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U.S Says Without Reform Aisan Crisi



U.S. says without reform Asian crisis would worsen

By Carol Giacomo
SAN FRANCISCO, July 24 (Reuters) - U.S. Secretary of State Madeleine Albright
warned Asian nations on Friday that their economic crisis would only worsen if
they do not take their reform "medicine." 

Albright acknowledged in a speech that "in some countries the medicine of
economic reform is bitter" and expressed particular concern about "the
potential for social unrest" in Indonesia. 

She said Japan was central to efforts to fix Asia's financial woes and
stressed the need for Tokyo's next prime minister, Foreign Minister Keizo
Obuchi, to "stimulate their economy, deregulate and clean up the banking
system." 

Albright stopped in San Francisco en route to Manila to  attend the annual
meeting of the Association of South East Asian Nations (ASEAN), which groups
the countries of Brunei, Indonesia, Thailand, Laos, Malaysia, Myanmar,
Singapore, the Philippines and Vietnam.  

The protracted Asian financial crisis, which is increasingly spilling over
into the U.S. as well as other economies, will be "at the top of our agenda,"
she told the International Diplomacy Council, which promotes discussion of
foreign policy issues. 

Fixing the problems at the heart of the crisis "requires that the old ways of
doing business must change, inefficient firms close and cozy relationships
break up," she said. 

While "consequences for workers and families caught in the middle can be
difficult and unfair ... this does not change the fact that reform is
medicine. If refused, the illness only grows worse. If taken, recovery becomes
only a matter of time," Albright said. 

If the crisis continues, "the risk of long term harm to the global economy,
and to our own prosperity, cannot be ignored," she said. 

Albright said the Asian crisis resulted from "bad economic habits in the
countries involved and on the part of those who did business with them." 

At the ASEAN meeting "we will stress the lessons of the past year (meaning
that) to attract outside investment and to ignite new growth, it is vital to
apply democratic principles and the rule of law to the marketplace," she said.

"Competition must be encouraged. Fair conditions for direct foreign investment
must be created and maintained. Accountability must be emphasized and
corruption must be stopped," she added. 

Japan, Indonesia, South Korea and Thailand are among the countries hardest hit
by the crisis which has required massive International Monetary Fund
assistance to many economies. 

Earlier in Washington, the White House urged Obuchi, who also will attend the
ASEAN meeting, to take bold and decisive steps to revive Japan's moribund
economy and speed the pace of banking sector reform. Obuchi has said he
intends to act quickly to deal with his country's economic woes. 

Albright insisted U.S. demands for reform would be coupled with a commitment
to "do all we can to help countries that are being hurt by the crisis." 

But this pledge was undercut by her own acknowledgment that Congress continues
to withhold funds the administration says it needs to fulfill U.S. foreign
policy goals and responsibilities. 

With Cambodian elections set for Sunday, Albright said she would seek at the
ASEAN meeting "a unified international response" to the election results. 

"The international community cannot impose democracy in Cambodia, but we can
encourage it by making our assistance to any government conditional on respect
for international norms," she said. 

Albright said she would express concern about the threat to international
peace and stability posed by the repression of freedom in Burma and reiterate
support for a dialogue between the military junta and democracy leader Aung
San Suu Kyi.     She also would encourage Indonesia's new leaders to "reach
beyond the traditional centers of powers to devise a plan for peaceful but
profound economic and economic and political reform based on democratic
principles." 

21:34 07-24-98