Troubled Countries Lee Kuan Yew Forbes Magazine
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Current Events
Troubled Countries
Lee Kuan Yew, 07.01.10, 08:20 AM EDT
Forbes Magazine dated July 19, 2010Korean Peninsula. Despite the extreme provocation of North Korea's torpedoing and sinking a South Korean warship, the South's response--responsible and restrained--has been to refer the matter to the UN Security Council. Speaking in Singapore at the Shangri-La Dialogue on June 4, President Lee Myung-bak of the Republic of Korea (ROK) used measured language to strongly caution Kim Jong-il, the North's leader, against further acts of provocation, stating that the ROK and the U.S. were ready to respond to any use of force.
It's not clear what North Korea hoped to gain by this wanton act of state terrorism. But cross-border tensions tend to rally North Koreans around their leader, and Kim Jong-il is well aware that similar destructive acts of terror have not escalated into war.
Where does China stand in this? China will have to declare its position once the issue reaches the UN Security Council. To use its veto would be to condone state terrorism. Analysts therefore believe China will go along with the Security Council's judgment.
Thailand. Strife and turmoil have beset this Southeast Asian nation. Thousands of red shirt demonstrators, joined by farmers from the north and northeast, took to the streets and occupied key areas of Bangkok for weeks on end. Adding to the tensions was the fact that many red shirts possessed deadly weapons. Once the leaders surrendered to the Thai army, however, the rest dispersed.
Seth Mydans, the International Herald Tribune's longtime correspondent in Thailand, wrote: "The country's divisions and enmities have only deepened. Nothing has been resolved. The battle for power in Thailand--between social classes and between the politicians who manipulate them--continues." And in a later report: "Antigovernment sentiment has hardened in the northeast and north of the country, to where many of the protesters were returning Thursday. ... The frightened protesters, who had cowered in the temple amid gunfire and explosions, were heading home with new grievances and hatreds."
What began as a fight between former prime minister Thaksin Shinawatra and the Bangkok establishment, which detests his populist, opportunistic policies, morphed into a movement. The farmers seek redress, wanting their share of the economic growth that has been concentrated in Bangkok. The establishment will have to address this push for equity.
Despite the massive demonstrations the Thai economy has shown signs of rebounding, and it won't be long before the attractiveness of the economy draws foreign investors back. Tourists have already returned in large numbers. Thailand's people, its society and its economy have strong foundations.
A Monetary Union in East Asia?
Economists have suggested that East Asia should have a monetary union similar to that of the EU. The euro has made for ease in trading among its 16 member countries, but I am skeptical that such a currency union could work in East Asia. Its countries have different fiscal policies and are in varying stages of economic growth and development, so maintaining the fixed exchange rates necessary for a monetary union would be impossible.
Eleven trouble-free years of the euro led many to believe that the currency was enduring, but the economic crisis in Greece has raised doubts about its sustainability. A currency union removes the ability of members individually to use monetary policy and interest rates to be more competitive or reduce inflation.
For a monetary union to work there needs to be a central authority that can transfer payments to help out those members experiencing higher unemployment and slower growth. For example, in the U.S. the federal government, in effect, makes substantial transfer payments to states that have more unemployment and lower incomes.
Without a political union a monetary union like the EU cannot balance the budgetary and financial situations of its member countries. The weaker economies in the euro zone experienced a decade of higher living standards before it became necessary for the wealthier members, such as Germany and France, to step in and bail out Greece, a less vibrant Mediterranean country. Germany's chancellor, Angela Merkel, was not in favor of doing this, but after talks with President Nicolas Sarkozy of France she agreed. That has cost her the German people's approval because they have no desire for Germany to be the paymaster for the weak members.
Former Deutsche Bundesbank chairman Karl Otto Pöhl opined that Greece should be allowed to go into default and that the losses be borne by the French and German banks. Doing that would have put the euro in less jeopardy.
There are no easy solutions. Dropping the euro to go back to the drachma would be disastrous for Greece. Besides, the Europeans won't allow the euro zone to disintegrate. British financial analysts have suggested a two-tiered EU: Germany, France and Benelux as the inner core countries, with the remainder making up the second tier. EU countries must find the political will to enact the structural reforms needed to save the euro.
Lee Kuan Yew, minister mentor of Singapore; David Malpass, global economist, president of Encima Global LLC; Amity Shlaes, senior fellow in economic history at the Council on Foreign Relations; and Paul Johnson, eminent British historian and author, rotate in writing this column. To see past Current Events columns, visit our Web site at www.forbes.com/currentevents.
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LKY senile liao lah............he also won't say what he knows..............
Korea - warship sinking an inside job by the South Koreans and US
Thailand - rioters are paid to riot by Thaksin and his bosses..........another ''colour'' revolution like in Georgia and Ukraine (fianaced by george soros)..........sponsored by foreigners
Currency Union - no way ! the banks are making so much money from currency manipulation, they'll never go for it.
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These are all extras.
Gay Zua (shoot extra).
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China had just delay condeming N.K. within UNSC So his first assesment hit rock.....
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his secretaries did the analysis la. And they are basically what other political analysts are writing.
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the implicit message: singapore better.