EU REFUSES TO TURN ITS BACK ON SICK ASIA

EU REFUSES TO TURN ITS BACK ON SICK ASIA

The European Union promised last week to stand shoulder to shoulder with Asia to help it to overcome an economic crisis that may get worse before it gets better.

Leaders from 25 EU and Asian nations meeting in London agreed that Asia would recover from the financial turmoil that has swept the region for nearly a year if it implemented tough economic reforms.But, with fresh doubts emerging about the fragility of Japan's economy, they acknowledged that the crisis was likely to have a material, though manageable, impact on world growth.

''There were already signs of substantial improvements in the external accounts of some Asian countries, but the difficulties were not yet over and the need for vigilance remained,'' they said in a communique after a day of talks dominated by the upheaval.

British Prime Minister Tony Blair, the host of the meeting, was more blunt. The crisis, which has forced South Korea, Thailand and Indonesia to turn to the International Monetary Fund for bailouts worth more than $100 billion, had dealt the most serious shock to the world economy in decades, his spokesman quoted him as telling the opening session.

''Although much has already been achieved, we are not at the end of the Asian financial crisis,'' he said in televised opening remarks.

Mr. Blair said that in today's interdependent world, the 15-member EU could not afford to turn its back on Asia, which bought $204 billion of the bloc's goods in 1996.

''We in Europe have a real opportunity to show that we meant what we said about partnership. That we are not fair-weather friends, who turn away at the first sign of difficulty. But partners for the long term, ready to stick by Asia through thick and thin,'' he said.

Many economists believe the key to Asian recovery depends on the willingness of Japan, the world's second-biggest economy, to pump up demand to suck in more imports from its struggling neighbors.

A succession of government stimulus packages has failed to boost domestic Japanese demand and the chairman of giant Sony Corp. said on Thursday the economy was on the verge of collapse.

But, eager not to upset nervous financial markets, the summit held back from putting public pressure on Tokyo. European leaders went out of their way to be supportive of Japan, Mr. Blair's spokesman said.

''There was no pointing of fingers at anybody, there was a consensus that we should all work together . . . The state of Japan's economy or the need for it to be a locomotive for Asia were not mentioned at the meeting,'' a Japanese official said.

The tough talking was left to an international official, European Commissioner Sir Leon Brittan, who said Tokyo had to come up with ''permanent and substantial tax cuts'' to boost business confidence and revive domestic demand.

''I am encouraged that serious consideration is being given to this possibility, but consideration alone is not enough,'' he said.

Japanese Prime Minister Ryutaro Hashimoto said he was aware of other countries' concerns about its economy but he believed the region was over the worst.