Asia Still Waits for a Strong America
‘Never put off until tomorrow what you can do today.” Sometimes the most blatant cliche can produce a profound wisdom. But bankers and economists are a sometimes dysfunctionally cautious lot. One recalls that the West did little about the tanking of the Thai baht in the summer of 1997. If it had intervened right away to shore up the baht, would one-quarter of the world now be in recession, and the other three-quarters increasingly nervous about what’s next? Would Brazil’s key-to-the-Latin-kingdom currency now be in danger of a baht-like poof? We’ll never know for sure, of course. But it’s hard to forget the remark of a top U.S. Treasury official, Deputy Treasury Secretary Lawrence Summers, back then. Dismissing the option of early intervention (the way the U.S. saved the Mexican peso in 1994), he said: “Thailand’s not on our border.”
Today, of course, we all know better: In this borderless world, almost every place on the planet, even Thailand, is as functionally close to the U.S. as Mexico. Worldwide telecommunications, like it or not, is the fire that fuses the world’s economies into neighbors. Some of those biggest neighbors--the world’s seven largest industrialized nations, known as the Group of Seven--are gathered in Washington this week for a neighborly five-day crisis meeting. Even though they now agree that inaction in the face of a speculative attack on a national currency will almost always lead to attacks on other currencies, even on national economies that aren’t fundamentally flawed, they are having trouble agreeing on much else. Over the weekend, Asian stock markets dived in response and on Monday, the Dow Jones dropped sharply before recovering. One idea emerging, however belatedly, comes from President Clinton and U.S. Treasury Secretary Robert Rubin: a new mechanism designed to afford early intervention by the International Monetary Fund when a national currency weakens. Rubin still has enough clout to move this idea forward, despite the handicap of a president weakened because he couldn’t keep his hands off a White House intern and a divided Republican Congress that can’t wait to get its hands on the president.
Rubin also needs to take the lead in a thorough reform of the IMF, which America dominates behind the scenes. In particular, IMF Managing Director Michel Camdessus has been getting on the world’s nerves with his continually chirpy complacency about how his IMF hasn’t really done that much wrong, when of course it has made many mistakes in Asia, especially in the early stages, when it insisted on cookie-cutter austerity reforms, not reforms tailored to national needs. He has been in that job since 1987. Too long. And too bad the U.S. hasn’t spent as much time criticizing the IMF as it has the government of Japan, the only Asian member of the Group of Seven. Yes, Japan’s sprawling banking system is in serious trouble, its domestic economy remains moribund and its slow-moving political system drives everyone nuts. But Japan remains the only country that has sent a lot of its own money to help other troubled Asian economies, and it now proposes to put an additional $30 billion on the table. Compare that to Washington’s reluctance: The next IMF installment of $18 billion from the U.S. is still hung up in Congress. Yet America continues to walk around as if it knows everything and Japan knows next to nothing. A year ago, Japan called for the creation of a quick-response fund to douse currency fires. It got no respect. Now, in Washington, Rubin is calling for something rather similar. Interesting, isn’t it? Maybe if Japan got a little more respect, it might move a little faster to make the economic reforms that the U.S. demands. Why not try it?
Another relevant cliche--”When a man knows he is to be hanged . . . it concentrates his mind wonderfully”--should hang over the conscience of the West, which has been all but ignoring the plight of Asian globalization advocate Anwar Ibrahim of Malaysia. A longtime friend of the West, Malaysia’s former deputy prime minister is now in jail in his beloved country. That’s the same country that will host November’s Asia-Pacific Economic Cooperation forum summit, during which world leaders will next discuss the widening world economic crisis.
The charges against this respected diplomat and finance expert include sodomy, a violation of Muslim religious law; but surely Anwar’s real offense was challenging his bait-the-West, roll-up-the-drawbridge boss, Mahathir Mohamad. What about Anwar’s powerful friend, the United States? The State Department issued exactly one statement, a tepid protest, last month. Very moving. How one now misses all those U.S. congressmen who, just last summer, were demanding that Clinton cancel his trip to China because of precisely this sort of political repression. Asian leaders, traditionally silent on internal political affairs, are loudly complaining. Anwar, a foremost proponent of the internationalism that this week’s IMF meeting proposes to protect, is in effect the first major political prisoner of the Asian financial crisis.
It seems extremely peculiar to hold the annual APEC summit in the capital of a country whose government would imprison the very Malaysian most identified with globalization.
