Governments can influence lending decisions when banks are protected from competition, whether foreign or domestic.

An IMF aid package could well create a Mexico-like scenario in which the Asian economies need financial assistance repeatedly in the future. Many European governments, however, have removed some regulations that impose such barriers. strong enough to condition money to Indonesia on human rights. Moreover, the IMF, with the Clinton Administration's blessing, has decided to increase its total capital resources (referred to as quota subscriptions) by 40 percent over current levels. the CIA, is closely monitoring all dissidents. 6 Johnson and Schaefer, "The International Monetary Fund," op.

Before Congress recessed in November 1997, it rejected the Clinton Administration's request for a $3.5 billion increase in funding for the IMF. • Formulate a strategic withdrawal from the IMF. The bad loans made by East Asian banks account for 10 percent to 20 percent of their loan portfolios today. for the US government to stop all military support to Indonesia and support the Although some progress has been made in the World Trade Organization toward an effective international financial services agreement, no international agreement at this point has been far-reaching enough to deal with the kinds of reforms necessary to abate the financial crisis now occurring in Asia. In addition, export-driven growth strategies spurred the highest economic growth rates in the world over the past decade. Foreign investment in banking services is often curtailed and sometimes prohibited. temporary fix.

Spring 1997. fundamental rights of both the citizens and the neighbors of Indonesia. Authors: In addition, there are indications that the IMF is now asking some recipients to raise taxes, mainly their value-added taxes.

An IMF bailout is not likely to help these countries in the long term. The International Monetary Fund and Indonesia appear to be near an of the 1996 Nobel Peace Prize to East Timorese leaders Bishop Carlos Ximenes Belo and An IMF bailout is no guarantee of a better tomorrow. This is a far better strategy than placing the burden on the backs of American taxpayers and Asian consumers who were not responsible for causing this crisis. cit. resulted in the death of over 200,000 people, according to Amnesty International estimates Tell Congress: No Bailouts for the Suharto Dictatorship! But without major domestic reforms, the structural and institutional causes of the Asian financial crisis will not be corrected, and new and much larger crises eventually will occur. U.S. policymakers should not support the IMF bailout in Asia. Seek an international agreement on financial services 11, US Secretary of Defense William Cohen said, "I am not To this date, the U.S. has pledged some $47 billion to the IMF, approximately $23 billion of which has gone to the IMF's main account. The International Monetary Fund and Indonesia appear to be near an agreement over the IMF bailout, while the stock market rose 9.1% Tuesday on optimism over the talks. Support for free and open societies in both Indonesia and East Timor is truly the only problems with any human rights, labor or environmental criteria, it will be at best a This agreement is slated to be signed in December 1997, and the United States should ensure that there are no last-minute postponements. This policy would attract more foreign banks and increase private-sector competition. For example, of the 89 less-developed countries that received IMF loans between 1965 and 1995, 48 are no better off economically today than they were before receiving the IMF loans. At the end of 1996, East Asia's outstanding international debt was $752 billion, making this region the international banking system's biggest potential liability. the drop in the value of Indonesian currency led Muslim leader Amien Rais to state Prominent in the news recently are reports Since the US and IMF $40 billion bailout of Indonesia does not address these serious populous country in the world. Cohen also pledged to restore funds for military training aid to Indonesia and expand

More recently, it has been paying greater attention to the policy changes that are needed to revive and sustain long-term economic growth, such as lowering tariffs, reducing barriers to foreign investment, eliminating unnecessary regulations, and privatizing state-owned enterprises.

The President is expected to try again when Congress reconvenes in January, presumably by arguing that more taxpayer money should be granted to the IMF to avoid a global financial meltdown. aid the afflicted countries. Now these Asian governments are running to the IMF to bail out their economies. The East Timor Action Network/US, and Dr. George J. Aditjondro, an Indonesian academic It is estimated that the International Monetary Fund's bailout of Indonesia, Thailand, the Philippines, and South Korea will cost $118 billion-an amount that will grow if South Korea asks for and receives a larger bailout and if the region's financial earthquake spreads to Malaysia and Japan.

and East Timorese people.

Moreover, few have asked whether the IMF is equipped to help these economies and whether its involvement ultimately will do more harm than good. Although the Indonesian occupation of East Timor has been condemned by 10 United Perhaps for no other country has the financial upheaval come at a more critical time, The central banks of these countries, however, accelerated domestic monetary supply in an attempt to make exports cheaper on the world market. Seek an international agreement to eliminate government corruption Normally, a government does this by raising interest rates, which has the effect of reducing the circulation of currency and bringing the currency's peg into balance with the U.S. dollar. 4 Bryan T. Johnson, Kim R. Holmes, and Melanie Kirkpatrick, 1998 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 1998).

Only 44 countries reduced the number of times they borrowed during these same periods. joint training with the Indonesian military. Many developing countries, while partially welcoming foreign banks, tend to treat them differently than they treat domestic banks.

Apa maksud bailout? Istilah bailout apa artinya? The solution to the Asian financial crisis is not to condemn these troubled economies to long-term dependence on the IMF. In order to prevent IMF aid from condemning Asian economies to long-term dependence, which has happened to countries like Mexico in the past, the United States should move immediately to withhold additional funding for the IMF. The bailouts of Indonesia and the Philippines may cost up to $40 billion and $1 billion, respectively.

internationally recognized poverty levels. Rather than rely on the IMF, the United States should use this opportunity to help Asian countries by pursuing steps that will help steer their economies toward greater stability. The U.S. should seek reimbursement for all the money it has contributed to the IMF. A major problem underlying the current economic crisis in these Asian countries is the lack of competitive financial services that are free from government influence. Suharto rose to power in 1965 in a bloodbath that left up to a million people dead. and Financial Services Committee, under the Sanders-Frank amendment, "the United implement its economic reform program "as soon as possible. Instead of increasing pressure on the Mexican government to reform weak financial institutions and the monetary policies responsible for the country's economic crises, these bailouts created incentives for government officials and foreign investors to continue policies and investment practices that led to new financial crises-on an ever larger scale. Since the US and IMF $40 billion bailout of Indonesia does not address these serious problems with any human rights, labor or environmental criteria, it will be at best a temporary fix.

Currently, the IMF does not have enough funds to borrow the billions of dollars the East Asian governments are seeking. These leaders are wrong. Although it may provide some short-term relief, history has shown that countries are more likely to repeat the mistakes that created a financial crisis if they receive IMF aid.2 Most countries that received IMF aid in the past have been back in line to receive more aid.

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