Mexican President Marks His First Year in Office Amid Crises : Latin America: Some say Ernesto Zedillo is weak. Others declare he has a vision.

President Ernesto Zedillo was less than a month into his job when he faced a critical decision, a choice that would help determine how the Yale-educated economist would steer this nation of 90 million through perhaps its most painful year in modern history: Should he allow one of his best, most trusted friends to resign from his Cabinet?

Jaime Serra Puche was Zedillo’s finance secretary and a Yale classmate from the late 1970s. Powerful money managers worldwide blamed Serra for bungling the Dec. 19, 1994, devaluation of the Mexican peso, which triggered Mexico’s worst financial crisis in more than a decade. Billions of dollars in investments had fled the country in a week, and Serra’s trip to try to placate bankers and brokers in New York had failed.

“On the plane home, Serra said flat out, ‘I’ve got to resign. These people don’t trust me anymore. The president has got to let me go,’ ” a former aide recalled. “The next morning, Serra handed the president his resignation.”

Zedillo refused to accept it. Every day for a week, as the Mexican economy continued to plummet, Serra begged Zedillo to fire him, aides say. Every day, the president refused.

Finally, a week later, Zedillo accepted the inevitable. Grim-faced, the president announced his friend’s resignation. Months later, as the economy continued toward collapse and lawlessness broke out in pockets of Mexico, Zedillo was forced to accept the resignation of the only other friend he had placed in his Cabinet, Interior Secretary Esteban Moctezuma.

Today, a few weeks shy of his 44th birthday and with the lowest popularity ratings of any Mexican president in recent times, Ernesto Zedillo Ponce de Leon marks the first anniversary of his stormy presidency politically isolated and more experienced in crisis management than perhaps any Mexican leader of the modern era.

After a year that analysts say will change the political, economic and social landscape of Mexico for decades, Zedillo’s aides, friends, former teachers and critics say the man most responsible for those changes has been altered too.

“Obviously, all this has had an effect on him,” said a senior aide. “But I can’t think of a Mexican government at any point in our history that has had to manage so many crises in so many different areas in so short a time as President Zedillo’s. It is a lonely office now. But, for the president, this has been a year of experience, a year of leadership and a year of making decisions--sometimes correct, sometimes not--no matter how unpleasant they may have been.”

Zedillo--and what his aides say is his vision of a new Mexico no longer governed by the decades-old dictatorial system -- may have compounded, even created, many of the crises that marked his first year in office. Unlike his predecessors, Zedillo has remained stubbornly aloof from key state elections that built a new power base for Mexico’s political opposition and pushed his ruling Institutional Revolutionary Party toward dissolution. Aides call it “reform of the state”; critics call it a political crisis.

Zedillo also has dug in behind free-market macroeconomics and a harsh austerity plan that won him nearly $50 billion in international credit--but the open-market policy allowed Mexico’s financial markets to fluctuate wildly. The nation was driven into a recession so deep that it cost 1 million Mexican jobs. Aides insist that, without such policies, Mexico’s economy would have collapsed; critics say it still could.

Most dramatic has been Zedillo’s break with a six-decade-old “code of silence” among Mexico’s political elite that previously protected officials from prosecution. He has jailed Raul Salinas de Gortari, his predecessor’s older brother, on murder charges. Raul Salinas is also under investigation for possible drug-money laundering--a case Zedillo is using, analysts say, to show this nation that he wants to end an era of impunity for Mexico’s ruling class.

Zedillo already has ceded vast presidential powers to the nation’s lawmakers, its governors and even his own Cabinet ministers. That has laid the groundwork for a new era of federalism and a balance of power. But it also has shaken the traditional ruling structure of Mexico and incurred the wrath of ruling party hard-liners. And foreign and domestic investors have viewed him as weak and indecisive.

In fact, analysts see an apparent contradiction built into Zedillo’s policies and his bookworm, slide-rule style: Can a man who is deliberately weakening the presidency still govern a nation accustomed to strong leaders?

In the halls of power, some question Zedillo’s decisiveness. On the streets, many Mexicans view him as a marionette, his strings pushed and pulled by a hidden power--perhaps by the United States, which bailed out the Mexican economy during Zedillo’s most critical hour. But those close to him say there is more to Zedillo than has met outsiders’ eyes in his first year in office.

“I think he actually is ruling Mexico, but not everyone likes what they’re seeing,” said Sergio Sarmiento, a political analyst and commentator who has met privately with Zedillo once a month since the president took office last Dec. 1. “It takes a lot of courage to maintain an open market system with all the pressures that he--and the Mexican people--have suffered. It takes a lot of courage to accept all the opposition victories the ruling party has suffered. The point is, yes, he’s a nerd, but he’s a good nerd.”

Zedillo’s critics are less sanguine. “President Zedillo has broken all the rules simply because he doesn’t know what they are,” political scientist Denise Dresser concluded a few months into his administration. “He doesn’t come from the elite political class. His whole background and his perspective are different.”

Zedillo was born into crushing poverty in the border town of Mexicali. “He was very poor,” recalled Celia Hernandez, who taught Zedillo in primary and secondary school. “He’s never been presumptuous . . . and he still isn’t.”

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Years later, when Zedillo had risen from his humble roots to serve as budget secretary under his predecessor, President Carlos Salinas de Gortari, Hernandez said Zedillo indicated just how central a role his poverty played in his childhood: “He told me, ‘I always tried to be the best so the other kids wouldn’t discriminate against me.’ ”

That apparent inferiority complex was grounded in an utterly unassuming youth: Zedillo ran the 100- and 200-meter sprints; he was elected president of the school cooperative “because he was so responsible,” Hernandez said; he wrote for the newspaper at Mexicali’s Public School 18; his studies were copious and his grades above average; his physique was so slight that teachers nicknamed him “wheat stalk,” and young Zedillo was almost obsessively neat and clean.

“His mother was very strict--she let him off at school and she came for him every afternoon,” Hernandez recalled. “He always came to school very well scrubbed. And he always wore his tie. He never took it off even to play when the other kids took off their ties. If his shoes got dirty, he cleaned them with a rag. And he never liked fights; he never liked violence.”

Zedillo’s youth differed sharply from that of many Mexican presidents. Most of the PRI’s handpicked leaders attended expensive private schools and wore power as comfortably as they did their imported suits. For Zedillo, this was a world unseen until at least 1981, when he earned his doctorate in economics and joined an emerging generation of potential leaders whose ticket to power was an advanced degree from a prestigious foreign university rather than popular support.

These individuals were armed with Ivy League degrees but had little support at Mexico’s grass-roots. Their rise in the 1970s, according to political analysts such as Tulane University’s Roderic Camp, marked a major shift here: Mexican leaders--once rough, tough and full of a raw charisma that appealed to voters--suddenly became technocrats trained at the world’s finest schools. Carlos Salinas earned two doctoral degrees from Harvard University but could still work a crowd in the countryside; Zedillo lacked such political skills, Camp says.

Zedillo was a colorless, mid-level bureaucrat at the Central Bank when Miguel Mancera--a senior bank official who is now its governor--singled him out for graduate study at Yale. Under a government program that fueled the technocratic transition, Zedillo--like scores of other Mexicans--had his studies financed by the Mexican government.

In his 1981 dissertation--a 215-page treatise called “External Public Indebtedness in Mexico”--Zedillo included a message that highlighted personality traits that his friends and enemies alike call “modesty and humility.”

“Up to graduate studies, I always attended public schools,” he acknowledged in his dissertation. “My expenses at Yale were paid by the government (and therefore with taxpayers’ money). I hope to have enough strength and skill to repay everything back.”

Zedillo, in his first year as president, has failed in that goal, many Mexicans conclude. They have watched helplessly as their incomes were cut nearly in half and their debts ballooned because of soaring interest rates prompted by his emergency economic measures.

For many critics, the greatest failing of Zedillo--who was his party’s second choice as a candidate and became president only after the PRI’s top pick was assassinated--has been his inability to communicate and take charge at the most dramatic moments of crises.

“Zedillo, either willingly or not, has simply removed himself” from the spotlight at critical moments, said Emilio Zebadua, a political science and economics professor at Mexico City’s Colegio de Mexico. “He has realized that his lack of popularity, his lack of charisma, his lack of leadership, his lack of a confidence-inspiring image makes it better for him not to be in the center of things. . . . He’s distancing himself from the public act of governing. “If you want to call this democracy, then you are really stretching the term. It’s not a question of intelligence. It’s a question of political skill. . . . He has no understanding of Mexican politics.”

Perhaps not, Zedillo’s aides and defenders concede. “But the president does have a vision, a clear view of the democratic and just nation he wants Mexico to be,” a senior aide said. As for politics, the aide added, Zedillo is learning fast.

Zedillo’s vision of himself is now changing too, say officials closest to the president. Analysts say his presidency ultimately will be viewed in kinder, gentler terms when it ends in the year 2000.

“The president has become cooler, colder perhaps, but definitely calmer and more self-confident,” the senior aide said. “He has always been an intensely private man--very family-oriented--but perhaps a little more so now.”

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Most days, Zedillo eschews the power lunches of his predecessors; he takes two hours out of most work days to dine with his wife and children at home. Aside from weekend tennis or bowling with his banking friends, Zedillo exercises alone each morning--an hour of running or biking around the verdant grounds of the presidential residence.

And when forced to make the toughest decisions--such as the dismissal of his friend Serra a year ago--Zedillo sometimes ponders for days before making his choice--alone.

Zedillo has acknowledged that his hair is grayer. He admitted to sleepless nights during the worst of this nation’s economic crisis, when he was unsure the United States would approve the $20-billion American credit package that ultimately saved his government from insolvency.

But aides and acquaintances say that after this brutal year, Zedillo finally appears to be settling in.

“I believe he is starting to enjoy it,” one senior aide said. “He understands that no president in the world has been popular in times of great economic difficulties. Of course, no president enjoys being unpopular. And he still dislikes the luxury and glamour historically attached to the job.

“But what others perceive as weakness actually is the demystification of the presidency. He deliberately has been taking away its power, piece by piece. And that, I think, has made him much more comfortable with the job.”