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US forces Apec to take new tack

 

Democracy and human rights have been added to Apec's core ideologies to make it a complete forum. On the other hand, it has been a disaster for Mahathir Mohamad, writes Thanong Khanthong.

 

Madeleine Albright, the US Secretary of State, upset her hosts by meeting with, and showing moral support to, Wan Azizah Wan Ismail, wife of former Malaysian deputy prime minister and finance minister Anwar Ibrahim, champion of the reformist movement in Malaysia. Al Gore, the US vice president, further shocked his hosts by hailing the Malaysian political dissidents as ''brave people'' who have been calling for democracy and self-government. The Canadians and Australians were also making similar symbolic moves in support of broader political changes and human rights in Malaysia.

In retrospect, these explosive events were predestined to occur, in one form or another, and dramatically redefine the Asia-Pacific Economic Cooperation (Apec) forum. It has taken 10 years for the core ideologies that have separated the developed and developing nations within this club of countries in the Pacific rim to come to the open. For the developed nations, the core ideologies are founded on democracy, human rights, free trade and free flow of capital. For the developing nations, the ideologies are based on lip-service democracy, half-hearted human rights, free and fair trade, and restrictions of short-term capital flow.

Founded on cooperation in 1989 under the Australian initiative, Apec has evolved rapidly to become a battleground for these contentious ideologies that have begun to polarise its members, with the United States and Malaysia standing at the opposite ends. From cooperation, Apec, engineered by the US, moved on to embrace trade liberalisation or free trade.

At the Seattle summit in 1993, Bill Clinton, the US president, threatened Europe that if it failed to come to the negotiating table to sign the final trade pact and end the Uruguay Round of multilateral trade talks, the US would challenge Europe by creating another trading bloc in Apec. In the following year, with the uneasiness of his fellow Asean members evident, President Suharto presided over the Apec summit to announce full trade liberalisation -- 2010 for the developed nations and 2020 for the developing nations -- within the Asia Pacific community.

Ever since, there has been no turning back for Apec, which cannot hold on to its originally loose forum for economic cooperation. Trade liberalisation has become the prominent feature of the Apec talkshop, while the developing nations, particularly Malaysia, were grumbling that Apec should not become a negotiating forum. But Apec has been dragged along, trying, albeit with little tangible success, to deepen trade liberalisation beyond the World Trade Organisation (WTO) framework.

At the Vancouver meeting of Apec last year, the developing nations, suffering from the financial and economic crisis, were on the defensive, having to put up with US preaching that they must reform and further open up their economies or otherwise they would have no future in the global community. Prime Minister Chuan Leekpai tried to appeal to the developed nations that they should pay more attention to the Thai crisis because it was not only limited to Thailand or the region but would become a global problem. The global financial crisis should take centre stage at Apec. His appeal fell on deaf ears.

It was not until this year that the US began to recognise that the Asia crisis was knocking at its door. Before, the top US policy-makers, from Robert Rubin, the US treasury secretary, Lawrence Summers, his deputy, to Alan Greenspan, the chairman of the Federal Reserve Board, believed that the Asian crisis would stop at its borders and would, in fact, benefit the US in that it did not have to raise interest rates to put a brake on an overheating stock market and economy; that cheap imports from Asia would reduce inflationary pressure; and that the US, driven by its huge domestic market, was immune from the Asian flu. Moreover, the Asia crisis would open up the rare opportunity for US industries to pry open the huge markets in this region.

Only after the crisis had hit Russia and Latin America and after the downfall of Long-Term Capital Management (LTCM), the largest US hedge fund, which threatened the liquidity crisis in the US, did the top US policy-makers begin to change their stance. There were calls for the creation of a new global financial architecture at the G-7 and G-22 meetings during the World Bank/IMF meeting in Washington DC in October this year, which foreshadowed the Apec meeting. As Malaysia was preparing to host Apec, it was clear that global finance restructuring would creep into the Apec talks.

It was a rough ride for Malaysia all the way. At the meeting of the G-22, South Korea and Australia volunteered to host the Apec meeting if other members viewed that Kuala Lumpur was not suitable as a venue in view of its human-rights problems and looming political crisis. Malaysia insisted on hosting the forum, overestimating its ability to take control over the agenda. The global financial crisis did become the subject of the talks, apart from economic cooperation and trade liberalisation of the nine key sectors.

In spite of US hesitation to curb short-term capital flows, there was a broad agreement that some forms of capital controls were needed for the developing countries, which had experienced the financial shocks from opening up their financial sectors too rapidly without adequate infrastructure.

Not surprisingly, democracy and human rights were added to the core ideologies to make Apec a complete forum in Kuala Lumpur, which has turned out to be a publicity disaster for Mahathir, if not for Malaysia as a whole. Only the US can exercise this kind of global politics. The US would like to make sure that the Kuala Lumpur summit is a complete failure for Malaysia. Obviously, on democracy and human rights, Malaysia has got little sympathy from its friends. It is being completely isolated.

In the meantime, Thailand has been walking the middle path between these conflicting ideologies, increasingly tilting toward developed nations' positions though. As the saying goes, if you cannot beat them, join them. Malaysia's isolationist policy has backfired and it could still have to pay a dearer price in the end.

 

 

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