Are global financial institutions proving to be defunked in the face of inflation and a global food crisis, and is it up to Asia as the emerging center of world power to take the lead in finding solutions? Business leaders who met at the annual World Economic Forum on East Asia, a high-profile gathering of business and government leaders, in Kuala Lumpur earlier this week seem to think so.

“Global institutions are inadequate. They are not responding to global challenges,” Yashwant Sinha, a former finance minister of India said while citing record-high crude oil prices. Rapid increases in the price of rice and other agriculture products have set off riots and protests from Africa to Asia and elevated fears of a global food crisis, reported the International Herald Tribune.

“I would say that this is where there is an opportunity for Asia,” said Sinha, who is now a member of the Indian Parliament. “There are a whole host of things that Asian nations can do together. We must start writing the rules of the game.”

Asian countries must help each other in dealing with crises because the United States can no longer be expected to be “the locomotive of the global economy,” said Yoshimi Watanabe, the Japanese minister of financial services and administrative reforms. “The Asian countries are in the same boat, we share the same destiny,” he said.

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Five days after Indian Foreign Minister Pranab Mukherjee visited Beijing to settle India - China border issues, and weeks after India discovered Chinese threats to its communication network and other space assets, India launched the Integrated Space Cell (ISC). The establishment of the ISC oddly follows an agreement between India and China on peace and tranquility, ongoing confidence building measures and a MoU on defence cooperation - marking another twist in the ‘friendly enemy’ status the two countries share.

Justifying the formation of the cell, Defence Minister A. K. Antony said at the United Commanders� conference that India wanted to utilise space for peaceful purposes and remained committed to non-weaponisation of space. However, �offensive counter space systems like anti-satellite weaponry, new classes of heavy-lift and small boosters and an improved array of military space systems have emerged in our neighbourhood.� according to the Hindu.

The Space Cell will be put under the command of the Integrated Defence Services Headquarters and will act as a single window for integration among the armed forces, the department of space and the Indian Space Research Organization (ISRO), the Times of India reported.

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Asia is becoming a hot bed for nuclear energy. With�fuel prices soaring�through the roof , US, French, Russian and Canadian�companies are exploring nuclear energy in Asia as an alternate energy source.

General Electric, Daewoo and Toshiba are among companies looking to win big contracts in Southeast Asia. A report by the world nuclear association last year said that through to 2010 projected new power generating capacity in Asia is approximately 38 GWe per year, and from 2010 to 2020 it is 56 GWe/yr, up to one third of this replacing retired plant. This is about 36 percent of the world’s new capacity (current world capacity is about 3500 GWe, of which 368 GWe is nuclear). Much of this growth will be in China, Japan, India and Korea. The nuclear share of this to 2020 is expected to be at least 39 GWe and maybe more if environmental constraints limit fossil fuel expansion.

There are currently 109 nuclear power reactors operating in six countries of the region, 18 units under construction and firm plans in place to build about another 40 units.

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Brazil, Russia, India and China, the world’s biggest emerging market economies or the BRIC countries, last week vowed to turn their four-way group into a powerful instrument for changing the world, affirming their global economic clout reported The Hindu. On the last day of their meeting in Yekaterinburg, in the Ural mountains, the BRIC countries institutionalised BRIC, agreeing to hold regular meetings at the level of Foreign Ministers.

They “confirmed the aspirations of the BRIC countries to work together with each other and other states in the interests of strengthening international security and stability foreign ministers from the BRIC countries said in a joint communique”, reported Reuters.

Russia�s Foreign Minister Sergei Lavrov said BRIC would work to �support global stability and ensure uninterrupted and manageable global development.�

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Foreign Ministers of Russia, India and China met for the eighth time in Yekaterinburg, Russia to reaffirm their commonality, in views on the global situation and, for the first time, set out coordinated positions on Kosovo, Iran, Afghanistan and the Asia-Pacific region, The Hindu reported.

Russian Foreign Minister Sergei Lavrov said a joint communique on boosting links between the three large developing countries would look at enhanced co-operation on humanitarian aid, fighting terrorism and combating drug trafficking.

“I believe that against the backdrop of a multi-polar world it is necessary to advance cooperation between Russia, China and India, the three countries that are rapidly growing and enjoying strong economic growth,” said Chinese Foreign Minister Yang Jiechi.

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Even as millions in developing countries in Asia and Africa are expected to die of starvation due to inflationary grain prices, president Bush asked Congress to authorize US$770 million to ease the global food crisis.

The United States is feeling the pressure of their empasis on biofuels even as energy and food demand rises. While grain supply is dwindling, experts around the world say that the American focus on biofuel subsidies which has given farmers incentives to grow biofuels in place of grain is only compounding the problem. As a result of the biofuels subsidies and a high demand for energy, farmers are more keen to plant acres of corn and sugarcane, the raw material for energy instead of rice and wheat human staples. This has led to the head on collosion of of a world food crisis partly fueled by record fuel costs.

Speaking on Monday at the European Parliament, Jeffrey Sachs, head of the Earth Institute at New York’s Columbia University and a special UN adviser said that while a third of the US maize crop will go to a gas tank, “it is a huge blow to the world food supply.” “We should cut back significantly on our biofuels programmes, which were understandable at a time of much lower food prices and much lower food stocks but do not make sense now at a time of global food scarcity condition,” he added, reported Reuters.

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A benchmark variety of Thai rice, a food stable across much of Asia, is at about US$1,000 a tonne, up threefold from last year. Meat prices have risen by 60 percent in Bangladesh in the year ending in March, and by 45 percent in Cambodia and 30 percent in the Philippines. The rise in global food prices has sparked riots last month in Egypt and Haiti, protests in other countries and restrictions on food exports in Brazil, Vietnam, India and Egypt.

In the first months of 2008, food price inflation has hit double digits in Bangladesh; People�s Republic of China (PRC); Hong Kong, China; Indonesia; Pakistan; and Viet Nam. Food price inflation is also rising in India, Malaysia, Philippines, Singapore, and Thailand. And although no 2008 figures are yet available for Sri Lanka, there is little doubt that food prices are also rising at double digits there as well. Wheat-dependent countries in Central and West Asia are also experiencing double-digit rates of food inflation says an Asian Development bank report on rising food prices.

The problem is not confined to importing countries, as net exporters are also experiencing food price inflation. In fact, the rising inflation pressure has been more intense in net exporting countries.

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In its report titled �Emerging Asian Regionalism,� the Asian Development Bank said Asia will account for as much as 35 percent of world gross domestic product (GDP) in purchasing-power parity [PPP] terms, from only 28 percent in 2005. By then, Asia�s GDP is set to be more than 50-percent larger than the European Union�s or North America�s.

While continued growth will reinforce the region�s market-led integration, official cooperation, production and financial markets integration, economic interdependence and inclusive and sustainable growth will need to intensify based on sound economic principles.

The report highlights that Asia is less integrated in finance than in trade but financial markets are now larger, deeper, and more sophisticated than they were a decade ago. The ADB Study urges policymakers to strengthen supervision, surveillance and dialogue on financial markets through creation of a new, high-level �Asian Financial Stability Dialogue.�

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As China’s voracious demand for iron ore rises, the country demands a more stable, long term pricing policy from India.� India which currently meets 16 percent of China’s iron ore demands sells iron ore on a spot basis, allowing the price to fluctuate as demand grows. India is China’s third largest supplier, after Australia and Brazil, who supply over 60 percent of their iron ore to China at contract prices, which allowed shipping costs to remain ‘relatively stable.’

‘Last year India’s spot sales to China led to additional costs of US$838.3 million for Chinese steel makers,’ Luo Bingsheng, executive vice chairman of the China Iron and Steel Association told Forbes.

Now, China plans to take serious action to make sure iron ore prices are more stablized. China will have to consider reducing purchases of iron ore from India if Indian suppliers do not moderate their ‘over-reliance’ on spot sales, he added.

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The�quest for natural gas has brought age old enemies India and Pakistan to seek an agreement, allowing a pipeline from Iran to bring energy to Pakistan and India.”I am very optimistic about the IPI (Iran, Pakistan, India) pipeline as it would go a along way in meeting India�s energy requirements in the long run,� Petroleum and Natural Gas Minister Murli Deora�told The Hindu on Sunday. The US$7.4 billion�, 2,700-km-long pipeline is scheduled to be completed by 2011 and would initially carry 600 million cubic metres of gas per day.

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