THE United States said yesterday it would not penalise Mexico for its record on drugs, shortly after one of Mexico's most powerful drugs-cartel bosses was arrested.

In recent days Mexico, seeking to counter an understandable US feeling that it is losing the "drugs war", had undertaken a propaganda offensive to ensure that Washington would renew its "certification" of Mexico as a US ally in the war on drugs.

This week the Mexican navy burned 1.1 million tonnes of confiscated drugs. President Ernesto Zedillo promised no mercy in the anti-drugs fight and attacked high-level government corruption.

A gradual recovery of the peso went into a tailspin this week because of fears that certification would not be forthcoming and that economic sanctions from the US - Mexico's main North American Free Trade Agreement partner - would follow.

The annual certification process, involving 32 countries, is detested in Latin America. In Mexico anti-US feeling has risen, with congressmen of the Institutional Revolutionary Party (PRI) pointing accusingly to the enormous US drugs market.

The certification had been in doubt since the February 18th arrest of the head of Mexico's anti-narcotics bureau, Gen Juan de Jesus Gutierrez, for allegedly protecting one of the country's most powerful drug lords. Hand-picked by President Zedillo only 10 weeks before, he had been praised fulsomely by Washington for his incorruptibility.

But Mexico's labyrinthine political story has recently included accusations of drugs-cartel links against the former president, Mr Carlos Salinas de Gortari, his father, sister and her late former husband.

Mr Salinas, who has been living in Ireland for almost a year, yesterday reiterated to The Irish Times his strong denial of the accusation of drugs-cartel links, saying his family was a victim of a kind of "ambush" due to "simplistic accounts" given in the US.

A few days before the general's arrest, Mexico's weekly investigative magazine, Proceso, published leaked testimony from a US trial at which witnesses said Mr Salinas, his family and top officials in his administration met drug barons, including the former Gulf cartel kingpin, Juan Garcia Abrego, who was sentenced to life in US courts last month.

This week the New York Times renewed the accusations against the Salinas family. Mr Raul Salinas Lozano, a former cabinet minister and father of the former president, denied any family links to drugs traffickers after a report said his alleged former private secretary had implicated him in statements to US authorities.

Mr Salinas (senior) said he had never even met the alleged former secretary, Ms Magdalena Ruiz Pelayo. The former president told The Irish Times he stood by this, saying it was "unbelievable" that the New York Times should publish such a story.

Her testimony was in relation to a forthcoming US trial of Mr Mario Ruiz Massieu, brother of the murdered PRI boss and the man who was originally in charge of the murder and embezzlement case against Mr Raul Salinas, the former president's older brother.

Also arrested in recent days was the former Mexican prosecutor who ordered the 1995 arrest of Mr Raul Salinas for the murder of his former brother-in-law, Mr Jose Ruiz Massieu. He was the PRI's general secretary. The former prosecutor, Mr Pablo Chapa, has been accused of planting a body in a grave on the ranch of Mr Raul Salinas to frame him for the Ruiz Massieu murder.

Gen Gutierrez said on the day of his arrest that his association with the drugs world - he was accused of receiving huge payoffs and securing protection from government officials - was part of a sting-type operation "to get to Amado Carrillo", head of the Juarez drugs cartel. President Clinton found the affair "deeply troubling". In the event, certification was granted but "with firm expectations of further progress in the near term," the Secretary of State, Ms Madeleine Albright, said.

The Mexican Attorney General's office said earlier yesterday that Mr Oscar Malherbe de Leon, allegedly the boss of the so-called Gulf cartel, tried to bribe his way back to freedom. Mr Malherbe had succeeded Abrego as the Gulf cartel kingpin.

Yet another twist to the ongoing tale came on Thursday with a report that the mother of Mr Carrillo - known as "the Lord of the Skies" because of his aircraft drugs fleet - may stand for election to the Mexican Congress in July 6th elections that may end the 68 years of unbroken PRI rule.