Mahathir says "oil prices will suffer a drastic rise in the event of the war"

By Kazi Mahmood, IOL South East Asia Correspondent

KUALA LUMPUR, February 23 (IslamOnline.net) - South East Asian (ASEAN) countries are bracing for possible price destabilization that could affect the lives of their citizens in the event of the war the U.S. wants to engage against Iraq.

This has led local regimes to warn against illegal price hikes and hoarding of goods during that period.

Malaysian Prime Minister said that he feared oil prices will suffer a drastic rise in the event of the war against the Middle Eastern country, reported Bernama news agency on Thursday, February 20, 2003.

He emphasized on the fact that oil prices was always subject to stability in the world and in case of a war in the Middle East, it was more than certain that oil prices would increase.

Mahathir Mohamad added that this could create havoc in many poor countries that depends on large oil imports, which indicates that this situation might trigger a series of price hikes that could endanger stability in several parts of the region.

Malaysia may be hit by hoarding of goods thanks to the activities of several cartels that controls the import and or distribution of essential products such as milk, rice and oil for cooking.

Though the government insists the country’s inflation rate is very low for this year, there are indications that basic commodities and agricultural products may suffer from a fuel price increase on the local market.

“Malaysia is currently suffering from a drought of cash flow on the market, forcing people to squeeze in their savings to cover for their monthly expenses, a war in the Middle East will make things worst and will surely slow down investments too,” Badarulzaman, manager of a financial services company in Kuala Lumpur said.

In Manila, President Arroyo said on Friday, February 21, 2003 that she will again court various transport groups to convince them to postpone their planned fare hike in that sector, Abs-Cbnnews agency reported.

Arroyo met with leaders of the transport groups on Friday at her presidential palace and offered a package benefits that included housing, discounted oil prices, lowering of toll at the South Luzon Expressway and creation of gas pumps at “jeepney” terminals to offset the effects of higher crude prices.

However the response was not as expected since the Confederation of Land Transportation Organizations of the Philippines secretary General Bert Suansing said drivers and private operators were keeping their options open but were lukewarm to Arroyo's housing offer.

Arroyo said the Iraq war will be short and quick and that this should not force local dealers to increase prices or ask for price adjustment of controlled items. She said such demands would wreck the peace in the country and will bring the economy further down.

Sources within the Moro rebel community however said Arroyo was promised an economic package that would supposedly better the Filipino economy and assist the Moro’s in Mindanao to recover from war after a formal peace treaty is signed.

This was promised to Arroyo, according to the rebel source after she agreed to officially support the U.S. plans to attack Iraq and urged the UN to order such an attack immediately.

They added that the Arroyo administration, an outgoing government, is basing its forecasts on the promises made in Kuwait two weeks ago when Arroyo flew to the emirate in a private jet.

In Singapore, the Islanders were busy discussing about the effects of the protracted war on Iraq and their burses. They were not worried of the consequences for the Iraqis as they were for their pay checks and for their standard of living.

Local newspapers are filled with letters from readers inquiring on the effect the war would have on the economy in the Chinese majority country, south of Malaysia.

Singapore has established an economic buffer, setting aside a large percentage of its forex reserves to deal with the impending war on Iraq in a move to calm its citizens in case oil prices rise uncontrollably.

Nevertheless, the Indonesian government released figures on Friday, February 21, showing a slight betterment of its overall economic performance and a strengthening of its local currency.

However the local business community was concerned with the slight fall in the local stock market index, which slipped following the announcement by U.S. President George Bush indicating that a fresh U.N. resolution to attack Iraq was underway.

In Indonesia the public in general, 90 percent of the population said an Indonesian Minister, were against the U.S. planned war on Iraq.

Indonesia will definitely suffer from further price hikes, something that is uncontrolled since imported goods would be affected by the war in Iraq, in the event it occurs.

Goods hoarding in an attempt to force price increase will be wildly practiced in the country, sending fears that rioting and vandalism could break out in several cities of the economically bed ridden nation.