THE ASIAN CRISIS AND ITS INTERNATIONAL REPERCUSSIONS/237more. French president Jacques Chirac, an expert in the art of self-
contradiction, has also said as much. Passing through Malaysia in
November 19 9 7, he met with Prime Minister Mahathir and declared,
'Excessive speculation must be controlled.' It seems logical that
speculation can only be controlled by placing strict limits on capital
flows, but Chirac had a response at the ready. 'I am naturally not in
favour of exchange controls or limits on capital movements. The free
circulation of capital is now a rule everyone accepts' (Le Monde, 18
November 1997). Yet, once again in the history of the last two
centuries, we have clear proof that the free circulation of capital is a
powerful catalyst for crises. Even if the IMF, World Bank, Bank for
International Settlements, the US Federal Reserve, and the German
Bundesbank were to unite their efforts, they would be unable to
discipline capital movements - unless, of course, new restrictive
legislation was put in place. But these institutions are opposed to such
measures. The IMF and those that run it (the G 7 countries, multina
tional corporations) have plainly shown that, whatever they may
say, they are the cause of this and other crises, and not the cure. IMF
head Camdessus even had to admit this, albeit discreetly, during his
negotiations with the Indonesian president Suharto. It was the
closing down of 16 Indonesian banks decreed by the IMF in
November 19 9 7, he agreed, that had provoked a panic and deepened
the crisis. He was obliged to offer an apology to the old dictator before
he would sign the agreement with the IMF on 15 January 1998. If
indeed the Asian model is 'out of fashion', is the free-circulation-of-
capital model not out of fashion, too?
- If inter-ethnic troubles erupt in Indonesia, the Philippines,
Malaysia and Thailand, will world economic and political leaders
continue to refuse to see the link with the current economic crisis?
Will these events merely be chalked up as 'undesirable side-effects'?