Clinton Calls On Japan to Lead Asia Out of Crisis

VANCOUVER, Canada — Emphasizing the peril that Asia’s economic crisis now poses to the world, President Clinton on Monday urged Japan’s prime minister 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 leaders summit of the Asia-Pacific Economic Cooperation forum, 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 economies--and especially the fiscal health of Japan--grew when Yamaichi Securities, Japan’s fourth-largest brokerage firm, announced it was failing and closing. Further, both the Japanese and South Korean markets suffered severe losses at their openings today.

White House officials said Clinton urged Hashimoto to stimulate consumer demand, push even harder for reforms to his nation’s financial system and liberalize trade rules to allow for more imports so that Japan can become an engine for a broader Asian recovery.

These moves, Clinton suggested, “would produce renewed growth in Japan, thereby helping Asia and, indeed, being an engine for the entire world economy,” said Dan Tarullo, assistant to the president.

Japanese officials said Hashimoto did not respond to Clinton’s assertion that Tokyo holds the key to Asia’s economic recovery. Instead, Hashimoto told the president 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 Tsuruoka, 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.”

Tsuruoka 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 among 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.

In all his sessions, Clinton stressed that Asia’s economic troubles will be deeply felt in the United States because U.S. 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 deepen because U.S. trading partners there will not be able to afford American products and their exports will be cheaper for American consumers and businesses, Clinton said. A day after characterizing the turmoil as “a few glitches,” Clinton warned that continued financial troubles in Asia can “bleed over to other parts of the world and it could have an impact on our stock market.”

He told leaders of 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 turmoil in so many Asian economies caused this APEC summit to have a drastically different atmosphere. The four previous annual sessions occurred when the region and its leaders were basking in the glow of their elevated prestige tied to their nations’ expanding prosperity.

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, 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 in sound fashion. 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 across much of Asia, including the Philippines, Indonesia and South Korea.

*

Meantime, in meetings with China’s President Jiang Zemin and Indonesian President Suharto, Clinton urged them to improve the human rights records of their nations. Clinton also met with South Korean President Kim Young Sam.

Chinese and Indonesian rights groups held an alternative summit and staged demonstrations at the APEC conference. The activists raised concerns about the Indonesian government’s threat to retaliate against Indonesian citizens involved in the protests. In 1995, the government jailed Bintang Pamungkas, a prominent critic of Suharto, after he took part in protests during a visit by the president to Germany.

*

Times staff writer Evelyn Iritani contributed to this report.

More Asia News

* S. KOREANS NOSTALGIC--With recent turmoil, South Koreans are nostalgic for a strong leader.Page A16

* FALL IN MARKETS--Markets in South Korea, Japan plunge as region’s economic crisis deepens. Page D1

* OK EXPECTED--Pacific Rim leaders are expected to endorse monetary plan at the Vancouver summit. Page D3