Laggard U.S. risks losing Asian influence: Analyst

Laggard U.S. risks losing Asian influence: Analyst

SINGAPORE (Reuters): The U.S. response to Asia's huge economic crisis has been slow and inadequate, risking a serious loss of influence and even an anti-American backlash over the long term, Asian analysts said yesterday.

"Everyone thinks the Americans were very slow and are reacting now because it's having an impact in the United States," said Sachi Phamampham, editor of the Asian Defence, Diplomacy magazine in Kuala Lumpur.

"A lot of pro-Americans have been very hurt by the way they have been treated," he said.

"A backlash may not come soon, but it will come," he said, as top U.S. officials toured the countries most severely hit by Asia's worst economic crisis in decades.

Analysts from several countries agreed a strong U.S. hand in resolving the problems in Indonesia, South Korea, Thailand and Malaysia was vital.

But Asia's crisis began in July and only last week did Washington's presence manifest itself, they said.

U.S. President Bill Clinton's phone calls to several Asian leaders last week in a bid to persuade Indonesia, they said, where financial markets were in a free fall, to stick to terms it agreed to for a US$43 billion bailout from the International Monetary Fund (IMF), were crucially necessary.

So were visits by Defense Secretary William Cohen and Deputy Treasury Secretary Lawrence Summers, which have been replete with soothing words about the U.S. commitment to the region.

"We all need the United States more than ever, because they're the ones with the money," said Bruce Gale, a Singapore-based analyst with Political and Economic Risk Consultancy.

"I don't think you want to scratch and kick now because ultimately you need the money and you have to buckle under."

But the analysts said there was a wide perception in Asia the United States, the biggest contributor to the IMF, was using the fund as a battering ram to open up economic sectors like banks, finance and insurance, which had been restricted.

No one was blaming the United States for their country's individual economic problems. The blame was firmly aimed at their own governments, said Kim Byung-kook, a political science professor at Korea University.

And while the crisis-hit countries would swallow the bitter IMF medicine to get their economies back on the golden track that made them a favorite destination for foreign investors, the effects could rebound on the United States, he said.

As people lost jobs and faced a much tougher life, there would be a diminution of American influence.

"There will be more anti-Americanism and less faith in U.S. leadership," he said. "The U.S. has invested tremendous resources and lives to build an American-centric East Asian international order. They risk throwing it away."

The analysts said part of the problem was that while in the 1980s Asia saw swift and bold U.S. action to resolve economic turmoil in South America, little, if anything, from Washington was seen when Asia was hit in recent months.

They also said that in Asia, where the prime problem was corporate debt, the U.S. backed IMF austerity measures of the type imposed on South America, where there was hyperinflation.

The analysts said that was seen as more helpful to Western lenders than Asian borrowers.

"We have South Korean companies which are making a profit but are going bankrupt because of the tight monetary conditions. It's impossible to manage when banks are pulling loans," said Kim.

He and other analysts said Western banks which lent money to Asian ventures should take their losses instead of being protected.

Sofyan Wanandi of Indonesia's Centre for Strategic and International Studies said U.S. banks should roll over their loans to Indonesian companies as they had for Korea -- and on terms which meant they would pay their share of losses.