BOLD AGENDA OF MEXICO'S FOX HAS U.S. ON EDGE

Diplomacy: The President-elect May Get A Hero's Welcome In Washington This
Week. But Ideas Such As Opening The Border And Special American Aid Have
Met With Skepticism.

WASHINGTON--When Mexican President-elect Vicente Fox arrives in Washington
this week, he has every reason to expect a hero's welcome. After all, he
just broke the legendary grip of the world's longest-ruling party with a
landslide victory viewed around the world as a triumph for democracy.

But while President Clinton can be expected to hail Fox publicly as a
harbinger of change, in private conversations administration officials are
noticeably more guarded about Mexico's incoming leader.

Since the July 2 election, Fox and his advisors have moved aggressively and
unapologetically to shake up the U.S.-Mexican relationship. Fox raised
eyebrows in Congress and in policy circles by calling for the opening of
the U.S. border to hundreds of thousands of Mexicans seeking to work and
live legally in the United States. His plan to reform Mexico's anti-drug
operations is being met with skepticism by U.S. law enforcement agents who
have watched a series of similar initiatives fail.

Several of Fox's top aides have even hinted that he will seek what they
call a "democracy premium" that could add up to billions of dollars in new
U.S. aid. That bold approach has put on edge even those U.S. policymakers
who want to see Fox succeed. Washington has long been able to engage the
country with which it shares 2,000 miles of border on its own terms; Fox
appears inclined to turn those terms upside down.

"While many of us who work on Mexico will argue that a little slack is
reasonable, given that this is the first time in 71 years they've had a
real transition in Mexico and they have to learn the ropes, at the same
time there is a real limit to U.S. tolerance on hot-button issues," said a
senior U.S. official who helps shape policy toward Mexico. "Fox has come
out of the gate running, and people are wary of that," said the official,
who declined to be identified at this sensitive stage of U.S.-Mexican
diplomacy. "There're some actions he can take that would serve to evaporate
that goodwill extremely quickly."

The relationship between the United States and Mexico is like none other:
Nowhere else does a powerful country share such a lengthy border with a
much poorer nation that sends forth so many immigrants, documented and
undocumented. Nowhere else are two neighboring countries with such
disparate standards of living so interdependent for everything from trade
to workers to fighting crime. And in few other cases have bordering nations
become such strong allies after years of war.

With so much at stake, policymakers on both sides of the border recognize
that maintaining a working bilateral relationship is essential. That is why
the United States for years has supported Mexican presidents, sending
advisors, military equipment and money to undemocratic, and sometimes
authoritarian, regimes. And that is why Mexico has subordinated its fears
of ceding sovereignty so it could accept its northern neighbor's helping hand.

In fact, Mexican foreign policy has long been shaped by Mexico's relations
with the United States, particularly in recent years. The North American
Free Trade Agreement, implemented in 1994, has helped U.S. companies crack
the vast Mexican market. But it has played a far more critical role in
Mexico, where booming exports to the United States helped pull the
country's economy out of crisis after a clumsy peso devaluation that same
year sent it into a tailspin.

Nation Has Sold Itself as Platform for the U.S.

Under the administration of current President Ernesto Zedillo, Mexico used
NAFTA to enhance its status throughout Latin America. Selling itself as a
platform to the U.S. market, it enticed nearby countries and even the
European Union to sign broad free-trade agreements with it.

With that groundwork already laid, and bolstered by having won office
legitimately, Fox has the opportunity to challenge the United States on a
number of specific issues as he capitalizes on Mexico's improving stature.

"For years, we wished that Mexico would do certain things," said Elliott
Abrams, who served as assistant secretary of State for Latin America during
the Reagan administration. "We talked mostly about wanting reforms in
Mexico, so now that there is a reformist government in Mexico, now comes
the hard part. What, everyone is wondering, is this reformer likely to ask
of the United States?

"I think the nervousness is easy to understand," Abrams said. "Many people
have been hoping for this change. Now it's here and we're not quite sure
what the implications are."

It is unlikely that Fox will delve into specific issues when he meets with
Clinton and Vice President Al Gore on Thursday and with Texas Gov. George
W. Bush in Dallas the next day, U.S. officials said. For one thing, he
doesn't take office until Dec. 1.

Meanwhile, he and his country are wrestling to accomplish an unprecedented
transition of power from the long-governing Institutional Revolutionary Party.

Fox has said he will offer jobs to many of the people who have been working
in the Zedillo administration and has pledged to base personnel decisions
on experience and competence rather than party membership.

That would come as a welcome development in Washington, where policymakers
have enjoyed increasingly close relations with their Mexican counterparts
since NAFTA went into effect, cementing the two countries' interdependence.

Fox has stressed that the people named to his transition team may not be
the same people he chooses to lead his government. But his choice of two
academics with long-standing ties to the Mexican left as his top advisors
on foreign affairs has aroused concern in Washington.

President-Elect's Aides Skeptical on NAFTA

Fox is a former business executive believed to be deeply trade-oriented.
But the advisors, Jorge Castaneda and Adolfo Aguilar Zinser, were both
openly skeptical of NAFTA when it was passed. And both served for years as
advisors to Cuauhtemoc Cardenas, a three-time presidential candidate from
the left-wing Democratic Revolution Party.

"The heart of it, really, is: What kind of advice is he getting? These are
people who were not particularly pro-NAFTA, and here NAFTA is seen as the
linchpin of our relationship with Mexico," said Bill Pryce, a former
National Security Council advisor and ambassador to Honduras.

"I think you have to wait and let him come here and speak for himself,"
Pryce said. "But it does raise some questions in some people's minds."

Speaking recently at the Brookings Institution, a Washington think tank,
Castaneda said the Fox government will make "specific proposals to enlist
the United States and Canada to increase living standards in Mexico." He
said Fox is looking at steps taken by the more affluent countries in the
European Union to "create jobs, fight economic disparities [and] raise
educational opportunities" in poorer member states such as Spain and Portugal.

Some U.S. officials interpreted Castaneda's comments as foreshadowing a
substantial request for financial aid from Washington.

Fox will inherit some of the toughest issues facing U.S. and Mexican
policymakers, including disputes over the extent to which the United States
and Mexico have adhered to NAFTA's promise of open markets.

Panel Mediating Truck Dispute

One disagreement, over Washington's refusal to give Mexican trucks access
to U.S. roads, is being mediated this summer by a bilateral panel. If the
panel rules against the United States, as expected, Mexico could seek
billions of dollars in damages.

The United States, meanwhile, has filed a complaint before the World Trade
Organization arguing that Mexico has not sufficiently opened its
telecommunications market to competitors.

Another potential trouble spot is the anti-drug effort. With 60% of
U.S.-bound cocaine moving through Mexico, American law enforcement
officials are particularly nervous about Mexico's leadership change.
Intelligence sources note that while Fox has made much of his proposals to
battle Mexico's endemic corruption, he hasn't promised to extradite
traffickers under arrest in Mexico to face prosecution in the United States.

And while U.S. counter-narcotics officials welcome Fox's proposal to
overhaul the country's drug-fighting apparatus, they say their enthusiasm
is tempered by the knowledge of just how deeply traffickers have
infiltrated those institutions.

Underlying all the concerns is an acknowledgment that Fox's election
represents much more than the traditional arrival of a new administration
in Mexico City.

"It's a new day," said Peter Hakim of the Washington policy institute
Inter-American Dialogue, "a day of profound change and promise."