Political will essential to end Asian crisis: Rubin

Political will essential to end Asian crisis: Rubin

DAVOS, Switzerland (AP): A key U.S. official said Saturday the global economy needs reform, but that countries must take charge of their own problems.

"There are no easy answers and no magic wands, and each of us must do our part" in stemming the financial crisis which started in Thailand in 1997, Treasury Secretary Robert Rubin told an audience of political and business leaders.

Rubin was speaking at the World Economic Forum, where concerns over how to pull Russia and Asia out of economic crisis, as well as Brazil's problems, have topped the agenda.

"The critical factor -- whether in countries responding to crisis or in countries working to avoid crisis -- is political will," Rubin said.

U.S. officials in Davos, including Rubin and Vice President Al Gore, have stepped up pressure on Japan to do more to revive the Asian economy.

"The world looks to Japan to make some appropriate changes in the way it discharges its responsibilities as the second-largest economy in the world," Gore said Friday.

"There have been some important, positive developments in the last six months or so, including actions to promote growth in many industrialized countries and progress in Korea and Thailand," Rubin said. "But there are also many serious challenges and risks ahead."

He dismissed ideas that an early-warning system should be established to warn of impending financial crisis, saying he could see no method of prediction "even remotely reliable enough for such a system."

"In addition, the early warning itself could create precisely the instability and even panic that such a system is designed to prevent."

Rubin also urged the private sector to play a greater role in dealing with economic crises, but conceded defining that role is "extraordinarily difficult."

His reform targets included "sound currency systems" and boosting social safety nets where needed.

He contrasted the growing U.S. trade deficit with European and Japanese surpluses, saying the world economy "cannot sustain indefinitely the large imbalances created by the disparities in growth and openness between the United States and its major industrial trading partners."

Among officials renewing calls for quick action to revive Asia was Hong Kong Chief Executive Tung Chee-hwa.

"If the lights are switched out in Asia, the impact on the global economy will be really unthinkable," Tung told delegates.

"Japan now has to be as creative and inventive as the Americans and the Europeans," added Lee Kuan Yew, Singapore's senior statesman.

A day after the lower house of Russia's parliament approved the draft 1999 budget, Russian Prime Minister Yevgeny Primakov is to take part in a forum discussion about finding ways out of Russia's economic crisis.

The advent of Europe's single currency also has attracted attention. German central bank president Hans Tietmeyer called for flexibility within Europe as part of making the euro "a lasting success."

Helmut Maucher, chairman of international food and drinks giant Nestle, said the financial criteria set up for countries to enter the European monetary union had placed pressure on governments such as Germany to reduce social spending.

"This is good for Europe and it's good for the consumer," Maucher said.