Mexican leader's honeymoon apt to be short

When Carlos Salinas de Gortari assumes Mexico's highest office today, he may want to trade in his colorful presidential sash for a handbook on handling political dilemmas. Faced with a labyrinth of problems ranging from debt to widespread discontent, the 40-year-old economist will need some deft maneuvering to save Mexico - and his beleaguered Institutional Revolutionary Party (PRI).

But today, as Mr. Salinas sets the agenda for his administration and introduces his new Cabinet, even the ever-hopeful Mexican public seems to doubt whether their new President will have the answers.

Salinas is considered to be in the weakest position of any incoming President in modern Mexican history. After pushing his country through six grueling years of economic austerity, the former budget minister squeaked by in the July 6 elections with 50.7 percent of the vote, the narrowest victory in the PRI's 59-year history.

And that was just the beginning. Salinas, who has never before held an elective office, is now challenged by everything from a surging leftist opposition coalition to an internal party rupture, from rampant poverty to soaring interest rates and a $105 billion foreign debt that saps two-thirds of total public spending each year.

Beyond the obvious need to alleviate Mexico's debt burden, Salinas says the only way to resuscitate his prostrate country is to ``modernize'' both its economic and political systems. For the intense, Harvard-educated economist, that means continuing down the path set by outgoing President Miguel de la Madrid: drastically reducing the state's role in the economy and democratically reforming the PRI's authoritarian power structure.

Salinas and Mr. de la Madrid say they have made strides toward both goals. Salinas, for instance, has called on top PRI ally, Manuel Camacho Solis, to transform the PRI into a more open and competitive party.

On the economic front, while the government continues selling off state-owned companies and cutting consumer subsidies, a package of wage and price freezes has successfully slashed inflation from 15.5 percent per month in January to 0.8 percent in October.

But many political experts and foreign diplomats here say Salinas's ``modernization'' program is jeopardized by Mexico's political turmoil and the tremendous short-term needs of its people.

``Radically redefining the nature of the economy has been extremely important for the country's long-term future,'' an American banker here says. ``But it hasn't created jobs, put food on the table, or put money in people's pockets. That's got to be Salinas's biggest challenge.''

Statistics reveal alarming rates of poverty and joblessness. The number of working-age Mexicans increased by 19.6 percent between 1982 and 1987, but the amount of employed people went up only 2.4 percent, the Budget Ministry says. Even for those fortunate enough to have a salaried job, real wages tumbled more than 50 percent during de la Madrid's six-year tenure, including 15 percent in the past year.

Now Salinas must pacify the labor unions and the general population without jeopardizing the progress made by the inflation-cutting freeze package. One close Salinas adviser likens it to letting the air out of a balloon: If you simply let go of wages, prices, and the exchange rate, inflation will zoom out of control.

Given the delicate balance, Mexican bankers and economic analysts do not foresee a quick exit from the economic slump, especially not with 40 percent real interest rates and a possible US recession looming late next year.

But Mexico's political clock only gives Salinas and the PRI two years to get the economy back on track, creating new jobs and a sense of well-being. Otherwise, political experts note, the PRI could suffer a system-shaking defeat in the 1991 federal deputy elections.

The opposition, bolstered by a strong showing in the July 6 elections, is already flexing its muscle in the Chamber of Deputies, where it controls 237 of 500 seats.

``The opposition doesn't have the power to push through new policies,'' says Jorge Castaneda, a political scientist and co-author of a new book on Mexico. ``But it is strong enough to make life miserable for Salinas.''

Internal party disputes could make his tenure even more unpleasant. Salinas is being pushed by a new ``critical current'' that wants to see faster political reforms. But he is being pulled even more strongly by the PRI's old guard, led by the ``dinosaurs'' in the huge labor unions.

These old-style leaders object not only to the economic restructuring, which has left workers out in the cold, but to the new political reforms that threaten one of their sources of power: assured political seats.

Joining forces with the strong opposition, even a tiny group of PRI dissidents could have the power of veto. Such influence will likely add some bumps to Salinas's road to political and economic reform.

But some experts say Salinas can overcome the difficulties if he takes bold actions that win over public confidence. ``The challenge is fundamentally psychological,'' says Adrian Lajous, a former high government official.

``Without confidence, there's no way to stop inflation, capital flight, or rising interest rates. Salinas will have an impossible task if he doesn't get public support.''