Washington, 5 February 1998 (RFE/RL) -- A senior U.S. official says America's role in dealing with the Asian financial crisis is a "real test" of U.S. global political, diplomatic and economic leadership in the post-cold war era.
Undersecretary of State for Economic, Business and Agriculture Affairs Stuart Eizenstat told a U.S. Senate committee Wednesday that U.S. support for the Asian nations now in crisis -- Thailand, Malaysia, Indonesia, South Korea and the Philippines -- is as critical for security interests as it is for economic.
Eizenstat noted that "four of the world's major powers rub shoulders in Northeast Asia, while some of the most important sea lanes on the globe pass through the confined waters of Southeast Asia."
He said that in fact those sea lanes are "critical" to U.S. naval power in the Persian Gulf, as is the airbase access it has in Thailand. That access was used extensively by American warplanes in the 1991 Gulf war, he said.
Eizenstat and U.S. Deputy Treasury Secretary Lawrence Summers went before the Senate Finance Committee to push for approval of American participation in a 46 percent increase in quotas for members of the International Monetary Fund (IMF), which is leading the global effort to handle the Asian crisis.
In addition to the U.S. portion of the quota increase -- $14.5 billion -- the Clinton administration is asking for another nearly $4 billion to be made available for the special facility called the New Agreements to Borrow (NAB). This special credit, long made available by the G-7 group of richest nations, is being expanded in size as well as bringing in several more countries as participants.
The NAB will make more than $50 billion available to the IMF in extraordinary cases when its reserves might be running low.
While many have said the quota increase is to help the IMF deal with the Asian crisis, in fact, it was agreed upon long before the crisis began and was part of an IMF management push to expand the organizations capital base to more closely match the size of the burgeoning global economy.
Summers says that even with the quota increase, the IMF's capital base will still be smaller in proportion to the size of the global economy as it was 15 years ago.
Summers and Eizenstat told the senators that the U.S. must remain a full participant in the IMF as it works to deal with financial crises anywhere in the world.
"Leadership is not divisible," said Eizenstat. "We cannot lead on critical security issues or in opening markets while abdicating our leadership in maintaining international financial systems."
Some members of the U.S. Congress have opposed American involvement in the Asian rescue programs, fearing it would merely help low-cost competitors hurt U.S. companies. Others in the congress have suggested a complete Washington withdrawal from the institution, arguing the fund is of little value to the world and does not always follow U.S. desires.
Eizenstat argued that the very course of development the U.S. supports -- more open and democratic societies, and more open and competitive economies -- are jeopardized by the present turmoil.
Actually, he said, the IMF reform programs agreed to by each of these countries accomplished in a few months advancement on opening trade and investment that the U.S. had been unsuccessful in achieving in years of negotiations.
Most important, said both officials, the Asian nations have agreed to extensive reforms in their financial systems and economic organization -- reforms many have said are long overdue.