Washington's Neoconservatives and the Fight Against Dictators
By Steve Hanke
Monday 09 June 2003
Most people believe that the United States' recent overthrow of Saddam Hussein derives from a new policy. This policy is new perhaps under the specific circumstances, but the ideas of regime change and of putting it into effect are not.
It's well-known that Assistant Secretary of Defense, Paul Wolfowitz and a small group of people related to the neoconservatives developed this idea quite some time ago and have not ceased to promote it ever since.
When, in the 80s, the American government arrived at the conclusion that The Philippines' President Ferdinand Marcos' power was not legitimate, he was forced to leave in 1986, with the United States actively contributing to his departure. And the key man who put that departure into effect was none other than Paul Wolfowitz, Assistant Secretary of State at the time.
During his tenure as Indonesian ambassador in 1986-89, he launched a new idea for regime change. This time President Suharto was the target. He was considered corrupt and anti-democratic. The United States, with the help of the International Monetary Fund, achieved their objectives in 1998 when Mr. Suharto fell.
It happens that I know a certain number of things about Suharto's overthrow. At the end of January 1998, I was giving a series of lectures at the University of Bogazici. One evening, while I was in the Ciragan Palace Hotel of Istanbul, I received an urgent phone call. It was an invitation from President Suharto to come and meet him in Jakarta. The Asian crisis of 1997 had hit Indonesia hard. The IMF has responded by prescribing its standard remedy and Indonesia let the rupee float on July 2 1997. The results were catastrophic. The rupee's value collapsed, inflation rose and economic chaos followed.
Mr. Suharto knew I had counseled Bulgaria and Bosnia to establish currency boards in 1997. And, as day follows night, monetary chaos stopped dead in its tracks in Bulgaria and Bosnia immediately after these countries had adopted fixed exchange rates guaranteed by their foreign currency reserves.
President Suharto understood that the IMF's remedy killed the patient and that a currency board could prevent the complete collapse of his country. Following our first meeting in Jakarta, Mr. Suharto named me special consultant. Shortly afterward, I proposed a currency board for Indonesia, which Mr. Suharto approved. That contributed to the rupee's 28% re-appreciation against the dollar the same day the proposal was announced.
But that suited neither the United States' government nor the IMF. Even though the currency board proposal had garnered the support of numerous Nobel Prize winners and other eminent economists such as Gary Becker, Rudiger Dornbusch, Milton Friedman, Merton Miller, Robert Mundell and Sir Alan Waltersit, it became the object of a brutal attack. Suharto was simultaneously entreated by United States' President Bill Clinton and IMF Director Michel Camdessus to abandon the idea if he wanted the 43 billion dollars of aid money that had been promised to his country.
Why did the proposal of an Indonesian currency board provoke such a reaction? Nobel Prize winner Merton Miller immediately understood the maneuver. He declared then in the Christian Science Monitor that the United States wanted to overthrow Suharto and that a currency board militated against such a project. Professor Miller brought to notice that a currency board would stabilize the rupee and the Indonesian economy and that in consequence Suharto would remain in power.
The former Australian Prime Minister arrived at the same conclusion: The United States Treasury deliberately gambled on the country's collapse to get rid of President Suharto , he said. Former American Secretary of State, Lawrence Eagleburger, formulated a similar diagnosis: We (the American government) were very shrewd to support the IMF so that he'd be overthrown (Suharto) . As for Michel Camdessus, he proudly declared as he left for retirement: We created the conditions that forced President Suharto to resign.
Neoconservative ideas about regime change are nothing new. The only novelty in Iraq was recourse to armed force and to an overwhelming extent, so as to succeed.
Steve Hanke is Professor of applied economics at Johns Hopkins University in Baltimore (USA). Was Senior Economist at the Council of Economic Analysis of the Reagan Administration.
Translation: TruthOut French language correspondent Leslie Thatcher.