Has George Soros, the "rogue speculator", been converted by Mahathir to become the Malaysian Prime Minister's latest disciple?

(Penang, Sunday): Reading some Malaysian press today, Malaysians could be forgiven if they come to the conclusion that George Soros, the international financier accused by the Prime Minister, Datuk Seri Dr. Mahathir Mohamad as the "rogue speculator" responsible for the currency and stockmarket turmoils in Malaysia as well as for destabilising other South-East Asian currencies, has been converted by Mahathir to become the Malaysian Prime Minister's latest disciple.

There were two news items about George Soros:

• firstly that he had lost an estimated US$2 billion in last week's global stock market crash; and
• secondly, that he had made several suggestions for control of speculators blamed for the present financial crisis, which are similar to those advocated by Mahathir when the ringgit came under attack from speculators more than a month ago.

For instance, the Sun carried on its front-page the single story under the headline "Soros backs PM" while the Sunday Star also carried the story on its front page under the heading "Control financial speculators, says Soros". Both these reports give the clear impression that Soros had come around to the view espoused by Mahathir in September that "markets need to be kept under some sort of control" to avert wild fluctuations.

I do not hold any watching brief for Soros and am not his spokesman. I have never met him nor have any dealings with him. But I think it is important that Malaysians are given the proper information, whether it is about the fast-changing international economic scene or any aspect of globalisation, so that Malaysians can make the right and proper judgment about events impinging on their future and that of the nation.

For the record, Soros had been consistent in his views over the years about the inherent instability of global financial markets, the damage done by boom-and-bust cycles, the power of institutional investors like himself, and the need for a state to cushion those harmed by financial fluctuations.

In fact, well before the currency turmoils started in Thailand in July this year, Soros wrote an article entitled "The Capitalist Threat" for the February 1997 issue of The Atlantic Monthly where he warned that the doctrine of laissez-faire capitalism can cause intolerable inequities and instability if there is excessive individualism, too much competition and too little co-operation.

Although Soros had made billions from the international financial markets, he had always advocated regulations as "History has shown that financial markets do break down, causing economic depression and social unrest", as he returned to this theme in "The Capitalist Threat".

It is therefore incorrect to give the impression that George Soros had somehow been converted to the views now advocated by Mahathir for regulations in the international financial markets to prevent sharp volatilities of currencies which would be most harmful both to nations and individuals - when this had always been held by Soros even before the current spate of currency turmoils in South East Asia which has spread to other parts of the globe.

(2/11/97)