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Viewing cable 06MEXICO4019, INFLUENCE OF STATES AND GOVERNORS OVER FEDERAL

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Reference ID Created Released Classification Origin
06MEXICO4019 2006-07-19 22:38 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Mexico
VZCZCXRO5628
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #4019/01 2002238
ZNR UUUUU ZZH
R 192238Z JUL 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 2254
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS SECTION 01 OF 02 MEXICO 004019 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/MEX, WHA/EPSC, AND EB/IFD 
STATE PASS USAID FOR LAC:MARK CARRATO 
USTR FOR JOHN MELLE 
TREASURY FOR IA MEXICO DESK:JASPER HOEK 
COMMERCE FOR ITA/MAC/NAFTA:ANDREW RUDMAN 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ELAB ENRG PGOV MX
SUBJECT: INFLUENCE OF STATES AND GOVERNORS OVER FEDERAL 
INITIATIVES (SECOND OF THREE-PART SERIES ON MEXICAN 
FEDERAL-STATE RELATIONS) 
 
REF: MEXICO 3961 
 
1. (SBU) Summary: State governments have limited ability to 
influence national policies.  The local legislature of each 
state enacts legislation that applies only within its 
territorial boundaries.  However, state legislatures do have 
a constitutional right to introduce legislation in the 
national congress.  For macroeconomic reforms requiring 
constitutional change, as energy reform would, the proposed 
amendment must be approved by a majority of the state 
legislatures following a two-thirds vote of approval of those 
present in each house of the Mexican congress.  Governors can 
and often do influence proposed legislation.  End summary. 
 
---------------------- 
Power of the Governors 
---------------------- 
 
2. (SBU) Many state governors wield considerable power and in 
some cases influence the voting behavior of state 
representatives in the national Senate and Chamber of 
Deputies.  Governors influence national legislation through 
the political party system and through CONAGO, the National 
Governors Conference, which is a national force for states 
rights.  Mexican analysts agree that the relative influence 
of state governors depends on their political party and 
standing within that party.  In general, PRI governors 
concentrated in the north have greater influence than other 
governors, especially those from the PRD.  The influence of 
PAN governors lies somewhere in between that of the other two 
parties.  Our interlocutors said it is the governors, not the 
political parties, who shape public perceptions through state 
spending. 
 
3. (SBU) We were told that governors typically weigh in on 
the selection of their state candidates for the national 
legislature, although the political party ultimately decides 
who runs.  Party discipline is expected and imposed on 
legislative representatives.  However, there is some tension 
between the governors and party leadership in the cases of 
the PRI and PRD.  Within the PRI, for example, a conflict has 
emerged between the majority of governors (primarily in the 
north) who are more likely to be reformists and support 
building a coalition with the PAN, and a minority of 
governors (mostly in the south) who supported Madrazo's party 
leadership and calls to ensure PRI independence, and identify 
more with the "dinosaur" wing of the party.  In the PRI, the 
state governors had a great deal of influence over the 
selection of Senate and Chamber of Deputy candidates.  PRI 
senators are more likely than deputies to support structural 
reforms and have good working relationships with the PRI 
governors.  Private sector analysts believe that although 
some of the recently-elected PRI deputies held allegiances to 
Roberto Madrazo, their loyalties may now begin to shift. 
 
---------------------- 
A New Day for the PRI? 
---------------------- 
 
4. (SBU) Some observers believe that Madrazo's spectacular 
defeat will embolden the PRI's progressive faction and make 
it easier for the technocrat-minded governors to assert 
themselves.  15 PRI governors have signed a document 
acknowledging the Federal Electoral Institute's (IFE's) 
results declaring Felipe Calderon the presidential winner; 
the only PRI governors who did not were Jesus Silverio 
Cavazos from Colima and Humberto Moreira from Coahuila.  It 
is likely that the PRI governors will be entering into a 
prolonged battle of wills with the national party hierarchy 
to see which has more influence over the party's future 
direction.  PAN governors and legislatures are relatively 
unified, by comparison.  However, the consequence of internal 
party divisions within the PRI and PRD is that governors have 
not quite become Mexico's new power-brokers, as some have 
claimed. 
 
5. (SBU) Economic and other analysts said that governors have 
other means to facilitate or frustrate federal reform 
initiatives.  In those states where the governor comes from 
the majority party in the state legislature, he may influence 
those representatives to introduce or lobby in favor of 
initiatives in the national congress.  Governors can also 
 
MEXICO 00004019  002 OF 002 
 
 
impact national policies through their work with the relevant 
ministries.  For example, they interact regularly with 
Hacienda, Mexico's finance ministry, through the Permanent 
Commission of Fiscal Officials.  A senior official at 
Hacienda told Econoff that during the November 2005 
negotiations for Pemex fiscal reform, the governors 
maneuvered within CONAGO and behind the scenes with Hacienda 
to prevent the Senate's attempts to reduce Pemex's tax rates, 
pressuring President Fox to veto the senate's bill and 
instead pass a lighter reform. 
 
------------------ 
Who Supports What? 
------------------ 
 
6. (SBU) It is a common view that the governors do not share 
a consensus for structural reforms.  With regard to fiscal 
reform, most governors have been spoiled in the face of high 
oil prices, unwilling to make the hard choices needed to 
improve their tax regimes.  This is a priority concern for 
the Bank of Mexico, among others.  However, the governors' 
perspective is that they do collect taxes on behalf of the 
federal government and the transfers they receive represent 
their just due.  None wants to be the first to raise taxes. 
The general view is that they would prefer an executive order 
compelling them to do so, leaving the president to face the 
political fallout.  One private sector analyst told us that 
it is possible that President Fox will propose extending the 
VAT to food and medicine, taking the political heat before 
the next president is sworn in.  Most governors would 
apparently support fiscal reform that replaces petroleum 
revenues with a sufficient increase in tax revenues. 
 
7. (SBU) The northern governors support labor reform, but few 
expect they will be prepared to push for a comprehensive 
agreement that involves taking on the unions.  Mexican 
political observers believe it should be possible to gain the 
support of southern governors for a reform of the labor law 
that makes hiring and firing of workers more flexible. 
Energy reform will be the big problem because it requires 
constitutional change. As several analysts pointed out, the 
PRD will only need to secure a handful of additional votes in 
congress to block the reform. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
 
BASSETT