cj#871-(1/2)> (rn fwd) perspectives on East Asian crisis

1998-11-30

Richard Moore

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(Part 1 of 2)


Delivered-To: mailing list •••@••.•••
Date: Mon, 30 Nov 1998
From: •••@••.••• (Jan Slakov)
Subject: RN: East Asian crisis

Dear Renaissance-Network,    Nov. 30

The three items below shed some interesting light on the current financial
crisis in East Asia.

It is all too easy for people in North America to convince themselves that
East Asia's crisis is largely due to an unfortunate regional tendency for
corruption. Certainly, our mass media seem convinced of this glib explanation.

So thank you to Eric Fawcett in Canada,  Daryl Copeland (also in Canada, I
think) and Wendell W. Solomons in Sri Lanka, for these articles.
all the best, Jan

PS For those of you who tried to send messages (re: Pinochet) to Jack Straw
and Robin Cook, it turns out only Jack Straw has e-mail; the other address
doesn't work.

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Date:   Mon, 23 Nov 1998 23:03:30 -0500
From: Eric Fawcett <•••@••.•••>
Subject:  Malaysia's real sin is against the New World Order


From:   Eric Fawcett <fawcett>
        see also REPLY below for a "reality check" by Daryl Copeland, who
        unlike the media commentators at APEC know something about Malaysia

Malaysia's sin is NOT violation of Human Rights, as all the western media
are saying, but defiance of the Nuclear Powers, and worse even, refusing
to submit to the IMF "reform" measures.

The second is the greater challenge to the New  World Order, but they are
two sides of the same coin, which means that after achieving nuclear
abolition our struggle must continue!  The roots of war are the lust for
power, and the nuclear states and their allies in NATO see their weapons
in this light.

1] Malaysia in 1997 (and again in 1998) introduced at the United Nations
a resolution calling for negotiations, starting in 1998 (1999) on a treaty
banning all nuclear weapons, in accord with the 1996 World Court opinion.

2] APEC Meeting, report by John Stackhouse, Globe and Mail, Nov 18, 1998
Heading: Malaysian PM ridicules Chretien on human rights
Sub-heading: Blames North American Greed for Asian crisis
   On the eve of the annual gathering of Asia-Pacific leaders, host Prime
Minister Mahathir Mohamad lashed out at Canada for its human rights stand
in the region, and at North American greed for throwing Asia into crisis.
   In a major speech to business leaders, Dr. Mahathir called for swift
action against currency speculators, blaming them for driving Asian
currencies to unprecedented lows, and blocking any hope for recovery.
He also condemned the Group of Seven industrial powers, including Canada,
for failing to rein in currency traders.
   "We still believe that currency traders are too powerful and completely
irresponsible." Dr. Mahathir said.  "They don't mind bankrupting countries
and regions, impoverishing millions of workers and destroying whole
economies in their quest for profits."
    ~snip

    After firing  his deputy prime minister Anwar Ibrahim, an ardent
market liberaliser, in September, Dr. Mahathir shut down currency trading
in Malaysia, froze the value if the ringitt, and announced that investors
would not be allowed to withdraw their money from the country for one year.
    Other counties that opted for the tough medicine of the International
Monetary Fund are still ailing, Dr. Mahathir said.  "The people in these
countries are suffering unemployment and acute shortages of food and other
goods," he said.  "None of the currencies of these countries have regained
their previous strength."
=========================================================================

REPLY
From: Daryl Copeland <•••@••.•••>, editor "Behind the Headlines"

Eric - I think that you are on to something. And the larger story is
instructive as a case study in international political economy.

Malaysia is a country of many interesting twists and ironies, and its
govvernment of course makes mistakes and has problems. The Malaysian
press, for its part, is with few exceptions simpering, self-censoring and
sycophantic. But Western political leaders and their own media toadies in
Kuala Lumpur for the APEC festivities earlier this week did little to raise
the benchmarks of informed discourse or good governance. Indeed, many of
the events and much of the foreign commentary surrounding this week's APEC
leaders meetings had the quality of a fiasco. Subtlety, nuance, and a
knowledge of the subject matter were notable mainly for their absence.

>From the analytical perspective afforded from this side of the Pacific, the
sense of disconnect throughout the proceedings was palpable. Perhaps
somebody handed poor Al Gore the wrong speech. Or maybe he thought he was
somewhere else. But the content and context of of his celebrated remarks
about "people power, doi moi and reformasi" and references to the brave
Malaysian people calling out for democracy were nothing short of astonishing.

International media coverage of this intervention and other instances of
human rights sermonizing was bereft of background research and was
appallingly unquestioning and superficial. Malaysia has held elections
fastidiously since independence. I was working in the country during the
last contest, in 1995; it was lively and pluralistic. The most effective
opposition to the ruling UMNO coalition came, interestingly, from the PAS,
an Islamic party with a strong base of support in the Northeast. Mr.
Mahathir, a strong believer in the secular state, nonetheless won his
largest majority ever, with 65% of the popular vote.

Though I can't rule it out, it is far from clear to me that the Malaysia's
PM has lost his touch. He is sometimes erratic, often outrageous and always
unpredictable, but he is a canny politician whose pronouncements always
contain enough truth that they cannot be dismissed. He has styled himself
as a lightning rod for issues close to  NAM and G77, and clearly relishes
exposing what he considers to be Westerm duplicity and double standards.
This has made him unpopular in some quarters.

Malaysia is not, however, Indonesia, and the tendency to put Mr. Mahathir
in the same archtypal box (corrupt, unrepresentative, authoritarian, etc.)
as former President Suharto is a serious mistake which should have been
resisted. Dr. Mahathir's careful, if calculated  management of
inter-communal relations has been at times heavy-handed, but he has secured
social peace in a country with profound ethnic, racial and religious
differences. In many other countries with a similarly volatile mix - Sri
Lanka, the former Yugoslavia, much of central Asia - things have not gone
as well.

Mahathir's vision of economic development has taken a toll on the
environment and indigenous peoples, but he has achieved much for the
country in terms of health care, education and infrastructure. Among the
majority in the kampongs and rural areas, the standard of living has
improved markedly on his watch. I suspect that he continues to enjoy
widespread support.

The country's human rights record is relatively good, especially if
assessed by regional standards. Former Finance Minister Anwar Ibrahim,
moreover, is a rather unusual victim and unlikely hero. He certainly would
not have been my choice of champion if I was a speechwriter for a visiting
dignitary. PM Mahathir's former protege and heir apparent rarely spoke out
during his 15 years in government. He was silent during the harsh crackdown
against the Al Arquam religious movement in 1994, which ended in an
unseemly show trial its leader, and a televised confession of religious
"deviance". Mr. Ibrahim's strongest defense against charges that his family
had benefitted unduely from schemes to distribute wealth to ethnic Malays
was that he did not sit on any of the committees charged with making such
decisions... I don't doubt that his persecution is politically motivated,
but he is apparently being accorded due judicial process and the court is
still in session.

Malaysia's response to the Asian financial crisis, imposed against the
advice of Mr. Ibrahim, provides another telling illustration of the gap
between appearence and reality.  Fearing the kind of chaos wrought on
Thailand and Korea, and sensitive to anything which might jeopardize its
delicate inter-ethnic balance, the Mahathir fired Anwar, assumed the
finance portfolio and instructed the government to place minimum length of
stay requirements on foreign investment, peg the value of ringgit and limit
its convertability.

The fact that Chile, Hong Kong and China, respectively, have been praised
for pursuing elements of this strategy seems not to have occurred to most
international financial commentators. Instead, this action had the effect
of stimulating World Bank types, investment house pundits and sundry
cheerleaders  for neo-liberal ideology to dump on Malaysia from great
heights, conjuring an inevitable future marked by the darkest consequences.

What happened as a result of this re-regulation? The stock market
rebounded, interest rates fell, and after a 5% contraction in 1998 (modest
indeed by regional standards) the economy is forcast to grow by 2% in 1999.
Social costs have to date been contained, and for most Malaysians life goes
on much as before.  Compare that performance to those who bought into the
conventional analysis and swallowed the IMF's bitter "recovery" pill:
Russia? Indonesia? Brazil?

Most of the underlying factors of production which made Malaysia an
attractive destination for foreign investment in the first place still
apply. Time will tell regarding the possibility of grave downstream impacts
as a result of experimenting with alternative approaches to the challenges
of globalization. It may be significant that although his call began as a
cry in the wilderness, more and more voices are now speaking in support of
Dr. Mahathir's critique of speculative currency flows and their sponsors.

It is a short road from heresy to prophesy. And as regards contemporary
Malaysia, so far the rich broth of received wisdom is tasting rather like
thin gruel.

************************************************************************
Date: Sun, 22 Nov 1998 18:19:30 -0800
From: "Wendell W. Solomons" <•••@••.•••>
Subject: IMF and East Asia


Subject:        Robert Wade on Asia's Monetary Fund

The Economist, November 7-13, pp. 19-21
"The resources lie within"
Robert Wade and Frank Veneroso

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Robert Wade is a professor of political science at Brown University and
the author of, among other works, Governing the Market, a celebrated study of
economic development in East Asia. Frank Veneroso of Veneroso Associates
is an adviser on global investment strategies.
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THE world is awash with proposals for new crisis-fighting mechanisms. The
United States, Canada, France and Germany have all expressed serious
interest in the idea of an expanded IMF , or a financial supervisory
organisation parallel to the IMF , or even a second Bretton Woods conference
to rethink the world's financial architecture from scratch. Part of the
hidden agenda is to prevent the Asians from going off on their own.
In August 1997 Japan proposed an Asian Monetary Fund to deal with the
crisis in South-East Asia. It secured pledges of $100 billion mostly from
itself, China, Hong Kong, Taiwan, and Singapore. The United States
Treasury pulled out all the stops to kill the proposal, and it died.
The Treasury explained that the IMF should be the sole co-ordinator
of the rescue effort.

Now the idea is again being seriously discussed in the region. This time
the West must encourage it. The Asian fund could make an important
contribution to recovery in Asia and the rest of the world. Too much is at
stake to worry about Asia going its own way.

How would the fund help? It would be better able to appreciate and build
on the distinctive strengths of Asian financial systems than the IMF has
proven to be. It would allow Asian governments and companies to refinance
their expensive western loans and provide selective new loans for recovery
programmes. And the creation of the fund would send a signal that Asians
were taking charge of their own destiny and no longer dependent on
bail-outs. This may prompt western bankers and portfolio managers to
supply new finance-helping to solve Asia's current short-term funding
problems.


(continued in part 2)
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