SAN SALVADOR — WHILE last week's meetings in Mexico between Salvadoran rebels and the government have been hailed as an historic step, observers are cautious. They say only the relatively simple task of agreeing on procedures - a commitment to continue monthly negotiations to end the decade-long civil war - was dealt with. The next step, a meeting scheduled for Oct. 16 and 17 in Costa Rica, will have to deal with the more difficult and substantive issues that separate the two sides in this bloody conflict.
``Nobody is pretending this is going to be an easy process,'' says a Western diplomat. ``There are those on the right that will find this hard to swallow and those on the left and then there is the Army.''
In Costa Rica the government will have to respond to the dramatic proposal put forward in Mexico, in which the Farabundo Mart'i National Liberation Front (FMLN) offered to end the war and transform itself into a political party if the government is willing to institute some significant reforms.
The FMLN said it would agree to a cease-fire on Nov. 15 if the government would agree to reform the judicial system, end repression, prosecute death squad members, respect and expand the economic reforms implemented under the Christian Democrats, ``self purify'' the armed forces, and move up the legislative and municipal elections scheduled for 1991.
The FMLN says it would then become a political party and aim for a definitive cease-fire by Jan. 31.
Government officials have said that some of the FMLN demands violate the 1983 Constitution. FMLN commander Joaquin Villalobos said in Mexico that the FMLN's proposal is flexible.
Leftists, however, tend to be skeptical of the willingness of President Alfredo Cristiani, and hardline elements of his ARENA Party and the military, to make concessions to the FMLN.
Other observers say that President Cristiani and sectors of ARENA want peace and are prepared for serious negotiations to achieve it. ``ARENA is largely business oriented,'' says the diplomat. ``They realize things can't continue like this. They really want to get it over with.''
But even as the FMLN stilled its guns on Sept. 13, declaring a 10 day unilateral cease-fire as a gesture of good faith for the first round of talks, along with a suspension of sabotage, the Salvadoran Army launched operations into most of the guerrilla base areas.
And although the rebels had called for a halt of repression as a sign of government goodwill, arrests of union activists increased, spurring street demonstrations, the burning of two buses Monday and the arrest of 61 protesters by US-trained riot police.
The biggest surprise of the Mexico talks was the presence of guerrilla commander Mr. Villalobos, who until a year ago had remained in his mountain stronghold in Morazan department since the early years of the war.
Considered the guerrillas' most brilliant military strategist, his sometimes ruthless tactics have mistakenly earned him the reputation as a political hardliner.
Villalobos was the main proponent of an insurrectional strategy which aimed at polarizing the society and leading the frustrated dispossessed to overthrow the rightist government.
The rebels have moderated their position, however, with their January proposal to participate in elections if they were postponed. In that proposal they discarded previous demands for power sharing and the integration of the rebel and government armies.
But despite signs of increased flexibility from both sides solutions will not be easy. As prominent leftist politician Rub'en Zamora points out, the decade long civil war is a sign of the disintegration of the ``social contract'' that all societies have.
The challenge of the negotiation process will be whether a new social contract can be agreed upon by a rightist government representing the elite that has traditionally ruled the country and the leftist guerrillas who are based among the most dispossessed.