Mexican Rebels Reject Peace Plan : Latin America: Action by Indians spotlights potential for instability as presidential election nears. But both sides insist they will honor cease-fire.

Indian rebels overwhelmingly rejected the Mexican government’s peace proposal, saying that it does not fulfill their political, economic and social demands, but both sides rushed to provide assurances Sunday that resumed fighting is unlikely.

The rejection puts the government in a tight spot two months before the Aug. 21 presidential elections. Despite a 6-month-old cease fire, the rebellion--which began New Year’s Day in the southern state of Chiapas and left at least 145 people dead--is a sign of continuing potential for instability in a country whose leaders have tried to portray it as an emerging economic force.

The rebellion is a reminder of the impoverished rural communities that have been left out of Mexico’s widely acclaimed economic modernization. It is also a reminder that Mexicans might seek to express their will if the party that has ruled Mexico for 65 years tries to maintain control through vote fraud.

Rebel leaders had hinted earlier that the proposal, made in March after nine days of negotiations, probably would not be acceptable to the rank-and-file members of the Zapatista National Liberation Army. A Zapatista delegation signed the proposal on the condition that its final approval was subject to a vote of everyone who supported the insurrection, the estimated 3,000 fighters as well as about 20,000 suspected civilian supporters.

After a complex consultation process, nearly 98% of those voting rejected the proposal, according to three rebel communiques dated Saturday. Fewer than 4% of the voters said they wanted to resume combat, and the communiques said the Zapatistas would fight only if attacked.

The government responded by trying to allay fears. President Carlos Salinas de Gortari said in a statement that the Mexican army will continue to observe a cease-fire in effect since Jan. 12. Peace envoy Manuel Camacho Solis returned immediately to Chiapas to try to reopen peace talks.

Rebels said they wanted a broader, national coalition to discuss issues that they say are important across Mexico. For that reason, they rejected the continuing intermediation of Roman Catholic Bishop Samuel Ruiz.

“Unfortunately, the historical shortsightedness of the supreme government prevents it from seeing that failure to submit to the drive for democracy will bring painful confrontations with predictable consequences for the nation,” one of the rebel communiques stated.

In an earlier interview, rebel spokesman Subcommander Marcos had said that the Zapatistas have received letters of support from Indian and human rights groups throughout the country and that they would like to include those groups in future talks.

After they briefly invaded several county seats near the Guatemalan border on Jan. 1, the rebels presented a list of 10 areas of contention: work, land, housing, health, education, independence, liberty, democracy, justice and peace. They then withdrew into a despoiled area of the Lacandon Rain Forest.

The government replied with a 32-point plan that largely ignored demands for democracy, liberty and justice, focusing on economic issues in the area under rebel control. Separately, Mexico’s three major political parties negotiated a political and electoral reform package.

The Zapatista delegates explained the government proposal during a long meeting in four indigenous languages with representatives of villages under their control. The representatives then took the proposals to their villages for a vote.

Reporters were allowed to watch the first phase of the consultations but could not be present for the voting in the villages.

The rebels also said that they will allow voting in August in the areas they control, which is roughly 17% of one Mexican congressional district, in a sign that they expect the renewed talks to drag on through the presidential election.

But it was not clear whether voting would be legal there because the deadline for picking up voter credentials was Sunday and citizens in rebel territory have been unable to get credentials.

Election officials had said earlier that they probably will call a special election in that district.