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Western Press Review: World Economy Still Teeters

By Don Hill/Esther Pan

Prague, 29 January 1998 (RFE/RL) -- Some commentators in the Western press turn their attention away from the U.S. presidential scandals and Iraq's defiance of UN inspectors to questions of world and national economies.

INTERNATIONAL HERALD TRIBUNE: It is essential to overcome the inadequacies of current structures

Commentator and U.S. financial consultant and oracle Henry Kaufman, in an article published in today's International Herald Tribune, proposes to create a super-arching new world financial watchdog agency to be called "Board of Overseers of Major Institutions and Markets." He writes: "The essential ingredient in an improved global financial architecture is (to) overcome the inadequacies of current national and international structures for supervising and regulating financial institutions and markets." Kaufman says: "What would this (proposed) board do? It would set forth a code of conduct for market participants to encourage reasonable financial behavior."

Kaufman concludes: "It would be a waste of time to set sights on a more modest program of reforms, for anything less would not accomplish much -- and within time would be faced with an even more extensive and potentially destructive emergency than the one we have been struggling to overcome."

NEW YORK TIMES: Creditors had little choice but to extend repayment

In today's New York Times, Timothy O'Brien writes in a news analysis that South Korea's international creditors were forced to restructure that country's immense debt to avoid swallowing unacceptable losses. O'Brien writes: "South Korean banks and their international creditors reached an agreement late yesterday to extend payment on $24, billion in short-term loans, granting the country an important reprieve in the financial crisis that has afflicted much of Asia since last summer. The agreement, which ended three weeks of often tortuous negotiations, marks the first time in the crisis that banks have given any of the stricken Asian nations such a measure of relief.

"It also reflected the pressure confronting both the South Korean banks and their creditors to find a speedy solution to avoid defaults on the most pressing debts. Otherwise those debts may have spiraled into much larger problems that could have affected industrial countries like Japan. Moreover, the creditors, which have been accused of reckless lending to Asia during its boom years, had little choice but to extend repayment unless they were willing to absorb big losses."

WASHINGTON POST: No one can foretell the consequences if the IMF and the United States abdicate their role

The Washington Post called in an editorial yesterday for the U.S. Congress to face the Asian economic crisis forthrightly. The editorial said: "Now that Congress is back, one of the first and most contentious debates it faces centers on the proper U.S. role in helping the financially ailing nations of East and Southeast Asia. We hope the debate will end with Congress allowing the administration to remain faithful to America's global commitments and interests."

It said: "Some conservatives, meanwhile, question whether the IMF -- or anyone else -- should get involved at all. The free market will work best unfettered, they say. Let banks, companies and countries that made bad decisions suffer the consequences; they'll be less likely to make bad decisions next time around."

"The editorial said: "As for the free-market argument, no one wants to bail out greedy banks. But no one can foretell the consequences if the IMF and the United States abdicate their role. (But) Before pumping more money into the system, Congress has the right to ask what is being done so it will not have to choose yet again between aiding undeserving bankers and risking a global financial collapse."

SUEDDEUTSCHE ZEITUNG: It is now time for Japan to shake off its introverted political apathy

Sueddeutsche Zeitung commentator Gebhard Hielscher today chides Japan for failing to accept responsibility for its economic situation and its world leadership obligations. He writes: "Japanese Finance Minister Hiroshi Mitsuzuka resigned because senior officials in his ministry were arrested on suspicion of corruption. Nothing new in the Far East, one might say. After all, there has been no end to the series of Japanese corruption scandals and one or two more cannot make much of a difference. But the remarkable thing about this resignation is this: at the epicenter of a serious financial and economic crisis, Japan has gone and changed the person in charge of the very ministry responsible for the planned financial reforms."

He writes: "The weight of the Japanese economy is far too much for Tokyo -- as it has done so far -- to limit itself to representing its own interests in such a narrow, self-centered manner. Japan just cannot any longer allow the continuing responsibility for the region or for the world economy to remain in the hands of the Americans or the Europeans."

The commentary concludes: "It is now time for Japan to shake off its introverted political apathy and became aware of the obligations which have grown out of its economic power. The present crisis is a chance, a necessity and a task all rolled into one: Japan has to get off the running board and get inside that car."

WALL STREET JOURNAL: Bankers and economists are grasping at clues wherever they can find them

International bankers are confronting European monetary union with questions rooted in world economic insecurity and the Asian crisis, staff writer Nichols Bray says in today's Wall Street Journal Europe. Bray writes: "Grappling with the complexities of the euro and the Asian crisis, bankers and economists are grasping at clues wherever they can find them. The euro won't come into being until January 1, 1999, when nearly a dozen European countries plan to merge their currencies into a single unit. With 11 months still to go, no one knows whether the new unit will be a hard currency, like the mark for most of the past few decades, or a soft one prone to inflation, like some other European currencies. As for its likely impact on European economies, that was already hard to predict, even before fallout from the Asian crisis in the form of expected slower growth began muddying the waters even more."

WALL STREET JOURNAL: Most of the world is overlooking what could be one of the decade's major economic events

Steve Liesman, writing in yesterday's U.S. editions of The Wall Street Journal, stepped back from the world view and remarked on what he said is a remarkable economic development in Russia. He wrote in an a analysis: "While fretting over Asia's financial crisis, most of the world is overlooking what could be one of the decade's major economic events: the end of Russia's seven-year recession."

The writer said: "Though far from complete, the change has been all-encompassing. After once nearly monopolizing economic activity, the state now accounts for just 27 percent of GDP. The mass privatization of the early 1990s was riddled with corruption and insider deals, but nevertheless created an entirely new private sector that has propelled the economic resurgence. Huge industrial overcapacity - a legacy of Soviet ideology, which considered production the only important economic measure - has been wrung out of many sectors. A thriving service industry, ranging from banks to advertising agencies to small shops, has stepped into the gap. And the change to private ownership and the liberalization of foreign investment has, to a surprising extent, integrated Russia into the world economy."