Clinton appeals for U.S. support for Asian bailout

Clinton appeals for U.S. support for Asian bailout

WASHINGTON (Reuters): President Bill Clinton appealed on Tuesday to the American people to support rescue deals for Asia's ailing tiger economies, saying it was the right thing to do for the United States and the world as a whole.

The president also called on Congress to renew its commitment to the International Monetary Fund, the agency that put together multibillion dollar bailouts to rescue the economies of Indonesia, South Korea and Thailand.

"The American economy remains sound and strong -- and I want to keep it that way," he said in his State of the Union address.

"But because the turmoil in Asia will have an impact on all the world's economies, including ours, making that negative impact as small as possible is the right thing to do for America and the right thing to do for a safer world," he said.

Clinton, however, faces an uphill battle persuading the American public and a skeptical Congress to support the bailouts and the fund that engineered them.

An alliance of lawmakers from the right and left launched a legislative assault on the IMF on Tuesday, proposing measures that could limit Washington's role in bailouts and cut off funding for the IMF.

One of the measures, drafted by Rep. Bernard Sanders, an independent from Vermont, would prohibit the Clinton administration from using more than $250 million from Treasury's Exchange Stabilization Fund as part of any international bailouts without congressional approval.

Legislation by Republican Rep. Ron Paul would end all U.S. participation in the International Monetary Fund, the agency that put together emergency loan packages worth more than $100 billion for Indonesia, South Korea and Thailand.

Both measures are certain to meet with stiff opposition from IMF supporters in Congress and from the Clinton administration. Paul's proposal stands little chance of passage because it is so radical, several congressional aides said.

House Majority Leader Dick Armey, speaking to public television's Nightly Business Report Tuesday, said U.S. funding for the global institution might be in trouble.

"We have to ask what will the IMF do with our tax dollars. We ... don't know yet what they have asked some of these nations in Asia to do," he said. "We're not going to just let our tax dollars underwrite a failed crony capitalism out there."

It was "a very big question" whether funding for the IMF would be renewed, Armey said, adding, "To a large extent the IMF has failed in the mission for which it was first created."

The legislation, whatever its fate, marks the start of a congressional battle, pitting the Clinton administration against an alliance of conservative and left-leaning lawmakers who insist that the IMF bailouts in Asia shackle the free market, and hurt workers and the environment.

"At the very least, Congress is interested in changing how the IMF works," said Ian Vasquez of the libertarian Cato Institute. "But there's also a growing sentiment questioning whether it is needed at all."

President Bill Clinton is asking Congress to approve some $19 billion to boost IMF resources, which have been drained by the rescue deals in Asia.

The administration has already pledged to tap the Exchange Stabilization Fund if it needs money to pay the $8 billion U.S. share of last year's international rescue deals for Indonesia and South Korea.