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Western Press Review: Economic Turmoil Defies National Boundaries

By Don Hill and Aurora Gallego

Prague, 5 December 1997 (RFE/RL) -- Western press commentary examines the striking post-communist interdependence of national economies, with emphasis on turmoil in Russia, South Korea and Asia generally.

FINANCIAL TIMES: The Russian government has been in storming mode

In a news analysis in today's issue of the British daily Financial Times, Chrystia Freeland and John Thornhill write that Russia is assaulting its financial troubles on two fronts -- "storming" the issues at home and negotiating on them internationally.

The writers say: "In the past few days the Russian government has been in storming mode, desperately trying to plug a hole in its finances and pay off its $6 billion wage arrears to federal workers by the end of the year, as President Boris Yeltsin has promised." The analysis says also: "Russian officials already have visited Washington to sound out IMF and World Bank officials about accelerating disbursement of big loans."

LE FIGARO: If the government does no cover its deficit severe political consequences will follow

Gerard Nicaud wrote yesterday in the French newspaper Le Figaro that the prospect of severe political consequences motivates the Russian leadership. Nicaud's analysis said: "So the Russian government needs money. It needs it to cover its public budget deficit, but also -- and mainly -- to keep the promise made by President Yeltsin to reimburse all salaries due in the public sector before January 1. If he does not succeed, severe political consequences will follow."

The writer said: "It is surprising that Russia was able to complete (an international) agreement to reschedule its gradual reimbursement of the commercial debt it inherited from the former USSR."

NEW YORK TIMES: Chubais is hoping for a new show of determination

A New York Times news analysis Wednesday by Alessandra Stanley in Moscow depicts Russian First Deputy Prime Minister Anatoly Chubais as putting on a reassuring show of confidence. She wrote: "Looking confident and self-possessed, Anatoly Chubais, the chief overseer of Russia's economic changes, said Tuesday that he had a plan to shore up the country's battered economy and get international loans, currently stalled, back on track."

Stanley wrote: "Chubais said that he had worked out a program with the help of experts from the International Monetary Fund and that it would almost certainly persuade the IMF to approve the next $780 million installment of its $10 billion loan to Russia soon." She said: "Most likely, Chubais is hoping that a new show of determination -- and the country's dire straits -- will persuade the IMF to relent and release the loan by January."

The New York Times correspondent wrote: "Chubais said that the Russian government would continue to defend the ruble, which has lost value since the financial crisis began. But he noted that it would stop intervening to protect interest rates on the treasury bond market. This would make life easier for the Central Bank, which has been straining to keep the ruble stable, but might create some turmoil in the short run."

Across the world, in South Korea, the International Monetary Fund was emplacing its largest bailout bundle ever.

LOS ANGELES TIMES: South Korea can be expected to resume its march toward greater prosperity

The Los Angeles Times editorializes today that South Korea brought the need onto itself. The U.S. newspaper says: "The International Monetary Fund has put together the biggest loan package ever arranged for a nation in financial distress, up to $55 billion to rescue South Korea from the follies of its own excessive reliance on government direction of the economy. In return, Seoul has been forced to agree to a spectrum of reforms that over time should revivify the world's 11th-largest economy. But in the short term things are likely to be tumultuous."

The editorial concludes: "Government policies that helped spur monumental growth over the course of a generation also fostered shameless cronyism and corruption, while buffering too much of the economy from the realities of the market. With the rescue operation that has been mounted, South Korea can be expected before long to resume its march toward greater prosperity, thanks in good part to its educated and hard-working labor force. But Koreans already know that the first leg of that march is sure to be painful."

SUEDDEUTSCHE ZEITUNG: The IMF must not be too quick to step in with large sums of money

Nikolaus Piper comments on the North Korea bailout today on the Suddeutsche Zeitung, urging the IMF to move deliberately. He writes: "The International Monetary Fund's agreement to provide $55 billion to bail out South Korea marks a historic watershed. Never has such a large package of aid been put together for a country and never has the IMF's role in the affair been so tricky."

Piper writes: "The IMF must not be too quick to step in with large sums of money, thus arousing the impression that it is coming to the rescue of careless speculators. At the same time it must put to the test its scarcely-defined role as regulator in the age of globalization."

The commentator concludes: "The IMF must help Korea and other Asian states to become normal national economies. This is a much more drastic intervention into national sovereignty than the old cost-cutting programs ever were."

WASHINGTON POST: The South Korean economy needs deep structural reform

The Washington Post said in an editorial Tuesday that the international package for Korea is neither altruistic nor a handout. The Post said: "It's worth pointing out that what's commonly referred to as a 'bailout' is by no means a gift from American taxpayers to their South Korean counterparts. When the United States 'bailed out' Mexico, U.S. taxpayers ended up in the black, because Mexico promptly repaid its loans, with interest. The goal in South Korea is the same: to provide a pool of money to restore international confidence in the Korean economy while it retools and works through its financial crisis. The South Koreans promise to repay the money once they regain their footing. That's the theory, and there's no reason it can't work in South Korea's case, where in many ways the economy is in better shape than was Mexico's. South Korea has an impressive industrial base, a high savings rate and a highly educated population. Its economy is the world's 11th largest."

The editorial concluded: "Those reforms, it should be stressed, aren't identical to what the IMF has imposed on Mexico and other ailing economies. South Korea's problem isn't one of government or consumer profligacy, so the traditional medicine of fiscal austerity and imposed recession needs to be modified. But the economy -- as many of its smartest policy experts have long argued -- needs deep structural reform. South Korean banks were too cozy with government and with allied industrial conglomerates, and they made a lot of bad loans."