Identifier
Created
Classification
Origin
07MONTERREY934
2007-11-09 22:59:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Monterrey
Cable title:  

REPORT FROM ZACATECAS: GOVERNOR SEEKS A NEW ROAD

Tags:  PGOV EAGR EAID ECON EMIN SMIG SNAR SOCI MX 
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FM AMCONSUL MONTERREY
TO RUEHC/SECSTATE WASHDC PRIORITY 2534
INFO RUEHME/AMEMBASSY MEXICO PRIORITY 3382
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHMC/AMCONSUL MONTERREY 7850
UNCLAS SECTION 01 OF 05 MONTERREY 000934 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV EAGR EAID ECON EMIN SMIG SNAR SOCI MX
SUBJECT: REPORT FROM ZACATECAS: GOVERNOR SEEKS A NEW ROAD

REF: 2006 MONTERREY 1407

MONTERREY 00000934 001.2 OF 005


UNCLAS SECTION 01 OF 05 MONTERREY 000934

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV EAGR EAID ECON EMIN SMIG SNAR SOCI MX
SUBJECT: REPORT FROM ZACATECAS: GOVERNOR SEEKS A NEW ROAD

REF: 2006 MONTERREY 1407

MONTERREY 00000934 001.2 OF 005



1. (SBU) Summary. On October 17-19, Consul General and Econoff
met with various political, economic, and media leaders in
Zacatecas, including moderate PRD Governor Amalia Garcia Medina,
Zacatecas City Mayor Cuauhtemoc Calderon, prominent businessmen,
and Representatives from the Zacatecas State Legislature. The
CG and the Governor discussed her party's role in Mexico,
security, the large migration of Zacatecanos to the U.S., and
the potential for greater economic development in Zacatecas.
Garcia is working to create jobs to curb the migration of
Zacatecanos to the U.S. and other Mexican states by capitalizing
on tourism and moving Zacatecas from an agriculture and
mining-based economy to a more high-tech one. However, her
highest priority is getting funding from the Felipe Calderon
administration for a key public works project: i.e., the
widening of the currently two-lane highway connecting Zacatecas
north to Saltillo (Coahuila). The thought is that if travel
time between Zacatecas and the Texas border could be shortened
to six or six and a half hours, then much-needed foreign
investment would inevitably arrive. End Summary.


2. (SBU) Zacatecas is a poor, arid, high-plains state with
rich cultural traditions located in the middle of Northern
Mexico. The city of Zacatecas still feels like a colonial town,
with more museums than chain stores. There are very few
concentrations of people outside of Zacatecas' three main cities
(Zacatecas, Fresnillo, and Sombrerete). Zacatecas has 58
municipalities, many of which are no more than small farming
villages inhabited by a few families. Local observers estimate
that 1.5 million Zacatecanos reside in Zacatecas and 1 to 1.5
million Zacatecanos live in the United States, or up to 50% of
the total native population, making people the state's primary
export. Overseas remittances constitute the state's third

largest income generator - after traditional industries such as
agriculture and mining but ahead of new fields such as tourism.
As Governor Garcia's Chief of Staff, Eduardo Ruiz Fierro,
explained, Zacatecanos have a history of migration dating back
nearly 100 years, and due to the lack of job opportunities young
people start thinking about moving elsewhere, either legally or
illegally, as young as 15. As Zacatecas is Mexico's leading
producer of black beans and it is unlikely that local bean
farmers will be able to compete with lower-priced U.S. imports
after full NAFTA liberalization of the market in 2008, there may
be even more pressures ahead.

--------------
Migration
--------------


3. (SBU) The daughter of Francisco Garcia Estrada, a former
Zacatecas Governor and a former Mexican diplomat, Governor
Garcia is well-educated, well-traveled, and well-versed, and
interested in taking best practices from other countries and
applying them to Zacatecas. She has an intelligent, serious
presence, and is engaged on national issues. Garcia told us
that all of her efforts were aimed at countering the negative
effects of migration out of the state. She noted that, whereas
previously only the men in a Zacatecas family would emigrate to
the U.S., entire families are leaving, effectively reducing the
amount of remittances that are channeled back to Zacatecas.
Garcia said that she works closely with the more than 50
well-established Zacatecano clubs in the United States to
encourage Zacatecanos to invest in the state. The clubs, the
largest of which are in Los Angeles, Dallas, and Chicago, help
Zacatecanos in the U.S. effectively invest in Garcia's
"Three-for-One" program: for every dollar that a Zacatecano
invests in a project in Zacatecas, the municipal government
gives one dollar, the state government gives one dollar, and the
federal government gives one dollar. Unlike similar initiatives
in Mexico, Garcia's program provides donors a formal,
institutionalized voice in the project selection process. So
far, the program has funded a variety of community projects,
including new schools, libraries, and rural irrigation
development. All political, economic, and media leaders with
whom the CG and Econoff met heralded the project as a shining
success.


4. (SBU) Garcia is also working to encourage Zacatecanos to
return to their native state. In particular, Garcia is focusing
her attention on getting young people, even if they have never
lived in Zacatecas, to attend university in the state. As an
incentive, she is working closely with the Autonomous University
of Zacatecas and the Technological University of Zacatecas to
improve their engineering programs, particularly in the area of
Personal Software Packaging (PSP) engineering, in which Garcia
believes Zacatecas can become a national leader. Comment.
Although government officials state that local universities are
increasingly producing graduates with technical aptitude,
Zacatecas currently has no high technology industry and the

MONTERREY 00000934 002.2 OF 005


general education level remains quite low (only 47% of
Zacatecanos receive education beyond primary school). Even if
Zacatecas could develop some high technology industry, this
would only provide a limited number of jobs and limited help in
alleviating widespread rural poverty. End Comment.

-------------- --
Agriculture and Mining Key Industries
-------------- -


5. (SBU) Despite the Governor's ambitious plans to move
Zacatecas towards a more technologically-based economy, the fact
remains that Zacatecas' economy relies almost exclusively on
agriculture and silver mining. Zacatecas produces 33% of
Mexico's black beans. In fact, according to Governor Garcia,
over 80,000 farmers in Zacatecas grow them exclusively. This
will be a huge issue in 2008 when the tariffs on beans are
phased out under NAFTA because Zacatecano farmers will not be
able to compete with U.S. producers with their small plots and
poor soil. Garcia said that she has been working on this issue
since she was elected in 2004. Notwithstanding her efforts to
help farmers transition to other crops, such as wheat, Garcia
lamented that Zacatecano farmers have been growing beans for
generations and that there is huge resistance to changing to an
entirely different product.


6. (SBU) Nevertheless, Garcia has moved forward with several
initiatives to help diversify Zacatecas' agricultural industry.
After traveling to Almeria in Southern Spain, which like
Zacatecas has a relative scarcity of water for farming, and
seeing the success of its greenhouse industry, Garcia promoted
the construction of several greenhouses in Zacatecas that now
produce fresh peppers, tomatoes, and cucumbers that are exported
to other parts of Mexico. She hopes to build on this model, but
it will require much more private investment and the willingness
of traditional bean farmers to learn new skills. In a separate
meeting with the Consul General and Econoff, Gerardo Roma
Fonseca, the Secretary General (Lt. Governor-equivalent) of
Zacatecas state, described another of Garcia's initiatives to
increase the production of agave in the southwestern part of the
state that borders Jalisco. Currently, more than 5000 acres of
land, which used to be devoted to bean plants, are now being
used to grow agave to produce mescal.


7. (SBU) The second of Zacatecas' major industries is silver
mining. Zacatecas is home to the world's largest silver mines.
Yet while the industry employs many miners, none of the silver
ore is processed in Zacatecas, and is instead trucked to
neighboring states. Some of the refined silver makes its way
back to Zacatecas where artisans make jewelry and silver-plated
tableware, but even this is a dying industry in Zacatecas as
fewer young people take up the craft. Also, with increased
competition from China for finished silver products, Zacatecas'
faltering silver crafts industry is hurting even further. Since
the February 2006 tragedy at the Pasta de Concho mine in
Coahuila, Garcia said she has been working to improve safety and
environmental conditions in Zacatecas' mines, but added that
much more federal funding was required to do so. She explained
that, although the silver mines are located in Zacatecas, the
mining companies paid taxes to the state in which they were
headquartered (typically the D.F),so Zacatecas rarely sees any
tax revenue from the mining that takes place in the state.

-------------- -
Are maquilas and tourism the answer?
-------------- -


8. (SBU) Given the constraints of the agricultural and mining
sectors' ability to drive further employment and economic growth
in Zacatecas, Governor Garcia is working to attract more
maquila-style industry to the state. While there are some
companies, like the U.S.-based Delphi Corp., that have
established maquiladoras in Zacatecas, there are few economic
incentives for companies to move to the state. A representative
from Delphi, which has two automotive parts manufacturing plans
in Fresnillo, Zacatecas that employ 5000 Zacatecanos, said that
any water-intensive manufacturing process or one that required
access to natural gas would never come to Zacatecas because
neither is readily available. "Fortunately," he said, "our
plants here require neither, which is why we have been here for
more than 15 years. That won't work for many other industries,
which is why they go to states like Coahuila and Nuevo Leon
instead."


9. (SBU) Another disincentive for companies that might
otherwise think of establishing a maquila in Zacatecas is the
lack of adequate shipping routes to move final products from
Zacatecas to other manufacturing centers or to the U.S.
Zacatecas' main trade link is through Saltillo, Coahuila, and

MONTERREY 00000934 003.2 OF 005


Monterrey, Nuevo Leon. While part of the highway between
Saltillo and Zacatecas is a modern, four land highway, it is
primarily a narrow (and extremely dangerous) two-lane road
congested with trucks and cars. Garcia stated that one of her
primary objectives is to modernize and widen the length of the
Saltillo-Zacatecas highway, which she believes will
significantly improve Zacatecas' economic and trade ties with
Coahuila, Nuevo Leon, and Texas. She is currently (and so far
unsuccessfully) lobbying Mexican President Felipe Calderon and
other national authorities to free up budget monies for this
endeavor - which she labeled as the state's most important
priority. When Econoff asked Governor Garcia why Zacatecas did
not export more products via the two rail lines that run
directly through Zacatecas from Aguascalientes all the way to El
Paso and Eagle Pass, Texas, Garcia explained that the
Ferromex-controlled line was saturated and that, with only one
track, the trains cannot run efficiently.


10. (SBU) Governor Garcia would also like to see Zacatecas
capitalize on and expand its already robust tourism industry.
To that end, she has embarked on a long-term effort to construct
a convention and business center just outside of the City of
Zacatecas, which will feature a convention center, hotels, a
golf course, restaurants, and transportation to the Zacatecas
city center where visitors can take advantage of the city's
colonial charm and numerous cultural events. According to
representatives from the Governor's office, although the project
will take 15 to 20 years to complete and huge amounts of private
capital investment, the Camino Real Hotel group has already
agreed to be part of the project and will construct at least one
new, large hotel next to the planned convention center. Also as
part of the initiative, the state government will move its
offices to the new "convention" area, freeing-up the historic
buildings it now occupies in the city center for more art and
history museums.

-------------- --------------
Relatively Shielded from Narco-Violence
-------------- --------------


11. (SBU) One comparative advantage Zacatecas has over its
neighboring states is its security situation. All the political
and business leaders with whom the CG and Econoff met referred
to the low level of crime in Zacatecas as an attractive feature
for tourists and business people. While other neighboring
states have been plagued by increased narco-violence this year,
Zacatecas has enjoyed a period of calm, with no drug-related
executions and no kidnappings this year. However, Garcia
recognizes that, while Zacatecas does not currently have a
problem, the situation could change at any time if rival drug
cartels decide to make Zacatecas the staging ground for a turf
war. Garcia and other political leaders with whom the CG and
Econoff met said that they would welcome assistance from U.S.
law enforcement agencies to help Zacatecas professionalize its
police and state investigative units, particularly during a
period of calm.


12. (SBU) Comment. If the Governor's dream of widening the
road to Saltillo came to fruition, this might lead to a greater
narco-presence in the state as traffickers also sought to take
advantage of the improved transportation links. The lack of
narco-related violence in the state can be contributed, at least
in part, to the lack of highway infrastructure connecting
Zacatecas with other states. The one major connection is the
two-lane road that connects Zacatecas with Saltillo, which runs
through barren terrain and has military checkpoints long the
way. With a new, modern four-lane highway, Zacatecas could
become a more attractive drug-trafficking route from
south-to-north and from west-to-east. End comment.

--------------
Bridging the political divide
--------------


13. (SBU) When the CG asked Garcia about her views on AMLO
more than a year after he lost the 2006 presidential election,
she described two types of PRD party members - the ones who lean
more towards AMLO and the ones who lean more towards the ideals
of the party's founder, Heberto Castillo. She indirectly
described herself as a Castillo-style PRD member and likened
that brand of PRD to the Lula wing of Brazil's Worker's Party
(PT),i.e. leftist but still pragmatic and results-oriented.


14. (SBU) Governor Garcia acknowledged the importance of
working with political leaders from other parties, particularly
other Governors of Mexican states that are facing similar
issues. Despite party differences, Garcia said that she works
well with Durango Governor Ismael Hernandez Deras (PRI),Nuevo
Leon Governor Natividad Gonzalez Paras (PRI),and in particular

MONTERREY 00000934 004.2 OF 005


with San Luis Potosi Governor Jesus Marcelo de los Santos (PAN)
-- with whom she works closely on immigration issues. When
asked about Coahuila Governor Humberto Moreira Valdes (PRI) - a
protege of the teachers union caudillo, Elba Esther Gordillo --
Garcia only said that she is trying to work with him, especially
on the Saltillo-Zacatecas highway initiative, but that he does
not often follow-through on promises. She quickly added that
she is working closely with the Governors of San Luis Potosi,
Durango, and Aguascalientes to lobby President Calderon for a
regional approach to trade that would be mutually-beneficial.


15. (SBU) Garcia also noted that she has a relatively good
working relationship with state legislators from the PRI, PAN,
and PT (workers) parties. The Consul General and Econoff had
the opportunity to meet with twelve Diputados (Representatives)
from the Zacatecas State Legislature after meeting with Governor
Garcia. The leaders from each party reiterated the same themes
as Garcia - migration, economic development, education, the
strong ties with Zacatecanos in the U.S. - and added that they
would like to establish a dialogue with the Consulate on these
issues. The Zacatecas state electoral law does not have any
residency or citizenship requirements, so two state legislature
seats are designated for representatives who are born in or live
in the U.S. The only requirement is that they have been born to
two Zacatecano parents.


16. (SBU) When asked about how well she works with Cuauhtemoc
Calderon, the City of Zacatecas Mayor who came into office last
month, she said she wasn't sure what their relationship would be
like, but added that she had an excellent working relationship
with the previous PRD mayor. Calderon is a young and ambitious
former restaurant-owner from the PAN party who already has his
sights set on running for governor in 2009 when Garcia's term is
up. He told the CG and Econoff that, despite their party
differences, he looks forward to working with Garcia on
improving the city's infrastructure, further developing the
Three-for-One program and generating employment through tourism.
(Calderon's business community supporters where much blunter:
they described Garcia as imperial and high-handed, noting that
her convention center idea could prove to be a vehicle for
diverting public funds to private pockets. Indeed, the fact
that the PRD took a drubbing in the most recent mayoral
elections indicates that some of the "Garcia" luster has faded.)
Calderon told Econoff that he thought Garcia would have a very
hard time attracting young people back to Zacatecas. "It's not
just that they go to the U.S., they also go to other Mexican
cities like Monterrey and Mexico City, first to go to University
and then to stay and work. There is little to keep young people
interested in Zacatecas when there is very little to do. Yes,
there are museums, but, for example, there is only one movie
theater in the whole state!"

--------------
Comment
--------------


17. (SBU) Comment. Although Governor Garcia has a strong
national image, the print and radio press with whom the CG met
described her as very capable, but primarily focused on her
national and international image. They criticized the amount of
traveling she does and joked, "when she's in town, it's big
news!" Governor Garcia admittedly travels a lot to Mexico City
to lobby President Calderon and national legislators, to
neighboring states to meet with fellow Governors, and to the
U.S. to meet with Zacatecano groups. It seems that at least
some of her travels, notably to Southern Spain, have resulted in
positive developments for Zacatecas. But despite her sincere
intentions, it is not clear whether Governor Garcia has been
successful in moving Zacatecas any further forward than the last
visit by Econoff in November 2006 (reftel). Statistics
demonstrate that Zacatecas is not generating sufficient
employment for its new workforce and state officials do not
appear to have made any headway with getting its 80,000 bean
farmers ready for the opening of the Mexican market to U.S. and
Canadian bean imports in 2008. If Garcia is unable to resolve
this problem, rural poverty could worsen, increasing pressures
to migrate to the United States, and potentially tarnishing her
national image. Her plans to increase tourism with a convention
center have the potential to generate more jobs, but only in the
long term. Currently, over 80% of tourists are Mexican, and
most tourists only stay an average of one and a half days.
Despite the plethora of cultural festivals in Zacatecas, with
only 3000 hotel rooms and little room to build new hotels in the
city, Zacatecas is very limited in the amount of new tourists it
can accommodate.


18. (SBU) The CG reiterated the USG's commitment to working
with Zacatecas on economic and security issues, and specifically
suggested to Governor Garcia, Mayor Calderon, and state

MONTERREY 00000934 005.2 OF 005


diputados that establishing a partnership with a U.S. city
(likely one with a concentration of Zacatecanos) through Sister
Cities International could help Zacatecas develop a municipal
partnership to strengthen its economic and community
development. All welcomed the idea. Post is following up with
Governor Garcia and Mayor Calderon to provide any assistance we
can to help them establish a Sister City program. End Comment.
WILLIAMSON