INDEPENDENT NEWS

Cablegate: Mexico Economic Notes, March 9 - March 16

Published: Fri 16 Mar 2007 11:37 PM
VZCZCXRO8269
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1367/01 0752337
ZNR UUUUU ZZH
P 162337Z MAR 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 5878
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHFR/AMEMBASSY PARIS PRIORITY 0362
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
RHMFIUU/CDR USNORTHCOM PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
UNCLAS SECTION 01 OF 02 MEXICO 001367
SIPDIS
SENSITIVE
SIPDIS
STATE FOR A/S SHANNON
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA, INR/B
STATE FOR EB/ESC MCMANUS AND IZZO
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD
USDOC FOR ITS/TD/ENERGY DIVISION
TREASURY FOR IA (ALICE FAIBISHENKO)
DOE FOR INTERNATIONAL AFFAIRS KDEUTSCH AND ALOCKWOOD
STATE PASS TO USTR (EISSENSTAT/MELLE)
STATE PASS TO FEDERAL RESERVE (CARLOS ARTETA)
NSC FOR DAN FISK
PARIS FOR OECD
E.O. 12958: N/A
TAGS: ECON EFIN ENRG MX PGOV PINR PREL
SUBJECT: MEXICO ECONOMIC NOTES, MARCH 9 - MARCH 16
REF: A. MEXICO 589
B. MEXICO 1256
Summary
-------
1. (SBU) A senior Mexican Treasury (Hacienda) official told
emboffs that pension reform introduced this week would pass
before a general fiscal reform because it was less
contentious. The Mexican Senate nixed Carlos Hurtado as a
new Deputy Governor of the Bank of Mexico (Central Bank). A
judge released the man considered Mexico's "king of
contraband" after declaring that the evidence presented
against him by the Prosecutor General's Office, including
documents provided by the USG, could not be corroborated.
Pemex reported crude production in the fourth quarter of 2006
fell 6 percent quarter on quarter from 2005. The
Inter-American Development Bank (IDB) and President Calderon
signed a memorandum of understand for a USD 2.5 million
credit line to be used for infrastructure projects. Mexican
Senators will travel to the OECD in Paris to learn about
fiscal policy. End summary.
Hacienda Official on Reforms
----------------------------
2. (SBU) Econ Minister Counselor and Econoff on March 2 met
with Miguel Messmacher Linartas, the new head of the Economic
Planning Unit at the Finance Secretariat (Hacienda).
Messmacher said that pension reform is at an advanced stage,
and that he sees this reform being passed before fiscal
reform because it is less contentious. He noted that the
government will discuss pension reform with legislators and
did not rule out the possibility of modifying the reform
proposal that is already with the Senate. Regarding the
Pemex reform being proposed by Senator Labastida (ref A, B),
Messmacher said Hacienda wants to make sure the company will
spend money efficiently before it allows the company to
retain more taxes. That is, Pemex needs internal reforms
before Hacienda will decrease its tax burden. Messmacher
said that President Calderon and Finance Secretary Carstens
work very long hours. (Bionote: Messmacher attended the
Instituto Tecnologico Autonomo de Mexico (ITAM) and got his
Ph.D. from Harvard. He told Econ Minister Counselor and
Econoff that he knows Carstens from his days of working at
Hacienda. Before assuming his current position, he was at
the IMF for several years. Messmacher speaks English well,
but with an accent.)
Senate Nixes Bank of Mexico Pick
--------------------------------
3. (SBU) Mexico's Senate officially rejected President
Calderon's pick to fill a vacant seat on the Bank of Mexico's
(BOM) board. In a conversation with Econoff on March 6, a
BOM official agreed with local pundits that the opposition's
rejection of Hurtado was political payback from days when
Hurtado was Under Secretary of Expenditures. Opposition
members maintain that Hurtado was an inappropriate candidate
for the position. Calderon will have to send another name to
Congress. Names being mentioned in the press include:
Manuel Ramos Francia, the BOM's Director of Economic
Research; Armando Baqueiro, the Director of Strategic
Planning; and Lorenza Martinez, the Chief of Insurance,
Securities, and Pensions at Hacienda.
"King of Contraband" Released
-----------------------------
4. (SBU) A judge released the man considered Mexico's "king
MEXICO 00001367 002 OF 002
of contraband" after declaring that the evidence presented
against him by the Prosecutor General's Office, including
documents provided by the USG, could not be corroborated.
Asa Barantz had been arrested in 2004 and sentenced to three
years and three months in prison for having defrauded the
Mexican government of USD 340,000 that he failed to pay on
Chinese-origin clothing, much of it counterfeit, that he had
imported into the country illegally. He was also charged
with trying to bribe federal police after his arrest.
Magistrate Carlos Olea Penaflores of the 19th Circuit
Tribunal in Matamoros wrote a letter to the Mexican newspaper
"Reforma" outlining his reasons for ordering Barantz's
release. Among others, he claimed that a prosecution witness
provided by the Embassy's DHS office later recanted his
testimony against Barantz. Prosecutor General Eduardo Medina
Mora told press that, while he respected the judge's ruling,
he did not agree with it. Medina Mora said federal
prosecutors would continue to investigate Barantz. The head
of a business coalition for the protection of trademarks
criticized Medina Mora's office for mishandling the case.
4th Quarter Crude Production Down
---------------------------------
5. (U) In their 4th quarter conference call March 6, Pemex
announced crude production in the fourth quarter of 2006 fell
6% quarter on quarter from 2005 to 3.1 million barrels per
day, due both to bad weather which reduced shipments from
offshore storage facilities and the decline of the Cantarell
field. Also in the fourth quarter 2006, Pemex drilled 41%
fewer exploratory wells nationwide quarter on quarter. In
2007 current Pemex plans call for drilling 27 development
wells and performing 44 workovers in Cantarell, as well as
installing nitrogen separation, dehydration, and
desalinization facilities. Pemex will invest USD 13.9
billion in 2007 of which USD 12.3 billion will be in
exploration and production.
IDB Credit Line for Infrastructure Projects
-------------------------------------------
6. (U) IDB and President Calderon signed a memorandum of
understand for a USD 2.5 million credit line to be used for
infrastructure projects. This credit line will serve as
leverage for an additional amount of USD 7.5 billion from
public and private sources. The credit line will be managed
by the Mexican development bank, Banobras and channeled
through the federal, state, and municipal levels.
Legislators Learn Reform in Paris
---------------------------------
7. (U) OECD Secretary General Jose Angel Gurria will meet
with Mexican legislators, governors, and Hacienda officials
in Paris March 26-29. The objective is to get the Mexican
officials speaking with OECD experts on simplifying the tax
system, expanding the database of taxpayers, and lowering the
value added tax.
Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity
GARZA
View as: DESKTOP | MOBILE © Scoop Media