$43 Billion Bailout for Jakarta Is Flawed
Reforming Indonesia, IMF, and U.S. Policy
Why has the International Monetary Fund (IMF) economic reform program for Indonesia thus far failed to work? Because Indonesia's sickness is more than economic. And therefore the IMF economic prescriptions, even backed with a $43-billion bailout, can't possibly cure Indonesia's ailments.
Just take an honest look at the man the IMF and its major financier, the United States, is counting on to make radical changes--President Suharto, the military commander who has ruled Indonesia for 32 years. It so happens that Suharto and his extended family are the chief custodians and beneficiaries of the vast financial empire that desperately needs radical reform. Suharto does make a few promises to reform and even signs them. No matter. His word is law, and his word can change. One day, because of IMF insistence, a Suharto son loses a monopoly industry; a few days later he gets it back. No use in being a strongman if you can't take care of yourself and your own kin.
American Complicity in Building Up Suharto Dynasty
Don't the sharp minds at the IMF, the White House, the U.S. Treasury
Department, and Wall Street--comprising an interlocking directorate of
power--understand the character of this ruler? Of course they do,
but right now they have no choice except to deal with him. They are in
a bind of their own creation. Over the years members of the U.S.
and Indonesian elites have established a warm mutual admiration society.
For its part, the U.S. side has long stuffed the Suharto regime with
Of course this cozy relationship was, and is, mutually beneficial, politically and financially--mostly to those who have become millionaires in Indonesia and in the United States--but it was, and is, detrimental to the millions of working men and women in Indonesia whose labor produces that wealth. The relationship has so many links, known and unknown, some more corrupt than others, that no single reform can possibly suffice. Change can't come overnight. But a good place to start right now is to require the U.S. Treasury Department to put into place a reform mandated by Congress nearly four years ago.
Pressure on Treasury Secretary Rubin to Apply U.S. Law
The issue is now coming to a head in the U.S. Congress because of the Clinton Administration's request for an appropriation of nearly $19 billion to boost IMF resources for Asia. The Labor Rights Fund, the AFL-CIO, and other groups are opposed to giving the IMF more money until it starts paying some attention to worker rights. In a statement at a bipartisan Capitol Hill forum, Terry Collingsworth, General Counsel for the Fund, called for the release of Muchtar Pakpahan, an Indonesian unionist now languishing in a prison for organizing an independent trade union.
"What's the best way to manage workers in China?" Taiwan
Footwear News, a monthly business periodical in Taipei, asked that
question recently for readers in Taiwan's footwear industry, which uses
China as a production platform for large-scale exports to the United States.
The publication offered this frank guidance for Taiwanese managers now
employing workers in thousands of Taiwanese-owned shoe factories in China:
Especially informative are Change's two latest issues: "The Working Class in China: the Biggest Losers in the [Communist Party's] Fifteenth Congress" and "Transnationals in China." You can enter your subscription by email (email@example.com) or fax (852-274-5098). The newsletter is free, but welcomes donations of $20 or more for a year's subscription of six issues. Address: HKCIC, 3rd floor, 57 Peking Road, Kowloon, Hong Kong.
Here are some late news items on the child labor front:
The Drive for Global Rules To Help Out Investors
Humdrum though their work may be, accountants play a crucial role in assuring that the financial system functions in a way that inspires confidence. Among other things, accountants help investors keep track of how corporate managers are using their money.
That responsibility becomes much more complex in an era of rapid internationalization, when more and more investment money circles the globe. How can investors really have confidence in the reports of accountants in far-off countries using diverse standards? Answer: adopt a single set of accounting standards that apply universally.
Easier said than done. But some highly influential organizations
are trying to meet the challenge. They include:
Negotiators face many controversial issues. But they have some leverage to reach a consensus. For example, firms in many countries with low-quality accounting are seeking access to the capital markets now closed to them, especially those of the United States, which has more transparent and rigorous accounting standards than most countries. Without an improvement of their own policies and practices by adherence to minimal global rules, such firms will continue to be barred from the attractive financial markets of the United States and Britain.
There are lessons here for applying international labor standards
to countries that flagrantly and persistently ignore them.
Human Rights for Workers: Bulletin No. III-4, February 23, 1998
Robert A. Senser, editor
firstname.lastname@example.org. (Send e-mail)