In Asia's mirror: from Commodore Perry to the IMF.

• Author: Mallaby, Sebastian

From Commodore Perry to the IMF

ASIA has been laid low before. It has, in its moments of crisis, been forced to open up to the West before. These openings have been attended by an interesting kaleidoscope of moods, their usual pattern neatly captured in the life of just one man, both hero and antihero of the most dramatic Asian opening of all. His name is Takamori Saigo.

Saigo's story starts in mid-nineteenth century Japan: a Japan that is still a feudal state, divided by caste, virtually devoid of industry. After two and a half centuries of shunning contact with the outside world, Japan's proud isolation is breaking down. Americans and Europeans are pushing into Asia, demanding opportunities to trade, carving up China. In 1853 it is Japan's turn. An American force commanded by Commodore Matthew Perry appears uninvited in Tokyo Bay, demanding that Japan open up also. Saigo and a group of fellow samurai decide that Japan can only survive by being strong; they launch a modernizing revolution now known as the Meiji Restoration. The encrusted caste system is scrapped; a system of modern law is put in place; designs for weapons and industrial machines are procured from America and Europe. After its long hibernation, Japan's doors are suddenly thrown wide. Even today, Japanese still remember the Meiji Restoration of 1868 as the First Opening.

Then, barely a decade on, Saigo has a change of heart. The reforms needed to modernize Japan have destroyed the feudal privileges of his samurai friends. The samurai right to wear swords has been abolished; their public stipends have been cut and then eliminated. This fills Saigo with guilt: forced to choose between foreign modernity and the human bonds of old Japan, a true samurai ought to prefer loyalty. To make amends, Saigo leaves the government and assembles an army of 40,000 rebels, dedicated to the overthrow of the Westernizing state that he had earlier created. A bloody fight ensues; the rebellion fails; Saigo commits ritual suicide.

The rebellion, and the grisly death, took place over a century ago, in 1877. Yet in modern Japan Takamori Saigo is still something of a hero. Museums and statues commemorate him, politicians invoke his name, and since its appearance in 1975, a series of books about him has sold more than eight million copies. This fascination hinges on Saigo's paradoxical career: He understood the need to modernize and copy from the West, yet he sacrificed his life defending Japan's ancient character. The Japanese are captivated by this, because the struggle between these two conflicting instincts is the story of their country. At the Meiji Restoration, and again after the Second World War, and yet again when its economy collapsed in the early 1990s, Japan has responded to weakness by opening up to the West. And yet, each time, it has felt the powerful undertow of nationalism and nostalgia.

For anyone trying to make sense of Asia's current financial mess, Saigo's story is instructive. The humbling of Thailand, Indonesia, and South Korea has brought another grand opening to the West, like Japan's earlier openings. Asia is vulnerable, as Japan was in Saigo's time: its system of capitalism has been made to look primitive, its firms are in hock to Western creditors. And Westerners have dispatched to Asia the technocrats of the International Monetary Fund. In its spirit, if not in its details, the IMF's progress through Asia over the past year recalls the long-ago voyage of Commodore Perry.

When Perry visited Japan, he brought exotic gifts: a graph machine, maps, and a miniature steam train. Now the IMF brings credit lines: $17 billion for Thailand, $43 billion for Indonesia, $57 billion for South Korea. Perry brought a trade ultimatum along with his gifts. The IMF brings demands for high interest rates, greater transparency in financial institutions, greater openness to foreign investors, less government involvement in the allocation of credit, less cronyism. In theory, the IMF is a supranational arbiter, with the power to pursue policies independent of America; in practice, it has little more leeway than did Perry when he set sail, entrusted by President Fillmore with "full and discretionary powers" to deal with the Japanese as he saw fit. Nobody doubts that the IMF represents American views. From the start of the Asian crisis, its technocrats have worked hand in glove with Robert Rubin's Treasury Department, a cooperation facilitated by the fact that Rubin's deputy, Lawrence Summers, comes from the IMF's sister organization, the World Bank; while David Lipton, the Treasury's top international man, is a former IMF official.

If the IMF, like Perry, is bent upon asserting American economic ideas, then East Asians, like the Japanese of Perry's time, seem disposed to listen - at least initially. This is especially true in South Korea, where the onslaught of financial turmoil in December 1997 coincided with a presidential election. The voters blamed the country's economic chaos on the president, and therefore snubbed his chosen successor. In his place, they elected Kim Dae Jung, a challenger who had long criticized Korea's un-Western economic system. Kim blames financial turmoil on cronyism, and declares that the corrupt ties between government and business are best dissolved by deeper democracy, Western style. He has welcomed the foreign infiltration of South Korea's economy, taking on those who suspect that if outsiders buy Korean firms, Korea's independence will be compromised. In short, he has made all the arguments that believers in Westernization love to hear. Nicholas Kristof, writing in the New York Times, declared in February that Kim Dae Jung stands for a "new Korea and a new Asia: political democracy, market-oriented economics."

And yet, like Saigo before him, President Kim cannot escape the undertow of nationalism and nostalgia. Korea, after all, is a fiercely nationalistic place, held together by its citizens' desire to ward off the great powers (Russia, China, and Japan) that have historically threatened its sovereignty. Like Japan, Korea has long made a point of excluding foreign companies from its economy. Like Japan, it has promised Westernizing reforms before and only partially delivered on them. For these reasons, it is risky to talk of a "new Korea and a new Asia." The Westernizing promises of Kim Dae Jung, like those emanating from other Asian seats of power, are made in Takamori Saigo's shadow.

This shadow is already apparent. White-collar workers have protested against the IMF in downtown Seoul; the middle class throughout the region is indignant at the sudden tripling in the cost of consumer imports. Editorialists have attacked arrogant American imperialism. They have muttered about a second Opium War, an allusion to precisely the same humiliation of Asians by Westerners that alarmed the Japanese nationalists of the nineteenth century. In Indonesia, President Suharto has resisted full implementation of the IMF's initial demands for sweeping reforms, growling that any change must conform to his nation's traditional belief in strong...