[asia-apec 809] AP Wire: APEC Summit Facing Unusual Risks

[Amit Srivastava]

October 19, 1998

 APEC Summit Facing Unusual Risks

          By The Associated Press

          TOKYO (AP) -- The last time the Asia-Pacific region held its
annual summit
          to promote free trade, Japan's prime minister assured everyone
that his
          economy wouldn't be the next victim of Asia's financial crisis. 

          Canada, the host country, was criticized by some in Canada for
cracking
          down on demonstrations against Suharto, Indonesia's iron-fisted
ruler at the
          time. 

          And President Clinton, whose popularity and booming economy were the
          envy of the planet, joined everyone else in urging countries such
as Thailand
          and South Korea to bite the bullet and comply with the tough economic
          reforms that the International Monetary Fund was demanding. 

          My, how the challenges have grown, as the 21-nation Asia-Pacific
Economic
          Cooperation forum prepares for its November summit in Malaysia. 

          Japan -- the world's second largest economy, and Asia's financial
anchor --
          is suffering through its worst recession since World War II, and
that bad
          news cost Prime Minister Ryutaro Hashimoto his job. 

          Suharto, who ruled Indonesia for 32 years, was driven out of power
by a
          violent, pro-democracy movement, and the world's fourth most populous
          country is in real trouble financially. 

          Wall Street is now coping with a steep downturn. And even though
Clinton
          has promised to attend the APEC meeting, some people wonder how he can
          do that while facing an impeachment inquiry back home, thanks to the
          Monica Lewinsky sex scandal. 

          Worse still, Asia's economic crisis is showing signs of going
global, and
          more and more economists are criticizing the IMF for the way it is
handling
          its bailouts. 

          Other well-respected economists are going even further,
questioning whether
          a free-market philosophy doesn't leave some countries too
vulnerable to the
          chaos of major market speculators. 

          In fact, Malaysia isn't the only country trying self-defense
mechanisms such
          as capital controls. Hong Kong recently spent a fortune investing
in its stock
          market to ward off speculators. 

          And Washington is trying to figure out what to do with hedge funds
after
          watching its Federal Reserve help bail out a major one that was
going under,
          and seeing the investments of others send the U.S. dollar into a
tailspin
          against Japan's yen. 

          Ironically, Malaysian Prime Minister Mahathir Mohamad, who made one of
          his typical anti-free-market comments during last year's summit,
probably
          could have opened this year's with an ``I told you so.'' 

          But even he is having major domestic problems. Mahathir, 72, who
is widely
          credited with creating modern Malaysia during his 17 years in power,
          dismissed Anwar Ibrahim, his expected successor, in an apparent
dispute
          over how to battle the country's economic mess. 

          Instead of stepping aside, Anwar launched a reform movement across
          Malaysia that quickly led to big rallies demanding that Mahathir
step down. 

          The prime minister used riot police to thwart the protests, and
jailed Anwar,
          charging him with corruption and sex crimes, and scheduling his
trial for Nov.
          2. 

          The trial will be interrupted during the Nov. 12-18 APEC meetings, but
          Mahathir's treatment of Anwar and his reform movement already have
been
          criticized by APEC members such as Australia, Indonesia, the
Philippines
          and the United States. 

          President B.J. Habibie of Indonesia and Philippine President
Joseph Estrada
          consider Anwar a friend, and Estrada won't say whether he plans to
attend
          this year's APEC summit. 

          John S. Wolf, the U.S. ambassador for APEC, recently acknowledged
that it
          won't be easy for APEC members to meet in Malaysia as the Asian crisis
          ``ricochets around the world with no clear sign what will happen
next.'' 

          But he also said the leaders of the 21 APEC members should aim for a
          productive meeting. 

          Wolf said such gatherings give members a chance to discuss IMF bailout
          strategies and the free-market philosophy, to resolve bilateral
disputes, and
          to continue to reduce tariff rates to help struggling countries
improve their
          exports. 

          ``This has been a lousy year in general. It has effected all of
us. It has set
          APEC back, and there is no silver bullet to solve the crisis right
away,'' said
          Wolf. ``But we should welcome the chance to work together and to
develop a
          sense of what's possible.'' 

          So far, APEC has been criticized for doing little during the
financial crisis.
          But next month it hopes to complete a plan that would lift trade
barriers in
          nine key industries: environmental products and services, energy,
fisheries,
          forestry, toys, jewelry, medical goods, chemical products and
          telecommunications. 

          Besides the United States, APEC, which accounts for half of all
global trade
          -- consists of these countries: 

          Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan,
          Malaysia, Mexico, New Zealand, Papua New Guinea, Philippines,
          Singapore, South Korea, Taiwan and Thailand. 

          During the Malaysia meeting, APEC also will include three new members:
          Russia -- one of the latest victims of the financial crisis --
Vietnam and Peru. 

===================================
Amit Srivastava
TRAC- Transnational Resource and Action Center 
P.O. Box 29344, San Francisco, CA 94129, USA
Tel: 1 415 561 6472  Fax: 1 415 561 6493
Email:  amit at igc.org
Web: http://www.corpwatch.org
===================================