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8 Nov, 2009

Asia Challenged To Overcome “Mental Colonisation”

Originally Published: 8 Nov 2009

A series of discussions organised at the UN Economic & Social Commission for Asia-Pacific last week led to some soul-searching debate on whether the lessons of these recurring financial crisis are being learnt, and whether the global system is geared up to handle them, especially as the next crisis is widely agreed to be just around the corner.

The debate ensued at the ESCAP’s first Trade and Investment week which ESCAP’s executive secretary Mrs Noeleen Heyzer said was designed to explore new approaches to economic growth by promoting more south-south trade and make the region less dependent on exports to the industrialised countries of the north.

However, it was more than obvious in the numerous presentations that delegates saw the slowdown in trade as being the direct result of the financial crisis which started in the West and wanted action to address that challenge first.

Delegate after delegate complained about the rules of the game being selectively applied by the multilateral financial and trade institutions, the unfulfilled promises of the economic nirvana that would dawn by following the mantras of economic and financial liberalisation and deregulation, the role of speculators in the currency and commodity markets, the trade distorting subsidies and their impact on poverty in the developing countries, the failure of monetary surveillance mechanisms, the looming impact of the growing U.S. budget deficit, the conditionalities attached to aid and financing, and the vast difference between what leaders of the G20 countries pledge in their communiqués and what they actually deliver.

Many of these issues were underscored in a brilliant summary lecture by Dr Supachai Panichpakdi, Secretary-General of the UN Conference on Trade & Development, and encapsulated in his concluding remarks, “I don’t think Asians need to be told how to trade or how to take care of open trading regimes. Asia must be able to get its act together financially. We need an Asian monetary fund.”

Indeed, he asked, “Who is going to take care of the house of global (financial) governance. Can you leave your house to the guards who were sleeping on the watch, while your house was broken into? Can you do that? It is already (being) lenient that we don’t fire the guards but (instead we) give more authority to the guards.” He said his audience knew very well whom he was referring to.

Debunking claims that the financial crisis was unforeseen, he noted that UNCTAD had been warning year after year about the looming impact of the growing global imbalances.

While Dr Supachai stressed the need for Asia to better harness its huge foreign exchange reserves and savings, Prof Kishore Mahbubani, Dean of the Lee Kuan Yew of Public Policy, National University of Singapore, called on Asia to better harness its intellectual capital in the search for solutions.

Prof Mahbubani, author of a 1990s book called “Can Asians Think”, called on Asia to rid itself of “mental colonisation”. He said, “Most (Asian) governments are living off ideas given to them by some defunct economists. The IMF was producing articles hailing the economic miracle of Asia until just a few months before the 1997 crisis hit. In many ways, the Asian mind remains colonised by the west.”

Formerly Singapore’s top diplomat at the UN, Prof Mahbubani also addressed the Foreign Correspondents Club of Thailand on another provocative topic, “Why the West fails to understand the rise of the East.”

He told the FCCT, “(The rise of Asia) is one of most exciting periods in human history and it is all happening here. And that story is not being told. That’s why we have to make a bigger effort to do so.”

He argued that solutions suggested to Asia by the U.S. and Europe are always driven first by the interests of U.S. and Europe. “For Asians to make a difference in the world, they need to realise that they cannot be free riders on a global system that was a gift to them from the U.S. and Europe.”

He said it was time for Asian intellectuals to be bold and start speaking out, which he sensed was already happening. “They are figuring out how to say no rather than how to say yes. We have to have the intellectual courage to address the fundamental obstacles.”

Some of the most heartfelt speeches came from Nepal and Mongolia, both landlocked countries.

Mr Binod Prasad Archaya, Under Secretary, Ministry of Commerce and Supplies, said Nepal sees the World Trade Organization “as an institution that ensures fair, just and inclusive trading regime where the concerns and aspirations of all the countries, small and big, rich and poor are well heard and listened.

“We expect that a fair trading system would help us bring about a structural change in our economy with the promotion of trade which would stimulate growth and help us reduce poverty. We are still waiting for that development dividend…..”

Mr Damdin Tsogtbaatar, State Secretary, Ministry of Foreign Affairs and Trade, Mongolia, recounted in flawless English how “the inadequacies of the systemic issues at the global level” had led to a massive diversion of financial resources into “surrealistic sectors” like dot-com bubbles.

“Surrealism in the paintings of Salvador Dali is very beautiful, but in the economy it is not a good thing, as it affects people.” He described in great detail how people began to abandon economic basics such as agriculture and animal husbandry and become part of the “frenzy” of the “new economy.”

“We even began defining things as ‘new and old economy’. Suddenly, there was all this talk about ‘outsourcing’, the ‘great leap forward’, and ‘filling the digital gap’….People were making wrong decisions and valuable resources went into it.”

He said the present financial crisis had revealed the inadequacies in the system, such as the ponzi schemes, and the “illogical irrationalities” in the production chain. “Money which could have gone to shepherds and rice producers was going nowhere,” Mr Tsogtbaatar said.

There isn’t enough space in this column to outline in detail the passionate pleas for global financial and economic justice, which were almost identical to the pleas for environmental justice heard at the climate change negotiations just two months previously in the same hallowed halls of ESCAP.

The big fear, and a general consensus, is that the present stimulus packages that have triggered a temporary revival in economies are merely steroid shots that have done nothing to fix underlying problems. If that happens, frustration today will readily explode into outright anger tomorrow.

Unless they are totally deaf, dumb and blind, the developed countries should be able to clearly see that they are being asked to own up to their own level of accountability for causing many of today’s problems. They may need to hark back to their own days of colonisation, especially why those colonial empires fell apart.

Just like the physical colonisation of much of Asia in the old days, the “mental colonisation” of Asia is about to end. The only thing which will stop it will be another world war. And Asia will not be the one to start that either.