Newspaper article The Christian Science Monitor

Clinton, Facing Fight on Mexican Bailout, Drafts Rescue Plan

Newspaper article The Christian Science Monitor

Clinton, Facing Fight on Mexican Bailout, Drafts Rescue Plan

Article excerpt

PRESIDENT Clinton's decision to abandon his $40-billion loan guarantee plan to Mexico represents an attempt to still help that country's ailing economy - while avoiding a major confrontation with the Republican-led Congress.

His replacement of the rescue package with a plan to lend Mexico money by executive order and through international channels will allow him to bypass legislative opponents of the plan.

"We cannot risk any further delay," Clinton told the nation's governors here on on Jan. 31. While Congress whittled away at the loan-guarantee proposal, "Mexico's situation continue{d} to worsen," he said.

The new plan, crafted by US Treasury Undersecretary Lawrence Summers, will provide Mexico with $20 billion from the Treasury Department's Emergency Exchange Fund.

It will also provide $17.7 billion from the International Monetary Fund, and another $10 billion in short-term financing from the Swiss-based Bank of International Settlements.

There is no implication for American taxpayers, as the money is already budgeted for, White House sources say.

"We will be able to have an even more aggressive action" than with the previous $40-billion loan, Clinton said.

In overnight talks on the plan, a top administration source says, House Speaker Newt Gingrich was "supportive," Senate majority leader Bob Dole was "cautious" and House minority leader Richard Gephardt said it would get Congress "off the hook."

During the past two weeks of negotiations between the White House and lawmakers, Mr. Clinton's rescue package seemed headed for a wreck.

In every major speech these days, President Clinton and members of his Cabinet invoked the need to stave off a steeper slide in Mexico.

On Capitol Hill, Federal Reserve Board chairman Alan Greenspan pleaded with legislators to accept the rescue package. But the harder the plan's supporters pushed, the stiffer the resistance became from legislative opponents. …

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