Mahathir on ASEAN center stage

Mahathir on ASEAN center stage

By Roberto Coloma

SINGAPORE (AFP): The severe crisis in Indonesia has eroded President Soeharto's standing as the region's elder statesman, allowing Malaysian Premier Mahathir Mohamad to fill the void, diplomats and analysts say.

"Overwhelmed by its own internal problems, Indonesia is no longer in a position to play its traditional leadership role in Southeast Asia," the Political and Economic Risk Consultancy Ltd. (PERC) said in a report.

"Indeed, with its economic situation deteriorating almost by the day, Indonesia is in danger of becoming a regional liability rather than an asset," added the Hong Kong-based group, which analyzes Asian trends.

Mahathir completed a Southeast Asian tour in Singapore over the weekend after visiting Indonesia, Thailand and the Philippines to sell his idea of using their battered currencies in regional trade instead of the U.S. dollar.

Stressing the need for a "united front" in ASEAN, whose major currencies have fallen sharply against the dollar, he said he had mustered support for the trading scheme, which is to be refined by regional central bank governors.

The mission came two months after Mahathir, 72, hosted a summit of the Association of Southeast Asian Nations (ASEAN) which Soeharto, 76, missed due to a still undisclosed health problem at the time.

With 200 million people in a vast archipelago strung across the region, Indonesia has been the big brother within ASEAN since it was founded 30 years ago. Jakarta has been a stabilizing force, serving as a mediator in solving the Cambodian conflict and easing tensions over the disputed Spratly islands.

But as Soeharto seeks a seventh five-year term in March elections after being in power since 1966, he is facing his worst crisis since coming to power and Indonesia is sliding irreversibly into a recession despite a US$40-billion international bailout.

Timely reforms have allowed Malaysia to avoid seeking a rescue, and Mahathir has joined a procession of Southeast Asian leaders who have visited Soeharto to offer their support.

"We can't let Indonesia go under. The only conceivable scenario worse than turmoil in Indonesia would be turmoil in China," said an ASEAN diplomat.

PERC said, "widespread social unrest in Indonesia could result in thousands of economic refugees heading to Malaysia and Singapore in search of a better life."

Soeharto's image was first hurt last year when pollution from forest fires in Indonesia generated severe smoky haze which made life difficult for millions in the region and triggered unusually open and bitter criticism of Indonesia.

PERC said because of the haze problem -- for which Soeharto had to apologize publicly -- "Indonesia's moral claim to regional leadership was seriously questioned."

"As Indonesia sinks deeper into an economic and political quagmire, Malaysia seems well positioned to take over Jakarta's role as the effective leader of ASEAN, helping the countries of the region come up with solutions to their common economic problems," it said.

Mahathir came under severe criticism last year and was labeled a "loose cannon" after calling for curbs on currency trading. But since hosting the ASEAN summit missed by Soeharto in December, Mahathir has toned down his rhetoric and taken a more pro-active role.

"I would say Mahathir's status has edged upward, especially when he held his tongue during the summit," the ASEAN diplomat said.

He said because of its largely ethnic Chinese population, Singapore cannot seize leadership in ASEAN despite its financial muscle.

The two other large countries in Southeast Asia, Thailand and the Philippines, cannot assume the role because their leaders do not stay in office long enough, he said. Mahathir has been in power since 1981 and from all indications intends to stay at the helm.

"Malaysians in general are also probably more attuned to the need for regional solutions to regional problems than the citizens of any other country in Asia," PERC said.