World economics, politics taking opposite directions

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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