Facility so that for the exporetation of hydrocarbon and the generation of other sources of energy to have the participation of the private sector which undoubtedly opens the opportunity. Rooney from mexico city a conversation with the president when we continue. Funding for charlie rose is provided by the following funding for charlie rose is provided by the following theres a saying around here you stand behind what you say. Around here, we dont make excuses, we make commitments. And when you cant live up to them, you own up and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it, when you know where to look. And by bloomberg. A provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rooney Enrique Pena Nieto took office at mexicos 57th president 2012. He succeeded Felipe Calderon after getting the vote his victory marked he the the return for power for revolutionary ruling part. Which ruled the party for 71 years from 1929 to 20 thousand. Mario varingas loso once called it the perfect dictatorship, nieto ordered that he has changed and will change mexico. His inauguration speech outlined a bold promise to reform the key aspects of Mexican Society, education, telecommunications, and the state or monopoly pemex. In 2013 he brought opposition Political Parties on board with his agenda. They formed so the called pact for mexico. But reforms have been hard to implement at the same time as the economy has slowed. On friday hi a conversation with president pena nieto at his home in mexico city loss penos. After you were elected with that bold promise of economic reform people began to talk about mexico in a very flattering way. They even called it the mexican moment and the country of the future. Time magazine on a cover story said after one year in office the president has passed the most ambitious package of social, political and Economic Reforms in memory. Global economic forces too have shifted in this countrys direction. Throw in the openness of mexicos oil reserves and Foreign Investment for the first time in 75 years and smart money has begun to bet on peso power. In the wall street community, i would say that mexico is by far the favorite nation just now. Its gone from a country people had sort of given up on to become the favorite. All based on what you said in your inaugural speech in december of 2012. Huge promise, huge hope. Tom friedman said there country will become the most dominant economic power in the 2 1st century. The answer to that question which country he said is mexico. So there was a huge amount of reaction to these bold reforms, then the economy slowed down. Your popularity slowed down the question many people are asking, what happened from your Vantage Point what happened . I think that we would have to review everythings that has happened in one year and a half. Thats how long we have been in this administration. A lot of expectations were generated in mexico as of the starting point. And the following day, the next day after i took office as president of mexico, we signed among the main Political Forces of the country and the federal government, an agreement we called the pack which would of course gather a vision that is aimed at making changes, structure adjustments that allow mexico to grow economically and have greater social discipline. And this is accomplished right the next day after i took office. And obviously it is to be supposed that during the transition, that is the day of the election to the day i took office we were building this with the main Political Forces. And according to your comments, i think that this is the processing that in such a short period of time, 18 months, this has allowed us to launch various structural on issues that have been postponed for many decades in our country. I could assert that in Mexico Mexico decided to change. Mexico decided to take the path of transformation. And this also showed the political maturity of the main Political Forces that have accompanied this effort, from having differences in the face of what has been processed in the adjustment of structural reform but undoubtedly this shows a very promising scenario for the future of our country the implementation of the reforms takes time. Benefits of those reforms also take time. Nonetheless what is a reality now in mexico is there have been changes, deep region reforms in energy in telecommunications, economic competition, financial education, political, that if a full agenda at least 7 profound reforms although right now congress is still debating the secondary legislation of the constitutional reforms in terms of energy and telecommunications, clearly we see and show the world that mexico will have a horizon of Great Development in the following year and my administration will, of course, have to carry out with efficient implementation of these reforms to insurance such a promising, encouraging future that many people abroad are seeing and mexico perhaps perhaps this will take time here, perhaps they will start seeing the benefits with time of this reforms for the population. What gave you the political courage to believe you could accomplish this. Mexico. Charlie is a democratic country. Meck cois a country that has political stability in the last 18 years. The president is peaceful order recession. We have different Political Forces ruling our country and i think weve reached a point in which after in congress a Political Party lost majority and the capacity to reform the constitution for the secondary legislation. For many years it was postponed, reaching an agreement. And truly being able to materialize. However, i think that with the passing of time mexico has reached more political maturity especially the different political expressions of the country, the most representative ones, all of them i think have shown in this effort maturity and political stability. This has allowed to us reach an agreement and the second thing which is more important with the work and the responsibility of legislator its we can make sure that those goals we have set out to accomplish are now materialized in reforms that have already taken place and they are now a legislation in effect in our country. Rooney but despite the pact from mexico you understood that this might become in the near term politically unpopular because the results are reform might not be felt for years to come. I think the reforms and their benefits will not necessarily be sent for future, were talking about a midterm and short term. Gradually were going to start feeling the benefits of this reform however it is evidence and this is sig want to say very clearly here, that my task at president of mexico, my responsibility, the most important thing is to make sure that the country has Greater Development and Economic Growth let me give you some data. In the last 30 years the average Economic Growth of our country is 2. 4 , undoubtedly positive in contrast with the growth of other countries but insufficient and lower than that of other countries with similar development. And therefore it is fundamental for to us do reform, reforms that would allow better education, quality education that would also allow us to open competition in different sectors. One of them is fundamental, telecommunication and that could also allow as to make sure that credit would be flowing to other sectors in population. Although we do have a robust banking system, very open and well capitalized system, the credit level was low compared with that of other countries. And thats why. We launched the financial reform and reform that would allow the state to have better collection and strengthened public finances to invest in strategic centers, infrastructure, science, technology, education and Different Things where we had been left behind. Let me focus on the economy for a second. Why isnt the economy growing as you expected it to grow . Is it because of the Global Economy . Is it because of the u. S. Economy or is it because internal conditions in mexico . I would say for all of those reasons you mentioned, charlie. I think everything you have mentioned, theyre all factors that have lead mexico not to have in this period of time the level of growth we would have expected although its been positive growth f you contrast it with that of other countries of the european region, the u. S. Just recently, weve known, the growth of its economy, its slowing down and of course undoubtedly 2. 9 is undoubtedly the type of growth the u. S. Might have, will have high impact in the performance of our economy the Public Investment which is another fundamental another fundamental factor and it is obviously when the new administration took over there was a new pace, nonetheless the second year of my administration the pace of Public Expenditure is greater practically 40 higher in real terms from what we had last year. I would sigh that not having more growth right now is due to multireasons. Performance of the u. S. Economy, i think this is a very important factor. The Public Expenditure level which is higher now and i have to tell you that mexico now san open economy, clearly dependent on what happens in the world. Some people in mexico tell me that you havent spent the money that you got from the increased revenue, they are waiting for to you make the commitment from that revenue, when will you do that. This is something we are doing right now. I think the investment level weve had this year, this first four months of the year, 40 higher in real terms than what we had exercised last year and there are some areas of the Public Administration that are triggering infrastructure, for instance, the communications attracts the the level expenditure of this agency the first four months, 112 higher than last year. This is not a lack of expenditure, on the contrary t is clearly shown that we are investing more than last year. And on the other hand were starting to see very encouraging figures, charlie. The truth is that all Economic Indicators month after month since january until right now, june, clearly are showing better performance in our economy. For all the reasons that ive mentioned. 2014 the Economic Growth rate will be less than 3 . Our estimate is 2. 67 . There is the estimate of the finance ministry. A couple things about the economy manufacturing went to china in some cases because of low wages has come back to mexico. You have a vigorous manufacturing economy. But some say because its based on low wages in part that youre not creating the demand that will spur and stimulate the economy i say the different scenario exactly as the reforms were promoted i think having done this educational reform will allow to us have more better human capitol and of course to have human capitol that is more specialized than different manufacturing thats exactly whats given our country a point of difference visavis china that seemed to be countries that were competing. It could see that perhaps we will have a competition this some sectors, not less i think that with all punk yulity with clearly marked the competitive advantage of each country, mexico is entering into a feel of greater specialization. Mexico has mainly a young population, Higher Education, in Higher Education with graduates, 100,000 engineers every Year Graduate here. And they will undoubtedly profile the economic profile of a people graduating will be incorporating into special industry undoubtedly we do have competitive, in the oughtive industry the fourth exporter of automobiles to the world were practically one of the main exporters of automobiles to the United States. In flat screen televisions were the first producer and exporter, refrigerators, we are the 6th supplier of the u. S. Industry. In aerospace, our industry is now becoming more specialized and it is getting competitive advantages. Rooney but you also wanted domestic demand. And i think this will depend on the Economic Growth. It will depend on internal consumption and this will depend on the level or the performance of our economy. Of course also the redistribution of wealth will be more just, more he gual tarrian that is why we have the fiscal reform which is more progressive than we had before. This is a reform that also it is charging more taxes for those who make more and then we also have location of the budget investing more in social programs, more in health infrastructure, inroads and especially to the less favored sectors. Rooney so when will the people of mexico feel that. When will they know the impact. The most anxious and the person that most desires for this to happen as soon as possible is myself. President of mexico, yours truly. Because everything i have to be very clear this is not a personal accomplishment this is really a mexico accomplishment. This is the accomplishment of a team. This is the accomplishment of a democracy we now have in our country that hag allowed for this to happen. Everybody says to me when i come to mexico city its about the execution its about the implementation. Are the people involved that you convinced to join you in a pact for mexico, are they equally committed to the implementation of these stig reforms . It evident that in the secondary legislation which is now in the process t is being debated, it will soon be passed, there should be consistency in terms of what the Political Forces have supported through the reforms so i hope that there is consistency, this congress visavis the support we have had will be maintained for the due processing and that this will also be part of the process there is a lot more responsibility on the government of mexico in this case or the State Government as well, the implementation of the reforms. The greater responsibility is in the government and very especially in the federal government it is fair to say that the world is looking at your Energy Reforms this is a dramatic thing that hadnt happened in 70 years in mexico an to tackle that was a significant move. Tell me how it will work . We started doing a very clear diagnosis. Mexico is an oilproducing country. Mexico is a country which is facing the great opportunity of Generating Energy through other sources. And because of geographical location and natural wealth we have the capacity of generating that, however we havent done it. In the face of this scenario, we launched a reform which allows us two things fundamentally one, it preserves and maintains for the mexican state the ownership of hydrocarbons. But at the same time, in the second grade element of this reform is that it opens the possibility so that for the expore takes of hydrocarbons and the generation of other sources of energy to have its pansion which undoubtedly opens the fan of opportunities. It opens the faith for to us have more investment in the sector and to generate more jobs. Rooney so you will allow Foreign Companies to come to the mexican oil fields even though ownership remains with the state of mexico. Thats correct. Thats right. The reform will make it possible for National Investment to be in the sector but the state maintains the ownership. Those that are extracting resources will have to pay, obviously the mexican for that extraction and deliver that. The state will continue to be the owner of the wealth of our oil, but additionally i think this makes it possible, i mean the reform for to us have competition in the sector. Pemex the Great Company it is, will continue to be t belongs to the mexican people, now will have to face competition and this undoubtedly will make the pemex process even more efficient. Rooney so they have to become more efficient. They have to restructure. Yes, they have to be more efficient. They do have to be more efficient. With more cost benefit for the population. Because the population says more competition is being generated, and access to different products that will be competing, this gives a great advantage, this will also allow us to increase our Energy Security especially in natural gas production. We know we have natural gas. We were selfsufficient in natural gas, now we have to import gas to supply households, national industry. If we want more investment or industry to generate more jobs, then we really have to count on this input. It fundamental at a better tries do you believe the scandal has affected pemex at all. That was a private issue of pemex supplying company, it is obvious that the problem of the fraud, there was clearly been Public Opinion is fraud of private companies with a financial institution. Fake information but it doesnt directly involve the oil company. Rooney okay. With respect to telecommunications, in restructuring televisions and creating more÷ ecompetitiog what some people believe is monopolistic circumstances, youre taking on your wealthiest citizens in mexico carlos slim, he clearly will fight back. How will this battle unfold . The Telecommunications Reform, charlie, is devoted to opening the sector for more competition. Because we have to make sure, i think it has three fundamental objectives. First more competition in television services, in