Analysis: Mexico's Pena Nieto to focus first on clean government

Reuters News
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Posted: Aug 31, 2012 2:11 PM
Analysis: Mexico's Pena Nieto to focus first on clean government

By Dave Graham and Miguel Gutierrez

MEXICO CITY (Reuters) - Enrique Pena Nieto cast himself as an economic reformer to win the Mexican presidency but, after facing accusations of vote-rigging, his immediate focus is likely to be tackling his party's reputation for corruption.

Pena Nieto is set to take office in December after the electoral tribunal on Thursday threw out a bid by leftist rival Andres Manuel Lopez Obrador to annul the July 1 election.

Nevertheless, the vote-buying and money-laundering claims and a series of street protests tainted Pena Nieto's victory and likely will color early legislative efforts by his Institutional Revolutionary Party, or PRI, which fell short of a majority in Congress and will need opposition support to pass laws.

The telegenic Pena Nieto, 46, is likely to bide his time on promoting tricky economic reforms until he is firmly installed, focusing first on showing a commitment to clean government and seeing next year's budget through Congress.

The job of ringing the bell for economic change in the new Congress, which begins on Saturday, is likely to fall first to outgoing President Felipe Calderon, who officials say will throw his weight behind a new drive to overhaul antiquated labor laws.

Calderon's past efforts to win congressional backing for economic reforms were blocked by the PRI for tactical reasons in opposition but since the party won the presidency campaigning in favor of very similar measures, labor reform has a fair chance of approval before Pena Nieto takes office on December 1.

Mindful that tough economic reforms will face opposition and that it does not have a majority, the PRI has signaled it will first seek deals on measures to reduce corruption, boost governmental transparency and oversee ties between the media and elected officials.

"These three reforms will be a priority for us," Manuel Anorve, a senior incoming PRI congressman told Reuters.

Establishing stronger curbs against abuses of political power and imposing tighter controls on election advertising are at the heart of the proposed measures.

Although the electoral court ruled Lopez Obrador had failed to prove that Pena Nieto's centrist PRI broke the law, critics say the election campaign at the very least showed there is still not a level playing field, and that the winner was helped by a cozy relationship with Mexico's top broadcaster, Televisa.

FAMILIAR ALLEGATIONS

By concentrating on political reform at the outset, Pena Nieto will try to blunt accusations long leveled against the PRI but it means his once-vaunted tax and energy reforms will probably take a back seat until after his new administration draws up the 2013 budget in late December.

The PRI governed Mexico for 71 consecutive years until 2000, a rule that was beset by allegations of graft, dirty tricks, collusion with the media and a hard line against dissent.

Lopez Obrador tapped into those memories in this year's election campaign, raising pressure on Pena Nieto to show he is serious about leaving the PRI's checkered past behind.

Shady dealings continue to haunt the party as federal prosecutors said this week an order had been issued for the arrest of Tomas Yarrington, a fugitive former PRI state governor suspected of working with drug cartels.

The smear of criminality helped fuel street protests during the election campaign. They ate into Pena Nieto's once-huge opinion poll lead and denied him a majority in Congress.

That was a blow to his planned reforms to the labor market, the tax system and state oil monopoly Pemex, which he hopes will help boost economic growth to about six percent a year.

Top PRI lawmakers were hopeful there would be consensus on the economic reforms by the time Pena Nieto took office but they have been more guarded since the election. Though he won by 6.5 percentage points, a clear victory, it was less than expected.

Pena Nieto plans to allow more private investment in Pemex, long a symbol of Mexican self-sufficiency, and soften labor regulations. He is also expected to review extending a sales tax to food and medicine, a measure the PRI has blocked in the past because it is seen as raising the tax burden on the poor.

The timeline for those reforms has been pushed back due to steadfast opposition to any sweeping changes from left-wing parties and even some wariness from leftists inside the PRI.

DEMONSTRATIONS AHEAD?

To press hard on Pemex and tax changes immediately would risk saddling Pena Nieto with a "permanent social protest" in office, said Roy Campos of polling firm Consulta Mitofsky.

Demonstrations may dog the new president regardless after Lopez Obrador said on Friday he would not accept the electoral tribunal's ruling, and called for a big rally on September 9.

Given the simmering tensions, only an overhaul of the labor laws appears a possibility this year - led by Calderon and his conservative National Action Party, or PAN.

A government official told Reuters that Calderon would likely present the new Congress with a proposed labor reform to be voted on before December. The prospects for a deal look good.

The PRI has been at pains to strike a conciliatory note with the PAN and leftist parties since the election.

Manlio Fabio Beltrones, the PRI leader in the lower house, has repeatedly stressed his party's desire to broker deals.

"This is a plural house of Congress and deals will be made within that plurality here," Beltrones said this week.

Early in August, he said the PRI's first initiatives in Congress would be to create an anti-corruption authority and extend the powers of an existing transparency watchdog.

Soon afterwards the PRI said it also would draw up guidelines to regulate the sale of media advertising to public office holders under independent supervision.

That plan appears designed to temper accusations that Pena Nieto owed his rise to the top to Televisa, which provided a stream of favorable coverage for him while he was a state governor between 2005 and 2011 and during the election campaign.

But with parties eager for good relations with broadcasters, overhauling media laws may take more time than the PRI's efforts to create a stronger framework to tackle corruption.

Long a byword for graft, the PRI is hoping the clean governance drive will not be lost on voters.

"They're trying to take these issues away from the (protesters) on the street," Campos said.

(Editing by Kieran Murray and Bill Trott)