6.    ASIA

Economic, social and political change

6.1   For long a region with significant growth rates, Asia's confidence and attractiveness as an investment destination were dented in the financial crisis of 1997-1998, but Asian economies badly affected by that crisis are staging a comeback, demonstrating that they still have fundamental strengths. Restructuring the financial and corporate sectors (whose weaknesses were at the root of the crisis) is the key to sustainable long term development and growth. To date, progress has been patchy and the risk is that recovery may undermine the impetus for further reform. Much will also depend on the fortunes of the global economy. A downturn in the United States would have a depressing effect in Asia, as elsewhere. Overall the very high pre-crisis growth rates are unlikely to reappear.

6.2   The resilience of Asian economies also means that the financial crisis has not had distinct effects on political relationships in the region. The major security issues which preoccupy Asia - the balance of power between China, Japan and the United States, the status of Taiwan, the nature of Korea's reunification, the South China Sea - remain as they were. Southeast Asia was more directly affected. Indonesia will take time to reestablish its preeminence. The responses from ASEAN and other regional institutions (including APEC) were less than convincing, but the continued utility of these groupings is not in doubt.

6.3   Of more relevance in gauging the future of Asia is that Asian societies are in the midst of large scale social, economic and political change, and this is being reflected in a much wider range of political activity. While democratic government may not spread quickly to those countries which currently do not enjoy it, it is likely to become entrenched where such accountable government has been in existence for the past ten years or so - South Korea, Taiwan, Thailand and the Philippines. This should help moderate features such as crony capitalism, which thrived in an imperfectly accountable political structure.

6.4   Asian governments are generally becoming more responsive to popular concerns, although this trend varies from country to country and does not necessarily translate into formal democratic processes. Better laws reduce business risk and provide greater certainty to investors, buyers and sellers alike. Much depends on the stage of economic development a country has reached, its historical background and the degree to which it has engaged with the international community. Cultural and ethnic factors are also playing a major part in reshaping political structures. Other influences include the trend towards greater regional co-operation and the fallout from the Asian economic crisis.

6.5   Changing perspectives are evident among the growing middle class, which is seeking more accountability and transparency in government. Popular discontent with corruption and business cronyism has been heightened by unemployment and the temporary fall in living standards which has accompanied the Asian economic crisis. The desire for change is shared by youth, a new generation whose views have not been shaped by the trauma of the struggle for independence or by cold war imperatives. Many have been educated overseas and exposed to Western thinking; others have been exposed to and influenced by more conservative forms of Islam. They have higher expectations of their political leaders and are becoming increasingly assertive (eg students in Thailand, Malaysia and Indonesia). Other agents for change include NGOs and women's groups, which are helping to lay the foundations for the establishment of a civil society in the region. Requirements for social safety nets as populations age is beginning to be factored into policy.

6.6   Momentum for change is also being generated by the expansion of the internet and other forms of information technology. The advent of satellite television has brought domestic politics under international scrutiny and has given domestic viewers access to external commentary while the internet provides a vehicle for dissident groups to propagate their views in the face of official attempts to ban them. The internet proved a powerful tool for overseas Chinese communities outraged at the treatment of Chinese in Indonesia in 1998. The new technologies present opportunities and challenges to governments in the region. Some are anxious to capitalise on the benefits these provide, especially those like Singapore who are keen to develop the knowledge sector of their economies in the global market. More authoritarian governments have been anxious to control or manage information flows but may ultimately fail.

6.7   Human rights issues will continue to loom large. Human rights have assumed a domestic dimension (eg: the treatment of political dissidents and the question of religious freedom) and some countries, at least, have established or are considering the establishment of human rights commissions. These moves are taking place in the wider context of a growing recognition of the need to respect the rule of law and due process as political structures evolve to meet changing circumstances.

6.8   Civil liberty and human rights issues will also take on an increasingly important international dimension. Until the onset of the Asian crisis the differences between East and West on occasion took the form of a heated debate between the advocates of "Western liberalism" and the proponents of "Asian values" and resentment at Western interference. The crisis has exposed some of the flaws in the Asian way of doing business and ruling a country. This led Korean president Kim Dae-jung to say that there was no such thing as Asian values while Singapore senior minister Lee Kuan Yew recently predicted that there would ultimately be "certain convergence" between East and West over what is and is not acceptable behaviour. As the role of Asian-based NGOs increases, some of the tension between Western and Asian perspectives on such issues may diminish, although there is also a risk that western governments will be blamed for the activism of local NGOs. Even those Asian countries with a reasonable human rights record will not take particularly kindly to criticism: human rights issues will continue to be a cause of friction between the countries of the region and the West.

Regional organisations

6.9   Proposals for regional organisations date back to the 1960s but gained momentum with the formation of the Asia Pacific Economic Cooperation (APEC) group in 1989 and the establishment of the ASEAN Regional Forum (ARF) in 1993 (see annex for chart showing overlapping membership of regional organisations). There are a number of important aspects to these organisations.

• Although they differ in membership they both crucially eschewed an 'Asia-only' configuration to include the United States and Canada - they are genuinely 'Asia-Pacific'. Both have cast the net beyond that: APEC includes three Latin American countries. The EU as a dialogue partner of ASEAN is a member of the ARF.

• The diversity of membership, and ASEAN origins in the case of ARF, are reflected in the way in which decisions are taken (or not taken). Consensus prevails, or in the case of APEC's economic programme, "concerted unilateralism".

• For each organisation the participation of China was a breakthrough. China never previously welcomed a discussion of security issues in a regional multilateral forum; and China has been able to accept Taiwan's participation in APEC, albeit within a framework which takes account of the one China policy. This provides a helpful precedent for the WTO.

• With Clinton's 1993 decision to make APEC a heads of government meeting there is now a forum in which the leaders of the region regularly meet each other. While the forms of a meeting to discuss economic issues are scrupulously preserved, the gathering does provide an opportunity for informal discussions (often bilateral) on political and security issues. And the leaders have couched the objectives of APEC in broad terms - enhancing security and stability, building openness, partnership and community in the region.

• The APEC dialogue provides a vehicle for economic cooperation between Asia-Pacific countries. That the members of APEC are at different stages of development and are not all (yet) members of the WTO has not inhibited the forum. The targets and topics are chosen accordingly, but it is the habit of consultation and discussion, generating a soft form of peer review, which adds value.

• The ARF makes a contribution simply by bringing the countries of the region together to discuss security issues. The fact of a meeting taking place is as significant as any particular decision taken.

6.10   Asia is not Europe. APEC and the ARF are sometimes judged against the standards of European institutions such as the EU, NATO and the OSCE and found wanting. This is misleading. The contribution of APEC and the ARF has to be measured against the complete absence of such institutions in Asia a decade ago.

6.11   But the limitations have to be recognised. No country in the region relies for its security on the deliberations of the ARF or APEC. There is no expectation that the ARF will develop into a multilateral/collective security arrangement. The ARF can reduce tensions but it does not (yet) have a capability to resolve issues.

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