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THE NATION: Editorial & Opinion; Fa
- Subject: THE NATION: Editorial & Opinion; Fa
- From: suriya@xxxxxxxxxxxx
- Date: Thu, 21 May 1998 20:40:00
Editorial & Opinion
Fates of Chavalit, Suharto
sealed in US
Thanong Khanthong compares the failed
governments of former prime minister
Chavalit Yongchaiyudh of Thailand and
former president Suharto of Indonesia.
In their last days in office, President
Suharto of Indonesia and Gen Chavalit
Yongchaiyudh went through similar
experiences, watching helplessly as power
slipped from their hands. In both cases, the
fates of the two leaders were predominantly
determined in Washington DC.
Chavalit's decision to resign from the
premiership on Nov 6, 1997, stunned the
country. There had not been the slightest
sign of his intention to step down, despite
his failure to halt the economy's slide or put
a lid on the intensifying financial and foreign
exchange crises. Domestic pressure had
been a big challenge, but he thought he
could ride through it.
As he cleared out his belongings at his
Government House office on his last day,
Chavalit told a close aide that it was time
for him to go because that morning Hubert
Neiss, the director of the International
Monetary Fund's Asia-Pacific Department,
was going to inform him officially that the
IMF would terminate its financial and
economic reform package with Thailand.
Washington DC was not happy with the
Chavalit administration, which, in its view,
did not have political credibility. The
absence of US support during Chavalit's
premiership would be reflected in the IMF's
policy toward Thailand, for the US wielded
a strong influence over the monetary
policeman of the world.
The IMF was very disturbed with the
Chavalit administration's implementation of
the tough conditions attached to the reform
package. Apart from other failures,
Chavalit's flip-flop on the oil tax illustrated
that he did not have the political leadership
to follow through with the IMF programme.
The reversal on the tax increase cost
Thanong Bidaya his job as finance minister
and raised doubts about the efficacies of
the IMF's tough medicine.
As head of the IMF, Michel Camdessus
had an obligation to protect the reputation
of his organisation if he found that the
patient was not swallowing the prescribed
medicine. Camdessus' intention was to
withhold support for Thailand until the
situation became clearer.
The implication of the IMF withholding its
support for Thailand, Chavalit realised, was
predictable: the economy would collapse,
with the baht exchange rate running away.
Political and social upheaval would ensue.
No leader would survive that kind of turmoil.
Thailand almost became another Indonesia
at that critical juncture. Chavalit made the
analogy that it was better for the doctor to
leave before the patient died.
Another reason for his abrupt resignation
was that Lt Gen Chatichai Choonahavan,
the late leader of the Chat Pattana Party
which controlled 52 MPs, was due to vote
down one of the six financial decrees that
needed passage in Parliament. Chatichai
was aiming for another shot at the
premiership and it would have been difficult
to stop him.
Finally, Chavalit thought he could find
solace on the other side of the aisles in
Parliament, where as opposition bloc
leader he could plot a comeback when the
A little more than six months later, Suharto,
who had ruled Indonesia with absolute
power for 32 years, became the second
domino to fall. Again, Suharto appeared to
be resisting the growing domestic pressure
for him to step down and the social
upheaval that almost ripped apart Jakarta
and other major cities. The top military
brass stood beside him in support.
When US Secretary of State Madeleine
Albright made a call on Wednesday urging
Suharto to step down and permit a smooth
transition to democracy, it was obvious that
Suharto's days were numbered. Without US
support, it would be impossible for the IMF
to continue to bail out Indonesia with its
US$43-billion reform package.
A $18-billion funding package is struggling
to get through the US Congress and
therefore the IMF was not in a position to
support the Suharto regime, an act that
would have certainly disturbed the
Without the IMF programme, Indonesia
would slide faster into the economic abyss
without any chance of recovery. Its 200
million people would sink into poverty.
Stanley Fischer, the first deputy of the IMF,
came out to confirm on Wednesday that the
IMF was suspending its rescue package for
Indonesia, which was scheduled to receive
a disbursement of $1 billion on June 4. ''It's
clear that we won't be able to move ahead
[with further disbursements] until the
political situation clarifies. That's the basic
situation,'' Fischer stressed.
As with Chavalit's fall, yesterday's
resignation of Suharto demonstrated how
external forces originating in Washington
and domestic pressure converged to
render the last verdict.