Jockeying over initiative to color Asia fund meet<\/p>\n
TOKYO (Reuters): Asian officials and representatives from
\nUnited States and the IMF meet in Manila this week to discuss an
\nAsian economic emergency fund, but there may be more haggling
\nover who leads the initiative than how the facility would be set
\nup.<\/p>\n
Asian nations, keen to craft a framework to fend off a repeat
\nof the recent financial upheaval, might see their idea of a
\nregional fund leave their hands after the U.S. and Europe made
\nclear they did not want to be left in the cold.<\/p>\n
A Philippine finance ministry official said last week that
\nEuropean countries, including Italy, France, Germany and Britain
\nhave indicated their wish to attend the meeting.<\/p>\n
U.S. Deputy Treasury Secretary Lawrence Summers will meet
\nEuropean officials in Frankfurt on his way to Manila, as well as
\nstopping in Japan to meet Finance Minister Hiroshi Mitsuzuka.<\/p>\n
Tokyo had mooted the idea of a fund facility separate from the
\nInternational Monetary Fund at the Group of Seven (G7) meeting in
\nHong Kong in September, and had hoped to lead the initiative.<\/p>\n
Japanese officials have said IMF financial aid, especially the
\nquota it sets to each country, is not enough for Asia.<\/p>\n
\"The growth and the capital flow of Asia has just been too
\nfast for the IMF,\" said a Japanese finance ministry official.<\/p>\n
He said IMF-led rescue packages for Thailand and Indonesia
\nhave proven that additional support was needed. In both cases, a
\ngroup of countries made financial contributions or commitments in
\naddition to those made by the IMF.<\/p>\n
IMF-backed packages to rescue and reform the Thai and
\nIndonesian economies, plus assistance for the Philippines, have
\ntopped US$40 billion.<\/p>\n
\"The resources of the IMF are not infinite,\" said another
\nJapanese official.<\/p>\n
But the IMF has been lukewarm to the idea of a separate
\nfacility, fearing it would undermine its authority.<\/p>\n
\"Whatever financing mechanism is in place, it shouldn't in any
\nway compete, alter...or reduce the strength of IMF policies and
\nconditionality,\" IMF Managing Director Michel Camdessus said in
\nManila on Saturday.<\/p>\n
The IMF chief has repeatedly said what is needed was a
\nregional surveillance forum where \"peer pressure\" would play a
\nrole in monitoring each others' economies.<\/p>\n
The U.S., hoping to retain its regional influence but cool to
\nthe idea of another bail-out fund, has insisted that the IMF
\nshould be at the center of any aid package. \"The IMF must remain
\nat the heart of any international response,\" Summers said last
\nweek.<\/p>\n
International financial sources, said many European nations
\nalso prefer the use of exceptional clauses within the IMF, rather
\nthan to set up a separate facility.<\/p>\n
Japan might have shifted course in the face of Western
\nresistance to a permanent Asian fund.<\/p>\n
Officials now say the package for Indonesia, in which Asian
\ncountries and the U.S. made financial commitments as a \"second
\nline of defense,\" was one idea for such a facility.<\/p>\n
Analysts said commitments of credit lines would be consistent
\nwith U.S. thinking and may be easier for the U.S. to agree to.<\/p>\n
\"If lines of credit can be arranged, it'll be easier to
\nconvince the U.S. Congress,\" Masahiro Kawai, economics professor
\nat the Institute of Social Science at Tokyo University told
\nReuters Financial Television (RFTV) last week. Congress has
\nrepeatedly shown reluctance to U.S. overseas aid.<\/p>\n
There might also be wrangling in Manila on whether to expand
\nthe fund facility to cover Asian Pacific Economic Cooperation
\n(APEC) forum nations, or limit it to Asian countries.<\/p>\n
\"It must be broader than just Asia...Bring in the U.S. and
\nCanada,\" said Fred Bergsten, director of the Institute of
\nInternational Economics in the U.S. \"Therefore I think the APEC
\nformat is the easiest, most natural way to do it.\"<\/p>\n
But Japanese officials said they were skeptical about putting
\nthe facility under the umbrella of APEC.<\/p>\n
\"We would have to address the issues of Latin American
\ncountries. That's not 'Asia',\" said one official.<\/p>\n
APEC, groups Australia, Brunei, Canada, Chile, China, Hong
\nKong, Indonesia, Japan, South Korea, Malaysia, Mexico, New
\nZealand, Papua New Guinea, the Philippines, Singapore, Taiwan,
\nThailand and the U.S.<\/p>\n
But Tokyo seemed to lack strong backing from its Asian
\nneighbors.<\/p>\n
Philippine President Fidel Ramos have said he would seek
\nAPEC's endorsement of the facility at a summit meeting which
\nstarts in Vancouver on November 24.<\/p>\n
Analysts said if APEC became the forum for the Asia fund, it
\nwould greatly undermine the influence of Japan, the region's
\nlargest economy, or of any other nation.<\/p>\n
\"The APEC umbrella could help prevent a dominance of one
\ncountry,\" Mari E. Pangestu, executive director at the Center for
\nStrategic and International Studies in Jakarta told RFTV.<\/p>",
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