Religion battles high
finance
By DENNIS J. CODAY
Special to the National Catholic Reporter Seoul, South
Korea
The strain on the participants was obvious. Brows pressed, heads
held and jaws clenched, their concentration was palpable as they strained to
learn a new language: swap markets, capital flow liberalization, shorting the
currency, shorting the stock market, OECD (Organization for Economic
Cooperation and Development) initiatives on the MAI (Multilateral Agreement on
Investment).
These were grassroots religious people confronting high finance.
It was tough work, but over five August days in Seoul, about 100 Asian church
people and representatives of secular groups plunged into a study of the global
financial system, paused to learn how their religious traditions could inform
the analysis and then set forth an action plan to confront the social
structures of sin that had beat their once booming countries into
economic submission and driven their people into despair.
The forum, The Asian Economic Crisis and the Role of the
Church -- IMF, Human Rights and the Church, met in Seoul Aug. 24-29.
Convened by the International Catholic Movement for Intellectual and Cultural
Affairs-Pax Romana (www.pax-romana.org/ click Regions and then Asia) and
the Woori Theology Institute of Seoul, it attracted about 100 people including
lay Catholics, religious, clergy and bishops as well as representatives of
nongovernmental organizations from Asia together with colleagues from Europe
and the Americas.
Many -- probably most -- participants here feel that Asian
societies and cultures are about to be absorbed into a global capitalist system
that obliterates all it consumes and results in a world dominated by the worst
of Western culture: cruel, avaricious free-market capitalism.
The economic crisis that has engulfed the region -- and now
threatens Russia, South Africa and much of Latin America -- is not the cause,
but only the sign of the evil structures responsible for this havoc, the
seminar concluded.
July 2, 1997, is the day a generation of Asians will remember.
That day the Thai baht was loosened from its exchange rate peg and allowed to
float. But it didnt float up, it plummeted, from 25 baht to the
U.S. dollar to nearly 52 baht to the dollar, before finally stabilizing
at about 40 baht to the dollar. By year end, all currencies in the
region followed the baht down. Economists and journalists called it the
tom yum kung effect, after the Thai national dish, spicy shrimp
soup.
To date, four countries have changed governments as a direct
result of the economic havoc: Thailand, South Korea, Indonesia and Japan. The
crisis has brought chaos to other Asian nations. Malaysias prime minister
Mahathir Mohamad fired his successor-in-waiting, Deputy Prime Minister Anwar
Ibrahim because of differences they had over economic policy and Bruneis
royal family has split over scandals exposed by the economic crisis.
The already weak countries -- Myanmar (Burma), Laos and Vietnam --
have been set adrift after enjoying much support from their once-rich
neighbors. In Burma, democracy groups are using the crisis to good advantage,
as are independence groups in various regions of Indonesia.
Unexpected crisis
Few people saw this crisis coming. Certainly, almost no one in the
countries most drastically hit expected it. They were blinded by a dozen years
of astonishingly high growth and believed their own public relations pitches to
foreign investors. The East Asian Miracle was the name of a report
from the World Bank.
When the World Bank issued that report, economies were booming and
living standards rising. Things looked rosy. Each country had a slightly
different plan, but all basically followed high growth models led by exports.
By the mid-1980s, a bit earlier for Korea, a bit later for Indonesia, these
plans were in full swing. Trade and direct investment were increasing year
after year.
The 1990s saw a dramatic change in development policies. At the
urging of international advisers and organizations, these countries began to
allow into the country foreign money for short-term loans, for currency
speculation and for stock market speculation. The amount of money is
staggering. Western banks offered so much money to local banks that they had
trouble re-loaning it. Much of the money ended up as margin loans for stock
trading or in an already bloated real estate sector.
Thailand, for example, created the Bangkok International Banking
Facility -- BIBF -- in 1993. Foreign banks put money into the facility, and
Thai banks borrowed that money to recycle as loans for Thai companies. In 1993
the fund was zero. By 1996, it had $35 billion in it. And it wasnt just
Thailand.
Around $2 trillion spins around the globe daily. About 3 percent
goes for the exchange of goods. The remaining 97 percent is purely speculative
transactions. Nothing is actually produced. Money is making money on money.
In 1996, $94 billion flowed into East Asia from developing
nations. In the first half of 1997, $70 billion entered. Then came July 2. In
the last half of 1997, $102 billion left the region. The outflow has continued
through 1998. This is the crisis that is bankrupting companies, causing massive
unemployment, foreclosing on home mortgages and raising suicide rates. But why
did it happen?
Going into the seminar, most participants seemed to know who the
culprits were: the International Monetary Fund on one hand and the local
politicians and businessmen who granted foreign access to domestic markets.
What they werent sure of was how all this fit together.
Shorting the currency
In his homily at the opening Mass, Bishop Peter Kang U-il,
auxiliary bishop of the Seoul archdiocese, set the stage for what would follow
over the next five days. Kang said that every day he passes through the
cathedral square, which has become a tent city for people who have lost their
jobs and are seeking redress. While the IMF and World Bank have operated for 50
years, the bishop said, Conditions have not improved much. Many indicate
it has become notably worse. It would be worthy to examine why this happened,
how the things were manipulated at this point ... to analyze and to make
manifest these vicious mechanisms and so-called structures of sin.
So what are the mechanisms Bishop Kang referred to?
asked Martin Khor, director of the Malaysia-based Third World Network.
Ill tell you, its called shorting the currency.
Shorting the currency is a strategy in currency speculation in
which currency traders take out massive loans in a local currency and then
start selling to buy dollars causing the exchange rate to plummet. When the
rate falls, they can repay the local currency loans for fewer dollars and
pocket the difference. That happened in Thailand, South Korea, Indonesia and
Malaysia.
As local currencies became worth less and less, Asian businesses
could not repay the billions of dollars they had borrowed from foreign sources.
Real estate investment offered no returns, and stock prices went through the
floor. So the speculators and the foreign lenders took their money out of the
region.
They pocket [the money] and clear out of the country,
because there are no rules for taking money out of the country, said
Khor, who led the economic analysis at the seminar. His thesis is that global
financial liberalization -- specifically the unregulated flows of capital
across borders -- caused the Asian crisis.
But the IMFs cure for Asia is more liberalization, Khor said
-- like a doctor who feeds mercury to a patient and when the patient gets sick,
prescribes increasingly higher doses of mercury.
Crony capitalism
Western analysts blamed the crisis on the sins of our
companies and the sins of our political leaders. This is summed up in the
phrase cronyism and corruption, Khor said.
Now this is a very tempting theory to have because, of
course, its all true. This is something we have struggled with
ourselves, Khor told the seminar. In fact, many of us have spent
our lives fighting these same things: official corruption, big companies and so
forth.
But we cannot say this is the what caused the crisis,
he insisted.
Its true that we have crony capitalism causing our
problems, but, Khor said, it is international crony capitalism of
Wall Street controlling the U.S. Treasury, [which is] controlling the IMF and
the IMF controlling the developing world. This is the crony capitalism. This is
what Bishop Kang must have meant when he said, structures of sin.
Analysis from Korean and Thai delegations showed that many of the
conditions that the IMF imposed to secure loans have little or nothing to do
with the crisis. Korea, for example, had to allow greater foreign ownership of
domestic companies. Thailand has had to restructure its banking system so that
now a foreign company can buy up to 100 percent of a Thai bank.
The G-7 countries [the worlds leading industrialized
nations] have wanted access to our markets but couldnt get it. They now
put their desires -- desires held for many years -- into the list of IMF
conditions, Khor said. These demands have nothing to do with our
crisis. Its sheer opportunism on their part.
While the IMF has 180 member countries, voting is weighted
according to shareholding, so G-7 countries keep the majority of shares and the
vast majority of votes.
Khor noted, This is not conspiracy, because it happens in
the daylight -- its not secretive. Indeed, Khors data is
drawn from public records and media, such as the Financial Times of
London, Fortune magazine and The Wall Street Journal.
The victims reality
Seminar participants did not end their analysis of the situation
with Khors economic research. The groups final statement explained:
Early in our forum we sought to situate our discussions in the reality
lived by the victims of this economic crisis.
In small groups, they visited striking labor unions, a center for
unemployed women and a shelter for unemployed migrant workers. They also
visited poor urban squatters and the Seoul Railway Station, which becomes a
dormitory for 3,000 homeless people every night. This experience of
meeting with the victims of the Asian crisis helped us to understand its human
consequences and to see them in the light of practical reality, the final
statement said.
Seeing with the eyes of the victims was stressed again and again
throughout the proceedings. Participants attended workshops to examine the
impact of the crisis on the environment and on specific groups, such as
farmers, fishing communities, the urban poor and workers, particularly migrant
and women workers.
In their analysis of the crisis, government officials and economic
experts dont see the real world, said Kim Hang Seob,
executive director of the lay-run Woori Theological Institute. They are
locked in a kind of fictitious world of neoliberal idolatry of
capitalism, he said.
This is where the church and theologians can step in to give
deeper, people-centered perspective, Kim Hang Seob said.
The Rev. Kim Yong Bock of Seouls Hanil University and the
Presbyterian Theological Seminary agreed. The victims are providing clues
to the ways to overcome the crisis, he said. People themselves have
sustained their lives throughout history. They have answers to microeconomic
questions that have been largely ignored.
They should be listened to and their wisdom shared, he said, and
the churches can help mobilize these people.
Jesuit Fr. Soosai Arokiasamy, a member of the Federation of Asian
Bishops Conferences theological commission, suggested that Catholic
theological analysis begin with the social encyclicals and then examine the
social teachings of the local churches. When these two meet, there is a
cross pollination and a basis for discernment, said Arokiasamy, a faculty
member of Vidyajyoti College of Theology in New Delhi.
Arokiasamys suggestion was accepted, with the acknowledgment
that such discussions in Asia must include other religious communities: They
cannot be limited to a strictly Catholic or Christian perspective.
The final statement said that the church learns in the
spirit to enter into dialogue with the poor of the world (especially of Asia)
and with the cultures of Asian people with deep respect and humbly takes off
its shoes before other religions because it recognizes Gods presence and
action in them.
The Seoul forum participants pledged to discern their
response of committed action in solidarity with people of other faiths and good
will in service of all in love.
One voice heard only faintly at the Seoul Forum was that of women.
During the morning tea break of the second day of the conference, an ad hoc
meeting of women delegates met and demanded greater participation in the forum.
They noted that women were given minor roles on the panels, not as keynote
speakers or topic leaders. The women took their concerns to the organizers and
made pointed interventions during discussions.
Susanna Yoon Soon-nyo, who chairs the Korean Catholic Womens
Community for a New World, told the forum it was making a big mistake in not
listening carefully to what women were saying about the economic crisis. Yoon
cited rising cases of unemployed men abandoning their families. Women are
given the task to take full responsibility for the family. This has always been
the case in [Korean] history. In the wars and since, women have always
sacrificed themselves to save the family, she said.
We really have to bring the womens role and a feminine
perspective to this reform of the neoliberal system, Yoon said. I
will fight this with you, but I will fight this as a feminist.
The ad hoc group continued to meet throughout the forum and at one
point wrote a statement that they planned to issue in parallel to the
forums final statement. On the last day of the conference, the
womens statement was accepted by the body and incorporated into the final
statement for the Seoul Forum.
From the ad hoc group came the final statements call to all
Asian bishops conferences to establish womens commissions.
Women, especially because of their suffering from the Asian economic
crisis exacerbated by gender discrimination, need an official channel to
express their needs and participate in dialogue for improvement, the
final statement said.
Several women delegates were still disappointed, saying that
tacking on womens concerns to the larger groups agenda still kept
women marginalized.
In the end, Seoul forum participants adopted two plans of action,
one titled An Agenda for Solidarity Action, which focused on the
need for a fundamental restructuring of the international financial
institutions, and An Agenda for the Renewal of the Church,
which noted it was important for the church to start with our own
conversion based on a critical review of our own behavior, mentality and
values.
A global view
The forum passed a resolution calling for opposition to an IMF
initiative to amend its articles of agreement to promote full capital
liberalization. The group called the plan an irresponsible action on the
part of the IMF.
The group also endorsed campaigns against similar liberalization
plans put forth by other international and regional groups, such as the World
Trade Organizations financial services agreement, the U.N. Organization
for Economic Cooperation and Developments Multilateral Agreement on
Investment and NAFTAs prohibitions against capital controls.
Participants were adamant: Controls on capital transactions
must be maintained.
According to Anselmo Lee, president of the International Catholic
Movement for Intellectual and Cultural Affairs-Pax Romana, these kinds of
resolutions are evidence of a changing perception among church-based grassroots
people in Asia. They saw, some for the first time, the connection between what
happens at the international level and what they have to battle at the local
level, Lee said. They saw that just as they can make positive actions and have
influence at the local level, they can take positive actions and have influence
on a global scale.
Michael Chai, a Malaysian directing the Asian office of Consumers
International, echoed Lees thoughts. After years of work among indigenous
groups and on environmental issues, Chai said, I learned that I needed to
go to places like Japan and Europe to campaign among politicians and business
persons there. ... They also have to change the way they consume because they
encourage the local people to destroy the forests blindly and to ignore the
rights of indigenous people.
Lee said this perception change, which one participant described
as globalization from the ground up rather than globalization from the top
down, was one of the most significant outcomes of the five day forum.
Renewing church
The group also said that the economic crisis was an ideal time for
deep re-examination of pastoral priorities within the church. We believe
that church structures should provide for lay participation at all levels
including decision-making; that there should be less emphasis on administration
and more on pastoral concerns; and that, in particular countries, a change from
investment in large buildings and structures to investment in people and their
needs, the final statement read.
They called on churches in the First World and the global church
institution -- particularly the Pontifical Council for Justice and Peace -- to
use their clout to lobby the international financial institutions and G-7
governments to follow a more humane program.
They urged the Federation of Asian Bishops Conferences and
lay Catholic groups to endorse the Jubilee 2000 campaign for forgiveness of the
debts of poor countries. They also called on the Asian bishops federation
to lead a delegation to the IMF and World Bank to ask them to review their
policies in light of the suffering of the poor of Asia.
They asked that as the Asian bishops prepare pastoral documents or
other responses to the economic crisis that they engage in dialogue with
victims of the crisis. Lay people, especially women, should be ensured
representation in the process of formulating such documents, the final
statement said.
National Catholic Reporter, October 2,
1998
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