The Mozambique Liberation Front (Frelimo) government abandoned its socialist policies in 1987 and embraced a structural adjustment programme drawn up with help from the International Monetary Fund and the World Bank. Inflation, officially above 40 per cent, remains high but the slide of the national currency, the metical, against the pound and the dollar has slowed.Much of the future will depend on the attitude of foreign investors, since with foreign exchange earnings of some dollars 150m per year and a foreign debt at nearly dollars 6bn, Mozambique has little domestic capital for investment. The economy grew by 5.6 per cent in 1993, the first full year of peace Similar growth is expected this year. But with a per capita income of dollars 70 to dollars 80 per year, 60 per cent illiteracy, an infant mortality rate of 325-to-375 per thousand and a total economic output worth dollars 1.2bn, Mozambique has a tight grip on the bottom rung of the global economic ladder. 'The regrettable fact is that the country is producing almost nothing,' said John Hewlett, chief executive of the Lonrho subsidiary that is the country's biggest foreign company.Yet there is hope of economic growth in the aftermath of the country's first democratic elections last week and the stability they promise. WALKING along the wide Portuguese-style avenues of the seafront capital of Maputo, sipping a cold Laurentina beer in a street cafe, or munching on grilled prawns in an outdoor restaurant, it is hard to imagine that Mozambique is the world's poorest country. However, it is generally conceded that the US has a comparative advantage by virtue of its security presence in the region - because of the distrust Asian countries have of each other That is President Clinton's trump card.. Many countries, emulating Japan's 'export-first' policies, have adopted strict industrial policies that limit access to their markets and emphasise domestic content provisions.In addition, the US is not universally loved in Asia.

The list included 10 US banks which are expected to provide the bulk of dollars 3.25bn in new loans projected for foreign banks next year.Asia, however, may be a much tougher market to crack. Although the US will not support date- specific proposals that APEC achieve regional free trade by 2010 or 2020, it will work on a sectoral basis to reach the goal even earlier.Specifically, it will seek bilaterally to lift barriers to investment and telecommunications while working through APEC to streamline standards, customs procedures and the rules governing government procurement and the movement of professional people.Particularly in the areas of investment, where the US believes it has comparative advantage, officials will work for liberalised codes similar to those negotiated in the North American Free Trade Agreement - the first fruits of which were realised when the Mexican government granted charters to 18 foreign banks, ending a ban that had been in effect for almost 60 years. In sharp contrast to big trade gains made in western Europe, the US is running a trade deficit with most of the APEC members.This explains the US emphasis on specific market-opening measures and overall trade liberalisation in the region. By far, the biggest losses were caused by exploding imports from China and Japan, accounting for two-thirds of the deficit.

With the exception of Japan, high performers in Asia are expected to achieve growth of some 6 to 8 per cent a year through the decade. This is the reason a surprised group of 30 chief executives were invited to the State Department last month for briefings from Cabinet officials on economic and trade prospects in Asia.According to Robert Rubin, head of the White House Economic Council, the 'mostly Republican' executives were startled but pleased by the attention.For its part, the administration was spurred not only by the prospect of gain but also by fears over the near-record US trade deficit that was running at an annual rate of dollars 147bn for the first eight months of the year The record was dollars 152bn set in 1987. Unlike other industrial countries, the US almost never mixes business with politics. But this has changed dramatically under the Clinton team: the President lobbied Saudia Arabia personally on a successful airplane deal; Ron Brown, the commerce secretary, has led several business groups on missions to China and Russia, and the US administration has targeted 12 big emerging markets for high- level commercial attention.The bulk of these are in Asia where US companies have been slow to take advantage of growth ranging up to 14 per cent a year. Using its continued security presence as a lever, the US is now intent on business gains.This, of itself, is unusual in US policy terms. Differences with Japan have been papered over with a watered down 'framework agreement'; the human rights saga with China is over; and the US has turned down the volume on labour rights violations in Malaysia.

The Clinton administration, having botched earlier dealings with key Asian countries, now finds itself in a better position to negotiate. Unlike other Asian groupings, it includes both China and Japan. Also, it is relatively new - born of Asia's fear that it would be left behind as a result of regionalising trends in both Europe and the Americas.Asia is the region and APEC is the kind of organisation President Clinton had in mind when he articulated the US policy goal of 'economic security'.Thus, the stakes are high at the Indonesian summit. Chile is expected to gain membership at the meeting. Europe's complete absence from this and other important Asian forums is glaringly apparent. APEC has been anointed by the US as the organisation through which it intends to play the balance-of-power politics that it hopes will result in big commercial gains. Members include the US, Australia, Brunei, Canada, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Thailand, Mexico and Papua New Guinea. This will be buttressed by another major position paper on US economic goals in the fast-growing region.