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John Howard: Beyond APEC - Time To Act

Beyond the APEC '99 hoopla, the spin-doctoring, the back-slapping, the hand-shaking and the diplomatic niceties, will the world be a better place in which to live? John Howard speculates.

By Tuesday the APEC trade talks will be over, and resolutions will go forward to the November Seattle-round of WTO. But we need to keep in mind that the General Agreement on Tariff's and Trade (GATT), which finally lead to the WTO, has been around since 1947.

The fact is, following APEC '99 and perhaps for the last four decades, most of the world's 6.5 billion population will still live in misery and poverty. The Western nations will still be consuming a large and disproportionate share of the world's resources, probably destroying the environment in the process and growing fat and lazy on the backs of the less fortunate.

Beyond APEC, behind the scenes deals will still be done, tariff's and barriers will remain in one form or another and wars will be fought, mostly to protect Western political backsides and their supporters.

However, I don't want to imagine the future as a picture of a boot stamping on a human face - forever.

It need not, and it should not, be allowed to happen. Something's very wrong in this world of ours.

Take Kosovo. It's been deserted by a world consisting of the G-8 nations who have failed to address with urgency the necessity of the economic reconstruction of Kosovo, the rest of Yugoslavia, in fact, the entire Balkan region remains devastated by the bombing war.

For the Balkans we firstly need a multi-nation engineering authority with the following emergency tasks. 1. Clear the Kosovo territory of land mines 2. Clear the total of the River Danube for immediate transportation 3. Restore road and rail transportation 4. Restore power generation, hospitals and related facilities.

Second, a special financial facility, independent from exisiting monetary institutions like the IMF.

This should be modelled upon the success of the Reconstruction Credit Corporation of the general reconstruction after the Second World War. This facility should be built on the principles of the National Bank of Alexander Hamilton, and which was successfully implemented by Roosevelt's recovery plan of the Tennessee Valley Authority and the Marshall Plan approach for the reconstruction of Europe.

Third, would be an international private contractor's consortium which mobilised public and private vendor's for materials and engineering services for support of the infrastructure-building effort so that the programme proposal can be realised.

The credit mechanism is known and has been tested successfully several times; the technologies required exist throughout the world; the human qualifications and abilities are available.

Angola, Iraq and now East Timor, to name just three, are but other examples where urgent action is needed. This is not a question of money. This is not a question of the "donor's club. This IS a question of attitude and political will - our will.

The reconstruction of the entire Balkan region would not only be the "peace through development" solution for the nations and the people directly involved, but would jump-start the engine of the economies of the United States and Europe, and get the world's physical economy in action again.

We've heard a lot of talk about how the world's economy is getting better and the Asian crisis is all but over. Hellooooo!!!

Since the Asian crisis erupted in1997, Western governments, led by the US Federal Reserve, are printing money at the fastest rate since the disastrous Weimar inflation in Germany in the early 1920's. This, in turn helps cause a further explosion in financial aggregates - derivatives, stocks, bonds etc. The world is wallowing in debt.

The amount of highly volatile derivatives now floating around the world, for instance, is now estimated at between $US 250-300 trillion, far more than the combined Gross Domestic Product of every nation on earth.

As more money is diverted away from the physical economy, into financial speculation, the physical economy collapses at an ever increasing rate. And it is the physical economy, after all, which ultimately sustains the financial economy.

The physical economy is now plummeting. The US consumption of machine tools, for instance, which are the tools that make other tools, and therefore the best barometer of the health of an economy, fell an astounding 39% for the first five months of 1999 as compared to 1998.

US steel production for that same period fell 10% compared to 1998, even as US imports of steel fell 6%.

Part of this collapse in steel production was caused by an astonishing 46% collapse in agricultural equipment production over the same period. This is a figure of great world importance since the US produces one third of all the world's farm equipment. Company after company in the US and elsewhere are restructuring and laying off workers in there tens of thousands.

The picture is the same across the world with steel and machine-tool production plummeting. That reflects the true state of the world's economy, not the speculative share market.

We will have solved nothing if APEC free trade simply means to move production from one country to another cheaper country. That's not a recipe for success - that's a recipe for disaster. Pretty soon you run out of "cheap" countries.

No, let's all rebuild the world's infrastructure which we've so ably bombed and destroyed - that's my dream beyond APEC.

ENDS

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