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UNCLAS SECTION 01 OF 03 MEXICO 000936 
 
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 ALOCKWOOD 
STATE PASS TO USTR (EISSENSTAT/MELLE) 
STATE PASS TO FEDERAL RESERVE (CARLOS ARTETA) 
NSC FOR DAN FISK 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EFIN ELAB MX PGOV PREL
SUBJECT: MEXICO ECONOMIC NOTES, FEBRUARY 16 - FEBRUARY 23 
 
Summary 
------- 
 
¶1.  (SBU) The Chamber of Deputies approved a bill that 
provides for up to 40 years in prison for those convicted of 
financing terrorist activities. President Calderon tried to 
address criticism of the January 2008 final opening of the 
agricultural market under NAFTA by extending and expanding 
farm subsidies.   Secretary of Economy Eduardo Sojo reported 
that foreign direct investment in Mexico dropped 3.6 percent 
from 2005 to 2006.  Felipe Munoz, who worked with the USG as 
chief of Mexican Attorney General's specialized unit for 
investigation of IPR crimes, was promoted to Deputy 
Prosecutor General for Federal Crimes.  Telecom regulator 
Cofetel announced that it would not support creation of a 
third national broadcasting network by auctioning regional 
frequencies as a package. The North American Development Bank 
has announced a USD 8.9 million loan to the city of Nogales. 
DaimlerChrysler representatives told emboffs that Mexico 
would gain from auto industry restructuring.  The Governor of 
Coahuila accused Former President Fox of urging him to accuse 
a controversial labor leader of responsibility for workers in 
2005's Pasta de Conchos mine disaster. 
 
Criminalizing Terrorism Financing 
--------------------------------- 
 
¶2.  (U) The Chamber of Deputies on February 20, 2007 approved 
a bill that provides for up to 40 years in prison for those 
convicted of financing terrorist activities. If passed, the 
law would establish the crimes of "terrorism financing" and 
"international terrorism." Mexico currently does not have a 
specific law criminalizing financing and support of 
terrorists and terrorist organizations. The draft law would 
enable the Attorney General's Office (PGR) to provide 
information to federal government authorities for 
investigations. It also would authorize prosecutors to track 
and obtain information from finance and tax authorities on 
suspicious transactions. The bill now goes to the Senate, 
which approved a similar proposal during last year's session. 
 (See septel). 
 
Calderon Extends Farm Subsidies 
------------------------------- 
 
¶3.  (SBU) Facing increasing political opposition to the 
January 2008 final opening of the agricultural market under 
the North American Free Trade Agreement (NAFTA), President 
Calderon announced that the program of subsidies for Mexican 
farmers (PROCAMPO) will be extended and expanded. The program 
had been set to expire in 2008.  Calderon's government also 
announced its plan for using the almost USD 700 million that 
the Mexican Congress approved for supporting the corn, bean, 
sugar, and milk sectors (the four sectors that will be fully 
opened to U.S. and Canadian imports next January 1).  Roughly 
USD 500 million will go to promoting domestic production of 
those crops, and another USD 200 million will beef up 
Mexico's shared risk fund for agriculture.  (See septel.) 
 
FDI Down in 2006 
---------------- 
 
¶4.  (U) Economy Secretary Sojo announced that Mexico received 
USD 18.9 billion in foreign direct investment (FDI) during 
2006, a 3.6% drop from 2005's USD 19.6 billion.  Sojo 
attributed the decrease to insecurity brought about by 
election-related protests that plagued the country. 
Nevertheless, the USD 18.9 billion figure is likely to be 
readjusted as companies continue reporting 2006 investments. 
Even with the delayed reports, FDI for 2006 is not expected 
to end above the Mexican government's goal of USD 20 billion, 
but may come closer to 2005 investments. 
 
MEXICO 00000936  002 OF 003 
 
 
 
New Deputy Prosecutor for IPR 
----------------------------- 
 
¶5.  (U) The Attorney General's Office (PGR) finally filled 
its last Deputy Prosecutor General slot. Felipe Munoz, who 
had previously been the chief of PGR's specialized unit for 
investigation of IPR crimes, is the new Deputy Prosecutor 
General for Federal Crimes.  In this capacity, he will 
supervise not only his old IPR unit, but also the PGR units 
responsible for investigating tax evasion, financial crimes, 
environmental crimes, and crimes committed by government 
officials.  (See septel on upcoming meetings with Munoz and 
Gonzalez.) 
 
Cofetel: No National Network Frequency Auction 
--------------------------------------------- - 
 
¶6.  (SBU) Mexico's telecommunications regulator Cofetel 
announced February 22 that an upcoming auction would not 
include auctioning regional frequencies as a package, which 
would have facilitated creation of a third national 
broadcasting network.  Cofetel Chairman Hector Osuna noted 
that companies that currently hold radio and television 
frequencies will not be permitted to participate in the 
upcoming auction; although, participants purchasing separate 
regional frequencies could form a national network through 
joint-ventures.  Commissioner Eduardo Ruiz Vega added that 
Cofetel opted not to auction regional frequencies as a 
package in order to avoid creating a national network under 
foreign control.  Osuna meets next week with FCC Commissioner 
McDowell. 
 
NADBank Announces Loan 
---------------------- 
 
¶7.  (U) The North American Development Bank has announced 
that the city of Nogales in the Mexican state of Sonora would 
receive a loan of USD 8.5 million to help finance an air 
quality project to improve street paving and traffic flows. 
Currently in Nogales, 250 kilometers of its 385 kilometers of 
streets are not paved.  The Border Environment Cooperation 
Commission (BECC) certified this project on July 30, 2004. 
 
DaimlerChrysler: Mexico Benefits from Detroit Downsizing 
--------------------------------------------- ----------- 
 
¶8.  (SBU) Luis Gomez Suarez, Director of Governmental 
Relations at DaimlerChrysler, told Econ and Commercial 
Officers that Mexico could benefit greatly from the 
restructuring being done by the Big Three auto makers.  He 
said that DaimlerChrysler wants to increase its sourcing 
outside of North America, and moving to Mexico would be of 
greater benefit than moves to South America or Asia.  He 
mentioned the possibility of having President Calderon visit 
Detroit to promote Mexico as promising location for increased 
investment. 
 
Governor Accuses Fox Over Mine Disaster 
--------------------------------------- 
 
¶9.  (SBU) During a February 18 national radio interview, 
Humberto Moreira, the PRI Governor of Coahuila, accused 
former President Vicente Fox of pressing him in 2006 to 
falsely accuse a controversial labor leader of responsibility 
for workers in a mining accident.  According to the Governor, 
PAN President Fox not only wanted him to accuse the labor 
leader but to arrest him as well.  Moreira says he refused 
the President's request; however, it appears he said nothing 
about the presidential pressure for an entire year.  In 
commenting on the Moreira's accusations, a senior official in 
the national office of the CTM labor confederation remarked 
 
MEXICO 00000936  003 OF 003 
 
 
that the Governor's allegations are impossible to prove. That 
said, the CTM official averred, allegations do underscore the 
fact that very few people in Mexico are willing to seriously 
take on a sitting president. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
GARZA