BY MAURICE WILLIAMS
Hours after government officials in south Korea announced a deal was reached with the International Monetary Fund (IMF) for an "economic rescue," Lim Chang Yuel, the minister of finance, told a December 2 Cabinet meeting that there are still issues to be resolved and adjourned the meeting after 10 minutes. Lim had also skipped a news conference scheduled the day before, where he was to disclose the details of the IMF "bailout" plan. After four rounds of talks, Seoul struck an agreement on December 3 with IMF officials that includes a pledge by the country's leading presidential candidates that they will honor the terms of the financial arrangement if they win the December 18 elections.

The finance minister's actions reflected south Korea's rulers' nervousness as they maneuvered to get a better deal from the IMF, which is demanding austerity measures from Seoul in exchange for delivering a $55 billion loan package - the largest ever. The "bailout" is intended to maintain the flow of blood money into the coffers of U.S. banks and other imperialist financial institutions. It will force Seoul to impose deep cuts in social programs and layoffs that could triple the country's unemployment and to give up chunks of the country's national patrimony to U.S. and other foreign investors.

South Korea, like other countries in southeast Asia, has been slammed by the storm of currency devaluations that have raised the specter of defaults on loan payments to imperialist banks. Also, throughout the region prices for goods have been falling as markets are glutted with automobiles and other commodities that cannot be sold at high enough profits for the employers.

Washington is also trying to take advantage of the effects of the financial crisis on Japan, its main imperialist competitor in the region, by pushing to pry open Japanese markets and buy up banks and other property there.

These moves, however, are stoking the pressures toward explosive confrontations in a region of hundreds of millions of people, increasing the stakes for the barons of finance capital and for working people.

The three major south Korean television stations reported December 2 that Seoul had agreed to the IMF demands to shut down more than half of 12 banks that are burdened with bad loans. That same day the government suspended the operations of nine of the country's 30 investment banks.

"Officials and bankers said a main sticking point in the talks is Korea's financial sector," the December 2 Wall Street Journal reported. "Labor unions are strong at banks, and a union umbrella group has threatened to strike if an IMF package leads to layoffs."

Bank workers organized protests against expected job losses in Seoul for two days, December 1-2. Last January hundreds of thousands of workers in south Korea participated in a general strike for more than three weeks to demand the repeal of antilabor legislation that restricted union rights, allowed companies greater latitude to impose layoffs, and gave additional powers to the secret police.

"IMF officials are said to have complained about Seoul leaking details of the talks to the domestic media and encouraging public resistance to the IMF demands," London's Financial Times reported December 3. The IMF delegation in Seoul is "scared about driving the economy into collapse and are uncomfortable about the implications," a U.S. investment banker told the financial daily.

Mexico set the pattern
When world stock prices soared December 1, pushing the Dow Jones Industrial average to above the 8,000 point level, some investment officials said this indicated the financial crisis had waned. "The message of the rally is relief that some of these concerns have been lessened," remarked Richard Cripps, chief market strategist at Legg Mason Wood Walker. But the currency devaluations and mushrooming bank failures throughout the region are setting the pattern, not the gyrations of the stock markets.

What the U.S. rulers are pushing for in Asia is a repeat - on a much greater scale - of the "bailout" scheme imposed on Mexico following the collapse of the peso there in December 1994.

U.S. president William Clinton told reporters Washington would join in providing new loans to south Korea only if Seoul agreed to take some "tough medicine" like the government of Mexico did when its economy was hammered three years ago. During a December 2 speech to the Economic Club of New York, Alan Greenspan, chairman of the U.S. Federal Reserve, said the prospects for many Asian economies were good, "provided their markets are opened up to the full force of competition."

When the regime of Ernesto Zedillo announced a devaluation of the Mexican peso three years ago, international money traders unloaded the currency, driving it down 40 percent against the U.S. dollar. At the time the country's foreign debt stood at $98 billion, or 38 percent of the country's gross domestic product. In 1995, Washington pieced together $48 billion in "loan guarantees," $20 billion of which came from the U.S. treasury and the rest from the IMF and banks in Europe.

In exchange, the Zedillo administration agreed to deposit all revenues earned from the state-owned oil monopoly Pemex into an account at the Federal Reserve Bank of New York before being transferred to Mexico - or seized in case of a loan default. The Mexican government acceded to implementing the IMF austerity program to repay the loans and pay interest on the country's foreign debt. The regime subsequently imposed a limit on pay raises well below the rate of inflation, hiked the sales tax from 10-15 percent, and raised fees for public services.

During the 1996 presidential campaign, Vice President Albert Gore bragged that Washington collected an extra $500 million profit in the deal, by charging "premium" interest to Mexico, 4 percent higher than normal U.S. rates, supposedly to compensate for the risk. New York Times columnist Thomas Friedman remarked at the time, "To pay for the bailout, Mexico cut the standard of living for most of its people by 20 percent. There should have been a revolution, but there was barely a demonstration." Since the currency devaluation in Mexico more than one-fifth of Mexico's banking system has been sold off to international investors. Four Mexican banks that were "bailed out" in late 1994 and early 1995 are now owned by foreign banks, including Banca Confia, now owned by the U.S. banking giant Citibank.

Three major `bailouts'
Washington has now engineered major "bailouts" for three countries in southeast Asia similar to the massive loans arranged to shore up the Mexican economy. The government of Thailand negotiated a $17 billion package and the regime in Indonesia agreed to a "rescue plan" of $40 billion.

The stakes for capitalist investors are higher in south Korea, which has an economy as large as Thailand, Malaysia, and Indonesia combined. One-third of south Korea's $70 billion in short-term foreign debt is due to be paid by the end of the year, while its foreign reserves have reportedly dwindled from $30 billion to $20 billion. The currency has been devalued 20 percent against the dollar this year, making the loans even more expensive to repay.

The IMF program for these regimes demands cuts in social spending, shutdowns of insolvent banks, the sell off of state- owned enterprises, and allowing international investors to take over commercial banks and other financial institutions through mergers and acquisitions. Other measures include industrial "restructuring" that would close debt-ridden conglomerates, throwing thousands out of their jobs.

Halla Heavy Industries, south Korea's fourth-largest shipbuilder, announced November 26 it was firing 3,000 workers in December, anticipating IMF "restructuring" conditions. The company missed a loan payment of $324 million that was due December 2. Workers at Halla said they would resist the measures. And mass layoffs are banned under Seoul's current labor laws.

John Lee, manager of the investment firm Scudder, Stevens & Clark, was reported to be eyeing the purchase of the south Korean steel producer Pohang Iron and Steel (Posco), whose stock is now trading for less than 10 times this years' expected earnings.

The Doosan beverage company said November 10 it planned to sell its bottling operations to Coca-Cola for $432 million, making the purchase one of the largest sales ever to a foreign investor.

Elsewhere in the region, Citibank announced a deal on November 26 to buy a majority stake in Thailand's seventh largest bank, which has assets of nearly $7 billion. If the pact is approved for the First Bangkok City Bank, it will be the first outright takeover of a Thai bank by a foreign institution.

Thailand remains on the brink of a financial collapse: the U.S. credit rating agency, Moody's Investors Service Inc., downgraded Thailand's debt ratings to one notch above junk status. It was the third such demotion this year, reflecting apprehensions that the regime could default on its $95 billion foreign debt.

Penetration of Japan's markets
South Korea's financial troubles have had the biggest impact on Japan. Capitalist investors in Japan held $24.3 billion in Korean bank debt last year. Seoul's finance minister acknowledged that Japanese banks have halted credit to south Korea.

U.S. capitalists are using the currency devaluations to bust open Tokyo's protections of its economy. "Japan's financial crisis has created an unprecedented opportunity for U.S. financial technology," declared an article in the December 15 issue of Forbes magazine. "That spells boom times for U.S. bankers, brokers and asset managers."

"For years American companies have complained that it is too expensive to invest in Japan; now they can pick up companies on the cheap," the November 24 New York Times asserted. "By the same token, American companies that have long complained that Japan is cornering key growth markets, like Vietnam, now have a chance to move while the Japanese are distracted."

During the month of October, the top trading houses in Japan were Merrill Lynch and Morgan Stanley Dean Witter, not Nomura and Daiwa as in the past.

Citibank, with $10 billion in deposits and Fidelity Investments, a Boston-based mutual fund company, will begin selling mutual funds in 1998, when Tokyo opens the country's financial markets to foreign competition. The big-business media in the United States is campaigning to press Tokyo to go further. "The failures point the way to the creation of a much sounder regional economy that could propel global growth," the December 8 Business Week opined. "But before the failures can pay off, authorities have to allow even more institutions to fail .. and even accept foreign ownership of major banks and companies."

Japanese officials pledged to shore up the largest financial institutions that are at risk and close the weakest banks. "Banks are to be given a chance to come up with plans to improve their business," stated Sei Nakai, senior deputy director of the ministry's banking bureau. "But if those plans are short of substance we will have no mercy."

Four financial institutions went belly up in Japan during the month of November, including Yamaichi Securities with $188 billion in investments - the largest bankruptcy ever in the country.

Moody's Investors Service announced November 26 it was considering downgrading the credit rating of five Japanese banks, including Mitsui Trust and Nippon Credit. A similar downgrading preceded the collapse of Yamaichi.

In response, Hiroshi Mitsuzuka, the finance minister, and the Bank of Japan's governor, Yasuo Matsushita, issued a joint statement that day "strongly requesting people not to be guided by groundless rumors and to act sensibly" Long lines are forming daily outside weaker banks as nervous depositors withdraw their savings. "Confidence in the financial system is collapsing," declared the November 29 Economist.

U.S. uses weight at Asia Pacific summit
President Clinton and other White House officials engaged in arm twisting during the November 24-25 meeting of the Asia Pacific Economic Cooperation (APEC) forum in Canada to push the IMF-sponsored programs as their solution to the Asian financial crisis. Washington initiated the annual grouping of 18 governments four years ago as a regional club to hammer its capitalist rivals in Europe. The Clinton team squelched demands pushed by the Malaysian government and other regimes for a regional monetary fund that would undermine IMF. They had laid the groundwork by calling a special meeting in Manila one week before the APEC conference to press finance ministers and central bank officials to accept the IMF proposals.

U.S. secretary of state Madeleine Albright chided Philippine president Fidel Ramos, who complained about Washington's "enhanced" position and the dangers of developing nations in Asia being forced back into colonial status as a result of "the medicine the United States is prescribing."

"Will we squander our energies on finger-pointing and blame- pinning, or will we focus on how to get back on track?" Albright barked in response.

Response by U.S. ultrarightists
The Clinton administration's response to the financial crisis sweeping southeast Asia has fueled the nationalist demagogy of the incipient fascist movement in the United States. Ultrarightist politician Patrick Buchanan deepened his attacks on the Clinton administration, which he has described as being weakened by the defeat of its attempts to pass "fast track" trade legislation in Congress and by the setback the White House suffered in its drive to launch a war against Iraq. These events, Buchanan said in a November 19 syndicated column, indicate "the first triumph of a blazing American nationalism."

In a November 29 column, Buchanan wrote, "Asia's financial crisis is not a natural disaster; it is man-made, the work of corrupt and incompetent political elites, crony capitalists and idiot investors who deserted their own countries to chase hot profits in Asia." Buchanan called on "Congress to run a sword through this corrupt global system." In an earlier article he had stated that "not another dime should go to the IMF or its neo-socialist little sister the World Bank." He said the two imperialist financial institutions were "leeches of U.S. capital."

He continued his campaign to fan the flames of resentment by "U.S. taxpayers" against these corrupt bankers, pointing once again to U.S. treasury secretary Robert Rubin and the investment bank Goldman Sachs - explicitly Jewish names - as his examples. "Clinton will come back from Vancouver Asia- Pacific summit and demand even more money to bail out Robert Rubin's Wall Street buddies," he wrote in his November 29 column. "We do it all - to make the world safe for Goldman Sachs."

In a demagogic appeal trying to draw working people into his "America First" campaign, Buchanan said that with the devaluation of the Mexican peso, "U.S. companies saw the price of Mexican labor had been cut in half in dollars, they laid off their workers, shut down their U.S. plants and headed south for the Rio Grande."  
 
 
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