REPORT FROM MEXICO : The dinosaurs & the fox.

MEXICO CITY. Mexico's Institutional Revolutionary Party (PRI), which has controlled the nation's presidency by hook and often by crook since the 1920s, is struggling to hold on to the presidential palace in Mexico City come election day July 2. Several polls in late May showed the PRI candidate, Francisco Labastida, neck-and-neck with Vicente Fox, the nominee of the center-right National Action Party (PAN). Both the situation and the electorate are fluid, if not volatile.

Until recently, the smart money rested on Labastida, a bland, competent former governor and cabinet member. Although the average Mexican scorns the ruling party's record of ballot-box stuffing and foul play, the PRI's relatively generous welfare state and array of agricultural subsidies continue to appeal to millions of poor and working-class voters. As a consequence, Labastida entered the race with a formidable lead in the polls, despite his party's unsavory past.

Historically, Mexico's presidents have been handpicked by the incumbent chief executive. That changed last year with a four-candidate party primary that was open to all citizens. This procedure, promoted by sitting President Ernesto Zedillo to "consolidate democracy," offered several advantages for the much-criticized PRI: it activated the party's often creaky grassroots machinery, lofted Labastida's name recognition, and invested the nominee with much-needed legitimacy. After all, 9.7 million voters participated in the selection.

The PRI was also optimistic about Labastida's chances because of the failure of the principal opposition parties, the PAN and the leftist-nationalist Democratic Revolutionary Party (PRD), to unite behind a single candidate.

Fox, a former Coca-Cola executive, joined the clubby PAN in 1987. He served a three-year stint in Congress and, on his second try, captured the statehouse in Guanajuato, where his family ranches and manufactures shoes. Soon after taking the oath of office, he set his sights on the presidential palace. Accustomed to berating Mexico's Tammany Hall-style system even as they cut mutually beneficial deals with PRI insiders, PAN traditionalists nevertheless considered Fox an outsider, upstart, and "Northern Barbarian." This term applies to aggressively impatient businessmen who have joined the party in the last few years and prize confrontation over compromise with a governing elite considered rotten to the core.

The physically imposing and temperamentally hard-charging fifty-seven-year-old Fox announced his candidacy for the presidency in late 1997. He immediately began barnstorming the country, making a point of wearing blue jeans, open-necked shirts, a giant "FOX" silver belt buckle, and boots that have become a trademark. He complemented this crowd-pleasing casual dress with bombastic speeches, castigating the PRI for ties to drug lords and seven decades of "a government that lies, is corrupt...[and] incompetent, and today lacks ideas and creativity." He also signed up several million members for "Amigos de Fox," a personal organization designed to raise funds, show his broad appeal, and pressure the skeptical PAN leadership to fall in behind him.

Ideologically there is little to choose from between Labastida's moderate neoliberal reformism and Fox's free-enterprise orientation. Fox is less conservative than his party, and has recanted his earlier talk about privatizing the state's oil monopoly. The outcome will depend on whether deeply conservative voters--six out of ten of whom claim to want "change"--will actually throw out the PRI amid steady growth and record goverment spending.

Often called the Marlboro Man because of his earthy bravado, Fox has clearly struck a chord with many Mexicans. In the nation's first televised presidential debate on April 25, he shrewdly played to the bleachers. Most observers had anticipated that the experienced, distinguished-looking Labastida would project a presidential image, shunning invective in favor of articulating sound approaches to curbing crime, improving schools, creating jobs, and broadening health-care opportunities. Instead, Labastida lashed out at his aggressive opponent for using profanity, calling Labastida "shorty" and implying that he was gay.

"My esteemed friend Senor Labastida," Fox shot back, "it may be possible for me to lose my vulgar language, but you politicians who are cheaters, who are corrupt, and have governed so badly, those characteristics you'll never lose." Morning-after polls declared Fox the hands-down winner. With the election only two months away, Labastida suddenly found himself in serious trouble.

Labastida's debate performance was only one of several self-inflicted wounds. Upon capturing his party's nomination last year, he quickly identified himself as the torchbearer for a "New PRI," committed to social justice, democracy, and crime fighting. Such rhetoric glistened in headlines and garnered praise from editorial writers abroad. At the same time, it alienated tens of thousands of party veterans, including the powerful "dinosaurs" used to playing hardball. Labastida's eagerness to embrace at least the rhetoric of reform seemed to tell the old guard, "You're not wanted in my campaign, because I can win without you."

Worse, Labastida failed to bring his PRI primary rivals into the fold, excluding many party bigshots from the list of PRI candidates for the Senate and Chamber of Deputies. When the PRI controlled all thirty-one states and Mexico City, rewards abounded for the party faithful. But Mexico has increasingly modernized its political system in response to economic liberalization, with the result that today the PAN and the PRD hold ten governorships and the capital's city hall. Now, there are fewer goodies for the PRI to hand out. As a consequence, the party is racked by internecine battles and defections.

After the April 25 debate, Labastida quickly changed course. He demoted his campaign manager and sought the assistance of the PRI's most experienced "alchemists," including Manuel Bartlett, whom most analysts credit with rigging the outcome of the 1988 presidential race for the PRI. Continuing to discard his "New PRI" trappings, he urged his party's governors, army of bureaucrats, and labor bosses to beat the bushes for him. In light of the leftist PRD's strength in Mexico City and the PAN's advantage in other urban areas and in the North, the PRI's old guard is concentrating on the "voto verde" or countryside vote. Party apparatchiks are touting the importance of scores of PRI-initiated federal programs that serve this poverty-stricken constituency. They were given a lift on May 24 when Fox was outmaneuvered by Labastida on live TV. However, in the campaign's second debate, May 26, Fox regained his footing.

"Six out of ten Mexicans believe there will be a political crisis if the PRI loses the election," according to pollster Alejandro Moreno. "Never before in the history of Mexico have we had a peaceful transition," says Sergio Sarmiento, columnist for the daily newspaper Reforma. "Not in the 100 years of Aztec rule, not in 300 years of colonial rule, or 180 years of republican government."

In fact, a Labastida loss could pose fewer dangers than a Fox defeat. Zedillo is prepared to recognize a Fox victory. While encrusted power brokers will grouse or jet abroad, they are unlikely to challenge the authority of the chief executive, fully backed by the armed forces. If, however, electoral officials designate Labastida the next chief executive by only a couple of points, real turmoil is possible. Whether deserved or not, a narrow win by Labastida could ignite a firestorm of protests. If the PRI candidate were inaugurated, he would also face attacks from Mexico City's mayor, sniping from the media, and adverse international opinion. And despite assertions that he, like Fox, will continue to reform Mexico's economy and politics, a President Labastida would owe a whopping debt to his party's change-averse dinosaurs.

The irony of the July 2 election is that a President Fox would owe his victory to the middle class and affluent sectors that cry out for change but have prospered under Zedillo. For his part, Labastida can only win if hard-pressed workers and dirt-poor peasants, who have lost ground economically, flock to his banner.

George W. Grayson, who teaches government at the College of William & Mary, has just written A Guide to the 2000 Mexican Elections, published by the Center for Strategic and International Studies in Washington, D.C.