Washington Post on A16

Dace edace at flinthills.com
Wed Apr 19 22:23:18 PDT 2000

Brad DeLong wrote:
>The first thing to realize is that the IMF's money made Korea's ride
>through the crisis a lot better than it would otherwise have been:
>less unemployment, lower domestic interest rates (because the IMF has
>provided you with more reserves and so you don't have to bid high
>enough to attract private capital immediately), a faster recovery.
>Even with the conditions, the fact that the Korean government went
>for the deal the IMF offered suggests that it was a good deal for
>Korea--a much better deal than no conditionality and no IMF loan
>would have been.
The IMF bailout of S Korea was designed to dismantle the Korean Development Model, even at the cost of deepening its financial crisis. The bailout was directed from the US Treasury by Rubin and Summers, who intended to break up the Chaebols into Western-style corporations oriented toward short-term profit and vulnerable to takeover by foreign investors. Given its desperation for new loans, S Korea had no choice but to accept the IMF-imposed measures.

Rubin and Summers must have realized that their plan would damage the S Korean economy, but they were surely taken off guard by the extent of the disaster that began unfolding in late 97. Rubin saw the light when S Korea threatened default, and Wall St. panicked. He dropped the original program and allowed S Korea to recover without having to disband its successful model of growth. This model had never been simply a matter of exporting its way to wealth but of controlling imports and maintaining strict local ownership over government-supported industries.

The IMF could conceivably do good things and probably did when Bretton Woods was still Keynesian, and developing countries experienced a degree of genuine economic progress. But now it functions strictly for the benefit of Northern finance capital, its policy dictated by Treasury. The real enemies, far more so than IMF or WB or WTO bureaucrats, are Clinton and Summers.


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