Wednesday, Oct. 7, 1998
Clinton calls for urgent financial steps
President pushes world's economic leaders to curb crises
WASHINGTON -- President Clinton urged world economic powers Tuesday to take ``urgent steps'' to limit the turmoil that has roiled global markets. He said the violence of boom-and-bust cycles must be contained.
Addressing financial officials from 182 countries at the International Monetary Fund's annual meetings, Clinton used his strongest language yet to describe the need for all countries to cooperate to calm an economic crisis that has sent U.S. stock prices plummeting and pushed one-third of the world into recession.
``Today the world faces perhaps its most serious financial crisis in half a century,'' Clinton said. ``We must take urgent steps to help those who have been hurt by it, to limit the reach of it and to restore growth and confidence.''
Behind the scenes, Clinton administration officials worked feverishly on a number of fronts. The White House confirmed that preliminary discussions were under way on an emergency economic summit in London next month, suggested by British Prime Minister Tony Blair.
Meanwhile, Treasury officials worked to put together an emergency rescue package of around $30 billion for Brazil, hoping to keep Latin America's largest economy from being the next to fall victim to panicky investors.
Argentine President Carlos Menem said negotiations on the loans for Brazil could be completed by next week and suggested the emergency lines of credit could be expanded to help other Latin American countries facing difficulty.
The Clinton administration also released a study showing the state-by-state impact that economic problems already have had on American manufacturers and farmers, hoping to increase pressure on Congress to approve $18 billion for the IMF before lawmakers go home.
But Republican opponents in the House insisted the IMF support will not be approved unless the administration accepts restrictions it so far has rejected that would tie the increased money to a major overhaul of the agency. Critics say the IMF badly bungled the Asian crisis by imposing too much austerity and pushing fragile economies into recession.
Clinton, in his remarks, renewed his call for Congress to approve the IMF money, saying, ``There is no excuse with refusing to supply the fire department with water while the fire is burning.''
He called for finance officials to continue working on proposals endorsed Monday by a special 22-nation conference that are aimed at stabilizing the vast flows of international money.
``We must address not only a run on a bank or firm, but also a run on nations,'' Clinton said. ``We simply must find a way to contain the pattern of boom-bust on an international scale.''
And he called on Japan to invigorate its economy, something his administration believes is essential for lifting other Asian nations.
IMF, World Bank pledge changesIn Tokyo, Japanese Prime Minister Keizo Obuchi announced plans for a bigger economic stimulus package after officials said the country, already in its worst recession in 50 years, was facing deepening problems.
Both IMF Managing Director Michel Camdessus and World Bank President James Wolfensohn pledged Tuesday to undertake major changes in their agencies because of the severity of current threats.
``It would be perhaps too dramatic yet to talk of global recession, but the evidence of the risks calls for immediate action,'' Camdessus said. He welcomed a U.S. proposal to provide a new IMF credit line for nations in distress that would speed loans to a country before panicked investors bailed out. But it is unlikely this week's meetings, scheduled to end Thursday, will produce final agreement on the U.S. proposal.
Wolfensohn spoke of the human pain of the market turmoil: millions of people thrown out of work, small and middle-sized businesses going bust, and children in Asia dropping out school to support families.
``We must go beyond financial stabilization. . . . We must focus on social issues,'' Wolfensohn said. ``If we do not have greater equity and social justice, there will be no political stability.''
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