As the Asia-Pacific Economic Co-operation summit opened in Vancouver yesterday, the tone of studied optimism adopted by the US to encourage market stability was being challenged, both by victims of the turmoil and by commercial reality. A day after President Bill Clinton referred to Asia's troubles as "a few glitches on the road", his Secretary of State, Madeleine Albright, said Apec was meeting "amidst predictions that the Asia miracle will be succeeded by an Asian meltdown". What was needed was the "energy of the tiger and the wisdom of the owl".
President Fidel Ramos of the Philippines said the turmoil could not be "waved away by brave talk" and the Malaysian Prime Minister, Mahathir Mohamad, attacked currency speculators, calling for new rules to curb their activity.
In South Korea, where an IMF team began work yesterday to try to prevent more damage from what Korean leaders described as "a sharp liquidity crisis", stock markets responded with scepticism.
Amid fears that IMF-decreed austerity measures could precipitate bankruptcies and job losses, the country's main economic indicator - the Korea Composite Stock Index - fell 7 per cent to its lowest point for a decade.
Differences about the seriousness of Asia's difficulties reopened discussion about a plan, formulated in Manila last week, under which rich countries like the US and Japan would offer support funds to ailing regional economies to supplement IMF loans, but only when IMF prescriptions had been agreed.
Apec leaders had been expected simply to endorse the plan which, according to US officials, entails relatively small amounts of money, but sends a confidence-boosting message.
Mr Clinton, who would face problems with Congress if he appeared to enter into open-ended financial commitments abroad, had said the money would be nearer the $3bn (pounds 1.8bn) it offered as part of the recent Indonesia rescue package than the $20bn it spent to shore up the Mexican economy three years ago.
But the IMF's spending is far greater: since July it has pledged $68bn to Asian economies, of which the most recent contribution is $20bn for South Korea, compared with $50bn it provided for Mexico.
US caution became clear on Sunday, when South Korea said it had unsuccessfully approached Washington for emergency funds to tide it over. Korean officials said the conversation had been only "brief and informal", but the "universal advice" was that Korea should go to the IMF.
The US and Japan - which also turned down a Korean approach for bilateral assistance - have since said they would consider supplementing IMF help for South Korea but not until the rescue terms are agreed with the organisation. Seoul insisted, notwithstanding yesterday's stock market fall, that the fundamentals of its economy were sound and that IMF conditions were likely to reinforce measures already being taken by the government.
The big worry hanging over the Vancouver summit is the prospect of a recession sweeping Asia that could also affect North America. The Canadian Prime Minister, Jean Chretien, said that while Asian growth rates were likely to fall, he saw no risk of recession in Asia. A poll of US economic forecasters earlier this month found similar confidence.
Published in conjunction with a study by the National Association for Business Economics in Washington, those polled said they did not anticipate that Asian difficulties would have a significant impact on US prospects for economic expansion.Reuse content