(FORTUNE Magazine) – James Baker seems to be turning into the most activist U.S. Secretary of the Treasury since his fellow Texan John Connally devalued the dollar for Richard Nixon in 1971. The attack Baker orchestrated on the dollar knocked it down 5% and dampened protectionist sentiment in Congress -- though the long-range effect may be higher U.S. inflation and lower incomes (see Money & Markets). Fresh from these adventures, Baker flew to Seoul for the annual meetings of the World Bank and IMF, where he was expected to propose a greater role by governments in dealing with the Third World debt problem and closer cooperation between the two international lending agencies. Until recently, banks and world lending agencies have been pointing to Mexico as an example of how a country can tighten its belt and generate large foreign-exchange surpluses that can be used to service its debt. But the devastating earthquake that shattered downtown Mexico City and claimed thousands of lives changed all that. Mexico needs some breathing room and seems likely to get a sympathetic ear from the banks and lending agencies trying to sort out its giant $96-billion debt. A consortium of banks representing 600 lenders agreed to postpone for at least six months nearly $1 billion in repayments due October 1 and November 4. With Mexico in the vanguard, the rest of the big Third World debtors won't be far behind. They set the stage for the Seoul meeting with a series of coordinated appeals for more lenient credit terms at the 40th session of the U.N. General Assembly. Brazilian President Jose Sarney, saddled with a foreign debt of over $103 billion, criticized the rising protectionist sentiment in industrial countries and the harsh economic measures often required by the IMF. ''This policy weakens civilian leadership, renders the social crisis explosive . . . and constitutes a threat to democratic structures,'' Sarney told the General Assembly.