Pena Nieto: Mexico’s new president faces an uphill battle on key reforms

GUADALAJARA, Mexico — As Enrique Pena Nieto of the Institutional Revolutionary Party, or PRI, is sworn in as Mexico’s new president on Saturday, thousands of people are expected to take to the streets to protest his inauguration.

After winning the July 1 election by a narrower-than-expected margin, Pena Nieto is inheriting a deeply divided country where many fear the return of the PRI, which ruled Mexico with a heavy hand for most of the 20th century, will turn the clock back to dark days of corruption, repression and economic mismanagement.

During the election campaign, the youthful-looking Pena Nieto was at pains to distance himself from his party's “Old Guard," promising to “break with the past.”

But many Mexicans are not convinced.

“What I’m worried about is that he will only be the operator or the face, but the machinery behind him are the powerful and the rich who have been ruling this country for decades and have no interest in understanding the new needs of the people,” said Silvia Jimenez, who works in media communications in Guadalajara, Mexico’s second-largest city.

Pena Nieto has set out an ambitious reform agenda that, if pushed through both houses of congress intact, could transform the country’s energy sector and tax system, which is hoped to boost economic growth.

Earlier in November, lawmakers passed a controversial labor reform bill, albeit a watered down version, which will make it easier for employers to hire and fire workers.

The reform’s supporters hailed this as a good omen for Pena Nieto, a former state governor, as he prepares to battle political opponents, including within his own party.

But Pena Nieto’s slim presidential win coincided with the PRI’s loss of a majority of seats in both houses of congress, meaning he’ll have to reach out to members of Mexico’s other leading parties to pass legislation.

On Friday, he announced his cabinet will include members of different political stripes — and even a carryover from the previous administration. Jose Antonio Meade, who was finance secretary under Calderon, will be Pena Nieto's foreign secretary, left-wing politician Rosario Robles was named secretary for social development and member of leftist Democratic Revolution Party, Manuel Mondragón y Kalb, was appointed interior undersecretary. But Pena Nieto reserved key government posts, such as finance secretary, for his closest party allies.

At least he can count on the support of US President Barack Obama, who praised Pena Nieto on his “ambitious reform agenda” during talks at the White House this week.

Analysts say he will need to move quickly if he is to succeed.

“The political capital of a new president is generally the highest in the first year of presidency and the incoming president has stated his willingness to pursue energy and fiscal reforms in 2013,” said Shelly Shetty, head of Latin America sovereigns at Fitch Ratings.

Luckily for Pena Nieto, he is inheriting the "best economic environment" in decades for Mexico, said Carlos Ramirez, a Mexico analyst at Eurasia Group in Washington.

Latin America’s second-largest economy is expected to grow by nearly 4 percent this year and unemployment is back below 5 percent.

Pena Nieto has said he wants to boost economic growth to 6 percent partly by opening up the state-controlled oil giant Pemex to greater private investment and closing gaping tax loopholes — which members of his PRI party, unions and big business have balked at.

Another key part of his agenda is shifting the security focus from tackling the drug cartel leaders head-on — the aggressive strategy favored by outgoing President Felipe Calderon over the past six years — to reducing the rates of murder, kidnapping, extortion and other crimes that affect ordinary people in their everyday lives.

But to do all this he will need the support of the outgoing administration’s National Action Party (PAN), whose candidate came third in the July presidential race but which still retains a significant presence in the congress.

Pena Nieto will be relying on the good graces of the PAN to back his reform plans. But there’s a twist: Some of those very reforms are similar to ones put forward by the center-right PAN during its 12 years in office, only to be repeatedly blocked by Pena Nieto’s PRI.

Many Mexicans believe Pena Nieto lacks the ability to get the job done, describing him as merely a puppet for the PRI elders, who have close links to the unions and big business.

“I wouldn’t give a peso for Pena Nieto,” Alex Aldaco, a commercial photographer in Guadalajara, told GlobalPost.

“It is time for us to wake up and ask ourselves about the future of our country.”

More from Mexico: Calderon's legacy of blood and busts