After the Storm

Abstract

For those keen on closer ties between Canada and the countries of the Asia Pacific, the last couple of years have been difficult. In a case of almost unbelievably bad timing, the bloom faded from the Asian boom, and the Asia-Pacific Economic Co-operation (APEC) summit in Vancouver appeared to implode in a cloud of acrimony and pepper spray in 1998, Canada's Year of Asia Pacific. Regional currencies and stock markets sank, and the Bre-X fiasco added to the woes. Since then, the 'Asian contagion,' which the best national and multilateral analysts failed to predict, has been blamed for precipitating crises in Russia and Latin America. The legions of newly minted promoters ran for cover, and the entire Asia-Pacific region has assumed a much lower profile in Canadian foreign policy and media circles. Fashion changed, and the herd galloped off to greener pastures elsewhere.While many causes have been assigned to Asia's well-advertised demise -- overvalued currencies and equity markets perhaps foremost among them -- globalization has played the most significant role. Among globalization's many and often conflicting characteristics is a preference for global and multilateral trade, finance and investment relations at the expense of more traditional regional and bilateral ties. In some key countries in the Asia Pacific, the impact of globalization has been accelerated and accentuated by the preferred tonic of the International Monetary Fund (IMF) -- policy conditionalities and neoliberal reforms. Although this was greeted enthusiastically by supporters of an integrated, if asymmetrical, world political economy, the costs imposed upon civil society were very real.Trade liberalization, structural adjustment, and other IMF-favoured macroeconomic policies tend to concentrate wealth, both within and between states. As globalization continues, neither the gains nor the losses from the process are evenly distributed, especially in the short term. At the same time, the ability of many of the regions governments to cope effectively with the consequences of globalization and the requirements of the international financial institutions is extremely limited. Welfare reductions, programme cuts, interest rate hikes, currency devaluation, privatization, and marketization are politically tough to implement, especially at times of economic weakness.The imposition of these 'reforms' can contribute to the creation of desperate circumstances which, when combined with population pressure, resource scarcity, and a rush to the bottom in terms of labour standards and workers rights, can give rise to feelings of intense insecurity among those most affected. One has to look no further than contemporary Pakistan or Indonesia. Polarization of income and wealth is leaving an increasing number of citizens economically distressed and politically disenfranchised, while government priorities have moved further away from the welfare vocation of providing for the disadvantaged and more in the direction of providing a suitable 'enabling environment' for and competitive incentives to business. Even in political cultures steeped in the ethics of Buddhist acceptance or Confucian submission, this is a potentially explosive combination.Globalization, with its inherently deregulating and liberalizing dynamic, expedited both the inflow of foreign capital and the outflow of export products. This, in turn, fuelled Asia's decade of record-breaking expansion and the flight of investment that precipitated the crisis when perceptions suddenly changed. The dazzling transformation of mainstream Western thinking about Asian business practices and political culture is particularly instructive. What was seen as an outstanding example of co-operation among business, labour, and government one day became 'crony capitalism' the next day. Countries that had been regarded as economic miracles and Asian tigers by pundits and financial markets alike came almost overnight to be seen as 'basket cases' and 'alley cats. …