By MARTIN CRUTSINGER
c. The Associated Press
WASHINGTON (Nov. 14) - Amid rising concerns about financial turmoil in Southeast Asia, the Clinton administration dispatched its point man Friday to consult with finance officials in Europe and Asia.
Deputy Treasury Secretary Lawrence Summers will meet with European monetary authorities in Frankfurt, Germany, on Saturday and officials of the Japanese government in Tokyo on Monday.
''Obviously, we and the Federal Reserve are watching developments in Asia very closely and with concern,'' said a senior Treasury Department official.
The Asian crisis has already engulfed a number of Asian countries, prompting the International Monetary Fund to assemble bailout packages this year for the Philippines, Thailand, and Indonesia.
The turmoil in the region has rattled financial markets around the world, triggering the biggest one-day point drop in Wall Street history two weeks ago. Private economists have expressed concern that South Korea, the world's 11th-largest economy, could be the next country in need of emergency financial support.
The senior Treasury official, who spoke on condition that he not be further identified, said that the financial troubles would be a central agenda item when President Clinton and the leaders of Japan, China and the other countries in the 18-nation Asia Pacific Economic Cooperation forum meet in Vancouver, Canada, on Nov. 24-25.
''Clearly, an important priority for us, for the Asian nations and for the coming APEC meeting will be finding effective procedures to respond to any future crises of this kind that may arise,'' said the official.
Summers' meetings with finance officials in Europe and Japan were added at the last minute to a long-scheduled trip Summers was to make for talks Tuesday and Wednesday in Manila on creation of a supplemental source of emergency financial support to help Asian countries in economic difficulty.
Japan first proposed the Asian fund in September during the annual meetings of the International Monetary Fund. At the time, the United States objected to the proposal, insisting that any emergency bailout funds should only be extended through the IMF.
The senior Treasury official said he believed there was a growing consensus on handling any supplementary financial assistance and ''the importance of the approach being centered on the IMF.''
The administration had refused to participate in a $17.2 billion rescue package for Thailand in August but reversed course two weeks ago and offered $3 billion in back-up support for Indonesia if a $23 billion IMF-assembled package proves insufficient.
Summers, who led the administration's crisis team in handling the $50 billion bailout for Mexico two years ago, and Federal Reserve Chairman Alan Greenspan both told a congressional committee Thursday that the adverse effects of the Asian crisis on the United States so far have been small.
''We do not foresee significant risk to the United States financial institutions or to domestic financial stability as a whole as a result of the turbulence to date,'' Summers told the House Banking Committee.
But at the same hearing, several private economists expressed concerns about South Korea, where a weak banking system and a falling currency have raised fears that it could need outside help.
Several economists said further devaluation of the South Korean currency could put added pressure on Japan, the world's second biggest economy, and a nation that has struggled for most of this decade to emerge from recession.
C. Fred Bergsten, a Treasury official in the Carter administration and now head of the Institute of International Economics, told the committee that a free-fall of the South Korean currency could set off another round of currency devaluations that would further destabilize financial markets.
''It would be very difficult to stop the new spiral and global markets - including ours in the United States - would be devastated,'' Bergsten testified.
Over reaction, maybe, I would like to know how large is the IMF? How much do they have?
Greg |
