Mexico City — FIDEL VELAZQUEZ, considered one of the most powerful labor leaders in the world, seems out of place in the 1980s. His gravelly voice, gold watch, fat cigar, and tinted glasses make him seem like a 1930s labor baron in ``The Untouchables.'' But the white-haired labor patriarch - known all over Mexico simply as ``Don Fidel'' - is still the glue that holds the Mexican political system together.
For 46 years, Mr. Vel'azquez has held an iron grip on the influential Mexican Workers Confederation (CTM) - a coalition of almost 9,000 unions throughout the country.
Every six years, presidents come and go. But Don Fidel remains, forging anew the social pacts between workers and bosses, between the unions and the new presidential administration. These pacts have ensured stability and peace - even when Mexico seems on the brink of falling apart.
``The situation we now confront is the most difficult of my career,'' says Vel'azquez, his mumbled monotone filling a plush conference room outside his office in the Mexican capital.
As more than 70 people - from sombrero-topped farmers to pin-striped businessmen - wait outside for an audience with him, Vel'azquez patiently talks about the sharp economic blows workers have endured in the past five years.
Inflation has soared to 130 percent. Food and transport subsidies have been slashed. Unemployment has doubled, to about 18 percent. Half of all Mexican workers now either earn less than the $3.10 minimum daily wage or have no job at all; and the other half, while fortunate to have a steady paycheck, have watched its real earning power shrink by nearly 50 percent.
But Mexico's ``time bomb'' has not exploded. There have been no national strikes, no widespread protests.
Close observers offer one principal reason: Don Fidel, even in the twilight of his career, ably treads the fine line between workers' growing demands and the government's austere economic policy.
In return for receiving political posts for CTM activists, minimum-wage increases, and a continuance of the government's broad social security net, Vel'azquez grudgingly accepts the austerity policies, even though they damage his workers' economic conditions.
``I don't think there's another country like this,'' says Vel'azquez. ``Despite the circumstances in which we find ourselves, we still have spaces to advance. The national unity has not been broken. Social peace has been maintained.''
Then, as if tossing out an afterthought, he adds: ``All within the limits of what the situation permits.''
For Vel'azquez, the phrase is more than a superfluous idea. It reflects his formula for preserving social stability: Never ask for more than the government can give.
In these days of austerity, Vel'azquez hasn't asked for much. Indeed, as the crisis has nearly crushed the working class, the cure - belt-tightening reforms twinned with a push toward international markets - has reduced the role of unions.
Yet the CTM remains the foundation of Mexico's political system - largely because of an unusual alliance Vel'azquez formed nearly half a century ago. He made the CTM an arm of the Institutional Revolutionary Party (PRI), the broad-based ruling coalition that has yet to lose any national gubernatorial election.
``Mexico is perhaps the only capitalist country in the world where the union movement is integrated into the ruling party,'' says labor specialist Javier Aguilar, marveling at the workers' tranquillity during this period of wrenching recession.
Wages for the CTM's 4.5 million members - roughly half of Mexico's unionized workers - may not be keeping up with inflation.
But, as Vel'azquez is quick to point out, confederation workers can still count on the government for housing, cheap food, loans, and (though he fails to mention it) even jobs for relatives.
Besides weaving this social-security net, the CTM has also accumulated considerable political clout: union activists hold three of 31 governorships, dozens of vital townships, and more than a third of the seats in Congress.
``The CTM is a real force because of its alliance with the system,'' says Ra'ul V'azquez, a labor analyst with the private-sector organization Coparmex, which is often at odds with the CTM. ``That strategic alliance is an absolute priority as much for the government as for the union. It's impossible to have a break in the relationship because it is the key to Mexico's political stability.''
As the government's main power broker, Vel'azquez has also maintained a fragile alliance between fiefdoms within the CTM. Even the corrupt and powerful Oil Workers Union, the richest in Latin America, falls dutifully into line behind Don Fidel.
Vel'azquez' influence comes in part from his long history, one that provides a colorful snapshot of modern Mexico. He was 10 when Mexico's bloody revolution erupted in 1910, 17 when the Constitution was signed, and 21 when - as a milkman - he began union work.
One of several CTM leaders soon after the confederation was founded in 1936, Vel'azquez rose to the union's top post of secretary-general in 1941. A staunch anticommunist, he swiftly purged the CTM of Marxists and other leftist elements. He also changed the union slogan from ``For the emancipation of the Mexican worker'' to ``For the emancipation of Mexico,'' a motto that better reflected his new task with the ruling party.
Today, as Don Fidel approaches what may be his last presidential succession, labor analysts warn that both the CTM's internal cohesion and its pact with the PRI could collapse without him.
``The moment Don Fidel leaves, this internal alliance will be in danger,'' Mr. Aguilar says. ``It's going to divide the CTM. Now it's united. But Fidel is the only one who is able to create a consensus.''
There have been strong rumblings that Vel'azquez will soon pass the gauntlet to his close friend Emilio Gonz'alez, the current governor of Nayarit. If so, labor experts say, Mr. Gonz'alez could expect bitter conflicts from the leader of the Oil Workers Union - the notorious Joaqu'in Hern'andez Galicia, known as La Quina.
Don Fidel, however, doesn't like to talk about retiring.
``I don't have any intention to,'' he says, noting that he still makes about 100 trips a year outside the capital. ``I like the fight. And during this period of the presidential succession, [leaving] would mean turning my back on the labor movement.''
Paradoxically, the confederation's role in the succession has become both more active and less influential during the past decade.
In 1981, Vel'azquez backed the front-runner, only to see him bypassed as the current President, Miguel de la Madrid Hurtado, nabbed the nomination.
Vel'azquez and the CTM can still flex their political muscles, however.
Three weeks ago, on the eve of the President's state-of-the-union address, the CTM released a document highly critical of current economic policies.
With just a few weeks left before the PRI's candidate for the July 1988 presidential election is unveiled, many analysts read the document as both a guide and a warning to Mr. de la Madrid's successor.
Vel'azquez remains cagey about his choice for the presidency.
His actions and history suggest that he would favor Energy and Mines Minister Alfredo del Mazo Gonz'alez. But in the Byzantine world of Mexican politics, one never knows. Jokes Vel'azquez: ``That's the 64 million-peso question.''
Only one thing is certain: Whoever does get the nod will quickly seek a private audience with Don Fidel.