Blair warns Indonesia to stay with IMF

BRITAIN yesterday warned Indonesia not to abandon an internationally sponsored rescue plan, amid growing tension between Europe and Asia over ways to solve the economic crisis in the Far East.

In a meeting in Jakarta with President Suharto, the Foreign Office minister, Derek Fatchett, delivered a letter from Tony Blair warning the President that an agreement with the International Monetary Fund for $60bn (pounds 37.5bn) of emergency funds in return for economic reforms was "not negotiable".

But Asian governments are impatient of what they see as Europe's feeble response to the region's currency crisis, compared to the reaction of the United States and Japan. "European countries have been free-riders on Asia's economic success, but unwilling to share responsibility for helping it out," said Mikie Kiyoi, of the Japanese foreign ministry, in a letter to the Financial Times this week.

The row between Europe and Asia threatens to spill over into next month's Asia-Europe Meeting (Asem), to be hosted in London by the Prime Minister.

The summit, which will be attended by EU heads of government and 10 Asian countries, is the second meeting of its kind. It comes when European governments are trying to improve their relatively weak ties with a region still dominated by the US. But the Asian crisis, caused by the near collapse of the region's currencies, has raised the stakes dangerously high. "There's been an exchange of accusations between the two regions," said one Western official.

Mr Fatchett is the latest in a string of international visitors to urge President Suharto to accept the IMF terms. "The President said to me that they were committed to the programme and I hope that is the case," he said. However, the authority of European pronouncements is compromised by what Asian governments see as their inadequate response to the crisis. Japan contributed $19bn to the IMF rescues of Thailand, Indonesia and Korea, and the US gave $8bn. Eight European countries have collectively given just $6.25bn. At the same time, the EU and the US have criticised Japan for not doing more to reinvigorate its stagnant economy to stimulate Asia as a whole.

European officials insist they are taking action. Britain has promised pounds 5m towards an Asem Trust Fund providing technical advice on restructuring the stricken economies in conjunction with the World Bank. Brussels fears a wave of Asian exports, whose prices have dropped as a result of the collapse of Far Eastern currencies, flooding their markets and driving European firms out of business.