A mid-life crisis usually comes about when an individual realizes that he/she
has been chasing the wrong goal, rather than when the person realizes that
their goals are unattainable. Much the same is apparent for ASEAN - the
Association of Southeast Asian Nations - that last week canceled its planned
get-together in the Philippines, ostensibly to avoid a typhoon but more likely
because of the threat of a terrorist attack.
In itself, the cancelation may have been a good thing, because ASEAN has very
little to discuss in the first place. (All mentions
of ASEAN in this article refer to the organization, rather than member states.)
The disparate range of demands from ASEAN members as they evolve economically
and politically has the effect of pulling the organization in multiple
directions. This would be challenging for any grouping, but for one that lacks
basic infrastructure, the effect has been deadly. ASEAN has a small secretariat
in Jakarta, but most of the coordination is achieved through national
secretariats in member countries. That's a polite way of saying that nothing of
importance can really be enforced. In and of itself, this is the biggest factor
that will cause the unraveling of ASEAN.
Buying the peace
The formation of ASEAN in 1967 was almost directly a result of a desire by the
United States to forge a common front against communism, given the slide
apparent in Indo-China at the time. As a grouping aimed at an obvious external
threat, it would have been easier to start off with a central organization.
Instead, due to personality and political conflicts between members (for
example, between Singapore and Malaysia), the grouping became a talk-shop in
order to avoid giving the impression that countries could interfere in each
other's affairs. Even so, it achieved a key goal of member states vowing to
avoid war with each other, recognizing that the slide towards poor neighborly
relations often proves fertile ground for malcontents such as communist rebels.
The original members of ASEAN also benefited from the sharp increase in global
trade beginning in the 1970s, aligning themselves with the rapid growth of the
US and Japanese economies during the period. The impetus toward job creation
was helped by significant investments from US companies in sectors ranging from
natural resources to automobile manufacturing. This period of rapid growth was
however a mixed blessing, as ASEAN failed to make the transition into an
integrated economic zone.
The decline of the Soviet Union effectively ended the grouping's raison d'etre,
as all subsequent crises have led to a weakening of the group, exposing as they
did its failure to integrate economic and political interests. The two most
important were of course the Asian financial crisis of 1997-98, and the
increase in terrorism across the region.
Asian financial crisis
The unwinding of the Thai currency peg in 1997 led to an increase in currency
speculation across Asia, and eventually the contagion spread to virtually all
parts of Asia. In the first instance, the failure of ASEAN to rally behind Thai
authorities in their defence of the currency peg marked an abject failure to
foresee the potential wider impact of the crisis - a function of the lack of
central leadership at the organization as countries sought to protect their own
interests rather than any common good.
Particularly galling for both Thailand and subsequent victims Malaysia and
Indonesia was the fact that currency speculators in the main operated from
fellow ASEAN member Singapore. Malaysia's then Prime Minister Mahathir Mohamad
made outrageous remarks condemning a "Jewish conspiracy", but many media
analysts at the time assumed that his "intended" target was actually Singapore.
Further inflaming the situation, Indonesian politicians blamed ethnic Chinese
businesspeople for the crisis affecting their country, leading to widespread
riots against Chinese families across the country. Many businesspeople fled to
Singapore, where they felt safer and more welcome. This naturally led to
accusations in the Indonesian media that Singapore was shielding the
businesspeople from legal action back in Indonesia, causing relations to
decline further. Once again, the ambiguity of ASEAN as an organization proved a
hurdle in any attempt to reconcile the two sides.
As the crisis ended, Singapore lost a significant opportunity to export its
more sophisticated business and legal practices to the rest of ASEAN. The main
reason was members' promise not to interfere in each other's affairs, and yet
in an increasingly global environment, such strictures were largely pointless.
A failure to address basic corporate governance and bankruptcy procedures
slowed down the recovery from the Asian financial crisis across Southeast Asia.
This is in contrast to the experience in many other Asian countries, for
example South Korea, which rebounded much more quickly by adopting improved
procedures. The fact that Singapore's relations with its neighbors had
deteriorated due to the above factors played a part in this eventuality.
Ironically enough it was these countries rather than Singapore that actually
bore the full brunt of the mistake.
The second missed opportunity following the Asian financial crisis was a
failure to push through a free trade zone. Malaysia in particular objected, due
to the impact on its palm oil and auto manufacturing businesses. This failure
to integrate quickly meant the continuation of wasteful government support for
failed businesses across the region, in turn delaying recovery from the crisis.
ASEAN could still have gotten away with sub-optimal practices, but for the
emergence of China at the same time as a higher value-added producer. China's
rise came at the expense of ASEAN countries, whose failure to create more
viable and global businesses has meant a continuation of the downward spiral
from the 1990s in certain areas of manufacturing.
The crisis had its upsides, as Singapore cemented its position as the sole
financial center of South and Southeast Asia in the aftermath of the Asian
financial crisis. Putative competitors such as Kuala Lumpur fell by the wayside
due to their failure to improve governance and the rule of law, as demonstrated
so clearly in the aftermath of the financial crisis.
By far the biggest crisis confronting the region now came about in 2002 when
terrorists struck at the tourist resort of Bali in Indonesia. Subsequent
expansion in terrorist activity is apparent elsewhere in the region. The
failure of ASEAN to address the problem comprehensively can be laid to
Malaysia's intransigence on key issues.
With both the Philippines and Thailand adversely affected in recent years, it
only seems a matter of time before the entire region is tarred with the label
of being unstable in coming years. Here too, the grouping has lacked a central
leadership that could have examined the problem in its entirety rather than the
specifics of actual terrorist attacks. This failure shows that nothing was
learned from the experience following the Asian financial crisis. It is my
opinion that a resurgence in Islamist terrorism across Southeast Asia will push
growth rates down sharply over the next few years.
Unlike the more successful European Union, ASEAN is quickly headed toward
becoming a nonentity. The group, which can claim to be a success in dealing
with its original objectives of securing the peace and promoting economic
prosperity, has now clearly failed to do either in a changed environment.
This failure is all about the inability of member states to accept the need for
a strong central authority, like the EU Commission and parliament, that could
essentially legislate across the region. In turn, this will cause ASEAN to
unravel as a grouping in the coming years, as countries adopt bilateral
agreements in place of multilateral or collective bargains, and economic and
political threats emerge.
ASEAN has a mid-life crisis, from which it may never really recover.