19 September ASEM finance ministers meeting

Date: 25/09/1997

FINANCE ministers from 25 Asian and EU countries provided a classic example of talk without substance at their first meeting in Bangkok, down-playing the long-term damage of Asia's currency crisis but offering no concrete solutions to end it. “The Asian success story has not come to an end,” said Luxembourg Prime Minister Jean-Claude Juncker after the meeting, adding: “The coming years will prove that the steps that have been taken during the last few months have been successful.” In his closing address, Thai Finance Minister Thanong Bidaya said ministers had noted that despite the recent “moderation” in economic activity in some Asian economies, “the short- and medium-term outlooks remain favourable”.

THE outcome disappointed those hoping for tougher foreign exchange intervention measures to protect the region's beleaguered currencies. In the end, they had to make do with general statements of support. The meeting did agree, however, on the need for “sound macroeconomic policy and well-managed exchange rate regimes”, according to Economics Commissioner Yves-Thibault de Silguy, who added that financial cooperation was “a vital response to the globalisation of free capital movement”.

MINISTERS did not endorse Thanong 's suggestion that a single ASEAN currency might help to fight off speculative attacks in future. Thai Prime Minister Chavalit Tongchaiyudh had earlier warned of the dangers to all international currencies from the huge currency flows which have accompanied market globalisation. “We need to join hands and together develop common strategies to deal with threats to our financial stability arising from systemic and contagious risks,” he said in his opening address. “This is crucial if the Asia-Europe partnership for greater growth and if our respective economies are to remain at the forefront of the global economy.” Thanong was upbeat about the euro, arguing that “the advent of the single European currency should pave the way for expansion of trade between Asia and Europe. The euro will assume a key role in trade and investment finance.”

THE circumstances of the meeting did not help European calls for faster financial liberalisation in Asia, with the region reticent about accepting World Trade Organisation moves for fear of becoming more vulnerable. Juncker said afterwards that the Europeans had asked their Asian counterparts to drop 12 restrictive practices and to “significantly weaken” nine others. Thanong agreed on the need to meet the December WTO deadline for an accord, but warned of lukewarm enthusiasm amongst Asian ministers. The ASEM meeting did, on the other hand, agree to crack down on money laundering, which is becoming a serious problem in several Asian and European centres.