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 MEXICO 00003088 002 OF 004 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. MEXICO 00003088 003 OF 004 --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 MEXICO 00003088 004 OF 004 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. 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 / GARZA