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Cablegate: President Calderon Delivers His "State of The

DE RUEHME #2753/01 2532127
R 092127Z SEP 08



E.O. 12958: N/A

1. Summary. President Calderon presented the written
version of an annual report on the
&state of the union8 to Congress on September 1. Over
prior decades, Mexico's president would deliver this report
orally to Congress. Over the summer recess, however,
Congress passed legislation that amended the Constitution
dispensing with this tradition and calling on the President
instead to present the report in writing. Calderon used the
report to present a laundry list of his administrations
accomplishments in the areas of Rule of Law and Public
Security, Economic Competitiveness and Employment Generation,
Equal Opportunity, Protection of the Environment, and
Democratic Effectiveness and Responsible Foreign Policy.
Separately, he has produced a series of television spot ads
to present the case for his achievements directly to the
public. Congress preserves for itself the right to call on
the government to address outstanding questions emerging from
the report. Ironically, however, while the Congress
eliminated oral delivery of the report to Congress with the
intention of diminishing the president's stature, as an
unintended consequence, it has spared the president an
uncomfortable confrontation with Congress. End Summary.

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2. Interior Secretary Juan Camilio Mourino delivered a
written copy of President Calderon's annual report to
Congressional leaders on September 1. The report of over 500
pages included an executive summary that provided the
equivalent of a laundry list of the administration's
achievements over the last year in five different areas
including Rule of Law and Public Security, Economic
Competitiveness and Employment Generation, Equal Opportunity,
Protection of the Environment, and Democratic Effectiveness
and Responsible Foreign Policy .

Rule of Law and Public Security

3. Calderon stressed that security remains his top priority.
Describing it as a shared responsibility, he noted the
importance he attached to joint cooperation amongst the
different enforcement agencies. He pledged to clean the
police forces and eliminate corruption through the
implementation of psychological and drug tests and polygraph
exams, the latter of which different USG agencies support.
In his report, he identifies the following as his
administration's most important initiatives and achievements.

-- Deployed joint operations in the Mexican states of
Sinoloa, Durango, Chihuahua, Michoacan, Guerrero, Nuevo
Laredo and Tamaulipas to combat organized crime.

-- Detained several major organized crime leaders including
Jesus Raul Beltran Uriarte, Alfredo Beltran, and Sandra Avila.

-- Captured over 200 kidnappers and the broke up more than 30
kidnapping rings.

-- Raised the salaries of army officials by over 40 percent
and of naval officials by over 57 percent.

-- Provided over 198,000 SEDENA officials human rights

-- Recruited into SEDENA 723 women in the first half of 2008
) four times more over the same period in 2007.

-- Created a telecommunications network to link public
security institutions from all 32 federal entities with a
centralized criminal information system.

-- Won adoption of judicial reform legislation that will
strengthen the investigation of organized crime.

-- Forged the Merida Initiative with the U.S. founded on the
principle of shared responsibility with a view to bilateral
cooperation in the form of equipment transfer and training.

Economic Competitiveness and Employment Generation

4. Calderon asserted that Mexico's economy remains
reasonably strong despite the adverse global outlook. He
maintained that during his two years in power 800,000 formal
jobs have been created. Mexico's 3 percent GDP growth, while
not sufficient to make a significant dent in poverty, was not
bad for a global environment characterized by recession and
high inflation. Calderon highlighted that, outside of Canada,
Mexico had the lowest inflation in the Americas. Speaking
to energy prices, Calderon noted that despite recent
increases in gasoline and fuel prices, gasoline in Mexico is

MEXICO 00002753 002 OF 004

still forty percent cheaper than in the United States.

5. Calderon's report to Congress maintains that the
government seeks to create opportunities and improve the
economic welfare of all Mexicans but in particular the most
impoverished. To that end, it has sought to generate greater
economic growth and more employment. The government has
focused its efforts in three areas: 1) maintain and
consolidate macroeconomic stability through sound public
finance policies; 2) implement structural economic reforms
that will transform the production apparatus with a long term
vision; and 3) diversify the basis for economic growth,
stimulate greater competition, and promote investment in
different sectors of the economy, including infrastructure,
tourism, rural regions, housing, and telecommunications. It
cited the following initiatives and achievements.

-- Maintained low inflation levels on a par with the
continent's best performers.

-- Won passage of fiscal reform legislation which has helped
generate a record level of funds dedicated to social
development ) over $112.5 billion.

-- Sent Congress energy reform legislation.

-- Seek to invest over 5 pct of the country's GDP in
infrastructure; a record amount of over $48 billion was
invested in infrastructure in 2007.

-- Seek to transform Mexico into one of the world's principal
logistic platforms.

-- Constructed and modernized highways with public-private
investment exceeding $8.1 billion over the administration's
first two years ) three times what was spent over the first
two years of the last administration.

-- Extended electric service to over 97.3 percent of the

-- Extended potable water service to 90.8 percent of the
population and sewage service to over 86.6 percent of the
country's population.

-- Attracted $2.5 billion in direct foreign investment with
the amount coming from the European Union growing from 18
percent of the total in 2000 to 45 percent in 2007.

-- Registered a 17 percent growth in exports in the first six
months of 2008 compared with the same period in 2007 and,
whereas in 2000 only 88.7 percent of Mexico's exports went to
the U.S., in the first six months of 2008, that number had
declined to 80 percent. This is attributed to an increase of
49 and 42 percent respectively in exports to Europe and Latin

-- Generated the creation of over 800,000 new jobs from the
end of 2006 through mid-2008.

-- Helped those affected by food price increases by
eliminating taxes on grains, reducing tariffs on basic
products, generating greater domestic productivity, and
providing direct financial assistance to families in need.

-- Launched a new program to promote the creation of jobs in
rural areas.

Equal Opportunity

6. The report stresses the administration's commitment to
improving access to education, health care, decent housing,
good jobs, and a strong social network. It identified
eliminating extreme poverty and closing huge wealth
disparities as the government's highest priorities in this
field. It listed the following as its most important
initiatives and achievements

-- Combat extreme poverty by strengthening the government's
&Programa Oportunidades8 which is helping over 5 million

-- Guarantee access for newborns that don't belong to the
social security system to doctors, medicine, and clinics.

-- Approved over 266,000 projects to assist impoverish
families to purchase their own home.

MEXICO 00002753 003 OF 004

Protection of the Environment

7. The report describes the government's efforts to
harmonize its development strategies with policies to
conserve and protect the environment. Calderon's efforts
have not attracted much media attention but, by all
appearances, he is genuinely committed to doing more to
protect the environment. His report touted the following
initiatives and achievements.

-- Planted 9.4 million trees on one day ) July 5, 2008 )
with the aid of private citizens and organizations and which
the government maintains is a record in Latin America.

-- Eliminated the import of gases that damage the ozone layer.

-- Planted more than 253 million trees in 2007 ) one fourth
of the total established by the UN for the entire world )
covering 580,000 hectares or twice the amount of the prior

-- Invested four times more money in the conservation of
forests in 2007 than the prior year.

Democratic Effectiveness and Responsible Foreign Policy

8. In seeking to strengthen the country's democratic
character, the government discusses its efforts to promote
constructive dialogue with the government's other branches,
all political parties and civil society. It proudly notes it
collaborative efforts with Congress helped produce
legislation on fiscal, pension and judicial reform. It also
boasts of efforts to promote greater transparency and
accountability through the expansion of access to government

9. In speaking to its foreign policy, the administration has
sought to develop strategies to take advantage of
globalization in a manner consistent with Mexico's interests
and respectful of its international obligations.

-- It describes Mexico's efforts to consolidate its status as
an &indispensable actor8 in Latin America allowing it to
promote regional stability and integration.

-- In March, Mexico assumed the lead of the Rio Group which
it describes as the &most important organization for
dialogue in the region.8

-- Mexico also sought to place a discussion of efforts to
combat organized crime on the agendas of regional meetings.

-- Proyecto Mesoamerica ) formally known as Plan Puebla
Panama ) represents Mexico's efforts to promote greater
integration in the fields of electricity, health, the
environment, and housing in Central America and Colombia.

-- In 2008, the government forged a Strategic Association
between Mexico and the European Union aimed at promoting
greater trade and investment between the two.

-- As coordinator of the Group of Five made up of Brazil,
China, India, South Africa, and Mexico, Mexico promoted more
meaningful dialogue with the Group of Eight.

-- Mexico has won the support of countries within Latin
America and the Caribbean for its election in October to the
UN Security Council for the period 2009-2010.

-- The Merida Initiative provides a framework of cooperation
for both the U.S. and Mexico to tackle shared challenges in
combating organized crime.

-- Mexico remains committed to respect for its citizens
living in the U.S.

Be Careful What You Wish For(

10. In decades past, Mexico's president would deliver this
report to Congress to much fanfare on a day celebrated as the
&President's Day.8 A subservient Congress dominated by the
PRI would applaud the president's list of accomplishments and
the press would faithfully and uncritically report them in a
tradition that served only to embellish the president's
authority. Of course, that tradition has weakened over
recent years. In 2006, protesting the July 2006 election of
Felipe Calderon, opposition Congressmen blocked outgoing
President Vicente Fox from entering the Congress to give his

MEXICO 00002753 004 OF 004

last report. Last year, Calderon agreed to present a written
version of his report but not present it orally so as to
avoid a similar experience.

11. Seeking to dispel what it perceived as a vestige of an
era when Mexican politics were dominated by the Mexican
President who always hailed from the PRI, Congress passed a
bill this past summer that dispensed with this tradition.
Under this bill that reforms Mexico's Constitution, the
President no longer delivers his address orally to the
Congress. Instead, he must deliver a copy of the written
report to Congress on September 1. The Congress reserves
for itself the right to request the administration through
its key cabinet members to address specific concerns either
in writing or at a Congressional hearing. If it remains
unsatisfied, the Congress also reserves the right to call
upon the President to respond.

12. Comment. While the opposition introduced this reform as
a way to diminish the power of the president ) and, in the
case of the PRD, to deprive Calderon of some measure of his
legitimacy ) it has also served to spare him what had become
an unpleasantly confrontational exercise. Few actually read
this 500 page tome. However, nothing prevents Calderon from
going on television to deliver five minute advertisements
touting his government's accomplishments as outlined in the
report. In this manner, he gets his message out without
having to face the controversy and criticism which in the
past overshadowed the report. No doubt, upon reviewing the
report, the opposition parties may avail themselves of their
right to criticize the report and call on him to address
their concerns. Or they may be too caught up in debates over
the budget to give it the time they would like. Either way,
their response is not likely to generate the kind of
publicity as would a response at the time the president
delivers his report, prompting some to suggest that it is
only a matter of time before the Congress once again requires
the President to present his report orally to Congress.

Visit Mexico City's Classified Web Site at and the North American
Partnership Blog at /

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