Asia continues to teeter over the economic precipice despite recent International Monetary Fund agreements with South Korea, Indonesia, and Thailand. The stability that was supposed to come with the $120 billion in IMF bailout money is not taking place. Instead of new reform programs, there are angry words, resistance, paranoia, and fear. The longer Asia remains in denial, the darker the prospects for the global economy in the months to come.
This is the time for Asian leadership. But politicians running for the Korean presidency are avoiding the country's dire economic problems. Indeed, they even hint of renegotiating the IMF agreement after the election, undermining Korea's credibility around the world. Prime Minister Ryutaro Hashimoto, who sent Japan back into recession by raising taxes, is now backtracking on his promise to speed up the deregulation of Japan's ailing financial sector. Instead, he appears to be giving in to demands by the LDP's traditionalists to use public money to prop up the same weak banks that created Japan's economic mess in the first place. Foot-dragging by Thai and Indonesian leaders in implementing their IMF packages has done similar harm. Singaporean leaders, who have stature in the region, remain silent.
The Pacific Century is beginning to fade even before it has begun. What should have been a temporary crisis that lasted 18 months may now be extended by up to a year or more. Japan has prolonged its post-bubble economic agony for a long seven years. Korea and the rest of Asia appear determined to do the same. The impact on the global economy is already being felt. Profits are beginning to decline for American and European corporations. Commercial aircraft and other orders are being delayed. Asia must face the realities and move fast to salvage its growth.