RIGHTEOUS LEADER.

Armando Calderon Sol chucks old-line politics for pragmatic economic policies.

ARMANDO CALDERON SOL, THE 50-YEAR-OLD FORMER president of El Salvador, rose from the ranks of the extremist Alianza Republicana Nacionalista (Arena) party to become the country's first true democratically elected president and rebuild the Salvadoran economy Instead of falling back on the protectionist Arena motto of "El Salvador first, El Salvador second, El Salvador third," Calderon Sol opened the tiny country's economy to foreign trade and competition, dragging the rest of Central America along kicking and screaming.

Calderon seems an unlikely figure to lead a revolutionary opening of the region's borders. He helped to found Arena, the ultra right-wing alliance, in 1981. His sense of holy crusade was heightened by his unswerving devotion to prophet and strongman Roberto D'AuBuisson, a cashiered National Guard major who unabashedly preached that the end of communism justified any means. Though he died in 1992, D'Aubuisson is still today regarded by the right as a messiah, and by the left as a pariah. The loyal Calderon manned the political trenches at D'Aubuisson's side and his skill at staying on top of the diverse and conflicting interests in his own party became as important as his ability to defeat the opposition.

The party bad come into power in 1989, after D'Aubuisson had handpicked Aifredo Cristiani to be the presidential candidate during the peak of the 12-year civil war. The right's U.S. government patrons would never support the flamboyant major, who among other things had been publicly accused (but never brought to trial) of ordering the assassination of the country's archbishop in 1980. Cristiani was a wealthy polished, English-speaking, natty-dressing businessman who had studied at Georgetown University and who the State Department could proclaim as someone with no blood on his hands.

After the war, many right-wingers were surprised and disappointed to see Calderon prevail in party infighting and ascend to the presidency in 1994.

Jolly, self-effacing, hut uncharismatic and unable to speak English, Calderon was viewed as crude compared with his predecessor. Many commentators predicted he would swing hard right to D'Aubuisson-style populism. But they failed to recognize his political acumen and adaptability, along with his unforeseen resolve to stand up to powerful vested interests.

Anti-nationalist. Calderon took friend and foe alike by surprise in embarking on a policy of opening up the economy on a scope wider than anyone had imagined. And the sum of his trade policies could well be described as, frankly, anti-nationalist. He opened the floodgates to cheap imported goods, while selling off the national telephone company, the country's social security and state pension funds, and its electric energy distributors to foreign investors.

Calderon says his concept of Arena's nationalism was really a reaction against international socialist ideas, rather than isolationist creed. Following the end of the Cold War, and El Salvador's own tragic role as a key battlefield in it, he understood the importance of plugging into the increasingly connected world, and chose to push his countrymen out of their legendary parochialism. "I am motivated toward the free market by the reality of the tiny size of El Salvador: We either had to open ourselves to the world and competition, or to stay submerged in our little corner," he says. "The latter is not viable for us.

First came the bold stroke of simplifying a nearly incomprehensible system of import tariffs that brought rates down (some from over 100%) to the current range of duty free for capital goods to a ceiling of 20% for consumer products.

"Organized whining." Calderon effectively forced the other four Central American countries to follow suit. The significance of that initiative is difficult to overstate. The policy immediately began to hurt the pocketbook of Arena's biggest supporters. As industrialists and exporters continued to complain that the government was throwing them to the sharks of Asia and Mexico, Calderon's administration often responded by publicly accusing them of "organized whining."

The jury is still out on the full effects of the quick opening and a stubbornly tight monetary policy, which greatly favor imports at the expense of exports, production, and employment. There are questions of whether it went too far, too fast, particularly as the world's big economic powers jealously cling to their own protectionist barriers. "I was heavily criticized by many businessmen, who, after all, were accustomed to operating within monopolies and oligopolies. But the fact is, only by being forced to understand the new rules of the game were these people going to change," he says.

The other linchpin of the Calderon program was the privatization of telecommunications and electricity distribution, and the establishment of a privately administered social security system.

Privatization had long been a mantra of the right, particularly since the disastrous nationalization of banks and the coffee sector. Yet Calderon's reforms went beyond his own party's comfort zone (even though other critics insist that he did not go far enough).

He broke the telephone company in two and sold the pieces to foreign investors, promoting the emergence of two dozen new companies now competing in paging, Internet access, cellular communications and long-distance service. He also sold the four regional electricity distribution companies to foreign investors, and initiated concessions for geothermal and petroleum-powered electricity generation.

While the measures allow industry to negotiate service from competitors, residential consumers appear forever stuck with the lone provider in their regional service area. Calderon failed to go the full route and privatize the country's predominant hydroelectric power production, which remains state owned.

The administration's last major stroke was the complicated phased-in privatization of the bankrupt social security and state pension funds. Based on the Chilean model, the new system obliges young workers to join a private fund administrator that, in turn, invests paycheck deductions, arranges medical insurance coverage and establishes individual retirement accounts. The new funds also should force domestic savings in a country with little such tradition.

Worrisome structural problems remain, however. The economy has slowed down into a low-growth pattern and huge trade deficits continue to grow. The coffee and the maquiladora offshore assembly sectors-the two principal export earners-are both depressed without much hope of strong rebound. Fiscal deficits and a fixed exchange rate maintained by Central Bank intervention in monetary markets keep interest rates high. El Salvador also remains dependent on the mailbox for over a tenth of GDP-hard currency remittances sent by the one-million-plus Salvadoran Diaspora.

According to Calderon's vision, however, those negative aspects of his legacy are all the more reasons to force the country's businessmen to become more productive and more imaginative to create wealth in an increasingly competitive world environment. "If I had any regret," he says, "it would be that I should have been even tougher, gone even further."

He completed his five-year term on May 31.