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Western Press Review: Economic Failures Result In Repercussions Worldwide

  • Don Hill

Prague, 12 November 1997 (RFE/RL) -- Western press commentary -- obsessed this week with events surrounding Iraq -- also turned its scrutiny on economic issues. The unifying theme was the growing global interdependence of the world's national economies. Financial market turmoil in Indonesia soon is felt in Russia and the United States; a U.S. political dispute over presidential negotiating powers concerns free traders around the world.


The Washington Post's David Hoffman describes one such interaction in a news analysis today. He writes: "Russia's hopes for an economic recovery have been dealt a setback by the recent turmoil in stock markets around the world, which has shaken confidence in Russia's nascent capital markets and forced the government to raise interest rates."

He writes: "Faced with sagging investor confidence and a large sell-off of Russian equities, the Central Bank moved unexpectedly on Monday to raise its key refinancing rate from 21 percent to 28 percent. Bank Chairman Sergei Dubinin said the move was an attempt to avert a panic flight of capital from the fragile Russian economy."

Hoffman says: "In a related long-term move, the Central Bank also announced a basic shift in the management of the ruble, Russia's currency. Previously, the ruble was allowed to devalue gradually against the dollar. But Dubinin said that for the next three years, the Central Bank will attempt to hold the currency stable in relation to the dollar."


In today's Suddeutsche Zeitung, Miriam Neubert analyzes recent Russian moves to strengthen the ruble relative to other currencies. Neubert writes: "It was not long ago that Russians were holding their breath day after day as they followed the dramatic fall of the ruble. The fact that the ruble now has settled can be put down to the cooperation between the government and the Russian central bank."

She writes: "When the government two years ago for the first time guaranteed a ruble rate for a period of three months, it seemed like a bold move. The question was if it would enforce the needed financial rectitude. The doubts about that now have been dispelled. Financial policies are strict, and the central bank is applying professionally its instruments of money and credit policies. Policies have been austere -- to the limits of what is socially tolerable. Inflation is down to below one per cent a month and is expected to decline to an annual rate of between 5 and 7 percent next year."

She concludes: "The policies charted for the ruble over the next few years underline the determination of the government to maintain exchange rates and price stability. They also send an important signal of predictability to both domestic and foreign investors."


"Everyman's Gone Global," says a headline over a commentary by Stephan-Gotz Richter in Sunday's Washington Post. Richter says that Asian market tremors are keenly felt by even minor U.S. investors, and affect the politics of U.S. foreign policy. The writer says: "While last month's Asian-induced pseudo-stock market crash appears to have had little lasting effect on the world's financial markets, it served as a direct and powerful reminder to millions of Americans that they are now real players, not mere observers, in what used to be an abstraction called the global economy."

He writes: "Believe it or not, like it or not, when Hong Kong's market shakes in its boots, American pension funds and mutual funds become an earthquake zone as well."

Richter continues: "And when one's own pocketbook is grabbed so rudely, it can have long-term political effects. American opponents to Asian domestic policies -- such as China's dismaying record on human rights or the lack of political pluralism in Singapore and Indonesia -- are likely to find their position significantly weakened. Barring any unwise or provocative moves by Asian leaders, they may be able to rely on the eternal pragmatism of the American mutual fund-owning public to fend off any threats to their commercial and economic relationship with the United States. Suddenly, Chinese President Jiang Zemin's argument about the relativity of human rights sounds both clever and credible."


In yesterday's edition of the French daily Le Figaro, Antoine-Pierre Mariano examined a peculiarly French domestic issue, the just-ended truckers' strike, and found pan-European consequences. Mariano wrote: "The trucks are back on the roads. There is gas again in the gas stations and dairy products in the supermarkets. The price of chicory is back to normal. We can learn from this ending strike political, economic and social lessons."

Mariano commented: "Concerning the economic lesson, one of the deep causes for this conflict is to be sought in the vulnerability of many French companies. The prospect of a law presented yesterday will not ease their situation, the idea of the new law being to control and punish the companies. A lower business tax alone will not allow them to face the deregulation which will be the rule in Europe after July 1 of next year. Then, a Portuguese or Italian truck will be able to transport goods between Lyon and Limoges or between Anvers and Frankfurt. It probably would have been more efficient to put all the efforts into a search for specific European rules, and establish the rules for competition. What will happen now is that the less competitive companies will disappear in 1998."


Edmund L, Andrews wrote in a news analysis in Sunday's New York Times that economic issues once strictly domestic now are European-wide. Unemployment is a case in point; Europe today cannot provide jobs for 18 million people available for and seeking work. Andrews said: "Even though the continent appears poised for its first significant growth in years, unemployment remains more than twice as high as in the United States and no one expects it to decline much in 1998."

He wrote: "Europe's problem transcends jobs. It is also about the distribution of pain and insecurity. Largely because its laws and union contracts have enshrined so many job guarantees, the European system protects those who have jobs at the expense of those who do not."

Andrews quoted Professor Guenter Wisswede, head of the Institute for Economic and Social Psychology at the University of Cologne, as saying, "We now have the curious situation where companies are growing and becoming more profitable, but their success comes from being able to do that with fewer workers."

Andrews added: "As if that were not enough, European governments are now under enormous pressure to cut social spending in order to bring their fiscal deficits down low enough to meet the guidelines for joining the new single European currency, the euro, in 1999."


The Times of London says today in an editorial that U.S. President Bill Clinton's inability to win trade negotiating powers from an opposition-led Congress illuminates his lame-duck status (ineligible for reelection) and creates an international policy issue out of a domestic dispute. The editorial says: "If it looks like a duck, talks like a duck, and walks like a duck then it is a duck. If it hobbles horrendously then it is a lame duck. A mere 12 months after his triumphant reelection, President Clinton's authority at home has been severely shaken. His failure to persuade Congress that he should be awarded fast track authority for future trade negotiations will have implications that extend well beyond this important issue itself."

"The President should now work within the structure of the World Trade Organization. This is the only arena -- and the best one -- for advancing a free trade agenda. His decision to ask for a mandate not linked to a specific trade treaty probably enhanced congressional opposition. He needs to present concrete proposals in future. The danger is that Mr Clinton will be inclined to abandon the field of battle. That would be a mistake felt long after his presidency."