Commentary
U.S. must not lose war for Islamic world's respect

By Tom Plate

U.S. must not lose war for Islamic world's respect

Malaysian Prime Minister Mahathir Mohamad has managed to keep at bay extremist Islamists in his country. Advertiser library photo

Not according to the Federal Reserve Bank of San Francisco, whose research wing has been often prescient about the U.S. and Asian economies.

"Even in light of recent data and events, a recession may not be a certainty," concluded its just-released study. Asia, now largely mired in its own recession and vulnerable to sinking U.S. export demand, can only hope this glimmer of optimism from San Francisco rules the day. But no one is betting the house on it. The Geneva-based World Economic Forum (WEF) has billed its 10th annual East Asia Economic Summit, which begins today in Hong Kong, as "Responses to the Recession: Regaining Stability and Growth in Asia."

Explained WEF Asia director Frank-Jurgen Richter, "The world has moved from a mere slowdown in demand to a broad downturn and now, with the loss of confidence after Sept. 11, is experiencing a full-blown recession."

One session — "Prospects for Regional Monetary Cooperation" will surely lift an old skeleton out of the closet. For Asia's economic stability is driven not only by the U.S. demand for Asian exports but the region's ability to withstand the kind of brutal currency shocks that rattled it during the recent, notorious financial crisis.

That 1997-99 storm is still painfully fresh, especially because the United States was, at first, almost suspiciously slow to come to Asia's aid. Cooperation among Asia's central banks is thus essential to guard against the next currency storm, with its ever-latent threat of roiling devaluations and cutthroat export competition. Indeed, who can forget those infamous attacks by Western-based currency speculators and hedge funds on national monetary systems? They were a kind of terrorism of an economic kind. Speculators sliced and diced currencies from Bangkok to Hong Kong while Washington, for the longest time, just looked the other way.

If Asians came to any overall conclusion from the trauma, it is that the region must be prepared to fend for itself. Perhaps that's why there was a palpably greater sense of Asian togetherness last week in Shanghai, at the annual Asia Pacific Economic Cooperation forum leaders' meeting, so often more hot air than achievement. China, the host, emphasized regional economic issues, not excluding the upbeat story of its own continued reform and growth. Many there were impressed by the tone China set.

"There are those who had felt the Chinese were not serious about open markets and economic reforms," says attendee Robert Lees, secretary-general of the Honolulu-based Pacific Basin Economic Council. "But the way they handled the conference and the leadership they offered won many over. It's their solid economic policies that are enabling China to continue to grow, even while others are in the doldrums."

Not surprisingly, conventional terrorism topics swirled at Shanghai, too. America's war on terrorism garnered sympathy and support, even from Malaysian Prime Minister Mahathir Mohamad, the most outspoken Asian critic of marauding Western hedge funds and predatory currency speculators. He characterized the Taliban kind of terrorism as "a 'disease' afflicting us, and this disease is caused by those who abuse the Muslim religion for their own interests — by people who 'hijack' the religion."

Over the years, the crafty Mahathir, nearing the nadir of a long political run, has somehow managed to keep at bay extremist Islamics in Malaysia, an otherwise moderate and successful Muslim state. But he openly worries that the American bombing will radicalize even Muslims who reject the militants' shameless violence against innocents. The Bush administration, he is known to believe, must do a better job at "winning the heart and mind" of Islamic people, as he puts it. While defending America from the ridiculous accusation that the U.S. attack on the Taliban is an attack on all Muslims, he views the bombing campaign, with its inevitably hideous civilian casualties, as a serious miscalculation, no matter how heinous the World Trade Center massacre.

For better or for worse, Mahathir usually speaks his mind. In all fairness, he knows Asia and the Muslim world better than anyone in Washington. The world hopes the bombing will at least pause for the coming Muslim high holy month of Ramadan.

In fact, it would be best if it did not resume after that. For the United States is in danger of winning the battle against the terrorists but losing the larger war for the Islamic world's respect. It would be in no one's interest for this to be the ultimate outcome of Sept. 11.

Is a prolonged U.S. recession inevitable?

Not according to the Federal Reserve Bank of San Francisco, whose research wing has been often prescient about the U.S. and Asian economies.

"Even in light of recent data and events, a recession may not be a certainty," concluded its just-released study. Asia, now largely mired in its own recession and vulnerable to sinking U.S. export demand, can only hope this glimmer of optimism from San Francisco rules the day. But no one is betting the house on it. The Geneva-based World Economic Forum (WEF) has billed its 10th annual East Asia Economic Summit, which begins today in Hong Kong, as "Responses to the Recession: Regaining Stability and Growth in Asia."

Explained WEF Asia director Frank-Jurgen Richter, "The world has moved from a mere slowdown in demand to a broad downturn and now, with the loss of confidence after Sept. 11, is experiencing a full-blown recession."

One session — "Prospects for Regional Monetary Cooperation" will surely lift an old skeleton out of the closet. For Asia's economic stability is driven not only by the U.S. demand for Asian exports but the region's ability to withstand the kind of brutal currency shocks that rattled it during the recent, notorious financial crisis.

That 1997-99 storm is still painfully fresh, especially because the United States was, at first, almost suspiciously slow to come to Asia's aid. Cooperation among Asia's central banks is thus essential to guard against the next currency storm, with its ever-latent threat of roiling devaluations and cutthroat export competition. Indeed, who can forget those infamous attacks by Western-based currency speculators and hedge funds on national monetary systems? They were a kind of terrorism of an economic kind. Speculators sliced and diced currencies from Bangkok to Hong Kong while Washington, for the longest time, just looked the other way.

If Asians came to any overall conclusion from the trauma, it is that the region must be prepared to fend for itself. Perhaps that's why there was a palpably greater sense of Asian togetherness last week in Shanghai, at the annual Asia Pacific Economic Cooperation forum leaders' meeting, so often more hot air than achievement. China, the host, emphasized regional economic issues, not excluding the upbeat story of its own continued reform and growth. Many there were impressed by the tone China set.

"There are those who had felt the Chinese were not serious about open markets and economic reforms," says attendee Robert Lees, secretary-general of the Honolulu-based Pacific Basin Economic Council. "But the way they handled the conference and the leadership they offered won many over. It's their solid economic policies that are enabling China to continue to grow, even while others are in the doldrums."

Not surprisingly, conventional terrorism topics swirled at Shanghai, too. America's war on terrorism garnered sympathy and support, even from Malaysian Prime Minister Mahathir Mohamad, the most outspoken Asian critic of marauding Western hedge funds and predatory currency speculators. He characterized the Taliban kind of terrorism as "a 'disease' afflicting us, and this disease is caused by those who abuse the Muslim religion for their own interests — by people who 'hijack' the religion."

Over the years, the crafty Mahathir, nearing the nadir of a long political run, has somehow managed to keep at bay extremist Islamics in Malaysia, an otherwise moderate and successful Muslim state. But he openly worries that the American bombing will radicalize even Muslims who reject the militants' shameless violence against innocents. The Bush administration, he is known to believe, must do a better job at "winning the heart and mind" of Islamic people, as he puts it. While defending America from the ridiculous accusation that the U.S. attack on the Taliban is an attack on all Muslims, he views the bombing campaign, with its inevitably hideous civilian casualties, as a serious miscalculation, no matter how heinous the World Trade Center massacre.

For better or for worse, Mahathir usually speaks his mind. In all fairness, he knows Asia and the Muslim world better than anyone in Washington. The world hopes the bombing will at least pause for the coming Muslim high holy month of Ramadan.

In fact, it would be best if it did not resume after that. For the United States is in danger of winning the battle against the terrorists but losing the larger war for the Islamic world's respect. It would be in no one's interest for this to be the ultimate outcome of Sept. 11.