MEXICAN CONGRESS DEMONSTRATES INDEPENDENCE, NOT

64799 2006-05-20 00:39:00 06MEXICO2711 Embassy Mexico CONFIDENTIAL 06MEXICO149|06MEXICO1716|06MEXICO2367 VZCZCXYZ0004 RR RUEHWEB DE RUEHME #2711/01 1400039 ZNY CCCCC ZZH R 200039Z MAY 06 FM AMEMBASSY MEXICO TO RUEHC/SECSTATE WASHDC 0914 INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE RUEHCV/AMEMBASSY CARACAS 1179 RHEHNSC/NSC WASHDC TAGS: PGOV PINR PREL MX C O N F I D E N T I A L MEXICO 002711 SIPDIS SIPDIS E.O. 12958: DECL: 05/11/2016 TAGS: PGOV PINR PREL MX SUBJECT: MEXICAN CONGRESS DEMONSTRATES INDEPENDENCE, NOT EFFICIENCY REF: A. A) MEXICO 1716 AND PREVIOUS B) MEXICO 149 ¶B. C) MEXICO 2367 AND PREVIOUS Classified By: POLITICAL MINISTER-COUNSELOR LESLIE A. BASSETT, REASONS: 1.4(B/D). ¶1. (C) SUMMARY: The final session of the 59th Congress ended on April 28, with the modest results that have become its hallmark under a divided government. Some, including Eduardo Perez Motta, head of the Federal Competition Commission (CFC) believe that the new competitiveness law will become the most significant law passed as time progresses and its effects are visible while others have been caught in the hype of the Radio and Television Law. The Congress also passed bills to strengthen the protection of personal information, to regulate Mexico's enormous private security industry. Opposition members of Congress continued to show strong interest in monitoring the Fox Administration's stewardship of foreign policy, a legislative prerogative that has gained significance in the era of divided government. Unlike in the days of one party rule, legislators themselves now generate the great majority of legislative initiatives, with bills introduced by the executive becoming an increasingly small minority. And while approximately 75% of the bills introduced by President Fox were approved, these were primarily relatively minor bills; the Congress approved virtually none of the pending structural reforms that formed the basis of President Fox's program of government and that both the PAN and PRI agree are necessary. END SUMMARY. Law Strengthens CFC Powers to International Standards -------------- -------------- ¶2. (U) Despite significant opposition to proposed changes to the competition law, CFC negotiated an agreement with the CCE (Mexican Business Coordination Council, an umbrella group of trade associations). This agreement became the basis for the new law passed April 25 in the Chamber of Deputies and April 27 by the Senate. The law is expected to be signed by President Fox and published in the near future (upcoming septel). The new law puts the CFC's authority on par with similar organizations in other countries, and allows the CFC to emit rulings over other regulatory agencies in Mexico, thus strengthening the relationship between the judiciary and the CFC. Although companies will still be able to appeal rulings, the time and cost involved will increase. ¶3. (SBU) CFC President Eduardo Perez Motta told Econ Minscouns and Econoff in a May 11 meeting that he believes the law will have significant long term effects including a decline in the number of appeals filed. He predicts Telmex and other private monopolies will have to change their business practices to avoid the penalties imposed by the new law. Sanctions under the law can be as high as 1,500,000 times the minimum salary in Mexico City or ten percent of the annual revenue of a company. Public monopolies, such as PEMEX and CFE (Federal Electric Commission) will also be regulated under the new competition law. Although they cannot be divided or sold, the law allows them to be sanctioned for acting as a monopoly in areas that are not of strategic importance (such as PEMEX's actions in gas distribution according to Perez Motta). Law on Radio and Television Steals the Show -------------- ¶4. (SBU) The Federal Law on Radio and Television ("media law") was the most controversial bill enacted during the current session. The media law, reportedly drafted largely by media giant Televisa, will give the Federal Communications Commission (COFETEL) regulatory and oversight authority over broadcasting issues. However it also provides, inter alia, that broadcasting frequencies henceforth will be allocated by public auction rather than by discretionary concession. Much of the controversy surrounding the law is that Congress, in its effort to quickly pass the legislation, left several loopholes and grey areas leading many to question how parts of the new law will be interpreted, applied, and enforced in the future. One question is whether existing broadcasters will be able to keep and utilize highly valuable digital spectrum freed up by Mexico,s digitalization process. Current broadcasters could have a significant advantage over new market entrants and competitors who have to pay for their spectrum. In addition, bidders will not have to wait for an opinion from CFC before submitting their bids in order to prevent media concentration. Given this, and the prohibition on foreign investment, dominant companies will have a distinct advantage in winning tenders. ¶5. (SBU) While we have already reported in detail on the substance of the law (ref A),a closer examination of the circumstances of its passage sheds light on the influence wielded in the Congress by powerful private interests. Although the average bill spends approximately six months in each house of Congress before winning approval, the media law was unanimously approved by the lower house last December in only 10 days (ref B). Although there was lively debate in the Senate, the bill passed on March 30 by a two-to-one margin primarily due to sponsoring Senators, promises to close the gaps with a follow-up bill which never passed. Weeks later, a group of 47 senators submitted a petition to the Supreme Court of Justice asking the court to find the law unconstitutional. Many Deputies and Senators only became aware of the details of the legislation after its passage provoked strong public outcry; PAN Senators Cesar Juaregui and Jesus Galvan told poloff they suspected that many of their colleagues had not even read the complicated bill before voting on it while many Deputies publicly admitted that they hadn,t read it. Juaregui intimated that the party leadership sought to push the legislation through as quickly as possible to minimize opposition. Politics Over Principle -------------- ¶6. (C) In fact, Senator Juaregui said that his party's support for the law -- and presumably that of the PRI -- was based largely on the fear that Televisa would carry through on its implied threat to accord poor campaign coverage to those opposing the law. Describing the law as a dirty trick ("porqueria"),Juaregui claimed that when PAN legislators had blocked quorum during a scheduled debate on the law, Televisa pulled all of Felipe Calderon's advertisements from the air that very same night, in a clear signal of how it would react should the bill not pass. Juaregui noted that he was one of the few members of his party who in the end withstood pressure from the party leadership and voted his conscience, against the law. In retribution, Juaregui alleges the PAN leadership removed him, a high-ranking member of his party's legislative faction, from the party's electoral list for the Chamber of Deputies in the July 2 election. Juaregui further claimed that President Fox himself was among those in the PAN who insisted that the party's legislative faction vote in favor of the bill, for fear of the electoral consequences of their failure to do so. Hints of Economic Nationalism -------------- ¶7. (SBU) Perhaps not surprising in an election year, a number of bills were introduced that were redolent of economic nationalism. For example, the Senate passed a bill that would give Mexicans preference over foreigners in certain bids for public contracts; it also passed a bill that would further restrict foreign investment which was later rejected by committee in the lower house. Both bills can be brought up during the new session in September, but significant changes would be needed to the proposed foreign investment legislation since the lower house committee filed an official rejection to the proposed legislation. Bills seeking to strengthen state control over energy resources were also introduced. Other Legislative Advances...and Setbacks -------------- ¶8. (SBU) PRI Senator Carlos Chaurand, one of the Senate's three vice presidents, told us that aside from the media law, he considered Congress's other major accomplishments this session to include (i) a law regulating private security companies, (ii) legislation protecting personal information (still in committee at the lower house),(iii) legislation strengthening guarantees of gender equality, and (iv) legislation seeking to strengthen Mexico's law on competition. ¶9. (SBU) Notwithstanding these modest achievements, Chuarand conceded that this final session of the 59th Congress had made no progress on the fundamental structural reforms that had been a cornerstone of the Fox Administration's legislative program, including fiscal reform, labor reform, justice sector and public security reform, and key energy sector reforms, to name but the most prominent. Moreover, the session left several significant loose ends: a law on federalism, seeking to return more federal revenues to the states, was passed by the Senate but remains pending in the lower house. Meanwhile, a highly controversial bill on drugs also remains in limbo (ref C). Although it has been passed by both houses of Congress, President Fox has indicated he has reservations about the bill, particularly the provision that effectively decriminalizes possession of small quantities of drugs for personal use. Senate Continues to Press Its Foreign Policy Prerogatives -------------- -------------- ¶10. (SBU) As one would expect in era of divided government, the Congress sought to enforce the Senate's constitutional right to "analyze" the Fox Administration's foreign policy. For example, the Chamber of Deputies approved a bill requiring Senate approval for any decision by the President to amend, modify, terminate or withdraw reservations of international treaties. The Senate showed a particular interest in monitoring the GOM's conduct of U.S.-Mexican relations: it requested Foreign Secretary Derbez to testify on the results of the March 2006 Cancun summit and on the Partnership for Security and Prosperity. The Senate considered a number of measures related to migration, approving a document entitled "Mexico Facing the Phenomena of Immigration" which for the first time recognized Mexico's "shared responsibility" for the problem of migration. Both houses of Congress enacted resolutions expressing support for migrants demonstrating in the U.S. A Look at Legislative Trends -------------- ¶11. (U) Analyzing the just-concluded legislative session, a recent article in Reforma identified several key trends: -- (U) Recent legislative sessions have witnessed a huge growth in the number of bills introduced by legislators, as opposed to by the executive. Whereas legislation initiated by the President accounted for 22% of all legislation introduced into the 56th Congress (1994-96),the last session in which the PRI enjoyed an absolute majority, legislation introduced by the executive branch in the 59th Congress accounted for less than 2% of all legislation introduced. The overall number of bills introduced rose dramatically from 250 in the 56th Congress to 2388 in the 59th Congress. -- (SBU) In absolute terms, the number of bills introduced by the Fox Administration declined one third from the first congressional session of its sexenio (2000-03),in which it introduced 63 bills, to the second session of its sexenio (2003-06),in which it introduced 42 bills. Strikingly, the Administration submitted no bills whatsoever in last fall's session, suggesting either that it had run out of new initiatives, or that it had given up on a divided Congress suffering from gridlock. -- (U) Given the explosion in the number of bills introduced, the percentage of bills passed into law declined from 43% in the 56th Congress to 21% in the 59th Congress. Nevertheless, in absolute terms, the number of bills approved increased nearly five-fold from the 56th to the 59th Congress, from 108 to 513. -- (U) The percentage of bills initiated by the executive that were passed into law declined from 97% in the days of PRI hegemony to 75% in the most recent session. However, while a strong majority of Fox's initiatives were enacted, these largely consisted of routine measures; as noted major reform bills remain pending. Comment: ¶12. (C) While some have suggested a special session of congress could still convene to finish outstanding business, electoral realities make it highly unlikely. The lack of legislative progress made in Congress over this sexenio is perhaps most tellingly conveyed by the almost frantic public service ads being run by both the Chamber of Deputies and the Senate, assuring Mexicans that the Congress is working for them. One of the questions most frequently asked of the current crop of presidential aspirants -- how will you work with Congress? This will be one of the fundamental challenges of the incoming Administration. Visit Mexico City's Classified Web Site at http://www.state.sgov.gov/p/wha/mexicocity KELLY