U.S. supports Indonesia's economic reforms

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)