Focus on Trade #23, part 1 of 8 (fwd)

[Robert Weissman <rob@essential.org>]

FOCUS-ON-TRADE #23, MARCH 1998
SPECIAL ISSUE ON THE IMF

Part 1 of 8

A regular bulletin produced by Focus on the Global South, Bangkok,
Thailand

Focus-on-Trade is a regular electronic bulletin providing updates and
analysis on regional and global trade and finance.  Although initially
concerned with APEC, the scope of the bulletin now extends to include
the World Trade Organisation (WTO), the International Monetary Fund
(IMF), the ASEAN Free Trade Area (AFTA), the Multilateral Agreement on
Investment (MAI) and any other acronyms that require critical
attention. Focus-on-Trade contains updates on trends in world trade,
with an emphasis on analysis of these trends from an integrative,
interdisciplinary viewpoint that is sensitive not only to economic
issues, but also to ecological, political, gender and social issues.
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IN THIS ISSUES

Taming the Tigers: The IMF and the Asian Crisis

by Nicola Bullard, with Walden Bello and Kamal Malhotra

This paper is published jointly by Focus on the Global South in
Bangkok and CAFOD in London for the Asia Europe Meeting (ASEM)being
held in London on 2 and 3 April 1998. The paper will be officially
released on 2 April in London by the two organisations. If you would
like a hard copy, please contact Focus on the Global South at
admin@focusweb.org or CAFOD at dgreen@cafod.org.uk.


The paper is in EIGHT parts:

Part 1: Executive Summary, Introduction and WHOLE DOCUMENT AS 
ATTACHMENT

Part 2: The IMF and Thailand
Part 3: The IMF and Indonesia
Part 4: The IMF and South Korea
Part 5. The social impact of the crisis
Part 6. The social impact of the crisis/The role of the IMF
Part 7: The role of the IMF
Part 8: Conclusions and recommendations, footnotes

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PART 1: EXECUTIVE SUMMARY AND INTRODUCTION 
and Attached file of whole document



Executive Summary

The crisis that struck Thailand, Indonesia, South Korea and much of
Southeast Asia in the second half of 1997 is far more than an Asian
financial crisis.

It is a human crisis. Already millions of people have been thrown out of
work, and poverty and hunger are on the increase, as decades of social
progress have been thrown into reverse. In Indonesia, the long-term
viability of the nation is threatened. 
It is a crisis of globalisation, revealing the extent to which governments
are unable to cope with the combination of rapid capital account
liberalisation and escalating global capital flows. In particular, the high
levels of now unserviceable private sector debt show that the capital market
is incapable of efficiently allocating resources, that national governments
have not developed the necessary levels of transparency, institutional
strength and regulation to keep pace with the rapidly changing external
environment, and that fast-track liberalisation is incompatible with
sustainable and equitable development.
It is a crisis of international institutions, and in particular of the
International Monetary Fund. The IMF’s performance in Asia to date has
demonstrated serious weaknesses. The Fund has prescribed wrong and socially
disastrous medicine for the region’s ills, grossly exceeded its mandate, as
laid out in its Articles of Agreement, and has shown itself both arrogant
and far too close to the interests of its principle shareholder, the USA.
The result of the Fund’s failures has been to exacerbate the human and
macroeconomic impact of the crisis.

Before further damage is done, governments should:

Reassert the IMF’s original role as lender of last resort during balance of
payments crises
Oppose any changes to the Fund’s Articles of Agreement, such as extending
its remit to include capital account liberalisation, pending a full review
of the Fund’s role and performance
De-link all trade and investment liberalisation, democratisation and good
governance conditions from IMF funding
Explore new mechanisms for the effective and just resolution of private
sector debt crises and the regulation of international capital flows,
especially of short-term speculative capital, to reduce their capacity for
economic destabilisation

In order to prevent the Asian crisis from deepening still further, and to
avoid similar debt crises occurring in the future, both in Asia and
elsewhere, the European and Asian governments present at the Asia Europe
Summit in London in April 1998 should act to assert their voting strength at
the IMF and in other fora, in favour of the above reforms.


Introduction

Taming the Tigers is a contribution to the debate over Asia’s economic
crisis. In particular it explores the actions and motives of one of the key
actors in the Asian crash – the International Monetary Fund. 

This report is a collaboration between Focus on the Global South, based in
Bangkok, and the Catholic aid agency CAFOD, based in London. It reflects the
experiences and concerns of church groups, trade unions and other grassroots
organisations working on a daily basis with the poor of Asia.

Taming the Tigers begins by describing what actually happened in the three
worst-hit countries of Thailand, Indonesia and South Korea. It goes on to
explore the social impact of the crisis. These chapters provide the material
for a detailed analysis of the IMF’s role, and of the numerous failings in
its performance to date. The report concludes with recommendations for
reform of the Bretton Woods institutions, and the international financial
system.

Criticising the solutions imposed by the IMF in no way implies an uncritical
endorsement of  'Asian' capitalism. The political and economic development
models in these countries have brought some overall improvements in health,
education and living standards. But the cost has been high in terms of
sharpening the divide between rich and poor, environmental exploitation and
loss of community control over natural resources, and growth without
economic democracy or expansion of political participation.

Rather this report demonstrates that the IMF does not have a monopoly of
social or economic wisdom (far from it). If the Fund’s neoliberal crusaders
can be reined in, and alternatives explored, the crisis can offer Asia the
chance to forge democratic and sustainable alternatives to the ruinous
development path of recent years. If not, then ordinary Asians could come to
look back on the 1970s and 1980s as a golden era. That would indeed by a
tragic testament to the failures of the "rescue packages" of 1997.


END OF PART 1 OF 8


______________________________________________________

Focus on the Global South (FOCUS)
c/o CUSRI, Chulalongkorn University	
Bangkok 10330 THAILAND
Tel: 662 218 7363/7364/7365	
Fax: 662 255 9976		

Web Page   http://www.focusweb.org   

Staff email addresses:
----------------------
Walden Bello                W.Bello@focusweb.org
Kamal Malhotra              K.Malhotra@focusweb.org
Chanida Chanyapate Bamford  C.Bamford@focusweb.org
Junya Prompiam              J.Prompiam@focusweb.org
Nicola Bullard              N.Bullard@focusweb.org
Ehito Kimura                E.Kimura@focusweb.org
Joy Obando                  Joy@focusweb.org
Mayuree Ruechakieattikul    nok@focusweb.org
Focus Administration        admin@focusweb.org 
______________________________________________________