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Cablegate: Sme Crisis Exposes Weaknesses in Mexico's Unions

VZCZCXRO2893
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #3107/01 3012347
ZNR UUUUU ZZH
P 282347Z OCT 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 8813
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC

UNCLAS SECTION 01 OF 03 MEXICO 003107

SENSITIVE
SIPDIS

STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA, AND DRL/AWH
STATE PASS TO DOL ILAB CRISPIN RIGBY

E.O. 12958: N/A
TAGS: ECON ELAB PREL PGOV MX
SUBJECT: SME CRISIS EXPOSES WEAKNESSES IN MEXICO'S UNIONS

A: Mexico 2865
B. Mexico 2933
C. Mexico 2978

1. (SBU) Summary: Apparently around 150,000 people marched in the
streets of Mexico City Thursday, October 15 in a show of solidarity
with the Sindicato Mexicano de Electricistas (SME), the union of the
now defunct electrical provider, Luz y Fuerza del Centro (LFC).
According to media polls and Laboff contacts, public opinion remains
divided on the issue of the SME. Radical and independent unions
associated with the left-wing PRD and the Union Nacional de
Trabajadores (UNT) sympathize with the SME, while the traditional
unions associated with the PRI have kept their distance. Former
presidential candidate Andres Manuel Lopez Obrador (AMLO) and Mexico
City Mayor Marcelo Ebrard (both PRD) have thrown their lot in with
the SME - at least for now. There are the usual calls for union
solidarity against the federal government and for large-scale union
action, but future plans remain unclear. Some observers suggest that
last Thursday's march was the SME's last hurrah; the SME, however,
is keeping the rhetoric up and promises peaceful future actions
against the government. Partly as a result of Thursday's march, the
federal government invited the SME to the negotiating table on
October 16. The SME walked away from the negotiations on October 19,
citing fears of "government trickery." The federal government
continues to follow through on retirement payments, re-employment,
and retraining. To date the GOM has played its hand well in tackling
one of the most corrupt Mexican unions. End summary.

Government and Union Negotiations Fall Apart
--------------------------------------------
2. (SBU) Mexico City Mayor Marcelo Ebrard (PRD) has become an
advocate for the SME workers and arranged to have Secretary of
Government Fernando Gomez Mont agree to meet SME negotiators to
discuss the dissolution of LFC. Negotiations fell apart shortly
after they began, however, because of both sides' intractability.
SME wants nothing less than the reformation of LFC and the union,
and Secretary of Labor Javier Lozano has publicly refused to reverse
the government's dissolution decree. The federal government agreed
to the talks to discuss the workers' situation and ensure total
conformity with laws protecting workers. On October 15 a plurality
of parties in Mexico's Chamber of Deputies approved a measure
authorizing an investigation into the constitutionality of the
dissolution of LFC. Gomez Mont has stated his confidence in the
legality of the government's abolition of LFC and welcomes judicial
confirmation. The SME is equally confident that the courts will
rule in favor of the workers.

3. (SBU) Ebrard has been a constant and steady figure in this
process. As a PRD mayor, his political sympathies lie with the SME,
but Laboff contact suggests that as a politician he has shown
himself to be moderate and modern in previous situations. Ebrard
also has national political aspirations and would like to be part of
the solution without dramatically weakening the institutions he
hopes to run someday. Ebrard's close relationship with Andres Manuel
Lopez Obrador (AMLO)and SME leader Martin Esparza could affect his
ability to be an honest broker, but to date he has been a mostly
positive force in this crisis.

PAN Calls for More Reform
-------------------------
4. (SBU) Some PAN lawmakers have begun to encourage Calderon and the
federal government to be consistent in its approach to labor and
unions and to close down the unions of the oil workers, the
teachers, and the public service workers, among others. They argue
that with consistency Calderon can avoid accusations of
personalizing and politicizing this issue. It is unclear and
unlikely that Calderon will take this advice, given the enormity of
the task. If Mexican unions sensed a general threat, they might
break out of their self-interested shells to call a general strike.
The consequences could be devastating for Mexico and for foreign
investors. (Comment: Although the costs may be too high for the
Calderon Administration to bear in the short term, in the long term
many observers believe that Mexico needs to take on the country's
most powerful unions to complete necessary reforms in labor,
education, energy, and other sectors. End comment)

Other Unions Keep their Distance
--------------------------------
5. (SBU) Mexico's other unions are involved in this process as well,
but the role they will play and the extent of their involvement on
either side remains to be seen. According to some Laboff contacts,
the big established unions, mostly associated with the PRI, have
little incentive to risk their relations with the federal government
for another union's woes and a significant incentive to watch the
PAN and the PRD fight it out. On the other hand, unions would be
foolish not to see the beginning of a pattern of attacks on labor

MEXICO 00003107 002 OF 003


rights and union autonomy. Unions calling for solidarity with the
SME point to the situation of the miners' union, on strike now for
three years, and suggest that the successive PAN governments have
revealed their party's true anti-labor agenda.

Government Responds to Union Pressures
--------------------------------------
6. Meanwhile, the government and the Labor Secretariat are doing
their best to respond to the charges that Calderon, who ran as the
"employment president" should now be known as the "unemployment
president" for putting 44,500 workers out of jobs during a bad
recession. As part of the negotiation process, the government agreed
to add several non-electrical sector employment opportunities to the
severance package for active employees who accept severance before
November 14. Among the opportunities proffered by the government are
franchise establishment, small business start-up support, and
cooperative formation assistance. Former LFC employees have also
been offered scholarships for professional development training in a
wide variety of subjects ranging from English language to graphic
design. The government has also opened centers for former LFC
employees to research their options, and it continues to honor the
severance pay-outs for retirees, pensioners, and those active
employees who have accepted the severance already.

7. (SBU) The complex association between unions and political
parties further complicates the responses of all parties as this
crisis moves forward. The SME broke ranks from Mexico's other
electrical unions to support AMLO (PRD) against Calderon (PAN) and
Madrazo (PRI) in the 2006 presidential election, and some radicals
claim that this is a political move by the PAN to avenge AMLO's near
win for the PRD. While some PRI governors have declared themselves
supportive of the SME, most PRI officials and unions have tacitly
supported Calderon. With editorialists gleefully claiming that the
government's next step should be to take on other entrenched union
interests, there is still a strong reason among the powerful unions
to isolate themselves even while potentially dangerous precedents
are being set.

Union Issues and Union Solidarity
---------------------------------
8. (SBU) The powerful, traditional unions in Mexico are usually
connected to the PRI, while the dissenting unions are usually
associated with the new political opposition, i.e. the left-wing
PRD. No unions claim association with the right-wing and overtly
pro-business PAN. On October 15, the union opposition movement in
Mexico held a conference on a Mexican phenomenon known as 'contratos
colectivos de trabajo del proteccion patronal,' i.e. collective
workers' contracts for employer protection. These are seen as a
corporativist arrangement between union leaders, business leaders,
and the federal government. Their purpose is to protect employers
from independent and potentially antagonistic union organizing by
providing them with an officially recognized union. Often workers
are unaware of these pre-formed unions, and many complain that the
unions are unrepresentative. The existence of these pre-formed
unions blocks the creation of an independent union organized
internally by workers and protects the employer from workers'
demands. The controversial process of obtaining official government
recognition of union leadership, called the 'toma de nota,' gives
the government final authority over which unions can operate in
which companies.


Complex and Emotional Situation
-------------------------------
9. (SBU) Comment: There are at least three major themes in the SME
situation that merit attention. First, from a business aspect, there
is general agreement that LFC was inefficient and badly run, though
who should bear responsibility for the condition of LFC's
infrastructure is still being discussed. The second issue is the
question of union autonomy. While the SME's position may have been
unsustainable, and even indefensible, there is a clear need for
strong dividing lines between government authority and union rights.
Mexico has ratified several ILO conventions on workers' rights, but
national laws and labor culture have not yet incorporated the rights
laid out in those conventions. The third issue is the political
aspect of the confrontation which can again be divided into internal
union party politics and external national political positioning.
SME is just one example of a union in internal disarray: many are
facing strong dissident movements. Union leaders' loss of internal
political control contributes to the uncertainty of the SME
situation and opens a world of possibilities for opportunistic
politicians and internal dissenters. Externally the federal
government must respond to SME accusations, other unions' fears, and
the Mexican taxpaying public in a time of significant financial and
economic uncertainty. Calderon is in a must-win position, or he will
risk being viewed as a weak, lame-duck president and his party could

MEXICO 00003107 003 OF 003


lose public support. The PRD also needs a political victory to
substantiate its claims that the government and PAN party have an
innate antagonism toward all unions. The PRD also needs desperately
to attract workers to its cause in time for the presidential
elections in 2012, especially following its dismal results in the
July mid-terms. The PRI is in the interesting position of watching
its competitors test the national mood and will likely support the
winning side for a political fee that is yet to be revealed. These
issues are impossible to treat separately, but they still must all
receive consideration as the parties work towards a resolution. End
comment.
FREELEY

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