G-24 blames speculators

By Vincent Lingga

HONG KONG (JP): Developing countries called yesterday for international recognition of the role of speculators in setting off the spread of the recent currency crisis from one Southeast Asian country to others in the region.

The Group of 24 Ministers (G-24), which represents developing countries in negotiations on international monetary affairs, acknowledged that domestic policy weakness contributed to the recent Southeast Asian currency crisis.

"But the ministers also emphasize the need to acknowledge the role of speculative activities and other external factors that spread the crisis, through contagion effects, to other countries with sound macroeconomic fundamentals," G-24 said in a communique.

The G-24 issued the communique yesterday afternoon after concluding a two-day meeting here to discuss agenda items of great interest to developing countries to be taken up at the IMF's and the World Bank's annual meetings which start here Tuesday.

While the G-24's Venezuelan chairman Antonio Casas Gonzales was presenting the communique at the convention center last night, Malaysian Prime Minister Mahathir Mohamad launched another attack on currency speculators at a meeting in a nearby hall.

Speaking at a packed last session of a World Bank seminar on Asia, Mahathir again blamed what he called a few rich rogues and currency traders whose greed had played a big part in the recent turmoil in Southeast Asia's financial markets.

"For almost half a century the countries of Southeast Asia have toiled day and night to better the lot of their people ... But a few people in the media and in control of big money seem to want to see these countries, in particular Malaysia, to stop catching up with their superiors (Western countries)," he said.

He said the 20 percent devaluation of the ringgit meant Malaysian's purchasing power had fallen 20 percent while currency traders became richer.

"I, therefore, suggest that currency trading be stopped, made illegal because it is unnecessary, unproductive and immoral. We need to buy money only when we want to finance real trade," he said.

Soros

But the Malaysian leader's 16-page speech stopped short of repeating Mahathir's attack on American financier George Soros, whom last month he called a moron with a lot of money and accused of being one of the few rogues behind Southeast Asia's financial turmoil.

Soros will speak at a seminar on global integration due to be opened here this evening by World Bank President James Wolfensohn.

The G-24 ministers also said they were greatly concerned that Asia's growth prospects were being affected by the shock of financial turmoil in dynamic Southeast Asia.

"We are concerned that the currency turmoil will also affect Japan's recovery because the Southeast Asian region provides large markets for Japan's exports and capital," G-24 chairman Gonzalez said.

The communique said developing countries had a common stance on various issues and programs which would make up the main agenda of the IMF-World Bank meetings.

The ministers said they supported the IMF-World Bank campaign against corruption and its campaign for the promotion of good governance as a key component of development.

"We also express full support for cooperative international efforts to combat transnational bribery, money laundering," Gonzalez said.

But the ministers emphasized the need to avoid the application of conditions based on subjective judgments to ensure members were treated uniformly based on objective criteria.

The finance ministers and central bank governors of the Group of Seven industrialized countries (G-7) also held a separate meeting here yesterday, discussing, among other things, Southeast Asia's recent financial crisis.

Mitsuzuka

Japanese Finance Minister Hiroshi Mitsuzuka, who chaired the meeting, said the ministers hoped Thailand would vigorously carry out the IMF's program in order to settle its financial situation.

United States Secretary of the Treasury Robert E. Rubin said the G-7 reaffirmed its agreement that exchange rates should reflect economic fundamentals and that excessive volatility and significant deviation from fundamentals were undesirable.

"In this context, we emphasized the importance of avoiding excessive depreciation where this could lead to the reemergence of large external imbalances," Rubin said.

Rubin said the ministers also underscored the importance of extra measures to enhance the transparency and supervision of financial systems.