June 28, 2012 / 4:03 PM / 7 years ago

Party of "perfect dictatorship" set for comeback in Mexico

MEXICO CITY (Reuters) - Accused of every dirty trick in the book during its 71-year grip on power in the 20th century, Mexico’s Institutional Revolutionary Party has bounced back and is on the verge of a dramatic victory in Sunday’s presidential election.

The PRI has seized on the anemic economic growth and rampant drug violence plaguing Mexico under the ruling conservatives and is promising to restore order and make voters better off if it returns to office after a 12-year hiatus.

Most polls show the centrist PRI’s candidate, Enrique Pena Nieto, with a comfortable double-digit lead, and the party also might secure the first working majority in Mexico’s Congress in 15 years.

That could allow Pena Nieto, the former governor of Mexico’s most populous state, to push through economic reforms that the PRI repeatedly had opposed in order to deny conservative President Felipe Calderon any major political victories.

A byword for corruption, vote-rigging and heavy-handed rule during much of its rule between 1929 and 2000, the PRI has tried to distance itself from its grubby past and recast itself as a modern democratic party under the handsome Pena Nieto.

“If Mexico is not like before, why would it be governed like before?” Pena Nieto said in one of his campaign ads. “Don’t be confused. As president of Mexico, I will govern with the most solid and free democratic principles in the world.”

But memories still linger of what Peruvian Nobel laureate Mario Vargas Llosa called the “perfect dictatorship” - the PRI’s shifting ideology, firm grip on political power and co-opting of both union bosses and captains of industry.

On the campaign trail, Pena Nieto has been vague on some key policy issues and on his potential cabinet team, leaving some to wonder whether he represents the PRI that modernized the economy and instituted democratic reforms in the 1990s or the PRI of old-time power brokers known as the “dinosaurs.”

“I’m holding back judgment on whether this means a return to the old PRI days,” said Stacy Steimel, managing director at PineBridge Investments who oversees Latin American equity funds worth more than $600 million.

“You have to give him credit for the way he’s administered his campaign,” she said. “It would appear he has more support from the technocratic side of the party than the dinosaurs, although it’s a big political machine.”

The conservative National Action Party, or PAN, pushed the PRI out of power in a 2000 election but its two presidents have struggled to get reforms passed and growth has been weak.

Calderon made his war against drug gangs a centerpiece of his presidency but it backfired with a surge in violence with more than 55,000 people killed in brutal turf wars. Polls show voters are most concerned about jobs and violence and the PRI has capitalized on the government’s perceived failures.


The PAN’s candidate, Josefina Vazquez Mota, is third in the polls despite warning that the PRI threatens Mexico’s hard-fought democracy. “Pena Nieto represents authoritarianism, the abuse of power and the surrender to crime,” she said at her closing rally on Wednesday night.

Still, the PAN could choose to work with Pena Nieto and help him get economic reforms passed in Congress if he wins.

Pena Nieto’s closest challenger is leftist Andres Manuel Lopez Obrador, who is promising to create millions of jobs and cut poverty. He narrowly lost the 2006 election to Calderon, claimed fraud and launched months of protests but failed to have the result overturned.

Lopez Obrador accuses the PRI of preparing a fraud this time and might call new protests if Pena Nieto wins.

“It would be terrible for the PRI to regain the presidency,” he told supporters at a recent rally. “They are going to want to buy people’s liberty and dignity with money.”

But Mexico’s electoral authorities are seen as reliable and any street protests are unlikely to have much impact if Pena Nieto’s margin of victory is as wide as polls suggest.

In power, the PRI governed partly through force, as with an infamous 1968 massacre of protesters, and largely through a patronage system that kept the rank and file loyal, filtering the rewards of corruption up the chain of command.

The party also nurtured a cadre of U.S.-educated technocrats who opened up Mexico’s economy before other Latin American powers and brokered the North American Free Trade Agreement with the United States and Canada.

A wave of privatizations made billionaires out of capitalists such as Carlos Slim, now the world’s richest man, and cemented an industrial base of de facto oligopolies.

Mexico’s oil monopoly Pemex, however, remained firmly in state control.

Pena Nieto is now pledging to push fiscal and energy reforms that his party once blocked, as well as boost competition and revamp police forces to focus more on tackling violent crime rather than going head to head with drug cartels.

Mexican financial markets already are betting on a Pena Nieto win, so an unexpected finish that puts his mandate and economic reforms at risk could spook investors.

He has said he wants Pemex to emulate the success of Brazil’s Petrobras and would consider listing Pemex shares on the stock market while keeping it under state control in order to transform the lumbering giant and boost output.

“That shows he is willing to break an old PRI taboo and it’s the kind of thing that you need to do to get reforms going,” said Timothy Kehoe, an economics professor at the University of Minnesota and an adviser to Federal Reserve Bank of Minneapolis.

But reforms will depend on Congress, and how much Pena Nieto will have to negotiate with the opposition if he wins.

“I’m betting there will be modest reforms with modest results,” Kehoe added. “I’m hoping for more.”

Additional reporting by Sara Pablo, Michael O'Boyle and Pablo Garibian; Writing by Simon Gardner and Daniel Trotta; Editing by Kieran Murray and Bill Trott

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