Suharto Unmoved

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JAKARTA: Indonesia’s President Suharto has Washington over a barrel -- and he knows it. “We can’t afford to simply pull the plug on him," says TIME correspondent Bruce Van Voorst, "because if Indonesia fails, the ripple effect throughout Asia, and beyond, would hurt us a lot.”

President Clinton’s special envoy, Walter Mondale, appears to have had little impact. His talks with Suharto Tuesday were aimed at dissuading him from playing chicken with the International Monetary Fund. “The talks were friendly enough, but Suharto has made no concrete commitments,” says Van Voorst. While he awaits the second installment of his $40 billion bailout, Suharto did promise to implement the IMF program. But he also questioned its efficacy and vowed to press ahead with plans to peg his currency to the dollar -- against the will of the IMF and Washington.

Clinton officials are now considering what action to take if Suharto fails to implement key aspects of the bailout plan. Tough love may be necessary, but it's a difficult call when this mainstay of U.S. Asia policy sits atop a volcano of social unrest.