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UNCLAS SECTION 01 OF 03 MEXICO 001102 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PINR ECON OVIP MX
SUBJECT: SCENESETTER FOR PRESIDENT'S TRIP TO MEXICO, MARCH 
12-14, 2007 
 
¶1. (SBU) Mission Mexico warmly welcomes you to Merida. 
President Calderon recognizes the broad-ranging challenges 
his country faces and appears to have the vision and 
political will to address them strategically.  Having 
completed three months in office, he has demonstrated resolve 
in tackling his key policy objectives, which he believes will 
fundamentally transform Mexico: improving security and the 
rule of law, attacking poverty, and creating jobs.  The U.S. 
and Mexico have developed a solid set of institutional 
relationships that allow us to work productively on most of 
our priorities, including fundamental issues of North 
American security and prosperity, and those links are set to 
expand.  Your visit is an unmistakable sign of our support 
for the Calderon government -- one of our most important 
allies in the hemisphere -- and our dedication to this 
complex, interdependent relationship. 
 
¶2. (SBU) Mexico's democratic institutions weathered a 
contentious presidential election, and Calderon has been 
quick to emerge as an activist president with a strong and 
respected cabinet, particularly in the security and economic 
areas.  His security efforts are designed to reassure foreign 
investors and Mexicans worried about drug-related crime and 
lawlessness that organized criminals will no longer act with 
impunity.  He knows that attracting investment, particularly 
from the U.S., is pivotal to curbing migration and narrowing 
the social and economic inequalities that undercut Mexican 
society and result in bitter political divisions.  Calderon 
also recognizes that his vision of Mexico becoming a more 
prosperous country and a regional leader depends on security 
and the rule of law. 
 
SECURITY AT THE FOREFRONT 
 
¶3. (SBU) The new administration has moved forcefully to 
improve public security by significantly increasing the 
security budget; launching surge operations against drug 
traffickers in eight of the most conflictive states; working 
to overhaul Mexico's national police organization; advancing 
justice reform; and authorizing the extradition to the United 
States of 15 wanted criminals, including 4 drug king-pins. 
The president's initial actions reflect his commitment to 
intensify security-related cooperation with the U.S, and his 
willingness to incur political risk in doing so.  Throughout 
your discussions, it will be important to convey that we 
understand and appreciate that Mexico is engaging in security 
cooperation both for its own national interests and as a 
responsible neighbor. 
 
¶4. (SBU) The president fully understands the depth of our 
concerns about international terrorism and the 
transformational effect of the 9/11 attacks on USG policy, 
and he has signaled his strong commitment to work with us to 
preempt terrorist activity or entry through our shared 
border.  While a solid foundation for joint counter-terrorism 
cooperation has been established, and the GOM's efforts 
should be recognized, we also need to press for further 
progress on information sharing.  With respect to WMD, the 
GOM -- on its own initiative -- has requested our assistance 
in strengthening its detection capabilities. 
 
¶5. (SBU) Mexico is a central partner in USG efforts to combat 
drug trafficking and other trans-border threats.  While 
taking aggressive measures to tackle organized crime at home, 
Calderon has also publicly urged the U.S. to boost its own 
efforts to drive down demand for narcotics and improve 
controls on arms, cash, and precursor chemicals smuggled into 
Mexico.  He acknowledges that Mexico cannot effectively 
confront narco-trafficking without our cooperation and is 
eager for expanded assistance, including help with combating 
money laundering.  During his recent trip to Mexico, 
Secretary Chertoff heard from Mexican Attorney General Medina 
 
SIPDIS 
Mora that Mexico's most critical law enforcement challenges 
are: improving the institutional strength of local, state, 
and federal police forces (including by unifying several 
autonomous police forces); dismantling the sophisticated 
business operations run by the drug cartels; and crafting a 
regional strategy encompassing the U.S., Mexico, and Central 
America. 
 
¶6. (SBU) Mexico's southern border remains extremely 
vulnerable to illegal immigration, trafficking in persons, 
and the smuggling of contraband. It is an issue of 
considerable concern to the GOM, which attributes its lack of 
success in securing the border to its rugged and porous 
nature, limited enforcement infrastructure and the poor law 
enforcement capabilities of its southern neighbors, Guatemala 
and Belize.  Nevertheless, progress in securing Mexico's 
southern border is of vital importance to our own security. 
 
MEXICO 00001102  002 OF 003 
 
 
As Mexico hopes for immigration reform in the U.S., Calderon 
is addressing Mexico's own immigration challenge.  He has 
just announced plans for a Safe Southern Border Program, 
designed to strengthen Mexico's law enforcement efforts in 
the south, improve treatment of illegal migrants, and create 
guest worker program for Central Americans.  You may wish to 
express support for this multilayered effort and offer U.S. 
law enforcement assistance. 
 
BILATERAL RELATIONS ON A MATURE FOOTING, BUT IMMIGRATION 
REMAINS DIVISIVE 
 
¶7. (SBU) Calderon has demonstrated pragmatism in his posture 
toward the United States and appears poised to build on an 
already modern and mature U.S.-Mexico relationship.  The 
president's message is that Mexico will seek what it needs 
from us on the basis of equality, respect, and the close 
cooperation expected of neighbors that share wide-ranging 
interests and challenges.  Far more than his predecessor, 
President Calderon recognizes that immigration reform is a 
U.S. domestic matter that is dependent upon U.S. 
congressional action.  He will seek progress in a low-key 
effort that avoids making migration the dominant bilateral 
issue.  Nevertheless, domestic political considerations 
require that he raise the issue with USG officials and that 
he publicly criticize measures -- such as the border fence -- 
that most Mexicans find offensive.  The Mexican public draws 
little distinction between documented and undocumented 
migrants, seeing both as hard-working countrymen driven to 
the U.S. by domestic economic adversity and U.S. economic 
demands.  Calderon will appreciate your recognition of the 
contributions Mexicans make to our economy and your 
commitment to immigration reform. 
 
A PRESIDENT WITH INCREASING POLITICAL CAPITAL 
 
¶9. (SBU) The change in atmospherics between the Fox and 
Calderon administrations has been evident from Calderon's 
first day in office, and he has restored to the presidency an 
aura of authority that many believe was eroded by President 
Fox's more informal and disengaged manner.  Although Calderon 
won election with a bare 36% plurality in a three-way race, 
the latest opinion polls show that 58% of Mexicans approve of 
his performance to date.  Nevertheless, the political climate 
remains conflictive, with a congress closely divided between 
the president's right-of-center Political Action Party (PAN), 
the leftist Democratic Revolutionary Party (PRD), and the 
left-of-center Institutional Revolutionary Party (PRI). 
Although support for defeated PRD presidential candidate 
Andres Manuel Lopez Obrador (AMLO) has waned and his party is 
split, Mexico's left can still mount noisy opposition to 
Calderon and energize opposition legislators to stall key 
reforms here. 
 
A PROMISING ECONOMY IN NEED OF REFORM 
 
¶10. (SBU) Our major economic interests stem from four areas: 
Over USD one billion a day in bilateral trade in goods and 
services, much of which passes through overtaxed facilities 
along our common border; our need to improve competitiveness 
in North America; Mexico's position as our second largest oil 
supplier; and Calderon's stated goal of economic development 
to stem migration from the poorest parts of Mexico.  We seek 
to quietly encourage Mexico to reduce barriers to the flow of 
legitimate trade across our common border, promote 
competition, reform its energy sector, professionalize its 
bureaucracy, strengthen education, fight poverty, and create 
jobs.  Mexican leaders understand what needs to be done but 
are often blocked by vested interests, such as labor unions 
and business oligopolies.  We will be most effective by 
sharing best practices, helping set the Mexican policy stage 
for needed actions, and providing technical assistance. 
 
¶11. (SBU) Mexico grew by 4.8% in 2006 following 3% growth in 
¶2005.  Analysts expect inflation to remain under control in 
the current 3-4% range.  We agree with Finance Minister 
Carstens that Mexico needs broad reform to improve tax 
collection, reduce reliance on oil income, confront growing 
pension liabilities and payments on government borrowing 
outside the federal budget, and provide needed spending on 
poverty alleviation, education, health, and infrastructure to 
develop the poorest parts of Mexico.  Carstens, who will pick 
his battles carefully and is unlikely to take on some of the 
entrenched monopolies in the near term, has asked for U.S. 
technical assistance.  President Calderon has also called for 
-- and is likely to raise with you -- expanding the mandate 
of the North American Development Bank in order to channel 
infrastructure investment to the areas of Mexican 
out-migration. 
 
MEXICO 00001102  003 OF 003 
 
 
 
BORDER - KEY TO COMPETITIVENESS 
 
¶12. (SBU) The private sector North American Competitiveness 
Council had it right when they told the February 2007 
Security and Prosperity (SPP) Ministerial that their top 
priority was "improving the secure flow of goods and people 
within North America."  Facilities along the U.S.-Mexico 
border must be improved significantly to securely accommodate 
current trade levels and expected future growth.  We can and 
must accomplish this without compromising security by, inter 
alia: extending and/or synchronizing operating hours at U.S. 
and Mexican border crossing points; sharing best practices; 
cutting back on redundant inspections; employing new 
technologies to track and speed the secure movement of cargo; 
identifying critical infrastructure investments needed on 
both sides of the border; and involving the private sector to 
make the North American supply chain more secure and 
efficient. 
 
ENERGY - REFORM NEEDED TO AVERT DECLINE 
 
¶13. (SBU) After Canada, Mexico is the largest source of U.S. 
oil imports.  We therefore have a strong strategic interest 
in continued stable supplies of Mexican oil.  Within Mexico, 
energy is an extremely sensitive topic tied to national 
sovereignty, but the energy sector requires difficult reforms 
urgently.  Because the Constitution prohibits private 
investment in many areas of the energy sector, the government 
must provide the tens of billions of investment dollars that 
the state oil monopoly Pemex needs. The current system will 
not withstand an expected steep drop in Mexican oil 
production, or a fall in oil prices.  President Calderon, a 
former Energy Secretary, is looking at how to head off the 
expected drop in oil production. 
 
CLOSING 
 
¶14. (SBU) Your visit early in the Calderon presidency will 
demonstrate our support for a serious leader whom we expect 
will be among our closest hemispheric allies, reaffirm our 
security-related priorities and our continued commitment to 
the SPP framework, and ensure that our relationship with 
Calderon's government enjoys early momentum.  Your presence 
here will also lay the groundwork for smooth communication 
with a sometimes sensitive neighbor, sending a broad signal 
that we are committed to working together to advance the 
shared interests and address the common problems of our 
increasingly linked countries. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
GARZA