`They Didn't Elect Me To Have A Pleasant Time'

Just 100 days into his term, Mexican President Ernesto Zedillo Ponce de Len is in the eye of a financial storm. His tough new austerity program has somewhat calmed the markets, but it is very unpopular in Mexico. On a flight from Durango to the capital,

Zedillo talked with BUSINESS WEEK's Mexico City bureau chief, Geri Smith.

His strategy for recovery:

From the very first day, I spoke of the need for an intense but brief adjustment period so that we could go into a growth path. I believe it is preferable to have an intense adjustment period, even if it's painful, so that afterwards we can clear the path for growth.

On the predictions of massive bankruptcies:

I believe that if we control the financial crisis, there is no reason for half of Mexico's industry, or even a small part of it, to die. I'm sure that in a few months, the financial situation will look much different and the companies will have adjusted their balance sheets, just as the country is doing. In two months, we have achieved a positive balance in the trade account and probably a zero deficit in the current account, and this is something that will benefit us for some time to come.

On forecasts of a 4% to 6% decline in gross national product:

I believe that it will depend on how quickly the financial markets are stabilized. If in the next few weeks, stabilization is achieved and the [current] tendency is reversed, the recession doesn't have to be so deep.

On export-led recovery:

Once the financial problem is overcome, I believe the economy will begin to react. In fact, there are sectors that already are reacting in a very impressive way. The governor [of Durango] told me that several plants here that were closed have reopened--cellulose, mining, and textile concerns. The overvalued exchange rate had killed them. I believe the true motor of reactivation will be exports.

On public protests:

Yes, I am worried about the social uncertainty. Evidently, the crisis is having an impact on the standard of living of Mexicans. But the important thing to explain to the people is that if we don't take these measures that we're taking, the social cost will be much greater.

On the progress of talks with the Zapatista rebels:

I believe we have given proof that we are interested in a political solution, but at the same time, it has to be a legal solution, within the confines of the law. Little by little, [the Zapatistas] have begun to understand this.

On the headaches of being President:

They didn't elect me to have a pleasant time. They put me here to resolve problems. Never in my life have I felt so motivated, so responsible, so committed to something as I do now.

On the inf luence of drug traffickers in government:

I have said that the chief legal and national security problem that Mexico has is narcotrafficking. There is evidence that some individuals in the government may have served the narcotraffickers' interests. This has happened for many years, and many of those people are in prison.

What can we do about it? Improve the government's ability to enforce the law through judicial reform. Also, we need more cooperation from the U.S. government. I think that now, with the Clinton Administration and Attorney General Janet Reno, we have a great opportunity to cooperate to combat this problem.

On his goals:

What I want is to see Mexico as a country with a growing economy, with a justice system that works, with a more democratic political system than it has today.

On a possible opposition victory in the next presidential election in 2000:

(Laughing) I am from the Institutional Revolutionary Party, and I'll always be a member of the PRI, eh? But I am very respectful of the results of the people's vote.

On Mexico's strengths:

If the world has the impression that the country is in ruins, it's wrong, and it will be the fault of you, the journalists, that the people think this. Over the last decade, the country carried out a more profound structural change than any other economy in the world has undergone. Mexican society has accepted the notion that we must have an open economy, linked to the world. That is irreversible. We must continue down this road.

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