MEXICO'S incoming president Enrique Pena Nieto is set take the reins of power, inheriting a country full of economic promise but beset by a brutal drug war.
Outgoing President Felipe Calderon handed power to Pena Nieto in a symbolic ceremony just after midnight on Saturday, hours before the new leader takes the formal oath of office before congress and delivers a speech at the national palace.
In a short ceremony at the palace, Calderon and Pena Nieto stood stone-faced, side by side before the incumbent handed a Mexican flag to his successor, who then handed the green-white-red banner to a soldier.
The two sang the national anthem and then shook hands with the outgoing and incoming cabinets, but they did not speak.
"This process has contributed to the preservation of the political, economic and social stability of the nation," Pena Nieto said after the ceremony. "Mexico has shown democratic maturity and institutional strength."
Pena Nieto's inauguration, taking place at 0200 AEDT on Sunday, will mark the return of the Institutional Revolutionary Party (PRI) after a 12-year absence from the presidency.
The PRI ruled Mexico for most of the 20th century with a mix of patronage, corruption and repression, but the telegenic 46-year-old lawyer, a former Mexico state governor, insists that his party has left its dark days behind.
Pena Nieto has promised to reduce poverty and wants to push through structural reforms to boost Latin America's second biggest economy, which posted stronger growth than regional powerhouse Brazil last year.
But the new president faces a relentless drug battle that has killed more than 60,000 people in the past six years.
While 25 of the 37 most wanted drug lords have been captured or killed, gangland gunfights, decapitations and kidnappings have surged since 2006, with the murder rate almost tripling to 24 homicides per 100,000 inhabitants.
Calderon deployed 50,000 troops to crack down on criminal groups such as the Sinaloa, Zetas and Gulf cartels, but analysts say the strategy backfired as the captures generated more street fights for control of US smuggling routes.
Pena Nieto, who visited President Barack Obama on Tuesday, has vowed to continue the anti-drug cooperation with the United States but he signalled in a Washington Post column that "the strategy must necessarily change".
He says his priority will be to significantly reduce the high levels of violence plaguing Mexicans.
Pena Nieto will be sworn in under tight security, with with metal walls around congress and some 6500 police officers deployed on the street.
Protesters plan to demonstrate around congress while the second-place finisher in the July 1 election, Andres Manuel Lopez Obrador, leads a rally at the downtown Angel of Independence monument.
Lopez Obrador has refused to accept defeat, charging that the PRI bought votes to secure victory. But the electoral tribunal threw out his claim.
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