Mexican President Felipe Calderon, interviewed by Lally Weymouth

By Lally Weymouth
Sunday, February 7, 2010; B01

Mexican President Felipe Calderón is a busy man -- battling drug lords, coping with an economic downturn and, as always, pondering his country's relationship with the United States. He sat down recently with Newsweek-Washington Post's Lally Weymouth to offer a progress report. Excerpts:

You have been fighting a war against the drug cartels in your country, and many Mexican soldiers have been killed. How do you feel it's going? What would you like to see the United States do to help?

From the very beginning I told the people that this was going to be a long-term battle, that there will be casualties and a high cost in terms of money and of time. We should fight this battle and must win the battle. It's not only a question of narco-trafficking alone -- my goal is to establish the rule of law. My goal is to transform Mexico to a safe place where people and children could be really free. We are moving ahead according to the plan to attack organized crime, and we are kicking them really hard. There are a lot of casualties and people have died, but let me tell you: Probably about 90 percent of those people are linked with organized crime in one way or another.

The problem is not only a criminal problem but also a social problem, in the sense that we have young people without opportunities who are [hired] by criminals as distributors of drugs. Finally, they die in the streets. I have serious concerns about that. The only way to defeat the crime is to combat it with a comprehensive strategy; one part is to use all the power of the state in order to fight the criminals, to preserve or in some cases to recover the authority of the state. . . . The second part [requires] renovating all the police corps in the country.

What does that mean?

I would start with the federal police. I want to deliver to my people, when I finish my presidency, a new and cleaner police corps at the federal level.

So that it can take over from the army? Right now, you have the army in the streets?

Right now we have the army and the navy supporting the actions of the formal authorities because it's inside their mission to preserve internal security in the country, not only external security. But of course my goal is that once we can build this new police corps -- not only at a federal level but at a local level -- we can withdraw gradually the presence of the army and the armed forces from the streets.

There is a lot of discussion about weapons from the United States flowing into Mexico. Is that a big problem for you? Do you feel the United States is doing everything it can do to help you?

It is a big problem for us. Most of the weapons we seize -- in the last three years, we have seized about 45,000 weapons -- come from the United States. There are about 12,000 stores that sell weapons on the border with Mexico. I recognize the American government is improving its actions [in] stopping the flow to Mexico.

What is the most damaging weapon that is sold from the United States?

Since four years ago, every day any single trader of weapons is able to sell armor-piercing bullets, which do a lot of damage against our police corps. We are working with the American government in order to stem the flow, but we have a very large border and it is very difficult.

The U.S. government aided Colombia in President Álvaro Uribe's fight against the drug lords. Do you feel the United States is helping you enough?

The U.S. has been very helpful to us, and we are improving and getting better results. For instance, some of the most important drug lords were either captured or died in action. Sharing intelligence has been very useful. We are improving the cooperation and I think the initiative is starting to work, and I hope that will provide very good results for us.

No country in Latin America has been worse hit by the economic crisis than yours, and this is largely due to Mexico being so closely tied to the United States. Should you diversify, and are you coming out of this recession?

There's an expression, "when the United States catches a cold, Mexico gets pneumonia," and that was exactly the case last year. Eighty-four percent of our exports go to the United States, so if American consumers reduce their consumption, we suffer a lot. By the third quarter [of 2009], the export of automotives in Mexico went down by almost 50 percent due to the economic crisis in the United States.

The crisis was more oriented toward the manufacturing sector, and Mexico is very dense in manufacturing, particularly automotive manufacturing. And there was another factor that worsened the situation in Mexico, and that was H1N1. It was terrible for tourism.

[Another] factor that sent a shock into our economy was the reduction of our oil production by 7 percent. Why? Under the old model of [the state oil company] PEMEX, Mexico didn't invest enough in the oil sector, and we are suffering the consequences . . . we are losing a lot of oil production. So there were several impacts on our economy at the same time this year. That is the reason why Mexico [had] almost negative-7 percent economic growth for 2009.

Is oil production key to Mexico's survival?

Yes, it's the key issue for the industry and for the country as well. Because we started to lose a lot of production and revenue: Forty percent of the total revenue of Mexico's government came from oil until 2008, when it went down to 32 percent.

That is the reason why I needed to propose to the Congress to raise some taxes, which wasn't very popular, but, at the end of the day, we preserved the macroeconomic equilibrium. Today we are running a deficit probably lower than 2 percent in total.

How do you get your oil sector to be productive? Do you get foreign investment into oil production?

The contracts are incentive-laden contracts, which are more flexible contracts that allow specialized global companies to help PEMEX to transfer technology and to explore and produce oil and natural gas in a lot of places that PEMEX was not able to reach before.

Isn't there a big fear in Mexico of foreign oil companies?

Yes, but we are overcoming that situation, and I think that PEMEX will have a very good opportunity to increase its production.

During your campaign, you spoke out against monopolies in Mexico. Is this still one of your main concerns?

Very important. Actually we are preparing a reform bill to submit to Congress to increase the power of regulatory institutions, antitrust commissions. I do believe that what Mexico needs is more competition and more fair play in several sectors -- from telecommunication to transportation.

What's your view of Venezuelan President Hugo Chávez and his effect on Latin America?

We live in a very complicated neighborhood. There are some tough guys around us. What we need to do is try to find an equilibrium in the area. It is probably time to reestablish some basic principles related to democracy, human rights and freedom of speech that are universal values. I have some concerns about what is happening in the region.

Why is the PRI [the Institutional Revolutionary Party] gaining momentum in Mexico?

Several factors. Probably the main factor is the midterm elections last year. As you can imagine, the Mexican economy was going down by 10 percent in the second quarter of the year, and that was exactly in the moment of the midterm election. So the result for PAN [National Action Party] -- my party -- was not a good one. PRI won the midterm election, and probably that explains the expectation that they are gaining ground.

Let me tell you, when I started to run for president of Mexico, according to the opinion polls, I was in 17th place. I had no chance to win, even inside my own party. Finally, I won. So nothing is written in elections. Not in Mexico, not in any other country.

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