U.S. SEES DEEP MEXICAN ARMY TIES TO DRUGS

For a year the Clinton administration has presented the stunning arrest of
Mexico's drug-enforcement chief as proof of that government's strong will
to fight corruption. But now U.S. analysts have concluded that the case
shows much wider military involvement with drug traffickers than Mexican
authorities have acknowledged.

According to an extensive classified report by the Drug Enforcement
Administration and other intelligence assessments, the arrest last year of
the former official, Gen. Jesus Gutierrez Rebollo, came after secret
meetings between Mexican army officers and Mexico's biggest drug mafia,
officials say.

Exactly what transpired remains unclear. But the officials say there is
growing evidence that military officers discussed a deal to let the drug
gang operate in exchange for huge bribes and that some such arrangement may
have been in place before the gang's leader, Amado Carrillo Fuentes, died
after extensive plastic surgery last year.

The Gutierrez Rebollo case initially raised fears that he might have passed
sensitive intelligence to members of Carrillo Fuentes' gang. But U.S.
officials say it now points to the possible collusion of military officials
who are central to U.S. drug-enforcement efforts in Mexico.

"The bottom line is that all this goes a lot deeper than we thought," said
one senior official.

If the indications of wider military involvement with traffickers are borne
out, another official said, "it points to much of our work in Mexico being
an exercise in futility."

Some intelligence officials have questioned aspects of the report,
officials said, describing them as speculative. But drug-enforcement
officials presented it to Atty. Gen. Janet Reno and other senior officials
Feb. 6, one year to the day after Gutierrez Rebollo was arrested on the
orders of the Mexican defense minister.

Beyond that, officials say the report has been very closely held because of
the sensitivity of the intelligence and the volatility of the politics that
surround it.

With strong U.S. support, President Ernesto Zedillo brought the military
into law enforcement in 1996 because it was seen as the only alternative to
the country's deeply corrupt police.

A month ago, as part of its annual evaluation of narcotics control efforts
abroad, the administration assured Congress that Mexico was "fully
cooperating." But a Senate discussion of two resolutions to overturn that
endorsement could begin as early as Thursday.

U.S. officials have been reluctant to confront Mexican leaders with their
new assessment. In part, they say, their unease has to do with
still-significant gaps in the story. But they also fear that such a
challenge could imperil largely secret anti-drug programs with which the
CIA and the Pentagon have been trying to build closer ties to a neighboring
army that has long been deeply suspicious of the U.S.

The director of White House drug policy, Gen. Barry McCaffrey, said he
would not discuss the intelligence reports other than to confirm that they
had been scrutinized very closely.

Mexican Defense Ministry officials have angrily denied the few sketchy
reports that have surfaced so far about negotiations between generals and
traffickers.

After Gutierrez Rebollo testified at his trial last September that such
meetings had taken place, military officials acknowledged that several
generals did indeed meet with a top lieutenant of Carrillo Fuentes. But
they insisted that the man had used an alias and that the officers did not
know he was a trafficker.

"The claim that there were any other meetings is false," said Gen. Tomas
Angeles Dauahare, a top aide to the Mexican defense minister. He described
the allegations as "lies, slander and infamy" generated by Gutierrez
Rebollo in an attempt to save himself.