So far, so good? Political change and the Asia crisis

East Asia’s economic turmoil was set in train in July 1997 by the decision to float the Thai Baht. That currency sank like a stone, taking a number of other regional currencies with it and producing acute economic adversity highlighted by cases of chronic indebtedness. Such a dire condition prompts the question whether corresponding turbulent political outcomes may follow, especially as East Asia’s economic success has been based on political stability.

The World Today Published 1 March 1998 Updated 7 December 2018 6 minute READ

There is an expectation that Asian economic distress and social unrest will lead to political upheaval and regional instability. Such turbulent circumstances may come but, as the economic crisis enters its ninth month, the political consequences have been less than dramatic and may provide a basis for reconsidering more alarmist conventional wisdoms.

One of the conclusions of the once celebrated volume on ‘The East Asian Miracle’, now a source of embarrassment to the World Bank, is that there was no single Asian model of development. In trying to assess the political consequences of regional economic adversity, it as well to begin with the same caveat about the political diversity of the region and the pitfalls of generalisation.

Nonetheless, there is a natural sense of foreboding about the likely political effects of the recent dramatic reverses in economic fortunes, especially in the more authoritarian regional states where the acceptable price of popular demobilisation has been a rising standard of living which is now being replaced by rising inflation and unemployment.

So far, the political change induced by economic adversity has been relatively peaceful and in accord with constitutional procedures. Governments have changed against a background of some public agitation in both Thailand and South Korea but not through that agitation.

In Thailand’s case, political change occurred with a realignment of parties as the fragile and inept coalition government of Prime Minister Chavalit Yongchaiyut collapsed. It has been succeeded by another coalition led by Chuan Leekpai in his second incarnation as prime minister. Its financial team is regarded nationally as the best available in the circumstances to administer the unpalatable economic medicine prescribed by the International Monetary Fund.

In the barracks

A striking feature of the recent transfer of governmental power in Bangkok has been the role of the Thai armed forces which have previously mounted violent coups to produce political change. During the political crisis in November 1997, the military, and in particular the army, displayed a notable restraint and a careful attention to constitutional proprieties to avoid any suggestion that another coup was being contemplated.

The powerful Army Commander, General Chetta Thanajaro, is not without political ambition but is also highly conscious of the legacy of the bloodletting of May 1992 which besmirched the reputation and legitimacy of the military. This time, the armed forces stood for constitutional propriety supported by the nationally revered King Bhumibol Adulyadej which meant that, despite agitation on the streets, there was no organised alternative centre of power capable of effecting political change by extra-constitutional means.

Political change in states in economic crisis is not automatically in the gift of the mob or indeed in that of students in revolt who tend to end up as water cannon-fodder. Obviously agitation on the streets in response to economic disaster and resentment at corrupt practice can provide a climate for more organised forces to step in and impose authoritarian solutions. It is as well to remember, however, that, with perhaps the limited exception of the Philippines, clandestine revolutionary parties capable of effective organisation no longer exist in those states most affected by the turmoil.

The armed forces do possess organisational competence but tend to be conservative institutions. And, even where they claim a national mission – with the exception of Myanmar (Burma) whose parlous condition has enabled it to avoid the current problems – have long acknowledged that they cannot rule without the support of civilians trained in the kind of economics acceptable to the International Monetary Fund (IMF).

Political turmoil is certainly possible in current circumstances in a number of the East Asian countries, but it is most likely to express itself in urban rioting which takes a heavy toll on the mortality and stamina of the participants and may burn itself out in exhaustion without direction and support from an organised centre of power.

Waiting in the wings

In South Korea the acute economic crisis coincided with presidential elections. By good fortune there was an alternative president in the wings with both national and international credentials. Once elected, Kim Dae Jung speedily adjusted to the economic imperatives of the IMF. He has come to office with his predecessor and his ruling political party totally discredited and with the armed forces lacking the confidence and interventionist disposition they displayed under the late President Park and his ill-fated successors. For the time being, President Kim has been able to produce a sense of national solidarity and sacrifice as the country painfully comes to terms with an almost incomprehensible reversal of economic fortunes.

Elsewhere in East Asia, with the notable exception of Indonesia, the political consequences have been less striking. The Philippines is in the grip of a highly traditional election campaign whose outcome is expected to determine political change.

In Malaysia, the national standing of Prime Minister, Dr Mahathir Mohamad has been diminished because his country’s economic predicament has been aggravated by what has been seen as his hubris and self-indulgent rhetoric. The management of the economy is now more directly under the control of his deputy and Finance Minister, Anwar Ibrahim, but this does not necessarily signal the early retirement of the Prime Minister who is a renowned political street-fig h t e r.

The crisis is unlikely to challenge an entrenched pattern of politics which has evolved over more than four decades and which pivots on the dominant role of the United Malays National Organisation (UMNO). And in neighbouring Singapore, although buffeted by regional economic storms which will take their toll on growth and expectations, the ruling People’s Action Party (PAP) is as well ensconced in power as ever with only two elected opposition members in a Parliament of eighty-three.

A dramatic link between economic turmoil and political turbulence is most likely in Indonesia where the five year term of the President and Vice-President ends this month. President Suharto, at the age of seventy six and in indifferent health, is standing unopposed for a seventh consecutive term. The President and the Vice-President are elected every five years by the thousand-member People’s Consultative Assembly which is an electoral college dominated by the ruling Golkar Party with support from representatives of the armed forces.

The age and health of the President, and his deliberate refusal to name more than a ceremonial running-mate and successor, has generated political uncertainty which has been a potent factor in undermining the value of the R u p i a h. His reluctance to come to terms with his country’s predicament in response to the prescriptions of the IMF and then his suggestion that the next Vice-President could be his confident and crony Dr B.J. Habibie, the Minister of State for Research and Technology, further undermined confidence in Indonesia’s willingness to face the crisis. It is notable however, at least so far, just how the President’s rule has held despite a huge economic reversal seemingly inconceivable nine months ago.

Like a monarch

President Suharto, although by background a professional soldier, has ruled Indonesia much like a Javanese monarch, with a firm and brutal hand, for more than three decades. His court-like entourage of close family and ethnic-Chinese business partners has enriched itself through presidential prerogative. Such abuse of power has been tolerated, although bitterly resented, as long as his claim to be the ‘Father of Development’ was matched by economic reality and a trickle down of benefits. The situation has now changed radically, reinforced by a burden of debt which can’t be repaid in the near future.

The problem for Indonesian advocates of political change, who have become more outspoken as economic circumstances have deteriorated, is that President Suharto has effectively closed off democratic space and retains armed forces support for a spurious constitutionalism which legitimises his rule.

Opposition parties and their leaders are effectively excluded from the political process, while the military high command has been filled with loyalists with personal connections to the President. The meeting of the People’s Consultative Assembly may well provoke public demonstrations, while economic distress has already been expressed violently at the expense of members of the ethnic-Chinese community whose prominent economic role is resented by indigenous Indonesians. That said, as long as the armed forces remain loyal, no alternative focus of political change exists. Singap o r e ’s respected Senior Minister, Lee Kuan Ye w, let it be known in January that he did not expect a dramatic political revolution in Indonesia as a result of the financial crisis.

Political change could occur if the armed forces leadership judged that their national standing was being radically diminished by close association with President Suharto. Indonesia’s armed forces see themselves as protector of the people’s interests with a dual political and military function as guardians of the state. This founding myth was created during the national revolution against the Dutch between 1945-49.

The very restrictive nature of President Suharto’s patrimonial rule has meant that the armed forces are the only effective and truly national institution. Any internal factional divisions have been well concealed, and their corporate interests have been protected up to a point by the Vice-President, Try Sutrisno, a former armed forces Commander, whose term ends also this month.

Should the President either die or become incapacitated, the Vice-President succeeds until the end of his term of office. The military could be involved in political change if, in repressing social unrest, bloodshed tarnished their reputation, or if President Suharto nominated a Vice-President unacceptable to military interests. The latter prospect arose with speculation about the vice-presidential nomination of Dr Habibie whose liking for heavy-spending on grandiose projects has aroused military resentment.

Political change is less likely to come about through a conventional coup, however, because the current military leadership is only too conscious of the internecine strife and bloodletting in the mid-1960s as the turbulent prelude to the downfall of the late President Sukarno. Their priorities are political stability and national unity, which are well represented by the newly appointed armed forces commander, General Wiranto.

A more likely scenario for change would be a discreet political intervention behind the scenes which would be legitimised by contrived constitutional process. Indeed, President Suharto removed the late President Sukarno from effective power through such an act in March 1966. Of course, political disaster could still befall Indonesia through factional rivalries should the President secretly become incapacitated while his venal family and courtiers rule, much like China’s experience of the mid-1970s when Mao Zedong was comatose.

Authoritarian solutions

East Asia looks on apprehensively as Indonesia, in particular, faces a political turning point which coincides with and has also aggravated the acute economic crisis. How it passes this political test is likely to have regional repercussions within South-East Asia, in particular. One form or another of authoritarian solution is most likely, which is probably why Lee Kuan Yew was prepared to predict that a political revolution would not occur.

The scale and suddenness of regional economic misfortunes have, of course, raised questions about the once-proclaimed virtues of ‘Asian values’ as the basis for the moral order on which economic development could and should successfully proceed. The cultural and political diversity of East Asia have long generated searching questions about the degree of valid generalisation about these ‘values’.

It is clear that many of the recent regional misfortunes are rooted in a flawed political economy with politics and business in an unhygenic symbiotic relationship without public accountability. Major acts of political will are necessary to repair such a structural shortcoming. Such acts do not necessarily demand democracy in the Western liberal sense. This is demonstrated by the experience of Hong Kong under colonial rule which came to an end, ironically, only days before the onset of Asia’s turmoil.

Beyond collective competence

One footnote concerning the relevance of regional institutions may be added to the sad saga of the end of the ‘East Asian Miracle’. The Association of South-East Asian Nations (ASEAN) has been gripped by political paralysis in the face of an embarrassing coup in Cambodia which interrupted its timetable for enlargement.

The temporary pollution of the regional atmosphere last year by forest fires in Indonesia proved also to be well beyond ASEAN’s collective competence. In addition, the association, which aspires to create a free trade area (AFTA) has been ineffectual in its economic role because the resources for rescue packages could only be mobilised by the IMF.

On a wider regional canvass, Asia Pacific Economic Cooperation (APEC) failed to demonstrate any competence or economic imagination when it met in Vancouver last November and has also been obliged to defer to the IMF.

Such shortcomings do not lead logically to any so-called institutional unravelling. Although the public rhetoric of regional bodies has been extravagant at times, the more modest but very practical purpose of entities such as ASEAN is well understood and valued by member governments.

ASEAN, for example, evolved during very troubled regional circumstances when growth rates were less than spectacular and has never modelled itself on European integration. Its role in avoiding and containing conflicts, as opposed to trying to resolve them in an ideal way, is not to be dismissed on the basis of misleading criteria of institutional performance.

Irrespective of obvious limitations, ASEAN’s diplomatic networks, which played a critical role in promoting the ASEAN Regional Forum (ARF) and the Asia-Europe Meeting (ASEM), are still viable and advantageous in mitigating tensions in an imperfect world.