Pressure mounts in US against IMF bail-outs in Asia
One of the country’s most respected commentators on Russia, the EU and the US, Mary Dejevsky has worked as a foreign correspondent all over the world, including Washington, Paris and Moscow. She is now the chief editorial writer and a columnist at The Independent and regularly appears on radio and television. She is an Honorary Research Fellow at the University of Buckingham.
Tuesday 13 January 1998
Opposition to US support for the IMF rescues comes from both ends of the political spectrum. From the right comes the view that "you can't buck the market". Accordingly, the market should be allowed to determine what happens to the Asian economies, not the IMF or the US administration. From the right, too, comes long-standing distrust of international institutions, particularly ones that cost the United States money that seems out of proportion to the benefits.
From the left comes the view that the much-prophesied budget surplus - which the Central Budget Office forecasts for 1999 at the earliest - should not be squandered in advance on rescuing feckless foreigners. Why should the US bail-out the mainly private bankers and investors whose irresponsibility arguably precipitated the present crisis, and why should the US be pouring money into countries that are economic competitors? If money is available, it should be used for social programmes at home.
Support for anti-IMF views comes also from some economists, in the US and in Asia, who argue that the rigour and discipline urged by the IMF are not suitable medicine for Asia. Jeffrey Sachs, director of the Harvard Institute of International Development, is one of the most vocal critics, arguing that the IMF solutions have actually aggravated Asia's financial crisis. Other analysts ask where economic prescriptions end and politics begins.
"Should the IMF carry out structural reform?" asked Michael Zielenziger, a Tokyo-based US analyst. ``Should it be telling President Suharto to go? Should it be telling government cronies in Indonesia or South Korea to get out of the trough? I'm not sure that it should.''
Yesterday, Michel Camdessus, the managing director of the Washington- based IMF, and a senior IMF delegation were in South Korea and are expected in Indonesia shortly. The US Treasury's chief trouble-shooter, Deputy Secretary Lawrence Summers, was in Singapore with a delegation of his own, headed also for Indonesia, Thailand and South Korea. And the US Defence Secretary, William Cohen, who had co-opted a Treasury adviser specialising in Asian economies and another from the State Department to travel with him, was in Malaysia, with a 12-day itinerary ahead of him that includes the same countries, plus Japan and China.
The aim of the IMF delegation is to examine what progress has been made in the economic reforms it has recommended. The purpose of the US delegations - distilled from advisers' statements - is to convince the Asian countries that the US "is a friend and support in good times and bad", to persuade them to implement "sound policies that can promote confidence and stability", but most of all to "shore up confidence" in the region and prevent any further dramatic slides. Mr Cohen has the additional brief to judge what can be salvaged from the millions of dollars' worth of defence orders that could be lost to US industry.
US concerns are twofold: the first - and the one that most concerns Mr Clinton both immediately and in the long term - is the possible effect on the US economy if the Asian economies, particularly those of Indonesia and South Korea, do not respond to the treatment prescribed by the IMF. The second, which is likely to make itself felt later this month, is the force of opinion - in the public at large and in Congress - which is uniting against US involvement in the Asian rescues. In comparison with the panic that gripped Indonesia last week, this potential domestic revolt in the US appears minor, but it threatens to grow.
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