Portugal wants realism at EU-Asia s

[RANGOONP@xxxxxxx]

INTERVIEW-Portugal wants realism at EU-Asia summit

By Richard Waddington 

LISBON, April 2 (Reuters) - The European Union (EU) must use a London summit
with Asia's financially strapped nations to stress that without political
change economic reform will come to nothing, Portuguese Foreign Minister Jaime
Gama said. 

In an interview with Reuters on the eve of the three-day meeting, Gama said
that it was the duty of European governments -- major contributors to
international rescue packages being mounted for Asia -- to drive the message
home. 

``If they (European states) do not want to continue pouring money down the
drain and want to take care of taxpayers' money...they need to make demands on
those who receive it.'' 

The second Asia-Europe Meeting (ASEM) starting on Thursday brings together the
15-member EU and leaders from Brunei, China, Indonesia, Japan, Malaysia, the
Philippines, Singapore, South Korea, Thailand and Vietnam. 

Pointing the finger clearly at Indonesia, with which the International
Monetary Fund (IMF) is negotiating terms of a $40 billion bail-out, Gama said
there was no evidence the government of President Suharto had learned any
lessons from the country's economic crisis. 

Suharto, who will be represented in London by his vice president, Jusuf
Habibie, was re-elected unopposed earlier this month for a seventh five-year
term. 

Gama said there was no doubt that political corruption and the nepotism
exercised by the Indonesian ``dictatorship'' lay at the heart of the worst
economic crisis in decades in the Moslem country of 200 million people. 

``Since the new government took power, we have seen no sign of change. Let us
hope we see it in London, but our hopes are not high,'' he said. 

Gama, whose government is locked in fierce diplomatic dispute with Indonesia
over the future of East Timor, its former Pacific colony, said that the West
needed to draw the obvious lessons from the economic crisis that began rolling
across Asia last summer. 

European governments should demand political change as the price of economic
assistance. ``I think they should do it,'' he said. 

The minister added that this was not a question of ``ideological whim,'' it
was the only practical, hard-headed way to approach the problem of financial
instability in the region. 

``All international observers know that the situation...is not just a problem
of foreign exchange...it is an institutional problem, notably the promiscuity
between the political and banking and investment systems,'' he said. 

But it was not just governments that needed to draw the correct conclusions
from the recent experience. The IMF should carry out some soul-searching, he
said. 

``I think the crisis will lead the IMF to re-examine the way it works and ask
itself how it did not spot the crisis coming.'' 

The ASEM summit meetings are aimed at strengthening economic and investment
ties between the two zones, but Gama said that Portugal would not shy away
from the question of human rights, particularly in Indonesia and Myanmar. 

Myanmar will not be taking part in the London meeting, although it is a member
of the Association of South-East Asian Nations (ASEAN). The European Union has
been heavily critical of the military government's rights record and crackdown
on the civilian opposition. 

``The (ASEM) agenda covers political and financial questions. (But) nothing
excludes discussion of Timor and Burma (Myanmar) nor of the need for
institutional and political changes,'' he said. 

Portugal has been pressing for top-level talks with Indonesia on the fringes
of the London meeting to be chaired by United Nations Secretary-General Kofi
Annan, who has been seeking to broker a final deal on East Timor. 

But Gama said there was no sign yet from the Indonesian side that they were
ready to meet Prime Minister Antonio Guterres, although Annan had said he was
ready. 

Indonesia invaded the mainly Roman Catholic East Timor in 1975 and annexed it
one year later in a move never recognised by the international community. 

Human rights organisations say that up to 200,000 people died in the military
take-over and subsequent famine.