The American economy, which was resilient enough to survive a rash of terrorist attacks last September, is now being threatened by corporate fraud, malfeasance and accounting jugglery. President George W. Bush says he is determined to stop corporations cooking the books. But will his recipe to clean up the corporate world work?

The stock market has been on a roller coaster ride while some of the big multibillion dollar corporations have gone bankrupt leaving hundreds and thousands of investors and workers out in the cold. The British satirical magazine, Private Eye, ran a caricature of one the most wanted men in America, Osama bin Laden, seriously thinking of switching jobs- provided he is alive and well and still living in the Tora Bora mountains. "Forget terrorism," he says, "I am taking up accountancy". The moral of the story is that the US economy is being more severely damaged these days by accountants than by terrorists. The front-pages of newspapers are adorned with pictures of corporate bigwigs- mostly chief financial officers, chief accountants and heads of accounting firms- being taken away in handcuffs. Since the world economy is so intricately linked to the American economy, the repercussions of corporate crime are likely to have a negative impact worldwide. According to a UN report released last week, the US economic downturn is having a ripple effect not only on the economies of developing nations but also on Eastern and Western Europe.

The collective economic growth rate of the 15 countries comprising the European Union (EU) is expected to average about 1.3 percent this year: down from 1.7 percent in 2001 and 3.4 percent in 2000. The Eastern European nations are expected to register an average growth rate of 2.8 percent compared with 3.2 percent in 2001 and 3.8 percent in 2000. "The outlook for the global economy, including Europe, is crucially dependent on the assumption that there will be sustained and gradually strengthening recovery in the United States, led by domestic demand," the report said. This is expected to stimulate domestic activity in the rest of the world, including Europe, via exports and the spillover effects from increasing business and consumer confidence in the United States. But a recession in the American economy after the September 11 terrorist attacks- along with the current decline in the US dollar and the financial scandals in corporate America- has undermined investor confidence in the United States. According to the UN study, the US economy is expected to grow by 1.6 percent in 2002: up from 1.2 percent in 2001, but down from 4.1 percent in 2000.

This situation has been aggravated further by the recession in the world's second and third largest economies, namely Japan and Germany. Japan will have a growth rate of minus 1.1 percent this year and Germany 0.7 percent. Of the 95 developing countries regularly monitored by the UN Secretariat, 37 experienced a decline in per capita output in 2001 (compared with 25 in 2000), and only 17, half the number of 2000, recorded an increase of more than 3.0 percent. The countries worst affected last year included Argentina (minus 4.5 percent growth rate), Iraq (minus 6.0 percent), Turkey (minus 8.0 percent) and Zimbabwe (minus 7.5 percent). The only exceptions were China and India with growth rates of over 7.0 percent and 5.0 percent respectively.

Both countries are expected to continue with high growth rates in 2002 and 2003. Even as the American economy was on a tailspin last week, President Bush signed new legislation against corporate fraud which he described as "the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt." "The era of low standards and false profits is over," he warned. "No boardroom in America is above or beyond the law." Noble thoughts, no doubt. But even the new legislation has drawn deep scepticism in a country governed by the age-old maxim:

" What's good for General Motors is good for America." Both the ruling Republican Party and the opposition Democratic Party are beholden to big business. The Republican Party convention which preceded the last presidential elections cost over $50 million, while the Democratic Party convention cost about $35 million - virtually all of which was underwritten by corporate America. Meanwhile, the decline in the US dollar, however, has been accompanied by a rise in the euro, the currency of 12 EU countries. The euro, which fetched only 82.25 cents on the dollar in October 2000, is now at virtual parity with the US currency. But there is one consolation though: the US dollar still fetches 1.7 million Turkish liras. When we next holiday in Istanbul, armed with a huge stack of 100 dollar bills, it may be wiser to buy the entire hotel rather than check into one.

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