Abstract
This paper comparatively examines diverse responses from three major actors in the global political economy (the state, civil society, international financial institutions) to the Asian financial crisis of 1997 and the current eurozone crisis. First, it analyses conditional lending policies of international financial institutions (IFIs) such as the International Monetary Fund toward countries in fiscal distress. It then critically examines how the lending policies engendered social tensions and conflicts as austerity measures such as cuts to social welfare programmes hit hard on the populace. Examining how the state and civil society in Asia reacted to and, as a result of contentious state–civil society interactions, altered the policies of IFIs, the paper draws lessons from the Asian financial crisis for the European Union and puts forwards alternative policy suggestions.
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Notes
Between 2005 and 2007, Spain enjoyed government surpluses that increased from 11.5 billion EUR in 2005 to 20 billion in 2007. As for government debt as a percent of GDP in Spain, it was very low by the European standard, in the range of 36–59 % between 2000 and 2007. Against the backdrop of the subprime mortgage crisis in the USA, its debt ratio jumped to 69 % in 2011. Portugal had a moderate level of government debt, around 50–71 % of GDP between 2000 and 2008 until it reached a record high 108 % in 2011. Greece is somewhat a different case. As for Greece, government debt level has been consistently high in the past, in the range of 97–112 % between 1995 and 2008. It reached 170 % in 2011 (Eurostat, Jan 26, 2013).
The main IFIs are the IMF and the World Bank in the case of the Asian currency crisis, and for the Euro area, they refer to the Troika—the IMF, the EU and the European Central Bank (ECB).
Public austerity measures target certain government expenditures mainly concerning social welfare programmes. When the Korean government suggested that it might cut the defence budget to meet IMF targets, Washington (worried about its lucrative weapon sale contracts) pressured Seoul not to reduce its military spending (Bullard et al. 1998).
During the food riots in 1998, many Chinese-Indonesians were rooted and killed by food rioters. It is reported that a large number of Chinese fled the country during and after the riots.
For instance, with the fall of Suharto, many ethnic groups in East Timor, Aceh, Kalimantan, Sulawesi and Maluku became more vocal about their plights under the former military regime. As the separatist movements gained more support, East Timor was eventually granted its independent status (The Economist, Feb 7, 2011).
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Park, M. Lessons from the Asian financial crisis for the eurozone: a comparative analysis of the perilous politics of austerity in Asia and Europe. Asia Eur J 11, 189–199 (2013). https://doi.org/10.1007/s10308-013-0350-x
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DOI: https://doi.org/10.1007/s10308-013-0350-x