The end of the Asian miracle could lead to the collapse of governments in the region, writes Nicholas D Kristof
As Asia’s miracle seems to fade to a mere marvel, many experts on the region worry that growing economic frustrations risk provoking political and social upheavals.
The underlying challenge is that for decades an implicit social contract has governed much of Asia: citizens put up with corruption, nepotism and often authoritarianism in their governments in exchange for getting rich. But now the financial crisis that has swept the region means that people can no longer count on getting rich.
No one knows exactly where the breach of this social contract could lead – to riots, to toppled governments, to ethnic clashes, or perhaps to nothing at all – but there is a profound apprehension that some countries may pay a price that is far greater than the already wrenching economic turbulence.
“Most of the governments in South-East Asia claim the right to rule on the basis of delivering the economic goods,” noted Muthiah Alagappa, a Malaysian scholar of politics at the East-West Centre in Honolulu. “So one of the sharpest repercussions of all this is going to be the questioning of governments that are no longer able to deliver the goods.”
The paradox is that much of Asia is still expected to grow by rates that are faster than the pace of the United States economy. But Asians accustomed to cruising in the fast lane in the economic equivalent of a Ferrari may be profoundly irritated at hobbling along for a couple of years with the rest of the traffic.
Many Asian countries have not endured a real recession in more than two decades – or in the case of Indonesia and Thailand, for three decades. The population of Asia is so young that this means that most Asians have no memory of a recession, and if one is now arriving it will be a devastating experience socially and psychologically, as well as economically.
“After consistently high rates of growth, even a deceleration of the growth can cause disappointment and despair that may well have political and social fallout,”said Linda Tsao Yang, the US executive director of the Asian Development Bank in the Philippines. “And if the economic adjustments cause growth to grind to a halt, then the political fallout will be even more challenging.”
Consequently, Yang argues that international organisations and Western governments should be careful in setting conditions for bailouts, so as not to aggravate poverty and risk a backlash that would undermine social and political stability.
Aside from the threat to governments in the region, one of the greatest concerns is how economic malaise will aggravate ethnic fissures. One of the most sensitive divides concerns the ethnic Chinese minorities who dominate the economies of most South-East Asian countries.
In the 1960s, Indonesia, Singapore and Malaysia were all torn by bitter riots between indigenous people and ethnic Chinese. In Indonesia, where the 4% of the population that is ethnic Chinese controls about 60% of the nation’s wealth, upheavals led to the deaths of more than 250000 people in the mid-1960s.
The long economic boom since then helped salve the ethnic antagonisms, for the average worker or peasant enjoyed a better life, even if he might fume about the Chinese shopkeeper down the road charging high prices for old vegetables. But over the last year, anti-Chinese riots have become more common, and the Indonesian Bishops Conference this month issued a statement warning against allowing the economic crisis to trigger further outbreaks. Even in more homogeneous countries, the challenges are immense, in part because economics and security are often intertwined.
In South Korea, for example, some people fret that the current economic weakness and labour unrest, as workers go on strike to protest planned layoffs, might tempt a North Korean attack. And others worry that the economic crisis, coupled with labour unrest and a possible opposition victory in the presidential elections on December 18, conceivably could encourage South Korea’s own military to stage a coup, although this is widely regarded as very unlikely.
In a region once famed for its strongman rule, it is striking that relatively weak governments now rule many countries in Asia, from India to Japan. The economic crisis has already toppled one government, Thailand’s, and some analysts believe that more could follow.
“Leaders are generally vulnerable across the region,” said William H Overholt, a Hong Kong-based managing director of Bankers Trust Co. “And there’s also a generational change under way that is now going to be accelerated.”
To be sure, a bit of upheaval might not always be such a bad thing. One government that may be vulnerable, for example, is the autocratic one in Myanmar, formerly known as Burma – and many experts believe that a new government is just what that country needs.
One difficulty in making predictions about the consequences of the economic crisis is that while governments are weak throughout much of Asia, the opposition forces also tend to be fractured. Japan’s experience over the last half-dozen years demonstrates that in such circumstances the result can be that the social contract tears without leading to revolution or even much evolution. – NYTimes