U.S. supports Indonesia's economic reforms

JAKARTA (JP): The United States reaffirmed yesterday its commitment to help Indonesia through its economic crisis and hailed the steps the government had already taken, saying that while they may cause some domestic woe they would help speed up the economic recovery.

U.S. Deputy Secretary of State Strobe Talbott said Washington was prepared to lend its support and that "our leading role in financial institutions like the International Monetary Fund (IMF) and the World Bank allows us to insure that financial support is available where it is needed."

Talbott, who arrived here yesterday, praised Jakarta's economic reform package to overcome the financial crisis spearheaded by the government's economic team.

"Some steps will involve short-term pain. Those include closing insolvent banks, eliminating import monopolies and tariff exemptions, and putting in place other structural reforms that will increase efficiency, competition and transparency.

"This strong medicine and your strong economic team will speed recovery," said Talbott, who is the second highest-ranking U.S. State Department official after Secretary of State Madeleine Albright.

After accepting an IMF-sponsored bailout package worth US$23 billion last week, the government announced a series of economic reforms which included an end to the monopoly of several food commodities and the liquidation of 16 unhealthy banks.

Several of the closed banks were owned by politically well- connected figures, one of whom has filed a suit against the government with another set to follow.

Addressing the Forum for Foreign Affairs at the foreign ministry here yesterday, Talbott said that if Indonesia and other countries in the region facing economic crises adopted the necessary macroeconomic policies then the outlook remained bright.

The U.S. itself has made a $3 billion contingency financing offer if funds are needed to bolster reserves and help restore market confidence.

"We Americans are more than just observers. We have a stake in the well-being, including the financial and political stability, of ASEAN (the Association of Southeast Asian Nations)," Talbott said.

Talbott also praised Indonesia's newly introduced environmental management law, saying that this legislation "strikes me as a model of good governance" and reflected the principle that more public participation results in better policy and governance.

"When governments are held accountable to their people at home they are more likely to act responsibly... Thus democracies are less likely to go to war, to persecute their citizens, tolerate high levels of corruption."

Earlier yesterday, Talbott had a chance to observe from the air the water-bombing operations conducted by two U.S. C-130 Hercules planes in West Java.

The two planes have been sent here to help put out the raging fires which have consumed over 300,000 hectares of forest and agricultural land.

Talbott said he would report back to Washington on how the U.S. could continue to work with the rest of the international community to help Indonesia deal with the forest fires.

He noted that environmental issues would likely receive greater attention when leaders of the Asia Pacific Economic Cooperation meet in Vancouver, Canada, in two weeks time. (10)