Prague, 28 November 1997 (RFE/RL) - Much Western press opinion and commentary in the past few days remains focused on Asia's economic and political problems, and their likely effects on other parts of the world. The collapse of the giant Japanese securities firm Yamaichi has led some to ask the question, Will the economic contagion spread to Europe and, particularly, to the United States?
HEARST NEWSPAPERS: No signs exist of a massive pullout of Japanese funds from the United States
In a commentary yesterday for the U.S. Hearst newspapers written from Paris, Bernard Kaplan minimizes the negative effect on the American economy of the current Japanese economic weakness. He writes: "The great scare scenario of the past 15 years has been that, if the Japanese ran into hard times, they would cash in their U.S. Treasury bonds -- estimated to be worth (up to) a whopping $300 billion dollars-- and wreak havoc on the American economy. Hard times have arrived all right, but no signs exist of a massive pullout of Japanese funds from the United States. Japan's current financial muddle gives U.S. officials plenty of reasons to worry, but the fear that hard-pressed Tokyo money managers will liquidate their American investments isn't one of them."
Kaplan continues: "In fact, just about the last thing the Japanese contemplate at the moment is selling strong dollar assets when their currency, the yen, is losing value almost daily. Some international financial analysts tell me that, if anything, Japanese banks --at least, those still sitting on ample cash reserves -- may start buying more U.S. Treasury bonds and notes instead of unloading those they already have." He quotes Swiss financial consultant Ernst Aveling this week describing the U.S. as again having become "the world's number one financial safe haven, as it used to be in the old days. (The Japanese) will act accordingly when it comes to placing their money."
"A more serious worry," Kaplan says, "is the possibility that Asia's financial
turmoil will lead Japan, South Korea and maybe Taiwan to embark on a binge of competitive devaluation of their currencies in order to increase exports and offset their domestic troubles. The likely effect would be to add dangerously to the already substantial U.S. trade deficit with these countries, increasing political friction between Washington and the Asians."
SUEDDEUTSCHE ZEITUNG: Nobody is getting a good night's sleep lately in Europe or North America
Germany's Sueddeutsche Zeitung yesterday carried a signed editorial by Josef Joffe that took a less sanguine view of the effects on the West of Asia's economic woes. While Joffe, too, dismisses "the nightmare scenario" of global economic collapse, he writes: "It is well known that everything is connected to everything else, at least in business, so nobody is getting a good night's sleep lately in Europe or North America. A milder nightmare called deflation is bearing down on the global economy. The (recent) dip in growth figures in Asia means a scaling down of global demand. In plain words, the price of export goods will fall and with it profits. The collapse of Asian markets means that money will become scarcer worldwide as tottering banks force their debtors to repay."
Joffe believes that "the Asian turbulences have only just begun and there are no bounds to the stupidity of bankers, politicians and bureaucrats. But," he says, "they know what happened last time (during the international 1929 crash and 1930s depression). It is therefore high time for Kohl, Chirac and Blair to get together with Clinton at a special G7 meeting to work out a rescue plan for the global economy. The enemy is runaway inflation this time round and the weapon against it is liquidity --even if some banks and countries are saved who, due to their reckless accounting, do not really deserve it."
DIE WELT: The growth was too rapid and too much
In Die Welt earlier this week (Nov. 25), commentator Bernd Weiler asked, "Is the Asian economic miracle finished?" He said that, "at first glance, all the signs point that way. A veritable wave of crises has broken over the continent, triggered by a currency collapse and general financial weakness in Thailand. Since June this year one Asian economy after the other has found its securities and currency markets under pressure." But, he continued, "in contrast to Mexico's (1995) financial crisis, the debacle in the Southeast Asian states has a different character. It is not public budgets which are overstretched, but private companies which have poured money into the wind and gambled away their capital."
Weiler continued: "That does not necessarily mean that the impressive growth of these countries was built on sand. But it was too rapid and too much. Now the consequences have to be faced." His conclusion was a balanced one: "If a country like South Korea, which transformed itself within three decades from a peasant economy to one of the world's 11 largest industrial nations, has to bid farewell to its overblown dreams of growth, it is certainly dramatic, but it will scarcely revert to its time as a developing country."
LOS ANGELES TIMES: Asia must not be dealt with as if it were some unruly schoolboy
U.S. Asian specialist Tom Plate is worried that the intervention of the International Monetary Fund (IMF) in South Korea's problems will do more harm than good. The title of his commentary in the Los Angeles Times Wednesday (Nov. 26) was "An IMF Sledgehammer Is the Wrong Tool for Asia." Plate wrote: "Now there is a new danger that the West, believing the worst of Asia and the best of itself, will force a Western perspective on the current economic downturn, prolonging the crisis by big-footing (that is, clumsily walking) all over it....(South) Korea...last week crawled to the doorstep of the International Monetary Fund. This is the world's lender of last resort for those on the brink of defaulting on their worldwide obligations."
Citing a Harvard University economist (Steven Radelet), who says that "the IMF puts conditions on (Asian) countries that are sometimes too onerous," Plate urged that Asia be treated like a grown-up, not a child. He argued: "Serious though its problems are, Asia must not be dealt with as if it were some unruly schoolboy who requires the West, acting as the sturdy disciplinarian, to bring order to the classroom. The worry is not that Asia won't recover; it's that Asia will derive the wrong lessons during the recovery, taking from this unpleasant experience the desire to retreat from an open economy." Plate concluded: "China, which so far has escaped the worst of the market meltdown but is looking the storm right in the face now, may, as U.S. Trade Representative Charlene Barshefsky notes, be 'tempted to use the current crisis as evidence it shouldn't open up.' Others in Asia are thinking that, too."
LOS ANGELES TIMES: The truth is that U.S.-Chinese relations are going to be fraught with misunderstandings and danger for a long time to come
Also in the Los Angeles Times this week (Nov. 26), another U.S. Asian expert, Karl Schoendorfer, warned Americans not to be taken in by what he calls the "pomp and showmanship of (Chinese) President Jiang Zemin's (recent) state visit to the U.S." He wrote: "To a nation that gets a disproportionate amount of its information about China from the movies, the recent burst of Sino-U.S. diplomacy could not have been more cinematic....It was a dramatic screenplay, culminating in the release of China's most celebrated political prisoner (Wei Jingshen). Never mind," Schoendorfer noted, "that an array of grave problems --from trade conflict to weapons proliferation to festering human rights violations-- remains fundamentally unresolved. This movie gives its audience a fuzzy feel-good satisfaction."
He continued by describing "what is really going on in China," writing: "With every day that passes, this emerging superpower struggles with multitudinous change. The forces of reform advance and retreat and surge around obstacles, while intolerable repression and corruption continue." Schoendorfer concluded: "The truth is that U.S.-Chinese relations are going to be fraught with misunderstandings and danger for a long time to come. But China must not be boiled down to a cartoon caricature, friend or foe, no matter how well the script reads."
NEW YORK TIMES: There must be clear rules for aborting elections if the campaign process is not completely free and fair
In an editorial today, the New York Times worries about political freedom in one of China's neighbors, Cambodia. The paper writes: "As has often been the case in Cambodia's tragic history, the country is once again ruled by a tyrant determined to cling to power. Hun Sen is no Pol Pot (the murderous Communist Khmer Rouge leader), but he is a violent, autocratic leader who seized control of Cambodia in a coup in July." The editorial continues: "The United Nations and Western and Asian countries have decided that the best way to unseat him is to move ahead with parliamentary elections scheduled for next May. Hun Sen, who is deeply unpopular, would likely lose a fair election."
The paper is concerned that "several nations have pledged money for election preparations. Many Western officials prefer Hun Sen to the corrupt and hapless (Prince Norodom) Ranariddh. They might tolerate an unfair election that will allow them to claim a democratic result and normalize their relations with Cambodia." The editorial concludes: "The international community must proceed more slowly toward elections. No one should send election money or experts until after Hun Sen has relaxed the climate of fear and his control of television, the exiles are home and able to campaign, and a new, independent election commission is established. There must be clear rules for aborting elections if the campaign process is not completely free and fair. Until it holds fair elections and respects the results, Hun Sen's government should not receive membership in the regional group ASEAN or a seat at the United Nations."
NEW YORK TIMES: The paradox is that Asians are not fleeing the filth but embracing it
In today's edition too, the New York Times' China correspondent Nicholas Kristof contributes a long analysis of Asia's environmental problems, entitled "Across Asia, a Pollution Disaster Hovers." Kristof writes: "When delegates from the United States and more than 150 other countries gather in Kyoto, Japan, beginning December 1 for a conference on global warming, one of the fundamental underlying challenges will be how to accommodate the economic rise of Asia. Aside from the United States, China is already the biggest source of the greenhouse gases linked to global warming, and --perhaps more worrying for the long run-- the two fastest-growing sources of these emissions are China and India."
The analysis continues: "More than 1.56 million Asians die each year from the effects of air pollution alone, not counting 500,000 more who die each year from dirty water and bad sanitation, according to estimates published recently by the World Health Organization and the World Bank. Another new study, also from the World Bank but using different assumptions, calculates that 2.03 million people die annually in China alone from the effects of water and air pollution."
Kristof adds: "The paradox is that Asians are not fleeing the filth but embracing it. From India to China, Asians vote with their feet --moving from rural areas with relatively clean air to the squalid mega-cities that are among the filthiest places on earth. To an American, the endless Howrah slums in Calcutta, India, or the shanty-towns outside Jakarta, Indonesia, seem hellish intersections of gritty air and contaminated water. But to many rural Indians or Indonesians, the slums sing of opportunity, of jobs, of schools, of hope to break out of subsistence poverty."