The 1997 "Asia Crisis" - updated with hi-res photo

Peter Myers, July 1, 2003; update August 9, 2022

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Japan's postwar economy was a kind of National Socialism pursuing neither guns nor butter but accrual of capital. It was admirable in many ways, and has now been adopted, with variations, by Singapore, Taiwan, Korea and China.

However, this system was not so good for those on the other end. It has destroyed jobs in many other countries, and led to economic colonialism.

Kinhide Mushakoji, an author published by the Trilateral Commission as well as UNESCO, wrote that the Asian Tigers were Japan's occluded (i.e. secret, hidden) East Asia Co-Prosperity Sphere: mushakoji.html.

Daniel Burstein had sounded the alarm in 1988 with his book Yen: Japan's new Financial Empire and its Treat to America.

George Soros wrote, in his book The Alchemy of Finance, "Japan has been accumulating assets abroard, while the United States has been amassing debts. ... President Reagan ... pursued the illusion of military superiority at the cost of rendering our leading position in the world economy illusory; while Japan wanted to keep growing in the shadow of the United States as long as possible. ... Japan has, in fact, emerged as the banker to the world" (1987; New Preface 1994, John Wiley & Sons, New York), p. 350.

Usurping Soros' own role, perhaps? Soros continues,

" ... the prospect of Japan's emerging as the dominant financial power in the world is very disturbing, not only from the point of view of the United States but also from that of the entire Western civilization" (p. 353).

"The United States and Britain are members of the same culture. This is not true of Japan. ... The Japanese think in terms of subordination. Contrast this with the notion that all men are created equal ... Japan is a nation on the rise; we have become decadent" (p. 354).

ASEAN was another target. Its decision to admit Burma was seen as defiance of the US. Soros and fellow speculators seem to imagine themselves champions of "human rights", a sort of Robin Hood. They objected to Burma's joining ASEAN, but not to Vietnam's joining.

Burma is important to them partly because it's a satellite of China; it gives China some access to the Indian Ocean.

In the Sydney Morning Herald of February 19, 1998, economist Max Walsh commented, "A little-noticed but significant feature of the Asian crisis has been the demise of the yen bloc."

Just as Japanese methods were covert, so were Jewish methods. Soros and other hedge-fund managers, with the help of leading Jewish figures within World Finance, brought down the "Asia Model" in 1997.

But Soros the dragon-slayer was hardly Saint George. He had been promoting privatization and deregulation of finance systems: soros.html.

I portrayed it as a struggle "Between Nippon and Zion". Even though my article of that title was written on May 16, 1997, just before the Asia Crisis, it sensed, I still believe correctly, the nature of the conflict: between.html.

At the time:
- Alan Greenspan was head of the Fed
- Martin Wolfensohn was head of the World Bank
- Stanley Fischer was running the IMF (as Chief Economist)
- Madeline Allbright was U.S. Secretary of State
- Robert Rubin was Secretary of the Treasury (Treasurer)
- Lawrence Summers was his Deputy
- Mickey Kantor was Secretary for Trade (in charge of GATT and WTO)
- William Cohen was Secretary for Defence
- Sandy Berger was National Security Adviser
all being Jewish.

Samuel Huntington had led the "Aryan" wing of the assault with his article and book on the Clash of Civilizations.

1. How To Kill A Tiger
2. Special Meeting of the ASEAN Foreign Ministers in Kuala Lumpur on 31 May 1997 decided to admit Burma
3. The Nation (Bangkok) editorial: Soros and currency woes
4. Federal Reserve Statistical Releases on Exchange Rates
5. The Conquest of South Korea - by Robin Hahnel
6. Whither Asia's Economies? - by Henry Rosemont, Jr.
7. Newspaper clippings on Burma (Myanmar) joining ASEAN [from soc.culture.asean]
8. European Parliament adopts Burma resolution unanimously on June 12th, 1997, Stratsbourg
9. More newspaper reports, & the US Reaction
10. Rush to embrace Burma's dictators will be swept aside in march of history by MARK BAKER, The Age, June 7, 1997; and Sydney Morning Herald, June 7, 1997:
"The decision by ASEAN foreign ministers to admit Burma as a full member next month in open defiance of the United States ... is likely to seriously complicate ASEAN's future relations with Europe and the US ... It is the ASEAN leaders who now stand isolated and who, with their Burmese military cohorts, will be swept aside in the inexorable march of history"
11. Mahathir And Soros: Currency Crisis And Political Agendas:
"Soros said through a spokesman that his Soros Foundations and Open Society Institute, philanthropic groups that have sought to promote democratic government in Burma and elsewhere, are distinct from Soros Fund Management, his investment group."
12. George Soros' Private Agenda By Harish Mehta.
13. Albright 7/27 Remarks At The Asean Regional Forum
14. Paul Krugman defends Speculators
15. HedgeFund Managers 16. Hedge Fund Jewish Values
17. Civilisation X - By Israel Shamir
18. The World Economy since 1997 Asian Economic Crisis
(19) Suharto, too, was a victim of regime change, by Steve Hanke
(20) The Reasons for the "Asia Crisis"
(21) Asia's Mercantilism Today Is Blowback From 1997
(22) Thailand Prime Minister repudiates Washington Neo-liberal Economics
(23) Indonesia terminates IMF "Rescue"
(24) South Korea: The End of the Bilateral Economic Relationship, by Meredith Woo-Cumings
(25) Cashed-up firms swoop on Asia
(26) Blame lies at home, says Reserve chief
(27) IMF's advice to US in ITS crisis is opposite to what it imposed on Korea in Asia Crisis
(28) Chalmers Johnson says Western Financiers caused the Asia Crisis
(29) East Asians lose faith in the Anglo-Saxon model - or is it Jewish?
(30) Mahathir accepts Soros' assurance that he was not responsible for the Asia crisis
(31) Soros' part in the economic crisis
(32) Lee Kwan Yew on the Asia Crisis

(1) How To Kill A Tiger

Speculators Tell The Story Of Their Attack Against The Baht, The Opening Act Of An Ongoing Drama

By Eugene Linden

TIME magazine

Asia November 3, 1997 Vol. 150 No. 18

no longer at

but a text-only version is at

See the full article (including graphs) here on my website (perhaps nowhere else) at Time-kill-Tiger.jpg (high resolution - easy to read).

Here is the complate text of the article:

The description was brutally honest: "We are like wolves on the ridgeline looking down on a herd of elk," said one of the currency speculators who helped trigger the cascading devaluations that eventually led to the stock-market tumbles that swept the globe last week. Late last year, eight months before Thailand finally succumbed and devalued the baht, the wolves had been on the prowl. They saw the Thai economy not as one of Asia's tigers, but more like wounded prey. Unable to resist, each predator began to plan his attack. "By culling the weak and infirm, we help maintain the health of the herd," said the trader. And cull they did. Through interviews with members of this wolf pack, Time has reconstructed the story of how the traders devoured the Thai currency and set in motion the ongoing crisis that caused last week's worldwide financial trauma.

The wolves, an amorphous group that includes secretive hedge funds as well as groups within banks with names as familiar as Citibank, began tracking the region in earnest in 1994. Economist Paul Krugman piqued speculator interest when he published a prescient article in Foreign Affairs titled "The Myth of Asia's Miracle," in which he argued that the Asian boom owed more to hard work and a shift from farms to industry than it did to investments in productivity. As a speculator put it, "We read this and thought, 'Well, well--Asian growth may have a limit.'"

Attention quickly focused on Thailand, which was being buffeted by a series of external and internal events. China devalued its currency 33% in 1994, allowing it to underprice neighboring economies on low-cost goods. Thai exports further eroded as the Japanese yen weakened, undercutting any Thai advantage in high-value products. With the baht tied to the strengthening U.S. dollar, the kingdom had little room to maneuver. Moreover, despite its large population, Thailand had a relatively small pool of educated, healthy workers, and wage inflation further undermined Thailand's competitiveness with surrounding countries.

Even as exports diminished, the flood of foreign investment continued. On the surface Thailand still looked good, with its open markets and a fiscal surplus, but underneath, the balance sheet was rotting. Foreign reserves remained steady at about $38 billion, but the amount of money Thailand owed to foreigners skyrocketed to $106 billion. By 1996 cash outflow exceeded inflow by 8% of the nation's gross domestic product, and the net foreign assets owned by the Thai government and commercial banks shriveled as the nation covered the outflow with borrowing. While in earlier years most of these loans had gone to build industrial capacity, now the money poured into real estate speculation, the stock market and finance companies, supporting an unproductive boom as consumers bought Mercedes sedans and cellular telephones. The Thai economy had become one big bulging bubble, and late last year the wolves took notice.

Currency speculators love a bubble economy because bubbles always pop. The billion-dollar question is When? Currencies, like the cartoon character Wile E. Coyote, can defy gravity long after they should be plunging to earth. By December 1996, speculators realized that Thailand's policymakers were trapped and bewildered. They had to keep interest rates high to dampen wage inflation and attract the foreign money to which the kingdom had become addicted. On the other hand, the high rates were badly hurting the debt-burdened economy.

One way out was to devalue the baht. This would hurt those who owed money in dollars. A confidential analysis done by a group of speculators estimated that a pre-emptive devaluation would cost the treasury about $10 billion of its $38 billion in reserves, which it would quickly recoup because of the credibility it would earn in the international marketplace. (It should be noted, however, that Indonesia did not oppose an attack on its currency, and its markets still got hammered mercilessly.)

The speculators guessed that the Thais would rather fight than devalue. Devaluation would hurt the elite, who would watch principal and interest payments soar for their dollar-denominated loans. The alternative to devaluation was a further hike in interest rates, but that would produce a flood of bankruptcies and further weaken a banking system that was already in trouble because lax government supervisors had allowed their banker cronies to ignore capital requirements.

Sensing that their prey had been cornered by their own venality, the wolves began to circle in early 1997. The amoral pursuit of profit was about to punish the sins of cronyism and corruption. Drawing from multibillion-dollar war chests, hedge-fund operators such as George Soros and Julian Robertson intensified their attack on the baht. One way the speculators bet against the currency was by entering into contracts with dealers who would give dollars in return for an agreement to repay a specific amount of bahts some months in the future. If the baht rose in value, the seller of the contract made money; but if it fell, the buyer profited because he could repay the contract with cheaper bahts. Demand for such contracts started to drive up interest rates, and the Bank of Thailand began issuing many of these so-called forward contracts itself.

This action turned out to be a fatal misstep that placed in the hands of speculators the perfect weapon with which to attack the currency. "It's as though an unarmed gunslinger walked into town and the sheriff handed him a pistol," remarked a beneficiary of the central bank's unintended largesse. Now speculators had access to an estimated $15 billion in forward contracts issued in February and March that they would not have to cover for as much as a year. An estimated 80% to 90% of these forward contracts ended up in the hands of speculators. By May the central bank realized it was contributing to the baht's undoing and abruptly stopped issuing any more forward contracts.

Sensing blood, traders began moving in for the kill and in mid-May flooded the market with orders to sell bahts. But the government began playing hardball. The central bank invoked a mutual-assistance agreement with monetary authorities in Singapore, Hong Kong and Malaysia and spent more than $10 billion in just a few days buying bahts and selling dollars.

The Bank of Thailand also squeezed the speculators by sharply raising interest rates, which restricted access to bahts that traders needed to cover short-term contracts. Holders of long-term forward contracts, however, knew the government could not pursue this painful course for long, and they emerged unscathed. "When governments resort to these tactics, you know the game is over," said a veteran of many currency battles. Indeed, the government tried ever more desperate measures. Finance officials allegedly used threats and bribes to try to get banks to divulge who owned which contracts, so they could exert strategic pressure. The Interior Minister, Sanoh Thienthong, threatened prosecution of newspapers that spread information damaging to the economy, and the special-branch police were authorized to track down callers to talk-radio shows who voiced the wrong opinions.

These antidemocratic actions turned out to be very expensive. They only served to convince foreign investors that the end was near. But what end would it be? Thai officials were so enraged by the attack that many speculators feared the government would default on its obligations, bringing down the speculators along with the Thai economy. California banks began taking out ads in Bangkok newspapers offering help for those who wanted to get money out of Thailand. Importers settled accounts early in anticipation of the fall of the baht, while exporters hoarded dollars offshore. Both reactions greatly exacerbated the drain of dollars. The government also tried to hide the extent of the damage, estimating that the loss of reserves in May was a moderate $2 billion. The speculators, relying on their own analysis and what they could glean from sources within the central bank, were estimating that the real number was $5 billion.

The question by then was not whether but when there would be a devaluation or default. Many speculators bet that the government would hold out until July so that companies could push losses into the second half of the year. "It's the old Asian idea that if you don't say it, it isn't true," remarked a player, "as if the market couldn't figure it out." And on July 2, the baht was devalued, setting off a chain reaction throughout the region's currency markets and then, last week, around the world's stock exchanges. While no hard number is available, the wolves who started all this turmoil were very well fed, probably with profits in excess of $3 billion.

An image of the article, with graphs showing the collapse of the currencies of Thailand, the Philippines, Malaysia and Indonesia is at Time-kill-Tiger.jpg.

Notice, in those graphs, that whereas all four currencies plummeted, only the Baht went up in the weeks before ... perhaps partly because Soros & co were buying baht to pay for forward contracts (to "Short" it, in effect betting that it would fall).

The graphs show that the plunge began in mid June 1997; the ASEAN Foreign Ministers agreed to admit Burma two weeks earlier - in defiance of Soros, Al Gore, and Madeline Albright - at their meeting in Kuala Lumpur on May 31, 1997.

(2) A Special Meeting of the ASEAN Foreign Ministers, in Kuala Lumpur, on 31 May 1997 decided to admit Burma on 23 July, 1997

(2.1) Special Meeting of the ASEAN Foreign Ministers

Kuala Lumpur, 10 July 1997

... The Foreign Ministers also recalled the decision taken by the ASEAN Heads of State/Government at the 5th Summit in Bangkok, in December 1995, on the inclusion of Cambodia, Laos and Myanmar as full members of ASEAN. Pursuant to the decision taken by the Special Meeting of the ASEAN Foreign Ministers on 31st May 1997, in Kuala Lumpur, they agreed that the admission of Laos and Myanmar will proceed as scheduled. ...

(2.2) Laos and Myanmar join ASEAN on 23 July 1997

ASEAN will admit Laos and Myanmar as full Members in a ceremony scheduled to be held in Subang Jaya, Malaysia, on 23 July 1997 ...

The ASEAN Foreign Ministers, at their Special Meeting in Kuala Lumpur on 31 May 1997, considered a report of the Secretary-General of ASEAN on the readiness of Cambodia, Laos and Myanmar (the CLM countries) to join ASEAN. ... The ASEAN Foreign Ministers agreed that the three be admitted in July 1997.

... However, the unfurling of the unfortunate events in Cambodia in early July led the ASEAN Foreign Ministers to convene another Special Meeting in Kuala Lumpur on 10 July to review the situation in Cambodia in all its aspects. ...

In view of the decision of the 10 July 1997 Special Meeting of the ASEAN Foreign Ministers, the admission ceremony on 23 July will now be confined to Laos and Myanmar. On the admission day, the Ministers of Foreign Affairs of Laos and Myanmar will each sign a Declaration on the Admission of their respective countries into ASEAN and a Protocol for the Accession of their respective countries into 11 major ASEAN agreements.

(3) [sangkancil] The Nation (BKK) editorial: Soros and currency woes

The Nation (Bangkok) Editorial

Saturday, July 26, 1997

Blaming Soros is no solution to currency woes

Billionaire speculator and quaint pro-capitalist democracy supporter George Soros does see eye to eye with Malaysian Prime Minister Mahathir Mohamad on one particular issue.

For years, Mahathir has been a staunch supporter of the besieged Muslims in Bosnia - a country which Soros has aided with his own money from philanthropic foundations. And for that, Mahathir had lauded Soros' magnanimous efforts.

Not anymore.

On returning from his two-month sojourn in Europe, Mahathir spoke darkly of a certain "American financier" who was undermining the economies of Southeast Asian countries by destabilising their currencies. He did not name Soros. But it was clear that he was referring to him.

Blaming Soros whenever a currency is being raided is not new. What is new, however, is Mahathir's assertion that the current bear run on Southeast Asian currencies is part of a conspiracy by Soros to punish Asean for embracing Burma.

There is no doubt that Soros was one of the key speculators against the baht, an attack which has since spilled over to other currencies in the region. But while Soros may have led the foray, the real push came from other speculators - institutional investors such as mutual and insurance funds, and non-financial corporations. Some of these speculators are Southeast Asians ...




The Board of Governors of the Federal Reserve System is advised that the Federal Reserve Bank of New York has certified for customs purposes the following noon buying rates in New York City for cable transfers payable in foreign currencies:

For January 6 to January 31, 1997:

For January 13 to February 7, 1997:

For February 10 to Mar 7, 1997:

For Mar 10 to April 4, 1997:

For April 7 to May 2, 1997:

For May 5 to May 30, 1997:

For June 2 to June 27, 1997:

For June 30 to July 25:

For July 28 to August 22, 1997:

For August 25 to September 19, 1997:

For September 22 to October 17, 1997:

For October 20 to November 14, 1997:

For November 17 to December 12, 1997:

For December 15, 1997 to January 9, 1998:

(5) The Conquest of South Korea

by Robin Hahnel

ZNet Commentaries

April 15, 1999

was at

If the Democratic Republic of North Korea ever had designs on the South Korean economy, it is too late now. The US Department of Treasury, with an assist from the IMF, has just "scooped" the North Koreans - and the Japanese, Chinese or anyone else who had an eye on picking up the pieces of the South Korean economic "miracle" in the aftermath of the recent economic "crisis."

For three decades South Korea had the highest rate of growth of GDP per capita of any country in the world. South Korea achieved these high rates of growth while preserving domestic ownership over its "world class" international business conglomerates known as "chaebols." At the core of the highly successful "Korean model" were the ownership and financial links between large, modern industrial enterprises and Korean banks, and between Korean banks and various Korean government ministries. ... Nor was the "Korean model" particularly unique - in most respects it was similar to the Japanese model that was equally successful in the 1950s, 1950s and 1970s, and to the models of other successful Asian "tigers" in the 1980s and 1990s. Moreover, even before the crisis hit in the fall of 1997 and a newly elected South Korean government found itself at the mercy of the IMF, South Korea had begun to succumb to US pressure to liberalize its financial sector. But in the summer of 1996 the US Treasury orchestrated a successful carrot-and-stick strategy to penetrate the South Korean economy that is proving successful beyond even the plotters wildest expectations. This is Nicholas Kristol's account of the details published in the New York Times:

"In South Korea, as a direct result of the crisis, the government is talking about selling two of the biggest banks to foreigners, and teetering local securities firms are searching for foreign companies to take them over. Under an agreement with the monetary fund, foreign banks will be able to compete in Korea beginning this year, and the government is considering ways to ease the restrictions that prevent foreigners from buying Korean land. Walmart is studying whether to open outlets in the country. After interagency discussions, the Administration dangled an attractive bait: if Korea gave in, it would be allowed to join the Organization for Economic Cooperation and Development, the club of industrialized nations. 'To enter the OECD,' recalled a senior official of the organization, 'the Koreans agreed to liberalize faster than they had originally planned. They were concerned that if they went too fast, a number of their financial institutions would be unable to adapt.' The pressure on them is reflected in an internal three-page Treasury Department memorandum dated June 20, 1996. The memo lays out Treasury's negotiating position, listing 'priority areas where Treasury is seeking further liberalization.' These included letting foreigners buy domestic Korean bonds; letting Korean companies borrow abroad both short term and long term, and letting foreigners buy Korean stocks more easily. Such steps would help Korean companies gain more access to foreign loans and investment, but they would also make Korea more vulnerable to precisely the kind of panicky outflow of capital that unfolded at the end of 1997. Moreover, for all Washington's insistence that it emphasized building financial oversight, nowhere in the memo's three pages is there a hint that South Korea should improve its bank regulation or legal institutions. Rather, the goal is clearly to use the OECD as a way of prying open Korean markets -- in part to win business for American banks and brokerages. 'These areas are all of interest to the US financial services community,' the memo reads.

But after the crisis hit, the IMF upped the ante and the struggle was over in weeks. The IMF simply insisted that remaining restrictions on foreign ownership be rescinded and that the government take active steps to dismantle the chaebols as a condition of its bailout. As Sandra Sugawara explained in the Washington Post:

"In return for a massive rescue package, Korea's newly elected president, former dissident Kim Dae Jung, agreed to restructure the nation's closed and debt-ridden economy and embrace the free market. A key target of economic reform are the business groups, known as chaebols. The top five chaebols - Hyundai, Samsung, Daewoo, LG Group and SK Group -- account for more than one-third of the country's gross economic output. Kim Dae Jung's new government launched a campaign to convince the nation that the chaebols, not foreign investors, were to blame for Korea's woes. ...

Many companies newly available for foreign purchase are very attractive to international investors not only because their stocks are depressed and the won is cheap, but because South Korean labor has been severely chastised. One can only wonder how South Korean workers who demonstrated and occupied plants in their attempts to avoid massive layoffs at the hands of their fellow South Korean employers at the outset of the crisis may react to going back to work for Western owners who flaunt their scorn for the South Korean system of "life time employment." ...

In the New York Times Kristof worries about how Asians will react to an avalanche of American corporate take overs ...

Robin Hahnel teaches economics at American University. This fall South End Press will publish his new book on capitalist globalism in crisis, Panic Rules!

(6) Whither Asia's Economies?

Part I, waging a new war in Southeast Asia

By Henry Rosemont, Jr.

Z Magazine May 1998

It worked, which is why everyone refers to it as the "Asian Miracle." Those manufacturers whose exports competed successfully on the world market prospered, were favored by their governments, and given incentives to expand, which they did, thereby further increasing employment, job security, wages, and standards of living. ... the system had many salutary consequences: employment, job security, wages, and living standards did increase throughout the region, and the extremes of poverty were reduced significantly, albeit much more so in some countries than others ...

Throughout the late 1970s and 1980s, these successful corporations expanded into other areas, using their profits and securing loans guaranteed by their governments to further increase wages, employment, and living standards. That they were altogether successful in this regard is evidenced by the fact that by 1990, overseas speculative investors (including Japan) were pushing tens of billions of dollars in easy loans on these profitable corporations to encourage them to expand still further.

And they did, but now much less wisely. South Korea borrowed $U.S. 100 billion, Thailand $70 billion, Indonesia $55 billion, and Malaysia $22 billion, much of which, with some outside encouragement, was used to speculate in real estate, build unneeded office buildings, luxury apartment complexes, and golf courses, and build factories to produce new products (i.e., automobiles) for which the market was already becoming glutted.

Thus these latter speculations did not quickly bring returns, and as the loans came due, governments/corporations became concerned to increase exports in order to repay them with much-needed foreign exchange. But many countries were now exporting the same products, so the only way to compete successfully would be to devalue the national currency, thus decreasing the costs of production. But that didn't (couldn't) work, as Thailand was the first to see. The tale was told succinctly by the Washington Post: "Currency speculators thought it was inevitable that Thailand's currency [the baht], which was pegged to the U.S. dollar, would be devalued to boost Thailand's exports, and began selling the currency in hopes of bringing about a self-fulfilling prophecy."

"But the Thais had borrowed billions of foreign dollars. A baht devaluation would make those loans far more expensive to pay off. So for several months the Thai government fought off speculators, buying mountains of baht to prop up the currency. On July 2 [1997] the government announced it was surrendering and would let the baht drop."

Thus the meltdown began and became a self-fulfilling prophecy. Taking Thailand as typical of all the Asian economies, the herd mentality took over, and, in unprecedented amounts, currency speculators began dumping the Indonesian rupiah, Malaysian ringgit, and Korean won as well.

As recently as January Indonesia, not having learned Thailand's lesson, was attempting to keep the speculators at bay. While the rupiah was fluctuating wildly between 7,100-7,800 to the dollar one day, two Indonesian banks bought rupiah in large quantities, temporarily driving the rate down below 7,000. The Far Eastern Economic Review was indignant at this effort of a country to aid its own economy, calling Indonesia's effort "a blatant attempt to distort the market." Equally indignant were the speculators: within a few days the rupiah fell to over 8,000 to the dollar, and was over 10,000 by mid-March.

The media would thus have it appear that the governments and corporations of the Asian countries are largely responsible for their current problems, aided and abetted only slightly by foreign traders and investors. But the reverse is more nearly the case. The economies of East and Southeast Asian countries are sound if we examine their real economies, that is, if we look at them in terms of actual goods produced, services provided, and how these are bought, sold, and traded both domestically and abroad.

Continuing through the early 1990s these economies grew at an average of around 8 percent, with inflation averaging less than 5 percent, and unemployment at all-time lows. ...

(7) Newspaper clippings on Burma (Myanmar) joining ASEAN - culled from soc.culture.asean


Dates are in "British" format, i.e. 1/6/97 = June 12, 1997.

1.6.97/THE NATION {Bangkok}/EDITORIAL: {published the day after ASEAN Foreign Ministers decided to admit Burma}


Asean will never be the same again. By embracing Burma as a member it has itself become a pariah organisation. Coming as it does on the eve of the 30th anniversary of the founding of the Association of Southeast Asian Nations, the decision yesterday will have repercussions far beyond whatever Asean leaders may envisage. It has indeed irreversibly damaged the organisation's integrity and setback some three decades of achievement.

We firmly believe the applications for membership by Burma, Laos and Cambodia should be judged on their individual merits and readiness, just as it has always been in other regional organisations. But still, these qualifications are secondary to their peoples' desire for freedom and democracy.

To accept Burma without any conditions is to ignore the aspirations of the Burmese people, who voted for Aung San Suu Kyi's National League for Democracy (NLD} in 1990. Why bless a regime that is clearly not legitimate? A regime that is willing to go back on its word.

From the beginning, the Burmese junta's motive in bidding for membership of Asean was obvious a regional aegis to prolong its own repressive rule and to fight against Western pressure for openness. By exploiting Asean's strengths and weaknesses the junta leaders have been able to turn the membership issue into an East-West divide - Asean against the West.

In the two years Burma has sought a closer rapport with Asean it has never lived up to regional or international norms of conduct and behaviour. Now, Asean would like us and the world to believe that as a member of Asean, the Slorc leaders will be more enlightened, open-minded and less oppressive.

The Asean leaders' decision yesterday was a triumph of evil over humanity. There is a Thai saying that one rotten fish can spoil the whole basket of fish.

The biggest disappointment must be those Thai leaders who failed to play appropriate roles in leading Asean. Partisan politics and self-interest on the part of various authorities completely destroyed the unanimity of Thailand's positions and policies. They will have to bear responsibility for the future of the Burmese people.

Nonetheless, we welcome the decision to take in Laos and Cambodia, despite the political uncertainty in Phnom Penh. Laos has been preparing for this eventuality the longest, knowing full well their inadequacies. The Laotian and Cambodian peoples are supportive of their governments' desire to join Asean.

The only tangible benefit of Burma's admission is perhaps the fulfillment of an Asean dream to encompass all 10 countries, as outlined in the Bangkok Declaration of 1967. It is doubtful whether the attainment of an Asean 10 under such circumstances will add to the influence that Asean has come to expect.

Then again, the decision should not come as a surprise to anyone.

Most Asean leaders have much in common with the State Law and Order Restoration Council in Rangoon. The decision is very much in line with their domestic politics - the ostensibly one-party rule in Malaysia, Indonesia, Vietnam and Singapore, and the vote-buying and political patronage which victimises the people of Thailand.

In the final analysis, it is not the international pressure against Slorc that really matters. What matters is the burning desire of the people in all Asean member states to incorporate democracy and human rights as part of their national development.

These aspirations, like Burma, are being ignored and quashed by current Asean leaders.

Thus, it is not that Asean has embraced Burma, but that Slorc has joined a club whose members are very much like themselves. And with Burma being a member of the regional grouping, we are seeing a "Slorcisation" of Asean. That, sadly, does not portend well for the people of the region. ====

Ministry of Foreign Affairs, Japan:

[Date: Mon, 09 Jun 1997 01:01:15 GMT] Excerpt from Ministry of Foreign Affairs, Japan. homepage (

Grant-in-Aid to Myanmar for Debt-Relief

June 2, 1997

1.The Government of Japan has decided to extend to the Government of the Union of Myanmar a grant-in-aid of 2,000 million yen in accordance with th eresolution adopted in March 1978 at the 9th Ministerial Conference of the Trade and Development Board (TDB) of the United Nations Conference on Trade and Development (UNCTAD). Notes to this effect were exchanged on June 2 (Mon.) in Yangon between Mr. Yoichi Yamaguchi, Japanese Ambassador to Myanmar, and Brigadier-General Win Tin, Minister for Finance and Revenue of Myanmar.

2.The present grant-in-aid represents the capital and interest on the ODA loans, out of those contracted up to March 31, 1988, based on the ODA loanagreement between the Governments of Myanmar and Japan, whose repayment fell due in the second half of FY1996. This constitutes one of Japan's debt-relief measures.

3.This grant-in-aid for debt-relief is intended to have the same effect as the annulment of a debt. When an LLDC country repays its debt, Japan, instead of reducing the amount of the debt, provides the same amount as a grant-in-aid to the country in order to carry out its international pledge as before. (This grant assistance is not implemented when there is no repayment.) As Myanmar has repaid 2,000 million yen, Japan is extending this grant-in-aid in order to keep its obligation based on the international pledge. (In FY1996, 8,000 million yen was provided.) ====

5.6.97/THE NATION {bangkok}:

[Fri, 06 Jun 1997 02:53:29 GMT] ASEAN ADMITS BURMA "TO CHECK CHINA"

SINGAPORE - Southeast Asia has embraced international pariah Burma despite strenuous Western objections partly due to rising apprehension over the growth of China's economic and military might, security experts said yesterday.

They said trepidation among leaders of the Association of Southeast Asian Nations (Asean) that China's robust growth will boost its military prowess was a vital factor in the decision to accept Burma, Laos and Cambodia into the group.

The seven members of Asean agreed last weekend the three countries would be admitted at a July summit in Kuala Lumpur. ... ====

5.6.97/THE NATION {bangkok}:



The decision of the foreign ministers of the Association of Southeast Asian Nations (Asean) last Saturday to admit Burma, Cambodia and Laos into the regional economic grouping in July this year is an important milestone for the organisation.

It signalled the beginning of a new era for the Southeast Asian region where all 10 countries will belong to a single regional body which aims to promote their common interests.

Moreover, the admission of these remaining countries will also help provide the glitter for the 30th anniversary celebration of the association this year in Kuala Lumpur. But what seems to be a cause for celebration is, in fact, a cause for concern over Asean's future.

The foreign ministers of the association which currently comprises Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam - decided to support the early admission of the three countries despite requests, as well as protests, from many quarters that Asean delay their entry until the end of the year. ...

The three countries still have a long way to go before they contribute meaningfully, either politically or economically, to the advancement of Asean's objectives.

On top of this, because of the strong anti-Burma sentiment in many parts of the globe, Asean will soon find itself in an awkward position in its dealings with the international community, particularly the West.

But while Asean has little to gain, the same may not be true for some of its members. By successfully resisting the pressure from the West and the civil society on Burma, Asean is sending out the message that the term "human rights" will no longer exist in the Asean vocabulary.

For some Asean members who have been criticised for human rights violations, the decision is a major victory against Western intervention.

Moreover, it also means that soon they will have more like-minded friends within Asean. For some other Asean members, the decision means that it is time to collect political debts.

Since the informal Asean summit in December last year when agreement was reached that Burma, Cambodia and Laos should be admitted simultaneously, some individual Asean members have been giving their repeated promises of support and assurances to the three countries. ...

*DARMP SUKONTASAP is a lecturer on international relations at the Faculty of Political Science, Chulalongkorn University. ====

AFP 6/6:

[Sat, 07 Jun 1997 01:20:47 GMT]

Burma in Asean, at a price

THE logic of Asean's policy of constructive engagement with Myanmar has been well-known and generally accepted. But the admission of Myanmar, together with Cambodia and Laos, into the association to fulfil the vision of an Asean 10 in the 30th year of its existence will remain highly controversial. ...

It is to be hoped that Asean leaders have not underestimated the strength of the objections to Myanmar's entry. In the US, there has been a groundswell of public opinion against the military junta. That groundswell has forced several US state governments -- New York was the latest -- to pass legislation barring the award of contracts to companies that have business links with Yangon. On its part, the Clinton administration last month imposed sanctions barring American companies from initiating new investments in Myanmar. No doubt, this was in response to pressure from various quarters.

More significantly, Washington's first collision with Asean over Myanmar could come as early as July, when the Asean Regional Forum convenes for a meeting in Kuala Lumpur. Aseandiplomats will have their jobs cut out for them, to explain the logic, rationale and benefits of their decision. Without a doubt, in light of the strong international opposition against Myanmar's admission, Asean has risked much in deciding in favour of inclusion. ====


[Sat, 07 Jun 1997 01:20:23 GMT]

Burma withstands West's embargo with Chinese military aid Ostracized for suppressing dissent, the Asian country still finds supporters.



PYIN-U-LWIN, Burma -- At the beginning of World War II, this small resort town was a gateway to the famous Burma Road, a vital supply line for Allied materiel being shipped into China for use against the Japanese.

Today the rutted, two-lane highway is still being used to transport armaments, but the flow has been reversed: Chinese-made weapons are coming south to the military government of Burma, according to Western officials.

Burma's generals became notorious in 1988 for brutally suppressing student protests, and in 1990 for annulling a democratic election won by an opposition party. Since then, the United States and most other Western nations have cut off economic relations with the country, also known as Myanmar.

But China has kept its door open. As a result, the Burmese government has relied heavily on weaponry imported from China -- and lately from Russia as well -- to keep its military forces equipped.

Buying military equipment from China is one of several ways that Burma has been able to evade the Western-led embargo. Drug merchants in China also have played a helpful role in Burma's continued export of near-record levels of opium gum for heroin production, and wealthy investors from a few other Asian nations have been spending just enough money on new Burmese hotels, real estate, mining and manufacturing projects to keep the country's economy afloat. And over the weekend, the Association of Southeast Asian Nations, or ASEAN, voted to allow Burma to join this summer.

Such economic and political support has "effectively annulled the West's attempt to induce domestic political change through international pressure," said Muthiah Alagappa, a Malaysian political scientist and senior fellow at the East-West Center in Hawaii.

Besides providing access to weaponry and economic breathing room, Burma's China connection also gives it important refuge from the world's disapproval, according to a diplomat who spoke on condition of anonymity. "If they keep deepening the relationship, Burma will always have China to turn to" if needed to veto trade sanctions that might be sought by the U.N. Security Council, he said. ====

Julien Moe:

[Date: Sat, 07 Jun 1997 01:20:39 GMT]

Malaysia slams ASEAN's critics on Burma 03:04 a.m. Jun 06, 1997 Eastern

... ASEAN -- Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam -- last weekend decided to admit its final three members at the grouping's annual meeting in Kuala Lumpur on July 24-25.

The United States and the European Union had lobbied heavily against the move, citing the poor human rights record of Burma's military rulers.

Some 240 policymakers, scholars, journalists and corporate figures from 24 countries were attending the three-day annual discourse organised by Malaysia's Institute of Strategic And International Studies (ISIS). ... REUTER ====

Julien Moe:

[Date: Sat, 07 Jun 1997 01:19:56 GMT] TITLE:02-06-97


BURMA/ASSOCIATION OF SOUTH EAST ASIAN NATIONS (ASEAN) -- Dinger was asked to comment on reports that ASEAN has decided to invite Burma to become a member. Citing Burma's human rights abuses and role in international narcotics trafficking, Dinger said: "We regret that ASEAN appears to have invited Burma to join its organization at this time." ...

Questions & Answers on Burma/ASEAN

Q: Do you have any reaction to the decision by ASEAN to admit Burma as a member?

DINGER: Our concerns about the State Law and Order Council's policies are very well known. It has violated the rights of its own citizens. It has taken actions that undermine stability in the region by producing refugee flows and allowing Burma to remain a major source of narcotics.

We know that ASEAN shares those concerns and, like the United States, wants to see them addressed. Of course, we acknowledge that decisions about ASEAN's membership are for ASEAN member nations to make. We, nonetheless, regret that ASEAN appears to have invited Burma to join its organization at this time.

At the same time, we now look to ASEAN to use its good offices to urge the SLORC to seriously address our mutual concerns, and urge the SLORC to enter into a productive dialogue with democratic forces in Burma, to cease its actions that damage stability the region. That's it? ====

9.6.97/THE NATION {Bangkok}:



MANILA- The decision by the Association of Southeast Asian Nations (Asean) to admit Burma, Cambodia and Laos has "sowed the seeds of discord" that could disrupt the group's solidarity, a leading Philippines newspaper said yesterday.

"Burma's accession opened cracks in the wall of Asean solidarity that were papered over by the official statement," the Philippine Daily Inquirer said in its editorial.

It said the decision to admit the three countries was opposed by the Philippines and Thailand, while Singapore had reservations on economic grounds and that "for the first time in its 30-year history, Asean was not one happy, harmonious family." ====

The Japan Times:

[Mon, 09 Jun 1997 14:07:11 GMT]

Australian (June 5)

ASEAN extends its reach

The admission to membership of the Association of Southeast Asian Nations of Burma, Cambodia and Laos is a turning point in the history of ASEAN and possibly a defining moment for Southeast Asia more generally.It is also a step of considerable importance Lor Australia.There is little doubt the move will be seen in many quarters as threatening to devalue ASEAN as a global force. ====

Editorial from Siam Post:

[Tue, 10 Jun 1997 22:22:44 GMT] BURMA MOVE BAD FOR IMAGE 10.6.97/BANGKOK POST

At a recent meeting in Kuala ALumpur, Asean foreign ministers unanimously agreed to accept Burma, Laos and Cambodia as new members of the regional grouping. Upon his return to Thailand, Foreign Minister Prachuab Chaiyasarn said he hoped people in the seven Asean countries would support Burma's entry.

Mr Prachuab's statement showed that Thailand was not afraid of any repercussions from a US trade sanction against Burma, announced in May to show Washington's displeasure with the ruling military junta. ... ====

Julien Moe:

[Date: Tue, 10 Jun 1997 22:22:14 GMT] Singapore, Philippines defend ASEAN expansion

By Uday Khandeparkar

MANILA, June 10 (Reuter) - Singapore and the Philippines on Tuesday defended a decision by the Association of South East Asian Nations (ASEAN) to admit international pariah Burma into their club, saying it would make the group stronger.

"There would be a lot of common make ASEAN an important economic bloc and also one with political influence," visiting Singaporean Prime Minister Goh Chok Tong told a news conference, dismissing objections by Western governments because of human rights abuses in Burma.

The group decided 10 days ago to admit Burma, Laos and Cambodia into ASEAN.

"We know that the U.S. and Europe are unhappy with Myanmar's (Burma's) admission but we have always taken a position that the internal situation of a country is that country's concern," Goh said on the second day of his three-day official visit.

He said ASEAN believed it was better to engage Burma in constructive dialogue so it could reform by looking at its neighbours.

"We don't believe that sanctions will work. We haven't heard anybody come out with a better alternative than constructive engagement," he said.

Goh said ASEAN members held a view that a country's internal affairs were its own concerns.

"We know that many people are unhappy with human rights or so-called human right abuses in countries within ASEAN. But we want to work together and we do things our way."

Western countries led by the United States had put pressure on the group to deny membership to Burma because of its human rights record.

ASEAN currently comprises Brunei, Malaysia, Indonesia, the Philippines, Singapore, Thailand and Vietnam and the new members are expected to be formally admitted next month.

Philippine President Fidel Ramos, who jointly addressed the news conference with Goh, also defended the group's decision to admit Burma as a member.

"We look at ASEAN as a family where you have strong, capable, economically affluent and at the same time some poor and weak members who must be kept together within the family," he said. ... REUTER ====

11.6.97/THE NATION {Bangkok}:


THAILAND's foreign policy towards Burma came under fire from Thai academics and non-government organisations (NGOs) yesterday for seeking to exploit its neighbour's economic potential while ignoring the lack of its political, social and human rights developments.

They urged policymakers to review their stand on Burma and consider all aspects of the situation there.

Public input on policies towards Burma should be allowed in view of the country's approach towards its Western neighbours, they said.

However, the Thai side defended current policy, arguing that it is well-formulated and implemented on the basis of Thailand's national interests and security concerns. ... ====

[Date: Fri, 13 Jun 1997 17:30:54 +0200]

(8) European Parliament adopts Burma resolution unanimously on June 12th, 1997, Stratsbourg, France 14 (c) B4-085, 0547 and 0551/97

Resolution on the continuing human rights abuses in Burma

European parliament resolution: positions on WTO & on ASEAN

This resolution was adopted by the European Parliament in its Stratsbourg session on Thursday 12 June 1997. Unanimously.

14 (c) B4-085, 0547 and 0551/97

Resolution on the continuing human rights abuses in Burma

The European Parliament,

- having regard to its previous resolutions on human rights in Burma and Burma's possible accession to ASEAN, - having regard to the statement of the Presidency on behalf of the European Union on 30 May 1997 on the deterioration of the political situation in Burma, A.whereas the State Law and Order Restoration Council (SLORC) has been recognised by the international community as being guilty of conducting a policy of complete disregard for human rights, B.noting that the United Nations Commission on Human Rights in its fifty-third session expressed its deep concern at the continuing violations of human rights in Burma including extrajudicial summary or arbitrary executions, death in custody, torture, arbitrary and politically motivated arrest and detention, forced relocation, forced labour by children as well as adults, and the abuse of woman and children by government agents and oppression of ethnic and religious minorities, C.noting the report by the UN Commission for the rights of children according to which thousands of children die from the effects of beating, exhaustion or illness during forced labour, D.deploring the fact that SLORC detained on 21 may more than 300 National League for Democracy (NLD) members, including 50 elected members of Parliament, to prevent them from attending a party gathering to mark the anniversary of its landslide victory in the 1990 elections, E.saddened by the recent death in custody of the political prisoner Tim Shwe, a prominent member of the NLD, which again highlights the appalling prison conditions in Rangoon; F.whereas Mrs Aung San Suu Kyi, a winner of Parliament's Sakharov Prize, has on several occasions called on the International community to impose political and economical sanctions on SLORC, G.regretting the continued surveillance, restriction of movement, and other forms of intimidation of Aung San Suu Kyi and senior leaders, and since September 1996 the almost permanent blockade of the house of Aung San Suu Kyi which has prevented her from giving public speeches, H.noting that on 20 May 1997 President Clinton imposed economic sanctions on Burma by prohibiting United States citizens from making new investments in Burma; I.whereas, at the last ASEAN ministerial summit, the governments of the member countries decided to admit Burma as a member, thus ignoring the appeals from various other countries and international organisations for the decision to be postponed on account of the serious political situation in Rangoon,

1.Condemns the military dictatorship IN Burma and all human rights violations committed by SLORC; 2.Calls on the Rangoon government to guarantee the fundamental rights of the Burmese people and to put a stop to politically motivated persecution and to fulfil its obligations as a State party to the Forced Labour Convention, 1903 (No 29), and to the Freedom of Association and Protection of the Right to Organise Convention 1948 (No 87) , of the International Labour Organisation; 3.Calls on the Council to respond to Aung San Suu Kyi's request that the EU implements economic sanctions against SLROC by ending all links between the European and Burma based on trade, tourism and investment in Burma by European companies; 4.Urges the Commission not to take action against the act regulating state contracts with companies doing business with or in Burma passed on 25 June 1996 by the Commonwealth of Massachusetts, under the dispute settlement procedure of the World Trade Organisation; 5.Vigorously condemns the accession of Burma to Asean, giving it further international recognition despite its violation of human rights; 6.Calls on the ASEAN countries to review their Ôpolicy of constructive engagement' with Rangoon, which appears to confer legitimacy on the policies of Burma's repressive and anti-democratic government; 7. Expresses its support for all the forces of democracy in Burma, in particular the NLD and Aung San Suu Kyi, who are campaigning for the establishment of constitutional government and respect for human rights; 8.Instructs its President to forward this resolution to the commission, the Council, the military Government of Burma and ASEAN. ==== ...

(9) More newspaper reports, & the US Reaction

The Straits Times:

[Date: Mon, 16 Jun 1997 11:20:14 GMT]

JUN 15 1997 Myanmar hopes to end isolation by joining grouping

YANGON -- Myanmar hoped to end nearly 30 years of isolation with its imminent membership in Asean, official media reported yesterday. Lieutenant-General Khin Nyunt, First Secretary of the ruling military State Law and Order Restoration Council, was quoted as saying that Myanmar hoped to exploit its vast natural resources with help from members of the regional bloc. ====


KUALA LUMPUR - The Association of Southeast Asian Nations decided yesterday to admit its final three members - Burma, Cambodia and Laos - in July, reaffirming their belief that this was in the best interests of the region and the world community.

The Asean foreign ministers hailed their controversial decision to "complete" the grouping, by expanding it tobring all 10 Southeast Asian nations into its fold, but critics warned that further repression was likely in Burma as a result.

The decision was made on therecommendation of the Asean Secretariat, which reported in detail on the three countries' readiness to fulfil all technical requirements and economic and non-economic commitments of membership. ...

Indonesia's Foreign Minister Ali Alatas led those who supported the admission in July and not later. ...

An Asean source disclosed that US Vice President Al Gore had, prior to the meeting yesterday, sent a personal letter to Malaysia and the Philippines, expressing US opposition to Burma's early admission. "Rather than an obstruction, it provided an impetus for Asean to come to this decision," he said.

According to the source, Asean did not want to be seen as bowing to US pressure. ====


WASHINGTON, June 1 (Reuter) - The United States said on Sunday it regretted the decision by Southeast Asian states to invite Burma to join their regional grouping.

The State Department acknowledged the makeup of the Association of Southeast Asian Nations was an internal matter for member states to make.

"Nonetheless, we regret that ASEAN appears to have invited Burma to join its organisation at this time," a department spokeswoman, Julie Reside, said.

Burma, along with Cambodia and Laos, won admission to the regional grouping on Saturday at an ASEAN Foreign Ministers' meeting in Kuala Lumpur.

The Clinton administration has pressed for isolation of the military junta in Burma until it stops repressing the pro-democratic opposition. The junta, the State Law and Order Restoration Council, blocked Aung San Suu Kyi, a Nobel Peace laureate, from taking power after her party won a landslide victory in 1990 elections. ...."

Washington, citing "severe repression," early this month imposed economic sanctions on Burma over the military government's rights record and treatment of the democracy activists. ASEAN has rejected Washington's stance and branded it as interference in the grouping's internal affairs. ====


KUALALUMPUR - Cambodia, Laos, and Burma applauded Asean's decision yesterday to admit them simultaneously into the regional grouping at their foreign ministers' meeting in July.

The decision was also welcomed by China and Japan, two close allies of the grouping but was received with shock by the Burmese democratic opposition. There was no reaction yet from the West particularly the United States which has strongly opposed Burma's early membership. ====

(10) Rush to embrace Burma's dictators will be swept aside in march of history

COMMENT by MARK BAKER, South-East Asia correspondent for the Sydney Morning Herald and the Melbourne Age.

The Age, Malbourne, June 7, 1997.

Also published in the Sydney Morning Herald, June 7, 1997.

WHEN regional governments came together 30 years ago to form the Association of South-East Asian Nations it was a modest partnership built in the name of economic development and co-operation.

The real, yet mostly unspoken, motivation was the Vietnam War raging to the north and fears that the communist dominoes were about to come tumbling down.

As both an economic and security alliance, ASEAN amply rewarded the ambition of its founders. As the communist threat withered, member economies boomed and the grouping helped cement the peace between a clutch of neighbours with divergent cultures and political systems, and unresolved territorial disputes.

Now, as ASEAN prepares to celebrate its 30th anniversary, a new dynamic is at work that is casting the seven-nation association not in the role of peacemaker and unifier, but as a force of reaction confronting the aspirations of a new Asian generation. A movement that helped an emerging region find its voice is now acting to silence the clamour for the freedoms it once claimed to defend.

The decision by ASEAN foreign ministers to admit Burma as a full member next month in open defiance of the United States, many other Western governments and the manifest wishes of the Burmese people. It has confirmed the grouping's status as an authoritarian club deaf to the winds of change gathering in their region.

It is a decision that is likely to seriously complicate ASEAN's future relations with Europe and the US - the nation which continues to underwrite regional security. It will further undermine the credibility of ASEAN's claims to be committed to democratisation and human rights, and to speak with moral authority in international affairs.

In rushing the entry of Burma, Cambodia and Laos, ASEAN could also threaten its own internal cohesion. Both Burma and Cambodia are politically unstable and both, along with Laos, are a long way from being capable of fulfilling the association's free-trade commitments.

While it is hardly surprising the likes of Indonesia and Vietnam have chosen to give comfort to a regime in their own totalitarian mould, the speed with which the ostensible democracies of the Philippines and Thailand have jumped on the bandwagon sends a disturbing message about the future of political liberalisation in South-East Asia.

There are, of course, compelling economic and security considerations to dissuade any member of ASEAN from rocking the boat. Thailand, which shares an unstable border with the Burmese, has particular reason to avoid antagonising its troublesome neighbour.

But the conspicuous failure of the Philippines to take a stand against the worsening repression in Burma - and the military's denial of the popular will expressed in elections in 1990 - is a betrayal of the spirit of the "people's power" victory over the regime of Mr Ferdinand Marcos in 1986.

ASEAN has justified its decision to speed Burma's entry by saying regional security demands that the regime be engaged rather than isolated, that the political situation in Burma is an internal matter and that, through engagement, the generals can be persuaded to reform.

In defence of ASEAN's policy of "constructive engagement", the Thai Foreign Minister, Mr Prachuab Chaiyasan, said: "Even a playboy can become a good husband after his marriage, with the family's help. That's the Asian way."

But the latest wave of arrests of members of Ms Aung San Suu Kyi's National League for Democracy - on the eve of the foreign ministers' meeting - has underlined the regime's contempt for ASEAN's token criticisms of their repression.

ASEAN's decision to close ranks behind Burma - which otherwise is being increasingly isolated - has been condemned by human rights groups, prominent political analysts and independent newspapers across the region.

As the modern political history of Thailand and the Philippines has shown - and the recent violent election campaign in Indonesia has reaffirmed - the democratic aspirations of the Burmese people are no regional aberration.

It is the ASEAN leaders who now stand isolated and who, with their Burmese military cohorts, will be swept aside in the inexorable march of history.



Kuala Lumpur, July 22 (AFP)- Malaysian Prime Minister Mahathir Mohamad made a thinly veiled attack published Tuesday on US financier George Soros, blaming him for Southeast Asia's currency turmoil.

Without identifying anyone, Mahathir accused a foreign financier of upsetting currencies to pursue his own political agenda. Soros was clearly the target.

Reports carried by Malaysian newspaper said the financier responsible for attacking the currencies was opposed to Burma joining the Association of Southeast Asian Nations(ASEAN).

The report said Mahathir made the remarks to a business group in the Japanese city of Okayama on Monday. "We feel that there is some other agenda apart from making money. As you may have noticed ASEAN countries are the targets," he was quoted as saying by Business Times. Mahathir said targets were Thailand, Indonesia, the Philippines and Malaysia.

"We ask ourselves is it just speculation to make money or is it something else? We feel that there is some other agenda, especially by this particular person who is the patron of a foundation," Mahathir said.

"If they want to attack the British pound, by all means do so. Britain is rich. Malaysia is poor country and it is not right for people like these to play and speculate with our currency," he was quoted as saying. Soros, widely blamed for forcing the pound out of European Exchange Rate Mechanism in 1992, called in January for an international tourist boycott of Burma and an end to investment there by oil companies.

"Every citizen of the world should abstain from travelling to Burma as a tourist.The use of forced labour has made it possible for the military regime to fix up tourist attractions and build new hotels," Soros said.Soros heads a foundation for an "open society" which aims to promote democracy and which provides financial aid for several countries, notably in central and eastern Europe.

Mahathir refused to named the financier but the New Straits Times said he was "known to have tried to have used his financial clout in the United Sates to block Burma's entry into ASEAN, due on Wednesday. Business Times added that the prime minister "would not rule out the possibility that this foundation is against ASEAN's decision to admit Burma and is therefore putting pressure on the currencies of the grouping's members in the hope of undermining their economies." ====


KUALA LUMPUR - Billionaire George Soros, well' known for his speculative plays in global currency markets, denies that his philanthropic foundation and currency speculation business are linked in an attack on Southeast Asian currencies in retaliation for Burma's admission into the region's trade group.

Soros said through a spokesman that his Soros Foundations and Open Society Institute, philanthropic groups that have sought to promote democratic government in Burma and elsewhere, are distinct from Soros Fund Management, his investment group.

"There is absolutely no connection," said Shawn Pattison, a Soros spokesman at his offices in New York.

The Open Society Institute finances the Burma Project, a 3-year-old operation that seeks to publicise human-rights abuses in Burma and support opposition groups.

"I can see how the misunderstanding may have arisen here as Mr. Soros has been quite vocal in his urging the governments of Thailand and Malaysia not to admit Burma into ASEAN," Pattison said. "He continues to consider totalitarian repressive regimes threats to the region's prosperity and stability." ====

From VOA: SOROS DENIAL July 23, 1997 by Dan Robinson

In a public statement, and later in a VOA interview, Mr. Soros says there is absolutely no connection between his philanthropic ªOpen Society Instituteª -- or its ªBurma Projectª -- and trading by Soros Fund Management:

"They are two entirely separate organizations.Soros Fund Management is there to make money for its shareholders, and it would not allow itself to be influenced by my political views. so there is no connection between anything the fund management does, and my concern about the political situation in Burma"

In recent weeks, the devaluation of the Thai currency (ªbahtª) set off what market experts described as a domino effect. Currencies in Malaysia, Indonesia and the Philippines lost value.Burma's currency -- the ªkyatª (pron: chat) -- fell sharply producing what some observers describe as a dangerous economic situation.

Although Mr. Soros denies using his financial clout to make a political point, he makes clear his disagreement with ASEAN over its admission of Burma, and his feelings about Burma'xs military government -- called the State Law and Order Restoration Council (SLORC):

"SLORC is running an economic regime which is a disaster for Burma.It has practically no currency reserves.You have a totally artificial value for the currency which gives you a chance to favor your people to the detriment of the general population.Because anybody who has permission to, let's say, buy gasoline at the official price can re-sell it and make a living on it. So it's a totally corrupt regime."

Mr. Soros says his fund management organization has no direct investments in Burma, and he says he urges companies in which Soros is a shareholder to withdraw. He mentioned that one company -- Newmont Mining of Denver -- had recently done so.

Soros had eight-million shares in Newmont, worth about 300 million dollars.A spokesman for the company said its withdrawal was mainly for economic reasons, but acknowledged Mr. Soros' views on Burma had been a factor.

As for ASEAN, Mr. Soros says the organization will, in his words, have to "live with its conscience" after having admitted Burma. Burma in ASEAN, he says, is harmful for the region and for the interests of the ASEAN countries. ====


US financier George Soros was accused today of destabilizing South East Asian currencies for political motives, as governments in the region resolved to fight-back against speculation in their money.

"Today, I'm conforming that Gorge Soros is the man that I was talking about, " Mr. Mahathir said today, after nearly a week of calling currency speculators " rogues", "robbers", "anarchists" and "brigands".

Mr. Soros had admitted that he did not want Malaysia and Thailand to allow Burma, which he regarded a "totalitarian and repressive regime", into ASEAN, the New Straits Times said.

"However, I do not believe that the cause of freedom in Myanmar would be advanced by linking it to currency speculation," he was quoted as saying.

Mr. Mahathir said today he was not convinced by the claim. "It is very difficult to separate the right hand and the left hand and sometimes you don't even know what your right hand is doing. But in this case, it is quite obvious there is a convergence," he said.

"We have worked 20 to 40 years to develop our countries to this level and along comes the man with a few billion US dollars and within a period of two weeks, he has undone almost the work we have done," Mahathir said. "Who is helping who...I would like to know that." ====

Soros currency speculation said to be unlinked to anti-Slorc lobbying 28/7/97

Source: BurmaNews Network (BNN), EBN,, Reuter 28 Jul 1997 ---- NEW YORK - U.S. financier George Soros said Monday his currency trading positions had no relation to his calls for Burma to be excluded from the Association of South East Asia Nations (ASEAN).

A spokesman for Soros here said the Burma Project of the Soros-funded Open Society Institute was separate and distinct from Soros Fund Management, the financier's investment arm.

"There is absolutely no connection with the Foundation's activities, in this case the Burma Project, and the activities of Soros (Quantum) Fund Management, in this case its rumored trading in the currencies of South East Asia," said spokesman Shawn Pattison.

Soros Fund Management, a hedge fund, was alleged to have taken large speculative positions against South East Asia currencies and helped to force effective devaluations of the the Thai baht and the Philippine peso earlier this month.

On Saturday, Malaysian Prime Minister Mahathir Mohamad cited Soros as being responsible for the recent pressure on the Malaysian ringgit and other South East Asian currencies. Last week, he blasted currency speculators as "rogues" and "robbers," who were out to destroy his country's economic progress.

Mahathir also said Soros had tried to use his "financial clout" to block Burma's admission into ASEAN, and said he saw links between Soros' philanthropic and investment work.

"It is very difficult to separate the right hand and the left hand and sometimes you don't even know what your right hand is doing. But in this case, it is quite obvious there is a convergence," Mahathir said.

But in a statement, Soros noted that the two organizations operate independently of one another.

"I can see how this misunderstanding may have arisen as I have publicly urged the governments of Thailand and Malaysia not to admit Burma into ASEAN and I consider the acceptance of a totalitarian and repressive regime a threat to the region's prosperity and stability," Soros said.

"However, I do not believe the cause of freedom in Burma would be advanced by linking it to currency speculation," he added.

---- News and Information Dept. All Burma Students' Democratic Organisation (ABSDO) [Australia] Tel/Fax: 61+03+98132613

(12) George Soros' Private Agenda

By Harish Mehta

The billionaire American Investment banker George Soros has an agenda that goes beyond his plan to destabilise Asian countries by launching wave after wave of attacks on their currencies. The Hungarian-born Mr.Soros does not consider currency speculation as just another way ofearning a few billion dollars. He views his war chest-worth between $10 billion to $12 billion - as a weapon to punish certain southeast Asian countries for supporting Myanmar (formerly Burma) and easing its entryinto Asean in July over the objections of the United States and some European countries that believe the Myanmar junta should be isolated and pressured to improve its human rights record. Mr. Soros, too, would like to see the Yangon junta show some respect for democracy and the rights of its citizens.

A few days after the admission of Myanmar into Asean, the outspoken Malaysian Prime Minister, Dr. Mahathir Mohamed, blamed Mr. Soros as the mastermind behind the attacks on Asian currencies that had driven downtheir value. Dr. Mahathir became the first southeast Asian leader to not only come out and identify Mr. Soros but also indulge in some plain speaking, accusing Mr. Soros of using his financial clout to hurt southeast Asian countries for their decision to admit Myanmar. Mr. Soros denied the charges and, in contrite mode, sought a meeting with the Malaysian Prime Minister.

Mr. Soros' interests go far beyond the pecuniary. He harbours strongdemocratic beliefs which he promotes through his Open Society Foundation which lobbies for democracy in Myanmar. Soros officials make a distinction between the Soros Open Society Institute which funded the Myanmar project for the past three years in a bid to publicise human rights abuses there, and the Soros Fund Management investment group that controls Mr. Sosors' wealth. But the dividing line between the two entities is blurred.

On the contentious issue of the admission of Myanmar into Asean, the views of the United States have not been "respected" by southeast Asianstates, observers say. "Washington's biggest ally seems to be Soros,"said one analyst.

The Thai baht, Malaysian ringgit, Philippine peso, and Indonesian rupiahwere attacked two months ago by currency spectaculators and plunged invalue. Asean countries now view the attacks on their currencies as the single most dangerous threat to their economic prosperity. But there is little they can do to stop Mr.Soros, who can choose a place and a time to launch an attack. Earlier assaults on the baht took place in forex markets in London, New York, Singapore, and Bangkok. The Thai central bank scrambled to obtain the assistance of monetary authorities in those countries, and did succeed in London and Singapore, but New York's financial authorities snubbed the Thais. The US, they said, is a free economy and the authorities do not get involved in what is essentially a market-driven transaction.

The only defence the Asian states have is a currency repurchase pact under which countries supposedly rally to help shore up currencies o fcountries under attack. For instance, if the Thai baht is under attack,then Singapore and Malaysia would buy baht in offshore markets to propup its value. And, at a later day, they could invoke the repo agreement under which Thailand would have to buy back the baht from them. However,the repo pact has never really been used, and it is unlikely to be used unless there is an emergency. The reason? No country would like to spend millions of dollars to buy units of a beleaguered Asian currency under the promise that the embattled state would buy its currency back later.

The most severely attacked currency in southeast Asian memory is the Thai baht that came under speculators' pressure in February this year. Since then, investment banks such as J.P. Morgan, the Goldman Sachs, George Soros, and others have dumped the baht for dollars, driving down the baht and forcing the Bank of Thailand to intervene at great cost. So hig was the cost that Thailand's foreign exchange reserves fell to a slittle as $29 billion after it spent more than $10 billion to defend the currency.

After attacking the baht, the currency speculators turned their attention to other regional currencies, and in the ensuing battle the peso, rupiah, and ringgit lost their value. In July, speculation on the Malaysian ringgit prompted the Malaysian central bank, Bank Negara, to intervene. The Philippine central bank had to dip into its foreign reserves to service the rising demand for dollars and raised its key borrowing rate to 30 per cent to ease dollar demand. But central bankers across the region denied that they would devalue their currencies. It was merely a feint.

Everybody knew that a long-term defence of the baht was not sustainable.The Thai government devalued the baht on July 2 this year, which immediately caused the baht to lose about 20 per cent on its value. The effects of the speculation shaved values off the region's bourses as well.

While other big investment banks were also speculating on Asian currency markets, only Mr. Soros was identified as having a political agenda on account of his Foundation that is active in Myanmar and supports the dissident opposition leader Aung San Suu Kyi and her pro-democracy student movement. In turn, Mr. Soros' role in Myanmar is supported by influential sections of the media, academics, and politicians across southeast Asia.

Whatever his motives, Mr. Soros has made financial history in southeast Asia. The man who earned $1 billion by betting on the devaluation of the British pound in 1992 is now a man much feared by regional central bankers. However, Asia's emerging economies probably have the resilience to see Mr. Soros off. The Hungarian-American may be worth $ 12 billion but the foreign exchange reserves of countries like Malaysia dwarf even Mr. Soros' war chest.


(U.S. will continue to meet its responsibilities to ASEAN)

Kuala Lumpur -- The United States will continue to meet its responsibilities as a partner to the Association of Southeast Asian Nations (ASEAN) and as a nation with vital interests in the security of the Asia-Pacific region, according to Secretary of State Madeleine Albright.

"Our fundamental goal is one that we share with our friends in this region. We want to see southeast Asia strong and united, able to speak with a single voice and to work with its partners in America and Europe to meet the common challenges we face," Albright said in July 27 remarks at the fourth annual meeting of the ASEAN Regional Forum in Kuala Lumpur, Malaysia.

Albright said that the United States supports and applauds ASEAN's leading role in the effort to resolve the crisis in Cambodia.

"We are agreed that toppling the results of the 1993 election in that country is unacceptable -- and the United States believes the status quo will remain unacceptable until the Cambodian government fully reflects the freely expressed will of the Cambodian people. Our aim is to consult with ASEAN and to forge a common front, as ASEAN moves forward with its diplomatic initiative," she said.

ASEAN has shown impressive leadership on Cambodia, and the United States encourages a similar effort by ASEAN and the ASEAN Regional Forum (ARF) to promote respect for democracy, law and human rights in Burma, Albright said.

"Burma is inside ASEAN, but it will remain outside the Southeast Asian mainstream and isolated from the global economy until accountable government is restored. That is not an admonition, but an objective fact we must acknowledge.

"Burma's future and ASEAN's future are now joined. And now, more than ever, Burma's problems need an ASEAN solution. That is why I hope ASEAN will use its contacts with the State Law and Order Restoration Council (SLORC) to urge a dialogue of reconciliation in Burma," she said.

Albright stressed that such a dialogue must encompass several factors if it is to be successful.

"To be worthwhile, that dialogue cannot be an end in itself -- it must lead to political change. To be genuine, it must rest on a willingness to compromise, not just on the part of the opposition but on the part of the SLORC as well. To succeed, it must include Aung San Suu Kyi, the only leader who enjoys the support and trust of the vast majority of the Burmese people," she said.

"The United States shares the goal of an integrated Southeast Asia that includes an open and thriving Burma. We acknowledge that the decision to admit Burma was ASEAN's to make and we respect it. Now that the choice has been made, we must insist that we work together: to promote conditions within Burma that will lead towards true democracy and permit its genuine integration into this region," she said.

Following is the full text of Albright's statement:

(begin text)


Mr. Chairman and fellow ministers, I am honored to represent the United States at the fourth annual meeting of the ASEAN Regional Forum. ...

America's interest in the Pacific region is reflected in the importance we attach to our participation in this Forum. ...

Because of its government's actions, Burma is also the only member of ASEAN and the ARF subject to international sanctions and consumer boycotts, the only member that is denied multilateral lending, the only member where foreign investment is stagnating.

Burma is inside ASEAN, but it will remain outside the Southeast Asian mainstream and isolated from the global economy until accountable government is restored. That is not an admonition, but an objective fact we must acknowledge.

The admission of Burma presents a challenge: to avoid the possibility of a chasm within ASEAN, between one part that is open, integrated and prospering, and another that is closed, isolated and poor. ... (end text) ==

[The Irrawaddy News Magazine - Interactive Edition] [Irrawaddy Publishing Group - Interactive Edition]

Vol 5 #3 June

Foreign Relations


How does the administration of U.S. President Bill Clinton react to a slap in the face in Asia? Earlier this month, the Association of Southeast Asian Nations made Burma a member in spite, or perhaps because, of staunch U.S. ambassadors to Asean countries embarked on a tour of three U.S. cities to promote trade with the region. The unfortunate symbolism of U.S. ambassadors on a trade tour while their host countries were busy spurning US advice is bound to reinforce the image of a Clinton administration preoccupied with trade at the expense of its political objectives.

Nevertheless, the US should take the Asean decision in stride, and retool its policy, if only slightly, to advance U.S. interests in the region.

First, however, it is important to analyse why Asean decided to let a rogue regime such as Burma's State Law and Order Restoration Council into its fold. One argument favoured by some analysts is that the organisation was simply recognising the need to woo Burma away from China.

Recent signs of cooperation include intelligence sharing as well as Chinese financial assistance, training and supplies of military equipment to Slorc. But Sino-Burmese ties have been developing for several years. Instead of forcing Burma to sacrifice Chinese arms and political ties for Asean membership, the Asean states have ensured that Slorc now has both.

Asean may also have acted in response to Washington. Allies of the Burma democracy movement were quick to link Asean's move to U.S. actions, specifically State Department spokesman Nick Burns's May 21 remarks explicitly opposing Burma's admission to Asean, and the announcement of a new ban on U.S. investment in Burma.

Maureen Aung-Thwin, director of the Burma Project of the Soros Foundation thinks that both were handled poorly. "The timing of the investment ban provoked the hardliners in Asean, rather than the ban itself, which had been expected by everyone for months," she says. "Sanctions should have been announced as soon as the conditions were reached, which happened very soon" after the Cohen-Feinstein amendment, which said that sanctions could be imposed if political conditions in Burma worsened or democracy leader Aung San Suu Kyi was again placed under house arrest.

According to Ms. Aung-Thwin, Mr. Burns's statement "was way too loud, but mostly too public. It would have been tremendously more effective had we sent the same message, much sooner, and quietly."

There's no denying that opposition from Washington may have rankled some of Asean's most independent-minded leaders. Malaysian Prime Minister Mahathir Mohamad, who is becoming the region's leading proponent of "Asian values," apparently sees the addition of Cambodia, Burma and Laos to the organisation at least in part as an expression of regional solidarity and exclusivity. ...

Secretary of State Madeleine Albright's June 26-29 visit to Hanoi and Phnom Penh, and the July 24-25 meeting of the Asean Post-Ministerial Conference and Asean Regional Forum offer the secretary a chance to reinvigorate the U.S. role in the region and seek multilateral action on Burma.

The Clinton administration may not have handled the sanctions and the Asean issues as deftly as possible, but ultimately, it was on the right side of both. Burma's admission to Asean is a setback, but it need not keep the U.S. from making progress on its agenda in Burma, and the rest of Southeast Asia.

This article appeared in the AWSJ and written by Ellen Bork. Ms.Bork is majority senior professional staff member for Asia and the Pacific on the U.S. Senate's Foreign Relations Committee.==

[The Irrawaddy News Magazine - Interactive Edition] [Irrawaddy Publishing Group - Interactive Edition]

Vol5 #4&5 August


A plan to weaken the region's currencies? Was there a conspiracy? The Asean nations certainly felt under 1919 siege. Hence the "serious concerns over well-coordinated efforts to destabilize Asean currencies for self-serving purposes" expressed in a joint communique issued by the group's foreign ministers in Kuala Lumpur.

It was an unusual comment from primarily a political group - and a measure of how frazzled Asean governments are by the regional currency turmoil.

Malaysian Prime Minister Mahathir Mohamad thought he knew who was behind it all: George Soros, the world's premier currency trader. Dr. M said Soros was using the wealth under his control to punish Asean for welcoming Burma. "There is definite evidence that we cannot disclose," said the PM. "There is no doubt he did it."

Soros has never hidden his unhappiness with the Slorc. His philanthropic Open Society Institute, which promotes democracy worldwide, has been critical of Slorc for human rights abuses against minorities and political opponents.

But Soros insists he wasn't involved in the currency attacks. Except for a single trade in mid-June, he said his funds had not sold ringgit or baht in the past two months.

Billionaire George Soros, well-known for his speculative plays in global currency markets, denies that his philanthropic foundation and currency speculation business are linked in an attack on Southeast Asian currencies in retaliation for Burma's admission into the region's trade group.

Dr. M accused the US financier of orchestrating currency attacks to punish the Asean. Asean admitted Burma.

Soros said through a spokesman that his Soros Foundations and OSI that have sought to promote democratic government in Burma and elsewhere, are distinct from Soros Fund Management, his investment group.

"There is absolutely no connection," said Shawn Pattison, a Soros spokesman at his offices in New York.

"I can see how the misunderstanding may have arisen here as Mr. Soros has been quite vocal in his urging the governments of Thailand and Malaysia not to admit Burma into Asean," Pattison said. "He continues to consider totalitarian repressive regimes threats to the region's prosperity and stability."

The currencies of Thailand, Malaysia, the Philippines, Indonesia and Singapore have fallen sharply in speculative waves of selling that have raised anxiety about the region's overall financial stability.

"Freedom of speculation had become a political weapon which has given power to a rich person who had forced independent nations to bow to him," the Bernama news agency quoted Mahathir as saying.

Mahathir isn't the first in Asia to blame Soros for the currency problem. The Thai press mentioned him as a force behind last month's speculative attack on the baht, which Soros also denied.

Soros attained global renown for attacks that forced the British pound out of the European Monetary System in 1992. His purchases and sales of currencies are closely followed in the foreign-exchange market.

Asia based financial experts agreed Soros's role was overblown - though not non-existent. "He was just one of many players in the market, albeit a bigger player than most," says Desmond Supple of BZW Securities in Singapore. If he did speculate, Soros was hardly alone.

In the days following the Asean conference, Mahathir was even critical of Malaysians who profited by "selling and buying the ringgit for quick gains." ...

Sources: Asiaweek, Bangkok Post, The Nation

(14) Paul Krugman defends Speculators


Fritz Lang's classic 1922 movie "Dr. Mabuse, the Gambler" begins by showing the arch-villain of the title at work: masterminding robberies, fomenting riots, practicing psychoanalysis, and - of course - engineering market panics. Economists knew even then that the economic chaos of Weimar Germany had little to do with market manipulation, and was basically the fault of a weak government that printed money to cover its deficit. But at the time the figure of the evil speculator was a powerful cultural icon; everybody believed that such men existed, and that they were the source of many of the world's ills.

Nor was this belief entirely unfounded. Financial markets in the late 19th and early 20th centuries were rife with dirty tricks: "corners", in which a group of investors bought up most of the available supply of a commodity, then drove up its price; "pools" that tried to drive stock prices up or down, in the hope that naive investors could be duped into buying high or selling low; and so on. Efforts to prevent market manipulation were a key component of Progressive Era legislation.

In modern times, however, the evil speculator's hold on the popular imagination has waned. Put it down partly to free-market ideology. Also, after 15 years in which stock prices have almost always gone up, those who play games in the market are more likely to be seen as creators of value than as disreputable exploiters. Anyway, today's financial markets are so vast that it seems hard to believe that any individual or group could have the power to manipulate asset prices - surely any attempt to drive those prices far away from fair value would be frustrated by other investors, who would rush in to seize the resulting profit opportunity. When the occasional accusation of financial conspiracy is heard - when, for example, Malaysia's Prime Minster blames his country's problems on the machinations of Jewish speculators - the reaction of most observers is skepticism, even ridicule.

But even the paranoid have people out to get them. Little by little, over the past few years, the figure of the evil speculator has reemerged. George Soros played a definite role - though probably not a decisive one - in the forced devaluation of Britain's pound sterling in 1992. In 1996, it was revealed that a Sumitomo executive had been rigging the whole world copper market, with considerable initial success. In both cases little harm was done: devaluing the pound turned out to be a pretty good idea, and Mr. Hamanaka overplayed his hand, losing rather than making billions. But the possibility of market manipulation had nonetheless reentered serious discussion.

And then came Hong Kong. Back in August, when the city-state's authorities began massive purchases to support share prices, many outsiders condemned it as an outrageous violation of free-market principles. But financial officials in Hong Kong claimed that they were fighting a deliberate conspiracy against the city's economy. As Finance Secretary Donald Tsang puts it in a widely circulated letter, "Regular patterns [of currency sales] suggested a co-ordinated manipulative play involving very large funds" (rumored to include Soros' Quantum Fund and Julian Robertson's Tiger Fund, among others) "accompanied by shorting of stocks and futures ... [t]hese plays were designed to create panic conditions for the shorting positions to be profitable. If left unchecked, such manipulative ploys would have resulted in panic selling in the stock market ..." In short, they were dealing with a cabal of speculators.

How did Dr. Mabuse manage to escape from the video vault? One answer is that deregulation and information technology have combined to make financial markets more "liquid", that is, made buying and selling easier, than ever before. As a consequence, aggressive speculators are able to leverage themselves - to take bets far larger than their capital. Long Term Capital Management - the hedge fund whose de facto failure rocked markets a few weeks ago - apparently leveraged a few billion dollars of its own money into more than a trillion dollars of assets. That's about four times as large as the value of the whole Hong Kong stock market. Suddenly the idea that a handful of big players could manipulate national financial markets doesn't look that implausible after all.

Another answer is that globalization has created loopholes in the rules. Tsang reports that "rumors began to circulate in the media about imminent devaluation of China's Renminbi and the de-linking of the Hong Kong dollar" - which is, despite the passive voice, clearly an accusation that the hedge funds involved deliberately spread those rumors in order to profit from their short positions. If someone sold stocks in a U.S. company short, then spread rumors about problems with its products and feuds among its managers, he would soon face criminal prosecution. But as far as anyone can tell, it is perfectly legal to sell a country short, then spread damaging rumors about its future policies - or if there is a law against it, it isn't enforceable.

Perhaps most important, when economies rather than mere companies are at stake, the comforting notion that it's hard for speculators to artificially depress the price of an asset, because other investors will rush in to take advantage of the bargain, becomes doubtful. The reason is that speculation against an economy can sometimes produce a crisis that justifies the market's low opinion. If Hong Kong's currency and political system remain stable, stocks in its companies will be worth a lot; but if a run on the currency causes that stability to wobble, they will be worth much less. So faced with a sufficiently large play against Hong Kong, those not part of the conspiracy may not rush in to buy cheap Hong Kong stocks; they may conclude that the play against the economy is on the verge of success, and sell all the faster. Or at least that's what Hong Kong's government feared; and given the way this global financial crisis has spread, who can say with confidence that they are wrong?

Of course, maybe it doesn't matter what Donald Tsang, or the public in general, think; maybe the free movement of international capital is too important to restrict, and occasional manipulation of their markets is simply part of the price small countries must pay. But my guess is that the days of the big international speculator are numbered. After all, the good guys always get Dr. Mabuse in the end.

(15) Hedge Fund Managers

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STOCKWHIZO-Daily Newsletter on Stock/Futures/Options

Market Analysis and Forecasting by Hiten Jhaveri


Becoming a successful investor takes education, patience, and at times, even a little bit of luck. On the other hand, investing other people's money is an entirely different ball game. Money managers require hardwork, intelligence and discipline to recognize opportunities other professionals may have missed. Well there is seldom even one Investing Legend of Indian markets to write about who have stood the test of time over the last couple of decades. We have had Investing Gurus like Harshad Mehta and Ketan Parekh for brief moments of months but they went bust overtrading their own investing philosophy. We can learn a lot from the Worldís greatest investors that we mention below, who have not just been legends in the United States, but innovators in their investing philosophy who stood the test of time.

Historically, the US market has returned a solid 12% per year on average. The 7 icons below all portray the pinnacle of financial world, dramatically exceeding market performance. They have all made fortunes off their success, but more importantly, so did the millions of people who empowered their savings by investing with them. In world of gloom and doom sentiments over the last 18 months for stock market investors and traders, it would be refreshing and enlightening to understand the trading strategies of the Worldís greatest investors who made billions in the stock market over decades of experience.

Warren Buffett

Born: Omaha, Nebraska in 1930 Employer: Berkshire Hathaway Chairman Most Famous For: A $10,000 investment into Berkshire Hathaway once Buffett took control of it in 1965 would be worth over $50 million today. In comparison $10,000 in the S&P 500 would have grown to only $500,000. Least Famous For: By many he is considered to be a real tightwad (or cheap). This is mainly because despite his $36 Billion net worth he has not been particularly charitable. Quoted Saying: "If past history was all there was to the game, the richest people would be librarians."

Background: Also know as "The Oracle of Omaha", many people consider him the greatest investor ever. Even with all the accolades, Mr. Buffett still lives in the house he bought for $31,500 over 40 years ago.

What's most intriguing about Buffett is that he is one of the few extremely rich people who has amassed wealth solely through investing in stocks. His investment strategy of discipline, patience, and value consistently outperforms the market and his moves are followed by thousands of investors worldwide.

He is also famous for not joining the infamous tech/internet stock rally in the late 1990's, stating that he refuses to invest in companies that he can't visualize 10 years down the road.

Great Buffet Quotes Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

Someone's sitting in the shade today because someone planted a tree a long time ago Wall Street in the only place that people ride to in a Rolls Royce to get advice from those who take the subway.

Risk comes from not knowing what you're doing.

John Templeton

Born: Winchester, Tennessee in 1912 Employer: Founder of the Templeton Group Most Famous For: Created some of the world's largest and most successful global investment funds using his independent investment strategy. Least Famous For:By today's standards, his funds have failed to provide the astounding gains his followers were used to, partly due to the recent Asian recession. Quoted Saying: "The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell."

Background: Mr. Templeton is a true pioneer of the global mutual-fund industry. He has led the charge for teaching investors to explore the globe for great investments. Investing overseas was virtually unheard of until investors caught on to Templeton's strategy. Today, the Templeton Group has combined assets of more than $25 billion.

Besides pioneering global investing, a great example of his independent investment strategy was in 1939. He was still young at the time, and as the outbreak of war darkened he bought every stock selling for under $1 per share on the major exchanges. Within four years he quadrupled his money.

Templeton is one of the strongest proponents of diversification. He once stated that "the only investors who shouldn't diversify are those who are right 100% of the time". Another great story about Templeton is a man by the name of Leroy Paslay, he was one of John's earliest investors who gave $65,500 to invest in 1954. In 40 years Pasly was worth over $37 million.

After making billions through his investment style he has now become one of the greatest philanthropists in the World. In 1987 he founded the $1/4 billion John Templeton Foundation.

Peter Lynch

Born :United States in 1944 Employer: Former Fidelity fund manager, today he is Vice Chairman of Fidelity Most Famous For: When he started managing the Fidelity Magellan Fund in 1978 it had assets of $20 million, when he retired in 1990 it had assets of $14 billion. Today it is over $50 billion! Least Famous For: Some people were awful upset when Mr. Lynch, one of the greatest, retired at the young age of 46. Quoted Saying: "Go for a business that any idiot can run - because sooner or later, any idiot probably is going to run it."

Background: Mr. Lynch is arguably the world's most famous mutual fund manager. He's often classified as a chameleon, adapting to whatever investment style worked at the time (growth vs. value). He was one of the first to uncover hidden gems such as Dunkin' Donuts, Pier 1 Imports, and Taco Bell. People began to criticize Lynch once his fund surpassed $1 billion in assets in the early 1980's, but the fund rose to $13 billion less than 7 years later. He admits to taking plenty of risks while managing the Magellan fund, but he has never suffered a losing year.

According to Valueline, "a $10,000 investment into Magellan in 1978 and then adding $100 per month, would add to over $1 million, in 20 years!" While at the helm, Lynch achieved an average annual return of 29% a year, unheard of even by today's standards for a mutual fund.

Julian Robertson

Born: Salisbury, NC in 1933 Employer: Founder/Chairman, Tiger Management Corp. Most Famous For: A titan of hedge fund investing, his funds today require a minimum investment of $5 million investment per person. He has turned $8 million in 1980 into over $8 billion in the late 1990's. Least Famous For:Remembered for a $200 million loss in 1996 as a "bet" on US Treasuries went wrong. Quoted Saying: "...our mandate is to find the 200 best companies in the world and invest in them, and find the 200 worst companies in the world and go short on them. If the 200 best don't do better than the 200 worst, you probably should get in another business."

Background: At his peak, no one could beat him for sheer stock-picking acumen. Robertson was the "Wizard of Wall Street" and was paid well for it. In 1993, his compensation and share of Tiger's mammoth gain reportedly exceeded $300 million. His estimated net worth currently is over $400 million.

Robertson had the best record for a hedge fund throughout the 1980's and early 90's. The compound rate of return to his investors was 32%.

On a sad note, Robertson suffered large losses in the late 1990's because of the "irrational" technology stock craze, this ultimately led to closing his investment company and liquidation of its $6 billion in investments which had once reached a high of $26 billion.

Michael Steinhardt

Born: 1941 Employer: Founder, Steinhardt Partners Most Famous For: $1 invested with Steinhardt when he founded his firm in 1967, would be worth $462 today. Least Famous For: Steinhardt didn't exactly end in style, he retired his illustrious hedge-fund career in 1995, a year after suffering big losses. Quoted Saying: "In the 1950s and 1960s, the heroes were the long-term investors; today the heroes are the wise guys."

Background: Similar to George Soros, Steinhardt made most of his fortune managing a hedge fund. Hedge funds tend to be much more risky, especially because they are usually limited to about 100 investors with minimum stakes of $1 million. This is unlike a mutual fund which accepts any investor, large or small. Hedge fund is synonymous with higher forms of risk, Steinhardt once stated "...our fund's risk factor can, at least in theory, vary from plus 200% to minus 200%". Steinhardt's fund produced an average annual return of 24%, netting him a personal fortune reportedly worth over $500 million.

Lately, Steinhardt has become a prominent philanthropist, giving away millions of dollars each year to various charities. He is also founder of the Jewish Life Network, which sponsors a number of major new Jewish outreach initiatives and organizations.

George Soros

Born: Budapest in 1930 Employer: Founder of Soros Fund Management Most Famous For: A well respected currency speculator, he once shorted the British Pound for a one day gain in excess of $1 billion. Least Famous For: Although not totally responsible, Soros' comments on the Russian economy contributed to their stocks plunging 12% in the first hour of trading. Five days later the currency had devalued 25%. Quoted Saying: "Its not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."

Background: Known as a hedge fund guru, his expertise is mainly in currency speculation. He is principal investment advisor for the Quantum Fund which is recognized as having the best performance record of any investment fund in the world over its 26 year history. If you invested $100,000 in 1969 when Soros established the Quantum Fund, and reinvested all dividends, your investment would of been worth over $150 million by the Spring of 1994. At one point analysts estimated Mr. Soros was earning over $4000 a minute.

John Bogle

Born: Montclair, New Jersey in 1929 Employer: Founder and Chairman of The Vanguard Group Most Famous For: Often referred to as the father of index fund investing, creator of the first S&P 500 index fund. Least Famous For: Admits that mutual funds "haven't been up front with investors - top fund performance has always been followed by mediocre returns". Quoted Saying: "If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks."

Background: Bogle is considered to be a pioneer in the mutual fund industry. He introduced the first S&P 500 Index fund ever - The Vanguard 500 Index which debuted in 1976. On countless occasions he has stated that investors shouldn't be so worried about trying to beat the markets, but rather should join the markets. His index funds were characterized as low-cost and low maintenance and have allowed several millions of investors to participate in the greatest bull market ever.

He avoids "today's emphasis on witchcraft and mystery" in investing, and supports a "back to basics" strategy. In his mind, these are the investment principles which have proven to be successful for over 75 years.

(16) Hedge Fund Jewish Values

Michael Steinhardt:

"although he is an atheist, he hopes to infuse American society with secular Jewish values."

"The Jewish generation I'm part of was at the confluence of two great rivers: East European Jewish religious traditions and the openness of secular America."

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Monday, Oct. 23, 1995,9171,983600,00.html

WHEN IT COMES TO LEISURE, Michael Steinhardt speaks a language all his own. In 1978 he was determined to escape the stress of his hedge-fund management job and took a year's sabbatical from Wall Street. However, he used that time to start a real-estate and construction business in Israel. Steinhardt's notion of a vacation, he admits, is "screaming into an antiquated telephone, trying to find out what's going on." Time off hasn't always been fruitful. In 1994, after a rare three-week vacation in China, Steinhardt returned to New York to find that his investment funds had lost 4% of their value while he was gone. He lost his legendary temper, then sat down and did what he has always done: work.

So investors were stunned last week when Steinhardt, 54, announced that he was winding down the four high-performing hedge funds he has guided almost flawlessly for 28 years. Wall Street struggled to imagine what his definition of retirement might be. Not one to disappoint, the financial whiz explained that although he is an atheist, he hopes to infuse American society with secular Jewish values.

That kind of counterintuition has served Steinhardt well over the years. His funds produced an average annual return of 24%, netting him a personal fortune of $400 million and providing his investors, whose assets total $2.6 billion, with huge profits. Unlike mutual funds, which handle investments of varying sizes from an unlimited number of clients, hedge funds are private limited partnerships of no more than 99 investors, usually with a minimum stake of $1 million. As such, they are not subject to the same regulations imposed on mutual funds by the Securities and Exchange Commission. By selling short securities whose prices they expect to fall and taking highly leveraged positions, hedge-fund managers can take bigger risks and, they hope, reap bigger rewards.

Few have performed as consistently as Steinhardt, a jeweler's son from Brooklyn whose first shares of stock were a bar mitzvah present from his father. He broke into Wall Street as a research analyst but, by the age of 26, had started his own firm and kicked off his winning streak. One dollar invested with Steinhardt in 1967, the year he founded his firm, would be worth $462 today. That compares with a $17 value today for a dollar invested the same year in the stocks listed in the Standard & Poor's 500. Richard Cooper, an investor who entrusted $500,000 to Steinhardt 28 years ago, has seen his investment bloom to $100 million. Says Cooper: "Thanks to him, I never had a sleepless night. I knew Steinhardt was always there, standing guard. Every investor loves him."

Well, almost every investor. Last year Steinhardt hit a speed bump, as did most other big hedge funds like George Soros' Quantum Group and Julian Robertson's Tiger Management. Neither however, suffered as badly as Steinhardt's funds, which lost 29% of their value during 1994, owing largely to the plummeting price of European bonds, in which Steinhardt had invested heavily. Says he: "I made a vast amount of money in 1993 on the same bet. Nevertheless, the pain in 1994 was far greater than the pleasure of 1993."

This year Steinhardt is back on form, with returns around 20%. In Steinhardt's lexicon, therefore, now is the time to get out, make sure his investors get their principal and profits and pursue his new dream. He says, "The Jewish generation I'm part of was at the confluence of two great rivers: East European Jewish religious traditions and the openness of secular America. That led to an extraordinary explosion of achievement. Just look at the number of Nobel Prizes, academics, writers, successful businessmen it produced. Not only that, this generation gives more philanthropically than any other group. And it has allowed itself to get kicked in the pants by the very minorities it feels so strongly about helping. But the present generation doesn't have the same commitment to Judaism and Jewish values." Steinhardt's idea is to create a nondenominational school to transmit those values.

Even if his latest endeavor does not pan out, Steinhardt will never be short of interests. He is a major contributor to the Democratic Leadership Council, which seeks a third road for American politics outside established political parties. Once an enthusiastic backer of Bill Clinton, Steinhardt now says, "I have my problems with our President. He doesn't believe in very much. His promise has been a failed promise."

Steinhardt's other pet project is, well, pets. The menagerie at his 54-acre estate north of New York City includes rheas, ostrich-like flightless South American birds; capybaras, the world's largest rodents; and even such mundane creatures as longhorn cattle. Competing for the time he spends with his wife Julie and their three children is Martha, a blue crane that has taken a romantic shine to her owner. Says Steinhardt: "She follows me around the grounds. Sometimes we dance: she jumps up and down, and I flap my arms. We've developed a close relationship." Retirement, in Steinhardt's way of looking at the world, is for the birds--and still a lot of fun.

--With reporting by Sribala Subramanian/New York


(17) Civilisation X - By Israel Shamir

(A talk given at "The Dialogue of Civilizations: the Contradictions of the Globalization" International Conference on May 23, 2003, in Kyiv, Ukraine. At the conference, Shamir was elected a member of the Ukrainian State Administration Academy)

The organisers of the conference could not find a better place to discuss its topic, for Ukraine is the borderlands between Civilizations; the ground where these ultimate personae of human history check their valour and vitality by prayer and sword. Founded by Vikings, peopled by Slavs, baptised by Byzantines, decorated by poplar and scented by lilac, Kyiv is the tolerant city of Igor's Lay, the old epic poem of a battle waging between the Orthodox Christian Slavs and the Turkic horsemen. Its hero Prince Igor, a Roland of Eastern Europe, marries a daughter of a Turkic chieftain, for there is no reason for deadly enmity between cultures. Rudyard Kipling expressed it in the last less frequently quoted line: there is no East neither West when Men meet (please check quote!).

Though your thyme-perfumed steppes interspaced with chestnut groves served as the preferred battlefield of Germans, Turks and Slavs, paradoxically, the border skirmishes of Janissaries, Cossacks and Hussars, the let-go of excessive masculine energy, prove the civilizations have no reason for conflict. Orthodox Christians, Roman Catholics and Muslims have their own habitat and they do not stray out of it, while the warriors deeply respect their adversaries and display their chivalry between the wars.

It is a trite observation, and that is why the concept of Clash of Civilisations was shunned in political discourse since the Crusades. The confrontations were perceived as ideological ones, be it the Cold War of Communism and Capitalism, or colonial wars of Imperialism and Liberation. American political scientists revived the Neo-Darwinist and racist concept of Clash of Civilisations for practical reasons: to explain and encourage the war of America against the World. Its enemies are presented in 'civilisational' terms: 'Old' (read: independent) Europe, Dar al-Islam, China. If these are the enemies, who are the friends? What is 'our' civilisation of Huntington and Strauss, Perle and Wurmser, Feith and Rice? Whatever it is, this Civilisation X is equally rejected by people of Eastern and Western Europe, French and Ukrainian, Germans and Greeks, Chinese and Zulu.

Let us consider the qualities of this Civilisation X:

- It is exterritorial, knows no borders and able to attack and devour from Iraq to China, from Russia to Nicaragua. It has no natural habitat and able of endless expansion. Wherever there is a man to enslave, a house to bomb, a tree to fell, it is ready to come.

- Its main occupation is usury. They provide loans to states, ensnare them with impossible conditions and ruin them.

- It considers human solidarity and brotherhood - 'totalitarianism'.

- It rejects Spirit and considers it 'fanaticism and fundamentalism'.

- It equally abhors Apostolic Christianity and Islam; but it loves to set the Christians upon the Muslims, and vice versa.

- Its devotion is given to the Jewish State. Not only the JINSA Cabal is ethnically faithful to Israel; the US National Security Adviser Condoleezza Rice said that the security of Israel is the key to security of the world. Rice added that she feels a deep affinity with Israel.

- It is heavily engaged in drugs. Wherever they win, heroin has its field day. London's The Independent newspaper, reported from Baghdad: The city, which had never seen heroin, is now flooded with narcotics. It is not unusual that where the Americans go, the narcotics flourish. Taliban had successfully eliminated the drugs from Afghanistan but since the US forces took over the control, Afghanistan has become the largest producer of heroin. Some reports suggest that the drug and arms trafficking is patronized by the CIA to finance its covert operations worldwide.

- It exalts vengeance. The war against Afghanistan was promoted as 'vengeance for 9/11'.

- It has soul of dastardly knave, in its narrow meaning of 'opposite to noble'. They did not dare to attack Iraq until it was fully disarmed by the UN.

- It produces no art. In vain archaeologists of Fourth Millennium will search for their Venus. The rusty American Venus a.k.a opus 5327 exhibited in the Guggenheim is identical to any heap of scrap metal. There are no glorious temples, no exciting architecture, absolutely nothing to miss if the gods would pour sulphur and brimstone on its cities.

- It is obsessed with paranoid fear. It is not enough that America spends on weapons ten times more money than the rest of the world. They want to disarm everybody. The war in Iraq was caused by desire to remove its weapons. Now they want to disarm Iran, Syria, Korea, and Ukraine and Russia just wait for its turn.

- Fear of weapons is not aimed exclusively outside: the proponents of Civilisation X try their best to disarm the American people as well. For this reason they committed the mass murder at Waco and implicated militias in Oklahoma bombing.

- It despises labour and labourers. American cinema, the only existing quasi-art output of Civilisation X, depicts millionaires and whores, gamblers and brokers, bums and gangsters, but its last worker was depicted in the pre-war Grapes of Wrath.

- It loves the rich. They believe the rich are virtuous, for they are blessed with wealth, while the poor are evil and damned just because they are poor.

The psychological portrait should be recognisable for the Ukrainians. Yes, the Civilisation X presently at war with the rest of the world, is this eminently familiar and contemptible figure, a medieval Ukrainian Jew, a usurer, tax collector and alcohol pusher magnified by a factor of million. Its size impeded our recognition, for it is not easy to recognise an elephant-size louse.

Centuries ago, this figure ruled your steppes. After expulsion from France and Spain, the immigrant Jews settled in the Ukraine, suborned the timid native Jews and in short time strategically placed themselves between Polish landlords and Ukrainian peasants. They had lent money to landlords and peasants, pushed alcohol, managed the feudal estates, and eventually became the ultimate source of power. The Jews fought the Church, for the Church objected to their liberal trade in alcohol and usury. Until nowadays, the Jewish word kabala (receipt) is used in the Ukrainian language for 'debt enslavement'.[1]

The Civilisation X pushes heroin instead of vodka, loans out billions instead of two roubles, sucks out the wealth of nations instead of meagre livelihood of a peasant, fears nuclear weapons rather than moujik's axe, but it is the same complex of ideas and methods. In short, Civilisation X is a dangerous and aggressive mutation of Jewish spirit grafted on the Anglo-American basis. Huntington was right - up to a point. The Conflict of Civilisations is unavoidable, but it is not a conflict of Christendom and Islam, but the conflict of Christians and Muslims versus Neo-Jews.


What a strange and dreadful thought, one would say. However, this thought is shared by many Jews, for instance, by a prominent Jewish thinker, ex-Rabbi of Oxford, author of a few books, a TV personality, Rabbi Shmuel Boteach, incidentally, a leader of Khabbad, the most racist and xenophobic Jewish movement. He notices and blesses similarity, almost identity of the traditional Jewish attitude and the ruling US paradigm. I do agree with him in his diagnosis, though our conclusions are diametrically opposed. Rabbi Boteach proclaims in The Jerusalem Post [2]: "America and the Jews are teaming up take over the world. But it is a conquest of ideas rather than armies, and you can be sure that when they give it back, it will be in much better shape than when they took it."

It is a conquest of ideas, but they are backed up by Tomahawks. These ideas will improve the world, like the character of the Jewish joke 'translated and improved' Shakespeare. As for 'give it back', tell it to Palestinians.

The ideas are the worst part of Jewish heritage, for these ideas were already tried in the Ukraine and now they are tried in Palestine. These ideas force many young Palestinians ('suicide bombers') to commit suicide rather than to live under the unbearable Jewish rule. These old Jewish ideas were modernized by Leo Strauss, the brain behind the JINSA cabal. Pfaff[3] sums them up in a one-liner 'The ostensibly hidden truth is that expediency works; there is no certain God to punish wrongdoing', or in even shorter form, their power is based on the secret knowledge that there is no God[4].

It is not a new observation. The Prophets complained about the Jews who act as if there is no God to punish wrongdoing or apportion grace. Since God through Christ has opened his Covenant to the Gentiles, those from the Jews who do not consider themselves to be in one beloved Israel of God with righteous Christians from all other nations do not belong to Israel either and do not participate in the Covenant of God[5]. In plain words, by rejecting Gentiles, the Jews rebelled against God.

Now these rebels command the nuclear arsenal of the US. Pfaff names leading disciples of Strauss: Deputy Defense Secretary Paul Wolfowitz; Abram Shulsky of the Pentagon's Office of Special Plans, Richard Perle of the Pentagon advisory board, Elliott Abrams of the National Security Council. These men have now enough bombs to erase the mankind, or, to achieve the ultimate goal of Strauss, ensuring Jewish group dominance in the modern world[6]. This frightening thought provides also a glimpse of hope, for 95% of American people do not belong to the Neo-Jewish community. Instead of fighting Muslims and supporting the Neo-Jews in the style they are accustomed to, the Americans can borrow a leaf from the Ukrainian book.

For the Jewish dominance in Ukraine was undone in 1648, when the Christian Ukrainians and the Muslim Tartars led by a Polish noble Bohdan Chmielnicki and supported by Russian troops united in a ferocious Intifada and freed the Ukraine. (For centuries, the Ukrainians were libelled as mass murderers of the innocent Jews, until the modern British Jewish researcher Jonathan Israel[7] proved there was no massacre; though Jews suffered as much as everybody else in the ensuing civil war.)

The defeat of the Jewish ideas in 1648 was good for everybody, and good for Jews, as well. Jews lost their arrogance and gained some respect to their neighbours. They lost their exalted position and became better human beings. Thousands of Jews, followers of Jacob Frank, were received in the Church and became ordinary Ukrainians or Poles. Others followed Besht into new Hassidic movement which internalised many Christian concepts.

Yesterday I visited Uman, a charming old town with its famous 18th century landscaped park of Count Potocki, one of the world wonders, where young Ukrainian belles in dangerously brief miniskirts stroll under the white pyramidal candles of chestnut blossom. There I attended the tomb of Rabbi Nachman, for this Jewish philosopher-saint and contemporary of Napoleon was venerated by my ancestors, and he is still revered by thousands of Jews everywhere. He was much influenced by the Ukrainian folk ways and dreamed to unite his people with the Ukrainians in one Church. He felt affinity to the soul of Jesus and repeated His words 'I came to fulfil the Law' while ostensibly transgressing it. He made a pilgrimage to the Holy Land but chose to return to his native Ukraine. His mystic teaching is the best proof of blessed influence the Ukrainian Orthodox had on the rebellious Jewish soul. Thus the old withered oak of Jewish spirit blossomed again in the Ukraine after the victorious Intifada.

Likewise, the strategic mega-usurer from New York and his partner the butcher from Tel Aviv will be defeated in the new world-wide Intifada, and that will be the end of the Clash of Civilisations. ----

[1] Good collection of data on Jews in Ukraine is available in chapter 7, A Closer Look At Poland And Eastern Europe, in the [2] Mar. 19, 2003 The secret conspiracy to conquer the world, By Shmuely Boteach [3] The long reach of Leo Strauss William Pfaff IHT Thursday, May 15, 2003 Neoconservatives [4] The Divine Wind, by Israel Shamir [5] The Russian Orthodox Church teaching on the Jews. [6] Kevin MacDonald, Culture of Critique [7] J.Israel, European Jewry in the age of mercantilism, Oxford 1985


It is astonishing how many of the key players in the Asia Crisis were Jewish: Soros, Albright, Krugman. At the time, Robert Rubin was U.S. Treasurer, and Wolfensohn was head of the World Bank. If the speculators represent the worst of things Jewish, Shamir represents the best.

Huntington's Clash of Civilizations: huntington.html.

(18) The World Economy since 1997 Asian Economic Crisis

Protocols Research Institute UPDATE: Tuesday, January 25, 2000

In 1997, The Jewish Financial Mafia headed by people such as George Soros, Alan Greenspan, Goldman Sachs, and several other Jewish Financial institutions launched an assault on Asia. The Asian countries which had borrowed heavily from Jewish banks in US and Europe, to expand their economies, and to serve the endless appetites of American Consumers, were vulnerable and the Jews knew it.

These Jewish bankers started a massive speculation against the currencies of Indonesia, Korea, Philippines, Malaysia, Thailand and host of other countries. Selling short their currencies and thus creating a demand for dollars. Since the Asians had borrowed in dollars and their assets were in their local currencies, which had in some cases devalued by 90%, were now facing bankruptcy. The other Jews, the Industrialists, swooped in on the undervalued businesses, banks and industries and started buying them up at the devalued rates, as a result large segments of the Asian economy was transferred in the hands of Jews overnight.

To the Jew it mattered not how many people were out of jobs and out of shelter and homes, or how many children and elderly will die starving or through political chaos.

It is estimated that in Indonesia alone, thousands of people were killed, and throughout Asia, millions are now jobless, and starving to death. Infant mortality has increased, and disease are rife in both urban and rural areas. Then came the robbery of Russia. Boris Berzovsky and several other Jewish tycoons, who control Russia, stole billions of dollars out Russia and then speculated against the Rouble, deflating it's value by 90% against the US dollar.

Russia was on the brink of collapse, but the Jewish Mafia from the World Bank and IMF, headed by Wolfensohn and Stanley Fischer advanced Russia loans of billions of dollars. Hardly had the money reached Russian central bank when Boris Berzovsky's gang siphoned off the entire loan amount of 4 billion dollars. Large amounts of it were laundered through the Bank of New York (owned by Jews) and through Israeli banks, which beyond control. Back in the 1980s when Bank of Credit and Commerce which was suspected of laundering money, it was immediately shut down, because it was owned by Pakistani and Arab interests, but no such treatment was meted out to Bank of New York!

Since the Asian and Russian crisis, the Jewish interests have let loose a massive speculative binge on the American and European stock markets, turning them into controlled gambling dens, and manipulating the markets through insider dealing, and through their buddy, Alan Greenspan's Federal Reserve Bank. Jewish startup Internet and e-commerce companies, such as AOL, Amazon, Qualcomm etc. who have not shown a dime of profit to date, have been given hundreds of billions of dollars of ordinary American investors money through the funds in which the ordinary people invest, as a result the share values which should be zero have rocketed up several thousand fold.

... the greatest robbery of world's wealth has taken place in less than 3 years through stock market manipulation. The result is that an average American today is massively in debt, a few years ago the national saving was about 2%, today it is negative. No doubt that a research found that 55% of American adults are mentally unstable.

European society is well on it's way to following in the footsteps of the Americans. The European central bank, and the European governments are encouraging speculation and gambling, and within a few years Europeans will also be in total debt to the Jew, vulnerable to his diktat. This in true nature is real terrorism against the world!


(19) Suharto, too, was a victim of regime change, by Steve Hanke

Long before Iraq, Paul Wolfowitz's neo-conservative idea was successfully applied in the Philippines and Indonesia, claims Steve Hanke

The Australian

April 29, 2003

MOST people think the overthrow of Saddam Hussein resulted from the US Government's embrace of a new policy. This particular policy may be new, but the regime change idea and its use are not.

US Deputy Defence Secretary Paul Wolfowitz and a small group of likeminded neo-conservatives developed the regime change idea some time ago and have been promoting it since. The Iraqi dictator was not the first to fall in the crosshairs of that policy. When the US government concluded that Philippines president Fernand Marcos was illegitimate, he had to go. Consequently, Washington assisted in his removal from power in 1986. The point man who engineered the overthrow of Marcos was Wolfowitz, an assistant secretary of state at the time.

During Wolfowitz's tenure as the US ambassador to Indonesia from 1986 to 1989, he planted the regime change idea once again. This time president Suharto was in the crosshairs. He was deemed to be corrupt and undemocratic, and had to be overthrown. The US, with the help of the International Monetary Fund, eventually accomlished its goal in 1998, when Suharto was toppled in May that year.

As it turns out, I know something about the overthrow of Suharto. In late January 1998, I delivered a series of lectures in Turkey. One evening, I received an urgent message: an invitation from Suharto to visit him in Jakarta.

The Asian crisis of 1997 hit Indonesia hard. The IMF responded by prescribing its standard medicine and Indonesia floated the rupiah on July 2,1997. The results were castrophic. The value of the rupiah collapsed, inflation soared and economic chaos ensued. Suharto was aware that I had advised Bulgaria and Bosnia to establish currency boards in 1997. And as night follows day, currency chaos was halted in those countries immediately after they adopted fixed exchange rates coupled with the full backing of their domestic currencies with foreign reserves.

Suharto realised that the IMF's medicine was killing the patient and that a currency board might prevent a complete collapse. Following our first meeting in Jakarta, Suharto named me his special counsellor. Shortly thereafter, Suharto endorsed my proposed currency board for Indonesia. This sent the rupiah soaring. It appreciated by 28 per cent against the US dollar on the day the news was released. This did not suit the US government and the IMF.

Even though the currency board proposal gathered support from many Nobel laureates and other distinguished economists, it was subjected to a withering attack. Suharto was told in no uncertain terms by US president Bill Clinton and the IMF's managing director Michel Camdessus that he would have to drop the currency board idea or forgo $US43 billion in foreign assistance. Why did a currency board for Indonesia cause such a violent reaction? Nobel laureate Merton Miller, who understood the great game immediately, said that the US wanted to overthrow Suharto and that a currency board would spoil that plan.

MILLER said the US Treasury knew that a currency board would stabilise the rupiah and the Indonesian economy and, as a result, Suharto would stay in power. Consequently, the US government used all means available - including the IMF - to oppose the idea.

Australia's former prime minister Paul Keating arrived at a similar conclusion: "The [US] Treasury quite deliberately used the economic collapse as a means of bringina the ouster of president Suharto." Former US secretary of state Lawrence Eagleburger embraced a similar diagnosis: "We [the US government] were fairly clever in that we supported the IMF as it overthrew [Suharto]. Whether that was a wise way to proceed is another question. I'm not saying Mr Suharto should have stayed but I kind of wish he had left on terms other than because the IMF pushed him out."

Even Camdessus could not find fault with these assessments. On the occasion of his retirement, he proudly proclaimed: "We created the conditions that obliged President Suharto to leave his job."

The neo-conservative regime change idea and its use are not new. The only thing that distinguished its application in Iraq was the use of extensive military force.

Steve Hanke, a senior economics adviser to president Ronald Reagan, is a professor of applied economics at Johns Hopkins University in Baltimore.

(20) The Reasons for the "Asia Crisis"

The speculators wanted to bring down the "Asia Model". At the time, South-East Asia was, to some extent, a "co-prosperity sphere" of Japan: mushakoji.html. So Japan was one target.

George Soros wrote, in his book The Alchemy of Finance, "Japan has been accumulating assets abroard, while the United States has been amassing debts. ... President Reagan ... pursued the illusion of military superiority at the cost of rendering our leading position in the world economy illusory; while Japan wanted to keep growing in the shadow of the United States as long as possible. ... Japan has, in fact, emerged as the banker to the world" (1987; New Preface 1994, John Wiley & Sons, New York), p. 350.

Usurping Soros' own role, perhaps? Soros continues,

" ... the prospect of Japan's emerging as the dominant financial power in the world is very disturbing, not only from the point of view of the United States but also from that of the entire Western civilization" (p. 353).

"The United States and Britain are members of the same culture. This is not true of Japan. ... The Japanese think in terms of subordination. Contrast this with the notion that all men are created equal ... Japan is a nation on the rise; we have become decadent" (p. 354).

ASEAN was another target. Its decision to admit Burma was seen as defiance of the US ... these speculators seem to imagine themselves champions of "human rights", a sort of Robin Hood. They objected to Burma's joining ASEAN, but not to Vietnam's joining.

Burma is important to them partly because it's a satellite of China. I believe that it gives China some access to the Indian Ocean.

Soros was heavily involved in the "Asia Crisis". The currencies of Indonesia and some other Asian countries had been pegged to the yen prior to the "Asia Crisis", suggesting a "yen block". As the US dollar fell, those currencies rose with the yen. Those who exonerate Soros say that the "Asia Crisis" was caused by those currencies rising too high. Yet, subsequently, the whole "Asia model" has been discredited, suggesting ideological motives. And the "yen block" appears to have been destroyed as well. In the Sydney Morning Herald of February 19, 1998, economist Max Walsh commented, "A little-noticed but significant feature of the Asian crisis has been the demise of the yen bloc."

(21) Asia's Mercantilism Today Is Blowback From 1997

by Marshall Auerback July 22, 2003

Global emerging markets equity strategist, Christopher Wood of CLSA, has recently published a highly though-provoking piece in the Asian Wall Street Journal, decrying Asia's refusal to abandon its export-led model and concomitant reluctance to abandon its extreme adherence to mercantilism. He argues that Asia's central banks "could stop slavishly buying dollars and let their currencies rise, which, given Asia's high savings rates, is what would happen if market forces were allowed to prevail. This would, in turn, boost Asian consumers' purchasing power helping to promote a more sustained domestic- demand cycle."

We find nothing with which to disagree in Wood's analysis. We concur that a move away from US-centric growth is absolutely essential if debt-laden American households are to rebuild their balance sheets and the country as a whole begins the process of alleviating extreme external imbalances. But however much we sympathise with the thrust of Wood's criticism, we believe that Asia's proclivity to buy dollars virtually on auto-pilot and thereby perpetuate the region's mounting current account surpluses can readily be understood as blowback to the American response to the region's grave economic crisis in 1997/98.

In essence, the old CIA term, "blowback", means that a nation reaps what it sows. During the 1997/98 Asian financial crisis, the triumphalist rhetoric of American leaders basking in their economy's "stellar performance" alarmed and deeply antagonised Asia. Instead of offering a helping hand to countries long viewed as steadfast Cold War allies, the US Treasury very visibly exploited the crisis by seeking to destroy Asia's model of "alliance capitalism". Critics such as former Treasury Secretaries Rubin and Summers, and Fed Chairman Alan Greenspan, virtually ignored the region's real sector economic variables - its sky high national savings, rapidly rising educational levels, low inflation, high productivity, balanced fiscal policies. Instead, these figures publicly denigrated Asia's substantial achievements, focussing almost exclusively on the region's financial instability, and its alleged "crony capitalism".

{Rubin, Summers and Greenspan being Jewish; was this a struggle between Jewish finance and Asian finance? Summers said in 2002:

"I am Jewish, identified but hardly devout. ... Indeed, I was struck during my years in the Clinton administration that the existence of an economic leadership team with people like Robert Rubin, Alan Greenspan, Charlene Barshefsky and many others that was very heavily Jewish passed without comment or notice ... "}

The United States, relieved of the constraints imposed on it by the Cold War, launched a campaign in 1997 to force Asia to adopt its form of capitalism. It did so under the rubric of "globalisation".

But in a sense, the problem goes back further. The export model to which Asia became wedded was in fact long tacitly encouraged by successive American administrations as the quid pro quo for remaining under the US security umbrella during the Cold War. The non-Communist countries of Asia worked hard at export led growth, primarily to the American market. They effectively ceded national security concerns to the United States, enabling the latter to assume responsibility for maintaining some ill-defined favourable military environment in the region as a counterpart to the Soviet Union's sphere of influence in Eastern Europe. After 40 years, the leaders of each of these countries assumed that the American consumer market would be a perpetual feature of the international environment; and so long as the Cold War existed, this was true.

Post the Cold War, this began to change. These countries became viewed less as loyal Cold War allies, more in the nature of dangerous strategic competitors hollowing out America's industrial base. From the early 1990s, the US led a campaign not just to open up the world for more free trade, but equally significant (and less economically justifiable), ensuring the freest possible flow of capital across national borders. That meant a comprehensive attack on capital account restrictions in countries such as Korea or Taiwan, whose capital markets were insufficiently robust to deal with the weight of unconstrained global capital that came to bear on them.

As far as the liberalisation of capital accounts goes, it is now widely appreciated that exposure to excessively mobile global capital flows exacerbated and perpetuated the crisis. Jan Kregel of the Jerome Levy Institute, using Hy Minsky's framework for understanding financial instability, has written several papers explaining the Asian crisis along these lines. He notes:

"The withdrawal of commercial bank lending, plus current account financing and the sale of portfolio equity total US$58.9 billion, over two-thirds of the accumulation of reserves over the period 1990-96 of US$76.2 billion. In one year (in fact, since the outflows only started in earnest in July, the relevant period is closer to six months), the region was called upon to reimburse lending and make current payments equal to the accumulated reserves of the previous seven years. This is equivalent to a massive 'bank run' on the region, without any lender of last resort. Just as no bank can ever repay all its deposits at sight, no country which is open to international capital flows can repay virtually all of its short term borrowing instantaneously without a collapse in the exchange rate and substantial disruption of the real economy. It is for this reason that the basic problem in the region was not mistaken domestic policy, or fundamental disequilibrium, nor even lack of transparency in the banking sector, although there is no question that weakness in the banking sectors of many of the countries aggravated the crisis, but was primarily caused by the reversal of the excessively rapid rise in capital inflows and the fall in global demand."

Although the global capital flows that ultimately wreaked much havoc on Asia was not a direct product of US Treasury policy, the government's response post the trauma is what is seared on the minds of most Asians today. Those, such as Thailand and Korea, who had opened their economies up to unrestricted capital flows, were the most seriously devastated. They did so without understanding the need to regulate the exposure of their own banks, particularly in this area of exotic derivatives described by Kregel.

At Vancouver in November 1997, with the Asian financial crisis now well under way, Washington pushed for the rapid removal of tariffs and non-tariff barriers to trade in fifteen different sectors of economic activity. The IMF and US Treasury policy imposed severe conditionality (high real interest rates, fiscal restriction, Western style restructuring in exchange for IMF loans) on the region, in a manner that would cause the recession to be exacerbated. By mid-1998, some countries had had enough.

For all of the apparent obeisance paid to "globalisation" and the American neo-liberal model, there were surprisingly few bankruptcies of major banks and industries, and few Western takeovers of large corporations in the region once the backlash began. This is a far cry from the expectations of the IMF, US Treasury, and western market participants a mere nine months after the IMF programs in the region had been concluded.

The reason for this surprising outcome lay in the reversion of the countries in the region to their special "alliance" brand of capitalism. Korea was a classic case in point. The Korean government initially appeared to be in compliance with the wishes of the IMF. Bankruptcies of small firms exploded in the early months of 1998. Though the Korean government desired lower domestic interest rates, higher rates were dictated by the Fund. However, by mid-year a large current account surplus had restored sufficient foreign exchange reserves, making Korea less dependent on the Fund and less subject to its conditionalities. The IMF's policies were having disastrous and unexpected economic consequences.

As these developments unfolded, Korea moved away decisively from IMF and US Treasury imposed policies. Bankruptcies peaked in March 1998. No major firms were allowed to go bankrupt after that point. The Korean government moved quickly to remove bad loans from the banking system, absorbing an estimated $70 billion to $150 billion of non-performing loans from the domestic banks. This assumption of bad loans left the Korean government in control of the banking system, which enabled the government to allocate bank credit in order to achieve the restructuring it (not the IMF) deemed necessary.

Under government sponsorship, the five largest chaebols agreed to get rid of more than half of their subsidiaries. Competitive operations owned by these conglomerates merged. In addition to the consolidation and rationalization of such facilities, the government acquiesced to the wishes of the chaebols in allowing the latter to reduce their respective workforces. In so doing, they sought to curb the militancy of the labour unions as a quid pro quo for securing the co-operation of Korea's major industrial conglomerates.

Thus came about one of the truly ironic by-products of the crisis. Rather than promoting moves to a neo-liberal market based system, the US Treasury's extreme heavy-handedness induced a reversion by the Koreans to the highly "dirigiste" policies reminiscent of the Park regime of the 1960's and 70's. Even today, western investors continue to hold Korea up as an "IMF success story", generally friendlier than it has ever been to western capital. But the changes are cosmetic. Foreign ownership limits have been increased on the stock exchange, but sales of major firms to foreign interests have been avoided. Following on from widespread public protests, Microsoft's attempted takeover of Korea's largest domestic software company was ultimately displaced by a local consortium of 8 companies. Contrary to widespread expectations by foreigners of a Ford takeover, Kia Motors was sold to a domestic auto company. The two large banks slated for sale to foreign interests were retained under local ownership. One can only assume that these sales have been discouraged, as they would have impeded the dirigiste restructuring of Korea Inc by the current government.

Similar responses abounded in the region: The populist Prime Minister, Thaksin Shinawatra, eventually formed a new party, Thai Rak Thai, which defeated the pro-IMF, so-called "reform administration" of previous PM Chuan Leekpai. In Kuala Lumpur, the perennially iconoclastic Malaysian Prime Minister, Mahathir Mohammad, introduced a form of capital controls, which gave his country the breathing space to reflate without creating additional damage to the currency. For this economic apostasy, then Vice President Al Gore openly denounced him and in effect encouraged the people of Malaysia to overthrow him. The November 1998 Asia-Pacific Economic Co-operation (APEC) meeting in Kuala Lumpur ultimately collapsed in acrimony with no less than Japan's traditionally supine Foreign Affairs Ministry railing that the United States was possessed by an "evil spirit", and accused it of further exacerbating the region's fragile economic condition.

Years later, a consensus of sorts has developed, suggesting that the restrictive demand management policies of the IMF/Treasury exacerbated the Asian economic crisis. In December 1998, the World Bank published a 200 page document which argued that the decision by the IMF and US Treasury to push Asian nations to send their interest rates soaring was a crucial blunder which worsened the world financial crisis. Although the Bank's account deliberately omitted any direct reference to the IMF or Treasury ("a conciliatory gesture to both institutions", according to Bank officials), the report made clear that the IMF and Clinton administration both shared responsibility for mishandling the initial response to the crisis. Even senior officials at the IMF conceded as much. Hubert Neiss, then director of the IMF for Asia and the Pacific, admitted that the Fund made a mistake in demanding that financially strapped Asian countries slash government spending: "Together with lower interest rates, it has also been proposed that fiscal policy should have been expansionary at the start of the Asia program. In hindsight, this proposal has some merit."

Collapses in domestic demand, coupled with vastly undervalued exchange rates, soon resulted in massive current account surpluses, sometimes equal to 10% of GDP, which in turn re-established official forex reserves and stabilized the region's external financing. Once this began to happen by mid-1998, the emerging Asian governments moved to lower domestic interest rates and expand fiscal deficits. Having bounced back with their savings largely intact, reserves growing substantially, and a degree of policy making autonomy restored, one can readily understand the Asian reluctance to move away from mercantilist inclinations today. These countries invariably associate current account surpluses with national autonomy. By virtue of its huge accumulation of US dollar reserves, the region is no longer at the mercy of speculative western capital. Rather, it is in the driver's seat in regard to establishing the external value of the US dollar exchange rate, and given that America's policy makers show no disinclination to curb the country's extraordinary profligacy, emerging Asia and China have understandably taken the easy route of continued reliance on the traditional export led model.

At some stage, the effects of this blowback will dissipate. At that stage, many of Asia's leading economies will follow Wood's advice, by curbing purchases of dollars, allowing their respective currencies to appreciate (as they did in real terms throughout the 1980s and early 1990s), thereby boosting Asian consumer's purchasing power and helping to promote a more sustained domestic-demand led cycle. Ironically, an economic relapse on the part of the US might be the catalyzing factor here insofar as it would force emerging Asia to break its unsustainable reliance on the US consumer and induce the region to look for alternative sources of growth. At that stage the current prevailing global macroeconomic imbalances would begin to diminish and a path to a more stable form of global economic growth could be achieved. But we are clearly not there yet. Most Asian leaders associate the sort of reorientation advocated by Wood as a path toward economic misery for their people with little discernible gains. America's misguided attacks on Asia during 1997/98 have led to an endemic crisis of blowback, which is simply storing up greater problems for the future. This is neither good for Asia, nor for the US in the long run, however understandable it is in today's context.


(22) Thailand Prime Minister repudiates Washington Neo-liberal Economics

Philip Bowring: Turning point for globalization Philip Bowring IHT Thursday, August 7, 2003

A signal from Thailand =105457.

HONG KONG The worm has turned. The early repayment by Thailand last week of $12 billion borrowed from the International Monetary Fund at the time of the Asian crisis was not just a technical one made possible by its now buoyant external financial conditions. It was a conscious rejection of the neoliberal doctrines known as the Washington consensus, whose influence reached their high-water mark following the Asian financial crisis. Those doctrines are themselves now suspect at home as the U.S. economy shows many of the signs that characterized pre-crisis Asia.

At the very least the Thai move is an indication that the era of Washington-led globalization is over and that new forces are at work that may lead to new interpretations of globalization, or rejection of its themes of ever freer trade in goods and capital.

Thailand's decision was accompanied by a burst of nationalist sentiment from Prime Minister Thaksin Shinwatra. Standing in front of a giant national flag and using words more in keeping with the demeanor of his Malaysian neighbor, Mahathir bin Mohamad, than of most Thai ministers, the former businessman declared that Thailand would "never again fall prey" to the forces of foreign capital or need to resort to IMF help.

The rhetoric now seems likely to be followed by the reversal of some crisis era measures forced on Thailand by the IMF, which opened up many industries to foreign capital. Changes in bankruptcy and property laws enabled foreign companies to buy local ones crippled by the currency and debt crisis. There will not be a wholesale retreat from liberalization. Thailand is too pragmatic and competitive to cut off its own nose to spite foreigners. Some liberalizations are now enshrined in World Trade Organization commitments - and a Thai heads the WTO.

But there will be change in domestic laws affecting ownership and corporate activity, as a newly confident Thailand basks in its recovery, and as Thaksin accommodates the interests of local business. The government is also, in effect, taking revenge on foreign banks by allowing some big Thai businessmen extraordinary leeway to keep control of their companies without repaying their debts. The banks and their foreign media friends cry "shame" but many Thais see it as justice, albeit it rough.

The Washington consensus imposed itself on Asia because capital that had fled from Asia to the West had to be returned through the intermediation of the Bretton Woods institutions and friends in the U.S. Treasury. It was as much a bailout for the lenders as the borrowers. The Asian recovery from crisis needed the markets of the West, the United States in particular. Naturally, local market access conditions were attached so Asian countries had further reason to accept Washington's advice.

But now the situation is being reversed. The United States is ever more reliant on injections of capital from Asia - roughly $1 billion a day at present - and China is emerging as a more important source of future trade growth. The U.S. market is still by far the largest market for Asia, but the trend is clear. Given its own trade and payments position, the United States is not in much of a position to impose policies.

Given the international role of the dollar, the Asian crisis will not be replicated in the United States. But America's domestic debt and external imbalances are castrating U.S. economic influence and placing huge question marks over the sustainability of 20 years of U.S.-led liberalization. Now the United States has to plead for other countries to revalue to cope with the results of its own domestic excesses.

Asian gloating now will be no more helpful than was Western gloating over the Asian crisis. But it is as well to acknowledge the global significance of Thaksin's flag-waving. It marks the end of the Washington-consensus era. Will it also usher in a reaction in the United States itself against an era of liberalization which has brought prosperity but, according to its critics, at a very high price in foreign debt?


(23) Indonesia terminates IMF "Rescue"

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Govt retains IMF monitoring

The Jakarta Post, Jakarta

July 30, 2003

The government decided on Monday not to renew the existing International Monetary Fund (IMF) economic bailout program when it expires at the end of this year, but the IMF is still to monitor the country's economic reform program via a post-program monitoring (PPM) arrangement.

Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti told an afternoon press conference the decision was made at a Cabinet meeting led by President Megawati Soekarnoputri, who would outline the government post-IMF economic policy program in mid-August.

The decision comes as no surprise to many financial analysts.

The People's Consultative Assembly (MPR) has urged the government not to extend the current IMF program; but determining an exit strategy has proven to be difficult and has involved lengthy, emotional public debates due to opposing views, even within the Cabinet.

While many of Megawati's economics advisors apparently wanted to keep the IMF's monitoring role to ensure credibility in the economic reform program, a strong opposition camp led by Chairman of the National Development Planning Agency (Bappenas) Kwik Kian Gie and former chief economic minister Rizal Ramli has insisted that even without the IMF's monitoring, the government could design a credible economic program.

The opposition camp, which claims that the IMF program had failed to cure the country's economic illness, said the country's relatively strong foreign exchange (Forex) reserve of US$34 billion should be more than enough to repay at once all debts to the IMF, which is estimated to reach around $10 billion by the end of this year.

Dorodjatun said the government had decided on a debt payment based on the original schedule, spread over a seven-year period starting this year. Proponents of this strategy argue that it is better for the country to install the repayment and maintain a relatively high Forex reserve in case it has to deal with another, unexpected economic turbulence.

As a consequence, until the country can bring down its IMF-debt to below the member quota level of $2.8 billion, it must adopt a PPM arrangement -- a move also made by other crisis-hit Asian countries when they first ended their IMF programs.

Dorodjatun said, however, that depending on the country's progress, the elected government in 2004 could accelerate the repayment of the IMF loan.

Under the PPM arrangement, the IMF would review the country's economic progress twice a year, while the government must spell out its economic targets and reform programs in a matrix of executed efforts.

The monitoring by the IMF and the disclosure of a detailed economic program are expected to give rise to investor confidence, which will be crucial to the government, as Indonesia will no longer be eligible for the Paris Club's debt rescheduling facility as a consequence of ending the IMF program.

The government has said it would issue bonds, both at home and overseas, sell assets and seek foreign loans to finance next year's fiscal gap.


(24) South Korea: The End of the Bilateral Economic Relationship, by Meredith Woo-Cumings

JPRI Working Paper No. 93, 7/03

It was at (but is no longer there)

After the Korean War, the United States sponsored the economic growth of South Korea, but this relationship is thought by many to have come to an end around the mid - 1980s, when South Korea began to record trade surpluses vis-à-vis the United States and trade conflict between the two countries became more frequent. In reality, however, this relationship of patronage continued up until the financial crisis of 1997, when the economic relationship that had prevailed in the days of the Cold War was completely turned on its head. In the moment of Korea's direst financial needs - caused, some would argue, by the very reckless policy of capital account liberalization spearheaded by the United States - the U.S. Treasury Department chose to turn its back on Korea and instead used the occasion of the crisis to settle the old, nettlesome trade accounts. This is a long and involved story, but the main point is that by the late 1990s Korea was of interest to American economic policy makers only to the extent that it provided markets for U.S. exports, which had become important as an engine of growth. The fact that Korea was an important strategic ally played very little role in the IMF decision to "bail-out" Korea. Quite the contrary, the desire of some American policy makers to use IMF conditionality to crack open the Korean financial and commodities market ended up in a huge mishandling of the initial "bail-out."

Similar to Japan's, the Korean system of industrial financing was largely based on the banking sector, which doled out loans to a hugely leveraged corporate sector. As a consequence the banks were saddled with loan portfolios that contained massive amounts of non-performing loans. So long as the economy was growing and corporations were able to service their debts, the perennial problem of non-performing loans could be papered over. In a global downturn, however, an economy as exposed as South Korea's was likely to have trouble with the huge fixed costs of interest payments, and predictably, South Korea would slip periodically into severe financial crisis.

The saving grace was that South Korea was blessed with an economic guarantor of last resort, the United States, with which it had a special relationship based on military security. One of the great cushions of the Korean economy was the Cold War, since any serious economic crisis would also raise security concerns, or even transform economic crises into crises of security. The United States always stood ready to help out in the event of trouble, even as it slapped the Korean wrist now and then for maintaining market barriers and not liberalizing enough. So, at any time before 1989, Seoul could expect Washington and Tokyo to step in and help it out bilaterally, with the best example being the crisis of 1979-1980, which was probably the worst financial crisis in recent South Korean history.

During the economic debacle of 1979-1980, the United States acted swiftly to stabilize Korea, sending signals to the international financial community that - notwithstanding the assassination of Park Chung Hee and the Kwangju rebellion - Korea was a sound investment for more loans. The United States also exerted pressure on Japan to "share burdens" in bailing out Korea, and the ensuing Reagan-Suzuki agreement stipulated in effect that the maintenance of peace on the Korean peninsula was important for the security of Japan, which meant that Japan would have to ante up. After much negotiating over the final bill, Japan extended to South Korea about $4 billion in government and EXIM bank loans, amounting to nearly 13 percent of Korea's net external debt, more than five percent of its GNP, and almost a fifth of 1983's total investments. (A comparable figure today - i.e., five percent of GNP - would be approximately $25 billion.)

By contrast, in November of 1997, when the South Korean Minister of Finance asked Washington for bilateral help, the refusal was swift and decisive. The Korean political economy had become a kind of leftover Cold War artifact, good for an era of security threats and close bilateral relations with Washington, but of questionable use in the global "world without borders" of the 1990s, and Washington's refusal to help out South Korea on grounds of international security finally laid to rest the long economic relationship between the two countries.

To be sure, there was a big debate within the U.S. administration over what to do about the impending default of South Korea. National security and foreign policy heavyweights pleaded with the Treasury Department that South Korea needed to be bailed out, using bilateral means, and that the United States could not simply walk away from Seoul at such an hour of need. Paul Blustein, whose The Chastening: Inside the Crisis that Rocked the Global Financial System and Humbled the IMF (New York: Public Affairs, 2001) is a fine account of the Asian crisis, writes that James Steinberg, the deputy national security advisor, argued that "By failing to show strong support for Korea, the United States risked stirring an anti-American backlash in Seoul that could lead to pressure for the removal of U.S. troops." Sandy Berger, the National Security Advisor, wondered if North Korea might cause mischief if the South Korean economy collapsed, and Madeleine Albright, the Secretary of State, was most emphatic in favor of bailout, even in the face of derision by Treasury officials who thought she knew little about economics (Blustein, pp. 137 - 38). In the end, the members of the foreign policy and national security establishment lost the argument.

There were a number of reasons why the tried-and-true national security argument did not gain traction in Washington. One was intellectual: the argument that South Korea was too important to be allowed to default was one that Treasury Secretary Robert Rubin hated because, as the Assistant Secretary Tim Geithner explained to Blustein, "you can't let some perceived imperative of action dictate your choices, and you may not have alternatives that are a plausible response to the problem." There were other, deeper reasons. Rubin, Lawrence Summers and their lieutenants saw the crisis as the perfect opportunity to break up Korea Inc. once and for all, and to do this, they wanted the International Monetary Fund to impose conditions on South Korea that went far beyond the Fund's traditional boundaries. Thus the U.S. Treasury kept steady pressure on Fund officials to extract more and more concessions from South Korea, including instant resolution of all trade related issues in favor of the United States. The exasperated Koreans were soon accusing the IMF of always raising new issues at the behest of the United States - something that the Fund officials readily acknowledged.

Foremost in the minds of Treasury officials was also the interest of Wall Street, especially American financial services firms. Joseph Stiglitz has argued that the origins of the Korean financial crisis rested, in the first place, with the excessively rapid financial and capital market liberalization that the U.S. Treasury had pushed on Korea, on behalf of Wall Street, and over the protests of the Council of Economic Advisors, of which he was the chairman. "At the Council of Economic Advisors we weren't convinced that South Korean liberalization was a matter of U.S. national interest, though obviously it would help the special interests of Wall Street" (Globalization and Its Discontents, New York: W. W. Norton, 2002, p. 102, italics in the original).

The IMF conditions served the brokerage firms on Wall Street far better than the needs of South Korea. Americans demanded, and got, the right to establish bank subsidiaries and brokerage houses in the Korean market by mid-1998; the ceiling on foreign ownership of publicly traded companies was raised to 50 percent from 26 percent; and the ceiling on individual foreign ownership went up from 7 percent to 50 percent. From that point on, accounting in Korean corporations would adhere strictly to international standards, with large financial institutions required to submit to audits by internationally recognized firms. In addition, there was large scale financial sector restructuring, including a revision of the Bank of Korea Act, to provide for central bank independence, "with price stability as its main mandate." "Other Structural Measures," contained in the December 3, 1997, Letter of Intent with the IMF covered trade liberalization, including old sore points like transparency of import certification procedures, complete capital account liberalization, corporate governance and corporate structure, and labor market reform.

By signing the December 3 Letter of Intent, the South Koreans practically gave away the store. The trouble was that even the massive concessions did not save the day, and the South Korean economy slid deeper into trouble as the month wore on. Part of the problem was the American refusal to send a credible signal to the world that the U.S. was now firmly behind the deal that promised more than $55 billion to South Korea. The $55 billion package consisted of $35 billion to come from the IMF, World Bank, and the Asian Development Bank, and another $20 billion - a so-called "second line of defense" - to come from wealthy nations. But South Korea could avoid default only if it could obtain all the loans in the package, and the U.S. Treasury never intended to permit disbursal of the "second line of defense," lest it catch flak from Congress. The market could see that South Korea was running out of reserves, and the financial analysts, peering through the $55 billion hype, realized that there was no there, there. The rush for the exits began, and by December 12 the IMF and U.S. Treasury were contemplating the unthinkable - allowing Seoul to default.

In the end, the method chosen to rescue the failed rescue attempt was a "bail-in." Banks that had made big loans to South Korea were asked to reschedule these debts, or else allow South Korea to default on them Once this decision was made - and it took an inexcusably long time, with Rubin and Alan Greenspan holding out until the last minute - the bankers moved extraordinarily fast. South Korea was an ideal candidate for a bail-in. It had a sound economy, good macroeconomic fundamentals, a good payment record, and it owed almost all its money to banks, which are more easily organized in a collective action situation, and not to mutual funds holding bonds. Why, one might ask, as the bankers who rescheduled the Korean debts also did, had it taken Washington so long to accept the call for a bail-in? If Washington had asked American banks at the outset of the crisis to roll over Korean debts, the situation would never have gotten so out of control.

On the other hand, if the whole point of the exercise had been to teach South Korea a lesson, then the U.S. Treasury succeeded brilliantly. Koreans suffered through massive bankruptcies of big and small firms, and a recession that contracted national income by seven percent, bringing down wages for the average worker by ten percent and sending the jobless rate to nearly nine percent. But along the way, they also learned another kind of lesson. The Koreans learned in the hardest way possible that at the moment of their financial ruination, the United States had chosen to further its parochial self-interest, rather than helping an ally. The economic basis of the U.S.-South Korean alliance now stands on a very different footing than it did before.

Guarantees of Security Turn into Guarantees of Insecurity

The security calculus that under-girded the U.S.-Korean relationship was also dramatically altered during the past decade. The beginnings of this change may be dated to 1994, when the United States began bolstering its military presence in South Korea in preparation for a possible strike against the nuclear facilities in the North. The Clinton administration came within a hair's-breadth of a war in Korea without so much as consulting with its South Korean ally on an action that would have had devastating consequences for the nearly seventy million people on both sides of the DMZ. War was averted by the signing of the 1994 Agreed Framework, through which North Korea agreed to mothball its nuclear facilities for producing and reprocessing plutonium, in return for alternate forms of nuclear energy production and eventually, diplomatic recognition. But the agreement was in trouble from the start. Two weeks after the agreement was signed, Republicans gained control of the House of Representatives and almost immediately began raising questions about whether it was proper for the U.S. to have sat down and negotiated with North Koreans in the first place. When the Bush administration was inaugurated in January, 2000, it took the position that all bets were off, and that it would not negotiate with any state that it deemed to be terrorist. The way things looked from Seoul, it appeared that the security of Korea, and the fate of seventy million people on the Korean peninsula, had become hostage to the vagaries of changes in U.S. administrations, and the whims of U.S. Congressional politics.

The basic difference in the way the U.S. approaches the North Korean issue, and the way that South Korea - or, for that matter, Japan and China - approach it, is that the East Asian countries want the problem to be managed and the only way to do that is through negotiations. Washington, on the other hand, wants moral clarity. As George Bush put it in his 2002 West Point commencement speech, "Containment is not possible when unbalanced dictators with weapons of mass destruction can deliver those weapons on missiles or secretly provide them to terrorist allies . . . Because the war on terror will require resolve and patience, it will also require firm moral purpose . . . Moral truth is the same in every culture, in every time, and in every place." But obviously moral truth looks rather different when you are facing tens of thousands of artillery guns, and the South Koreans have tended to think that avoidance of war ought to take top priority, even if that meant purchasing peace outright with cash payments - as the Kim Dae Jung administration did by funneling hundreds of millions of dollars to North Korea.

The bellicosity of the rhetoric of moral clarity in turn has given rise to the widespread perception in Korea that the United States may well become the party that provokes a war there. Perhaps this perception, in turn, has contributed to the renewed focus by South Korean activists on the U.S. military bases. The military bases in South Korea are in any case a profoundly troubled place, more so even than such bases in Okinawa or Germany. South Korea is a "non-command-sponsored tour," meaning that the Department of Defense does not pay for the travel and living costs of family members. In 1991, only 10 percent of the 40,000 troops in South Korea were accompanied by their family members. Korea is also a "hardship tour," due to its status as a war zone and because of the living arrangements, language, and cultural differences; and it is a relatively "short tour," usually about one-and-a-half years long. These characteristics combine to produce severe problems of drinking, prostitution, and an indifference to Korean sensitivities and customs. By contrast, Germany is a "plum post," reserved mostly for married men with their families, where they can have their "European experience."

It is well known that the U.S. commands the South Korean armed forces in times of external crisis, and has done so since 1950. Less noticed is the issue of extraterritoriality, which has allowed Americans, for the most part, to live outside the processes of Korean law ever since 1945, when the American Occupation began. Thus, for example, two American army sergeants who on June 13, 2002, drove a 60 - ton tracked vehicle and crushed to death two young Korean girls, were tried before an American military tribunal that refused to consider a charge of manslaughter and even exonerated them of "criminal negligence."

By the early 2000's, then, the main political, economic, and military underpinnings for the Cold War alliance between the U.S. and South Korea had all been undermined. But the U.S. still maintains its military presence - and it is this military presence that serves as the lightening rod for anti - Americanism in Korea. It is a lightening rod because South Koreans imbue the U.S. presence with all kinds of highly charged and ambivalent emotions that reflect their own troubled feelings about national identity, sovereignty and history. They are conflicted about whether the U.S. troops are there as guarantors of security or as occupiers, whether they are facilitators of a reconciliation between the two Koreas or the main stumbling block to such efforts. Meanwhile, every fracas that involves American servicemen is a reminder that South Korea is not a wholly sovereign country, that the United States operates its military bases as a sovereign state-within-a-state, unbeholden to the laws of Korea.

In June 2003, Under-Secretary of Defense Paul Wolfowitz traveled to Korea to inform the Seoul government that the U.S. would soon begin moving its 15,000 - odd troops currently stationed between Seoul and the DMZ to new locations south of the Han River. (The Han River offers a useful natural defense line, but the heart of modern Seoul lies north of it.) In some respects this move is a good idea. The American public has never liked the idea of a "tripwire deterrent" that would automatically involve Americans in any new war in Korea. As Selig Harrison has recently noted in his book Korean Endgame (Princeton University Press, 2002, p. 189), a majority of the American public has consistently expressed opposition to the use (let alone the automatic use) of U.S. forces even if North Korea attacks South Korea. U.S. public opinion has been remarkably stable on this score. According to the 1975 foreign policy survey by the Chicago Council on Foreign Affairs, 65% of those polled said that they opposed the use of U.S. forces if North Korea attacked South Korea. In 1999, 66% said they opposed it. A redeployment of American forces will also finally get them out of the venerable Yongsan base, which was created by Japan in 1894 but is today located smack in the middle of Seoul. But, of course, South Koreans worry that the U.S. actually wants this pull - back so that its own forces will be under less direct threat, should a conflict break out over the North's nuclear program. Even worse, they worry that the U.S. is preparing to initiate such a conflict without any warning to or input from South Korea.

Latent anti-Americanism has long been an aspect of many cultures, particularly in Europe where it is almost de rigueur to disparage the United States as brash, uncultured, and money-grubbing. The Bush administration's unilateralism, and its general unwillingness to accept binding restraints on its sovereignty, has merely brought this dislike to the fore again, and into the open; and the U.S. decision to go to war in Iraq without the endorsement of the United Nations Security Council has caused it to spread and bloom. Predictable as it might be, the spread of anti-Americanism, particularly in Europe, has been so alarming to the foreign policy establishment that every issue of Foreign Affairs since the autumn of 2002 has carried an article or two dealing exclusively with the issue of anti-Americanism, in Europe and the Middle East. But this concern with anti-Americanism must be seen in the broader context of the anxiety over the deteriorating relationship with old European allies within the Atlantic Alliance.

Koreans, however, have never shared the European biases about the inferiority-cum-barbarity of American civilization. Instead, contemporary Korean apprehensions about the United States are best analyzed in light of the fundamental shifts in the U.S.-Korean relationship over the past 25 years, illustrated by long-term support for dictatorship, the Kwangju Rebellion, the Korean financial crisis, and the changing perception of military (in)security provided by the U.S. since the crisis of 1993-94. In the final analysis, is it so surprising that a country colonized, divided, and then devastated by war - only to remain divided - over the past century should assert its cultural identity even if this takes the form of anti-Americanism? George Santayana once wrote that such rejection is also a form of self-assertion: "You have only to look back upon yourself as a person who hates this or that to discover what it is that you secretly love."


(25) Cashed-up firms swoop on Asia

Rowan Callick

Hong Kong

Australian Financial Review, December 29, 1997

Asia is set to host the biggest new year sale in history, with American and European corporations already queuing to buy distressed businesses at prices likely never to be repeated.

The resulting wave of mergers and acquisitions could give birth to a second golden age of Asian growth.

This will prove more robust, with deeper corporate pockets, more internationalised boards and management and sounder governance than the "Asian miracle" of the past decade.

The collapse this year of regional currencies and asset prices - and the International Monetary Fund-policed opening of economies to foreign investors - are presenting cashed-up Western corporates with a historic opportunity that many are surveying eagerly, despite the continuing sour mood on Asian equities.

There are few signs that Australian mpanies are joining the rush, with the slide in the $A diminishing the country's corporate buying power. But for US, European and stronger Asian companies, the spree has begun:

* The Zurich Group has just bought 20 per cent of Peregrine, Asia's biggest non-Japanese finance house.

* In Thailand, Citibank is circling First Bangkok City Bank and US firm Prudential Securities is eyeing major parts of Nava Finance and Securities.

* In Hong Kong, major corporate First Pacific is considering a leading stake in Philippines brewer San Miguel, taking advantage of the HK dollar peg to the greenback.

* In Korea, US major Procter and Gamble has acquired Ssanyong Paper, while German industrial group Robert Bosch has bought control of its car venture with Kia.

* Chase Manhattan, General Motors and General Electric are also likely candidates to buy Korean companies as Seoul is forced to open up to foreign investment as part of a $60 billion international bailout. But this is just the start. Mr Richard Tsiang, Hong Kong-based director of fund manager Allard Partners, recently discovered the hotel at which he regularly stays in Kuala Lumpur to be packed despite the slump - this time with German business people scouring the city for corporate bargains.

"Mergers and acquisitions work is growing enormously. This could well be the catalyst for recovery for the recapitalisation of balance sheets"" he said.

In $US terms, Korea, Indonesia, Malaysia and Thailand are all more than 50 per cent cheaper than before the regional crash.

Foreign creditors already all but own considerable numbers of highly indebted Asian businesses , and banks.

Mr Tsiang anticipates the new investments will enable bank debts to be repaid, helping stabilise central banks and renewing access to "real" liquidity for regional economies.

"But this remains dependent on liberalising the capital account," he said.""Western corporations that have sought expansion or exposure in Asia have often encountered problems doing it themselves, or with unsatisfactory joint venture partners. Now they have a better option."

Mr Miles Armstrong, chief executive corporate finance and capital markets of Jardine Fleming, said: "Mergers and acquisitions are going to come of age as alternatives to the capital markets of Asia. Who is going to move in? Mainly US companies." {end}

(26) Blame lies at home, says Reserve chief

Sydney Morning Herald, October 16, 1997

Washington: The chairman of the United States Federal Reserve, Dr Alan Greenspan, has put the blame for South- East Asia's recent financial troubles on the countries involved.

His comments effectively reject arguments by the Malaysian Prime Minister, Dr Mahathir Mohamad, who has targeted everything from currency traders to a Jewish conspiracy for his country's problems.

Dr Greenspan warned on Tuesday that proposals to stabilise the situation by imposing government controls on the billions of dollars that are invested daily around the world would be a fruitless attempt to return to a simpler time.

"We cannot turn back the clock on technology, and we should not try to do so," he said in a speech on global finance at the Cato Institute, a Washington think-tank.

In his first extended comments on the worst financial turmoil since the collapse of the Mexican peso in 1994, Dr Greenspan said the lessons from Mexico and this year's troubles in South-East Asia were the same countries must follow sound economic programs or run the risk of being punished by unforgiving investors.

"In a world of increasing capital mobility, there is a premium on governments maintaining sound macro-economic policies," he said.

Thailand, Malaysia and Indonesia have been buffeted this year by plunging currencies and stock markets.

Dr Greenspan said the dramatic reversal in the Asian tigers' fortunes came from a series of policy missteps: they had allowed their currencies to become overvalued, had failed to keep their trade deficits under control, and had allowed a huge speculative surge to push up stock and real estate prices.

"As a consequence, these countries lost the confidence of both domestic and international investors," he said.

While never mentioning Dr Mahathir by name, Dr Greenspan's analysis of what went wrong stood in direct contrast to the Malaysian leader's recent comments variously blaming currency traders and Jews for the crisis.

As its economic woes deepened, Malaysia tried to curb both currency and stock market trading. But Dr Greenspan said the biggest danger this posed was a loss of critical investment funds needed to raise living standards. ...

Associated Press, Reuter

(27) IMF's advice to US in ITS crisis is opposite to what it imposed on Korea in Asia Crisis

IMF's Belated Reflection

Seoul Should Remain Alert on New Economic Order

Monday, March 23, 2009

For many Koreans, the International Monetary Fund has meant much more than just another worldwide organization over the past decade.

In exchange for extending a $57-billion bailout fund to Korea in December 1997, the "lender of last resort'' forced this country to undergo an extremely painful economic restructuring that called for keeping interest rates unbearably high, deregulating the domestic financial industry and sharply enhancing the flexibility of labor markets.

Numerous businesses, including almost half of the nation's 30 largest conglomerates, went belly up and were put on fire sale, producing a far larger number of unemployed who called themselves "IMF'' (I Am Failure). Surviving firms saw their financial structures solidified, but the so-called neo-liberalistic reform triggered controversy about a massive drain of national wealth and, more importantly, an income polarization leading to the present 20-80 society.

The United States and a number of other economies are in a situation Korea faced about 11 years ago, but the IMF's advice this time is exactly the opposite: enhanced financial regulations and economic stimulus that may have to continue until 2011.

In a policy report released on Friday, the IMF acknowledged it could neither spot the early signs of crisis nor cope effectively with it even as the global financial turmoil deepened. We would like to add one more age-old problem inherent in the 65-year-old body -- double standards and partiality in favor of industrialized countries.

Fortunately, the nation will likely have a good opportunity to have its voice heard on the international stage when Seoul serves as the chairing country of the Group of 20 summit next year. Even at this year's summit in London on April 2, Korea will be a member of the chairing group, along with host Britain, an occasion for both industrialized and emerging economies to revive the global economy, improve the world's financial system and reform various international institutions, including the IMF.

Korea, which has posed itself as a bridge between industrialized and industrializing countries, should be able to match its words with deeds, not leaning to a particular group or region but taking a balanced and global initiative, such as anti-protectionist campaigns -- no easy task given the nation's limited diplomatic capacity and experience.

Currently, some East Asian countries are calling for enhancing regional cooperation by boosting regional trade from 38 percent to 50 to 60 percent of their total trade and setting up an Asian Monetary Fund (AMF) or Asian Currency Unit (ACU). This is only natural for regional countries, now forced to shoulder inappropriate burdens caused by a crisis that took place across the Pacific.

It would be a high-wire act for Seoul to please both regional partners and its single biggest ally ? Washington ? on which Korea unduly relies on in terms of economy and security.

America is still the world's biggest economic and military power, but the U.S.-originated crisis is driving the world back toward a multi-polar situation, a trend to which many Korean officials seem to turning a blind eye, at least officially.

Putting all your eggs in one basket is always risky, but never has this old saying been truer than it is now. Korea will have to walk on a diplomatic tight rope very skillfully over the next few years, between bilateral and multilateral interests and between regional and global relationships.

(28) Chalmers Johnson says Western Financiers caused the Asia Crisis

Globalisation: creed of greed

If the APEC ieaders fail to deal with the real cause of the Asian financial crlsis - the preservation of American global hegemony - then this week's summit will fail to accomplish anything substantial, argues Chalmers Johnson.

Australian Financial Review, November 18, 1998

After all the endless mouthing off in the pages of The Wall Street Journal, The Economist of London and The Australian Financial Review about East Asia's "crony capitalism", the lack of "transparency" in Asian stock exchanges, the "no pain, no gain" logic of the International Monetary Fund, and how the Asian economic challenge to Anglo-American capitalism had fizzled, we now know that none of these things had anything at all to do with the Asian - now global - economic crisis. ...

Here's the new explanation as it is developing in seminar rooms from Seoul to Kuala Lumpur: with the end of the Cold War, the United States decided it had to launch a rollback operation in East Asia if it were to maintain its global hegemony.

The high-growth economies of East Asia had become the main challengers to American power in the region, and it was time they be brought to heel. The campaign worked in two phases.

First, a major ideological barrage from the Jagdish Bhagwatis and Ross Garnauts of this world was launched to soften up the Asians. These famous tenured professors of economics, who never once faced a "market force" in their own lives, were hired to preach the beauties of "globalisation', in this case meaning American economic institutions.

{Ross Garnaut was a Professor of Economics in the Research Schools of the Australian National University, Canberra, and a member of the Trilateral Commission:}

Concretely, these include total laissez-faire, destruction of unions and social safety nets, staffing of regulatory agencies with retired financiers, indifference to pay differentials between CEOs and the ordiniary labor force, moving manufacturing to low-wage areas regardless of the social costs, and totally unregulated flows of capital in and out of any and all economies.

Then came phase two. Once the Asian economies had begun to open themselves up and were standing in the world marketplace more or less naked, the "hedge funds" were let loose on them. These funds are actually huge concentrations of capital owned by very wealthy Western white men, who manipulate bewilderingly complex financial instruments called "derivatives". They usually locate their offices in offshore tax havens like the Cayman Islands and do everything in their power to avoid regulators or tax collectors in the so-called "free market democracies".

The funds easily raped Thailand, Indonesia and South Korea and then turned the shivering survivors over to the IMF, not to help the victims but in order to ensure that any Western bank was not stuck with "non-performing" loans in the devastated countries.


The complete article (plus more from Chalmers Johnson) is at johnson.html.

I try to avoid quoting the Protocols of Zion. But the following quote, from Protocol 5, was at the back of my mind in the "Between Nippon and Zion" article:

{quote} Were genius in the opposite camp it would still struggle against us, but even so a newcomer is no match for the old-established settler: the struggle would be merciless between us, such a fight as the world has never yet seen. Aye, and the genius on their side would have arrived too late. All the wheels of the machinery of all States go by the force of the engine, which is in our hands, and that engine of the machinery of States is - Gold. The science of political economy has for long past been giving royal prestige to capital. {endquote} protocol.html.

Richard A. Werner is Professor and Chair of International Banking at the University of Southampton. His book Princes of the Yen is about the role of Japan's central bank in the "miracle" years and the recent "crisis" years. It is also about banking, and central banking, in all countries: werner-princes-yen.html.

Werner's book New Paradigm in Macroeconomics is welcome:, but has some omissions.

Here's a clue:

"Samuelson's nephew, Lawrence Summers, is another example of a successful neoclassical economist who made it into highest government office." http//

Both are Jewish - yet Werner is innocent of this factor. Samuelson, whose textbook on Economics has long been the standard training manual in universities, is listed among Jewish economists:

Others listed there include Stanley Fischer, Milton Friedman, Alan Greenspan, Paul Krugman, Ludwig von Mises, Ayn Rand, Murray Rothbard, Jeffrey Sachs, Joseph Stiglitz, Lawrence Summers.

Lawrence Summers is Jewish:

"Indeed, I was struck during my years in the Clinton administration that the existence of an economic leadership team with people like Robert Rubin, Alan Greenspan, Charlene Barshefsky and many others that was very heavily Jewish passed without comment or notice -- it was something that would have been inconceivable a generation or two ago, as indeed it would have been inconceivable a generation or two ago that Harvard could have a Jewish President."

Would the media have noticed if Clinton's cabinet had been Islamic instead?

It is astonishing how many of the key players in the Asia Crisis were Jewish:

Jewish Hedge Fund managers: George Soros, Michael Steinhardt.

Clinton's cabinet: Madeline Allbright (Secretary of State, i.e. Foreign Minister), Robert Rubin (US Treasurer), Mickey Kantor (Secretary for Trade, in charge of GATT and WTO), William Cohen (Secretary for Defence), Sandy Berger (National Security Adviser)

Alan Greenspan was head of the Federal Reserve. Martin Wolfensohn was head of the World Bank (succeeeded by another Jew, Paul Wolfowitz). Stanley Fischer was running the IMF (as Chief Economist there; in 2001 he became Governor of the Bank of Israel).

Paul Krugman was writing articles deriding the Japan model.


(29) East Asians lose faith in the Anglo-Saxon model - or is it Jewish?

Kishore Mahbubani - Comment

Published: 23 December, 2009

Trust and confidence in the Anglo-Saxon model of regulation have evaporated so much as a result of the financial crisis that Asian policy-makers are now beginning to rethink key issues about regulation from first principles.

As the financial tsunami unleashed by the West has swept across the world over the past two years, it has washed away from many Asian minds the notion that Western financial management was their superior. This will probably be the single biggest effect of the financial crisis and will pave the way for the creation of a new and more stable financial order based on inputs from Asia and other regions.

It is amazing how much can change in a decade. After the Asian financial crisis of 1997/98, Time magazine produced a triumphant story titled 'The Three Marketeers' explaining how American policy-makers 'prevented a global economic meltdown ­ so far'. It pictured Alan Greenspan, Robert Rubin and Larry Summers on the cover and labelled them 'the committee to save the world'. ...

{all three are Jewish, but that can't be mentioned - Peter M.} ==

Time Magazine, February 15, 1999

The Three Marketeers

Economist heroes? It sounds silly unless you understand how close the world came to economic meltdown last year


{visit the above link to see the photo. It's also at}

"The committee to save the world is now in session." ...

In late-night phone calls, in marathon meetings and over bagels, orange juice and quiche, these three men--Robert Rubin, Alan Greenspan and Larry Summers--are working to stop what has become a plague of economic panic. Their biggest shield is an astonishingly robust U.S. economy. Growth at year's end was north of 5%--double what economists had expected--and unemployment is at a 28-year low. By fighting off one collapse after another--and defending their economic policy from political meddling--the three men have so far protected American growth, making investors deliriously, perhaps delusionally, happy in the process.

It has meant some very difficult decisions. In some of the nations devastated by the crisis, there is a growing anti-U.S. backlash, and politicians such as Malaysian Prime Minister Mahathir Mohamad complain that Rubin, Greenspan and Summers--and their henchmen at the International Monetary Fund--have turned nations like Malaysia and Russia into leper colonies by isolating them from global capital and making life hellish in order to protect U.S. growth.


(30) Mahathir accepts Soros' assurance that he was not responsible for the Asia crisis

Last Update: Friday, December 15, 2006. 11:29pm (AEDT)

Malaysian ex-premier Mahathir and billionaire Soros end feud

Malaysia's former premier Mahathir Mohamad toay met his old foe George Soros and said he accepted the billionaire financier was not responsible for the 1997-98 Asian financial crisis.

Mr Mahathir has long blamed Mr Soros for undermining South East Asian economies by destabilising their currencies, and famously called him a "moron".

"Mr Soros said he was not involved in the devaluation of the Malaysian currency and that other people were involved. And I have accepted that," Mr Mahathir said at a joint press conference.

Mr Mahathir, who said he had a "very good discussion" with Mr Soros which also touched on conflict in the Middle East and the Palestinian situation, said he had wrongly been portrayed as anti-Semitic.

During the financial crisis he noted that Mr Soros was Jewish, and suggested that the crisis was the result of a plot by Jews who "are not happy to see Muslims progress".

"I would like to say this - that I have Jewish friends and many of my Jewish friends don't think I'm anti-Semitic but the press only pick on what I say against Israel and make it sound as if I'm against all Jews," he said.

Mr Mahathir and Soros appeared relaxed and cordial towards each other at the news briefing after the hour-long meeting - their first ever face-to-face encounter.

"We really did agree ... our view of the world is really very similar," Mr Soros said.

"And after we cleared up this misunderstanding of anti-Semitism, our views about the errors of the Bush administration (in its response to terrorism are) very similar", he said.

Both men, however, maintained their opposing views on currency speculation, with the 81-year old Mr Mahathir saying he is still against the practice which "destroys economies".

Mr Soros said he is "no longer" active in currency trading but defended currency speculators as traders who operate within the rules of financial markets.

"My view is that the responsibility doesn't belong to speculators but to the authorities. The authorities should decide how markets should function," he said.

The Hungarian-born philanthropist arrived in Malaysia on Thursday as part of a regional tour to promote his new book The Age of Fallibility



(31) Soros' part in the economic crisis

January 30, 2001

Thanong Khanthong investigates George Soros' involvement in the 1997 baht crisis.

In August 1997, a month after the baht collapsed, leading to the Asian crisis, a Thai diplomat attached to the United Nations bumped into George Soros at a party in New York. They talked about the ailing Thai economy - and the sick baht.

Soros told the diplomat that it should have been apparent to any student of the Thai economy for six or seven months that the Thai authorities would inevitably have to devalue the baht.

By pegging the baht to the dollar, Thai authorities encouraged banks and big corporates to borrow US dollars unhedged. The dollar was converted into baht for domestic lending, leading to a credit boom and an economic bubble. With an economic slowdown in Japan and a rising US dollar, trade and capital accounts in Thailand had deteriorated. The baht became unstable, eventually leading to the economic bubble bursting.

Soros admitted to speculating on the baht in forward markets, losing money in the first round but taking profits later. Soros would not reveal the size of his speculation or the profit he made.

But a former Bank of Thailand official overheard talk in the financial markets that the Quantum Fund used some US$700 million (Bt29.7 billion) from its total war chest of $12 billion against the baht. Soros' top aides were Stan Druckenmiller and Rodney Jones.

But the central bank's real enemy No 1 during the attacks was Julian Robertson and his Tiger Fund, which bet $3 billion against the baht.

His colleagues were Bruce Kovner and Lee Cooperman. Other operations and dealers speculating in the market included Goldman Sachs, JP Morgan, Citibank, and BZW. Bandid Nijatha, the then director of the Bank of Thailand's Banking Department, also identified Morgan Stanley as getting involved.

During the conversation with the Thai diplomat, Soros expressed his sympathy for the state of Thailand's economy and the hardship being faced by its people. For this reason, he said he had refrained from making any public statements over his speculation.

"But I would not have been able to speculate [against the baht] if the Thai economy or its financial system were not in such bad shape," he said.

Soros argued that hedge funds did not start the crisis, although they played a role in the turmoil.

"If a trend is unsustainable, it is surely better if it is reversed sooner rather than later," he said in his latest book, Open Society: Reforming Global Capitalism.

"For instance, by selling the Thai baht short in January 1997, the Quantum Fund managed by my investment company sent a market signal that the baht may be overvalued. Had the authorities responded to the depletion of their reserves, the adjustment would have occurred sooner and been less painful. But the authorities allowed their reserves to run down; the break, when it came, was catastrophic."


(32) Lee Kwan Yew on the Asia Crisis

LEE KUAN YEW (b. 1923)

The first officially elected prime minister of Singapore, Lee Kuan Yew served in office from 1959-1990, during which time he led his country through a period of remarkable economic growth and diversification.

Interview conducted 05/05/01

INTERVIEWER: I want to ask you about your sense of the evolution of the Clinton administration's global economic policy in the '90s. We interviewed [Robert] Rubin, Clinton, and [Lawrence] Summers, and they talk about their push to open markets, particularly in Asia, the emerging markets. I'm wondering whether you think that perhaps they pushed too hard to encourage countries to open themselves up, particularly to capital.

LEE KUAN YEW: Yes. It was an article of faith that these countries would thrive and prosper if they opened themselves up and allowed free flows of trade, investments, currencies, people, ideas, machines, everything. But it assumes that you have the administrative machinery or the system in place which can prevent yourself from being demolished when you have a withdrawal of capital. I support the view that free trade in goods and services is a win-win situation. I'm not so convinced that free flows of capital without restriction is a win-win situation. Theoretically, it is the most effective way to allocate capital. And there are trillions of dollars' worth of pension funds and insurance company funds waiting to go into the best markets, highest returns. But if they had not persuaded the Thais and the Indonesians to lift their exchange controls, this enormous inflow of funds from Europe, some from America, some from Japan, would not have gone into this economies. They were booming, and the finance ministers thought this was the way to join the boom. These countries did not need extra money; they had huge savings of their own. But when Western bankers set up businesses, they said "Here you are," at lower interest than their own countries, because their currencies were pegged to the dollar, in order to sustain the value of the peg at high interest rates, so they borrowed in dollars with low interest rates. When the trade balance moved against them, because the Chinese had devalued their own currency and were capturing American markets -- replacing Indonesia, Thailand, and several other countries, the fund managers immediately noticed that this money won't be repaid. First, they can't sustain that rate of exchange. Secondly, where's the foreign exchange going to come from? So they pulled out, and when they pulled out, as all fund managers do, they acted in rapid unison just in case they were the last one out. And no small economy can withstand a withdrawal of... I think within a few months they had $200 or $300 million worth pulled out. Currencies were devalued; stock markets plummeted, because they were sold to get the currency to move out; property prices collapsed; companies collapsed. And in the case of Indonesia the social fabric collapsed; the social fabric was torn apart. From an economic [standpoint] it became a national unity problem. And you had ethnic groups fighting each other; you have Muslims versus Christians. Was it necessary? Could it have been different? Yes, I think so. They should not have persuaded them to do something which they were not capable of doing, to monitor the inflow of funds to make sure that it was allowed in at a rate that they could repay. They didn't have the machinery to monitor what was being transacted by their private corporations with the foreign banks.

Globalization's Fallout

INTERVIEWER: I read that you wrote that after the end of the Cold War, the U.S. become as evangelical as the communists.

LEE KUAN YEW: Yes, it's an article of faith. I mean, democracy, human rights, free flows of capital -- it does not brook a counter-argument. They believe this is right, and therefore let's do it.

INTERVIEWER: Who believes?

LEE KUAN YEW: People who set policies in Washington.

INTERVIEWER: Did you ever speak to Rubin or Summers and tell them...

LEE KUAN YEW: No, who am I to tell Rubin or Summers how to run the policy of the American dollar or the Fed? But I did tell Larry Summers that... He came out here on his way to Indonesia after the rupiah [Indonesian currency] started spiraling downwards, and the shops were cleaned up. So my prime minister rung up President Clinton said, "Look, do something." He said, "Well what we need is discontinuity." Suharto was in charge. I was astounded. I said: "Look, what we need is continuity; this is an old man, 32 years in office, doing his last few laps, and is passing on. Just make sure he's got a good successor, arrange to give him some support, and you will have a gradual transition into a new phase." But he wanted to change the system and have a level playing field, stopped giving contracts and grants or franchises to his friends and his family. [Suharto] was offended, because he said, "I'm the president; I've done my country proud 32 years; I'm going to buck you." And the market got scared, and more money pulled out. So the result was collapse. He resigned after riots. His successor didn't do so well and was rejected after 18 months. A popular election and a not-so-popular National Assembly produced a leader. It's not so successful, and we have a problem.

INTERVIEWER: This article of faith that you've mentioned -- what is the faith?

LEE KUAN YEW: The faith is this way: If you have a better world, everybody would be prosperous; everybody will maximize his capabilities and his benefits. But is it true? I don't think so. Within limits, it may be true for countries like Singapore, because we have learned to build up the institutions, but even then we suffered. Because when you have people selling shares and currency, when they're pulled out... They don't say that "When the crisis broke in '97..." The fund managers didn't know the difference between Indonesia and Malaysia, Thailand, Singapore; they just say, "I want out." So they just sold, brought our currency down, brought our stock market down. Then, after a while, they discovered [that] no, we were slightly different. We were not so bad; we were not in debt. And then we recovered. But we lost a lot of money, and our banks lost a lot of money in Indonesia and Malaysia, and Thailand where we had that money.


(33) The Economist magazine on the Asia Crisis

Leaders | Debt in developing countries

Emerging-market crises have become harder to resolve

But less of a threat to the world economy

July 21, 2022

[...] Whenever america's Federal Reserve raises interest rates, investors reflexively worry about a crisis in emerging markets. Today it might appear the usual pattern is playing out. On July 27th the Fed is expected to raise rates by another three-quarters of a percentage point. Meanwhile, Sri Lanka has run out of foreign exchange, Argentina faces another default and many poor countries are in trouble. Look more closely, however, and the world economy has been transformed in ways that mean the nature and consequences of emerging-market turmoil have changed.

The archetypal emerging-market crisis was in 1997-98. As the Fed raised rates, pulling capital back to America, Thailand's currency peg broke, leading to a panic that floored South Korea and Indonesia. It then spread to Brazil and Russia, and to ltcm, a Wall Street hedge fund that collapsed. Calm was restored by the Fed and Treasury cajoling American banks to roll over loans, and by the imf. Three American officials who led the firefighting were dubbed Òthe committee to save the worldÓ. A decade or so ago there was a faint echo of 1997-98 when the Fed signalled it would tighten policy, triggering a sell-off in emerging markets. [...]

Comment (Peter M.): This article implies that the Asia Crisis was simply the result of the Fed's raising interest rates. It ignores the role that advocates for Free Trade played in urging Asian countries to open their Capital markets to foreign investment. It also ignores the evidence presented in item 1 above, "How To Kill A Tiger", subtitled "Speculators Tell The Story Of Their Attack Against The Baht, The Opening Act Of An Ongoing Drama".

Another article from the Economist is "East Asian economies The lost (half) decade", date July 4th 2002. It is strongly pro-IMF:


Back to the Asia index: asia.html.

How the U.S. Government forced Marcos and Suharto out of power: asia.html.

More on George Soros' role in the Asia Crisis: soros.html.

Write to me at contact.html.