Mahathir renews call for East Asian economic bloc

Mahathir renews call for East Asian economic bloc

Eileen Ng, Agence France-Presse, Kuala Lumpur

Malaysian Prime Minister Mahathir Mohamad on Monday renewed
his call for an East Asia Economic Grouping (EAEG) and backed a
proposed regional monetary fund independent of the International
Monetary Fund (IMF).

The EAEG is the brainchild of the 77-year-old Mahathir, who is
Southeast Asia's longest serving leader, but the idea was dropped
amid strong opposition from the United States a decade ago.

Mahathir said the region had overcome objections to an East
Asian grouping by using the ASEAN Plus Three forum, the name
given to ASEAN's annual summit with its dialogue partners China,
Japan and South Korea.

"We know what it is. It is an East Asian grouping but we call
it ASEAN-plus-Three so as not to ruffle the feathers of some
countries," he said at a dialogue session after opening a three-
day East Asia congress.

"But now the governments of East Asia must come out openly.

"We must stop hiding behind this spurious title of ASEAN-plus-
Three and call ourselves the East Asia Economic Grouping. From
then on, the process will be very easy."

In his speech earlier, he told more than 1,000 delegates that
East Asian integration was vital to drive growth, give the region
more economic clout and to counter growing Western pressure.

"We are not cows to be led by the nose, we are not children to
be led by the hands. This is a journey we must make with our own
two feet. We must walk together ... in unity, there will be
strength," he said.

He also stressed the region must remain outward-looking and
not "retreat behind a great East Asian economic barricade."

Asked about the Asian Monetary Fund (AMF) first proposed by
Japan in 1997 after the region was thrown into economic turmoil,
Mahathir described it as "not only a good thing but a much needed
thing.

"We have to have an Asian Monetary Fund simply because the IMF
is not as independent as it should be. As we know, there are
other hands which are controlling it and those hands have other
ideas contrary to the prosperity of East Asia," he said.

"It may fail and it will fail certainly if you subject it to
the regulations of the IMF but it can be made to succeed if we
are willing to find our own way, to make corrections as we go
along."

The AMF idea was also withdrawn after strong US opposition but
many regional leaders had supported Japan, which later refined
the idea to complementing IMF loans through a regional currency
support mechanism.

Former Japanese vice finance minister Eisuke Sakakibara said
the AMF was necessary as a "lender of last resort" to provide
quick liquidity and prevent a repetition of the 1997/98 Asian
currency crisis.

"We need some lender of last resort to forestall a financial
crisis. The AMF is a body for such a do-it-yourself lender of
last resort," he told the congress.

Contrary to fears that the AMF may be used as an excuse to
delay tough economic reforms, Sakakibara said he believed it
would instead accelerate domestic reforms.

Nicknamed "Mr. Yen" when he ran Japan's foreign exchange
policy in the 1990s, Sakakibara said the AMF might have taken off
if Japan had sought China's full backing at the time.

"We could have said to the rest (of the world) that this is
Asian business, don't bother us. The situation could have been
different," he said.

In the same way, he said China must be "centrally involved" in
the creation of an EAEG and not be viewed as a threat.

Sakakibara said Asia was lagging behind other regional
groupings, especially the European Union which was becoming more
powerful.

East Asian nations, like Japan and South Korea, must not be
"overly afraid of the US" and must change their "hub-and-spoke"
relationship with the superpower to one that is based on
networking, he said.

The region must seek a "coordinated political will" to
accelerate its integration, failing which it will "once again be
divided and ruled by the rest of the world," he warned.