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Cablegate: Eeb a/S Sullivan Discusses Major Economies Meeting

VZCZCXRO1649
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #4856/01 2502220
ZNR UUUUU ZZH
P 072220Z SEP 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 8796
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0420
RUEHRL/AMEMBASSY BERLIN PRIORITY 0398
RUEHBR/AMEMBASSY BRASILIA PRIORITY 1445
RUEHBY/AMEMBASSY CANBERRA PRIORITY 0246
RUEHJA/AMEMBASSY JAKARTA PRIORITY 0074
RUEHLI/AMEMBASSY LISBON PRIORITY 0060
RUEHLO/AMEMBASSY LONDON PRIORITY 0391
RUEHMO/AMEMBASSY MOSCOW PRIORITY 0320
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0289
RUEHFR/AMEMBASSY PARIS PRIORITY 0385
RUEHSA/AMEMBASSY PRETORIA PRIORITY 0147
RUEHRO/AMEMBASSY ROME PRIORITY 0610
RUEHUL/AMEMBASSY SEOUL PRIORITY 0317
RUEHKO/AMEMBASSY TOKYO PRIORITY 0467
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0269
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0166
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHAAA/WHITE HOUSE WASHDC PRIORITY
RUEAEPA/EPA WASHDC PRIORITY

UNCLAS SECTION 01 OF 06 MEXICO 004856

SIPDIS

SENSITIVE
SIPDIS

STATE FOR G, E, EEB/ESC, WHA/MEX, WHA/PPC, AND OES/EGC
DOE FOR PI/KHARBERT/GWARD/ALOCKWOOD
EPA FOR OIA AND OAR
WHITE HOUSE FOR CEQ/CONNAUGHTON

E.O. 12958: N/A
TAGS: SENV ENRG MX
SUBJECT: EEB A/S SULLIVAN DISCUSSES MAJOR ECONOMIES MEETING
ON CLIMATE CHANGE AND ENERGY SECURITY

Summary
-------

1. (SBU) A/S Dan Sullivan met with a range of senior GOM
officials to encourage high-level Mexican participation from
the full range of relevant ministries in the September Major
Economies Meeting on Climate Change (MEM) proposed by
President Bush. Upon being assured that the MEM is aimed at
contributing to UN climate change efforts, A/S Sullivan's
interlocutors expressed enthusiasm for attending the MEM and
agreement with the cross-ministry approach and the focus on
protecting the environment without sacrificing economic
growth. They also concurred that Mexico was well positioned
to play a bridge role between developed and developing
economies on climate change. Two things became obvious over
the course of these meetings: 1) President Calderon is firmly
committed to addressing climate change and 2) his
administration is already coordinating interagency on GOM
participation in the MEM. A cautionary note was sounded by a
foreign ministry official, who asserted that Mexico would not
be bound by any MEM outcome in terms of its freedom to
negotiate in the UN process. End summary.

Broad Range of Meetings
-----------------------

2. (SBU) From August 29-30, A/S Sullivan met with the
following senior Mexican officials: Dionisio Perez-Jacome,
senior domestic policy advisor to President Calderon from the
Office of the Presidency; Under Secretary Alejandro Werner of
the finance ministry; Under Secretary Beatriz Leycegui of the
economy ministry; International Affairs chief Enrique Lendo
of the environment ministry; Director General for Global
Issues Ernesto Cespedes of the foreign relations ministry,
and Director General for International Affairs Aldo Flores of
the energy ministry. These GOM officials displayed
remarkable message consistency over the course of five
separate meetings, indicating that climate change is an issue
that receives considerable attention from President Calderon
and is carefully coordinated among the relevant ministries.
Below we report the GOM responses to the key points in A/S
Sullivan's presentation.

MEM Proposal
------------

3. (SBU) A/S Sullivan explained that President Bush proposed
in May 2007, two weeks prior to the G8 summit, to convene a
meeting of the world's 15 major economies, who together
account for 85-90 percent of global emissions, to initiate a
process aimed at achieving by the end of 2008 a consensus
among these major players on a post-Kyoto framework that
could also lead to a global greenhouse gas (GHG) reduction
goal. This consensus could then feed into and contribute to
the negotiations that will take place under the auspices of
the UN Framework Convention on Climate Change (UNFCCC) to
establish by the end of 2009 a successor regime to the Kyoto
Protocol, which expires in 2012.

4. (SBU) Every one of A/S Sullivan's interlocutors remarked

MEXICO 00004856 002 OF 006


on how committed President Calderon is to tackling the issue
of climate change, and how frequently he raises it with his
cabinet. In fact, Flores (energy ministry) insisted that he
had never attended a presidential meeting on energy issues at
which Calderon had not discussed climate change. As further
evidence, Lendo (environment ministry) and others cited the
formation of the GOM,s Intersecretarial Commission on
Climate Change and the publication of its National Strategy
on Climate Change. A/S Sullivan and his counterparts also
pointed to language on energy and the environment in the
joint statement of the North American leaders from their
Montebello meeting as explicit proof that both presidents are
committed to facing this problem, in a way that integrates
climate, energy security, and economic growth issues.

High-level and Cross-cutting Representation
-------------------------------------------

5. (SBU) A/S Sullivan highlighted that the U.S. side would be
represented at very senior levels across an array of
departments and offices, including State, Treasury, Energy,
Commerce, EPA, and the Council on Environmental Quality. He
encouraged the GOM to follow suit. He noted that Secretary
Rice would host the meeting and participation from other
cabinet members (including Secretary Bodman and Secretary
Paulson) and their chief deputies was expected.

6. (SBU) Presidency's Perez-Jacome (whom A/S Sullivan met on
Wednesday the 29th) recalled the meeting he had had with
Under Secretary Dobriansky in May on the MEM. He said Mexico
was very interested in the MEM and would definitely
participate. He said he would brief Calderon personally on
the details raised by A/S Sullivan and urge a very high-level
Mexican team. The other Mexicans echoed him, saying each of
their ministries would like to include high-ranking officials
in the Mexican delegation, though neither the finance,
economy, or energy ministries could commit to sending anyone
yet. At A/S Sullivan's penultimate meeting on Thursday the
30th, Cespedes (foreign ministry) and Lendo (environment
ministry) said that Environment Minister Juan Elvira would
lead the Mexican delegation and that the U/S for Foreign
Affairs would attend as well.

7. (SBU) There was a similar meeting of the minds on the
value of including a wide range of ministries in the MEM
process due to the cross-cutting nature of the climate change
problem, as already reflected by the composition of Mexico's
Intersecretarial Commission, which in addition to the four
ministries that met with A/S Sullivan, also includes the
agriculture, transport, and social development ministries.
Werner said the finance ministry is getting involved in the
climate issue, but admitted that it has been slow to do so
because of the federal budget and pension and fiscal reform
(on the latter, see septel). He strongly agreed that a
comprehensive, cross-ministry approach is needed. Indeed, he
argued that the finance ministry should take part in this
process so policymakers keep in mind the costs and benefits
of their actions. He did not want Calderon telling his staff
to "do this," and then have people follow through without
consideration of the expense. Werner noted that Mexico's

MEXICO 00004856 003 OF 006


development banks could play a role in the climate agenda.
Flores noted that the energy ministry would follow the MEM
closely, as PEMEX, Mexico,s state petroleum monopoly, was by
far Mexico,s largest polluter. Leycegui (economy ministry),
who met with A/S Sullivan on Thursday the 30th, reported that
one of her staff had already been called to an interagency
meeting on the MEM.

Tackle Climate Change Without Sacrificing Growth
--------------------------------------------- ---

8. (SBU) A/S Sullivan pointed out that the U.S. was serious
about climate change, and confident that a global solution
would not necessarily mean sacrificing economic growth, using
as an example the fact that last year U.S. greenhouse gas
emissions dropped 1.3 percent in absolute terms while the
U.S. economy grew 3.3 percent.

9. (SBU) Werner (finance ministry) responded that in some
instances there might be a trade-off between growth and
environmental protection, but that this is clearly not so in
many other cases. He raised the example of Mexico's
irrational pricing of energy, which led to both economic
inefficiency and environmental harm. Flores (energy
ministry) remarked that the U.S. had opposed the Kyoto
Protocol with exactly the reverse argument, i.e., binding
commitments to reduce emissions would hurt the U.S. economy.
He suggested that some, largely in Europe, would view U.S.
leadership in the process with skepticism, adding the caveat
that it was not clear that Europe spoke with a single voice
on the issue. A/S Sullivan said the MEM does mark a shift in
U.S. policy, but that the U.S. believes it is possible to
address GHG emissions without negatively affecting economic
growth. Flores agreed and noted that this would be an
important message for China and other large developing
economies that criticize rich countries for using climate as
a tool to stymie their own development.

Bridging the Developed and Developing Country Divide
--------------------------------------------- -------

10. (SBU) A/S Sullivan said that the European governments he
had briefed on the MEM had responded positively, including
France. He then pointed out that strong Mexican
participation would be key to the MEM's success, as Mexico,
in some ways like the U.S., was well positioned to serve as a
bridge between the climate change perspectives and interests
of rich countries like the EU disposed to Kyoto-like
approaches and more skeptical but crucially important
developing countries like China and India.

11. (SBU) Presidency's Perez-Jacome agreed, saying that the
U.S. could help bridge the gap from the rich countries to the
developing ones, while Mexico could work in the opposite
direction. He recalled Calderon's forceful remarks to the
leaders of the other major developing economies who had been
invited to the May 2007 G8 meetings in Germany on the
responsibility of all to do their part to combat climate
change. Werner (finance ministry) agreed that Mexico could
play a "bridge" role, but noted that developing countries

MEXICO 00004856 004 OF 006


will always hark back to how developed countries "that have
already polluted" are now telling them not to pollute.
Flores (energy ministry), quoting Mexican historian Enrique
Krause, called Mexico a "pre-modern, modern, anti-modern, and
post-modern" society, making it well-suited for a mediating
function between more- and less-developed nations' positions
in the debate. Nevertheless, Flores cautioned, Mexico is
ever-conscious of how its relationship with the U.S. is
perceived, and Mexico's precise level of involvement in a
U.S-led MEM process will be calibrated with this in mind. He
could not firmly predict Mexico's eventual level of
involvement.

Contributing to, Not Competing with, the UNFCCC Process
--------------------------------------------- ----------

12. (SBU) A/S Sullivan took great pains to refute allegations
made in various news media that the MEM is designed to rival
the UNFCCC process. He cited the May 2007 G8 summit
declaration on climate change and the invitation letters
President Bush had sent to leaders of the 15 major economies
(including President Calderon) that explicitly contradicted
these allegations and made clear that the U.S. wants the MEM
to feed into and contribute to the UNFCCC process. He
reported that U.S. had also invited UN Secretary General Ban
Ki-moon, who had not yet confirmed his attendance but had
expressed great interest in the initiative.

13. (SBU) These assurances were clearly of critical
importance to the GOM and opened the door to the enthusiastic
responses received from almost all of A/S Sullivan's
interlocutors. Perez-Jacome (Presidency) and Lendo
(environment ministry) emphasized Mexico's ongoing commitment
to dealing with climate change principally in the
multilateral forum, a position they would be sure to
reiterate at the September MEM, and Leycegui said that
initially the Calderon administration had been concerned
about how the MEM would fit in with the UNFCCC, noting that
the U.S. commitment to working under UN auspices on tackling
climate change seemed to represent a policy shift. She asked
how the MEM would interact with the APEC climate initiative.
A/S Sullivan replied that the U.S. view was that these
processes should all complement one another. Cespedes told
A/S Sullivan that maintaining the UN framework was essential
for Mexico; "regional and other multilateral initiatives"
were acceptable, provided they remain within the UN
framework.

Mexico Will Not be Bound by MEM
-------------------------------

14. (SBU) Perhaps the most discordant note in response to A/S
Sullivan's presentation came from Cespedes (foreign
ministry). He acknowledged the importance of climate change
on Mexico's domestic agenda and now on the international
agenda, and said Mexico was happy to collaborate in gathering
data under the MEM. However, he asserted that even if the
MEM process concluded with an agreement on binding GHG
emissions targets, Mexico would not consider such an
agreement to be binding or to restrict in any way its freedom

MEXICO 00004856 005 OF 006


of negotiation within the UNFCCC framework. A/S Sullivan
responded that achieving consensus would be a challenge, but
that the whole point of the MEM was to reach agreement among
the world's major polluters on as many points as possible,
including emissions reductions, by the end of 2008. Such a
consensus would then serve as a basis or impetus for global
agreement under the UNFCCC. Cespedes made clear that his
ministry would take the lead on policy-related aspects of
Mexico's MEM participation, while the environment ministry
would lead on the technical aspects.

Specific Agenda Items
---------------------

15. (SBU) To varying degrees depending on the time available
in each meeting, A/S Sullivan gave a brief overview of the
draft agenda and solicited GOM input. He emphasized the
bottom-up approach we favor of first trying to assess what
the major economies are already doing and asked the GOM to
fill in matrices on its existing clean energy policies and
measures and its climate-related technology research and
development. He said that the U.S. would like to focus
attention on sectoral approaches, highlighting the
transportation and power generation sectors as particularly
important.

16. (SBU) During discussions of the agenda, the various
interlocutors commented on issues of particular interest to
their own ministries. They also noted that the work done to
complete President Calderon's National Strategy would
facilitate their completion of the MEM matrices. Lendo
(environment ministry) and Werner (finance ministry)
mentioned that the Calderon administration had allocated
money in this year's budget to help combat deforestation,
which in turn would contribute to carbon sequestration, and
said they hope to have a similar amount of resources in the
2008 budget. Werner also mentioned Clean Development
Mechanism (CDM) projects that Mexico has implemented on
converting buses and trains to cleaner fuels and promoting
the construction of more energy efficient homes. He said
there is a need to develop a comprehensive agenda for the use
of CDM credits in Mexico. Lendo said his ministry was also
interested in other land use and sectoral issues. Flores
(energy ministry) noted that both the energy and the
environment ministries have been developing a framework to
promote the development of biofuels and clean energy, and
that Mexico has set specific sectoral objectives on
greenhouse gas emissions, though no national objective. On
cooperation with the U.S., Flores noted the recently signed
SPP agreement on cooperation in Energy Science and
Technology, and Secretary Kessel's proposal that the U.S. and
Mexico cooperate on research in Geothermal Energy.

Comment
-------

17. (SBU) The GOM is clearly motivated and coordinated on the
climate change issue and sees the MEM as a promising
mechanism worthy of full and active participation, so long as
progress under the MEM is fully channeled into the UNFCCC

MEXICO 00004856 006 OF 006


process to which Mexico gives place of precedence. Clearly
Mexico wants to play a constructive role and takes seriously
the possibility that it can serve as a "bridge" between rich
and poor countries. We will need to be mindful of Mexico's
need to avoid being seen merely as a messenger for the U.S.,
but we can be optimistic that it will bring the right people
and the right intentions to the September meeting. End
comment.

18. (SBU) Bio Note: President Calderon clearly has his
economic ministries delivering a consistent message on the
importance of combating climate change. Presidencia's
Perez-Jacome had told A/S Sullivan he would brief President
Calderon and ensure relevant GOM Ministries supported the MEM
effort. That very evening, he sent the MEM matrix handed out
by A/S Sullivan to Cespedes, the foreign ministry lead for
the MEM, who brought the matrix to the meeting A/S Sullivan
had at the environment ministry meeting the following day.

19. (U) This cable has been cleared by A/S Sullivan.


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 /
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