| MEXICO CITY
MEXICO CITY Surprise gains by Mexico's ruling conservatives in gubernatorial elections in key states at the weekend signal that the 2012 presidential race could be tighter than expected.
President Felipe Calderon's National Action Party, or PAN, joined forces with left-wing parties in some states to wrest control of three governor seats from the Institutional Revolutionary Party in elections across nearly half the country, which the PRI had been expected to sweep.
"The results don't display a victory or a strengthening in positions," Mexican political analyst Fernando Dworak said. "We are being reserved on the outlook for 2012 as many things could still come into play."
In Puebla, Oaxaca and Sinaloa states the PAN paired up with the left-wing Party of the Democratic Revolution, or PRD, its archrival in the 2006 presidential race when leftist Andres Manuel Lopez Obrador came within a whisker of winning and then disputed his defeat with months of streets protests.
Votes from Sunday's elections for governors, mayors and local deputies were still being counted on Monday races were close in two other PRI strongholds, Durango and Veracruz.
"Without the local alliances between the PAN and the PRD, which the PRI has christened 'unholy,' the victories ... would have been unthinkable," columnist Denise Maerker wrote in Mexico's El Universal newspaper.
The PRI had a strong showing in the election, winning nine governor spots, including three it seized from rival parties, but it had been expected to win all the races hands down.
The PRI, which ruled Mexico for 71 years as a semi-dictatorship, has been in opposition for a decade after it lost power in an historic 2000 election to the PAN. It is gearing up for a comeback in 2012 with its young rising star, State of Mexico Governor Enrique Pena Nieto.
With a feeble economy and raging drug gang violence dogging Calderon's ratings, many analysts are already putting their money on a PRI return, but Sunday's results suggest many voters in Mexico are still skeptical of a party with a reputation of ruling with a mixture of corruption and authoritarianism.
DRUG GANG INTIMIDATION
The PAN and the PRD are unlikely to join forces again for the presidential race and either party on its own may have a hard time beating the PRI, which controls large blocks of voters from unions to farmer organizations in rural Mexico.
"The alliance was a successful bet, the results prove that," Jose Gonzalez, the PAN's deputy leader, told Reuters. "But for the presidency, frankly, it would be impossible."
State-level voting in Mexico tends to focus on local, rather than national issues, yet the PRI is keen to capitalize on Calderon's sinking popularity as a slow economic rebound and out-of-control drug killings weigh on morale.
More than 26,000 people have been killed since Calderon came to power in late 2006 and launched an army-led crackdown on drug gangs. But the strategy has only sparked more violence as pressure from security forces splinters cartels, exacerbating battles over valuable smuggling turf.
Campaigning for the July 4 elections was blighted by drug gang intimidation as suspected cartel hitmen murdered two candidates and threatened others, in the strongest sign yet that traffickers are trying to sway the political process.
The ambush and murder of a gubernatorial candidate in northeastern Mexico spooked investors and hit the peso.
Mexico grapples with the endemic federal and local-level corruption left over from the PRI's seven-decade rule, and even under the PAN cartels have sought out new relationships with officials. A number of candidates from different parties in the state elections were accused by rivals of working for cartels.
The PRI is working to move away from its past and rebrand itself under the fresh-faced Pena Nieto, a pro-business lawyer with an MBA who is trying to energize young voters.
(Additional reporting by Caroline Stauffer; Editing by Catherine Bremer)