EU urges Indonesia to implement IMF program

EU urges Indonesia to implement IMF program

JAKARTA (JP): The European Union (EU) yesterday joined
international calls urging President Soeharto to wholeheartedly
follow through with commitments to reform the country's economy
under the International Monetary Fund's US$43 billion rescue
package.

An EU special emissary told the President that Indonesia's
economic chaos could only be put back in order if the government
patiently and consistently carried out the 50-point economic
program.

"I urged the President to follow the IMF program. This is the
commitment Indonesia has already made and it is important, and
that should happen because it is the only way to restore
confidence in the market," British Junior Foreign Minister Derek
Fatchett said after holding a 40-minute meeting with Soeharto at
his private residence on Jl. Cendana, Central Jakarta.

Fatchett was accompanied at the meeting by Jim Cloos, cabinet
chief of the European Commission. Soeharto himself was flanked by
Minister/State Secretary Moerdiono, Minister of Foreign Affairs
Ali Alatas and the government's economic advisor Widjojo
Nitisatro.

British Prime Minister Tony Blair is currently the president
of the European Union. Blair sent Fatchett as his special
emissary to visit some members of the Association of Southeast
Asian Nations (ASEAN), including Malaysia, Thailand and
Singapore.

Fatchett said the main purpose of his mission was to discuss
the economic crisis with regional leaders because the situation
would be a major issue discussed at the Asia-Europe Meeting
(ASEM) in London on April 2.

"The Indonesian economy is the motor economy within the
Southeast Asian region. We wish to see a restoration of
confidence in its economy," Fatchett noted.

When asked about the President's reaction to his message,
Fatchett replied: "I am certain that the message was understood
by the President."

The envoy did not agree with Soeharto's view that the IMF
prescription had failed to remedy Indonesia's dying economy,
saying the government had just started implementing the economic
reforms.

"If you do not fully follow the doctor's prescription and,
instead of three pills during the three days, you take only one
pill in three days you cannot say that the prescription is not
working," Fatchett said.

While saying that he was fully committed to the IMF program,
the President strongly indicated Sunday that he was considering a
fixed exchange rate for the rupiah under a currency board system
(CBS).

"In the short and medium term, we do not see the CBS approach
as consistent with the IMF program," Fatchett said.

Moerdiono said Fatchett told Soeharto that Indonesia would be
able to overcome the upheaval.

"He (Fatchett) told the President the situation here has
attracted world attention due to the country's size and
population, as we are the fourth most populous country in the
world," he remarked.

No solution

A senior White House official said in Philadelphia on
Wednesday that he saw no immediate solution to problems between
Indonesia and the IMF following a visit to Jakarta early this
week by U.S. envoy Walter Mondale.

"We believe that the question of the Indonesian problem will
evolve over time," the official told Reuters.

Asked if the former vice president's mission had been a
success, the official replied: "We've had discussions with him
since he's been back, and I think success around this isn't about
Mondale's visit. It's about Indonesia returning to strength,
which is what we're working with them to do."

Mondale met Soeharto on Tuesday to pass along a message from
President Bill Clinton and to urge Soeharto to fully implement
the IMF reforms.

Jakarta has been criticized for not implementing economic
reforms attached to the IMF rescue package quickly enough.

Asked if there were now tangible signs of Indonesian readiness
to comply with the IMF, the White House official said: "We're
just going to continue to work. This is a problem that's going to
be monitored day to day. We're going to continue to work with
them and encourage them to do full implementation of the IMF
plan."

U.S. Treasury Secretary Robert Rubin said earlier that he
would hold meetings Wednesday evening to discuss Mondale's
reports on the visit.

Australia has also warned Indonesia to stick to the terms of
the IMF package, saying there was no alternative to the program.

"There is no plan B outside of the IMF," Foreign Minister
Alexander Downer told Australian Broadcasting Corporation
television late Wednesday.

"That means if the IMF package were to collapse, if the IMF
were to walk away from Indonesia or Indonesia to walk away from
the IMF, then that would do enormous damage to the Indonesian
economy over and above what's already happened."

Australia is contributing A$1.49 billion (US$1 billion) to the
IMF rescue package and helped ensure reforms were more socially
sensitive by covering food pricing issues. (prb)