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.