Alternative title: Summers dictated more than once
Revived from the liberal bore observer (lbo) online crypt:
http://nuance.dhs.org/lbo-talk/0205/2290.html
Some Ricklesque comments from the post-er:
A common Asian currency possible? Not bloodly likely. More than anything the latest meetings are the Japanese trying to appease E. and S.E. Asians pissed off if the yen goes below 125 to the dollar.
In the new world ordered economy, we went from Rubin to Summers to O'Neill probably without missing a beat.
All these guys are used to giving orders as the CFO of the US empire.
The Korean and the Chinese currencies are pretty well pegged to a weak dollar vs. the yen (hence the rather flush times with exports), so right now there is very little to be gained for them in creating a yen or yen basket area--til the next outrush of panicked dollarized capital and loss of liquidity, that is.
Consider, 1999, when the world was hardly a better place
http://www.twnside.org.sg/title/1943-cn.htm
Next, extract from a much reproduced Bello article follows:
>>The first big let-down occurred a few months
into the crisis. In what was then seen by
practically all Asian countries as an innovative
response to the currency crisis, Tokyo proposed
the establishment of the Asian Monetary Fund
(AMF), which would have been capitalised to the
tune of $100 billion from the reserves of Japan,
China, Taiwan and Hong Kong.
The AMF was conceived as a multipurpose, low-conditionality, quick-disbursing facility from which governments whose currencies were under attack could have drawn cold cash to counter the speculators. But the US Treasury and the Fund opposed the idea on grounds that it would weaken the ability of the IMF to 'extract reforms'.
Moreover, as analyst Eric Altbach has noted, Summers and the Treasury 'saw the AMF as more than just a bad idea; they interpreted it as a threat to America's influence in Asia'. Japan backed down, the opportunity to stabilise the situation early on with an intergovernmental united front backed by hard reserves passed, and key Asian economies plunged into spiral accelerated by Washington-backed contractionary IMF programmes.
Since then, Japan has largely danced to the American tune. No concrete proposals have come from Tokyo on global capital controls, though Finance Minister Kiichi Miyazawa and other Finance Ministry officials have rhetorically targeted hedge funds on occasion. Tokyo has also made critical noises about the IMF but it has not followed these up with actual proposals for institutional reform.
The vaunted Miyazawa Plan has, in fact, elicited US approval, largely because it provides aid that is conditioned on advancing Washington's agenda for Asia - that is, rapid liberalisation, deregulation and privatisation.
In the Philippines, for instance, Miyazawa money has been made contingent on Manila's implementing two things: the privatisation of the National Power Corporation, which has been a long-standing demand of the World Bank and the IMF; and the opening up of retail trade to foreign participation, of which the American Chamber of Commerce has been a prime advocate.
It is not that Japan lacks the clout to stand up for an alternative paradigm of global financial stabilisation. For when it comes to issues that bear on its domestic economy, Japan has not hesitated to take decisions that Washington protested but could do nothing about, like Tokyo's refusal to open up its forestry and fisheries sector and its move to restrict the short-selling of stocks. What Japan has studiously avoided is filling a leadership role for Asian interests.
Unchallenged by Europe and Japan, the US has dominated the global financial agenda. This agenda has been fairly consistent.
The reason that Washington has felt uncomfortable about attaching urgency to controlling global flows of speculative capital is that, as a New York Times series earlier this year revealed, Treasury's push for rapid, indiscriminate liberalisation of the capital accounts of the Asian economies was a central cause of the crisis. And as the crisis developed, Washington's agenda, as former Federal Reserve Governor Lawrence Lindsey has pointed out, has been to take advantage of the situation to push its long-standing bilateral agenda of opening up trade and financial markets.
Now, Larry Summers talks about 'properly paced liberalisation', but it remains the case that capital account and trade liberalisation in the emerging markets continues to be the central thrust of the US programme for global financial reform. Washington's main antidote against global financial instability is not international measures to throw sand in the wheels of speculative capital but more liberalisation at the national level.
Summers revealed the logic behind this approach in his comments on Argentina in a recent speech: 'Today, fully 50% of the banking sector, 70% of private banks, in Argentina are foreign-controlled, up from 30% in 1994. The result is a deeper, more efficient market, and external investors with a greater stake in staying put.'
In the curious algebra of the US Treasury: financial liberalisation = financial stability = global interest. In sum, five years after the Mexican financial crisis and two years after the outbreak of the Asian financial crisis, Washington's single-minded pursuit of its financial agenda and European and Japanese timidity have ensured that the world remains without a serious system of defence against periodic stampedes of the Electronic Herd.
This is irresponsibility of the highest order. - Third World Network Features
About the writer: Walden Bello is director of Focus on the Global South and professor of sociology and public administration at the University of the Philippines.
<<end of article extract
Charles J
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