Mexican Government, Rebels Make Peace Moves : Latin America: Chiapas guerrillas say they will return to bargaining table. In turn, the army will withdraw from key towns.

Breaking a week of trauma, tension and fear, Mexico appeared on the path toward peace Wednesday, after Indian rebels agreed to negotiate through an official Roman Catholic mediator and President Ernesto Zedillo ordered the army to withdraw from two key towns in the southern state of Chiapas.

The concessions by the Zapatista National Liberation Army and the government came amid escalating threats of guerrilla war in advance of the first anniversary of the rebels’ New Year’s Day uprising, which left at least 145 people dead in 12 days of fighting.

In his first statement since declaring an 11-month truce void and deploying hundreds of armed fighters throughout the state, rebel leader Subcommander Marcos “saluted” Zedillo’s government for naming a commission headed by Chiapas Bishop Samuel Ruiz to mediate the conflict. Marcos also accepted Zedillo’s trusted Interior minister, Esteban Moctezuma Barragan, as government negotiator.

In response to Marcos’ statement, made in a letter dated Christmas Day but released by the church late Tuesday night, Zedillo said that the Mexican army, which has sent a huge force of armor, artillery and troops to Chiapas in recent days, was withdrawing from the towns of San Quintin and Monte Libano. Both border the Lacandon rain forest, which is the Zapatistas’ remote stronghold.

“This is another example of the willingness of President Zedillo to find paths to build a just and lasting peace,” the Interior Ministry said in a midnight communique reacting to Marcos’ new willingness to negotiate.

Marcos’ silence in the week after his armed, masked fighters seized dozens of villages and blockaded eight major highways in the state on Dec. 19 fueled an economic disaster that drove the Mexican peso into a tailspin and shattered confidence in Zedillo’s month-old government.

With the loss of an additional 10% of its value at the close of trading Tuesday, the peso had lost a total of nearly 40% of its value in a single week after Zedillo, blaming the Zapatistas for a “climate of uncertainty,” stopped defending the currency. The move was intended to arrest a sharp decline in the nation’s stock market and make Mexico’s export industries more competitive.

On news of the peace moves in Chiapas and the pending arrival in Mexico City of a team of economists from the International Monetary Fund, the peso rallied somewhat Wednesday, closing about 10% higher than a day earlier.

But most analysts said the markets were waiting for public declarations from Zedillo, a Yale-educated economist, on how his government will deal with the crisis.

As Mexico approached another key Jan. 1 anniversary--the day the North American Free Trade Agreement took effect--sources said Zedillo on Monday will make his first public comments on the fall of the peso. The speech will be a major economic address, they said.

The Zapatista agreement to return to the bargaining table after several months of deepening mistrust on both sides could help stabilize the currency and restore some confidence in the national economy.

Negotiations have been suspended for months, since before the elections in August that brought Zedillo to power along with a governor in Chiapas who the rebels insist won through fraud.

Government sources said they were encouraged by the fact that Marcos’ letter made no mention of earlier Zapatista demands that Gov. Eduardo Robledo Rincon resign and that Mexico City recognize a parallel, self-declared “government in rebellion” headed by opposition candidate Amado Avendano.

Avendano, a lawyer, journalist and social activist who sympathizes with the rebels’ demands for sweeping democratic reform and equal rights for indigenous Mexicans, is likely to play a key role in the new round of peace talks with the Zapatistas.

Particularly dramatic, Mexican political analysts said, was the timing of the joint concessions late Tuesday night.

Although not a single shot has been fired by either the army or the Zapatistas since they agreed to a cease-fire Jan. 12, the massive army deployment this week in a state where hundreds of armed guerrillas were positioned on mountainsides led many to fear a resurgence of fighting timed to coincide with the Zapatistas’ New Year’s anniversary.

After an evening meeting that lasted nearly four hours before the concessions were announced, Bishop Ruiz’s National Intermediation Commission said that the army deployments had pushed the state to the brink of war.

And, in a statement issued just an hour before Marcos’ concessions were made public, the commission declared, “We express our readiness to cooperate with any alternatives that will bring the peace that Mexican society so desires.”