This is risky business, and the “reforms” the IMF is imposing had better work. If they fail, and collapse follows, the United States is the villain at whom every Asian demagogue will point the finger — for the IMF is seen in Asia as an agent of U.S. economic imperialism…
The Clintonites are playing a dangerous game in Indonesia and courting an Asian nationalist backlash against America.
After phoning President Suharto repeatedly to demand he give up his cherished idea of a currency board to stabilize the rupiah, Bill Clinton sent Walter Mondale to read him the riot act. The International Monetary Fund then made the old general an offer he could not refuse: It told him his $40 billion bailout depended on his capitulation.
As Clinton, who dismissed the Asian crisis as a “glitch in the road” in November, is an untutored child on matters monetary, he is clearly taking his cue from Treasury’s Robert Rubin.
But no matter whose hostility toward a currency board Clinton is reflecting, we are trampling all over Indonesia’s sovereignty, intruding in its internal affairs and using extortion by threatening a cutoff of IMF loans to force Jakarta’s capitulation.
This is risky business, and the “reforms” the IMF is imposing had better work. If they fail, and collapse follows, the United States is the villain at whom every Asian demagogue will point the finger — for the IMF is seen in Asia as an agent of U.S. economic imperialism.
This is not to defend Suharto, who rescued his country from a corrupt dictator in 1965 only to loot it for his own family. But we deceive ourselves if we think we can root out endemic Asian corruption with IMF bribes or paddlings. To try to impose Reaganomics on Asian cultures is to invite big trouble.
Last month, there ran across Asia a stunning photograph of Suharto signing a document acceding to IMF demands, as Michel Camdessus of the IMF stood by, arms folded, leaning forward and observing the surrender like MacArthur at Tokyo Bay. For a proud people, this was a national humiliation they will not soon forget.
In South Korea, too, the new government is going into debt to the IMF to pay back Korean loans from Western banks. Under IMF-imposed austerity, assets that represent the sweat equity of the Korean people are being sold off. U.S. banks and corporations will be the beneficiaries of Korea’s misery. Again, this had better work.
The latest target of the Asia-bashers: Japan. One reads of rising exasperation at Treasury that Tokyo has not revved its economy to soak up Asian exports and put cash in the coffers of Asian regimes so they can pay back the IMF. Writes The Wall Street Journal: “The U.S. is telling Tokyo with unusual specificity that Japan urgently needs to cut taxes and raise spending by between $65 billion and $80 billion.”
Pardon me, but who are we to instruct Japan on fiscal policy? How would we react if officials arrived from Tokyo to pound tables on Capitol Hill for U.S. spending increases? The arrogance of the Clintonites is astonishing. In the 1980s, they were not terribly visible either in backing the Reagan policy that won the Cold War or in supporting the Reagan tax cuts that gave us prosperity. Yet Rubin and his deputy Lawrence Summers do a splendid imitation of the conqueror’s swagger as they jet around Asia and instruct nations on what they must do to clean up after a typhoon neither Rubin nor Summers ever saw coming.
This pair has also escaped accountability for the year-long sabotage of a Japanese-led effort to have Asia pool the money to deal with its own crises. Ex-Federal Reserve official Lawrence Lindsey writes: “This proposal, advanced by the Japanese Ministry of Finance, could have accomplished everything the administration is trying to do in a much timelier fashion and without risking U.S. dollars. A senior European central banker told me that the only reason he could find for the U.S. refusal to cooperate was that our Treasury officials wanted to be seen playing a role.”
What America needs most today in the hubris of our Cold War triumph is a touch of humility and a sense of our own limits.
We do not have the only successful economic model, and the Asian model is no more a proven failure than was the U.S. model in 1933. Japan, with less land than Montana, rose from ruins to rival U.S. supremacy in two generations. Korea’s per-capita income rose from $80 in 1960 to $6,500 in 1991 as she soared to second in the world in ship building, third in semi-conductors, fourth in textiles, seventh in steel and ninth in autos. These are still economic miracles.
Both nations triumphed under our protection and with our aid. But Clintonite-IMF arrogance may wipe out in months reservoirs of goodwill it took generations to build up. To recapture Asia’s friendship, Congress may yet have to make a sacrificial lamb out of the IMF.