The Salinas Solution : Can President Carlos Salinas, With His Harvard Ph.D. and His Free-Market Ideas, Make Mexico Work?

WAVING red-white-and-green placards, hundreds of patriotic supporters gather under a searing midday sun to welcome President Carlos Salinas de Gortari to Acapulco’s Juan N. Alvarez International Airport. They are taxi drivers and government workers, housewives and street vendors, all chanting “PRI! PRI!”--the initials of the mighty Institutional Revolutionary Party that has ruled Mexico for more than six decades.

The president has declared this National Solidarity Week, and Acapulco is his next stop on a grueling 13-state tour to inaugurate public works projects. Today, he will lead a caravan of officials through neighborhoods of dirt streets and wooden shacks, waving to the poor who live in the shadow of glitzy tourist hotels. He will hand out land titles, launch neighborhood electricity and waterworks programs and open a dispensary that sells milk at a subsidized price.

“We are working so that there are not two Acapulcos--one for the tourists and another for those who work,” Salinas will say to the cheers of residents. “We want the conditions to exist so that, thanks to the efforts of all, you can find a better horizon for yourselves and for your families.”

But first, as the airport crowd awaits the president’s arrival, a different kind of commotion breaks out. A PRI member is handing out white T-shirts emblazoned with the word Solidarity in red, and there aren’t enough to go around. Two teen-age women have grabbed the same shirt, and neither will relent.

“I got it! It’s mine!” shouts one.

“No, it’s mine!” barks the other.

A coin toss finally resolves their dispute. But the loser, 18-year-old Florentina Chino, is more than glum. This, it turns out, is only the latest in a string of disappointments. Two months earlier, Chino’s family was one of 45 evicted from their houses and promised other shelter; so far, they have received nothing and are living with relatives. More recently, the government forced her and other street vendors off the beaches and sidewalks near the hotels.

No home, no work and, now, no T-shirt--and not much love for the president either. You know, she says, getting worked up in the summer heat, Salinas didn’t even win the presidential election in 1988; the vote was a fraud. As far as she is concerned, Salinas is just as bad as the presidents before him.

So why is she here, carrying a banner to greet him? She looks surprised by the question.

“Because he’s the president,” Chino says. “Who else can help us?”

Mexicans have long regarded their presidents with such ambivalence--blind faith tempered with dark misgivings. They lived through an oil boom in the late 1970s and early 1980s that brought a huge foreign debt rather than prosperity. They discovered that President Jose Lopez Portillo’s administration plundered the treasury before leaving office in 1982. Then, President Miguel de la Madrid’s six-year austerity program ate painfully away at half their salaries.

Now the 42-year-old Salinas, a career technocrat from a politically well-connected family, stands at the apex of Latin America’s oldest political pyramid. He, too, has his critics. Not only has he been accused of stealing the election, but he also has been called a democrat in name only, out of step at a time when one-party states are crumbling around the world. He is the architect of a neo-liberal economic program that he believes will propel Mexico out of a prolonged crisis and into the 21st Century. But his opponents charge that he is doing little to end the poverty that afflicts half of Mexico’s 81 million people.

Despite his many detractors, however, Salinas remains determined to carry out his ambitious program to dismantle the huge government that emerged from the 1910 Mexican Revolution. Thus, two years into his six-year term, El Senor Presidente still finds himself on the campaign trail, selling his presidential vision and seeking legitimacy and popular support.

BEFORE BECOMING President de la Madrid’s hand-picked successor, Salinas spent years toiling as Treasury secretary and Planning and Budget secretary but never held public office. To campaign as he does now, he has had to overcome his natural reserve and button-down manner.

The slight, bald, Harvard-educated economist has demonstrated surprising political savvy on the stump. He has learned to raise his voice and his arms during political rallies. He even elicits an occasional embrace from the suspicious women in braids and aprons who come to hear him speak.

Salinas is unabashedly pro-American in a country where not long ago that was a political liability. He speaks fluent, lightly accented English and does so in public--something his predecessors never dared to do. He also has invited the United States to sign a free-trade agreement, which he will discuss with President Bush during their sixth meeting, scheduled to start tomorrow in Monterrey, Mexico.

During his campaign, Salinas had opposed a free-trade agreement, but a trip to Europe earlier this year convinced him that Eastern Europe was commanding the loans and investments he had hoped would be Mexico’s. He believes that to be competitive in the world market, Mexico must join forces with the United States. Besides opening the nation’s borders to imports and foreign investment, his administration has put Mexico’s banks and most major state-owned companies on the auction block.

“Our commitment to change is unalterable,” Salinas said in a state-of-the-nation speech last month. “The world is experiencing far-reaching transformations in all respects. Nations that do not know how to adapt creatively to the new conditions will not be able to preserve their integrity. Those who do not adapt in time will let the opportunities offered by the new situation pass them by and have to suffer its disadvantages. We have decided to meet those changes.”

Solidarity is the $1.2-billion-a-year apple of Salinas’ eye, a program that he believes will vindicate his economic policy. But critics call the anti-poverty program an “aspirin,” insufficient for easing the pain of his overall plan. This is charity, not jobs, they say, and the kind of populist pork-barrel politics that Salinas supposedly opposes.

“Solidarity is openly pro-PRI, and that’s what bothers people,” says Carlos Ramirez, an editor and columnist for the Mexico City newspaper El Financiero. “They go into communities where people need services and, at least at that moment, the people have to support the PRI. It is delivering services with the face of the PRI. They hand out tortillas, but people need eggs and meat. Instead of giving people a dignified job with a salary and benefits, they give them tortillas.”

Salinas fiercely defends Solidarity against criticism. He calls it a self-help program because states and cities share costs, and townsfolk must contribute with labor or materials. “This is not a populist program because it is not financed by printing money at the Central Bank. It is financed with the privatization of state enterprises,” he says.

While Salinas’ economic reforms have been sweeping, his political reforms have been limited-- perestroika without glasnost , critics say. Salinas has fine-tuned some aspects of the Mexican political system without making fundamental changes to decentralize. As president, he retains the authority to mobilize a national party entwined with the government, to name state governors and to force them to resign, to control most news media and to present legislation to a ruling-party majority in Congress. Vested with such power, Salinas has used it to its fullest. Six weeks after taking office, for example, he ordered the arrest of the corrupt boss of the PRI oil workers union, Joaquin Hernandez Galicia, a leader so powerful that previous presidents would not touch him for fear of national strikes.

What’s more, critics say, Salinas has not hesitated to call in the army during labor strikes and to lean on the Roman Catholic Church for support; both are considered steps backward in Latin America, where Mexico is the only country to have successfully broken the political power of both institutions.

“There is no intention from above to lead Mexico toward a democracy,” Mexico City lawyer Jose Agustin Ortiz Pinquetti says. “First of all, the strong suspicion of electoral fraud has not disappeared every time there is an election. There is more control than ever from the president’s office over information on television and in the large newspapers. And the president’s offers for political openings are more diluted every day.”

After his election in 1988, Salinas announced the end of “virtual one-party rule” in Mexico. And last year, he forced the PRI to recognize its loss in the Baja California governor’s race to opposition candidate Ernesto Ruffo Appel of the conservative National Action Party (PAN). For the first time in 60 years of PRI rule, an opposition governor was to take power. On the same day, however, the applause for Salinas drowned out the clamor in Michoacan state, where the PRI reportedly rigged an election against the leftist Democratic Revolutionary Party (PRD). The opposition victory in Baja seemed to be based more on political expediency than on a push for democracy; it was Salinas’ effort to win legitimacy, form an alliance with the PAN and warn his own stodgy party to shape up.

Since Baja, the PRI has swept most state and local elections, and nearly all the results have been marred by charges of fraud. PRI officials insist that these charges are an opposition tactic to discredit the government. PRI chairman Luis Donaldo Colosio complains that the party is in a Catch-22, where it can win credibility only by losing.

Some elections have led to a spasm of violence. Scores of activists from the PRD have died in armed clashes, shootings and assassinations in Michoacan and Guerrero states. In addition to having suffered electoral violence, several government critics have received anonymous threats, and one, human rights worker Norma Corona, was murdered in Cuiliacan, Sinaloa, in May. Gunmen have been jailed, but the masterminds of her killing have not.

Salinas addresses issues such as human rights when they threaten Mexico’s international image and, therefore, its chances for drawing foreign investment or U.S. support. Ultimately, Salinas’ main concern is protecting his economic program.

During an interview in the high-ceiling splendor of the Los Pinos presidential residence on the edge of Mexico City’s Chapultepec Park, he sits in a cool blue-gray leather armchair beneath a Diego Rivera painting and demonstrates a charm and quick intelligence that come across better in private than before crowds. Still, he remains controlled and aloof--even when countering his adversaries’ charges that he is repressive and authoritarian.

“The greatest proof of the climate of freedom here is that people say what they want. It seems to me that the critics who belong to the opposition are trying to explain why their party is losing ground, and they want to blame causes beyond their control rather than their own deficiencies,” Salinas says.

“It’s such a paradox. For years, they insisted that we act against those who committed fraud, who participated in drug trafficking, who attacked journalists and committed corruption. And then, when we do it, they act surprised.”

IN A VERY REAL SENSE, Salinas was bred to be president. Born in 1948, he was reared in Mexico City among the country’s political elite. His father, economist Raul Salinas Lozano, was Commerce secretary in the 1960s under President Adolfo Lopez Mateos; the young Salinas made his first trip to Los Pinos then, to attend a concert of Mozart. Cabinet ministers, famous journalists and politicians frequented the Salinas household in the colonial Coyoacan neighborhood.

One family friend was impressed by the “atmosphere of books and permanent reflection” at Salinas’ home: “I only knew three families that had a library at home, and the Salinases were one,” says Luis Martinez, who taught Salinas at the National Autonomous University of Mexico and is now a federal senator from Oaxaca state. “I had the impression that their father prepared them as the Kennedys might have prepared their children.”

Raul Salinas and his wife, Margarita, also an economist, sent their five children to public schools, but at home the family enjoyed an upper-class life. They vacationed in Acapulco or at their country residence in Agualeguas, Nuevo Leon. The children were given piano lessons and horseback-riding instruction.

Congressman Gonzalo Martinez Corbala, another family friend, gave Salinas and his older brother, Raul, their first political jobs, clerkships in the federal Chamber of Deputies, when they were teen-agers. “He claims he used to carry my briefcase, but it’s not true,” Martinez Corbala says with a laugh. On the contrary, the boys learned the ins and outs of the Mexican legislative branch from one of its experts.

Salinas attended the National University at the height of the student movement, when youths around the world took to the streets to protest the existing political order. In July, 1968, striking students shut down the university, demanding the release of political prisoners, changes in the penal code and dissolution of the riot police. Their protests were an embarrassment to the government, which was preparing the country to host the 1968 Olympics. A police crackdown on the students fueled the demonstration. But on Oct. 2, the government put a sudden and bloody end to the movement at Tlaltelolco Plaza in downtown Mexico City.

A member of the PRI since 1966, Salinas remained on the sidelines of campus activism. “He respected it, but it was clear he had another focus,” says Gustavo Gordillo, then a student leader from the economics school. “He was more interested in studying and finishing his courses.”

For Salinas’ generation in Mexico, Tlaltelolco was the sort of experience that the assassination of President Kennedy and the student killings at Kent State University were for young Americans. About 10,000 demonstrators were gathered at the plaza when, as helicopters circled overhead, hundreds of soldiers opened fire with automatic weapons.

The government officially reported 29 dead, but witnesses put the toll at closer to 300. The nation was stunned.

Salinas first learned of the massacre from a journalist friend. “There was a lot of confusion,” the president recalls now. But what did it mean to him? “I think for all of us who grew up during those years, we saw the importance of negotiation, of dialogue, of conciliation.”

The cautious conclusion that he draws from the massacre is vintage Salinas, but also it is typical of the Mexican political system. A sitting president does not publicly condemn his predecessors, the men who bequeathed him the office.

In college, Salinas befriended some of the brightest students and faculty members, people who could challenge him and help his career. Mexican politics are characterized by what political scientist Rodric A. Camp, an authority on the country’s ruling elites, calls “cliques, or camarillas. “ A smart politician cultivates personal relationships as a means of accumulating power. He surrounds himself with loyal and hard-working people who rise as he rises in public office, or fall when he falls. Later Salinas tied his fortunes to De la Madrid, who eventually repaid his loyalty by naming Salinas president.

Likewise, many of Salinas’ college friends now work in his government: His closest classmate, Manuel Camacho, is regent, or mayor, of Mexico City and one of those rumored to be in line to succeed the president; Emilio Lozoya, who went to Harvard as well as the National University with Salinas, is head of the social services system; Gustavo Gordillo is an assistant secretary of agriculture, and Hector Araujo is a leader of the PRI organization for peasants and farmers.

But, through his father’s career, Salinas also learned what it was like to be an outsider. Raul Salinas was close to President Lopez Mateos and had been mentioned as his possible successor in 1964. When Lopez Mateos selected Gustavo Diaz Ordaz instead, the elder Salinas was relegated to la banca , literally “the bench,” a no-man’s-land in which politicians are expected to wait quietly and patiently to be called for another turn at power.

From that experience, Salinas says he learned “that in Mexico public posts are not eternal, fortunately, and that as hard as it was in my family’s case, it was still a necessity for rotation and circulation.” But he acknowledged that he and his family learned who their true friends were.

During his years at the National University, Salinas invited classmates to suit-and-tie luncheons with his father and influential friends in an atmosphere akin to a European salon. With teachers and political luminaries, they argued the issues of the day. They were progressives, criticizing President Diaz Ordaz for sending the army into the university and then-Interior Secretary Luis Echeverria for using police to repress student demonstrations.

“There was very direct criticism of the autocratic style of Diaz Ordaz,” says Luis Martinez, one of Salinas’ professors.

As the presidential succession neared, the consensus at the Salinas lunches was that “we didn’t see anyone with the stature to confront the problems ahead,” says another friend, who did not want to be identified.

Word of the meetings reached Echeverria, who later was Diaz Ordaz’s choice for president. “The government monitored our meetings. I’d like to think they were only watching from the outside,” says Martinez. Adds the other friend: “Someone was watching. I was told we’d gone too far.”

Years later, ironically, Salinas’ own critics would similarly accuse him of being authoritarian and spying on his adversaries.

In the early 1970s, when most young men preparing for political careers studied law, Salinas followed in his father’s footsteps, studying economics in graduate school at Harvard. Family friend Hugo Margain, the Treasury secretary, approved the government scholarship Salinas received to study abroad.

Salinas, then 24, and his wife, Cecilia Occelli, went to Cambridge, Mass., where their daughter--the first of three children--was born. Harvard history professor John Womack Jr. recalls teaching Salinas, who he says believed then that the Mexican Revolution stood for nationalism, sovereignty and justice.

“His father’s generation had a very strong feeling that the Mexican state could and should do things for the Mexican people,” Womack says. “One thing Salinas seems to be trying to do now is to make sense of the Mexican Revolution at the end of the 20th Century. The world isn’t the same as it was in 1910 or even 1945.”

Although Salinas and Emilio Lozoya, his friend from home, focused most of their attention on their studies, they were intrigued by two political upheavals: the Watergate scandal and the coup in Chile that ousted President Salvador Allende. “We were struck by the autonomy of the judicial branch during Watergate,” Lozoya recalls. They claim not to have been as shocked as Americans were by the high-level involvement in the Watergate break-in and cover-up. Ever the statesman, Salinas says only, “Maybe outside observers were less naive about the United States.”

The coup in Chile, on the other hand, shook them profoundly. It offended them as Latin Americans. “For us, it was very sad,” Lozoya says. “It was the overthrow of a democratic regime, and it was a step backward in the political (development) of Latin America.”

Salinas earned a master’s degree in public administration in 1973 and a Ph.D. in political economy in 1978. While he researched his doctoral thesis on farm production and political participation, he seems to have had his most intimate contact with the poor of Mexico. For several months, Salinas lived and worked with peasant families in Tlaxcala state. Asked what he learned during that period, Salinas says, “a fundamental lesson, the generosity of those who have the least, because they share not what is left over but what is lacking.”

After Harvard, Salinas worked his way up through the Treasury Ministry until 1979. Then, Planning and Budget Secretary Miguel de la Madrid gave him a prominent position in his ministry. Four years later, as president, De la Madrid named Salinas his Planning and Budget secretary.

Columnists and those in the political know first mentioned Salinas as a potential presidential candidate on Nov. 20, 1983, when he was selected to deliver the prestigious annual speech celebrating the Mexican Revolution. The biggest misstep a Mexican politician can take is to actively pursue a job, especially the presidency, so Salinas kept his head down and worked hard at the posts De la Madrid gave him. Nearly four years would pass before De la Madrid, in his own attempt at modernization, announced the six people he was considering as PRI’s choice for president. Salinas was among them.

Perceived as the architect of De la Madrid’s austerity program, Salinas was not a popular candidate. Labor leaders began to grumble openly about him while competitors maneuvered behind the scenes. As a result, one of the most sensitive incidents in Salinas’ personal life became one of the most controversial moments of his political career. A book titled “An Assassin in the Presidency?” was published anonymously. It contained details of the accidental death of a maid in the Salinas home when Carlos Salinas was 3. According to the book, Salinas, his brother Raul and a young friend found his father’s loaded shotgun and fired it, killing a maid who was looking after them.

The government managed to quash the story in most newspapers and to collect most copies of the book. But word leaked out, and rumors ran amok: Was it true? Who put out the book? The first explanation was that it was the work of then-Interior Secretary Manuel Bartlett Diaz, considered Salinas’ chief rival for the presidency. Salinas called on De la Madrid to discuss the problem. “It hurt him, and he was furious,” says one of Salinas’ close friends. “But he responded politically.”

That afternoon, in one of the nicest restaurants on Paseo de la Reforma, where they were sure to be seen by several members of Mexico’s clase politica , who were sure to repeat what they saw, Salinas met with Bartlett for a drink. A friendly, no-hard-feelings, Bartlett-didn’t-do-this drink. Later, it was said that Joaquin Hernandez Galicia and the PRI oil workers union had financed the book. After Hernandez Galicia all but declared his support for opposition candidate Cuauhtemoc Cardenas during the presidential campaign, and after Salinas ordered his arrest, this became the accepted version of the book’s origin.

In October, 1987, De la Madrid’s party chief announced that Salinas was his candidate for the presidency. Salinas was with his family when he received the news. His daughter, Cecilia, then 13, was joyous: “The truth is, my father has worked very hard. He doesn’t deserve less,” she was quoted as saying. In an interview with the Mexico City newspaper Excelsior, the usually reserved Salinas described the emotional scene. “My father stood up crying--I had only seen him cry twice in my life--he hugged me and I was scarcely able to say to him, ‘It took us 25 years, . . . but we made it.’ ”

SALINAS’ OPPOSITION calls the July, 1988, election his “original sin.” Officially, Salinas won just over 50% of the ballots, far less than any other president of Mexico. But supporters of PRI defector and leftist leader Cuauhtemoc Cardenas claim that their man won the vote, and because of the contested results, Salinas has had to share the limelight with Cardenas at home and abroad.

Several people who know Salinas say that the tall, stoic and dark-skinned Cardenas is his one obsession, his nemesis. They say he maintains a visceral dislike for the man who turned his back on the ruling party to oppose him. Many in the opposition believe that attacks on Cardenas’ party are Salinas’ personal revenge and that he will never permit the PRD to grow. Cardenas, the son of populist President Lazaro Cardenas, who served from 1934 to 1940, continues to stump the country to build his party, while denouncing Salinas and his policies.

Few politicians have dared to criticize a sitting Mexican president as Cardenas has. “The system is authoritarian, but he who exercises power has the capacity to make it more or less autocratic,” Cardenas says. “I believe there has been a decision made centrally to destroy all that is the PRD. There is no place for any real opposition with any real risk.”

No president in modern times has faced such a prolonged challenge to his authority as Salinas. But it is Salinas who occupies the National Palace and Cardenas who, in effect, is banging on the back door.

Salinas appears confident that he will make a success of his presidency. He watched as his South American colleagues, former President Alan Garcia in Peru and President Carlos Menem in Argentina, came to power as heroes only to be dragged down by their failure to stem their countries’ economic ruin. Salinas’ fate has been the opposite. Mexicans held few illusions about him to begin with, but he can claim moderate successes in the economy, and several polls show Salinas to be surprisingly popular.

First, as Planning and Budget secretary and then as president, Salinas brought annual inflation down from a rate of 160% in 1987 to 19% last year, although now it is creeping back up to 30% per year. The government’s punishing program of wage, price and government-spending controls has impoverished workers but not provoked the kind of street riots that Venezuelans launched against President Carlos Andres Perez’s austerity program last year.

The Salinas administration negotiated the first debt-reduction agreement with commercial banks to lower Mexico’s $100-billion foreign debt. The accord came nowhere near Mexico’s goal, but it lessened the overall debt by $7 billion and lowered annual interest payments by $1.6 billion. More important, it virtually eliminated debt as a damaging political issue for the government.

It is difficult to determine whether human rights abuses are worse now than they were under past administrations or if record-keeping is more rigorous and protests more widespread. National and international human rights groups, including the U.S.-based Americas Watch, have condemned the Salinas government’s record on police torture, disappearances, political violence and violations of press freedoms.

In response to growing pressure, Salinas named a high-level National Human Rights Commission in June with just enough independent members to give it credibility. In October, he replaced his hand-picked drug czar, Javier Coello Trejo, under whose leadership federal police were accused of widespread abuses. Salinas also took major steps to curb police torture by proposing legislation that would limit the use in court of a suspected criminal’s confession.

Salinas’ new drug czar, Jorge Carrillo Olea, is likely to provoke fewer human rights problems for the administration, and Carrillo has taken great pains to reassure U.S. officials that Mexico will continue to fight cocaine trafficking across its borders.

On the political front, however, Salinas still is lagging. Elections in the state of Mexico this month once again were marked by opposition charges that the government committed fraud. In September, the PRI’s most outspoken dissident pulled out of the party after asserting that it was undemocratic and unwilling to separate itself from the government. Rodolfo Gonzalez Guevara, head of the Critical Current faction of the PRI, left after the party’s 14th national convention failed to produce the internal changes reformers had been pushing for.

In response, Salinas dug in his heels. During the party convention, he likened criticism of his government to treason, accusing dissidents of using “adjectives without arguments, without considering the damages this activity can signify for the country. . . . (Their) irrational (behavior) is objectively converting them to allies of those who want to trample sovereignty.” He said that all opinions were welcome within the party “except those that, speaking of democratization, in reality promote its division.”

Mexicans want the kind of strong leader that Salinas has shown himself to be, but they also want democracy and economic improvements. Bankers and economists laud Salinas’ program to restructure the economy, but the optimistic numbers have yet to produce obvious benefits for most Mexicans.

Thus, the looming question in Mexico is how much its people will tolerate. While Salinas waits for his economic policy to pay off, he continues to court public opinion feverishly. He took 48 trips in Mexico last year and is expected to top that this year with his Solidarity tour. Solidarity is delivering badly needed services to the poor, but it is unclear how much political goodwill it is buying for Salinas and the ruling party.

For example, in Chalco Valley, on the outskirts of Mexico City, more than 1 million people live in a dusty slum with unpaved streets, no parks and few trees. Solidarity installed street lights, electricity for about 120,000 families and wells of potable drinking water throughout. Water spouts were installed in many houses. But residents remain skeptical.

In the Jardin Market of Chalco on a recent afternoon, warehouse worker Juan Mendez and barber Arceni Vazquez ruminate over the president’s record. Vazquez didn’t vote for Salinas in 1988 and still wouldn’t vote for him. “The fraud goes back too far. The PRI has been in for so many years, and elections are just to fool people,” Vazquez says with a disgusted click of his tongue.

Mendez isn’t so sure. He also didn’t vote for Salinas but thinks he would do so if the election were held now. The president is strong, and has done much for Chalco. After all, Mendez has water and electricity now.

“Ah, but there’s four more years in this administration,” Vazquez warns. “They all fill their pockets in the last two years before they leave.”

Mendez nods knowingly. “This government has given us something,” Mendez says. “I hope we can say the same thing at the end.”