Clinton urges Soeharto to stand behind reforms

Clinton urges Soeharto to stand behind reforms

WASHINGTON (Reuters): U.S. President Bill Clinton told
Indonesian President Soeharto on Friday that it was important
Soeharto take steps to demonstrate Indonesia's political
commitment to economic reform, a White House spokesman said
yesterday.

Speaking as Group of Seven ministers gathered in London to
discuss Asia's financial crisis, Clinton "reiterated the
importance of Indonesia's sustaining economic reform policies and
of taking steps to demonstrate its political commitment to
reform," the spokesman said.

In his second telephone call to Soeharto in seven days,
Clinton "suggested measures that the United States and other
countries might take to help alleviate some of the problems
created by Indonesia's financial difficulties, including the
unavailability of trade financing and shortages of necessities,"
the White House said.

The spokesman gave no details of what measures Clinton
suggested to Soeharto, but said "these cooperative efforts" will
be discussed by the Group of Seven.

It was the second telephone call by Clinton to Soeharto this
month. They spoke Feb. 14 for about 30 minutes.

The spokesman said the latest call was "to follow up on their
conversation of last week" but did not say whether the presidents
discussed Indonesia's plan to peg its currency, the rupiah, to a
major currency, such as the dollar.

The Jakarta proposal to fix the rupiah rate through a currency
board system has been criticized by the IMF and the G-7 as being
premature for Indonesia until a series of reforms and issues were
settled.

Indonesian and IMF officials were meeting through the weekend
to discuss a range of subjects, including the government's
economic reform program and the issue of a currency board, an IMF
official said Saturday.

"They are going over a range of issues, including the issue of
a currency board," the official said.

The U.S. government has said repeatedly that Jakarta's plan to
create a currency board was too risky given Indonesia's current
economic state.

U.S. Commerce Secretary William Daley said on Thursday
Indonesia must make the economic reforms prescribed by the IMF to
get its ailing economy back on track.

"We are anxious to see the commitments made followed through
on," Daley, who was in Singapore to meet regional business
executives with U.S. trade links, told a news conference.

A Singapore newspaper, meanwhile, reported Saturday that
Soeharto has decided to indefinitely postpone his plan to
implement a currency peg on rupiah.

"The draft legislation for the currency board is ready. So
too, the presidential decrees. But President Soeharto has decided
not to sign them anytime soon," sources in Jakarta told the
Straits Times.

The report said Soeharto had backed down following
international opposition from its creditors to the setting up of
the currency board system.

In other development, Malaysian Prime Minister Mahathir
Muhammad said that Indonesia has the right to pursue a proposal
for a currency board, even if it is damaging to its economy or to
its neighbors,

"As far as we are concerned, Indonesia is an independent
country, and if it wants to do something, it should be allowed to
do something," Mahathir told a news conference after opening a
political party's general assembly.

"If you say that in so doing, it would damage itself, that
still is the right of Indonesia," Mahathir said. "Otherwise we
are not independent because we are always being forced by
somebody else to do certain things."