Tue, 30 May 2000

Asia-Europe meeting showcases realities and prospects

This is the first of two articles by the former foreign minister, 1988-1999, Ali Alatas, based on a presentation at the 30th anniversary of the Indonesian-Germany Economic Association (Ekonid) in Jakarta on May 17.

JAKARTA (JP): On March 1 and March 2 1996, a new cooperative forum called the Asia-Europe Partnership for Greater Growth, was launched between Western Europe and East Asia at the first summit-level Asia-Europe Meeting held in Bangkok, Thailand.

The Meeting (ASEM) was attended by the leaders of the 15 member-states of the European Union, the President of the European Commission, the leaders of 10 countries of the Association of Southeast Asian Nations and those of Japan, China and the Republic of Korea.

Subsequently, the second Summit was held in London in April 1998 and five months from now ASEM will be holding its third Summit meeting in Seoul, Korea. It may, therefore, be timely for us to see how ASEM is doing at present and what its prospects are.

The idea originated with Prime Minister Goh Chok Tong of Singapore, who inter alia argued that as we were moving into the 21st century three centers of economic growth and power could be discerned: North America, Western Europe and East Asia.

North America and Western Europe were already closely linked through history and an extensive network of trans-Atlantic institutions and arrangements.

East Asia and North America were being bonded together by the Asia Pacific Economic Cooperation forum (APEC) and a growing web of intra-Pacific networks.

The missing inter-regional link was the one between Asia and Europe. Hence the raison d'etre for ASEM, i.e. to provide that missing link, to strengthen dialogue and cooperation among the countries of the two continents, against the backdrop of a world moving rapidly towards increasing interdependence and multipolarity.

Apart from "providing the missing link" there were of course other, substantive considerations for launching the ASEM.

Firstly, it was felt that by strengthening the triangular relationship among the three major poles of economic growth and power, the international economic system as a whole would be stabilized.

Secondly, there is a real and vast potential for synergy between Asia and Europe. Both continents are cradles of ancient civilizations and cultures. The economies of the two regions show both dynamism and complementarities.

Thus, closer inter-regional cooperation would promote continued economic growth and development in both regions as well as contribute to a world of rich cultural diversity.

Thirdly, Asia and Europe play important roles in the present political and economic constellation of the world. By getting together in this new forum leaders of Asia and Europe could make a significant contribution to global peace, security and stability.

As to the economic rationale for ASEM, a few statistics may prove enlightening. Some three decades ago, the combined strength of the 10 Asian economies within ASEM accounted for only about 9 percent of world gross domestic product (GDP).

By 1996, East Asia's aggregate GDP managed to equal that of the United States, each accounting for 25 percent of the world economy. Since 1996, two-way trade between East Asia and the European Union surpassed the two-way trade between the E.U. and the United States and, at present growth rates, it is predicted that E.U. trade with East Asia will be 50 percent larger than its trade with North America in the coming decades.

Europe will continue to need Asian commodities and manufactures. Conversely, Asia will have a growing demand for the sophisticated consumer items and technologically advanced capital equipment of Europe. Asia will also require larger inflows of European investments.

The World Bank has estimated that each year for the next decade, East Asia by itself will absorb about US$150 billion worth of infrastructure investment. Also, at least 45 percent of all global orders for power generation will be from Asia, which is also predicted to become the largest market for telecommunications equipment.

The partnership between Asia and Europe, however, does not only revolve around economics. It is also about geo-politics and the rise of trilateralism, linking three important centers of economic gravity within an increasingly multi-polar world.

Thus closer cooperation between Asia and Europe is clearly based on solid common interest and mutual benefit.

For all these reasons, the results of both the Bangkok and the London Summits were encouragingly successful, both in terms of the substantive actions and programs agreed upon as well as of the ambiance created.

Nevertheless, the question may arise whether the optimistic projections about ASEM will continue to be valid in the current, rapidly changing international environment. I believe the answer is positive.

True, most economies of East Asia have been hard hit by the financial-economic crisis of 1997 -- 1998. But there can be no doubt that East Asia is bouncing back and its leaders and people are determined to overcome their setbacks and to regain the pace of impressive socio-economic growth of the pre-crisis era.

For ASEM to fulfill its original expectations, however, some formidable challenges still have to be met, certain priorities need to be set and some lingering misperceptions removed.

Among the most daunting challenges are those posed by the effects and implications of globalization. Neither Europe nor Asia can insulate themselves from its impact.

On the contrary, in developing their cooperation, they must fully embrace globalization, by seizing upon the tremendous opportunities for economic progress it offers while, at the same time, eliminating or at least ameliorating its possible adverse effects, which could be devastating.

For the advantages of globalization have so far been reaped mostly by the stronger, advanced economies while severe risks and hazards are suffered by the developing economies.

Thus, cooperation within ASEM in a globalized economy, in order to remain viable and attractive to the developing Asian partners, must be directed to ensure that the benefits of globalization can be equitably shared by all.