china(with its great civil liberties and India)?
France unworried by dollar dip, urges Japan to act
By Brian Love
PARIS, Sept 13 (Reuters) - French Finance Minister Dominique Strauss-Kahn said on
Sunday the dollar's recent slide was far from a disaster for France, but the outlook for U.S.
economic growth was far more important than current emerging markets crises in
themselves.
He said he thought U.S. growth remained relatively untouched by the financial turmoil that had spread from southeast Asia. In a
wide-ranging interview, he also reiterated calls for Japan to revive its economy as well as for an overhaul of an outdated global
monetary system.
''Even if the dollar has fallen a bit...it's still above the average level of 1997, and well above where it was at the start of 1997,
when the dollar stood at five francs,'' he said.
The dollar at times passed six francs in value during 1997, making French exports more competitive at a time when exports
were the main engine of economic growth, but recent weakness amid the resurgent emerging markets crisis and President Bill
Clinton's troubles has knocked the dollar to 5.70 francs.
''Yes, it has slipped a little, but it's not catastrophic -- indeed far from it,'' Strauss-Kahn told Europe 1 radio.
''But we also can see that it (dollar level) is not unrelated to U.S. internal developments. You're right to say our attention must
be fixed on the United States,'' he said.
Strauss-Kahn said the advent of the single European currency next January had provided the 11 participating countries with a
protective buffer from financial turmoil in other parts of the world, which had not been the case in past times of crisis.
But he said the financial and economic turmoil tormenting southeast Asian countries for over a year required effective action
from Japan to revive the world's second largest economy.
The economic troubles of Asian countries like South Korea, Thailand and Indonesia had knocked an estimated 0.5 percentage
point off French growth in 1998 and would take a similar toll in 1999. Official French forecasts of 3.1 percent growth this year
and 2.7 percent growth in 1999 take account of this.
Strauss-Kahn said the crisis which erupted in Russia in August was of another kind, as was the follow-on crisis of confidence in
Latin America, where Brazil was now suffering despite being a ''well-run economy,'' Strauss-Kahn said.
Strauss-Kahn said the West was ready to keep helping Russia financially if Moscow reformed. Things seemed to be sorting
themselves out politically with the naming of a prime minister.
''But this is only a first step. They need to take action -- reorganise the Russian economy. There's no economy without a state,
without taxes being raised to pay for public services and the normal functioning of the country,'' he said.
Strauss-Kahn, who said he conferred with British counterpart Gordon Brown on the eve of Russia talks among Group of
Seven officials in London, appealed to Tokyo to play a more effective role in sorting out the crisis that has spread beyond Asia.
Senior foreign and finance ministry officials meet in London on Monday to discuss Russia's woes since the country's political
and economic meltdown in August triggered wider market turmoil.
On Japan, Strauss-Kahn said that eight months of successive economic revival plans appeared to have done little to change
things and that Japan needed to do something concrete.
''The crisis (in southeast Asia) is rooted in the Japanese situation, where we can see all too clearly there has been no sign of
things improving,'' he said.
''It's all dead calm in Japan. Economic growth is very weak and the financial system needs restructuring, but nothing happens --
it's a case of one step forwards one step back,'' he said.
''We'll get involved as we already have in the past at the G7 (Group of Seven) level,'' he said. ''Our involvement has to be
followed up with action,'' he said, specifying that he was speaking of Japan responding to pressure from G7 partners.
Strauss-Kahn said market turmoil from Asia to Latin America added poignancy to France's long-time calls for a major overhaul
of the world monetary system which was founded with the Bretton Woods agreements after World War II and is now
inappropriate.
''What we have today are rules which are no longer adapted to the context,'' he said. ''The International Monetary Fund plays
its part, it has been heavily criticised, probably too harshly. But beyond IMF's role what we need today is a new Bretton
Woods, an new organisation of the world monetary system,'' he said.
China and India should be involved in this reform, he
added.
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