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Mexico's Pena Nieto takes power vowing to end violence

Mexico's outgoing President Felipe Calderon (L) holds the national flag as Mexico's new President Enrique Pena Nieto salutes during a midnig
Mexico's outgoing President Felipe Calderon (L) holds the national flag as Mexico's new President Enrique Pena Nieto salutes during a midnig

By Dave Graham and Michael O'Boyle

MEXICO CITY (Reuters) - Enrique Pena Nieto took over as Mexico's president on Saturday, promising to end years of violence and sluggish economic growth, and giving the party that shaped modern Mexico a shot at redemption after 12 years out of office.

The 46-year-old Pena Nieto said the people had been let down since his centrist Institutional Revolutionary Party, or PRI, fell from power in 2000, and pledged a raft of changes to boost growth, create jobs and fight poverty.

"The state has lost ground in important areas. Lawlessness and violence have robbed various parts of the country of peace and freedom," Pena Nieto said in his inaugural speech at a ceremonial palace in the old center of Mexico City. "My government's first aim will be to bring peace to Mexico."

Pena Nieto takes command of a country that was convulsed by the deaths of more than 60,000 people in violence between drug gangs and security forces during the six-year term of his conservative predecessor, Felipe Calderon.

Pena Nieto says he is committed to fighting organized crime, but has also stressed his main goal is to reduce the violence.

He paid tribute to Mexico's armed forces early in his speech and then saluted them on the capital's Field of Mars parade ground.

The torrent of gangland killings in Mexico has worried investors and tourists alike, and voters in the holiday resort of Cancun said they expected Pena Nieto to calm things down.

"I hope security improves, that there are no more decapitated bodies, that the drug gangs don't continue shooting in the streets," said Carlos Madrid, a tourism worker in the eastern city. "It's no good for families, no good for business, no good for the population, it's no good for anyone."

PROTESTS

Calderon's National Action Party, or PAN, took power in 2000 pledging to reinvigorate Mexico, but it never had a majority in Congress and struggled to push through legislation it wanted to create jobs in Latin America's second-biggest economy.

Memories of the PRI's unbroken 71-year rule are still vivid in Mexico, and the party was a byword for corruption, cronyism and vote-rigging by the time it left office.

"It's like the Communist Party of the Soviet Union making a comeback," said Lorenzo Meyer, a left-leaning political scientist and historian at the National Autonomous University of Mexico. "The PRI should be dead. Its time had passed."

Demonstrators sought to take the shine off Pena Nieto's swearing-in ceremony, and several thousand protesters, mainly from leftist groups that supported Pena Nieto's main rival and oppose his reform plans, massed earlier outside Congress.

Police fired tear gas to disperse protesters, who rattled metal barriers in a bid to disrupt the upcoming ceremony. Elsewhere, small groups of protesters threw Molotov cocktails.

"They have imposed an illegitimate president. There's lots of us here, this struggle is just beginning," said a 16-year-old student who identified herself as Frida, her eyes stinging from the gas and wearing a T-shirt emblazoned with the image of a guerrilla leader.

Married to a popular actress, Pena Nieto, the telegenic former state of Mexico governor, won the July 1 election with about 38 percent of the vote, more than 6 points ahead of leftist Andres Manuel Lopez Obrador, who refused to accept the result.

Lopez Obrador also rejected the outcome of his narrow election loss in 2006 to Calderon, and the protests on Saturday were slight by comparison with the demonstrations then.

TWO-SPEED COUNTRY

Having helped shepherd a labor reform through Congress since his election victory, Pena Nieto now wants to pass legislation to strengthen Mexico's tax base and allow more private investment in lumbering state oil giant Pemex.

"Mexico has not achieved the advances the people demand and deserve," Pena Nieto said. "We are a country growing at two speeds. There's a Mexico of progress and development. But there's another one too that's been left behind in poverty."

If he is successful, the reforms could help spur stronger growth and create jobs, blunting the allure of organized crime.

Annual economic growth averaged less than 2 percent under the PAN over the past 12 years, far behind many other Latin American countries. That record and the drug war violence opened the door for a PRI comeback under Pena Nieto.

Still, inflation has been kept in check, debt levels are low and growth picked up toward the end of Calderon's term, with the economy outperforming Brazil's in the past two years.

Pena Nieto's inner circle features several ambitious young economists and financial experts eager to prove the PRI can do a better job of managing the economy.

For much of the PRI's rule, Mexico enjoyed stronger growth than the PAN mustered, but memories linger of default on the country's debts in 1982 and a financial crash in 1994 and 1995.

"It's very hard to believe in the PRI. They bankrupted Mexico," said construction worker Jose Luis Mendoza.

Supporting a family of four on 1,300 pesos ($100) a week, Mendoza, 29, said he was worse off now than when Calderon took office, and doubted his life would improve under the PRI. "The cost of everything has gone up - but my wage hasn't," he said.

Pena Nieto has pledged to put more money in Mexicans' pockets and shake up competition in a country where large swaths of the economy are concentrated in the hands of a few, like telecom billionaire Carlos Slim, the world's richest man.

But Pena Nieto has been vague so far about how he plans to create a more level playing field, and pollster Jorge Buendia said it would be foolish to expect radical change.

"Pena Nieto's not a reformist guy. He never has been," Buendia said. "He's an establishment guy and I don't think he's going to rock the establishment that much."

(Additional reporting by David Alire Garcia, Isela Serrano, Alexandra Alper, Miguel Gutierrez, Simon Gardner, Gabriel Stargardter and Noe Torres; Editing by Kieran Murray, Simon Gardner and Peter Cooney)

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