Mexico stumbles toward crisis in chaotic election By Kieran Murray
Mon Jul 3, 7:06 AM ET



MEXICO CITY (Reuters) - The specter of political chaos hung over Mexico's young democracy on Monday after two rival presidential candidates both claimed victory in a bitter election that divided the country between left and right.

Election officials said the race was too close to declare a winner and a recount was needed, but that didn't stop combative left-winger Andres Manuel Lopez Obrador and ruling party conservative Felipe Calderon from insisting they had won.

Rival celebrations erupted just a few miles apart in the early hours of Monday morning, including thousands of people in Mexico City's vast central square.

It could be days before a final vote count is in, and some feared Mexico could be lurching toward a nightmare scenario of political deadlock, street protests and volatility in financial markets.

Unrest would also worry the United States, which relies on Mexican help in securing its borders and tackling immigration and violent drug smuggling gangs.

Lopez Obrador supporters, remembering a 1988 presidential election widely believed to have been stolen from another left-wing candidate, claimed foul play.

"They are up to their tricks because everyone knows Andres Manuel won," said Gabriela Ramirez, a Mexico City student.

Critics of Lopez Obrador, a feisty and austere figure who pledged to put Mexico's poor first if elected, said the close race played into his hands and that he was looking for an excuse to mobilize supporters and cause trouble.

"Now if he loses, he can say the rich guys stole it from us. It could lead to chaos," real estate agent Victor Perera said at an upscale Mexico City neighborhood restaurant.

NARROW LEAD

Incomplete results from Sunday showed Calderon with a narrow lead. With about 86.8 percent of votes counted, the Harvard-educated politician had 36.90 percent support and Lopez Obrador trailed on 35.66 percent.

But the leftist, who won support for introducing welfare benefits to old people and single parents when he was Mexico City's mayor, earlier showed no signs of quitting.

"Smile. We've already won ... They have to respect our triumph," the former Indian rights activist told cheering supporters.

Critics compare him to Venezuela's firebrand President Hugo Chavez and say he would lead Mexico into a growing camp of anti-U.S. leaders in Latin America.

Lopez Obrador counters he has no intention of fighting with business leaders or Washington. He says his infrastructure projects and government bureaucracy spending cuts would help the economy and so reduce the flow of poor Mexicans crossing the U.S. border illegally for work.

Those policies worry business leaders and Wall Street investors, as does the prospect of a drawn-out battle over the election results.

Mexico's peso currency dropped 1.5 percent in after-hours trade when election officials said they could not call the vote, although it later clawed back the losses. Still, analysts predicted volatility in Mexico's markets in coming days.

Mexico only won full democracy at its last presidential election six years ago, when conservative rancher Vicente Fox ended 71 years of rule by the corrupt and often authoritarian Institutional Revolutionary Party, or PRI.

Fox was barred under Mexico's constitution from seeking reelection but Calderon, a fellow member of his National Action Party, would follow the president's pro-market policies.

The PRI candidate in Sunday's election, Roberto Madrazo, trailed way behind in third place.

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