Noninterference goal fades among ASEAN members

Noninterference goal fades among ASEAN members

HONG KONG (Reuter): The first political victim of Asia's economic crisis will be the region's rallying cry that countries do not interfere in each other's affairs, the head of a regional think tank said yesterday.

"I think this is far and away the most important regional political implication of the turmoil," said Bob Broadfoot, managing director of the Hong Kong-based Political and Economic Risk Consultancy.

"All of Asia now recognizes that there are cross border linkages that they were tending to ignore before," he told Reuters.

Thailand pushed the entire region into economic turmoil with its July 2 managed float of the baht after months of currency speculation.

Currencies fell and rates soared throughout the region as the spotlight fell upon current account deficits, rampant asset price inflation, high foreign denominated debt exposure and disappointing economic growth.

Although Thailand's situation was considered far worse than elsewhere, its capacity to catapult the region into a prolonged period of economic instability forced all Asian nations to contemplate their interdependence, Broadfoot said.

This issue strikes at the foundation of the Association of Southeast Asian Nations (ASEAN), whose members have prided themselves on an ability to speak as one voice on matters of common interest while respecting each other's national independence.

But the Asian economic crisis was the second reminder of the elusiveness of this goal in recent months, falling hard on the heels of ASEAN's decision in July to delay Cambodia's entry following a coup by Second Prime Minister Hun Sen, Broadfoot said.

China's contribution of US$1 billion to the Thai bailout fund was also significant given ASEAN's wariness of China's growing regional influence, Broadfoot said.

"Asia needed a voice to position itself against this growing political and economic clout of China," he said. "But now governments of Asia putting into bailout funds can twist the arms of other governments if they perceive domestic policies could get so out of whack they threaten to have regional repercussions... "When was the last time China coughed up US$1 billion for anything?" he asked. "This is new. You now have governments that are participating in a package to stabilize an economic situation in another country -- and they're not doing it out of the goodness of their heart."

Greater regional cooperation, probably through the "politically correct" front of the International Monetary Fund, was now more likely in a region characterized by the sort of authoritarian governments and volatile politics that disrupted Cambodia earlier this year, Broadfoot said.

"The most important thing to remember is, it always starts with politics. And now what we have are the economic realities," he said. "Now we see very, very clearly that the mismanagement of one economy, if allowed to go on, can have regional implications."

The nine member nations of ASEAN are Brunei, Myanmar, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.