Financial Crisis: North Asian states summit

On the sidelines of international meetings, a three-day trilateral summit, sponsored by Japan, among the North Asian nations, former enemies, Japanese Prime Minister Taro Aso, South Korean President Lee Myung-bak and the Chinese Premier Wen Jiabao, following the global financial crisis, was held in the southern city of Fukuoka in Japan. The leaders of three of Asia's biggest economies met in Japan to discuss measures to reduce the damage caused by the global financial crisis. The trio agreed to boost trade and greatly increase currency swaps. They have vowed to work more closely together to reduce the damage caused by the global financial crisis...

China, Japan and South Korea are closely intertwined economically and their leaders regard co-operation with their neighbors as a vital means of lifting the East Asian region out of its current financial malaise. All three countries - which account for 75% of the region's economy and two-thirds of its trade - have announced major individual economic stimulus packages in recent months. They are planning to increase the amount of money they swap between them through the Chiang Mai Initiative on a permanent basis - a move which should benefit South Korea especially, as the won has lost a third of its value since the start of the year.

The nations believe the swaps will prevent a repeat of the situation 11 years ago when sudden slides in currency values triggered a major financial crisis in Asia. The three men also called for an urgent injection of capital into the Asian Development Bank. Ahead of the talks, the South Korean central bank announced in a statement that it had increased its bilateral swap facility with the Bank of Japan to $20bn (£13bn), and a similar facility with the People's Bank of China to $26bn.

At a separate meeting on Dec 13, the South Korean and Japanese leaders condemned North Korea for showing an "uncooperative attitude" in the latest round of six-party talks aimed at dismantling its nuclear disarmament program in Beijing this week. The three leaders hope to discuss ways they can co-operate in overcoming the economic crisis which has left Japan in recession and hit growth in China and Korea.

  Legacy and present

A strong candidate for the notorious UNSC with the support of the USA and European capitalist powers, Japan still struggles with WWII legacy as Japanese attitudes to the war has become a spot on international arena, after Japan's air force chief was sacked over an essay in which he appeared to question his country's accepted role as an aggressor in World War II. From being an aggressor, Japan has now painted itself as a victim since victim syndrome has a lot of sympathy the world over especially with advent of terrorisms. Possibly under pressure from USA, Japan expressed remorse for its wartime actions in 1995, and followed with another apology a decade later. But the entry that won General Toshio Tamogami an essay competition described Japan as a victim.

Defense Minister Yasukazu Hamada said it was improper for the general to publicly state a view clearly different from that of the government. The essay said Japan had only occupied China to secure rights it had obtained under various treaties. It also portrayed Korea under Japanese rule as prosperous and safe. Disputes over wartime history often stir tensions between Tokyo and Beijing, but his swift dismissal should ensure no lasting damage is done to relations between Japan and its neighbors.

The new Prime Minister, Taro Aso, is himself a conservative nationalist. He has praised Japan in the past as a unique example of a nation with one culture, one language, and one ethnic group. He has also angered China by describing it as a considerable threat. Yet that perception is common across the Far East and South-East Asia, where Beijing's sharply rising military spending is a cause for disquiet.

In fact, as prime minister, Aso has courted both China and South Korea, offering to host a three-way summit in the southern city of Fukuoka. Comments such as those made by Gen Tamogami suggest readings of history, widely seen as revisionist, persist in Japan. Black vans known as gaisensha are a familiar, if fairly infrequent, presence on the streets of Japanese cities. The gaisensha remain a fringe phenomenon, at the crossroads of extreme nationalism and organized crime. The Yasukuni shrine, in the heart of the city, is an altogether more stately affair than the gaisensha. Contrary to popular belief, the shrine only honors a handful of war criminals, among those millions of Japanese war dead.

Aso took office in late September in hopes of leading the long-dominant ruling party into elections, but his approval rating has rapidly fallen as the world's second largest economy falters Aso was expected later Friday to unveil a bigger package to help Japan weather the global financial crisis. The sharp-tongued prime minister has also lost support by making a series of offensive remarks, including criticizing the elderly in the rapidly greying country for not staying physically fit. The opposition last year forced a temporary halt to the Indian Ocean mission by refusing to vote on it in the upper house. This year, the opposition offered to vote the bill down -- effectively letting it pass -- in return for Aso calling early elections or at least taking quick action on a new supplementary budget. However, Aso has indicated he is in no hurry to call elections or start debate on a new budget, which is separate from his emergency package.

China Focus

Earlier this week, China revealed that its exports had fallen for the first time in seven years. However, it still reported a record monthly trade surplus. Beijing launched a 4 trillion yuan ($586bn) stimulus plan last month, and on Wednesday pledged to boost public spending and cut taxes. South Korea , the hardest hit by the financial crisis, meanwhile offered $130bn of guarantees on foreign-currency borrowing and liquidity to its banks. Japan is also trying to put aside its past differences with China, partly because it was trade between them that helped pull Japan out of its last prolonged recession during the 1990s. Ahead of the talks, the South Korean central bank announced in a statement that it had increased its bilateral swap facility with the Bank of Japan to $20bn, and a similar facility with the People's Bank of China to $26bn.

Japan's parliament on 12 December approved a one-year extension to a naval mission backing US-led operations in Afghanistan, offering a welcome success to beleaguered conservative Prime Minister Taro Aso. "This is a great global recession which comes once in a hundred years," Aso said, but by taking appropriate measures without any delay, we can minimize the impact". The Japanese government increased by 23 trillion yen ($255bn) its stimulus plan, more than half of which will be used to bring stability to the financial markets. It follows a 27 trillion-yen package in October.

The lower house, where the ruling coalition holds a commanding majority, used its power to approve the bill by overriding the opposition-led upper house which voted down the bill earlier in the day. The mission, which was due to expire in January, provides fuel and other logistical support on the Indian Ocean to the US-led coalition. Aso supports a more active security role for Japan, which has been officially pacifist since its defeat in World War II. The opposition, which is rising in the polls, says Japan should not be part of "American wars." Tsuyoshi Takagi, a lawmaker of Aso's Liberal Democratic Party, said in parliament, "Japan must continue its part in the war on terror and continue the refueling mission so as to assume its responsibilities as a member of the international community."

The trio talks focused on boosting trade and increasing currency swaps. They also discussed security issues and climate change. Officials in Tokyo say the summit marks a "significant" development in Japan's relationship with its two neighbors.

China's Wen Jiabao called the summit, the first of its kind, a "milestone". He said such co-operation would "have real significance" as the crisis impacted on economies around the world.  In a joint statement, the leaders said that Asia was "expected to play a role as the centre of world economic growth in order to reverse the downward trend of the world economy. 

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Yours Sincerely,

DR.ABDUL RUFF Colachal

Columnist & Independent Researcher in World Affairs,

South Asia.