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Moreover, the national debate over energy policy permitted Andrés Manuel López Obrador (the PRD's de facto leader and Calderón's main opponent in the bitterly disputed 2006 presidential election) to revive his political fortunes by leading the nationalist opposition to an expanded private-sector role in the energy sector.

Although the federal government's policy setbacks might pose problems for the ruling National Action Party (PAN) in the 2009 midterm congressional elections, the PAN's difficulties were minor compared with those affecting the PRD.

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The violence claimed victims ranging from rival cartel members to senior federal police commanders and law-enforcement personnel, innocent bystanders caught up in gunfights, and members of Mexican-style country music groups (), whose song lyrics often depicted the lifestyle of drug traffickers.

Most disturbing, the overall incidence of drug-related violence (more than 5,600 deaths in 2008) was on the rise, with no clear indication that the Mexican government had yet gained the upper hand.

Some sources judged that the rising retail price and the declining purity of cocaine sold in the U. As shipping cocaine, methamphetamines, and other drugs into the U. became more difficult, traffickers began selling a higher proportion of their product in Mexico, where addiction levels rose steadily.

Fragmented cartels waged war against each other for control over lucrative smuggling routes, and they increasingly turned their formidable firepower (derived from sophisticated armaments smuggled from the U. In a particularly gruesome turn, they frequently beheaded their victims as a macabre sign of their determination.

Positive developments in 2001 included a drop in inflation to 6.5%, a sharp fall in interest rates, and a strong peso that appreciated 5% against the dollar. About three-fifths of Mexico's people are mestizos, one-third are American Indians, and the rest are of European ancestry. Mexico has two major peninsulas, the Yucatán in the southeast and Baja California in the northwest.

Mexico City implemented free trade agreements with Guatemala, Honduras, El Salvador, and the European Free Trade Area in 2001, putting more than 90% of trade under free trade agreements. Languages: Spanish (official); more than 50 Indian languages are spoken. The high Mexican Plateau forms the core of the country and is enclosed by mountain ranges: the Sierra Madre Occidental, the Sierra Madre Oriental, and the Cordillera Neo-Volcánica.In 1821 rebels negotiated independence from Spain, and in 1823 a new congress declared Mexico a republic. In 1993 it ratified the North American Free Trade Agreement.The election of Vicente Fox to the presidency (2000) ended 71 years of rule by the Institutional Revolutionary Party. Felipe Calderón maintained favourable overall public-approval ratings, he encountered considerable difficulties in advancing his policy agenda during 2008.In March, Alejandro Encinas, a former governor of the Federal District and López Obrador's preferred candidate for party leader, appeared to have narrowly defeated Jesús Ortega of the more moderate New Left faction in the race for party president.Not for the first time in the PRD's 19-year history, however, the election was badly tarnished by ballot fraud and other irregularities. In July interim party leaders finally agreed to annul the results and postpone the election until 2010. Congress failed to enact a comprehensive immigration reform, creating a policy vacuum that encouraged state and local governments in the United States to devise their own approaches to illegal immigration. economy sliding into recession, Mexico's GDP grew by only an estimated 1.6% in inflation-adjusted terms during 2008.The nation continues to make an impressive recovery.

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