Brace For More Asian Shocks

At his first full-fledged press conference in almost a year, President Clinton last week could hardly be faulted for concentrating on the urgency of Kosovo and ignoring Asia, except to take questions about the China spy case. But while Serb aggression has pushed the Asian financial crisis out of the limelight, the prospect of systemic economic turmoil is hardly abated. Worse yet, though Clinton may be the logical choice to lead the charge for global economic reform, he’s probably the wrong man for the job.

The chief prophet of grimness regarding Asia is Jeffrey E. Garten, dean of the Yale School of Management, writing in the journal Foreign Affairs. Garten’s thesis in “Lessons for the Next Financial Crisis”--the most authoritative and haunting review of the Asian financial crisis to date--is that world leaders are fooling themselves: “The biggest problem is that the crisis might appear to be abating, thus lulling everyone into moving on to other issues. That would be an immense tragedy, for the one certainty is that we have not seen the end of serious global financial turmoil.” In this belief Garten has expert company, from MIT economist Paul Krugman to hedge-fund impresario George Soros to South Africa’s Nelson Mandela.

Garten, a Washington economic official under several previous administrations, focuses on the leadership vacuum. He argues that the global market system is on the verge of a massive credibility gap that only new leadership at the highest levels can alleviate. “There are far too many actors for any coherence,” he writes. “Someone has to lead.” He dismisses as either unrealistic or politically infeasible the obvious options, including the creation of a new global bank, a larger leadership role for either Europe or Japan, and expanded new responsibilities for existing international economic or financial institutions. Thus, the job of serious reform to save global capitalism from disrepute and decay falls to Washington. Concludes Garten: “For better or for worse, it has to be the United States.”

Probably for worse. The State Department’s leadership ability is limited because the bureaucracy often underrates economic factors in world politics; and our Congress is too inward-looking and domestically fragmented to offer the world sustained, credible leadership. But is the Clinton presidency really capable of the transcendent, Rooseveltian effort that’s now needed? Probably not. For this otherwise adept U.S. politician, who propelled himself from Little Rock to the presidency on the memorable slogan of “It’s the economy, stupid,” is winding down his presidency without measuring up to that slogan on the world stage.

Where was any mention last week by our president of the new world financial reform that so many experts say is mandatory? And where was his call for new U.S. aid to Asia? The Japanese government, to which Clinton officials have been so generous with their unsolicited advice, has given plenty of money to troubled Asian countries in the last several years. But not wealthy America. If the leading capitalist power sits on its fat Wall Street posterior when others are struggling to feed themselves, worldwide capitalism will be exposed as a fraud on humanity. As Garten puts it, “The crisis has eroded the faith of many up-and-coming nations in modern capitalism itself.” What is urgently needed now--but what we probably won’t get from this flawed president and complacent nation--is a wisely guiding leader who can rally the world’s economic reformers around a coherent program. There are still good, timely moves for Clinton to make. For example, he should announce that after this summer’s nationwide elections in unraveling Indonesia--with 200 million people, it’s the world’s fourth most populated nation--he will travel there, bringing with him a U.S. aid package. He could announce at his next press conference that nothing will ever again deter him from attending the next annual meeting of the all-important Asia Pacific Economic Cooperation organization. (He has missed two of the last four). He should publicly reward Asian nations committed to economic reform. For example, why not honor determined, reforming Thailand with a show of U.S. support behind the campaign of its deputy prime minister, Supachai Panitchpakdi, to become the next director general of the World Trade Organization? Installing a man who hails from ground zero of the global financial crisis at the head of WTO would be the right gesture. And Clinton should also play the world stage better with timely, substantive speeches. Next month’s World Bank/International Monetary Fund meeting or the G-7 summit in June offer glorious opportunities.

Asia needs a strong U.S. president now. But Clinton may not be the man for the job. Character may be fate, and his administration may be destined to spend the rest of its time dodging bullets and scarfing up campaign money. At last week’s press conference, Clinton defensively insisted that his legacy will transcend the Lewinsky scandal and garner an admiring judgment from history--that his “box score” will show “hundreds and hundreds and hundreds” of times that he told the truth, against just “that one negative.” But the really important truth is this: Unless our president gets cracking, even his economic legacy may be severely tarnished. Surely he knows that worldwide economic meltdown would relegate the sorry sex scandal into a footnote in a dark chapter of history. And that’s hardly how he would want the Lewinsky matter overshadowed.