Prague, 6 January 1998 (RFE/RL) -- American super-financier George Soros has taken a personal role in providing encouragement to South Korea, one of the former economic tigers hardest hit in Asia's financial crisis.
Soros has spent several days in Seoul holding talks with South Korean President-elect Kim Dae-jung and other South Korean leaders about the country's economic plight and prospects for improvement.
He went out of his way to offer support to Kim, a former dissident who, commentators have said, lacks both a knowledge of economics and the political mindset to remedy the crisis.
Soros said that he had found in Seoul a "clear vision" of the way ahead. And he said that although South Korea's troubles are very severe, they can be quite quickly remedied by radical restructuring. Most significantly, Soros also told journalists he's sending a team to study the possibility of substantial new investments in South Korea.
Words like this from one of the world's most powerful and successful investors had an immediate tonic affect on the country's stock market, which rose. And his comments will have been noted by investors around the world, many of whom -- like Soros -- quickly withdrew massive amounts of money from South Korea when troubles first became evident last year.
Soros's name has been intertwined with the Asian crisis almost from the first. He came under severe criticism last year by Malaysian Prime Minister Mahathir Mohammad, who accused him of playing a leading role in the speculative attacks which have shattered the Asian currencies, something which Soros denied.
Apart from this week's practical gesture towards South Korea, the American financier has taken a prominent role in theorizing about how to prevent similar economic meltdowns in future. Experts now acknowledge that the phenomenon of economic globalisation has unexpected hazards that need to be studied: What was once seen as a voyage over blue seas to the treasure islands beyond has now become a journey across a turbulent ocean, with all the accompanying dangers. Soros says he believes these dangers are capable of engulfing world finance and trade, and he has recommended that the world's financial system be reformed. Among other thing, he has recommended an international credit insurance corporation which would guarantee international loans up to a certain level. This would remove the pressure on investors to race to withdraw their money, thus spreading panic, at first signs of a downturn in any given situation.
Meanwhile for Asia, the crisis continues to deepen. Major regional currencies, including the Thai baht, the Indonesian rupiah and the Philippines peso, have dropped to new record lows since trading opened again for the new year. And Thailand, one of the recipients of a multi-thousand-million dollar bailout from the International Monetary Fund, now says it is not able to meet all of the tough terms of the loan.
The Thai government spokesman Akapol Soyasuchart said this week that Bangkok cannot meet the IMF condition that it should run a budget surplus. He said that's because it cannot raise enough revenue, despite stringent austerity measures. The Thai admission will add fuel to the debate among economists on whether the conventional IMF prescriptions are appropriate, given the size of the Asian problems and the speed at which they are developing. Some analysts are airing the views that the strict austerity regimes imposed by the IMF bailouts will in fact help strangle growth.
Indonesia, another IMF recipient country, is bringing in a strict austerity budget this week amid rising social tension. Millions of new jobless are swelling the ranks of the bewildered unemployed in Indonesia as in the other Asian countries, as the economic downturn bites deep. The government in Jakarta knows it has to tread carefully if social unrest is to be avoided. Behind the economists' jargon for describing the crisis lies the fact of personal anguish and poverty for millions of people in Asia.
U.S. Treasury Secretary Robert Rubin said this week (Jan. 4) that in the global economy the well-being of people in one area clearly affects the well-being of populations elsewhere in the world. He said the U.S. is working to end the crisis and to restore Asia's financial health, in concert with the other industrial nations, with leading banks and with the IMF.