NEWS ANALYSIS : Some Fear Zedillo Can’t Pull Mexico From Mire : Latin America: Voters chose technocrat in hopes of avoiding instability. But president’s leadership so far has failed to stem crisis.

MEXICO CITY —  When President Ernesto Zedillo met with members of the Mexican Congress on Tuesday morning, he was firm and candid, and he spoke with all the confidence and authority of a Yale University Ph.D. in economics about the country’s worsening financial disaster.

Unity, he declared, is the only path by which to confront the economic crisis; the current financial turmoil must not distract the government from the deep democratic reforms that the public demands. And the basis of the nation’s economy, he asserted, remains firm and potentially one of the most dynamic in the world.

As he spoke, however, the bottom seemed to be falling out of that same economy.

Hundreds of millions of dollars in investment were fleeing the nation’s stock and bond markets, chasing billions of dollars already long gone. The Mexican peso was losing even more of its value against the U.S. dollar, and political analysts in the capital already were declaring Zedillo’s young government to be mired in a crisis of confidence.

Just six weeks into a term that Zedillo promised would usher in a new era of prosperity and reform, many were beginning to ask the same question: Can this bright, 42-year-old technocrat whose political skills have been questioned in the past govern a nation of 90 million through its tidal wave of crises?

“I have serious doubts at this point,” Sergio Sarmiento, a prominent political columnist, said as the Mexican stock market suffered its second major loss in two days and the peso tumbled yet again Tuesday. “At this point, I don’t think he has control over the country. He has lost control of the economy. He has lost control over the political situation. Clearly, he’s failing.

“He’s a bright man. He knows what’s happening. He just can’t do anything about it.”

Indeed, in the 22 days since Zedillo took bitter measures to adjust Mexico’s overvalued peso, the analysts agreed, he has become a reactive--rather than active--president. And each of those reactions, they said, seems to have had an equal and opposite reaction among the foreign and Mexican investors who had driven Mexico’s recent economic boom--and its more recent bust.

When Zedillo last week unveiled what was billed as a bold emergency plan to heal the ruptures the devaluation caused in the economy, the markets fell the following day. The president announced a “severe” government austerity plan Monday night, banning first-class travel, vanity construction projects and unlimited telephone use for public servants--and the markets crashed anew Tuesday.

Most analysts agreed that the compounding crises are not entirely Zedillo’s fault. Many expect that Zedillo’s performance and that of the national economy as a whole will improve in time--if only because, as Sarmiento put it, “it can only get better.”

But, taken together, Zedillo’s first weeks have left most Mexicans questioning the skills of the man they had elected largely out of fear that an opposition regime would lead to just such economic and political instability.

Even the government-owned newspaper, El Nacional, ran an editorial by a Mexican economist Tuesday declaring “a crisis of credibility” in Zedillo’s administration.

Some analysts were even questioning Zedillo’s ability to complete his term, which would be unprecedented in 65 years of continuous rule by the Institutional Revolutionary Party.

“It could change the country. If the president can’t govern, someone’s going to have to kick him out. And that saddens me, because this is my country,” Sarmiento added. “In the 19th Century, no Mexican president ever finished his mandate. I can only hope we’re not going back to that.”

Zedillo inherited most of the crises he now faces from his predecessor, Carlos Salinas de Gortari, who appeared to concede Zedillo’s lack of political skills when he selected Zedillo to replace Luis Donaldo Colosio as his successor after Colosio was assassinated on the campaign trail.

“Salinas justified it by saying Zedillo was a quick learner,” said Emilio Zebadua, a political science professor. “But the dynamics of the situation haven’t given him any time to learn at all.”

In fact, the simmering Indian rebellion in Chiapas, which detonated the current economic crisis when the Zapatista National Liberation Army staged a peaceful, one-day insurrection last month, was part of the Salinas legacy. That legacy also included an overvalued peso draining billions of dollars from the government’s foreign-exchange reserves.

Although Zedillo initially was given high marks for his handling of the Chiapas revolt--using a combination of military threat and political concessions to bring the Zapatistas to the bargaining table--his leadership in the ensuing financial crisis has, in the words of one political columnist, also “devalued” his presidency.

“He lacks the capacity to assert a modicum of control needed to direct the economy,” Zebadua said. “He lacks any kind of strategy. He needs to show the Mexican people that he has some sort of plan for the economy.”

At the root of the investor skepticism that greeted Zedillo’s frank economic address a week ago was his government’s handling of the initial devaluation. Economic and political analysts alike said--and the markets have proved--that little faith remained in his administration after it allowed the peso to float freely against the dollar just 12 hours after promising it would not do so.

In a clear damage-control effort, Zedillo fired Treasury Secretary Jaime Serra Puche after 27 days on the job. But that and Zedillo’s speech apparently were not enough to restore confidence.

Most analysts hold out hope that Zedillo could soon get the breathing space he needs to recover his credibility. “The peso is grossly undervalued right now,” Sarmiento said. “Every stock on the stock market is undervalued. It’s an excellent time to buy. I have to assume someone smart and brave is going to start buying. That will stabilize the market and give the president a chance to stabilize his administration as well.

“But if we don’t get at least two or three big buyers, well, the expression in Spanish is vuelo en picada --a plane in a nose-dive. And that’s just where we are at the moment.”