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MEXICO ACCEPTS MEDIATOR IN CHIAPAS CONTROVERSY

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In a Christmas Eve announcement that analysts called a potential breakthrough toward a peaceful settlement to the conflict in Chiapas, President Ernesto Zedillo's government made a major concession Saturday to the rebels in Mexico's southernmost state, the Zapatista National Liberation Army.

Zedillo's Cabinet said it would accept a commission headed by a controversial Roman Catholic bishop, Samuel Ruiz of San Cristobal de las Casas, to be the official mediator between the government and the rebels.Designating the National Intermediation Commission as chief negotiator was among the key demands of Zapatista leader Subcommandante Marcos when he launched a renewed insurrection against the government last week.

With the Mexican army and the armed Indian insurgents at a standoff in the jungles of Chiapas, the uprising has wreaked havoc on the Mexican economy and spread uncertainty nationwide.

There was no immediate reaction to the announcement from Marcos, who remains in the rebel's remote stronghold within a rain forest near the Guatemalan border. But Ruiz, a rebel sympathizer who has been on a hunger strike since the Zapatista's second major mobilization began seven days ago, underscored the importance of the government's decision.

"The star of peace has appeared on the horizon in Chiapas," the tired and weakened 70-year-old declared as he met with a key deputy of Zedillo's interior secretariat at his cathedral Saturday.

Also at the meeting with Deputy Secretary Beatriz Peredes was Chiapas opposition leader Amado Avendano, a former gubernatorial candidate who heads a parallel, self-declared "Government in Rebellion" in the state.

"I cannot hide the happiness that we have for this news of the day," the bishop said. "I assume we would be able to re-establish contact immediately with both parties."

The initial decision by Interior Secretary Esteban Moctezuma late Friday night to accept Ruiz's commission as chief negotiator with the Zapatistas was not likely to have been easy. The bishop is seen by many as a Zapatista partisan. He has expressed support for the rebels' demands but condemned their use of violence after they launched a New Year's Day shooting war with the Mexican army to support their demand for equal treatment for indigenous Mexicans, constitutional and democratic reforms and an end to rule by the rich. At least 145 people died in 12 days of fighting nearly a year ago.

When the Zapatista fighters remobilized during a one-day insurrection in the northern part of the state last Monday, they rekindled fears of more violence to come. Those fears triggered an economic panic that ultimately led the government to take the drastic measure of devaluing the peso by more than 20 percent in a single day.