MEXICAN CONGRESS DEMONSTRATES INDEPENDENCE, NOT

64799
2006-05-20 00:39:00
06MEXICO2711
Embassy Mexico
CONFIDENTIAL
06MEXICO149|06MEXICO1716|06MEXICO2367
VZCZCXYZ0004
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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
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KELLY