Asia Times: EDITORIAL Apec: Mahathir isn't going, as well he shouldn't



	September 08, 1999	atimes.com

Editorials

EDITORIAL
Apec: Mahathir isn't going, as well he shouldn't

Back in 1993 when Malaysian Prime Minister Mahathir Mohamad decided to boycott the inaugural Asia-Pacific Economic Cooperation forum summit, then Australian prime minister Paul Keating, a man not to mince words, called him ''recalcitrant''. Keating was miffed: after all, Apec was an Australian brainchild and perhaps the splendidly isolated down under country's first ever international initiative. Traditionally with closer ties to London than nearby East Asia, Keating wanted to see Australia break out and become recognized as a part of Asia. Dr Mahathir was threatening to spoil the party.

Well, be that as it may, the ensuing major diplomatic row over the Keating name-calling incident was soon settled (a Keating apology included), but apparently not the combative Malaysian leader's misgivings over Apec, its purpose and its usefulness. This year, it was announced in Kuala Lumpur last Friday, he has decided once again not to attend the 21-member nations' annual get-together to be held in Auckland, New Zealand, this coming weekend. Some of the reasons for that are spelled out in the September instalment of the prime minister's monthly column, ''Dr Mahathir's World Analysis'', in the Japanese daily, Mainichi Shimbun.

Otherwise devoted to reflections on his recent visit to China, he writes regarding Apec that it ''is either unwilling or powerless to help the East Asian countries during the economic and financial turmoil. Instead it passed the buck to a lesser organization, the Group of 22. Apec is now focused only on prising open the Asian markets as early as possible. And we know who will gain from this.''

And he also comes back to his own regional economic grouping proposal of an East Asian Economic Caucus, first put forward in 1994, but opposed by the United States and (hence?) receiving only lukewarm support from Japan and Korea. Had the EAEC been in place (in 1997 when the Asian crisis erupted), Mahathir says, ''much could have been saved not just for the East Asian economies but for the world's economy as well'', adding that, ''It seems grossly unfair that while Europe can form the European Union and the US, Canada and Mexico can form NAFTA, and even the Latin American countries can form their regional organizations, East Asia is not allowed to do so. If one does not know better one would be tempted to believe that the opposition to it is racial.''

We had to look up ''Group of 22'' to refresh our memory on its purpose and composition and doubt it had any more to do with Asian crisis resolution than Apec. But Mahathir is surely right in calling Apec ''unwilling or powerless to help the East Asian countries during the economic and financial turmoil''. When push came to shove, Apec simply seemed to have disappeared and the 1998 summit in Kuala Lumpur achieved nothing. Crisis management and policy reform were (and remain) entirely in the hands of the International Monetary Fund, with some help and guidance from the US Treasury and Federal Reserve. Crisis-stricken nations were (and are) left to dealing with the IMF one-on-one or - like Malaysia - to fend for themselves.

So, we fully understand and endorse Dr Mahathir's decision not to waste valuable time and Malaysian taxpayer money on a useless junket to Kiwiland (how ever nice a place that may be in early spring) and merely deplore that he didn't go a step further and call for the abolition of a provably ineffectual organization.

We also share the prime minister's suspicion that the advanced industrialized member nations of Apec will be the intial principal beneficiaries of Apec liberalization measures. Much as when it came to selection of a new World Trade Organization head or China's entry to the WTO, the US is certainly prepared to play hardball when it comes to advancing its own interests and of using whatever available vehicle and leverage to do so.

Where we disagree with Dr Mahathir is on his notion of counterposing one regional grouping he alleges to be dominated by the US by another that excludes the US, Australia and New Zealand or his contention that, had an EAEC been in place in 1997, the Asian crisis could have been contained or been dealt with more effectively.

The issue in the Asian crisis (and crisis resolution and reform) was and is NOT primarily the protection of certain national or regional interests against competing national or regional interests, but the extent to which companies, financial institutions and countries, in the manner they conduct business, structure legal and regulatory regimes, and adopt longer-term business and development strategies, prove able to cope with the demands and exigencies of largely unrestricted (and effectively unrestrictable) global capital movements.

Much as we doubt (and have previously said on several occasions) that Malaysian capital controls did much in aiding the country's economic recovery, so we doubt that Dr Mahathir's oft repeated calls for new international financial regulations would prove effective in creating a less crisis-prone and disruptive world economic environment. The challenge ahead is not to come up with new regulations or competing regional structures which will only be circumvented by new financial and information technologies and their adept practitioners, but with facilitating - through educational advancement and in-depth restructuring of industry and finance - the transition from the old industrial to the new information-technology economies.