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Mexican reforms hostage to opposition in local elections
July 4, 2013 / 2:09 PM / 4 years ago

Mexican reforms hostage to opposition in local elections

By Dave Graham
    MEXICO CITY, July 4 (Reuters) - A year after winning the
Mexican presidency, Enrique Pena Nieto needs a solid performance
by the opposition in state elections on Sunday to keep alive a
fragile alliance he built to steer reforms through Congress.
    Falling short of a majority when he won, Pena Nieto crafted
an informal coalition with the opposition to help realize his
economic vision, two key parts of which - opening up state oil
giant Pemex to private capital and boosting the tax take - he is
planning to send to Congress by September.
    That accord, known as the Pact for Mexico, has yielded a
major education shake-up and a landmark bill to spur more
competition in the telecommunications industry - but it has also
given the opposition leverage over the government.
    Anxious to preserve their autonomy, opposition leaders have
kept up a steady barrage of criticism on Pena Nieto's
Institutional Revolutionary Party, or PRI, accusing it of
seeking to steal or buy its way to victory on July 7.
    Throughout, both the conservative National Action Party, or
PAN, and the leftist Party of the Democratic Revolution (PRD)
have threatened to quit the pact if the PRI does not play fair.
    "If the elections don't look clean, there's no question it's
going to be very difficult to maintain the pact," said Gabriela
Cuevas, a senator for the PAN.
    Fourteen of Mexico's 31 federal states hold elections for a
mix of local parliaments and municipal governments, but the only
state governorship up for grabs is Baja California, a region of
particular importance to the PAN, Mexico's former rulers.
    In 1989, Baja California was 
    the first state the PAN captured and it became a major
stepping stone for the party en route to ending 71 consecutive
years of PRI rule in 2000.
    The PAN still holds the border state, but since Pena Nieto
reclaimed the presidency last year, the party has been mired in
internal squabbling that has shaken the Pact for Mexico.
    Powerful PAN backbenchers have attacked party chairman
Gustavo Madero for agreeing to the accord, saying it has made
the conservatives too pliant to Pena Nieto's will.
    As pressure on him has mounted, Madero has trained his fire
on the government, marking out a trail of alleged PRI corruption
around Mexico on a giant map, and calling the pact into doubt.
    Madero's insistence that the PRI cannot be trusted may make
it hard for him to back down if results do not go his way.
    Should the PAN go empty-handed and take out its frustration
on the pact, Pena Nieto's hopes for cross-party consensus on
Pemex and how to strengthen Mexico's weak tax take will suffer.
    "What does Enrique Pena Nieto's government gain from a PRI
victory in Baja California? Very little. And it could lose a
lot," said Jorge Buendia, head of polling firm Buendia & Laredo.
    Outwardly, the PRI is talking up its chances of winning Baja
California. But in private, several PRI lawmakers admitted that
if the PAN holds the state, it could help steady the pact.
    Few independent voter surveys have been conducted on the
outlook for the Baja California election, but one released on
Friday gave the PAN and its allies an 8 point lead over the PRI.
    The PRD has less to lose in the elections, with fewer
elected officials in most of the 14 states, barring Oaxaca.   
    Pena Nieto has won praise for his efforts to reform the
economy since taking power seven months ago, but the reforms of
taxes and Pemex, due to be presented to Congress by early
September, promise to be his biggest legislative challenges.
    Re-energizing Pemex and improving the tax take are arguably
the two most important planks of the government's aim to ramp up
average economic growth to around six percent per annum from
little over two percent since the start of the millennium.
    Pena Nieto wants to change the constitution so Pemex can
form partnerships with other companies, and to open the door to
production and exploration contracts with oil majors.
    Opening up Pemex to foreign capital is a touchy subject in
Mexico, and the PRD has already said it sees no need for
constitutional changes to improve national crude oil output,
which has fallen by a quarter since 2004.
    Pemex has been a symbol of Mexican pride since the PRI
nationalized the oil industry in 1938, and previous attempts to
reform the company have foundered on populist opposition.
    Though PRD officials have said in private the party may be
willing to discuss tweaks to the constitution, Pena Nieto looks
increasingly likely to depend on the PAN for a constitutional
reform that would require a two-thirds majority in Congress.
    If Pena Nieto does pursue a shake-up of Pemex without the
PRD, he is sure to face major street protests mobilized by the
left - a prospect that has made the ruling party nervous.
    Speaking on condition of anonymity, one senior PRI lawmaker
said Mexico risks inviting the kind of demonstrations that have
rocked Brazil and Turkey in recent weeks if it ignores the PRD.
    Some 65 percent of Mexicans are opposed to foreign
investment in Pemex, a survey last month showed. Still, parts of
the oil industry already benefit from foreign investment.
    Dropping the PRD would also suggest that the Pact for Mexico
was reaching the end of its natural lifespan.
    That would not mean the PAN, which has been pushing for a
major overhaul of Pemex for years, would stop supporting
economic reforms it believed in, said PAN senator Laura Rojas.
    But it would bring the government off the ambitious
timetable the pact had laid out for its plans. Both the energy
and fiscal reforms were scheduled to be passed this year.
    "If the pact does break ... it's going to cost the
government a lot more work to pass its reforms," Rojas said.

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