U.S. defends efforts to solve SE Asian crisis

U.S. defends efforts to solve SE Asian crisis

WASHINGTON (Reuters): U.S. monetary officials defended their
efforts to help Asia's troubled tiger economies on Thursday,
while lawmakers rejected a request for extra funding for the
International Monetary Fund.

U.S. Federal Reserve Chairman Alan Greenspan and Deputy
Treasury Secretary Lawrence Summers told the Banking Committee of
the House of Representatives that temporary help for the once-
booming tigers was in the best interests of the United States.

But aid should be channeled through the IMF, which could set
the conditions needed to encourage the right sort of policy
change, they added.

"The IMF must remain at the heart of any international
response," Summers told the committee, which was examining Asia's
financial troubles. "We must ensure that the IMF has the means to
act promptly and effectively."

Even as Summers and Greenspan spoke, Congress was passing a
$13 billion foreign aid bill that excluded an administration
request for $3.5 billion for the IMF.

The money would have formed the U.S. share of the IMF's New
Arrangements to Borrow (NAB) -- which provide funds to deal with
what the IMF describes as financial emergencies.

The IMF already has engineered multi-billion dollar
international bailouts for Thailand and Indonesia, and many
economists expect South Korea to seek help soon. "Korea is the
next crisis candidate," U.S. economist Fred Bergsten said in
remarks prepared for the committee.

Bergsten, a former economic adviser to the White House,
criticized Congress for excluding the IMF funding from the
foreign aid bill and declining to grant fast-track trade
negotiation authority to President Bill Clinton. "While the world
burns, Congress is fiddling," he told reporters.

The South Koreans have denied they will turn to the IMF, and
IMF officials say they know nothing of any request.

Greenspan said it was important not to give the impression
that the international community was ready to guarantee the
liabilities of governments or companies, but he added:

"It is in the interests of the United States and other nations
around the world to encourage appropriate policy adjustments and,
where required, provide temporary financial assistance," he said.

The United States, which put together a $50 billion
international package for Mexico in 1995, has offered Indonesia
$3 billion in its bailout -- to the disgust of lawmakers
concerned about military spending, human rights abuses and
nepotism.

"These efforts are not motivated by charity. They have been
motivated by our concern in American interests and in a strong
American economy," Summers said.

He added: "Our participation reflected our concerns about the
risk of further contagion, our desire to join a number of other
countries in showing support for the program and our desire that
it should succeed."

Summers said the problems in Indonesia were different from
those in Mexico, which had been "within a small number of days of
possible default" in 1995. This was not the case in Southeast
Asia.