As fears grew of a financial crisis in Japan following the collapse of a large Tokyo brokerage firm, the leaders at the APEC summit here prepared to back new powers for the International Monetary Fund to help restore calm to money markets.
As the Japanese Prime Minister, Mr Ryutaro Hashimoto, arrived yesterday, his Foreign Minister was expressing confidence about the future of the Asian economies. Mr Keizo Obuchi said: "There is no doubt the Asian nations will recover," but he also admitted that Japan was still "facing a difficult financial situation" after the effects of the "bubble economy" of the 1980s.
The summit communique to be issued today is expected to endorse a plan worked out by senior finance officials in Manila last week which will give the IMF a greater role in heading off future financial turbulence. President Clinton spent part of yesterday in a bilateral meeting with Mr Hashimoto discussing the Japanese situation, the new IMF plan and the growing US trade deficit with Japan. The US fears that its already enormous trade deficit with Asian countries will grow faster as they are forced into devaluations which make their imports more attractive to American consumers.
President Zedillo of Mexico, one of the leaders of the 18 APEC economies, has been urging his Asian colleagues to face up to their massive financial problems and take the IMF medicine so that international confidence can be restored. He pointed to the success of the $50 billion (£33.3 billion) Mexican bailout in 1995 which has now been completely re-paid.
"You have to bite the bullet immediately," Mr Zedillo told APEC business leaders who are also meeting here as part of the summit. "You cannot fool around, not even for a few weeks, with a financial problem as big as we had and as big as seems to be happening in some Asian countries."
The latest Asian country forced to seek an IMF aid package is South Korea, the world's 11th biggest economy. As discussions were under way in Seoul on the details of the $20 billion bail-out, South Korean ministers put the best face on the IMF intervention and said they expected it "to go rather smoothly".
The details of the APEC plan drawn up in Manila by senior financial officials are still not fully revealed. The IMF will remain the first recourse for countries in crisis but it will have what President Clinton calls "a new window for short-term financing". There are reports that the IMF will also have the assistance of a regional surveillance squad to identify financial and economic problems at an early stage.
The summit has been taking place against a backdrop of protest marches in the Vancouver streets against human rights abuses in Asian countries, especially China and Indonesia. The Canadian authorities have kept the protesters from disrupting APEC meetings or getting close to President Jiang Zemin and President Suharto but they have also helped fund an alternative "People's Summit" where human rights abuses are being highlighted.
President Clinton and the Canadian Prime Minister, Mr Jean Chretien, have said that they will raise human rights issues in private meetings with Asian leaders. Under pressure from the demonstrations, the Canadian Foreign Minister, Mr Lloyd Axworthy, said there was unlikely to be any dramatic breakthrough on human rights at this summit but the issue, as well as women's rights, should be a major theme at APEC meetings next year.
