Date: Mon, 25 Jan 1999 15:59:23 -0500
From: Robert Weissman <email@example.com>
To: Multiple recipients of list STOP-IMF <firstname.lastname@example.org>
Subject: Japanese minister disses IMF & US; Asia effects worsening (fwd)
TOKYO, Jan 24 (AFP) - Japan's influential vice finance minister
Eisuke Sakakibara has pitted himself against the International
Monetary Fund and what he calls its
market fundamentalism and
Sakakibara, known as
Mr Yen for his influence on currency
markets, is putting forward the
intellectual background to the
policies followed by Finance Minister Kiichi Miyazawa.
Citing US financier George Soros, Sakakibara has criticised the role
of the IMF during the crises in Asia, Russia and now Brazil. He
described the philosophy of the Fund, which he called the
Washington consensus, as
free markets and sound money.
It amounts to the
blind application of the universal model on
emerging economies, he said at the Foreign Correspondents' Club
in Tokyo on Friday.
The handling of the Asian crisis by the world's leading nations was, at least at first, seriously at fault, he said.
Since I was personally involved in the process and agreed, although
reluctantly, in the end to what was recommended I am in no position to
criticise others for what has happened, he said.
But unlike the (IMF's) managing director Michel Camdessus I can
only say that if I am confronted with similar situations in the future
I will probably handle them differently.
A senior official at the Fund has told AFP there was no sign of reticence from Japan at key IMF meetings during the crisis, even though Japan has the second largest stake in the organisation.
The Fund has admitted it underestimated the severity of the crisis when it put forward its rescue programmes in Thailand, Indonesia and South Korea but insisted it was right to impose tough economic reforms.
Sakakibara said he felt closer to Jeffrey Sachs, the Harvard academic critical of the IMF, than Stanley Fischer, the Fund's deputy head.
Behind Sakakibara's attack on
market fundamentalism there is
also a defence of Japanese bureaucracy.
The financial bubbles in Japan or Asia were not necessarily created
by mistakes in macroeconomic policy alone but were natural
consequences of markets where fallible market participants interacted
with each other with less than perfect foresight, he said.
Will a triumphalist and totally unfettered free market survive? Sakakibara thinks not.
First, American dominance which seemed assured for some time after
the demise of socialism seems to be declining both on political and
economic grounds -- partly because of the unification of Europe and
partly because of potential anti-American sentiment in various parts
of the world that has arisen in recent years, he said.
In the early 1990s
it may have looked as if the US would come close
to having a financial empire but that is certainly not the reality we
face at the end of the 20th century.
The Japanese official, who has publicly backed the foreign exchange
controls which Premier Mahathir Mohamad put in place in Malaysia,
Global capitalism needs to be restrained in its
cross-border transactions be it through disclosure, supervisory and
prudential regulations or outright controls.
The need for coordination is absolutely essential but coordination
should remain coordination and not coercion, concluded Mr