Clinton Calls for Effort to Revive Global Economies

President Clinton called Monday for greater global cooperation to restore growth in struggling Asia, protect the economies of other threatened regions and “douse the flames of the international financial crisis.”

In a hastily scheduled speech delivered to a small audience assembled by the Council on Foreign Relations, he made no reference to the Monica S. Lewinsky scandal. Although administration officials said they began making plans for the president to deliver such a speech more than a month ago, the audience was assembled at the last minute.

The council, an independent organization that studies international political and economic issues, said last week that it had been asked Wednesday to bring together a small audience for the president’s address.

With the House of Representatives on the verge of deciding whether to consider impeaching him, Clinton nevertheless pressed a balking Congress to approve his request to provide the International Monetary Fund, or IMF, with $18 billion.

Clinton’s remarks came as senior economic policymakers of the Group of 7--the United States, Japan, Germany, Britain, France, Italy and Canada--issued a statement in London echoing his view that the industrialized nations must do more.

However, both Clinton and the G-7 officials stopped well short of advocating a coordinated cut in interest rates--a step financial markets have demanded as a sign that the major economic powers are willing to act aggressively to contain the spreading Asian economic slump.

Asked if the administration was pushing for an interest rate cut, Treasury Secretary Robert E. Rubin said: “Absolutely not.”

More than a week ago, Federal Reserve Board Chairman Alan Greenspan opened the door to a possible interest rate reduction in the U.S. if the economic slump overseas becomes more threatening. But he too stopped well short of promising any such move.

The seeming new willingness by the allies to combat the financial crisis more forcefully marked a major shift from the posture they had taken since the outbreak of the Asian crisis last year, when the slump was considered a regional problem, unlikely to spread.

At the same time, however, officials and private analysts both cautioned that Monday’s pronouncements were only a start.

“This is the first step in a dialogue,” a senior U.S. official said, hinting that the allies still have issues to tackle before they will be able to agree on any specific measures.

For Clinton, the worldwide economic turmoil--and the effect itmay have on the United States--carries with it potentially extraordinary consequences: The strength of the economy is widely viewed as the remaining pillar in his wobbling political support.

Clinton said Monday that the United States has “profound interests” in preventing the slump from widening. He said “there is now a stark challenge not only to economic freedom but, if unaddressed, a challenge that could stem the rising tide of political liberty as well.”

With one-quarter of the world living in countries in which economic growth is declining, the president said, “we need to get credit flowing again. We need to get business back to making products, producing services, creating jobs.”

The program Clinton unveiled was short on specific proposals. But he said he had asked Rubin and Greenspan to convene a meeting in Washington next month of the finance ministers and central bank governors of the Group of 7 along with their counterparts from emerging markets in the developing world.

The goal, he said, will be “to recommend ways to adapt the international financial architecture to the 21st century.”

Both Clinton and the G-7 officials also said the industrial countries would be willing to tap a special $16.5-billion global emergency fund--known as the General Arrangements to Borrow--to help rescue countries such as Brazil that are being threatened by the Asian crisis.

The IMF said Friday that it would use the account to rescue struggling economies in Latin America, the latest financial hot spot, and, by implication, other countries too.

But Clinton warned that Congress also must approve the $18-billion line of credit he is seeking to provide as the U.S. share of a move to replenish the IMF’s regular lending pool.

“After a year of financial firefighting, the IMF’s resources are badly strained,” Clinton said. “Congress simply must assume its responsibility for our leadership in the economy. . . . Failure by this Congress to pay our dues to the IMF will put our own prosperity at risk.”

The Senate has approved the new funding, but the House has not. Congress is scheduled to end its current session in about a month.

Clinton argued, as he has in the past, that as the global economy becomes more unified, the United States cannot afford to ignore problems in Asia, Russia or South America.

“These people are our customers,” he said. “These nations are also our competitors. . . . When their currencies drop precipitously, the prices of their goods fall.”

This, he said, undercuts sales of domestic goods in the United States, increases the trade deficit and brings the risk of protectionism.

Besides, he said, “where economic turmoil plunges millions into sudden poverty and disrupts and disorients the lives of ordinary people, the risks of political and social instability and of a turn from democracy clearly rise,” threatening economic reform.

Defending his request for greater support for the IMF, Clinton praised its demand that aid recipients adhere to strict rules of sound financial management.

“If a nation chooses to print money indiscriminately, to wink at cronyism or corruption, to hide bad loans and protect corrupt or inefficient banks, then investors, foreign and domestic, sooner or later, will withdraw their investments, with consequences both swift and severe,” he said.

Japan is widely seen as the key to restoring the Asian economy, but its challenges, the president said, “are quite formidable.”

“They have to spur domestic demand, revive a banking system, restore confidence, deregulate the economy and open markets,” he said.

Times staff writer Marjorie Miller in London contributed to this story.

* TWO IN A ROW FOR WALL ST.: Stocks rallied strongly for a second straight session, with the Dow up 149 points. D1