Mexico's old rulers bounce back as new start beckons GUADALAJARA, Mexico (Reuters) - Watching democrats, dictators and revolutionaries come and go across Latin America while Communism and Fascism waxed and waned in Europe, Mexico's Institutional Revolutionary Party took a firm hold on power that lasted 71 years. Once a socialist grouping that nationalized the oil industry and gave land to peasants, the party known as the PRI later swung to the right, privatizing much of the economy and forcing through free market reforms and ambitious trade deals. The party rigged elections along the way and was widely reviled as a corrupt and anti-democratic tool of entrenched interests by the time it was ousted at the ballot box in 2000. Yet just 12 years later, despite lingering misgivings about its record, the PRI is poised to recapture the presidency, pledging to inject new momentum into a misfiring economy and restore order in areas racked by horrific drug-fueled violence. Fighting between drug cartels and their clashes with security forces has killed more than 55,000 people since President Felipe Calderon took office in December 2006, miring Mexico in a flood of gory images and grisly newspaper headlines. The mayhem has dampened economic growth, which has averaged around two percent under the Poi's successors, the conservative National Action Party (PAN). The rate was well below the performance of Latin America's biggest economy, Brazil. Sickened by the killings and fed up with the government's economic record, many voters are turning back to the PRI, which has a clear poll lead heading into the July 1 election. Pinning its hopes on the youthful Enrique Pena Nieto, the PRI has recast itself in the image of its telegenic candidate, whose media celebrity and glamorous actress wife have given a fresh sheen to Mexico's oldest political franchise. "After 12 years of a different government I see society demanding a change, and in my view the PRI represents this option for a change," Pena Nieto told Reuters in April. "We're discredited for many things, but recognized for our experience in government," he added. A Pena Nieto victory would cap a dramatic turnaround for a party that appeared sunk in terminal decline when it finished a distant third in the 2006 presidential vote, failing to carry any of Mexico's 31 states against Calderon. However, the PRI remained dominant in state-level politics after the defeat, giving it a platform to stage a recovery. An advocate of fiscal conservatism and free markets, Pena Nieto backs reforms similar to many of those sought by Calderon, whom the constitution bars from pursuing a second six-year term. However, deadlock has plagued Congress since 2006, impeding efforts to modernize the economy, which has grown too slowly to create enough jobs for the growing population. Drug gangs have found work for many of the idle hands and their violent impact has sapped confidence in Calderon's PAN. "I want nothing more to do with the PAN," said Maria Fernanda Luna, 42, a lifelong supporter of the party who has switched allegiance to the PRI in despair at the lawlessness invading her home city of Guadalajara, Mexico's second biggest. Calderon staked his reputation on crushing the drug gangs, and though his government has captured or killed many top capos, it has been unable to stem the flow of drugs and the country has been ravaged by a sharp increase in violence. According to Luna, the last straw for her came in 2009. Recalling how she took her 2-year-old son to visit her parents one Saturday, Luna said she was taken captive as she arrived by a group of armed men who were ransacking the house. Tied up with the boy and her own mother, Luna said she feared for her life as the men beat her father from one room to the next looking for valuables. After the attackers left, she managed to cut the bindings with her cigarette lighter. "And this was nothing compared to some things going on here," she said, mentioning how a friend's wife and baby daughter had recently been kidnapped. Twice they paid the ransom, but they never returned the wife or the daughter. Before the PAN was here, this never used to happen. Outside the sleek, minimalist apartment complex where Luna attended a rally for the PRI, gleaming tower blocks cut from jagged angles and cylindrical shapes climb high into the sky. Guadalajara, where Pena Nieto launched his election campaign on March 30, is the capital of Jalisco, a center of industry and the most populous state currently governed by the PAN. The capture of Jalisco in 1995 was a major stepping stone for the PAN on the road to the presidency, but as a state election approaches on July 1, its days in power are numbered. Frustration over murders and kidnappings emanating from a turf war between the powerful Sinaloa and Zetas drug cartels means the PRI is now in pole position to reclaim Jalisco. In 2006, there were 45 deaths caused by organized crime in Jalisco, according to a tally by the Reforma newspaper. By the end of last year, the total was 776 - more than 17 times higher. The annual police tally of kidnappings in Jalisco leapt from 5 to 46 over that period, though Luna said the real figure is much higher because people are afraid to report the incidents. We didn't do anything. We feared reprisals," Luna said, adding that she worries that the local police force has been infiltrated by the gangs. Luna and many other middle class voters are among the 43 percent of electorate which thinks Pena Nieto has the most experience to run Mexico, according to a survey published on Monday by the Excelsior newspaper. That is about double the number who said the same of PAN's Josefina Vazquez Mota and Pena Nieto's closest rival, leftist Andres Manuel Lopez Obrador. Pena Nieto was also seen as far likelier to bring the drug gangs to heel, cut poverty and create jobs, outscoring his competitors in all the main policy areas, the study showed. Buttressing support for the PRI are frequent complaints by Mexicans that the other parties have been just as susceptible to corruption and abuses once they attain high office. Yet even if the PRI does win, its promises will count for little unless it can strike deals in Congress to pass reforms that have been stalled for years, said Oscar Benavides, president of employers' association COPARMEX in Jalisco. Pena Nieto's team has given priority to three economic reforms: the liberalization of Mexico's labor laws, broadening the tax base to improve government revenues and opening up state-owned oil giant Pemex to more private investment. Passing these bills would enable the Mexican economy to grow by 6-7 percent a year, Benavides said. But time and again, party politics has stymied the planned reforms, he added. "It's definitely going to be difficult to honor all these pledges because it will depend on a Congress they probably won't have control of," Benavides told Reuters. Polls show Pena Nieto is on track to win over 40 percent of the vote, and could double the PRI's score in the last election. However, the PRI may fall short of a majority in Congress, because he has not had everything his own way. In May, a sudden flare-up in student opposition to the prospect of a PRI return lifted the hopes of 2006 runner-up Lopez Obrador, and one poll showed him just four points adrift. Since then, that surge in support has faded, and latest polls put him roughly 10-15 points behind Pena Nieto. The chasing contenders have repeatedly reminded voters of scandals to taint the PRI, such as the brutal repression of dissent and alleged links between the party and drug cartels. A steady stream of negative media revelations about the PRI has kept the allegations fresh and ratcheted up pressure on Pena Nieto to deliver on his pledge of a new start if he wins. The 45-year-old has faced repeated questions on reports that ex-Tamaulipas state governors Tomas Yarrington and Eugenio Hernandez as well as former Veracruz governor Fidel Herrera are being investigated for suspected ties to cartels. For the PAN, this is proof the PRI has allowed drug gangs to flourish in states it governs, fanning the violence in Mexico. Official police data do not bear out the accusation - last year, states governed by the PRI accounted for just over half the population of Mexico, and just over half the homicides. The media criticism has drawn a response from the PRI. The party has condemned transgressions in its ranks, suspending Yarrington and ejecting Humberto Moreira as party chairman after he ran up massive debts while governor of Coahuila. Aristoteles Sandoval, PRI candidate for the governorship of Jalisco, told Reuters the party had learned from the past and today should not be confused with the old "regime." "One (lesson) is never to repeat events in history which divided us or sowed conflict in our nation," said Sandoval, 38, a former mayor of Guadalajara and the favorite to win Jalisco. He cited the bloody suppression of student protests in 1968 and 1971, abuses by various PRI state governors and the corruption scandals that beset the presidency of Jose Lopez Portillo between 1976 and 1982 as examples of this. "There cannot be a repeat of the PRI that made these mistakes," he said. Now we have a modern and open PRI with a different philosophy and a different vision. Students who rattled Pena Nieto's campaign in late May are not convinced that the PRI has changed its ways and some warn of massive upheaval if the party triumphs. "If the PRI wins, there will be another Mexican revolution," said Carlos Figueroa, 26, a supporter of the youth opposition to the PRI who works in accounting in Guadalajara. Longstanding opponents of Mexico's old rulers, like Jesus Ortega, a former chairman of the leftist Party of the Democratic Revolution (PRD), said a PRI victory would be "unprecedented," comparing it to the return of Communism in Eastern Europe. Did any of the old authoritarian or dictatorial regimes of Latin America come back after the transition process? The military dictatorships didn't, nor did the authoritarian regimes," Ortega told Reuters. Not one of them has come back. Whatever the truth, the PRI never really left Mexico. At the lowest ebb in its fortunes, not long before Calderon won the 2006 election, the party still governed half of Mexico's states. Today it controls 20 states, ten of which it has never lost an election in. Most voters do not seem too worried about the PRI returning. A survey conducted by polling firm BGC last month found that 43 percent of them felt a victory for the PRI would be a step forward for Mexico, with only 30 percent of the opposite view. "We know the PRI," said Jose Luis Esparza, a 38-year-old street vendor in Guadalajara. We didn't know the PAN before but we gave them a chance - and ended up with one mistake after another. The one thing the PRI has is experience in power. Reporting by Dave Graham; Editing by Kieran Murray and David Brunnstrom