APEC summit facing some unusual risks

APEC summit facing some unusual risks

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 Soeharto, Indonesia's iron-fisted ruler at the time.

And President Bill 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.

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.

Soeharto, 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.

Estrada would attend next month's forum and will also try to meet with Malaysia's jailed former No. 2 leader, Anwar Ibrahim, officials said Monday.

Estrada and Habibie have spoken out against Anwar's arrest and treatment in jail, and said they were considering not attending the APEC summit in Kuala Lumpur next month.

"The president will definitely attend APEC, and if the occasion arises and there are no legal obstacles, the president is interested in seeing Mr. Anwar," presidential spokesman Jerry Barican said.

Estrada welcomed reports that Malaysian Prime Minister Mahathir Mohamad will allow him to visit Anwar in jail, saying it was "a good sign."

Meanwhile, Malaysian Foreign Minister Abdullah Badawi said that it would be a loss for the Association of Southeast Asian Nations if any of their leaders fail to attend the APEC forum in Kuala Lumpur next month.

He said that at time when ASEAN countries were trying to rehabilitate their economies, they should take advantage of the meeting to attend and express their views.

Abdullah expressed belief that APEC provided the best forum to find solutions to economic problems facing Asean countries.