"He's denying it but we have it on tape," said Mr Jonathan Fenby, editor of the South China Morning Post yesterday afternoon as he hurried into the convention centre where the annual World Bank/ International Monetary Fund meeting takes place this week.
He was referring to a denunciation of foreign exchange trading made at the weekend by Malaysia's combative prime minister, Mahathir Mohamad, who blames `manipulators' for the plunge in Malaysian and other south east Asian stocks and currencies this summer.
To the fascinated horror of thousands of international bankers and financiers gathered here, Mr Mahathir has chosen Hong Kong as the arena for a confrontation with his nemesis, Mr George Soros, the Hungarian-born billionaire, whom he has named as the most destructive international investor. "We've decided it (manipulation) cannot go on because it is no benefit to us," said Mr Mahathir, who called currency traders immoral, in an interview with the Post. "Why should we allow something which is damaging to us. Currency trading will be limited to financing trade."
His deputy prime minister Mr Anwar Ibrahim was left to control the damage, saying "There is absolutely no change in the various rules and regulations required for foreign exchange trading in Malaysia."
But it was too late. Selling sparked by Mr Mahathir's remarks sent share prices down yesterday and the Malaysian ringgit plunged to a 26-year low against the US dollar. Mr Mahathir's alleges that "men in control of the big money" want to prevent south east Asia catching up with the west.
His rage has focused the attention of the 16,000 government officials, financiers and observers gathered here on the frustrations of the struggling Asian `tigers', and on the normally reticent hedge fund manager who helped forced the British pound out of the European exchange rate mechanism in 1992. With brown hair and brown-rimmed spectacles, Mr Soros has found himself in the limelight, but not on the defensive. Most delegates defer to him as a guru and other suffering Asian countries have conspicuously declined to side with Mr Mahathir. "Interfering with the convertibility of capital at a moment like this is a recipe for disaster," Mr Soros told reporters. He denied accusations that he had been behind speculative attacks on regional currencies.
He also said he believed South east Asia would bounce back from the currency crisis if regional problems were addressed, such as weak banking supervision, lenient credit policies and a lack of information. "The region will recover because it has tremendous energy," he said.
While Malaysia cast itself as an international pugilist, and succeeds only in delivering itself a knockout, Thailand moved in the opposite direction. Its officials made strong efforts to convince US Treasury Secretary Robert Rubin that the country whose currency collapse sparked off the south east Asian crisis and which had to be rescued by the International Monetary Fund (IMF) and the World Bank, was now serious about reform.
The problem of financial market stability has dominated the preliminary World Bank/IMF talks, with officials lobbying developing countries on the need to base their booming economic growth on sound and transparent policies and more effective management. The World Bank/IMF conference will be formally opened this morning by Chinese Prime Minister Li Peng, in his role as host of the first international finance meeting in Hong Kong since it reverted to Chinese sovereignty on July 1st. Last night the number three in the Chinese hierarchy, Mr Zhu Rongji, outlined to bankers and economists China's plans to reform its struggling state-owned enterprises in three years.
As Mr Li entertained world financial figures yesterday evening, about 30 protesters from the Hong Kong Alliance in Support of the Patriotic Democratic Movement in China demanded freedom for Chinese dissidents at a designated protest area outside the Hong Kong Convention and Exhibition Centre. "Build a democratic China, end one-party rule, release political prisoners, release Wang Dan, release Wei Jingshen," they shouted in English, Cantonese and Mandarin. The World Bank said yesterday it had asked China to reconsider its refusal to accredit two human rights groups, Hong Kong Human Rights Monitor and Human Rights in China. The Chinese authorities questioned the relevance of the organisations to the annual meeting," said a spokesman.
