From Financial to Democratic Crisis in Asia

JAKARTA: Political crisis has replaced financial crisis in Southeast Asia. President Estrada of the Philippines, who never mastered his office, was removed in a bloodless coup aided by mob rule. Now Indonesia’s President Wahid faces possible impeachment; so, too, may Taiwan’s president. Thailand’s new prime minister assumed office surrounded by scandal, Malaysia’s politics seem more unsettled than at any time in twenty years.

Southeast Asia’s boom years are gone, but this is not to say that they have vanished forever, for the causes of this instability are not hidden. Today’s political turbulence, indeed, has the same roots as yesterday’s financial storms: inadequate, unsound, and unformed institutions. Unless these institutional gaps are addressed, Asian societies will not get back on track.

Of course, finance and democracy are not twins. Yet parallels exist: without the checks and balances of sound domestic institutions, the global winds of political liberalization unsettle former authoritarian regimes, much as economic globalization wrecked havoc on weak financial institutions. Indeed, important lessons can be drawn from Asia’s economic crisis of 1997-98 for today’s political tumult.

The irony of Asia’s economic crisis was that it struck the “miracle” economies that maintained sound macroeconomic policies and carried out far-reaching financial liberalization. What went wrong? Some analysts proclaim that liberalization was “inappropriate” or “disorderly.” Something similar to this complaint is now made by critics who say that countries like Indonesia and the Philippines are too sprawling and undisciplined to adopt democracy.