Military

DATE=7/9/03

TYPE=CORRESPONDENT REPORT

NUMBER=2-305261

TITLE=MEXICO/POLITICS ( L-ONLY)

BYLINE=GREG FLAKUS

DATELINE=MEXICO CITY

CONTENT=

VOICED AT:

INTRO: As a result of the setback suffered by Mexican President Vicente Fox and his National Action Party, known as the PAN, in Sunday's midterm election, many pundits are proclaiming the president a lame duck. Financial institutions outside Mexico have also expressed concern that badly needed reforms will remain sidetracked for the next three years. But, as V-O-A's Greg Flakus reports, from Mexico City, there are signs that opposition parties may be on the road to compromise and cooperation.

TEXT: Leaders of the PAN and the former ruling party, the Institutional Revolutionary Party, or PRI (pree), say representatives of the two parties will meet sometime next week to begin a dialogue on how to cooperate in the next session of Congress. Following Sunday's election, in which the PRI gained seats and the PAN lost, with no single party holding a majority, many analysts saw the specter of stalemate hanging over the country until the next presidential election, nearly three years away.

But Reforma newspaper columnist Sergio Sarmiento, in a V-O-A interview, expresses a more optimistic view.

/// Sarmiento act one ////

Now the PRI feels that it can actually reach power in the year 2006. My feeling is that many Pri-istas (PRI leaders and supporters) will be more willing to actually accept some of the reforms that would help them have a better economic situation if they do reach power in 2006. Certainly the discourse of Roberto Madrazo, the PRI chairman tends to suggest that his party is actually looking for agreement with President Fox.

/// end act ///

Mr. Sarmiento says ideological positions in the PRI may make it difficult to accept some Fox proposals such as opening the state-controlled energy sector to private investment. But he says next week's meeting could be the beginning of an effort to find points of consensus and possible compromise agreements.

/// OPT Sarmiento act two ///

I am not saying that in just a few meetings the parties will iron out all their differences. That would be totally naïve. But if they begin talking right now it might be easier to have reforms ready by the time the new Congress, the new legislature, takes office, which will be on September first.

/// end act /// /// END OPT ///

Among the reform proposals that have been stuck in Congress for the past two-and-a-half years are proposals to open the energy sector to private investment and to restructure the tax system, the labor laws and the educational system.

/// REST OPT /// Mr. Fox won the July, 2000 presidential election and ousted the PRI from the power it had held for 71 years, but his party failed to win a majority in Congress. As a result, the PRI, helped by the left-leaning Party of the Democratic Revolution, has blocked much of the Fox program. Mr. Fox and his party had hoped to solve that problem by winning more seats in last Sunday's election.

Instead, the PAN lost more than 50 seats and the PRI made a slight gain. Leaders of both parties say the election results show that Mexican voters want to see impasses resolved through dialogue and negotiation. (signed).

NEB/GF/RH