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Salinas' Plan: First Feed The People, Then Talk Reform

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Knitting together the Mexican and U. S. economies may be troubling to many Americans. But it's south of the border where the biggest convulsions are likely to occur. While Mexicans are hungry for some of America's prosperity, it's not easy for them to swallow national pride and hitch a ride with Uncle Sam.

It was nothing less than economic failure that drove Mexico to look north for help. Like the nations of Eastern Europe, Mexico is ditching an unsuccessful economy based on protected national industries and behemoth state-run enterprises. It's throwing in with the U. S. just as global competition makes the going tougher.

But unlike Eastern Europe, Mexico's political system hasn't collapsed -- at least not yet. The challenge facing President Carlos Salinas de Gortari is at once to open the economic doors to the gringos and keep a grip on Mexican politics.

OBSESSION. Salinas enjoys great power as Mexico's President, and he's exerting it squarely on economic reform. "The economic transformation seems to be his obsession," observes Lorenzo Meyer, a historian and frequent Salinas critic. If he succeeds, Salinas thinks the inevitable political changes will come more gently.

Or, think of it this way: Salinas is putting perestroika before glasnost. A top official of Salinas' Institutional Revolutionary Party, which has ruled Mexico without interruption since 1929, explains: "Gorbachev should have used the monolithic power of the state to revamp the economy before he opened up the political system."

Salinas is determined to conduct his reforms the other way around. He has built a new ruling coalition in Mexico. Jilting the mammoth labor unions, Salinas has cozied up instead to Mexico's powerful business leaders, who now are busy buying back banks that the government nationalized in 1982.

Oddly enough, another key ally is George Bush, who has gone to great lengths to support Salinas. Bush pushed through Mexico's debt renegotiation two years ago. Next, he put free trade near the top of his agenda. Last November, at the height of the gulf crisis, Bush even took time to travel to Salinas' tiny hometown in the state of Nuevo Leon to give the Mexican President a boost. "Mexico's political regime will survive, thanks to the endorsement of Washington," says Adolfo Aguilar, a political analyst with close ties to Salinas' leftist opposition.

While counting on Bush to deliver a free-trade deal in Washington, Salinas is working to stifle nationalist foes. Opposition politicians complain that Salinas supporters in Mexico's ineffectual Congress have worked to keep the free-trade debate off the floor and have banned hearings on the subject. "We don't even have access to information on what's going on," complains Luis H. Alvarez, president of the conservative National Action Party.

Then there's Cuauhtemoc Cardenas, son of the revered Mexican President Lazaro Cardenas, who nationalized the oil industry in 1938. The leader of the Party of the Democratic Revolution, Cardenas is campaigning for summer elections on an anti-free-trade platform. He decries what he sees as a sellout to the yanquis. Ineffectual at home, the PRD nonetheless is making inroads in Washington, feeding anti-free-trade ammo to groups ranging from bird lovers to carmakers.

BENDING THE LAW. Troublesome as Cardenas may prove, Salinas' greatest challenge lies ahead. He has led Mexicans to expect a tidal wave of foreign investment and growth once a free-trade deal is in the works. Anticipating this, the Mexican stock market this year already has run up 47%. "The government promised an economic turnaround after the debt was renegotiated, and it didn't happen," says one Mexican government insider. "People are going to begin to wonder if the fast track doesn't bring anything."

More unsettling to more people may be the quakes Mexican workers will feel as their economy tilts northward. In Mexico, laws are flexible--and often are bent to fit immediate political needs. Such discretion gives sustenance to an army of bureaucrats. Pressures unleashed by free trade promise to attack this system, the very heart of Mexico's power structure. "We're going to have to change laws," predicts Luis Pazos, an economist. "We're moving into the same political culture as the U. S.."

On such shifting ground tiptoes Carlos Salinas. In his three years left as President, he wants to do no less than remodel the economy before easing mpen the doors to full democracy. But if the economy doesn't swing to his rhythm, disappointed, angry Mexicans may force political changes ahead of his schedule.Stephen Baker in Mexico City

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