NEXT STEP : Can Zedillo Keep the PRI From . . . : FALLING APART? : The president’s reforms threaten the way Mexico’s ruling party does business.

Huddled on the patio of a colonial hacienda, half a dozen young, professional campaign workers did a post-mortem over tequila and cigarettes. For three months, they had tirelessly organized rallies, worked the phones and blanketed the state of Guanajuato with campaign posters for the party that has ruled Mexico for six decades.

They are among the professionals who have powered the Institutional Revolutionary Party, or PRI, machine to victory after victory in Mexico. They are the heirs to the spoils that inevitably have come with PRI power and PRI victory. But now, as they assessed the ruling party’s most devastating defeat in 66 years, they faced a personal future that may well be as bleak as their party’s.

The day before, in a critical vote in this pivotal political year for Mexico and the PRI, the world’s longest-ruling party, the voters of the city and state of Guanajuato had rejected their gubernatorial candidate, Ignacio (Nacho) Vazquez Torres, by an overwhelming 2-1 margin. And in the wake of that defeat, the young professionals were disappointed and hurt. But mainly, they felt betrayed--not just by the voters, but by the national leaders of their own party.

“How can they take this so lightly?” one asked angrily, after learning that the nation’s Yale-educated president, Ernesto Zedillo, whose election they had worked for, actually had telephoned the opposition candidate to congratulate him on his victory.

“Because they never stayed up all night hanging campaign posters,” the PRI activist continued. “While they were off studying at Harvard and Yale, people like Nacho were out in the trenches campaigning--something they know nothing about.”

As those around the table nodded, another loyalist added a bitter bottom line that bodes ill for the party that has been synonymous with the state.

“And what does this say to us? I want to be a federal deputy. But when my time comes, will these scummy technocrats do the same thing to me that they did to Nacho?”

Reflected in the disillusionment of these up-and-coming politicians, who with others elsewhere form the inner core of a party clearly in crisis, is nothing less than the basic question: Can the PRI survive the clean elections and multi-party democracy that Zedillo has promised?

To fulfill that pledge, Zedillo is trying to separate the presidency from the party in an operation as delicate as parting Siamese twins.

At stake for the PRI this year are governorships, state legislatures or mayoral seats in nearly a fifth of Mexico’s 31 states. Already, the party has lost badly in Guanajuato and Jalisco. A narrow win by an old guard PRI hard-liner last week in Yucatan is being sullied by stiff legal challenges by the opposition, which charges that the PRI won through fraud and coercion, time-honored electoral traditions in Mexico.

In the months ahead, the PRI faces ballot challenges in the states of Oaxaca, Michoacan, Puebla, Durango and Baja California, where the governor’s seat is up for grabs.

And in the years leading up to presidential elections in the year 2000, the PRI will face election tests that raise the prospect of the PRI losing--for the first time--the presidency, the authoritarian power and the promise of patronage that has allowed the party to rule for six decades.

For most of that time, a PRI nomination for political office was tantamount to election.

The guarantee of a political job in government was the hueso , the bone, that went to party stalwarts for getting out the vote and maintaining party discipline: working hard and waiting patiently until, as the party worker in Guanajuato put it, their turn came.

Last week’s resounding defeat in Guanajuato--the fourth governor’s mansion the PRI has lost in six years--undeniably underscored how much those rules have changed. And, arguably, the change was just as evident in the southern state of Yucatan.

“Even if the PRI sustains the victory in Yucatan, sophisticated young politicians recognize that it barely squeaked by,” historian Roderic Camp said.

In last week’s results, officially ratified by the election commissions in both states Sunday night, is a critical message, he added: “Winning and losing has become part of the game for what had formerly been the dominant party.”

He predicted that the revolutionary transformation of Mexican politics into a risk-taking business will have a tremendous impact on the type of people attracted to public life and their motives.

“In the future, there will be no guarantees,” said Camp, a veteran analyst of Mexican politics at Tulane University. “People will have to choose a party they believe in and go with that party, win or lose.”

Politics necessarily will become more ideological, and more young people may be attracted to opposition parties if those parties have a chance of winning. And, because they also will have a chance of losing, politicians are more likely to take up second careers as entrepreneurs or academics so that they can earn a living when they are out of office, Camp said.

But for the traditional PRI and the hard-liners universally known here as “dinosaurs,” that process is fraught with a sense of doom.

The PRI, in fact, has had no set ideology through its decades in power. The party survived partly by controlling the levers of power--and the polls--but also by reinventing itself time and again to match the times.

What began as a fiercely nationalist and socialist institution after the Mexican Revolution of 1910 is now a bastion of Harvard- and Yale-educated capitalists and macro-economists, who are privatizing many of the same industries their party founders had nationalized.

The new PRI’s lack of ideology, combined with Zedillo’s promise to separate the party from the presidency for the first time, has made it an easy target for Carlos Castillo Peraza, the party’s No. 1 nemesis.

Castillo is president of the opposition National Action Party, or PAN, which swept the PRI from power in Guanajuato, Jalisco and three other states in recent years. He describes the PRI as a headless body, flailing in its death throes.

“The PRI does not know how to be a party not headed by a president, by presidentialism, and this has everyone scared,” Castillo said in a recent interview.

“The PRI is like a strong body without a head. It’s like its old muscles have a nervous memory. It has the capacity to break and to destroy but not to create new programs or guide the country.”

This was an image Castillo sought to reinforce as he barnstormed Yucatan with a life-sized black coffin bearing the PRI’s symbol during the final week of campaigning in the strategic southeastern state last month.

“This party is dying,” he shouted at rally after rally, hoisting the coffin above his head. “Sixty-six years? Enough already!”

Castillo’s criticism is echoed within the PRI by activists such as Ramiro de la Rosa, who at 26 is one of the most outspoken advocates for reform inside the ruling party.

“We lack leadership in the party,” he said. “Our leaders have never done any grass-roots work. They just move from government jobs to party jobs.”

The attempt to form local leaders through Solidarity--the previous administration’s community-based anti-poverty program--was a failure, he said. Irapuato, a Guanajuato township that received huge funding from Solidarity, voted 3-1 for the opposition.

“We see these people are only leaders when they have money to offer,” said De la Rosa. “The great fiasco of the PRI is that it has no proposal for change.”

Still, prognoses of the PRI’s demise may be premature, according to many analysts within the party and outside it.

They acknowledge that Zedillo’s hands-off policy on party matters, along with his promise to deny the party direct access to his presidency, have deepened internal party splits between the reformers and the dinosaurs. Yucatan was a clear illustration, they said.

“I believe Dr. Zedillo told the PRI: ‘Stay over there’--a healthy distance,” said Victor Manzanilla Schaffer, a former Yucatan governor and now a member of the party’s reform wing.

Manzanilla said the deep poverty in his home state has made it more difficult to break the patronage system there than elsewhere in Mexico. “So the National Executive Committee of my party came away with the idea that the only formula to win was with Victor Cervera. . . . They’re desperate for a win.”

Cervera is widely considered a key member of the party’s dinosaur faction, and his narrow victory in last week’s election instantly fueled fears that the party’s reform wing was weakened as a result--particularly after Zedillo the reformer called Cervera the dinosaur to congratulate him.

But, amid the continuing opposition legal challenges there, PRI insiders said they believe that Cervera’s triumph was an aberration. In time, they said, the reformers will have to prevail if the party is to survive.

And once again, they said, the PRI will have to reinvent itself, this time as a party tailored to 21st-Century pluralist politics that will no longer require patronage-seeking foot soldiers such as the embittered professionals in Guanajuato.

“The defeat in Guanajuato demoralized the PRI,” said De la Rosa, the reform advocate. “But it is the fault of those within the PRI who do not want to change, who want to keep winning with the same old methods and candidates of the same old cut.”

In contrast, PAN is winning because its grass-roots militants have a different attitude, he said. “They don’t want jobs,” he said. “They want to win elections.”

For that reason, De la Rosa said he believes that PAN represents a better alternative for aspiring politicians, especialaly those who share the party’s center-right ideology.

“PAN is developing politicians, while the PRI is developing bureaucrats,” he said.

And those PRI activists who might have become skilled politicians are dropping out because of losses such as that in Guanajuato.

That too was reflected in the conclusion the group of PRI pros reached at the end of their post-election wake at the Guanajuato hacienda. They decided to take their skills where they would be appreciated.

They plan to form a U.S.-style political consulting firm--just in time to sell their services to the highest bidder before the next major elections.

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Voting for a Future

Mexico is having a busy political year. Ten states have upcoming legislative elections. Baja California Norte will also elect a governor.

* JULY 9

Chihuahua

Michoacan

* AUG. 6

Baja California Norte

Durango

Oaxaca

Zacatecas

* NOV. 12

Puebla

Sinaloa

Tamaulipas

* NOV. 19

Tlaxcala

Compiled by Times researcher MICHAEL D. ALVAREZ

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Past Paved With Revolution

Key dates in Mexico over the past two centuries:

* 1810

Father Miguel Hidalgo declares Mexico’s independence from Spain; achieved in 1821.

* 1847

Half its territory lost in Mexican-American War.

*1877

Porfirio Diaz begins 33-year dictatorship.

* 1910

Francisco L. Madero leads revolution overthrowing Diaz.

* 1914

Pancho Villa and Emiliano Zapata help take capital.

* 1917

Revolutionary constitution adopted.

* 1929

National Revolutionary Party is formed to promote power sharing.

* 1934

Land distribution to farmers begins.

* 1937

Ruling party is renamed Institutional Revolutionary Party.

* 1938

Foreign oil company property is taken over.

* 1968

Students are rounded up after unrest threatens to disrupt Olympics.

* 1970s

Major new oil deposits are found along Gulf of Mexico coast.

* 1982

Mexico sets off a Third World debt crisis by telling international banks that it must default on a payment.

* 1988

Cuauhtemoc Cardenas is defrauded of victory after the most successful opposition presidential campaign in nearly six decades.

* 1989

In Baja California, Ernesto Ruffo of the National Action Party is the first opposition party candidate elected state governor in modern Mexican history.

* 1994

Rebels in Chiapas rise up; two key leaders assassinated.

* 1995

Value of the peso plunges.

Sources: World Book, Times Mexico City bureau