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Economics and money a big concern for 1998
Copyright ) 1997 Nando.net
Copyright ) 1997 The Associated Press
(December 28, 1997 00:42 a.m. EST http://www.nando.net) - Money will be
on a lot of minds in 1998. Asians are anxious about shoring up their
humbled currencies. Europeans are debating how to give up their national
money and switch to a single currency. Russians just want to make some.
The world's perennial problems remain. Arabs and Jews enter another year
still warily talking peace. Conflict simmers and flares across Africa.
Poverty grips much of Latin America.
Yet peace, however fragile, seems to be holding in some African nations
long wracked by civil war. Economies are strengthening in much of the
Americas. Democracy tenaciously retains its foothold in the Third World.
Humankind always has been a swirl of contradictions, a producer of good
and ill, and the coming year promises more of the same.
The Associated Press asked some of its correspondents around the world
to assess what lies ahead for 1998. Here are their reports:
Asia
HONG KONG -- Many Asian countries will be preoccupied with rebuilding
their financial systems or trying to stave off further currency
collapses. They'll be closely watched by the United States and other
nations whose markets have been roiled by Asia's economic stumble.
Governments accustomed to rapid growth will have to cope with rising
unemployment and the political and social tensions it produces.
In Thailand and South Korea, which had the most bad debts and face the
deepest recessions, outraged citizens hope newly elected governments
will end the cronyism that helped produce the crisis.
No such change is likely in Indonesia, also badly hit. The national
assembly is expected to expand President Suharto's powers to declare a
state of emergency in case economic hardship produces unrest.
Japan seems to be learning from its neighbors' meltdowns and is expected
to let more indebted banks and companies shut down rather than try to
prop them up.
Hong Kong will hold its first elections under Chinese rule. Democrats
who lost legislative seats with the handover say new election rules
favor pro-business and pro-China parties.
Elections also are planned in the Philippines and in Cambodia, where
strongman Hun Sen has quashed most opposition by force.
Chinese President Jiang Zemin plans cautious moves to reorganize or
close debt-ridden state industries. His main challenge will be
containing protests from laid-off workers, making 1998 an unlikely year
for political reform or softening on dissent.
Beijing's tense relationship with Taiwan likely will be tested, if
pro-independence forces on the island gain seats as expected in
legislative elections.
Australia may face early elections because of a deadlock in Parliament
over government efforts to restrict aborigines' land rights.
By KATHY WILHELM
Europe
BRUSSELS, Belgium -- The European Union, in one of the biggest steps
toward unity in continental history, is beginning the process of joining
a dozen countries in a single currency -- an act as much political as it
is economic.
The new notes and coins won't fill cash registers until 2002, but the 15
EU leaders will decide over a long weekend in May who gets in on the
first wave and the value of national currencies against the new "euro."
Eastern Europe will join the unity act as well when EU enlargement
negotiations open with a number of former Soviet bloc nations.
Three of those nations -- Poland, Hungary and Czech Republic -- also
anxiously await ratification of their invitations to join the 16-nation
NATO military alliance. At the same time, NATO is looking for ways to
bring the suspicious Russians closer.
Bosnia will continue to preoccupy Europeans east and west. It is
virtually certain the NATO-led peace force will extend its mission past
June on the widely accepted assumption that withdrawal would lead to a
resumption of war.
Two other clouds loom in the Balkans -- between Serbs and Albanians in
the Serbian province of Kosovo and between Albanians and Macedonians in
Macedonia.
Romania and Bulgaria, left out of the first phase of NATO and EU
expansion, are striving to overcome years of bad post-communist
government. While Hungary seems to have righted itself, the Czechs face
a protracted period of economic and political instability.
Germans will decide in September whether to reward Chancellor Helmut
Kohl with an unprecedented fifth term as head of Europe's most powerful
economy. The opposition Social Democrats are moving toward a more
business-friendly posture in an effort to end the conservatives' 15-year
lock on power, but they can't decide whether to challenge Kohl with a
leftist or a moderate.
By JEFFREY ULBRICH
Russia and CIS
MOSCOW -- Persuading the people of former Soviet states, and Russians in
particular, that reform is starting to work will again dominate the
region in 1998. And stability in Russia is vital to world stability.
Ask Russians to sum up in a single word what's wrong with their country.
Many will say reform.
Ask what they mean by reform and they start ticking off the problems:
rising crime, going without pay for months, falling life expectancy.
In short, many Russians think reform is the name of the chaotic system
they have lived under since the collapse of the Soviet Union at the end
of 1991. Many people in other former Soviet republics say the same
thing.
For all the grumbling, there are signs of progress. Russia expects to
see its first economic growth since the 1980s. Individual rights are
improving. And there are signs of prosperity in a few cities.
Progress in most other former Soviet nations lags far behind, although
Ukraine hopes to see growth in 1998.
The problem, reformers say, is that decades of communist mismanagement
cannot be fixed quickly. It will take years to turn Russia and its
ex-Soviet neighbors into liberal democracies, but each year that passes
peacefully boosts chances of success.
Russia can still go wrong, and some Central Asian nations and Belarus
are sliding back to autocracy. Russia's communists and nationalists hope
they can ride people's disillusionment to power. Hardliners are hoping
for big gains in Ukraine's parliamentary elections in March.
Heading into 1998, the region is a bit more peaceful. Russia's war in
Chechnya appears ended, but Tajikistan could slip back into civil war
and there are worries of new fighting between Armenia and Azerbaijan.
By BARRY RENFREW
Mideast
JERUSALEM -- Israeli Prime Minister Benjamin Netanyahu and Palestinian
leader Yasser Arafat face critical decisions that will determine the
direction of the Arab-Israeli peace process.
Under pressure from the United States, Israel plans to offer to yield
more land to the Palestinians, but it may not be enough to win back Arab
confidence about Israel's overall intentions.
Another key test will likely be whether Israel is willing to curtail
expansion of Jewish settlements in the West Bank, which Arafat wants as
part of an independent Palestinian state.
For his part, Arafat will have to restrain Islamic militants and prevent
suicide bombings to keep Israelis in a mood to compromise.
Israel's talks with Syria are unlikely to move forward unless
Netanyahu's conservative government changes its policy and agrees to a
deep withdrawal from the Golan Heights, which Israel captured in 1967.
Iran is gaining influence in the region under the new, more moderate
leadership of President Mohammad Khatami. Saudi Arabia, Egypt and other
Arab states that gave a cold shoulder to the recent U.S.-sponsored
regional economic conference are now looking more warmly at the Islamic
regime in Tehran.
The rise of Iranian influence would likely spell an end to Washington's
policy of keeping both Iran and Iraq isolated with economic and
political sanctions.
Islamic insurgencies still bedevil two secular Arab governments.
Muslim militants in Egypt are increasingly torn between calling a
unilateral cease-fire and continuing attacks that angered many Egyptians
by killing more than 60 foreigners in 1997 and devastating the lucrative
tourism industry.
In Algeria, the government is locked in a bitter battle with religious
militants that has killed 75,000 people since 1992 and left extremists
in control of pockets of the country.
By NICOLAS B. TATRO
Latin America
MEXICO CITY -- President Clinton plans to join Western Hemisphere
leaders at April's Summit of the Americas in Chile.
Free trade is at the top of the agenda. But with Clinton struggling to
win support for that at home, Latin Americans are moving ahead with
their own free trade zones and reduced barriers to regional commerce.
The political bloodshed of the 1980s is fading into history in most of
the Americas, replaced by concerns about violent crime and the seemingly
eternal problem of dire poverty.
Most of the region's largest countries -- Argentina, Mexico and Chile
among them -- expect strong economic growth from free-market policies,
though benefits have been slow to trickle down to the poor.
Brazil was hurt by Asia's financial crisis, causing problems for
President Fernando Henrique Cardoso, who is expected to seek re-election
in 1998.
A more unusual race is shaping up in Venezuela, where Miss Universe
1981, Irene Saez, is considered a strong contender for the presidency.
She has generally won praise as mayor of Chacao in the Caracas area.
Ecuador, Paraguay and Costa Rica also will have presidential elections.
Drugs and political violence continue to plague Colombia and Mexico.
The leading candidate in Colombia's presidential campaign, Horacio
Serpa, is distrusted by Washington because of his ties to President
Ernesto Samper, accused by U.S. officials of taking drug money to win
office. But he recently said he might back legislation to let suspected
drug traffickers be extradicted to the United States.
Colombians expect no letup in attacks by leftist rebels and paramilitary
gangs that some suspect are linked to the army.
Mexico still struggles with repeated crises over the influence of drug
traffickers, and enters the year with two small rebel movements
relatively dormant but not quelled.
By JOHN RICE
Caribbean
SAN JUAN, Puerto Rico -- Pope John Paul II's historic trip to Cuba will
pose a challenge for Fidel Castro and the Roman Catholic Church, whose
relations have been frosty, if not hostile, since the 1959 revolution.
Castro's communist government hopes the Jan. 21-25 visit will enhance
its image by showing religious tolerance. One possible windfall: a papal
denunciation of the U.S. economic embargo of Cuba.
The church, meanwhile, hopes John Paul II can galvanize believers on the
island and broaden its influence among Cuba's 11 million people. Cuba
officially embraced atheism in 1962, and believers suffered for their
faith.
Cuba wants more regional trade, and Caribbean countries are prepared to
bring it back into the fold. While Washington disapproves of such moves,
area leaders grumble that the U.S. government hasn't come through with
aid and scholarships promised at a regional summit last May. Look for
some of those pledges to be fulfilled in 1998.
The region is looking for help after the World Trade Organization ruled
in favor of a U.S. complaint that Caribbean bananas compete unfairly in
Europe. Without a hand, island farmers could turn to drug trafficking,
leaders warn.
As it is, the drug trade is thriving. Squeezed in Mexico, traffickers
are turning to the Caribbean as a preferred trade route. Washington will
be fortifying its interdiction efforts in the region in coming months.
1998 may be a watershed year for Haiti. U.N. peacekeepers are gone, and
the government is paralyzed by infighting, putting the U.S.-backed
democratic experiment in the Western Hemisphere's poorest nation at
risk.
Puerto Rico marks 100 years of U.S. rule with competing commemorations
by advocates of statehood, independence and the current commonwealth
system. A proposed plebiscite on the island's status will be considered
by Congress.
By JAMES ANDERSON
Africa
NAIROBI, Kenya -- Four African giants -- Nigeria, Congo, Sudan and South
Africa -- will set the continent's tone in 1998.
Nigeria's dictator, Gen. Sani Abacha, will attempt the transformation
from iron-willed military ruler to popular politician if he goes through
with August elections.
Laurent-Desire Kabila, Congo's new strongman, will try to obtain
much-needed aid and foreign investment while attempting to keep at bay
those who call for a more open government and respect for human rights.
In Sudan, President Omar El-Bashir continues to insist his Islamic-based
government is sincere about allowing regional autonomy for southern
Sudan. But rebels, backed by neighboring countries and the United
States, will keep chipping away at northern authority.
South Africans are preparing for the day they will have to live without
President Nelson Mandela. Thabo Mbeki has just replaced him as leader of
the governing African National Congress and is widely expected to become
president in two years.
Low-level conflict continues in Rwanda, where Hutu rebels are stepping
up attempts to destabilize the Tutsi-dominated government.
Neighboring Burundi likely will see more countries drop economic
sanctions, but efforts are proceeding to coax its Tutsi regime and Hutu
rebels into some kind of coalition government.
Personal rivalries remain a threat to the stability of Charles Taylor's
fragile civilian regime in Liberia, and doubts persist the military
junta in Sierra Leone will keep its promise to return power to the
elected government it overthrew.
In Angola, Jonas Savimbi probably won't go to Luanda to fulfill his
government role under the 1994 peace accord that formally ended a
19-year civil war. But international pressure is nudging his UNITA army
toward giving up most of the territory and diamond fields it controls.
By SUSAN LINNEE
United Nations
UNITED NATIONS -- The United Nations enters the new year with the
prospect of further downsizing and downgrading as a forceful and
independent global institution.
Iraq and its refusal to cooperate with U.N. weapon inspectors remains a
thorn for the 15-member Security Council. No strong action seems likely,
however, with the the United States and the four other council powers
unable to reach a consenus on dealing with Saddam Hussein.
Secretary-General Kofi Annan's efforts to restructure the organization
have not been enough to convince the United States to pay its $1 billion
in arrears.
As a result, the United Nations is expected to finish 1998 with a $200
million deficit in the operating budget and owing $800 million to
countries that have provided troops to U.N. peacekeeping operations.
For years, the United Nations has lumbered along by borrowing from the
fund used to reimburse countries for peacekeeping expenses. But as many
peacekeeping operations close, that fund is dwindling.
Annan has warned that new sources of cash must be found unless the
United States and other major debtors start paying their bills.
At the same time, the United Nations' role as an independent player in
world affairs is clearly in decline. Annan's predecessor, Boutros
Boutros-Ghali, was denied a second term in 1996, largely because
Washington resented his independence.
Annan, in turn, has deferred to Washington and other major powers on
such issues as sending peacekeepers to the Republic of Congo or
increasing the oil revenues that Iraq can use to buy food and medicine.
Annan's supporters say he has little choice. Without resources and
rights of a sovereign state, he must serve the interests of the U.N.
membership, and especialists its wealthiest and strongest members.
But critics argue Annan must also serve as an advocate for those without
the power and the voice to influence the great powers.
By ROBERT H. REID
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Rough year in the making for Japan's economy
Copyright ) 1997 Nando.net
Copyright ) 1997 Agence France-Presse
TOKYO (December 27, 1997 11:30 p.m. EST http://www.nando.net) - When
Japan's fourth leading securities house collapsed and its president
finished his last press conference in tears, the Japanese public knew
their economy was in a shambles.
Amid shattered corporate confidence, many facing up to the bad shape the
economy is in, fear their year-end salary bonuses could be cut.
"We had one horrible news after another and many think it is not over
yet, " said Tetsu Ishijima, chief strategist at Okasan Securities.
Some analysts are tracing the current crisis back to a consumption tax
increase in April, which affected consumer spending, and has in turn led
many corporates into a life-or-death struggle.
The catchphrase in Japan these days is "financial system crisis."
The description of the local economy has become more real for many
Japanese following the recent decision by the century-old Yamaichi
Securities Co. Ltd. to declare insolvency just a week after one of the
country's top 10 city banks collapsed under a mountain of bad loans.
Economic indicators point to more bad news to come for the world's
second largest economy before any reversal of the current trend.
The Ministry of International Trade and Industry said Thursday that
industrial output in November dropped 4.1 percent from the previous
month, much more than the 2.2 percent decline forecast by the ministry.
The ministry said on the following day that retail sales in November
dropped 4.7 percent year-on-year, the largest fall since the ministry
began compiling such data in 1955.
The nationwide consumer price index in the same month fell 0.7 percent
from the previous month, a sign that stagflation may be just around the
corner. The unemployment rate has remained at 3.5 percent, matching an
all-time high.
Trading on the Tokyo Stock Exchange has also suffered with prices
plunging 3.3 percent on Friday.
Analysts are pessimistic about any measures to launch a recovery of the
economy and many businesses are looking to a rough ride ahead in 1998.
Those who remain optimistic that a recovery is possible, however, point
to Japan's strong economic growth potential and immense public savings.
They blame the country's politicians for the economic standstill and
believe the government could improve confidence.
"We still have not seen constructive policies or measures which can help
circulate money," says Hiroshi Sakurai, an economist at Kankaku Research
Institute.
The economist said that falling share prices were a fair verdict on
politicians' inability to address the economic slump and take necessary
action.
"Some economic measures did come out but the stock market, where so many
investors have their money, has responded correctly," Sakurai said.
"Those investors have eyes which cannot be deceived by mere looks of
clever policies by the government."
While most analysts and investors welcomed Prime Minister Ryutaro
Hashimoto's surprise announcement 10 days ago of a one-time income tax
cut worth $15 billion, they said much more was needed.
"The government needs to launch a system in which unlimited amount of
public funds can be injected" to rescue financial institutions burdened
with huge bad loans, independent economist Keitaro Hasegawa said.
Hasegawa said the ruling Liberal-Democratic Party's scheme announced
Wednesday to issue 20 trillion yen ($153.8 billion) worth of
government-backed bonds to help the ailing finance sector was not the
form of a public fund called for in revamping the economy.
"It is senseless to impose an upper limit for the public fund use when
there is no telling how much it will cost," Hasegawa said.
Hashimoto, he said, needs to shift his policy priority on fiscal reforms
to tackling economic troubles at hand and carrying out painful, but
healthy reforms of the finance sector.
"The policy turnabout is an absolute (necessity) as doing things at the
wrong timing would cost huge money," Hasegawa said.
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