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219064
2009-07-31 20:55:00
09MEXICO2264
Embassy Mexico
CONFIDENTIAL
09MEXICO60
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C O N F I D E N T I A L SECTION 01 OF 05 MEXICO 002264 
 
NOFORN 
SENSITIVE 
SIPDIS 
 
FOR THE PRESIDENT FROM CHARGE D'AFFAIRES JOHN FEELEY. 
NSC FOR DAN RESTREPO. 
WHA FOR ROBERTA JACOBSON, E.A. LEE. 
 
E.O. 12958: DECL: 12/21/2017 
TAGS: PGOV PREL PHUS PINR KCRM SNAR MX
SUBJECT: SCENESETTER FOR PRESIDENT OBAMA'S VISIT TO 
GUADALAJARA, AUGUST 9-10,2009 
 
Classified By: CHARGE D'AFFAIRES JOHN FEELEY. 
REASON 1.4 (b), (d). 
 
¶1.  (C) Key Points 
 
--President Calderon remains committed to forging a legacy 
based on the rule of law, where Mexico's criminal 
organizations are severely diminished, and the benefits of 
Mexico's wealth and trade are more widely shared among its 
citizens.  At the same time, he faces record levels of 
violence, continued financial distress, problems within his 
political party, and diminished power in Congress following 
his PAN party's loss in recent midterm elections.  Inequality 
and poverty are on the rise, and the Mexican public 
increasingly questions whether the war against drug 
trafficking and organized crime is winnable. Despite these 
challenges, President Calderon remains resolute.  He fully 
understands and appreciates that our commercial and law 
enforcement interdependence is complete and necessary.  He 
looks to build stronger strategic alliances with us to 
advance common goals in the areas of North American 
competitiveness, energy and the environment, and citizen 
security. 
 
--President Calderon will want to engage you on an impossibly 
wide range of issues, but he will focus most intently on the 
domestic security challenges Mexico faces from criminal 
violence.  He will convey appreciation for U.S. cooperation 
to date, but press hard for an explicit commitment to outyear 
funding beyond the original three years of the Merida 
Initiative.  He will also push for greater efforts to stem 
the flow of illegal arms and drug money into Mexico.  You 
should ask that the GOM provide a more transparent account 
for how it handles accusations of human rights violations, 
especially in the military court system, access by ATF to 
seized weapons caches, and the extradition of high profile 
cartel members, not just low-ranking lieutenants. 
 
--The United States and Mexico have a broad and growing 
relationship on energy that encompasses oil, gas, clean 
energy, and new collaboration on renewables, climate change, 
and carbon reduction.  Mexico is emerging as a leader among 
developing countries on clean energy and climate change and 
is a willing partner in expanding cooperation on such 
endeavors.  In fact, President Calderon would like to see 
greater U.S. engagement on environmental issues, recognizing 
it as an area of mutual interest. 
 
--While Mexico has taken significant steps to achieve 
macroeconomic stability and is the second largest economy in 
Latin America, GDP growth rates averaged only 2 percent over 
the past ten years, and reforms have been slow in coming. 
Despite the urgency of fighting the recession, structural 
tax, energy, and fiscal reforms and increased competitiveness 
are essential elements of a long-term, sustained recovery. 
We can join with Canada in urging the GOM to pursue a 
competitiveness agenda in the education, labor, trade and 
finance sectors, as well as encourage modern, efficient use 
of Mexico's petroleum and other energy sources. 
 
--Eighty-two percent of Mexico,s exports go to the United 
States, and we remain by far the country's largest source of 
foreign investment.  Mexico is the first or second largest 
trading partner for 22 U.S. states.  Mexico's long-term 
prospects for growth and prosperity are tied to ours, and 
President Calderon is particularly mindful of the positive 
impact NAFTA has had on both our economies.  Trade irritants 
still persist, such as the delay in reformulating a pilot, 
cross-border trucking program and our revised 
country-of-origin labeling (COOL) provisions for beef and 
pork products.  Nevertheless, the GOM wants to resolve these 
and other concerns without reopening the agreement. 
 
--Mexico and Canada seek to deepen diplomatic cooperation, as 
Canada has identified stronger ties with the Americas as a 
foreign policy priority. Canada is increasingly concerned 
 
MEXICO 00002264  002 OF 005 
 
 
about Mexico's security situation, and is looking for avenues 
to support President Calderon's efforts to reform the police, 
corrections, and judicial sectors.  Although Canada remains 
at times concerned that trilateralism comes at the expense of 
its bilateral relationship with the United States, Canada 
values the trilateral summit process and will seek to sharpen 
focus on the leaders' engagement on climate, energy and the 
environment. 
 
Citizen Security 
---------------- 
 
¶2. (U) President Calderon continues to confront Mexico's 
difficult security environment with unprecedented commitment. 
 Polling indicates that most Mexicans still approve of his 
efforts, which include deploying some 45,000 troops dedicated 
to counter-drug activities, yearly increases to the security 
budget, and the passage of important security and justice 
reforms to modernize and restructure the country's judicial 
system.  Mexicans also recognize the need to improve and 
better coordinate the country's disparate police forces. 
While polling indicates that the Mexican public believes that 
the cartels are winning, over half of the population supports 
President Calderon's security strategy and upwards of 80 
percent agree with the military's domestic deployment in the 
counter-drug fight. 
 
¶3. (SBU) Nevertheless, the President faces significant 
challenges despite his myriad efforts to improve the 
country's security situation.  Levels of violence show no 
signs of decreasing, with organized crime-related homicides 
and casualties suffered by security forces in the counterdrug 
fight likely to surpass 2008's record figures.  Allegations 
of human rights abuses by soldiers deployed on counterdrug 
missions threaten to undermine continued public support. 
While there is general consensus on President Calderon's 
frontal assault strategy, the new political environment 
following the July 5 midterm elections, in which his rivals 
made significant gains, could embolden his opponents and make 
the passage and implementation of important legislation more 
complicated. 
 
¶4. (C) In light of these complications, President Calderon 
needs our unalloyed support.  The Merida Initiative provides 
important material support to President Calderon's strategic 
goals.  As important, it demonstrates our shared 
responsibility and resolve in facing up to the challenges 
posed by transborder organized crime.  While this initiative 
was originally conceived of as a three-year plan, it is now 
clear that we and the Mexican government must continue our 
cooperation and assistance.  We now need to focus on the 
state and local level institution building, given Mexico's 
strong federal system and the need to address security issues 
locally.  U.S. assistance is modest compared to what Mexico 
is doing on its own, but it is critical to keeping the 
country moving in the right direction.  You should make the 
following points: 
 
-- We can expect that President Calderon will press the 
United States to take stronger measures to fight arms 
trafficking.  Reinforce with him that we have stepped up our 
deployment of resources under the Southwest Border Initiative 
to combat arms flows.  You should also note that success 
relies in large measure on tracing the weapons Mexico has 
seized from criminals.  We are making progress on developing 
protocols with Mexican law enforcement agencies to expand our 
access to seized weapons, but it would be helpful if you 
requested Calderon push the process along. 
 
-- You should also be prepared to speak to the status of 
Merida Initiative funds, including how reports of rising 
human rights abuses stand to impact their delivery and 
overarching support in Congress.  We have prepared a report 
to Congress on Mexico's human rights efforts to secure the 
release of the 15 percent of funding, as required by law. 
While the GOM, and particularly the military, must do more, 
 
MEXICO 00002264  003 OF 005 
 
 
we see their efforts beginning to take shape.  On July 24, 
the Mexican military (SEDENA) issued a press release stating 
it had convicted 12 soldiers for human rights abuses since 
¶2006.  This kind of announcement is positive for the case 
SEDENA makes in response to charges of impunity, and it also 
flies in the face SEDENA's historical aversion to addressing 
such issues in public.  But more military transparency with 
us and the NGO community on human rights issues is needed. 
 
-- Mexico has extradited record numbers of criminals over the 
last two years and has sent back 63 wanted criminals already 
this year.  However, only one of these is a major cartel 
figure -- Miguel Caro Quintero.  While commending Calderon on 
extradition in general, push for the extradition of 
high-level figures, such as Benjamin Arrellano Felix and 
Sandra Avila Beltran. 
 
-- The Mexicans are hyper-sensitive to any notion of 
deploying National Guardsmen to our shared border.  You may 
consider briefing Calderon on this plan, its purpose and what 
it entails before it becomes public. 
 
--You should thank Calderon for Mexico's outstanding 
participation in the recently concluded National Level 
Exercise focusing on terrorism prevention.  Mexico's 
contribution to the program highlights its increased trust 
and willingness to work with us on important security issues. 
 
Energy, Health, and the Environment 
----------------------------------- 
 
¶5. (C) We have a broad and growing relationship on energy 
that encompasses oil, gas, clean energy, and the beginnings 
of cooperation on renewables, climate change, and carbon 
reduction.  As our fourth largest supplier of oil, Mexico's 
production and exports are falling rapidly.  In late 2008, 
the Mexican Congress approved a modest energy reform package, 
breaking a taboo prohibiting past administrations from 
addressing the highly sensitive topic.  The reform does not, 
however, address the most pressing issues facing Mexico's 
state-owned oil company (PEMEX).  Since oil accounts for over 
one third of Mexican budget revenues, the Calderon government 
must find ways to offset declining oil revenues in order to 
keep the fiscal deficit under control.  Successful bilateral 
talks on Transboundary Reservoirs in the Gulf of Mexico might 
help lead over the long-term to more efficient exploitation 
of oil and help Mexico treat a pending fiscal crunch. 
 
¶6. (C) Mexico is emerging as a leader among developing 
countries on clean energy and climate change and is a willing 
partner in expanding cooperation on such endeavors. 
President Calderon would like to see greater U.S. engagement 
on environmental issues, recognizing it as an area of mutual 
interest.  We are working to reach agreement on strategies 
for the December 2009 Copenhagen Conference of Parties on 
climate change.  The U.S. -- Mexico Framework on Clean Energy 
and Climate Change has established a formal mechanism for 
collaboration, information exchange, and facilitating common 
efforts to achieve clean energy economies.  Mexico is working 
at home to promote energy efficiency, the use of clean energy 
sources, and the reduction of its reliance on hydrocarbons. 
Mexico also recently announced a national energy transition 
and sustainable energy strategy that will funnel $1.5 billion 
to implement more than 50 projects in order to foster the use 
of new technologies to generate renewable energy, create 
standards for energy efficiency, and diversify energy 
sources. 
 
¶7. (U) The outbreak in April of the H1N1 virus highlighted 
the value of and continued need for international 
collaboration on health issues.  Mexico's rapid response to 
the outbreak and transparency in communicating with 
international partners helped slow the spread of the virus 
and mitigated the loss of life.  Swift and efficient 
cooperation between the United States, Mexico and Canada 
during the outbreak demonstrated the value of trilateral 
 
MEXICO 00002264  004 OF 005 
 
 
preparations to address cross-border health threats, and 
Mexico was grateful to the United States for our balanced 
response and decision not to halt or slow cross-border 
activities.  Nevertheless, the Calderon government's swift 
response came also with high economic costs, particularly for 
tourism, small businesses and pork producers.  Mexico,s 
finance minister predicted that the economic impact of the 
crisis could be between 0.3 and 0.5 percent of Mexico,s GDP, 
which was US $1.14 trillion in 2008.  Following HHS Secretary 
Sebelius' successful visit to Cancun on July 2 at the 
W.H.O.'s  H1N1 conference, your public affirmation of the 
GOM's strong performance will help keep the government 
focused for the expected return of H1N1 this fall. 
 
Competitiveness 
--------------- 
 
¶8. (SBU) Mexico has taken significant steps to achieve 
macroeconomic stability.  It is the second largest economy in 
Latin America and the region's top destination for U.S. 
foreign direct investment.  Mexico has long leveraged its 
cultural and geographic proximity to the United States market 
to its economic advantage. Despite this, Mexico,s GDP has 
grown just 2 percent annually over the past 10 years, totally 
insufficient to achieve the 7-8 percent growth rate necessary 
to address social inequities, make inroads against the 
40-plus percent poverty level, and modernize the economy. 
 
¶9. (SBU) Structural reforms have been slow in coming due to 
political stalemates and powerful entrenched interests. 
Education levels, tax collection, and transparency remain low 
by both OECD and regional standards. In 2009, the World 
Economic Forum ranked Mexico 60 among 134 countries in its 
Global Competitiveness Index.  Mexico fell far short in labor 
market efficiency (110), institutions (97), innovation (90) 
and higher education and training (74).  Calderon knows this 
and wants desperately to improve Mexico's competitiveness, 
achieve dynamic growth, and increase prosperity. 
¶10. (C) However, structural reforms and increasing 
competitiveness are essential elements of a long-term, 
sustained recovery regardless of the current recession or 
hoped-for 2010 recovery in the United States.  We and Canada 
can urge the GOM to pursue a competitiveness agenda in 
education, labor, trade and finance, as well as encourage the 
efficient use of Mexico,s petroleum and other energy sources 
to make them more competitive. Cross-Border Trade 
Facilitation is another area for improvement.  It is in our 
mutual interest for Mexico to increase trade with its 
neighbors and commercial partners.  The GOM must increase 
customs revenue and reduce customs revenue leakage caused by 
rampant corruption. With Canada, we can continue work to 
enhance Mexico,s capacity in customs and trade facilitation, 
which will improve the environment for international trade 
and transit.  Mexico also suffers from monopolies and 
oligarchies that should be addressed through strengthened 
competition authorities.  At the same time, Mexico must 
tackle head-on the politically difficult issue of education 
reform, or the next generation of Mexicans will not be 
prepared to respond to the needs of a changing, 
knowledge-based economy. 
 
Beyond the Bilateral Relationship 
--------------------------------- 
 
¶11.  (C) President Calderon highly values the unique 
U.S.-Mexico relationship and has taken steps during his 
presidency to strengthen it.  He also seeks a larger role 
internationally for his country.  Mexico is using its two 
year tenure (2008-2010) on the UN Security Council to expand 
its growing engagement in the hemisphere and on the global 
stage.  So far, Mexico's tenure has been positive.  We work 
closely and constructively with its UN team both in Mexico 
City and New York, and Calderon will be receptive to 
suggestions where the GOM can be helpful on UNSC issues. 
¶12.  (C) Regionally, Mexico views itself as a leader, and 
Calderon has capitalized on Mexico,s large commercial and 
 
MEXICO 00002264  005 OF 005 
 
 
cultural footprint.  While deeply suspicious of 
leftist-populism, he has avoided the bitter feuding his 
predecessor waged with Cuba and Venezuela and sought to 
normalize relations with both.  He is deeply concerned with 
lawlessness in Central America and seeks our cooperation, 
through the Merida Initiative and other programs, to bolster 
the security and stability of his southern border neighbors. 
At the same time, he is perhaps less proactively engaged in 
the region at the moment, focusing on security and economic 
woes at home. 
 
¶13. (C) Canada is becoming increasingly concerned about the 
security situation in Mexico and is actively looking for ways 
to support President Calderon's efforts to reform the police, 
corrections, and judicial sectors.  Its bilateral security 
working group focuses on increasing cooperation and 
information exchange on migration, emergency management, 
marine security, and law enforcement, which Canada has 
characterized as "practical" and "results oriented."  Canada 
also seeks to coordinate closely with us to assist the 
Calderon government on security reform.  Although Canada is 
concerned that trilateralism comes at the expense of its 
bilateral relationship with the United States, it does value 
the trilateral summit process and will seek to place greater 
focus at NALS on climate, energy and the environment. 
Mexican-Canadian relations are currently strained in the wake 
of Canada's re-imposition of visa requirements for Mexicans 
to combat what Canada perceives as abuses of its liberal 
refugee process by Mexican applicants.  Both governments have 
pledged to work through this problem, and it is unlikely to 
have a lasting impact on their overall cooperation on other 
issues. 
 
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 / 
 
FEELEY