The last plenary session at the WEF last night featured the heads of state of the UK, South Korea, South Africa and Mexico. Fareed Zakaria moderated.
Gordon Brown opened the panel with a generic call for international cooperation. He seemed to be sucking on a candy while blathering on. His pants were high up and his socks too low and gave the impression of a misbehaving kid in school. Not the finest moment of oratory for the land of Shakespeare.
Calderon, who was smartly put together, followed with lessons learned from the many financial crises in his region. "We had 30 financial crises in 25 years - we are experienced in this area." Calderon emphasized three points:
1. The need for coordinated action among all international players 2. The need for swift action to separate the bad debt from the good. 3. The need for quick stimulus
Zakaria then gave the zinger question of the panel . He asked South Korean Prime Minister Han the following:
Back in 1998, during the Asian crisis, the IMF and other western powers forced a set of prescriptions on Korea which were bitter indeed:
1. Do not rescue failing institutions 2. Do not lower interest rates to near zero 3. Do not spend significant sums to stimulate the economy.
Now that the West is hit with this crisis they are implementing the inverse policies - why? Han was loathe to take Fareed's bait and lambast the West for turning 180 degrees on their own advice. Instead he merely replied that large stimulus packages will one day necessitate higher taxes and that will be painful as well. Quite a diplomatic answer.
Han did emphasize the need to pass the free trade agreement between Korea and the US calling it "the most important free trade agreement after NAFTA." He recognized that Obama has other priorities right now, but stressed the need to finalize the agreement in the near term.
The panel went on as each speaker said that we need international cooperation in diff\erent ways.
After the panel, I interviewed Zakaria to get his take on the proceedings. I asked him what he thought was missing from Gordon Brown's remarks. "He did not push Obama," he replied. Zakaria noted that while Brown stressed the need for multinational coordination, he did not press Obama to act; Calderon did.
I then asked Fareed what he thought of Prime Minister Han's diplomatic evasion of the question on the contrast between his crisis and the one now. Zakaria noted that while the South Korean situation was indeed a crisis, SK banks at the time did not pose a systemic threat to the global financial system. They could go under without worldwide calamity.
At the same time, it's clear that the West dealt out a much harsher medicine to Korea than it is now prepared to take for its own ills.
Perhaps we will remember this crisis and our reaction to it the next time a single state or region falls into crisis.