Chapter 73

The Bearish Nation is Now My Pleasure 73

Chapter 73: There Were Bad Guys in America Too / Indonesia, Stripped by Russia

Elliott Management Hong Kong Branch.

The orange incandescent lights dimly illuminated the office, where the curtains were drawn even in the daytime.

Harrison, the head of Elliott's East Asia operations, had been reading a report for a while and then threw the documents on the table with a sardonic smile.

Thud.

"Pitiful. They didn't prepare even after seeing how Thailand collapsed."

"The Indonesian economy was healthier than Thailand's, wasn't it?"

Harrison chuckled at the team leader's question, who was in charge of the Indonesian exchange rate.

"Is there such a thing as a profitable bankruptcy for no reason?"

They should have been thoroughly prepared when things were going well after seeing what happened to Thailand.

However, the Indonesian government exuded confidence.

They claimed they were different from Thailand.

The result was this report.

"That's why it's important to meet the right leaders."

Harrison gestured to clear the documents and continued.

"We took some hits in Hong Kong, but we'll more than make up for it in Thailand and Indonesia."

"That's right."

"The foreign exchange reserves held by the central bank will soon be depleted."

The Indonesian central bank raised the three-month short-term interest rate from 11% to 28% to stop the outflow of dollars.

It was a signal that they would not withdraw dollars if they were given high interest.

They also tried to prevent the rupiah from falling with $20 billion in foreign exchange reserves.

Additionally, the Ministry of Finance pressured domestic companies not to sell rupiah, but the results did not change.

The situation went against the government and the central bank's wishes.

Not only domestic but also foreign investors rushed to hoard dollars (fleeing funds overseas), and the value of the rupiah plummeted rapidly.

In early August 1997, Indonesian companies were the first to withdraw dollars and flee.

Then, American mutual funds converted their rupiah investments into dollars and fled Indonesia.

As a result, Indonesia's foreign exchange reserves, which were $20 billion, were depleted as Harrison predicted.

"The Indonesian government will likely surrender by the end of this week at the latest."

"That's right. Everything is going according to plan."

Harrison loved East Asia. No, he adored it.

Why wouldn't he love it when it brought him such immense happiness?

"1997 will be a year we won't forget, won't it?"

"That's right."

"Once Indonesia is wrapped up, your bonus will be substantial. So, finish it well."

"Understood. But, there are a few more things I need to report."

As the team leader placed other documents on the table, Harrison read them slowly.

How much time had passed?

Harrison pushed up his wire-rimmed glasses and asked.

"Has the Russian money come in?"

"Yes. It's accurate, as it came from the Thai Ministry of Interior. Because of this, they only received part of the funds the IMF agreed to provide."

"Wasn't the loan Russia borrowed due in two years? There's still a year left, so why now?"

Harrison knew about the loans Thai banks had given to Russia.

He had learned the details from a person who had assisted the Thai Deputy Prime Minister for 17 years.

"The timing is too perfect."

He knew the exact timing because he was the one who created the Indonesian situation.

However, he did not expect Russia to repay the loan a year early.

"It's as if they knew we would move like this and followed suit, isn't it?"

"That's right."

"The amount... It far exceeds the total profits of the fund companies that worked with us."

"Perhaps it's because it's Russia. Their financial management is terrifying. One reason Thailand collapsed so easily at first might be due to the large amount of loans to Russia."

"That's true."

The biggest reason for Thailand's collapse was due to speculative forces like Elliott, but the two men tried to find psychological comfort by blaming Russia for their mistakes.

"It's fine now that it's over, but if... "

The team leader left the sentence hanging, but Harrison understood what he meant.

If the Russian funds had bought Thai baht, the ones who would have collapsed would not have been Thailand but themselves.

Suddenly, he felt a cold sweat on his back.

"Let's stop there."

Harrison changed the subject because he didn't want to think about it anymore.

"Yes. And Japan has recalled all short-term loans from Korea."

"They're already scared. Korea is in a different economic league from Thailand or Indonesia. The Japanese are quick to notice things."

At that moment, the intercom buzzed.

Beep.

-You have arrived.

"Oh, you're here. I'll go out."

Harrison quickly went to the window, drew the curtains, and switched the lighting from incandescent to fluorescent.

"Is there anything else special?"

"Well, there's... "

There was a significant amount of untraceable funds, but since Indonesia was almost over, the team leader did not report it.

"You can go now and take care of things."

"Understood."

A moment later, he greeted the white man with great respect.

"Welcome, Minister. We've been waiting for you."

"It's been a while."

Harrison waited for the man to sit on the sofa before sitting opposite him.

"I received the money you sent. Thanks to you, I had a wonderful vacation."

"Are your family in Hawaii?"

"They said they would go after a day or two due to work."

The secretary placed a refreshing drink, but the man did not touch it.

"Let's get straight to the point since we're both busy."

The man was Robert Rubin, the U.S. Treasury Secretary.

"Sure. What does the State Department say?"

"The government will not provide any funds to Korea."

"Is the decision already made?"

"It's as good as made. Ha ha. Ironically, the Blue House helped us."

"As you know, Korea is currently in a trade dispute with us over U.S. beef and cars. During the dispute, the Blue House did something to shoot itself in the foot."

In the original history, President Bill Clinton, Secretary of State Madeleine Albright, and National Security Advisor Sandy Berger had discussed providing an emergency loan of about $15 billion to Korea due to the serious situation.

However, the situation took a decisive turn when the Blue House revealed to the media that E. coli O157 had been detected in U.S. beef.

"Thanks to the Blue House, our arguments were more convincing."

When the E. coli O157 detection was made public, people who argued for maintaining the upper hand in negotiations and against supporting Korea emerged.

Vice President Al Gore.

Treasury Secretary Robert Rubin.

Commerce Secretary William M. Daley.

The person sitting across from Harrison was the second of these figures.

In the end, after debates within the U.S. cabinet, Vice President Gore and Treasury Secretary Rubin won.

"Since the situation is like this, you can be assured that no funds will be provided to Korea."

Harrison's expression brightened even more with this short conversation.

"Is there any chance that President Clinton might change his mind?"

"He's preoccupied with the NATO agreement falling apart. He was hit hard by President Zahir. So, the result won't change."

President Clinton, after the NATO agreement fell apart, tried to find other ways but couldn't think of a way to pressure Russia.

Experts also argued that there was no point in needlessly pressuring Russia.

However, President Clinton, whose pride was scratched, was determined not to back down and was focusing all his efforts on finding another way.

"Given the situation, I will proceed with confidence."

"Do so. I came in person to discuss this matter, not over the phone. So, that's all I have to say."

"Yes."

As Treasury Secretary Robert Rubin stood up, Harrison said with a peculiar expression.

"If you have time, I can take you to a good place."

The Secretary understood the meaning and immediately replied.

"Oh, that sounds good."

They then headed to a high-end bar.

* * *

On August 14, the central bank declared its surrender, stating it would no longer defend the rupiah.

Immediately, the exchange rate broke through 3,000 rupiah to the dollar, and the value of the rupiah plummeted.

That day was the 20th anniversary of the founding of the Jakarta Securities Regulatory Board (Bapepam).

President Suharto of Indonesia appeared at a ceremony in a Jakarta hotel, attended by over a thousand securities and business professionals.

After President Suharto's daughter, who was the chairman of the Securities Association, finished her commemorative speech, the central bank governor took the microphone.

He announced that they were switching to a floating exchange rate system by removing the exchange rate band.

The central bank governor was declaring surrender to the many investors gathered there.

Of course, the Suharto family was also a loser.

Indonesian companies and foreign investors took the same stance on the rupiah's decline.

They competed to sell rupiah and convert to dollars.

In the end, the rupiah headed towards 4,000 to the dollar.

Nikolai, who was well aware of the Indonesian situation, waited calmly.

* * *

While the 'World Ball' march was starting again, two representatives from Indonesia visited the Kremlin.

President Suharto of Indonesia and his daughter.

Being in the Kremlin and in a position to ask for help, the two were very nervous.

On the other hand, President Zahir and Nikolai were calm.

"You said you want to repay the loan. It seems Indonesia is in a very difficult situation?"

Although he knew the situation, President Suharto had to answer politely.

"The value of the rupiah is falling endlessly since we switched to a floating exchange rate. We are in a situation where we can no longer do anything about it."

"Didn't the IMF say they would provide funds?"

"Sir, you know how severe the IMF's demands are."

"That's true."

"We can't accept all of the IMF's demands. Please help us."

Thailand and Indonesia bowed their heads to Russia.

Compared to Russia, they were just two small countries in Southeast Asia, but this had significant implications.

Thailand and Indonesia would now have to be cautious of Russia, and there was a high probability that their economies would fall under Russian control.

"It's quite a dilemma to ask for repayment a year early. We took the loan with a two-year repayment condition because it was urgent."

"That's why we are asking for your help."

Ironically, Indonesia was in the same situation as Thailand, having to bow its head after borrowing money.

"Hmm. If the situation is that difficult, we will repay the loan. All in dollars."

"Ah!"

"...!"

The two people's faces lit up.

"We, Russia, are not as stingy as the IMF. We received help, so now it's time to repay it."

"Thank you."

"But there are a few conditions."

"...?"

"Of course, they are not unreasonable like the IMF's, so don't worry."

President Zahir began to speak about the content he had discussed with Nikolai beforehand.

"Please grant us the right to develop, produce, and sell gas and oil in Indonesia. Also, the underground mineral resources."

"...!"

Indonesia is the largest producer of gas and oil in Southeast Asia.

It also ranks among the top in the world for coal, tin, copper, and nickel reserves.

Nikolai intended to use Gazprom's advanced technology to be the first foreign country to tap into Indonesia.

"Is that possible?"

President Suharto exchanged a glance with his daughter and nodded.

"We will do that."

"Good. The term will be 50 years."

"...!"

"...!"

The two people's eyes widened.

President Zahir continued as if the 50-year term had already been approved, without waiting for their response.

"Also, we would like you to import Russian weapons."

"What kind of weapons?"

"How about fighter jets? About 20 would be good."

Indonesia's fighter jets were outdated, so it was not a big problem to replace them, and he nodded.

"We will do that."

"Then, 20 fighter jets within 50 years, correct?"

"Yes."

"You made a good decision."

"When can the repayment be made?"

"We will deposit the money this Friday."

"Thank you."

As President Suharto expressed his sincere gratitude, President Zahir suddenly remembered something.

"Oh, I almost forgot. We will deduct the cost of the fighter jets from the repayment and deposit the rest."

"Yes?"

"Why are you so surprised? It's only natural to pay for what you buy, isn't it?"

"That's true, but the current situation... "

"Even after deducting the cost of 20 fighter jets, there should be no problem stabilizing the rupiah exchange rate, right?"

"..."

Nikolai remembered an incident from his days as a journalist.

Indonesia had signed a fighter jet contract with South Korea but had not paid.

They had caused a lot of stress to South Korea by dodging payment.

Now, Indonesia was in the same situation with Russia.

"Will you accept all of these conditions?"

It was not the time to think about accepting or not, so President Suharto swallowed hard and answered.

"We will accept them."

"Then, everything is settled. I will send our staff on your flight back tomorrow to proceed with the contract."

"Understood."

They exchanged pleasantries, and President Suharto and his daughter returned to their accommodation.

"Father, compared to the IMF's demands, this is nothing. Don't be too disheartened."

"I know."

They tried to think positively, but Nikolai shattered their thoughts.

"Ha ha, instead, we will sell 20 fighter jets and secure those rich underground resources for 50 years."

"Grandfather, that's not all."

"Is there more?"

"Making fighter jets takes a very long time, doesn't it?"

"That's true."

Even the U.S., which sells weapons worldwide, takes about three years to deliver fighter jets.

South Korea was unusually fast, but other countries typically took this long.

"We can deliver them in about four years, with older models."

He planned to polish and shine some of the used but good fighter jets and include a few.

He would also inflate the price a bit.

Additionally, the money spent on production could be kept in foreign banks for four years, earning interest.

Or it could be used as investment funds by Black Hole Investments.

Nikolai had these plans in mind.

"We can use the money from selling 20 older models to develop the latest fighter jets."

"Ha ha, what a brilliant idea."

Thus, the President of Indonesia and his daughter were caught in the web Nikolai had set and were stripped and sent back.