PLENTY of Americans must have cast a jealous eye south of the border this year and noticed that Mexico appears to have found the medicine for political gridlock. It is a cross-party alliance called the Pact for Mexico, and in the seven months since President Enrique Peña Nieto took office it has been a model of political compromise. It has made possible reforms aimed at weakening the power of entrenched interests in education, telecoms and television that Mexico has needed for decades. It has survived the violent run-up to local elections in almost half the country on July 7th, in which many candidates were intimidated and some were murdered (see article).

Now Mr Peña may be faced with a hard choice—between the pact and reform of Mexico’s energy business. If it comes to that, he should ditch the pact.

Pemex, the sickly, state-owned oil and gas monopoly, is cocooned in a nationalist mythology. Since the expropriation of the foreign oil companies operating in Mexico in 1938, national ownership and management of energy reserves has been promoted as a central pillar of anti-gringo sovereignty. Pemex’s monopoly is enshrined in the constitution, and any attempt to break it up causes outrage. Given the mixed record of market reforms in Mexico—not least the sale of the public phone monopoly to Carlos Slim—scepticism is understandable. But even Cuba now has a more open energy market than Mexico.

Two big reforms are needed. An amendment to the constitution to allow private exploration and drilling in oil and gas fields would bring in foreign investment. At the same time, the value-added-tax base should be broadened, to allow the government to stop milking Pemex. The national cash-cow currently contributes about a third of the government’s income, leaving little to invest. Pemex’s poverty, and the absence of foreign investment, have prevented Mexico from unlocking its vast deep-water potential, as Brazil has done. If implemented properly, energy reform could add more than one percentage point to Mexico’s annual GDP growth.

But some of the parties in Mr Peña’s pact oppose the idea of reform. The leftist Party of the Democratic Revolution (PRD) has taken an over-my-dead-body approach to any threat to Pemex’s monopoly. The PRD’s erstwhile presidential candidate, Andrés Manuel López Obrador, has abandoned the party and is preparing to take his populist battle against energy reform to the streets. Even parts of Mr Peña’s own Institutional Revolutionary Party (PRI) are nervous about change. After all, it created the monster in the first place.

The pact is certainly worth trying to preserve. In a country scarred by violence and with a rabble-rouser in the wings, it remains a shining example of political civility. And getting cross-party consensus on energy reform will improve the chance that it is properly done. So Mr Peña should offer the other members of the pact bolder political reform in exchange for their support for energy liberalisation. Allegations of voter-intimidation and other shenanigans in the PRI’s regional strongholds in this week’s elections smacked of the practices that kept the party in power for most of the 20th century.

A means to an end

However, if he cannot bring the other members of the pact with him, the president should push ahead with reform regardless. The PRI has enough votes with the conservative National Action Party and some fringe supporters in Congress to pass the required constitutional reform, even without the PRD on board. For the first seven months of Mr Peña’s presidency, the pact has been a way to bring about vital reforms. It must not be allowed to become an obstacle to them.