Mexico's New Era of Reform in Jeopardy

By , Sol Sanders, author of ``Mexico: Chaos on our Doorstep,'' lives in New York.

PRESIDENT Carlos Salinas de Gortari's trip to South America and on to Paris this week for the economic summit is, paradoxically, the end of a six-month honeymoon. The young, ultrasophisticated Mexican president had almost convinced Mexico's international creditors, the US media, and many Mexicans that he had ushered in a new era of reform and revitalization. That image is now in jeopardy on two fronts: Despite some progress over the past weekend, negotiations with Mexico's creditors for relief from the $110-billion debt burden still face hurdles. Intense pressure from the Bush administration on US banks has not moved European creditors to relent. And a dramatic political ``solution'' before the Paris summit may endanger Mexico's access to ``new money.'' Additional lending from the international community is the sine qua non of Mr. Salinas's program to transform Mexico from autarkic socialist economics to an export-led market prosperity.

Simultaneously, state elections - particularly in the urbanized border state of Baja California - are testing Salinas's promised new politics to replace Mexico's authoritarian corporativism. Here, too, Salinas is caught on the horns of a dilemma: By conceding the July 2 election to the opposition, he ha may have dealt a death blow to the remnants of el sistema, which has run the country for more than half a century and which brought him to power as a minority president. Worse still, he could undermine the anti-inflationary program he believes is vital to his economic policies, for it depends on keeping the government trade union's demands in line. But a return to alquimia, the traditional methods of frauding the vote, would demolish his reformist image at home and abroad.

The truth is that Salinas may have already made the mistake of believing that ``Salinastroika'' could proceed cautiously. He has moved skillfully and decisively, but only in some specific instances.

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Moves against union caciques have largely been cosmetic, at best replacing older corrupt officials with younger, more malleable men from the same stable. While Salinas claims some 700 government-owned corporations have been privatized, the major ones - suffering from inefficiency and corruption - are bleeding the treasury. The resultant mushrooming internal debt - financed at some 5 percent a month - may be a graver problem than payments to the external creditors. Recent moves against drug trafficking have been significant and ecstatically welcomed in Washington. But they have taken place in a region where narco-finance and narco-terrorism have grown to fantastic proportions.

All in all, Salinas's policies have not restored confidence. In fairness, he is caught between efforts to stabilize prices and preserve internal security against growing unemployment and privation while rebuilding an inefficient economy. Thus, for example, capital flight is encouraged with the peso overvalued in order to help the anti-inflationary campaign. (Mexican reserves are at a mere $4 billion, down from $18 billion after the last debt restructuring only two years ago.)

Salinas's hope - or rather that of his well-wishers - is that his own view of Mexico's problems has been at least theoretically more longterm than his predecessor's. He is eminently aware, we are told, that the winds of change that have swept even Soviet and Chinese communism toward market economics, and in some cases more political freedoms, must reach Mexico.

He counts heavily, too, on massive support from the Bush administration. Secretary of the Treasury Nicholas Brady has made it clear that the US does have a special relationship with Mexico among the Latin American debtor nations. (The new Brazil payments crisis only underscores Mexico's privileged position, vis-`a-vis the US at least.)

Like everyone else approaching the Paris meeting, Salinas must be hoping for a miracle. Whatever does come out of those sessions, Salinas and Mexico are now entering a new and more convoluted phase of the country's decade-long politico-economic crisis.

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