Straight Talk from a Neighbor

By Laura L

Mexico's President presses the U.S. on Central America

The words were polite but assertive: "Democracy cannot use the arms of tyranny. Reason and understanding are superior to the illusion of the effectiveness of force." That advice from the rostrum in the House of Representatives, directed at the Reagan Administration's policies in Central America, came not from a Democratic Congressman but from Mexican President Miguel de la Madrid Hurtado, leader of a nation sandwiched between the U.S. and Central America, with a capital city nearly as populous as all of the isthmus' tiny republics put together.

During his 2 1/2-day visit to Washington, De la Madrid, 49, disguised his criticism in diplomatic jargon. But as he addressed a joint session of Congress, his message was clear and the response overwhelming. He received a standing ovation when he entered the packed chamber. Four times during his 30-minute speech, he was interrupted by applause. In an open-armed bow, the Mexican President thanked Congress for its support of diplomatic efforts in the region. Said he: "Latin America demands a new understanding between its countries and the industrialized countries of the hemisphere."

As a crisp wind whipped the flags on the South Lawn of the White House, President Reagan welcomed De la Madrid with the U.S. prescription for regional peace. "Responsible governments of this hemisphere cannot afford to close their eyes to what is happening or be lulled by unrealistic optimism," Reagan said, implying that Mexico was naively ignoring the Communist threat in Central America. De la Madrid responded by warning of "the risk of a generalized war." He called on all parties to "apply the principles and rules of international law established by the countries of the American continent: self-determination, nonintervention, equality of states before the law, peaceful solution of conflicts and international cooperation for development."

Cautious as the phrasing was, De la Madrid's American hosts had little trouble getting his meaning. The reference to "rules of international law" was implicit criticism of the CIA-organized mining of Nicaraguan harbors. "Nonintervention" and "self-determination" referred to U.S. support for the contra guerrillas who are trying to overthrow the Sandinista government of Nicaragua. "Peaceful solutions" was a slap at the U.S. military buildup in Central America. "Equality of states before the law" and "international cooperation" were allusions to the U.S. economic squeeze on Nicaragua.

In a private 45-minute session with Reagan in the Oval Office, De la Madrid reiterated his belief that the problems of Central America should be dealt with not by military means but through diplomacy. He tried to enlist greater U.S. support for the diplomatic Contadora process, in which Mexico is a leading player (see box). "They agreed that the search for peace was the primary objective," a senior official explained after the meeting. In others words, there was little agreement on substance.

Support for Contadora came from another quarter last week. Echoing De la Madrid's assessment, the Inter-American Dialogue, a privately funded group of U.S. and Latin American diplomats, businessmen and academics, concluded in an 87-page report that "the roots of insecurity in the hemisphere and particularly in Central America are primarily economic, social and political." The solutions, it added, "lie in economic and social development and political dialogue, not in more weapons and military advisers." The study, prepared under the direction of Sol Linowitz, former U.S. Ambassador to the Organization of American States, encouraged direct negotiations between the government and guerrillas in El Salvador. It also urged the U.S. to stop supporting the contras who are fighting Nicaragua's Sandinista government.

Despite the attention given to Central America, De la Madrid's main purpose in Washington was to discuss the hemisphere's economic plight. He argued that economic recovery throughout Latin America is being hampered by high U.S. interest rates and protectionist measures that keep out many of its products. De la Madrid stressed that Latin America's $335 billion foreign debt, of which Mexico's $85 billion is second only to Brazil's $96 billion, poses a potentially worse problem for the U.S. than the turmoil in Central America. The reason: many countries are being forced to impose harsh austerity measures that create social unrest. The Mexican delegation specifically asked Reagan to ease import tariffs on such Mexican products as steel and leather goods. Administration officials were somewhat unsympathetic, arguing that Mexico's markets are far more protected than those of the U.S. Mexico, for example, sells some $40 million worth of beer to the U.S., but bans American beer from entering the country. The Administration, however, offered to consider loosening regulations against the sale of unfairly subsidized products. Under the proposal, U.S. manufacturers complaining about Mexican goods would have to demonstrate not only that the products had been subsidized but that the lower price had "injured" competitors in the U.S. market.

If De la Madrid could speak with any confidence, it was because he has used his 18 months in office to put Mexico's economic house in relative order. When he took office in December 1982, the Harvard-educated economist inherited a stagnant economy with an inflation rate of more than 100%, unemployment of 8% and a plummeting peso. He quickly imposed a rigorous austerity program and renegotiated the country's short-term loans so as to make interest payments easier. De la Madrid cut the government deficit and sharply reduced imports, especially of luxury goods. As a result, Mexico should enjoy a trade surplus of $9.5 billion in 1984; foreign currency reserves increased $3 billion in 1983 alone.

De la Madrid has had some success in dealing with Mexico's endemic corruption. He has created watchdog offices for public spending and jailed Jorge Diaz Serrano, former president of the state-owned PEMEX oil giant, on charges of defrauding the company of $34 million. He has also allowed the government to investigate the suspicious wealth of former Mexico City Police Chief Arturo Durazo Moreno, and confiscated some of his ostentatious properties.

Even so, huge problems remain. Inflation is still running at 50% to 60%, unemployment has risen to 12%, and underemployment is an estimated 37%. Considering their country's own debt, many Mexicans questioned De la Madrid's efforts to arrange a $500 million bailout loan for Argentina during a tour of South America last March. Says Miguel Angel Granados Chapa, a liberal newspaper columnist: "His style is that of a doctor who has diagnosed what the problem is and then proceeds to surgery. There is no anesthesia."

The two corruption cases have been cheered on by the public, but many people complain that "moral renovation," the term De la Madrid coined during his election campaign, has run its course. Mexicans point to the case of former President Jose Lopez Portillo, who is widely thought to have lined his pockets during his six years in office but is living in comfortable self-imposed exile in Paris with no charges against him. "De la Madrid seems honest in his personal desire to eliminate corruption," observes a Western diplomat, "but after decades of corruption, Mexicans expected to see some heads roll."

Another sensitive issue for the Mexican President is the treatment of some 46,000 Guatemalan refugees in camps along Mexico's southern border. The refugees began to cross the border in large numbers in 1982, when the Guatemalan army began a massive counterinsurgency campaign. Various political and religious groups have complained that the Guatemalans are being denied access to food and medical treatment, and are sometimes treated as criminals by local authorities. The Mexican government announced this month that it would move the refugees to new camps 130 miles north in the oil-rich region of Campeche. Relocating the refugees may limit incursions by the Guatemalan army, thereby resecuring Mexico's southern border. Yet even if the immediate problem is solved, it serves as a reminder that Mexico is vulnerable to upheavals south of its border.

Before the departing Mexican delegation was even airborne, Congress was once again slogging through the Central American quagmire. A House-Senate conference failed to approve a $62 million military-aid package for El Salvador, as well as the Administration's request for $21 million in covert aid to the contras. In an effort to lobby for a bill that would provide $114 million in military aid to El Salvador, Reagan was to meet with newly elected Salvadoran President Jose Napoleon Duarte during his visit to Washington this week. It was the White House's hope that Duarte could sway Congress, where he is held in high regard, more than De la Madrid had influenced Reagan.

--By Laura Lopez.

Reported by David DeVoss with De la Madrid and Barrett Seaman/Washington

With reporting by David DeVoss, Barrett Seaman