The participants recognized that the current economic crisis has influenced important political transitions in some parts of Asia. Indonesia was a subject of particular concern. Participants noted that countries with a functioning succession mechanism are better able to cope with the pressures of change. The participants also agreed that good governance and improved transparency would encourage a more participatory and accountable relationship between government and their people.
Oceania and Asia
Discussion on the links between Australia/New Zealand and Asia centered on the evolving dynamic nature of those links and the possibility of "multiple identities." Neither country is Asian, but both countries are part of the Asia-Pacific community, and movements of people, goods and services, investment, and ideas are increasingly linking these countries to Asia. Participants emphasized that despite the current financial and economic crisis, the Asia-Pacific remains at the top of the foreign policy agenda of Australia and New Zealand.
Williamsburg 1998 saw the South Pacific discussed for the first time. While globalization may provide niche opportunities for the countries of the South Pacific, many of the problems faced by the region - global warming, drought related to El Niño, pollution from forest fires, -- are also challenges to many other countries in the Asia-Pacific region. Participants agreed that a number of the challenges cannot be controlled or dealt with by Pacific Island states alone.
The Major Powers
Relations between the United States and Japan are going through a positive phase based on viable security alliance arrangements. Relations between the United States and China have improved following a period of stress. Increasing interactions among China, Japan, Russia, and the United States were also noted. The Asian financial crisis has occurred in a period of strategic calm. Responses of the major powers to the crisis are important to the solution to the crisis. However, if such responses are not coordinated and mutually supporting they have the potential to cause misunderstanding and friction.
Participants welcomed Japan's contribution to the IMF rescue packages for Thailand, Indonesia and Korea, as well as its various forms of bilateral assistance. The Japanese economy will remain stagnant unless appropriate initiatives are taken. This stagnation will have significant implications, given the importance of the Japanese economy as a driver of regional economic growth. A number of participants urged Japan to take steps to reflate the Japanese economy. Others noted that this would be difficult for Japan given its high level of non-performing assets, worsening public debt position and aging population. It was agreed by all that Japan's capacity to reinvigorate its economy will have a vital impact on regional recovery.
Participants agreed that China's commitment to maintain the current value of the renminbi is an essential contribution to Asia's recovery. They also noted that some of the lessons of the financial crisis might be of value to China: in particular, that systems for good financial governance need to be put in place before financial markets are deregulated.
Participants noted that the United States, if it is to respond effectively to the crisis, should continue to support the IMF efforts to restore confidence in regional economies. It should also keep its markets open, support further trade liberalization including "fast-track authority," and maintain its security commitments to the region.