[asia-apec 571] Financial Crisis : Our Responses

[appasec]

Financial Crisis : Our Responses

Conference Orgnaised by Hong Kong Based Regional NGOs, 15-18 June, 1998

FINAL STATEMENT   

The meeting was jointly organised by Regional NGOs namely, Asia Alliance of
YMCAs, Asian Regional Exchange for New Alternatives, Asian  Center for the
Progress of Peoples, Asian Human Rights Commission, Asia Monitor Resources
Centre, Committee for Asian Women,  Oxfam Hong Kong, and World Student
Christian Federation (Asia Pacific Region).

Twenty five participants representing local and regional NGOs met at the
YMCA in Hong Kong from June 15 to 18, 1998 on the theme "Financial Crisis:
Our Response."  The participants examined the situation of crisis in the
region and listened particularly to perspectives coming from people's
organizations and NGOs in Thailand, Korea, Indonesia, Philippines, Malaysia,
and Hong Kong. The participants reached the following conclusions:

1. That what we are witnessing and experiencing in Asia is not just a
financial crisis but an economic crisis that has wide-ranging social,
political, and cultural dimensions;

2. That the roots of the current crisis run deep and are very much related
to the kind of economic models that many Asian societies have been pursuing
for many years, the inability of national governments to exercise leadership
that is responsive to people's needs and interests, the dominant role that
multilateral financial institutions have had in shaping economic and social
policies of Asian countries, and the entire globalization process which has
aggressively pushed for "free market" economic policies and practices
worldwide in the service of global capital and the economic elite;

3. That this present crisis which has resulted in the impoverishment of
millions and millions of people, has now become a threat to the basic right
to life of Asian peoples, the worst affected being those sectors who have
been the pillars of Asian economies and who now have to suffer the burden of
the crisis such as  workers, migrant workers, rural sectors, indigenous
peoples, and women; 

4. That unfortunately, the response of Asian governments and multilateral
institutions, posing themselves as "saviors" in this time of crisis,
resorted to the very same economic policies that have created the conditions
leading to Asia's economic collapse, and that such "short-term recovery
programs," and "bail-out packages" are not only not viable but will, in the
long run aggravate and threaten Asia's economic future; and finally

5. That the solution to the crisis lies not in the hands of the very actors
that have created the problems but in the Asian people who are the victims
of development and at the same time are their country's primary producers
and forgers of their future. Civil society organizations and grassroots
people's movements are now being challenged to strengthen their efforts
toward concerted action and coordinated response in seeking short-term and
long-term solutions to the crisis that are oriented towards meeting the
people's basic needs and aspirations.


In light of the above, the participants to this conference offer the
following insights, perspectives, and commitments: 

A Crisis of Structures and Paradigms :

The economic crisis that erupted in the Asian region last year took most of
the world by surprise.  For many years the phenomenal growth of the
economies of Korea, Malaysia, Indonesia, Thailand, Singapore, and Taiwan,
paved the way for the image and reputation of Asia as the growth region.  It
is an extreme irony that the most dramatic indications and impacts of the
crisis are in the very countries that were held up as models for the other
developing countries in the region and the world.

Many analysts and international financial institutions call the crisis a
"currency crisis." While it is true that the crisis first made itself known
in the Asian monetary values and exchange rates, participants of this
conference do not believe that it is simply a currency crisis.  It is a
crisis of the economic structures and paradigms promoted by the economic
elites, the multilateral financial institutions such as the IMF and WB, and
the governments subservient to their interests.  This Asian economic crisis
has in turn affected the full fabric of society with staggering effects.

Crony capitalism is indeed a problem in many Asian nations but we refuse to
accept the analysis that cites this as the main cause of the crisis. The
same economic strategies used by the Asian dragon economies to pursue growth
were the same policies that pushed them over the edge of the high precipice.
Some examples:

· Capital accounts liberalization, promoted by the IMF, was deemed necessary
in order to encourage the entry of foreign capital which in turn was
necessary to finance economic projects and achieve high growth targets.
However, this same policy led to the massive inflow of short-term capital,
rendering the economies extremely vulnerable to any sudden movement of this
capital.
· High interest rate regimes, espoused by the IMF, was similarly held
important for attracting foreign capital and maintaining the currency peg,
official or de facto, to the dollar. High interest rates fueled speculative
economic activities at the same time weakened or undermined domestic production.
· Privatization was promoted with the aim of raising government revenues and
fiscal stability, but led to the commercialization of public services and
undermined whatever limited safety nets that existed for the poor.
· Trade liberalization was pursued to stimulate the market but
indiscriminate liberalization further marginalized the small producers and
consumers in whose name it was being pushed.


Causes of the Crisis :

Globalisation 

Globalisation is a process that is variously defined and differently
understood.  However, it is commonly used to refer to integration with the
prevailing free market system characterized by trade liberalization,
structural adjustment programs, and export-oriented growth. This crisis is
an inevitable consequence of this indiscriminate, unregulated, neo-liberal
development model. It is a system that prioritizes the profits of the few
while ignoring the livelihood of the many. This profit oriented,
structurally inequitable system has been aggressively imposed upon the
peoples in Asia. Indeed, this is re-colonization par excellence. We reject
this model.

Elites and the Private Sector

Governments and multilateral institutions are not solely responsible for the
crisis. Local elites and the private sector served as active agents in
creating and exacerbating the crisis, e.g. through their speculative
activities, profiteering from currency fluctuations, and huge debts and
non-productive investment. Ironically, bail-out programs pass on the
responsibility of repayment to governments and peoples. Such bail-out
packages are bound to not only aggravate the present economic crisis, but
also jeopardize Asia’s economic future. We do not accept that the poor will
take over the debt burden that was accumulated by the private sector.

Poor Governance and the Absence of Substantive Democracy

After the period of decolonization 35-40 years ago, most of the countries in
the region had authoritarian regimes. Such mentality which described
democracy as an hindrance to economic development was widespread among the
ruling elites, Asian leadership and financial institutions. The culture of
authoritarianism, militarisation, violence, corruption and immorality has
prevailed all over the region for decades. Social control, education and
media were used as effective tools to oppress the ordinary people. General
elections in these countries are being used merely as a trick to distort
democratic principles and make the election process meaningless. A
participatory democracy which gives the people and community a significant
role should be a key concern alongside the establishment of democratic
institutions to ensure a meaningful decision making process.

The crisis today exposed the reality that those outdated dictatorial regimes
are no longer able to handle the situation. Similarly, the "Asian Miracle"
under undemocratic governments no longer exists. The concept of  "Good
Governance" sponsored by the IMF and the WB, which is intended to primarily
benefit the market, is also questionable in terms of how it handles the
crisis and responds to the needs of the people in our region.

Such process of decision made by governments, financial institutions, and
private sector must be transparent. Therefore, the monitoring mechanism
needs to be in place.



Consequences of the Crisis :

The policies that produced this crisis have brought adverse consequences to
everyone from white to blue collar, migrant workers, rural populations,
women and children. The crisis has intensified urban and rural poverty,
unemployment, ethnic and racial sentiments, and domestic and societal
violence. The workers are subject to gross exploitation in wages and
conditions.  More than 21 million from Korea, Malaysia, Philippines,
Thailand, Hong Kong and Indonesia alone, will go unemployed in 1998 due to
the crisis. 

In the past decade, migrant workers have moved to Asian countries en-mass.
At least one million Asian migrant workers will be deported due to the
crisis. The absence of legal remedies in the receiving as well as sending
countries, and the absence of adequate international mechanisms for
protection, expose them to extremely harsh situations, particularly during
deportation.  

Even when they can stay legally, unscrupulous agents and politicians have
aggravated tensions between migrant workers and the local population to
divert attention from the real cause of the crisis. Globalization and the
crisis have increased social tensions and intensified discrimination and
racism. 

In urban areas, loss of employment also means loss of housing, health
facilities, educational facilities for children and the civil amenities that
connect a citizen to his society.  In some instances, workers have resorted
to suicide, after they have murdered their own families for fear that they
will be left without proper care. In recent decades, many from rural
communities have migrated to urban centers in search of employment. With the
crisis often comes a mass exodus back to the rural areas that were unable to
support the people in better times. Reductions in welfare, education and
medical facilities removes the safety net for the entire country, rural and
urban so there is really no escape.

Like in any crisis, the most affected are the women and children in the poor
sectors of society.  Women are the ones to bear the double responsibility to
take care of the economic need of the family and the old and the young. With
the privatization of the public and social services, like water, supply of
electricity, health care and education, the burden on women increased. Women
are regarded as the secondary labor force and most of the low-paid,
unskilled jobs are taken up by women. With the economic crisis, women
workers are the first ones to be retrenched. With the limited social support
system, their situation is very severe.

Challenges to People :

It is clear that the present neo-liberal system has increasingly become a
threat to the Right to Life of Asian  people, and has also evolved in such a
way that it has become increasingly complex for peoples to understand and
respond. The challenge remains to provide for a more integrated approach to
answering the regional financial crisis, which is only a manifestation of
the fundamental contradictions in this development model. To meet this
challenge, it is essential to safeguard, protect and develop democratic
processes and mechanisms as well as foster the development of alternative
development models on the ground.  These alternative economic and social
models must be based on the tenets of equity, plurality, and sustainability.
At the heart of the search of these alternatives is the centrality of the
role of the people in determining their own histories and seeking solutions
to crises.

Over the years, the peoples of Asia have pursued campaigns against
structural adjustment programs, debt issues, and economic globalization.
Concurrently, local and international groups have been engaged in alliance
work, trans-border solidarity, local campaigns and organizing, and
intervening in international fora. This serves as fertile grounds and
foundations for the development of alternative practices, models and alliances. 

Recommendations :

The conference participants believe in the primacy of the struggles of
peoples’ organizations and grassroots communities in addressing the economic
crisis and advancing alternative economic policies and paradigms. These
struggles should also be primarily waged in local and national arenas and
contexts. Regional and global initiatives have played an important role in
supporting and reinforcing local and national struggles.

In the era of globalization, issues have been increasingly common across
countries. In addition, regional and international arenas have gained
significance as sites for many waging resistance and advocating change,
because many issues can now no longer be won solely within national
boundaries. Therefore, participants in the conference believe that regional
and global engagements are imperative

With the above statement the participants adopted the following
recommendations for participation:

Grassroots/Local Cooperation :

1. Grassroots organizing — key task, conscious part of NGO agenda to devote
more effort on this: assisting, supporting, reinforcing, facilitating
grassroots organizing. Need to give primacy to the agenda of grassroots
communities. Objective is to build groups that can speak for and represent
themselves, without mediation from any NGO, and help them to develop
responses and alternatives. One possible venue for this is participation in
the Asia Europe Meeting to be held in Seoul in the year 2000.

2. Providing linkages between and among grassroots groups and across borders
— globalization seeks to isolate and divide grassroots groups. NGOs can help
them to build links with each other, within and across borders, and help
break down divisions created or reinforced by the crisis and mainstream
development models that create the crisis. NGOs can facilitate dialogues
among these groups.

3. Build up and expand alliance at local level. This kind of forum will
have: common analysis and strategy; short-term goal of easing burden of the
poor; long-term goal of sustainable development.

4. Bring the issues to the public through people's platform—involve POs in
different sectors (women, workers, rural and urban poor, farmers, academics
and professionals)

Regional/Global Cooperation :

1. Role of regional organizations is to support the building of local
movements and alliances, information sharing and networking. Bringing local
agenda of grassroots groups to international fora and bodies—NGOs should
carry agenda of local groups and help them lobby at international fora.
Lobby should not just be for policy changes but also for more direct
grassroots participation.

2. NGOs should monitor the economic globalization process and its entailed
impacts on grassroots, and of compliance of governments with covenants,
international laws, etc., that the governments have ratified—NGO role is to
force government to have transparent mechanisms in its economic reforms.
They need to assess government performance, thereby compelling governments
to be more accountable to their people.

3. Utilize media as an alternative voice. Many NGOs and POs should learn how
to utilize media, including mainstream media, effectively in order to raise
their issues to the public. Timeliness and relevance of issues raised are
important. 

4. Promote alternative development models, and explore with various
networks, the feasibility of these models.

5.  Promote an effective state that is responsive to the demands and
interests of the people, priorities should always include social security
and services, health and education.  It must be based on democratic
policy-making and administration that gives substances and true meaning to
citizenship rights and participation.

6.  Emphasize the role of regional organizations in initiating appropriate
campaigns to inform the public and mobilize public opinion toward developing
alternative models and modes of intervention to address the crisis.

7.  Promote new forms of solidarity within and among peoples of all
countries, poor, developing and industrialized.



20/6/98 (FinCrisis-FinalStatement98)

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