VZCZCXRO9366
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #6810/01 3411733
ZNR UUUUU ZZH
P 071733Z DEC 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 4499
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RHMFIUU/CDR USNORTHCOM
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 MEXICO 006810 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR A/S SHANNON 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA 
STATE FOR EB/ESC MCMANUS AND IZZO 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/ARUDMAN 
USDOC FOR ITS/TD/ENERGY DIVISION 
TREASURY FOR IA (Alice Faibishenko) 
DOE FOR INTERNATIOANL AFFAIRS KDEUTSCH AND SLADISLAW 
STATE PASS TO USTR (EISSENSTAT/MELLE) 
STATE PASS TO FEDERAL RESERVE (CARLOS ARTETA) 
NSC FOR DAN FISK 
 
E.O. 12958: N/A 
TAGS: ECON ENRG ELAB EFIN PGOV PREL MX
SUBJECT: MEXICO Economic Notes, November 30-December 6, 
2006 
 
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Summary 
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¶1.  (U) President Felipe Calderon Hinojosa followed his 
short, but successful inauguration with a speech at the 
National Auditorium detailing key goals of his 
administration.  CalderonQs Secretaries of Finance, 
Economics and Labor have named their respective 
undersecretaries. The new Director General of Pemex said 
his goal is to promote reform, but not privatization.  On a 
separate note, inflation expectations improve slightly. End 
Summary. 
 
---------------------------- 
CalderonQs three commitments 
---------------------------- 
 
¶2. (U) After the December 1 swearing-in ceremony, Calderon 
addressed supporters and the civil society representatives 
at the National Auditorium.  There, the new President 
committed to work hard to resolve existing political 
differences and said he will always be willing to dialogue, 
but that he wonQt wait for this dialogue to happen in order 
to start working.  Calderon instructed his Security Cabinet 
to prepare a proposal to combat organized and other crime, 
to strengthen the police, and to create a unique national, 
criminal information database in no more than 90 days. 
Calderon acknowledged that fighting poverty and social 
inequality were among his main challenges.  He promised to 
allocate more resources and use public resources more 
efficiently to alleviate poverty.  Calderon said he would 
improve health services and education as well.  He 
instructed his Social Cabinet to maintain and improve 
existing programs. 
 
¶3. (U) Calderon instructed the Economic Cabinet to present 
in December a program to reallocate public expenditures 
and, during the first quarter of 2007, to prepare measures 
to make the productive sector more efficient.  In this 
context, his cabinet will also have to incorporate 
resources for the QFirst Employment ProgramQ (in which 
employers will be exempted from social security fees if 
they hire young people that are looking for their first 
job).  In summary, as stated by Calderon, his three main 
priorities will be:  security, extreme poverty reduction, 
and creation of jobs.  Calderon also announced that he 
would reduce top officialsQ salaries by 10 percent and also 
reduce government administrative costs. Finally, he 
promised to send to Congress an electoral reform to 
regulate expenses and duration of campaigns. 
Official designations in Hacienda 
 
¶4. (U) The top three aides to Finance Secretary Agustin 
Carstens will be Alejandro Werner as Under Secretary of 
Finance; Ernesto Cordero (key Calderon transition staffer) 
as Under Secretary of Expenditures; and Fernando Sanchez 
Ugarte (former consul in Oregon) as Under Secretary of 
Revenue  The Secretariat of Finance also announced the 
following designations:  Eugenia Casar as treasurer; Jose 
Antonio Gonzalez Anaya as Chief of the Coordination Unit 
with State Governments; Alberto Real Benitez as SATQs 
General Administrator; and Luis Roberto Patron as Customs 
General Administrator (SAT).  Jose Antonio Meade will be 
CarstenQs coordinator of advisors.  Roberto del Cueto will 
be chairman of the National Banking and Securities 
Commission; and Agustin Acosta will be chief of the 
Financial Intelligence Unit. 
 
--------------------------------------- 
Continuity in Economia with SojoQs team 
--------------------------------------- 
 
 
MEXICO 00006810  002 OF 003 
 
 
¶5. (U) Eduardo SojoQs team is expected to give continuity 
to EconomiaQs projects and more support to small and medium 
sized enterprises (SMEs).  Beatriz Leycegui was designated 
Under Secretary of International Trade Negotiations; 
Heriberto Felix was designated Under Secretary of Small and 
Medium-Size Businesses; Carlos Arce (former head of the 
Regulatory Improvement Commission and the ConsumerQs 
Protection Office) was designated Under Secretary of 
Foreign Investment and International Trade Practices; and 
Rocio Ruiz was ratified in the Under Secretariat of 
Industry and Commerce. Some applauded RuizQ ratification 
because of her experience and knowledge, but some disagreed 
because of her part in orchestrating the reduction of 
several tariffs.  Felix, former PAN candidate for Governor 
of Sinaloa in 2004 and former PAN Senator will have to 
implement new programs to support SMEs.  Leycegui, who was 
one of NAFTAQs negotiators and Jaime Serra PucheQs partner 
in the private consulting group SAI, is seen as a technical 
person that will continue with the trade opening policy. 
Leycegui, who also collaborated in the Secretariat of 
Foreign Affairs, will also have the task of taking 
advantage of MexicoQs 12 foreign trade agreements with 42 
countries.  Alberto Ortega will be SojoQs Coordinator of 
Advisors. 
 
------------------------------------- 
Recycling at the Secretariat of Labor 
------------------------------------- 
 
¶6. (U) The new Secretary of Labor, Javier Lozano, 
designated the team that will accompany him during his 
tenure.  In the Under Secretariat of Labor, Security and 
Social Prevision, he designated Alvaro Castro (former 
Director of Religious Affairs in the Secretariat of the 
Interior); as Under Secretary of Employment and Labor 
Policy, Lozano named Javier Prieto de la Fuente, who is 
former director of Institutional Affairs of Cemex and led 
Concamin from 2001-2003, and is former advisor to Secretary 
Carlos Abascal).  Patricia Espinosa Torres will be the 
Under Secretary for Human Development.  Espinosa was a PAN 
Deputy and Chief of the WomenQs National Institute. 
Reyes Heroles on Energy Reform 
 
¶7. (U) Jesus Reyes Heroles, new Pemex DG, said that his 
goal is to have a business capable of guaranteeing an 
abundant supply at competitive prices.  However, he said 
that this target does not mean that Pemex is going to be 
privatized, or sold, nor does it mean an expansion of the 
private sectorQs participation.  Reyes Heroles said that in 
order to accomplish his goal he would look into what is 
needed to run Pemex better and more efficiently. 
Separately, the chairman of the Energy Committee of the 
Chamber of Deputies, David Maldonado (PAN), announced that 
lawmakers are working to reform the Energy Regulatory 
Commission (CRE).  The reform will seek to grant powers 
currently held by Hacienda to the Commission so that the 
CRE establishes electricity and natural gas prices.  The 
goal is to eliminate subsidies and provide support only to 
those who need it.  Maldonado also stated that the 
committeeQs challenge is to reach consensus in order to 
pass Pemex corporate governance reforms, such as changes to 
its tax regime and diluting the strength of the union on 
PemexQs board of directors.  Maldonado said that the 
Mexican oil industry requires both public and private 
investment. 
 
------------------------------ 
Inflation expectations improve 
------------------------------ 
 
¶8. (U) Inflation expectations improved slightly in late 
November, but the growth expectations for 2007 worsened to 
3.5 percent according to the latest survey from the Mexican 
 
MEXICO 00006810  003 OF 003 
 
 
central bank.  The market expects annual inflation to end 
2006 at 3.9 percent compared to the previous forecast of 
4.0 last month. Inflation expectations for 2007 continue at 
3.5 percent. 
 
BASSETT