Mexico's Opposition PRI May Gain in Vote, Get Momentum to Take Presidency

Mexico’s largest opposition party, out of power for a decade, may boost its chances of taking back the presidency in elections for 12 governorships today after the bloodiest campaign season since 1994.

The Institutional Revolutionary Party, which ruled the country for 71 years until 2000, may win at least 10 governor races and could win them all, said Roy Campos, head of Mexico City-based polling group Consulta Mitofsky. Victories in every state would put the party known as the PRI at the helm of 22 of Mexico’s 31 states, up from 19 now.

A sweep by the PRI would give the party momentum heading into the 2012 presidential vote, said Andrew Selee, director of the Mexico Institute at the Woodrow Wilson Center in Washington. It would also showcase the political strength of state of Mexico Governor Enrique Pena Nieto, Selee said. Pena Nieto, the frontrunner in polls to succeed President Felipe Calderon, campaigned for PRI candidates in several states.

“The PRI would like to show that they are the party that’s in the strongest position to win presidential elections,” Selee said. “They see this election as their opportunity to position themselves to win the one in two years.”

The election has been overshadowed by rising violence ahead of the vote, especially along the U.S. border where rival gangs have been fighting to control the nation’s drug trade. The PRI gubernatorial candidate in Tamaulipas state, Rodolfo Torre Cantu, was assassinated June 28. Last month, a mayoral candidate was shot dead in the same state. This week, a headless body was found outside the home of another mayoral hopeful.

Risk, Turnout

Polls opened without reports of violence in Tamaulipas today, Mexican cable network Milenio TV reported. Elections also began without incident in Sinaloa and Chihuahua states, cable network Foro TV said.

The cost of protecting Mexican debt against non-payment for five years with credit-default swaps has risen 11 basis points to 137.74 since Torre Cantu was assassinated, according to data compiled by CMA DataVision.

Shootouts tied to drug traffickers, particularly the violence directed at candidates, may cause voter turnout to fall to as low as 33 percent from 44 percent to 60 percent in previous midterm elections, estimates Tony Payan, a political scientist at the University of Texas in El Paso.

Lower turnout may bolster the PRI’s chances because the party is adept at using unions, farmer groups and other organizations to get its supporters to the polls, said Jose Antonio Crespo, an analyst at the Center for Economic Research and Teaching in Mexico City.

The increasing violence has hurt the popularity of Calderon and his party. The percentage of registered voters who approve of Calderon dropped to 53.3 percent in a May poll conducted by Mitofsky, the lowest level since the beginning of his administration.

2012 Groundwork

Pena Nieto, governor of the State of Mexico and a PRI member, is the leading candidate for the presidency ahead of the July 2012 vote, according to a poll released June 14 by Mitofsky. Pena Nieto has 25 percent support of those surveyed compared with 6 percent for former presidential candidate Andres Manuel Lopez Obrador, his closest rival.

Torre Cantu, who campaigned on an anti-violence platform, was a two-to-one favorite in Tamaulipas state before he was killed, according to a Mitofsky poll. Egidio Torre, the deceased candidate’s brother, is running in his place.

Torre Cantu was the highest-level politician to be assassinated since presidential candidate Luis Donaldo Colosio was killed in 1994.

Should the PRI increase its control over state governments, the new governors may help rally their constituents to allow the PRI to win back the presidency, according to Jorge Chabat, a political science professor at the Center for Economic Research and Teaching in Mexico City. Mexicans will also choose dozens of mayors in today’s vote.

Investors Watching

Violence has also raged in other parts of Mexico. A July 1 shootout between rival gangs left 21 people dead in a rural area of Sonora state about 12 miles from the Arizona border. The Sonora governorship isn’t up for grabs this weekend.

Mexico has turned increasingly violent since Calderon came to office in December 2006 vowing to fight traffickers. More than 22,000 people have been killed in Mexico in violence related to the drug war since the crackdown began, according to the U.S. State Department.

Investors are paying more attention on Mexico’s drug war since the killing of Torre Cantu, which “raised the level of concern over the escalation of drug-related violence,” said Eduardo Suarez, a Latin American debt strategist at Royal Bank of Canada in Toronto.

“Moving forward, we expect market reactions to violence- related news to become a more important driver for Mexican financial assets,” Suarez said in a July 1 report.

Mexico’s economy, the second biggest in Latin America, is forecast by the central bank to grow 4 percent to 5 percent this year after a 6.5 percent contraction in 2009.

To contact the reporters on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net; Jonathan Levin in Mexico City at jlevin20@bloomberg.net

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