so, i wonder just the fact that the new party comes, or comes back to power, will be the first step towards solution, i think, it will be very questionable. and, they give the image that they know how to govern and i think this perception of not -- does not address the fact that the whole country has changed a lot in the last 20 years. the country, the mexico that was governed by the priests during the 20th century, is not there any month, and maybe, it is still -- exists in some regions and states, but that is -- as a nation, our institutions are different, our society is different and it would be a huge challenge for the pre to change the circumstances, and, my source of optimism is in society and my source of pessimism is in political institutions. thank you.

>> shannon, tell us about -- give us your optimism and pessimism for next week with juan's admonition that things happen, do you expect anything unexpected between the meeting between president felipe calderon and president obama. >> historically the last 20 years and mexican presidents' visits to the u.s., they are often characterized by ambitious agendas, with salinas, was nafta and fox, in 2001, was comprehensive immigration reform before september 11th and this agenda next week will not be as ambitious as those, in part for optimistic reasons and part for pessimistic reasons, the biggest issue between u.s. and mexico are security issues, one reason that is not an ambitious agenda is because the u.s. and mexico

have been working well almost three years together on the agenda and will be more touching base and pushing forward in small, concrete forms, an agenda, security agenda, u.s.-mexico bilateral agenda that has been quite developed and started under the bush administration, and in his last year under the obama administration we have seen a transformation of the initiative, moving from a military focus to one that includes institution building and what they call resdmrilient communities, the problems at the bored and we saw under two months ago a whole host of high-level u.s. officials, led by hillary clinton go to mexico city to hash out the new agenda. so, some of this has been done and, we've done it in washington and mexico city a couple of months ago and this meeting on the security side is ratification by the two presidents and some flushing out of a few details on particular

programs that happened the last two months. an issue that could be on the agenda, and probably should be on the agenda, that would be ambitious, but will not be talked about most likely next week is north american competitiveness. and where that goes. you know, the union put forth, they wanted to double experts the next five years which is ambitious but in order to do that, mexico and north america would have to be part of the equation. i mean, you talk to many private sector companies, big ones, that are in mexico and other places, intel, caterpillar, ford, others, and the way that they are able to produce competitively in the u.s. has much to do with the ties they have in canada and to the u.s. if they do not put part of their plants in mexico or canada they put them in china or brazil or other places. when they're in mexico, they are

able to bring imports from the -- inputs from the u.s. and take them to mexico and bring them here and bring them to other markets and when they are in brazil or china they don't use inputs from the u.s. and while they may take 200 jobs out of u.s. it often saves thousands of jobs because some inputs are coming from the u.s., to mexico, there is be a integration which happens that doesn't in other parts of the world, for the benefit of the mexico and its economic growth and also the benefit of the u.s., and its export growth the issue of north american competitiveness should be on the agenda and unfortunately, i don't think we'll hear people talk about those big issues, we'll hear about smaller trade issues, perhaps a trucking issue will come up and where we are with that, other border issues but not an ambitious agenda thinking of the medium to long term for the u.s. and mexico. we will see on the agenda, most likely, immigration. now, this as we know is quite a

difficult issue in the u.s. and polarizing and also a difficult issue in mexico. but, particularly, because of the law recently passed in arizona, president felipe calderon almost -- must mention it. and really put it forcefully on the agenda to play to his home audience, and if he goes back to mexico without mentioning what happened in arizona and how the mexicans feel about it, it will be hard for him to come home and on the u.s. side it will be gift to touch too deeply on that and push too hard a mexican point of view, how unjust they think the law is, immigration politics in the u.s. is policy lar rised and call drone and obama, agree on the law in arizona, neither are in favor of it. but, how that works through the u.s. system is something that is not as much of a foreign policy as a domestic policy issue and

we'll see immigration talked about but there will not be a resolution, really coming out of this. and the final issue that will be on the agenda but is perhaps the most positive one, or new one to be put on the agenda, is the issue of climate change. we have right now two presidents in both felipe calderon and barack obama who are interested personally in issues of climate change, alternative energy, green technologies. we also have a situation where mexico will be the next host of the u.n. conference of parties process, so, mexico and particularly cancun will be the next copenhagen. coming up in december of this following year. so for felipe calderon it is important that cancun be seen as a success and is important something comes out of the meeting with global leaders coming together on the u.n. process and to do that the u.s. has to be on board in some way, shape or form.

in part because mexico and the u.s. are so close but in part because if the u.s. is not at the table, many of these agreements we have seen in the past, kyoto and others fall apart. and so where cancun goes from copenhagen and what the u.s. can put on the table will be part of the discussion. most likely what we'll see out of this is again a focus on small, concrete programs. i don't think anyone in the international system thinks we'll see a treaty with legally binding emissions targets put forth in six months in cancun but there are areas where mexico and the u.s. and other countries would work together to flesh out what we saw at the copenhagen accord and what we saw happen there, particularly on the financing mechanism for mitigation, adaptation, how developed countries and even large emerging economies like mexico, china, brazil, india, how they'll work with the least developed countries to mitigate the effects of climate change

and transfer the money that we're promised in copenhagen, how it will work and perhaps we'll see the presidents and their staffs talk through. and overall it will be a meeting of reaffirming the status quo, reaffirming the progress made on lots of different issues. but, not one with a big ambitious agenda. >> before turning to david to be provocative i should mention, the people are here... what is not on the agenda that should be there. are they getting it right on the security strategy? will there be anything new and different? should we be looking for what has been a large number of drug related homicides to be going down in the near future? should we look at a development of a modern policing judiciary force in mexico? some efforts at reducing arms flows and money coming from the u.s., the new strategy from

ondcp and the white house on drug an assumption in the u.s., what is out there on the security side and beyond security that might be new and different and are we on the right path? >> well, first of all, thank you, andrew and to the wilson center for hosting this events. it has been a great pleasure to be here. i have enjoyed working with andrew on a variety of projects. let me take that one step back and, we have heard different estimates about whether we should be optimistic or pessimistic about where mexico is and where the u.s.-mexico relationship is heading and to talk about that context, a little bit, pessimism looms large in the discussion. certainly some of the things we haven't mentioned, u.s. public

perception of mexico are at and all-time low since nafta began, and the public image, images the public sees of mexico, the assessments of mexico, the security partner, trade partners are actually despondently low. we're also -- we've also got very difficult intractable issues on the bilateral agenda like immigration, one of things we haven't mentioned also is trucking, mexico would like to see nafta move to a different level, where we can have free flows of not only commerce but also trucks and labor going across the border and in terms of mexico specifically there are a number of very difficult, unresolved issues that my colleagues have pointed to. i think while security has

loomed largest in the u.s. mind about mexico's current situation, for ordinary mexicans, since felipe calderon was elect in '06 the issue has been consistently the problem of the economy and specifically the fact that still today, approximately 40% of mexicans live in poverty, by poverty i mean, typically earning less than $5 a day and also the issue of in equality. the fact that although so many mexicans live in dire circumstances, mexico is also home to one of the world's richest -- actually, the world's richest man, carlos slim. and the reason he's so rich is because mexico has extremely uncompetitive domestic economy. add on top of all of this, the

idea that in 2012 we're going to see a pri victory, and i think for people who have championed mexican democracy and have concerns about whether or not the pri changed its ways, and there are significant signs that it is still very much the same party it was ten years ago, and before, all of this adds up to a pretty half or 3/4 empty glass. i think that we also need to take into consideration the other side of things. first of all, i mean, while the u.s. public may not perceive it, u.s.-mexican relations are at an all-time high on several indicators in terms of levels of security cooperation, the simple

extent or intensiveness of engagement by the u.s., between the u.s. and mexicoi ics at a significant high and fortunately for mexico and the u.s. on problematic, thorny issues like the situation in arizona, the obama administration and this calderon administration strongly agree about that particular issue. also, thinking about mexico's problems and about its economic situation, it is very easy to be dissatisfied. but, the reality is, mexico is in a very different place, ten years -- than it was ten years ago, especially where it was 15 or20 years ago. mexico is seemingly devaluation proof, not that they are free from devaluation but the significant devaluation of the

peso in the last year we saw, was not a major blip on most people's radar screen and ordinary mexicans pocketbooks and that suggests there were fundamental changes in mexico's macroeconomic picture which are ultimately quite positive. add to that the fact that in the last decade we've seen mexico's gdp per capita in terms of purchasing power, actually increase to the -- what economists like to see as a critical watershed which is the $10,000 a year mark. now, some of that could be because carlos slim had a couple of good days on the stock market. not a perfect measure but it does suggest that things are not entirely bad and as easy as the gringo -- to have the gringo's eye view, when you're not actually immersed in these

problems on a daily basis, when you're not the one earning less than $5 a day it is very easy to be sanguine about these issues. but i think there is no going back to 1988. almost a quarter century ago. that is hard to -- well for some people, hard to legalize that but it is hard to go back. there is no going back to 1988, when we saw mexico's last great fraudulent election and when we saw mexico suffering triple digit inflation and many people were dissatisfied and mexico is a very different situation and our relationship with mexico is different as a result. shannon mentioned that we've moved to this new framework for u.s.-mexico relations, this new security framework which focuses on dismantling the -- the four pillars, the idea of dismantling drug trafficking networks and

actually we've had significant success over the last decade. we have taken out the top leaders of at least four of the major -- three of the four major drug trafficking organizations in mexico, we have taken out high ranking members of the afo, and we have taken out ocl c cardonas, who is now a resident of the u.s. -- not to his liking necessarily and we'll soon be welcoming a new resident, mar i don't villeneuve, and, the mexican government has recently taken out, tranleiva, an important collaborator of a cartel and the juarez cartel and significant operations against

the la famalia and other regional thugs. so that lends to the calderon... >> there are rumors chapel's wife may have been arrested in the last day or so, but these have yet to be confirmed. >> who knows whether that is what he wanted or not. but the administration's goal, the administration's measure of success, the calderon administration's measure of success and by and large the u.s. measure of success is on the point in time of dismantling drug trafficking networks and that is seen as a measure of success. i'll get back to that. the other issues are building effective judicial sector institutions and here, again, mexico made significant progress. may not look like it but the fact we are identifying corruption in law enforcement in mexico and the fact we're actually talking about trying to

really strengthen municipal policing, the fact that these issues are on the agenda and there are significant reforms in place, that will move mexico to a more effective judicial system i think are important. the third pillar is this idea of building a 21st century border. and i thought the 21st century was supposed to be the borderless century, but the idea is to facilitate trade and prevent illicit flows, stop southbound flows of u.s. weapons and arms into mexico. i think that is obviously something the united states and mexico have to work on together but out meltout -- ultimately ms the real point, when we talk about cross border and trans bored solutions, we are talking

about the hiring of undocumented workers or talking about the selling of weapons, we need to be focused on where those transactions take place. if they get to the border it is already too late to address those problems effectively. but the last point in time is this idea of building strong and resilient communities and this is a true innovation in u.s. mexico security relations and puts onto the agenda the idea of strengthening rifle society and some measure of job creation or creating economic opportunities so that the young people today who are involved in illicit activities and don't really have any other options because maybe in some places as many as a third of people aged 18-30 neither work nor study in school. they are idle hands and the idea of thinking with mexico about

how to promote a greater degree of prosperity and opportunity, a greater degree of competitiveness as an economic region or block, i think is exciting, it is important, but by far we are -- i should say we are far from really advancing that agenda, significantly. it needs to be much more strongly put on the table. and i do have ideas about the measures of success. and i'll end with this. it is great to make blows against organized crime and that is what the administrations have been advocating and the problem with making significant blows against organized crimes is it leads consistently and historically over the last century to one predictable result and that is more violence and deaths as the cartels fight among and within their organizations to reestablish order. this year alone, we have seen almost 3800 drug trafficking

related killings in mexico, on par to well exceed the 6500 killings we had, at least 6500 killings we had in 2009. so, in other words, we could be looking at 8,000, which is a significant increase by the end of 2010. so, for the mexican public you can arrest all of the bad guys you want but as long as people are dying by the hour, in the war on drugs, it is not going to be popular. and, lastly, for me, ultimately, i mean, why are we doing this? because theoretically we want to reduce the availability, the flow, availability and consumption of drugs in the u.s., how is that working out for you... to quote sarah palin. it doesn't appear we have made a great deal of success and if you look at the data, we are approaching a majority of

american voters, that is, people aged 18 or over, who have experimented at least at some point in their lives with the use of drugs. that is abominable, and an insult to mexico we are not able to control consumption. this week the breaking and enterings -- the obama administration said they would try and get a handle on that, and so in the meantime as we look around the country and see states like california going in completely the opposite direction, possibly voting to legalize the consumption of certain drugs, it really makes you scratch your head and say, what is all of this for? >> thank you, david. let me go back and i want to open this up to the audience, but, one minute responses from each of you on points you made or i know you have made elsewhere which is denise, quickly, what is -- does felipe calderon need out of the visit

next week? what does he want to take back. >> he wants american validation for the war on drugs. he wants a big pat on the back. he wants recognition for his boldness, his bravery, his willingness to take on organized crime, at a time in which the war on drugs is increasingly unpopular in his own country. where midway through his term, his main policy initiative is being questioned by many mexicans as the polls reveal, at a time in which it's not clear that the war on drugs is actually reducing the violence or, rather, fueling it. at a time in which his party faces increasing political competition and has not fared well. so i think felipe calderon is coming here with the hope that

once president obama embraces him and says they'll right things in terms of applauding what he has done the past three years he can carry that back to mexico and bolster his political legitimacy in a contest in which he's a lame duck, a weak president who has very little to offer the mexican public and what -- in what remains of his term. so he comes here on a quest for validation, ratification, and for political capital. >> let me ask you the mirror question. what does president and the obama administration need to get out of next week's visit? >> the obama administration -- >> how much is domestic politics as much as -- >> exactly. obama administration, first and foremost needs it to go well and not to mess up the domestic agenda too much. they need to not get too deep in

to the weeds on immigration issues, they can agree the arizona law is a terrible law, and, hurtful to the u.s. and mexico which they've already done publicly and they need to make sure, calderon visiting and talking about immigration, for instance, does not hurt them, in trying to think about and put forth on the agenda whether, before the elections, or probably after the midterm elections, a more comprehensive immigration reform. they need, when they turn to issues of climate change, they need president felipe calderon to recognize there is a bill on the table, the lieberman bill that came out this week and potentially there is a chance for it to pass and play along with that though it looks very unlikely that it will pass, given the polarization and the lead-up to the midterm elections, they need mexico to play along on that side but, in general they dead and in some ways need to pat felipe calderon on the back because they've invested in security and taken on the bush merit initiative and

expanded it in ways david and i both talked about and need to validate, this is the way forward with mexico and in general, by being seen together and talking about things in a quite positive way, it is worth this investment. in security and security very broadly defined with socioeconomic factors and the 21st century border and they need to get out of it that this is a good investment for the u.s. and should continue to go on, because many people in the obama administration want to do this, but are trying to convince at times some members of congress that are less sure about whether this is a good investment of u.s. money and resources. >> david, you hinted at this at the end and raised questions about the strategy. tell us what would be -- and this is sort of a preliminary view of the report you and eric have been coordinating on security cooperation. what would be the right strategy, likely where what they

do the next two years will be locked into policy over time in some ways? how do you get it right and what is the right way to go and what needs to be tweaked? >> well, if this is the idea of getting drug trafficking under control, and ultimately preventing access to drugs for u.s. consumers, you've got, well, you've got four possibilities. there are four strategies to dealing with the black market in drugs, in north america. and worldwide, really. one is, complicity, or what mexico might call the idea of simply working, hand in glove with traffickers, accepting their existence and taking the occasional bribe. that is the way drug trafficking in the u.s.-mexico context worked for many years with very high ranking officials on the mexican side and no small number, recently, of low-level u.s. officials, border patrol

agents and others getting snared up in this kind of thing. the second approach is to do a head-on fight against the cartels and that has been the strategy we have taken on almost the last decade. with the idea of dismantling organized crime syndicates. some people call that the hydra strategy because like the mythological beast of ancient times, cut the head off of one organization and a new one grows back and so there are serious questions about how effective that can be and thirdly, you can try to reduce consumption. and as i said, unless you are willing to put very serious resources into that effort, it is dubious how much you can decrease the availability of drugs, and, therefore, decrease the profits that drug trafficking organizations have, and, 15% reduction in youth consumption of drugs as the

obama administration recently proposed, is not going to take a lot of money out of the pockets of guzma and the richest drug trafficking in mexico and the last option which no one wanted to talk about for 40 or 100 years or so... is the idea of trying to regulate consumption in some kind of legalized scenario. and i think whether the administrations like it or not, or whether... whether it is in tune with the majority of the american public which opposes the idea of drug legalization now, i think we're on a path to legalization in the sense that states and localities are beginning to explore legal options for people to consume, whether the dozen or so states that allow for legal consumption of marijuana, for medical reasons, or states like california, that are flat broke and just need extra tax revenue

from a little bit of pot bills. whatever the reason is i think we're seeing a shift and when the u.s. can elect a person who is an open, admitted drug user, not only did he inhale but also snorted, i think that suggests a sea change in the way the american people views the issue of drug consumption and will be interesting to watch play out over the next decade. >> finally, before we open it to the audience, to come back to the issues we started off, juan, what does -- felipe calderon, getting into the last two, two-and-a-half years of administration, is like a sea time and what can he do in the last two, two-and-a-half years to leave a legacy and is he willing to do those things? >> well, i joked once in an article that so far the biggest legacy that president calderon has is that he is the president that teaches us how to sneeze

with the inside part of our elbow. >> the swine flu concept. >> he went on national television and gave us a lesson on how to sneeze. he has a huge problem with his legacy and the most important decision, economic and policy-wise, he has taken, was against the company, which was a union in control of the utility company that provides electricity to mexico city and the surrounding areas, but that was the position of power, the union and the company, but which would be a legacy, which institution would be there in 20ors, which would be, salinas gaves the nafta, for example we might have conflicting memories of the character but he left something for the mexico people to be remembered of, and, he

gave autonomy, and created the mexican equivalent of the... and fox at least didn't obstruct the creation of the national transparency institute. which would be the legacy of call drone, andrew, what i did wrong, that you ask me such a difficult question. >> okay. let's open it up to your question and we welcome viewers who are watching us by, this is video cast, and video cast as well as those on c-span and joe... another infomercial on may 24. we'll launch the paper on renewable energy and we are impressed that joe will join us as a commentator on that day and ambassador babbitt as well. joe, we'll take -- and we'll come here and let's do three questions and we'll come back to the panel. joe, the first one. >> okay, i'm a political

economist, senior associate with the center for strategic and international studies, andrew, i'm awfully glad that you asked shannon the question you did, about the domestic considerations, in this country, as to what will happen at the summit, and this is really a political commentary. just as the mexican president must play to his constituency in regard to immigration, i think the u.s. president must play to his current constituency in respect time gracious. now, senate majority leader harry reid fouled things up on the comprehensive energy and climate change legislation by announcing that he would push immigration legislation this year and as a result, this is inside the beltway, i guess, but lindsey graham, the one republican supporter of the climate change legislation,

announced that he would drop off. i think president obama has established a habits of making grand promises which he sometimes is not constrained to keep and this is pure speculation but a lot will depend on how the major news media play not just the statement but the news conference that is held and the "washington post" and "new york times" and "wall street journal" may force president obama to say something that he would rather not say about pushing immigration. it depends a lot on -- afraid to day -- whether or not it is a slow news day on may 19 and may 20. >> sure. >> i wanted to pursue juan's misery and in talking about felipe calderon's potential legacy. i remember in this country in 1994, disastrous midterm elections for the clinton

administration. i remember a lot of people saying about president clinton, he didn't do anything big, he was always giving press conferences, talking about things like school uniforms as a mechanism for creating stability and -- in under served communities and that kind of thing. somebody on the panel, give us a list of those kinds of things, to which the mexican population would respond. because, the u.s. population responded to president clinton's miniature initiatives positively in the end and reelected him resoundingly. >> let me ask, too, is there a chance his signature effort which has been dealing with organized crime, i mean, three years from now we'll look back and say there were gains of judicial and police reform and might have got -- counterintuitive and we are pessimistic but three years from now is it possible to look back on that and say, is that a real

legacy. diane here and this woman as well. >> a question for denise. >> give us your name and asillation. >> -- affiliation. >> marcos... a few days ago thomas friedman wrote an article in "the new york times" between the different middle classes in mexico and he mentioned that 40% of those who live under the poverty line and that is, like 50 million people, 75% of those 40% believe that they actually belong to the middle class. in the context, one of the biggest challenges for -- from my perspective in terms of mexico's political system is how to break up the current political needs, the business

needs and perhaps the church needs and all of these people, few people who are basically governing our country and which, by the way, you have pointed out, i really like your perspective on that. what would you say about why these people -- 50 million people living on the border line still believe they are living quite okay? why? i mean, is it such -- what is your perspective on that. >> before we close the round, dr. negroponte. right in front. >> shannon o'neill mentioned in passing, diana negroponte from the brookings institution. she mentioned in passing the trucking issue and yet, a

specific decision which our two presidents could make next week is a timetable for lifting the prohibition against mexican truck drivers driving in the u.s. we are not in compliance with our agreement under the nafta by pro -- our prohibition and the retaliation against the quotas on fruits and vegetables and perfumes has hurt particularly california. the engagement on that issue of trucking would be a substantive step. i would like your opinion. >> let's go done the line and, quick responses, and we'll have time for one more round. we'll start with you. >> the problem with legacy, is that the most relevant issues are quite unpopular, for example, breaking the news to mexicans that the oil is going down because we don't have a real energy reform and then we'll have to do this

uncomfortable thing of paying taxes. it is news the mexican public doesn't want to hear. they don't want to hear in the rest of the world private companies could extract oil, no matter if the oil remains in the hands of the mexican government and the nation but it could be a company difference, and that is not something the mexican public is really willing to accept as tax reform. so the most relevant reforms are... will hurt politically, felipe calderon and the president and the sad part is we didn't have the reforms and already, they are having a hard time in order to be reelected in 2012. and, i just... i want to make a point, i didn't mention in my last intervention. i wouldn't blame it -- all the responsibility of the failure of reforms on felipe calderon.

i think he has faced a very irresponsible opposition. there is an open debate of how good or bad was the pri as governing, as... in power but i think it is very clear there has been a lack of creative, interest-driven opposition, and, just from a foreigner point of view, as a mexican, i was appalled of the criticism against president obama, during his first year in government, saying he has not achieved anything. well, he wasn't allowed to achieve anything by the interest of the opposition. we still haven't... that reforms will happen if the government managed to have a decent opposition with a view of changing the country, but, if their position is just concerned of -- in the next election,

which issues will favor their candidates, that the country will not change. >> denise? >> i think felipe calderon's legacy is going to depend on whether the national action party is capable of retaining the presidency in 2012. if he is kicked out in the election, felipe calderon will be viewed as a failed president, as one who after 12 years of rule was unable to fundamentally change the country in a way that created a broad constituency for reform. however, if his party wins, and that could happen, i mean, my initial comments, i gave you a photograph of mexico today. that photograph could change as the campaigns evolve, as they

are forced to debate and it was talked about democracy being the institutionalization of uncertainty and in that sense, mexico is an electoral democracy and we cannot foresee who the next president will be but the trends today in terms of who dominates at the state level, who has the resources, majority of governorships, the capacity to mobilize the electorate, in order to win the presidency, that without a question today, is the pri. if... however if the good kuwait runs a good space and he falls apart and, his party again divides and, they win, felipe calderon will be credited with fueling the ranks of the middle class and will be commended for taking on drug traffickers an

organized crime and will be commended for the beginning of an anti-monopoly agenda by dismantling fuerta and taking the initial steps on education reform and will be viewed as a reformer. a reformer who couldn't go as far as he wanted to, because of the institutional constraints. but that is contingent on the results of that... of the next presidential race. and, in regards to your question... >> becomes president or some third-party or... rises from the ashes. >> i'll make a bet today. and if i lose you can lambaste me in three years, come back and secure me at another one of these forums. the mexican left has no possibility of winning the next presidential election. and i think it is a shame that

the left has self-imploded, because mexico needs a functional, effective counter weight and needs a functional left that can negotiate in congress and i think we would have witnessed a very different sort of presidency had felipe calderon had a prd to negotiate with. and to form a reformist coalition with and he's trying to do so now and it is interesting to see the reforms he puts forward are supported by the left but it is too little, too late, bus theecause the pri control of the key levers, including its majority in congress. in response to your question, thomas friedman's article talked about the three constituencies in mexico, the narcos, the nohs and the naftas. and the nos have been winning and who would be talking about when he aincludes to the nos, he's talking about this veto centers who did not want mexico

to change. when david shirk was presenting an optimistic portrayal of mexico, at one point i thought, he's not talking about my country. he's talking about the place that we'd all like to live in but not about the country i have seen move sideways over the past 12 years. yes, perhaps in some senses we haven't moved backward but we haven't moved forward significantly, either, particularly in terms of our potential of what the country needs and what our competitors have been doing with their last 12 years. >> can i push you on that point, den denise? i would disagree, i think mexico moved ahead but so far below its potential that it is frustrating for those who -- i mean, as a foreigner i look at mexico and say, per capita income went up and transparency, forward and backwards... a lot of good things we can talk about, but,

for those in mexico who aspire and know what mexico could be it moved so slowly it is agonizing. is that a fair assessment? >> well, i think mexico is a more open economy. it is a more competitive place politically, that is certainly true. it is not a safer or more, quitable society. when you have -- equitable society. what has been the economic growth in mexico the past 15 years? 1.5% a year. that with the demographic characteristics that we have, is leading to economic stagnation. and i think that that has produced a country that is in response to your question, divided. i mean, i remember ginger thompson's article right before the 2006 presidential race.

there was a photo. actually two photos, side by side. of in one photograph, it was all of the lower middle class public dwellings that had been created under vincente fox where there was a huge public housing boom and all the people who lived inside those places were going to vote for felipe calderon because they had become stake holders of macroeconomic stability, of nafta, of the economic gains that mexico has witnessed over the past 1 years. next to those were the slums. you know, the slums that you see outside of any mexican city. all of the people in the slums were going to vote for the other candidate. what you have in mexico today is a stalemate. a stalemate of the nos and the naftas.

40% of the population calls itself middle class because it is a beneficiary of some -- many of the reforms that we have witnessed over the past 12 years but the rest of the country is willing to go out and vote for an anti-institutional populist politician because those gains aren't sufficient. so i think we have seen mexico move sideways, and moving sideways in many ways in the global economy today means falling back. and it also means that it is very difficult for whoever has the reformist agenda to win. because, the constituency is not large enough. see what i'm saying? and the nos, when i say the nos have been winning, who am i talking about? union leaders? monopolies, even party leaders. we talk about mexican democracy but to what extent is this a fully functional representative democracy, when there is no

re-election. i mean, it is said mrn democrex democracy is like a green dog. it is too exotic. why? because it lacks some of the fundamental traits that any functional democracy would need to be truly accountable and representative including re-election, citizen candidacies, term... i mean, and at the same time it has all of the elements that make it exotic. such as the prohibition on re-elections, such as very little public spending. i mean, parties that are among the wealthiest in the world will receive, what is it? $300 million in public financing? but zero accountability. because there is no re-election. so it ultimately becomes a discussion of the glass half full and half empty, but if the

glass were half full how would you explain an election as you saw in 2006? where people took to the streets for over four months precisely because we have a country of naftas, mexico from the... and this country of the have-notes and without economic growth that stalemate continues, and mexico becomes a fertile ground for any sort of populist anti-institutional politician who rails against the status quo because it doesn't work for half of the country. or, mexico becomes a fertile ground for political regression, via the pri that is appealing to the country as it was before because at least there was stability, there wasn't as much violence, there was a patron agent driven machine that gave things to people, who live with their hands out stretched, and,

frankly, i think that that stalemate is what explains the electoral results we are seeing, which i think are not good for mexico's electoral, political prospects in the future. >> thank you, denise. we're at 10:30 but we'll take a couple more minutes to wrap up, david and shannon. so, david... >> well, i'll take on the felipe calderon legacy issue. for one thing i totally, the great thing is though she disagrees with me i agree with most of what denise has to say. i don't know how that works, but... i completely agree that it depends very much on what happens. there is still' chance that the they could begin and, something could cripple him in some

significant way, but it the education pri's to lose in twoec2012 and in the last two election they couldn't get along and that is largely why they lost, perhaps more so than we might like to believe. so assuming the prism does win, i think we may look back and see president felipe calderon as the man who took mexico to war against itself and lost. and as a result, lost the presidency, who neglected his initial promises when he took office, to be the jobs president, but, who instead became the war on drugs president. that said i want to talk very briefly about the secret to being an optimist. and the secret to understanding -- thinking about mexico as the place we'd like it to be. and i think the secret to being an optimist is to have low

expectations and a long time horizon. mexico has and will continue to make progress in the long run. unfortunately, no idealist can ever really appreciate that or be an optimist because in the long run we're all dead, as john maynard keen said and i tend to focus on the fact that the problems mexico confronts are enormous problems. and, we could focus on mexico's potential and focus on the -- what mexico has not been able to do, and to a certain extent we should. we need to have that as our sort of guiding motivation. but i think pragmatically we have to understand that we should... need to appreciate whatever progress we can make. in the short-term, and when we look at felipe calderon i mean, he's made very modest progress on some issues that were completely elusive to previous

administrations, energy sector reform, sure, it is paltry. tax reform, sure, it is not enough. justice sector reform, gosh that will be awfully hard and costly and is nowhere near where we need it to be and pension reach, we have not been able to deal with that effectively in the u.s., and these are huge problems an even a modicum of progress in a context of divided government, in a context of -- welcome to democracy. this is how democracies work. they don't make grand sweeping advances like nafta because... >> or health care reform. >> or health care reform because only a dictator can do that effectively. i mean, i don't want to oversell mexico as having made the progress it needs to, but i think that there is room for cautious optimism about what

mexico has done and what it can do in the future. >> and -- >> that is assuming that mexico is a normal democracy. i mean, the u.s. and mexico are on par and if mexico can't pass reforms it is because of divided government. i don't buy that. i mean, in a normal democracy you don't have the sort of veto power that a carlos slim... can exercise over the political process. >> although, it would be interesting to ask how much in other unequal societies, societies that -- as mexico is, you pointed out, it is more the norm than the exception. >> absolutely, but then we are talking about all of the adds oligarchies... >> we can go into a number of them that perhaps... >> absolutely, then add on the caveat. >> would anyone trade the mexico of today for the mexico of 15 or 20 years ago.

>> no. without a doubt, no. >> i should point out, health care reform, i mean, our vice president qualified it as a big f-ing deal and much in the end in a democratic process it became watered down, whether they agreed or disagreed, what came up was a compromise of compromises of compromises. >> shannon, you have the last point. >> on the domestic consideration, obama's big promises and little follow through and trucking issue diana brings up, i mean, this is a big issue, right? and the question is, where is the u.s. policy on here and, depending on who you talk to, the energy bill and at least graham's participation was dead before this came up and this was a way to gracefully bow out and blame it on something else, but whether you believe that or not and the trucking issue, obama's big problem it seems to me at the moment is he's playing to the center, with big promises

and there is nobody at the center. and so, this is a big issue for our domestic agenda as we have seen with health care and other things, but, it will be a big issue in our relationships with the countries like mexico, hoping for big changes, and unfortunately, our polity and party seem divide and polarized and unable to come together even on little things, which frankly trucking should be a little thing. let me say one thing to add to the middle class debate. because it is something i think a lot about and write some about. and i have to put myself into the cautiously optimistic side. are there huge problems in mexico? yes. but look at what happened over the last 20 years, and before, to be in the middle class in mexico you almost necessarily needed a government job. that is no longer the case. we have seen per capita income increase and in equality is still there but there is a diversity about to get to that position and thinking about the

middle class, academics think of it in marxist terms, a worker or a capitalist and then we pick the middle class and professionals in the middle and being a middle class person can be defined as being a consumer and what we have seen in mexico and the u.s., frankly, mexico the last 15 or 20 years is a huge explosion of consumption options. whether you like walmart or not the fact that you can buy lots of things at decent prices in mexico, you may not be earning much more but your capacity to live a higher quality of life, assuming you think gadgets can give you higher quality of life increased significantly and on the last thing, when i go to mexico city or other cities and even rural areas, sometimes i see mexicans actually as optimists and the reason i do is because you go around mexico and there are lots of one-story houses, but, everybody has ribar up for the second-storey and think they'll build the

second-storey and put the wire out to be ready to do that. and, so, the question is for felipe calderon and the next president, is, can they make an opportunity for mexicans to build the second floor. >> there's a lot more we could carry on and jose, i see your hand up and others and hopefully the panelists can stay around and, i want to thank all the panelist, denise, thanks for suggesting this. panel, juan coming from mexico and shannon for making a stopover on your way from mexico to new york and david for the wonderful time we've had at the wilson center, thanks for joining us and a round of applause for our panelists. [applause] [inaudible conversations]. >> felipe calderon is scheduled to attend a state dinner next wednesday. on thursday, he'll meet with president obama and address a joint meeting of congress, we'll be following those events