VANCOUVER, British Columbia -- Leaders gathered for the annual Asian-Pacific economic summit declared yesterday that stringent domestic economic policies and closer international monitoring are the only way to contain the financial emergencies that have crippled South Korea, Indonesia and Thailand in recent months and have endangered Japan's already weakened financial system.
While previous Asia-Pacific summits have made traditional declarations about the importance of sound economic policies, the Asian financial crisis is expected to pressure member nations to turn these platitudes into policy.
Three of the 18 members of the Asian-Pacific Economic Community, South Korea, Indonesia and Thailand, have asked the International Monetary Fund for emergency loans, and they must follow IMF conditions for austerity in order to get that money.
The summit was dominated by talk of the Asian crisis. In their session yesterday morning, the leaders cast aside their agenda to focus on the financial situation and kept a wary eye on currency and stock markets for signs that the financial virus had spread.
A key Japanese stock index, the Nikkei, fell more than 5 percent yesterday and the yen plunged to a five-year low.
The plan endorsed by the leaders was based on a document drafted last week in Manila, Philippines, by a group of finance officials from the United States and several countries in the region. Individual nations did not pledge financial help.
Instead, the arrangement calls on countries experiencing financial difficulties to take responsibility for solving them by adopting belt-tightening domestic economic policies, propping up their currencies, rooting out corruption and strengthening oversight of banks.
The broad message of the gathering was that the fast-growing Asian "tigers" would have to accept a time of slower growth and narrower dreams to assure a more stable and predictable future.
The IMF would hover nearby as a watchful nanny, ready to intervene at the first signal of trouble, backed up if necessary by financial aid from countries in the region.
The summit produced a consensus that these remedies are the right way to rescue Asian economies, and that, officials argued, was the important accomplishment of what could easily have been a ritual gathering.
Prime Minister Chuan Leekpai of Thailand, whose country sparked the current crisis in July when it devalued its currency and sought emergency relief from the IMF, summarized the climate at this year's conference. "Confidence and optimism are out, and uncertainty and gloom are in," he declared as the two-day meeting opened.
But President Clinton emphasized the positive, repeatedly stating that prospects for strong growth in Asia remain good, that the gathering had agreed to continue lifting trade barriers in nine large industries and that it had endorsed a framework for addressing problems as they arise.
"We also supported an action plan to meet the financial challenges that we all face in Asia," Clinton said. "We believe that the affected countries are doing the right thing in committing to take the right steps to remain strong, with the IMF taking the lead for the international community, and with other advanced countries backing them up when it's appropriate."
Leaders of all the participating nations labored to convey a sense of optimism even as they acknowledged the seriousness of the region's financial problems.
A communique at the meeting's end said, "We believe it is critically important that we move quickly to enhance the capacity of the international system to prevent or, if necessary, to respond to financial crises of this kind."
The IMF has already pledged $57 billion to underpin the shaky financial systems of Indonesia and Thailand. The fund is certain to be called on for at least another $20 billion to assist South Korea, which appealed for aid last week as the depth of the financial crisis in its large conglomerates and financial system became clear.
The APEC forum includes major regional powers -- the United States, Japan, China -- as well as developing countries including Mexico, Singapore and Chile. The leaders voted to admit three new members -- Russia, Vietnam and Peru -- next year. They then declared a 10-year moratorium on new memberships.
The thrust of the Manila declaration and the talks here is that miracles don't last forever and that a thriving middle class is the base for growth and democracy.
"During the past quarter-century, Asia-Pacific economies have achieved miracles of expansion, job creation, poverty reduction and rising living standards," Secretary of State Madeleine K. Albright said in Vancouver on Monday. "Today, they are undergoing a severe test. And so are we all."
Pub Date: 11/26/97