Mexico reform drive at stake as regions vote

MEXICO CITY Sun Jul 7, 2013 11:37am EDT

People cast their votes in a ballot box reading ''Delegates'' in Santiago Xalitzintla July 7, 2013. REUTERS/Imelda Medina

People cast their votes in a ballot box reading ''Delegates'' in Santiago Xalitzintla July 7, 2013.

Credit: Reuters/Imelda Medina

MEXICO CITY (Reuters) - Mexican President Enrique Pena Nieto's sweeping economic reform plans hang in the balance in local elections on Sunday with a strong opposition showing seen as crucial to preserve a cross-party pact.

Nearly half of Mexico's 31 states are voting for a mix of local parliaments and municipal governments, but all eyes are on the race for governor in the state of Baja California, a stronghold of the conservative National Action party (PAN).

The PAN lost control of Mexico in last year's presidential elections, being relegated to the third force in Congress, but Pena Nieto must keep them on board to help him push through planned overhauls of state oil giant Pemex and the tax system.

Baja California is one of the PAN's few remaining bastions and if the party can hold the state it could be just what Pena Nieto needs to keep alive the so-called Pact for Mexico he forged with opposition leaders upon taking office in December.

PAN lawmakers already have accused Pena Nieto's centrist Institutional Revolutionary Party, or PRI, of trying to steal the election by buying votes, and have warned that any sign of fraud could scupper the political accord.

"If the elections don't go freely and democratically, it is clear the pact will come to no good," said Francisco Dominguez, a PAN senator on congressional commissions debating the shape of energy and fiscal reforms. "It's very simple. If there are complaints, if there are irregularities, we will act."

Baja California, which nestles along the U.S. border in northwest Mexico, was the first state the PAN wrested from the PRI 24 years ago as it eroded the party's stranglehold on power before ending a 71-year ruling streak in 2000.

Although a poll late last month gave the PAN an eight-point lead over the PRI in Baja California, the race is expected to be tight, with some voters in the state weary of more than two decades of rule by the same party.

Moreover, the PAN has been locked in public, petty infighting since last year's drubbing, when voters castigated the party for failing to curb violence between warring drug cartels that has claimed more than 70,000 lives since 2007.

That bloodshed has continued, and the election campaign has been marred by the murder of a number of candidates.

Jose Maria Martinez, a PAN senator presiding over a committee to observe the electoral process, said this week the elections would be the "most violent" in Mexican history.

BETTER THE STATUS QUO?

PAN chairman Gustavo Madero will be under the spotlight, and if Baja California is lost, it risks plunging the party into a leadership crisis and endangering the pact - a fact not lost on Mexicans looking to Pena Nieto to revive the economy.

"The most convenient thing would be for the PAN to win, so it at least holds this governorship after last year's defeat and so the pact remains in place," said Pedro Feria, 32, an out-of-work lawyer who supports the PRI.

"What I want is for them to focus on creating job opportunities. I've been looking for a year now. They should create policies to help people progress," he added, sitting in the blazing sun on a park bench in downtown Mexico City.

The pact has already pushed a wide-reaching education reform and a major shake-up of competition in the telecoms sector through Congress, with a separate bill aimed at spurring bank lending expected to pass in coming weeks.

But the central planks of Pena Nieto's hopes to raise economic growth to 6 percent a year from barely two percent since the millennium began are the reform to improve the tax take and the plan to open up Pemex to more private investment.

Those measures may be in doubt if the pact falls apart.

The PAN's Madero has laid the ground for post-electoral fight, pinning accusations of vote buying, fraud and corruption against the PRI on a giant map of Mexico during the campaign.

Adding fuel to the fire, a PAN candidate running in the eastern state of Veracruz said a few days before the elections that he had been kidnapped and questioned about party politics.

When asked about the incident, PRI chairman Cesar Camacho said he suspected the Veracruz case had been made up in an attempt to discredit the ruling party and that reports were surfacing to generate a "general sense of disorder and discontent."

"It seems like an advance justification of defeat," he said.

(Editing by Dave Graham and David Storey)