Commentary

25th October 1998

The invisible superpowers

By Mervyn de Silva

At the end of the last World War the two countries that had threatened world peace, Germany and Japan were defeated and humbled. The joys of victory however could not always suppress an unanswered question. Why was the atom bomb, a new awe-inspiring weapon, used against Japan and not Germany?

Was it racial prejudice? Of course many other plausible answers were offered. In any case, a new war had commenced, a new kind of war, not a clash of arms but a battle of ''isms'', ideologies - Capitalism Vs. Communism, an undeclared war between systems, democracy Vs. the totalitarian state.

It was soon introduced as the Cold War. Author? Author? Was it George Kennan, a middle-rung diplomat in the American Embassy in Moscow? Was it Walter Lippman, the Doyen of American columnists or was it Robert Strauss-Hupe, who served a few years in Colombo as the American Ambassador?

The United States of America has remained ''united'' while its once implacable adversary, the Soviet Union has been wrecked by dis-union. Whatever the answer, or answers, we need to focus on the man in the White House

Meanwhile the same forces and the administration pursue its post-war ally, Japan, which appears to have done better in the cut-throat business of Big business. It ignored the conventional wisdom that the business of America is business meaning, global trade. Japan, the aggressive rival is the yellow peril.

Of course the United States has allies (or weapons) to deal with threat and promote its interests in the two strategic spheres - the military, and the economic - NATO in the military field, thus the intervention in KOSOVO, and the IMF and World Bank in the global economic sphere.

The American reaction to the Japanese crisis is strong evidence, Japanese experts claim of American ''double standards.''

"It showed that the Americans could easily ignore their own principles," says Takoshi Nakamae, President of the Nakamae International Research Institute in Tokyo.

Despite this accusation, ''few people here (Hong Kong) are gloating over a high-flying investment Fund that crashed to earth. It hits close to home in Asia, which has seen many of its top investors wiped out in the financial crisis,'' reported Mark Landler of the NYK TIMES.

How does the Clinton administration read the situation? Alan Greenspan, Chairman of the Federal Reserve Board told the US Congress ''the Central Bank was getting more amenable to a reduction in reduced interest rates''.

The reaction was immediate. The same evening, the Dow Jones industrial average went up by about two hundred points.

And Greenspan had a special word to prospective investors. He warned that there were ''few signs'' that the financial crisis which started in Asia had subsided, or is about to do so. Policy makers throughout the world have to be specially sensitive to the deepening signs of global distress, which can impact on their own economies''.

If the title of ''economic superpower'' is acceptable, then it is Japan which can stand at the head of any line-up, ahead surely of the European challenger Germany

And yet, last month the Lower House passed as many as eight banking Reform Bills. But the move did not "halt panicked foreign investors from dumping massive amounts of stocks and sending the Tokyo market temporarily crashing to alarming new lows,'' reported Sandra Sugawara, a Tokyo-based American Correspondent.

But this must be placed in the ''big picture''. The Japanese authorities have to deal quickly with the 600 billion, I repeat billion, dollars, in loans that are not being repaid. And the politics of this situation? The new legislation includes a "Financial Revival Committee'' to work with the Finance Ministry to oversee the failed banks. Let the High Priest of American global affairs punditry have the last word:

What began 15 months ago as a currency crisis in Thailand and then spread across Asia, now threatens the industrialized world.

No government and virtually no economists predicted the crisis, understood its extent or anticipated its staying power," observed Henry Kissinger in a contribution to Los Angeles Times. He added: "The inability of the IMF to operate where politics and economics intersect is shown by its experience in Russia. In Indonesia, the IMF contributed to the destruction of the political framework by an excessive emphasis on economics....."

Does it mean World Bank - IMF policies can only operate successfully in a ''controlled'' democracy or limited democracy..... in other words a (benign?) dictatorship? Perhaps Sri Lankan leftist leaders were right when they warned of the LOKA BUNKUWA.....!

Hulftsdorp Hill

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