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)