KONGClouds from the Asian crisis linger, Japan's stagnation remains
intractable, China's success is flawed, Indonesia wears its ailments on its
sleeve. But, all things considered, East Asia is again looking to be the most
promising place on the planet. Politically it has the least immediate problems
and economically it has regained much of the promise lost by the 1990s boom and
The United States may worry about Muslim
extremists, but for people who live and travel in the region east of India it
seems remote from post-Sept. 11 traumas. That day has transformed, mostly for
the worse, U.S. priorities - its budget balance, its view of human rights, its
support of free trade, its attitudes to foreign countries. Osama bin Laden has
He has also focused attention on Europe's
weaknesses - its migration dilemma, its attitudes toward its Muslim citizens and
neighbors, its vulnerability to terrorism, and its lack of foreign policy
Bin Laden has further traumatized a
troubled Middle East. He has rekindled India-Pakistan tensions and, with help
from Atal Bihari Vajpayee's government, stirred communalism within India.
Russia is looking more promising but is
hardly a guiding star. Africa may be off the bottom but only just. South
America's revival has been put in doubt, not least by Argentina, whose problems
are equally due to local failure to face facts and the West's contribution of
simplistic economic theories and investment banks' greed.
So it is symbolically appropriate that
the soccer World Cup kicks off this week in South Korea. More than anywhere in
Asia, Korea has trounced the critics - the stock and credit analysts, editorial
writers and IMF pundits. Since 1997 it has transformed its corporate and banking
structures and almost eliminated its net foreign debt.
Most recently it has been proving that
its economy is not wholly dependent on exports to the West. Domestic demand has
surged without leading to balance of trade problems.
Despite Japan's problems, East Asian
trade growth has been fast. South Korea and China have made big inroads into
Japan's market, and China's Asian imports have risen rapidly.
The Korean combination of domestic-led
growth with increased regional trade is seen to a lesser degree in Taiwan,
Thailand, Malaysia and Indonesia. In these countries problems remain, especially
with banking sectors, but pre-1997 strengths are reasserting themselves:
technological upgrading, strong entrepreneurship, improving educational
standards, high savings, favorable demographics. Meanwhile, asset prices and
currencies mostly remain low by Western standards. It will hurt if currencies
now rise strongly against the dollar, or if the United States has a double-dip
recession. China is challenge as well as opportunity for many. But East Asia now
has a cushion of reserves, low debts and a broad awareness that domestic demand,
the service sector and regional cooperation can between them replace past
drivers of growth.
Politically the region is stable. The
Korean Peninsula is not as dangerous as many imagine. Strategic issues like
Japan-China rivalry, the Taiwan question and the erosion of U.S. military
hegemony in the western Pacific are real but distant worries. Domestic political
stability is on balance higher than at any time since 1997. Indonesia has not
broken up. Vietnam and Cambodia are making quiet progress. The renewed
self-confidence is evident in reactions against foreign morality lectures. The
depth of auditing, broking and corporate sleaze in the West has been a boost.
Post Sept. 11 detentions without trial and harsh treatment of immigrants have
Neither South Korea nor Japan will win
the World Cup. But the next few weeks will provide daily reminders that East
Asian progress since 1960 was interrupted, not halted, by the Asian crisis.
International Herald Tribune