Asian IMF idea does not seem bad: U.S. official

Asian IMF idea does not seem bad: U.S. official

SYDNEY (Reuters): The administration of President George W. Bush would support the future establishment of an Asian IMF, a senior U.S. official said on Friday.

Deputy Secretary of State Richard Armitage said regional speculation about an eventual Asian Monetary Fund to help deal with economic crises like the 1997-98 meltdown "doesn't seem to me to be a bad idea".

His enthusiasm contrasted with a cool response from the previous Clinton administration and Europe to Asian criticism of the International Monetary Fund (IMF) during the economic crash three years ago and a Japanese proposal then that Asia go it alone.

"I don't know that they have right now the excess capital floating around to bring such an idea into fruition," Armitage said.

But he added: "I would suggest that this administration thinks there's plenty of work for everyone. Anyone who's got a good idea is welcome to the table."

The idea of an Asian Monetary Fund has sprung out of progress by 13 Asian nations towards setting up a regionwide currency stability network to avoid a repeat of the 1997-98 crisis, when Asian currencies fell like dominoes.

ASEAN+3

The so-called Chiang Mai Initiative is built on swap arrangements between central banks in the 10-member Association of South East Asian Nations (ASEAN), and those of China, Japan and South Korea.

Japan for example has set up a US$3 billion currency swap deal with Thailand, a $2 billion pact with South Korea and a $1 billion swap facility with Malaysia.

The IMF has welcomed the agreements, but has stressed it believes any Asian Monetary Fund would need to work in conjunction with the global monetary body.

Under the Chiang Mai Initiative, swap deals can only be triggered without IMF involvement in cases where member countries are considered to be suffering temporary cash crunches. Anything more serious and officials from Washington must be brought in.

But some members, in particular Malaysia, have been extremely adverse to continuing dependence on western agencies.

Australia, which has strong links to Asia through trade and geography, has been locked out of the swap arrangements in a sign that some regional analysts interpret as growing Asian discontent with economic solutions imposed by the west.

Former Australian prime minister Malcolm Fraser has been campaigning for the island continent to water down its strong ties with the United States in order to take its rightful place alongside its Asian neighbors.

"If Australia is excluded from that (an AMF) at the end of the day it's Australia's fault. If people in Asia think America is our major priority..., then we can't expect to be fully accepted as a partner in Asia," Fraser told Reuters on Thursday.