The Asian crisis: Towards democracy?

By Gwynne Dyer

This is the last in a three-part series of articles examining the economic, social, and political implications of the crisis that began in Asia and now threatens to involve the entire world. Previous parts appeared in this newspaper's Friday and Saturday (Jan. 23-24) editions.

LONDON (JP): "If the first reaction to the economic crisis by many Asian leaders has been denial, the need to attract foreign capital will eventually force a more rational response. That transition may result in a change of leadership in several countries." -- Christopher Wood, Peregrine Securities, Hong Kong

Typical Western arrogance and free-market triumphalism. What does this ignorant Western capitalist understand of the ancient and subtle cultures of Asia? Nothing -- and it serves him right that the Peregrine Group has been one of Hong Kong's earliest casualties in the Asian financial panic.

But maybe he's right nevertheless. What if modernization truly is a package, and nobody gets to cherry-pick only the aspects that appeal to them? If every country that acquires a modern economy is fated to get a modern political system as well, then Asia is heading for democracy. All across the region, there are signs that this may be the outcome:

Bangkok, November 20: Chuan Leekpai was so surprised at becoming prime minister on Nov. 8 that he kept forgetting and using opposition facilities instead. He went on driving the car assigned to the opposition leader, and showed up at a meeting room where the opposition parties were plotting strategy against him.

Silly old Chuan. But the point is that the Thais have responded to the crash by dumping the traditional politicos whose power came from buying rural votes wholesale, and who were then compelled to loot the government while in power to refill their coffers for the next election. In place of the robber-barons, they have installed Chuan's Democratic Party, which is Thailand's only modern, broadly based political party.

The "tiger" economies got to where they are now (or rather, where they were three to six months ago) by using authoritarian and essentially pre-modern methods to grow their economies. Cronies and political allies got endless unsecured credits, any little problems that this caused the financial institutions were solved by further injections of government funds, and foreign competition was frozen out by manipulation of the legal system.

It was a system that England's King Henry VIII or France's Cardinal Richelieu would have been quite at home with, and it did the job. The combination of modern production technologies with low wages, an emerging global market, and unlimited funds for investment enabled these countries to achieve truly amazing growth rates. For a while.

Now the party is over, and the disciplines being applied to Asia's emerging economies by the global markets, or directly by the International Monetary Fund, will put an end to those pre- modern economic relationships. They may put an end to the regimes that built their own power on those relationships as well.

Seoul, December 24: South Korea's President-elect Kim Dae-jung declares himself "flabbergasted" at the scale of the country's economic crisis. But the real surprise is that this man, long vilified as a communist by the military regimes who directed the "Miracle on the Han (River)", and twice the target of state- organized assassination attempts, was elected to clear up the mess they left behind.

South Korea, like Thailand, made the formal transition from military rule to civilian democracy at the end of the 1980s, but neither country is yet a fully modern state where politics, the military, the business world and the courts have clearly defined and largely separate spheres of responsibility. Now, the crisis is forcing them towards that conclusion.

Will it work the same way in the rest of Asia too? Will countries like Indonesia and even China be pushed towards more democracy, or deeper into tyranny? Analogies are tricky, but they're all we have to work with.

The first countries to democratize, in North America and Western Europe, did so at more or less the same time as they modernized economically. But the economic growth was very slow by contemporary Asian standards, and the political change came in great sudden lurches like the American and French revolutions, so it's hard to establish chains of cause and effect. All you can safely say is that there was "some" link between economic modernization and democracy in the West.

In the second great wave of democratization, in the former communist countries of Central and Eastern Europe at the end of the 1980s, the relationship seems closer and clearer. The Stalinist pattern of industrialization produced "East Asian" growth rates at first, by simply forcing peasants into the factories and exploiting their cheap labor, but the system's inability to move beyond primitive "command" relationships resulted in economic stagnation by the 1970s. After two decades of frustration, the citizens rebelled -- and their tactics were far more sophisticated than the first-wave democratic revolutions because they knew so much more.

The miracle of 1989-1991 was not just that all those Orwellian dictatorships fell. It was that they almost all fell non- violently, and were instantly replaced in most places by more or less functioning democracies. Down in the ethnically tangled, mountainous southern fringes of the old communist empire it got quite bloody for a while, and many of the successor states are still struggling economically, but the political transition was astonishingly smooth in the industrialized countries. Why?

Because even Soviet-style industrialization produced so many urban, literate, modern people, and even the closed Soviet-style economies had so many contacts with the outside world, that it was impossible to close off the information flows.

By the late 1980s, in a place like Moscow, everybody knew everything -- about how their own country was really run, about the alternatives available in the rest of the world, and about the possible techniques (like non-violent action) for moving from A to B. Then it only took a trigger like the opening of the Berlin Wall for the whole avalanche of democratization to begin.

In the "newly industrializing countries" of Asia and elsewhere, industrialization has produced the same critical mass of urban, literate people that swept away the old communist systems in Europe. There is virtually no control over the information flows in these countries except for China, and even there it isn't very effective. Rising prosperity has protected some of the old regimes for a while, but unless Asians are fundamentally different, the same logic ought to apply in the end.

"Asian values" was a crude attempt by the authoritarian regimes to escape this conclusion by arguing that "Asians" are indeed fundamentally different. But the "Asian" social and political values preached by Singapore's Lee Kuan Yew or Malaysia's Mahathir Mohamad are virtually identical to the values that predominated in the pre-industrial, pre-democratic West.

There is no common "Asian" culture: Thailand and Myanmar are Buddhist, Indonesia and Malaysia are Moslem, the Philippines is Christian, the Chinese are ex-Confucian ex-Marxist-Leninists, and the Koreans are deeply confused Confucian/Buddhist/animist/ Christians. "Asian values", to the extent that it ever meant anything, is a slogan in a generational war among Asians, not some profound and ineradicable cultural difference between East and West.

The modern style of non-violent democratic revolution was actually pioneered in Asia, first in the Philippines in 1986, then in Thailand, Bangladesh and South Korea (partial successes) and in Myanmar and China (bloody failures) in 1987-1989, even before it was copied in communist Europe. This fact largely escaped notice because there was no monolithic political empire in Asia, and therefore no visible "wave" effect. Until, perhaps, now.

Jakarta, January 18: Even two months ago, it was taken for granted that Indonesia's 76-year-old President Soeharto would win the March presidential elections and go on to a seventh five-year term. But now, with Indonesia's currency worth only a fraction of its August value, many people have little left to lose. "The only way to turn the situation around is to break the status quo," says Amien Rais, chairman of the 25-million-strong Moslem organization Muhammadiyah. "And the only way to do that is to replace Soeharto."

"He should have stepped down a long time ago, we need different people," agreed Abdurrahman Wahid, leader of the Nahdlatul Ulama, which claims a grass-roots membership of 30 million Moslems. And Megawati Soekarnoputri, daughter of the man whom Soeharto replaced 32 years ago, has volunteered to run for the presidency herself if nobody else will stand against him.

So, can economic crisis bring political reform? There is one recent precedent: three years ago, the Mexican economy hit the buffers just as dramatically as the recent smashes in Thailand or South Korea. The peso halved in value, foreign investment fled, and wages and employment collapsed. An IMF bail-out imposed severe disciplines on the economy, and ordinary Mexicans paid the price.

The macroeconomic statistics for Mexico have improved tremendously since then, but real wages are still 23 percent lower than in 1994, and job losses continued until last year. The economic pain has been intense -- yet this is also the period when Mexico finally took decisive steps towards democracy.

Mexico became a one-party state seventy years ago, and though opposition parties have been allowed to operate for the past few decades, they were never allowed to win at the federal level. In last July's elections, however, the Institutional Revolutionary Party (PRI) lost its majority in the lower house of Congress.

The PRI machine could have prevented it, but faced with overwhelming public demand for fair elections, it did not. President Ernesto Zedillo has now agreed to work with an opposition-dominated Congress, and PRI could even lose the presidency in three years' time. All this in the midst of, indeed because of, the huge economic crisis that has hit the country.

Can we expect the same counter-intuitive outcome in crisis- struck Asian countries that have not yet democratized? Very probably, yes. If the virus spreads to China, we might even see democratization there.

So all we have to worry about now is a global depression.