VZCZCXRO5751
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #6934/01 3490045
ZNR UUUUU ZZH
P 150045Z DEC 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 4590
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RHEHNSC/NSC WASHDC
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RHMFIUU/CDR USNORTHCOM
RUEHC/DEPT OF LABOR WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 MEXICO 006934 
 
SIPDIS 
 
SENSITIVE 
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 INTERNATIONAL AFFAIRS KDEUTSCH AND SLADISLAW 
STATE PASS TO USTR (EISSENSTAT/MELLE) 
STATE PASS TO FEDERAL RESERVE (CARLOS ARTETA) 
NSC FOR DAN FISK, CYNTHIA PENDLETON 
 
E.O. 12958: N/A 
TAGS: ECON ELAB EFIN PINR PGOV MX
SUBJECT: CALDERON,S BUDGET PROPOSAL SPARKS DEBATE OVER 
SPENDING ON EDUCATION IN MEXICO 
 
REF: A. MEXICO 5854 
     ¶B. MEXICO 6157 
     ¶C. MEXICO 6823 
 
------- 
Summary 
------- 
 
¶1. (SBU) The level of educational spending in Mexican 
President Felipe Calderon,s 2007 budget proposal has set off 
a firestorm of protest.  While the budget proposal increases 
real spending on education by 4.2% when compared to the 
approved 2006 budget, it decreases real spending by 1.2% when 
compared to an estimate of what was actually spent on 
education in 2006.  The government,s decision to cut real 
spending on higher education has been particularly 
controversial.  Lawmakers from across the political spectrum 
have publicly pledged to push for more resources for 
education.  Not all Mexico experts believe that increasing 
funding for education is in the country,s best interest, 
arguing that other areas have a greater need for resources 
and that Mexico already spends a relatively large percentage 
of GDP on education.  Some say that funds should be 
redirected from universities to lower levels since most of 
Mexico,s poor do not attend college.  Many commentators have 
argued that increasing the educational budget will not 
improve the quality of education in Mexico, as the poor 
performance of the educational system stems from a lack of 
needed reforms.  In what some characterize as backtracking, 
President Calderon on December 12 told Finance Secretary 
Agustin Carstens to work with Congress to find ways to boost 
educational spending in 2007.  End Summary. 
 
------------------------------------ 
Educational Budget Spurs Criticism 
------------------------------------ 
 
¶2. (SBU) The level of educational spending in the Calderon 
administration,s 2007 budget proposal has set off a 
firestorm of protest (Ref C).  The budget proposal increases 
spending on education by 4.2% in real terms when compared to 
the approved 2006 budget, but it decreases spending by 1.2% 
in real terms when compared to an estimate of what was 
actually spent on education in 2006.  Criticism against the 
government's decision to cut real spending on higher 
education by 2.1% (compared to the approved 2006 budget) has 
been particularly vocal, as universities in Mexico wield 
significant political influence.  Under Secretary of 
Expenditures Ernesto Cordero this week said publicly that 
universities were less in need of funding than junior high 
and high schools. 
 
¶3. (U) Lawmakers from across the political spectrum, 
including some from Calderon's National Action Party (PAN), 
publicly rejected the 1.2% budget cut and pledged to amend 
the preliminary spending plan accordingly.  Legislators from 
the two major opposition parties, the Democratic 
Revolutionary Party (PRD) and the Institutional Revolutionary 
Party (PRI), formed a working group to restore the slashed 
funds before the Chamber of Deputies approves a final budget 
later this month.  The Chamber's Policy Coordination Board, 
controlled by the PRI, said it would present a resolution 
calling for the protection of the universities from any 
budget cuts.  Even Education Secretary Josefina Vazquez Mota 
promised to urge the Finance Secretariat to reconsider the 
level of educational funding. 
 
--------------------------------------------- -- 
Not All Agree That Spending Should Be Increased 
--------------------------------------------- -- 
 
¶4. (SBU) A number of Mexico followers and experts on 
 
MEXICO 00006934  002 OF 003 
 
 
education have responded to calls for increased spending on 
education with criticism of their own.  These commentators 
argue that dedicating more resources to education -- 
particularly to higher education -- is not the best use of 
Mexico's limited public funds.  Indeed, many experts have 
criticized the government for diverting funding to the 
universities at the expense of Mexico's poor, most of who 
never attend college or even get a decent education, because 
of the lack of educational reform and funding for primary and 
secondary education (see Ref A).  Many commentators have 
argued that increasing the educational budget will not 
improve the quality of education in Mexico, as the poor 
performance of the educational system does not stem from a 
lack of resources, but rather from a lack of needed reforms 
(e.g. modifying the way teachers are hired and the way they 
are evaluated, making spending more efficient, and making the 
teachers' union more democratic). 
 
¶5. (SBU) Econoff on December 12 asked Dr. Carlos Munoz 
Izquierdo (strictly protect), the Director of the Institute 
of Research for Educational Development at Universidad 
Iberoamericana, what he thought about the proposed spending 
on education.  Dr. Munoz began his response by noting that 
educational spending as a percentage of GDP in Mexico -- 
which the government estimates will amount to 7.1% this year 
if you include private spending -- is actually higher than in 
any other OECD country.  Dr. Munoz said that this difference 
highlights the need to increase tax collection in Mexico. 
 
¶6. (SBU) Although he did not explicitly say that he favored 
redirecting resources from universities to junior high and 
high schools, Dr. Munoz highlighted how enrollment at these 
levels was growing rapidly and how they face the largest 
coverage deficit.  He added that there are many ways for 
universities to cut costs and improve the efficiency with 
which resources are spent, but he lamented that these 
institutions do not appear predisposed "to take this path." 
 
¶7. (SBU) Dr. Munoz told Econoff that universities in Mexico 
have become more "democratic" over time but that they 
continue to favor more well-to-do students.  He said that 
many university students can in fact afford to pay some 
tuition.  To illustrate his point, he noted that students at 
some Mexican universities pay around 25% of their tuition, 
but that the National Autonomous University of Mexico (UNAM) 
in Mexico City has been unable to implement such a policy 
because deans who have tried, have been forced by students to 
resign. 
 
¶8. (SBU) Comment:  While perhaps more a sign of the 
compromises Calderon had to make to win the election than an 
indication of prospects for educational reform, it is worth 
noting that the son-in-law of national teachers' mega-union 
leader Elba Esther Gordillo, Fernando Gonzalez Sanchez, was 
appointed Under Secretary of Basic Education.  Gonzalez' 
appointment has generated considerable criticism in the 
press.  It remains to be seen whether his appointment will 
represent an obstacle to achieving much-needed change in 
Mexico's educational system.  Post's initial thoughts are 
that he will not dampen prospects for reform because such 
prospects are already relatively dim.  End Comment. 
 
------------------------- 
The Government's Response 
------------------------- 
 
¶9. (SBU) In what some characterize as backtracking, President 
Felipe Calderon on December 12 told Finance Secretary Agustin 
Carstens to work with Congress to find ways to boost 
educational spending in 2007, according to local press 
reports.  Other senior administration officials have said 
that they are willing to discuss budget proposals with 
 
MEXICO 00006934  003 OF 003 
 
 
interested members of Congress, and make moderate changes as 
appropriate.  (Note:  The fiscal responsibility law approved 
earlier this year says that if Congress approves more 
expenditures than are in the President's budget proposal, it 
has to identify a revenue source to offset the extra 
spending.  End Note.)  The Chairman of the Senate Finance 
Committee, Gustavo Madero (PAN), said publicly that he is 
confident that agreements will be reached and that the 2007 
budget will be approved by all political parties.  Carstens 
(strictly protect) told Econoff this week that these debates 
and protests over the budget are "a part of the game" to get 
more resources.  He said it was possible that Congress would 
approve the budget by mid-December, but also possible that 
legislators would go home for the Christmas holiday and then 
look at the budget again at the end of the month. 
 
------- 
Comment 
------- 
 
¶10. (SBU) A political analyst from a leading Mexican think 
tank told Poloff this week that it is possible the government 
is using the educational budget as a negotiating strategy to 
get the PRD to sit down at the negotiation table. 
Universities are generally PRD strongholds, and PRD officials 
so far have been reluctant to negotiate on many issues. 
 
¶11. (SBU) This debate highlights the need not only for 
educational reform, but also for fiscal and energy reform to 
generate more resources for education and social development. 
 Senior Finance Secretariat officials have frequently 
reminded university deans and lawmakers that the 2007 budget 
has to be austere due to public pension liabilities, which 
each year consume a larger portion of the budget, and 
Pidiregas obligations (Note: Pidiregas are long-term 
productive infrastructure projects that are supposed to be 
ultimately paid for with the revenues generated by the 
projects themselves.  End Note.) 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
BASSETT