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UNCLAS SECTION 01 OF 06 MEXICO 006571 
 
SIPDIS 
 
STATE PASS TO USTR FOR MELLE AND EIESSENSTAT 
STATE FOR A/S SHANNON 
STATE/INR/B 
NSC DAN FISK 
STATE FOR WHA/MEX, WHA/EPSC, EB/ESC 
DOE FOR INTERNATIONAL AFFAIRS KDEUTSCH AND SLADISLAW 
DOC FOR ITS/TD/ENERGY DIVISION 
FEDERAL RESERVE (CARLOS ARTETA) 
 
SENSITIVE, SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON ELAB PGOV PREL ETRD PINR MX
SUBJECT: CALDERON NAMES ECONOMIC CABINET 
 
REF A. Mexico 6516 
¶B. Mexico 6424 
¶C. Mexico 6065 
¶D. Monterrey 1361 
¶E. Mexico 6413 
¶E. Mexico 5810 
¶G. Mexico 6542 
¶H. Mexico 6067 
 
------- 
SUMMARY 
------- 
¶1.  Mexican stocks jumped 1.6 percent on November 21 after 
President Elect-Calderon announced his Economic Cabinet. 
Many of the members were expected, having worked on the 
transition team, and/or for the Fox Administration. The new 
Secretary for Telecommunications and Transport Luis Tellez, 
 
SIPDIS 
however, was a member of the PRI who worked for past PRI 
governments.  The only somewhat surprising choice is 
Secretary of Energy Georgina Kessel Q but she served as 
 
SIPDIS 
head of the Mexican Federal Regulatory Commission on 
Energy.  Together, the new cabinet represents a consistent 
message that Calderon intends to continue the policies that 
have led to Mexico's macro-economic success and stability. 
The cabinet includes some U.S.-educated members, including 
former Fulbrighter (Kessel) and at least one participant in 
a U.S. Embassy International Visitor Program (Tourism 
Minister Elizondo).  Since being officially named winner of 
the Presidential election in September 2006, Calderon has 
consistently called for economic reforms to create jobs by 
promoting public and private investment in infrastructure 
and undertaking fiscal, labor, energy, education and other 
economic reforms to improve Mexico's competitiveness (REFS 
A-D).  The key for the new cabinet will be to move beyond 
rhetoric and actually implement reform.  This would require 
tackling the monopolies, oligopolies and other special 
interests that have blocked reform in the past (REF E). 
Specific challenges facing each Minister are described 
below.  END SUMMARY 
 
¶2.  On November 20, President-elect Calderon announced his 
Economic Cabinet: 
Secretary of Finance, Agustin Carstens 
 
SIPDIS 
Secretary of Energy, Georgina Kessel 
 
SIPDIS 
Secretary of Economy, Eduardo Sojo Garza Aldape 
 
SIPDIS 
Secretary of Communications and Transport, Luis Tellez 
 
SIPDIS 
Kuenzler 
Secretary of Labor, Javier Lozano Alarcon 
 
SIPDIS 
Secretary of Tourism, Rodolfo Elizondo 
 
SIPDIS 
-------------------------------------- 
Agustin Carstens, Secretary of Finance 
-------------------------------------- 
 
¶3.  (SBU) Agustin Carstens' expected appointment as 
Secretary of Finance (Hacienda) will undoubtedly be well- 
 
SIPDIS 
received in the financial community, as he is known to be a 
solid economist and a skillful negotiator.  Carstens, who 
was the head of Calderon's economic transition team, has 
already begun work on his initial tasks of developing the 
new government's economic program and the 2007 federal 
budget.  When announcing Carstens' appointment to his 
transition team in October, Calderon noted that Carstens 
was charged with designing an economic program that would 
maintain macroeconomic stability and strengthen public 
finances in order to improve Mexico's competitiveness and 
generate jobs.  In accepting his appointment, Carstens 
pledged to work to boost employment and combat poverty. 
Carstens had earlier been quoted saying that in order to 
achieve faster growth and poverty reduction, successful 
integration needs to be accompanied by prudent 
macroeconomic policies and a deepening of structural 
reforms. 
 
¶4.  (U) Carstens was Deputy Managing Director at the IMF 
from August 1, 2003 to October 16, 2006 and an Executive 
Director at the IMF from 1999 to 2000.  Prior to taking his 
position as the Fund's Deputy Managing Director, Carstens 
 
MEXICO 00006571  002 OF 006 
 
 
was Mexico's Deputy Secretary of Finance.  He also held 
senior positions at the Bank of Mexico, including those of 
head of operations and chief economist, and he was an 
Alternate Governor for Mexico at the Inter-American 
Development Bank and the World Bank.  Born in 1958, Mr. 
Carstens received his BA in Economics from the Autonomous 
Technological Institute of Mexico (ITAM) in 1982, and his 
MA and Ph.D. in Economics from the University of Chicago in 
1983 and 1985, respectively.  Mr. Carstens has published 
many articles in leading journals in Mexico and abroad.  He 
is fluent in English. (See REF H for additional information 
on Carstens.) 
 
------------------------------------ 
Georgina Kessel, Secretary of Energy 
------------------------------------ 
 
¶5.  (U) In the press conference announcing her appointment 
as Mexico's first female Secretary of Energy, Georgina 
Kessel Martinez underscored the importance of the petroleum 
sector for public finances and said she world work for a 
significant modernization of the sector, preserve the 
national patrimony, and seek more autonomy for Pemex, the 
national monopoly, as well as improve the firm's 
operational capacity. 
 
¶6.  (SBU) Kessel's greatest challenge will be reversing 
Mexico's declining oil production (REF E) and addressing 
massive inefficiencies in Pemex.  The Mexican constitution 
forbids private or foreign investment in oil production. 
Absent fiscal reform to reduce the amount of Pemex revenue 
going to support the state budget, it is difficult to see 
how the firm can obtain the funds it needs for required 
investment to prevent significant production declines over 
the next five to eight years. Finding policy options 
(including possibly joint ventures and some foreign 
investment) that will bring in needed investments will be a 
key preoccupation. 
 
¶7.  (U) Kessel's most recent position, before being named 
Energy Secretary was as director of the Mexican Mint (Casa 
de Monedas).  She also served as the first President of 
Mexico's Energy Regulatory Commission, the CRE.  She has 
also served in the Mexican Secretariat of Finance/Treasury 
(Hacienda) as an Assistant Secretary for Investment and 
Privatization and at the Secretariat of Trade and 
Industrial Promotion, a precursor to today's Secretariat of 
the Economy. 
 
¶8.  (U) As an academic, Kessel taught for nine years at the 
prestigious Instituto Tecnologico Autonomo de Mexico 
(ITAM).  Starting her career as an office secretary in the 
travel industry, later she earned a bachelor's degree in 
economics at ITAM and won a 1980 Fulbright scholarship to 
Columbia University where she earned a Masters and PhD, 
also in economics.  The Fulbright panel considering her 
candidacy singled her out for leadership potential. 
 
¶9.  (SBU) Kessel worked with leading Mexican economists 
Enrique Davila and Santiago Levy to develop Mexico's "Plan 
Puebla Panama" that supports development of Southern Mexico 
and Central America.   This could suggest that the Calderon 
administration may retain the Fox team's Mesoamerican 
Energy Integration Plan (PIEM), an outgrowth of the Plan 
Puebla Panama.  Earlier key Calderon staffers had suggested 
that the incoming Calderon team would scrap the PIEM. 
 
--------------------------------------------- -- 
Eduardo Sojo Garza Aldape, Secretary of Economy 
--------------------------------------------- -- 
 
¶10.  (U) In accepting his appointment as Secretary for the 
Economy, Eduardo Sojo Garza Aldape promised to promote 
foreign investment and strengthen international trade in 
order to make Mexico one of the most attractive investment 
destinations in the world.  He also pledged to work with 
the Mexican Congress and other sectors of the country. 
 
MEXICO 00006571  003 OF 006 
 
 
During the recent presidential campaign, Sojo worked in the 
Calderon war room on economic policy issues.  Since the 
election, he has been Calderon's transition coordinator. 
Sojo is well-regarded in Mexico and brings with him a 
considerable amount of policy and academic experience in 
economic affairs. 
 
¶11.  (SBU) Sojo has pointed with great pride to the 
economic (and political) stability that the Fox 
Administration is bequeathing to its successor but has 
lamented its inability to gain congressional support for 
the sort of structural reforms necessary for a higher 
growth rate.  As Secretary of Economy, Sojo will be 
responsible for international trade, foreign investment, 
industry and commerce, small and medium-sized enterprises, 
and intellectual property rights.  Key challenges that Sojo 
will face include the implementation of Mexico's final and 
most painful NAFTA obligations (including corn and beans). 
Other challenges are strengthening the international 
competitiveness of Mexican industry, and diversifying 
Mexico's exports (at present, the U.S. takes approximately 
85 percent of Mexico's exports). 
 
¶12.  (U) Sojo served as Coordinator of Public Policy in the 
Office of the President during much of the Fox 
Administration, and had worked on Fox's transition team in 
¶2000.  Prior to that, he had been Coordinator of then- 
Governor Fox's Economic Cabinet for the state of 
Guanajuato.  Even earlier, he had been Technical Director 
and Short-Term Statistics Director of INEGI (National 
Geography and Statistics Institute). From 1979 to 1982 he 
performed a variety of activities as an analyst in the 
General Economic and Social Policy Bureau.  He has been a 
researcher and professor at the Monterrey Institute of 
Technology and Advanced Studies, and has authored numerous 
economic articles in various periodicals and reviews. 
Together with Nobel Prize winner Lawrence Klein, he 
published research on combined time series and econometric 
modeling.  Born January 9, 1956 in Leon, Guanujuato, Sojo 
earned his Bachelors in Economics from the Monterrey 
Institute of Technology and Advanced Studies, and a Masters 
and PhD from the University of Pennsylvania. 
 
--------------------------------------------- --------- 
Luiz Tellez Kuenzler, Secretary of Communications and 
Transport 
--------------------------------------------- -------- 
 
¶13.  (SBU) In accepting his appointment as Secretary of 
Communications and Transport, Luis Tellez Kuenzler pledged 
to make infrastructure a priority.  He said that providing 
adequate infrastructure to the most vulnerable regions of 
Mexico was the only way to close the economic gap between 
Mexico's regions.  He said the way to help the poorer 
regions was to expand coverage of infrastructure and 
telecommunications, and increase competitiveness. 
 
¶14.  (SBU) Besides Mexico's underdeveloped infrastructure, 
especially in the southern part of the country, Tellez's 
greatest challenge will be to encourage competition in the 
monopoly/oligopoly-dominated telecom and transportation 
sectors, and encourage the roles of regulators such as the 
Federal Telecommunications Commission (Cofetel) and the 
Federal Competition Commission (Cofeco).  The current 
Secretariat Telecommunications has favored dominant firm, 
 
SIPDIS 
Telmex, but Cofetel and Cofeco did limit his most recent 
attempts at favoritism (SEE REF G)  While Telemex remains a 
near monopoly in fixed telephone service, it is starting to 
face some challengers.  Fixed-line competition will deepen 
now that the merged company Axtel/Avantel has laid 8,000 
kilometers of cable and has a readily available internet 
protocol (IP) based solution for calls.  Tellez comes into 
office in a time of great technological development in the 
world, though the benefits of this technology are not 
available to many Mexicans.  He faces the challenge of 
bringing technology "to the last mile" in Mexico, 
encouraging the spread of broadband and WiMax access while 
 
MEXICO 00006571  004 OF 006 
 
 
at the same time making sure that such simple technology as 
telephone lines are also available to underserved 
populations of Mexico. 
 
¶15.  (U) Tellez has been a member of the PRI, but may not 
currently be an official PRI member since he endorsed 
Calderon in the Presidential campaign.  (Comment:  PRI 
members tell Emboffs they do not consider people like 
Tellez to be PRI members of Calderon's government because 
they had endorsed Calderon.  End Comment)  Tellez is 
currently the Mexico City Managing Director of The Carlyle 
Group, one of the world's largest private equity firms. 
Before joining the Carlyle group, he was Executive Vice 
President and CEO of DESC, SA de CV (DESC is a firm working 
in Mexico with activities in auto parts, chemicals, food 
and real estate.)  In addition to his strong connections 
with the finance and business community, he has solid 
government experience.  Tellez served as Secretary of 
Energy from 1997 to 2000, previous to which he served as 
President Ernesto Zedillo's Chief of Staff.  In 1998 and 
1999, Mr. Tellez headed Mexico's oil diplomacy efforts and 
played a key role in restoring stability in international 
oil markets and oil prices. 
 
¶16.  (U) Tellez earned his B.S. in economics from the 
Instituto Tecnologico Autonomo de Mexico and his Ph.D. in 
economics from MIT.  From 1987 to 1993, Tellez served in 
several senior positions in the Mexican government, 
including Head Economist at the Ministry of Treasury and 
Undersecretary of Planning ant the Ministry of Agriculture. 
After the Mexican peso crisis of 1995, Tellez helped secure 
the financial rescue package of USD 50 billion granted to 
Mexico by the US and other major financial institutions. 
 
----------------------------------------- 
Javier Lozano Alarcon, Secretary of Labor 
----------------------------------------- 
 
¶17.  (U) In accepting his appointment as Secretary of 
Labor, Javier Lozano Alarcon promised to work for a 
competitive economy in Mexico, so that people would not 
have to emigrate; changing the dynamic so that labor would 
not leave the country and investment would come in. He 
pledged to work with the unions and workers, without 
discrimination by acting as an intermediary to promote 
negotiation and agreement.  He also pledged to comply with 
Article 123 of the Constitution, the Federal Labor Law. 
 
¶18.  (U) Incoming President Felipe Calderon has repeatedly 
said that job creation will be one of the highest 
priorities of his administration.  In order to help 
Calderon accomplish this job creation, Mexico's Secretary 
of Labor designate, Javier Lozano Alarcon, will face many 
challenges.  In post's view four of the more significant 
challenges will be as follows: 
 
¶19.  (U) One of the very first things Lozano will have to 
do is familiarize himself with Mexico's organized labor 
movement. Lozano is not a new player on Mexico's 
economic/political scene but up until now he has not been 
known for his expertise on labor or labor related issues. 
 
¶20.  (U) Next, in order to help with job creation Lozano 
will have to address the problem of competitiveness.  This 
will be a significant task since there appears to be little 
concurrence in Mexico on exactly what is meant by 
competitiveness and even less agreement on how 
competitiveness should be measured. 
 
¶21.  (U) The third item on Lozano's to do list, should be 
to promote a major reform of Mexico's labor laws.  There is 
widespread agreement among all the relevant sectors of 
Mexico's economy that the country's labor laws are 
inflexible, unrealistically slanted in favor of the worker 
and nearly impossible to comply with even for those 
employers who might be inclined to do so.  Unfortunately, 
there is almost no agreement on how to strike a balance 
 
MEXICO 00006571  005 OF 006 
 
 
between changes that could foster competitiveness and 
maintaining the correct level of worker rights. 
 
¶22.  (U) Finally, as Labor Secretary, Lozano should be 
willing to help the incoming Calderon administration to 
take on the task of regulating or in some way organizing 
the informal sector of Mexico's economy.  This is another 
area of disagreement where some say that the informal 
economy makes up a minimum of 23 percent and others 
(including the OECD) say a maximum of 43 percent of 
Mexico's workforce. 
 
¶23.  (U) Lozano, an attorney, was most recently working as 
a private consultant on policy and telecommunications, 
having left government to work on the Calderon campaign 
since its early days.   He is also a weekly contributor to 
the El Universal newspaper, and the Magazine Vertigo, 
Publishing Advisor for the magazine El Seminario, and 
commentator for the radio program "Financial Forumula" and 
TV Azteca program, "Puebla."   Lozano also served as 
Academic Coordinator for Personnel Management for the 
National Public Administration Institute, and is a law 
professor at the Escuela Libre (Free University) of Mexico 
City, and at the University of Anahuac del Sur. 
 
¶24.  (U) In March 2003, Lozano was appointed Representative 
of the State of Puebla in Mexico City, and later became 
Puebla's General Coordinator of the Commission for 
Transparency in Public Sector Lending, whose main 
objectives were to promote transparency and prevent 
corruption in provision of public services. He resigned 
these positions in January 2005 to join the Calderon 
campaign. 
 
¶25.  (U) In March 2001, Lozano founded the firm Javier 
Lozano and Associates as "strategic consulting firm for 
projects and companies." 
 
¶26.  (U) In May 1999, Lozano was appointed Under Secretary 
for Social Communication for the  Ministry of the Interior 
(Secretaria de Gobernacion), acting as liaison between the 
federal government and the electronic and printed media, in 
addition to establishing broadcasting and publicizing 
criteria for Ministries and federal state-owned entities. 
Lozano was also Chairman of the Governing Board for the 
Mexican Radio Institute and Chairman of the Notimex Board 
of Directors. 
 
¶27.  (U) In April 1998, Lozano was appointed President of 
the Federal Telecommunications Commission (Cofetel). In 
August 1996, he had been appointed Communications under 
Secretary for the Ministry of Telecommunications and 
 
SIPDIS 
Transport.  There, he coordinated the division in charge of 
procedures for granting concessions and permits for radio 
and television, and initiated the Rural Telephony Program. 
 
¶28.  (U) In January 1995, Lozano was designated Chief of 
Staff (Oficial Mayor) for the Ministry of 
Telecommunications and Transport in charge of general 
management of human, financial and material resources, and 
coordinating the legal commissions that prepared the drafts 
for amending article 28 of the Constitution to allow 
private investment in satellites and railroads; as well as 
for preparation of the Regulations for Railway Services, 
the Federal Telecommunications Law, the Airport Law and the 
Civil Aviation. 
 
¶29.  (U) From December 1994, Lorenzo had served as 
Corporate Comptroller General for Pemex.  Thereafter, he 
was designated Director General for Standards and 
Administrative Development in the Under Secretariat for 
Spending of the Ministry of Finance and Public Credit, 
where he worked on civil service policies of the federal 
public administration, and norms applicable to public 
acquisitions and works. At that time, he coordinated 
preparation of the draft Law on Public Acquisitions and 
Works, which was enacted in 1994. 
 
MEXICO 00006571  006 OF 006 
 
 
 
¶30.  (U) In 1989, Lorenzo had started working for the 
Mexican Ministry of Finance as Director for Private 
External Credit.  At the same time, he worked as Minutes 
Secretary (Secretario de Actas) for the Banking Divestiture 
 
SIPDIS 
Committee and participated in the commissions in charge of 
drafting the Credit Institutions Law, and the Law to 
Regulate Finance Groups. He took the position as Advisor 
Coordinator for the Under Secretary of Standards and Budget 
Control within this Ministry, where he participated in the 
first work teams that created Mexico's Retirement Savings 
System. From May 1987 to October 1989, Lozano was Legal 
Manager of the Petrochemical Sector for Grupo Industrial 
Alfa.   From December 1984 to May 1987, he worked as a law 
clerk at the Bank of Mexico (Mexico's Central Bank) Legal 
Orders Directorate.  Lozano is a graduate of the Escuela 
Libre de Derecho (Law) in Mexico City in 1986, and was born 
in Puebla on November 21, 1962.  He is married to Silvana 
Ponzanelli, and has four children. 
------------------------------------- 
Secretary of Tourism Rodolfo Elizondo 
 
SIPDIS 
------------------------------------- 
¶31.  (U) Rodolfo Elizondo was unable to attend the ceremony 
announcing his re-appointment as Secretary of Tourism, 
since he is on a working visit to Japan.  Elizondo has held 
the position of Secretary of Tourism since August 1, 2003 
when he replaced Fox's first tourism secretary Leticia 
Navarro after the PAN lost ground in mid-term elections of 
that year. 
 
¶32. (SBU) Elizondo has supported what were sometimes 
considered radical changes to transform the tourism sector. 
During his time as Senator, he served on the Commission for 
Tourism and was a strong proponent for installing casinos. 
He has publicly stated that the new government will have to 
greatly increase investment in the sector and modify the 
Tourism law if it plans to achieve Calderon's goal of 
making Mexico the fifth world tourism power during the next 
sexenio. 
 
¶33. (SBU) Politically, Elizondo has been known for being 
more pro-Fox than pro-PAN and is known for being blunt in 
speaking his mind.  This has not endeared him to the 
traditional PAN elite but has appeared to have little 
effect on his work as Tourism Secretary. 
 
¶34.  (U) Prior to his promotion to the cabinet level 
position, he served as Fox's communications 
director/spokesperson from Janurary 1, 2002 and, before 
that, was Fox's Coordinator for the President's Office of 
Civic Alliance.  He also served as Political Coordinator 
for Fox's presidential campaign where he was in charge of 
bolstering support outside of PAN. 
 
¶35.  (U) Elizondo is a 23 year member of PAN hailing from 
the Duango province.  Since his win as Mayor of Durango, he 
has also served 2 terms as a federal deputy and has been a 
Senator.  In 1990, during his time as Federal Deputy 
Coordinator for PAN he was the recipient of an individual 
International Visitor grant.  He has served as manager and 
director of numerous businesses in his home state. 
Elizondo was born in Durango, Durango on July 18, 1946.  he 
holds a Bachelor's in Business Management from the 
Monterrey Institute of Advanced Studies and a degree from 
the University of Kansas. 
 
BASSETT