Soeharto warns of crisis contagion

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.