Commentary

The Real Difference Between Indonesia and the Rest

Sir, Dennis de Tray (Letters, July 5) attempts to clarify the International Monetary Fund’s record in dealing with Indonesia during the Asian financial crisis. He presents what has been repeated ad nauseam from the IMF/World Bank nexus: Indonesia was different from other east Asian countries and the prescribed high dose of standard reform medicine was an appropriate last ditch effort to save Indonesia.

The difference between Indonesia and other countries in the region was that Washington had decided to add regime change to the IMF’s agenda. As former US secretary of state Lawrence Eagleburger put it: “We were fairly clever in that we supported the IMF as it overthrew [Suharto]. Whether that was a wise way to proceed is another question. I’m not saying Mr Suharto should have stayed, but I kind of wish he had left on terms other than because the IMF pushed him out.”

Even Michel Camdessus could not find fault with this assessment. On the occasion of his retirement, he proudly proclaimed: “We created the conditions that obliged President Suharto to leave his job.”

Steve H. Hanke is a professor of applied economics at the Johns Hopkins University and a senior fellow at the Cato Institute.