- The Washington Times - Friday, February 1, 2002

NEW YORK European, Latin and Asian economies no longer can depend on the United States for expansion, but must take their own steps toward stability and growth, several speakers said yesterday at the World Economic Forum.
Economists, business leaders and other analysts said that in the increasingly fragile time, foreign economies also must resist blaming their problems on a softening U.S. economy.
"The world has to figure out a new way to grow," said Stephen Roach, chief economist for Morgan Stanley. "America can't do all the heavy lifting any longer."
He warned that with a low savings rate and "massive debt," the anticipated U.S. recovery "will be shaky at best."
"The U.S. economy is going to continue to underperform, the dollar will fall, and that puts even more pressure on Japan and Germany and other engines," Mr. Roach said.
Economists, business and political leaders, and academics who dodged a thick blue line of police officers and a few isolated groups of protesters engaged in discussions about the future of money, religion, technology and social welfare on the first day of the World Economic Forum.
The annual meeting, held in an isolated Swiss village for the last 31 years, moved to New York this year partly to show solidarity with the city after the September 11 terrorist attacks.
But organizers also acknowledged that the Swiss government's reluctance to pay millions of dollars to guarantee the security of participants against violent anti-globalization protesters also contributed to the one-time move.
About 4,000 police officers one-tenth of the New York Police Department's uniformed force, were deployed for the five-day forum.
Hundreds idled throughout midtown redirecting pedestrians and increasingly frustrated drivers. Scores of police were visible guarding Gaps, Starbucks shops and other chain stores that have drawn protesters' rocks and spray paint in previous demonstrations.
Five women were charged with trespassing and reckless endangerment in lower Manhattan for climbing to a building rooftop and unfurling a banner that read, "Bush and big biz agree that people with AIDS drop dead."
Police also reported vandalism at several chain businesses around Manhattan. A man was arrested for defacing the front door of a Starbucks coffee shop, police said.
About two blocks from the Waldorf Astoria, where the meeting is being held, several hundred followers of the Chinese meditation sect Falun Gong which is banned in China did slow-motion bending and stretching exercises in a cold drizzle behind a police barricade where they hung a banner saying "Help Stop State Terrorism in China."
Nearby, a dozen environmentalists, outnumbered by reporters and camera crews, chanted, "WEF, you are the weakest link goodbye."
Hundreds of police, private security guards and plainclothes diplomatic protection officers were stationed in hotel lobbies, restaurants and other places frequented by high-profile, high-net-worth visitors.
Former Mayor Rudolph W. Guiliani proudly told reporters yesterday that the World Economic Forum was nothing new to New York, which had hosted U.N. General Assembly summits for years.
Inside the hotels, an estimated 3,000 participants raced from one seminar to the next, gorging on such intellectual fare as "Artificial Intelligence: Meet the New Machine" and "Terrorism is Not the Sole Challenge to International Security."
Despite the variety of subjects offered, the economy and business seemed to dominate discussions.
Jacob Frenkel, president of Merrill Lynch International, said the European economy "is struggling with the sins of the past," such as government overspending on social benefits and business subsidies.
Klaus F. Zimmermann, president of the German Institute for Economic Research, concurred.
He said that in his view the U.S. economy is fundamentally strong and should recover by the end of the year, primarily because of strong productivity and expanding monetary policy.
"But Europe is not as flexible, more dependent."
The Asian economy is also in trouble, say participants, who blamed Japan's failure to clean up its banking and financial structures.
"Until Japan deals with its financial structures, no recovery is possible," Mr. Zimmermann said.
Yotaro Kobayashi, chairman and co-chief executive officer of Fuji/Xerox Co. of Japan, said his country's problem is structural, but praised the Koizumi government for gently devaluing the yen to stimulate exports and trade.
"The Bank of Japan has been very careful, and right now the [devaluation] is within a permissible range," Mr. Kobayashi said. He said that retailers are starting to feel the pinch, and said he would not want to see the yen fall further.
The yen yesterday was trading at 134.9 to the dollar.
He said Japan's troubles were afflicting other Asian nations.
Roberto Civita, chairman and chief executive officer of Abril Group, a Brazilian publisher, said American investors and venture capitalists, with their single-minded view of the bottom line, had hurt long-term growth potential.
After the attacks, he said, "The United States has stopped believing that the be-all and end-all is the quarterly earnings of the stock market. This is healthy for the planet, a return to what I call reality."
But he saved his harshest words for the government of Argentina.
"I think my friends and neighbors have done a very bad job of managing their economy," Mr. Civita concluded. "This was one of the healthiest economies in the world, and it's gone [south] with bad management."
Fan Gang, the director of the China's National Economic Research Institute, said China's economy is strong, but may feel the impact of Japan's falling yen. But he also noted that sustained domestic consumption and a strong foreign investment likely would prevail.

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