Backlash may hit foreign buyers

Backlash may hit foreign buyers

LOS ANGELES (Reuters): Foreign investors scavenging for
bargains amid the rubble of Asia's financial crisis could spark
nationalist backlashes that could alter the political landscape,
an analyst who sparked controversy over alleged corruption in
Indonesia said on Thursday.

The West could do more to uphold democracy and the rule of law
in Asia, although implementing those ideas will likely be driven
by popular demand rather than by foreign lecturing.

"In order to minimize hostility that has arisen, and to keep
it from snowballing, global capital needs to show it has an
interest in long-term stability," said Jeffrey Winters, an
associate professor of political economy at Chicago's
Northwestern University.

"Long-term investors will be much more warmly received than
the jump-in, make money off the devastation, jump-back-out kind,"
Winters said in an interview on the sidelines of the Milken
Institute global economic conference here.

Winters has been embroiled in a controversy in Indonesia for
raising questions last year of corruption by a top economic
official.

Indonesia said in October it would ban him from the country,
then said he would be allowed in for questioning over the alleged
slander of its chief economics minister.

Foreign investors, many of whom fled the region when the
economic woes started in 1997, have started eying Asian companies
that are for sale for pennies on the dollar.

The quest for quick profits could stir up nationalist
sentiment, however, in countries already smarting from having to
accept handouts from international agencies after the collapse of
their once-vibrant economies, Winters said.

"It could engender a shift in tone of politics and make more
viable extreme candidates and parties and policies that were not
viable before," Winters said.

For instance, Indonesia could see the rise of a more radical
form of Islam, Winters said. Former U.S. allies could distance
themselves from Washington.

Winters pointed to the indignant backlash of many Americans
against Japan in the 1980s when Japanese firms snapped up prime
U.S. real estate.

"Americans seem to forget that sentiment when they run around
the world buying up other people's assets," he said. "Nationality
still matters."

Resentment in Asia would be further sharpened by the perceived
hypocrisy of Western nations, which often contradicted their
free-market mantra, he said.

He pointed to demands from Washington that Asian countries
allow bankrupt companies to fail and then turning around and
bailing out the U.S.-based investment fund Long-Term Capital
Management last year.