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Western Press Review: G-7 Unveils Positive Plans

  • Joel Blocker

Prague, 2 November 1998 (RFE/RL) -- Western press commentary today and over the weekend focuses largely on international economic affairs. There is also some discussion of the new governments in Germany and Slovakia.

NEW YORK TIMES: Nothing that regulators can do will prevent markets from occasionally moving in excessive ways

The New York Times on Saturday (Oct. 31) analyzed the economic reform program made public a day earlier by the Group of Seven leading industrial nations. The paper wrote in an editorial that the G-7's "plan to revamp the international financial system and improve the handling of economic crises...looks promising, but will be difficult to carry out."

The editorial went on to say that the plan "recognized that the great growth of global financial markets has not been accompanied by a similar expansion in global regulatory capabilities, and rightly called for more disclosures by countries, international agencies and major market participants."

The NYT continued: "The experience of the past several years has shown that global markets can move in ways that seem irrational. In the middle of this decade, investors poured money into emerging countries, often heedless of the fact that accounting standards were weak and essential financial information not made public. Then, particularly after the Russian default, those same investors stampeded out. Better disclosure might have helped, but nothing that regulators can do will prevent markets from occasionally moving in excessive ways."

FINANCIAL TIMES: The G-7's main remedy is transparency

Also on Saturday, Britain's Financial Times said the G-7 program was "clearly intended to help bolster confidence ahead of the financial package for Brazil, to be announced (this) week." In its editorial, the paper called the plan "in effect, an agenda to avert future financial crises. (Its) ideas," it continued, "are sensible and, if realized, will certainly help. But...there is no sweeping solution in sight."

The FT editorial went on: "The G-7's main remedy is transparency...The G-7 is also anxious to ensure that private sector banks and other financial institutions take on more of the burden when official assistance is required."

It added: "These measures would run in parallel to stronger international cooperation, and the sharing of information between global institutions. If the next crisis appears earlier on the radar screens, the theory goes, there will be a better chance of avoiding it."

LE MONDE: The G-7 plan shows the airplane does have a pilot

In its weekend edition, the French daily Le Monde spoke of "a healthy turn-around by the G-7." The paper wrote: "Unless there is a return of confidence, the financial crisis that has shaken the world for the past 16 months -- 'the worst in 50 years,' in Bill Clinton's phrase -- could easily plunge the planet into a real depression."

Le Monde went on to say that the G-7 program "demonstrated an awareness of this threat by the leaders of the world's principle industrial nations. The political leaders have shown a new and positive determination to play a major role (in averting a catastrophe)." The paper also said that even though the G-7 plan "is only words for the time being, words also have their importance (in the financial world). They are in fact gestures that have a psychological effect on (economic) reality. They tend to show that there is a real and firm collective leadership of the international economy -- in short, that the (economic) airplane does have a pilot."

INTERNATIONAL HERALD TRIBUNE: The challenge to the prevailing paradigm is clear

In today's International Herald Tribune, Los Angeles Times syndicated columnist William Pfaff writes of a new "clash of economic paradigms" in the world today. He says: "Now visible on the horizon is a challenge to the economic paradigm that has dominated the policy-making of governments during most of the 1990s. New governments of the Left in Germany and Italy have created an unprecedented situation in which the major nations of Western Europe are ruled by socialists."

Pfaff continues: "The dominant Western domestic policy paradigm...holds that the majority of voters demands low taxation (which stimulates) growth and enterprise (while) health and social services are most efficiently provided by the private sector....The new European program for the domestic economy envisages pan-European programs for job creation and growth stimulus..."

He sums up: "The challenge to the prevailing paradigm is clear. Most American analysts would undoubtedly say that the inefficiencies of intervention doom it to failure. The new socialist consensus in Europe thinks otherwise. In a decade or less, we will know."

TIMES: The new program is too heavily stamped with the trademarks of traditional tax-and-spend socialism

On the occasion of today's visit to Britain of Germany's new Social Democrat Chancellor Gerhard Schroeder, the conservative London Times writes: "The welcome mat rolled out for...Schroeder at (the Prime Minister's residence at number) 10 Downing Street...promises to be of thick red pile.... Tony Blair has already hailed the prospect of a dynamic Anglo-German partnership of the 'third way,' aimed at promoting what he calls 'modernized social democracy' within the European Union....Herr Schroeder has returned the compliment, speaking of an Anglo-German-French 'triangle'..."

The paper continues: "Allowances have to be made for diplomatic courtesies, and it is always wise to give a newly elected leader the benefit of the doubt....Yet both on the home front and in the burgeoning Franco-German confrontation with the (EU's) European Central Bank, (Schroeder's vaunted) pragmatism has already led the supposedly business-friendly Chancellor to surrender strategic territory to his powerful Finance Minister, the severely unmodern Oskar Lafontaine."

The Times concludes: "The new German Government's program is too heavily stamped with the trademarks of traditional tax-and-spend socialism to bear scrutiny as a modernizing agenda."

INTERNATIONAL HERALD TRIBUNE: There is a widespread notion that Lafontaine is more forceful than Schroeder

In a news analysis in today's International Herald Tribune, John Vinocur also remarks on the influence of Finance Minister Oskar Lafontaine on the new German government.

He writes: "A week into his four-year term, faced with the perception that his authority has diminished since his election a month ago....The situation's most obvious explanation --that...Lafontaine (the) Social Democratic Party chairman, effectively upstaged the new chancellor during three weeks of cabinet-building and took over the national agenda -- contains certain elements of reality."

"But," Vicocur goes on, "the more basic fact is that Mr. Schroeder has done little to mark the new government's program with his own personal emblem by creating the sense that Germany is off to a new start, with a plan and leadership style unmistakably his own."

The analysis also says: "Against this soft, vague context, Mr. Lafontaine's activism, his reported domination of the cabinet-building talks, his pressure for lower interest rates, his aides' needling of the Bundesbank's austerity program...have created the widespread notion in the German media and political world that he is the more forceful of the two men."

SUEDDEUTSCH ZEITUNG: The threat of instability could force everyone to exercise restraint

The Sueddeutsche Zeitung today writes of what it calls "Slovakia at the dawn of a new era." The paper's editorial says: "Those who appreciate world-historic formulations might describe the change of government in Bratislava with the grand words (of Czech President Vaclav) Havel: 'Slovakia is returning to Europe.'".

The SZ editorial goes on: "The high-handed manner employed by the former government of (Vladimir) Meciar in dealing with the institutions and customs of parliamentary democracy...isolated the young state as an immature outsider in Central Europe. (The former prime minister) behaved more like a Central Asian despot than someone leading a society in the heart of this continent."

The paper also says: "The new coalition government formed by Mikulas Dzurinda has (changed all that) in an impressive fashion: The process of reaching agreement within the former opposition -- whose divisions always played into the hands of its autocratic opponents -- has demonstrated political discipline. Now constructive ideas must be embodied in concrete reforms."

"Instability," the paper notes, "remains a threat to (Slovakia's new) four-party coalition. Paradoxically," it adds, "...this threat could force everyone to exercise restraint indefinitely."