THE NATION: Editorial & Opinion; Fa

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Editorial & Opinion 

      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.