U.S. support of Asia's economy faces Congress

U.S. support of Asia's economy faces Congress

WASHINGTON (Reuters): The Clinton administration's support of international efforts to bail out Asia's ravaged economies will face a major test in Congress later this month, a senior Republican senator predicted on Saturday.

"I think that Congress will have, as we should have, some very real reservations and will want to ask some probing questions," Sen. Alfonse D'Amato said in a television interview.

D'Amato, a New York Republican who heads the Senate Banking Committee, said his panel would investigate the issue immediately after Congress reconvenes on Jan. 26.

"We are going to hold hearings on this, and I have some very serious reservations about the current U.S. policy and the readiness with which we are providing funds to bail out some very undisciplined investors ..." he said on the CNN program Evans & Novak.

Pending before Congress is legislation that would make an extra $3.5 billion available to the International Monetary Fund for emergency lending, as well as $15 billion to cover the U.S. share of a quota increase to replenish IMF accounts depleted by multibillion-dollar loans to South Korea, Thailand and Indonesia.

The IMF put together the bailouts over the past six months after the July 2 crash of the Thai baht currency sent shock waves through Southeast Asian economies. The United States and other rich countries have agreed to contribute billions of dollars to the rescue efforts.

But the Clinton administration's decision to take part has drawn heavy fire from some lawmakers, who argue that U.S. taxpayers should not be forced to prop up countries responsible for their own financial problems.

D'Amato objected to what he called "bailing out undisciplined private-sector corporations with taxpayers' money" and said his committee wanted to know what was being done to ensure that U.S. funds were not "feeding speculators and others who have taken advantage of the situation."

"I don't think that we can just willy-nilly make monies available without there being some very real discipline and guarantees that these monies are not following other money down the proverbial chute," he said.

D'Amato suggested that in some cases it could be against the U.S. national interest to join rescue efforts, but did not say what those cases might be.

"We're talking about some situations where I don't believe that the IMF has sufficient funding, nor can we bring it up to bail some of these countries out, nor do I think that it's our obligation," he said.

Conservative Sen. Lauch Faircloth, a vocal critic of the IMF- led bailouts in Asia, has called a meeting of Republican staffers on Capitol Hill on Wednesday to rally support against the administration's IMF funding requests.

Aides and speakers scheduled to attend the closed-door session said they expected the briefing to draw dozens of Republican staff members. Faircloth, a North Carolina Republican, and his colleagues will be briefed by experts about the IMF and economic developments in Asia.

Analysts expect a bitter struggle in the Republican-led Congress over the legislation to replenish the IMF's coffers.

"This is not just a Republican issue," said Ian Vasquez of the Cato Institute. "This is an issue that Democrats are going to be sympathetic about."