Sunday, August 29, 2010

Obama Blows Off 3 Billion Wannabe Billionaires

For a guy who talked big about re-engaging Asia, Barack Obama has a funny way of showing it. Nobody doubts the US president's team is supremely busy juggling oil spills, Muslim cultural centres, convincing ignoramuses he has a birth certificate and averting recession. Yet there's no excuse for blowing off last week's Association of Southeast Asian Nations trade meeting in Vietnam.

It was a dreadful decision and its significance didn't escape members of the fourth-biggest market for US goods. This is no time for the US to be taking the most dynamic economies for granted. Not with China becoming an ever-bigger player both in Asia and globally. Advertisement: Story continues below On any list of George W. Bush's failings, ignoring Asia deserves a prominent mention. When his administration bothered with Asia, it was all terrorism all the time. There was little talk about potential, cooperation or partnership. Bush just wanted to know how many bad guys governments were rounding up. He tried to make amends in the twilight of his presidency, naming a US ambassador to Asean in 2008. Recently, Obama tapped that official, Scot Marciel, to be US ambassador to Indonesia. Obama hasn't bothered to name a new Asean envoy. The US missed a timely opportunity last week to confer with the economic ministers of Asean's 10 members, along with counterparts from Australia, China, India, Japan, South Korea, New Zealand and Russia.

Blowing Off Asia

At a time of global crisis, one the US caused, does Obama really want to be sending a message of indifference to Asia? Coming a week after the announcement that China's economy has surpassed Japan's, the US's closest Asian ally, you would think the White House would be stepping up a charm offensive. Instead, it risks turning off the region. "Confidence in the United States and its ability to lead and follow through on commitments is based on its economic well- being, and that status is being questioned by friends and competitors alike in Asia," Ernest Bower, an analyst at the Center for Strategic and International Studies in Washington, wrote in a recent report.

China's rapid growth is slowly, but surely, chipping away at the US's importance. Granted,at almost three times China's economy, the US will long be a vital customer for Asia's goods. Officials here also know that depending on growth in a developing economy is risky.

US Brand

Yet neglecting future trade ties with the liveliest economies is just plain dumb. Asia is churning out a fast- growing number of billionaires and is home to 3 billion consumers who aspire to join them. The U.S. wants to be in on that process. Obama must not forget just how much the 2008 meltdown damaged the US brand. During Asia's 1990s crisis, US officials preached the free-market gospel. They told leaders to raise interest rates to support currencies, slash spending and debt, scrap subsidies and avoid bailing out industries. When the US faced a crisis, it did exactly the opposite. There's also considerable grumbling over the dollar. True or not, the theory that the US is devaluing to help exporters is making the rounds. That perception is a problem if you want China to let its currency strengthen. It doesn't play well in Japan, where panic is rising over the strong yen. Nor can the US complain about corruption in Asia. Incestuous ties between Washington and Wall Street helped cause the US crisis. Conflicts of interest between regulators and oil companies led to BP Plc's devastating Gulf of Mexico leak. The US has little moral high ground on dodgy dealings.

Corruption's Cost

That's a shame, considering the magnitude of Asia's corruption fight. In Indonesia, for example, officials face an uphill battle to weed out graft and allow more of the nation's people to benefit from 6 per cent growth. In the Philippines, the honeymoon enjoyed by Benigno Aquino, since becoming president in June, ended last week in gunfire. Eight Hong Kong tourists being held hostage in Manila died in a botched rescue attempt. The tragedy was emblematic of what plagues the nation's economy. The gunman was a former police inspector who was dismissed on allegations of extortion. The standoff's surreal finale suggested a breakdown in the nation's security apparatus, ineptness at many levels and weak diplomacy. Corruption is the common link in all these shortcomings.

Lost Opportunity

Obama got off to a good start, becoming the first US leader to meet with Asean in November. Vietnam was the perfect opportunity to go further -- to discuss views on credit markets, North Korea's provocations, China's currency, Australia's election, Russia's growth prospects, and Japanese deflation. This last topic is a growing concern. Not only have consumer prices fallen for 17 consecutive months, but Japan now has a leadership battle on its hands. Prime Minister Naoto Kan faces a challenge to remain head of the ruling party by veteran kingmaker Ichiro Ozawa. It's the last thing Japan needs: its sixth prime minister in three years.

Obama's team could have learned about all of this, and much more, if it had only shown up in Asia. It should do so as soon as possible. by William Pesek for Bloomberg

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