IN TELEVISA FORUM, ANALYSTS JUDGE CANDIDATES

UNCLAS SECTION 01 OF 04 MEXICO 001124

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/MEX, WHA/EPSC
STATE PASS USAID FOR LAC:MARK CARRATO
TREASURY FOR IA MEXICO DESK: JASPER HOEK
COMMERCE FOR ITA/MAC/NAFTA: ANDREW RUDMAN

E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV PINR MX

SUBJECT: IN TELEVISA FORUM, ANALYSTS JUDGE CANDIDATES
PROPOSALS AS RADICAL (AMLO),COHERENT (CALDERON),AND VAGUE
(MADRAZO)


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SUMMARY
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1. (SBU) Mexican broadcaster Televisa created a TV program
in which a group of well-known and respected analysts and
think tanks study and comment on various proposals made by
the three main presidential candidates. The analysts
concluded that none of the proposals of the three
candidates would pose major risks to the countrys economy,
but found Andres Manuel Lopez Obrador (AMLO) to be somewhat
radical, Felipe Calderon coherent, and Roberto Madrazo
unclear and redundant. End summary.

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DIALOGUES FOR MEXICO
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2. (SBU) Televisa, one of the two main broadcasters in
Mexico, produced a show called Dialogues for Mexico aimed
at analyzing the various proposals made by the three major
presidential candidates. Televisa created a technical
committee that analyzed the proposals sent in writing by
the candidates. The technical committee is made up of
twelve prominent analysts and intellectuals, including Luis
Rubio, President of the Center of Research for Development
(CIDE),Luis de la Calle, former NAFTA negotiator and
current Director General of a consulting firm; and Jesus
Reyes Heroles, CEO of Associated Economists Group (GEA).
The candidates answered a questionnaire on the economy,
combating poverty, education, health, public security, and
legal certainty. The candidates were also provided time to
present, in different shows, their proposals to a panel of
three members of the technical committee. A group of
analysts and specialists in different areas of public
policy then commented on the candidates proposals.

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AMLOS CONTRADICTORY OFFERS
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3. (SBU) Andres Manuel Lopez Obrador (AMLO),of the Party
of the Democratic Revolution (PRD),tried to assuage
concerns over his position on state intervention in the
economy. He said he believed in a balance between the
governments social responsibility and the countrys
development needs, and between public and private
investment to accomplish this. To the relief of those who
were questioning whether AMLO was going to be more like
Brazils Lula or Venezuelas Chavez, AMLO mentioned that
Mexico could learn from Chile, which has a strong record of
economic development and social justice.


4. (SBU) However, AMLOs various contradictory statements
ements
and unclear proposals that seemed to focus on vast
government spending programs have some worried. In a
comment typical of AMLOs contradictory statements, he told
the analysts that he would say yes to globalization, but
as long as national producers were protected. AMLO stated
that he would promote transparency first by respecting the
law, second by providing information to the public if
requested, and third by making government officers
earnings and assets public. A lynchpin of AMLOs plan is
to generate savings of up to 1.5% of GDP by eliminating
corruption and waste in government expenditures. AMLO said
he would also eliminate many high-level government jobs for
a savings of MP 100 billion (hes not clear as to whether
this figure is included in the 1.5% figure he has also
cited). Analysts challenged AMLO, saying that elimination
of 8,000 government positions (analysts estimate of the
potential number of high-level jobs to be eliminated) would
) would
yield savings of just MP 16 billion, even at MP 2 million
per job per year. AMLO responded, implausibly, that the
other MP 84 billion would come from eliminating benefits
and privileges.


5. (SBU) AMLO would like to channel these savings to
poverty-reduction and public works programs. AMLO has
focused much of his attention on economic development in
southern states. Among his ideas is a plan to plant a

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million hectares of trees in order to stop importing wood
and provide employment in communities in Oaxaca, Chiapas,
Veracruz, Tabasco, Campeche, and Quintana Roo. In
addition, AMLO would invest heavily in infrastructure in
the southern parts of the country. Another AMLO priority
will be the continuation of his pension program for senior
citizens and scholarships for the working poor.

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AMLOS ENERGY, TAX, AND PENSIONS REFORMS
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6. (SBU) When asked how he would reduce energy prices and
d
how he would compensate Pemex for mandated reductions oil
transfer prices (the price at which Pemex Exploration sells
crude oil to Pemex Refining),AMLO was unclear and
responded that he would construct refineries to stop
importing gasoline. On the fiscal reform issue, AMLO said
he would restructure the government, eliminate corruption,
combat existing tax evasion, and bring the informal economy
into tax compliance by simplifying the procedure to collect
taxes. Taxpayers would be audited through a random
mechanism. Then, he would summon a democratic forum to
examine how to reform fiscal policy (disregarding the
recommendations generated by the National Fiscal Convention
that took place two years ago, most of which were ignored).
AMLO also plans to help ease the public pensions crisis by
eliminating pensions for former presidents. AMLO is
confident that he could reform the Mexican Social Security
Institute (IMSS) pension system and federal government
workers (ISSSTE) pension system by reaching agreements with
unions and workers, something the current administration
has failed to accomplish.

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CALDERONS FIVE MAIN PROPOSALS
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7. (SBU) National Action Party (PAN) candidate Felipe
Calderon has based his campaign on five themes: rule of law
and public security; a competitive economy; equal
opportunities for all; sustainable development; and a
transparent and democratic political system. For Calderon
the priorities would be the rule of law, infrastructure
with new highways and a housing program using public and
private resources, and health and education services for
everyone. To make the economy more competitive, Calderon
favors: private investment in the energy sector; a lower
general flat tax rate for consumption and income,
eliminating tax exemptions; and a more flexible labor
market. To accomplish needed consensus in Congress, he
would create a coalition government and will work on an
alternative agenda that doesnt need Congressional
approval, in case he cannot pass needed reforms through
Congress.


8. (SBU) Calderon expressed to the analysts his belief in
free markets. While he acknowledged the governments
regulatory role, he would like to reduce the regulatory
burden on individuals and businesses. To combat poverty,
Calderon would increase spending on health, education,
infrastructure, telecommunications, and basic services for
rural areas, using increased revenues to be gained through
comprehensive fiscal reform. He would continue Foxs
successful social programs and has pledged to maintain
macroeconomic stability.

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CALDERONS PENSION REFORM
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9. (SBU) Calderon proposes individualized pension accounts
for government employees, a proposal that has been on the
table during the current administration, but has failed to
to
pass congress. He will negotiate with unions, but has made
it clear that the national interest was above the narrow
interests of unions. Calderon proposes to raise the
minimum retirement age as one means of addressing large
pension shortfalls. He would also study possible
contingency plans to provide health services, should health

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care workers strike against modifications to their absurdly
generous contracts.

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MADRAZOS CHALLENGE
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10. (SBU) Institutional Revolutionary Party (PRI) candidate
Roberto Madrazos big challenge is to convince voters that
his party has changed and that the PRI is serious about
fighting corruption. To stimulate the economy, Madrazo
proposes comprehensive fiscal reform, combined with
increases in public investments. His main economic
proposals are infrastructure investments combining public
and private resources, investment in R&D, and a clear
fiscal policy (whatever that means). Madrazo promises to
to
control public deficits and inflation. Like AMLO, Madrazo
praised the Chilean model to combat poverty and said he
would continue Foxs housing program.

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WHICH REFORMS WOULD MADRAZO SUPPORT?
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11. (SBU) In his written proposal Madrazo mentions
structural reforms, but when analysts questioned him about
the PRIs reluctance to support those changes in Congress,
he alleged that PRI lawmakers didnt pass such reforms
because they didnt see a long-term vision from Foxs
administration. Madrazo said he would support labor and
energy reforms, but failed to elaborate more on his
proposals. Madrazo didnt address how he would gain the
support of unions (largely PRI creations and long-time PRI
supporters) to pass needed reforms. On pensions reforms,
he would maintain gained privileges, but would modify the
regime for new workers.

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ANALYSTS COMMENTS ON PROPOSALS
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12. (SBU) The analysts agreed that despite the written
documents sent by the three candidates and the interviews
held, the three candidates proposals are still very
general and lacking in detail. Felipe Calderon has been
the most explicit and coherent, while AMLO has been the
most radical, stating that the current economic model
should be modified. Madrazo has preferred playing it safe,
remaining vague while trying to portray himself as
centrist. Calderon clearly favors free markets, while AMLO
supports greater state intervention in the economy.
Madrazo purposely avoids elaborating further on his
positions so as not to offend any potential voters.


13. (SBU) Calderon is in favor of the big structural
reforms, while the other two candidates focus on less
controversial changes. None of them clearly explains how
he would finance their proposed investments in
infrastructure or on what projects and how they would
combine public and private resources. To raise government
revenues Madrazo and Calderon propose better tax
administration, while AMLO bets on the elimination of
corruption. All three candidates agree, unsurprisingly,
that the economy needs to improve. The most comforting
conclusion of this exercise is that the analysts didnt
find any major risks to economic stability in the
candidates various proposals and answers.

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COMMENT
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14. (SBU) This Televisa-led excerise was useful in
providing a relatively unbiased airing and assessment of
the candidates proposals. However, the conclusions
reached were not particularly surprising. Sadly, a central
conclusion that the proposals all lack needed details is a
fact of modern campaigns around the world. That none of
the candidates, based on their responses, poses a risk to

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economic stability is encouraging, but not necessarily an
optimistic assessment. This conclusion will likely most
help AMLO as he is the candidate most criticized for
policies that may be destabilizing for the economy. End
nd
Comment.
GARZA