Region's Leaders Poised To Give Kohl the Message : East Asians See Europe's Power On the Decline
International Herald Tribune
February 20, 1993
Michael Richardson 

When Mahathir bin Mohamad, the prime minister of Malaysia, thinks of Europe these days, he professes to see a continent handicapped by a high cost structure that puts it at a permanent disadvantage vis-à-vis more efficient economic competitors in Asia.

Lee Kuan Yew, Singapore's elder statesman, worries that Europe is becoming increasingly inward-looking as it tries to solve a post-Cold War surge of ethnic tension, mass migration and other problems at a time of economic slowdown.

Europe, says Noordin Sopiee, director-general of the Institute of Strategic and International Studies in Kuala Lumpur, is becoming so "tied down by the emerging market economies and learner democracies of Eastern Europe" that it is retreating from world affairs.

He says the only powers that are likely to play a larger role on the international stage in the next decade than they play now are Japan and China.

These views of the European Community as a declining global player are expressed with increasing frequency in East Asia.

The point seems certain to be made forcefully with Helmut Kohl, Germany's chancellor, when he begins a tour of Singapore, Indonesia, Japan and South Korea on Monday. Mr. Kohl arrived in India on Friday on the first leg of his visit to Asia.

The visit had been planned for October, but Mr. Kohl postponed it in September when turmoil hit the EC's exchange rate mechanism, threatening plans for monetary union in Europe.

German officials said that Mr. Kohl, who will be accompanied by a delegation of senior German business officials, will be seeking to strengthen commercial and political relations between Germany, which has Europe's biggest economy, and the rapidly growing markets of Asia.

Trade between the EC and East Asia more than tripled in the 10 years that ended in 1990, to $246 billion. European investment in the region is also substantial.

However, many East Asian policymakers worry that difficulties and divisions in the EC will lead not only to diminished European trade and investment in Asia but to increased protectionism in Western nations whose markets provide a major outlet for the goods of East Asia.

Europe, a Japanese official said, is setting the pace for global trade policy.

There are doubts about the future of U.S. trade policy toward Japan, China and other countries that have persistent trade surpluses with the United States. And there is also concern that a decline in Europe's economic presence in East Asia will leave Japan unchallenged economically in the region.

The impasse in the Uruguay Round of negotiations that were intended to reduce global trade barriers - as well as increases in trade frictions among the EC, the United States and Japan, and an accelerating trend toward regional trading arrangements - are unsettling developments for East Asians.

A World Bank report on economic prospects for the area, published this month, warned that if trade barriers rose or trade tensions worsened, "one of the principal casualties in terms of lower growth and lost opportunities would be the open economies of East Asia."

The report also said Japan was "quietly replacing the United States as the key partner in the development of East Asia - in aid, trade and foreign direct investment." It added, "Lately, this has expanded to include financial flows and economic policy advice, as well as portfolio investment."

Asian leaders want Europe as well as the United States to retain a strong economic presence in East Asia, to balance Japan's potential dominance and to sustain the global trading system.

Wong Kan Seng, Singapore's foreign minister, told a predominantly Western business audience at the World Economic Forum in Davos, Switzerland, last month that Japan, China, South Korea and members of the Association of South East Asian Nations would "all find it easier to have comfortable relationships with each other if they have healthy and comfortable relationships with the United States and Europe."

The image of Europe as a sick and distracted continent, in contrast to the relative peace and buoyant growth of East Asia, appears to be deeply etched in the minds of regional leaders.

Mr. Mahathir said at a recent meeting of East Asian newspaper editors that when Europe and the United States had a monopoly on industrial technology, it was "quite O.K. to have high pay and forget about competition."

But now, he said, Asia has the same technology, and that, combined with a lower cost of production, has enabled East Asia to outsell the rest of the world.

Western nations, Mr. Mahathir asserted, are no longer able to compete, "because it's not possible to bring down their wages without sacrificing standards of living." This, he said, is something they are not willing to do.

In an interview with a European newspaper ahead of Mr. Kohl's visit, Mr. Lee said that as problems in Europe had multiplied over the past couple of years, there had been a marked decline in European, though not in British, interest in Asia.

He said that before the Berlin Wall came down in 1989, "every month I would meet a German industrialist, a German banker, a German state minister or state prime minister, or even the German federal chancellor."

He added, "That was the level of their interest."

However, Mr. Lee said, by 1992 the flow of German visitors had slowed to a trickle.

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