Cohen urges Indonesia to act quickly

Cohen urges Indonesia to act quickly

KUALA LUMPUR (Reuters): U.S. Defense Secretary William Cohen urged Indonesia yesterday to move quickly to bring its economy in line with the International Monetary Fund's policy prescriptions.

"It's important for Indonesia to act quickly to try to conform its economic structures as closely as possible to the IMF recommendations," Cohen told a news conference in the Malaysian capital.

Cohen, who met Malaysian Prime Minister Mahathir Mohamad earlier on Monday, was scheduled to travel on Tuesday to Jakarta where he was to confer with President Soeharto.

The U.S. defense secretary spoke as IMF representatives and senior U.S. officials led by Deputy Treasury Secretary Lawrence Summers were in Jakarta to discuss Indonesia's efforts to overcome the effects of a regional economic crisis.

Cohen, asked to comment on the possibility of race riots in Indonesia or migration of disgruntled citizens, said it would be counter-productive to speculate.

He said Washington was aware that IMF-led rescue plans can be austere and lead to difficulties in some countries, but that they offered the best chance for those economies to stabilize.

Indonesia, Thailand and South Korea have turned to the IMF for emergency aid.

"For the moment, they need a stabilizing force which comes from IMF assistance," Cohen, flanked by Malaysian Deputy Prime Minister Anwar Ibrahim, said. "It's the best hope that they have for recovery."

Cohen said that in his talks with Mahathir and Anwar at the outset of his seven-nation Asian tour, he did not suggest Malaysia needed to turn to the IMF for emergency aid.

"I did not suggest to Dr Mahathir or the deputy prime minister that they should invoke the need for IMF funding," he said. Anwar later told the news conference that Malaysia had decided it did not have to resort to IMF aid.

Cohen said the United States had funneled emergency assistance to the region through the IMF-led programs, and he did not anticipate that Washington would provide direct funding to the region.

The U.S. defense chief said Washington was also trying to help troubled Asian countries by allowing them to stretch out or defer payments for weapons.

Anwar said the economic slowdown had forced his country to revise some earlier defense spending projections. "We have agreed to defer many earlier commitments," he said, adding that Malaysia still intended to have an efficient, modern military force.

Cohen said he did not expect the region to reject U.S. military cooperation because of its economic woes. "There is a very strong support for maintaining the American presence," he said.