On the Beat | By Wong Chun Wai

Sorrows of 1997 too painful to forget

There are no permanent enemies or permanent friends in politics, as people say. Not only did they shake hands, Dr Mahathir even said Soros was not to blame for bringing down the ringgit in the 1997 financial crisis. 

The former premier said he accepted Soros' explanation that he was not involved in the devaluing of the ringgit and that it was done by other traders. 

Soros complimented his former nemesis for his "great contribution" to Malaysia's material development, describing him as a "great man". 

And we thought we have heard and seen it all. The pat on the back must have surprised many of us. 

In 1997, Dr Mahathir had blamed currency speculators for the Asian financial crisis, singling out Soros. In one year, the ringgit plunged from RM2.52 to the US dollar to RM4.596. 

Dr Mahathir had then said that Soros was using the wealth under his control to punish Asean for welcoming Myanmar. 

"There is definite evidence that we cannot disclose. There is no doubt he did it," he was quoted as saying. 

Soros maintained that he wasn't involved except for a single trade in mid-June 1997 and that his funds had not sold ringgit or baht. 

Ten years later, the wound must have healed. Or circumstances have changed. Dr Mahathir is no longer prime minister and Soros, who operates the Open Society Institute, has shifted his interest from promoting democracy in countries like Myanmar to fighting drug dealers. 

Whether Soros did attack the ringgit or not is now purely academic but the fact remains that he had attained renown for his attacks that forced the British pound sterling out of the European Monetary System in 1992. 

His alleged involvement in Asia following the attacks by Dr Mahathir helped him gain notoriety. Soros may plead innocence and perhaps he is telling the truth but he is no angel. That is certain. 

Rogue speculators, to borrow the words of Dr Mahathir then, such as Soros had caused much misery to Asians, especially Malaysians and Thais. And many Asians have not forgiven Soros. 

To be fair to Dr Mahathir, he said he was still concerned about currency speculation wrecking the economies of poor countries. 

As Japanese strategist Kenichi Ohmae then said, if Soros had not come into the picture, "someone else would have done the same thing". 

In short, while we have been quick to blame external factors, not many Asian governments were prepared to admit their own mistakes. 

The fact then was that despite the entry of China and India into the international export markets, the South East Asian economies failed to restore their competitiveness by making drastic adjustments to their exchange rates. 

There were also macro-economic weaknesses in several countries in the region, more than the governments would care to admit. 

Some of us may remember that we were lulled into a false sense of security and even superiority. 

We were tagged the Asian Tigers and economist John Nasbitt made lots of money writing books praising the South East Asians. All of us believed in our superiority and even invincibility. 

The Malaysia Boleh spirit carried us too far as we were kept busy making the biggest popiah and longest satay

Some economists had asked us to look at our wastage on unproductive projects and, of course, the region's notorious reputation for corruption but the calls went unheeded. 

With plenty of money in our pockets, many voters were prepared to tolerate the abuses of their leaders. 

They argued that it was okay for politicians to be corrupt so long as the people also got their share. Democracy and human rights were the least of their concerns. 

It is always easy to blame outsiders because many of us refuse to accept our own weaknesses. We like to live in a state of denial, preferring to fault others instead of taking a hard look at our flaws. 

Ten years later, we need to ask ourselves whether we would still give simplistic explanations for our financial failures at the micro or macro level. 

We have taken steps to protect our ringgit from the likes of Soros, who destroyed many families in the region with their greed. It is strange that he is now regarded as some kind of a hero. 

Until Dr Mahathir pegged the ringgit with his unconventional but effective financial methods, it was chaos for many businessmen as they saw the ringgit dip. 

Whether it was the failure of their governments, the greedy currency trader or Soros, they remember the sorrows of 1997. 


  • Wong Chun Wai can be reached at onthebeat@thestar.com.my