G-7 tells Indonesia to use restraint over social unrest
G-7 tells Indonesia to use restraint over social unrest
LONDON (Dow Jones): The Group of Seven (G-7) industrialized nations on Saturday signaled their mounting concern over civil unrest in Indonesia, and the need for the government to stay on the course of economic reforms.
"Indonesia is surely the country in Asia that we are most worried about," said German Economics Minister Guenter Rexrodt.
U.S. Treasury Secretary Robert Rubin repeated a need for restraint by Indonesian authorities dealing with the unrest, while Secretary of State Madeleine Albright said that the government should allow peaceful political demonstrations.
The G-7 finance and foreign ministers, who convened two days of talks in preparation for a May 15-May 17 leaders' summit in Birmingham, stopped short of issuing any formal declarations about Indonesia.
But officials confirmed that Indonesia was a dominant topic of discussion during ministerial discussions, and few immediate solutions other than continued financial support was suggested.
"In particular, at this time of unrest the world will be watching Indonesia and I believe more must be done," British Chancellor of the Exchequer Gordon Brown said to tackle the social problems that come in the wake of Asia's financial turmoil more generally.
The G-7 ministers, possibly leaving more formal declarations for the leaders next week, also did not issue any formal comments on the Asian financial crisis, which has not yet been declared dead primarily because of the political and economic uncertainties hanging over Indonesia.
Finance ministers of the U.S., Japan, Germany, France, the U.K., Italy and Canada noted that the continuing process of globalization and the events in Asia "have revealed a number of weaknesses and vulnerabilities in national and international financial systems, as well as in the lending practices of private sector investors".
The ministers saw a need for Indonesia to take steps to create a more pluralistic society in the long run, and at least in the short run a move to clear up some of the political succession issues that continue to overshadow the country's economic reform efforts.
Officials, however, generally steered clear of any specific policy suggestions to Indonesia, and Rubin declared, "There is no suggestion of sanctions".
Rubin underlined that if Indonesia moved forward with the IMF- backed reforms then the economy would improve and social pressures ease.
A critical balancing act will be required by all parties, G-7 officials said, given that the social unrest is being fueled by the austerity measures backed by the IMF.
Rexrodt said the state of reforms in South Korea and Thailand indicated that those two countries were well on their way to conquering their troubles. "Indonesia is a special case, however," Rexrodt said.
Dominique Strauss-Kahn, France's finance minister, said he hopes the G-7 heads of state and government take a "firm resolution on Indonesia" at next week's summit in Birmingham.
Hikaru Matsunaga, Japan's finance minister, urged continued IMF and G-7 financial support to Indonesia. Japan is decidedly a front-line nation, particularly since its tinder-like banking sector has the largest financial exposure to Indonesia of any single nation.
"The Indonesian government is strictly following policies agreed with the IMF. Japan urges the G-7 that we shouldn't pull off our assistance to Indonesia using the riots as an excuse," he said.
System -- Page 8