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.