East Asia has cause for confidence
 
Philip Bowring IHT
Wednesday, May 29, 2002
South Korea stands out
 
HONG KONG Clouds 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 bust.
.
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 hijacked America.
.
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 cohesion.
.
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 been another.
.
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
< < Back to Start of Article
  Print Article Text Larger Text Small Single Column Mutli Column