2010 POLITICAL SITUATION & OUTLOOK

1. 2010 POLITICAL SITUATION & OUTLOOK September 22, 2010

2. CONTENTS GEA-ISA nationwide voter survey Presidential approval Drug trafficking and security Structural reform The road to campaign 2012

3. Presidentialapproval • The public appears totally divided over the performance of President Calderon. One out of every two citizens approve of the president’s performance while the other half disapprove. • His roughly 50% approval rating is by no means dramatically negative, the public gives very low marks to the members of his cabinet. • The lack of public security has emerged as the top issue both nationally and on a local level.

4. Do you generally approve or disapprove of the job Felipe Calderon has done to date as President of Mexico? • (Approval readings for Felipe Calderon Hinojosa [FCH] to date alongside those of his predecesor Vicente Fox Quesada [VFQ] at the same point in his administration.) 80 60 40 20 0 ‘Dec06 'Jun 07 'Mar 07 'Feb 08 'Mar 09 'Mar 10 'Sep 07 'Nov 07 'May 08 'Nov 08 'May 09 'Nov 09 'May 10 'Aug08 'Aug10 'Aug09 Approve 52 64 69 67 60 64 66 59 58 54 52 54 52 45 50 48 Disapprove 19 25 23 28 34 32 29 36 36 38 40 37 46 53 46 48 Approve FCH Disapprove FCH • Approve Fox • Disapprove Fox

5. In general, do you approve or disapprove of the job Felipe Calderon’s cabinet to date? 60 50 40 30 20 'Jun 07 'Mar 07 'Mar 09 'Feb 08 'Mar 10 'May 08 'May 09 'Sep 07 'Nov 07 'Nov 08 'May 10 'Nov 09 'Aug08 'Aug10 'Aug09 • Approve 53 57 54 46 44 46 39 43 44 35 38 38 32 32 31 • Disapprove 32 29 33 39 45 42 50 43 46 52 43 54 59 54 59 • * The rest of the responses were “others,” “no opinion,” or “none of the above”.

6. What do you regard as the main problem facing Mexico today?* 60 40 20 0 ‘Dec06 'Jun 07 'Feb 08 'Mar 09 'Mar 07 'Mar 10 'Sep 07 'Nov 07 'Nov 08 'May 08 'May 09 'Nov 09 'May 10 'Aug08 'Aug09 'Aug10 Economic 36 38 26 40 40 38 40 41 47 47 49 50 50 43 44 38 Political 17 17 18 17 15 15 15 11 7 9 12 10 12 10 11 12 Security 42 37 41 26 36 41 40 43 40 39 29 38 34 42 41 48 Sevices 4 5 5 6 8 5 5 3 3 3 3 2 3 4 3 2 • * The rest of the responses were “others,” “no opinion,” or “none of the above”.

7. What do you regard as the main problem facing your neighborhood or town?* 60 40 20 0 ‘Dec06 'Jun 07 'Feb 08 'Mar 09 'Mar 07 'Mar 10 'Sep 07 'Nov 07 'May 08 'Nov 08 'May 09 'Nov 09 'May 10 'Aug08 'Aug09 'Aug10 Economic 25 18 21 27 26 25 27 26 23 29 29 30 32 26 32 28 Political 3 2 4 3 4 5 4 4 3 5 3 2 5 2 4 3 Security 42 41 44 33 43 40 42 47 51 48 47 51 46 44 40 51 Services 23 31 20 30 24 26 24 21 18 14 15 15 13 25 11 14 • * The rest of the responses were “others,” “no opinion,” or “none of the above”.

8. Drug trafficking and public safety Violence associated with organized crime is expanding exponentially. The number of murders attributed to such groups has quadrupled since 2007. Although the violence to date has been concentrated in roughly 162 municipalities, it has increasingly penetrated regions in Mexico far from the northern border. Despite this sprawling violence, public support for the government’s military strategy has remained firm. In fact, the fight against crime is the issue on which President Calderon scores his strongest approval numbers. The debate over the legalization of drugs has failed to produce significant social support for such measures as the public remains overwhelmingly supportive of maintaining a ban on all aspects of drug production, distribution and consumption.

9. Number of murders attributed to organized crime since 2007 (bi-monthly death toll) Mar-Apr Jul-Aug Jan-Feb Jan-Feb Jan-Feb Mar-Apr Jul-Aug Nov-Dec Jul-Aug Mar-Apr Jul-Aug Jan-Feb Nov-Dec Nov-Dec Mar-Apr

10. Total number of murders attributed to organized crime in the 162 most violent municipalities(color coding indicates the specific inter-cartel conflicts blamed for most of the deaths) Conflict Percentage Conflict Homicides Homicides Data as of July 31, 2010

11. Total number of murders attributed to organized crime in the 162 most violent municipalities(color coding indicates the specific inter-cartel conflicts blamed for most of the deaths) Data as of July 31, 2010

12. Do you approve or disapprove of the combined police & military operations carried out by Felipe Calderon’s government to combat drug trafficking in the country? 100 80 60 40 20 0 'Jun 07 'Mar 09 'Mar 07 'Mar 10 'Feb 08 'Sep 07 'Nov 07 'May 08 'Nov 08 'May 09 'Nov 09 'May 10 'Aug08 'Aug09 'Aug10 Approve 83 88 80 70 81 82 80 72 67 63 76 74 68 71 66 Disapprove 13 8 16 23 15 15 17 23 28 31 21 24 29 25 29 • No opinion 4 4 4 7 4 3 3 5 5 6 3 2 2 4 5

13. Do you believe that the combined police & military operations carried out by Felipe Calderon’s government to combat drug trafficking in the country are having their intended effect? 80 60 40 20 0 'Jun 07 'Mar 09 'Mar 07 'Feb 08 'Mar 10 'May 08 'May 09 'Sep 07 'Nov 07 'Ago 08 'Nov 08 'Ago 09 'May 10 'Ago 10 'Nov 09 • Yes they are 66 72 69 61 63 68 74 70 57 57 63 56 57 53 55 • No they are not 24 19 25 29 30 25 19 25 36 35 29 38 37 37 39 • No opinion 10 9 6 10 7 7 7 5 7 8 8 6 6 10 6

14. Do you believe that the government’s fight against drug trafficking truly qualifies as a war or not? If it does qualify, do you regard it as a war of the Mexican people or just by the government? 60% 40% 20% 0% 'Nov 09 'Mar 10 'May 10 'Aug10 • Of thepeople 25% 22% 18% 24% • Of thegovernment 46% 44% 47% 51% • Isnot a war 24% 27% 25% 18%

15. Do you agree or disagree with the direct participation of the Mexican Army in the police-military operations aimed at fighting drug trafficking? 100 80 60 40 20 0 'Mar 09 'Mar 10 'Nov 08 'Nov 09 'May 08 'May 10 'Aug08 'Aug10 • Agree 83 85 76 67 80 69 71 70 • Disagree 11 11 20 25 14 28 23 25

16. On what issue do you think the government has providded its best initiative? 27% • Fightingcrime 27% 5% • Seguro Popular healthcareprogram 10% 6% • Promotingeducation 7% 24% • None 22% 0% 5% 10% 15% 20% 25% 30% 35% May 10 Aug10

17. Do youbelievethatitisnecessarytosustainindefinitelythefightagainstdrugtraffickingorwoulditbebettertonegotiatewithdrugtraffickers? March 2010 August 2010 Sustainthefight Sustainthefight No opinion No opinion Negotiate 24% Negotiate 34%

18. Do you believe that it is necessary to sustain indefinitely the fight against drug trafficking or would it be better to legalize drugs? March 2010 August 2010 Sustainthefight Sustainthefight No opinion No opinion Legalize Legalize

19. Do you believe that Mexico should legally penalize the production, sale or use of the following drugs? • (percentage of positive responses) 80% • Marijuana 80% 78% 86% • Cocaine 85% 84% 86% • Heroin 85% 84% 84% • Hallucinogens 83% 82% 84% • Methamphetamines 83% 81% 0% 20% 40% 60% 80% 100% Production Comerce Consumer

20. The government, politicians, and analysts insist that the country needs various reforms to facilitate its economic growth and achieve a greater degree of development. Do you believe that these forms are or are not needed? 60% 50% 40% 30% 20% 'Aug09 'Nov 09 'Mar 10 'May 10 'Aug10 • Are needed 47% 43% 38% 48% 58% • Are notneeded 41% 43% 49% 31% 29% • No opinion 12% 14% 13% 21% 13% Structuralreforms

21. How convinced are you that in Mexico there are…? 12% • Non fraudulent and transparentelections 32% 8% • An economy that guarantees a living wage 35% 8% • A judicial system that treats everyone equally 40% 0% 10% 20% 30% 40% 50% • A greatdeal • Not at all

22. Do you believe that the law should be changed to make it easier for companies to hire and fire personnel? August 2009 August2010 • Should • Should 31% 39% No opinion 25% No opinion 30% • Shouldnot 39% • Shouldnot 36%

23. If the social security system were to lack the funds needed to meet its future obligations, who do you believe must solve the problem? • ThePresident 30% • Legislators 36% • Undecided 34%

24. Do you believe that the president should continue to name his officials as he sees fit or should they require approval from Congress? 70% • Freely 30% 60% 50% • Undecided13% 40% 30% 20% • Congessionalapproval • 57% 10% 0% PAN PRI PRD • Freely 36% 25% 31% • Congessionalapproval 47% 63% 56%

25. Do you believe that the president should continue to name his officials as he sees fit or should they require approval from Congress? 60% Yes 36% 50% 40% Undecided 20% 30% 20% No 44% 10% 0% PAN PRI PRD Yes 48% 34% 27% No 35% 47% 52%

26. Do you believe that voters should be free to reelect public servants or should the rule banning reelection to the same post for consecutive terms remain in effect. 60% • Reelection 41% 50% Undecided12% 40% 30% 20% • No reelection 47% 10% 0% PAN PRI PRD Yes 46% 41% 39% No 44% 47% 50%

27. Do you have a positive or negative opinion of_______? (balance of positive & negative responses) Enrique Peña Nieto 40% Beatriz Paredes Rangel 14% Marcelo Ebrard 5% Jesús Ortega Martínez -1% Josefina Vázquez Mota -3% Ernesto Cordero -5% Fidel Herrera Beltrán -5% Santiago Creel Miranda -8% Manlio Fabio Beltrones -9% Javier Lozano -9% Andrés M. López Obrador -21% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% Rumbo al 2012

28. If presidential elections were held today, for which party would you cast your vote if the candidates on the ballot were…? E Peña Nieto E Peña Nieto 43% 45% S Creel S Creel M Ebrard AMLO 18% 17% 12% 12% Undecided Undecided 27% 26%

29. If presidential elections were held today, for which party would you cast your vote if you had to choose between …? E Peña Nieto 45% E Peña Nieto M Ebrard 44% 19% S Creel 17% Undecided Undecided 38% 37%

30. Do you expect organized crime to conduct violent acts in an effort to influence presidential elections? • Expect 46% • Do notexpect30% • Undecided 24%

31. Conclusions and outlook The local elections held in a number of states last July appear to have set the stage for a deterioration of the political environment during the last quarter of the year. On the one hand, there has been a breakdown in interlocution between the governing National Action Party (PAN) and the main opposition party, the Institutional Revolutionary Party (PRI), making it all the more difficult for the administration to win congressional approval for any of the reforms on its agenda. The situation is further complicated by the partisan tensions building ahead of more local elections over the course of 2011: Guerrero (January 30); Baja California Sur (6 February); State of Mexico, Nayarit and Coahuila (July 3); Michoacán (November 13). But even more pressing than the tensions such electoral confrontations are to produce is the extent to which the crisis of violence challenges governability on the level of all three branches of government at the national, state and local levels. The lack of public safety is the issue of greatest concern to the public and the gap separating public expectations and the institutional response to date is probably one of the factors that explains the extent to which those surveyed have more harshly evaluated the government in the latest poll.

32. Conclusions and outlook It is clear that more than three years since the federal government launched its military offensive, it has failed to line up consensus support for its anti crime strategy. Worse still is the extent to which the public is palpably growing feed up and weary of the violence. If we add to the generally disgruntled mood of the public and a lack of support for the factors such as the growing demand for drugs in the United States, the erratic response of U.S. officials, the lack of major drug kingpins that have yet to be captured, and expectations of a further intensification of violence and erosion of public safety, the issue emerges all the more clearly as the main source of risk to governability in Mexico today.