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Fates of Chavalit, Suharto sealed in US

 

Thanong Khanthong compares the failed governments of former prime minister Chavalit Yongchaiyudh of Thailand and former president Suharto of Indonesia.

In their last days in office, President Suharto of Indonesia and Gen Chavalit Yongchaiyudh went through similar experiences, watching helplessly as power slipped from their hands. In both cases, the fates of the two leaders were predominantly determined in Washington DC.

Chavalit's decision to resign from the premiership on Nov 6, 1997, stunned the country. There had not been the slightest sign of his intention to step down, despite his failure to halt the economy's slide or put a lid on the intensifying financial and foreign exchange crises. Domestic pressure had been a big challenge, but he thought he could ride through it.

As he cleared out his belongings at his Government House office on his last day, Chavalit told a close aide that it was time for him to go because that morning Hubert Neiss, the director of the International Monetary Fund's Asia-Pacific Department, was going to inform him officially that the IMF would terminate its financial and economic reform package with Thailand.

Washington DC was not happy with the Chavalit administration, which, in its view, did not have political credibility. The absence of US support during Chavalit's premiership would be reflected in the IMF's policy toward Thailand, for the US wielded a strong influence over the monetary policeman of the world.

The IMF was very disturbed with the Chavalit administration's implementation of the tough conditions attached to the reform package. Apart from other failures, Chavalit's flip-flop on the oil tax illustrated that he did not have the political leadership to follow through with the IMF programme. The reversal on the tax increase cost Thanong Bidaya his job as finance minister and raised doubts about the efficacies of the IMF's tough medicine.

As head of the IMF, Michel Camdessus had an obligation to protect the reputation of his organisation if he found that the patient was not swallowing the prescribed medicine. Camdessus' intention was to withhold support for Thailand until the situation became clearer.

The implication of the IMF withholding its support for Thailand, Chavalit realised, was predictable: the economy would collapse, with the baht exchange rate running away. Political and social upheaval would ensue. No leader would survive that kind of turmoil.

Thailand almost became another Indonesia at that critical juncture. Chavalit made the analogy that it was better for the doctor to leave before the patient died.

Another reason for his abrupt resignation was that Lt Gen Chatichai Choonahavan, the late leader of the Chat Pattana Party which controlled 52 MPs, was due to vote down one of the six financial decrees that needed passage in Parliament. Chatichai was aiming for another shot at the premiership and it would have been difficult to stop him.

Finally, Chavalit thought he could find solace on the other side of the aisles in Parliament, where as opposition bloc leader he could plot a comeback when the situation improved.

A little more than six months later, Suharto, who had ruled Indonesia with absolute power for 32 years, became the second domino to fall. Again, Suharto appeared to be resisting the growing domestic pressure for him to step down and the social upheaval that almost ripped apart Jakarta and other major cities. The top military brass stood beside him in support.

When US Secretary of State Madeleine Albright made a call on Wednesday urging Suharto to step down and permit a smooth transition to democracy, it was obvious that Suharto's days were numbered. Without US support, it would be impossible for the IMF to continue to bail out Indonesia with its US$43-billion reform package.

A $18-billion funding package is struggling to get through the US Congress and therefore the IMF was not in a position to support the Suharto regime, an act that would have certainly disturbed the Congressmen.

Without the IMF programme, Indonesia would slide faster into the economic abyss without any chance of recovery. Its 200 million people would sink into poverty.

Stanley Fischer, the first deputy of the IMF, came out to confirm on Wednesday that the IMF was suspending its rescue package for Indonesia, which was scheduled to receive a disbursement of $1 billion on June 4. ''It's clear that we won't be able to move ahead [with further disbursements] until the political situation clarifies. That's the basic situation,'' Fischer stressed.

As with Chavalit's fall, yesterday's resignation of Suharto demonstrated how external forces originating in Washington and domestic pressure converged to render the last verdict.

 

 

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