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In the most significant Cabinet overhaul of his administration, President Felipe Calderon accepted the resignations of two important secretaries and the director of the state-run oil company PEMEX and also announced a plan to eliminate three Cabinet ministries. The changes set the tone for the second half of Calderon's administration, in which the president will have to continue his campaign against drug traffickers, address the country's lingering economic crisis, and contend with a Congress now dominated by the opposition.

Attorney general, agriculture secretary, PEMEX director resign

After winning the July 5 midterm elections by a landslide (see SourceMex, 2009-07-08), the opposition Partido Revolucionario Institucional (PRI) demanded that Calderon make some important changes, including to his Cabinet. Therefore, it was not a matter of if, but when, the changes would occur. They came on Sept. 7, when President Calderon announced that he had accepted the resignations of Attorney General Eduardo Medina Mora, Agriculture Secretary Alberto Cardenas, and PEMEX director Jesus Reyes Heroles.

Cabinet changes in the middle of a six-year presidential term are not uncommon. One of the most prominent departures during President Vicente Fox's tenure was Calderon, who left the post of energy secretary (see SourceMex, 2004-06-02. Fox also lost Santiago Creel as interior secretary (see SourceMex, 2005-10-05). One of the most significant changes for ex-President Ernesto Zedillo was Esteban Moctezuma's decision to step down as interior secretary (see SourceMex, 1996-01-03).

The PRI, the center-left Partido de la Revolucion Democratica (PRD), and other opposition parties had sought changes not only at the Procuraduria General de la Republica (PGR), presided by Medina Mora, but also at the Secretaria de Hacienda y Credito Publico (SHCP), led by Agustin Carstens, the Secretaria de Energia, led by Georgina Kessel, and the Secretaria de Gobernacion, headed by Francisco Gomez Montt.

Medina Mora was the only one of those four secretaries who Calderon replaced. But his ouster came as no surprise because the PGR has been strongly criticized for its handling of Calderon's campaign against drug-trafficking organizations. Under Medina Mora's leadership, the PGR not only failed to curb drug-related violence but actually saw a significant spike in murders. The cartels not only targeted members of other cartels but also turned against law-enforcement personnel and public officials (see SourceMex, 2008-05-14 and 2009-02-25).

Some observers said there had been considerable friction between Medina Mora and Public Safety Secretary Genaro Garcia Luna regarding the government's fight against organized crime. "In some government circles, this change is interpreted as a victory for Garcia Luna," said the Mexico City daily newspaper La Jornada.

In contrast to the criticisms from the opposition, US officials had praised Medina Mora's accomplishments during his tenure as head of the PGR. Even with the increased violence, the Mexican government was able to boost prosecutions against leaders of some drug cartels and some politicians who were collaborating with the traffickers (see SourceMex, 2008-11-05 and 2009-05-27).

In his press conference, Calderon did not specify why Medina Mora, Cardenas, and Reyes Heroles stepped down, although it is common knowledge that he asked for their resignations. He praised Medina Mora, who was offered a job in Mexico's foreign service. "His professionalism, his commitment, and his loyalty to Mexico have been crucial to promoting the modernization and efficacy of our system of justice and to prosecuting organized crime with a firm hand," said Calderon.

The president praised Cardenas for helping boost Mexico's agricultural production to unprecedented levels, saying the ex-agriculture secretary would return to the Senate and also serve in an advisory role.

Congress criticizes replacements

La Jornada noted that Medina Mora and Cardenas were holdovers from the administration of former President Vicente Fox, and they were replaced by individuals with more experience in the fields of prosecution and agriculture.

The president named former Chihuahua state prosecutor Arturo Chavez to replace Medina Mora, saying that the nominee "has wide experience in law and specifically in combating organized crime." But his ratification faces an uphill battle in the Senate, with members of the PRI and PRD questioning the selection.

PRD Sen. Tomas Torres said he did not see "great virtues" in the nominee. "It would not be a good signal if the Senate rejected such an important nomination," he said.

Calderon also nominated Francisco Javier Mayorga Castaneda to replace Alberto Cardenas as head of the Secretaria de Agricultura, Ganaderia, Desarrollo Rural, Pesca y Alimentacion (SAGARPA). This is the second time that Mayorga has been appointed in a caretaker role to replace a departing agriculture secretary. In 2005, Fox appointed him to replace Javier Usabiaga (see SourceMex, 2005-10-05).

There was also controversy regarding replacing Reyes Heroles as head of PEMEX, no so much about his removal but about his successor. Critics applauded his removal, citing his failure to eradicate corruption in the company. There was also a need to find a scapegoat for PEMEX's declining production and exports, which are contributing to a budget crunch both in the company and the federal treasury.

But given PEMEX's shaky finances, legislators from all three major parties questioned Calderon's decision to nominate the company's finance director Juan Jose Suarez Coppel to replace Reyes Heroles.

PRI Sen. Francisco Labastida, who chairs the energy committee (Comision de Energeticos) in the upper house, charged that Suarez Coppel and ex-Finance Secretary Francisco Gil Diaz were responsible for designing PEMEX's previous fiscal structure, which led to excessive drilling and overproduction. "This was a deliberate act intended to cause PEMEX to go bankrupt and thus open the door to sell the company to national and international interests," said Labastida.

Labastida said all delegations in the Senate, including the PAN, had pushed for an expert in the oil industry, not a specialist in finances, to replace Reyes Heroles.

PRD Sen. Graco Ramirez said the energy committee had already formally rejected Suarez Coppel, so Calderon's decision to designate him as director of PEMEX was a "sign of disrespect" for the Congress.

In announcing Reyes Heroles' departure, Calderon said the former PEMEX director would be going on to unspecified new projects. "I wish Doctor Reyes Heroles all the success that he deserves in his new endeavors," said the president.

With Reyes Heroles' departure, Communications and Transportation Secretary Luis Tellez is now the only PRI member to hold a high position in Calderon's government.

Calderon also proposes eliminating three Cabinet ministries

The changes in Calderon's government do not stop with replacing the heads of the PGR, SAGARPA, and PEMEX. Calderon also announced that his government has proposed phasing out the Secretaria de Turismo (SECTUR), the Secretaria de Reforma Agraria (SRA), and the Secretaria de Funcion Publica (SFP). This means that Tourism Secretary Rodolfo Elizondo, Public Administration Secretary Salvador Vega, and Agrarian Reform Secretary Abelardo Escobar Prieto will lose their jobs if Congress ratifies the move.

Eliminating the three Cabinet ministries, which is supported by the Mexican Congress (see SourceMex, 2009-09-02), is part of Calderon's plan to reduce government spending. The move to eliminate SECTUR, the SRA, and the SFP is contained in the 2010 budget proposal that Calderon was submitting to the Congress in the second week of September. Under the plan, SECTUR functions would be transferred to the Secretaria de Economia (SE), while the Secretaria de Desarrollo Social (SEDESOL) and SAGARPA would assume the duties once ascribed to the SRA.

The federal comptroller's office (Controlaria General de la Federacion) would take over most duties that were once the responsibility of the SFP.

The changes were not universally accepted. The Mexico City daily newspaper Milenio Diario noted that the move jeopardizes the jobs of more than 7,600 employees of the SRA, SFP and SECTUR.

Three rural organizations--the Confederacion Nacional Campesina (CNC), Central Campesina Cardenista (CCC), and Unidad de la Fuerza Indigena Campesina (UFIC)--argued that eliminating the SRA would take away support for the rural sector while saving little money for the government. CNC president Cruz Lopez said eliminating the SRA might meet some resistance in the Congress, since the PRI had actually proposed strengthening it by moving some SAGARPA functions to that ministry. Furthermore, said Lopez, there is also a move to incorporate the indigenous development commission (Comision de Desarrollo Indigena) into the SRA.

Opposition to eliminating SECTUR is coming mostly from the business community, although the sentiment is not unanimous. Some critics argue that the move creates uncertainty about pending tourism and rural-development projects. "At risk are developments like the one in Huatulco [in Oaxaca state], which envisions adding 2,500 new rooms," said Milenio Diario. "These would have required a public investment of US$108 million between now and 2012."

Jorge Hernandez Delgado, president of the Asociacion Mexicana de Agencias de Viajes (AMAV), echoed those sentiments. "There have been a lot of budget cutbacks at a time when we need more spending to reactivate the economy," said Hernandez Delgado. "What is required is that spending be conducted in a transparent manner."

But others, like Gaston Azcarraga of the giant tourism-related companies Grupo Mexicana and Grupo Posadas, lauded the Calderon administration for its decision. "The business sector is happy that this government is making an important effort to cut back on its spending," said Azcarraga. (Sources: Agencia de noticias Proceso, Associated Press, 09/07/09; Notimex, Financial Times (London), Los Angeles Times, El Sol de Mexico, 09/08/09; El Universal, Excelsior, Reforma, La Jornada, The News, Milenio Diario, 09/08/09, 09/09/09)
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Publication:SourceMex Economic News & Analysis on Mexico
Geographic Code:1MEX
Date:Sep 9, 2009

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