Both U.S., Asia Must Take Medicines
All the world is suddenly saying that Asia isn’t what it used to be, but only a cold heart could laugh at Asia’s ordeal. Through much of this shaken region, businesses open for decades or generations face closure; people accustomed to job security face the foreseeable future without paychecks in societies with little safety net other than family. Yes, Asians will blame their politicians for the mess. But they will blame outside forces as well. They will note that the pain they will have endured in return for the bailout money was imposed on them. William Itoh, U.S. ambassador to Thailand and America’s sole top-level diplomat of Asian heritage, explains: “It’s a natural human tendency to look for reasons for your failure outside yourself. Asians just wish it were someone else’s fault.”
Itoh continues: “Remember Malaysian Prime Minister Mahathir’s comments blaming the West? They had more resonance than we might have thought they would. Even in pro-American Thailand, at first people thought we were trying to destabilize the country with our calls for more market opening. Hey, they say, it was financial liberalization that got us into this mess.”
Itoh reports that Thailand has made peace, however superficially, with the International Monetary Fund’s reform-for-dollars program. But South Korea, in the home stretch of a wrenching presidential election, is bridling. For years it has done much of what America asked, abandoning dictatorship and opening markets. Now, thanks to its own inept regulation and oversight, Seoul is facing the unthinkable: national bankruptcy. So what does the IMF require from what was once the world’s 11th-largest economy in return for the life-saving $57-billion credit line? Further market openings and deregulation. That’s where Korea can’t follow the logic. As a quietly sympathetic report from the Federal Reserve Bank of San Francisco notes: “Openness has exposed Asian economies to sudden shifts in market sentiment, which can disrupt economic activity by triggering large changes in exchange rates. . . . The experience apparently has made some Asian policymakers very wary [and] raised the stakes in the debate.”
Economic stability isn’t the only thing at stake. Says U.S. Trade Representative Charlene Barshefsky, one of America’s most internationally respected voices: “I just hope these Asian economies get on their feet rapidly. At a time when our relations with Asia are absolutely critical, it’s going to be very tough to keep the political balance if they fail.” I just hope America and the West don’t unintentionally wind up destroying Korea in their effort to save it.
Even in America, there’s more than a little Korean-style skepticism about financial and trade openness, is there not? After all, Congress stunned President Clinton and the world by denying the administration fast-track authority. And earlier this month, when giant Kodak lost Round 1 in its World Trade Organization dispute with giant Fuji over open markets in Japan, many Americans sulked and complained. Cracked a U.S. official, noting that whenever America emerges victorious in WTO disputes (as in no less than the 15 prior cases), it emphatically urges the losers to accept the WTO’s wisdom without whining: “Americans are great at dishing it out, but we can’t take it.”
That could prove a serious handicap, because until this Asian crisis is played out, it looks like there will be a great deal to take. If recession-engulfed Japan, the world’s second-largest economy, falls on its face, prepare for a worldwide economic downturn. Certainly Washington has little confidence in the Hashimoto government’s economic smarts or the calcified Japanese system’s ability to move quickly. “There’s a growing sense in Washington that Hashimoto doesn’t get it,” says one top official, “at the very time that their economy is in big trouble. They have got to wake up!”
Perhaps America does too. President Clinton needs to be more masterful as Great Communicator to get Americans to understand that free trade is a job creator, not a job destroyer. The president should point out that it is no coincidence that as imports are at an all-time high, U.S. unemployment today stands at its lowest since 1973. “It is so easy to demonstrate the down side,” admits a top administration official. “One picture of a factory closing, and people hate free trade.”
Blunt-speaking Alexander Downer, Australia’s foreign minister, warns that in Asia and elsewhere “there will be a sense of very great disappointment if Congress does not approve American fast-track legislation in the spring. America then would have abrogated the leadership role on economic trade issues it has had since 1945.” This would be a great irony for an administration whose foreign policy vision has been based on world trade and whose surrogates at the IMF are telling Asia to open up or else. Before long, it could just be that the rest of the world will be laughing at America. And that would not be funny.
Times columnist Tom Plate is a professor of policy and communication studies at UCLA. E-mail: tplate@ucla.edu
