Rumblings of war in the Middle East cast a shadow over the East Asia Economic Summit Sunday as government and corporate leaders met to map out a plan to revitalise growth and deflect a looming crisis.

Calls for unity in the face of adversity dominated the opening day of the three-day World Economic Forum (WEF) meeting, which is attended by some 800 participants from 33 countries.

Malaysia's International Trade and Industry Minister Rafidah Aziz said Asia should accelerate integration efforts to cushion the effects of a threatened US-Iraq war that would "wreak havoc" on the global economy, escalating oil prices and disrupting trade.

"Asian countries and Asian companies must strive to synergise to make Asia work for Asia. It may be inward-looking but there is no two-ways about it," Rafidah said.

Kenneth Courtis, Goldman Sachs vice-chairman for Asia, said the threat of war was dragging down Asian economies at a time when regional growth had broadly peaked.

There were increasing signs of deflation gathering momentum in the region, with rising debt levels, and weak confidence and slow investment in the corporate sector, he said.

The WEF's Asia director Frank-Jurgen Richter told AFP ahead of the summit that Asia's recovery from the 1997-1998 financial crisis that crippled the region and shattered a decade-long boom remained fragile amid a weak US economy and the US-Iraq crisis,

"Asia now faces a second crisis. We see an IT slump in the US and we see a looming war on the horizon," he said.

Stockpile oil

A top oil executive, Mohamad Hassan Marican, president and CEO of Malaysia's national oil company Petronas, said Asian countries should consider cooperating to stockpile oil in the face of possible supply disruptions caused by instability in the Middle East.

The summit was opened by Thailand's Prime Minister Thaksin Shinawatra who said: "Now is the best time to forge our strategic partnership and reawaken our inner strengths.

"I believe Asia's future rests upon its ability to harmonize the region's diversified characteristics and to develop a sense of unity and, at the same time, a sense of interdependence."

He proposed the setting up of an Asian bond market to protect the region against unscrupulous financial speculators and ensure stable economic growth.

Such a market would "help maximize our continent's potential and prevent exploitation of our reserves by others against the interest of ourselves."

The way forward would be to establish a fund to purchase bonds issued by Asian countries through mobilizing one percent of each country's reserves on a voluntary basis.

Asia could offer an "Asianbond" to its European trading partners just as the European Union offered Eurobond.

More dependent on US now

Thaksin expressed fears that the twin calamities of the 1997 crisis and the September 11 terror attacks were choking the two main growth engines of the world the United States and Japan.

Japan's Minister for Economic and Fiscal Policy Heizo Takenaka said Asian countries were "much more dependent on the US market than they were ever before" and must strive to break this reliance.

One beacon of hope in the region was rising economic giant China, said Goldman Sachs' Courtis, noting it was still experiencing a "mini-boom" with strong investments, rising industrial production and robust consumer spending.

Apart from Thaksin, Malaysian Prime Minister Mahathir Mohamad and Singapore Prime Minister Goh Chok Tong will deliver keynote addresses at the summit which has the theme "Renewing Asia's Foundations of Growth: building on diversity."

It focuses on six core areas business challenges, economic competitiveness, governance and leadership, regional integration, trade and "well-rounded" growth, religion and nation-building. AFP