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UNCLAS SECTION 01 OF 04 MEXICO 004816 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR A/S SHANNON 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OIA, AND DRL/AWH 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD 
TREASURY FOR IA (ALICE FAIBISHENKO) 
NSC FOR RICHARD MILES, DAN FISK 
STATE PASS TO USTR (EISSENSTAT/MELLE) 
STATE PASS TO FEDERAL RESERVE (CARLOS ARTETA) 
 
E.O. 12958: N/A 
TAGS: ECON EINV ELAB EFIN PINR MX
SUBJECT: REALISTIC VIEW OF CHALLENGES IN STATE OF UNION 
ADDRESS 
 
 
Summary 
------- 
 
¶1. (U) On September 2, President Calderon presented his 2007 
State of the Union Address (Informe) at the Palacio National. 
 The Informe covered rule of law and security, competitive 
economy and job creation, equal opportunity, sustainable 
development, effective democracy and responsible foreign 
policy.  Calderon highlighted his administration's 
accomplishments and emphasized the need for public support 
for the changes necessary to build a better nation. 
 
Introduction 
------------ 
 
¶2. (U) Calderon presented the written version of his 2007 
Informe to Congress on September 1 and spoke publicly the 
following day at the Palacio National.  He began his speech 
with a call to change the format of the yearly address to a 
debate as opposed to a presentation format.  He also recalled 
 the five fundamental areas of his government's focus, which 
also served as the main topics for his address: rule of law 
and public security, competitive economy and job creation, 
equal opportunities, sustainable development, effective 
democracy and responsible foreign policy. 
 
Rule of Law and Security 
------------------------ 
 
¶3. (U) Calderon praised the efforts of the Secretariat of 
Public Security (PGR) and the Army in combating 
narcotrafficking.  Thanks to their efforts, the government 
has been able to gain ground against organized crime.  Over 
10,000 people linked to the drug trade have been captured, 
including 20 of the biggest drug lords in the country. 
Mexico has successfully extradited the most dangerous 
kingpins to prevent them from controlling the trade from 
jail. 
 
¶4. (U) Calderon acknowledged that part of the problem with 
drug trafficking is the impunity criminals enjoy.  He drew 
attention to the National Evaluation and Confidence Control 
Center, created by the government to combat corruption in 
police forces and spoke about the "Plataforma Mexico" program 
which will create a single criminal information center 
interconnected via a national network including voice, data, 
and images.  He also mentioned the proposal he sent to 
Congress that would modernize security laws and institutions 
by providing the police more tools to conduct their 
investigations and expand the rights of victims in 
proceedings.  Calderon reminded the audience that the war 
against organized crime will be long and hard but is 
essential to decreasing the threat to Mexico's peace and 
security. 
 
Competitiveness and Job Creation 
-------------------------------- 
 
¶5. (U) Calderon noted how his government has been able to 
control inflation and maintain low interest rates and 
macroeconomic stability.  Despite the recent financial 
volatility worldwide, Mexico has been stable, enjoying a low 
country-risk premium -- the lowest level ever recorded was in 
June 2007.  He reported that international reserves currently 
total USD 71 billion and that during the first half of the 
year, FDI totaled USD 13.2 billion, a reflection of investor 
confidence in Mexico.  He boasted that the government created 
618,000 formal jobs since January 1. 
 
¶6. (U) Calderon acknowledged that neither economic stability 
nor the current levels of economic growth are sufficient to 
alleviate Mexico's poverty problem.  He emphasized the 
importance of public and private investment to achieve 
sustainable growth and job creation.  To improve the 
country's competitiveness and productivity, the government 
needs to channel the additional investment toward 
 
MEXICO 00004816  002 OF 004 
 
 
infrastructure projects that improve the country's logistics. 
 He highlighted the National Infrastructure Plan and his 
administration's goal to provide Mexicans with better water 
and electricity services, while improving transportation and 
communication networks to stimulate the economy.   He also 
highlighted "Promexico," a government agency created to 
promote exports and attract more investments.  He mentioned 
how the government has revamped its processes to channel 
financing to small and medium enterprises (SME) through a 
special SME fund and the national financing agency, NAFIN. 
He also emphasized government efforts to increase the 
competitiveness of Mexican farmers, including 176 billion MXP 
(USD 16 billion) in special support programs to help farmers 
handle the opening of the bean, milk, sugar, and corn sectors. 
 
¶7. (U) Calderon described the approval of public sector 
pension reform as an important success in making public 
finances viable over the long term.  Calderon praised 
legislators, help in approving support for the elderly and 
for the Seguro Popular, which provides health services to 
those not covered by private or public sector social security 
programs.   He stressed the need for additional fiscal, 
labor, education and telecommunication reforms.  He warned 
that public finances are threatened by the predicted decline 
in oil revenues.  Proven reserves will last for only nine 
years, and daily production has declined by 200,000 barrels. 
In light of this, he insisted on the approval of fiscal 
reform.  He said that he was convinced that consensus could 
be achieved to pass the needed reforms. 
 
Equality of Opportunity 
----------------------- 
 
¶8. (U) Calderon stressed his commitment to closing the gap 
between rich and poor.  Currently, 40% of Mexicans live in 
poverty.  More than 14 million Mexicans are living in extreme 
poverty, and 10 million do not have access to potable water. 
He praised government efforts that have helped to reduce the 
number of Mexicans living in extreme poverty by 20 million 
over the last 10 years and said that government programs will 
have proven successful if the trend continues in the coming 
years.  The fiscal reform that he sent to Congress in June 
would very much help to alleviate poverty.  He promised to 
analyze the existing social programs and eliminate those that 
are ineffective while improving the others. 
 
¶9. (U) Calderon highlighted a number of steps his 
administration has taken to improve the life of the country's 
poorest citizens.  Oportunidades, the most important social 
program in the Calderon administration, reaches 5 million 
families -- one in four Mexicans.  In addition to health, 
food, and education assistance, the government also provides 
subsidies for electricity and domestic gas.  The government 
has invested 4.7 billion MXP (USD 427 million) in the "100 X 
100" program.  This program provides support to the 100 
poorest municipalities, the majority of which are indigenous. 
 In education, the government is focusing its attention at 
the high-school and university level.  The government has 
also provided more than 1 million scholarships for 
high-school students and 347,000 for college and university 
students.  Calderon pointed out that increasing the coverage 
and the quality of teachers is the government's next 
challenge.  He praised his Health Insurance for a New 
Generation and the Popular Insurance program as steps toward 
achieving universal health coverage and the "70 and Older" 
and the "Childcare Centers for Working Mothers" programs for 
helping the underprivileged elderly and children. 
 
Sustainable Development 
----------------------- 
 
¶10. (U) Calderon described protecting the environment as an 
issue of national security.  The Mexican government has 
prepared a national strategy on climate change to reduce 
greenhouse gas emissions and foster the development and use 
of alternate energy sources.  The protection of water 
 
MEXICO 00004816  003 OF 004 
 
 
sources, mainly in urban areas, is another high priority. 
The government has increased the number of protected natural 
areas which currently represent 12% of the total territory. 
Calderon maintained that overcoming poverty and caring for 
nature are linked. 
 
Effective Democracy and Responsible Foreign Policy 
--------------------------------------------- ----- 
 
¶11. (U) Calderon praised Congress for demonstrating the 
political will to approve needed reforms.  The government 
appreciates the importance of constant dialogue with the 
existing political forces.  He praised the relationship the 
federal government has with the state governors.  With regard 
to human rights, Calderon said that his government has been 
and will continue to be open politically.  He understands 
that the country's democracy needs to improve and modernize, 
but that political actors must first have the political will 
to negotiate and be subject to increased transparency and 
responsibility.  He has been following the discussions 
regarding the electoral reform and is in favor of shorter, 
less expensive political campaigns, as well as a level 
playing field for all candidates. 
 
¶12. (U) Calderon said that a challenge for the government 
will be to strengthen Mexico's international position while 
exercising a responsible foreign policy.  He has instructed 
the Secretariat of Foreign Affairs to promote Mexico abroad 
and to attract more investment to Mexico, using the term 
"more Mexico in the world, and more of the world in Mexico". 
He said that Mexico needs to increase its international 
leadership, beginning with Latin America.  Calderon said that 
the Mexico needs to increase open markets for its products on 
each continent.  He announced that his government has 
nominated Mexico for a non-permanent seat on the UN Security 
Council. 
 
¶13. (U) Calderon remarked that during the SPP leaders, 
summit, he stressed that the three countries should use the 
regional advantages they have to compete globally, without 
hurting sovereignty, while resolving migration, organized 
crime, and investment issues.  Calderon criticized U.S. 
immigration policies dealing with the persecution of illegal 
Mexican migrants in the U.S.  The Mexican government will 
continue to push for a comprehensive migration reform. 
 
Comment 
------- 
 
¶14. (U) The Informe contained nothing that has not been said 
before.  Calderon explained that he will continue his fight 
against organized crime; his push for reform, development, 
and equality; and his drive to gain Mexico a larger role in 
global affairs.  Notably absent was mention of the cross 
border trucking program, which the GOM had hoped to highlight 
as a success for North American competitiveness.  Also, 
immigration constituted a mere one paragraph mention in the 
course of the 15-page address. 
 
¶15. (U) Many opinion makers agree with Calderon's call for a 
dialogue and debate to replace the long standing tradition of 
the president presenting his State of the Union Address to 
Congress without any opportunity for the latter to respond. 
They complain that the Informe has become only a list of 
statistics and that Mexico requires a fuller debate to tackle 
its problems.  Currently, no mechanism exists to guarantee 
the level of civility required to adopt a new system. 
 
¶16. (U) The majority of the population has a positive opinion 
of the President and his administration.  He is seen as a 
capable politician and, despite the divided Congress, was 
able to deliver his speech in front of Congress without 
interruption - more than can be said for Fox in his last two 
years.  Some opinion makers, however, complained that the 
lack of media coverage of the PRD representative's comments 
at the presentation before Congress was reminiscent of the 
 
MEXICO 00004816  004 OF 004 
 
 
cloaking that occurred during the days of the PRI's reign. 
The address itself was directed at highlighting all the good 
things the administration has done, while at the same time 
placing a strong emphasis on the additional things that need 
to be accomplished to guarantee a bright future for Mexico. 
It was a fairly realistic assessment of Mexico's challenges. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA