Clinton may have rescued own currency


WASHINGTON -- President Clinton's decision to prop up the Mexican peso may or may not ultimately rescue Mexico's economy, but it already appears to have bolstered the president's standing.

From his first week in office, Mr. Clinton has been bedeviled by the perception that he is loath to act on his own. As a consequence, his tenure has been characterized by what even his allies see as tardiness, indecisiveness and an often-futile search for consensus.

But in the effort to rescue the peso, even those who disagree with what Mr. Clinton did concede that he acted swiftly and decisively.

Just 48 hours after he was presented with the option of backing up Mexico with $20 billion in a currency stabilization fund controlled by the president, Mr. Clinton went for it -- and did so before he knew whether Congress would support him.

"He was presidential," said Stephen Hess, a presidential scholar at the Brookings Institution and frequent critic of Mr. Clinton. "Regardless of the substance of his decision, and I wouldn't know whether it's right or wrong, it's extremely useful for him to act decisively.

"The criticism has been that he doesn't stand for anything. Well, he stood for something this time -- something that was unpopular, too -- and he did it quickly."

Republican leaders also grudgingly praised Mr. Clinton, saying that this time he proved to be a man of action, not words.

Though he called the president's plan "risky," Texas Sen. Phil Gramm, an opponent of the aid plan and a potential Republican opponent against Mr. Clinton in 1996, conceded yesterday that the president had put himself on the line for something he thought was right.

Republican House Speaker Newt Gingrich commended the president for his "decisiveness."

"It was a very sobering, very hard decision," Mr. Gingrich added. As late as Sunday, the president's staff was working on legislation that Congress would have had to pass to guarantee $40 billion of U.S. funds to back up the peso.

But while Mr. Clinton was at church, top White House aides had concluded that they were losing support in Congress -- and that key Mexican banks might fail while Congress was talking.

Counting noses, Leon E. Panetta, the White House chief of staff, started with the House Democrats.

Of those who had voted for the North American Free Trade Agreement, only 60 were left in Congress. This was the administration's core of support, but it wasn't enough. Efforts to round up more seemed to be going nowhere.

Some critics maintain that Mr. Clinton's inability to round up support from his fellow Democrats on the peso stabilization issue revealed his weakness as a political leader, but on the Republican side Mr. Gingrich was having his own troubles.

Those most supportive of the speaker were balking at what they considered a bailout. Moreover, they were talking of imposing conditions that were an affront to the Mexicans.

By Monday night, Mr. Gingrich had phoned the president to report that there was no way to move swiftly on it -- and administration officials decided to switch gears.

The idea to have Mr. Clinton unilaterally tap into the currency stabilization fund had surfaced in mid-January in the offices of Treasury Undersecretary Lawrence H. Summers and Assistant Treasury Secretary Jeffrey R. Shafer.

Their three main concerns, they said later, were that they didn't believe the $20 billion to $25 billion in the fund was enough to stabilize the peso; they were worried that Congress would act to undermine the president's authority to act unilaterally; and they were afraid that if Mr. Clinton acted alone, it might spook the financial markets -- and leave the president exposed politically.

Monday night, after Mr. Gingrich's call, Mr. Panetta, Treasury Secretary Robert E. Rubin and Samuel R. Berger, the deputy national security adviser, waited for Mr. Clinton to return from a formal dinner.

Shortly after 11 p.m., they sat in the Oval Office and explained the options to him. "He concluded that we would use this approach," Mr. Panetta recalled.

Mr. Summers, who had flown to Europe to line up more money, got a commitment for $10 billion more from the International Monetary Fund. This took care of one concern.

Congressional leaders were summoned to the White House for a Tuesday morning meeting. "I'm prepared to take this other approach," the president said. "But I need your support to make this work."

The leaders were supportive, but said they'd like to go to their members before making a commitment to back the president. Mr. Clinton said he was going ahead -- that he didn't want the financial markets in Mexico to take another beating while Washington dithered.

Two hours later, Mr. Clinton outlined his plan to the National Governors' Association. Two hours after that, the congressional leaders released a strongly worded letter of support affirming both the wisdom and legality of the president's action. That took care of the second worry.

On Tuesday, the peso strengthened and stock prices surged in the biggest gains since the Mexican government devalued the peso Dec. 20.

Yesterday, stock prices eased as investors took profits. But the value of the "new peso" -- so called since the government slashed three zeros off the old currency in 1993 -- continued to rise.

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