Carry On London

Or you did not even know, let alone care, that the EAS was supposed to be happening at all. The EAS joins together the 10 members of the Association of South-East Asian Nations with India, China, Japan, South Korea, Australia and New Zealand. If ever an Asian equivalent to the European Union is formed, it will look rather like the EAS.
Yet nobody’s life will have been ruined by the EAS’s abandonment, except perhaps that of the host, the Thai Prime Minister, Abhisit Vejjajiva. But then again, the G20 meeting in London did not transform anyone’s life either, although at least the protesters (in this case, so-called anti-capitalists) did not succeed in thwarting the summit.
The G20, like those protests, was a pretty damp squib. Still, that very dampness is a measure of its success. That is also why it is vital for Asia that the EAS should be rescheduled soon, with the leaders stressing how important it is that these meetings happen regularly — and unexcitingly.
How so? The content of the G20 meeting was not important. The “$1.1 trillion global boost” that the G20 boasted it had agreed upon was a pretty fake figure, being made up mainly of technicalities, additions to the IMF’s emergency lending facilities here, or to credit lines for trade finance there, which is not really a boost, more a stronger safety net.
Actually, the big progress, the quite genuine achievement, at the G20 summit was not what happened but what did not. What did not happen was division, bitter argument, blame- game for the crisis or to try to get one over on other countries. That may sound banal, but is really rather important.
Most — perhaps all — of the true solutions to this economic crisis are matters of domestic government policy and of the workings of private businesses and investors. Primarily, though, what governments could do, if they so chose, is to make things even worse. They could do that chiefly by fighting with one another, by pursuing nationalistic, ‘beggar-my-neighbour’ policies of local subsidies, of higher trade barriers.
That is why the G20’s harmonious vagueness is really important. In the 1930s, the big powers were at each others’ throats. Reparations were owed, invasions were threatened, trade barriers were erected. In 2009, thank goodness, things look completely different.
Divisions do exist. Last November, the same G20 promised not to introduce new protectionist measures for the following 12 months; yet according to the World Bank, 17 of the countries have since then introduced a total of 46 trade-restricting measures. The G20 is no guarantee against hypocrisy. The protectionist measures introduced so far are all regrettable, all damaging, but none cripplingly so. Every recession brings some reversion to nationalism, to inward-looking, short-sighted policies. The crucial point is that they must be minor, must be reversible, and must not trigger outright trade war.
Could they? The biggest danger period is still to come, perhaps as soon as the second half of this year but certainly by 2010. The global crisis is still young and new. Unemployment has been rising only for six to nine months in most countries. What if unemployment keeps on rising as private spending keeps on falling, and the fiscal measures fail to counter or reverse that fall? If that happens, governments will not know what to do. The most tempting option, at that point, will be to blame foreigners, or in other words each other.
That is when the solidarity of the G20 will be sorely tested, but will also be most important. The US and Europe are easily capable of falling out and of blaming each other, but too many interests are shared, too many companies span the Atlantic for them to fall out too seriously with one another.
That is not, however, true of the US and China, nor is it true between the big new emerging powers, such as China and India. Meetings, in the glare of the media, and then more meetings: that is at least one good way to discourage such falling-outs. The G20 must meet again; so must the EAS. Indeed, vacuous though all the EAS’s meetings have so far been, this crisis offers the best opportunity to turn that forum into something serious. Just not too exciting, please.

The author is a former Editor of The Economist.
You can reach him at [email protected]

(Businessworld Issue Dated 21-27 April 2009)