Zedillo Offers Wise Warnings on Asia

Were it not for the break in the East Timor impasse, the unexpected star of the Asia-Pacific Economic Cooperation summit here would have been a non-Asian: Mexican President Ernesto Zedillo. Along with South Korean President Kim Dae Jung, to a lesser extent, and President Bill Clinton, Zedillo offered a powerful worried vision about the looming Asian economic question.

With an incisive address to the annual gathering of Asia-Pacific leaders, Zedillo managed to slice through the routine diplomatic miasma and protocol puffery that beclouds such meetings. His unmistakable message was that the region faces another economic collapse unless its troubled national economies continue on the road to reform. And he, for one, knows. He spoke about the Asian financial crisis with the conviction of a Noah on the necessity for flood control. Pointing to Mexico’s own near-economic-death experience in 1995, Zedillo said that globalization at its worst is a monster force that takes no prisoners: “An obvious but extremely important conclusion to be drawn from recent events is that the margin for unsound and inconsistent macroeconomic policies is narrower than ever. In fact, that margin is practically nil.”

Zedillo’s address electrified APEC because it was one of the few efforts to deal bluntly with regional reality. The Mexican leader excoriated the corrosive tendency to declare economic victory when, in reality, the battle against the Asian flu is far from over. The reform of corrupt, inefficient, backward or hopelessly dated economies must proceed apace, he warned. “There is not the tiniest room for relaxation or complacency,” he said.

Zedillo, wisely or not, all but dismissed bold international reforms--such as technical devices to tame the whirlwind effects of fast-moving capital, or new or enlarged international institutions to play Big Brother to the world market--as false gods of reform. Instead, he insisted that the only way to strengthen global architecture is to make certain that every concrete block (i.e., every national economy) that lies at the world’s economic foundation is structurally sound and unlikely to crumble under international or internal pressure. “I am skeptical about calls for a new grand design of the international order,” he said. “Usually such calls never land in workable proposals, while entailing the risk of more damage than benefit for emerging economies.”

Zedillo would focus APEC’s efforts on the adoption of accepted international banking standards and the reform of troubled domestic banking systems. That’s the best immunization against another Asian flu, he insisted.

The remarkable Kim Dae Jung, limping to the podium but inspiring genuine respect from the APEC delegates, offered a similar vision. The South Korean president has guided his once-booming economy out of the worst. But rather than declare victory and bask in the domestic and international applause, Kim proposed to make an example of Korea, which is to say: It’s not over until it’s over. Because just as South Korea still has the serious economic need to reform, so do many other economies in the region.

The combined effect of the speech by Zedillo, which was unexpected by business leaders here, and the level-headed warning by Kim, who is well-respected in Asia, was to make the case for regional institutions like APEC. For, if nothing else, these institutions provide a sense of shared experiences and a platform for regional reflection.

Sure, a summit of this nature--with 21 head-of-state egos jockeying for attention and acclaim--is no cure-all for the region’s problems. Indeed, APEC seemed to intensify a few of them. The all-important China-U.S. negotiation over China’s admission to the World Trade Organization hit a serious snag. Malaysia’s Prime Minister Mahathir Mohamad, in a snit, refused to attend. A fistfight between journalists from China and Taiwan broke out.

Even so, this was a far more productive summit than last year’s disaster in Kuala Lumpur, which Clinton didn’t attend. This time, Clinton helped make it work. These kinds of glorified high-level photo ops are no more than that, unless someone makes more of these events than a carnival of political animals. And for such policy wonking, there’s probably no better head of state than Bill Clinton. In private bilateral and trilateral meetings here, as well as in his major public statement, he focused discussion on the need to keep the Asian economic reform efforts on the front burner, even if the regional economic picture is nowhere near as bleak as it was two years ago.

Like Zedillo and Kim, Clinton is unwilling to let go of the larger picture, precisely because it is potentially so grim. One hopes that the American president will use the remaining months of his office to transform that alliance of understanding into one for regional economic progress. Even lame ducks can teach other political animals the fine art of how not to drown.