Mexico reform drive hits setback amid political row

Mexican President Enrique Pena Nieto faced the first major political setback of his young administration Tuesday after an unprecedented alliance with the opposition to enact ambitious reforms hit a snag.

After taking office in December, Pena Nieto struck a "Pact for Mexico" with two rival parties to try to implement structural reforms in Latin America's second biggest economy, but a political row is now threatening the grand bargain.

The president canceled Tuesday's scheduled presentation of a financial reform bill after the conservative National Action Party (PAN) pulled out of the event. He also announced the suspension of the pact's public activities.

The PAN decided not to attend the presentation after it accused the ruling Institutional Revolutionary Party (PRI) of improperly using social programs to help candidates in upcoming local elections in the eastern state of Veracruz in July.

"The events we are reporting are serious and worrisome," PAN leader Gustavo Madero, whose party lost its 12-year hold on the presidency last year, told Milenio television.

The pact's other partner, the leftist Democratic Revolution Party (PRD), also pulled out of the presentation.

The PRI ruled Mexico without interruption from 1929 to 2000 through a mix of patronage, repression and rigged elections, but Pena Nieto has vowed that his party has changed its ways and that he would not tolerate corruption.

In a statement, the government said it was "temporarily suspending public activities related to the Pact for Mexico in order to open space for a frank dialogue that will allow us to overcome disagreements."

The PAN and the PRD leaders expressed hope that the row could be resolved.

Speaking at an event in the central city of Puebla, Pena Nieto sought to ease tensions, vowing that he would not tolerate "the electoral use of social programs."

Analysts said Pena Nieto was facing his first real political crisis as president.

"The honeymoon is over, and this is his first important crisis," Lorenzo Meyer, researcher at the College of Mexico, told AFP.

The PAN has demanded the temporary suspension of Social Development Minister Rosario Robles and Veracruz Governor Javier Duarte during the investigations into the election scandal. The government has suspended seven social development officials, but not the minister.

The Pact for Mexico led to the approval of legislation to overhaul the country's flagging education system, which has been controlled by the powerful teachers' union.

A bill to open the telecommunications market to more competition is expected to be approved this month. The telephone business is dominated by billionaire tycoon Carlos Slim while two channels, Televisa and TV Azteca, rule the airwaves.