Asian countries are "watching the Greek crisis unfold with a mixture of envy and schadenfreude", Korea University economist Lee Jong Wha wrote in a recent opinion piece.
"When they experienced their own financial crisis,
they received far less aid, with far harsher conditions. But they also recovered much more strongly."
They did so not because of the harsh conditions imposed by the International Monetary Fund (IMF), which caused great pain among citizens, but despite them.
For all the differences between their economies, Greece shares many similarities with 1997 Korea: endemic corruption, widespread tax avoidance, rigid labour movements, huge underground economies and oligarchs hoarding national wealth.
Korea recovered by admitting the magnitude of its public and private debts and the amount of cash available in state coffers. Weak corporate links and politically connected banks were allowed to fail. Efforts were made to introduce greater transparency to the family-owned groups known as chaebol, whose profligacy helped topple the economy.
Tax collection became a national obsession, as did sacrifice: Millions of Koreans donated their heirlooms, wedding rings, gold bars and artworks to help replenish the treasury. In April, German international broadcaster Deutsche Welle ran a piece headlined Koreans' Gold Donations - a Model for Greeks?
Malaysia presents a cautionary tale. The country managed to avoid an IMF bailout by imposing Greece-like capital controls.
But 18 years later, the perceptions of cronyism, dysfunction and opacity that prompted capital to flee persist in many quarters. The growing scandal surrounding state investment company 1Malaysia Development Bhd (1MDB) seems to underscore the lack of reform in a resource-rich nation with as much potential as any in Asia.
Greece can leave the euro, or stick it out. What it can't do is defend the status quo and hope to remain competitive or relevant.
In 1998, Korea's real gross domestic product plunged 6.7 per cent. In 1999, it surged 9.5 per cent. Money returned because investors saw Seoul acting boldly to build a more open and sustainable economy. The reforms didn't go far enough; the chaebol are still too dominant and stymie innovation. Yet by 2003, as Korea University's Professor Lee points out, the government had shuttered some 776 financial institutions.
Five years into its crisis, how much has the Greek government done to purge its excesses?
The rest of Europe can go ahead and write more cheques to Greece, demand that Athens cut this and slash that. But things will end badly for the euro zone if Greece doesn't address its underlying problems. Asia's experience is proof that denial and ill-timed austerity fix nothing.
http://www.straitstimes.com/opinion/three-lessons-for-greece-from-asias-1997-crisis
