rose to speak, John said that I was his friend and brother, that he had stood with me when I was up and would not leave me when I was down, that I had been a good President, and that if it were up to him, I would continue to be. John Lewis will never know how much he lifted my spirits that day.
We returned to Washington at the end of the month to face another tremendous problem. The Asian financial crisis had spread and was now threatening to destabilize the entire global economy. The crisis had begun in Thailand in 1997, then infected Indonesia and South Korea, and now it had spread to Russia. In mid-August, Russia had defaulted on its foreign debt, and by the end of the month the Russian collapse had caused large drops in stock markets across the world. On August 31, the Dow Jones industrial average dropped 512 points, following a drop of 357 just four days earlier; all the gains of 1998 were wiped out.
Bob Rubin and his international economics team had been working on the financial crisis since Thailand’s trouble began. Although the details of each nation’s problem were somewhat different, there were some common elements: flawed banking systems, bad loans, crony capitalism, and a general loss of confidence. The situation was aggravated by the lack of economic growth in Japan over the past five years. With no inflation and a 20 percent savings rate, the Japanese could stand it, but the absence of growth in Asia’s largest economy increased the adverse consequences of bad policies elsewhere. Even the Japanese were getting restless; the stagnant economy had contributed to the election losses that had led to the recent resignation of my friend Ryutaro Hashimoto as prime minister. China, with the region’s fastest-growing economy, had kept the crisis from growing even worse by refusing to devalue its currency.
The general formula for recovery in the 1990s was the extension of sizable loans from the International Monetary Fund and wealthy countries in return for necessary reforms in the affected nations. The reforms were invariably politically difficult. They always forced change on entrenched interests and often required fiscal austerity that made things harder on ordinary citizens in the short run, though it brought a quicker recovery and more stability in the long run.
The United States had supported the IMF efforts in Thailand, Indonesia, and South Korea, and had made contributions in the last two cases. The Treasury Department decided not to put money into Thailand because the $17 billion already available was sufficient and because the Exchange Stabilization Fund, which we had used to help Mexico, had some new, albeit temporary, restrictions imposed on it by Congress. The restrictions had expired by the time the other nations needed help, but I regretted not making at least a modest contribution to the Thai package. State, Defense, and the NSC all wanted to do it because Thailand was our oldest ally in Southeast Asia. So did I, but we let Treasury make the call. On the economics and in terms of domestic politics it was the correct decision, but it sent the wrong message to Thais and across Asia. Bob Rubin and I didn’t make too many policy errors; I believe this was one of them.
We certainly didn’t have the Thai problem with Russia. The United States had been supporting the Russian economy since my first year in office, and we had contributed almost a third of the $23 billion IMF package in July. Unfortunately, the first disbursement of about $5 billion from the package had virtually disappeared overnight, as the ruble was devalued and Russians began to move large sums of their own money out of the country. Russia’s problems were aggravated by the irresponsible inflationary policies of its central bank and by the Duma’s refusal to establish an effective system to collect taxes. The tax rates were high enough, maybe too high, but most taxpayers didn’t pay them. Right after we got back from Martha’s Vineyard, Hillary and I took a quick trip to Russia and Northern Ireland with Madeleine Albright, Bill Daley, Bill Richardson, and a bipartisan congressional delegation. Ambassador Jim Collins invited a group of leaders of the Duma to his residence, Spaso House. I tried hard to convince them that no nation could escape the discipline of the global economy, and that if they wanted foreign loans and investment, Russia would have to collect taxes, stop printing money to pay bills and bail out troubled banks, avoid crony capitalism, and pay debts. I don’t think I made many converts.
My fifteenth meeting with Boris Yeltsin went as well as it could, given his problems. The Communists and ultra-nationalists were blocking his reform proposals in the Duma. He had tried to create a more effective tax collection system by executive action, but he still couldn’t stop the central bank from printing too much money, which only encouraged greater capital flight from the ruble to more stable currencies and discouraged foreign credit and investment. For now, all I could do was encourage him and say the rest of the IMF money would be available as soon as it could make a difference. If we released it now, the funds would disappear as quickly as the first installment had. We did make one positive announcement, saying that we would remove from each of our nuclear programs about fifty tons of plutonium—enough to make thousands of bombs—and render the material incapable of being used to make weapons in the future. With terrorist groups as well as hostile nations trying to get their hands on fissile material, it was an important step that could save countless lives. After a speech to the new Northern Ireland Assembly in Belfast in which I encouraged the members to continue to implement the Good Friday accord, Hillary and I went with Tony and Cherie Blair, George Mitchell, and Mo Mowlan, the UK secretary of state for Northern Ireland, to Omagh to meet with victims of the bombing. Tony and I spoke as best we could, then we all moved among the families, listening to their stories, seeing the children who had been scarred, and being struck by the victims’ steady determination to stay on the path of peace. During the Troubles someone had painted a provocative question on a Belfast wall: “Is there life before death?” Amidst the cruel carnage of Omagh, the Irish were still saying yes.
Before leaving for Dublin, we and the Blairs attended a Gathering for Peace in Armagh, the base from which St. Patrick brought Christianity to Ireland and now the spiritual center in Northern Ireland for both Catholics and Protestants. I was introduced by a lovely seventeen-year-old girl, Sharon Haughey, who had written to me when she was just fourteen, asking me to help end the fighting with a simple solution: “Both sides have been hurt. Both sides will have to forgive.”
In Dublin, Bertie Ahern and I spoke with the press after our meeting. An Irish reporter said, “It usually seems to take a visit from you to give the peace process a boost. Will we need to see you again?” I replied that for their sake I hoped not, but for my own sake I hoped so. Then Bertie said my quick response to the Omagh tragedy had galvanized the parties to make decisions quickly that “might have taken weeks and months.” Just two days earlier, Martin McGuinness, the chief Sinn Fein negotiator, had announced that he would oversee the arms decommissioning process for Sinn Fein. Martin was Gerry Adams’s top aide and a powerful force in his own right. The announcement sent a signal to David Trimble and the Unionists that for Sinn Fein and the IRA, violence, as Adams had said, “is a thing of the past, over, done with, and gone.” In our private meeting, Bertie Ahern told me that after Omagh, the IRA had warned the Real IRA that if they ever did anything like that again, the British police would be the least of their worries.
The first question I got from an American reporter was a request to reply to the stinging rebuke I had received the day before on the floor of the Senate from my longtime friend Joe Lieberman. I replied, “I agree with what he said… I made a bad mistake, it was indefensible, and I’m sorry about it.” Some of our staff were upset that Joe attacked me while I was overseas, but I wasn’t. I knew he was a devoutly religious man who was angry about what I had done, and he had carefully avoided saying that I should be impeached.
Our last stop in Ireland was in Limerick, where fifty thousand supporters of peace filled the streets, including the relatives of one member of our delegation, Congressman Peter King of New York, who had brought his mother home for the event. I told the crowd that my friend Frank McCourt had memorialized the old Limerick in
