CALD-ALDE Meeting Tackles the State of the Global Economy

“It’s the economy, stupid” is an American campaign slogan that has become a political cliche, emphasizing how the state of domestic economy can influence, even determine, electoral outcomes. This phrase appears to be more relevant in an era where national economies become more interlinked, resulting in a more volatile and crisis-prone global economic situation with huge political repercussions.

In recognition of the importance of this topic, the Council of Asian Liberals and Democrats (CALD) and the Alliance of Liberals and Democrats for Europe (ALDE) brought together delegates from Asian and European countries in Kuala Lumpur, Malaysia on November 12-14, 2010 to analyze the current state and future prospects of the world economy.  Hosted by the Parti Gerakan Rakyat Malaysia (PGRM), and with the support of the Friedrich Naumann Foundation for Liberty (FNF), the gathering carried the theme “Reinvigorating the Global Economy: Successes and Lessons from Asia and Europe.”  The meeting aimed to: 1) assess the state and prospects of the global economy in the aftermath of the recent global financial crisis; 2) discuss the repercussions of the various policies adopted by governments of European and Asian countries in response to the crisis; 3) understand the issues and problems associated with global economic governance and international trade and how to address them; 4) examine the different proposals to prevent, lessen the possibility, or mitigate the effects of an economic crisis of such scale in the future; and 5) identify specific policy recommendations, drawing from the experiences of countries in Asia and Europe, on how respond to global economic crises and how to promote sustainable and equitable economic development.

The biennial meeting was formally opened by CALD Chair Dr. Rajiva Wijesinha, Member of Parliament (MP), and FNF Regional Director for East and Southeast Asia Dr. Rainer Adam.  Both warmly welcomed the participants to the meeting and expressed confidence that the gathering would be a productive and insightful one.

The meeting’s keynote addresses were delivered by Y.B. Senator Tan Sri Dr. Koh Tsu Koon, PGRM President and Minister in the Malaysian Prime Minister’s Department and Hon. Niccolo Rinaldi, Member of the European Parliament (MEP), and ALDE Vice President.  In his address, Dr. Koh related the different measures that Malaysia adopted in the aftermath of the 1997-98 Asian financial crisis.  These policies, according to him, assisted the country in weathering the recent economic crisis.  He then made the important point that the free enterprise system is a much more workable system than the controlled economic system.  The former, he pointed out, rewards and recognizes individual initiatives, which, in turn, encourages everyone to keep on working for the growth of the economy. He recognized, however, that this system might lead to excesses, and that these excesses need to be managed. He posed the question regarding the extent of state intervention needed, especially in a multi-ethnic society like Malaysia where economic disparity among groups persists.  He concluded by saying that within the context of a free enterprise system, the challenges are how to manage the economy, how to be an inclusive society, and how to sustain the balance between the two. Hon Rinaldi, in his keynote speech, shared his hope that something significant would come out of the meeting, particularly in terms of sharing of experiences in addressing the crisis.  CALD and ALDE, he noted, are part of the network with enough goodwill to form a coalition to respond to the economic downturn.   He emphasized that the response should be international because a local one might further lead to global anarchy.  Hon. Rinaldi reaffirmed his belief that free trade is a way to boost economies and get them out of the crisis. He noted, however, that one of the core discussions in the meeting should be on the ethical dimension of markets. He observed that while the crisis has affected millions of innocent people, it has also been viewed as a punishment to the financial class for its selfishness and lack of moral standard. He said, “Profit is essential for the people,  but we cannot have profit without justice and we cannot have justice without freedom.” He ended by saying that liberal democrats should struggle to achieve both economic justice and economic freedom, and the meeting, he hoped, would help the participants in finding the right balance.

After the keynote addresses, the first session tackled the policies adopted by Asian and European governments in addressing the crisis.  Chaired by Ms. Jayanthi Devi Balaguru of PGRM, the session’s speakers included the following: Hon. Florencio “Butch” Abad, Philippine Minister of Budget and Management and former CALD Chair; Hon. Toine Manders, MEP; and Hon. Nataphol Teepsuwan, MP and Director General of Democrat Party (DP) of Thailand.  Hon. Abad’s presentation highlighted the experience of the Philippines during the global economic crisis.  Noting that the Philippines was considered as one of the least affected countries by the crisis, he explained that this was because the country’s structural and even political issues prevented it from participating fully in the world market arena. He then presented a global and regional outlook, which essentially argued that domestic and international reforms are needed in order to prevent the “worst case scenario of another possible global economic meltdown.”  Citing the  Philippine case, he noted that approaches based on good governance and other liberal principles are now being implemented by the new government.  The policy direction of the administration, he observed, seemed to point to the continuance of capital inflow (with the caveat that government intervention should be considered in times of volatility), use of currency appreciation to settle foreign debt, and improvement of the business environment. Finally, he emphasized the importance of “integrity relative to the soundness of structures, on having systems that are complete, efficient and effective, improving mechanisms to allow us to be fully vigilant of how a possible new order will play out globally and domestically.”  Hon. Manders, in his presentation, brought down the highly technical discussion of the state of global economy to the personal level.  Citing his own life experiences, he noted that the economy, simply put, is the means for an individual to live the life that he wants. This, he said, would only become possible in an atmosphere of freedom and possibilities – and the state plays a role in ensuring that this condition is realized.  He also mentioned a simple but relevant observation that “the higher the level of prosperity, the greater the greed.”  Citing numerous examples from the recent economic crisis, he made the argument that greed is the root cause of the collapse of the global economy. In conclusion, he said that the worst is not yet over for the global economy, so mechanisms still have to be put in place in order to lessen the possibility of mismanagement and abuse.  The last speaker of the session was  Hon. Teepsuwan, who claimed that “if all of us can strengthen the national economy, there would be less problems in the global economy.”  Using Thailand as a case study, he identified some measures that could strengthen the national economy.  These included: 1) stimulating the economy by making the necessary state investments, particularly in the fields of education and health care; 2) improving the budget process to guarantee greater sensitivity to the needs of people; 3) reforming the tax system to balance taxation of income and taxation of wealth; 4) strengthening of the welfare system; 5)  addressing governance and corruption issues; 6) abolishing monopolies and preventing processes which inhibit competition; and 7) encouraging exports. Like Hon. Manders, he also adhered to the conclusion that the global economic crisis is far from over, so he recommended that the strategy of countries should be on how to prepare themselves for future crises.  In this regard, Hon. Teepsuwan reiterated the need for countries to come together, share experiences, and formulate an integrated approach to respond to the volatility of the global economy.

The first session was followed by a special session on Burma, where U Aung Moe Zaw, Joint General Secretary of the National Council of the Union of Burma (NCUB) gave a briefing on the recently concluded elections and on the impending release of democracy icon, CALD honorary member and Nobel Peace laureate Daw Aung San Suu Kyi.  During the open forum,  session chair Mr. Moritz Kleine Brockhoff of FNF Malaysia, Cambodia and Burma asked the delegates if a joint CALD-ALDE statement on the possible release of Daw Aung San Suu Kyi would be desirable.  The proposal received a positive response.  Hence, upon receiving the news that Burma’s democracy icon was released that night, a joint statement was subsequently drafted, discussed and approved by the body the following day.

The second session, chaired by CALD Founding Member Ms. Maysing Yang, looked at the importance of world economic governance in responding to the crisis.  Mr. Willem Vander Broucke, Head of Unit, ALDE Staff was the first to speak followed by CALD Secretary General Dr. Neric Acosta.  Mr. Vander Broucke started by saying that the crisis gave “new momentum to the cooperation between Europe and Asia to promote growth, restore market confidence, strengthen the financial system, reform the financial sector and the international financial institutions.”  Emphasizing in particular the increasing economic might of Asia, he said that it is important to reform the shareholder and voting structures of multilateral agencies to reflect the power of emerging markets.  The European Union (EU), he said, has been supportive of this process, as evidenced by its espousal, through the G20, of the reform of International Monetary Fund (IMF) and World Bank (WB).  Dr. Acosta, in his speech, highlighted the challenges confronting many countries in Asia which were made more complicated by the economic crisis.  He framed his presentation by using the “5Is” – inequality, instability, increase in population, institutional deficiency and integration.  With regard to inequality, he said that while Asian countries witnessed phenomenal economic growth in the past decades, the divide between the haves and the have-nots in many countries has persisted, and the recent economic crisis further deepened and widened that gap.  On instability, he observed that the region, to this day, is marked by insurgency, terrorism, human and drug trafficking, natural disasters flowing from climate change, among others, which affect the capacity of Asian countries to cope and respond to the crisis.  This capacity, he added, was further hampered by significant increase in population – the demographic bulge – and its attendant impact on poverty alleviation, employment, and social welfare programs. In Asia also, the need for strong institutions based on integrity, efficiency, and the rule of law was a perennial problem. For this reason, Dr. Acosta noted that until these institutional deficiencies are addressed,it would be difficult to build institutions at both the regional and global levels.    This, in turn, impacts on integration, which, he argued, should be tied to basic democratic principles.  He concluded by saying that, “We cannot move our society forward without a bedrock of democratic values and processes.”

Mr. Jules Maaten, FNF Philippine Office Country Director, chaired the third session on international trade, where Hon. Jan Mulder, MEP and PGRM’s Mr. Ng Lip Yong served as speakers.  Hon. Mulder highlighted the importance of international trade by relating it to the origins of the EU.  He said that one of the reasons for the establishment of the EU’s predecessor, the European Coal and Steel Community (ECSC), was to lessen the possibility of war among European countries, particularly Germany and France, by making them economically interdependent through their trade relations.  The prevention of war, according to Hon. Mulder, remains to be one of the great successes of the EU.  He noted, however, that the organization still has to address a number of issues such as the the completion of the internal market, the emergence of protectionism, and difficulties posed by the membership criteria on applicant countries.  Mr. Ng, in his presentation, provided a  backgrounder on Asia’s GDP growth. He argued that “although Asia’s fundamentals remain healthy, the region is vulnerable if a sharp slowdown is to happen in the rest of the world.”  Nonetheless, he said that Asia is expected to outperform other regions and to have a greater share in the world economy in the future. The next part of his presentation discussed the promotion of inter-regional trade between Asia and Europe. He argued that business-to-business and people-to-people contacts have been the critical drivers of international trade, not government-to-government relations.  He then described the situation of Malaysia, geographically located in Asia but with strong ties with its former colonial master, the United Kingdom. The country, for this reason, bridges the West and the East, laying the groundwork for its trade links with European countries.  In the last part of his presentation, he assessed the global context of trade, concluding that both the US and China, as the world’s two biggest economies, should undertake some reforms in order to stabilize the global economy.  According to Mr. Ng, the US should “stop spending money that it does not have”, while China, on the other hand, should concentrate on its domestic economy and transform itself from being the “factory of the world” to being the “market of the world.”

The last session addressed the issue of how seemingly competing alternatives of economic development, social cohesion and environmental preservation could be achieved.  Chaired by Mr. Lambert Ramirez of Liberal Party of the Philippines, the session included in its roster of speakers Hon. Mulder and Dr. Wijesinha. Citing the experience of Europe, Hon. Mulder emphasized the importance of free enterprise in promoting economic growth.  He pointed out, however, that this has to be accompanied by strong support for education, healthcare, unemployment insurance and other and poverty alleviation measures. When the economic crisis struck, Hon. Mulder noted that this strong social welfare system was put into question. Dr. Wijesinha, in his presentation, focused on the experience of Sri Lanka, noting how the country weathered both the international and domestic crises in the period 2007-2008.  In particular, he mentioned the successes of government policies on eradicating terrorism, supporting agriculture and regional development, addressing inflation  and financial volatility, promoting education and human resource development, among others.  These, according to him, explain the relatively better economic standing of Sri Lanka at present.

In his synthesis of the meeting, Dr. Acosta expressed satisfaction that the meeting adopted a comparative framing of issues, and emphasized the importance of collaboration in addressing problems in the global economy.  He summarized the meeting by identifying the following themes or tensions: 1) the need to see what power really means in the backdrop of struggling economy, particularly how power is used and restrained to ensure fairness; 2) the importance of striking a balance between promoting (whether in terms of investments, property rights, tourism, etc.) and safeguarding (i.e. sovereignty, patrimony, natural wealth, human resources, among others); 3) a recognition of the importance not only of economic growth, but of sustainable and equitable economic development;  4) the need for business-to-business, people-to-people, party-to-party engagements in addressing the crisis; and 5) the reality of the “tyranny of the urgent” in this is an era of great unpredictability.    At the end of the day, he said, liberals need to return to institutions and processes in order to address the abovementioned tensions.  In conlusion, he quoted the late Filipino martyr and liberal, Senator Benigno “Ninoy” Aquino Jr., who once said, “Life at best, I have learned, is second best. Because it is always going to be about managing the tensions to seek the compromise between what is the ideal and what is possible.”

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This post was written by CALD