The Militant(logo) 
    Vol.62/No.4           February 2, 1998 
S. Korea: Washington Presses Austerity  

Some 2,500 workers and students shouting "Fight! Fight!" and thrusting their fists in the air marched in south Korea January 17 to protest layoffs the government says are needed to meet demands of the International Monetary Fund (IMF). Two days later the Korean Federation of Trade Unions, which led a three- week general strike against layoffs last year, organized another demonstration against the IMF demands for austerity. A few days later in Thailand, 3,000 auto parts workers walked out, protesting a cut in their work hours and the company's refusal to pay an annual bonus. Police violently broke up their protest demonstration and arrested 58 strikers January 21.

These protests came as Washington pressed its Mexican-style IMF "bailout" scheme on workers and peasants throughout southeast Asia. At the same time capitalists in the United States and Europe are debating the impact of the Asian economic crisis on their profit margins.

In mid-January the south Korean government set up a "consultative group" modeled after the one the Clinton administration imposed on Mexico in 1995 following the collapse of the peso in 1994. As the Mexican government repaid the "rescue" loans there, workers were hit with a drop in living standards and higher unemployment, and U.S. capitalists bought up more of the country's patrimony.

The "consultative group" in south Korea will include trade union officials, the economic deputy prime minister, and the head of the Federation of Korean Industry. They hope to implement a "social contract" of layoffs and other austerity measures without provoking sharp confrontations with the workers. The Parliament postponed discussion on a layoff bill January 15 pending an agreement reached by the group.

In the midst of a currency crisis, last December the IMF extended a $57 billion package of loans to the south Korean government, while insisting Seoul impose deep cuts in social programs and layoffs that could leave 1.3 million people jobless. One of the main aspects of the IMF deal called for "restructuring" among south Korean conglomerates to pay off debts and force layoffs to reduce excess capacity.

International investors had foisted loans on enterprises in south Korea and throughout the region as a way to extract profits from interest payments into the coffers of U.S. banks and other imperialist financial institutions. The IMF bailout is intended mainly to assure repayment of these loans.

As part of its "revamping process" Hyundai, the largest conglomerate, announced January 19 that it would shelve plans for an integrated steel mill and drop plans for building a semiconductor factory in Scotland, an auto plant in Indonesia, and office buildings in China. The third largest of the top four corporations, the LG Group, known mainly for its chemical and electronics operations, said it would jettison 90 businesses by 1999. Neither Hyundai nor LG announced layoff plans.

Washington pushes military might
Seeing a profit bonanza from the devalued currencies throughout Asia, imperialist investors are moving into the region to buy up enterprises at discount rates. A few ruling class figures, however, repeated their anxieties that the currency turmoil could prompt spiraling deflation, an economic slowdown, and political instability. "This uncoordinated global contraction could lead to a deflationary cycle," wrote Robert Reich in the January 15 Financial Times of London. "As the global economy slows, social unrest threatens," added Reich, who had been the labor secretary in the Clinton administration.

"People [in some Asian countries] have lost half their savings. That's a pretty predictable recipe for some serious turmoil," stated Robert Manning, an official with the Council of Foreign Relations, a U.S. ruling- class policy-making institution. One Pentagon official voiced concerns about a "rise in Islamic radicalism" in Indonesia.

Seeking to underscore Washington's ability to use its military might for maintaining stability and to enforce IMF "reforms," U.S. defense secretary William Cohen launched a 12- day tour of the region January 12. The defense secretary organized a meeting in Jakarta to discuss military relations. "I am not here as any sort of financial expert, I am here to talk about security issues," he explained.

Cohen announced January 14 that the Clinton administration and the Philippines government reached a tentative agreement to resume military relations. The U.S. military has not had forces stationed in the Philippines since 1992. The White House is aiming to beef up its arsenal in the region, which already includes 100,000 troops, fleets of aircraft, and warships.

"Washington's key concern, however, is with the Korean peninsula," reported the January 15 Christian Science Monitor. The 37,000 U.S. GIs deployed in south Korea remain a dagger aimed at the workers state in north Korea.

Meanwhile, "Asia's financial crisis is starting to affect Europe, slowing down exports of everything from heavy machinery to telephones," the New York Times stated January 20. With unemployment at record levels in Germany and France, the south Korean corporation Daewoo suspended plans in mid-January to build two new factories in France that would have created 1,000 new jobs.

The aircraft industry has been rocked by the Asian economic crisis as Asian airlines contemplate canceling orders. Cancellations could easily reach 100 jets if the economic turmoil continues. The two giants in the industry, the European consortium Airbus Industrie and the U.S.-based Boeing Co., are tussling over a shrinking market.

On January 14 Philippines Airlines canceled delivery of four Boeing 747s. Malaysia Airlines System is discussing with Boeing executives delaying the delivery of 20 aircraft by up to five years. Some 35 percent of Boeing's backlogged orders are in Asia, and the company is expected to post a $384 million loss for 1997.

Indonesia's state-owned airline Garuda missed two payments totaling $8 million on aircraft ordered from Airbus in December and acknowledged on January 13 that it had stopped lease payments on six new Airbus A330s.

Moody's Investor Service lowered its credit rating on two big French banks and released warnings on seven other banks based in Europe. European banks are reported to have outstanding loans to crisis-ridden Asian nations that are nearly 2 percent of the Gross Domestic Product. Countries in the European Union export some $56 billion in trade to Thailand, Indonesia, Malaysia, the Philippines, and south Korea.

Last year, bankruptcies in Japan soared to the highest number in more than a decade as 16,365 businesses collapsed. The three largest brokerage companies in Japan reported losses totaling $438.5 million for the final quarter of 1997. Yamaichi Securities, which had been the country's fourth- largest brokerage firm, went belly-up last November under the weight of $2 billion in losses.

A Japanese television network estimated January 11 that bad bank debt in the country amounted to $682 billion. Eight days later the Japanese cabinet approved an infusion of $232 billion to shore up the country's banking system.

Nationalist and protectionist demagogy
Bosses and government officials in the United States and Europe have stepped up accusations that Tokyo and other regimes in Asia are jacking up exports to resolve their economic woes.

Exports from Japanese auto makers to Europe soared 32 percent in the 11 months leading up to last November, according to the Japan Manufacturers Association. Japan's car companies plan to increase overall production in Europe by 300,000 to 350,000 over the next four years "This is the clearest indication the Japanese are exporting their way out of their troubles at the expense of somebody else," declared Anthony Millington, a representative of the European industry association ACEA.

"I don't think Congress is going to tolerate any countries that try and export their way out of an economic downtown, which don't give us access to the market at the same time," U.S. Senator Carl Levin remarked January 14. Levin said Tokyo would risk renewed trade tensions if it did not open its domestic markets to U.S. business interests.

This economic nationalism and demagoguery is reflected in the comments of members of the U.S. Congress who are trying to restrict the Clinton administration's access to the government's $40 billion Exchange Stabilization Fund. The fund allows the president to provide direct loans to other nations without Congressional approval. They have also warned that Congress will not approve the president's request for an additional $18 billion for IMF loan arrangements.

"We all have a stake in Asia's financial stability, but this help should not be a bailout for bankers, speculators or repressive dictators," said Congressman David Bonior, the second-highest-ranking Democrat in the House of Representatives.

"Where is the magic of the marketplace for the reckless investors and speculators at Chase Manhattan, Bank of America, and Citibank who have made huge profits in Asia but now want U.S. taxpayers to take the hit so they don't have to lose substantial sums as their loans go sour," proclaimed social democrat Rep. Bernard Sanders.

This nationalist demagogy is put forward by prominent rightists as well. Columnist Phyllis Schlafly, for instance, denounced the IMF as "a bank account into which Congress puts U.S. money that is given away by a European bureaucrat named Michael Camdessus."  
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