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by FR. FELIX RAJ, SJ, DIRECTOR |  « back


Asia is one
By Fr. John Felix Raj. S.J.



The Asia’s first Nobel Laureate, Gurudeb Rabindranath Tagore had once proclaimed, “Asia is one”. Yes, a much-desired Asian unity seems to be in the making. Asian nations are currently taking giant steps towards economic integration and closer political cooperation. With 3.5 billion people – well over half the population of humankind, Asia has a lot to offer to the global system, in spite of linguistic, ideological, religions and racial differences. Asian countries have the human, natural and financial potential to emerge as global leaders in trade, commerce, investment and governance.

The main problem in the global economy is that 20 per cent of the people living in the US, the European countries and Japan consume 80 per cent of the world's resources. The 20/80 asymmetry requires that we build an alliance of the 80 per cent people of the world who are now consuming only 20 per cent of the world's resources despite most of these resources being in their countries. It becomes imperative for giants like China and India to forge ahead in their ties to combat adverse impact of western alliances and to enhance a model of economic integration and political cooperation within Asian region.

Single Asian Currency
If the sense of Asian unity has to be promoted, then a single Asian currency can either facilitate that unity or become a common means towards that end. "The case for a single Asian currency is overwhelming," declared Hong Kong's chief executive, Donald Tsang, at a conference in China in April 2005. But unfortunately, reality is not that simple. Asia is not like Europe that needed a single currency as part of a political union, and Europe had worked towards political and economic integration for over 50 years before the birth of a single European currency in 2001.

Asian finance ministers took another step toward creating an Asian monetary fund at the annual meeting of the Asian Development Bank in Istanbul in the first week of May 2005. It is a kind of European-style financial union that proponents of closer cooperation in Asia are striving for. However, the gulf that Asia needs to bridge before establishing anything like a European-style financial union is dauntingly wide.

Common wisdom has it that Asia is dreaming. If it wants, economies, as diverse and as far-flung as China, Japan, South Korea, the countries of the Association of South East Asian Nations and India, can emulate Europe. For one thing, Europe has settled the question of hegemony; Asia has not. "There is no hegemony in Europe," argued Norbert Walter, chief economist for Deutsche Bank. "There are three in Asia: China, Japan and India."

Yet the move toward common financial arrangements is a confidence-building mechanism among Asia's rising powers. Haruhiko Kuroda's election in February 2005 to head the ADB has lent momentum to economic integration in Asia. Laying down a key marker for his tenure, Kuroda, formerly an influential official in Tokyo, has set up a new department of regional integration, which is headed by Masahiro Kawai, an economist from the University of Tokyo.

Kawai points out that trade and investment among the ASEAN states, China and Japan is leading the way, and in trade terms, the region is actually coming together at a more rapid rate than Europe ever experienced. At the Istanbul meeting, finance ministers from 13 Asian nations agreed to enhance a modest mechanism that allows countries to swap their foreign reserves to ease liquidity problems on a bilateral basis first set up in the Thai city of Chiang Mai in 2000.

The idea is to transform this bilateral arrangement into a single multilateral process by increasing the size of the swaps and developing a surveillance mechanism similar to that, which is currently applied by the International Monetary Fund. Kawai has argued that this regional approach fills a gap left open by the IMF, which is country-focused. According to Kawai, the Asian Financial Crisis in 1997 told us that this country-focused approach would not work because of contagion. The regional approach is important, and the IMF has not been strong on that.

The first attempt by Japan in 1997 to set up a multilateral fund in Asia met with fierce resistance from the United States and was hurriedly shelved. But in Istanbul, Japan's finance minister, Sadakazu Tanigaki, gave a ringing endorsement of moves toward an Asian Monetary Fund, saying “Japan was committed to promoting cooperation for the further prosperity of the region."

Of course, this isn't all about safeguarding financial stability in Asia. Japan is in a hurry to cement its role as a pivot of these financial mechanisms before China becomes too dominant - and perhaps before the yen is overshadowed by the yuan. China is quietly supportive because Beijing sees itself as inheriting an Asian financial system sealed off from too much outside scrutiny. There are shades too of the kind of Asian hubris evident before the Asian financial crisis.

But many financial experts working on integration are wary of moving too fast. "Asia is not like Europe, "argues Jin Liqun, a former vice finance minister of China who is now an ADB vice president. "We don't have the social and political homogeneity". If indeed these moves toward integration are more about hegemony than homogeny, then it would be prudent for less powerful Asian nations to ensure that they are not being lured into a greater China or greater Japan.

Looking Ahead
Over the past decade in Asia, a growing awareness of the interdependence among countries in the region and of the importance of regional cooperation in managing the challenges of globalization has led to important steps to enhance regional economic cooperation initiatives. Relatively slow progress with multilateral initiatives and the proliferation of regional blocs in other parts of the world have provided additional impetus to greater cooperation within Asia. There is a realization that open regionalism can contribute substantially to enhanced productivity and economic growth, and to poverty reduction, within the region.

“India is ready to play an ‘active’ role in promoting Asian economic integration and is keen to co-operate with China in achieving the goal. India’s approach towards Asian integration and its relations with the rest of the continent is increasingly an important element of Indian foreign policy”, announced P. Chidamparam last year during his visit to China. He pointed out that “It was India which first propagated the idea and concept of an ‘Asian economic community’ in September 2003.”

Asian economies, especially India and China, seem posed to provide the thrust necessary for continued economic growth in the 21st century. “India and China are two of the most important contributors to the political and economic dynamics of this continent, as also of the world. They should join hands towards these goals” to prove the prophesy of Adam Smith, “In the 21st century India and China would emerge as economic giants”, true.

The first Prime Minister of India, Jawaharlal Nehru, while speaking to Mr. Paul Feng of the Central News Agency, had said on January 20, 1946, "If China and India hold together, the future of Asia is assured." This holding together need not be confined to diplomacy and trade; it can, by all means, be a psychological force that can work wonders in the realms of creativity in Asia and in the world.

I am reminded of Tagore’s message to some Chinese friends: "Age after age in Asia, great dreamers have made the world sweet with the showers of their love. Asia is again waiting for such dreamers to come and carry on the work, not of fighting, not of profit making, but of establishing bonds of relationship. The time is at hand when we shall once again be proud to belong to a continent that produces the Light that radiates through the storm clouds of troubles and illuminates the path of Life."


The author is Vice Principal, St. Xavier’s College and Director, Goethals Library & Research Society, Kolkata.

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