Soeharto warns of crisis contagion

By Kornelius Purba

CAIRO (JP): President Soeharto said yesterday that Asia's economic crisis could endanger not only the region's social welfare and political stability but could also spread to other continents.

Speaking on behalf of Asia at the opening of the Group of 15 developing countries' (G-15) eighth summit here, the President pointed out that since the crisis broke out in mid-1997, it had persisted with no indication as to when it would abate.

"It has also taken a heavy toll on the region's social and political situation due to massive unemployment which could trigger a series of social problems, including the further spread of poverty, a rise in crime and political instability," Soeharto said.

The President said the crisis had wiped out significant gains of three decades of painstaking development in Indonesia.

"To reverse these negative trends, Indonesia must now implement a series of integrated reforms in the economic, financial and monetary fields, including those already underway in cooperation with the IMF," he said.

He pointed out that the ongoing upheaval could not be fully blamed on the suffering countries alone since external factors had also played a decisive role in their fall.

Facts show that all of the affected countries have pursued policies opening their economies and liberalizing their trade and investment, he said.

"It was generally accepted that each of these countries had basically sound fundamentals and were locomotives of growth and development in their region," Soeharto asserted.

The President and his entourage arrived here Saturday afternoon for a one-week visit to attend the three-day summit and pay a three-day state visit to Egypt.

Established in 1989, the group's objective is to boost cooperation among developing countries. It is comprised of Egypt, Malaysia, Algeria, Argentina, Brazil, Chile, India, Mexico, Peru, Senegal, Zimbabwe, Venezuela, Jamaica, Indonesia and Kenya, which joined the group last year in Kuala Lumpur. Sri Lanka is expected to become the 16th member in this summit.

Soeharto warned the international community that the Asian crisis could eventually spill over beyond the region if the world community did not closely work together to help the victim countries restore their economies.

"Since the international financial sector is deeply integrated and Asian markets, production and trade are highly significant factors in the global economy, the contagion effect could spill beyond the region," Soeharto cautioned.

Soeharto spoke after the meeting's opening speech by President Hosni Mubarak.

"The Asian crisis is but a passing phase in the growth of Asia's economies," Mubarak noted.

He said the crisis had shown the social costs of global integration and the "contagion effect of weakness" from one economy to another.

"The liberalization of our markets must be gradual," he added.

Egyptian Foreign Minister Amr Moussa said in remarks broadcast Monday that G-15 countries must open their markets but ensure that World Trade Organization (WTO) moves did not damage their interests.

The WTO is dominated by the interests of the top industrialized countries, which "do not coincide with the interests of the (world's) developing group of nations", Moussa was quoted by Reuters as telling local Nile TV.

"Market economy is the buzzword," he said. "We have to join this globalization and global markets but we need time."

Peruvian President Alberto Fujimori said in a speech on behalf of Latin American G-15 members that the region was taking steps to integrate, especially with free-trade zones.

"South-South cooperation has to be expanded to give stronger support to our development efforts," he said.

"In Latin America, we are now fully aware that integration is an integral tool", Fujimori said, adding that globalization "should not lead to frustration for anyone".

Algerian President Liamine Zeroual, speaking for African states, said the G-15 was unified in its aspirations. "It has the responsibility of urgently and continuously seeking a fruitful dialog between the South and North," he said.

The summit was also attended by Malaysian Prime Minister Mahathir Mohammad, Jamaica's Prime Minister James Patterson, Kenya's President Daniel Arap Moi, Senegal's President Abdou Diouf and Zimbabwe's Robert Mugabe.

The leaders are to meet at the El-Golf Resort in Sharm El- Sheikh province, South Sinai, for their summit today. They will host a joint news conference at the end of their meeting tomorrow.

President Soeharto will then start his state visit. His entourage includes Minister of Foreign Affairs Ali Alatas, Minister/State Secretary Saadilah Mursjid and his senior economic advisor Widjojo Nitisastro.