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Cablegate: Calderon's Chief of Staff Replaces Sojo at Economy

VZCZCXRO6853
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #2453/01 2212240
ZNR UUUUU ZZH
P 082240Z AUG 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 2904
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 1040
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC PRIORITY
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 MEXICO 002453

SENSITIVE
SIPDIS

STATE FOR A/S SHANNON
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA, EB/CIP/BA
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD
TREASURY FOR IA (RACHEL JARPE, LUYEN TRAN)
NSC FOR RICHARD MILES, DAN FISK
STATE PASS TO USTR (EISSENSTAT/MELLE/SHIGETOMI)
STATE PASS TO FEDERAL RESERVE (BORA DURDU)

E.O. 12958: N/A
TAGS: ECON PGOV ETRD EFIN MX
SUBJECT: CALDERON'S CHIEF OF STAFF REPLACES SOJO AT ECONOMY
MINISTRY

Summary
--------

1. (SBU) President Calderon announced that Eduardo Sojo would
be leaving the helm of the Economy Secretariat in order to
head up the National Institute of Statistics and Geography.
Calderon assigned his Chief of Staff and longtime political
confidante, Gerardo Ruiz Mateos, to succeed Sojo as Secretary
of Economy, publicly praising his experience as a businessman
and charging him to fight inflation, foster small business,
and make Mexico a "multi-directional link" for international
trade flows. Ever since the tortilla crisis in early 2007
there have been complaints about Sojo's lack of firm,
executive leadership and rumors of his impending departure.
Although Ruiz lacks Sojo's academic pedigree, his close ties
with the President could make him a more authoritative
figure. Ruiz has said he does not plan to change any of his
top officials for now, but it remains to be seen how long
"now" will last. One change that has already been made is
that Felipe Duarte, the hitherto chief economic adviser in
the Office of the Presidency, has replaced Alberto Ortega
Venzor as the Chief of Staff to the Secretary of Economy.
Ruiz will be replaced by Patricia Flores as the new Chief of
Staff in the Office of the Presidency. End summary.

Sojo to INEGI
-------------

2. (U) On August 6, President Calderon announced a major
shake-up in his economic cabinet. Secretary of the Economy
Dr. Eduardo Sojo-Aldape would be leaving his post to take
over the National Institute of Statistics and Geography
(INEGI). Sojo, if approved by the Congress, will run INEGI
through December 2009. In previous professional incarnations
he has served as Technical Director and Director of
Statistics of INEGI. As Calderon noted in his remarks, INEGI
has been strengthened by recent amendments to its governing
law that have made it autonomous and shifted responsibility
for official economic statistics (e.g., inflation, GDP
growth, unemployment) from the Bank of Mexico to INEGI. We
expect that most of the statisticians now working for the
Bank of Mexico will simply be transferred to INEGI.

3. (SBU) Bank of Mexico Governor Guillermo Ortiz told
econoffs that he was happy to see INEGI take on this work, as
the Bank of Mexico had previously been in the uncomfortable
position of both measuring and fighting inflation. He also
said that the Bank of Mexico had been plagued by a number of
legal actions in which private parties had alleged
inaccuracies in its inflation statistics that had resulted in
unwelcome contractual obligations tied to the rate of
inflation. An Assistant Secretary-level contact in Economy
told econoff that while the move to INEGI was at least a
half-rank demotion, he believed that Sojo welcomed it. This
was due to exhaustion from his workload and constant stress
regarding rising prices, and the fact that INEGI is
headquartered in the city of Aguascalientes, much closer to
his hometown of Leon, Guanajuato than Mexico City.

And Ruiz to Econom!a
--------------------

4. (U) At the same press event, Calderon announced that his
Chief of Staff Gerardo Ruiz Mateos would be taking over the
Secretariat of Economy (effective immediately - the Secretary
of Economy does not need congressional approval). Ruiz
received his industrial engineering degree from the highly
regarded Technological Institute of Monterrey and became
director of an auto-parts manufacturing firm in Queretaro in
1989. He joined the National Action Party (PAN) in the
mid-1990s and has been closely connected with Felipe Calderon
ever since, serving as the executive director of the PAN's
National Committee while Calderon was party chief. He was
the chief of finance and administration for Calderon's 2006
presidential campaign, served as technical coordinator for

MEXICO 00002453 002 OF 002


the presidential transition, and then served as Coordinator
of the Cabinet and Special Projects in the Office of the
Presidency until he replaced Juan Camilo Mourino as Chief of
Staff. In his remarks, Calderon commented on his high level
of personal trust in Ruiz, but also noted that his experience
running a private sector company and being on the "other side
of the counter" from the government gave him an intuitive
sense of what needs to be done, i.e., "deregulate the economy
and free the country's productive forces to spur growth."
The President directed the newest member of his cabinet to
focus his energies on five tasks: 1) support Mexican families
as they struggle with higher prices; 2) continue to promote
investment to generate jobs for Mexicans: 3) strengthen
programs to support small- and medium-sized enterprises; 4)
strive to make Mexico "a multi-directional link in trade
flows among Asia, America, and Europe" and 5) coordinate the
efforts of all relevant federal agencies in order achieve
faster economic growth.

5. (SBU) Ruiz brings with him as his chief of staff Felipe
Duarte, who was the chief economic adviser in the Office of
the Presidency. Ruiz told press yesterday that he does not
plan to make any other major personnel changes for the time
being. However, a contact in the Economy Secretariat told
econoff that Ruiz has quarreled with Rocio Ruiz, Under
Secretary of Economy for Industry and Commerce, and Jesus
Heriberto Felix, Under Secretary of Economy for Small and
Medium Enterprises, and he would not be surprised to see them
leave in the not-so-distant future. On the other hand, we
are assured that Under Secretary of Economy for International
Trade Negotiations Beatriz Leycegui still plans to attend the
Americas Competitiveness Forum being hosted by Commerce
Secretary Gutierrez in Atlanta later this month, and a
Foreign Ministry contact told econoff he suspected Ruiz would
attend as well (Embassy is still seeking confirmation). Our
Economy contact remarked that Ruiz was substantively far less
prepared for his new responsibilities than Sojo had been, but
acknowledged that he would wield considerable clout given his
closeness to the President. He also mentioned that Patricia
Flores, who will take over as Calderon's chief of staff, will
have a very limited policy role due to the fact that her two
predecessors took much of their policy portfolios with them
(Mourino to Interior and Ruiz to Economy).

Comment
-------

6. (SBU) Numerous outside commentators have long criticized
Sojo for being a weak executive at Economy, especially since
his slow response to the tortilla price crisis in early 2007.
Running an important technical agency like INEGI is no
sinecure, but clearly at least half a step down from heading
a cabinet-level policy department. We do not know whether he
was pushed out or transferred to INEGI willingly, but the
announcement caught almost everyone (including our Economy
contacts) by surprise, indicating that he made the move with
his dignity intact. It remains to be seen how Ruiz's
performance will compare with his predecessor's, but dealing
with the daunting challenges of rising inflation, the U.S.
economic slowdown, and Mexico's own low growth rate provide
him ample opportunity to earn his spurs. What is obvious is
Calderon's clear preference for filling new openings in his
cabinet with longtime loyalists. End Comment.
Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity and the North American
Partnership Blog at http://www.intelink.gov/communities/state/nap /
BASSETT

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