Holbrooke pesimistic on RI reforms

Holbrooke pesimistic on RI reforms

HONG KONG (AFP): Former U.S. State Department troubleshooter Richard Holbrooke said yesterday there was little chance of seeing economic reforms in Indonesia.

Holbrooke, now vice-chairman of Credit Suisse First Boston bank, also criticized those who condemned U.S. action over Indonesia and those who hid behind Asian values to avoid meeting international standards.

Holbrooke brokered the 1995 Daytona accords on Bosnia as a special envoy of President Bill Clinton, before moving to the private sector last year.

Speaking in an interview about the Asian financial crisis, he said Indonesia was "perhaps the most complicated situation I have seen in the last five years in government."

The International Monetary Fund has organized a US$43 billion bailout for Indonesia, but has withheld funds because changes have not been made by the Indonesian authorities as agreed. Talks are now being held in Jakarta.

Holbrooke said there was "no chance" President Soeharto will institute necessary reforms.

"I think the chance of Soeharto having real reforms are quite questionable but we must hope that he will start these reforms to reduce the suffering and dislocation and unemployment that are going to occur in the region."

Holbrooke said more international focus should be put on "the corruption at the center" in Indonesia.

"Look at the Indonesian banks. There are 220 banks in Indonesia. Over 100 of them are clearly insolvent and to save those banks is impossible because to attempt to save the banks would be to throw good money after bad. Those banks have to be liquidated."

Holbrooke declared: "I think basically you have got a real chance of recovery in South Korea and real chance of catastrophe in Indonesia."

The former presidential envoy defended the U.S. response to the Asian crisis.

He said criticism of the United States for not getting involved in solving the crisis had been valid.

"Now we are being accused of economic and cultural imperialism again, so we are blamed both ways: First we are too slow and we do too little, then we are to fast and we do too much.

"That's the price of leadership and if I had to choose I would prefer to be criticized for too much leadership than for too little."

Holbrooke said many nations had taken shelter behind "Asian values" to avoid accepting international standards.

"I really think that people who are talking about sovereignty and 'Asian values' are really setting up a smoke screen in order to prevent scrutiny of their balance sheet."

He said the Asian economies now in the global economic mainstream -- Korea, Taiwan, China and Japan "can't go to the capital markets to borrow money and then say 'we won't show you our books, we play by different rules.'

"If they want to remain isolated like North Korea and remain backward and totalitarian and despotic, then that's another route.

"But if you want to be a part of the international community, you have to play by international rules -- and the words Asian values and sovereignty are really being used by people to obscure the truth."