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Al-Ahram Weekly 29 June - 5 July 2000 Issue No. 488 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 29 June - 5 July 2000 Issue No. 488
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Doctor's calling
By Gamal Nkrumah
"Is a free market free if it is dominated by the rich?" thundered a visibly enraged Malaysian Prime Minister Mahathir Mohamed. The question sounded more like the utterances of a veteran Marxist than a wisecrack from one of the most vociferous proponents of Asian capitalism.
"Malaysia has experienced the globalisation of capital and nearly [been] destroyed by it," Mohamed told a spellbound audience at Cairo University following last week's G-15 summit. His scathing criticism of Western reluctance to recognise so-called hedge funds as the "main culprit responsible" for triggering the Asian financial crisis astounded his listeners, who included Egypt's Minister of Higher Education Moufid Shehab and Cairo University President Naguib El-Hilali Gohar. Also in attendance were Waduda Badran, acting head of the university's Faculty of Economics and Political Science and Mohamed El-Sayed Selim, director of the Centre for Asian Studies, who described the Malaysian speaker as a "fresh voice from Asia."
As a graduate of King Edward VII College of Medicine in Singapore, Mohamed dissects economic ills and political malaise with clinical precision. As a graduate of Harvard University in the United States, he is well versed in Western norms and value systems. He is also Asia's most ardent critic of Western-steered globalisation.
Carefully argued, Mohamed's capacity to identify figures like the powerful international currency speculator George Soros as culpable for the Asian financial crisis left a marked impression on his audience.
"What could have caused the Asian economy to recover was the fear on the part of currency traders that many Asian countries would have adopted Malaysia's exchange controls," he explained. As this would have resulted in huge losses for currency speculators, speculations were reduced. But Mohamed cited another contributory cause to reduced speculator activity.
"At about this time the Long Term Credit Management Fund lost its bet on the Russian ruble and threatened to destabilise the US financial institutions completely. Suddenly, currency speculation became a dangerous game for the rich countries and it was stopped."
The rising tide of excitement that washed over southeast Asia with the economic miracles of the Asian tigers came to a grinding halt with the Asian financial crisis of 1997.
"In Malaysia's case, instability in the ringgit exchange rate was aggravated by outflows of the ringgit to offshore markets. The situation in Malaysia was peculiar in that we had a very liberal foreign exchange regime ... Malaysia could not compete by raising its interest rates because this would adversely affect business in Malaysia. To prevent this hemorrhage we stopped the movements of the ringgit across our border ... Foreign holders of the currency had to return the currency back to Malaysia."
It was not an easy decision, Mohamed conceded, but it cleaned the wounds. The measure deprived currency traders from access to the ringgit to speculate with, Mohamed explained. "With the banks flushed with repatriated money it was possible to lower interest rates, thus reducing the cost of doing business." Fortunately, Malaysia managed a large trade surplus during the crisis, which brought in sufficient foreign exchange to pay for imports.
"Malaysia was very conscious that its decision to control the exchange rate was a move fraught with danger, Mohamed said. The action counters accepted methods and incurred a hostile reaction from the international financial community, including "the IMF, the World Bank and the most powerful country in the world."
"Clearly it was going to frustrate the rich investors who had invested huge sums of money in the hedge funds and were getting as much as 30 per cent return on them ... When Malaysia tried to borrow from abroad to finance local projects, the rates shot up so that the loan had to be aborted. Other actions were also taken to prevent Malaysia's economic recovery, including reporting that Malaysia is dangerous for tourism."
Such are the terror tactics many Third World governments who dare contradict Western dictates come up against. But, Malaysia, according to its premier, is undaunted. Because Malaysia is not under the IMF, Mohamed says his country has been able to keep off "foreign predators."
Calling Western-led globalisation jargon "the propaganda machine of the West," Mohamed sneered that terms like "democracy," "free market," "world without borders" and "liberalism," have served developing countries little more than to impose intrinsically deceitful ideologies that are beneficial only to the rich upon the poor. The free market, for instance, has been sold as a means to reduce corruption by sidelining government. In reality, the markets exist only to enable investors to maximise their profits; even at the expense of a nation's needs and society's welfare. "The free market is no more than a new name for capitalism -- unbridled Capitalism with a capital 'C'," Mohamed declared.
Still, the Malaysian premier does not feel that his remedy can be prescribed to all and sundry. Answering one inquirer, the physician-cum-politician remarked, "Others must decide whether they want to copy our example or not. I wouldn't presume to advise the Egyptian government."
