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Viewing cable 06MEXICO1626, ANALYSTS GIVE CANDIDATES' PROPOSALS LOW MARKS

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Reference ID Created Released Classification Origin
06MEXICO1626 2006-03-28 18:55 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Mexico
VZCZCXRO4818
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1626/01 0871855
ZNR UUUUU ZZH
R 281855Z MAR 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 9843
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
UNCLAS SECTION 01 OF 02 MEXICO 001626 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/MEX, WHA/EPSC 
STATE PASS USAID FOR LAC:MARK CARRATO 
TREASURY FOR IA MEXICO DESK: JASPER HOEK 
COMMERCE FOR ITA/MAC/NAFTA: ANDREW RUDMAN 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV PGOV PINR MX
SUBJECT: ANALYSTS GIVE CANDIDATES' PROPOSALS LOW MARKS 
 
Ref: Mexico 1124 
 
------- 
SUMMARY 
------- 
 
1. (SBU) A group of forty prominent political and economic 
experts brought together by a new Mexican think-tank 
analyzed the three main presidential candidates' proposals 
in a report called "Evaluate and Decide."  The analysts 
found candidates' proposals incomplete, with all failing to 
identify financing sources or produce execution plans.  The 
report also ranked the three candidates based on the design, 
feasibility, and implementation of their proposals.  Leading 
the overall ranking was Institutional Revolutionary Party 
(PRI) Roberto Madrazo, followed closely by National Action 
Party (PAN) candidate Felipe Calderon.  Front-runner Andres 
Manuel Lopez Obrador (AMLO) from the Party of the Democratic 
Revolution (PRD) came in last.  All three were on the low 
end of the scoring scale.  End summary. 
 
--------------------------------------- 
ANALYSTS EVALUATE CANDIDATES' PLATFORMS 
--------------------------------------- 
 
2. (SBU) The recently created Espinosa Yglesias Studies 
Center recently brought together 40 experts from Mexican 
universities and research centers to evaluate and compare 
the three main candidates' platforms.  This represents the 
third such effort from civil society to provide an unbiased 
assessment of candidates' proposals.  The other two efforts 
were Televisa's "Dialogues for Mexico" (reftel) and 
Historian Enrique Krauze's website "Lupa Ciudadana."  The 
purpose of this exercise was to "rank" the candidates based 
on their proposals, in order to help Mexicans evaluate their 
choices.  The project divided the proposals into five main 
issues: rule of law, political, social, international and 
economic.  The experts were divided into five groups and 
evaluated each of the issues based on the following 
criteria: design, feasibility and implementation.  Each of 
the candidates were graded on a 0 (worst) to 5 (best) scale. 
 
3. (SBU) Unsurprisingly, the findings revealed the proposals 
lacking in detail and substance.  Final grades ranged from 
zero to two.  Overall, Madrazo rated highest with 1.5, 
followed by Calderon with 1.4, and AMLO with 0.9.  In the 
economic proposals, Calderon led the ranking with 2.5, 
followed by Madrazo with 2.2, and AMLO with 1.3.  Analysts 
studied and compared the candidates' economic proposals on 
monetary and fiscal policies, employment and infrastructure. 
 
--------------- 
MONETARY POLICY 
--------------- 
 
4. (SBU) Madrazo promised continuity of the current monetary 
policy as it has been successful in bringing economic 
stability.  Calderon's intentions are ambiguous, stating 
that the Bank of Mexico's priority should be controlling 
inflation, but that it should also consider the exchange 
rate and the impact of the monetary policy on economic 
growth.  AMLO has explicitly proposed modifying the Bank of 
Mexico's objective to include economic and employment 
growth.  He proposed designating experts in a special 
commission to reform monetary and financial laws.  Analysts 
were concerned about AMLO's proposal to modify the central 
bank's mandate, commenting that this was risky and that any 
changes could hurt one of the pillars of Mexican economic 
stability.  (Both AMLO and his economic advisor Ramirez de 
la O have repeatedly promised continued macroeconomic 
stability.) 
 
--------------------------------------- 
AGREEMENT ON THE NEED FOR FISCAL REFORM 
--------------------------------------- 
 
5. (SBU) All three candidates agreed to restructure the tax 
system to make it simpler, reduce tax evasion, and increase 
the taxpayer base.  Madrazo acknowledged the government's 
dependence on oil revenues, but failed to present a specific 
proposal to increase tax collection.  Calderon proposes a 
flat income tax rate, which has been successfully applied in 
some Eastern European countries.  Despite Calderon's 
promises to give tax exemptions to low-income families, 
analysts believe the proposal is not politically feasible in 
 
MEXICO 00001626  002 OF 002 
 
 
Mexico where the income distribution is very unequal. 
Calderon will have problems trying to pass it through a 
divided Congress.  Surprisingly, the analysts thought AMLO's 
proposal to be the most feasible one, but the most naive as 
well.  He intends to raise tax collection and eliminate 
evasion by simplifying the process and managing taxes more 
efficiently.  AMLO would not tax food and medicine, but has 
said that richer people will pay more taxes. 
 
-------------------------- 
A MORE FLEXIBLE JOB MARKET 
-------------------------- 
 
6. (SBU) To create more jobs, Calderon has proposed more 
flexible hours for workers, but has not explicitly mentioned 
any labor reform.  Madrazo said he would push for labor 
reform, which was also deemed politically difficult by the 
analysts.  Former presidents Carlos Salinas and Ernesto 
Zedillo failed to pass labor reforms despite the PRI's then 
congressional majority.  AMLO has promised to increase 
minimum wages above the inflation, raising concerns about a 
potential inflationary spiral. 
 
--------------------------------------------- ------ 
INFRASTRUCTURE PROJECTS WITH PUBLIC-PRIVATE CAPITAL 
--------------------------------------------- ------ 
 
7. (SBU) On infrastructure, the three candidates agreed on 
the need for more investments in highways, railways, 
airports, and ports to increase the country's 
competitiveness.  Madrazo didn't elaborate further on how he 
would obtain financing.  Calderon has mentioned tapping 
private investment, capital markets, and institutional 
investors (private pension funds), loans from international 
organizations, federal, state, and municpal funding, and the 
use of oil revenue surpluses.  Lopez Obrador emphasizes the 
promotion of public and private co-investment programs 
similar to what he did in Mexico City. 
 
------- 
COMMENT 
------- 
 
8. (SBU) It is unfortunate, although not surprising, that 
analysts still consider the candidates' proposals to be 
lacking in detail.  The candidates' very low scores are 
somewhat more surprising, but not necessarily fair given the 
nature of political campaigns, which tend to favor general 
promises over substantive details.  With little time left in 
the campaign to expand on their proposals, we are likely to 
see candidates focusing even more on their confrontational 
and repetitive speeches, attentive only to their popularity 
levels, which will be supported by massive expenditures on 
advertising. 
GARZA