PAN UNVEILS LEGISLATIVE, REFORM

C O N F I D E N T I A L SECTION 01 OF 05 MEXICO 011061


PASS TO HERMOSILLO
TIJUANA
MERIDA
MATAMOROS
GUADALAJARA
NUEVO LAREDO
CIUDAD JUAREZ

E.O. 12958: DECL: 11/17/2006
TAGS: PGOV ECON PINR KDEM MX
SUBJECT: PAN UNVEILS LEGISLATIVE, REFORM
AGENDAS


1. (U) CLASSIFIED BY MINISTER COUNSELOR FOR
POLITICAL AFFAIRS VAL MARTINEZ. REASON 1.5
(D)


2. (C) SUMMARY: ON NOVEMBER 7, 1997,
NATIONAL ACTION PARTY (PAN) PRESIDENT FELIPE
CALDERON UNVEILED THE PAN'S LEGISLATIVE
AGENDA FOR THE COMING YEAR, AS WELL AS ITS
PROPOSAL FOR REFORM OF THE STATE. THE PAN'S
AGENDA CLOSELY MIRRORS THE PARTY'S MORE THAN
FIFTY YEAR PURSUIT OF INCREASED FEDERALISM IN
MEXICO, DECENTRALIZATION OF GOVERNMENT
AUTHORITY, AND EMPOWERMENT OF STATE AND LOCAL
GOVERNMENT. AT THE SAME TIME, THE PROPOSAL
CONTAINS ELEMENTS INTENDED TO RAISE THE
PARTY'S PROFILE IN CONGRESS AND INCREASE ITS
ATTRACTION TO LOWER INCOME VOTERS, WHILE NOT
RUNNING COUNTER TO THE BUDGETARY AND REFORM
GOALS OF ITS MAJOR "ALLY" IN THE CHAMBER, THE
PARTY OF THE DEMOCRATIC REVOLUTION (PRD).
THE PAN GOAL OF REDUCING TAXES, PARTICULARLY
THE VALUE ADDED TAX FROM 15 TO 12 PERCENT, IS
NOT UNIVERSALLY ACCEPTED EVEN IN THE PAN AND
IS PROBABLY NEGOTIABLE. INTERESTINGLY
ENOUGH, NONE OF THE PAN'S 33 FEDERAL SENATORS
PARTICIPATED IN THE UNVEILING OF THE PARTY'S
AGENDA. A FORMER PAN CONGRESSMAN TOLD POLOFF
NOVEMBER 14 THAT COMMUNICATION AND
COORDINATION BETWEEN THE PARTY'S
REPRESENTATIVES IN BOTH HOUSES IS LACKING,
THAT THE PROBLEM EXISTS IN THE OTHER MAJOR
PARTIES AS WELL (THE INSTITUTIONAL
REVOLUTIONARY PARTY (PRI) AND THE PRD),AND
THAT SOME TYPE OF MECHANISM -- PERHAPS
CONFERENCE COMMITTEES-- MUST BE ESTABLISHED
BETWEEN THE TWO HOUSES TO ENSURE THAT THE
REFORM OF STATE EVENTUALLY PROSPERS. END
SUMMARY.

PAN: RAISING ITS PROFILE
--------------


3. (U) ON NOVEMBER 7, PAN PRESIDENT FELIPE
CALDERON AND PARTY LEADERS FROM THE CHAMBER
OF DEPUTIES UNVEILED TO REPORTERS AND
DIPLOMATS THE PAN'S LEGISLATIVE AND REFORM OF
STATE PROPOSALS FOR THE 57TH CONGRESS. PAN
COORDINATOR IN THE CHAMBER AND PRESIDENT OF
THE RULES COMMITTEE, CARLOS MEDINA, AND SUB-
COORDINATOR FOR SOCIAL POLICY, FRANCISCO JOSE
PAOLI BOLIO, OUTLINED THE PARTY'S LEGISLATIVE
AGENDA FOR THE COMING YEAR.


4. (U) THE PRESENTATION FOLLOWED A FLURRY OF
ACTIVITY BY CALDERON IN RECENT WEEKS TO RAISE
AND DISTINGUISH THE PAN'S PROFILE FROM ITS
GOVERNING ALLY IN THE CHAMBER, THE PRD.
CALDERON INITIALLY TRADED BARBS WITH THE
PRD'S SHARP-TONGUED COORDINATOR IN THE
CHAMBER, PORFIRIO MUNOZ LEDO. HE THEN
SOUNDED THE NEED FOR A BROAD CONSENSUS IN
STATE REFORM TO ACHIEVE FULL DEMOCRACY AND
SHARED COFFEE WITH PRD PRESIDENT -- AND MUNOZ
LEDO RIVAL-- ANDRES MANUEL LOPEZ OBRADOR.
MOST RECENTLY, CALDERON MET WITH PRESIDENT
ZEDILLO AT HIS LOS PINOS RESIDENCE, IN THE
WAKE OF THE UNSETTLED DISPUTE BETWEEN THE
OPPOSITION IN THE CHAMBER AND THE EXECUTIVE
BRANCH OVER WHETHER ZEDILLO OR SECRETARY OF
GOVERNMENT EMILIO CHAUYFFET SHOULD LEAD
NEGOTIATIONS WITH CONGRESS OVER REFORM OF THE
STATE.


5. (C) THE PAN BUDGETARY AND REFORM
PROPOSALS APPARENTLY ATTEMPT TO ACHIEVE
MULTIPLE OBJECTIVES. WHILE PAN DOGMAS OF
GREATER FEDERALISM AND DECENTRALIZATION OF
GOVERNMENT ARE HONORED, THE PARTY ALSO
PROPOSES MEASURES TO INCREASE ITS POPULARITY
WITH SECTORS THAT HAVE RARELY IDENTIFIED WITH
THE PAN: LOWER INCOME MEXICANS AND
INDIGENOUS PEOPLES. IN ADDITION, AND DESPITE
CALDERON'S EFFORTS TO BURNISH THE PAN'S
PROFILE, THE PROPOSAL APPEARS CAREFULLY
TAILORED TO AVOID RUPTURING THE DELICATE
COOPERATION ACHIEVED IN THE CHAMBER, NOT ONLY
WITH THE PRD, BUT WITH THE LABOR PARTY (PT)
AND ECOLOGICAL GREEN PARTY (PVEM) AS WELL.
THE PAN PROPOSALS ARE SUMMARIZED BELOW.

PAN'S BUDGET PROPOSAL: GREATER FEDERALISM
--------------


6. (U) REGARDING TAXES, THE PAN PROPOSES TO:

-- REDUCE THE VALUE ADDED TAX (IVA) FROM 15
TO 12 PERCENT.

-- EXEMPT GAS, ELECTRIC ENERGY, AND TELEPHONE
SERVICES FROM IVA FOR THOSE EARNING THE
EQUIVALENT OF LESS THAN THREE MINIMUM
SALARIES.

-- ELIMINATE THE BUSINESS ASSET TAX.

-- REDUCE THE TAX ON INCOME AND TO EXEMPT
THOSE WHO EARN LESS THAN 4 MINIMUM SALARIES.

-- ALLOW DEDUCTIONS FOR EDUCATIONAL EXPENSES,
AND FOR DONATIONS FOR RESEARCH AND TO
CULTURAL INSTITUTIONS.


7. (U) ON THE BUDGET SIDE, THE PAN PROPOSES
TO:

-- INCREASE FROM 20 TO 23 PERCENT FEDERAL
TRANSFERS TO STATES AND MUNICIPALITIES.

-- DOUBLE THE RESOURCES ALLOCATED TO
MUNICIPALITIES TO FIGHT POVERTY.

-- INCREASE EXPENDITURES IN EDUCATION AND
HEALTH, WHILE SIMULTANEOUSLY CANCELING
UNJUSTIFIED FEDERAL SPENDING.

-- DECREASE THE FEDERAL GOVERNMENT'S CURRENT
EXPENDITURES (EXCLUDES CAPITAL EXPENDITURES)
SPENDING BY FIVE PERCENT IN REAL TERMS.

-- MAINTAIN A BALANCE BETWEEN INCOME (TAXES)
AND BUDGETARY EXPENDITURES; THEREBY
PREVENTING FURTHER PUBLIC INDEBTEDNESS AND
REDUCING INFLATION.

-- INCREASE RESOURCES FOR EMERGENCIES AND
DISASTERS THROUGH A NATIONAL SOLIDARITY FUND.

-- INCREASE FUNDS FOR PUBLIC SECURITY, BUT BY
ALLOCATING THESE DIRECTLY TO STATES AND
MUNICIPALITIES.

-- PROVIDE NECESSARY SUPPORT TO THE
AGRICULTURAL AND PRIMARY SECTORS, INCLUDING
RURAL LABORERS.

-- PURSUE PROGRAMS ESTABLISHED TO AUDIT
CONASUPO, BANK AND TOLL ROAD RESCUE PROGRAMS,
AND TO INCREASE INCOME FOR PENSIONERS AND
RETIRED PERSONS.

-- PROVIDE GREATER PUBLIC INVESTMENT IN
SCIENCE AND TECHNOLOGY.

-- STRENGTHEN INVESTMENT PROJECTS, PROVIDE
OPPORTUNITIES FOR WORKERS TO INVEST IN THE
OWNERSHIP OF BUSINESSES, AND ADDRESS THE
BURDEN OF OVERDUE LOANS AND PRIVATE
INDEBTEDNESS.


8. (U) DURING THE PRESENTATION MEDINA AND
PAOLI BOLIO STRESSED THAT THE PAN'S SOCIAL
AND ECONOMIC PROPOSALS ARE ROOTED IN OVER
FIVE DECADES OF PROPOSALS BY THE PARTY IN
CONGRESS.

THE PARTY'S STRATEGIC FOCUS
--------------


9. (U) CONGRESSIONAL DEPUTY JUAN MIGUEL
ALCANTARA SORIA, DEPUTY COORDINATOR UNDER
MEDINA FOR POLITICAL AND JURIDICAL ISSUES,
OUTLINED THE PAN'S STRATEGIC FOCUS FOR THE
57TH LEGISLATURE.

PROMOTING PUBLIC PARTICIPATION IN DEMOCRACY
--------------


10. (U) THE PAN INTENDS TO IMPEL REFORM OF
THE MEXICAN STATE BY:

-- DEMOCRATIZING THE PUBLIC'S RIGHT TO
INFORMATION THROUGH NECESSARY INITIATIVES AND
REFORMS.

-- PROMOTING PARTICIPATORY DEMOCRACY THROUGH
A CONSTITUTIONAL REFORM ALLOWING REFERENDUMS,
PLEBISCITES, AND POPULAR INITIATIVES.

-- BRINGING UP TO DATE LEGISLATION CONCERNING
CONGRESS' RESPONSIBILITIES IN ORDER TO
RESPOND MORE EFFICIENTLY TO THE GREATER
POLITICAL PLURALISM IN MEXICO TODAY.

-- CONSOLIDATING JUDICIAL REFORM, TO INCLUDE
INCORPORATING ADMINISTRATIVE TRIBUNALS IN THE
JUDICIARY.

EMPOWERING THE MUNICIPALITIES
--------------


11. THE PAN WILL WORK FOR TRUE FEDERALISM IN
MEXICO BY:

-- MAKING OPERATIONAL THE "FREE MUNICIPALITY"
THROUGH REFORM OF ARTICLES 115, 116, AND 124
OF THE CONSTITUTION.

-- STRENGTHENING THE ABILITY OF
MUNICIPALITIES TO COMBAT POVERTY BY GIVING
THEM FULL CONTROL OVER THE FUNDS PROVIDED IN
SECTION 26 OF THE FEDERAL BUDGET.

-- ACHIEVING A JUST DISTRIBUTION OF FISCAL
RESOURCES PROVIDED BY THE FEDERAL GOVERNMENT
BY MODIFYING THE BUDGET AND THE LAW OF FISCAL
COORDINATION.

-- PROVIDING AUTHORITIES TO THE LEGISLATIVE
ASSEMBLY OF THE FEDERAL DISTRICT (DF) TO
EXPEDITE THE GOVERNING STATUTE OF THE DF, THE
GOAL OF WHICH IS TO GIVE THE DF JURIDICAL,
POLITICAL AND ADMINISTRATIVE AUTONOMY.

"HUMANIZING" PUBLIC POLICY
--------------


12. (U) THE PAN WILL ACHIEVE A HUMANISTIC
PUBLIC POLICY IN TERM OF TAXATION AND PUBLIC
EXPENDITURES BY:

-- CARRYING OUT AN INTEGRAL FISCAL REFORM
THAT FOSTERS PRODUCTIO, SAVINGS, INVESTMENT,
ECONOMIC GROWTH, DEREGLATION, AND PURCHASING
POWER OF MEXICAN CITIZENS.

-- SUBSTANTIALLY INCREASING THE EDUCATON
BUDGET, WITH THE GOAL OF MEETING EDUCATIONAL
DEMAND AND OPTIMIZING ITS QUALITY, WHILE AT
THE SAME TIME DECENTRALIZING EDUCATIONAL
PLANS AND PROGRAMS;

-- COMBATING CORRUPTION AND IMPUNITY BY
STRENGTHENING THE CHIEF ACCOUNTING OFFICE THE
TREASURY.

SOCIAL PROGRESS ALSO A PRIORITY
--------------


13. (U) THE PAN WANTS TO ACHIEVE AN
INCLUSIVE, ORDERED, AND DIGNIFIED SOCIAL
DEVELOPMENT BY:

-- PROMOTING THE PAN INITIATIVE TO PROMULGATE
A NEW FEDERAL LABOR LAW THAT REEVALUATES AND
ENRICHES SALARIES; IMPROVES WORKING
CONDITIONS FOR WOMEN; ESTABLISHES SOCIAL
JUDGES WITH JUDICIAL AUTHORITY; MAKES
POSSIBLE JOINT-EMPLOYEE OWNERSHIP OF
BUSINESSES, BEGINNING WITH 2.5 PERCENT OF A
PARTICULAR ENTERPRISE; IN ADDITION, THE
JURIDICAL STRUCTURE OF THE NATIONAL
COMMISSION OF MINIMUM SALARIES MUST BE
REVISED.

-- ADDRESSING IN A COMPASSIONATE AND
EFFICIENT FASHION RURAL PROBLEMS, KEEPING IN
MIND THESE INVOLVE ISSUES OF HUMAN DIGNITY.

-- ADDRESSING PROBLEMS OF INDIGENOUS PEOPLES
AND COMMUNITIES, WITH THE GOAL OF PRESERVING
THEIR IDENTITY, CULTURE, AND RIGHTS THROUGH
NECESSARY CONSTITUTIONAL REFORMS AND LEGAL
MEASURES.

-- ESTABLISHING A NEW POLICY OF PUBLIC
SECURITY THAT PROMOTES CITIZEN PARTICIPATION
AND EDUCATION TO FIGHT CRIME; TIMELY
ATTENTION SHOULD BE GUARANTEED TO CRIME
VICTIMS, AS WELL AS EFFICIENT PROSECUTION AND
SOCIAL REHABILITATION OF CRIMINALS.

-- DETAINING THE CONSTANT INCREASE IN FUEL
PRICES THROUGH APPROPRIATE LEGISLATION.

-- CREATING THE JURIDICAL BASES NECESSARY TO
END PRIVATE OVER-INDEBTEDNESS, WITH A
TRANSPARENT DISTRIBUTION OF THE COSTS BETWEEN
DEBTORS, INVESTORS, BANKS AND THE GOVERNMENT.


14. (C) COMMENT: OBVIOUSLY THE PAN'S BLUE
PRINT FOR REFORM IS SUBJECT TO DEBATE AND
COMPROMISE, BOTH INSIDE AND OUT OF THE PARTY.
GUANAJUATO GOVERNOR VICENTE FOX, A SELF-
PROCLAIMED CANDIDATE FOR THE PARTY'S
PRESIDENTIAL NOMINATION IN 2000, DISAGREES
WITH THE PARTY'S POSITION TO CUT TAXES. PAN
SENATOR JUAN ANTONIO GARCIA VILLA TOLD MEXICO
CITY DAILY "REFORMA" ON NOVEMBER 13 THAT
REDUCING THE IVA TO 12 PERCENT IS NEGOTIABLE,
WHILE THE PARTY'S PROPOSAL TO PROVIDE GREATER
RESOURCES TO MUNICIPALITIES IS NOT. POLOFF
DISCUSSED THE PAN'S AGENDA WITH ALEJANDRO
DIAZ, FORMER PAN DEPUTY AND CURRENTLY
TECHNICAL SECRETARY TO THE CHAMBER'S
INTERNATIONAL ISSUES COMMITTEE, CHAIRED BY
PAN DEPUTY JULIO FAESLER. DIAZ CONFIRMED
THAT THE PROPOSAL IS ROOTED IN THE PAN'S HALF
CENTURY LONG STRUGGLE TO EXTEND FEDERALISM IN
MEXICO, END THE CENTRALIST STATE, AND CONVEY
THE RESOURCES NECESSARY TO STATES AND
MUNICIPALITIES TO MEET THE NEEDS OF THEIR
CONSTITUENTS. DIAZ NOTED THAT DIFFERENCES
EXIST BETWEEN THE REFORM AGENDAS OF THE PAN
AND THE PRD, BUT THAT THESE ARE "NUANCES" AND
ARE NOT INSURMOUNTABLE. BOTH, FOR EXAMPLE,
PROPOSE DOUBLING RESOURCES FOR COMBATING
POVERTY AND INCREASING SPENDING ON EDUCATION
AND HEALTH.


15. (C) POLOFF NOTED TO DIAZ THAT NONE OF
THE PAN'S 33 SENATORS PARTICIPATED IN THE
PRESENTATION OF THE PARTY'S PROPOSAL. DIAZ
INDICATED THAT LACK OF COMMUNICATION AND
COORDINATION BETWEEN PARTY REPRESENTATIVES IN
THE CHAMBER AND THE SENATE IS A PROBLEM, ONE
THAT EXISTS FOR THE OTHER MAJOR PARTIES AS
WELL (THE PRD AND PRI). THIS IS AN ISSUE
THAT MUST BE ADDRESSED THROUGH THE CREATION
OF A MECHANISM LIKE CONFERENCE COMMITTEES,
ESPECIALLY NOW THAT THE TWO HOUSES OF
CONGRESS ARE CONTROLLED BY DIFFERENT PARTIES
OR COALITIONS, THE PRI IN THE SENATE, AND THE
PRD, PAN, PT, AND PVEM IN THE CHAMBER. DIAZ
ADDED THAT LITTLE, IF ANY, PROGRESS WOULD BE
MADE ON REFORM OF THE STATE MATTERS BETWEEN
NOW AND YEAR'S END, WITH CONGRESS' FOCUS
CLEARLY RESTING ON DEBATING AND APPROVING THE
BUDGET. END COMMENT.

BRAYSHAW