Mexicans to Lay Aside Contadora Issue for U.S. Talks

The Mexican government, which has been a strong supporter of the so-called Contadora Group’s effort to make peace in Central America, is expected to deemphasize that effort when the Mexican and U.S. presidents confer in January and to make a strong pitch instead for help with its foreign debt problem.

President Miguel de la Madrid and President Reagan are scheduled to meet early in January at the border town of Mexicali, on the Mexican side of the border. The Contadora effort, meanwhile, has been suspended, with no further action scheduled until next spring.

“One might say the suspension comes at a convenient time for Mexico,” a source in the Mexican president’s office said. “We want the talks with Reagan to deal with bilateral issues.”

Lowered Mexican interest in the Contadora process reflects not only the frustration of three years of futile diplomatic effort but increasing government preoccupation with Mexico’s own problems.

The Contadora negotiations, under the auspices of Mexico, Colombia, Venezuela and Panama, were aimed at forging a peace treaty between Nicaragua and its Central American neighbors, El Salvador, Costa Rica, Honduras and Guatemala.

The talks had been the centerpiece of Mexican foreign policy and the special project of Foreign Secretary Bernardo Sepulveda. But there has been no indication that the countries involved can agree on the terms of a treaty, and negotiations were suspended for five months following a recent round of talks in Cartagena, Colombia.

Mexico had been the Nicaraguan government’s staunchest friend in the Western Hemisphere, with the exception of Cuba. This was in keeping with Mexico’s longstanding opposition to U.S. intervention in Latin America, in this case represented by U.S. aid to right-wing Nicaraguan rebels.

Less Involved

In the past year, the De la Madrid government has reduced both its involvement in Central America and its confrontation with U.S. policy in the region. Mexico sharply reduced oil shipments to Nicaragua, because of payment problems, and reopened diplomatic relations with the Washington-backed government of El Salvador.

Still, officials here have made it clear that Mexico is not abandoning the effort to mediate among the Central American countries. Foreign Secretary Sepulveda said last week in a speech: “Faced with the panorama of rising tensions, the government of the republic proposes to firmly maintain its labor in favor of peace for the zone.”

Sources close to De la Madrid were more pessimistic. One said, “There does not exist the political will to resolve the Central American problem.”

De la Madrid will be willing to talk about Central America with Reagan, sources said, so long as the subject does not dominate their discussions. “We’re not discarding Contadora,” one said, “but there are other subjects more pressing.”

The deemphasis on Central America and Contadora will be in sharp contrast to the last meeting of the two presidents. On that occasion, in May, 1984, in Washington, De la Madrid persuaded Reagan to open direct peace talks with the Sandinista government of Nicaragua as an adjunct to the Contadora effort. The talks were undertaken but ended in failure last fall.

In the January talks, economic problems will top the agenda, according to sources here. Falling prices on the world oil market threaten Mexico’s already marginal ability to make payments on its $96-billion foreign debt. And faltering export earnings and the two devastating earthquakes that hit Mexico City in September have aggravated the crisis. As a result of the quakes, creditors have granted Mexico a six-month moratorium on debt payments of $1 billion.

De la Madrid has maintained that if Mexico is to repay its debts, its economy must grow, and that growth depends on new investment from abroad. But the potential for economic growth has been clouded by the quakes’ impact and the threat of a worldwide price war in oil.

De la Madrid is expected to remind Reagan of the promise made by Congress to help Mexico recover from the effects of the earthquakes. “We took that to mean relief from the debt, too,” one source close to the president said.

Until recently, the Reagan Administration had virtually ignored the debt question, despite indications that big debtors such as Mexico and Brazil were having difficulty making payments. This changed when Treasury Secretary James A. Baker III recently announced a plan to use the international financial agencies to shore up struggling economies.

U.S. officials here are anxious that Mexico’s deemphasis on Central America not be seen as a gesture toward Washington in exchange for financial favors.

“That would be crass,” one U.S. official said. “Relations between the United States and Mexico are too broad and important to stand or fall on Contadora.”