But no longer. Washington is now backing a $33 billion bailout of Indonesia led by the International Monetary Fund. The U.S. will indirectly provide much of those funds through its support for the IMF and allied institutions. The administration has unilaterally committed another $3 billion in back‐up credit through the Exchange Stabilization Fund. Explained Treasury Secretary Robert Rubin: “Financial stability around the world is critical to the national security and economic interests of the United States.”
Well, yes, but the financial stability of every nation around the globe? The United States bailed out Mexico two years ago, the reason explained the administration, was that Mexico was unique. Its economy was intimately tied to that of America– the two nations had only recently inked the NAFTA trade accord– and refugees might flood across the border if prosperity was not restored. America’s southern neighbor could not be allowed to fail.
Although the slump in an economy a tenth the size of America’s in no way threatened the U.S., the argument at least had some surface plausibility. And there was only one Mexico. No other developing state could make a similar claim to U. S. aid.
Until now, apparently Indonesia has been liberalizing, but its economy remains bedeviled by inefficient monopolies, insolvent banks, harmful trade barriers, wasteful food subsidies, and political favoritism. Being a relative, or married to a relative, of President Suharto is the surest way to wealth.
Thus, the Suharto government has no one to blame but itself for its problems. The collapse of Indonesia’s currency and stock market forced the regime to inaugurate serious economic reform. The resulting “structural reforms are more important than the size of the [aid] package” observes Indonesian business analyst Pablo Zuanic.