BY MAURICE WILLIAMS
South Korea's new finance minister, Lim Chang-yuel,
announced November 21 that the regime is requesting a $20
billion "rescue" package from the International Monetary Fund
(IMF). Touted by big-business as Asia's "most robust tiger
economy," south Korea has the world's 11th largest gross
national product. The head of the central bank, Lee Kyung Shik,
said a much larger amount would be needed to stabilize the
economy. "I think $20 billion is too low," he remarked to
reporters from Reuters Television.
The IMF "bailout" comes with strings attached - an austerity program that calls for cuts in government spending, the sell-off of state-owned enterprises, shutdowns of insolvent banks, and industrial "restructuring" that would close debt- ridden conglomerates, throwing thousands of workers out of their jobs.
"This could lead to general strikes by the nation's famously militant workers," London's Financial Times fretted. Union officials said wage cuts or layoffs would spark major strikes. The Korean Confederation of Trade Unions, the second- largest labor organization, asserted it would do "whatever it takes to fight against foreign interference in the Korean economy."
The financial crisis stalking the region is hitting Tokyo's banking and credit system. Yamaichi Securities Co., the fourth largest brokerage firm in Japan, shut down November 24 with a debt of some $24 billion. The closure of the 100-year-old enterprise was the largest single corporate failure in the history of Japan, which has the world's second largest economy. More than 7,000 people will lose their jobs at the firm.
Earlier in November, Sanyo Securities, the country's seventh-largest broker, and Hokkaido Takashoku, the 10th biggest commercial bank, also collapsed. Over the past three years nearly 20 financial enterprises went bankrupt. Japanese bankers are jittery about the $265 billion in loans and bank deposits they have extended to various countries in the region. Capitalist investors in Japan held $24.3 billion in Korean bank debt last year, estimated to be the second largest amount after Europe. Seoul's finance minister acknowledged November 20 that Japanese banks have halted credit to south Korea. A 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 $30.5 billion to $20 billion. The south Korean won has dropped by 20 percent against the dollar this year, making the loans even more expensive to repay.
Meanwhile, at the Asia Pacific Economic Cooperation summit in Vancouver, British Columbia, U.S. president William Clinton pressed the governments in Asia to take the "painful steps" demanded by IMF officials. He held up the IMF's "action plan" as a program "to meet the financial challenges that we all face in Asia." Clinton said regimes in Southeast Asia are "doing the right thing in committing to take the right steps .. with the IMF taking the lead for the international community."