VZCZCXRO6310
RR RUEHCD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHGD #0365/01 1991810
ZNR UUUUU ZZH
R 181810Z JUL 07
FM AMCONSUL GUADALAJARA
TO RUEHC/SECSTATE WASHDC 0300
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHME/AMEMBASSY MEXICO 1534
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEHGD/AMCONSUL GUADALAJARA 4332

UNCLAS SECTION 01 OF 02 GUADALAJARA 000365 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN MX
SUBJECT: GOVERNMENT PROGRAMS TO HARNESS REMITTANCESS HAVING MIXED 
RESULTS IN RURAL JALISCO 
 
REF: GUADALAJARA 327 
 
GUADALAJAR 00000365  001.2 OF 002 
 
 
Summary 
 
¶1. In the last seven years the GOM has attempted to harness the 
power of the billions of dollars remitted from migrants in the 
U.S. via socioeconomic development programs.  Two specific 
programs are Tres Por Uno (Three for One) and Proyectos 
Productivos (Productive Projects), formed by migrant clubs in 
the U.S.  For every peso remitted, the federal, state and local 
governments each add an additional peso, turning one peso in Los 
Angeles into four pesos on the ground in Mexico.  In rural 
Jalisco state the programs have seen both success and failure. 
Tres Por Uno, which focuses on funding infrastructure, appears 
to have less impact on the root cause of migration-lack of 
economic opportunity.  The newer Proyectos Productivos appears 
to have potential to generate economic opportunity for those 
most apt to migrate north.  The programs also have ancillary 
economic results, as businesses sprout up to support phases of 
the projects.  While the programs are intended to better the 
lives of Mexicans, they appear to have little effect on the 
flood of migrants rushing north. 
 
Migrants go north, cash goes south 
 
¶2. Mexico received an estimated $23 billion in remittances in 
¶2006. That's a 15% increase from 2005, making remittances 
Mexico's second largest source of external finance behind 
petroleum.  Approximately 1.7 million Mexicans with Jalisco 
roots live in the US.  In turn rural Jalisco is particularly 
affected by the flow of migrants north and the flow of cash 
south. (reftel) 
 
Tres Por Uno 
 
¶3. The Tres Por Uno program began in Jalisco in 2001 as a way of 
capturing remittances for infrastructure projects in rural 
Jalisco. The program depends on migrant clubs in the U.S. to 
collect funds.  The program was established in the late 1990's 
in Zacatecas, one of the highest migrant-sending states in the 
country.  The program is named "three for one" because for every 
peso from a migrant club, the federal, state and municipal 
governments each contribute one peso.  The GOM uses the money 
for infrastructure projects such as an events center in Tonala, 
road improvements in Tala and water purification in the 
highlands.  Decisions as to what programs are to be funded are 
made by a committee composed of representatives of each 
contributor (club, federal, state and municipal).  Priorities 
are generally set by the municipalities. 
 
Proyectos Productivos 
 
¶4. Juan Carlos Lepe, a local official with the Secretary of 
Social Development, runs the Tres Por Uno and Proyectos 
Productivos programs in Jalisco.  He wants to increase economic 
opportunity in Mexico in order to stem the flow of migrants 
north.  Proyectos Productivos focuses on micro-regions, the GOM 
term for the most economically isolated regions in the country. 
Like Tres Por Uno, for every peso contributed by a club, the 
federal, state and municipal governments each contribute 
another.  Project beneficiaries also contribute a set amount 
based on the number in the group.  For example a group with one 
person must contribute 12,500 pesos, a group of six must 
contribute 75,000 pesos.  The money functions as a small 
business loan which is supposed to be paid back to the 
government. Mr. Lepe acknowledged that the GOM does not expect 
to get the money back and would rather see projects succeed. 
Participants must develop a business plan which is presented to 
a committee who decide which projects to fund. In Jalisco alone, 
the federal government will contribute up to US$550,000 to 
Proyectos Productivos in 2007. 
 
Migration in Capilla de Guadalupe - where have all the young men 
gone? 
 
¶6. Capilla de Guadalupe is a town of 21,000 in northeast 
Jalisco.  The principal of the local school told econoff that 
there are in fact no projects in the town because contributions 
go to Tepatitlan, the larger patron city in the region. He 
stated that 70% of his high school students are female, compared 
to 50% ten years ago.  He lamented that young men, starting at 
the age of 15, migrate to the U.S. for economic opportunity. 
 
Ancillary economic effects of Tres Por Uno and Proyectos 
Productivos 
 
¶7. Tres Por Uno and Proyectos Productivos have had ancillary 
economic effects in the U.S. and Mexican marketplace.  Media 
reports that in the past seven years, the average cost of 
sending a remittance has dropped to 3% of the total remittance. 
 
GUADALAJAR 00000365  002.2 OF 002 
 
 
Costs vary widely, with rural Jalisco residents paying more as 
the funds transit additional agents.  While the remittance 
market is dominated by small businesses, most large U.S. banks 
have begun accepting the Matricula Consular, the ID card issued 
by Mexican Consulates in the U.S.  This could increase 
competition.  In addition, the joint USG-GOM program "Directo a 
Mexico" has the ability to shift the remittance marketplace by 
reducing the cost of remitting.  In the program each central 
bank charges a fee of US$0.67 per remittance and then the bank 
branch charges a small fee.  It effectively cuts out the myriad 
of middle men involved in a traditional money transfer. 
Business plans are required for all Proyectos Productivos. An 
isolated but growing number of businesses are sprouting up to 
support business plan development. These businesses are focused 
on assisting program participants from their raw ideas through 
the formative years of the business.  The businesses provide 
access to accountants, subject matter experts and business 
consultants. The Jalisco government foots 50% of the bill for 
business plan development in order to cultivate opportunities 
for people at the margins of the program in regards to the 
initial investment. 
 
Comment 
 
¶8.  Tres Por Uno appears to be a zero sum game for illegal 
immigration.  A key flaw of the program is that it addresses 
infrastructure, creating short-term and unskilled jobs 
(construction, etc.). In addition, clean water or a new road, 
while necessary, do not motivate young people to stay in their 
towns and work when there are no jobs to be had.  Proyectos 
Productivos appears to have more potential to stem the flow of 
illegal immigrants and generate long term economic opportunity. 
In Jalisco there appears to be a genuine desire to create 
economic opportunity in the most isolated regions.  Success will 
depend on the federal, state and local governments' ability to 
run the program efficiently and equitably over the long term. 
 
 
 
 
MELZOW 
RAMOTOWSKI