The objective of the ASEM process is to build a new comprehensive partnership among equal partnership, based on the promotion of the three pillars of political dialogue, the deepening of economic relations and the reinforcement of cultural links between East Asia and the EU. While overshadowed by the financial turmoil in East Asia at the second ASEM Summit in London in 1998, the third ASEM Summit in Seoul will have the task of setting out the key perspectives and priorities which Asia and Europe might address in the first decade of the new century.
With this in mind, this study aimed at evaluating the potential role and developing the desirable future path of ASEM in enhancing Asia-Europe partnership. In the political dialogues, ASEM efforts should focus on issues of common interest with a view to enhancing mutual awareness and understanding between partnership, particularly in areas where our views may differ such as 'human rights' and 'good governance'. Despite initial difficulties and confrontations, 3rd ASEM Summit is expected to forge a new equilibrium for political dialogue based upon mutual respect.
In the economic fields, ASEM efforts should focus on strengthening the economic partnership between the two regions, with a view to strengthening our economic and business relations, promoting infrastructural assistance to information networks, and contributing to open multilateral trading system
As for the future of ASEM process, there seem to be three broad scenarios: 'Status quo scenario', 'APEC type evolution scenario', and 'Hybrid scenario.' Under 'Status quo scenario', its agenda will be aimed primarily at facilitating information networks. Concerning the second, a more forward-looking strategy for ASEM would be aimed at achieving a goal where trade liberalization measures are matched with a non-binding regional investment initiative such as those in place in APEC. Under 'Hybrid scenario', ASEM can be used as a useful vehicle to facilitate information networks and to reinforce open multilateralism at the same time. A more plausible scenario for ASEM Ⅲ may well be somewhere in between the 'Status quo scenario' and 'Hybrid scenario'. However, in the longer term, the future of ASEM process will be somewhere in between the 'Hybrid scenario' and 'APEC type evolution scenario'.
In the cultural and intellectual field, ASEM should focus on promoting enhanced contact and strengthened mutual awareness between the people of the two regions, with a view to helping civil society in the two regions better appreciate. As regards education, the key priority should be to enhance our contacts and exchanges in the fields of education, including student and academic exchanges.

The choice of exchange rate regime in developing countries carries critical importance to their self-protection from speculative attacks and currency crises, as well as achievement of long-term economic growth. Deep integration of developing countries to the global economy makes it difficult to keep the intermediate regime between the two polar solutions. Shifting to more extreme choices between free floating and credible institutional arrangement (monetary union, currency board, or even dollarization) is recommended for many developing countries.

This paper examines the viability or appropriateness of two polar solutions, especially free-floating regime for developing countries. To do so, We investigate the Korean financial markets, which provide interesting case, utilizing multivariate GARCH and various VAR (Vector Auto-Regression) tools. We find that the slightest sign of either weakness of domestic economy or fragility of international financial markets might cause foreign investors to flock out of Korean financial markets and result in inviting another turmoil in Korea. In a limited sense, it is fair to say that the current transitory period from managed to flexible exchange rate regime is a very vulnerable period for Korean economy, and we need to be well equipped to another near international financial turmoil.

1. ASEM has, in regularly bringing together East Asian countries and a consolidated group of European partners, contributed to the emergence of a new voice on the global scene, the voice of East Asia. This has important geo-strategic implications as it will permit Asia's position to be strengthened through a partnership with Europe in accordance with a new model of equal partnership.

2. ASEM was not originally conceived as a bloc-to-bloc dialogue process, but it has taken on, more and more, an inter-regional character.

3. Hence, while ASEM should by nature be open to Asia as a whole, and Europe might in future be enlarged, there might be some value in consolidating ASEM first as a Western Europe-East Asia forum, at least for the time being. Nevertheless, ASEM could consider opening further dialogue avenues with countries which might become partners in the future.

4. ASEM should remain an informal process where no decisions have to be taken, nor treaties negotiated. It can be a useful forum to build consensus between East Asia and Western Europe on political dialogues and global issues such as the New Trade Round, international financial architecture, drug trafficking, money laundering, and the environment.

5. Non-institutionalisation in the form of a loose and informal process does not necessarily mean an absence of organisation. The function of a lean and effective secretariat along the lines suggested in the Asia-Europe Vision Group's report, in addition to existing political co-ordination mechanisms, might not be inconsistent with the principles of adding value and avoiding duplication of initiatives. Initiatives such as the ASEM Trust Fund or ASEM Educational Hubs should be given due recognition, and it can be seen that through this loose and informal process, Track I may give birth to various institutions and build infrastructure to promote exchanges between Europe and Asia.

6. A common agenda is not given, but must be built through a continuous effort. Issues such as the challenges of globalisation, the necessity of state and corporate reform, human rights, good governance, and the role of civil society should be discussed. An annual ASEM Roundtable on Globalisation was proposed as a useful vehicle to promote such discussion.

7. Parliamentarians, the media, and NGOs should be more actively associated with the ASEM process, whether through Asia-Europe Foundation (ASEF) or other initiatives. The role of the ASEF should generally be fully acknowledged at ASEM III, and its mandate should be renewed, backed by the necessary financial commitment.

8. In the economic sphere, ASEM does not yet have any binding obligations. However, it is evolving through peer pressure and discussions on trade and investment liberalization help to build an Asian-European consensus in support of free trade and open economies, as well as international cooperation and globalisation with a human face.

9. Political issues should not be conceptualised too narrowly. Despite initial difficulties and confrontations, it is hoped that ASEM III will forge a new equilibrium for political dialogue based upon mutual respect.

This report commemorates 10 years of Korea-Russia economic cooperation. The purpose of this report is to estimate and suggest analysis of the main ideas of the economic program of a new Russian government against a background the political and economic situation in Russia. In its conclusion, this paper offers prospects for the fundamental direction of Korea-Russia relations in light of Russian economic development.

Different levels of corporate leverage are used in this paper to help explain the very wide range of output adjustment across east Asia in response to the 1997-98 crisis. In the model developed here, highly leveraged firms facing a cutoff of capital inflows are threatened by bankruptcy. These firms respond by eliminating investment and selling their capital goods--at a discount--to try to stay afloat. Lower investment and wasteful capital sales shrink the aggregate capital stock, trigger deflationary pressures, and contract overall output. The available data are consistent with the assumptions and predictions of the model.

The objectives of the APEC Forum on Shared Prosperity are to exchange views on the current status, strategies and future directions of the structural reforms and liberalization, pursued by individual economies in overcoming the economic crisis so as to explore ways to coordinate the policies of the member economies, and present policy directions for sustainable economic growth in the Asia-Pacific region.

The Korean government plans to report the conclusions of the Forum to the next APEC Leader's and Finance Ministers' Meeting as a basis for future discussions and hopes that they will provide invaluable foundations for various APEC Meetings in the future.

The North American Free Trade Agreement (NAFTA), after six years of existence, has left its mark and brought tremendous change to both Mexico's economy and its politics. There are cases both for and against NAFTA in terms of its performance and impact. Arguments on the positive side are that, first, NAFTA has contributed to the transformation of Mexico into one of the major traders in the world. Second, NAFTA paved the way for the prompt assistance of the U.S. when Mexico fell into financial crisis at the end of 1994. Third, NAFTA provided Mexico with an attractive investment environment and foreign direct investments increased from $4.4 billion in 1993 to $12.5 billion in 1997 and $10.2 billion in 1998. The trade expansion and investments surge absorbed labor.

Others, on the negative side, however, argue that Mexico's socioeconomic situation is still far short of real improvement. First, the continuous readjustments in the manufacturing sector produced an increase in unemployment for unskilled workers who were then only later absorbed by the informal employment sector, which has adversely affected the accuracy of employment and job statistics and has also worsened labor conditions. Second, the Mexican economy has increasingly become further exposed to external shocks. Third, the gap between the rich and the poor has widened, and this has resulted in providing critical momentum for increased sociopolitical instability.

The timing of the establishment of NAFTA overlapped Mexico's ongoing unilateral trade liberalization and the sharp devaluation of the Mexican peso amid the financial crisis. This further complicates the possibility of offering an objective evaluation of NAFTA's effects in Mexico. Many of the "positive" effects largely resulted from trade liberalization and the peso devaluation. On the other hand, most of the "negative" effects occurred prior to the implementation of NAFTA or would have happened, whether NAFTA existed or not, under the ongoing liberalization and globalization environments. Both sides' evaluations of NAFTA tend to be exaggerated due to the politicization of the NAFTA issue and the practical difficulty in distinguishing NAFTA's effects from those caused by other factors.

On the political front, the politicization of NAFTA, and other reform issues, by opposition political parties and other actors on the one hand, and the depoliticization of Zedillo's economic policy on the other hand, quite naturally resulted in the political defeat of the ruling party in the July 6, 1997 mid-term parliamentary and local elections. The result may be seen as contributing to the further democratization of Mexican politics as well as to the decentralization of power. However, whether the political realignment that took place after the 1997 elections has been beneficial, or at least still neutral, to the continuity of economic reform is quite uncertain. The government has to negotiate with the opposition in the Congress on the details of economic policies without global consensus, and deal with traditional governors and local caciques (power brokers) to meet decentralizing challenges for the purpose of coordinating economic policy at the national level. This may bring about deadlocked economic policies in Congress, and accelerate the already existing accountability and transparency problems at the state level.

There have been many calls for financial cooperation at the regional level since the Asian financial crisis broke out. However, there has been, as of yet, no tangible cooperative framework for regional financial cooperation among the three key countries in Northeast Asia: China, Korea, and Japan. Hence, the discussion on regional financial cooperation has not entered into the stage of practical and specific policy formation. The three countries engage in dialogue only through various broad Asia-Pacific channels such as ASEAN+3, the Manila Framework, and APEC. This study is a precursor to the inception of an enhanced cooperative body that will bring forth concrete plans for practical financial cooperation among these three Northeast Asian countries. The study deals extensively with the necessity for financial cooperation in the region, long-term visionary goals, and the action agendas for execution of this financial cooperation in stages.
Financial cooperation in Far-East Asia does not only have implications for crisis prevention and management. It can also lay the foundation for establishing a financial infrastructure that promotes regional trade and investment, strengthens linkages in the East Asian financial markets, develops the regional capital markets, and reinforces the regional financial system.

Furthermore, in an effort to stabilize the foreign exchange market, where contagion is most rampant, we should explore the feasibility and viability of a systematic device for stemming vulnerable intra-regional exchange rate fluctuations. The framework for successful regional financial cooperation is as follows: first, there should be an increase in trade linkages through the expansion of intra-regional trade and investment; second, there should be a consolidation of the financial linkages in the region; third, there is a need for minimizing regional exchange rate instability and contagion effects; and finally, there is a need for fostering crisis management capabilities to resolve problems such as illiquidity in emergency situations.

With respect to the visionary goals of long-term regional financial cooperation, it is first essential to draw a road-map for monetary cooperation. In this regard, the issue of a single Asian currency or a regional monetary arrangement could be worthy of consideration. However, practically speaking, the current economic divergence in this region would appear to preclude the sort of policy coordination that would be required to launch a regional monetary arrangement. In addition, a single currency implies a degree of political cooperation that is not currently conceivable in Northeast Asia. Nonetheless, more active macroeconomic policy coordination would contribute to the stability of exchange rates by mitigating the macroeconomic instability accruing from external shocks or by stemming competitive devaluation. Instead of pursuing a complete and consolidated monetary arrangement, a broader form of cooperation would be able to sustain the existing and various exchange rate systems and to consider adopting intermediate regimes in between the two extremes; floating and fixed.

Second, it is crucial to establish a system that will prevent the recurrence of a crisis. At the national level, each country in the region must maintain consistency and coherence in macroeconomic policies and improve the soundness of the financial systems through restructuring. Without strong and sound economic fundamentals in place, countries cannot effectively stem contagion in the region. While addressing internal deficiencies, we must not merely be bystanders to the financial crises of our neighbors, but should instead devise a system that will protect one another and minimize the spread of these crises.

Third, we should develop the financial markets and strengthen the competitiveness of the financial industry. To do so, each country should endeavor to create a blueprint for long-term development of the financial markets and foster mutual linkages to integrate the markets in the region. The development of Asian bond markets and the opening of a common stock market will contribute to the reduction of the region's heavy dependence on the bank-centered indirect financing of corporations. In addition, more competitive private financial institutions in the region must appear so that they can provide better financial services to corporations in the region at large.

Fourth, we should also enhance financial cooperation in order to promote trade and investment flows in the region. Because of the reciprocity involved in trade flows, a cooperative financial arrangement for preventing the disruption of trade credits should prove to be a suitable solution in times of an emergency. In the medium to long-term, a regional Free Trade Area, or Agreement, will enhance trade and investment cooperation in the region. As core infrastructures, various financial innovations will appear to support trade and investment flows. The ACU (Asian Currency Unit), as a regional currency, and a new payment settlement system, through the internet, will reinforce the ever expanding real sector cooperation. Region-wide commercial and investment banks will also emerge to secure sufficient funds for investment and development.

With respect to the four aforementioned visionary goals for Northeast Asian financial cooperation, we must pursue the following action plans. First, the ultimate vision for regional financial cooperation lies in monetary cooperation, as currency integration is the most advanced form of economic integration. Therefore, while maintaining the existing exchange rate regimes, we must carefully explore means by which to achieve monetary cooperation in stages by reexamining the pros and cons of previous monetary arrangements experimented with when the Euro was developed. Then, we must strive to meet the conditions for ensuring the most appropriate form of monetary cooperation.
Exchange rate cooperation, through the internationalization of the Japanese Yen, mostly driven by the market forces, can be seen as one form of monetary cooperation that has already begun. In the short-term, such monetary cooperation seems feasible in the region, as the overall effects look positive.

Second, the establishment of a credit support arrangement that helps prevent the recurrence of crises, and which more effectively manages any crises that may occur, can be revisited in the medium term. The launch of a regional monetary fund, such as an AMF (Asian Monetary Fund) is far-fetched.

Nevertheless, East Asia, including China, Japan and Korea, can pursue other types of credit support arrangements by utilizing a portion of their foreign reserve holdings. Current workable proposals include expanding bilateral SWAP arrangements, or developing this back-up facility into a region-wide arrangement. These credit support facilities, or arrangements, will be reinforced by the regional surveillance mechanism.

Third, in order to ensure a strong foundation for sustainable growth in the three countries in the region, it is necessary to develop the domestic and regional capital markets and to strengthen financial systems. The development of long-term, domestic currency denominated securities will require stable and consistent macroeconomic policies, a strong supervisory and regulatory framework for financial institutions, and a proficient administrative capacity to enforce such prudential supervision and regulations effectively. However, fully-fledged capital markets will take some time to develop, although most countries in the region are now moving in the right direction. The three countries in the region should continue to work on financial sector reform through a mutual exchange of knowledge and experience. When the financial markets and the financial systems in the region mature, we will be able to envision the creation of an influential international financial hub that links the three financial centers in the region, Tokyo, Seoul, and Hong Kong (or Shanghai).

Fourth, we should seriously consider creating a Free Trade Area, or Agreement, that consolidates the trade and investment links among the three countries in the region. Although not likely in the near future, the creation of an FTA, if pursued, will have practical significance as long as it is carried out by the year 2020, as proposed in the APEC Bogor Declaration. Furthermore, emergency trade financing schemes should be considered, if not immediately implemented. At this moment, the feasibility of a Bilateral Payment Agreement is questionable, however, mutual credit guarantee schemes for exports may be worthy of examination.

Finally, as discussed in this report, the current and impending issues, and future agendas concerning regional financial cooperation, indisputably cover a broad range of topics. First and foremost, an appropriate regional dialogue framework should be established to promote a regular channel of communication among the three countries, and to enhance mutual understanding. A shared long-term vision, based on this understanding, should then be constructed. Financial cooperation will form the backbone of the implementation of this vision and it is imperative that the initial focus of this cooperation is centered on the prevention of future financial crises. By re-examining the fundamental causes of the last crisis, and by striving to serve as a role model to the others while simultaneously learning from each others' past policy successes and mistakes, the path to future successes and achievements will be set.

Vladimir Putin was elected Russia's 2nd President in the presidential election of March 26, 2000, following Boris Yeltsin. Thus Putin, who was a KGB agent during the Cold War and later the director of the Federal Security Board (FSB), will be in charge of the country and at the same time commander-in-chief of the military for the next four years.

The purpose of this article is to grasp Russia's situation in a comprehensive way by dealing with the following issues: (1) the presidential status written in the Russian constitution and laws; (2) results of the 2000 presidential election; (3) The 'Putin Phenomenon' (4) the tasks ahead for President Putin; (5) Korea-Russia relations in the Putin era.

Putin was successful in being elected on the first ballot, unlike Boris Yeltisn in 1996. It is thought that ordinary Russians, who were disappointed by the corruption and weakness of the Russian elite under Yeltsin, see Putin as both fresh and strong. In particular, his conviction in the need for military intervention in Chechnya is comforting to Russians. As a result, building a 'strong state', which Putin has emphasized thus far, does look feasible in contemporary Russia. However, even if relations between Putin and the Duma continue to be good, controling the violent crime oligarchs and local leaders as well as restoring bureaucratic discipline will be very difficult because these problems are already widespread and deep-rooted in society. Perhaps Putin will have to strengthen the security apparatus, such as the FSB, to confront social forces that might cause instability in the process of implementing stable economic reforms. Yet, he will not be a dictator.
With regard to foreign policy, Russia's relations with the West will further deteriorate if the U.S. insists on revising the ABM treaty to build its TMD, or if NATO offers membership to the three Baltic counties. However, Putin's Russia will do its best to avoid both the visible and invisible costs accompanying its security and military diplomacy by all means.

Meanwhile, Russia's Korea policy will continue on the same path it took during Yeltsin's second term. That is, it will pursue a balance between its South and North policy. Although domestic and other urgent international matters are major concerns for Russia at the moment, Korea could be a focal point should Russia's relations with the U.S. get worse. Korea must be careful not to let deteriorating Russo-US relations negatively affect its own relations with Russia.