Mexican President Enrique Peña Nieto on Implementing Reforms in Mexico
Mexican President Enrique Peña Nieto joins CFR Co-Chairman Robert E. Rubin to discuss Mexico's reform progress. Having passed wide-ranging reforms in the areas of labor, education, finance, tax, telecommunications, energy, and governmental structure, Peña Nieto describes the process of implementing these reforms and their intended results. Economic growth, he says, is forecast to reach 2.7 percent by the end of 2014, with a projection of 3.7 percent in 2015. He highlights a major shift in energy policy, opening up Mexico's energy industry to competition. On the issue of transnational crime and security policy, he cites positive statistics in arrests of cartel leaders and a drop in the murder rate, adding that security remains a top priority.
Inaugurated in 1969, the Russell C. Leffingwell Lecture was named for Russell C. Leffingwell, a charter member of the Council who served as its president from 1944 to 1946 and as its chairman from 1946 to 1953. The lecture is given by a distinguished foreign official, who is invited to address Council members on a topic of major international significance.
RUBIN: I'm Bob Rubin. I'm co-chairman of the Council on Foreign Relations, and I welcome you to today's Russell C. Leffingwell lecture with our distinguished guest, the president of Mexico, Enrique Peña Nieto, who I first met about three years ago before he was president. He came to my office and he said, "we're going to do all these wonderful things," and I said, "that seems very unlikely." Well, you've done them.
So, I was wrong.
Let me—where's Tom? Here he is.
Let me thank Tom Leffingwell Pulling and his entire family for the generosity in endowing this annual lectureship. Let me also welcome CFR members from around the nation, and I even think from around the world who are plugged in through livestream and to teleconference, and we'll hear questions from them as we get to the Q&A at the end.
In accordance with the Council practices, I will not recite from the president's resume, but as you can see from your materials, it is extraordinarily impressive. Let me make just one personal observation, if I may. I mentioned a moment ago that I had the opportunity to meet the president when he was just a candidate, and now all of us have had an opportunity to see what he has done, and it is really quite remarkable how he and his team, his finance minister who's run his campaign, have made this congressional system—this presidential-congressional system work for the first time really, since it became a true democratic system when Ernesto Zedillo created the opportunity for real elections. It's been a remarkable accomplishment and a stark contrast to conditions of some other countries.
So, we are delighted to have you with us today, Mr. President, and to give us a better understanding of Mexico, and also how you have accomplished all that you have accomplished. We're going to begin with some framing remarks from the president, then the president and I will have a conversation.
And I threatened Richard with my giving a 30 minute address, but he didn't seem to think that would meet much interest. So, we will have a discussion and then the president will respond to questions from participants. When you're called upon, please wait for the microphone, state your name, state your affiliation, and then keep your question relatively brief so that we can get in as many as possible.
Also, for national members, you can email your questions to [email protected], and then when we finish, if you all would remain seated while the president would leave—leaves, that would be our appropriate procedure.
OK. With that, it is my honor and privilege to introduce the president of Mexico, Enrique Peña Nieto.
PEÑA NIETO (through translator): Thank you very much, Robert Rubin, Richard Haass. I would like to thank all the members of the Council on Foreign Relations for this remarkable invitation to meet with all of the attendants to this event.
And you have given me the opportunity to share what has happened in Mexico in the last 21 months. And I would like to share with you what Robert Rubin made reference to. I would like to refer to important structural changes. I would like to note as well the important relationship that Mexico has with the United States.
Before NAFTA and after NAFTA, we have built a relationship between the U.S. and Mexico, between Mexico and the U.S. We have been able to build an intense relationship with a growing trade growth. We have extended our relationship to other fields. We have been able to set a strong dialogue with President Obama's administration. We have set a dialogue to review many areas, including security. We have tried to improve the infrastructure in the border.
And let me tell you that this is the busiest border in the world, with 1 million crossings every day, more than 300,000 vehicles cross the border. We have a trade exchange that ranges around $1 million a minute. And being Mexico, the third top trade partner of the United States, and the second destination of its exports, and being Mexico, a country that buys to the United States more than all of the BRICS countries together, more than Brazil, Russia, India, China, and South Africa, together.
That is how important it is for the United States and the same, the U.S. very important for Mexico, because the U.S. is a top destination of our exports. On top of all of that, Mexico is a country with political stability. For many decades now, we have had political stability. I could say for a fact that it's 80 years that we had political stability since 1934. Upon that precise date every six years, we have had, in every change of administration, we have had a stable and ordered transition. And not many countries, many regions of the world, can state the same thing. Mexico has had this transition, and that's why we are strong.
Let me tell you that in the last 20 years, we have made significant progress in the process of consolidating our democracy. We have made Mexico a pluralistic and diverse country, and a congress, in reference to what Robert Robin said, we have managed to have a pluralistic congress. Not a single political party by itself holds the majority.
That is why we should recognize the merit that after having, since 1997 to be more precise, for really 20 years, if we would have managed to materialize an important structural reforms agenda with the unanimous support, almost unanimous support, and in some cases, support of the majority to the reforms, we have managed to do that.
And the reforms are oriented to several areas. We have one goal to broaden the rights of Mexicans, and this is where we have the educational reform, the reform that amends the amparo law, the acts (ph) fourth rates of induction (ph) to address the acts of authority.
And we have a standardized code of procedures applied nationwide. That is to say all of the procedures in criminal settings, it doesn't matter in which state of Mexico, the proceedings take place. The rules will be exactly the same. On the other side, on the other hand, we have modified and we have strengthened our democratic and political institutions.
I would like to make reference to two important elements, first of all. For the first time ever, the attorney's general's office becomes independent. It is an autonomous agency from the executive branch. It has its own powers now. And additionally to this reform, of course there are many other components to it, but I would like to note that we have set forth that democratically elected government can now form coalition governments. And that is an incentive to the creation of agreements and to create governments in a presidential regime that could opt for coalitions.
And thirdly, one of the third objectives in the structural reforms that probably you might be interested in this area the most, we have targeted the biggest challenge for Mexico in the last three decades, and that is to have more economic growth and to speed up our growth and make it sustainable.
Six reforms, actually, are oriented to this purpose. The labor reform that was passed before I came into office, when a couple of days before with the previous arrangements made, and I must have said before that we had been paving the way for it to create this climate in Mexico. Before I took office the level of agreement was very positive, and then we managed to pass the labor reform, to open up the labor market to hire more youth, to hire more women that want to join the labor market.
Afterwards, the educational reform will happen, and this aims to broaden the rights of Mexicans. And this reform tries to raise the quality of education and to have more recognition to the merits, the professional merits of teachers. And teachers had to prove their skills in order to teach students throughout their career. We have a financial reform as well, that even that we are—we have a sound economy. Our financial institutions are sound.
As well, the level of credit in Mexico has shown to be low. And where credit concentrates the most, favors, large corporations and not companies. And the financial reform meant that we amended 34 laws. It is aimed to have more credit available and to have more competition between financial institutions so that the credit rate are lower to make credit more affordable.
A tax reform is not the most popular one, let me tell you, as it is the case of any country. But the tax reform gave the state more capabilities. Therefore, the budget for public investment grew. Starting in 2014, we have more budget for infrastructure for dedication for health and for science and technology. Less expenditure for bureaucracy. Most investment will happen to make a more competitive country of our own. And some, the fiscal, the tax reform (AUDIO GAP) procedures and to set a more progressive tax regime to collect more taxes to all of those who have higher levels of income.
Then reform happened in the area of economic competition to have a regulating agency that fights monopolistic practices, that advocates for competition in different areas of our economy.
And we have a reform for a very relevant sector in our country, telecommunications. In order to open up this sector to have more competition that will end result provide benefits for Mexicans. And we start to see now the benefits of all of these reforms. And specifically I have noted the telecommunications reforms, there's more competition in the area of telecom services.
And the last reform that is the most relevant one in this set of reforms, which is the energy reform. Because with it, we change and set up a new model to take advantage of our energy resources, based on a model that had been used for roughly 70 years. And without a doubt, it was being overused and in terms of how to take advantage of Mexican resources. But now, with the energy reform, the state will own its hydrocarbons, but at the same time, it sets the grounds so that the private parties—private sector participating in the exploration and the exploitation of our energy resources, it incentivates and promotes the use of cleaner energies.
And this is just the ground work for the energy reform. We are changing a paradigm, we are changing the model that we used to have for exploitation purposes. So, these are the structural reforms that have taken place in Mexico in just 20 months.
We have walked at a very steady pace, and I appreciate Robert Rubin's reference to the major achievement that this represented for Mexico in this time span. Political forces, the top political forces, along with the government of Mexico, have been able to materialize these reforms. Some of them, we have this custom.
Not—as a candidate, I met him before I was running for office awhile ago. He asked me, well, I reminded him that it has been three years. I have been working for three years. And he said, "what has happened in your life?" Since then, I was a precandidate. I run for office. I became the president of my country. And all of those reforms that we've discussed were very important for us when we discussed them since, but now we have the reforms passed, and are in the process of implementation.
My administration is working on it because now it—now it's time to provide tangible results to the population. We have passed the reforms, but society demands that what we have set forth in the laws, in the reforms, have to be reflected in the standard of living of the population, and the actual benefit that the Mexican households can receive from the reforms.
We're in that process. We're in the process of implementing at a speedy pace the reforms that I'm—I'm sure that I'll receive many questions from you, and I hope that I can answer to your questions about the process of implementing the reforms.
And on the other hand, the government from the beginning of my administration has worked on a very ambitious plan to extend the country's infrastructure in the area of highways, roads, ports, airports, railroads that are of course ambitious projects, and which we're working on. These are projects that would require an investment that goes over $500 billion and which, of course, spaces will open up for the participation of the private sector to develop these projects together.
And I would like to prop up this brief introduction to the competition that we will have momentarily. I should have started saying this, let me tell you, because I tried to share with you, and will—we have time over our shoulders, because Robert Rubin is very strict on time, and he told me that I have specific time for this. But I should've mentioned the most important thing.
What made it possible to have all of these reforms? I'm sure that you have heard about the Pacto por Mexico, the Pact for Mexico. And this was a pact, an agreement that it was built upon during the transition period. In the case of Mexico, it's a very lengthy transition that happens between get elected and the moment you are sworn in and take office. It takes five months from July to December. So, this is going to change in the future elections, because that is part of the—of the political reform. It will happen in three months.
But in this five month span, we built a pact for Mexico that made it possible that on December the 2nd, one day after I took office, between the top political forces in Mexico and my administration, we were able to agree on the pact, but what makes it different? What does it stand out from it? It was not just a true sign of good will. It was, yes, a true sign of building a project. But we worked on an agenda that included the top topics to be addressed, all the reforms that needed to be passed, and all the structural changes needed.
Beyond different approaches and each political party approach, we were able to define, in very clear terms, the substance of the agreement. And this is—this shows level of political maturity that we have in Mexico, and how civil politicians are in Mexico in every group. Central party, left wing, right wing, all together. And this is how it happened.
And based upon this agreement, we began implementing it. At congress, there was quite extensive debate for each one of the reforms. And over the course of this month, we have been able to pass 11 structural reforms that I have described.
This is how I'd like to wrap up this intervention, and I'm very grateful for this opportunity to appear before you, and to, in a nutshell, describe what in a very brief time, has happened in Mexico. Thank you very much.
RUBIN: Let me start, if I may, with this question, Mr. President.
I first got involved in Mexico about 25 years ago. And I remember meeting business people and political people and thinking that they were just extraordinarily impressive, and I've had that feeling ever since, that Mexico at some point would take off.
But there was a lot that needed to be done. You've now done a lot of what needed to be done, albeit not all of it. As you look—and yet, you don't have growth yet. I thought, when these reforms were enacted, it might well create the kind of confidence that would spur growth. So, I question—well, two related questions.
One is, now that you've done all this, when do you think the effects will actually begin to show in terms of actual growth. And secondly, what are the risks to growth that you think are greatest? In that respect, let me pose two particularly.
You still have of income, about 35 percent poverty rate or something like that, and enormous inequality. It's always seemed to me that it's going to be hard to get sustained growth without being more effective in addressing that. And then of course, you have the issues around law enforcement and like, which is on everybody's mind.
But I must say, having said that, I think there's a tremendous—I know because I live in this little world of financial people, tremendous confidence in what you've done, and a tremendous amount of interest...
PEÑA NIETO (through translator): Thank you very much, Robert.
Thank you very much. I will leave that all of the reforms address the needs for Mexico. We need higher economic development. The greatest challenge in the area of economics and social development is that we have reached a higher rate that has been recorded in the last 30 years, an average rate of 2.6 percent. And yes, it is positive, this are positive figures, but it's quite evident that we need to increase this rate more, to have more social development and a better standard of living for Mexicans.
Therefore, we needed the reforms. Right now, we are seeing signs of a better economy, more growth. Last year, according to the autonomous institute that generates figures in Mexico, the INEGI, our country grew by 1.4 percent. It is a figure under what we had expected and wished, but due to all the reasons that I have expressed and described why it happened, the outlook for the closing of this year is 2.7 percent growth.
And the statistical figures about how our industry will grow, how jobs will grow, and our exports will grow are quite optimistic. We're going to reach that goal, the forecast for next year is 3.7 percent, based on all of the ground work prepared for that to happen, and the reforms will boost our economy. It is clear that the implementation of the reforms will not happen overnight, and the effect of each of one the reforms will not happen overnight.
Most of the benefits of these reforms, yes, are evident. People are starting to see the results. But it will take some time to see the full impact of the reforms. And eventually, we'll see it reflected in how our economy will grow. We're seeing it. Next year we will see the signs, and in the upcoming years, we're expecting to have more expedited economic growth. And this is the same forecast that we see by financial analysts that the—know the Mexican economy.
In the area of poverty, Robert, the big question here is what would make us reduce poverty and fight the roots of poverty to the core? I am fully convinced that we have to grow on economic terms. We meet a sustained a growth. We need to have higher rates. And with a social policy, we need to find a way to elevate richness in a more egalitarian way. But if we fail to grow economically, there is no social policy enough to reverse poverty and marginalization that we see in certain sectors of society.
What we have done so far, on the one hand, is to push these reforms forward, to grow economically, and most of them are aware that to reach this goal, but on the other hand, we have revamped our social policies. We have social programs to address the needs of the population and we don't only want beneficiaries of social policy. We don't need a hand out policy.
We need to provide our policies a new face to make sure that all of those beneficiaries of social policies, they need to become part of an income-generating activity. And for that to happen, we need to have more economic growth. I believe that if we work in tandem, by implementing the reforms to have more economic growth, and on the other hand, we have an efficient social policy, I believe that we will revert poverty and we will show more economic growth.
RUBIN: That, to me at least, sounds like a very sensible approach. As you look at the floor, Mr. President, you have a program, I forgot the name of it, but it's a cash outlay program to help...
PEÑA NIETO (through translator): It used to be known as Oportunidades. Now it's known as Prospera. It's not just that we have changed the name. We have changed the purpose. It's to prosper. Prospera means to prosper, and that's what we want for people.
RUBIN: Does that involve equipping—working to equip people to enter the economic mainstream to more effectively function in the economy?
PEÑA NIETO (through translator): That is right. The program will provide higher education. It will give grants for higher education studies and previously, this program used to cover high school--all the way up to high school, and now the program extends for higher education grants. So, all of those beneficiaries of this project can move on and go to college.
And it also has training programs, so individuals can join the labor market. Those beneficiaries will receive skills to get a job and this government program links the market sector and the beneficiaries. In other words, the scope of this—this project is bigger. The beneficiaries of the previous program, known as Oportunidades, now known as Prospera, 'to prosper', the government tries to work hand in hand with them in their professional process to incorporate the labor market. We're providing them with the tools, but we are also helping them to join the labor market. And having that opportunity means, and I must insist, we will set our economy at a more dynamic pace. That's the effort that we're driving for.
RUBIN: Let me change directions a little bit, Mr. President.
My impression is that generally speaking, the United States government tends to pay a lot less attention to Latin America than it should, given the importance of Latin America. Our country—but there are always other kinds of issues around the world, and they tend to be—the importance sometimes gets pushed out by the immediate.
But what is your view of your relationship to the United States today, but particularly, what could our country—what would you like our country to do that we're not doing, and in general are we more or less functioning in the ways that are constructive in your view, or...
PEÑA NIETO (through translator): First and foremost, let me tell you that the relationship that the Mexican government has with the U.S. government is undergoing a very positive moment. We have built a very constructive climate. We have diversified our collaboration agenda. And it is not only targeting security—security matters. We do have cooperation in that arena, but we have projects for education, technological exchange, rotating up trade channels. We have diversified our agenda with the U.S. government. We have a very cordial and respectful relationship.
Mexico, and this is my own personal belief, I believe that Mexico has been called upon to respond to this level of growth to be more dynamic economically and to develop its energy sector to build more infrastructure, and along with the rest of North America, want to make this region of the world a more competitive one, a more productive one.
I believe that today, the world is defined by what happens in specific regions, and when we talk about North America, we need to link ourselves better so we can create synergy. We need a joint effort to make this region a more competitive one. It is already competitive, without a doubt. Specifically, the U.S. holds strength. Its own context makes it a very competitive country, but I believe that if we recognize how interdependent the U.S. with its neighbors from the north and the south, we are part of NAFTA, a trade agreement.
And we are interdependent more than many people believe. I believe that we will be able to generate a stronger synergy to carry out joint efforts to make this region a more competitive one. Development that Mexico will show in its energy sector without a doubt will make it—this region more competitive, and it adds up to what the U.S. has contributed to, specifically in the area of exploiting shale gas, and also to have inputs that are more affordable compared to other places in the world, this is where we should target our efforts.
We need to work in the space of mutual respect, but we have to link efforts and create synergies. We want win-win situation for North America and each one of its components.
RUBIN: I think it's a very powerful vision. Shannon O'Neil, as some of you may know, is Council on Foreign Relations expert on Mexico, and is terrific. Wrote a book about a year ago, Shannon, "Two Nations Indivisible," and it is basically the vision that the president of Mexico just expressed.
As you look forward, Mr. President, and you've asked, I presume, your minister of finance and others, to think about not just next year but longer term. What do they think a sustainable, long-term rate of growth might be for Mexico?
Or perhaps they haven't gotten to the point yet where they've focused on trying to project the...
PEÑA NIETO (through translator): There are forecasts made by analysts and those are the figures that I would share with you, but the growth outlook that started to show the differences that different institutions have made point out to the fact that Mexico will show an accelerated growth in its economy, 2.7, is around 2.7. This is the forecast that the government is using by the closing of this year. 3.7 for next year, reaching four percent or probably more in upcoming years. And it is estimated, according to different studies, to range around five to six percent in the last two years of this administration and the upcoming years after that.
All the reforms that have been implemented, and the actual enactment of these reforms are the groundwork to reach this level of growth in our economy. That is how we're going to expand our economy and make it a sustainable growth. And this is going to result in benefits for Mexicans.
RUBIN: And Americans, in my opinion. No, I really do. I think your vision is a right one.
I'll ask one more question, then we'll turn it over to the participants.
As you look at that prospect, Mr. President, what do you think the chief risks might be to your accomplishing the purposes that you've just outlined, and how would you envision responding to those risks? And do you have the political ability, still, to move forward as you have so effectively?
PEÑA NIETO (through translator): I believe that more than risks, I believe that there is a big challenge that Mexico faces in the process of implementing its reforms, specifically due to the fact that we are going to venture into the energy field. We're going to venture into areas that until this moment, were unexplored in our country. We're breaking with the paradigm.
I believe that we should have done this before. Many countries had done this before in the area of energy. And we are late. But eventually, we decided to give that step forward. We decided to change our development model to exploit our energy industry. Basically, we decided to boost an energy industry for the benefit of our country, and we decided to use a new model, and that is venturing into a completely new field for Mexico.
Therefore, Mexico is open to listen, to learn from success stories that companies have—and governments have experienced in other places in the world, and we are open to receive feedback so we can draft policy that helps us implement reforms the right way.
More than a risk, I see a great opportunity ahead of us. Yes, it is a challenge, but it's an opportunity at the same time. We have to show that Mexico can step up to the plate, and I am convinced that we are fully capable of achieving something as big as we have set out to do, and we have the grunt work. And those are the structural reforms.
This is the great opportunity that we have ahead of us and for the government. We have to expedite our actions. We have to act timely. And we're going to speed up the pace and the process of implementation so the benefits are reflected for the benefit of Mexicans.
I would like Robert, if you'll allow me, I would like to touch on specifically, the energy reform. We have created all the government agencies where the implementation of the energy reform. We have approved the agencies that will be in charge as well as the members that will be part of this agency as the commissioners. All the institutions that will be in charge of implementing the energy reform. All of them need to be appointed and presented to the Senate and be approved by the majority.
And all of these appointments, let me tell you just one week ago, they were approved. All the agencies had been created. The heads of those agencies had been appointed. Even before the deadline stated in the reform, we are ahead of ourselves. And the senate has endorsed the appointments so we can have the agencies that will regulate the implementation.
We have worked on the Round Zero, those are the fields for exploration and exploitation. This is what Pemex will have ownership of, and will exploit in the upcoming years. And preliminarily, we have disclosed the fields that will be open to exploration and exploitation activities that will be open for bids. And we'll—we'll—a call for bids will happen in the first semester of next year, and this is called round one.
But those fields have been disclosed, so that all of the stakeholders interested from the private sector can start planning, can learn from the fields, and can know where the bids will take place.
RUBIN: Good. Mr. President, thank you.
Why don't we open this up to, because this will be the case, there's a lot of people with a lot of questions they'd like to ask. Let me just start right here. Yes ma'am.
And by the way, if you would, ask your questions in English so that we can all understand them, and then they can be translated.
QUESTION: Yes. My name is Lucy Komisar. I am a journalist. I think Mexico has problems similar to the U.S., which is sometimes individuals with huge amounts of money use that money to buy influence, buy politicians, buy policy. You have an individual called Carlos Slim, and he has had a monopoly on the phone system in Mexico, which hurts mostly the people at the bottom, because it takes more of their disposable income, and some can't afford phones at all. Why has this been allowed to continue? Are you going to stop it so he doesn't have a monopoly or even a dominant position in the telephones system?
RUBIN: This is why it's good to be president. You get to answer questions.
PEÑA NIETO (through translator): Well, let me tell you, the reforms that have been enacted, there is one specifically and of course relates to your question. That is the telecommunications reform. And that is oriented—is not oriented for just one person or a company. These reforms are overarching. This reform sets forth new rules for the sector to make it more competitive.
And upon the enactment of the telecommunications reform, the company Telmex announced that they would divide the company, because they were declared a dominant company in the telecommunications sector. The agency in charge of competition, they determined that they were a dominant stakeholder, and therefore, the scope of the telecommunications reform and also the economic competition reform is precisely that, to incentivate more competition and you have shared concern yourself. So, the answer is there, in the reform that we have enacted, and what will come after it is implemented, and that is to have more companies offering telephone services, ground lines, television services.
And the government will also open the bid for two more broadcasters. And the process has just started, and it would finish by early next year. We're going to bid two more television broadcasters, so this is how we have been implementing the telecommunications reform.
RUBIN: Yes sir. Actually, I'll just add, it's interesting, when this reform was enacted, one of the comments in Mexico were the great credit to the president for taking on something that was opposed by—I have not quite the same view of Carlos Slim you do, but that took on the power of Carlos Slim. You've got a great deal of credit for having done that.
QUESTION: Mr. President, my name is Ken Roth from Human Rights Watch. I wanted to first of all congratulate you on the greater transparency you've brought to the horrible violence in connection with the drug war. And I wanted to ask you, federal authorities have said that there are 22,000 disappearances. Are those just people who are missing, or people who were forcibly disappeared by security forces?
And with respect to your predecessor, President Calderón, the numbers given are that those that reduced the number disappeared from 29,000 to 12,000. Are those—that reduction of 17,000, are those people who were found alive or dead?
PEÑA NIETO (through translator): Listen. Let me tell you that security is a top priority for my administration, and the law enforcement and security policy being implemented, and it's—it's fully aware of the full respect of human rights, and the attorney general's office has created a specific unit to review the number of individuals that allegedly have disappeared.
And yes we have seen changes in the figures, because we have carried out a thorough evaluation of the information available about those missing individuals. Of course, some, as you said, were missing. Some others, not necessarily were disappeared, they were just not present. They were found.
And when a missing person report happens, in the case of the claimant, they do not report back when that person comes back home. Therefore, the attorney general's office carried out a thorough review of those claims of missing people, and they have created a specific unit to address the reports of missing individuals.
I don't have with me, and please let me get back to you, I'll give you the exact figures that the attorney general's office has of all of the reports of missing people and the update of all of the other cases.
And I would like to note that if we have made a difference in the area of law enforcement policy and security policy, I think make reference to two. We have paid full respect to human rights. The national commission for human rights has acknowledged that the number of reports has dropped. Let's say the—the alleged abuses of authority in the enforcement of the law. We have seen a drop in that. And we have also seen a reduction in violence.
The recently published figures in the first quarter of this year, we can see. And even the strongest detractors have acknowledged that we have seen a drop of 29 percent of rate of murder in the whole country in the first semester of 2014 compared to 2012 figures. And that is an encouraging figure. And we believe that our security policies are showing good results and the path that we have decided to walk, we are in the process of generating peace of mind and peace for Mexico.
QUESTION: (OFF-MIKE) As Mexico succeeds in its integration as part of the North American (inaudible) or the two countries, indivisible, how do you see the role that you play with the rest of Latin America? What would you like it to be, and do you see that affecting it at all?
PEÑA NIETO (through translator): Well, Mexico is one of the most open economies you can find in the world. Mexico has decided to be an open economy, and Mexico is considered the fifth most open economy in the G20 countries. And that is why—that is why we have considered to develop our economy using this component. That is why we have tried to integrate with North America. We have decided to integrate with Latin America as well.
I would like to note the creation of the Pacific Alliance. In this framework, this is an integration mechanism, conformed by four countries, which are political principles, economic principles, like trade liberalization, and also it generates a market around 220 million inhabitants. This is an agreement. This is a young mechanism. It was created only three years ago, and it is going to bear fruit very soon, as soon as all of the congresses approve the agreement. It was recently agreed between the four member countries: Mexico, Colombia, Peru, and Chile.
This is an open mechanism. This is a trade integration mechanism that is open. And eventually, all of those who share the same economic principles as the member countries will eventually—can be part of the Pacific Alliance.
I believe that Mexico, geographically, is located in a privileged position. We serve as the meeting point with North America and the rest of Latin America. Therefore, we are interested. And my administration is pushing forward through the reforms that I have mentioned. We want to make Mexico a logistic destination that provides high added value, and want to make integration happen in Latin America, and in all the Latin American region, and we want to integrate with North America as well, through it.
QUESTION: Nelson Cunningham with McLarty Associates. A related question. You spoke mostly about the economic principles in which Mexico could be a leader and integrate with Latin America. And certainly, that is the case. There are many Latin American countries where the principle issues are not necessarily economic, but are human rights, democracy, openness, transparency.
What can Mexico do as a leader in Latin America to help by its example, or more directly, to show these countries the benefits of the openness that Mexico has embraced?
PEÑA NIETO (through translator): In terms of our foreign policy, one of the main goals that we decided to set right from the beginning of my administration is to be globally engaged. And in our globally engagement goal, we want to be more present and integrate with Latin America. We had lost a space, we had lost our presence and our participation. We have kept up with it, and now as parts of the Pacific Alliance, we are working together to collaborate with other countries in Latin America, and also the Caribbean, and we are more present with those countries, but what Mexico can do is to exchange success stories.
Mexico is in a process of becoming a more modern country. We are building our capacities in the area of democracy, as I said. We have a reform targeted to that in the area of transparency. As well, I didn't mention, but the transparency reform is another reform that adds up to the political reform that we have passed, to create a robust prosperity system.
But Mexico shares all of its expertise. And Mexico is trying to outreach to all of our sister countries in the Latin American region as well as in the Caribbean. We're trying to set a climate of synergy with all of them. And by this, we will be able to promote in this region a higher level of support.
Mexico can—can work on having a more supported region, but we can also help to foster development, and I am making reference to Central America and the Caribbean, where the absence of development of course affects areas—of course, effects those countries domestically, but also affects Latin America as a whole.
RUBIN: Let me. We—Mr. President, I think they could keep going all day. So, could we.
PEÑA NIETO (through translator): Don't worry.
RUBIN: I'm told, it's time—well, I think your staff is worried, actually.
We have time for one more question, and what I'm going to do is ask questions that came in from a national member from California. And his question was, in the context of what really is a remarkable set of accomplishments that you've outlined, and the prospects that Mexico may realize now, the potential that it has, how do you plan to deal with the question of drug cartels and crime more generally?
PEÑA NIETO (through translator): Well, as I have noted already, truth be told, security is a top priority for the Mexican state. We had made progress. I have shared with you figures that have been accepted and have been recognized in our country, even by the most critical sectors, and they are the most involved in the security issue, civil society organizations, and they have observed the developments that have taken place in Mexico.
And we have sent encouraging figures. And in the area of cartels, well, cartels are present transnationally, and we have to create a common front, especially in the countries with—we exchange information, and we do that with the Pacific Alliance countries, we exchange information with Central American countries, specifically our neighboring countries in the south, and that is also happening with the United States.
Because these cartels, of course, they do not only operate in one country. They are present transnationally.
But it is a fact that we have acted efficiently, and I can say and it has been acknowledged as well, out of 122 targets, the heads of the cartels,now, in my administration, 88 have been arrested. Others have been shot. But they are no longer a peril for society. So this has resulted in the cracking down process of those cartels.
We see the emergence of other organizations within those cartels. And they perpetrate crimes in specific regions of the country. We have addressed specifically the regions where we have identified extortions, kidnapping for ransom.
We saw, at the beginning of this year, a spike of those cases. But we had to decide on specific policies for security in that specific region of our country. And today, we see a downward trend in the perpetration of this crime.
We—we cannot take on a triumphalistic approach with the organized criminal activities. We have to reaffirm, instead, that this is a priority for my administration, that we are making progress in terms of fighting crime, and then the figures that we see are encouraging. But still, we know that we are on the right path. Yes, violence is coming down in the country specifically in those regions that were hit hard by insecurity.
And I've shared with you a figure. We've seen violence coming down, and number of murders have dropped down by 29 percent in contrast to 2012 figures. We see that there are states in the northern border with the United States. And in the southern border states, in the south border, yes there were moments where crime was pretty bad.
In Monterrey for example, we have seen a 60 percent drop in Monterrey. In Ciudad Juárez we have a 50 percent drop of those crimes...in Coahuila as well, roughly 50 percent is the figure. On average, in the border states with the United States, violence and murders perpetrated there have dropped by more than 40 percent.
But this doesn't mean—I will say it again, we don't want to sound triumphalistic, and we don't want to show off that the problem has been solved. It is not that we want to show off. Of course not. Security is going to be a priority of the Mexican state. It will be a priority of the government of Mexico. And the figures, yes, are encouraging, but we're on the right path.
RUBIN: Mr. President, Mexico is very fortunate to have you as its president. We are very fortunate that you visited with us. And we hope you will visit with us again when you are in New York.
Thank you very much.
PEÑA NIETO (through translator): Thank you very much, Robert.
I'm very glad to have had this space worked out with all of you. I'm very glad for sharing with you what is happening in Mexico, and I hope that you can turn your eyes to Mexico and see all the breakthroughs that are going on in my country. Thank you very much for this great opportunity.