PRI,S CONGRESSIONAL SELECTION PROCESS REVEALS

C O N F I D E N T I A L SECTION 01 OF 03 MEXICO 002545 SENSITIVE SIPDIS NSC FOR DAN RESTREPO. WHA FOR DAS ROBERTA JACOBSON, MEX DIRECTOR LEE. E.O. 12958: DECL: 07/24/2019 TAGS: PREL PGOV PINR MX SUBJECT: PRI,S CONGRESSIONAL SELECTION PROCESS REVEALS PARTY DIVIDES Classified By: Confidential by Political Minister Counselor Gustavo Del gado. Reason: 1.4 (b),(d). ¶1. (C) Summary. On August 25, the PRI selected Francisco Rojas to be coordinator of the party's Chamber of Deputies bloc. Backroom negotiations and factional bickering characterized the selection process, leading to cracks in what has otherwise been a fairly united public party facade. Rojas is a former director of PEMEX and a close associate of ex-President Salinas; his selection highlights the party's focus on economic matters. Rojas' selection may also serve to strengthen party stalwart, Mexico State Governor Enrique Pena Nieto, who will seek Salinas' support to become the PRI's candidate for president in 2012. The PRI's lengthy coordinator selection process demonstrates the party's continued struggle with factionalism will only increase over the next legislative period. The PRI's legislative agenda continues to emerge with a particular focus on the economy and the budget, which will undoubtedly put President Calderon on the defensive with respect to fiscal policy in 2010 as the party seeks greater social spending. End Summary. Party Wrangles over Positions in Congress -------------- ¶2. (C) The PRI's 237 Chamber deputies voted on August 25 to name Francisco Rojas as the coordinator of its Chamber of Deputies bloc. The vote was merely a rubber stamp, as legislators representing various factions, including the influential trade union National Federation of Popular Organization (CNOP) agreed the night before to endorse Rojas' candidacy. Even earlier, press reports indicate that former President Carlos Salinas de Gortari, party leadership, and Sonora and Mexico State PRI deputies agreed to name Rojas, a former director of state oil company PEMEX under the Salinas administration and a close ally of the ex-president. PRI sources leaked to the Mexico City daily, "La Reforma," on August 18 that Beatriz Paredes had decided to retain the party presidency. Incoming PRI deputy Carlos Flores Rico told Poloffs on August 21 that Paredes' plan to remain as party president would better serve her own political agenda as a possible 2012 presidential contender. Flores Rico said that Salinas continues to exert considerable influence over �A;the party. Salinas drove Rojas' selection process, with Paredes' likely approval. Flores Rico also implied that Rojas is closely associated with Mexico State Governor Enrique Pena Nieto, godson and acolyte of Salinas, which could be a boon for the latter as he seeks to build a powerful political base in preparation for a presumed presidential bid. ¶3. (C) The backroom negotiations to select Rojas have rankled other PRI factions. Negotiations, in combination with jockeying for the distribution of leadership positions on key committees, led to some cracks in what has otherwise been a fairly united public party facade since 2006. In an August 19 gathering in Oaxaca State Governor Ulises Ruiz's Mexico City home, a group of incoming legislators, including Flores Rico, proposed Cesar Augusto Santiago, a five time federal deputy, as an alternative. Flores Rico claimed that disagreements over the selection process and the preferred approach in Congress to President Calderon and his National Action Party (PAN) drove the debate. He said that the group behind Cesar Santiago advocated a more forceful strategy to drive the congressional agenda, while the Salinas-Pena Nieto-Rojas front favors maintaining the status quo of more accommodation and negotiation. ¶4. (C) Other observers speculate that Santiago's candidacy was more a bargaining ploy to wrest committees, like Constitutional Points, away from Pena Nieto allies and to ensure that the Mexico State governor is unable to hijack the congressional process. Governor Ruiz, as the PRI leader with the third largest representation in congress, almost certainly sought to use the negotiations to check Pena Nieto's authority. The PRI legislative bloc's unanimous acquiescence to Rojas' nomination and Cesar Santiago's MEXICO 00002545 002 OF 003 decision not to register as a candidate suggests that the factions reached a behind-the-scenes accommodation. This theory -- rather than that of real strategic divide -- is closer to the truth. ¶5. (C) Pena Nieto's growing profile may increasingly be a point of contention within the party. Arnulfo Valdivia Machuca, Pena Nieto's international relations coordinator, told Poloff on August 21 that he disagrees with the characterization of Rojas as a "Salinas man." He did admit, however, that Pena Nieto is consolidating a strong position for himself in Congress, with former Mexico State Secretary of Finance Luis Videragay likely to head the budget committee and Rojas also hailing from the same state. Videragay himself told Emboffs on August 25 that the Mexico State legislative bloc is pleased with Rojas' leadership. Valdivia Machuca also noted that PRI Senate leader Manlio Fabio Beltrones, while increasingly isolated in the party, is still a force with whom Pena Nieto will have to reckon. He claimed that Beltrones was behind the Congress Permanent Committee's request that the National Electoral Council investigate several governors, including Pena Nieto, for illegally using public funds to finance PRI campaigns. Beltrones' conciliatory public statements last week toward the Calderon government may also indicate that the Senate leader is trying to enshrine his role as key interlocutor with the executive, make himself indispensable to the party, and counter any attempt by Pena Nieto to further segregate him. Agenda Items -------------- ¶6. (C) The PRI's legislative agenda continues to center on economic and budget issues. Flores Rico said the party will not make major budget cuts except in administrative expenditures, but reiterated that the party will advocate for more distribution to state governments. Given the country's grim fiscal picture, Flores Rico added that the PRI is unlikely to approve major increases in the security budget, but said that it would at least maintain the status quo. The PRI will not approve any tax increases, according to Flores Rico, but would instead press for technical or administrative measures to improve tax collection. Governor Pena Nieto told Charge d'Affaires on August 21 that he expects the Calderon administration will propose some tax increases in its "bouquet" of economic proposals. He did not rule out some sort of accommodation with the government, but said that few are willing to bear the political cost of backing such measures. Videragay echoed these sentiments, arguing that Mexico does need to wean itself off oil dependency, but noted that an economic crisis is hardly the appropriate moment for major tax increases on an already burdened population. Additionally, press reports indicate that the PRI's emergency economic package continues to include measures to transfer greater spending authorities and education, social development, and agricultural programs to the states. Flores Rico criticized the GOM's security strategy but offered little in the way of concrete alternative proposals. ¶7. (C) On August 25, Rojas said in a victory address to the PRI legislators that the party will look for consensus with its opponents when possible but will ready to use its congressional majority when necessary. He emphasized that the party will not try to "co-govern" with Calderon and will not serve as an obstructionist force. He focused on the country's economic challenges -- paying little lip service to security issues -- and said that treating the economic crisis should be the first priority of the upcoming session. Videragay told Emboffs that Rojas, having served in a presidential administration, understands the difficulties of governing better than someone who has only been part of the opposition and will be responsible in dealing with the GOM. Videragay said that communication between the Calderon government and the PRI is relatively open, and he is optimistic about the coming session. Rojas' "serene" personality and serious economic credentials will be useful in working with other parties, he noted. Under Rojas' leadership, the PRI is likely to negotiate concessions from MEXICO 00002545 003 OF 003 Calderon and the PAN on the budget, for example, by cooperating with the GOM's security strategy, particularly given its overall lack of a different approach and its desire to improve its law and order credentials. ¶8. (SBU) Rojas has been an active member of the PRI since the 1960s. In addition to having served as PEMEX director, Rojas also worked in the Secretary of Finances under the Miguel de la Madrid administration, served as the Finance Secretary on the PRI's National Executive Committee, and was Beltrones' private secretary. He graduated from the National Autonomous University of Mexico (Mexico) with a degree in accounting. Comment -------------- ¶9. (C) The PRI's lengthy coordinator selection process demonstrates the party's continued struggle with real factionalism will only increase over the next legislative period. The PRI was relatively adept over the past three years at maintaining a unified public face to ensure a midterm elections victory. The party is now looking toward the 2012 presidential contest, however, and securing the presidency is not just a party goal, but an individual desire of several powerful leaders who may be willing to scramble a few proverbial PRI eggs in order to make themselves a presidential omelet. 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 / FEELEY