BUSINESS LEADERS SUPPORT MEXICAN MILITARY AND MERIDA

UNCLAS SECTION 01 OF 02 MONTERREY 000158

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: SNAR SOCI PGOV KCOR ECON MX
SUBJECT: BUSINESS LEADERS SUPPORT MEXICAN MILITARY AND MERIDA
INITIATIVE; DEEPER REFORMS STILL NEEDED

MONTERREY 00000158 001.2 OF 002



1. (SBU) Summary. ON April 23 Post convened a group of
respected business leaders for an in-depth discussion of
Mexico's progress on security, the role of the military and
their perspective on the Merida Initiative. The business
leaders thought that Mexico could be at a tipping point in terms
of its ability to defeat the drug cartels and develop clean
institutions. Our interlocutors fully supported President
Calderon's use of the military to fight the cartels, but they
saw little trust in other public institutions, particularly the
state and municipal police. Without effective state and local
law enforcement, one businessman lamented, it would be difficult
for the GOM to make progress in the medium term even though it
is now registering short term success. They also strongly
supported the Merida Initiative, and hoped that the USG would
extend it and expand contemplated arms trafficking reduction
efforts, intelligence sharing and police training. Finally,
these leaders did see some hopeful signs that the Mexican public
supports fighting the cartels, citing the increased numbers of
security complaints (denuncias) being filed. End Summary.



Mexico at a Tipping Point vis-a-vis Corruption




2. (SBU) Several businessmen lamented how just a few
years ago Monterrey was a very safe city, but now its citizens
face a large increase in drug usage, kidnappings and extortion,
petty crime, and highway cargo theft. Manual Zambrano, former
head of the business association Coparmex, noted that some
businessmen have permanently left Monterrey for the U.S. because
they were threatened or are simply scared. Julio Cesar Cepeda,
president of the business association CANACO, complained that
authorities do not bother to punish petty crime, creating a
sense of impunity. Businesses are incurring substantial costs
because of the deterioration of the security environment. David
Eaton of Kansas City Southern Railroad (KCS) said that 25% of
their salary costs are for security for the trains, but it still
isn't enough. In another meeting, John Castany, president of
the Nuevo Leon Maquila Association, commented that businesses
are not leaving due to security concerns, but firms may not
decide to locate to Mexico if the decision is close between
Mexico and another country.




3. (SBU) Eaton argued (and the others agreed) that Mexico
is at a tipping point that will decide if the Government of
Mexico can effectively take on the drug cartels. Eaton warned
that if Mexico (and the U.S.) waste time, the Mexican people
could lose confidence in their government, the government could
become so corrupt that it will not fight the drug cartels, and
it would be extremely hard after that to rebuild state
institutions.




4. (SBU) Our business interlocutors believe that the key
issue is corruption and the deterioration of Mexican public
institutions. Carlos Jauregui, head of the Nuevo Leon Citizens
Security Advisory Committee, described a feeling of insecurity.
For instance, if a person's relative is kidnapped, their family
usually does not report the crime since they lack confidence in
the police. Similarly, Eaton commented that if KCS trains are
vandalized in outlying towns, KCS receives little help from the
local police, either because they are not capable (with little
equipment) or they are corrupt. Several businessmen commented
how the police were still very poorly paid, making them
susceptible to corruption. Our contacts agreed that police
reforms have not been effective, although in some areas, such as
in the wealthy suburb of San Pedro, the municipal police are far
better than in other metropolitan areas. Jauregui added that
judicial reform is essential to improving the security
situation. However, according to Jauregui the reforms such as
oral trials are a sham, because in that particular case the
government has no clear plan, the reform covers only a few
offenses, and they have been poorly implemented.




5. (SBU) Despite these problems, the business leaders did
not think that the Mexican public has `woken up' to the problem.
Several commented that in other countries it took a spectacular
assassination or other terrible event to galvanize the people
into action, and this has not yet happened in Mexico. They

MONTERREY 00000158 002.2 OF 002


discussed several other regions, such as Sicily or Colombia,
where a dramatic event turned the tide of public opinion so that
the average person became interested in working to improve the
situation.



Support for the Military; When Can the Police Step Up?




6. (SBU) Echoing comments that post has heard many times,
the businessmen fully supported President Calderon's use of the
Mexican military to fight the cartels. Cepeda emphasized that
the people trust the military, while Eaton went farther, arguing
that the military had prevented a possible failed Mexican state
by calming the situation and restoring order in violent areas.
In some places the military is the only effective arm of the
government. For example, in the northern rural sections of
Nuevo Leon the drug cartels have intimidated or compromised the
mayors and police, so only the military will confront the
cartels. However, while they agreed that the continued use of
the military to police Mexico is not sustainable, our contacts
did not see any plan to prepare state and local police to take
up the fight if and when the soldiers return to their barracks.




The Merida Initiative is a Great Start but Mexico Needs More Help




7. (SBU) Our business contacts were unanimous in their
praise of the Merida Initiative, but called for even more help.
PAN Nuevo Leon deputy Francisco Cantu argued that Mexico needs
more money, intelligence sharing, and effective means to root
out corruption. Zambrano commented that controlling arms
trafficking was critical to restricting the means of the cartels
to attack the GOM. All thought that the Merida Initiative will
take much longer than three years to be effective. Finally,
since the Mexican police must eventually take over the army's
role, they saw the importance of helping to strengthen the state
and local police, including higher pay to reduce the incentive
for corruption.



Several Hopeful Signs




8. (SBU) Despite the general gloom, the business leaders
did see several hopeful signs. They pointed to the success of
the Mexican military in arresting a number of important cartel
leaders. In addition, they were very positive in the potential
of the Merida Initiative. PAN deputy Cantu thought that there
had been slow advances in intelligence at the federal level.
Business leader Cepeda stated that there have been an increased
number of public complaints filed with the Mexican Federal
Police (PFP) and the Mexican military, indicating the people
will denounce criminals if they have confidence in the
institutions.




9. (SBU) Comment. Based on this conversation and many
others like it, in the Monterrey region there is strong public
support for the Mexican military and a belief that the Merida
Initiative is the right track. We agree that it is crucial to
strengthen Mexican law enforcement and judicial institutions
because the military cannot fight this battle indefinitely.
Reliable state and municipal police forces are indispensible in
the long run to win the battle against corruption and narcotics
traffickers. End Comment.
WILLIAMSON