From Volume 7, Issue 41 of EIR Online, Published Oct. 7, 2008
Asia News Digest

India Ready To Cooperate on New Financial Order

Oct. 1 (EIRNS)—Assuring domestic and foreign investors, India's Commerce Minister Kamal Nath said: "There is an atmosphere of gloom in the world economy, in the European economy ... but not in the Indian economy." He added that India could not "be insulated in the long term from such a crisis," and, "We need today a new financial order where the [rules for the] banks, financial institutions, are common" for every country. He also said India would play its part with France and the European Union in the process.

In an interview with Le Figaro, Indian Prime Minister Manmohan Singh said that India cannot remain "untouched by the financial turmoil in the U.S." Singh said the nation's capacity to finance development "will be affected and exports compromised if major economies go into recession," adding that he feared the "crisis affecting the developed countries at the moment can spread to the rest of the world." Singh said wanted India and China to be part of finding a solution. "We live in an interdependent world and the fate of all countries is related to the international financial system," he said.

Despite what the Indian authorities claimed, the financial collapse has begun to show its angry face in India. India's currency, the rupee, hit a five-year-low against the dollar on Oct. 1 before recovering, but is remaining under pressure as risk-averse investors reduce holdings of emerging market assets. India's trade deficit for the month of September jumped to $13.94 billion from the deficit of $7.19 billion a year ago.

Chinese Banker: U.S. Still Center of World Financial System

Sept. 28 (EIRNS)—China wants to cooperate with the United States on solving the world financial crisis, Guo Shuqing, chairman of China Construction Bank, said yesterday at the Tianjin World Economic Forum. Although China has suffered a good deal in the crisis, China will still emphasize that "the U.S. financial system is not the U.S.'s, but the world's," the ChinaStakes news service reported from Tianjin yesterday. "If it is good for the U.S., it is good for the world," Guo said, echoing Chinese President Hu Jintao and Prime Minister Wen Jiabao.

Jiang Jianqing, chairman of the state-owned Industrial & Commercial Bank of China Ltd. (ICBC), which is the world's largest commercial lender by market capitalization, said that China is not interested in a "fire sale" of rotten assets. He said that the "U.S. will still lead the world's financial system after it goes through the crisis." However, "there will be some changes, as regional powers and markets will become more important. 45% of China's bond market, and 22% of the world bond market are related to the U.S. market." The ICBC had bought junk, but would not again. "ICBC will take good care of its purse, and has no interest in a fire sale. We aim to be a strategic investor," Jiang said.

Pakistan's Reserves Collapse

Sept. 29 (EIRNS)—Pakistan's foreign reserves have fallen to just $3 billion, and there is real danger of a national default in the next months, Al-Jazeera TV reported today. Fighting is escalating in the region bordering Afghanistan, as the economy crumbles.

The Pakistani government has to spend the equivalent of $1 billion a month just to ensure basic food and fuel requirements for Pakistan's 165 million people, and grain and fuel prices have shot up. Prices of some commodities have gone up 100% in recent months.

Saquib Sherani, economic advisor to Prime Minister Yusuf Reza Gilani, told Al-Jazeera yesterday that Pakistan urgently needs some $7 billion to bridge the gap just to the end of the year. "It's large and we need it quite fast ... the reserves are down to covering one month of imports," he said. "We started talking in June with our development partners, but unfortunately the delay has cost Pakistan quite a bit....

"Pakistan is the central front in the war against terror, internationally, and you cannot have such a vital country go down, its economy go down the way it would without support. If this trend continues, and Pakistan is not able to get a handle on it, then certainly it will be a big, big victory for the elements that want to destabilize Pakistan."

A group of the "Friends of Pakistan" met on Sept. 26 to discuss a plan, and called on Islamabad "to undertake serious economic reform and agreed to look at improved trade access for Pakistan to their markets." The group includes Britain, France, Germany, the U.S., China, the UAE, Canada, Turkey, Australia, and Italy, plus the UN and the European Union. No financial assistance was pledged, and the group will meet again in Abu Dhabi this month.

South Korea's Lee Makes Overture To North Korea by Way of Russia

Sept. 30 (EIRNS)—After discussions with Russian leaders, South Korea's President Lee Myung-bak said he is willing to meet North Korean leader Kim Jong-il to discuss a project to link the Trans-Korean railway to Russia's Trans-Siberian railway.

"I hope North Korea will show interest in the project, which will bring lots of economic benefits to it," Lee said at his meeting with Russian journalists in Moscow yesterday. "Russia will ask North Korea first to participate in the venture. I then will meet with Kim to discuss it, if he is agreeable to the idea."

Lee said the project will help consolidate peace and prosperity on the Korean Peninsula and in Northeast Asia.

South Korea and Russia agreed yesterday to push for the envisioned rail link between the two countries through North Korea, for its eventual connection with Europe following the summit between President Lee Myung-bak and President Dmitri Medvedev in Moscow.

The two countries also agreed to build a pipeline to deliver gas from Russia to South Korea through the North by 2015 at the earliest. Under the plan, South Korea will receive about 7.5 million tons of natural gas per year from the world's second-largest producer of oil and largest source of natural gas.

"The South Korean people are deeply concerned about North Korea's chronic food shortage problem. I'm ready to help North Korea." Lee also said. "The North can rebuild its economy very rapidly if it abandons nuclear weapons and opens itself to the outside world."

Thailand Completes Step in Nuclear Development Plan

Sept. 29 (EIRNS)—The Electricity Generating Authority of Thailand has awarded Burns and Roe Asia the feasibility study contract for the construction of a nuclear power plant. The company is a subsidiary of the U.S.-based Burns and Roe, which provides a full engineering, construction, operations, and maintenance service. Norkun Sitthipong, deputy permanent secretary at the Energy Ministry, said Burns and Roe Asia had won with a bid of 180 million baht.

The company will choose a suitable area for construction, suitable technology, the size of the plant, and the appropriate electricity production capacity. It will also assess environmental impact. Construction is planned to begin in 2014-19. The ministry wants the plant to generate 2,000 megawatts in 2020 and 4,000 MW in 2021.

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