fbaezer & Dux: Mexico's Ruling Party Losses in Election?

fbaezer, why so you think Vincente Fox's party is in trouble?
---BumbleBeeBoogie

Mexico's Ruling Party Faces Losses in Congressional Elections

July 6 (Bloomberg) -- Mexican voters today choose a new lower house of congress, six governors and hundreds of municipal leaders in elections that may weaken President Vicente Fox's chances of implementing plans to boost growth in Latin America's largest economy.

Polls show Fox's National Action Party may lose as many as 44 of its 202 seats in the 500-member lower house. Such losses would reduce the likelihood the former Coca-Cola Co. executive will be able to carry out proposals that would allow increased spending with new taxes, open the energy industry to more private investment and cut company manpower costs through changes to labor laws.

``These reforms would raise the ceiling on our economic house,'' said Rodolfo Navarrete, who helps manage $100 million in Mexican stocks and bonds at Casa de Bolsa Vector SA in Mexico City. ``Mexico will keep growing without them, but it's a question of how fast and for how long.''

Mexico's $600 billion economy, the fortunes of which are linked to the U.S. through the North American Free Trade Agreement, expanded 0.9 percent last year, compared with an average annual growth rate of 3.4 percent in the 1990s. The central bank has reduced its 2003 growth forecast to 2.4 percent from 3 percent and plans to lower the estimate again.

Fox, whose lack of a parliamentary majority and inability to gain consensus from opposition parties have stalled his economic program since he took office in December 2000, needs to win more seats at today's election so he can increase government revenue to pay for schools and hospitals and increase investment and competition in the $10 billion state-controlled electricity industry by allowing private investors more participation.

Second Half

``He needs support to have a better second half, but people aren't showing great enthusiasm,'' said Luis Ugalde, a political analyst at the Mexico City-based Centro de Investigacion y Docencia Economica.

The most recent survey by polling firm Consulta Mitofsky shows an alliance of the Green Ecological Party and the Institutional Revolutionary Party, or PRI, which dominated Mexican politics for seven decades before Fox began his six-year term, has gained ground among the country's 55 million voters in the run-up to the election.

Mitofsky's June 21 to June 23 poll of 1,200 households indicates the alliance, which was formed earlier this year, will probably take 204 to 224 seats compared with 158 to 174 that are likely to be won by the National Action Party. The poll had a 4.5 percent margin of error. A similar poll conducted in May suggested Fox's party would win 194 to 244 seats and the alliance 182 to 221 seats.

State Races

The PRI also may take back Nuevo Leon state, the hub of Mexico's northern industrial economy, which it lost six years ago to the National Action Party. Nuevo Leon, which borders Texas, is home to some of Mexico's largest companies such as cement maker Cemex SA and glassmaker Vitro SA. Other races in Queretero, Campeche, Colima, Sonora and San Luis Potosi are too close to call, analysts said. Mexico has 31 states plus the federal district of Mexico City.

Voting starts at 8 a.m. (9 a.m. New York time on Mexico's east coast and 11 a.m. New York time on Mexico's west coast) and ends at 6 p.m.

The opposition alliance has won over voters with the help of more than 100,000 campaign workers and a publicity campaign that highlighted rising crime and joblessness as the country's main challenges.

Candidates from the PRI also have promised to expand government health services, state-funded daycare and housing subsidies.

``If this formula works, it moves the entire political process to the left,'' said Larry Birns, director of the Council on Hemispheric Affairs in Washington. ``If Fox is going to get anything through at all, he's going to have to learn to deal with these people and their platform.''

Last Updated: July 6, 2003 07:11 EDT