U.S. Democrats blast IMF over Indonesia

U.S. Democrats blast IMF over Indonesia

WASHINGTON (Reuters): Congressional Democrats dealt a blow to President Bill Clinton on Friday by threatening to withdraw their support for the IMF over loans to Indonesia and the agency's push to open capital markets around the globe.

The International Monetary Fund is expected on Monday to restart bailout payments to Indonesia despite fierce criticism from U.S. politicians, who say the IMF should link its loans to improvements in human rights and labor laws.

"It's a mistake. It clearly puts in jeopardy Democratic support" for the Clinton administration's $18 billion package for the IMF, Massachusetts Rep. Barney Frank, a senior Democrat on the House Banking Committee, told Reuters.

House Democratic Leader Richard Gephardt of Missouri, Democratic Whip David Bonior of Michigan, California Rep. Nancy Pelosi and Frank also threatened on Friday to oppose IMF funding because of a plan by IMF member countries to amend its charter to make the liberalization of capital movements one of the fund's chief goals.

The U.S. State Department on Tuesday expressed concern about the reported abduction and torture of an opposition activist in Indonesia and spokesman James Foley said Washington was concerned about numerous other cases of people, many of them opposition activists, who allegedly have disappeared.

Over objections from lawmakers, the IMF is set to approve a $1 billion loan payment to Indonesia next Monday, and to disburse a further $2 billion in June and July from a $40 billion international rescue package.

Frank said the IMF should withhold the money because Jakarta has yet to prove that it is committed to reform.

"I think it (the loan payment) sends exactly the wrong message to the Indonesian government and the opposition in Indonesia," Frank said.

"They (the IMF and the Clinton administration) better hope that Indonesia responds after getting this money. If they give them the billion and get no response, they're going to lose (support from) me and many others," Frank said.