Background
document
From the Asian Financial Crisis to the 1998 London Summit
15. In the nine months before the ASEM2 London Summit in April 1998, the Asian Financial Crisis caused turmoil primarily in the five east Asian countries of Thailand, Malaysia, Indonesia, Korea, and the Philippines. A massive outflow of portfolio investment capital occurred, leaving depreciated local currencies, very high interest rates, countless defaulted loans, and no investor confidence. It also left rapidly rising unemployment, food shortages in Indonesia, and a fiscal crunch that dragged the region into a recession. When ASEM Leaders met in London, this situation was the main pre-occupation, to the European members in the risk that this recession would spread globally, but more immediately to the Asian members.
16. While many portfolio investors lost out, and the global markets were shaken by the collapse of the model developing economies, the biggest loss was that borne by the workers and citizens of the east Asian countries, who lost their livelihoods, savings, and future economic prospects. These people were the casualties of the crisis, and as such, should have been the ones most targeted by the relief funds and plans.
17. The ICFTU Statement to ASEM2 pointed out that ASEM could be a force for recovery from the crisis, but that it must effect this recovery for the entire population of the region. In order for this to occur, European economic recovery must be ensured, so that its market for Asian goods and services continued to grow. But at the same time, the ASEM dialogue must be expanded to include social and labour concerns in order to provide an alternative to poverty and desperation for the millions affected by the crisis.
18. The ICFTU Statement recommended that in addition to regulations to ensure increased transparency and accountability in the financial sector, social policies, and not just market-oriented policies, were needed to address the social damage that was caused. It recommended that an employment recovery strategy be implemented to protect the millions of workers being laid off, and that at least 50% of the relief funding go to this and other social programs such as ensuring food security.
19. ASEM2 adopted a document on the response to the crisis, entitled A shared interest in restoring stability, and also set up a Trust Fund at the World Bank to assist the stricken economies. The report stressed the concern of the ASEM Leaders about the human cost of the crisis, and suggested that affordable social safety nets be developed to protect the poor. They also suggested that it would be important to protect social expenditure where possible from the comprehensive reform programmes they suggested.
20. Most reforms suggested by ASEM2 were concerned with the transparency of the financial system, and the means of attracting foreign capital back into the region, not with the fundamental causes of the crisis, nor with the social consequences. Even the way the crisis response document presented these social consequences made them seem an afterthought: ¡°Leaders recognised the need to consider the social impact of the financial difficulties in Asia.¡±
21. The Chairman's Statement of ASEM2 reflected a sense of accomplishment in the expansion of general security dialogue between ASEM members, and again emphasised their commitment to arms-control and non-proliferation of weapons of mass destruction. The Leaders agreed to co-operate with the UN Secretary-General's Track II reform programme, in the hope of securing the UN's pre-eminent role in global peace, security and sustainable development.
22. As mentioned above, the Leaders tasked the Meeting of Economic Ministers with closely supervising the early implementation of both the TFAP and IPAP. In addition to the concern about the Asian Crisis, the leaders emphasised their commitment to ensuring that all trading nations be members of the WTO, and agreed to work to that end. They generally affirmed their support for the WTO as the main forum for trade dialogue, and stressed the importance of fully implementing all existing WTO commitments.
23. A delegation of CEO's and business leaders met with the Heads of State and Government, and the Leaders acknowledged how important the Asia Europe Business Forum (AEBF) had been in promoting economic co-operation. In order to make the high-level meeting possible, the 3rd meeting of the AEBF had been held on the eve of the ASEM2. The AEBF was expected to continue its efforts to increase the profile of SME's in their activities.
24. The Leaders recognised the leading role of technology in economic growth, and saw this as an area of co-operation for enormous potential mutual benefit. As such, they discussed arranging a ministerial meeting on the subject. Accordingly, a ministerial conference was held in Beijing the following year, as was a TFAP seminar on technological transfer.
25. Concerning co-operation on what the Chairman's Statement termed Global Issues, the Leaders agreed to work together on human resource development, poverty, food supply, the welfare of women and children, the fight against drugs and international crime, community health, employment, the environment and sustainable development. The category of Global Issues was new to the London Chairman's Statement, and shows a development in the identification of certain issues, which previously had generically been considered other (i.e. to political or economic concerns). In terms of specific initiatives in this area, a meeting of experts was held in London at the end of 1998 to co-operate on child welfare issues, and a follow-up meeting of police and enforcement agencies was held in Seoul earlier this year. Also, an Environmental Technology Centre was launched in Thailand.
26. In the closing statement from London, the Leaders re-affirmed that ASEM was an informal process, which need not be institutionalised. They adopted a Co-operation Framework(AECF) as a focus for ASEM activities and methodology for the development of new initiatives. This Framework formalised the stewardship of the co-ordinators' meeting of ministers and senior officials. The Leaders also commissioned a Vision Group to develop a long-term plan for the ASEM process, with a report to be discussed at ASEM3. One of the recommendations of the Vision Group report is that the process be institutionalised slightly by the formation of a small Secretariat.
© Friedrich-Ebert-Stiftung I October 2000
Draft
statement
to
ASEM 3