Pena Nieto Claims Mexico Vote Win as PRI Returns to Power

Enrique Pena Nieto was elected Mexico’s president yesterday, returning the once-dominant Institutional Revolutionary Party to power following a 12-year hiatus, while failing to win a majority in congress.

“The Mexican people have given our party a second opportunity,” Pena Nieto, 45, told supporters in a speech at his PRI party’s headquarters in Mexico City last night. “I will be a modern, responsible president, open to criticism, ready to listen, and taking into account the views of everyone.”

With 93 percent of the vote counted, Pena Nieto won 37.8 percent, topping 31.9 percent for Andres Manuel Lopez Obrador of the Democratic Revolution Party. Josefina Vazquez Mota of outgoing President Felipe Calderon’s National Action Party, or PAN, gained 25.5 percent of the vote. The new president will serve a six-year term and is barred from seeking reelection.

President Barack Obama called Pena Nieto today to congratulate him on his victory “based on the initial results,” the White House said in a statement. Obama told Pena Nieto he “looks forward to advancing common goals,” including promoting democracy, prosperity and security in the region, the White House said.

Pena Nieto’s margin of victory, which was about half the 13 percentage points in the final pre-election poll, probably cost the PRI and its alliance partner, the Green Party, their majority in the Chamber of Deputies.

Congress Control

With more than 90 percent of the votes counted, the PRI alliance will have about 241 lawmakers in the 500-seat lower house, Jorge Ramirez Marin, the second in command of Pena Nieto’s campaign, said in a telephone interview.

The ruling alliance will also fall short of the 65 seats needed to control the Senate, winning about 58, Arturo Sanchez, a former board member of the electoral institute, said in an interview.

The results will force the PRI to seek support from the opposition and give Lopez Obrador’s party more power to block legislation, including a proposal to overhaul Petroleos Mexicanos’ oil monopoly created by the PRI’s 1938 nationalization of the then foreign-owned industry. Ending the monopoly can be accomplished only through a constitutional amendment, which requires a two-thirds majority.

“We know we’ll need agreements to generate the necessary reforms,” said Arturo Zamora, who was elected senator for the state of Jalisco in yesterday’s election. “The big reforms must get approval in the first year of the new government,” he said in a telephone interview from Guadalajara, Jalisco’s capital.

Potential Deadlock

The exact composition of Congress may not be known until July 4, when final tally of votes is expected.

The lack of a majority “at best could cause reforms to be watered down, at worst it could lead to a continuation of the political deadlock that has stalled reform during the PAN’s” 12-year rule, London-based Capital Economics Ltd. said in a report.

Pena Nieto led polls from the campaign’s start, fueled by pledges to boost salaries held back by economic growth that averaged 1.8 percent a year since Calderon took office in 2006. That’s half the rate of Brazil’s 4.1 percent average over that period, though Mexico has caught up in the past two years. Pena Nieto also promised to turn the tide in a drug war blamed for more than 47,000 deaths under Calderon and pursue tax, labor and energy overhauls to boost competitiveness.

“In facing organized crime, there will be no pact or truce,” Pena Nieto told supporters just before midnight.

Final Word

Lopez Obrador, who claimed fraud in 2006 when he lost to Calderon by less than a percentage point, hasn’t conceded defeat amid calls for him to do so by the PRI leadership. Instead, the former Mexico City mayor, who focused his campaign on the poor, said he’d wait for district tallies.

“The final word hasn’t been spoken,” Lopez Obrador said in a televised speech from Mexico City last night, adding that he’d act “responsibly” when the results are known.

In a televised speech, Vazquez Mota thanked her supporters while outgoing President Felipe Calderon called on the nation to respect the results, adding that he’d work with the Pena Nieto to assure a smooth transition before the next government takes office Dec. 1.

Pena Nieto has criticized the ruling PAN for not spreading the benefits of economic stability more widely during 12 years of rule since President Vicente Fox’s election in 2000 ended the PRI’s 71-year reign. Mexico remains economically dependent on the U.S., the world’s largest economy, sending 80 percent of exports to its northern neighbor.

Interdependence

Mexico is also biggest buyer of U.S. goods after Canada, and about 12 million people living in the U.S. were born in Mexico, 30 percent of all immigrants, the Washington-based Pew Research Center said in an April report. Remittances, which totaled $23 billion in 2011, are Mexico’s third-largest source of foreign income after automobile and oil exports.

Mexico’s peso dropped, falling 0.5 percent to 13.4224 per U.S. dollar at 10:07 a.m. in Mexico City, after data from the Institute for Supply Management showed manufacturing in the U.S. unexpectedly shrank in June. The currency earlier touched a seven-week high.

Investors had taken the election in stride. The peso rallied 4.2 percent in the six months through last week, the best performance of 16 major currencies tracked by Bloomberg. The benchmark IPC stock index surged to a record on June 29 and has gained 9.2 in the past year, compared with a 19 percent drop in the MSCI Emerging Markets Index spurred by Europe’s debt crisis.

Growth Outlook

Analysts surveyed by Bloomberg forecast Mexico’s gross domestic product will expand 3.7 percent in 2012, outpacing growth in Brazil for a second straight year. Mexican peso bonds have returned 12.9 percent in dollar terms this year, compared with an average gain of 3.4 percent for local-currency emerging- market debt, according to Bank of America Corp.

The PRI’s years in power were marked by “theft and devaluation,” said Maria Etchegaray, 82, as she lined up to vote in Mexico City yesterday. “I am going to vote for Vazquez Mota because I’ll never vote for the PRI,” she said, adding that Lopez Obrador “scares” her.

At the same polling station, Enrique Torres said he would vote for Pena Nieto, describing him as more “refined.” Lopez Obrador’s “time has passed,” he said.

Whereas Lopez Obrador arrived in a single car to vote, Pena Nieto came in a convoy of three dark sport utility vehicles and took several photos with supporters on his way in and out.

Student Protests

In the past few weeks, Pena Nieto has faced student protests organized on the Internet and driven in part by concern he will erode civil liberties and revive corruption that thrived under previous PRI regimes.

Pena Nieto has said that if elected he plans to spur growth by making it easier for companies to hire and fire workers, increasing tax collection and encouraging more businesses to join the formal economy.

Pena Nieto has said he’ll change tactics in the drug war, reducing violence by focusing on the worst crimes such as murder and kidnapping and eventually return the army to the barracks.

The PRI’s rivals have said that Pena Nieto isn’t capable of bringing about the change that he promises and that returning the party to power would reignite corruption that blossomed under its previous rule.

Speaking to the supporters in the auditorium of the PRI’s headquarters, which is adorned with a several-story high mural depicting peasants in the Mexican revolution charging forward with outstretched bayonets, Pena Nieto promised a more inclusive administration and a new era for the PRI in Mexico.

“I want a new country that’s successful and recognizes the potential and talent of every Mexican,” he said, moments before he and his family were showered with confetti. “It’s time to leave the country that we are for the country that we deserve.”

To contact the reporter on this story: Eric Martin in Mexico City at emartin21@bloomberg.net; Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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