Assessing ASEAN's Performance and Potential - 'Why has it been imperative for ASEAN to embark on a process of reform and 'reinvention' since the regional crisis?'

Table of content

Introduction

I. Failure to react to the financial crisis

II. Ineffectiveness of the ‘ASEAN-way’

III. ASEAN’s view on China

IV. Emergence of East-Asia regionalism and geopolitical factors

Conclusion

Bibliography

Introduction:

Singapore’s Prime Minister Goh Chok Tong opened the 6th Summit of the Association of Southeast Asian Nations (ASEAN) in Hanoi with the words: "This has been a traumatic year for ASEAN members ."^[1] Indeed, the financial crisis of 1997 marked the end of an extraordinary decade of internationally oriented economic growth throughout Southeast Asia, and came as a shock for the Southeast Asian countries. Although Paul Krugman had warned that Asian growth, like that of the Soviet Union in its high-growth era, seemed to be driven by extraordinary growth in inputs like labour and capital rather than by gains in efficiency,^[2] his was a lone voice in academic discussion. The severity of the crisis inevitably raised the question of how it would affect ASEAN.^[3] Ross Garnaut commented that the largest long-term effect of the crisis would be its effect on policy formulation.^[4]

Since its formation in 1967, ASEAN has occupied a central role in the international relations of Southeast Asia.^[5] It was the first regional organization in Asia, and is a crucial factor in East Asian and Asia-Pacific regionalism. From the beginning, ASEAN’s mission was regional resilience against great power interests. Economic development in the region was perceived as means to ward off communist and ethnic rebellions.^[6]

However, after three decades of promoting peaceful intra-regional relations, ASEAN – one of the most successful regional organizations in the developing world–has needed to seriously reinvent itself since 1997.^[7] As the Deputy Prime Minister of Singapore, Shanmugam Jayakumar, noted in April 2006: “we have to rethink and remake ASEAN”.^[8] According to Jayakumar, ASEAN has to deepen and accelerate the process of integration to stay competitive in the face of the challenges confronting the regional grouping, or face the risk of being marginalised. Furthermore, he claimed that ASEAN must adopt a different paradigm with both bold and practical ideas for the future.^[9]

This essay will examine four reasons why ASEAN must redefine its future aims, strategies and paths. The first part deals with its failure to react to the financial crisis, while the second outlines its norms, especially non-interference. Parts three and four analyse external factors: the rise of China, the emergence of East Asian regionalism and other geopolitical factors.

I. Failure to react to the financial crisis

Asiaweek commented in December 1998: “Never before have the members differed with each other so intractably and so publicly – leading many observers to even fear for ASEAN's very survival.”^[10] Indeed, the financial crisis had been widely recognised, even within the grouping itself, as a major blow to ASEAN’s credibility.^[11] In many ways, it had shown the limits of Southeast Asian’s regional capability, as the Southeast Asian nation-states did not respond to this major economic crisis by strengthening cooperation.^[12] Bluntly stated, ASEAN as an organization was irrelevant in the financial crisis. Neither as a group nor as individual members were the ASEAN countries able to provide the resources to one another that would have enabled them to restore financial stability.^[13]

ASEAN states were basically left on their own to deal with the IMF and to find their own ways out of the crisis. Anthony Milner highlighted the differing perceptions and interpretations of the financial crisis. The King of Thailand proposed in December 1997 that if it could revert to being a self-sufficient economy, Thailand would survive.^[14] In Indonesia, the crisis quickly escalated from being solely monetary to a near total, including political, disaster. Indonesia’s earlier prosperity was as attributed to the achievements of Suharto, but with the crisis the father of the state had failed.^[15] Until the beginning of December 1997, Malaysia’s position was characterized by denial that it would suffer Thailand’s fate. Problems were deemed to be temporary and were also blamed on external forces.^[16] Later, Malaysia's Prime Minister, Mahathir Mohamad, repeatedly made vitriolic attacks on speculators and on the West, and evened threatened to impose capital controls.^[17]

All of Southeast Asia’s political systems, be they autocratic, communist, transitional or democratic, faced challenges to their authority. Those states increasingly relied on the successful delivery of economic goods as their legitimacy was severely challenged by the crisis.^[18]

Encouraged by Hong Kong and Japan, ASEAN finance ministers attempted to set up an ‘Asian Monetary Fund’ as an additional source of financing to the IMF,^[19] but Japan was unable to provide the macro-support or boost that the Asian economies needed.^[20] ASEAN was simply too weak to provide meaningful economic solutions to the severe financial crisis.^[21] ASEAN’s response to the crisis revealed its considerable failure to wield global influence, but even to assume that ASEAN had previously exercised such influence would seem a substantial overstatement.^[22]

[...]

^[1] Mitton, Roger and Alejandro Reyes: THE NATIONS - ASEAN - HURTING IN HANOI - A summit exposes ASEAN as divided, but trying to hang together, Asiaweek, 25th December 1998.

^[2] Krugman, Paul (1994): The Myth of Asia’s Miracle, in: Foreign Affairs, Nov./Dec. 1994, Volume 73, No. 6, 70.

^[3] Rüland, Jürgen (2000): ASEAN and the Asian crisis: theoretical implications and practical consequences for Southeast Asian regionalism, in: Pacific Review, 13 (3), 427.

^[4] Milner, Anthony (2003): Asia-Pacific Perceptions of the Financial Crisis: Lessons and Affirmations, in: Contemporary Southeast Asia, Volume 25, No.2, 286.

^[5] The original five members were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Brunei joined when it got its independence in 1984. Myanmar and Vietnam joined in 1997, and Cambodia two years later.

^[6] Rüland, Jürgen (2000): ASEAN and the Asian crisis, 427.

^[7] Acharaya, Amitav (2001): Constructing a Security Community in Southeast Asia: ASEAN and the problem of regional order, London and New York, 208.

^[8] Kagda, Shoeb: Integration crucial to future of Asean: Jaya, Business Times Singapore, 20th April 2006.

^[9] Ibid.

^[10] Mitton, Roger and Alejandro Reyes: THE NATIONS - ASEAN - HURTING IN HANOI - A summit exposes ASEAN as divided, but trying to hang together, Asiaweek, 25th December 1998.

^[11] Acharaya, Amitav (2001): Constructing a Security Community in Southeast Asia, 152.

^[12] Rüland, Jürgen (2000): ASEAN and the Asian crisis, 444.

^[13] Denoon, D. and C. Colbert (1999): Changes for the Association of Southeast Asian countries, in: Pacific Affairs, Vol. 71, No. 4, 521.

^[14] Milner, Anthony (2003): Asia-Pacific Perceptions of the Financial Crisis: Lessons and Affirmations, in: Contemporary Southeast Asia, Volume 25, No.2, 293.

^[15] Milner, Anthony (2003): Asia-Pacific Perceptions of the Financial Crisis, 298.

^[16] Nesadurai, Helen E.S. (2000): In defence of national economic autonomy? Malaysia’s response to the financial crisis, in: The Pacific Review, Vol. 13, No. 1, 85.

^[17] The Economist: The limits of politeness, 28th February 1998.

^[18] Thayer, Carlyle A. (2004): Southeast Asian marred miracle, in: Current History, Vol. 103, 179.

^[19] Denoon, D. and C. Colbert (1999): Changes for the Association of Southeast Asian countries, 521.

^[20] Milner, Anthony (2003): Asia-Pacific Perceptions of the Financial Crisis: Lessons and Affirmations, in: Contemporary Southeast Asia, Volume 25, No.2, 296.

^[21] Rüland, Jürgen (2000): ASEAN and the Asian crisis, 445.

^[22] Camilleri, Joseph A. (2003): Regionalism in the Asia-Pacific Order, Cheltenham, 191.