Asia-Europe meeting showcases realities and prospects

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.