President Mohammad Khatami in a meeting with the newly selected secretary-general of the Economic Cooperation Organization (ECO), stressed the need for regional cooperation between ECO and the Association of Southeast Asian Nations (ASEAN) last Sunday. He later embarked on a four-day state visit to Malaysia where he and his counterpart, Prime Minister Mahathir Mohammad, discussed a range of issues including economic cooperation.

President Musharraf of Pakistan, commenting on President Khatami's proposal, also stated that if the two organizations initiated collective actions the entire region would benefit.

The President of Iran and the Prime Minister of Malaysia witnessed the signing of two bilateral agreements, the first covering avoidance of double taxation and tax evasion and the second promoting measures to protect mutual investments.

Memorandums of understanding were also signed by the two countries to cooperate in tourism, trade, information and communications technology.

Iran together with Pakistan and Turkey established the Economic Cooperation Organization (ECO) in 1985, which now comprises ten members. After the break-up of the Soviet Union, the newly independent republics of Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan), Azerbaijan and Afghanistan joined ECO. The region is endowed with rich natural resources and a population of over 300 million.

On the other hand Malaysia, Indonesia, the Philippines, Singapore, and Thailand established the Association of Southeast Asian Nations (ASEAN) in 1964, with Brunei Darussalam joining in 1984, Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. The ASEAN region has a population of about 500 million and enjoys a combined GDP of over U.S.$730 billion and total trade in excess of U.S.$700 billion. Despite intractable problems, should ASEAN be able to forge a free trade area with China, for which they are currently holding preliminary discussions on initial parameters, ASEAN and China would represent a vast area with a population of about 1.7 billion.

Considering the abundance of energy resources of the majority of ECO member nations plus their potential to develop their agriculture and increase output of crops collectively, they may be well advised to evaluate the merits of forging close ties with ASEAN countries. On the other hand, the majority of the developed ASEAN members, having achieved Newly Industrialized Country (NIC) status and possessing the industrial know-how and advanced technology desperately sought by ECO countries, need energy to propel their growing industries. This way, ECO members can export energy and agricultural products to ASEAN countries with growing populations and in return receive advanced engineering and technology know-how, management expertise and investment in various fields.

The developing countries of ECO are well advised to learn from the NIC's valuable experiences in development to identify their economic priorities and plan their growth accordingly, with considerable resource savings through prevention of mistakes. The transition of the newly independent republics of the former Soviet Union into market economies and the huge opportunity costs of the Iran-Iraq war, necessitates accelerated efforts on the part of ECO in particular to cooperate closely with ASEAN. Noting that the majority of the nations making up ECO and ASEAN already are members of the World Trade Organization (WTO) and other countries such as Iran are applying to join in the near future, poses further challenges.

To benefit or at least not lose out from world trade by joining the WTO, certain minimums in economic health, stability and competitiveness are paramount. It follows that complacency to act fast is a recipe for certain failure in keeping up with the constantly evolving patterns of international trade. To lessen the pace of the ever-widening gap between developing and developed nations requires strong determination. One of the main drawbacks inherent in developing countries is their inability to enforce and effectively implement their plans. This failure will have a considerable impact on the proper allocation of scarce resources, and prolong their convergence towards the above mentioned minimum economic requirements.

As the world is being increasingly divided into powerful trading zones that would rather deal with one another than individual nations, it is imperative more than ever to pursue cooperation among nations with close proximity sharing common goals. As far as Asia and especially the Middle East is concerned, recent decades have borne witness to severe deterioration of their terms of trade with the developed nations of the West. It is about time to learn from history and switch emphasis through regional alliances such as close cooperation between ECO and ASEAN. Besides imports of consumer and industrial goods, ECO must demand and carefully negotiate transfer of science and advanced technology from ASEAN nations to help it develop modern economies.

Besides economic development and growth, cooperation between ECO and ASEAN would at the very least stop the terms of trade of ECO members from further worsening in the medium term and even help it improve in the long run. The potential benefits of cooperation are huge, but first it requires national will and intricate planning followed by a coherent and well-defined collective strategy on the part of ECO to establish full ties with ASEAN.