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By Dave Graham and Miguel Gutierrez
MEXICO CITY (Reuters) - Divisions within Mexico's main conservative opposition party have erupted into a bitter public dispute that threatens to undermine the reform agenda of President Enrique Pena Nieto.
Short of a majority in Congress, Pena Nieto's Institutional Revolutionary Party (PRI) is likely to need support from the conservative National Action Party, or PAN, to see through plans to overhaul state oil giant Pemex and broaden the tax base.
But the PAN has been mired in a power struggle since it lost the presidency last year, and tension has risen steadily over disagreements on how much the party should support the president's efforts to reform Latin America's No. 2 economy.
That friction boiled over this weekend when PAN Chairman Gustavo Madero said he would strip former Finance Minister Ernesto Cordero of his role as PAN Senate leader, leading to a tense exchange live on national television on Monday.
"The PAN can't be a satellite of the PRI," Cordero told a news conference in the Senate shortly afterwards.
Madero, 57, has sought to honor a pact he and the leader of the leftist Party of the Democratic Revolution (PRD) made with Pena Nieto to cooperate on reforms, but the PAN's wing around Cordero has been wary, making it harder for bills to pass.
Things came to a head last week when Cordero said he would put forward an initiative for political reform in Mexico with the PRD in the Senate - just days after Madero had presented his own proposal for the PAN to the lower house of Congress.
An angry Madero responded by saying the party unity was at risk ahead of 14 state elections in July, and he announced that Cordero's role in the Senate would be reviewed Tuesday.
In the end, Madero decided to change the Senate leadership before the weekend was over, despite a letter signed by 24 of the PAN's 38 senators in support of the 45-year-old Cordero.
The strife has accentuated the divide between PAN lawmakers willing to work with the PRI - which often stymied reforms when the PAN held power - and those who believe the party must mount a robust opposition to Pena Nieto or risk becoming irrelevant.
If an obstructionist position gains the upper hand in the PAN, Pena Nieto's bid to change the constitution to make oil company Pemex more attractive to outside investors will become harder, as will his hopes of carrying out a far-reaching tax reform.
The PRD opposes a constitutional change to shake up Pemex and has spoken out against some measures under consideration to boost tax revenues, like levying value-added tax on food.
Other bills like a reform to spur greater lending by banks, as well as measures needed to implement wholesale changes to the telecoms sector and the education system, also hinge on Pena Nieto's ability to keep the opposition parties on side.
On Monday, Madero and Cordero locked horns on air, with the latter sitting stone-faced in the studio of broadcaster Televisa as Madero tersely stated via telephone that he had been within his rights to remove the younger man from his post.
The party chairman hung up shortly afterwards, leaving Cordero to accuse Madero of breaking his word and having acted in an "authoritarian" and "anti-democratic" manner by going over the heads of a majority of the PAN in the Senate.
"This confirms that we're closer to the PRI in the PAN than we have ever been," said Cordero.
Many of the Senate group around Cordero are close to former President Felipe Calderon, who left office in December but remains an influential figure behind the scenes in Mexico.
One of the senators, Calderon's former private secretary Roberto Gil, wrote in newspaper Excelsior on Monday that Madero was showing a "dangerous devotion" to Pena Nieto.
Former PAN labor minister, senator Javier Lozano, another Calderon loyalist, attacked Madero immediately after his cross words with Cordero saying on his Twitter account that the party chairman's conduct had been "embarrassing."
(Reporting by Dave Graham and Miguel Gutierrez; Editing by Cynthia Osterman)