|Secretary of State Madeleine K. Albright
Op-Ed on "The Economic Crisis in Asia"
for Diario Las Americas, Miami, Florida
February 1, 1998
As released by the Office of the Spokesman
U.S. Department of State
The eruption of financial difficulties in several Asian countries--Thailand, Indonesia, South Korea--in recent months has demonstrated the interconnections within the regional, as well as the world’s, economy. We have seen economic difficulties in one country in Asia triggering a series of problems elsewhere in the region. Similarly, a severe economic crisis in one part of the world could have an undesired effect in other regions and here at home. Given the interconnections among the economies of individual countries, restoring confidence and financial stability in Asia serves our long-term economic and security interests. The United States is thus committed to continue working on an urgent basis with affected governments, the International Monetary Fund (IMF), the international community, and the private sector to restore confidence to the troubled economies of East Asia.
The financial problems in Asia, which began in Thailand and spread to Indonesia and South Korea, have shaken market confidence in other parts of the region and in international financial markets. The crises can be traced back to some common problems. Several years of excessive speculative lending by private companies and financial institutions, partly funded by foreign borrowing, led to unsustainable levels of private debt. Weak financial supervision and poor accounting standards made it hard to measure the full extent of the problem. Industries and banks followed bad lending practices. And there was an early reluctance to take strong corrective actions. In addition to these common problems, each nation also has its own unique economic situation. The IMF has carefully tailored financial stabilization programs to the circumstances in each country.
To help restore financial stability and protect international markets, the United States has strongly supported IMF-led plans for Thailand, Indonesia, and South Korea. Each plan requires the country concerned to take significant steps to reform its economy. Those steps include restructuring the financial sectors, new measures to improve transparency of financial regulation, and substantial market opening. Resources will not be disbursed to countries who are not implementing programs, adopted in agreement with the IMF, to address their problems and prevent their recurrence.
The United States is participating in these programs for a very clear reason: the stability of the Asia-Pacific region is in our economic and national security interest. These countries are our friends and allies, and their prosperity makes them better customers for U.S. exports. Their financial difficulties have undermined stability and growth in the countries affected and have triggered declines elsewhere. The steps we support will help prevent the situation from spreading further. And the resources we pledge to the IMF for helping other nations also protect and benefit the United States and the American people. A stable and growing American economy depends on a stable and growing world economy; growth produces new markets for American exports. Our exports, which have provided jobs for nearly eleven million Americans, fuel our own economy, and help insure a higher standard of living for American families.
Our support for the IMF also contributes to the national security of the United States. South Korea, for example, has been one of our key allies for several decades. The 37,000 American troops now in South Korea are part of our successful effort over the past forty-four years to maintain the fragile peace between the two Korean states. Economic instability could adversely affect that fragile peace, particularly at a time when the two Koreas have agreed to enter into peace talks and when the United States has successfully contained North Korea’s nuclear program. Those important accomplishments must not be jeopardized by financial crises.
We have stressed that successful restoration of market confidence and future growth and development in East Asia will depend on vigorous and sustained implementation of economic reform commitments. Affected countries in the region have made such commitments under the aegis of IMF programs. The IMF, supported by the U.S. and other industrialized nations, is best suited to monitor the reform process and ensure that momentum is sustained. We believe the IMF must remain the world’s first line of defense against financial instability and economic strife.
In the end, however, confidence will only be restored through dramatic and sincere efforts by Asian governments to repair structural defects in their economies. Thailand, Indonesia, and South Korea are rich in resources, but need to reform their businesses and financial institutions. The IMF has offered its expertise and assistance to each country to bolster market confidence and attract capital inflow. South Korea’s implementation of economic reforms proposed by the IMF has already shown signs of improved economic stability and confidence in future growth.
As no other event up to now has shown so clearly, the Asian financial crisis is a vivid demonstration of the interdependence of the world’s economies and of the importance of the global economy to our own economic well being. Reform of the economies in Asia will be a long and difficult progress. But by working together we can put the necessary structures in place that will restore confidence in the economies of Asia and strengthen international financial foundations. And an economically strong Asia insures economic benefits for the United States and countries around the world.
[End of Document]
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