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