A Southeast Asian lesson

The money crises shaking Thailand, Malaysia and Indonesia have put the future of Southeast Asia's economic miracles at risk. At this unexpectedly difficult time, these Asian "tigers" could retreat toward prejudice and protectionism, sealing their fates as economic backwaters. Or they could tackle some of the fundamental problems that led to their current troubles, in which case they could well resume within a year or two the economic growth that has been their hallmark for more than a decade.

Unfortunately, Malaysia's Prime Minister Mahathir Mohamad has become the leading apostle of the first option. The prime minister was until recently identified with Malaysia's spectacular success. But since the currency and stock market took a dive this summer, Mr. Mahathir, Malaysia's leader since 1981, has blamed just about everyone but the man in the mirror.

A possible International Monetary Fund (IMF) rescue of neighboring Indonesia could take that country in a different direction. An IMF bailout is by no means unalloyed good news. It would put U.S. government dollars at risk. A well-managed plan, though, as in the rescue of the Mexican peso, can minimize the risk.

More dangerous, a bailout might signal to other developing countries -- and to those who invest in them -- that they can pursue whatever foolish policies they want, because the IMF will bail them out when things go sour. The right kind of bailout for Indonesia could mitigate that danger by showing that rescues are not cost-free -- and at the same time could help set Indonesia on a more sustainable course.

-- The Washington Post