THE ASIAN CRISIS AND ITS INTERNATIONAL REPERCUSSIONS/229extensive layoffs, the central bank has been made Independent of the
government (making it easier for the IMF to exercise its influence
over it), interest rates have skyrocketed (sinking local industry and
consumer spending into recession), major investment projects have
been abandoned, the big South Korean conglomerates (the chaebols)
are being dismantled, the South Korean labour code is being reformed
to allow for extensive layoffs, and Indonesia has abandoned its
ambitions in the aviation and automobile sectors. These countries
have been plunged into a deep recession.
Governments have been placed under the supervision of the IMF,
the World Bank - and the G7 countries, particularly the US. They
must make regular reports to their overseers, who can at any time
threaten to stop the flow of loans that the countries need to pay back
private creditors. This represents nothing less than a loss of national
sovereignty.
The loans provided by the IMF, the World Bank and private banks
all include a risk premium tacked on to the market interest rate
(except for a small number of the World Bank loans, which target the
most vulnerable sectors of the population). These institutions will
make huge profits. IMF head Michel Camdessus recognised as much
at a press conference given on 18 December 1997. The tens of
billions of dollars contracted in loans were immediately used to pay
back the banks and other international financial institutions. Every
single one of the contributors to the so-called rescue package will be
paid back, thanks to the countries' export revenues and savage cuts
in public spending. Tax revenues will also go towards paying off the
external debt.
Openings for foreign investment (with no limit on the repatriation
of profits) will clear the way for American, European and Japanese
multinationals to buy up Asian companies at rock-bottom prices. The
IMF convinced South Korean officials to allow foreign companies to
acquire 100 per cent ownership in South Korean companies.
International financial institutions will now be able to return to the
region to invest a part of the funds they had previously withdrawn in
a panic. George Soros acknowledged having withdrawn his funds
from the region in 1997, yet he was welcomed back to the country
like a visiting dignitary by the new South Korean president, Kim Dae-
jung, who promised he could pursue his lucrative interests in the
country. The new president announced that foreign investors were