World economics, politics taking opposite directions

JAKARTA (JP): Economic and political trends are leading towards contradictory ends, Henry A. Kissinger, a former U.S. secretary of state, said here yesterday.

Speaking at the 11th Asian Bankers Association's meeting, Kissinger noted that the world economy is widening its focus, while politics is becoming more inward looking.

"On the one hand, finance and capital are moving on a global basis. And yet, politics is becoming more nationalistic," Kissinger said.

He explained that the expansion of capital brings about a situation where productive competitiveness has moved from one country to other distant countries, based on dynamic economic considerations.

Due to political reasoning, Kissinger said, the expansion of capital has recently become the concern of industrialized countries because such expansion has cost them unemployment crises.

"And it seems to me that one of the biggest issues of the next decades will be the employment issue in industrialized countries," Kissinger said on the second day of the meeting which was attended by 140 bankers from 14 Asian and seven non-Asian countries.

He contended that developed countries are making the protection of employment for their people a priority as they have come to realize that it will become an increasingly political issue.

Kissinger acknowledged that politics has caused protectionism in economic activities. "It is true that free trade recognizes equality principles, but it doesn't come to everybody being equal. And those who loose employment will try to protect themselves," he said.

GATT

Commenting on the possibility of the ratification of the new General Agreement on Tariffs and Trade (GATT) by the U.S. senate, Kissinger said, "I think the GATT will pass." But he predicts that controversies will remain.

He noted that while the World Trade Organization has to be implemented to administer the new GATT early next year, public movements in developed countries, especially European countries and the United States, tend to be protectionist.

Such protectionist policies have resulted in the formation of trade groupings, such as the North American Free Trade Agreement (NAFTA), the European Union (EU) and the ASEAN Free Trade Area (AFTA).

Speaking at the seminar on the previous day, American Ambassador Robert L. Barry stated that NAFTA is not a trade bloc, but a complement to the GATT agreement, which recognizes the formation of regional trade groupings as long as they do not create new barriers for non-member countries.

Mari Elka Pangestu of the Center for Strategic and International Studies is convinced that AFTA is also not a trade bloc because it concentrates on the acceleration of time frameworks given to all GATT's signatories to adjust their import tariffs and trade regulations in line with GATT principles.

However, Governor of Bank Indonesia J. Soedradjad Djiwandono argued that all three trade groupings are nothing else than trade blocs because they could cause some disadvantages for non-member countries although their formation is consistent with the GATT framework.

Soedradjad exempted the Asia Pacific Economic Cooperation (APEC) forum from trade-bloc categories because it does not treat member and non-member countries differently.

Kissinger chorused Soedradjad's notion yesterday, saying that the formation of the APEC forum "reflects the modern condition" of world economics.

The participation of the United States in this forum, Kissinger said, benefits the Asian countries in terms of political and economical stability as the relationships between Asian countries and the United States are closer than those among Asian countries themselves.

"Asian countries do not look to each other as a community but as competitors or even threats," Kissinger said. "And thus, I don't think Asian APEC countries want to expel us (the U.S.) from Asia."

Yesterday's meeting saw David K.P. Li, the chief executive of the Hong Kong-based Bank of East Asia, as the chairman of the Asian Bankers Association to replace outgoing Mochtar Riady of Indonesia's Lippo Group. Arsenio M. Bartolome II of the Philippine National Bank was elected vice chairman of the association. (rid)

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