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From owner-indonesia-p@indopubs.com Wed Mar 4 14:07:44 1998
Date: Wed, 4 Mar 1998 12:06:57 -0700 (MST)
Message-Id: <199803041906.MAA14800@indopubs.com>
To: apakabar@clark.net
From: indonesia-p@indopubs.com
Subject: [INDONESIA-P] RTR - IMF holds key to Asia recovery - EU envoy
Sender: owner-indonesia-p@indopubs.com
Posted at 1:08 a.m. PST Wednesday, March 4, 1998
FOCUS-IMF holds key to Asia recovery - EU envoy
By Nelson Graves
KUALA LUMPUR, March 4 (Reuters) - The International Monetary Fund holds the
key to restoring confidence in Asia's economies, and Indonesia could
destabilise the region if it tried to peg its currency, a European Union
emissary said on Wednesday.
Derek Fatchett, British junior foreign minister and special representative
of the EU presidency, said Europe remained firmly behind Asia and wanted to
explore ways to help the region at a summit meeting set for London next
month.
"We are not just fair-weather friends," Fatchett told reporters during a
one-day visit to the Malaysian capital. "The purpose of this visit is to
embody a vote of confidence in the region. We are not washing our hands of
Asia."
Fatchett, who was accompanied by Jim Cloos, senior aide to European
Commission president Jacques Santer, came out squarely against Jakarta's
proposal to implement a currency board to fix the struggling rupiah
currency to a single peg.
"I would see the currency board as not being compatible with the IMF
programme at the moment and may not be in the medium term," he said.
The British official said he agreed with U.S. special envoy Walter Mondale,
who told Indonesian President Suharto on Tuesday that the only way to
resolve the country's economic crisis was to embrace IMF reforms.
"I would very much echo what Mondale has said about the IMF programme, that
there is a need to follow that to restore confidence. Priority must be
given in Indonesia to the IMF programme," Fatchett said.
"To stand outside of that programme runs risk, not just for Indonesia...our
fear is it would have an impact on others within the region."
Cloos said the Group of Seven industrialised nations were firmly of the
view that the conditions in Indonesia were not right for a currency board.
Suharto said on Sunday that he had started and would continue implementing
the IMF reforms, but complained they had not helped to bring about a
recovery in the rupiah.
U.S. President Bill Clinton has expressed concern about Indonesia's crisis,
the worst since widespread financial turmoil in the mid-1960s led to the
ouster of founding president Sukarno and helped propel Suharto to power.
Fatchett, on a four-nation tour of Southeast Asia, said Suharto had
indicated he would not introduce a currency board without the IMF's
consent.
The British official said the EU was keen to see stability return to Asian
markets, and Asia's troubles would top the agenda at the Asia-Europe
Meeting (ASEM) in London on April 3 and 4.
Britain has proposed a trust fund in association with the World Bank that
would provide technical assistance for financial restructuring and examine
the social impact of the economic upheaval in Asia. Britain has offered to
put five million sterling ($8.2 million) towards the fund, Fatchett said.
Asked if the EU would support an Asian proposal for a separate fund to
stimulate trade and investment in the region, Fatchett said: "We wish to
see more details. It is an idea we could take forward to ASEM."
Thai Foreign Minister Surin Pitsuwan said last week Asian nations planned
to put the proposed fund on the ASEM agenda.
Fatchett was in Thailand earlier this week and will go to Jakarta and
Singapore from Kuala Lumpur.