[Congressional Record Volume 144, Number 18 (Monday, March 2, 1998)]
[Senate]
[Pages S1193-S1194]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      SUPPORTING IMF REPLENISHMENT

  Mr. BAUCUS. Madam President, I rise to discuss the President's 
request

[[Page S1194]]

to provide new support for the International Monetary Fund.
  Last December I spent two weeks in Southeast Asia, visiting the 
Philippines, Brunei, Thailand and Indonesia.
  Two of these countries, Thailand and Indonesia, are among the nations 
hardest hit by the currency crisis. They, along with the Philippines 
and South Korea, are working with the IMF to reform their financial 
systems and promote an early recovery.
  I believe it is very much in our interest to help them through this 
crisis, and to provide insurance against a new one by supporting the 
full request for IMF replenishment.


                       ECONOMIC STAKES FOR THE US

  Why is this?
  First, all the countries suffering from the crisis are important 
markets. South Korea is our sixth largest export market. Thailand 
bought nearly $9 billion worth of American exports last year. And the 
longer this crisis continues, the less they will be able to buy.
  So economists predict that our economy will lose a half point to a 
full point of growth next year, meaning $40 billion to $80 billion. 
Bringing it home, I got a letter last month saying a Montana 
semiconductor company has just laid off 85 people because of this 
crisis. If we fail to stop the crisis now, we could well see worse, as 
pressure grows on China to devalue its own currency. The result of that 
would be new panics and currency crashes, coupled with greater economic 
losses for America.


                        NATIONAL SECURITY STAKES

  National security should be an even greater concern in this crisis.
  In the past century, we fought seven foreign wars: the Spanish-
American War, the ``Philippine Insurrection'' which followed it, World 
War I, World War II, Korea, Vietnam and the Gulf War. And of these 
seven wars, we fought no less than five in countries affected by the 
Asian financial crisis. Even today, we have 37,000 troops in South 
Korea to deter a North Korean invasion.
  Since the 1970s, economic growth has helped make Asia more 
prosperous, stable, and peaceful. And that has been of immense national 
security benefit to us. If the region falls into depression, that could 
change. Southeast Asia could become destabilized; North Korea could see 
an opportunity in an unstable South; and we could see other 
consequences we cannot now predict.


                            FOUR CONDITIONS

  So it is in our interest to end this crisis. And we should contribute 
to the IMF's effort to do so, under four conditions.
  First, we should not simply bail countries out; instead, we should 
help those people who are willing to help themselves.
  And that is what we see in most affected Asian countries. Thai 
citizens, through the ``Thai Helping Thai'' campaign, have contributed 
millions of baht to help the country pay off foreign debts. In Korea, a 
similar campaign has brought in donations of gold from sixteen million 
of the country's forty-two-million people. As the President of the 
Institute of Korean-American Affairs told me in a letter she sent last 
month:

       With every ounce of gold that is collected, there lies a 
     pool of personal memories. Married couples are giving their 
     gold wedding rings and parents are surrendering gold items 
     they had hoped to pass on to their children.

  Likewise, governments are taking very tough and courageous reforms--
closing failing financial institutions, ending subsidies and opening 
capital markets. Having spoken first-hand with Prime Minister Chuan and 
his team, I believe the Thai government is of high quality and has a 
convincing plan for recovery. While I have not visited South Korea 
since the crisis began, my impression is that President Kim Dae-jung 
also has an aggressive reform agenda and deserves our support.
  Second, other countries should share the burden. And, in contrast to 
the Mexican crisis three years ago, they are doing so.
  Japan has pledged $19 billion, about double our pledge of $9.7 
billion. While Japan should do more to promote imports from affected 
countries than it has, its financial contribution in time of recession 
deserves credit.
  Other countries are also doing their part. Australia has pledged $5 
billion, Singapore also $5 billion, the European Union $3 billion, and 
China $1 billion. And China should be applauded for sticking by its 
promise not to devalue its own currency despite intense pressure on 
Chinese exports.
  Third, the new IMF funding should be part of a long-term strategy to 
update the international financial institutions.
  Between 1986 and 1995, world GDP grew from $26 trillion to $33.5 
trillion, or 25%. During the same period, world capital flows grew from 
about $188 billion to $1.2 trillion per day--about 630%. So the 
financial world has fundamentally changed in a way the world productive 
economy has not.
  International financial policies and institutions have not kept up. 
Our failure to anticipate two large crises in three years--Mexico and 
Asia--shows that beyond any doubt. So as we approve funding for the IMF 
as today's leading financial institution, we also need a serious, 
profound effort to understand what changes we need to make to adapt 
ourselves to a new world.
  Finally, we must be ready to say ``no'' when governments will not 
reform. In this regard, I am very concerned about Indonesia.
  Indonesia's finances are no worse off than are Thailand's or Korea's. 
But the government has been far slower to implement the reforms it 
pledged last year, and has recently cast about among several new plans. 
The result has been a prolonged crisis, continued capital flight and 
threats to political stability.
  We should work very closely with Indonesia's government to fix these 
problems. But if the government will not implement its promises, we 
will have no choice but to back off.
  On the whole, I believe the Administration is acting in the spirit of 
our national interest and good common sense by working with the IMF to 
end the financial crisis. So far, when governments have implemented the 
IMF programs, the results have been good. The Thai currency has 
recovered from a low of 57 to the dollar to 43 today, and the Thai 
stock market has rebounded by more than 50% since January. Korea is 
also seeing good results; and countries with less financial trouble--
Singapore, the Philippines, Brunei--are benefiting from their 
neighbors' recovery.
  So we should stick with a plan that is working. We should approve the 
Administration's request for IMF replenishment. It is appropriate for 
Congress to add some conditions relating to market access or greater 
openness on the part of the IMF. But it is not appropriate to turn the 
request down or to link it to totally unrelated issues like abortion, 
as some in the House hope to do.
  Madam President, this is a critical issue of American leadership; of 
American national interest; and also of jobs and prosperity for 
Americans at home. I hope the Senate will approve the Administration's 
request.
  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SPECTER. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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