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C O N F I D E N T I A L SECTION 01 OF 03 MEXICO 003494 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR FOR JMELLE 
 
E.O. 12958: DECL: 06/12/2016 
TAGS: ECON EFIN EINV ENRG EAIR ELTM ETRD PREL MX
SUBJECT: SUBJECT: A CONVERSATION WITH AMLO,S INFRASTRUCTURE 
ADVISOR 
 
 
Classified By: ACTING ECON CHIEF JONATHAN KESSLER FOR REASONS 1.4(B) AN 
D (D) 
 
¶1. (C) Summary: Carlos Robles-Gil, a key infrastructure 
advisor to PRD presidential candidate Andres Manuel Lopez 
Obrador (AMLO), discussed AMLO's economic team and proposals 
related to budget and finance, infrastructure, energy, and 
trade policy.  Robles-Gil said the PRD campaign expects AMLO 
to win the presidency by at least six percentage points. 
Nevertheless, he characterized the economic team as 
uncoordinated and said the focus remains on winning the 
election rather than flushing out policy proposals.  End 
summary. 
 
¶2. (C) Econoff met June 22 with Carlos Robles-Gil, a former 
director general at Mexico's airport authority (ASA) and 
recent graduate of Harvard's Kennedy School of Government, 
following Mexico's loss in the World Cup to Portugal. 
Robles-Gil lamented Mexico's performance but said this was 
good for the PRD (since the PAN is perceived to benefit from 
Mexico's success in the games).  Robles-Gil reiterated the 
centrality of Rogelio Ramirez de la O to AMLO's economic 
program, and named Gerardo Esquivel, a Harvard-trained PhD 
economist, Eugenio Robles Aguayo, Mexico City's lead fiscal 
attorney, and Carlos Urzua, Dean of Tec de Monterrey, as 
other influential voices on financial matters.  Robles-Gil 
predicted that most of the senior people currently working 
under Francisco Gil Diaz, Minister of Finance, would be 
tossed out of Hacienda under an AMLO government. 
 
¶3. (C) Robles-Gil recognized that it would be useful for AMLO 
to name a finance minister immediately following a possible 
victory in order to avoid pressure from vested interests, but 
did not know how long AMLO would in fact take.  He thought 
that AMLO, if elected, would dispatch an economic team very 
quickly to New York and London to reassure markets.  (Note: 
At a January breakfast with the Ambassador, AMLO stated he 
would create his teams quickly and not wait until December to 
start developing policy initiatives.  End note.)  Robles-Gil 
also predicted that if AMLO wins the presidency the PRD would 
negotiate successfully with the PRI to get legislation pushed 
through the next congress.  He added there would likely be a 
quick "witch hunt" against AMLO's enemies following the 
elections to "send a signal of strength."  He named Arturo 
Montiel Rojas (former governor of the State of Mexico), 
Roberto Hernandez Ramirez (former director of Banamex), and 
President Fox's step-children as examples. 
 
---------------------------- 
Budget and finance proposals 
---------------------------- 
 
¶4. (C) Robles-Gil discussed three key problems that AMLO's 
team believe have undermined Mexico's economy under President 
Fox: an explosion in government spending and continued tax 
evasion, the lack of investment in infrastructure, and high 
domestic energy prices.  AMLO's agenda for improving Mexico's 
competitiveness addresses these issues by reducing the 
highest official salaries, limiting perks such as 
government-provided chauffeurs, eliminating wasteful or ghost 
positions, and reducing bureaucratic structures to avoid 
redundancies.  AMLO's team believes Mexico can save at least 
one percent of GDP by reducing federal spending and another 
percent through synergies.  The reduction in government 
spending would be used to free resources for investment. 
 
¶5. (C) Robles-Gil said tax revenues would be increased by 
closing corporate tax loopholes and reducing tax evasion. 
Savings could equal one percent of GDP.  He noted that Arturo 
Herrera Gutierrez, Mexico City's Secretary of Finance, 
substantially increased the capital's tax revenues while AMLO 
was mayor, and he could be tapped to head the Servicio de 
Administracion Tributaria (SAT--Mexico's equivalent of the 
IRS) in an AMLO administration.  Under AMLO's plan, existing 
tax rates would be preserved. 
 
-------------------------------- 
High speed trains to the border? 
-------------------------------- 
 
¶6. (C) AMLO views infrastructure development as key to 
maintaining market share and investment momentum.  His 
short-term strategy for growth would focus on housing and 
infrastructure development, including a framework for 
public-private partnerships.  Robles-Gil said AMLO's team is 
looking at trains and airports, including building an isthmus 
 
MEXICO 00003494  002 OF 003 
 
 
railway corridor and lines from Mexico City to both Monterrey 
and Guadalajara.  He approximated initial railway development 
costs at USD 32 billion and said AMLO has already sent a 
delegation to Spain to discuss railcar purchases.  Ramirez de 
la O has said the first stage of transportation development 
would be a railway from Mexico City to Queretaro. 
 
------------------- 
Cheaper gas, please 
------------------- 
 
¶7. (C) AMLO views a reduction in domestic energy costs as 
crucial to Mexico's competitiveness.  Robles-Gil said gas is 
not a fungible market and AMLO's advisors believe Mexico 
should link domestic gas prices more closely to costs of 
production rather than to high U.S. prices.  Lower energy 
costs will boost the competitiveness of Mexican industry, 
attract investment, and increase jobs. 
 
¶8. (C) Robles-Gil said AMLO recognizes that Pemex cannot 
continue under its present condition.  Pemex requires greater 
autonomy and efficiency, but AMLO will not open it up to 
privatization.  His economic team believes that deep water 
exploration is unnecessary; rather, Pemex should exploit 
shallow water reserves in front of Veracruz and Tamalipas. 
Robles-Gil acknowledged that the next finance minister would 
face a dilemma as he searches for funds to pay for 
infrastructure development and social programs before 
government savings and funds from increased tax collection 
are generated.  Pemex will remain the government's cash cow 
for the foreseeable future. 
 
----------------------- 
Don't bug me with trade 
----------------------- 
 
¶9. (C) Robles-Gil gave the impression that trade issues do 
not make the list of campaign priorities.  "I doubt whether 
AMLO knows what the Doha Development Agenda is," he remarked. 
 He offered his understanding that AMLO would seek a 
pragmatic relationship with the U.S. while seeking ways to 
balance Mexico's international relations and reduce Mexico's 
dependence on the U.S. economy.  Perhaps AMLO would be 
interested in Mercosur, but for now he is distancing himself 
from Venezuelan President Hugo Chavez and would not discuss 
Mercosur during the campaign.  Robles Gil did not know how 
AMLO intended to approach NAFTA, commenting only that the 
presidential candidate believes the trade agreement "could be 
enhanced."  He added that key advisors like Ramirez de la O 
and Manuel Camacho--who would likely receive a cabinet or 
chief of staff position in an AMLO government--are 
pragmatists and strong supporters of robust economic ties 
with the U.S.  "But the big question for AMLO is going to be 
how to deal with the U.S. 
immediately after he wins," Robles-Gil remarked. 
 
-------------------------------------- 
Willing to go after special interests? 
-------------------------------------- 
 
¶10. (C) Responding to a question about which monopolies AMLO 
believes most damage the Mexican economy, Robles-Gil named 
only Televisa.  He then stated AMLO would focus on the 
banking sector, which he views as vastly underused and making 
enormous profits while doing little to promote Mexico's 
growth.  AMLO supports a truth and reconciliation commission 
to uncover malfeasance that stemmed out of the GOM's massive 
bailout of local banks following its 1995 currency collapse 
and would seek to get money back from the banks. He would go 
after two to three people, including Roberto Hernandez 
Ramirez.  "Mexicans are still paying for crooked bankers," 
Robles-Gil commented.  When asked whether AMLO would 
challenge Mexican billionaire Carlos Slim, he surmised that 
AMLO's personal relationship with Slim would seem to preclude 
this. 
 
---------------------- 
We're ahead, now what? 
---------------------- 
 
¶11. (C) Comment: Robles-Gil presented an image of a confident 
but chaotic campaign team, where little time is available for 
working through difficult policy questions.  Success for 
AMLO's economic program relies on the continuation of 
positive trends that are largely out of Mexico's control, as 
well as investor confidence.  AMLO's team continues to 
 
MEXICO 00003494  003 OF 003 
 
 
disregard the warnings of energy interests that characterize 
AMLO's calls to divorce Mexico from world oil and gas markets 
as "unrealistic".  It is also not clear what effect AMLO's 
aggressive stance towards local bankers would have on 
international investors.  Still, AMLO's economic advisors do 
appear to recognize that Mexico will face difficult times 
ahead if oil prices fall, interest rates continue to rise, 
remittances slow, or the U.S. economy stumbles.  AMLO's team 
understands that maintaining investor confidence will require 
reassuring the markets in the days immediately following a 
potential victory, but it is not clear that the candidate has 
yet formulated a plan for doing so. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
 
GARZA