THE ASIAN CRISIS AND ITS INTERNATIONAL REPERCUSSIONS/223foresee the crisis that would hit South Korea, the world's eleventh
strongest economy, in November 1997. The IMF's pronouncements
recall a well-known French song from the depression era 19 3 Os, 'All
is well, Madame la Marquise'. In it, the maid-servant replies to the
marquise's question about the state of her castle, 'Your castle is
burning to the ground, but all is well.'
IMF president Michel Camdessus constantly changes his
explanation for what is happening. He has become a champion of
political and diplomatic doublespeak. At a press conference held at
IMF headquarters on 18 December 1997, he said that the IMF had
underestimated both the danger and scale of the crisis. Yet in Brussels
on 21 January 1998 he blamed the crisis on the leaders of the
countries affected. He accused them of not having heeded IMF
warnings! He added, 'If we had been able to act six months earlier, the
crisis in South Korea would never have happened' (Le Soir, 22
January 1998). What nonsense!
The IMF and the Asian 'Dragons'
It is worth recalling that beginning in the 1980s both the IMF and the
World Bank had pointed to the four 'dragons' as models to be
emulated by all Third World countries, and even by those of Eastern
Europe. This posture was maintained right up until the outbreak of
the crisis.
On the subject of Thailand, the 1997 Annual Report includes a
summary of a working meeting held between the IMF and Thai
officials in 19 96. According to the report, the external debt had risen
sharply between 1991 and 1995, going from 3 9 per cent to 49.5 per
cent of GDP. Furthermore, it says, half of this external debt was
contracted on a short-term, high-interest basis; and the trade balance
was increasingly in the red. The report highlights other reasons for
concern. Nevertheless, it draws the following balance sheet: 'The
governors enthusiastically praised Thailand's remarkable economic
performance and its strict application of sound macroeconomic
policies. They noted that financial policy had been tightened in 19 9 5
in response to the increase in inflation and in the current account
deficit; and that these measures had begun to bear fruit although
they warned the Thai authorities against being complacent' (IMF
1997 Annual Report).