Leaders aim to end currency crisis

By Martin Crutsinger Associated Press Published:

President Clinton and the other 17 leaders picked an idyllic university campus with a magnificent view of the ocean and mountains for the final day of their Asia-Pacific Economic Cooperation meetings.

The tranquil setting belied the subject of their discussions _ a financial firestorm of plunging currency values, falling stock markets and rising bankruptcies that has engulfed a number of Asian countries.

In Tokyo, Japan issued its clearest warning yet that ailing financial companies will be allowed to go under and that the government will not embark on any corporate rescue missions.

Finance Minister Hiroshi Mitsuzuka said the stability of Japan's financial institutions depends on having companies like Yamaichi Securities Co. resolve their own problems.

Yamaichi Securities _ one of Japan's four largest securities firms _ closed its doors Monday, unable to cope with its $24 billion debt. In doing so, it became the third Japanese financial company to collapse in a month.

Rather than save Yamaichi and avoid job losses, the government said financial institutions are largely on their own. The result may be a more competitive economy.

Meanwhile, in Seoul, South Korea, Union leaders from 21 major brokerage houses staged a sit-down at the Korea Stock Exchange today, demanding a temporary halt in trading of tumbling shares.

"Shut down the stock exchange!" the union leaders shouted in front of the office of the head of the exchange in Seoul's Yoido district, a business and government center.

The union leaders said a temporary halt in trading would help ease what they called a catastrophic situation in the Korean stock market.

"It's unfair that all the burden of the bankrupt South Korean economy is being passed on to stock investors who are being driven to the road of death," they said in a statement.

There was no immediate reaction from Hong In-ki, head of the Korea Stock Exchange, who was out of his office during the three-hour protest.

The Asia-Pacific Economic Cooperation meetings were ready to endorse the "Manila framework," a plan that gives primary responsibility for managing the crises to the International Monetary Fund but holds out the promise of back-up support from wealthy nations such as the United States and Japan.

Clinton made it clear during a round of meetings Monday that the United States had a lot at stake in putting an end to the turmoil, which has already triggered the biggest one-day point loss in Wall Street history.

"We sell about a third of our exports to Asia," he said. "We need to take this seriously ... but we should also have confidence that we can work through it."

The APEC leaders pledged to "enhance our capacity and that of the international system to prevent future crises and to respond quickly and effectively in the event they do occur," according to the draft final communique.

But it was far from clear whether the group's calming words would be enough to convince nervous financial markets that world leaders are on top of the mounting crisis.

Stock markets from Tokyo to New York swooned as the meetings were getting under way under renewed worries about the stability of the region. After being closed Monday for a holiday, Japanese markets tumbled Tuesday, with the benchmark Nikkei Stock Average closing down 5.11 percent.

The current troubles first struck Thailand in July and then spilled over into the Philippines, Indonesia, Malaysia and Hong Kong before claiming South Korea as its latest and largest victim last week.

The total cost of emergency assistance received or requested is $68 billion so far with many experts certain that the $20 billion requested by South Korea will only be a down payment to rescue the world's 11th largest economy.

The APEC meetings, which normally focus on trade issues such as the goal of achieving a free trade zone in the region beginning in 2010, have been overwhelmed by the Asian financial woes.

Japanese officials strongly denied that their country, the world's second largest economy, was even contemplating IMF assistance but that didn't stop reporters from asking Clinton and Prime Minister Ryutaro Hashimoto about the possibility during their joint meeting.

"The problems Japan is facing are different from the ones of Southeast Asia and South Korea," Hashimoto insisted.

U.S. officials did step up pressure on Japan to do more to stimulate domestic demand rather than relying on exports to the United States to restart its stalled economy.

They complained that Hashimoto has not lived up to his commitments to deregulate the economy. That deregulation, the United States believes, is key to boosting Japanese purchases of American products and narrowing a trade deficit with Japan that has swelled by 20 percent this year.

Clinton said a strong Japanese economy "could lead Asia out of this difficulty" by serving as an engine of growth for the region.

Canadian Prime Minister Jean Chretien, the host for this year's gathering, insisted that he had found the other leaders generally upbeat about prospects despite the current turmoil.

"All my friends ... they don't see a serious recession," he told reporters.

Before the summit's formal opening, Clinton met with Hashimoto, China's Jiang Zemin, Indonesia's Suharto and, in a sudden addition to the schedule, South Korea's Kim Young-Sam.

China, another country with which the United States has a sharply rising trade deficit, brought what U.S. officials characterized as "an important new offer" to open its markets to more American products. The United States has been blocking China's entry into the World Trade Organization until it does more to lower market barriers.

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