From Miracle to Malaise Southeast Asia Goes South.

• Author: Hartcher, Peter

WHILE most of the world celebrated the true arrival of the millennium with an explosion of carefully choreographed fireworks, the occasion was marked in two of the major nations of Southeast Asia with meticulously planned sequences of terrorist bombings. The eight deadly detonations in Indonesia and the five in the Philippines were timed and placed for maximum political impact. In Jakarta they were set off in churches in an effort to provoke a Muslim-Christian conflagration. In Manila explosions ripped apart buses and shopping malls in a campaign to foment a sense of national emergency. And in each case the terror campaigns were suspected of being organized not by some lunatic fringe but by a major power bloc in the national establishment that could think of no better way to unsettle political rivals. These bombings tolled the death of Southeast Asia as the world has known it for the past thirty years. They seem to be a suitable, if dreadful, declaration of the arrival of a new era, of the region's abrupt tr ansition from miracle to malaise.

In 1960 Southeast Asia was as grim as sub-Saharan Africa--poor unstable, violent. But by the early 1990s the region had become a shining symbol of hope for the improvement of the Third World while most of sub-Saharan Africa remained a sad synonym for its hopelessness. Southeast Asia's main states became a showcase for economic advancement in the developing world, a case study in the ascendancy of democracy and capitalism, an object lesson in religious and ethnic tolerance. The region was also an exemplar of strategic stability. In 1967 five countries--Indonesia, Malaysia, the Philippines, Singapore and Thailand--formed a stabilizing political bloc, durably anti-communist and pro-capitalist, the Association of Southeast Asian Nations (ASEAN). After the Vietnam War and the triumph of communist Vietnam, the ASEAN states-the great bulk of the region--emerged as a bulwark against Marxist revolution. The dominoes stood firm. Not only did they refuse to tumble, they prospered.

In sum, the region became an economic, political and strategic lodestar, a significant asset for both the Third World and the West. When in 1996 the Singaporean diplomat-intellectual Kishore Mahbubani described the ASEAN experience as a kind of "magic", no one argued. The region, he waxed, "which has greater diversity of race, language, religion, culture etc. than the Balkans of Europe", had emerged as "one of the most peaceful and prosperous corners of the world." It was "a miracle of history." [1]

Miracles are not only rare; they can also be fleeting. Today--only five years later--when Southeast Asia is compared to the Balkans, it is not to draw a contrast but a parallel. Most regional economies are in disarray. They have emerged from the Asian economic crisis of 1997-98 not improved but enduringly impaired. The collective Southeast Asian economy is smaller today than it was before the crisis broke. Many dormant ethnic and religious resentments have exploded in violence. Democratic systems are under tremendous stress and a stinking tide of corruption is on the rise. The dominant regional power, Indonesia, has lost the territory of East Timor that it held by force of arms for twenty-four years and is in danger of further splintering in a process commonly invoked as Balkanization. The ASEAN grouping has lost the power of action and degenerated to the brink of meaninglessness. And, depressingly, the region is increasingly inclined to blame the West for its troubles.

The holiday bombs are a clear symptom and a timely signal that the world needs to reconsider this asset that is fast becoming a serious liability. How serious a liability? In a June 2000 speech to the Asian Development Forum, Tan Kong Yam, professor of business studies at the National University of Singapore, suspected that, as the rich United States has the poor, crisis-prone Latin America at its feet, the dynamic economies of North Asia will succeed while the poorer nations of Southeast Asia lapse into a long-term, Latin-style stagnation:

Like Latin America, South-East Asia could gravitate towards being poor and prone to periodic crisis for the next ten years. The effects of weak growth could compound with political difficulties to create the same downward cycle that occurred in Latin America in the 1980s.

The crucial question must now be whether the sharp deterioration is a temporary relapse, or whether it was the quarter century of gains that was the aberration. Were those years, like most apparent "miracles", really just an effervescence? Is Southeast Asia merely returning to form as a Third World trouble spot? If so, it would become a truly worrisome one. For the last quarter century the world has been spared the need to pay much attention to the region because things have been, by and large, going right. But as things go wrong, what is at stake will emerge more starkly.

First, the region is economically important. Forty percent of all world shipping passes through Indonesia's straits, making them a vital global choke point. This includes about 80 percent of the oil that fuels Japan's economy, the world's second-biggest. Indonesia and the neighboring sultanate of Brunei are themselves significant oil exporters. The region is home to a large slice of Japan's lower value-added industrial structure. It has been a contributor to the cause of global market opening; ASEAN has its own plan for an intra-region free-trade area and it has signed up to a larger pan-Pacific free-trade plan too. All of these commitments now totter in the balance.

Second, Southeast Asia is strategically important. Just as it was a bar to the encroachment of communism during the Cold War, today it could be a strategic counter to China's ambitions in the South China Sea. China has territorial disputes with Malaysia, the Philippines, Taiwan, Vietnam and Brunei over rival claims to tiny islands and vast tracts of seabed in the putatively resource-rich region. All but Brunei have built some sort of military outposts on the islands to emphasize the point. In the last few years, Beijing has been prepared to discuss these claims, but it has not yielded on any of them. Although the ASEAN states want to negotiate en bloc with China to increase their bargaining power, Beijing has insisted on bilateral discussions or no discussions at all. In the words of an authority on international boundaries, "In terms of the number and complexity of overlapping jurisdictional and sovereignty claims made to it, the South China Sea is probably the most disputed place on earth."2 Indonesia, in particular, is wary of China's intentions to extend its territorial ambit southward. China has unilaterally drawn a line on the map to encompass an expanse of sea that loops so far south as to include part of the vast Indonesian--claimed West Natuna gas discovery. Beijing has assured Indonesia that it has no territorial dispute with Jakarta. Still, the Indonesians pointedly staged the biggest naval exercises in the country's history in the vicinity. Last...