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Economic woes on backburner at APEC

By SHIHOKO GOTO, Senior Business Correspondent   |   Oct. 16, 2001 at 7:37 PM   |   Comments

WASHINGTON, Oct. 16 (UPI) -- While the global economy remains at its most precarious state in recent years, the war against terrorism will be on the top of U.S. President Bush's agenda when he heads to Shanghai Wednesday for the two-day annual meeting with leaders of the Asia-Pacific region.

"For the first time, security issues will overwhelm talks on the economy," said Lael Brainard, former deputy National Economic Advisor to Bill Clinton. He was speaking at a Brookings Institution briefing on Bush's upcoming meeting with fellow leaders of member nations of the Asia-Pacific Economic Cooperation (APEC) forum. It will also be the first time Bush ventures outside the United States since the terrorist attacks, as well as marking his first visit to China in more than 30 years, since his father was U.S. ambassador to the country in the 1970s.

Launched in 1989 as an opportunity for Asian trade and economic ministers to gather once a year to discuss issues of mutual concern to promote growth, APEC has expanded into a much broader gathering over the years.

But much as the global economy remains extremely fragile and likely to head further south before bouncing back up, analysts do not expect much, if any solution to be put forward after the APEC meeting. For one, the finance ministers of the world's richest nations had already met in Washington earlier this month, and even their one-page statement following the G-7 meeting focused on hounding out terrorist organizations in the financial sector, rather than coming up with any global policy measure to stimulate economic growth.

On Monday, National Security Adviser Condoleezza Rice pointed out the Bush administration's concerns about the global economic slowdown, and the sharp downturn in U.S. growth since the attacks. But at the same time, she concentrated on cutting off terrorist funds, as opposed to proposing any coordinated financial policy, as a means to spur global demand.

"As you know, it's been a slowing global economy, and so this is an opportunity to spur, through discussions with key leaders there, strong economic global recovery and what can be done to do that," Rice said. "And (Bush) believes that one of his most important tasks as president is to work on strengthening our alliances, as I said, to work on the global economic issues here, to continue to build the coalition against terrorism. He believes he can do that best by going to APEC."

As such, the 21 APEC countries, ranging as far apart on the economic scale as the United States and Vietnam, should be convening to draft a common proposal to eradicate a global menace, the understanding being that political stability is a prerequisite to longer-term prosperity.

Whether the group can actually come up with concrete measures to further the campaign against terrorism remains to be seen, but it will certainly be the most visible platform to date for the United States to shed its often-held image as a domineering superpower bent on getting through unilateral moves. Expectations for a forceful communique at the end of the meetings on Oct. 21 decrying terrorism will be high, but the international community should also be looking closely for signs on just how the United States can accommodate the varying needs of a loosely-joined group of nations, said James Steinberg, former deputy National Security Advisor in the Clinton administration.

As U.S. air strikes against Afghanistan's Taliban regime continues, it will be a particularly delicate balancing act for Bush to encourage support equally from all member states. For while countries such as Australia, South Korea, and Japan have quickly come to support U.S. military actions, others such as Indonesia, which is home to the world's largest number of Muslims, have been less forthcoming in backing Washington's action plans.

But at the same time, those APEC countries with a high Muslim population are also some of the most industrialized in the world, and they have a vested interest in assuring a stable world economy. Meanwhile China, which is hosting the APEC meeting this year, had hitherto been loath to discuss military and security issues at high-level forums, given its relations with Hong Kong and Taiwan. Yet, China has been open to having the latest discussions being dominated by how to deal with terrorism, given its potential threat to its own economic future.

Accordingly, coordinating global efforts to combat terrorism will be of foremost concern for APEC's 21 member countries. Measures to choke the financial resources of terrorist organizations by cracking down on money laundering will be one of the many specific actions that will be discussed by the industrialized and developing nations of APEC.

But for the United States, bilateral talks with member countries, rather than the more formal official group meetings on Oct. 20-21, are likely to be more constructive, particularly in securing trade negotiations, said Brookings' senior fellow Nicholas Lardy.

"We're not going to see any concrete results from this meeting, except to expect more from (the World Trade Organization meeting in) Doha next month," Lardy said.

Bush will be holding one-on-one meetings with the heads of China, Russia, Japan, South Korea, Malaysia, Singapore, Brunei, Peru, and Indonesia, and potentially several more. The remaining member nations of APEC are: Australia, Brunei, Canada, Chile, Hong Kong, Mexico, New Zealand, Papua New Guinea, Taiwan, Thailand, and Vietnam.

Accompanying Bush to Shanghai will be Secretary of State Colin Powell, who has been touring Pakistan and India from earlier this week, as well as National Security Adviser Condoleezza Rice.

© 2001 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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