(2007-1908-F) Asian Economic Crisis

The materials in FOIA 2007-1908-F are a selective body of documents responsive to the topic of the FOIA. Researchers should consult the archivist about related materials. It is difficult to briefly summarize complexities of the Asian Economic Crisis. The Asian Economic Crisis began in early summer 1997 and continued into the early months of 1998. By February of 1998, many of the Asian economies were stabilizing and beginning to see improvements. Many people attribute the beginning of the crisis to Japan though other countries ultimately suffered more greatly than Japan. Through the early 1990s the Tokyo Stock Exchange saw a general decline in its position in world trading and by 1995 it was responsible for only seventeen percent of the world’s trading. Exasperating this decline of the market was the collapse of thirteen financial firms and the revelation of bad loans worth trillions of yen. Two of these companies alone held over one trillion yen in bad loans. As a result, Prime Minister Ryutaro Hashimoto announced in November 1996, that the country would be undertaking a series of major financial reforms. In addition to Hashimoto’s financial reforms, Japan announced in May of 1997 that they were considering raising interest rates to protect the yen from speculative trading. Though they never implemented this interest rate the announcement resulted in speculative selling of Asian currencies across world economic markets. The result was a decline in currency values and a retarding of trade in Asian stocks. This led to two rounds of dramatic currency depreciation, the first began with the Thailand baht, the Malaysian ringgit, the Philippine peso, and the Indonesian rupiah. The second round followed in late 1997, with the fall of the Taiwan dollar, the South Korean won, the Brazilian real, the Singaporean dollar, and the Hong Kong dollar. South Korea was very dramatically affected by the recession and in November of 1997 sought the assistance of the International Monetary Fund (IMF) to help stabilize their economy. As an example, by March of 1998 fourteen of Korea’s thirty merchant banks had suspended operations. In January 1998, Alan Greenspan estimated that losses in Asian markets amounted to $700 billion USD. American losses were estimated to be $30 billion. Ultimately the IMF assistance package to Korea totaled $57 billion USD. Japan pledged $10 billion of this portion and the United States offered $5 billion from the Exchange Stabilization Fund. In-turn Korea agreed to a number of IMF mandated financial reforms as well as some United States dictated Frank-Sanders Amendment requirements (Frank-Sanders Amendment of the Foreign Operations Appropriations Bill of 1994). Japan faced unprecedented scandal and loss in its financial sectors through the 1990s. Though its stock market was weak, real estate values were weak, and its economy slow, the country did not face as dramatic a financial crisis as that of Thailand, Indonesia, and South Korea. In fact, Japan was one of the countries who, along with the IMF, was providing financial aid packages to help stabilize Asian economies. Japanese Prime Minister Ryutaro Hashimoto was uniquely qualified to lead Japan at the time of the economic crisis. He served as both the Minister of Finance and the Minister of International Trade and Industry prior to being elected as Prime Minister. Hashimoto served as the 82nd and 83rd Prime Minister of Japan. He took office January 11, 1996 and served until his resignation on July 30, 1998 when the Liberal Democratic Party lost its majority rule of the Diet. He was born in Soja, Okayama on July 29, 1937 and graduated with a degree in Political Science from Keio University in 1960. In 1963, Hashimoto was elected to the House of Representatives of Japan and he rose quickly through the ranks of the Liberal Democratic Party. After resignation in 1998, Hashimoto remained active in politics and was even considered as a candidate for Prime Minister in 2003. Hashimoto retired from politics following a scandal in 2004 and in July 2006 he died at a Tokyo hospital. Kim Young-sam was the first civilian elected as President of the Republic of Korea (South Korea) since 1960. He took office February 25, 1993 and served only one five year term. Kim was born December 20, 1927 and graduated from Seoul National University in 1952 with a degree in Philosophy. After serving in the Korean Armed Forces during the Korean War, he was elected in 1954 to the Korean National Assembly. He would ultimately serve nine terms. He was expelled from the National Assembly and banned from politics from 1980 to 1985 for supporting democratic activities. In both 1990 and 1992, Kim ran for President of South Korea. During his inaugural he pledged to build a New Korea and as President he undertook a significant program to rid the government and the business communities of corruption. The Asian Economic Crisis had a dramatic effect on South Korea and Kim’s seeking and acceptance of IMF money and restrictions was seen as an embarrassment to the country. He resigned as head of his party in 1997 and retired from politics following the end of his term in 1998. Clinton Presidential Records relating to communications between presidents Clinton and Kim and President Clinton and Prime Minister Hashimoto are Memorandum of Telephone Communications (telcons), Memorandum of Communications (memcons), and letters. The fact that these are Head of State and Foreign Relations records results in many records closed for national security reasons.