By Mica Rosenberg

COLONIA JUAREZ, Mexico (Reuters) - In the craggy desert of northern Mexico, U.S. presidential hopeful Mitt Romney's relatives turned an arid valley into lush agricultural land and prospered after being chased from the United States for their Mormon beliefs.

They suffered years of hardship, living in dirt dugouts and overturned wagons, but then went on to build sturdy homes and a thriving school, develop irrigation canals and dams, raise herds of cattle, and plant vast peach and apple orchards from the punishing landscape.

The story of the early Mormon settlers in Mexico, who fled the threat of arrest in the United States for practicing polygamy, is embodied by Mitt Romney's great-grandfather Miles P. Romney, who crossed south of the border in the late 1880s.

His offspring still live in Mormon enclaves in the northern Mexican state of Chihuahua around 200 miles from the border and near the house where Mitt's father, George Romney, was born.

There are about 300 Mormons left in the area, and some 40 of them still have the Romney surname.

George Romney spent the first few years of his life here and his pride in the history shines through in a family travel log he helped write in 1941, tracing the flight across the western United States and down into Mexico.

"It is apparent that we are the descendants of a father and a mother who, in turn, were descendants of parents ... who were willing to make the greatest of individual effort for the great cause in which they believed," George wrote.

Mitt Romney, who is seeking the Republican presidential nomination, has never visited his distant relatives here and rarely discusses this part of the family history beyond saying his father was born in Mexico. His campaign team declined to comment on what links, if any, he has to the Romneys in Mexico.

But residents here says two of his siblings came several years ago to see a small wooden train station said to be built by Miles P. Romney and other landmarks from the family's past.

Miles P. Romney was pursued by U.S. marshals after polygamy, or "plural marriage" as it is known in the Mormon religion, was outlawed in 1882.

He set up camp in Mexico with three wives and more than a dozen children. They braved harsh winters and hunger in a home with a dirt roof and he helped found the colonies.

It is that kind of pioneer determination that Mitt Romney's modern day relatives still living in Colonia Juarez say their American cousin can bring to the White House if he wins the Republican nomination and then is elected president in November.

"In pioneer families ... it's you against the elements and you just have to have a certain toughness and work ethic to be able to prosper. I think that has been handed down to us," said Mitt's distant cousin Brandon Romney, 33, a chili pepper farmer in Colonia Juarez.

"There is a certain morality that comes with having to collaborate to build something from nothing ... Hopefully Mitt Romney can portray that."

LaMond Tullis, a Church of Latter Day Saints historian who wrote a book on the Mormons in Mexico, also sees the family's past in Mitt Romney's character.

"Whatever can be said about Mitt Romney, he has been a risk taker and a responsible one, and that kind of ethic emerges out of this colonial experience in Mexico," he said.

Colonia Juarez resident Edward Whetten says he hosted Mitt's brother and sister when they came to visit, and they left behind a copy of the travel log from 1941 - a spiral bound notebook complete with snapshots and hand-scribbled notes, that tells the family tale through the eyes of George Romney and other family members. Whetten keeps the unique document in his small private library and shared it with Reuters.

George was five years old when the family left this area in 1912, driven out under threat from Pancho Villa's rebel troops during the turmoil of the Mexican Revolution.

While other Mormons went back when things calmed down, George's parents settled in the United States. He became a successful car executive and made his own presidential bid, seeking but failing to win the Republican nomination in 1968.

In 1941, George traveled back to his birthplace with his father Gaskell, marveling at the ups-and-downs of the family history.

"I have never felt our being driven out was anything other than a blessing. Of course, father lost a small fortune in farm lands, mills, home etc. but I am glad I was brought up in the good old USA," he wrote in the travel log.

A KNACK FOR MAKING MONEY

Colonia Juarez is now an oasis of American suburban life in a rough Mexican border region. Along orderly streets, brick houses stand with tire swings and trampolines on neatly cut lawns, and ruddy blond residents rope cattle and drive pick-ups.

A gleaming white Mormon temple crowns a hill overlooking the town and below is a school where locals and Mormons study together. In the cemetery, the modest graves of Romneys have simple stone plaques flush with the ground while elaborate Mexican gravesites are adorned with flowers and large crosses.

Some of the Romneys live particularly well.

"The Romneys here were always more prosperous than anyone else, they still are. They are hard workers and good managers. It's funny how these traits are passed down in the genes," said John Hatch, an amateur town historian.

Hatch sees a clear connection between the fabulously wealthy U.S. presidential hopeful - who made his fortune at a private equity firm he co-founded - and his industrious Mexican cousins.

"I personally know four generations of Romneys ... and the Romneys know how to make money."

That wealth sticks out in a part of the country that has become an increasingly dangerous drug trafficking corridor.

Meredith Romney, Brandon's uncle, was kidnapped in 2009 from his cattle ranch and was held in a cave for several days before being released after a ransom was reportedly paid. The incident helped make the older generations of Romneys wary of the media spotlight brought on by their famous relative.

"We don't really like all the attention," said Derrick Romney, Meredith's son, as he roped cows at the family corral.

Most of those living in the only two remaining Mormon colonies - Colonia Juarez and Colonia Dublan - out of the eight that existed before the Mexican Revolution speak English and Spanish fluently and are dual citizens, traveling back and forth between Mexico and the United States to study and work.

Many residents interviewed by Reuters disagree with Mitt Romney's views on immigration. They are proud of their own heritage as industrious immigrant settlers and understand the plight of fellow Mexican citizens who leave to seek a better life in the United States.

The Mormon population descended from the original settlers has declined dramatically over the years with many from the younger generation leaving because of security concerns or for better jobs north of the border.

"I think most of them would come back in a heartbeat if they could," says Derrick Romney, who says he loves the small town life of Colonia Juarez.

POLYGAMIST HAVEN

Before the Mexican Revolution, more than 4,000 Mormons were given refuge in Mexico by dictator Porfirio Diaz, buttressed by ideas of support for religious freedom espoused by Mexico's founding father, Benito Juarez.

Mitt's great-grandfather Miles P. Romney was one of them. He married five women over the course of his life, and joined the first wave of settlers in Mexico.

In 1867, Miles P. was told to take a second wife by Brigham Young, who took over the leadership of the Mormon church after founder Joseph Smith was killed . Miles' first wife, Hannah Hood Hill, Mitt's great-grandmother, was at first unhappy but accepted the decision because of her faith and ended up living happily in a polygamous family, the travel log recounts.

Miles P. was a lover of theater who staged elaborate productions of Hamlet and other works by Shakespeare. He was dedicated to education, opening the first school in the colony where one of his wives taught under willow trees.

Those early days were difficult for the settlers - photos show them living in rock dugouts with no shoes and little food. They hunted deer and wild turkey for meat. But they created a haven where the polygamist families could stay together.

The Mormon church officially banned polygamy in 1890, but many spiritual weddings continued to take place in the colonies and Miles P. married his fifth wife seven years after the ban.

By the next generation, that of Mitt Romney's grandfather Gaskell, the practice was all but non-existent. Mitt Romney has called polygamy "bizarre".

George, in his recollections, calls his grandfather's other wives his "aunts". Although he found the idea of polygamy "repugnant", he admired the family around him.

"The devotion and attachment of all the children for each other and of the wives, themselves, two of whom I remember very clearly, could have only resulted from a home in which there was unity," he wrote in the personal travel log. "The high character of these people is attested to by their own achievements and by the achievements of their children."

(Reporting by Mica Rosenberg; Editing by Kieran Murray)