SCENESETTER FOR THE VISIT TO MEXICO BY SECRETARY

C O N F I D E N T I A L SECTION 01 OF 04 MEXICO 003088

SENSITIVE
SIPDIS

STATE FOR EB, P, WHA

E.O. 12958: DECL: 12/21/2017
TAGS: PREL MX
SUBJECT: SCENESETTER FOR THE VISIT TO MEXICO BY SECRETARY
OF STATE CONDOLEEZZA RICE -- OCTOBER 22-23, 2008


1. (SBU) On behalf of the Embassy community I warmly welcome
you to Mexico for your discussions with Foreign Secretary
Patricia Espinosa on October 22-23. You are arriving as
Mexico enters a period of some peril on a number of fronts.
President Calderon and his government continue to enjoy the
support of a majority of the Mexican public, but economic,
security and political challenges have emerged that will
demand his full attention and aggressive responses.


2. (SBU) The U.S. financial crisis, and its impact in
Mexico, has generated considerable concern in recent weeks.
You will also note widespread public concern over crime and
violence. As drug-related violence spirals, a perception is
growing that Mexico's already troubled security situation has
deteriorated suddenly and disturbingly. Mexico's opposition
political parties, beginning to position themselves in the
run up to next year's elections cycle, have ramped up
criticism of Calderon's approach to both security and the
economy.

Mexico's Economy


3. (U) The Calderon administration has registered some
impressive accomplishments since 2006--maintaining
macroeconomic stability, keeping inflation for the most part
at a reasonable 4 percent, and lowering barriers to trade.
The President secured quick congressional approval of the
2007 and 2008 budgets, and won passage of an unpopular but
necessary government workers' social security reform.
Congress also approved last year a tax reform that will boost
government revenues by 2.1 percent of GDP by 2012.


4. (SBU) Much remains to be done, however, to arrest Mexico's
slipping global competitiveness. The GOM's challenge is to
implement structural reforms required for growth sufficient
to raise 40% of Mexicans out of poverty. The country has
also grappled over recent months with inflation rates of over
5 percent fueled by rising international food and energy
prices. Real GDP growth is also expected to slow to below
2.6 percent this year, down from an estimated 3.3 percent in
2007, primarily due to the U.S. economic slowdown.


5. (C) In response to what many here believe will be a steep
global downturn as a result of the U.S. financial crisis, and
a sharp reduction in both production and prices of Mexican
oil, President Calderon has announced plans to increase
public spending on housing and infrastructure projects,
initiate an emergency program to support small and medium
businesses and introduce tariff and tax changes to improve
Mexico's competitiveness. In the near term, these measures
must genuinely help mitigate the negative impact of stalled
growth in Mexico if President Calderon is to sustain his
public support -- and that of his party. Over the longer
term, the president must advance reforms that make a lasting
impact on the lives of Mexico's poor and struggling middle
class in order to keep his party in power beyond 2012.

Security Strategy


6. (U) Elements of President Calderon's counter-crime
strategy are beginning to bear results. Since taking
office, he has launched anti-drug operations in more than ten
states, raised pay for the military, and replaced numerous
high-ranking federal police officers. Combined military and
law enforcement operations have resulted in the takedown of
nearly ten senior members of Mexico's notorious cartels. In
all, more than 17,000 persons involved in drug related crimes
have been arrested in the past year and seizures of all major
illicit drugs and precursor chemicals are up significantly.
President Calderon also initiated sweeping structural and
operational reforms among police elements, and signed into

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law constitutional reforms of the criminal justice system in
June. Such wide-reaching actions and enhancements will take
time to fully implement, but will considerably strengthen GOM
security capabilities across-the-board.


7. (SBU) However, advances on security issues have come at a
high human price for both civilians and officials at the
federal, state, and municipal levels with over 3000
narco-related killings registered so far this year --
including nearly three hundred members of federal, state and
local security forces. Recent events indicate that the
cartels may have decided to up the ante in response to
President Calderon's aggressive campaign. The carnage
inflicted in Morelia on September 15, apparently by Cartel
hit men who threw a grenade into a crowd of independence day
celebrants, has injected a new level of fear and uncertainty
among the population. Second-guessing of his security
strategy has become a minor blood-sport here among
politicians, although we have yet to see a pragmatic
alternative advanced to the course he has set. Key secondary
legislation advancing police reforms and the administration
of justice are pending in Congress this session.

Political Landscape


8. (SBU) In addition to growing concerns over the economy,
crime and violence, the president and his party face a
hardening political environment here in advance of
legislative and key gubernatorial elections next year. All
three of the main political parties in the legislature have
their eyes on the bellwether 2009 elections, and the
Institutional Revolutionary Party (PRI),in particular, is
expected to make gains. The window of opportunity to
effectively cooperate with a divided congress on major reform
initiatives, such as the currently pending energy reform, is
rapidly closing.

The U.S. - Mexico Relationship


8. (U) Calderon has demonstrated pragmatism in his posture
toward the United States and bilateral cooperation across a
wide range of issues, particularly in law enforcement, has
never been stronger. The President has significantly
expanded the number of criminal extraditions to the U.S.,
instructed key members of his security team to engage their
USG counterparts fully and worked closely with us to develop
a joint approach to counter-narcotics through such efforts as
the Merida Initiative. As you know, Merida Initiative
funding was passed by our Congress and signed into law by the
President in June. We are awaiting final approval by
Congress of our Merida spending plan, and finalizing a letter
of agreement with the Mexican government.

Key Issues


9. (C) A longtime friend of the U.S. and one of SRE's more
pragmatic professional diplomats, Secretary Espinosa will
eagerly discuss how we can best move the bilateral
relationship forward. Specific issues you should expect to
discuss include:

--Merida Initiative: We hope to have letters of agreement
ready to sign in coming weeks and expect to begin
implementation by the end of the calendar year. Senior GOM
officials, including President Calderon, have expressed
concern with the length of time it has taken to begin
implementation. Key Point: We are finalizing the letters of
agreement and the program will begin in a matter of weeks.
We will continue to work closely with our counterparts here
to ensure the program has the greatest possible impact.


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--CBP's Halcon Program: A joint aerial interdiction
program, utilizing two USG Cessna Citations, was put on hold
in December 2006 over status of personnel and liability
issues. Officials on both sides of the border agree it was a
useful and effective program, and we should begin discussing
resumption. Key Point: Halcon was a successful program and
we encourage you to consider resuming this joint effort,
which compliments our other bilateral law enforcement
programs.

--Narcotics Prosecutions Legislation: President Calderon has
submitted legislation to congress intended to strengthen
enforcement of laws against street trafficking of illegal
drugs by establishing minimum possession thresholds. Over
clearly defined quantities, suspects are presumed to be in
possession with intent to sell and subject to criminal
prosecution. Under such thresholds, arrestees will have the
option to enter a treatment or prevention program rather than
face jail time. Key Point: We appreciate the GOM's effort to
strengthen counter drug laws targeting traffickers. Success
of this initiative will depend on the ability of Mexican
courts to monitor participation and sanction those who fail
to enter a program.

--UN Cooperation: As Mexico assumes its seat on the UN
Security Council in January 2009, it will become even more
important that we coordinate closely with Mexico on issues in
both the GA and on the council. Mexico's voting pattern in
the UN has not reflected the close cooperation we have on
many fronts. Key point: I hope we can begin a dialogue in
coming weeks on how we might improve cooperation in the UN on
issues of importance to both of us.

--Mexico-Cuba Relations: Secretary Espinosa visited Havana
in March in an effort to normalize previously strained
relations with Cuba. Foreign Minister Felipe Roque is
expected to visit Mexico on October 20-21 to sign a
Memorandum of Understanding with FM Espinosa on migration
issues and reportedly extend an invitation to President
Calderon to visit Cuba. In addition to broadening law
enforcement cooperation in combating trafficking in persons,
Mexico seeks to step up repatriations of Cubans entering
Mexico illegality (mostly en route to the U.S.). However,
senior Mexican officials remain skeptical that, even with the
MOU, Cuba will do much to expedite repatriations. Key
Points: We hope Mexico takes the opportunity afforded by
closer relations to urge the Cuban Government to address
human rights concerns. As Mexico seeks to repatriate greater
numbers of Cubans we would urge you to work with the UNHCR to
guard against returning any individuals with legitimate
concerns about facing political persecution.

--Pathways to Prosperity: You can discuss the upcoming
December ministerial and urge full Mexican partnership with
the U.S. to ensure the benefits of free trade are broadly
shared in the hemisphere. Key Point: Pathways provides an
excellent mechanism to continue advancing free trade in the
region and will help us spread the benefits of trade.

--Travel Alert: The Travel Alert issued for Mexico on
October 14 reflects the current (and widely reported) reality
of crime and violence in Mexico, particularly declining
security conditions along the U.S.- Mexico border. The vast
majority of American citizens travel to Mexico without
incident; the updated alert is designed to ensure this
continues to be the case. Key Point: The Travel Alert does
not advise Americans to avoid travel to any region or city:
it provides information on current conditions that allows
travelers to be better informed.

--Consulate Security: Late night on October 11, unknown

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gunmen shot at our consulate in the northern city of
Monterrey and threw a grenade onto the consulate grounds.
Local security for constituent posts in Mexico is mixed:
police protection was recently drawn down in Tijuana and
there is as yet no sustained police presence at our consulate
in Cuidad Juarez. Key Point: The recent attack on our
consulate in Monterrey underscores the importance of
sustained local police security at our constituent post
facilities. We urge that a sustained presence be established
in Ciudad Juarez, and that local security be re-established
and fortified in Tijuana.

--Bradley Will: After a lengthy investigation by Mexico's
Attorney General's office into the death of Bradley Will, who
was shot and killed in the city of Oaxaca in October 2006
while reporting on violence between anti-government
protesters and local police, there may have been a
breakthrough with the arrest of two suspects tied to one of
the protest groups. Human rights organizations, believe the
evidence points to plainclothes policemen and had criticized
the government for the lack of progress in the case. Some
groups may believe the arrests result from the government's
attempt to find scapegoats rather than pursue the true
perpetrators of the crime. Key Point: We welcome news of a
possible breakthrough in this case and hope that a thorough
investigation and prosecution will bring the true
perpetrators of this crime to justice. Our Congress remains
very interested in the resolution of this case.











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