[Back] Date: Sat, 20 Dec 97 12:25:45 CST
From: "Workers World" <ww@wwpublish.com>
Organization: WW Publishers
Subject: U.S. Banks & Asia: Crisis on Workers' Backs
Via Workers World News Service
Reprinted from the December 25, 1997 issue of Workers World newspaper

U.S., IMF deepen crisis for Asian workers

By Fred Goldstein, in Workers World
25 December 1997

The ruling class is declaring that the worst of the financial crisis in Asia is easing. But the crisis is actually deepening for millions of workers who are faced with layoffs, and for the middle classes threatened by bankruptcy.

Meanwhile, world finance capital--headed by U.S. bankers and financiers--is pursuing policies that can only widen and aggravate the crisis, in both the short run and the long run.

The Dec. 22 edition of Business Week reported: "An unemployment crisis is gathering force in Asia, and layoffs are soaring to levels not seen for more than a decade. Asia's currency crisis, which touched off bankruptcies, halted spending, and slowed growth when it began in July, is likely to result in nearly 2 million Asian workers losing their jobs by next year.

"Not just the Korean financial sector, but Thai assembly plants, retail stores in Hong Kong, and construction sites in Indonesia are firing workers by the thousands. Migrant workers who fueled Asia's boom are likely to be sent home. Even Japanese are seeing the long-sacred lifetime employment system shrivel.

"In Indonesia, 420,000 construction, textile, and electronics workers have lost their jobs so far, according to labor union leader Tohap Simanungkalit, and the number could reach 1 million by next year. In Korea, the government predicts that chaebols [conglomerates] and banks will have to lay off 350,000 Korean workers--without a social safety net--in the next few months.

"In Hong Kong the giant Yaohan department store closed in late November, throwing more than 2,700 workers into the street. Real estate agents have been closing shop as property sales dive and prices have fallen more than 20 percent since October.

"'Unemployment is issue No. 1 in Hong Kong,' says Lee Cheuk Yan of the Hong Kong Federation of Trade Unions."

Seth Mydans, writing in the Dec. 15 New York Times from Athum Thani, Thailand, told of hundreds of needle workers coming to work at the PAR Garment Factory six weeks ago to find a sign reading "the company is closed."

Mydans reported, "The 449 people at the factory here who lost their jobs are among some 4 million rural migrants who flooded into the capital during the last decade."

The workers are as poor as ever. They lived on the $3.50- a-day minimum wage and now they are in "the first wave of layoffs in an economic catastrophe that could cost 2 million jobs by the end of next year," according to Pasuk Phongpaichit, an economist at Chulalongkorn University.

Mydans wrote the next day from Kuala Lumpur, Malaysa, about the austerity measures the regime there is taking. "Government spending is to be cut by 18 percent," announced Deputy Prime Minister Anwar Ibrahim. Building projects will be halted.

"Anwar acknowledged that these steps meant unemployment-- as many as 200,000 jobs," Mydans reported.

The crisis is the result of years of imperialist banks foisting high interest loans on local corporations and banks. At the same time, multinational corporations were flooding the area with investment.

The imperialist banks brutally and abruptly turned off the faucet when overproduction of everything from microchips to chemicals, steel and autos caused sales to decline in the region. The local corporations and banks were unable to pay off their loans to foreign banks.

Then the International Monetary Fund stepped in to promote the U.S. program. First, it demanded that no aid be given to ailing companies and that they be forced into bankruptcy and layoffs. Then it demanded cuts in government spending so that the funds could be used to buy dollars to pay back U.S. banks, causing more layoffs.

Third, the IMF demanded that governments raise interest rates and slow their economies--thus reducing the competition to the multinational corporations in their struggle for markets, and leading to further unemployment. And finally, they demanded economic concessions: expanded rights to buy up local corporations and expanded access to local markets.

Thus, the United States and to a lesser extent Japan made sure to push the crisis on to the backs of the oppressed countries in Asia and to extract concessions at the same time. Of course, unemployment is the inevitable result of capitalist overproduction, but the U.S./IMF axis has aggravated the current situation in Asia with a vengeance.


By a remarkable conjuncture of events, the final round of the negotiations on the so-called General Agreement on Trade in Services relating to financial operations was scheduled to be completed on Dec. 12, in the midst of the crisis.

"Under the darkening clouds of Asia's financial crisis," wrote the New York Times on Dec. 13, "the United States and more than 100 other countries signed a global trade agreement early Saturday morning to open up the world's financial markets.

"The agreement ... commits countries to dismantling hundreds of barriers and admitting foreign banks, insurance companies and investment firms to their markets."

The Times reported: "U.S. companies were a conspicuous presence in and around the negotiations here in Geneva. Citibank, Goldman Sachs, Merrill Lynch and numerous insurance companies--particularly the American International Group and Aetna--established command posts at the President Wilson Hotel, about a half-mile from the headquarters of the World Trade Organization," which is to administer the agreement.

In fact the signing was delayed for two hours while the United States pushed for final concessions.

"The accord," reported the Dec. 13 Washington Post, "struck after frenzied negotiations ... will open up banking, insurance and securities markets of a number of fast-growing developing countries to U.S. firms that have been clamoring for entry."

While the agreement's details have yet to be made known, its essence is easily understood.

Each oppressed country puts forward a list of concessions it is willing to make to the imperialists' financial corporations. Of course, the U.S. graciously allows companies in the oppressed countries to buy up banks in the United States--as if any of them could afford to buy Chase Manhattan.

Once the developing countries put forward their list of concessions, the list has the force of law and is enforced by the World Trade Organization. The governments of those countries no longer have anything to say about the matter.

If the oppressed country gives up control over foreign banks and allows them to take over domestic corporations, then no matter how important any specific domestic corporation may be to a local economy, it can be taken over by a U.S. bank without the government having any say in the matter.

If the government protests, it can be hauled before the World Trade Organization and penalized.

This agreement is the third Multilateral Agreement on Investment that has been signed recently. Two others were signed this year: one on telecommunications and the other on information technology. All three of these areas are where the United States is the strongest power in the world.


There is great irony here.

This agreement on further opening up the oppressed countries to parasitic finance capital was signed in the midst of a financial crisis. It expands the already wide latitude U.S. and Japanese financiers have to push the Asian economy into a position of overinvestment and overproduction.

Each financial giant--J.P. Morgan, Chase Manhattan, Bank America, Mitsubishi, etc.--has privately pursued its own profit lust in Asia. They raked in high interest rates while they could, skimming off the surplus value created by the Asian workers.

And in the process they drove the region into crisis at an accelerated rate.

Now these same predators want even greater latitude--not just to loan, but to own or control every financial asset on the globe. They are pushing governments aside and making themselves and their high court, the WTO, the legally sovereign lords over the oppressed world.

But their blind profit madness is what brought about the current crisis. How much greater damage will they do with unlimited control--after they have completely pushed aside all protective regulatory powers of states in the underdeveloped world?

In the post Soviet period, corporations in the United States and Britain have waged a war of deregulation at home against every barrier to capital. They have used their newfound deregulated freedom to attack the workers, degrade the environment, undermine the health of their own populations; impair the safety of air travel and commit many other offenses against the masses.

What will they do in the oppressed countries when they have full sway?

Karl Marx showed that capitalists are only the personification of capital. Capital must seek the highest rate of profit, the greatest exploitation. Those who own and administer it must do so in a ruthless fashion and attempt to destroy everything that hinders the pursuit of profit and super-profit.

Owners who either hesitate or show ineptitude in this pursuit will be pushed aside and other capitalists will wrest their capital from them.

If left to themselves, the bosses--the owners of capital-- will rapidly accelerate the ruination of society and cause such suffering that they will hasten their own revolutionary destruction by the workers and oppressed. Pushed to the point of rebellion by unrestrained capitalist exploitation, the workers and oppressed will rise up.

One of the principal functions of the capitalist state, after its primary function as a repressive force, is to regulate the bosses so as to retard this tendency. The state introduces an element of conscious control, of restraint, to keep the bosses from going so hog wild that they provoke revolution.

The MAI agreements tend to remove all vestiges of conscious control by society over capital, and thereby accelerate the tendency toward anarchy and crisis.

The current attacks on the Asian workers and the attempts to use this crisis to increase their suffering and exploitation will only lead to greater resistance in the long run--and to the ultimate imposition of conscious control over society's economic assets and their use in the interests of human need: socialism.

(Copyright Workers World Service: Permission to reprint granted if source is cited. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: ww@workers.org. For subscription info send message to: info@workers.org. Web: http://workers.org)

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