ZAPATERO VISIT BOOSTS CALDERON

UNCLAS MEXICO 003839 SIPDIS SENSITIVE SIPDIS FOR WHA/MEX AND EUR/WE E.O. 12958: N/A TAGS: PGOV PTER ECON MX SUBJECT: ZAPATERO VISIT BOOSTS CALDERON ¶1. (SBU) Summary: During his four-day visit to Mexico, Spanish PM Jose Luis Rodriguez Zapatero and President Calderon agreed to cooperate on apprehending ETA members and other extremists, develop infrastructure and the tourism sector, increase people-to-people contacts through a "Dialogue Forum," and defend the environment. Zapatero also publicly criticized the "border wall" between the United States and Mexico. End summary. ¶2. (SBU) During the Prime Minister's visit from July 14-17, the Spanish and Mexican governments agreed to renew their strategic association agreement dating from 2001, intensifying operational cooperation in counterterrorism, money laundering, terrorism funding, organized crime, and drug trafficking. The Spanish Government has long sought the GOM's assistance in cracking down on ETA fugitives in Mexico. Spain will open a Security Department in its Embassy in Mexico City, and the leaders pledged to intensify police and judicial cooperation, including funding and extradition. They also vowed to encourage greater cultural and environmental cooperation. ¶3. (SBU) During his tour of Mexico, Zapatero was accompanied by a group of Spanish investors, headed by Javier Gomez Navarro of the Superior Council of Chambers in Mexico. They pledged continued support for Mexico through investment and trade. Zapatero envisioned an increase in Spanish investment in Mexico's tourism industry (boosting rooms under Spanish control by a third) and infrastructure construction. This built on a theme touted during Calderon's earlier tour of Europe, in which he highlighted Spain as a logical gateway for Mexican commerce with Europe. ¶4. (SBU) Despite the promotion of stronger commercial ties between Spain and Mexico, Spanish businessmen used a meeting with Zapatero and Calderon as an opportunity to present a list of obstacles that the Spanish tourism industry encounters in Mexico. Concerns included the lack of legal certainty and efficient resolution to permit requests. The executives also called for improved transportation infrastructure (roads and airports) and complained that the lack of alternative airports in the Quintana Roo region made it difficult to accommodate large-scale tourist evacuations, as was needed during hurricane Wilma in 2005. ¶5. (SBU) The Spanish executives joined numerous businessmen concerned over the Calderon government's fiscal reform proposal (particularly the corporate single rate tax, called CETU). While the businessmen agreed reform is necessary, Navarro said there is some nervousness over the way the new law would be implemented. Calderon responded that law-abiding companies do not need to worry about the tax, intended to catch those who try to dodge their fiscal responsibilities. Zapatero extended his support to Calderon regarding the issue, saying that every country has a right to fiscal reform that facilitates commerce and improves social justice. Speaking to the press on the border fence, Zapatero said, "there is no wall, no matter how high, wide, or long (that can) prevail over the dream of a better life." ¶6. (SBU) Zapatero's visit received mixed reactions from members of the Mexican left, particularly the PRD. A number of Andres Manuel Lopez Obrador (AMLO) supporters demonstrated against Zapatero's visit, and Gustavo Iruegas, foreign policy advisor to AMLO, called Zapatero a "persona non grata." Some members, including party chairman Leonel Cota, insisted that Zapatero was a traitor for his prompt recognition of President Calderon's electoral victory, while the PRD legislative coordinators said Zapatero was welcome in Mexico. 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 / BASSETT