Asia has yet to show any real signs of recovery from the great economic meltdown of 1997. Besides economic reforms being handicapped by high oil prices, the ability to meaningfully reform Asian economies seems beyond the grasp of its several governments.
Superficial post-crisis reforms have barely scratched the surface of the region’s deep financial problems. The basic means of exchange in Thailand, the Philippines and Malaysia hover at rock bottom values, forcing Singapore, one of the brighter Asian stars, to devalue its currency to remain competitive.
Under these pressures the Asian nations are feeling forced into cooperating via regional, multi-national economic bodies to consider such schemes as an Asian Monetary Fund. The problem is, the capital required for this type of scheme is not there.
Added to the region’s woes are the uncertainties posed by China seeking greater control of South Asian shipping lanes, and the prospect of changes in relations between North and South Korea. Japan’s seeking a greater role in Asian security must also be considered by the various nations of Southeast Asia, which suffered so terribly under Japanese militarism half a century ago.
Asia presents a worrying picture of a vast region, with teeming millions of multi-ethnic peoples living at Second and Third World status, increasingly forced “to employ ever more desperate, ineffective and ultimately counterproductive delaying strategies” (www.stratfor.com, Oct. 10). This is a recipe for disaster on a major scale, particularly as Asia will not be able to continue to subsidize high-priced fuel from its already fractured economies. Ironically, it may well be another Asian economic downturn which slows demand for fuel to the point where oil prices again become depressed.
Watch for a secondary Asian financial meltdown in the coming year.