Rubin rules out Mexican-style bailout for Asia

Rubin rules out Mexican-style bailout for Asia

WASHINGTON (Reuters): Treasury Secretary Robert Rubin on Sunday ruled out a U.S.-led Mexican-style bailout for the shaken economies of Southeast Asia.

Rubin said the United States is working with Asian governments, especially Indonesia, as well as the International Monetary Fund (IMF), the World Bank and other governments to craft a package to ease the financial crisis gripping the region.

Thailand, the Philippines and Indonesia have sought help from the IMF since their economies were dealt financial blows that shook their stock, bond and currency markets.

Hong Kong became the latest victim last week after its stock market plunged and sent U.S. stocks into a tailspin.

"In Mexico, we had a support program that was dependent primarily on the United States. That is not envisioned here. The key participants here will be the IMF and the World Bank," Rubin said on Sunday on ABC-TV's This Week" program.

"We're all in the process right now of trying to think through what kind of a program will make the most sense for this set of circumstances," he added, saying that the United States was "part of a much larger process."

The United States, by contrast, led an international effort in 1995 that made almost US$50 billion available to Mexico to help that nation ward off its own financial crisis.

Rubin said the Asian nations are "well-positioned" to regain their footing as long as the right steps are taken by government officials there, international monetary officials, and other government leaders.

"Assuming all these things happen, and we're all working to make them happen, then I think these countries are well- positioned to re-establish financial stability," he said.

The IMF in recent days has been moving closer to wrapping up a multibillion-dollar bailout for Indonesia. An IMF official said late last week that only a few details remained to be worked out.

Some estimates have put the bailout at as much as $10 billion.

Indonesia, following in the footsteps of its neighbors, asked for IMF assistance on Oct. 8 after the rupiah currency came under sustained pressure.

Rubin downplayed the likelihood that the crisis gripping Southeast Asia would hurt the world economy.

"The world community is clearly strong enough to overcome this problem," Rubin said.

But the woes facing Southeast Asia, particularly Hong Kong, have shaken investors in the United States.

U.S. stocks were battered for a second day on Friday due to jitters over the impact on U.S. corporations of Asia's crisis.

The Dow Jones average ended down 132.36 points, or 1.7 percent, at 7,715.41 after losing 187 points on Thursday.

For the week, the blue-chip index was down 131.62 points.