The ASEAN Summit Prepares for Economic Downturn

 The 20th ASEAN summit took place last week in Cambodia. It ended after two days with a Phnom Penh Declaration, which basically reiterates the members’ commitment to establishing the ASEAN Economic Community by 2015. The summiteers were greeted in the capital’s Peace Palace by huge billboards depicting the smiling faces of the Chinese president Hu Jintao and that of the king of Cambodia. The official Chinese visit took place only two days before the opening of the ASEAN summit, leaving participants in no doubt as to the political allegiance of premier Hun Sen.

Thus during the summit Hun Sen insisted that China should be involved in the drafting of the Declaration of Conduct, a code of conduct meant to settle territorial disputes peacefully in the South China Sea. Given the reluctance of some of the participants, the drafting was not finalised on this occasion.

One of the most important decisions reached was that of increasing the emergency funding available to member countries in case of an economic downturn, from 120 billion to 240 billion US dollars, mirroring similar efforts undertaken by the EU’s political leaders with regard to the ESP. The so-called Chang Mai Initiative (CMIM) sets the rules for bilateral swap arrangements established in 2009 between the ten ASEAN members plus China, Japan and South Korea. The biggest contributors to the pool of money are obviously China and Japan, followed by Indonesia, Singapore, Malaysia, the Philippines and so on. The initiative’s authors were careful to point out that this was not meant to replace the IMF’s role in Asia – as much as they’d probably like it to – but rather to supplement it. (sources: Singapore Institute of International Affairs, Jakarta Post, Xinhua News, Huffington Post)