VZCZCXRO2560
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #2123/01 1141202
ZNR UUUUU ZZH
R 241202Z APR 06
FM AMEMBASSY MEXICO
TO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHC/SECSTATE WASHDC 0423
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 MEXICO 002123 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD, AND EB/EPPD 
STATE PASS USAID FOR LAC: MARK CARRATO 
TREASURY FOR IA MEXICO DESK: JASPER HOEK 
COMMERCE FOR ITA/MAC/NAFTA: ANDREW RUDMAN 
 
E.O. 12958: N/A 
TAGS: ECIN ECON EFIN EINV SMIG MX
SUBJECT: MIGRATION AND REMITTANCES PART III: HOMETOWN 
ASSOCIATIONS, LOCAL GOVERNMENT, AND ACCOUNTABILITY 
 
REF: A. MEXICO 2042 
 
     ¶B. MEXICO 2097 
 
Sensitive but unclassified, entire text. 
 
This is the third in a series of four cables examining the 
effect of U.S. migration and remittances on the economy of 
rural Mexico. 
 
¶1. (SBU) Summary.  There has been a significant growth in the 
influence of migrant organizations based in the U.S., often 
known as "hometown associations" (HTAs).  While Mexican 
immigrants have long supported their communities of origin, 
HTAs are now larger and better organized, and increasingly 
able to affect municipal and state policies.  HTA 
contributions enable significant infrastructure improvements, 
encourage greater accountability and transparency on the part 
of local government, and may be more effective in stimulating 
economic growth than family remittances.  Given its vast 
potential, encouraging the growth of hometown association 
investment is likely to remain a top priority for the 
incoming administration.  End summary. 
 
A TOP PRIORITY 
-------------- 
 
¶2. (SBU) Realizing its economic promise, state and local 
governments are devoting more resources to promote HTA 
investment.  Michoacan, a state that receives more than 15 
percent of its GDP from remittances, created a new department 
solely for this purpose in 1990.  Most other states have 
followed suit, with 26 out of 32 now having separate 
departments devoted to addressing migration issues.  In 2000, 
the Migrant Assistance Office's responsibilities were greatly 
expanded by mandate of the current governor, Lazaro Cardenas. 
 Carlos Perez, director of the Office for Migrant Assistance, 
told Econoff on April 4 that he believes that Mexican policy 
makers cannot underestimate the influence of HTAs, and that 
encouraging and leveraging hometown association investment is 
a top priority for the government of Michoacan.  As an 
illustration of its importance, Perez pointed out that while 
the state economy grew by 3.4 percent in 2005, remittance 
income grew by 16 percent during the same time period. 
Attracting HTA investment is not only a priority for state 
government; the federal government created the Three-for-One 
initiative in 2002 for this purpose.  Moreover, numerous 
municipalities now have programs designed to encourage HTA 
contributions. 
 
INFLUENCE OF MIGRANT ASSOCIATIONS 
--------------------------------- 
 
¶3. (SBU) It would be difficult to overestimate HTA influence 
in Michoacan.  According to Perez, there are an estimated 1.3 
million Michoacanos in the U.S., increasingly represented by 
groups with hometown connections.  In Chicago, the Federation 
of Michoacanos in Illinois claims to represent 35 clubs and 
over 1,000,000 citizens of Michoacan, an increase of 20 
percent in 2005.  Their organizational purposes may also be 
changing.  Eneida Martinez, Coordinator of Foreign Services 
for Michoacan, explained to Econoff on April 4 that when she 
began working with migrants in 1990, HTAs were primarily 
social clubs.  Today, however, they are organizing to serve 
primarily a political and economic role.  Martinez also 
described the active recruiting programs of many HTAs, many 
of whom enlist new members before they leave Mexico.  Nearly 
every town in Michoacan, no matter how small, has at least 
one HTA.  Cojumatlan, a town of 5,000 residents, has one, 
while Venustiano Carranza, a farming community of 50,000 
residents, has three.  Since most migrants in the U.S. earn 
five to ten times the average salary in Mexico, HTAs normally 
have sizable financial resources relative to their home 
communities. 
 
THE THREE-FOR-ONE PROGRAM 
------------------------- 
 
¶4. (SBU) The Mexican Government's Three-for-One 
(Tres-por-Uno) program has partially funded thousands of 
community development projects nationwide since its origin in 
¶2002.  The program provides state and federal matching funds 
for projects proposed by HTAs and municipal governments, who 
are required to present a proposal to a state panel tasked 
with recommending approval or disapproval.  According to 
 
MEXICO 00002123  002 OF 003 
 
 
Martinez, 64 percent of submitted proposals were approved in 
2005, compared to 71 percent in 2004.  Martinez also 
explained that the panel normally prioritizes basic 
infrastructure improvement projects, such as road paving. 
However, this precedence has evolved over time.  In 
Michoacan, 57 percent of proposals approved in 2002 were 
beautification works such as the renovation of a church or 
town plaza, but by 2005 this percentage had fallen to 23 
percent.  The program also continues to grow in popularity, 
with the number of statewide projects rising from 65 in 2002 
to 148 in 2005. 
 
¶5. (SBU) The program is also fundamentally changing the 
nature of relationships between migrants and their 
communities of origin.  The Secretary of the City Council in 
the town of Venustiano Carranza, Sergio Gudino, is the 
primary liaison between the municipal government and 
Venustiano Carranza's hometown association in Winter Garden, 
CA.  Gudino explained that although the relationship is 
usually harmonious, conflicts occasionally arise.  Because 
the city works budget is extremely small, the city council 
tends to emphasize practical projects, such as irrigation, 
instead of the beautification works sometimes favored by the 
HTA.  While disagreements are quickly resolved, the hometown 
association often holds a veto over major decisions.  The 
city council in Venustiano Carranza also routinely consults 
with HTA representatives after council meetings. 
 
¶6. (SBU) By requiring municipal authorities to collaborate 
with non-state entities in the design, funding, and 
implementation of community projects, Three-for-One is 
forcing a higher level of responsibility and transparency in 
many areas. Martinez cited several cases in 2005 where HTAs 
protested the non-competitive selection of higher-priced 
contractors and achieved significant cost savings for their 
project, a new phenomenon in many areas of rural Michoacan. 
Officially, local leaders all stated to Econoff that they 
welcomed the involvement of their HTA.  The reaction among 
townspeople was even more supportive. 
 
¶7. (SBU) Decisions regarding funding for infrastructure 
projects traditionally have been made in Mexico City.  As a 
result, many rural areas of Michoacan have lacked sufficient 
funding to undertake meaningful development projects. 
However, through Three-for-One, which is driven by HTA and 
municipal interest, many rural areas have seen a dramatic 
increase in federal and state resources.  An example is 
Venustiano Carranza.  According to Gudino, there were only 
three state and zero federal works projects in their 
municipality from 1993-2002.  Since 2003, through 
Three-for-One, there have been four projects, with seven 
others already planned for 2006. 
 
INDEPENDENT PROJECTS 
-------------------- 
 
¶8. (SBU) Not all contributions by HTAs take the form of 
Three-for-One proposals; municipal leaders also solicit for 
independent project funding.  Leonardo Hernandez, the mayor 
of Cojumatlan, travels to California three times a year to 
visit Cojumatlan's hometown association.  The HTA has 
provided significant financial support for local projects, 
such as the purchase of a school bus and a computer training 
center.  In Tanaco, a small town known for its production of 
wooden clocks, local leaders solicited funding from their HTA 
to construct a new community woodworking shop.  With the 
influence of HTAs likely to increase, cross-border 
cooperation will become increasingly important in order to 
provide opportunities in economically depressed areas. 
 
COMMENT 
------- 
 
¶9. (SBU) Programs such as Three-for-One may be more 
successful than remittances alone in stimulating economic 
development, although this has been the subject of debate. 
For example, a recent study conducted by Michigan State 
University in conjunction with USAID showed that 22 percent 
of guava farmers funded their initial orchard through 
remittance income, suggesting that remittances play an 
important role by encouraging small business.  On the other 
hand there is significant anecdotal evidence that remittances 
are often used as a substitute for declining agricultural 
income.  Of the twenty-two remittance recipients interviewed 
 
MEXICO 00002123  003 OF 003 
 
 
in rural Michoacan and Guanajuato, eighteen spend the money 
primarily on basic necessities, such as food or medical 
treatment.  Moreover, while recognizing the critical lifeline 
remittances provide, municipal leaders tended to emphasize 
the tangible long-term benefits of Three-for-One projects, 
such as the proposed fish oil processing plant in Venustiano 
Carranza which may create 200 new jobs.  Every region faces 
specific opportunities and challenges, however, in many 
communities economic progress has not kept pace with the 
record amount of remittance income, as evidenced by the 
growing number of emigrants. 
 
¶10. (SBU) HTA programs also have the potential to transform 
rural Mexico in several other ways.  First, HTA contributions 
provide resources for infrastructure improvements in areas 
traditionally neglected by federal and state authorities. 
Furthermore, HTA involvement appears to encourage 
accountability, transparency, and decentralized decision 
making.  Increased migrant influence and contribution is not 
a magic solution for Mexico's economic woes.  However, their 
positive impacts may have multiplier effects that facilitate 
greater mobilization and change in the future.  If other 
groups in rural areas also begin to demand the same standards 
of accountability from all levels of government, the impact 
of HTAs will have gone far beyond the projects themselves. 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
 
KELLY