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DE RUEHME #1031/01 0991822
ZNR UUUUU ZZH
P 081822Z APR 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 1291
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RHMFIUU/CDR USNORTHCOM
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RHEHNSC/NSC WASHINGTON DC
RUEHXI/LABOR COLLECTIVE
RUEHSN/AMEMBASSY SAN SALVADOR 2563
RUEHGT/AMEMBASSY GUATEMALA 3675
RUEHZP/AMEMBASSY PANAMA 2294
RUEHBE/AMEMBASSY BELIZE 0029
RUEHTG/AMEMBASSY TEGUCIGALPA 1751

UNCLAS SECTION 01 OF 07 MEXICO 001031 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR A/S SHANNON 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA, AND DRL/AWH 
STATE FOR EB/ESC MCMANUS AND IZZO 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD 
TREASURY FOR IA (ANNA JEWEL, LUYEN TRAN) 
NSC FOR RICHARD MILES, DAN FISK 
STATE PASS TO USTR (EISSENSTAT/MELLE) 
STATE PASS TO FEDERAL RESERVE (ANDREA RAFFO) 
DOE FOR INTERNATIONAL AFFAIRS KDEUTSCH AND ALOCKWOOD 
DOT WASHDC FOR DAVID DECARME 
 
E.O. 12958: N/A 
TAGS: ECON SENV ELAB EFIN PINR PGOV MX
SUBJECT: Presidential Advisors Discuss CalderonQs Social 
Development Efforts, including Education 
 
REF: (A) Mexico 944 
     (B) Mexico 13 
 
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Summary 
------- 
 
¶1. (SBU) On April 6, President Calderon once again 
publicly explained how fighting poverty is the top 
economic goal of his Administration. In Ref A, Post 
explains President CalderonQs overall strategy for 
alleviating poverty, which includes macroeconomic 
stability, increased trade and foreign investment, 
improved competitiveness and infrastructure, structural 
reform and social development programs. On April 4, 
Econoffs met with members of CalderonQs Qsocial cabinet 
to discuss social development efforts. Dr. Liliana Meza, 
Technical Secretary for the Social Cabinet, described the 
effort as Qinvesting in peopleQ in order to make the poor 
economically productive members of the labor force, while 
providing all Mexicans a minimum floor of assured 
welfare. Since this effort requires education reform, 
Meza said the President and had met with the leader of 
the politically powerful teachersQ union (SNTE) Elba 
Esther Gordillo, and Education Minister Josefina Vasquez 
Mota to discuss an agreement on education reforms. A key 
goal of social development, Meza said, was to eliminate 
Qfood-based povertyQ by 2030.  (Comment:  Currently 14.4 
million Mexicans, 13.8% of the population, do not earn 
enough to meet basic nutritional needs. End Comment) 
Meza also described how reforestation programs promote 
rural development, and made a pitch for the United States 
to join European countries in seeking carbon emission 
offsets by supporting reforestation in Mexico.  End 
Summary 
 
------------------------------------------- 
Calderon Again Pledges to Alleviate Poverty 
------------------------------------------- 
 
¶2. (U) In an April 6 speech in San Juan Chamula, Chiapas, 
one of MexicoQs most representative indigenous 
communities, President Calderon again discussed the 
priority he places on alleviating poverty. He said 
Qsocial developmentQ was the centerpiece of his 
Administration, with the ultimate goal being that all 
Mexicans, regardless of their ethnic origin or native 
language, should be assured that there will not be a lack 
of food on their table, that their children will be able 
to attend school, and they will have access to medicine, 
hospitals and doctors. Calderon stressed his commitment 
of providing MexicoQs most vulnerable with education, 
housing, health, water, infrastructure, job 
opportunities, and a better income. His speech also 
stressed the importance of protecting the environment and 
the countryQs forests and jungles. 
 
------------------------------------------- 
CalderonQs Social Cabinet Lays out the Plan 
------------------------------------------- 
 
¶3. (U) On April 4, Econoffs met with CalderonQs social 
cabinet, led by Dr. Liliana Meza, the Social Cabinet 
Technical Secretary.  Also attending were Dolores Nieto, 
 
MEXICO 00001031  002 OF 007 
 
 
Director for Agricultural and Livestock Policy; Luis 
Villanueva, Coordinator for Social Policy; and Enrique 
Mezo, Head of the Department for Agricultural Policy. 
Meza explained that social development has been a 
priority for Calderon since his Presidential campaign, 
and now Qsocial policyQ and Qequal opportunityQ were main 
pillars of the National Development Plan for 2007-2012 
(Ref A). Overall, she said the goal was to invest in 
people so that all Mexicans have equal opportunity to 
obtain adequate nutrition, housing, health care and 
economic security for their families. A key specific goal 
was to eliminate Qfood-based povertyQ by 2030. 
 
---------------------------------------- 
Escaping Poverty Starts with Health Care 
---------------------------------------- 
 
¶4.  (U) Part of the effort to achieve equality of 
opportunity, Meza noted, was the pledge Calderon made in 
his inaugural address that every child born during his 
Administration would have health insurance. To do this, 
Calderon expanded former President FoxQs QPopular Health 
InsuranceQ program (Seguro Popular)(Ref A) to create the 
QHealth Insurance for a New Generation.Q She said the 
ultimate goal was for all Mexicans to have health 
insurance by the end of the Calderon Administration in 
¶2012. 
 
¶5. (U) Responding to criticism from the Central Bank 
Governor (Ref A), and some industrial sectors that 
government health programs motivate people to remain in 
the informal sector of the economy where they do not pay 
social security or other taxes, Dr. MezaQs colleagues 
said it was easier for poor people to overcome poverty if 
they had health coverage. Meza explained that these 
health programs are critical to supporting other social 
development efforts, such as the QOportunidadesQ program, 
which directly tackle poverty (Ref A). She said the 
Administration was aware that even for families receiving 
support from existing social development programs, a 
catastrophic illness can wipe out a familyQs savings, 
forcing them to pull children out of school, and pushing 
the family into poverty. Health insurance programs also 
improve educational opportunities for children, she said. 
If families have health coverage, they do not need to 
spend the little money they earn on health, but in 
sending their children to school. 
 
--------------------------------------------- --------- 
Goal of Universal Pensions Requires Energy and Tax Reform 
--------------------------------------------- --------- 
 
¶6.  (SBU) Meza said CalderonQs pledge to provide Qequal 
opportunityQ for all Mexicans extended to providing them 
financial security. This in turn, she explained posed the 
Qgreatest challenge,Q providing all Mexicans retirement 
pensions regardless of where they worked. She noted that 
reform of state oil monopoly PEMEX and further fiscal 
reform would be needed to generate sufficient revenue, 
and that so far there is no political consensus on how to 
handle even indirect taxes, such as the value-added tax. 
She explained that the Administration was making some 
progress on financial security for all by expanding 
government health insurance for the elderly. 
 
MEXICO 00001031  003 OF 007 
 
 
 
--------------------------------- 
Day Care Needed to Escape Poverty 
--------------------------------- 
 
¶7. (U) Another measure cited by Meza to alleviate poverty 
was the establishment of over 6000 day care centers. 
Previously, she explained government-provided day care 
was only available to workers in privileged sectors of 
society, such as workers for the state oil monopoly 
PEMEX, and workers of the social security institute for 
government workers (ISSSSTE).  The Calderon 
Administration realized that poverty levels decline when 
both spouses work, and therefore has expanded government 
day cares to help women enter the labor market. Overall, 
she said, from 1994 through 2008, womenQs participation 
in the labor market grew from 30 to 50%. 
 
----------------------------------------- 
Building Human Capacity the Critical Step 
----------------------------------------- 
 
---------------------------- 
Education Reform on the Way? 
---------------------------- 
 
¶8.  (U) Dr. Meza explained that the ultimate goal is to 
develop the capacity of MexicoQs poorest people so they 
can move beyond government social development programs 
into decently paying jobs. To do that, she said the 
Administration is trying to tie social and education 
programs in rural and urban areas to the needs of the 
labor market.  She said that reforming basic education 
alone was not enough to increase the capacity of MexicoQs 
labor force. Instead, the government was working to 
improve technical training, use of the internet and 
reform middle-school and high school/university education 
to link it to the needs of the labor market. With the 
support of business chambers and universities, the 
government is working to link education programs to the 
countryQs the most-demanded jobs. The government has also 
begun to foster development of those technical careers 
that are currently in more demand and could help young 
Mexicans to insert more easily to the global labor 
market.  Meza said current government efforts include 
facilitating the issuance of education scholarships, in 
particular for high school and university education. 
 
¶9. (SBU) Meza claimed the politically powerful teacherQs 
union, The National Union of Education Workers (SNTE), 
was Qwell disposed to cooperateQ in this effort. She said 
on April 2, Calderon and his Education Minister Vazquez 
Mota met with SNTE President Gordillo to discuss 
education reforms. Meza claimed Gordilla had had no 
problems with the measures being discussed. Meza opined 
that she hoped Mexico had Qturned the corner on this 
binding constraintQ of the teacherQs union blocking 
education reform. She noted that if Mexico failed to 
prepare its people to be part of the world economy, 
MexicoQs polarization would deepen, bringing economic and 
social problems. (Comment:  The communique issued by 
CalderonQs office about the meeting seemed carefully 
worded. It said Calderon had called Gordillo and Vasquez 
Mota to meet him in order to Qdialog and construct an 
 
MEXICO 00001031  004 OF 007 
 
 
agreement to promote education,Q and to design a Qshared 
strategy between the government, society and teachers to 
allow a significant increase in the quality of 
education.Q The communique said this agreement would be 
the basis for a fundamental transformation of the 
education sector, and that Calderon told Gordillo and 
Vasquez Mota he would be waiting for them to present 
specific initiatives to improve the quality of education. 
While it was a significant accomplishment for Calderon to 
get Gordilla to the same table with him and Vasquez Mota 
to discuss education reform, Post has not yet seen 
indications that Gordilla is willing to support education 
reform. End Comment) 
 
------------------------------- 
Financial Services for the Poor 
------------------------------- 
 
¶10. (U) Meza said another means to bring the poor into 
the productive economy was through expanding their access 
to credit and other financial services. Since the 
government lacked resources to directly develop savings 
and lending for the poor and micro-businesses, Meza said 
it used programs like the QCompartamosQ (LetQs Share) to 
facilitate development of non-government organizations 
and the private credit market (Ref A). (Comment: 
Compartamos was a non-profit organization that became a 
for-profit bank focused on micro-lending.  In order to 
ensure a sustainable means for expanding financial 
services for the poor, the Mexican Secretariat of Economy 
has used loan capital and capacity-building to support 
non-government, private and cooperative groups that 
provide financial services to micro- and small-scale 
busineses and rural households. End Comment) Meza said 
such programs help small- and micro-businesses and rural 
households invest and grow economically by helping them 
establish a credit history. She explained that 
QSolidarity Guarantees,Q in which members of a group 
cross-guarantee each othersQ loans in place of 
traditional collateral, ensure the loans are repaid. 
(Comment: Many of MexicoQs most successful micro-finance 
institutions, such as Compartamos, Fincomun, Finca and 
AlSol, are also partners in USAIDQs ongoing micro-finance 
project, in which USAID partners with the public and 
private sector to expand access to financial services for 
the more than one million Mexicans who had previously 
been excluded from the traditional financial sector.  End 
Comment) 
 
¶11. (U) Noting the importance of promoting savings for 
the poor, Meza said the main reason Mexicans immigrate is 
lack of credit and social services. She said people 
migrated to obtain the capital needed to provide 
financial security for their families. 
 
---------------------------------------- 
Rural Development Through Re-forestation 
----------------------------------------- 
 
¶12. (U) Meza noted that each Cabinet Secretary was given 
a goal in promoting rural development, and each was 
tasked to identify their specialty regarding rural 
development, and to improve the efficiency and impact of 
their programs. She said government programs to stimulate 
 
MEXICO 00001031  005 OF 007 
 
 
development in rural and impoverished areas included 
Procampo (the rural development program described in Ref 
A) and QYoung Entrepreneurs,Q and reforestation. 
 
¶13. (U) Meza said QProArbolQ was among the most important 
environmental programs that Calderon has implemented. 
ProArbol seeks to reforest vast areas, and maintain 
existing forest cover. Through this program, she said the 
government pays peasants the cost of its land and an 
additional amount to motivate them to re-plant trees. 
(Comment: ProArbol supports peasants to maintain forest 
coverage by paying for environmental services, such as 
water, carbon and biodiversity; promoting sustainable 
productive forest management, soil restoration, fire 
prevention; as well as motivating local communities to 
replant trees. In the first year of the ProArbol program, 
Calderon promised to plant 250 million trees, fully one- 
quarter of the worldwide total the United Nations called 
for in 2007.  The government claims to have reached this 
goal. End Comment) Meza also discussed the program, 
Cuenca Forestal de Golfo,Q under which Mexico contributes 
to reducing carbon emissions thus becoming a Qlung for 
North America.Q She said European countries were already 
exchanging carbon credits by funding restoration of humid 
and temperate forests in Mexico. She opined that it would 
be natural for the United States to use Mexico to offset 
its carbon emissions, thus supporting CalderonQs efforts 
to protect the environment of North America as a region. 
 
--------------------------------------------- - 
Support to Marginalized Areas Meant to Compete with 
Central America 
--------------------------------------------- - 
 
¶14. (U) Meza provided some insight into CalderonQs 
recently announced support programs for marginalized 
areas of Mexico, described in Ref A. Meza said Mexican 
firms were about to leave for Central America seeking 
lower labor costs.  The Administration responded by 
asking these firms to work with the government to develop 
incentives to invest in marginalized areas of Mexico that 
had ample supplies of the low skilled labor offered in 
Central America. The measures were meant to help head off 
MexicoQs slipping competitiveness to Central America. 
 
--------------------------------------------- - 
Minimum Wage Not A Tool for Social Development 
--------------------------------------------- - 
 
¶15. (SBU) Econoff asked Meza about the debate each 
December/January over how much to increase MexicoQs 
minimum wage.  While the government and many business 
representatives favor keeping the minimum wage low in 
order to control inflation, unions call for increasing 
the wage (Ref B) claiming that the low minimum wage 
perpetuates poverty and immigration out of Mexico. Meza 
acknowledged that 18-20 percent of workers in Mexico earn 
less than two minimum salaries (roughly USD 10 a day), 
but said the minimum wage was a Qreference price,Q rather 
than a real price for labor. If wage levels were too low, 
she explained, market forces push wage levels upward 
regardless of the minimum wage. As for those who saw 
increasing the minimum wage as a panacea to poverty, Meza 
said it would be QfoolishnessQ to increase the minimum 
 
MEXICO 00001031  006 OF 007 
 
 
wage enough for a family of four or five to join the 
middle class. She explained that the minimum wage was 
established to stabilize the economy in the 1980Qs by 
resolving the crisis caused by rampant inflation and 
soaring foreign debt. Meza said that wages were low in 
Mexico because of market forces responding to the excess 
supply of unqualified labor. It was therefore important 
for the government to raise the productivity of the labor 
force.  Raising labor costs without increased 
productivity would only increase inflationary pressures, 
and continued macroeconomic stability was essential to 
reducing poverty in Mexico. 
 
------------------------------------ 
Importance of Macroeconomic Stability 
------------------------------------ 
 
¶16. (SBU) In echoing public statements by President 
Calderon and Finance Minister Carstens that macroeconomic 
stability is the pillar for development and poverty 
alleviation (Ref A), Meza noted that Mexico is barely 
recovering from the financial crises of 1995. The 
government must remain cautious in keeping government 
spending in line with revenues because of the devastating 
cost a financial crisis has in pushing more people into 
poverty. Thus, although the government recognizes the 
utility of further expanding the successful poverty 
alleviation program Oportunidades into urban areas, 
current revenues do not allow such expansion. Instead, 
Calderon is trying to coordinate and realign efforts to 
spend public resources more efficiently and improve the 
impact of the existing social programs while maintaining 
economic stability despite the threat of a possible U.S. 
recession. 
 
----------------------------- 
Importance of Public Security 
----------------------------- 
 
¶17. (U) In a television interview following the 
PresidentQs April 6 speech, Secretary of Social 
Development, Ernesto Cordero explained that CalderonQs 
announcement that social development was the center piece 
of his Administration did not mean he would disregard the 
fight against drug trafficking. Cordero said the 
Administration understands that Mexico requires 
integrated and coordinated actions for law enforcement 
and social development. CalderonQs social development 
team highlighted this connection during the April 4 
meeting with Econoffs. Villanueva noted that at the start 
of his Administration Calderon launched QLimpiemos 
MexicoQ (QLetQs Clean Up MexicoQ), to combine efforts to 
combat insecurity and foster social development. The plan 
consists of rescuing public spaces from criminals, and 
making them secure. Such efforts included sending the 
military into areas where local law enforcement has been 
unable to combat drug traffickers, combined crime 
prevention and social development efforts focused on 
cities with high crime rates. 
 
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Comment 
------- 
 
 
MEXICO 00001031  007 OF 007 
 
 
¶18. (SBU) While there are critics who accuse Calderon of 
using the social policy as a governmentQs flag for 
electoral purposes, in particular for the upcoming 2009 
mid-term elections, there is no doubt that social 
programs, such as Oportunidades, have helped reduce 
poverty.  However, it is also true that these sometimes 
scattered efforts must be better coordinated to improve 
their impact and effectiveness, not only to alleviate 
poverty and provide more opportunities to the population, 
but also to reduce the incentive to migrate to the U.S. 
by giving Mexicans the access to education they need to 
find a decent job. 
 
¶19. (SBU) As noted in Ref A, bringing the poor into the 
productive labor force also requires structural economic 
reforms to obtain the resources the government seeks to 
Qinvest in people,Q to create an education system that 
produces productive workers, and to transform Mexico into 
a competitive economy able to provide sufficient jobs for 
its people. End Comment. 
 
 
GARZA