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64799
2006-05-20 00:39:00
06MEXICO2711
Embassy Mexico
CONFIDENTIAL
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TAGS: PGOV PINR PREL MX
C O N F I D E N T I A L MEXICO 002711 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 05/11/2016 
TAGS: PGOV PINR PREL MX
SUBJECT: MEXICAN CONGRESS DEMONSTRATES INDEPENDENCE, NOT 
EFFICIENCY  
REF: A. A) MEXICO 1716 AND PREVIOUS B) MEXICO 149 
     ¶B. C) MEXICO 2367 AND PREVIOUS 
 
Classified By: POLITICAL MINISTER-COUNSELOR LESLIE A. BASSETT, REASONS: 
 1.4(B/D). 
 
¶1. (C)  SUMMARY:  The final session of the 59th Congress 
ended on April 28, with the modest results that have become 
its hallmark under a divided government.  Some, including 
Eduardo Perez Motta, head of the Federal Competition 
Commission (CFC) believe that the new competitiveness law 
will become the most significant law passed as time 
progresses and its effects are visible while others have been 
caught in the hype of the Radio and Television Law.  The 
Congress also passed bills to strengthen the protection of 
personal information, to regulate Mexico's enormous private 
security industry.  Opposition members of Congress continued 
to show strong interest in monitoring the Fox 
Administration's stewardship of foreign policy, a legislative 
prerogative that has gained significance in the era of 
divided government.  Unlike in the days of one party rule, 
legislators themselves now generate the great majority of 
legislative initiatives, with bills introduced by the 
executive becoming an increasingly small minority.  And while 
approximately 75% of the bills introduced by President Fox 
were approved, these were primarily relatively minor bills; 
the Congress approved virtually none of the pending 
structural reforms that formed the basis of President Fox's 
program of government and that both the PAN and PRI agree are 
necessary.  END SUMMARY. 
 
Law Strengthens CFC Powers to International Standards 
--------------------------------------------- -------- 
 
¶2. (U) Despite significant opposition to proposed changes to 
the competition law, CFC negotiated an agreement with the CCE 
(Mexican Business Coordination Council, an umbrella group of 
trade associations).  This agreement became the basis for the 
new law passed April 25 in the Chamber of Deputies and April 
27 by the Senate.  The law is expected to be signed by 
President Fox and published in the near future (upcoming 
septel).  The new law puts the CFC's authority on par with 
similar organizations in other countries, and allows the CFC 
to emit rulings over other regulatory agencies in Mexico, 
thus strengthening the relationship between the judiciary and 
the CFC.  Although companies will still be able to appeal 
rulings, the time and cost involved will increase. 
 
¶3.  (SBU) CFC President Eduardo Perez Motta told Econ 
Minscouns and Econoff in a May 11 meeting that he believes 
the law will have significant long term effects including a 
decline in the number of appeals filed.  He predicts Telmex 
and other private monopolies will have to change their 
business practices to avoid the penalties imposed by the new 
law.  Sanctions under the law can be as high as 1,500,000 
times the minimum salary in Mexico City or ten percent of the 
annual revenue of a company.  Public monopolies, such as 
PEMEX and CFE (Federal Electric Commission) will also be 
regulated under the new competition law. Although they cannot 
be divided or sold, the law allows them to be sanctioned for 
acting as a monopoly in areas that are not of strategic 
importance (such as PEMEX's actions in gas distribution 
according to Perez Motta). 
 
Law on Radio and Television Steals the Show 
------------------------------------------- 
 
¶4.  (SBU) The Federal Law on Radio and Television ("media 
law") was the most controversial bill enacted during the 
current session.  The media law, reportedly drafted largely 
by media giant Televisa, will give the Federal Communications 
Commission (COFETEL) regulatory and oversight authority over 
broadcasting issues.  However it also provides, inter alia, 
that broadcasting frequencies henceforth will be allocated by 
public auction rather than by discretionary concession.  Much 
of the controversy surrounding the law is that Congress, in 
its effort to quickly pass the legislation, left several 
loopholes and grey areas leading many to question how parts 
of the new law will be interpreted, applied, and enforced in 
the future.  One question is whether existing broadcasters 
will be able to keep and utilize  highly valuable digital 
spectrum freed up by Mexico,s digitalization process. 
Current broadcasters could have a significant advantage over 
new market entrants and competitors who have to pay for their 
spectrum.  In addition, bidders will not have to wait for an 
opinion from CFC before submitting their bids in order to 
prevent media concentration.  Given this, and the prohibition 
on foreign investment, dominant companies will have a 
distinct advantage in winning tenders. 
 
¶5.  (SBU) While we have already reported in detail on the 
substance of the law (ref A), a closer examination of the 
circumstances of its passage sheds light on the influence 
wielded in the Congress by powerful private interests. 
Although the average bill spends approximately six months in 
each house of Congress before winning approval, the media law 
was unanimously approved by the lower house last December in 
only 10 days (ref B).  Although there was lively debate in 
the Senate, the bill passed  on March 30 by a two-to-one 
margin primarily due to sponsoring Senators, promises to 
close the gaps with a follow-up bill which never passed. 
Weeks later, a group of 47 senators submitted a petition  to 
the Supreme Court of Justice asking the court to find the law 
unconstitutional.   Many Deputies and Senators only became 
aware of the details of the legislation after its passage 
provoked strong public outcry; PAN Senators Cesar Juaregui 
and Jesus Galvan told poloff they suspected that many of 
their colleagues had not even read the complicated bill 
before voting on it while many Deputies publicly admitted 
that they hadn,t read it.  Juaregui intimated that the party 
leadership sought to push the legislation through as quickly 
as possible to minimize opposition. 
 
Politics Over Principle 
----------------------- 
 
¶6.  (C) In fact, Senator Juaregui said that his party's 
support for the law -- and presumably that of the PRI -- was 
based largely on the fear that Televisa would carry through 
on its implied threat to accord poor campaign coverage to 
those opposing the law.  Describing the law as a dirty trick 
("porqueria"), Juaregui claimed that when PAN legislators had 
blocked quorum during a scheduled debate on the law, Televisa 
pulled all of Felipe Calderon's advertisements from the air 
that very same night, in a clear signal of how it would react 
should the bill not pass.  Juaregui noted that he was one of 
the few members of his party who in the end withstood 
pressure from the party leadership and voted his conscience, 
against the law.  In retribution, Juaregui alleges the PAN 
leadership removed him, a high-ranking member of his party's 
legislative faction, from the party's electoral list for the 
Chamber of Deputies in the July 2 election.  Juaregui further 
claimed that President Fox himself was among those in the PAN 
who insisted that the party's legislative faction vote in 
favor of the bill, for fear of the electoral consequences of 
their failure to do so. 
 
Hints of Economic Nationalism 
----------------------------- 
 
¶7.  (SBU) Perhaps not surprising in an election year, a 
number of bills were introduced that were redolent of 
economic nationalism.  For example, the Senate passed a bill 
that would give Mexicans preference over foreigners in 
certain bids for public contracts; it also passed a bill that 
would further restrict foreign investment which was later 
rejected by committee in the lower house.  Both bills can be 
brought up during the new session in September, but 
significant changes would be needed to the proposed foreign 
investment legislation since the lower house committee filed 
an official rejection to the proposed legislation. Bills 
seeking to strengthen state control over energy resources 
were also introduced. 
 
Other Legislative Advances...and Setbacks 
----------------------------------------- 
 
¶8.  (SBU) PRI Senator Carlos Chaurand, one of the Senate's 
three vice presidents, told us that aside from the media law, 
he considered Congress's other major accomplishments this 
session to include (i) a law regulating private security 
companies, (ii) legislation protecting personal information 
(still in committee at the lower house), (iii) legislation 
strengthening guarantees of gender equality, and (iv) 
legislation seeking to strengthen Mexico's law on 
competition. 
 
¶9.  (SBU) Notwithstanding these modest achievements, Chuarand 
conceded that this final session of the 59th Congress had 
made no progress on the fundamental structural reforms that 
had been a cornerstone of the Fox Administration's 
legislative program, including fiscal reform, labor reform, 
justice sector and public security reform, and key energy 
sector reforms, to name but the most prominent.  Moreover, 
the session left several significant loose ends:  a law on 
federalism, seeking to return more federal revenues to the 
states, was passed by the Senate but remains pending in the 
lower house.  Meanwhile, a highly controversial bill on drugs 
also remains in limbo (ref C).  Although it has been passed 
by both houses of Congress, President Fox has indicated he 
 
has reservations about the bill, particularly the provision 
that effectively decriminalizes possession of small 
quantities of drugs for personal use. 
 
Senate Continues to Press Its Foreign Policy Prerogatives 
--------------------------------------------- ------------ 
 
¶10.  (SBU)  As one would expect in era of divided government, 
the Congress sought to enforce the Senate's constitutional 
right to "analyze" the Fox Administration's foreign policy. 
For example, the Chamber of Deputies approved a bill 
requiring Senate approval for any decision by the President 
to amend, modify, terminate or withdraw reservations of 
international treaties.  The Senate showed a particular 
interest in monitoring the GOM's conduct of U.S.-Mexican 
relations: it requested Foreign Secretary Derbez to testify 
on the results of the March 2006 Cancun summit and on the 
Partnership for Security and Prosperity.  The Senate 
considered a number of measures related to migration, 
approving a document entitled "Mexico Facing the Phenomena of 
Immigration" which for the first time recognized Mexico's 
"shared responsibility" for the problem of migration.  Both 
houses of Congress enacted resolutions expressing support for 
migrants demonstrating in the U.S. 
 
A Look at Legislative Trends 
---------------------------- 
 
¶11.  (U) Analyzing the just-concluded legislative session, a 
recent article in Reforma identified several key trends: 
 
-- (U) Recent legislative sessions have witnessed a huge 
growth in the number of bills introduced by legislators, as 
opposed to by the executive.  Whereas legislation initiated 
by the President accounted for 22% of all legislation 
introduced into the 56th Congress (1994-96), the last session 
in which the PRI enjoyed an absolute majority, legislation 
introduced by the executive branch in the 59th Congress 
accounted for less than 2% of all legislation introduced. 
The overall number of bills introduced rose dramatically from 
250 in the 56th Congress to 2388 in the 59th Congress. 
 
-- (SBU) In absolute terms, the number of bills introduced by 
the Fox Administration declined one third from the first 
congressional session of its sexenio (2000-03), in which it 
introduced 63 bills, to the second session of its sexenio 
(2003-06), in which it introduced 42 bills.  Strikingly, the 
Administration submitted no bills whatsoever in last fall's 
session, suggesting either that it had run out of new 
initiatives, or that it had given up on a divided Congress 
suffering from gridlock. 
 
-- (U) Given the explosion in the number of bills introduced, 
the percentage of bills passed into law declined from 43% in 
the 56th Congress to 21% in the 59th Congress.  Nevertheless, 
in absolute terms, the number of bills approved increased 
nearly five-fold from the 56th to the 59th Congress, from 108 
to 513. 
 
-- (U) The percentage of bills initiated by the executive 
that were passed into law declined from 97% in the days of 
PRI hegemony to 75% in the most recent session.  However, 
while a strong majority of Fox's initiatives were enacted, 
these largely consisted of routine measures; as noted major 
reform bills remain pending. 
 
Comment: 
 
¶12.  (C)  While some have suggested a special session of 
congress could still convene to finish outstanding business, 
electoral realities make it highly unlikely.  The lack of 
legislative progress made in Congress over this sexenio is 
perhaps most tellingly conveyed by the almost frantic public 
service ads being run by both the Chamber of Deputies and the 
Senate, assuring Mexicans that the Congress is working for 
them.  One of the questions most frequently asked of the 
current crop of presidential aspirants -- how will you work 
with Congress?  This will be one of the fundamental 
challenges of the incoming Administration. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
 
KELLY