Leadership Struggle Thwarts Regional Solidarity
With the U.S. financial crisis crossing the Atlantic and Pacific oceans, Europe and Asia are scurrying to make regional responses.
President Lee Myung-bak's suggestion for a finance minister's meeting of Korea, Japan and China last week was meaningful in this regard as one step closer towards an East Asian financial community.
The rare, timely move made by the Korean leader, however, has a long way to go before reaching any significant point, let alone its final destination of the Asian Monetary Fund (AMF), the Asian version of the International Monetary Fund.
If there is any silver lining even in this global financial cloud, it may be the opportunity for East Asian nations to cement their financial and economic cooperation, as they have the experience (Asian financial crisis of the late 1990s) and money (more than two thirds of global foreign reserves).
The problem now, as it was a decade ago, is a difference of views regarding who would put in how much and how to operate the proposed body, if launched at all. Behind this tedious, repetitive debate is a leadership struggle between its two biggest players, Japan and China. The United States has never liked the AMF idea, either, seeing it as a potential move by Asian countries to move out of America's influence.
It may be not only unwise but also unnecessary, therefore, for pushers of the Asian financial community to ring an alarm bell for the rest of the world, particularly in America. They should make it clear the ultimate purpose of this movement is not Asian regionalism but the pursuit of open cooperation with non-regional partners.
At the same time, however, the time is long past for Asian nations to hesitate to do what they think is right while watching the faces of other regions, particularly when the United States is doing exactly what it told Asians not to do a decade ago under the pretext of terminating ``crony capitalism," including the governmental bailout of the private sector running counter to its leaving-all-to-market principle.
The three Northeast Asian countries and the Association of Southeast Asian Nations should step up efforts to raise the $80-billion fund, as they agreed years ago. The foreign reserves of Japan, China and Korea alone, the world's Nos. 1, 2 and 6 holders of foreign exchange, respectively, reach $3 trillion, more than four times bigger than the recent U.S. bailout package. One also can't help but wonder how long they should put the huge reserves in U.S. Treasury bills because of the underdeveloped regional bond markets.
As always, it depends much on whether Seoul, Beijing and Tokyo can come to terms with their historical benefaction and spite to chart out a new, futuristic course of cooperation. Japan is urged to play a political role congruous with its economic might, as Tokyo holds the key in both leaving unpleasant memories behind and playing a leading role in the proposed regional body.
Korea is the weakest link in the three, in both economic size and vulnerability to external shocks, which may explain Seoul's eagerness to materialize the regional cooperative body. This means the Lee administration should simultaneously do its homework by reducing external debts, improving current-account balance and implementing more prudent financial and economic policies.
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