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."