Monday, Oct. 23, 1989

Spain "I

By Felipe Gonzalez Margot Hornblower, Jane Walker

Halfway through an 18-day re-election campaign, Spanish Prime Minister Felipe Gonzalez Marquez finds himself attacked on several fronts. Once friendly trade unions complain that the Socialist leader has forsaken his party's traditional ideology by freezing social benefits and allowing 16% unemployment. Businessmen, who still applaud Gonzalez's successful campaign to attract foreign investment and reduce inflation, now fret about high interest rates and a growing trade deficit.

But after seven years in office, Gonzalez -- and, apparently, the electorate -- remains unfazed by the criticism; he is expected to lead his party to a third consecutive victory on Oct. 29. The Prime Minister feels confident enough about the outcome to leave the campaign trail and visit Washington this week, his first official trip to the U.S. since 1984 and his first substantive meeting with President George Bush since the two countries renewed their defense agreement last year and arranged for the transfer of 72 U.S. Air Force fighters from Spain to Italy.

Gonzalez talked for two hours with correspondent Margot Hornblower and TIME's Jane Walker at the neoclassical Moncloa Palace, the Prime Minister's ! official residence. Excerpts:

How are Spain's relations with the U.S.?

They are much better today than they have been for a long time. When we had a dictatorship, our relations with the U.S. were, shall we say, "special." It could not have been particularly agreeable for the U.S. to deal with an authoritarian regime, but they considered it necessary from a geostrategic viewpoint. We have gone through a difficult period when we had to negotiate a new agreement on a different footing. The former regime ((of General Francisco Franco)) posed no problem for the U.S., but that comfortable relationship was lost. Now we have one of mutual acceptance and respect.

What will you discuss with Bush?

I don't want to advance any agenda. I think that the U.S. will be interested to know the Spanish views on the process of unity in Europe. We are one of the countries that are most determined to see a European unity, not only a free- trade zone.

What do you think of American policy in Latin America?

A much more daring attitude toward the debt problem is vital. North American banks have been far too rigid. There should be not only a North Atlantic relationship between Europe and the U.S. but also a triangular one between Europe, the U.S. and Latin America. This has never been properly understood by the U.S.

What about U.S. policy in Panama?

They should respect and comply with the ((Panama Canal)) treaties. And there should be no intervention in Panama. We must exclude any possibility of intervention, even in speeches.

Is it true that Spain is the most liberal country in Europe?

There is an explosion that occurs when freedoms are granted after a dictatorial regime. On the other hand, Spain is a Mediterranean society that lives a lot in the streets. At 3 in the morning, Madrid streets are still full of people coming out of restaurants, having a drink.

And taking cocaine . . .

Perhaps.

Openly.

Yes, but I believe this is no different from other European countries. In 1970, during the Franco era, the Supreme Court decriminalized the use of drugs.

Many Spaniards feel that permissiveness has gone too far.

No more than in France, Italy or the U.S., but one is more aware of it here because my generation was repressed. Sometimes people complain that there are certain kinds of movies on television at 2 a.m. I have never watched television at 2 a.m.

Your party is called Socialist. What does that mean to you?

Ask the Hungarians to help me on this one ((chuckle)). Socialism is the deepening of democracy. Public power must try to prevent the worst consequences of a society that lives off free competition and savage confrontation in the marketplace. A mixed economy on a world scale is inescapable. The great error of Communism is that of the dinosaurs. They did not adapt, so they died. You can't be socially effective if, at the same time, you're not economically efficient.

If you are a party of the workers, why do the unions oppose you?

I think that any union, if it is a free one, has to make demands on any government, whatever its color. We have come out of a crisis, the economy is growing, everyone wants to be the first when it comes to enjoying the fruits of this growth. The workers, when it comes to actually voting, vote for the Socialist Party.

Your critics say you are no longer a populist, that you have locked yourself away and that you now sail on yachts.

I do not like going out to make populist pronouncements and cut ribbons. But it is a slander to say I live the life of the rich. If I go fishing in a six- meter launch, it is always described as a yacht. I honestly do not believe I have lost a sense of what is happening in the street.

Have any of your views changed?

I will make a confession. I used to have little faith in the U.S., and this was still true when I came into office. I held the Americans responsible for the duration of the Franco dictatorship. But I changed as I came to know the U.S. a little more. Americans want so much to be liked. But they also have enormous power, and that is not easily compatible with the affection of other people. This gives me a feeling of tenderness toward them.