IMF 'not to blame' for Indonesian unrest

IMF 'not to blame' for Indonesian unrest

WASHINGTON (Reuters): U.S. House Minority Leader Richard Gephardt on Thursday defended the International Monetary Fund's reform program in Indonesia, saying it was not too tough and not to blame for outbreaks of violence.

"I don't think there are riots in Indonesia because of what the IMF has asked," the Missouri Democrat told reporters. "I think there are riots in Indonesia because they have practiced crony capitalism for as long as anybody can remember."

"I think the IMF is doing its dead level best," he said.

Anti-government demonstrations in Indonesia intensified this week after the government raised fuel and transportation prices in line with an agreement with the IMF. Students are demanding that aging President Soeharto quit to take responsibility for Indonesia's ravaging economic crisis.

Gephardt defended the IMF-mandated price increases, sought as a condition for the release of a US$1 billion installment of a $40 billion rescue package arranged by the lending agency.

"The IMF is trying its best to both bring about a stabilization of these countries' economies and bring about sensible change in the way their countries operate," he said.

Gephardt said the reforms were not too tough and were needed to correct Indonesia's economic course.

"The IMF is asking for decent, slow change," he said. "Frankly, if there is not change in Indonesia, if you simply write them a blank check, you're sending good money after bad."

"They're trying to figure out the best things to do for the future of these countries, and I am more than willing to have America be a part of that. I will vote for that. I believe in that," he said.

Earlier this week, the IMF agreed to resume loan payments for Indonesia over objections from some U.S. lawmakers, who say IMF programs ignore human rights violations and neglect the needs of the poor.

U.S. Treasury Secretary Robert Rubin on Thursday urged President Soeharto to show restraint in dealing with social unrest. The U.S. State Department has also urged authorities to let peaceful protests take place.

Massachusetts Rep. Barney Frank, a senior Democrat on the House Banking Committee, said the IMF's decision to resume bailout payments had sent "exactly the wrong message to the Indonesian government and the opposition in Indonesia."

He warned that the decision could make it more difficult for the White House to convince Congress to approve an $18 billion funding package to replenish the IMF's reserves.

The White House needs support from Democrats in the House, and especially from Gephardt, because many Republicans oppose the funding.