Post-Crisis Agenda for Korea and Global
by LEE Chan Keun
Professor, University of Inchon
Director General, Tegu Round Korea Committee
I must deliver my deepest thanks first of all to CCA, WCC and WARC for
giving me a chance to present some of my ideas related with the latest currency and
financial crises in East Asia. As we all know well, international debate has been going on
quite intensively regarding the causes and remedies of the crises. Three main lines of
argument have been put forth. First, the "internal limitations view" highlights
the fundamental weaknesses of the national development model of East Asian economies as
the cause of the crises. Second, the "external conditions view" points to
massive, unpredictable movements of international speculative capital as the cause of
repeated currency crises throughout the world, beginning in the 1980s. Third, the
"anti-IMF view" stresses the overly harsh reaction of the International Monetary
Fund as serving to exacerbate the situation, when a different approach might have resolved
the problem in a relatively short period of time. Instead of reviewing the spectrum of
views analytically, in this short presentation, I will try to derive several important
implications of the crisis to East Asian economies with specific focus on Korea.
1. Is IMF Program Successful in Korea?
Among the crisis-stricken countries, Korea is more or less regarded by the outside world
as the case of the successful recovery. There is no doubt that its macro-economy performed
very impressively over the year 1999: foreign exchange reserve reached $74bn; current
account surplus recorded more than $20bn; GDP growth rate rebounded up to 10 percent;
inflation rate was suppressed below 1 percent; stock market resumed booming rally;
sovereign credit rating recovered the above - investment grade, etc.
Then, can we say that IMF has done a great job in Korea by implementing its dogmatic
turn-around program? Even with such a broad range of positive signs, I must admit that
it's still too early to judge Whether IMF program has been successful in Korea or riot.
There are couple of important reasons.
Apparently, the turn-around of Korean Economy over 1999 doesn't seem to be achieved by the
fundamental improvement of its competitiveness. Transient favorable external conditions
emerged to the benefit of Korea. For example, foreign exchange rates realignment, that is,
Japanese yen deeply strengthened while Korean won steeply depreciated relative to US
dollar, is helping Korean products to regain price competitiveness. Arid Korea's staple
export item, semiconductor, of which the price fluctuation is very severe, is currently
enjoying the booming cycle in the international market. At the same time, it is highly
likely that the current rebound of Korean economy took place partly as a natural
adjustment from the drastic plunge of 1998.
More importantly, there exists indication that Korea comes to have triple structural
diseases that will definitely take long to he cured: they are snowballing debt burden:
rampant government deficit: and significant subordination of Korean industry to foreign
capital. Let's see the structure of each disease.
According to the official statistics, Korea's total foreign debt amounts to almost $I5Obn.
It is not insignificant. However, it does not include the important part of Korea'
external debt burden. For example, Daewoo Group which recently announced near-bankruptcy
at the peak of globalization has built up around 600 overseas business entities over the
past 20 years and all of those overseas entities are as highly leveraged as their domestic
mother companies. But their debt burdens are excluded in the compilation of Korea' s debt
burden due to the reason that they are affiliated overseas in accordance with the law of
the host country. Will the mother company not be claimed by the borrowers in case the
overseas affiliate does not be able to service its debt? If not, we must admit that
Korea's total external debt burdens are seriously underestimated.
Then how big is the Korea's external debt burden? We don't know exactly. Since Korean
companies and financial institutions are not required to report the magnitude of their
debt incurred overseas for overseas operations to the monetary authorities, we don't have
the all-inclusive figure at hand. Let's assume as an exercise that so-called local
financing is around $100 bn. Then, Korea's total debt burden will amount to $250 bn. With
average annual interest rate of 10 percent, total annual interest payment will be $25 bn.
Will Korea be able to serve annual interest payment safely with its trade surplus?
Wouldn't such a high level of trade surplus engender backlashes from deficit countries? In
this respect, we cannot rule out the possibility that Korea will be required to draw
additional foreign debt only to serve its interest payment. As a result, snow-balling of
external debt burden will follow.
The same story applies to the Korea's budget deficit. In order to implement IMF-dictated
corporate and financial restructuring, massive amount of government money is pulled out,
automatically ending up with rampant government deficits. If the size of inevitable
deficit is Won 200 trillion with the annual interest rate of 10 percent, Korean government
will need to spend roughly 25 percent of its annual budget only to serve its interest
charges. Will it he sustainable?
What kind of solution alternatives are open to Korea to resolve the severity of the debt
problems? There are not many. Korean government sees it unavoidable to sell off as much as
possible Korean companies and financial institutions to foreign capital. Don't we need to
he concerned about the subordination of Korean economy to foreign capital. Of course, in
this age of globalization, Korea cannot prevent foreign capital from acquiring its local
companies. If Korea is allowed to acquire US companies freely, it must open its M&A
market to US capital. But does it imply that Korea doesn't need to be concerned about the
fire sale of its strategically important companies? Let's take an example of Daewoo Motor
Company. What will happen to Korea if it is sold out to General Motors? Will GM regard
Daewoo Motor's Buchon factory as importantly as its Detroit factory? When it faces the
restructuring pressures from the market, what will happen to Buchon factory's over 15
thousand employees and those of numerous parts & components sub-contractors?
2. Why Should IMF he Criticized?
IMF needs to he penalized for their own mistakes, a lot of mistakes and for a number of
First, IMF revealed lack of impartiality in its handling the crisis. Basically Korean
financial crisis took place because private hankers mostly from the developed countries
stopped rolling over their short-term credits to Korea. But the debtors in Korea were
neither Korean government nor ordinary Korean citizens hut were the Korean business
conglomerates and financial institutions. So its was not a public default as was the case
in Latin American crisis, but a genuine private-private deal, But IMF, immediately after
getting involved in Korean situation, stressed that the government had to make a public
dollar funding to rescue Korean private sector, "You, the government, must repay or
make a guarantee of repayment of private debts". At the same time the creditor banks
heightened interest rates from 6% to over 18%, with the reasoning that Korea's country
risk had been aggravated so much that interest penalties or risk premiums had to be added
upon. As a result, creditor banks made incredibly high profits out of Korea's crisis. They
did not lose any single penny on their loan principals and at the same time earned triple
high interest earnings. Isn't it an extremity of moral hazard on the part of creditors?
Second, IMF encroached upon the realm of national sovereignty by applying the drastic
restructuring program to Korea beyond its own mandate. In the Articles of Agreement of the
IMF, it has the authority of policy recommendation only in the area of macroeconomic
management. For example, it can ask for the change in monetary and fiscal policies. They
have the right to say "You guys need to reduce money supply and fiscal
deficits." But IMF does not have any mandate to demand the total restructuring of the
socio-econornic system of the crisis country. In the letter of intent agreed upon by the
Korean government, however, IMF specified the necessity to increase the flexibility of
labour market, to restructure conglomerates and financial institutions, and to liberalize
the whole economy. At this point we must raise the Question, "why do we need to have
a nation state if the IMF take care of everything in the field of sovereign
Third, IMF stick to its orthodox stringent monetary policy with the reasoning that high
interest rate was the only way to stem from the continued withdrawal of foreign capital.
At the launch of the program, IMF' predicted that the Korean economic growth rate for the
year 1998 would be at least 2 percent, hut around the end of the year, it fell to minus 6
percent. This is absolutely a total disaster of IMF policy. Why did IMF stick to such a
dangerous policy even though Korea was more vulnerable to wide-spread economic recession
than the Latin American countries if the interest rate was heightened since Korean
companies are far more financially leveraged? Of course, IMF economists are not stupid.
They must know well that any economics textbook recommends the expansionary monetary
policy to fight against the liquidity crisis. Then, why did IMF economists go against the
textbook remedy? In retrospect, they must have been worried vet-v much about the
short-term speculative nature of capital and waged to set the priority to retain foreign
capital ahead of the economic recovery. At this point, we can suspect that the implicit
assumption behind the high interest rate policy is based on the Vagaries of the
speculative capital movement. Then, why is IMF not seriously considering the measures to
contain or relax the volatility of short-term capital movement? Since we have kept
observing over the past two years that IMF hesitates to introduce remedying
counter-measures, we must doubt the intellectual honesty and fairness of the IMF
Fourth, IMF revealed that it is not capable enough both to prevent and to manage crisis.
In the annual report of the IMF which was published in August 1997, that is roughly three
months before the occurrence of the Korean financial crisis, IMF praised a lot the Korea's
macro economic management. So it means that IMF, such an important international
institution, does not have a capability to predict financial crisis at all. More
surprisingly, the IMF mission team first came to Korea early December 1997 and the team
was composed of only seven specialists. They stayed only a week and then announced a
comprehensive restructuring program. Can you imagine how such a small number of economists
propose the total disintegration of the existing economic system in seven days? After the
announcement of the IMF Proposal, foreign capital made a flight out of Korea even more
3. Meaning of IMF Crisis to Korea and Asia
On the eve of the 21st Century East Asia has become a hostage to Western capital. Korean
people, especially the opinion leaders, are so much indoctrinated by American values that
they seem to have almost discarded Korea's own economic development model as well as the
country's existing socio-economic systems.
The Koreas' submissive stance was fully revealed when the 1997 financial crisis began to
unfold. Groundless speculation in international capital markets was a critical factor in
exacerbating Korea's foreign exchange crisis, yet Koreans tend to accept all of the blame
for the crisis, pointing to the internal weaknesses of the Korean system as the prime
Koreans do not realize the fundamental change of surrounding conditions. During the early
phase of its successful drive toward industrialization. Korean products were freely
allowed to enter the US market given the strategic importance of Korea for the United
States. However, the United States started to treat Korea differently since the end of the
Cold War. It urged Korea to liberalize financial market, to deregulate exchange controls,
to allow free flow of capital, to disband Chaebols, to privatize government-owned
companies, etc. As a matter of fact, the IMF program is exactly the bundling of all US
complaints against Korea sprouting after the end of the Cold War.
Then one has to wonder whether Korea will have a promising future if it completes the
IMF-dictated reforms literally. Recognizing the dynamic potential of the Korean economy
and the need for a preemptive control, the Western capital is trying to capitalize the
crisis situation by attempting an assault aimed at depriving Korean corporations of the
opportunity to earn substantial profits through economies of scale and brand recognition.
So, what does the Korean economy need to do in the face of such arrogant neoliheral
doctrine, which is in fact to further the interests of Western capital? The propaganda
that all industries and corporations regardless of nationality should be welcome to Korea
in order to boost production, create employment, and increase tax revenue is somewhat
misguided. It will effectively force Korean industries to succumb to Western capital and
History tells us the ironic lesson. Even the United States, the self-proclaimed free
market leader, was a protectionist country for a long time. Indeed, until the early part
of the 20th century, it applied various protectionist measures such as high tariffs,
countervailing duties and anti-dumping duties especially against imports from Britain to
help its fledgling industries to survive. It even refused to sign the Bern Convention and
did not hesitate to infringe on British copyrights.
Given this background the critical stance of the globalization should not be regarded as
old-fashioned protectionists. No one today would dare argue that local industries can be
developed competitively based on a closed domestic economic environment. However, if
advocates of globalization push too far, their arguments should be met with resolute
As the term "globalization trap" literally signifies, globalization brings with
it many hidden pitfalls, in particular those related to multinational corporations and
globalized capital Multinational corporations naturally seek hegemony in the world market.
Indeed, no sooner had Korea shown its weaknesses than these companies demanded, under IMF
pretenses, that Korea remove every harrier to doing business in Korea.
On the other hand, globalized capital often wages a "confidence game" in which
international financial speculators seek to take advantage of minor misalignment in a
country's foreign exchange rate. Once a speculative attack is unleashed, countries must
gain the confidence and trust of international investors by adopting so-called
anglo-american standards or Washington consensus in their economic management.
To be sure, direct confrontation with the United States is out of the Question. The power
and influence of the United States must be duly acknowledged, while Washington's role of
promoting global norms and standards should he accommodated. Small Asian countries do not
seem to have either the right or the power to formulate international rules, though they
seem obliged to adhere to them. Nonetheless, it is a serious mistake for the Asian people
to indulge in sugarcoating the reality of globalization, which is not necessarily for
everyone's benefit. Instead, Asia should ensure room for its own leeway in order to
improve the region's competitiveness, enhance quality of life and brighten future
prospects. In short, globalization can only be adopted with critical scrutiny it must not
be pursued with blind, total acceptance.
4. Taegu Round
Facing the currency and financial crises starting from 1997, Korean people have inclined
to seek its causes and remedies only in terms of shortcomings of the domestic economic
systems of the individual countries, and thereby, to overlook problems inherent in the
current international financial order. Of course, such an approach is partial and
dangerously biased indeed. Therefore, civil activists, religious groups, trade unions,
etc., formed Taegu Round Korea Committee June 1999 to address the issue of reforming the
existing international financial order. Taegu Round Korea Committee understands that the
current international financial order has the following problems.
Along with the rapid liberalization of financial markets and unfettered movement of
international capital, tremendously large amounts of financial capital accumulated in
advanced countries have transformed into international speculative money and have
aggravated the volatility of the exchange and interest rates worldwide. As an unavoidable
result of the disturbing movement of the international speculative money, many countries
are now suffering from deep economic recession, high unemployment, and social
disintegration while the governments concerned are left with few policy tools to cope with
them. While the burden of foreign debts in developing and poor countries is getting
heavier deepening the disparity between rich and poor countries, the IMF has not been
playing the role of an impartial mediator, facilitating rather speculative transactions of
international capital markets -- that is, helping creditors paid back, all the principal
and interest, no matter how much they have contributed, through their speculations, to the
destabilization of the economy concerned. As a result, the economic base of civil
societies, in Korea and in the world as a whole. have started to collapse.
For a proper solution of such problems caused by the international speculative capital
flows and growing foreign debts of developing and poor countries, an all-out change in our
thinking paradigm is urgently called for. It is important, of course, for debtor countries
to reform their economic systems so that they can be kept from incurring moral hazard. It
is equally important, however, for the G-7, the IMF, and creditor countries to overcome
the moral hazard by rectifying the existing one-way international financial order.
Globalization implies there is no longer separate existence of the inside and the outside,
the precarious situation of the outside inevitably affecting the inside. Therefore is
required a simultaneous reform of the inside arid the outside together.
The Taegu Round Korea Committee, believe both creditor and debtor countries should sit
together at a new Round to discuss on reforming the current international financial order.
This new Round must represent both parties equally, based on a 'two-way' principle aimed
at creating a sound international debt order as well as a sound international capital
order. There is no doubt that the final agreement should be reached at a government-level
Round. But to urge on the creation of such a government-level Round, and to complement it
once it comes into being, we hereby propose to inaugurate a Pan-Civil Round on world level
The Taegu Round Korea Committee calls for the citizens of the world to understand that
they are the firsthand victims of international financial turmoil and that they are the
one who should take the initiative to establish a democratic control system on the
globalized financial market. They should convince themselves they have the ability to do
Taegu Round Korea Committee held a Global Forum from Oct. 6th to 8th, 1999 by inviting one
hundred progressive people from more than twenty countries and arrived at the following
- We demand that all global economic institutions, particularly the
17V[F, World Bank and WTO, be held accountable to internationally agreed human rights
standards in conformity with their member governments' UN treaty obligations.
- We declare our support for the Jubilee 2000 Campaign and related
activities such as the November 1999 Johannesburg South-South meeting and the July 2000
Okinawa initiative, with their goal of Third World debt cancellation, and promise to put
organizational resources behind this enterprise.
- We urge the immediate adoption of global, regional, and national
controls on short-term speculative capital in order to reduce its destabilizing impact on
- We demand that the IMF be brought to account for the destructive
impact of its programs on the social and economic rights of the Korean people and the
peoples around the world.
- We support the Korean Federation of Bank and Financial Labor Unions
in their effort to take legal action against the IMF for activities injurious to the
welfare of the Korean people.
- We support a moratorium on the Millennium Round of the WTO pending a
full evaluation of the impacts of trade liberalization policies on people and the
- We support the creation of an Asian Social & Economic Institute
that with the full participation of civil society would study and try to solve issues of
regional trade, investment, short-term capital controls, and foreign debt management with
a view to formulating concrete action to promote sustainable regional development.
- To meet the above goals, we support the creation of the Taegu Round
Global Network for Social and Economic Justice, which will bring together Korean and
Global NGOs in a common endeavor.
* [The above article was a summary of the presentation made at a
recent CCA-Development & Service Consultation held in Bangkok, Thailand. Please write
to us if you want the unabridged version of the presentaion.]
Korean Workers Solidarity support
Australian BHP workers fighting for their rights.
The Sammi Specialty Steel Workers (President KIM, Hyun-Jun) brought up
an issue of Australian Workers struggle to secure their rights, collective bargaining and
freedom of association.
On the 17th of February, at 14:00, around 100 protesters including Sammi Specialty Steel
Workers, Korean Confederation of Trade Unions (KCTU), Korean Metal Workers Federation
(KMWF), Korea Federation of Construction Trade Unions (FKCTU) and human rights
organizations will protest against the Australian government's failure to effectively
support and promote the freedom of association and collective bargaining as enshrined in
the ILO conventions No. 87 and 98.
The protesters will gather near by the building of Australian Embassy to protest against
Australian government s failure in supporting and promoting the freedom of association and
collective bargaining and also against the BHP employers who ignore the union
representation and try to introduce individual contract.
The Sammi workers are also fighting against the POSCO, the largest Steel company in Korea,
since the POSCO employers failed in abiding by the workers freedom of association, and the
Korean government showed no intention to settle the case. The Sammi workers have been
fighting against POSCO's illegal dismissal with the POSCO's anti-union policy ever since
they were unfairly dismissed in 1997.
The KMWF has been informed by the International Metalworkers Federation (IMF) that in
1996, the Australian government passed a law which allowed employers to take advantage of
the anti-union legislation introduced by the right-wing Conservative government, and the
BHP, the largest multi national company in Australia, refused to negotiate new terms and
conditions of employment through the process of collective bargaining.
The main demands of the protest by the Korean workers are:
- The BHP should withdraw their trail of individual contract.
- The Australian government should abide by the ILO conventions No 87 & 98: freedom of
association and collective bargaining.
- Recognize the rights to union membership and effective union representation
- Equal pay and benefits between staff contractors and collective agreement workers.
Currently, the Sammi workers are campaigning for their reinstatement along
side with the international solidarity protest to support Australian workers struggle.
They will start their struggle tour nationwide in the early March to raise public
awareness on the anti-union POSCO, and their reinstatement. To support their campaign, the
KCTU and KMWF printed 5000 protest postcards and distributed them to unions worldwide.
Metal unions and colleges from around 12 countries, showed their solidarity and support
North Korea to open consulate in Hong
HONG KONG, Feb 15 (AFP) - North Korea is to officially open a consulate
in Hong Kong on Wednesday, a government spokeswoman said Tuesday.
"We have been informed that the Democratic People's Republic of Korea will open its
consulate general in Hong Kong tomorrow," the spokeswoman said.
The consulate will be located in the waterfront business centre of Wanchai on Hong Kong
island, not very far from the South Korean mission which has its office in the adjoining
banking district of Central.
A spokesman for the commission of Chinese foreign ministry in Hong Kong, said "China
has in principle approved" the proposal by North Korea to set up a consulate in the
former British colony.
Hong Kong will be one of a few places where consulate generals from both sides of the
divided Korean peninsula will be stationed at the same time.
A North Korean delegation visited Hong Kong a year ago to find a site for its consulate
and China has reportedly granted permission for seven diplomats to be stationed here.
Hong Kong, which reverted to Chinese rule in 1997, has been a key base for companies from
capitalist countries, including South Korea, wanting to invest in North Korea --
particularly in a struggling free economic and trade zone on its northeastern frontier.
Beijing has been a long-time ideological ally of Stalinist North Korea but, in a delicate
balancing act, has also sought to improve its ties with the more affluent South.
North and South Korea fought a bitter war from 1950-1953 which ended in a fragile
armistice, which has never been translated into a full peace treaty.
ABSDF Forced to Close Thai Offices
(By MATTHEW PENNINGTON)
BANGKOK, Thailand (AP) - The main political group for exiled students
opposed to Myanmar's military regime said Thursday it had closed all its offices in
Thailand under pressure from Thai authorities.
The closure could be a crippling blow to the All-Burma Students Democratic Front, which
has been under heavy Thai pressure since Myanmar rebels crossed the border last month and
took hundreds of hostages at a Thai provincial hospital.
The siege ended with Thai commandos killing all 10 rebels, who included members of the
radical Vigorous Burmese Student Warriors and God's Army, a fringe ethnic Karen group led
by twin 12-year-old boys.
Though the front has disavowed the actions, Thailand, for years tolerant of Myanmar
dissidents, has made clear it does not want the mainstream group to maintain a presence
Authorities have tightened security at the border with Myanmar, also known as Burma, where
around 700 members stay.
"If our offices cannot open here anymore, we shall go back into the jungle of
Burma," said Kyaw Kyaw, a central executive committee member.
On Wednesday, Thai police raided two of the group's offices in Mae Sariang district in
northern Mae Hong Son province, 400 miles north of Bangkok. Three students were sent to a
refugee camp along the border.
A third office in the district was immediately closed by the front itself, a member told
The Associated Press on condition of anonymity.
A Thai official in Mae Sariang, speaking on customary condition of anonymity, confirmed
the closures, saying it was Interior Ministry policy to "keep all refugees in a
The front says its other offices have already shut.
The front was formed by students who fled the Myanmar military's bloody crackdown on a
mass uprising for democracy in 1988.
Manila Hotel Employees on Strike!
February 10,2000. Workers of Manila Hotel gone to the strike against
the management's exploitative tactics and efforts of crush union. Workers in manila were
forced to go to on strike by the management's callous indifference to workers plight. The
management has also long begun its mission to harass and repressed not only union members,
but also the entire hotel workforce.
Negotiations for union collective barganining agreement with the management headed by the
Arnulfo Acedera (former AFP Chief of Staff) and Emilio Yap has been dragging for more than
four months now, there have been no positive developments. The provisions in the present
CBA (which has been in effect for 3 years now and still effective for one more year) have
been railroaded and flagrantly violated. There are 820 workers in the union, and the
management wants each one workers to back down from fighting for a just CBA. Twenty -four
regular employees were terminated on shallow charges. Two union officers were arbitrality
terminated on the mere suspicion of writing on anonymous grievance letter. What's more the
management wants to impose a moratorium on the CBA renewal negotiations. The vacancies
left by workers who were laid off were never filled, thus making the workload of the
remaining employees greater. Management also initiated harassment tactics against union
members, even filing a libel case against four union officers Jose Pepito Sales, Danilo
Penaranda, Clodualdo Roxas and Ferdie Barles. The department of Labour and Employment
(DOLE) has also conspired with the management by handing down an assumption of
juricdiction order (AJ) on the same day that CBA negotiations failed, which was November
As far the new CBA, the demands which workers are pushing is reasonable. Demands are given
Salary increase of P 2,000 and another P 2,500 for the year 2000. The year-end and
mid-year bonuses are merely 1.75% of the basic salary for this year and 2% of that we
expect to get in year 2001.
Management wants us to believe that the hotel is incurring losses. Whom do they think they
are fooling? Just this week, 95% of all the hotel rooms are occupied. Service charges
alone amount to P 4.1 million and over-all monthly profits are a whopping P41 million!
We should also like to air out righteous anger against certain key people in the
management. Emilio Yap and his coterie of congressmen and generals the like of Gen.Arnulfo
Acedera, Gen Edgar de la Torre, and Congressman Martin Isidro run the hotel like the
profit-hungry capitalists that they are virulently anti-union, and anti-worker. What they
have successfully done to the Manila Bulletin Union, they want to replicate at the Manila
Hotel-bust the union, retrench the workers and keep the remaining workers on slave wages
and working under exploitative conditions.
The workers in Manila Hotel are seeking your support in exposing their plight! Kindly
support their strike because this fight is also the fight of all Filipino workers!
Send solidarity messages to:
Manila Hotel Employees Association
C/o KMU National Office
37-A Quinto's Compound, Tomas Morato Avenue
Quezon City, Philippines
Protest letters to:
Former AFP Chief of Staff Arnulfo Acedera
The Manila Hotel
One Rizal Park, Manila 1099
Mr. Emilio Yap
Chairman of the Board
The Manila Hotel
One Rizal Park, Manila 1099
Message from U Aung Shwe, Chairman
of the NLD.
Wishing you all happiness and good health. The 12th of February 2000 is
Union Day in our country, Burma. I would like to explain how Union Day began in Burma's
Our national hero General Aung San and the ethnic nationality leaders from frontier areas
signed the Panlong Agreement on 12 February 1947 in Panlong, Southern Shan State. The
purpose of the Panlong Agreement was to reunite the ethnic nationalities in an attempt to
gain independence. It was intended to build a federal union when the country gained
The Agreement also established the Panglong spirit or the union spirit. However, the
spirit has disappeared in recent days because no genuine federal union emerged. The ethnic
nationalities do not trust each other and hatred and hostilities have grown among them.
This also is due to the fact that the Burmese Socialist Programme Party (BSPP), dominated
by members of the military, drafted and promulgated a unitary system constitution which
installed a dictatorial regime rather than establish the federal union that was demanded
by the people of Burma. As a result, the federal spirit has been destroyed.
It is very important for all our ethnic nationalities, such as Kachin, Kayah, Karen, Chin,
Burman, Mon, Rakhaing, and Shan, to re-enforce the spirit of unity that existed when the
Panlong Agreement was signed in order to prevent the country's disintegration. The NLD
strongly requests and urges all the ethnic nationalities of Burma to rebuild the Panlong
spirit or solidarity of ethnic nationalities by joining hand in hand, with courage, firm
efforts and objectives, and genuine patriotic spirit. Moreover we believe that in order to
achieve unity among the ethnic nationalities, it is necessary to draft a constitution in a
democratic manner, acceptable to all people including ethnic nationalities.