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From Al Gore, Thailand expected so much more

November 8, 2000

THAI business leaders will claim sweet revenge should US Vice President Al Gore lose in his presidential bid today.

Gore is seen as part of the US establishment that stood idly on the sidelines as Thailand and the rest of Asia were engulfed in the financial crisis in 1997.

More than half of the 210 bankers, exporters and business leaders surveyed by the Thai Farmers Research Centre wanted Gore to lose the election because of his failure to speak out for the plight of Thailand and Asia during a most difficult time. This anti-Gore sentiment appears to have been galvanised by two events that left lasting impressions in Thailand.

The first occurred at the height of the baht crisis in early 1998, when Finance Minister Tarrin Nimmanahaeminda flew to Washington, DC, to seek US help.

Tarrin's mission was to win back the critical confidence for Thailand from the international community. To achieve this goal, he needed the support of the G-7 countries, of which the US is the leader. Even if the Clinton administration declined to offer financial aid, the least his government could do was provide guidance and moral support for Thailand's attempts to undergo financial and economic reform.

Tarrin was ushered into the White House to meet President Clinton. While he was waiting for their appointment, he sat down to chat with Gore in a photo opportunity that was broadcast around the world. This staged encounter appeared to send a signal that the US was willing to provide moral support to Thailand in one form or another.

The second event occurred during the Asia-Pacific Economic Cooperation summit in Malaysia late last year.

Clinton was too busy dealing with a dispute between the Republican-controlled Congress and the White House that led to a shutdown of some federal services to make his way to the Far East.

Assuming Clinton's role as US leader at the Apec meeting, Gore used his moment in the limelight to drop a political bombshell.

Stealing the show from host Mahathir Mohamad, the Malaysian prime minister, the US vice president spoke out for human rights and indirectly criticised the way the Malaysian government had handled its famous captor, Anwar Ibrahim.

But Gore's memorable performance on the Asian stage was not followed by any statement from either himself or Clinton in regard to the Asian economic crisis.

A more prominent US role was played by Robert Rubin, the former treasury secretary, and Alan Greenspan, the chairman of the Federal Reserve Board. Those two men ultimately shaped the course of the crisis through their selective intervention with the International Monetary Fund.

It was Rubin who dug into the US treasury coffers to provide Mexico with at least US$30 billion (Bt1.29 trillion) in credit during the peso crisis of 1992-93. The IMF was also summoned to extend help to Mexico. That event turned Rubin into a white knight.

But when it came to the Thai crisis, Rubin, a former bond trader who rose to become chair of Goldman Sachs, did virtually nothing, believing the crisis would not affect the US economy. Greenspan, on the other hand, did act on the Asian crisis. Indeed, he worsened it by demanding that Thailand publicly declare its foreign-exchange reserves.

Instead of recognising that when a country seeks financing support from the IMF it usually means the country has run out of reserves to defend its currency or support international transactions, Greenspan issued an ultimatum: if Thailand did not declare its reserves, it would not receive a financing package from the IMF.

Fearing it might lose favour with the IMF - and thus international confidence - Chaiyawat Wibulswasdi, then governor of the Bank of Thailand, caved in and quoted foreign-exchange forward contracts worth about US$21 billion.

International investors expressed shock, saying Thailand was insolvent. The consequence was a massive capital flight, not only from Thailand but also from other Asian countries.

The US role during this critical phase will not be easily forgotten. It's the main reason Thai business leaders no longer trust the Democrat-led administration. But Gore may have been blamed for a situation not entirely of his own making.




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