Asia and Europe moving forward as equal partners

By Hau Boon Lai

KOBE, Japan: In the end, realism won.

The "slowing U.S. economic slowdown" was included as one of the "external shocks" which would affect the Asian and European economies in a joint statement put out by finance ministers from the two regions, after some Asian officials objected to the unrealistic way earlier drafts had neglected to do so.

It was also a reflection of how far dialogue has moved from the cautious beginnings of five years ago. This time, participants arrived with high hopes of substance.

The two-day Third ASEM Finance Ministers Meeting, which ended on Sunday, was anything but uncontentious, according to participants, but this only pointed to a strengthening relationship less encumbered by diplomacy.

For instance, some Asian representatives felt that Europe's assurance to take up the slack from the slowing U.S. economy was a little on the "glib side", considering how Asian economies were tied much more closely to the American one.

Said an official of an ASEAN country: "The Europeans don't seem to be that interested in the U.S. economic slowdown because they are confident that they will achieve strong growth for themselves for the next two years.

"But Asian countries are much more closely tied to the U.S. economy than we are to the European one."

The European response to the criticism?

They curbed what had been described as their over-optimism and due consideration was given to the different state of the economies in Asia, as exemplified by changes to the final statement.

Since the last meeting in Frankfurt two years ago, the Europeans have also been boning up on their knowledge of Asia, including ASEAN and ASEAN-plus-Three, something which was felt palpably by Asian participants.

"They came this time with a much clearer idea of the various Asian entities so discussions could go on smoothly," said a Japanese official.

He also noted the timeliness that the ASEM finance ministers' meetings were held -- the first, in Bangkok in September 1997, was held just two months after the Thai baht crisis began; the second, in Frankfurt in 1999, right after the single currency, the Euro, was introduced; and the current one, just when the U.S. economy was slowing down.

The stress on ASEM being a partnership of equals has its roots in the largely unequal relationship both sides find themselves to be in when dealing with the sole superpower of the United States.

Efforts have been made to ensure that the 10 Asian and 15 European partners do not end up dictating terms to each other.

This can be seen in the carefully-crafted language officials on both sides use when trying to convey their ability to share their experiences with each other.

In fact, the word "teach" is anathema to both sides.

Tongues are twisted as officials emphasize that the Europeans are not in Asia to teach, but to share what they have encountered, good or difficult, on their path towards monetary and economic integration.

Japanese Finance Minister Kiichi Miyazawa said: "It's not entirely accurate to say that Asia has a lot to learn from Europe because of the vast differences between the situations in the two regions."

Finance Minister Bosse Ringholm of Sweden, the current European Council president, said: "I wouldn't go so far as to say that the Europeans have something to teach Asia. We do have something which we hope Asian economies can make reference to."

Officials revealed, however, that participants have become increasingly frank during private discussions among themselves as the representatives from both sides meet more often.

The ability of Asian countries to articulate their doubts and, sometimes, unhappiness has also increased the knowledge of their European counterparts about them.

As a European Union official puts it: "Each time we engage in these discussions, we go back knowing more about the different Asian institutions and entities from the things they are happy and unhappy about."

At the current meeting, China and Indonesia were said to have expressed their concerns that issues regarding developing countries, all of which are from Asia, needed to be addressed more clearly.

Finance ministers from the two Asian giants saw ASEM as a chance for them to get the ears of four of the G-7 developed nations in a non-threatening venue.

"Finance Minister Xiang Huaicheng was keen to promote issues that would benefit emerging economies in a more concrete way," said a Chinese source.

Their voices found expression in the clear recognition by participants that no single exchange rate regime was "necessarily right for all countries all the time".

This contrasted sharply with the punishment inflicted on the rupiah in 1997 and 1998 each time Indonesia refused to adopt the currency board.

An observer noted that it was no mean feat to shift the "conventional wisdom" that a U.S.-dollar peg was essential to economic performance.

It has long been recognized that bridging Asia and Europe requires more than determination to prevent it from becoming another talkshop.

A combination of timeliness and the implications of an increasingly linked global economy meant that finance ministers from the two regions were able to move things forward as equal partners, despite one or two glitches arising from the unequal state of development of the two sides' economies.

-- The Straits Times/Asia News Network