James R. Jones has been U.S. Ambassador to Mexico since august 1993.

Well I think that if President Clinton hadn't shown the courage to put together the financial assistance package that there would have been a global recession by now. My sense from my experience in the financial community is that the money, investment would have dramatically flowed from the developing markets to safe investments, and that would have triggered a serious recession starting in the developing - emerging markets, which would have come back to bite the industrial countries.

SO IT'S POSSIBLE THAT CARLOS SALINAS'S POLITICAL AMBITION TO BE THE FIRST PRESIDENT WHO DIDN'T DEVALUE THE PESO COULD HAVE TOUCHED OFF A WORLD WIDE DEPRESSION OR RECESSION?

Well I think once the devaluation hit and once the flight of money occurred in Mexico, it would have occurred in other emerging markets and I think that would have created a global recession. The only thing that prevented that was to reinstill the confidence which was done by President Clinton's financial assistance package.

DRUG TRAFFICKING HAS BECOME A TOP PRIORITY OF THIS EMBASSY. WHY?

Well it's very simple. That when we succeeded as a government in closing off the enormous lanes of narco trafficking from Colombia, etc. to the United States through the Caribbean there was only one other natural route to take and that's through Mexico. It started growing within the last 5, 6, 7 years and when President Zedillo came in he showed a real willingness and a desire to put a stop to it, to disrupt these narco trafficking organizations. And it was the first real effort and a cooperative effort between our two countries to work together to defeat narco traffickers. And so President Zedillo says it's the number one national security problem for Mexico, we obviously believe it's a very important security problem for the United States.

IS IT A NATIONAL SECURITY ISSUE?

Well just stability, national security, trade. Every element of the relationship is very intense and very important between the United States and Mexico. So when they had their problems it had an effect on the United States. If Mexico is in a situation where it can't get out from under this deep problem that it has it affects massive immigration to the United States, it affects corruption, it affects narco trafficking, it affects trade markets, it affects the whole gamut of our relationship.

ONE OF THE THINGS THAT PRESIDENT ZEDILLO DID WHICH WAS A BREAK WITH THE PAST WAS TO APPOINT AN ATTORNEY-GENERAL, ANTONIO LOZANO WHO WAS INDEPENDENT OF THE RULING PARTY

Right.

AND YOU'VE COMMENTED IN THE PAST THAT THIS LED TO THE GREATEST COOPERATION BETWEEN THE U.S. AND MEXICO IN 30 YEARS IN LAW ENFORCEMENT. BUT NOW HE'S BEEN FIRED.

As I said after he left office, and as Attorney General Reno said, we had a very good relationship. We had confidence in him, we believed in his honesty, we believed in the direction he was going. President Zedillo obviously felt he was not moving fast enough, that these high profile cases were not being concluded. The investigations were sort of being ridiculed in the Mexican press and the Mexican people were having a loss of confidence in those investigations and the Zedillo administration felt it would be better to get someone else in. That's an internal decision.

YOU DON'T SEE IT AS A STEP BACKWARD?

No I don't see it as a step backward. Actually Attorney General Madraso and former attorney-general Lozano both have our confidence and both have the confidence of our justice department and we hope that the reasons for this will actually materialize and that is even more progress in fighting corruption and narco trafficking.

BUT.... THE FIRING OF ANTONIO LOZANO, IT'S NOT A STEP BACKWARD?

......The one thing we were concerned about, and we're satisfied that this is not the case, was that this event was a signal that there would be less cooperation, less vigorous enforcement of the law, less vigorous efforts to go after drug traffickers and we do not believe that's the case.

THE GENERAL ASSESSMENT IS THAT THESE CARTELS ARE OPERATING, --THAT IS THE ONE OUT OF JUAREZ AND THE ONE IN TIJUANA--WITH RELATIVE IMPUNITY TODAY.

I don't totally agree with that. I think they have grown and they've established networks both in the United States and in Mexico. The fact of the matter is actions are being taken. We really only had this good cooperative effort to jointly go after these cartels both in the United States and Mexico since President Zedillo was elected. And so we're talking basically about a two year program and at the time he came in, they didn't have the legal tools, they didn't have evidentiary use of wiretapping, they didn't have witness protection programs, they didn't have conspiracy laws, they didn't have the money laundering criminal statutes. They now have those. They're in the process of getting the technical equipment to be better investigators. And so we're only talking about roughly a two year period in which we've been able to go after them. Having said that, there has been some success. Are we satisfied? Absolutely not.

MANY OF THE INVESTIGATIONS THAT HAVE GONE ON SUBSEQUENTLY - THE ARREST OF RAUL SALINAS IN PARTICULAR, TOUCHED OFF ALL KINDS OF INTERNATIONAL INVESTIGATIONS, AND THE INCREASING EFFORT OF OUR GOVERNMENT TO ASSIST THE MEXICANS AND DEVELOP OUR OWN INVESTIGATIONS. IT'S OUR INFORMATION THAT'S BEGINNING TO DEVELOP TANGIBLE EVIDENCE THAT MAY IN FACT LINK RAUL SALINAS TO DRUG MONEY.

I think if that's the case they just have to prosecute.

YOU'RE NOT AWARE OF THOSE INVESTIGATIONS?

I'm not aware of the status of these investigations because they're supposed to be kept confidential until they're brought into the public record which is the right way to do it. I do know that there is a vigorous investigation and that we're cooperating in every way possible to determine that question as to whether or not there's an evidentiary tie-in to drug money. And I know from our point of view and I believe from the Mexican point of view, they're going to continue that vigorous investigation until they get to the root of it

THE SWISS HAVE EXPRESSED A CERTAIN DEGREE OF DISENCHANTMENT WITH THE UNITED STATES. THEY SAY THAT THEY HAVE SEEN SOME OF THE EVIDENCE THE U.S. GOVERNMENT HAS GATHERED - FOR THE SWISS THE NEED IS TO NOT ONLY SEIZE THE MONEY BUT KEEP IT AND THEY ARE LOOKING FOR MORE COOPERATION FROM THE UNITED STATES BECAUSE THEY SAY THAT WE DO HAVE THE INFORMATION THAT CAN PUT RAUL SALINAS TOGETHER WITH VARIOUS DRUG CARTEL OPERATIONS.

I don't know specifically about the Swiss complaint. I do know that in the area based upon past times in government, in years past, that it is not unusual that law enforcement agencies of different countries have difficulty working together and that stems from their domestic laws and various things like that. One of the things I'm concentrating on is how our law enforcement agencies can cooperate with Mexico in a common goal of defeating and disrupting narco trafficking and we are making substantial progress in that.

RECENTLY PRESIDENT ZEDILLO HAS PUT THE ARMY ON TO THE STREET IN MEXICO AND INTO VARIOUS LAW ENFORCEMENT ROLES.

---- IS THAT A GOOD SIGN, A BAD SIGN?

Well, what President Zedillo has said, and has said publicly about the corruption in the civilian law enforcement agencies is that it has to be cleaned up and that it has to be made more professional. And he has said in the interim he wants the best possible people to try to start this clean-up process, and he has confidence in the leadership of the military of defense here in Mexico.

He said repeatedly this is not a permanent situation, that this is part of the transition and he trusts these people to be able to bring some order out of the chaos and some discipline and some ethics. That is their mission. Obviously if you would say this is going to be carried to total militarization and if we felt that this was going to be carried to the total militarization of Mexico that would concern Mexicans, it would concern everybody. That is not what is what we see.

BUT THE DANGER IS, ISN'T IT, THAT THE ARMY WILL BECOME AS CORRUPT AS THE LAW ENFORCEMENT APPARATUS HAS BECOME?

President Zedillo has said that himself, that it is very important that you develop an elite honest, professional civilian law enforcement apparatus because anybody that's fighting the kind of money that exists in narco trafficking is subject to corruption and he doesn't want his military corrupted that way.

THE NEW YORK TIMES DID A STORY ABOUT A FORMER U.S. GOVERNMENT INFORMANT NAMED GUILERMO GONZALES CALDERONI, WHO APPARENTLY, ACCORDING TO MY SOURCES, GOT SOME OF OUR TAX MONEY WHILE HE WAS IN THE MEXICAN GOVERNMENT. IN THE ARTICLE IT SAYS THAT IN A MEETING WITH PRESIDENT SALINAS SOON AFTER MEXICO REQUESTED GONZALES'S EXTRADITION, AMBASSADOR JAMES JONES REFERRED IN GENERAL TERMS TO GONZALES'S CHARGES, THAT IS, THAT THE WHOLE REGIME WAS CORRUPT. GONZALES CALDERONI HAS SO MUCH BAD STUFF ON YOUR ADMINISTRATION THAT IT COULD BRING DOWN YOUR GOVERNMENT, JONES TOLD PRESIDENT SALINAS, ACCORDING TO THE OFFICIAL.

I'm not sure who that official was. I think Mexico clearly wanted -

DID YOU TALK TO PRESIDENT SALINAS ABOUT GONZALES CALDERONI'S INFORMATION?

First of all I would never comment on any private conversation I had with any president, of our country or their country. I think what I was trying to say is that we were trying to determine the motives of Mexico's desire for extradition. It is our best judgment that the government of Mexico believed that he was dishonest, that he needed to be brought to justice.

THIS IS GONZALES CALDERONI?

Gonzales Calderoni and they wanted him back there to bring him to justice. Clearly he would be a very high profile case and so if they tried to do something that was extra legal, it would have - it would have not been easily hidden. So on that basis, our justice department worked and tried to help in that extradition but it didn't occur.

IS IT POSSIBLE THAT IT'S CORRECT THAT YOU IMPLIED TO PRESIDENT SALINAS THAT THIS COULD HAVE BROUGHT HIS GOVERNMENT DOWN?

Well Calderoni I think had said all those kinds of things publicly.

WHICH JUST BRINGS ME THEN TO ANOTHER QUESTION. THE SWISS POINT OUT TO US THAT THEY SEIZED THIS MONEY IN SWITZERLAND BASED UPON COMMUNICATIONS FROM THE U.S. GOVERNMENT CONCERNING INFORMATION THAT THE U.S. GOVERNMENT HAD ABOUT RAUL SALINAS'S CONNECTIONS TO VARIOUS GULF CARTEL MEMBERS - DRUG CARTEL MEMBERS.

I think that's the kind of question you're going to have to ask out of Washington because that wouldn't have come out of Mexico.

APPARENTLY THE COMMUNICATION CAME OUT OF THIS EMBASSY DIRECTLY TO BERN.

I'm not aware of it.

DOES THE U.S. GOVERNMENT HAVE INFORMATION THAT WOULD LINK THE SALINAS FAMILY TO DRUG MONEY?

I'm not sure - there are all kinds of things that are given in terms of both rumors and speculation and it's possible but I don't know for sure.

WOULD YOU BE SURPRISED IF CARLOS SALINAS RETURNS TO MEXICO?

I would be surprised quite frankly, or at least if he returns in the near future.