HANNS W. MAULL
Crisis in Asia: Origins and Implications

In a certain respect, the monetary crisis in East Asia is a crisis of the capitalist global financial system. The detachment of international financial streams from the use of finance in the real economy means that the decision on whether there will be stability or crisis has been placed in the hands of financial investors who have a latent tendency towards herd behaviour and panic reactions - or into the hands of those who speculate on the latter. There is a lack of regulation to counter the dynamics of crisis far enough in advance. But we are also facing a crisis of the developing states in East Asia; here the close links between the state, the banks and private enterprise has led to the uncontrolled growth of unsound debt positions, particularly in the context of economic policies aimed principally at expansion. This syndrome characterises the democracies and dictatorships of the region in equal measure. Regaining economic dynamism is dependent in the foreseeable future on a dramatic rise in exports. But the OECD countries will only accept this if East Asia in turn adheres to the rules of a neo-liberal world economic order. The associated opening to foreign competition and foreign capital requires profound change in the East Asian societies. Old power structures must be dissolved and the influence of the state must be pushed back. In principle this means more democracy and pluralism. But at the same time there is no way to avoid disappointing the economic aspirations of broad sections of the population. Reform measures will not be popular. All of this makes political unrest more likely in the medium term which could also lead to conflicts between ethnic groups and states. Xenophobic nationalism is likely to increase. It is important for the rest of the world that the East Asian economies should rapidly start to grow again. In order to achieve this, exchange rates must be sustainably stabilised, debt burdens drastically reduced and credit streams reactivated. The industrial countries must provide some help by writing off debts and keeping their markets open to East Asian goods. Japan must return its economy to a course of growth. Beyond that, the international financial system must be made more resistant to crises through appropriate regulations and the stabilisation of exchange rates.