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
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

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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

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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.

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