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War with Iraq to Ruin Economy of East Asia

PRAVDA.Ru correspondent Andrei Krushinsky reports from Beijing

If the US launches the war with Iraq, its influence upon regional export in Southeast Asia could be destroying, a Far Eastern Economic Revue article from October 17 reads. The influential Hong Kong weekly refers to statements of governmental and business figures who gathered in early October in Kaula Lampur in the framework of World Economy Forum of East Asia. The US war in Middle East, the participants of the forum suppose, could threat prospects of growth in the whole world, though, first of al, in Asia.

Economies of Hong Kong, Malaysia, Singapore, Taiwan could return to recession, Malaysian trade minister Rafidakh Aziz warned. Special concern of East Asia is caused by two points: oil prices growth and inevitable decrease of demand of Asian export’s US consumers.

The Taiwan newspaper Taibai Times, in its article “American-Iraqi War threatens Asian Economies” quoted the report of the Singapore company ING specialized in economical forecasts. “Influence of a US short anti-Iraqi war upon dependant on the US small open economies of Southeast Asia, - the article reads, - could be fatal.” It will become especially apparent in early 2003, though already now negative influence of the Middle East crisis created by the US could be seen already now. In the report, in particular, it is said, that this is the reason, why the 2002 gross domestic product growth of Hong Kong will make only 1.4 per cent (instead of expected 2.0 per cent), of Taiwan – 3 per cent (instead of 4.5), of Thailand – 3.7 per cent (instead of 4.0), of Malaysia – about 3.9 per cent (instead of 4.3).

Will the US make a fortune on the poor Asiatic’ troubles? It hardly will, Taibai Times supposes, which published the article by Jeoffry Sax “War Could Damage Globalization.” Economical costs of this war could be great, Sax supposes, and if the US acts alone, the costs will be especially high. Eminent economist calls in question traditional conception from text books that war stimulates economy. According to Sax, even restrict war with Iraq could ruin international flaws of goods, services, investments, on which global economy prospers. Direct macroeconomic stimulus which could be the result of military expenses will be annihilated by devastation and uncertainty caused by the conflict, the economist supposes. Today’s economy is based on complicated global economical links, Sax writes, so geopolitical price of unilateral US war will be higher. The economist concludes that a fast and successful war openly supported by the UN would give a maximal chance to avoid unforeseen negative economical consequences. This is an explanation of the unseemly bustle of the Bush administration, which does not shrink from economical and political bribery to avoid possible opposition of Russia, China and France in UN Security Council.

Andrei Krushinsky PRAVDA.Ru Beijing

Translated by Vera Solovieva

Read the original in Russian: http://www.pravda.ru/main/2002/10/12/48304.html