Prague, 15 December 1997(RFE/RL) -- Southeast Asian nations have appealed for urgent international assistance to overcome their worsening economic crisis.
The appeal came (today, Dec. 15) at the summit in Kuala Lumpur of the nine-member Association of South East Asian Nations (ASEAN). The grouping includes countries which have been hit hardest by the currency collapse of recent months, such as Malaysia, Thailand, Indonesia and the Philippines.
In their appeal, the ASEAN leaders called for a concerted effort by the major economies, including the United States, the European Union and Japan, as well as international financial institutions, to overcome the crisis as soon as possible. They endorsed a strengthened role of the International Monetary Fund (IMF) in providing guidance and financial support, and they called on the IMF to speed up a study of global financial markets, and to propose immediate solutions to stabilize their currencies.
The summit coincides with new currency turmoil: Friday (Dec. 12) the currencies of Thailand, Indonesia and the Philippines all touched historic lows, while the Malaysian ringgit also came under new pressure, as did the South Korean won. Analysts say the mood around the region is one of gloom and hardly concealed panic. The ASEAN statement noted that regional currencies had continued falling in the last two weeks, even though Thailand, Indonesia and South Korea have received multi-billion-dollar assistance packages from the IMF. They stressed the urgency of further international assistance, but did not spell out exactly in what form they envisaged this help.
At the summit, there was some controversy over how strong the IMF role should be in any further rescue effort. Malaysia has declined to ask for IMF help, with Prime Minister Mahathir Mohammad likening the IMF's imposition of stringent conditions for loans to a return to colonialism. At the summit Thailand -- which has received an IMF aid package -- also complained about the severity of the IMF's prescriptions. But Japan's Prime Minister Ryutaro Hashimoto sounded a reminder that the big Western economies will certainly not give financial support to countries not following IMF conditions. A Hashimoto spokesman said that, in any case, the Asian countries must keep in mind the need for extensive restructuring of their economies, whether or not they receive IMF assistance. It's the opaque financial-and-banking sectors in particular of the former Asian 'tiger' countries which have led to the present collapse. In the end, despite the doubts of some, the summit endorsed a central role for the IMF in future assistance efforts.
The presence at the ASEAN summit of top officials of non-ASEAN countries: Japan, China and South Korea, show the importance the entire region places on finding a quick solution to the deepening crisis. Economic analysts from New York to Frankfurt say that no-one really knows where the Asian spiral will lead the world economy. So far, apart from estimates of somewhat reduced global growth, the rest of the world has not suffered greatly. But when a forest fire rages out of control, even those distant enough to see it only as a smudge of smoke know they too have reason to worry.
One of the chief problems is that, even where underlying economic indicators are solid, investor confidence can suffer blows which have concrete impact on the business cycle.
Take South Korea, one of the world's biggest and most dynamic economies. Only three months ago in a report the IMF welcomed South Korea's "impressive" macroeconomic performance and praised the authorities "enviable" fiscal record. Now, South Korea is essentially bankrupt, and has accepted a huge $60 billion IMF loan -- and, now, there are fears that even that might not be enough to stabilise the situation.
Investors had gradually become acutely aware that, althouth the South Korean economy was, as usual, performing splendidly, the country's short-terms debt was very high, possibly as much as $100 billion. They began to show nervousness, the currency began to crumble, then it went into free fall as investors fled. The foreign debts of many banks and companies is now practically impossible to pay back at present won values, and bankruptcies and closures are increasing. With the downturn comes social anguish, as people, who had thought of their jobs as secure for life, are thrown out of work.
The Asians, deeply shocked as they are at their sudden fall, are not relying only on the world's help. The Kuala Lumpur summit issued a call for Asian nations to increase their mutual trade, as a means of overcoming the unprecedented devaluation of their currencies. And in several countries, including South Korea, individuals and organizations are pledging themselves to a new, thrifty way of life as a means of helping their nation out of trouble.