By Paul Blustein
Washington Post Staff Writer
Tuesday, August 12, 1997; Page C01

International donors yesterday pledged $16 billion in loans to Thailand to help it through a financial crisis -- with the United States conspicuous by its absence.

The Thai bailout, which is exceeded in size only by the $50 billion rescue of Mexico in early 1995, will be led by the International Monetary Fund and Japan. It includes pledges from several of Thailand's neighbors, such as Malaysia and Indonesia, according to an announcement yesterday following an international conference in Tokyo.

Washington won't contribute a dime directly to the package, though some U.S. money will flow to Thailand indirectly through U.S. membership in the IMF. That's in contrast with the Mexican rescue, when the Clinton administration pledged the biggest amount -- $20 billion -- in what critics called a bailout of rich investors, and U.S. officials called a necessary move to prevent economic chaos south of the border.

Washington's decision to provide no direct emergency aid to Thailand, an important ally and trading partner in Southeast Asia, underscores the limitations on the administration's willingness to play an overt global role when domestic political attack is likely, international economic experts said. The development is even more striking, they added, in light of the major Japanese contribution, which reflects both Tokyo's role as the region's richest power and the billions of dollars of loans that Japanese banks have extended previously to Thai borrowers.

One key player in the Mexican bailout voiced dismay over Washington's reticence to put up money for a more distant ally.

"It's too bad the current attitudes in the United States apparently precluded our representatives from agreeing to join the IMF and more than half a dozen countries in the financial support package for Thailand," said Jeffrey R. Shafer, who until February was undersecretary of treasury for international affairs.

Shafer, now vice chairman of investment banking firm Salomon Brothers International, said that while U.S. funds may not have been necessary in Thailand's case, "we have important relationships and interests in the Asia-Pacific region, and it's shortsighted not to join others in a sound financial undertaking of great importance to the region."

Deputy Treasury Secretary Lawrence H. Summers responded that the United States had played a key role by consulting closely with the IMF on the terms of the bailout. Washington also sent an assistant secretary for international affairs, Timothy Geithner, to the Tokyo conference.

"The United States is making a substantial contribution as the IMF's largest shareholder, and has played an important role in shaping the international approach," Summers said.

The bailout announced yesterday for Thailand came in response to a collapsing Thai currency, the baht, and other troubles that have ruined the country's image as a star performer among Asia's fast-growing economies. Facing a rising trade deficit, slumping property prices and a weakened banking system, the Thai government has been forced to close major finance companies, raise taxes and curb government spending to convince the IMF that it is getting its house sufficiently in order to qualify for such a large loan.

Thai Finance Minister Thanong Bidaya told a news conference that the money will be used mainly to shore up the country's reserves of foreign exchange, according to press reports from Tokyo.

The IMF and Japan's Export-Import Bank each will contribute $4 billion. Australia, Malaysia, Singapore and Hong Kong pledged $1 billion each, and South Korea and Indonesia promised $500 million each. More money may come from China, the World Bank and the Asian Development Bank.

"The impressive part of this package is the extremely significant contributions from countries in the Asia-Pacific region," said Eisuke Sakakibara, Japan's vice finance minister for international affairs, according to the Associated Press.

But the Asian solidarity might raise concern in the United States, because "we don't want to create the notion of regional financial blocs," said Robert Hormats, vice chairman of Goldman Sachs International, who held high-ranking economic policy positions in the Carter and Reagan administrations.