Emphasizing the peril that Asia’s economic crisis poses to the world, President Clinton urged Japan’s prime minister on Monday to attack his country’s financial troubles as a first step toward pulling the region out of its woes.
“Japan can lead Asia out of this difficulty with the strength of its economy,” Clinton said after meeting with Prime Minister Ryutaro Hashimoto.
The meeting with Hashimoto was the highlight of the first full day of the Asian Pacific Economic Cooperation summit, which has been overshadowed by the financial tumult that has spread across much of Asia over recent months.
Even as Asian-Pacific leaders gathered here, fears about the region’s economy - and especially the fiscal health of Japan - grew when Yamaichi Securities, Japan’s fourth-largest securities firm, announced it is failing and closing. Furthermore, the Japanese and South Korean markets suffered severe losses at their opening today.
The benchmark Korea Composite Stock Index continued its decline this morning, falling 34.79 points, or 7.2 percent, to close at 450.64, the lowest level since November 1987. In Tokyo, the Nikkei Stock Average closed at 15,867.53 points, down 854.05 points, or 5.11 percent.
White House officials said Clinton urged Hashimoto to push even harder for reforms to his nation’s banking system and other financial institutions and for deregulation of trade rules to allow for more imports so Japan can become an engine for a broader Asian recovery.
Japanese officials said Hashimoto did not respond to Clinton’s assertion that Tokyo holds the key to Asia’s economic recovery. Instead, Hashimoto told Clinton that the Japanese government has introduced an economic reform plan that it hopes will pull Japan out of its recession, revive its entrepreneurial drive and boost consumer spending.
Koji Tsunoka, a Japanese Foreign Ministry spokesman, said Hashimoto also assured Clinton that Japan’s financial deregulation and the collapse of Yamaichi Securities would “in no way endanger investors, users or any other relevant parties because the necessary safeguards were implemented.”
Tsunoka later explained that the Japanese government did not share the same sense of “interrelatedness” between the problems of Japan and the rest of Asia. He said Japan views its current financial difficulties as a largely domestic matter that can be addressed with the reforms already in place.
Clinton’s session with Hashimoto was one of four, one-on-one meetings he had with Asian leaders Monday in advance of the first group session involving the leaders of all 18 nations in APEC. The president also had a working breakfast with representatives of the Association of South East Asian Nations.
In all his sessions, Clinton stressed that Asia’s economic troubles will be deeply felt in the United States because American companies send almost one-third of their exports to Asia, White House officials said.
If the Asian calamities spread, the U.S. trade deficit with the region is sure to widen because America’s trading partners there will not be able to afford U.S. products and their exports will be cheaper for American consumers and businesses, Clinton said. And as U.S. investors learned just a few weeks ago, continued financial troubles in Asia can “bleed over to other parts of the world and it could have an impact on our stock market,” the president noted.
He told the leaders of the APEC nations that they must all work to restore the health of Asia’s economy, saying, “In my view, we should approach this with determination but with confidence. After all, we have a lot of productivity and a lot of hard-working people in Asia. … So we need to take this very seriously.”
The collapse of so many Asian economies caused this APEC summit to have a drastically different atmosphere, especially when compared with the four previous such sessions, which occurred when the region and its leaders were basking in the glow of their people’s pleasure with their growing wealth, expanding markets and financial vigor.
U.S. Secretary of State Madeleine Albright summarized the situation, telling APEC leaders: “We meet amidst predictions that the ‘Asia Miracle’ will be succeeded by an ‘Asia Meltdown.’ “
The leaders who met with Clinton expressed their support for a plan developed in Manila, Philippines, in advance of this summit, to help revive the region’s economies. Under this proposal, which APEC leaders are expected to endorse at the end of their summit here, each nation would commit to ensuring that its own financial system is developing.
But the International Monetary Fund would provide emergency aid in the event of crises and APEC leaders would supplement IMF funds, if needed.
Asia’s economic crisis started this summer in Thailand and has spread to the Philippines, Indonesia and South Korea.
On Friday, South Korea admitted that its fiscal situation was so dire that it had sought at least a $20 billion bail-out from the IMF - the largest sum granted any country in the region.
On Monday, Clinton also used his meetings with Asian leaders and his session with the ASEAN representatives to urge developing nations to pledge that they would support at a forum next month in Kyoto, Japan, a global push to reduce greenhouse gas emissions. “I’m lobbying as hard as I can here,” the president said.
Although the United States and other developing nations now produce much of the greenhouse gases that experts believe are altering the world’s environment, developing nations are expected to bear an increasing share of such blame.