ASEAN during the Crisis

Abstract

This article examines the efforts that have been made by the Association of Southeast Asian Nations (ASEAN) as an institution to deal with the Asian crisis. At the national level, member countries have taken steps to strengthen supervision of banks, foster great transparency in financial transactions, and promote competition. At the bilateral level, ASEAN members have extended assistance to the most affected countries, especially Indonesia. At the international level, ASEAN members have collectively appealed to the advanced countries to keep their markets open, to be more accommodating in the renegotiation of debt, and to remember to protect the poor in their reform programmes. The article traces ASEAN initiatives at successive meetings, but concludes that existing economic co-operation programmes need to be widened in scope and deepened in commitments. Introduction There appears to be a serious gap in perceptions between ASEAN officials and the public in and outside ASEAN on the efforts made by that institution to overcome the economic crisis that has affected all its members, albeit in varying degrees. Indonesia, Thailand and Malaysia have been hit hardest; Singapore and the Philippines to a much lesser extent. Yet, a prolonged and deep crisis in the severely affected regional economies will also pull down the growth rates in Singapore and the Philippines as has been evident since the beginning of 1998. Even countries such as Vietnam and Laos that are relatively more insulated are also affected by the economic slowdown in the region. Since the regional impact of the crisis is so pronounced, it would be logical to expect ASEAN to be in the forefront of regional and international responses to the crisis. In the public's view this is one of the most important reasons for having ASEAN and for promoting ASEAN economic co-operation. The public has been largely disappointed with ASEAN. Its perception is that of a helpless ASEAN, an ASEAN that cannot move decisively, an ASEAN that is trapped under its organizational and bureaucratic weight, and an ASEAN that fails to respond to real, current problems and challenges. Perhaps this public perception has been influenced mainly by ASEAN's failure in 1996 and 1997 to do something tangible about the severe regional haze problem that affected the health of the people in many ASEAN countries. The expansion of ASEAN membership to include a problem country such as Myanmar, and the difficulties ASEAN has encountered in bringing in Cambodia, are regarded as hampering ASEAN's ability to act swiftly. They are also seen as weakening the diplomatic clout that ASEAN would need to effectively mobilize international support in resolving the crisis (Hernandez 1998). There has been much soul-searching in ASEAN during the past year that coincided with the onset of the crisis. Until then ASEAN was still in a state of euphoria due to the region's remarkable record of rapid economic growth, the near completion of the One Southeast Asia enterprise, and its important role in the creation of the wider regional co-operative structures by virtue of being a copilot in APEC (Asia-Pacific Economic Cooperation) and occupying the driver's seat in the ARF (ASEAN Regional Forum). This position crumbled almost overnight with the financial meltdown. ASEAN's future relevance to its members and to the region suddenly becomes a relevant question in many quarters, even within the ASEAN officialdom. ASEAN, some have argued, cannot maintain its relevance if it continues to be inhibited by the principle of nonintervention that it has held sacrosanct. Suggestions were made to bring ASEAN back to the drawing board. It is to be re-established under a new principle of constructive involvement (Malaysia's Anwar Ibrahim) or flexible engagement (Thailand's Foreign Minister) that enables its members to discuss domestic developments in an ASEAN member that affect other members' security and well-being, ASEAN's cohesiveness, and the security of the wider region (Wanandi 1998). …