She Welcomes the Challenge : Owner of Spa in Political Dispute as Leader of Tiny Federal Agency

Behind an electric security gate and a parking lot crowded with luxury cars is lovely Rancho la Puerta, a $1,000-a-week weight-reducing spa on the U.S.-Mexico border. And behind a colonial-style desk sits Deborah Szekely, founder of the resort and now president of a U.S. government agency to aid the poor in Latin America.

Szekely spent a recent holiday here amid high-brow guests, reading for five hours a day on Third World development and the Inter-American Foundation, the tiny federal agency she now heads.

What are the development problems in Latin America?

“I don’t know. It’s such a vast thing,” Szekely said, shaking her head. “Water, sanitation, education. It’s the primary things lacking to a tremendous degree.”

Agency Has Small Budget

The problems are big, much larger than anything that can be resolved by an agency with a budget of about $25 million a year. But the IAF and its grass-roots development programs, which represent less than 3% of all aid to Latin America, have become controversial beyond their size.

And Szekely, 62, a San Diego businesswoman and philanthropist, is in the middle of the big-league political fray.

Szekely’s critics, most of whom are liberals and Democrats, charge that she is unqualified for the development job and was named simply as a figurehead so that a Reagan-appointed board majority could run the organization.

They charge that the Reagan Administration is trying to make IAF into an arm of U.S. foreign policy, in direct violation of the congressional mandate that established the foundation 15 years ago. Congress wanted the foundation to be independent of day-to-day U.S. foreign policy concerns--and independent of any foreign governments.

Established Under Nixon

The foundation was set up during the Nixon Administration to deal directly with poor people’s self-help projects--setting up farming and artisans’ cooperatives, making small loans, organizing health-care programs--projects that might not catch the attention of the larger Agency for International Development, which works through foreign host governments.

In the United States, IAF has earned a good reputation in Washington for staying small and accomplishing its goals. In Latin America, where many U.S. aid projects are suspected of having ulterior political motives, IAF also has gained the trust of poor people.

“I am deeply concerned about the autonomy of the organization,” said Doris Holleb, one of two remaining board members appointed by President Jimmy Carter. “If it loses its credibility and becomes a tool of foreign policy concerns, it has no reason to exist and should be abolished.”

Szekely asserts that she, not the agency’s board, is running the organization, and that the IAF is still doing valuable work, independent of the Administration.

“Anyone who knows me will know I’m not a figurehead,” Szekely said.

Controversy Not New

Controversy over the agency preceded Szekely’s appointment last July. For a couple of years, conservatives have been accusing the foundation of supporting “socialist-oriented” programs, and last year Reagan Administration board appointees fired Carter’s IAF president, Peter D. Bell.

Bell’s firing set off a flurry of outcries from IAF insiders and observers, who claimed it was political and unwarranted. They said the agency had remained apart from partisan politics through the Nixon, Ford and Carter administrations.

Szekely, a longtime Republican Party activist in San Diego, said she first learned of the IAF when she read of Bell’s firing in the newspaper. She applied for the job and soon became one of a handful of serious contenders.

“I was one of four and I called all my friends and then I won,” Szekely said.

Szekely was made president by a 5-2 vote by the board, with the two Carter appointees Holleb (whose term is almost up) and Luis Nogales dissenting.

3 Reagan Appointees

Those who voted for Szekely were Reagan appointees--Chairman Victor Blanco, a Cuban American from Los Angeles who headed California Hispanics for Reagan in 1980; Vice Chairman Howard Phillips, a car dealer from Burbank, and the government representatives on the board, Organization of American States Ambassador J. William Middendorf II, Assistant Secretary of State for Inter-American Affairs Langhorne Motley, and AID administrator Peter McPherson.

“She was the best (candidate),” Blanco said. “She has run a business and she has been very, very successful. She has not always had what she has now. She started from nothing. The woman exudes enthusiasm and energy. She is someone who can make things happen.”

While Szekely herself admits she does not have an excess of experience with Latin America development projects, she says she is a strong manager, fluent in Spanish, and comfortable with Latin culture because of her unusual upbringing.

Szekely describes herself as “a legitimate health nut,” the daughter of “fruitarian” parents who made money selling copra--dried coconut meat.

Raised in Tahiti

Born in Brooklyn and raised in Tahiti, Szekely spent six-month stints as a teen-ager in rural communities of Mexico, where her mother taught midwifery and community gardening.

“I went to school where we sat on mats,” she said. “My roots are more in Mexico than Brooklyn.”

In 1940, Szekely and her Hungarian-born husband founded Rancho La Puerta, then a $17.50-a-week health camp in what was then a border hamlet of 400 residents. Today this is a well-known resort in a town of 60,000, attracting the likes of the Washington Post’s Katherine Graham and songwriters Burt and Carol Bacharach.

The Szekelys also founded the highly successful Golden Door health spa near Escondido before they were divorced in 1969. The Golden Door, a $2,500-a-week resort that also caters to the famous and powerful, recently suffered a fire that caused an estimated $1.5 million in damage.

Szekely has been active in San Diego politics since the late 1970s, working in committees to elect President Gerald R. Ford, Sen. Pete Wilson and Gov. George Deukmejian, as well as running unsuccessfully herself for Congress in 1982.

She is a cheery-looking woman with a round face, silver hair and smile lines around her eyes. Friends and critics alike describe her as a warm, kind person--traits she makes an effort to project.

On a recent tour of her ranch, she stopped several Mexican employees to ask them to tell a reporter how long they had been with her. They answered 17, 20 and 25 years.

Although obviously intelligent, Szekely does not seem armed for battle in the polarized world of Washington politics, and she appears genuinely stunned at the acrimony around her appointment and other issues there.

The controversy over IAF has escalated with Szekely’s tenure, beginning with the charges that Blanco and the board majority are running the agency, not Szekely.

The Washington Report on the Hemisphere, a newsletter published by the liberal watchdog Council on Hemispheric Affairs, calls Blanco “the real power” at IAF.

The Development Group for Alternative Policies, another liberal group that puts out minutes on IAF sessions, reports that at Szekely’s first board meeting, held in November, the board discussed dividing into committees to review all project funding proposals, which currently are reviewed by the staff and president.

Blanco and Vice Chairman Harold K. Phillips respond that the board has every right to approve funding proposals.

“We are responsible for this agency. We either take seriously what Congress has intended by making us responsible or we don’t,” Blanco said.

Phillips said that past boards have chosen to relegate funding decisions to the President, but that Congress allows the board to make those decisions.

The critics charge that the IAF is becoming tied to U.S. foreign policy, pointing to the decision at Szekely’s first board meeting to resume funding projects in El Salvador--a charge which Szekely hastily parries by pointing out that IAF also is funding an agricultural cooperative in Nicaragua.

And they point to an exchange of letters between Szekely and the U.S. ambassador to Chile, James Theberge, in which Theberge complained that IAF funding in Chile is perceived there as being directed to left-leaning research groups critical of free enterprise and hostile to the United States.

Consultation Urged

He asked the IAF to consult with the embassy before making grants and to reevaluate its current funding. Szekely responded in writing that she agreed with the ambassador’s suggestion for a review of the results of the grants made Chile: “You can be sure that your views will be given careful attention.”

Szekely said in an interview that when she met personally with Theberge, “I told him it was against our mandate (to consult with ambassadors), but that I would look closely at our projects. I pointed out that it was hard to find poor people who were fond of (President Augusto) Pinochet.”

Blanco said that it is the critics rather than he or Szekely who are making political hay out of the foundation.

“The same people who charge us (with trying to politicize the IAF) try to influence the foundation by planting articles and going out and creating problems and publicity to get their own way. I have never had the White House or Sen. (Jesse) Helms try to tell me what to do,” Blanco said.

Blanco said the only change the board and Szekely are making is to try to gear the IAF toward more practically oriented studies and programs.

“Instead of studying how the Imara Indian culture came into being, I would rather know how can the Imaras grow better corn and market it,” he said.

“We go to extremes to make sure we are not supporting the left or the right. We try to be absolutely fair, to help the poor without looking at politics. Of course we don’t want to go against the U.S. government. We work for the government, after all.”

Despite the fact that three high-ranking government officials sit on the IAF board, Szekely said she believes the 60-employee foundation is too small to interest the Reagan Administration as a tool of foreign policy.

Meanwhile, Szekely said, she is spending her time cramming to learn about development in Latin America. She said she has spent a week each month since taking office visiting IAF projects in Latin America and the Caribbean.

She said she has learned that conditions are worse in Latin America today than when she was a youth in rural Mexico.

During a visit to a hillside village in Colombia, she said, she realized that many of the crowded houses no longer had chickens running in front of them as they did when she was a child, but had television antennas on the roofs. Instead of the wood-burning stoves she had seen as a child in Mexico, the women used kerosene stoves because the wood had been depleted.

“There is a change in the people. There is a sense of urgency and we need to have a sense of haste in helping them.”

She said she wanted the job that attempts to do that because she was “looking for something that would make a change in a big arena.” Szekely wanted a challenge, “something that would keep me up at night.”