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July 5, 2007 3:00 am
From Mr Dennis de Tray.
Sir, Your picture of Michel Camdessus, arms folded, hovering over President Suharto ("Wrong lessons from Asia's crisis", July 2) brought a wave of nostalgia and a desire to clarify the record.
This picture has long been seen as capturing a bygone era in which countries had to accede to the International Monetary Fund's will. As the World Bank's country director for Indonesia during the east Asian crisis, I was present during the signing, and remember well the events that led up to that fateful day.
For Indonesia, by January 1998 neither the IMF nor Indonesia nor Suharto had much in the way of options. It was clear by the end of 1997 that Indonesia's was a crisis of leadership, not economic management. When Stan Fischer, then the IMF's first managing director, arrived in Jakarta on January 11 1998, I told him that Indonesia's crisis was not like those in the other east Asian countries, and was unlikely to yield
to standard economic crisis management tools.
Indonesians, most especially the ethnic Chinese, were by then convinced that Suharto's era was over and were fearful of the transition to follow. But I also said that I saw no option for the IMF or the World Bank but to forge ahead with a strong reform programme. Why? Because the one and only chance we had to help bring Indonesia back from the brink, short of Suharto's stepping down (which was not on the cards in January), was to design a reform package that went beyond anything the markets might expect. Nothing less would convince investors that Suharto understood things had to change.
The package did not work because Indonesians rightly guessed that Suharto was not serious when he signed the package, and the rest is history.
Which brings me to Mr Camdessus. I have always found it profoundly unfair that someone who went out of his way to support what we all saw as a last ditch effort to save Indonesia has been pilloried simply because he stood where he was told to stand, and has the same habit I have: he folds his arms when he is standing.
Dennis de Tray,
Vice-President, Special Initiatives,
Center for Global Development,
Washington, DC 20036, US
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