IMF willing to help N. Korea escape from isolation: Strauss-Kahn

June 29, 2010 10:42 am 

By Hwang Doo-hyong

WASHINGTON, June 29 (PNA/Yonhap) — The International Monetary Fund (IMF) said Monday it is ready to provide assistance to North Korea to help the reclusive communist state get out of isolation if Pyongyang makes such a request.

"We could have (provided) if North Korea was asking some technical assistance or things like this," Dominique Strauss-Kahn, managing director for the IMF, told reporters at the headquarters of the leading global agency. "We could consider having some relationship with them. But until now we have not been asked to do something on this."

He was responding to a question about whether or not the IMF will play a role in defusing tensions on the Korean Peninsula by either inviting the North to an IMF meeting or providing assistance to help improve the impoverished country's economic system.

North Korea has in recent years sent groups of economists and government officials to European countries to learn the capitalist economy, amid on-and-off tensions surrounding its nuclear weapons ambitions.

Tensions have escalated in recent months as a North Korean submarine torpedoed a South Korean warship in the Yellow Sea in March, killing 46 sailors.

South Korea brought the incident to the U.N. Security Council for possible sanctions or condemnation, but China and Russia have been lukewarm as Pyongyang denied responsibility and threatened war if sanctioned. North Korea is already under U.N. sanctions for its nuclear and missile tests early last year.

Strauss-Kahn said the IMF basically deals with 87 member states alone, but added that it is still flexible.

"There is no reason why we could not do it," he said. "We did provide technical assistance to Kosovo. We were working with the Palestine Authority even though it's not a Palestinian state. So it's flexible. And wherever we provide technical assistance, of course, the request has to come first. We don't go somewhere, saying we are going to provide you with technical assistance that you are not asking for."

The IMF also provided technical assistance to Vietnam and East Timor before their membership by sending staff to train officials and through consultations on economic reform policies and providing limited financial assistance.

North Korea unsuccessfully applied for membership to Asian Development Bank in 1999 due to opposition from the U.S., which is not supposed to engage North Korea under various laws imposing sanctions on the communist state. U.S. officials have said Pyongyang needs to join the IMF first by taking measures to ease tensions, agreeing to provide adequate economic statistics and preparing to undergo major economic reform.

The U.S. is the biggest shareholder of the IMF with a 17 percent equity that gives it virtual veto power due to the regulations requiring at least 85 percent of approval for decision-making.

The IMF invited North Korea, which has never applied for IMF membership, to its annual conferences in 2000 and 2003 as a special guest, although the North did not appear due to short notice and rising tensions with the North's nuclear weapons programs.

Strauss-Kahn, meanwhile, cautioned South Korea of the "risk of exiting too soon."

"The Korean economy has been impressive and is now clearly in the process of exiting the stimulus," he said.

The IMF chief, who is due in South Korea in mid-July for a conference on Asia's role in rebuilding the global economy, advised South Korea regarding its considerations to exit the stimuli in the coming months.

He seemed to be restating the advice of the G-20 summit leaders in Toronto on Sunday to walk the tightrope between exit strategies and continuing stimulus measures amid growing woes on sovereign debts in many economies that could result in a double-dip recession.

Strauss-Kahn admitted some mistakes the IMF made while addressing the Asian financial crisis in the late 1990s, saying the agency learned a lot and will no longer try to resolve all of the problems of troubled countries.

"IMF has been during the Asian crisis very badly received by Asian countries," while trying to "clean up the financial sector" of South Korea, Indonesia and Thailand, he said. "Probably Korea, Indonesia, Thailand have any kind of problems in their financial sector. But it is true also to say it has been done through a very high cost. Looking backward, probably it could have been done in another way."

He said the IMF will try to limit their role when crises arise, and will try to find solutions "certainly more adapted to the countries." He added that sometimes solutions can add to financial woes. "Solutions provided (during the Asian crisis) were good solutions, but had nothing to do with the crisis at the moment," he said.

"We are trying to rebuild, renew the relationship with the region," Strauss-Kahn said. "Asia has a lot to say. We have already done this with Latin America and Africa. Asia is probably more complicated because of the memories of stigma, stronger in Asia than in the rest of the world. So this conference is very important."

On the yuan's revaluation, he did not expect the value of the Chinese currency to go up dramatically soon despite Beijing's recent announcement to allow more flexibility in the currency value.

"I do not expect that things are going to change very rapidly," he said. "We still believe the renminbi is undervalued, but of course the move is starting to progressively correct this feature. It will take time for the renminbi to reach the normal market value."

The IMF chief, however, said, "Even the very strong revaluation won't solve all the imbalances. Far from that. Of course, revaluation is going in the right direction. We are pushing for this. Imbalances will not be addressed only by changing the currency."

China has said it will make its own decision on the currency value without considering pressure from the outside, insisting that the huge trade imbalance between Washington and Beijing has nothing to do with the currency value. (PNA/Yonhap)

ALM/ebp

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