Reuters Investors frustrated with years of gridlock on economic reforms in Mexico now believe the best chance for progress lies with the party that has done most to prevent change over the last decade. Enrique Pena Nieto of the opposition Institutional Revolutionary Party, or PRI, has a commanding poll ahead of the presidential election in July and, if its support holds, the PRI could win the first ruling party majority in Congress in 15 years. Pena Nieto, 45, has pledged an ambitious reform agenda that backs some of the very policies his party has blocked since 2000, when a victory by the conservative National Action Party, or PAN, ended seven decades of PRI rule. The reforms include boosting tax revenues and allowing more private investment in the state-run oil industry. The failure of Mexico's political leaders to reach a deal on those issues is blamed for holding back the economy. Growth has averaged about 2.2 percent during the past eight years - barely half the rate for Latin America and the Caribbean as a whole. Investors say failure to liberalize the labor market, improve a paltry tax take and attract more foreign investment could condemn Mexico to years of weak growth and threaten its credit rating. They hope that PRI leaders who blocked reforms over the past decade will push them through if they win back power. “The PRI knows good and well that this is going to blow up in their faces,” said Alonso Madero, who manages $4 billion in fixed income assets at Actinver in Mexico City. “Eventually it will be in their interest to approve many things they rejected in the past,” he added. The PRI currently holds just under half the 500 seats in Mexico's lower house. But it only has a quarter of seats in the 128-member Senate due to a poor showing in 2006 elections. A clear victory for Pena Nieto next year could restore to the PRI the congressional majority it lost in 1997. Ever since then, bickering between Mexico's three major parties has scuttled a host of economic and political reforms. __
