P 171732Z NOV 97
FM AMEMBASSY MEXICO
TO SECSTATE WASHDC PRIORITY 3265
INFO SECDEF WASHDC
WHITE HOUSE WASHDC
DIA WASHDC
USIA WASHDC 4040
DOJ WASHDC
DOL WASHDC
AMCONSUL MONTERREY 
CIA WASHDC
NSC WASHDC

C O N F I D E N T I A L SECTION 01 OF 05 MEXICO 011061 
 
 
PASS TO HERMOSILLO 
TIJUANA 
MERIDA 
MATAMOROS 
GUADALAJARA 
NUEVO LAREDO 
CIUDAD JUAREZ 
 
E.O. 12958:  DECL: 11/17/2006 
TAGS: PGOV ECON PINR KDEM MX
SUBJECT: PAN UNVEILS LEGISLATIVE, REFORM 
AGENDAS 
 
¶1.  (U) CLASSIFIED BY MINISTER COUNSELOR FOR 
POLITICAL AFFAIRS VAL MARTINEZ.  REASON 1.5 
(D) 
 
¶2.  (C) SUMMARY: ON NOVEMBER 7, 1997, 
NATIONAL ACTION PARTY (PAN) PRESIDENT FELIPE 
CALDERON UNVEILED THE PAN'S LEGISLATIVE 
AGENDA FOR THE COMING YEAR, AS WELL AS ITS 
PROPOSAL FOR REFORM OF THE STATE.  THE PAN'S 
AGENDA CLOSELY MIRRORS THE PARTY'S MORE THAN 
FIFTY YEAR PURSUIT OF INCREASED FEDERALISM IN 
MEXICO, DECENTRALIZATION OF GOVERNMENT 
AUTHORITY, AND EMPOWERMENT OF STATE AND LOCAL 
GOVERNMENT.  AT THE SAME TIME, THE PROPOSAL 
CONTAINS ELEMENTS INTENDED TO RAISE THE 
PARTY'S PROFILE IN CONGRESS AND INCREASE ITS 
ATTRACTION TO LOWER INCOME VOTERS, WHILE NOT 
RUNNING COUNTER TO THE BUDGETARY AND REFORM 
GOALS OF ITS MAJOR "ALLY" IN THE CHAMBER, THE 
PARTY OF THE DEMOCRATIC REVOLUTION (PRD). 
THE PAN GOAL OF REDUCING TAXES, PARTICULARLY 
THE VALUE ADDED TAX FROM 15 TO 12 PERCENT, IS 
NOT UNIVERSALLY ACCEPTED EVEN IN THE PAN AND 
IS PROBABLY NEGOTIABLE.  INTERESTINGLY 
ENOUGH, NONE OF THE PAN'S 33 FEDERAL SENATORS 
PARTICIPATED IN THE UNVEILING OF THE PARTY'S 
AGENDA.  A FORMER PAN CONGRESSMAN TOLD POLOFF 
NOVEMBER 14 THAT COMMUNICATION AND 
COORDINATION BETWEEN THE PARTY'S 
REPRESENTATIVES IN BOTH HOUSES IS LACKING, 
THAT THE PROBLEM EXISTS IN THE OTHER MAJOR 
PARTIES AS WELL (THE INSTITUTIONAL 
REVOLUTIONARY PARTY (PRI) AND THE PRD), AND 
THAT SOME TYPE OF MECHANISM -- PERHAPS 
CONFERENCE COMMITTEES-- MUST BE ESTABLISHED 
BETWEEN THE TWO HOUSES TO ENSURE THAT THE 
REFORM OF STATE EVENTUALLY PROSPERS.  END 
SUMMARY. 
 
PAN: RAISING ITS PROFILE 
------------------------ 
 
¶3.  (U) ON NOVEMBER 7, PAN PRESIDENT FELIPE 
CALDERON AND PARTY LEADERS FROM THE CHAMBER 
OF DEPUTIES UNVEILED TO REPORTERS AND 
DIPLOMATS THE PAN'S LEGISLATIVE AND REFORM OF 
STATE PROPOSALS FOR THE 57TH CONGRESS.  PAN 
COORDINATOR IN THE CHAMBER AND PRESIDENT OF 
THE RULES COMMITTEE, CARLOS MEDINA, AND SUB- 
COORDINATOR FOR SOCIAL POLICY, FRANCISCO JOSE 
PAOLI BOLIO, OUTLINED THE PARTY'S LEGISLATIVE 
AGENDA FOR THE COMING YEAR. 
 
¶4.  (U) THE PRESENTATION FOLLOWED A FLURRY OF 
ACTIVITY BY CALDERON IN RECENT WEEKS TO RAISE 
AND DISTINGUISH THE PAN'S PROFILE FROM ITS 
GOVERNING ALLY IN THE CHAMBER, THE PRD. 
CALDERON INITIALLY TRADED BARBS WITH THE 
PRD'S SHARP-TONGUED COORDINATOR IN THE 
CHAMBER, PORFIRIO MUNOZ LEDO.  HE THEN 
SOUNDED THE NEED FOR A BROAD CONSENSUS IN 
STATE REFORM TO ACHIEVE FULL DEMOCRACY AND 
SHARED COFFEE WITH PRD PRESIDENT -- AND MUNOZ 
LEDO RIVAL-- ANDRES MANUEL LOPEZ OBRADOR. 
MOST RECENTLY, CALDERON MET WITH PRESIDENT 
ZEDILLO AT HIS LOS PINOS RESIDENCE, IN THE 
WAKE OF THE UNSETTLED DISPUTE BETWEEN THE 
OPPOSITION IN THE CHAMBER AND THE EXECUTIVE 
BRANCH OVER WHETHER ZEDILLO OR SECRETARY OF 
GOVERNMENT EMILIO CHAUYFFET SHOULD LEAD 
NEGOTIATIONS WITH CONGRESS OVER REFORM OF THE 
STATE. 
 
¶5.  (C) THE PAN BUDGETARY AND REFORM 
PROPOSALS APPARENTLY ATTEMPT TO ACHIEVE 
MULTIPLE OBJECTIVES.  WHILE PAN DOGMAS OF 
GREATER FEDERALISM AND DECENTRALIZATION OF 
GOVERNMENT ARE HONORED, THE PARTY ALSO 
PROPOSES MEASURES TO INCREASE ITS POPULARITY 
WITH SECTORS THAT HAVE RARELY IDENTIFIED WITH 
THE PAN:  LOWER INCOME MEXICANS AND 
INDIGENOUS PEOPLES.  IN ADDITION, AND DESPITE 
CALDERON'S EFFORTS TO BURNISH THE PAN'S 
PROFILE, THE PROPOSAL APPEARS CAREFULLY 
TAILORED TO AVOID RUPTURING THE DELICATE 
COOPERATION ACHIEVED IN THE CHAMBER, NOT ONLY 
WITH THE PRD, BUT WITH THE LABOR PARTY (PT) 
AND ECOLOGICAL GREEN PARTY (PVEM) AS WELL. 
THE PAN PROPOSALS ARE SUMMARIZED BELOW. 
 
PAN'S BUDGET PROPOSAL: GREATER FEDERALISM 
----------------------------------------- 
 
¶6.  (U) REGARDING TAXES, THE PAN PROPOSES TO: 
 
-- REDUCE THE VALUE ADDED TAX (IVA) FROM 15 
TO 12 PERCENT. 
 
-- EXEMPT GAS, ELECTRIC ENERGY, AND TELEPHONE 
SERVICES FROM IVA FOR THOSE EARNING THE 
EQUIVALENT OF LESS THAN THREE MINIMUM 
SALARIES. 
 
-- ELIMINATE THE BUSINESS ASSET TAX. 
 
-- REDUCE THE TAX ON INCOME AND TO EXEMPT 
THOSE WHO EARN LESS THAN 4 MINIMUM SALARIES. 
 
-- ALLOW DEDUCTIONS FOR EDUCATIONAL EXPENSES, 
AND FOR DONATIONS FOR RESEARCH AND TO 
CULTURAL INSTITUTIONS. 
 
¶7.  (U) ON THE BUDGET SIDE, THE PAN PROPOSES 
TO: 
 
-- INCREASE FROM 20 TO 23 PERCENT FEDERAL 
TRANSFERS TO STATES AND MUNICIPALITIES. 
 
-- DOUBLE THE RESOURCES ALLOCATED TO 
MUNICIPALITIES TO FIGHT POVERTY. 
 
-- INCREASE EXPENDITURES IN EDUCATION AND 
HEALTH, WHILE SIMULTANEOUSLY CANCELING 
UNJUSTIFIED FEDERAL SPENDING. 
 
-- DECREASE THE FEDERAL GOVERNMENT'S CURRENT 
EXPENDITURES (EXCLUDES CAPITAL EXPENDITURES) 
SPENDING BY FIVE PERCENT IN REAL TERMS. 

-- MAINTAIN A BALANCE BETWEEN INCOME (TAXES) 
AND BUDGETARY EXPENDITURES; THEREBY 
PREVENTING  FURTHER PUBLIC INDEBTEDNESS AND 
REDUCING INFLATION. 
 
-- INCREASE RESOURCES FOR EMERGENCIES AND 
DISASTERS THROUGH A NATIONAL SOLIDARITY FUND. 
 
-- INCREASE FUNDS FOR PUBLIC SECURITY, BUT BY 
ALLOCATING THESE DIRECTLY TO STATES AND 
MUNICIPALITIES. 
 
-- PROVIDE NECESSARY SUPPORT TO THE 
AGRICULTURAL AND PRIMARY SECTORS, INCLUDING 
RURAL LABORERS. 
 
-- PURSUE PROGRAMS ESTABLISHED TO AUDIT 
CONASUPO, BANK AND TOLL ROAD RESCUE PROGRAMS, 
AND TO INCREASE INCOME FOR PENSIONERS AND 
RETIRED PERSONS. 
 
-- PROVIDE GREATER PUBLIC INVESTMENT IN 
SCIENCE AND TECHNOLOGY. 
 
-- STRENGTHEN INVESTMENT PROJECTS, PROVIDE 
OPPORTUNITIES FOR WORKERS TO INVEST IN THE 
OWNERSHIP OF BUSINESSES, AND ADDRESS THE 
BURDEN OF OVERDUE LOANS AND PRIVATE 
INDEBTEDNESS. 
 
¶8.  (U)  DURING THE PRESENTATION MEDINA AND 
PAOLI BOLIO STRESSED THAT THE PAN'S SOCIAL 
AND ECONOMIC PROPOSALS ARE ROOTED IN OVER 
FIVE DECADES OF PROPOSALS BY THE PARTY IN 
CONGRESS. 
 
THE PARTY'S STRATEGIC FOCUS 
--------------------------- 
 
¶9.  (U) CONGRESSIONAL DEPUTY JUAN MIGUEL 
ALCANTARA SORIA, DEPUTY COORDINATOR UNDER 
MEDINA FOR POLITICAL AND JURIDICAL ISSUES, 
OUTLINED THE PAN'S STRATEGIC FOCUS FOR THE 
57TH LEGISLATURE. 
 
PROMOTING PUBLIC PARTICIPATION IN DEMOCRACY 
------------------------------------------- 
 
¶10.  (U) THE PAN INTENDS TO IMPEL REFORM OF 
THE MEXICAN STATE BY: 
 
-- DEMOCRATIZING THE PUBLIC'S RIGHT TO 
INFORMATION THROUGH NECESSARY INITIATIVES AND 
REFORMS. 
 
-- PROMOTING PARTICIPATORY DEMOCRACY THROUGH 
A CONSTITUTIONAL REFORM ALLOWING REFERENDUMS, 
PLEBISCITES, AND POPULAR INITIATIVES. 
 
-- BRINGING UP TO DATE LEGISLATION CONCERNING 
CONGRESS' RESPONSIBILITIES IN ORDER TO 
RESPOND MORE EFFICIENTLY TO THE GREATER 
POLITICAL PLURALISM IN MEXICO TODAY. 
 
-- CONSOLIDATING JUDICIAL REFORM, TO INCLUDE 
INCORPORATING ADMINISTRATIVE TRIBUNALS IN THE 
JUDICIARY. 
 
EMPOWERING THE MUNICIPALITIES 
----------------------------- 
 
¶11.  THE PAN WILL WORK FOR TRUE FEDERALISM IN 
MEXICO BY: 
 
-- MAKING OPERATIONAL THE "FREE MUNICIPALITY" 
THROUGH REFORM OF ARTICLES 115, 116, AND 124 
OF THE CONSTITUTION. 
 
-- STRENGTHENING THE ABILITY OF 
MUNICIPALITIES TO COMBAT POVERTY BY GIVING 
THEM FULL CONTROL OVER THE FUNDS PROVIDED IN 
SECTION 26 OF THE FEDERAL BUDGET. 
 
-- ACHIEVING A JUST DISTRIBUTION OF FISCAL 
RESOURCES PROVIDED BY THE FEDERAL GOVERNMENT 
BY MODIFYING THE BUDGET AND THE LAW OF FISCAL 
COORDINATION. 
 
-- PROVIDING AUTHORITIES TO THE LEGISLATIVE 
ASSEMBLY OF THE FEDERAL DISTRICT (DF) TO 
EXPEDITE THE GOVERNING STATUTE OF THE DF, THE 
GOAL OF WHICH IS TO GIVE THE DF JURIDICAL, 
POLITICAL AND ADMINISTRATIVE AUTONOMY. 
 
"HUMANIZING" PUBLIC POLICY 
-------------------------- 
 
¶12.  (U)  THE PAN WILL ACHIEVE A HUMANISTIC 
PUBLIC POLICY IN TERM OF TAXATION AND PUBLIC 
EXPENDITURES BY: 
 
-- CARRYING OUT AN INTEGRAL FISCAL REFORM 
THAT FOSTERS PRODUCTIO, SAVINGS, INVESTMENT, 
ECONOMIC GROWTH, DEREGLATION, AND PURCHASING 
POWER OF MEXICAN CITIZENS. 
 
-- SUBSTANTIALLY INCREASING THE EDUCATON 
BUDGET, WITH THE GOAL OF MEETING EDUCATIONAL 
DEMAND AND OPTIMIZING ITS QUALITY, WHILE AT 
THE SAME TIME DECENTRALIZING EDUCATIONAL 
PLANS AND PROGRAMS; 
 
-- COMBATING CORRUPTION AND IMPUNITY BY 
STRENGTHENING THE CHIEF ACCOUNTING OFFICE THE 
TREASURY. 
 
SOCIAL PROGRESS ALSO A PRIORITY 
------------------------------- 
 
¶13.  (U)  THE PAN WANTS TO ACHIEVE AN 
INCLUSIVE, ORDERED, AND DIGNIFIED SOCIAL 
DEVELOPMENT BY: 
 
-- PROMOTING THE PAN INITIATIVE TO PROMULGATE 
A NEW FEDERAL LABOR LAW THAT REEVALUATES AND 
ENRICHES SALARIES; IMPROVES WORKING 
CONDITIONS FOR WOMEN; ESTABLISHES SOCIAL 
JUDGES WITH JUDICIAL AUTHORITY; MAKES 
POSSIBLE JOINT-EMPLOYEE OWNERSHIP OF 
BUSINESSES, BEGINNING WITH 2.5 PERCENT OF A 
PARTICULAR ENTERPRISE; IN ADDITION, THE 
JURIDICAL STRUCTURE OF THE NATIONAL 
COMMISSION OF MINIMUM SALARIES MUST BE 
REVISED. 
 
-- ADDRESSING IN A COMPASSIONATE AND 
EFFICIENT FASHION RURAL PROBLEMS, KEEPING IN 
MIND THESE INVOLVE ISSUES OF HUMAN DIGNITY. 
 
-- ADDRESSING PROBLEMS OF INDIGENOUS PEOPLES 
AND COMMUNITIES, WITH THE GOAL OF PRESERVING 
THEIR IDENTITY, CULTURE, AND RIGHTS THROUGH 
NECESSARY CONSTITUTIONAL REFORMS AND LEGAL 
MEASURES. 
 
-- ESTABLISHING A NEW POLICY OF PUBLIC 
SECURITY THAT PROMOTES CITIZEN PARTICIPATION 
AND EDUCATION TO FIGHT CRIME; TIMELY 
ATTENTION SHOULD BE GUARANTEED TO CRIME 
VICTIMS, AS WELL AS EFFICIENT PROSECUTION AND 
SOCIAL REHABILITATION OF CRIMINALS. 
 
-- DETAINING THE CONSTANT INCREASE IN FUEL 
PRICES THROUGH APPROPRIATE LEGISLATION. 
 
-- CREATING THE JURIDICAL BASES NECESSARY TO 
END PRIVATE OVER-INDEBTEDNESS, WITH A 
TRANSPARENT DISTRIBUTION OF THE COSTS BETWEEN 
DEBTORS, INVESTORS, BANKS AND THE GOVERNMENT. 
 
¶14.  (C) COMMENT: OBVIOUSLY THE PAN'S BLUE 
PRINT FOR REFORM IS SUBJECT TO DEBATE AND 
COMPROMISE, BOTH INSIDE AND OUT OF THE PARTY. 
GUANAJUATO GOVERNOR VICENTE FOX, A SELF- 
PROCLAIMED CANDIDATE FOR THE PARTY'S 
PRESIDENTIAL NOMINATION IN 2000, DISAGREES 
WITH THE PARTY'S POSITION TO CUT TAXES.  PAN 
SENATOR JUAN ANTONIO GARCIA VILLA TOLD MEXICO 
CITY DAILY "REFORMA" ON NOVEMBER 13 THAT 
REDUCING THE IVA TO 12 PERCENT IS NEGOTIABLE, 
WHILE THE PARTY'S PROPOSAL TO PROVIDE GREATER 
RESOURCES TO MUNICIPALITIES IS NOT.  POLOFF 
DISCUSSED THE PAN'S AGENDA WITH ALEJANDRO 
DIAZ, FORMER PAN DEPUTY AND CURRENTLY 
TECHNICAL SECRETARY TO THE CHAMBER'S 
INTERNATIONAL ISSUES COMMITTEE, CHAIRED BY 
PAN DEPUTY JULIO FAESLER.  DIAZ CONFIRMED 
THAT THE PROPOSAL IS ROOTED IN THE PAN'S HALF 
CENTURY LONG STRUGGLE TO EXTEND FEDERALISM IN 
MEXICO, END THE CENTRALIST STATE, AND CONVEY 
THE RESOURCES NECESSARY TO STATES AND 
MUNICIPALITIES TO MEET THE NEEDS OF THEIR 
CONSTITUENTS.  DIAZ NOTED THAT DIFFERENCES 
EXIST BETWEEN THE REFORM AGENDAS OF THE PAN 
AND THE PRD, BUT THAT THESE ARE "NUANCES" AND 
ARE NOT INSURMOUNTABLE.  BOTH, FOR EXAMPLE, 
PROPOSE DOUBLING RESOURCES FOR COMBATING 
POVERTY AND INCREASING SPENDING ON EDUCATION 
AND HEALTH. 
 
¶15.  (C) POLOFF NOTED TO DIAZ THAT NONE OF 
THE PAN'S 33 SENATORS PARTICIPATED IN THE 
PRESENTATION OF THE PARTY'S PROPOSAL.  DIAZ 
INDICATED THAT LACK OF COMMUNICATION AND 
COORDINATION BETWEEN PARTY REPRESENTATIVES IN 
THE CHAMBER AND THE SENATE IS A PROBLEM, ONE 
THAT EXISTS FOR THE OTHER MAJOR PARTIES AS 
WELL (THE PRD AND PRI).  THIS IS AN ISSUE 
THAT MUST BE ADDRESSED THROUGH THE CREATION 
OF A MECHANISM LIKE CONFERENCE COMMITTEES, 
ESPECIALLY NOW THAT THE TWO HOUSES OF 
CONGRESS ARE CONTROLLED BY DIFFERENT PARTIES 
OR COALITIONS, THE PRI IN THE SENATE, AND THE 
PRD, PAN, PT, AND PVEM IN THE CHAMBER.  DIAZ 
ADDED THAT LITTLE, IF ANY, PROGRESS WOULD BE 
MADE ON REFORM OF THE STATE MATTERS BETWEEN 
NOW AND YEAR'S END, WITH CONGRESS' FOCUS 
CLEARLY RESTING ON DEBATING AND APPROVING THE 
BUDGET.  END COMMENT. 
 
BRAYSHAW