EEB A/S SULLIVAN DISCUSSES MAJOR ECONOMIES MEETING

UNCLAS SECTION 01 OF 06 MEXICO 004856 SIPDIS SENSITIVE SIPDIS STATE FOR G, E, EEB/ESC, WHA/MEX, WHA/PPC, AND OES/EGC DOE FOR PI/KHARBERT/GWARD/ALOCKWOOD EPA FOR OIA AND OAR WHITE HOUSE FOR CEQ/CONNAUGHTON E.O. 12958: N/A TAGS: SENV ENRG MX SUBJECT: EEB A/S SULLIVAN DISCUSSES MAJOR ECONOMIES MEETING ON CLIMATE CHANGE AND ENERGY SECURITY Summary -------------- ¶1. (SBU) A/S Dan Sullivan met with a range of senior GOM officials to encourage high-level Mexican participation from the full range of relevant ministries in the September Major Economies Meeting on Climate Change (MEM) proposed by President Bush. Upon being assured that the MEM is aimed at contributing to UN climate change efforts, A/S Sullivan's interlocutors expressed enthusiasm for attending the MEM and agreement with the cross-ministry approach and the focus on protecting the environment without sacrificing economic growth. They also concurred that Mexico was well positioned to play a bridge role between developed and developing economies on climate change. Two things became obvious over the course of these meetings: 1) President Calderon is firmly committed to addressing climate change and 2) his administration is already coordinating interagency on GOM participation in the MEM. A cautionary note was sounded by a foreign ministry official, who asserted that Mexico would not be bound by any MEM outcome in terms of its freedom to negotiate in the UN process. End summary. Broad Range of Meetings -------------- ¶2. (SBU) From August 29-30, A/S Sullivan met with the following senior Mexican officials: Dionisio Perez-Jacome, senior domestic policy advisor to President Calderon from the Office of the Presidency; Under Secretary Alejandro Werner of the finance ministry; Under Secretary Beatriz Leycegui of the economy ministry; International Affairs chief Enrique Lendo of the environment ministry; Director General for Global Issues Ernesto Cespedes of the foreign relations ministry, and Director General for International Affairs Aldo Flores of the energy ministry. These GOM officials displayed remarkable message consistency over the course of five separate meetings, indicating that climate change is an issue that receives considerable attention from President Calderon and is carefully coordinated among the relevant ministries. Below we report the GOM responses to the key points in A/S Sullivan's presentation. MEM Proposal -------------- ¶3. (SBU) A/S Sullivan explained that President Bush proposed in May 2007, two weeks prior to the G8 summit, to convene a meeting of the world's 15 major economies, who together account for 85-90 percent of global emissions, to initiate a process aimed at achieving by the end of 2008 a consensus among these major players on a post-Kyoto framework that could also lead to a global greenhouse gas (GHG) reduction goal. This consensus could then feed into and contribute to the negotiations that will take place under the auspices of the UN Framework Convention on Climate Change (UNFCCC) to establish by the end of 2009 a successor regime to the Kyoto Protocol, which expires in 2012. ¶4. (SBU) Every one of A/S Sullivan's interlocutors remarked MEXICO 00004856 002 OF 006 on how committed President Calderon is to tackling the issue of climate change, and how frequently he raises it with his cabinet. In fact, Flores (energy ministry) insisted that he had never attended a presidential meeting on energy issues at which Calderon had not discussed climate change. As further evidence, Lendo (environment ministry) and others cited the formation of the GOM,s Intersecretarial Commission on Climate Change and the publication of its National Strategy on Climate Change. A/S Sullivan and his counterparts also pointed to language on energy and the environment in the joint statement of the North American leaders from their Montebello meeting as explicit proof that both presidents are committed to facing this problem, in a way that integrates climate, energy security, and economic growth issues. High-level and Cross-cutting Representation -------------- ¶5. (SBU) A/S Sullivan highlighted that the U.S. side would be represented at very senior levels across an array of departments and offices, including State, Treasury, Energy, Commerce, EPA, and the Council on Environmental Quality. He encouraged the GOM to follow suit. He noted that Secretary Rice would host the meeting and participation from other cabinet members (including Secretary Bodman and Secretary Paulson) and their chief deputies was expected. ¶6. (SBU) Presidency's Perez-Jacome (whom A/S Sullivan met on Wednesday the 29th) recalled the meeting he had had with Under Secretary Dobriansky in May on the MEM. He said Mexico was very interested in the MEM and would definitely participate. He said he would brief Calderon personally on the details raised by A/S Sullivan and urge a very high-level Mexican team. The other Mexicans echoed him, saying each of their ministries would like to include high-ranking officials in the Mexican delegation, though neither the finance, economy, or energy ministries could commit to sending anyone yet. At A/S Sullivan's penultimate meeting on Thursday the 30th, Cespedes (foreign ministry) and Lendo (environment ministry) said that Environment Minister Juan Elvira would lead the Mexican delegation and that the U/S for Foreign Affairs would attend as well. ¶7. (SBU) There was a similar meeting of the minds on the value of including a wide range of ministries in the MEM process due to the cross-cutting nature of the climate change problem, as already reflected by the composition of Mexico's Intersecretarial Commission, which in addition to the four ministries that met with A/S Sullivan, also includes the agriculture, transport, and social development ministries. Werner said the finance ministry is getting involved in the climate issue, but admitted that it has been slow to do so because of the federal budget and pension and fiscal reform (on the latter, see septel). He strongly agreed that a comprehensive, cross-ministry approach is needed. Indeed, he argued that the finance ministry should take part in this process so policymakers keep in mind the costs and benefits of their actions. He did not want Calderon telling his staff to "do this," and then have people follow through without consideration of the expense. Werner noted that Mexico's MEXICO 00004856 003 OF 006 development banks could play a role in the climate agenda. Flores noted that the energy ministry would follow the MEM closely, as PEMEX, Mexico,s state petroleum monopoly, was by far Mexico,s largest polluter. Leycegui (economy ministry), who met with A/S Sullivan on Thursday the 30th, reported that one of her staff had already been called to an interagency meeting on the MEM. Tackle Climate Change Without Sacrificing Growth -------------- --- ¶8. (SBU) A/S Sullivan pointed out that the U.S. was serious about climate change, and confident that a global solution would not necessarily mean sacrificing economic growth, using as an example the fact that last year U.S. greenhouse gas emissions dropped 1.3 percent in absolute terms while the U.S. economy grew 3.3 percent. ¶9. (SBU) Werner (finance ministry) responded that in some instances there might be a trade-off between growth and environmental protection, but that this is clearly not so in many other cases. He raised the example of Mexico's irrational pricing of energy, which led to both economic inefficiency and environmental harm. Flores (energy ministry) remarked that the U.S. had opposed the Kyoto Protocol with exactly the reverse argument, i.e., binding commitments to reduce emissions would hurt the U.S. economy. He suggested that some, largely in Europe, would view U.S. leadership in the process with skepticism, adding the caveat that it was not clear that Europe spoke with a single voice on the issue. A/S Sullivan said the MEM does mark a shift in U.S. policy, but that the U.S. believes it is possible to address GHG emissions without negatively affecting economic growth. Flores agreed and noted that this would be an important message for China and other large developing economies that criticize rich countries for using climate as a tool to stymie their own development. Bridging the Developed and Developing Country Divide -------------- -------------- ¶10. (SBU) A/S Sullivan said that the European governments he had briefed on the MEM had responded positively, including France. He then pointed out that strong Mexican participation would be key to the MEM's success, as Mexico, in some ways like the U.S., was well positioned to serve as a bridge between the climate change perspectives and interests of rich countries like the EU disposed to Kyoto-like approaches and more skeptical but crucially important developing countries like China and India. ¶11. (SBU) Presidency's Perez-Jacome agreed, saying that the U.S. could help bridge the gap from the rich countries to the developing ones, while Mexico could work in the opposite direction. He recalled Calderon's forceful remarks to the leaders of the other major developing economies who had been invited to the May 2007 G8 meetings in Germany on the responsibility of all to do their part to combat climate change. Werner (finance ministry) agreed that Mexico could play a "bridge" role, but noted that developing countries MEXICO 00004856 004 OF 006 will always hark back to how developed countries "that have already polluted" are now telling them not to pollute. Flores (energy ministry),quoting Mexican historian Enrique Krause, called Mexico a "pre-modern, modern, anti-modern, and post-modern" society, making it well-suited for a mediating function between more- and less-developed nations' positions in the debate. Nevertheless, Flores cautioned, Mexico is ever-conscious of how its relationship with the U.S. is perceived, and Mexico's precise level of involvement in a U.S-led MEM process will be calibrated with this in mind. He could not firmly predict Mexico's eventual level of involvement. Contributing to, Not Competing with, the UNFCCC Process -------------- -------------- ¶12. (SBU) A/S Sullivan took great pains to refute allegations made in various news media that the MEM is designed to rival the UNFCCC process. He cited the May 2007 G8 summit declaration on climate change and the invitation letters President Bush had sent to leaders of the 15 major economies (including President Calderon) that explicitly contradicted these allegations and made clear that the U.S. wants the MEM to feed into and contribute to the UNFCCC process. He reported that U.S. had also invited UN Secretary General Ban Ki-moon, who had not yet confirmed his attendance but had expressed great interest in the initiative. ¶13. (SBU) These assurances were clearly of critical importance to the GOM and opened the door to the enthusiastic responses received from almost all of A/S Sullivan's interlocutors. Perez-Jacome (Presidency) and Lendo (environment ministry) emphasized Mexico's ongoing commitment to dealing with climate change principally in the multilateral forum, a position they would be sure to reiterate at the September MEM, and Leycegui said that initially the Calderon administration had been concerned about how the MEM would fit in with the UNFCCC, noting that the U.S. commitment to working under UN auspices on tackling climate change seemed to represent a policy shift. She asked how the MEM would interact with the APEC climate initiative. A/S Sullivan replied that the U.S. view was that these processes should all complement one another. Cespedes told A/S Sullivan that maintaining the UN framework was essential for Mexico; "regional and other multilateral initiatives" were acceptable, provided they remain within the UN framework. Mexico Will Not be Bound by MEM -------------- ¶14. (SBU) Perhaps the most discordant note in response to A/S Sullivan's presentation came from Cespedes (foreign ministry). He acknowledged the importance of climate change on Mexico's domestic agenda and now on the international agenda, and said Mexico was happy to collaborate in gathering data under the MEM. However, he asserted that even if the MEM process concluded with an agreement on binding GHG emissions targets, Mexico would not consider such an agreement to be binding or to restrict in any way its freedom MEXICO 00004856 005 OF 006 of negotiation within the UNFCCC framework. A/S Sullivan responded that achieving consensus would be a challenge, but that the whole point of the MEM was to reach agreement among the world's major polluters on as many points as possible, including emissions reductions, by the end of 2008. Such a consensus would then serve as a basis or impetus for global agreement under the UNFCCC. Cespedes made clear that his ministry would take the lead on policy-related aspects of Mexico's MEM participation, while the environment ministry would lead on the technical aspects. Specific Agenda Items -------------- ¶15. (SBU) To varying degrees depending on the time available in each meeting, A/S Sullivan gave a brief overview of the draft agenda and solicited GOM input. He emphasized the bottom-up approach we favor of first trying to assess what the major economies are already doing and asked the GOM to fill in matrices on its existing clean energy policies and measures and its climate-related technology research and development. He said that the U.S. would like to focus attention on sectoral approaches, highlighting the transportation and power generation sectors as particularly important. ¶16. (SBU) During discussions of the agenda, the various interlocutors commented on issues of particular interest to their own ministries. They also noted that the work done to complete President Calderon's National Strategy would facilitate their completion of the MEM matrices. Lendo (environment ministry) and Werner (finance ministry) mentioned that the Calderon administration had allocated money in this year's budget to help combat deforestation, which in turn would contribute to carbon sequestration, and said they hope to have a similar amount of resources in the 2008 budget. Werner also mentioned Clean Development Mechanism (CDM) projects that Mexico has implemented on converting buses and trains to cleaner fuels and promoting the construction of more energy efficient homes. He said there is a need to develop a comprehensive agenda for the use of CDM credits in Mexico. Lendo said his ministry was also interested in other land use and sectoral issues. Flores (energy ministry) noted that both the energy and the environment ministries have been developing a framework to promote the development of biofuels and clean energy, and that Mexico has set specific sectoral objectives on greenhouse gas emissions, though no national objective. On cooperation with the U.S., Flores noted the recently signed SPP agreement on cooperation in Energy Science and Technology, and Secretary Kessel's proposal that the U.S. and Mexico cooperate on research in Geothermal Energy. Comment -------------- ¶17. (SBU) The GOM is clearly motivated and coordinated on the climate change issue and sees the MEM as a promising mechanism worthy of full and active participation, so long as progress under the MEM is fully channeled into the UNFCCC MEXICO 00004856 006 OF 006 process to which Mexico gives place of precedence. Clearly Mexico wants to play a constructive role and takes seriously the possibility that it can serve as a "bridge" between rich and poor countries. We will need to be mindful of Mexico's need to avoid being seen merely as a messenger for the U.S., but we can be optimistic that it will bring the right people and the right intentions to the September meeting. End comment. ¶18. (SBU) Bio Note: President Calderon clearly has his economic ministries delivering a consistent message on the importance of combating climate change. Presidencia's Perez-Jacome had told A/S Sullivan he would brief President Calderon and ensure relevant GOM Ministries supported the MEM effort. That very evening, he sent the MEM matrix handed out by A/S Sullivan to Cespedes, the foreign ministry lead for the MEM, who brought the matrix to the meeting A/S Sullivan had at the environment ministry meeting the following day. ¶19. (U) This cable has been cleared by A/S Sullivan. 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