Japan to determine $30b Asia aid in go alone fashion
Japan to determine $30b Asia aid in go alone fashion
KUALA LUMPUR (Reuters): The United States on Thursday appeared to be trying to elbow in on a US$30 billion Japanese plan to aid the battered Asian region but Tokyo was having none of it.
"Japan will use the $30 billion aid based on its own policy decision and we do not expect any intervention on how to spend the aid by a third party," a Japanese finance ministry official said.
A U.S. official in Washington said on Wednesday that the United States was trying to put together a proposal to help Asian companies restructure their debt burdens ahead of next week's summit of Asia-Pacific leaders in Kuala Lumpur.
The official declined to provide details, but said that the November 17-18 summit of the Asia-Pacific Economic Cooperation (APEC) forum offered an obvious venue to discuss such a proposal.
U.S. President Bill Clinton is scheduled to attend the summit, as is Japanese Prime Minister Keizo Obuchi.
The Wall Street Journal reported that details of the plan had not been worked out but could include allowing ailing Asian countries to issue government bonds backed by Japan and other nations as well as multilateral lenders such as the World Bank.
The proceeds of such bond issues would be used to recapitalize struggling Asian banks, which would then oversee the restructuring of corporate debt, the newspaper reported, adding that the United States wanted Japan to provide much of the financing.
The reported U.S. plan, however, bears startling resemblance to Japan's $30 billion Miyazawa Plan, unveiled by Finance Minister Kiichi Miyazawa last month.
The Miyazawa Plan for crisis-hit Asian nations included the notion of guarantees for sovereign bond issues.
It also urged the World Bank and the Asian Development Bank to step up efforts to provide guarantees for bank loans and bond issuance by Asian countries, and to co-finance projects for them with Japan.
"There is a stunning similarity between the Miyazawa Plan and what's been reported as a U.S. rescue plan for Asia," said Tetsuji Sano, an economist at Nomura Research Institute in Singapore, adding that it would be "quite strange" for the United States to claim those plans had been designed and initiated by Washington.
The Japanese official also said on Thursday that "Japan would welcome it if the United States wanted to give any financial support to Asian economies along with Tokyo".
The official said, however, that the Miyazawa Plan would be funded in part by Japanese taxpayers money, so "it would be improper" to let other nations to decide how to spend it.
Another Japanese official said Tokyo would welcome any U.S. efforts to persuade the World Bank and ADB to join the plan.
Debtor countries, meanwhile, would be pleased if the two economic superpowers joined together to put forward the debt restructuring plan, one analyst said.
"I hope they will work closely together on this," said Mari Pangestu from the Jakarta-based Center for Strategic and International Studies, adding that U.S. participation would be vital for success of a corporate debt restructuring plan.
"From the debtor country view ... without U.S. leadership, it seems it can't happen," Pangestu said, adding that Clinton had in fact floated the notion of corporate debt restructuring as early as September, ahead of the unveiling of the Miyazawa Plan.
Japan has been hoping that the Miyazawa Plan and its track record in providing other aid for Asia since the financial crisis hit in July 1997, would take the sting out of criticism that its faltering economy and tough stance on APEC trade talks are two big headaches for the region.