Salinas Touts Reforms But Downplays NAFTA

BY law, the Mexican president cannot be reelected. And President Carlos Salinas de Gortari isn't looking for a second term. But on Nov. 1, Mr. Salinas did lay out what may be the campaign themes for the ruling party's 1994 presidential elections in his annual state-of the-union speech.

``He's mapping out the political strategy,'' says Denise Dresser, a political scientist at Mexico's Autonomous Technological Institute, a private university here. ``The emphasis is on consolidating economic reform rather than deepening it. He spoke of nationalism, the need for political harmony, and there was an incredible emphasis on Mexican sovereignty to preempt the Cardenas campaign message,'' Ms. Dresser says.

Center-left opposition candidate Cuauhtemoc Cardenas is already playing on the concerns of many Mexicans who believe that a free-market economy and, in particular, the North American Free Trade Agreement (NAFTA), means that Salinas is selling the country to the gringos.

``We are unavoidably neighbors of the greatest world power at the end of the cold war,'' Salinas said. ``History has taught us to be profoundly zealous of our territorial integrity, of our will to endure as a sovereign nation.... The defense of sovereignty demands a Mexico that is internally strong and also united,'' Salinas said, pointing to lower inflation, less public debt, more social spending, and record education spending as making Mexico stronger. Critics not moved

But some observers were not particularly impressed. ``Normally, the fifth year address is more triumphant,'' says Arturo Sanchez Guitierrez of the Mexican Institute of Political Studies, a private think tank. ``Salinas would like to have boasted that the economic reforms are guaranteed by NAFTA and the political reforms were consolidated with broad support, but he couldn't.''

Although he once touted it as a cornerstone of his economic reforms, Salinas is downplaying NAFTA because of uncertainty over the outcome of the Nov. 17 NAFTA vote in the United States Congress.

``I reiterate that, with or without the agreement, the evolution of our economy will not be substantially altered in the immediate future,'' Salinas said.

As if to prove Mexico wasn't putting all its eggs into a North American basket, Salinas launched his three-hour speech giving extensive details of new agreements with Latin American nations, including a soon-to-be completed free trade pact with Colombia and Venezuela. Salinas notes that NAFTA has been instrumental in transforming European ``curiosity'' into ``forthright interest in investing'' in Mexico. European Community investments are up 50 percent during his administration, and Mexico has been invited to start the process of becoming a member of the Organization for Economic Cooperation and Development, a Paris-based group of 24 wealthy nations. Tax cuts promised

In true campaign fashion, Salinas promised to make some tax cuts and to jump start the struggling economy with an injection of funds from the fiscal surplus - a surplus not seen for many years here. The price of bringing inflation down to single digits this year has been continuing price controls and a squeeze on credit that has brought economic growth to a 1.3 percent crawl during the first half of 1993.

``Let us be objective in comparing today's difficulties with the much more serious problems we had a few years ago,'' Salinas said. Net foreign debt has dropped from 48 percent of GNP in 1988 to 12 percent today. Interest payments on debt have fallen from 18 percent of GNP to 3 percent. But the figures on reducing poverty are far less impressive, an admitted weak spot in the Institutional Revolutionary Party (PRI) political armor.

Sifting for clues to whom Salinas will choose to succeed him, political analysts here found conflicting signs. ``The overall tone brought to mind the figure of Manuel Camacho Solis [mayor of Mexico City]; the economic reforming is done, it's time for political harmony,'' Mr. Sanchez notes. ``But Salinas only spoke for three minutes about Camacho's achievements ... He gave 20 minutes to the successes of Treasury Secretary Pedro Aspe.''