PEMEX pipelines over the last
year and threats of new attacks to come, Calderon offered
several lines of thinking. First, Mexico needs to develop a
sounder system for investigating attacks as the current
system is antiquated. Second, Mexico needs to foster a
deeper democratic culture that will diminish the appeal of
armed movements. Third, Calderon maintained that while
authorities investigated attacks on government property, he

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had ordered authorities also investigate what had happened to
the two EPR members who apparently disappeared earlier in the
year. He noted the government had taken steps to strengthen
protection of PEMEX.

Calderon on Challenges in Latin America

8. Calderon expressed concern about the emergence of
personalistic regimes in Latin America which he described as
undemocratic and dangerous. He described Venezuelans, vote
to reject a referendum in the face of enormous government
support for the measure as an enormous and historic step in
preserving democratic values in Latin America. He also
congratulated Chavez for accepting the defeat. Observing
tension in relations between Uruguay and Argentina as well as
between Colombia and Venezuela, he saw an opportunity for
Mexico to assume an important role in reorienting discussion
towards progressive values such as liberty, justice,
democracy, the market place and investment, as well as the
rule of law.

9. Signaling some displeasure with Caldron's remarks,
Venezuela's Ambassador to Mexico Roy Chaderton visited
Mexico's Foreign Ministry (SRE) seeking an explanation.
Apparently Chaderton left satisfied with assurances by
Mexico's Foreign Minister Patricia Espinosa that Mexico
"respects the self-determination of the Venezuelan people as
expressed at the polls and Mexico will respect the
self-determination of the Venezuelan people and government in
matters that are exclusively within its competence."

Concern about Attacks on Mexicans in the U.S.

10. Calderon also expressed concern about how in the both
Democrats and Republicans were targeting Mexicans unfairly in
the course of U.S. electoral debates. The U.S. has serious
economic and political problems. It was wrong for U.S.
politicians to believe closing its borders was going to solve
its economic problems. The problem was that the U.S. economy
is not competitive. It is financing a war that is putting
the country only deeper into debt and displacing private
investment. Mexico is innocent in this matter and continued
attacks on Mexicans will only hurt relations between Mexico
and the U.S.

11. Comment. Calderon was straightforward and precise in
his remarks. He repeatedly drew attention to his
administration's success in creating new jobs, aware that his
government's fortunes ride in large measure on its ability to
expand economic opportunity for Mexicans. He also keenly
focused on the threat narco-trafficking poses to Mexico and
his efforts to meet that challenge by strengthening law
enforcement institutions and going after traffickers. He
recognized the importance of cooperation with the U.S. but
stressed the need for the U.S. to do more both on demand and
arms trafficking. His frank remarks on Chavez drew GOV
attention as they were tantamount to criticism of Chavez's
referendum, but the Foreign Ministry averted controversy by
reaffirming respect for Venezuelan "self-determination."
Mexicans in Mexico are sensitive to attacks on Mexicans in
the U.S. In his remarks, however, Calderon went beyond just
rejecting such attacks to suggesting the U.S. needed to
reflect more on its own internal policies to resolve its
economic policies. Overall, Calderon, conveyed a strong
command of all matters raised and projected confidence in his
leadership and pride about his accomplishments. End Comment.

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