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VIEW FROM WASHINGTON
COVER:
CHUAN INTERVIEW:
SILVER LINING:
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ASIA | March 30, 1998 VOL. 151 NO. 12 |
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Americans for Thailand! By effusively supporting Chuan, Clinton hopes to send a message to Suharto By Christopher Ogden  here was nothing subtle about it: a spirited welcome, a two-hour Oval Office meeting, lavish praise from the President, the forgiving of debt, the granting of $1 billion in short-term trade financing. Not many foreign heads of state are met with such warmth in Washington. That's because Bill Clinton hoped that others-pay attention, Indonesia-were watching when he rolled out the red carpet during the mid-March visit of Thai Prime Minister Chuan Leekpai.
Years of friendship between Thailand and the United States would have guaranteed Chuan a pleasant reception under most circumstances. But this situation was special, reflecting Washington's enthusiasm over Thailand's economic reforms since Chuan came to office in November. By embracing him politically, Clinton and Treasury Secretary Robert Rubin, point man in the U.S. administration on the Asian economic crisis, were saying: Look at Thailand. It's doing what a country should when markets are a mess and currency is in freefall. It's not out of the woods yet (as Chuan was the first to admit in Washington), but it's headed in the right direction and deserves encouragement. Clinton, Rubin and Congressional leaders in both parties have been impressed by Chuan's moves to slash spending and hike taxes, push privatization, drop foreign exchange controls that limited investor confidence, install capable technocrats instead of cronies, float the baht and put into place the belt-tightening reforms demanded by the International Monetary Fund, the very measures President Suharto has mostly refused to adopt in Indonesia. As a result, Clinton said, "We want to do whatever we can to be a good friend and good partner." Good friends follow through, and the U.S. did just that with an assistance package totaling $1.7 billion. It relieved Thailand of $250 million in payment obligations for eight F-18 fighter planes that Bangkok could no longer afford, promised to try to seek reimbursement for the $75 million Thailand has already paid for the jets, agreed to finance $1 billion of raw materials imports, offered to help clean up land mines along the border with Cambodia, vowed to keep U.S. Peace Corps strength in Thailand at current levels rather than cut the program as earlier planned, said it would provide vaccines for Thai children and would move ahead with talks to create an international law enforcement training institute in Bangkok. opic, the U.S. Overseas Private Investment Corp., also approved $400 million in loan guarantees to construct two power projects expected to employ more than 2,000 Thais. A group of private U.S. investors told Chuan it would put more than $600 million into a steel mill. So, in return for imposing the dreaded stick, the Thai leader was able to take home a few carrots. Everything from the public embrace to the tangible goodies marked a sharp turnaround in the U.S. administration's attitude toward Thailand, a country that, before Chuan took office, could scarcely get Washington to return a phone call. Last July, the U.S. took one look at Bangkok's problems and promptly backed away. Badly criticized in Congress two years ago for helping bail out Mexico-despite its huge importance as a neighbor and trade partner and that rescue program's evident success-the administration was wary of exposing itself to criticism once again on behalf of Thailand. When Bangkok approached the IMF for help last year, the U.S. covered its eyes and ears. It was not merely a case of being thin-skinned. Thailand did not appear at first to pose a strategic problem. Its economy was too small. The ignominious record of then Prime Minister Chavalit Yongchaiyudh, whose own cabinet was filled with cronies, inspired little confidence that U.S. taxpayer dollars would be put to good use. When the crisis hit Indonesia, Clinton was paralyzed because of his campaign-finance ties to Jakarta's Lippo Group and his old fund-raising chum Mochtar Riady. For the worst of reasons, Indonesia had red flag written all over it. Only when the turmoil hit South Korea, threatened the implosion of Indonesia and rocked Wall Street did the U.S. climb into the ring. Suddenly, Washington woke up to the realization that the crisis could hit hard economically at home, as well as lead to political and military instability across Asia. Although U.S. Secretary of State Madeleine Albright, whose expertise is neither economics nor Asia, is playing a secondary role to Rubin, the Americans now are treating the crisis as a political issue, not solely an economic one. True, if much of Asia sinks into recession and its currencies continue to drop, the region won't be able to buy many U.S. goods and could flood the West with cheap exports. That outcome won't be avoided by financial re-jiggering and magic bullets, but instead by leadership toward transparent accountability and real reform. Chuan's realism showed that Thailand understands what's at stake. Did Suharto get the message? Does he care? Don't bet on it. He seems perfectly happy to go his own way, just as he has the last 32 years. Photograph by RUTH FREMSON-AP
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