NEWS ANALYSIS : Zedillo Reveals Bold Presidential Style : Mexico: Analysts give high marks to new leader after he unceremoniously fires his treasury secretary.

When Mexican President Ernesto Zedillo unveiled his young Cabinet a month ago today, Treasury Secretary Jaime Serra Puche was seen as the cornerstone of stability in a dream team of economists and technocrats who would carry Mexico’s gradual free-market revolution into the next century.

On Thursday, amid Mexico’s worst economic crisis in more than a decade, Zedillo unceremoniously fired him, announcing on national radio that he was accepting the resignation of the only Cabinet holdover--other than Zedillo himself--from the administration of his predecessor, Carlos Salinas de Gortari.

In a single, bold act, Zedillo has done more than just clear the halls of power of the last of Salinas’ top aides and remove a key professional who was the darling of Wall Street and Mexico’s chief negotiator of the North American Free Trade Agreement.

In allowing Serra--who analysts now say apparently knew more about international trade than banking and currency markets--to fall on the sword for a bitter devaluation that has thrown the Mexican economy into chaos, Zedillo also put the first bold strokes on the signature of his presidential style.

As the dust began to settle Friday just in time for Zedillo’s one-month anniversary in office, several Mexican political analysts actually gave high marks to the bookish and shy president for his early demonstration of guile within the grilla , the Mexican equivalent of “inside the Beltway.”

The president, whose lack of political experience had dogged him during his campaign and after, had acted decisively--if not swiftly--to isolate the cause of what he declared a national “economic emergency,” to fix blame and to replace Serra with another Cabinet technocrat who is highly respected internationally: Guillermo Ortiz, the Stanford-educated former secretary of communications and transport.

Mexico’s markets did not react with immediate favor when they opened Friday morning. In light trading, the peso fell five centavos against the dollar, at 4.925 pesos from Thursday’s close of 4.875. But economists and market analysts said they were encouraged by leaks from the president’s office Friday of a bailout plan that Zedillo is expected to unveil in an address to the nation Monday night.

Top aides said the government is negotiating an assistance package totaling between $10 billion and $13 billion with two major commercial banks, Citibank and J.P. Morgan Inc. In his address, Zedillo is also expected to offer a bond scheme to encourage investors to hang onto key government securities called tesobonos. About $10 billion worth of the bonds come due in the first quarter of next year, which could cause another run on Mexico’s sharply declined reserves.

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There were also encouraging signs Friday on the political front. The rebel Zapatista National Liberation Army uprising in the southern state of Chiapas, which Zedillo and others had blamed for triggering the economic crisis, had moved off the front burner. Zapatista leader Subcommander Marcos issued a communique late Friday from his rain-forest stronghold declaring a unilateral cease-fire from New Year’s Day through Friday.

During that period, he said his fighters will take no offensive action against government forces, blockade no roads and redeploy far enough from Mexican army positions to ensure peace until negotiations can start anew.

Marcos’ latest communique reinforced his earlier order withdrawing his armed fighters from positions they had taken outside dozens of villages during a one-day insurrection on Dec. 19. Marcos “saluted” Zedillo’s decision to similarly redeploy Mexican army troops away from the rebel zone.

The communique defused immediate fears of a repeat of the Zapatistas’ 1994 New Year’s Day shooting war, which left at least 145 people dead. But some Mexican analysts were unforgiving, criticizing Zedillo for acting too slowly or for deepening the nation’s political instability with a Cabinet shake-up so early in his six-year term.

Others contemplated conspiracy theories focusing on the simple fact that Serra was considered the ruling Institutional Revolutionary Party’s leading candidate to replace Zedillo as president in the year 2000.

Most analysts agreed that Zedillo’s biggest test will come Monday night, when he is scheduled to explain how he will end the current economic nightmare and stop a seemingly inevitable ballooning of inflation, which the president’s aides believe they can manage by the second half of next year.

While encouraged by Zedillo’s moves Thursday and Friday, Morgan Stanley Vice President Rafael Bello said, the president “will have to show that he is in control, that he has a handle on the situation and that he is ready to move forward.”

Clearly, that will be a monolithic task. Despite a late-week rally, the Mexican currency lost 40% of its value in two weeks. Most of Mexico’s banks, already overextended with bad loans 4.5 times larger than American banks, are considered in critical condition. Tens of thousands of small- and medium-sized Mexican businesses faced potential disaster after interest rates on short-term borrowing were doubled Wednesday in an effort to keep some foreign capital coming in.