“No reservation over nuclear deal” says South Korean Foreign Minister

Excerpts from an interview of Song Min-soon, Foreign Minister of the Republic of Korea by P.S. Suryanarayana appeared on The Hindu 21st September 2007.


India-Republic of Korea relations are becoming very broad-based. One of the issues now in focus is India’s request for RoK’s support in the Nuclear Suppliers Group (NSG). Will this be a defining issue in India-RoK relations?

You are posing a very sensitive issue, and you are bringing me to the corner of a defining moment (laughs heartily). We fully understand India’s need for peaceful use of nuclear energy. At the same time, India has a great responsibility — as a great country, as the largest democracy in the world — for strengthening the global non-proliferation regime.

We have [placed] great reliability and credibility on India’s sound discretion and its sense of responsibility in the international community. On the other hand, as far as the Republic of Korea is concerned, we are in a unique position. One, we are the sixth largest nuclear-energy country in the world. And, at the same time, we are now … making a de-nuclearised Korean peninsula. We, as a key member of the six-party talks, are ardently pursuing the goal of de-nuclearising the peninsula. So we are sensitive to any development that may give any unintended impact on our efforts for de-nuclearising the Korean peninsula. With that in mind, while fully understanding India’s need for peaceful use of nuclear energy and its commitment for strengthening the non-proliferation regime, we will take our position in the NSG. So [too] the others.

As of now, RoK has not made up its mind about whether or not to support India in the NSG?

I cannot go further to take our position in public. Also, we support India’s endeavour, India’s position, to galvanise, to strengthen the global non-proliferation regime.

Do you want India to do anything more than signing this 123 Agreement with the U.S. — which has a non-proliferation component, as seen by the U.S. — in order to gain support in the NSG?

I am not telling that we do have some reservation in taking our position vis-À-vis this India-United States deal. What I am saying is that because of our unique position in which Korea is, we cannot make our position in public. I think, that says enough (smiles).

You are convinced that India is a responsible power for non-proliferation globally...

Yes, yes. I think, India will continue to behave as a responsible member of the international community, which needs to strengthen your non-proliferation regime.

But you are not asking India to join the NPT (Nuclear Non-Proliferation Treaty)?

It is up to India’s discretion.

RoK will be satisfied if India promotes non-proliferation even without joining the NPT…

Actually, that cannot be decided by RoK alone. We are somewhat composed [about] seeing the future developments of India’s policy, India’s course. Because India is increasingly becoming an important player, [a] member of the international community. That says everything that I can. You are very much (laughs heartily) [questioning] me.

Australia, for instance, wants India to sign a [bilateral] nuclear safeguards agreement [for receiving its uranium]. Does RoK want India to enter into an RoK-India nuclear safeguards agreement to get NSG-related support?

We will see. We will see this issue.

With RoK playing an important role, India has recently joined the International Thermonuclear Experimental Reactor (ITER) project related to fusion technology. What, in your assessment, is the value-add that India brings?

Korea believes that India will be complementary to other member-countries [the U.S., Canada, the European Union, China, Japan, and RoK], as India is recognised as having a competitive edge in the science and technology sector. India’s participation is significant because the ITER project is a joint effort to ensure the peaceful use of nuclear energy while also conforming to an international non-proliferation regime.

India played a role under U.N. auspices on the Korean peninsula in the 1950s. Do you foresee a role now for India in the final settlement of the Korean reunification issue or the North Korean nuclear arms question, or both, or none?

India enjoys a special status with the two Koreas. By making use of this special status, we hope India will provide North Korea with the appropriate advice, so that North Korea will be able to actively participate in the international community through the reform and opening up of its society. Our Government would greatly appreciate the support of India with regard to the six-party talks [on the de-nuclearisation of the Korean peninsula].

Does RoK feel left out of the Japanese proposal of a quadrilateral forum of Asia-Pacific democracies — the U.S., India, Japan, and Australia? Alternatively, does RoK see the planned forum as a provocative gesture towards China, or indeed a polite political attempt at marginalising Seoul?

The concerned parties have repeatedly expressed their position on the implications of the China factor. My Government believes that the initiative [for this quadrilateral forum] is not a geopolitical bloc against any particular third country.

Korea has built a democracy and a market economy that meet the highest global standards. And [Korea] has been exercising regional roles commensurate with its political status and economic capability. We do not see any reason for any particular country to attempt to marginalise Korea.

RoK is an active participant in the ‘Coffee Club’ of middle-power aspirants at the U.N. Does this cast a shadow over Korea’s bilateral exchanges with India?

We have been supporting the [formation of a] reformed Security Council that is more representative, democratic, transparent, and efficient. Any proposal on Security Council reform should be based on the widest possible political agreement of the U.N. member-states.

Would you describe Korea’s emerging equation with India in this broad context as a tension-free engagement? However, if any real concerns cloud the bilateral front, what is the way forward?

I do not see any real concerns that could cast a shadow on our bilateral relations. There are no disputes or security concerns between our two countries and no feeling of animosity between the two peoples. Our two countries are united by the shared values of democracy and market economy. There is, moreover, huge potential for mutually beneficial cooperation.

When do you realistically expect an RoK-India Comprehensive Economic Partnership Agreement to be signed? Does RoK have concerns about the investment climate in India for a long-term CEPA?

At this time, both sides are in the midst of what is normally the most challenging phase of CEPA negotiations: finalising the tariff offers for trade in goods and the concession list for trade in services. I am confident that the two sides will be able to finalise the negotiations by the end of this year.

While the difficulties encountered by [the Korean company] POSCO in its efforts to construct a state-of-the-art steel complex [in Orissa] do give rise to some concerns in the short term, in the long term Korea is quite confident about the direction of the Indian economy. I can tell you that Korea’s business sector foresees strong economic growth in India in the future and is committed to actively participating in the process.

Will China’s sensitivities condition RoK’s defence links with India?

ROK’s defence cooperation with India … gaining momentum … is not directed against any third country.

RoK and India are endeavouring to base bilateral defence ties on objective factors and mutual interest. Technology and market factors will govern the relations.

Korea is cooperating on the security and defence front with China. One notable example is the annual foreign policy and security dialogue. We believe that bilateral security cooperation of this kind will indeed serve to further strengthen regional security in East Asia.

Shinsedae: Conservative Attitudes of a ‘New Generation’ in South Korea and the Impact on the Korean Presidential Election

This aticle was written by Park Sun-Young, a journalist on the International Affairs Desk at Hankook Ilbo in Seoul, South Korea. She delivered this presentation at an East-West Center Seminar held in Honolulu in June 2007. It was translated from Korean into English for this publication.

HONOLULU (Sept. 5) -- Who are the new generation called Shinsedae? Since the early 1990s the term Shinsedae, which means “new generation” in Korean, has come to be used to refer to a specific group of people in Korean society. Though there were other terms for this new or younger generation -- such as the X-generation and the N-generation -- they all share a common denominator of being the “post-386 generation,” which means they are free from ideological or political bias.

The “386 generation,” named after 386 computers, was coined in the 1990s to describe those in their late 30s and 40s who were “born in the 1960s and attended university in the 1980s.” It is the 386 generation who spent most of their youth fighting for democracy under authoritarian rule and who had a shared generational experience and culture for the first time in Korean history. They are now in decision-making positions in all fields, including political, economic, social and cultural areas. The 386 generation will go down in history as a very active and passionate group of people who toppled a military dictatorship of more than three decades and built democracy in Korea.

The 1990s was an era of a widening generation gap. Farewell to ideology, a new generation emerged – a generation that is heavily immersed in consumption. This group of Koreans was born during a time of rapid economic growth, spent their childhood in a prosperous environment and experienced the 1997 Asian financial crisis. They are substantial beneficiaries of the nation’s democracy, which was achieved by the blood, sweat and tears of the 386 generation. And they are the first generation who went abroad for travel and study with the liberalization of overseas travel and the advent of an era of information and communications.

Unlike the 386 generation who fought for democratization and ideological issues, what worries this new generation most is the high unemployment of university graduates. While the 386 generation enjoyed a booming economy with plenty of jobs available, the new generation is struggling with unemployment and riding the tide of “fierce competition.”

When Korea was hit by the Asian financial crisis, they were in high school or college. Raised in an affluent society with full access to the Internet, this new generation witnessed their fathers being kicked out of jobs and their families collapsing. After having to submit resumes without success, they have faced the grim reality that getting a job is crucial but never easy. The Asian financial crisis changed the mindset of this new generation in Korea to put the economy before anything else.

A series of events, such as the Asian financial crisis, the 2002 World Cup where the Korean national soccer team reached the Final Four and the candlelight vigil after two middle school girls were killed by a U.S. Forces Korea military armored vehicle, clearly demonstrated the identity of the younger generation. These young people, who are open-minded, practical and confident, are often indifferent to politics.

Conservative Shinsedae and post ideology

Traditionally, the younger generation represented by college students was considered to be liberal and progressive. Yet the long belief that college students are always progressive has collapsed. According to a joint survey by the Hankook Ilbo and school newspapers at Seoul National University, Yonsei University, Korea University and Ewha Women’s University conducted with 1,089 university students, more respondents answered they are conservative than replied they are liberal, 23% to 21%. While a majority responded they are moderate, on the question of whether to participate in a democratic movement if they were in a situation where there was a democratic movement as in June 1987, more than 60% of the respondents answered “no,” showing a significant setback in participation of the younger generation in social issues.

Although it is said that being rebellious is a privilege of youth, the younger they are, the more conservative they seem to be in Korea at the moment. According to the survey conducted by the Korea Society Opinion Institute last November, more respondents in their early 20s regarded themselves as conservative than respondents in their late 20s.

The conservative attitude of the new generation is also apparent in their changing preference for political parties. The Woori Party has lost the support of voters in their 20s. Since 2004 support fell about 18% to a support rate of just over 21% in 2006. In the meantime, the approval rating of the Grand National Party (GNP) rose in 2006, with almost one-quarter of the younger generation favoring the party.

In fact, the support gap between the two parties appears to be wider with university students. In a poll conducted with 1,925 college students across the country by Campus Plus, a monthly magazine for college students, more than one-third of those polled favored the GNP by a big margin. The Woori Party received less than 10 percent support and the Korea Democratic Labor Party less than 5 percent.

Moreover, Lee Myung-bak, the former Seoul mayor, took the lead among all presidential candidates by garnering support from more than half of the students polled. Trailing behind were former GNP chairwoman Park Geun-hye (15.8%) and Sohn Hak-kyu (14.5%), who has recently withdrawn from the GNP.

As unemployment among the young has emerged as a core problem in Korea, what matters most to this generation is economic wellbeing. Now, their slogan is: “It’s the economy, Stupid.” According to a survey conducted by the Federation of Korea Trade Unions, seven out of ten university students surveyed support capitalism. In a poll conducted by the University News Network, students said they value economic growth more than narrowing down disparity in wealth, which is quite a different opinion from that of the 386 generation.

Practical nationalism

Shinsedae, the new generation, would go to McDonald’s for hamburgers after burning the U.S. flag at a candlelight vigil in a protest against America. They do not think it is contradictory to accept the American culture on one hand, while claiming to condemn a U.S. action. These young people, the first beneficiaries of globalization in Korea, have strong confidence and pride in their country, especially after the Korean national soccer team performance in the 2002 World Cup and with overseas travel and study much more common.

Their version of nationalism -- which is based on the belief that Korea is not inferior whatsoever to the United States or Japan -- is fundamentally different from the nationalism of past generations with vestiges of Japanese colonial rule of Korea.

Here we can see the emergence of “confident nationalism” for the first time in Korea, strikingly different from the previous “resistant nationalism.” Hence, it may not be an exaggeration to call this new generation full of national pride, “the new people” or “the new race.”

Yet to these young people, nationalism never takes precedence over their pursuit of pragmatic interest, meaning they become nationalistic only when it serves their interest. If there is a conflict between nationalism and pragmatism, the former never trumps the latter. Such a tendency is even more visible when it comes to North Korean issues. According to a survey conducted by the Chosun Daily in August 2005 with 813 young people, when asked the question about which side to support if a war breaks out between Washington and Pyongyang, close to two-thirds of respondents said they will support North Korea, while less than one-third answered they will be on the U.S. side. The survey suggests that young people today no longer view North Korea as an enemy or a competitor.

However, when asked if they are willing to bear the cost and burden for reunification, the responses turned negative. The students said it is desirable for the two Koreas to be unified only without sacrifice from their side. A survey of university students in January of this year showed barely a fifth of the respondents think unification is an urgent matter that should be pursued at the expense of national interest. Almost 80% of students either answered unification should take place cautiously to avoid any kind of setback and negative impact on the national economy or preferred remaining divided.

The new generation tends to be fiercely nationalistic particularly toward events combined with sports or the Internet. As seen in the cases of China’s distortion of Northeast Asia history, Japan’s claim of sovereignty over Dokdo islet and whitewashing of history textbooks, and the tragic death of two school girls by a U.S. army vehicle in 2002, Internet-savvy young people exploded with rage and shared and spread their nationalistic messages by leveraging the Internet. Global sporting events such as the World Cup and the Olympics have also witnessed how patriotism of these confident young people turned to nationalism.

Still they express nationalism only when it suits their pragmatic interests. To them, economy and culture are major drivers to go nationalistic. A key example is their shifting support from a traditional ally, the United States, to a rapidly emerging China. When asked which nation will help the development of Korea most a decade down the road, twice as many university students said China will be more helpful than the United States, according to a survey by the Korea Economic Daily. The survey also showed that almost twice the number of respondents answered they have become increasingly favorable to China, compared to the number expressing their growing preference towards the United States.

A survey conducted by the Chosun Daily also showed that more than a third of this new generation has a positive impression of Japan, often associating it with its computer games and comic strips. With regard to the question of where they want to immigrate or work, apart from Korea, Australia was ranked first, followed by the U.S. and Japan, respectively.

Politics as a Product, New Generation as Consumers

The new generation does not show a consistent tendency of liberalism or conservatism. Rather to those young people who increasingly go global and digital, all issues are intertwined between individuals and society, production and consumption, and politics and personal life, which lead to more complicated patterns regarding their stance and beliefs.

The same goes for their political attitudes. Most of them are apathetic toward politics, yet actively participate in political events. They don’t read newspapers but are intensely interested in contacting and building relations with politicians through their mini homepages and the Internet. To them, politicians are just celebrities to take photos with when they bump into them on the street. Truly, we are now living in an era where politics has become a kind of product or entertainment.

Then, which presidential candidate will have the greatest value as a product? According to a survey conducted by Campus Plus, two-thirds of respondents selected the “strong drive” of candidates as an important factor in deciding whom to vote for. Much less important were morality, previous achievements and political affiliation, which ranked at the bottom, which again demonstrates their ideology-free pragmatism.

Those aged between 26 and 35, also known as the “2635 Generation,” represent 17% of the national population and 24% of the working population, which indicates the strong influence they will have in the next presidential election. Between older conservative people or those over 46 and the progressive 386 generation between ages 36 and 45, this 2635 generation will hold a deciding vote. Even though they are more conservative, it doesn’t mean more votes to a conservative party since they are indifferent to politics. During the 2002 presidential election, only about 57% of these young people turned out to vote despite their strong craze over then presidential candidate, Roh Mu-hyun.

Stronger conservatism of this generation will be a benefit to the Grand National Party. With the next presidential election only six months away, the GNP is now cementing its solid basis for victory. Candidates enjoying high popularity among the public are all members of the GNP, whereas the ruling party has not even come up with candidates who are able to compete with them. Worse, taking into consideration serious public disappointment over the current administration and extreme fatigue against reform efforts and progressivism, it may be difficult to expect any sudden changes as were seen in the 2002 presidential election.

That said, there is still room for unexpected changes in votes among the new generation in the election slated for December 19. That may hinge on the image of candidates.

As seen by surveys cited above, young people put personal image over political ideology or political party affiliation when deciding whom to vote for. Not only in politics but in commercial arenas, image now constitutes an important value that drives the sales of products. That leads us to predict heated cyber campaigns and promotions to win the hearts and minds of the younger generation during the next election. Yet, building an image that meets the pragmatic desire of the new generation will require more than fine-sounding rhetoric, especially after the serious disillusionment of voters who followed image and rhetoric in deciding their votes in the election of 2002.

Park Sun-Young is a staff reporter on the International Affairs Desk at Hankook Ilbo in Seoul, South Korea. She has mainly covered Korean ministries and government agencies during her reporting career at the newspaper, including the National Human Rights Commission, the Ministry of Government Administration, the Seoul Metropolitan Government and the Ministry of Gender and Family. She has also written news articles on film and literature.

Currently Ms. Park covers international news, focusing mainly on foreign affairs and national security. She writes articles on the politics of North America, South America and Europe. She delivered this presentation on the “new generation” in South Korea during the “Northeast Asia Journalists Dialogue: Meeting Regional Challenges in the Media,” an East-West Center Seminar held in Honolulu in June 2007. It was translated from Korean into English for this publication.

CALL FOR PAPERS

"Multiculturalism and Feminism"

13th International Symposium
International Association of Women Philosophers(IAPh) Seoul (Korea)
Ewha Womans University, Koreal, July 27-29, 2008

Deadline: November 15, 2007

The Thirteenth Symposium of International Association of Women Philosophers(IAPh) will be held in Seoul, Korea, just prior to the XXII. World Congress of Philosophy. The symposium seeks to bring philosophical analysis to bear on the complex relationship between feminist and multicultural theories and practices. It also seeks to explore questions concerning commonalities and differences among women, who often come from radically different social, cultural, and political contexts and yet who live in a world that is increasingly globally connected.

Feminism has developed globally in accordance with the diversity of the demands of women who are often faced with divergent forms of inequality and discrimination. Its diversity thus reflects the different sources of gender inequity that originate from particular socio-cultural and political situations. However, the diversity of women’s concerns does not deter women philosophers from collaborating and engaging in shared philosophical discourse. The Seoul symposium will examine proposed solutions to the inequality and discrimination that undermine women’s living conditions and that deny women decency, while also attending to issues posed by differences among women.

The Seoul Symposium especially invites contributions from women scholars who are interested in the intersections of “multiculturalism and feminism,” as well as with the philosophical interrogation of the concepts of “women,”
“feminism” and “multiculturalism” as (for example) ontological, epistemological, or ethical questions.

The symposium plans to focus its discussions around a number of substantive areas, or “sites of inquiry.” These include:

[1] examination of the self-understandings of women in diverse culture and societies today.
[2] critical reflection on the role forms of the family play within women’s lives.
[3] examination of how the perpetuation of tradition and processes of modernization – and tensions between them - affect women’s lives within diverse social and historical contexts.
[4] examination of processes of globalization, their intersections with particularistic forms of inequality for women, and the dilemmas thus faced by emergent global or trans-national feminist movements.
[5] discussion of biomedical practices, and other uses of science and technology, that may threaten women’s rights to bodily integrity and social autonomy.
[6] analysis of the diversity of cultural norms that give rise to images of women in various forms of representation and self-expression, ranging from art, to religion, to the media.

We welcome the participation of women philosophers and other scholars in addressing the intersections of feminism and multiculturalism through an exploration of any of the above “sites of inquiry.” Proposals that address the relations of feminism and multiculturalism through other “sites of inquiry” will also be considered.

Abstracts:
Language: English, German, French, Spanish, or Korean (language of the hosting country).
Information: Abstracts should include
1) author’s name, mail and e-mail address;
2) an indication (if appropriate) of the “site of inquiry”
for which the contribution is intended.
Deadline: November 15, 2007
Length: 300-500 words

For More Information

Republic of Korea and United States sign free-trade pact

The United States and the Republic of Korea have signed a landmark free-trade agreement, the biggest such agreement for the United States in nearly 15 years. However, the United States Congress has indicated that it may not approve the pact. The agreement was signed just hours before the President’s trade promotion authority – or ‘fast track’ trade authority which gave the president the right to sign trade agreements and submit them to Congress for a simple up-or-down vote without amendments – expired at midnight. The pact eliminates nearly 95 per cent of tariffs on bilateral trade in consumer and industrial goods within three years and almost two-thirds of United States farm exports will be immediately duty free when the FTA is implemented.

Read More

FTAs advantageous to US says Stiglitz

An interview with Nobel laureate and former World Bank chief economist Joseph Stiglitz by Maryann Tan & Yong Yen Nie

Joseph Stiglitz believes that no country should enter into free trade agreements with the US, as none of the developing countries has benefited greatly from them.

Stiglitz, who is currently in town as a guest speaker for Khazanah Nasional Bhd’s Global Lectures, called free trade agreements “advantaged agreements in essence” and “a disaster for developing countries and the global trading system”.

“Countries do not need free trade agreements. People will come and invest in your country if you provide good infrastructure and human resources.

“The good news is, the tariffs now are so low, that they no longer serve as an impediment to trade. They are not going to make any difference to the friendly business atmosphere, which Malaysia has,” he said in an interview with The Edge Financial Daily.

The sharp critic of US trade policies also applauded Malaysia for making the right move by rejecting aid from the International Monetary Fund (IMF) during the 1997 Asian financial crisis, but added that the country should improve the quality of its universities towards riding the next phase of development.

Citing IMF’s incompetence in handling the Asian financial crisis a decade ago, Stiglitz said Indonesia had to suffer the consequences which resulted in the slow recovery of the country and affected its ability to take advantage of the opportunities to rebound, through the Sept 11 terrorist attacks as well as China’s and India’s emergence as the new economic giants.

Below are the excerpts of the interview:

Q: The world by now is familiar with your criticisms of IMF-prescribed remedies for the Asian Financial Crisis. Countries like Thailand and Indonesia took the IMF route, unlike Malaysia. Although restructuring was painful, the economies of these countries have been doing well ever since. Do you see any irreversible damage in these economies that adopted IMF policies?

A: Firstly, they were very slow to recover. They were just getting back to where they were a decade ago. So, in a way, you can see that they have lost almost a decade, say, eight years. (However),
Malaysia caught up very quickly to where it was.

The major thing is, its (Indonesia’s) economy today is much poorer than it has been had they not gone into the crisis. That meant, of course, they were not as able to take advantage of some of the new changing global landscape that was going on.

There were two very big changes in the global economy in the last 10 years. Firstly, the emergence of China and India (in which they) developed new trading patterns to reflect the changing global economic landscape. Countries like Korea also recovered very quickly, due to change in their trade relations, which has much more to do with China than the United States.

The second thing was Sept 11. It had a very big effect on the global economy in several ways. Much of the money in the Middle East decided they didn’t feel comfortable staying in the United States (and) Singapore was able to take advantage of that money coming in.

People in the Middle East ... Malaysia took advantage because they (Middle-Eastern investors) wanted a place where they can do tourism, business, finance. There are many opportunities that the changing economic structure that Sept 11 brought about that Indonesia was slower in taking advantage of.

Q: Largely because of?

A: They were still trying to recover from the crisis. So, the bottom line was, their growth was set back a great deal, particularly when it came to poverty reduction. Indonesia’s (number of) poor people went up, and they were always behind Malaysia.

Today, for instance, if you measure the number of the poor in the country using the two-dollar-per-day standard that the World Bank uses, 49% of the people are still in poverty. There are other standards, for example, the one-dollar-a-day standard. They made progress in that standard. They were down by 16%. But, in the broader standard, there is still a long way to go.

Q: This may be the case for Indonesia, but what about Korea? It had to resort to IMF for help, but the outcome for the country today is different.

A: Well, what IMF did in each of the countries was a little different (from each other). For Indonesia, it was probably the absolute worst. For instance, one of the things they did for Korea in March 2008 was organising the rollover of loans. (But), they never did that for Indonesia. So, in some sense, they helped other countries more than they helped Indonesia, but they were also much worse when it came to making policies for Indonesia.

One of the things that Malaysia did very well was ensuring that the banking system did not collapse. They restructured the banks, but made sure that there was a continuous flow of credit.

What the IMF did for Indonesian banking system was worse than you could ever imagine. Because what they did was shut down 16 banks, and then said: “We are going to shut down 16 more banks, but we are not going to tell you which ones.”

So, they induced a run on the banks. So if someone were trying to kill the banking system, you could not have done a better job than what IMF was trying to do. If you tried to kill an economy, you could not have done worse than what the IMF did.

Q: And the [best] example was Indonesia’s case?

A: Yes. During December 1997, I was in KL for a meeting with all finance ministers and central bank governors from Southeast Asia, Korea and other countries in the region, and G10.

And I said, reflecting the view of the World Bank, that if they (IMF) keep up the tight monitor of fiscal policies, and their misguided economic policies for Indonesia, within six months, we forecast there will be political turmoil in the country.

We were off, but only by two weeks. In May 1998, the riots (in Indonesia) broke out, but no one could have imagined that in the midst of recession (and) depression, where unemployment was soaring, the IMF recommended that they eliminate their subsidies for cooking oil.

And they said: “Don’t worry about it, people are so happy.” Because they smiled, but people didn’t understand that smiling doesn’t mean that you are happy.

Q: Why do you think that there is this discriminatory treatment between Indonesia and South Korea, for instance?

A: The major reason was incompetence. I don’t think that it was any conspiracy involved. It was sheer incompetence. Secondly, I think that the economic problems were different in each of the situations, and their abilities to deal with them (the problems) differed.

Thirdly, the political and economic strength of the countries differed. Remember the problems created because of Suharto in Indonesia? He gave the IMF greater opportunity to push their own policies, whereas in Malaysia, which is the other extreme, they had no luck at all. Nobody paid any attention to them. There was greater resistance because people here understood much more deeply the problems caused.

When I talked to the government officials of different countries, it was very clear that the people here, (though) not everybody, but some of the people here really understood what needed to be done. That’s why the World Bank, (during the time I was chief economist), was very supportive of those capital controls. I supported them because I thought it was the right policy.

In other countries where people did not have the depth of understanding (of what ought to be the right policies), it was easier for IMF to push (for) their bad policies.

Q: IMF also set some rules that required countries to comply with certain regulations imposed by them. There was this debate about these countries losing their sovereignty, especially over their assets and resources. Now that most of the economies have paid back their debts, does IMF’s dominance over these assets still linger?

A: It lingers on in a couple of ways. In South Korea, they were told by the IMF: “Sell your assets to foreigners (because) they know how to manage them better. But the foreigners obviously didn’t know anything about the country.

All they did was hold on to the asset for a couple of years, until the economy recovered, and then they sold it back. They bought it at a very low price, and then they sold it back at a very high price. The result of it was that it actually gave the American financiers literally billions of dollars.

So, it was a foreign aid programme for rich Americans and people in other Western countries, but it didn’t help the country. They actually became worse than before, because the IMF never advised them about taxes.

For instance, in South Korea, the American firm bought some of their assets, and one of them was actually incorporated in Malaysia, I think. When they made a profit of a billion dollars, no money was paid to the Korean government. So, it was a tax-free profit.

They (IMF) really gave bad advice. This has become a very political issue in Korea, because they said: “You didn’t help us restructure, you didn’t give us advice when you were supposed to be professionals. You knew about tax evasion, and you were supposed to be experts. Did you make a mistake, or were you working for the Western companies?”

Q: But it’s all done now, isn’t it?

A: There’s nothing they can do about it, but there is a lingering resentment among many people in the country. There was theft in a way, of billions of dollars worth of assets, sponsored by the IMF. In terms of national sovereignty, the issue is now resolved and people are calmer now, but the issue of advising people to transfer their money to foreign companies was the source of resentment.

Q: Coming back to Malaysia, it is a country whereby development has largely been guided by the hand of government. Despite the many success stories behind it, we seem to lack creativity, entrepreneurial spirit and intellectual property. What then, should a middle-income country like ours, do to make the next development leap?

A: Actually, we may have underestimated the amount of entrepreneurial spirit in Malaysia. But, there are several things that one needs to do (to address mediocrity). Firstly, would-be entrepreneurs should be given easy access to small and medium-sized enterprises financing, and in a way, some of the new technologies that Malaysia is very strong for, like IT, should be made easier for small enterprises to start.

In some ways, new technologies facilitate the creation of new enterprises and Malaysia has been very good at developing the infrastructure and education that make this possible.

The second thing, which is important for the next phase of development, is improving the quality of universities. What draws some of the bright people abroad, is not so much because of the money, but the opportunities to do research and to teach.
It’s the intellectual climate, and you need strong universities to do that.

Countries that are going to be in the next phase of development have seen this as a major point of discussion. For instance, China has their 11th five-year plan. They talk about an independent and innovative system. They want to have 10 global, first-grade universities. Obviously, Malaysia is smaller and not on the same scale, but many of the top universities in the United States are in small parts of the country. Singapore is trying to strengthen their universities as well.

Q: An effective way to eradicate poverty is by the government redistributing income. However, is this sustainable in the long run? Once the government has achieved its target, how does it keep the people out of poverty, without creating a culture of perpetual dependence?

A: The most important long-run strategy, is try to improve the before-tax profit distribution income. It can reduce poverty by reducing the number of people with low wages, or you can subsidise the income of people with low wages. So, most importantly, you reduce the number of people with low wages. How do you do that? You improve education and create job opportunities for people at the bottom.

Next, you try to study where the source of poverty is. For instance, in the United States, what we discovered about the people living in poverty is that, they also have health problems. But, we have a very bad health system.

If you have a health problem and your income is low, you lose your job, you can’t afford a doctor, you health gets worse, it’s just a vicious cycle. So, if you asked me about how to reduce poverty in America, one of the things that I would say is to improve the health system. That’s one of the main defects in our system.

Another aspect about poor people is that, they often have an episode where something happens. If you don’t have a good safety net, they get into a downward, vicious spiral. They cannot afford a car, so they cannot go to work. The number of jobs available to them is very limited.

They often have a very weak support system, so if their children get sick, they miss a day of work. You need to provide a good support system for their children as well. You need to try to analyse the sources of poverty and intervene structurally. Most of the people do not want dependency, but they get caught in this vicious, downward spiral.

Q: What about free trade agreements (FTAs)? We are concerned about being less attractive to foreign direct investment, and now we seem to be moving along the path of signing bilateral agreements with other countries, especially the United States. What are your views of bilateral agreements between developed countries and developing countries? Are we better off without them?

A: Overall, bilateral agreements have been a disaster, for the developing countries and for the global trading system. The global trading system is based on principle of non-discrimination, which is called the most favourite nation principle. These FTAs are creating a world in which there are two groups — the first consist of “my friends who can get in free” and the other, consist of countries that have to pay tariffs. So, it is a disaster.

Secondly, bargaining between the United States and developing countries is not bargaining. Especially under the Bush (administration), it has been a take-it-or-leave-it situation. The provisions, the way I see them, have not benefited most of the countries in significant ways. In fact, these countries lost a great deal, especially access to intellectual property.

They have more difficulty accessing to knowledge and particularly, generic medicine. So, there are thousands of people dying in developing countries because of the trade agreements with the United States. They don’t want to talk about it that way, but that is what is happening.

Q: Should we walk away from these agreements?

A: Yes. The good news is, the tariffs now are so low, that they no longer serve as an impediment to trade. If you have good infrastructure and educated people, they will come to Malaysia (to invest). The tariff of 3%-5% is not going to make any difference to the friendly business atmosphere, which Malaysia has.

Q: So, that means FTAs are not about trading goods?

A: It’s not about trading goods; it’s about losing sovereignty. And it’s about helping American drug companies. It’s about America pushing for a particular agenda. It has not benefited any country. In fact, the free trade agreement with Mexico was the strongest, but the gap between Mexico and the United States increased in the first decade.

They are not free trade agreements. They are not about free trade, but they are advantaged trade agreements. And they managed to advantage the United States at the cost of the developing countries.