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7. ASEAN’s Achievements are Endangered by Continuing Crisis
- ISEAS–Yusof Ishak Institute
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7 ASEAN’s Achievements are Endangered by Continuing Crisis As foreign ministers of the Association of Southeast Asian Nations start their annual meeting in Manila today, their organization is facing a number of challenges. The most formidable is the economic crisis battering the region. It used to be said that if economics went wrong in SoutheastAsia, social and political instability would follow. This has already happened in Indonesia, the world’s fourthmost populous nation and a key member ofASEAN. Political instability could spread if the crisis is prolonged, with the danger of exploitation by extremist elements. Greater instability in domestic politics causes uncertainty, coloring the perceptions of foreign investors and financial markets, which tend not to differentiate among the individual countries of Southeast Asia. The region’s loss of international credibility is not entirely fair.Amid the publicity given to crony capitalism and corruption, it is easy to forget the achievements of ASEAN. Over the past thirty years it has kept the peace among its members, enabling them to concentrate on economic and social development. In so doing, ASEAN helped transform ASEAN’s Achievements 29 Southeast Asia — once seen as the Balkans of Asia — from a region of poverty and almost endemic instability to one of relative peace and plenty. This could not have happened without the support of the United States. But without the pragmatic, moderate and basically pro-Western leadership of the five founding members ofASEAN — Indonesia, Malaysia, the Philippines, Singapore and Thailand — Southeast Asia would have been a different and more troubled place. ASEAN’s reputation as a forward-looking organization of developing states was enhanced by its decision to establish theASEAN Free TradeArea by 2003 and its role in nurturing Asia-Pacific regionalism, especially the ASEAN Regional Forum on security. But ASEAN’s achievements may be threatened if the region does not recover soon from the depression in Indonesia and worsening recessions in a number of other member states. The problem is how to implement farreaching and potentially painful reforms amid deepening recession and growing social discontent — and when there is no indication how long the pain will have to be borne before recovery starts. Recovery in the region is critically dependent on policies and developments in the major economic powers, over which ASEAN has no control. Unlike Mexico’s recovery from its financial crisis several years ago, Southeast Asia’s revival is hampered by not only large private-sector debts, weaknesses in banking systems and depressed domestic demand, but also by continued exchange rate instability and the absence of a United States across the border to absorb more of the region’s exports. [54.165.248.212] Project MUSE (2024-03-28 22:15 GMT) 30 By Design or Accident That is why a resurgence of growth in Japan and a strengthening of the Japanese yen against the dollar are imperative. In this situation, the United States, as the world’s major power, must provide leadership in devising and implementing strategies to help restore confidence in the region’s markets and rekindle economic growth. Confidence is the key. The virtues that enabledASEAN countries to register high growth rates in the past — hard work, high savings, investments in education and training, and mostly sound macroeconomic policies — remain in place. If Southeast Asia fails to recover, the forces of political moderation and economic liberalization in the region could suffer setbacks. This would not be in the interests of either the West or Japan. Note This article first appeared in International Herald Tribune, 24 July 1998. ...