Bread. 19 February 2009
Nathan fluffs his reserves explanation
Singapore President S R Nathan finally gave a press interview to explain
how he decided to give in-principle approval for the government to draw on
past reserves in the 2009 budget.
For the first time in the ten years since 1999 when we (had not) elected him to be President, we now have a glimpse of the calibre of the man. And I have to say I am disappointed.
I read Straits Times' edited transcript  twice, to give him as much benefit of the doubt as I can, but I am still left with the impression that firstly, he had no clue what was really on people's minds and therefore failed to address the key questions in his interview, and secondly, faced with even the slightest difficulty of a question, he gave a most unconvincing reply.
It's hard to have full confidence that he is up to his constitutional job of protecting the reserves.
Of course, I am also disappointed with our journalists in pulling its punches, but then, that's not news, is it?
In his long preamble, Nathan dwelled mainly on how many meetings he had with ministers and officials. He said,
I thought it was interesting that his starting point was mid 2008. Weren't Singaporeans already raising eyebrows in late 2007 when Temasek Holdings and the Government of Singapore Investment Corporation bought into UBS, Citicorp and Merrill Lynch, and things started going awry almost the day after? Wasn't the money involved our reserves?
Anyway, Nathan then noted the continually revised economic growth figures and what he heard from the prime minister:
Even as Nathan listed out the many meetings he had with government officials, not once did he suggest that he sought outside opinion. Did it not occur to him that if he was to form an independent opinion, he might need outside advice?
He did however, say that the CPA
I think Singaporeans would need to understand what is this animal called the CPA's Secretariat? Are they fulltime staffers with the necessary expertise? Are they more government officials doubling up as the Secretariat?
It was a pity that the journalists didn't pull at this dangling thread.
Nathan ended his preamble with even more details about who met whom when. Almost like reading from a diary.
Readers are left with the impression that quantity-wise, there was plenty of communication. But that's secondary to what thinking Singaporeans would want to know. The questions that are uppermost in people's minds are: What were the features of the economic situation that, in his mind, justified unlocking the reserves? What were the features of the budget proposals that in his opinion merited his consent?
In other words, we wanted to be satisfied about the quality of the decision, the pivot points that make for a Yes or a No. He should have described it in terms of principles, so that the case would be useful as a constitutional precedent for the future.
He should have been speaking like a judge, going through the evidence and justifying what tipped the decision to "guilty" or "not guilty", rather than merely reciting a list of who appeared in the witness box and when.
After that unenlightening introduction, the Straits Times (or some other newspaper?) decided to help him out. Spoonfeeding him with Goh Chok Tong's suggested dealbreakers, the first question was:
And then he still hashed it up, with a waffling reply.
So, is that agree or don't agree? And if he agreed, why did he think the situation met Goh's third condition -Ė a dire state of affairs?
It's that bad: You're left with the feeling that he and the CPA had no pivot points to guide them in arriving at a decision.
The next question showed a different side of him. A reporter asked:
The trailing ellipsis suggests that Nathan cut the reporter off, jumping in with a curt, dismissive reply:
Naturally, the reporter(s) was too polite to mention that his predecessor Ong Teng Cheong had a hard time obtaining a valuation of the reserves.
From an archived copy of an interview Ong gave after leaving office (published in Asiaweek, March 2000), this was the situation as he described it:
Back to the Nathan interview, there was a glimmer of hope when a reporter very gently came back to the key question, by asking,
Nathan's reply was that
This begs the question: How was he satisfied that the proposals to be funded by the drawdown of the reserves were not scatterbrained?
For example, one of the proposals is to underwrite up to 80 percent of new bank lending. The government has said they do not intend to supervise how banks will assess loan applications. Does that lay the ground for highly risky bank loans? Is there moral hazard for banks -Ė to be able to earn all the interest on these loans, while bearing only a fraction of the cost should borrowers default?
But, as you can see from the transcript, that too was a road not travelled. The question was not pursued. And we are left none the wiser how the green light was decided upon.
© Yawning Bread