U.S. Prepares Korea Aid Package

By John King/CNN

WASHINGTON (Dec. 24) -- Treasury Secretary Robert Rubin announced today that a $1.7 billion loan will be made available to South Korea in January, to help the Seoul government bolster confidence in its financial markets.

The loan is part of a hastily arranged international effort to accelerate assistance to South Korea. Administration sources say U.S. participation in making what had been considered "last resort" money available was predicted on two developments:

• A pledge by South Korea's president-elect to undertake major financial sector reforms, including a privatization of the country's central bank.

• A commitment by major banks to "roll over" South Korean loans due in the coming weeks. Demanding payment likely would have significantly exacerbated the financial crisis by forcing major Korean conglomerates to miss scheduled loan payments.

Rubin defended these bailouts, which are facing criticism from both Republicans and Democrats, arguing anew that they are critical to both the economic and national security interests of the United States.

The commitment by the U.S. and other G-7 nations is in conjunction with an International Monetary Fund decision to also speed up loans to South Korea.

The centerpiece of the bailout package is a total of $57 billion in loans, most of them from the IMF and the World Bank.

South Korea has received $14 billion so far and today's announcement means another $10 billion in loans will be made available by early January.

As part of the bailout package, the United States pledged to make $5 billion in loans available as a "second line of defense" in case IMF and other international assistance was not enough to stabilize South Korean markets.

Until now, the administration had resisted South Korea's calls for some of that money to be made available immediately. But the White House says it is now clear a more aggressive international response is necessary.

In Other News:

Wednesday Dec. 24, 1997

• The Year In 'Toons
• Clinton: 'Measure Of Comfort' In Verdict
• Clinton Wants More Aid For Homeless People
• U.S. Prepares Korea Aid Package
• Clinton Plans Some Recreational Shopping

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• Tucker Granted Medical Leave
• Rep. Schiff Battles Cancer