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Western Press Review: Commentary Returns To Basics -- Money

Prague, 16 September 1998, (RFE/RL) -- U.S. Presidential candidate Bill Clinton's campaign staff in 1992 had an internal slogan: "It's the economy, stupid," meaning that economic affairs eventually always will push other issues aside. Many Western press commentators turn their attention to economic concerns today as issues such as Russian politics, the Clinton scandal in the United States, and even shooting wars from the Balkans to the Congo turn gray. A consensus is that the international finance system has the tools to prevent global economic collapse.

LOS ANGELES TIMES: The safety net is torn and needs repair

From New York, investment banker and former U.S. Treasury Department official Roger C. Altman writes in a Los Angeles Times commentary that the troubled world economic system is sound at base but needs attention. Altman writes: "Imagine a map of the world. In mid-1997, when Thailand's economy became the first in Asia to collapse, we could have colored that country red. Now, only 14 months later, the entire developing world would be crimson. The worst international economic crisis in 50 years, which no one foresaw, has ravaged two-thirds of the globe. Standards of living, so painfully raised, are falling. The U.S. economy and financial markets, initially expected to escape unscathed, are also damaged."

He says: "But our international economic system, based on open and competitive markets for goods and capital, is the right one. It is the safety net underneath that is torn and needs repair."

SUEDDEUTSCHE ZEITUNG: Bill Clinton seized the initiative

German commentator and Sueddeutsche Zeitung editor Joseph Joffe, also contends that the system will work -- if properly operated. He writes: "First Southeast Asia, then Japan, Latin America, Russia. Is this crisis, rolling on westward, the harbinger of a catastrophe? And is the economy or is politics the problem? This does not have to turn into a catastrophe like that in the 1930s if the political mechanisms function. At that time they were unable to do so."

Joffe says: "The bad news? Bill Clinton is tottering, Russia is leaderless, Japan a government merry-go-round. And the next German chancellor will have to govern either with a majority which is either too narrow or far too wide. The former would be too weak to provide decisive, the latter too psychologically frail to provide long-term leadership.

"The good news is that apart from reading the 445 pages of charges against him, Bill Clinton found time to concern himself with politics. While top officials of the Group of Seven (G-7) countries were conferring in London, he seized the initiative in Washington to put forward a six-point program to rescue the world economy."

TIMES: Gordon Brown replies to George Soros attack

The Times of London carries today a news analysis by Janet Bush and Alasdair Murray of hints that the G7 group of industrialized nations may be paving the way for an international reduction in interest rates. The Times writers say: "Gordon Brown (British finance minister) yesterday hinted broadly that interest rates in America and Britain are set to fall as part of the Group of Seven's new emphasis on promoting growth in the troubled world economy."

They write: "His comments came as George Soros, the billionaire investor, was attacking the G7 and IMF for their 'woefully inadequate' response to the Russian crisis. In testimony before the US House of Representatives Banking Committee, Mr. Soros warned congressmen that there was a global credit crunch, economic panic in South America and inadequate responses from the IMF because it had run out of money. Mr. Soros also attacked capital controls used by countries, notably Malaysia, as a 'beggar-thy-neighbor' strategy."

The analysis says: "However it is also expected that tonight Mr Brown will signal a volte face in the International Monetary Fund's position on limited capital controls for countries at the early stages of development. The chancellor (Brown) said that he would be referring to this issue in a speech he will make in Tokyo tonight to Japanese bankers."

NEW YORK TIMES: Growth must be spurred in the industrial world

The New York Times takes up the cause of lower interest rates in an editorial today. It says: "A quarter of a century ago when Washington was mired in scandal, the greatest challenge to global prosperity since the Great Depression presented itself in the form of an Arab oil embargo that promptly led to spiraling inflation, recession in the Western world and, within a few years, a third-world debt crisis that stifled development in Latin America for a generation. The largest economies were unable to respond to those challenges in a timely manner, and the world suffered."

The editorial says: "Now, with Washington immersed in another scandal, another major threat to world prosperity has arisen from the collapse in Asia and plunging commodity prices that endanger much of the past decade's progress in developing countries. There is reason to hope the response this time will be better. The Group of Seven countries say they will cooperate in stimulating world growth. Those actions should include a coordinated lowering of interest rates by central banks in Europe and America."

The Times says: "President Clinton, in an important economic address in New York this week, was right to say the world must look for ways to ameliorate those problems by spurring growth in the industrial world."

The editorial concludes: "It is a measure of the sad state of the Clinton Presidency that the President's effort to address the world's economic problems was viewed by many through a Monica prism, with commentators wondering whether Mr. Clinton was trying to change the subject. The real question here is whether the American Government can deal effectively with major problems at the same time Congress considers the Starr report. Congress should immediately provide the $18 billion needed by the IMF, and its leaders should make clear that they are open to further actions that may be needed to avert a world recession."

WASHINGTON POST: The IMF is the right institution to start a new flow

L. Ronald Scheman, former U.S. director of the Inter-American Development Bank, comments today in a contribution to The Washington Post that the IMF is the right institution to prime the world economic pump, that is pour in money to start a new flow.

He writes: "Anyone who questions whether we are living in a global economy needs to reflect carefully on he financial turmoil of the past few weeks. We can no longer escape the issue of how to manage in a world in which economic currents have no frontiers but our instruments to deal with them do. The International Monetary Fund lies at the center of this storm. It is the only financial institution that has some semblance of global influence."

Scheman says: "The IMF must now find ways to channel its support to specific sectors of the economies that can generate employment, such as rapidly disbursing loans directly for activities such as housing, infrastructure construction, agriculture and credit to small and medium businesses. Policies should be pressed to facilitate lower interest rates in the developing countries to rescue viable business. Loans must be conditioned on governments' adopting financial market regulation, global accounting standards and bankruptcy codes so that corrupt banks and businesses can be placed under receivership to preserve jobs.

"We also need to build safety nets for the poor, similar to those the World Bank and Inter-American Development Bank financed in the 1994 Mexican crisis, to prevent government spending curbs from emasculating social programs that maintain the limited spending power of the poor. These kinds of programs are best achieved not by lending to central banks but by channeling specific loans through the World Bank and regional development banks that have the capacity to ensure that the money gets where it is supposed to go."

He says: "In short, it's time to prime the pump and also aim the fire hose in the right direction. But there is no escape from the reality of the global economy. The IMF is the best, and only, instrument we have. Our challenge is learn to use it effectively."