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The status quo is not enough

Updated On: Dec 12, 2009

TODAY Dec 12, 2009
by Simon Tay

One year ago, the world was panicking when finance froze and American consumer demand disappeared. Now governments are meeting in Copenhagen to discuss ways to combat climate change into 2020 and beyond. More consumers are returning to the shops and malls for Christmas gifts.

In different ways, both show some appetite for commitments, long term or short. People are again thinking ahead. I travelled from New York to Sydney via Singapore and met with a journalist, a billionaire and a prime minister. Three people with varying perspectives but who all are thinking about paths ahead that are different from the past.

In Singapore, I hosted Martin Wolf, the chief economic commentator for the Financial Times, probably the most essential reading during this turbulent year. To Wolf, the economy has not recovered and returned to things as they used to be. Rather, we are in a different stage of a multi-year transition, with many uncertainties still ahead.

There are vast amounts of money that governments have injected into the system via stimulus packages and easy monetary policy. There are still high levels of unemployment in the West and rising doubts about the benefits of free trade. Many key issues will need to be managed in the year ahead.

In New York, I met withMr George Soros, the sometimes controversial billionaire who knows the global financial system all too well. At a talk I hosted in January 2006, he had made a clear and early warning that the US housing market would collapse.

Looking ahead, Mr Soros believes that the US dollar is in danger of losing its dominant status as the Americans can print and devalue the dollar to fund their huge deficits. But tensions will arise from such policies, since the immense reserves of China and others in Asia are also held in US dollars.

There is no ready replacement or international currency but Mr Soros considers the need for the Special Drawing Rights in the International Monetary Fund to serve as a quasi-currency amongst governments, as suggested by some in Beijing.

In Sydney, I met with Mr Kevin Rudd, the Australian Prime Minister, who has been suggesting a new Asia-Pacific community. While details remain sketchy, Mr Rudd sees the need to bring together all the key leaders of the region, including the United States, to discuss both economic and strategic issues.

Asia is leading the recovery. But there is a deep and continuing interdependence with the US and global problems will require close cooperation. For Asians, we must learn to deal with a history of tension and future potential for increasing rivalry. The Pacific may not otherwise be peaceful.

Each point raised by the journalist, billionaire and prime minister can be debated. But one conclusion seems inescapable. This is that the world has changed and is still changing in complex and surprising ways, more quickly than most imagine or are ready for. Effort must be made to adjust to new balances and map the difficulties ahead.

Where do Asia and Singapore stand? Our region seems a relative winner from the crisis. But economically and politically, Asians are not ready to go ahead alone or to run the world. Most still struggle to think about the global system and how it should be reformed.

These three people I spoke to are British, American and Australian. Their nationalities coincidentally reflect the Anglo-American roots of the global system. Asians have participated in this system and benefited, but we have not shaped it.

If, as now seems likely, there is a coming shift in the global balance, Asians must see the need for transformation and increase their contributions to the future of the global system. Economic purchasing power and military strength alone do not shape our world or determines outcomes. Ideas are needed to match the region's growth. The status quo is not enough.

Simon Tay
About the author: 

The writer is chairman of the ingapore Institute of International Affairs and, for 2009,the Schwartz Fellow at the Asia Society in New York.

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