Moving East Asia Forward Again

In the short and the medium terms, however, I think we will be facing much tougher changes. We are facing not only a financial crisis—the financial crisis is a symptom—but something much more basic that permeates all sectors of life. It is the challenge, as has been said yesterday by Hisashi Owada, of a globalization process that is so rapid and so fundamental. We are still looking for answers. Of course, every country in East Asia does not face the same depth of challenge because they are in different stages of development. Indonesia is the worst case scenario. We must recognize that these are fundamental challenges and we will have to struggle with those very difficult challenges in the short and medium terms.

New Development Strategies
What we need is a vigorous debate in the region on some of the things that we have to change. Because each country is at a different stage of development, we have to decide for ourselves what kind of development strategy each country might need in the future. The so-called Korean model—economic development first and then automatic political development—is passé. We have learned that it is not relevant anymore. What we don’t need is twenty-five or thirty years of economic development, then a bust and maybe a ten-year setback, as in the case of Indonesia. So we have to define our own development strategies in much more comprehensive and balanced ways, of which political development is a very important part. Otherwise, we cannot even get the fundamentals of the economy right.

We should have inclusive development because the globalization process has created a dichotomy in society where a shallow upper level, 20 percent maybe, has benefitted, while 70-80 percent of the population is being left behind. This dichotomy is already creating havoc, especially in the case of Indonesia, where it is also related to issues of race and social justice. Social safety nets are the next challenge we will have to face.

Development also has to be sustainable. We have learned from our forests burning and the haze problem in Southeast Asia how dramatic and critical environmental disaster can be. At the time, when a poll in Singapore asked, “What is the greatest threat we are facing?”, they said it was the forest fires of Indonesia.

So we have to come to our own conclusions on new development strategies.

Regional Institutions
I would like to mention how we should deal and cope with our regional institutions. We have achieved some very good developments, especially in the case of ASEAN. There is no doubt about it. This non-legal, personal, and informal-relations-based regional institution is why the impact of the economic crisis is not overflowing into the security field. Considerable confidence-building has been achieved through these regional institutions. But at the same time we have to recognize, if we really want to move into regional institution-building in the future, it has to be much more rules- and norms-based and we have to have many more institutions on which to build. Here we can learn from the EU. Although we cannot emulate the EU (historically, it has much more experience and we are a much more diverse and much bigger region), I think we can learn from how parts of the EU have been built. Therefore, it is an important model for us.

Let me come to some concrete problems we are facing now with these regional institutions. A lot has happened and a lot of achievements have been accomplished in ASEAN. That it will stay open is very important. The idea that we have to have agreements, norms, and rules has started. We have declared ASEAN to be an investment area in the year 2002 and that has to be based on solid agreements. We have agreed to transparency and to reviews of macro-economic indicators to watch each other with help by the ADB, also based on very rigorous agreements. But at the same time, we have to recognize that we are facing a lot of challenges in ASEAN, not only because of the crisis, but also because there are new leaders coming up who have never met each other before and they have to get through to each other. The challenge of new members is a real challenge, and we just don’t know yet how to cope. And, of course, we have to look for new principles of cooperation in the future.

APEC is in a critical period. How do we reinstate its idealism and cooperation? I do think, though, that this year, with the leadership of New Zealand, it will achieve a better result than last year. APEC is very dependent on the country in the Chair to guide the results of APEC every year. Unfortunately, last year the chair was held by Malaysia, which had internal problems limiting its capacity to lead APEC to a further stage of development. So, I hope at least, and we are working very hard, that APEC this year will be better than last year. It is important that we keep APEC alive because it is the only regional institution where the heads of governments are coming together, and the institution upon which regionalism, in the end, has to be built.

Now one footnote in relation to APEC is the idea of an East Asian summit. This summit has been established by ASEAN to be used for policy coordination and consultation among East Asian leaders, including Australia and New Zealand in the near future. This summit is where we can have effective consultations and policy coordination, as core members of APEC, so that we will be able to move APEC, and the ASEAN Regional Forum as well, in a much better direction in the future and have much better input into global issues as East Asians. That process already started in ASEM, the Asia-Europe Meeting.

Now, these activities have been kept alive because of the activities of society itself. Regionalism is dependent not only on the governments. I think the “second track” activities of these regional instititutions that have been established in the meantime, like PECC (Pacific Economic Cooperation Council) are very important sources of support for the future of all the regional institutions to come. PECC, for instance, has started an independent peer review of macro-economic indicators. If we can achieve a full-fledged review in the next five to ten years, then I think we will be much better off; we will then be keeping the idea of regional cooperation alive and going.

Regional Security
The last point that I would like to make is on security. The good thing that has happened is that the financial crisis has not brought in the instabilities about which we were worried. This fact lends credence to the idea that our regional institutions have created enough confidence to maintain stability, despite the crisis. Southeast Asian leaders have more problems because they have historical grievances as well as new leaders coming up, but relationships have not become more acrimonious. In Northeast Asia, the situation has improved, especially between Japan and Korea. The Japan-China relationship also is going to be built up, slowly, in the near future. Our main concern, however, is the shadow of the China-U.S. relationship hanging over East Asia. This is a very critical problem because the presence of the United States is critically important to the region, politically, economically, and militarily. I hope this shadow will not become a storm and, instead, will fade away. This is a very crucial matter that, of course, the American political body has to decide in the end; but we are hoping that cooler heads will prevail, and that this very important relationship, which is so broad-based, will not be looked upon only from one angle.

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The region is facing a lot of turbulence, and we will have to work very hard to turn this around. We might need between three and ten years to be able to do that; in some countries, it can be done better and quicker, but it will not be an easy job. For the region as a whole, maybe in the next decade or so we can become a better East Asia, not only turning around the macro-economic indicators, but having societies that are democratic and looking to include the masses that they have left behind over the last decade; and, at the same time, have much more stable relationships among one another.