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19 Jul, 2007

When will Asia muster the courage to start pushing back?

Originally Published: 19 July 2007

Tarrin Nimmanhaeminda is a man who chooses his words with care. Thailand’s finance minister during the critical Asian economic crisis, which just commemorated its 10th anniversary amidst much soul-searching, is well versed in both the intricacies of global finance as well as the English language.

When he recounted the crisis during a recent talk at the Foreign Correspondents Club of Thailand, he pointedly used the words “When the baht was attacked…..” in describing the action that precipitated the collapse of the currency, triggering the meltdown.

This contrasts with the terminology used in other international fora which reads, “When the baht collapsed…..”

That’s a big difference. In recording the history of the crisis, the international financial system is keen to portray it as being purely the result of poor policy-making and other systemic factors, the combination of which, it is claimed, would have triggered a collapse anyway.

By contrast, without denying the broader contributing factors, Mr Tarrin indicated that the attack on the baht also played a role.

This does not go down well with international financiers and bankers, one of whom questioned Mr Tarrin’s choice of words, claiming that the problems were home-grown and that in an era when currencies are traded like commodities, the markets respond to what they see as perceived weaknesses in the system.

Responded Mr Tarrin, “It (the attack) was real. We lost our (foreign exchange) reserves not through systemic pullout of banks. Not at all.….It was just the direct operation of the traders against the central banks. This was quite different from what happened in Korea. It’s a fact.”

However, Mr Tarrin added, “We don’t blame the other people all the time. We should admit our own weakness. We just have to work it out for ourselves. We don’t have that denial mentality. We shouldn’t.”

Later, I asked Mr Tarrin that if “the baht was attacked”, there had to be an attacker, in which case why hasn’t more been done to identify the attackers and make them accountable, as would be expected in any civilised society seeking to abide by the rule of law.

Here’s where he went cold. “It’s very difficult to know to know who the attackers, as due to the (way the) banking system (works), we are not privy to the ultimate beneficiaries. And due to the cross-holdings, you don’t know. I did try to make sense of it but that information will remain privy to the Bank of Thailand. They may know.”

They do know. In the Bangkok Post’s Mid-year review, an article by former Central Bank Governor Vijit Supinit says clearly “[Famed currency speculator George] Soros attacked the baht in August (1996), then again in November, in December and February 1997).”

Sure, Asia was doing many things wrong. Pumped up by all the macho talk of becoming the “Asian Tigers”, the nirvana of an “Asian Century” and the utopia of unending economic growth, Asia had begun to believe its own BS.

Sure, Soros took advantage of it. That’s how he makes his billions.

But it is the ultimate travesty that these predators, referred to as “financial terrorists” by the former Malaysian Prime Minister Mahathir Mohammed, walk free, are never held accountable, and that in all the various measures being taken to prevent another crisis, the attacked are held far more responsible than the attackers.

This “blame the victim” policy is very much a part of the global agenda. Indeed, it has uncanny parallels with developments in other parts of the world where the West and its people and government policies have created a right royal mess, but deny all accountability.

Iraq is the best case in point. The people of Iraq have become the horrendous victims of a grotesque lie fed to the world to justify an attack. Although sunk in a quagmire of its own making, the US administration shows virtually no desire to hold itself accountable, a situation not at all helped by the rest of the world continuing to look the other way.

Indeed some of the latest pronouncements by the US government now blame the Iraqi government for not doing enough to get its act in order and curb the raging violence. This blame-game is being expanded to include Iran for “meddling” in Iraq.

Palestine is another case in point. There is no ambiguity that the Palestinians are the victims of an occupation, which is clearly abetted by unequivocal support by the West for everything and anything done by Israel, the occupying power. Yet, it is the Palestinians who are blamed for being corrupt, violent, undemocratic and ultimately the source of all problems.

In the latest debate over global warming, India and China are being blamed as major contributors because their rapidly growing economies are burning huge amounts of fossil fuels. This, in spite of the fact that Western economic prosperity was achieved almost entirely by burning cheap oil in an era when that best served its interests.

When the US government is blamed by the Islamic world for its own flawed, biased and opportunistic policies as being responsible for the 9/11 attacks, Americans get hugely offended and extremely defensive. The accusers are lashed for “blaming the victim”.

The common thread running through all this is that the Western governments, institutions, companies and policies are never to be held responsible for anything, that they know what is best for the rest of us — from opening our markets, fighting the “war on terror”, combating global warming, dealing with piracy of intellectual property, etc.

This policy succeeds is because we allow it to, and it is really up to us to decide how far we want to be pushed and when and how we want to start pushing back.

As Mr Tarrin says, we are not in denial about our problems and are keen to fix them. But it might help if the West, too, shows some humility, culpability and accountability rather than continually behaving like some kind of a magnanimous demi-god.

Over the long term, this approach cannot and will not work, no matter how powerful the pressure.