Kuala Lumpur, Dec. 17, 1997 - As the East Asian region continues
to suffer worsening economic conditions there was no sign that either the IMF or the
world's leading economic powers are considering changing their fundamental approach toward
the financially strapped Asian economies or rushing new funds to them. As such, officials
of both the United States and Germany expressed reservations about the idea of an
additional boost in IMF resources and stressed that the most important thing Asian
countries can do is regain investor confidence by taking the painful steps the IMF has
urged to restructure their economies.
What is wrong with this picture? The question that is all too frequently being asked is about the honesty by Northern power houses to bail out the East Asian economies that are in dire need due to the plunge that their currencies have taken in relation to the US dollar. For that matter, is the bailout by the IMF of the various troubled economies an honest gesture to help in the first place or is it part of the charade to knock down the burgeoning East Asian economies back onto their knees?
Although Soros has denied playing any significant role in the initial collapse of the Thai baht and consequently the nose-dive all the other currencies of the region have taken (some more than others), Third World analysts have also sought to highlight the fact that, like stock market trading, it only takes one person, a market leader or indicator, to start a domino effect. Much like how Soros attacked the British sterling to prove his point that there is no equilibrium in the international market for currency trading, there are those who believe that the plunge the East Asian currencies have taken is also for proving a similar point and more.
If one were to recall that the Multilateral Investment Agreement (MIA) was rejected at the first WTO summit in Singapore, Dec. 1996, the proposal made by the EU to allow 100% equity in all sectors except security was rejected mainly by the developing economies led by the then tiger economies of Southeast Asia. One of the more prominent arguments was that the MIA was an example of protectionism within market liberalisation since the EU, much like the rest of the developed North, needed to secure a large enough share of the markets in Asia. What with the speculation or projection that the growth of the world economy in the 21st century will be result of the growth potential of the Asian if not specifically the East Asian region, the developed economies of the North needed to ensure that they get a big enough stake so as to perpetuate their dominance over the world economy.
How was this to be achieved, now that the MIA has been rejected? The truly civilised and diplomatic move at the inaugural meeting of the WTO had to fail. So the big players in the North got nasty. The preferred method used was elegant in its simplicity: turn the weaknesses of the region's nations against themselves via their Achilles heel, their currencies. The result, they have no choice but to open up their economies beginning with so-called austerity measures that seem to be more for removing indigenous competition in preparation for the onslaught of the latter day "carpet baggers".
Many speculate that despite the belt-tightening measures adopted by the troubled economies, real inflation rates will rise, due not so much to irresponsible government or mismanagement of those economies but, because of spiraling demand due to dwindling supply of both imports and local produce, making it ripe for takeovers of whole markets and corporations. Indeed, the ingenuity of neo-colonialists never fails to leave their victims breathless.
For Malaysia, in particular, the government has had to concede at the recent WTO negotiations a binding 51% majority ownership for the original foreign owners of locally incorporated insurance companies at the behest of the American International Group which owns American International Assurance (AIA). Even then, AIA has insisted that there be a guarantee that it need not divest its additional 49% stake. Malaysia's Finance Minister and Deputy Premier Anwar Ibrahim has announced that it was the product of the resilience of the multilateral trading system which has in turn strengthened its credibility. Unfortunately, what has seemed more likely was that the North has finally achieved what it could not do at the inaugural meeting of the WTO.
Indeed, the fundamentals of much of East Asian economies remain strong if only for the fact that the potential of the region's markets remains, but insofar as the Northern power houses like the US, Germany and the rest of the EU are concerned, the gloves have come off. And the once tiger economies can do nothing but live with the fact that for the most part their economic sovereignty is gone, and maybe for good.
Ahmad Faiz bin Abdul Rahman
18 December 1997.
[Currently, he is a Researcher with the Institute of Islamic Understanding, Malaysia (IKIM) and a Pro-temp Committee Member of the International Movement for a Just World (JUST).]