East Asian Institution-Building

What It Is Not
Let me at the outset stress what it is not, so there will be no confusion about this idea.

First, it is not the same proposal that, with due respect, Prime Minister Mahathir advanced in the form of a so-called East Asian Economic Grouping. As you know, that proposal was then considered more based on his resistance to the dominance of the so-called Western countries, particularly the United States.

Second, the idea of having an East Asian institution is not to divide the Pacific into two parts. The proponents of an East Asian institution, particularly in Southeast Asia, think that APEC—Asia-Pacific Economic Cooperation—is still the most important institution in the region. This is not least because the United States is a member. The United States has clout and influence in the region economically, politically, and in security terms which is vital to the stability and peace in the region. APEC is also the most developed regional institution we have, including a summit with the various ministers meeting on a regular basis, and supported by a lot of “second track” activities or organizations (NGOs, academic think tanks and the private sector more generally). APEC is not only an economic institution and, after a few years of hiccups, has gone into much more stable development. As you have seen, it has also handled some very sensitive political problems, such as providing for important bilateral talks between China and the United States at the summit, and also addressing informally the crisis last year of East Timor.

Third, East Asian institution-building is also not going to turn East Asia into a bloc for economic or political purposes, especially not given the willingness of East Asia to support global rules and institutions. I think of all the world’s regions East Asia is the most interdependent with the EU and North America, as well as with the global system as a whole.

What It Is
Let me try to explain what East Asian institution-building is in a few minutes.

It is more, at this stage of the game, a consultative process to exchange ideas about the region and assessments of developments as well as of policies and strategies to be developed. Of course, wherever possible some coordination of policies could be undertaken.

East Asian institution-building will mainly deal with economic problems in the future. The monetary and economic crisis in the last few years has given a new impetus to the idea that actually has been developing over the years. The idea is that we need an East Asian institution to be able to cope with such crises in the future.

It is also true that the idea of an East Asian institution is to be able to contribute more actively to global development of institutions and rules in the future. So far, as has been recognized, East Asia has not participated or initiated a lot of new thinking on global rules and institutions as such.

But beyond the recent crisis, East Asia fundamentally has an intense economic interdependence, and in some instances integration. That makes East Asian institution-building not only a viable thing in the future, but also a must.

ASEAN-plus-Three Summits
This process of consultation so far has been anchored most importantly in the so-called Ten-plus-Three summits, that means the ten ASEAN countries plus Korea, Japan, and China. It has now been held for three years in a row and it will be held again this year in November in Singapore. While the main stress as I said will be economic, of course political consultations are going to be happening informally as well, as has been done in APEC. We are going to start some institutional preparation. We are going to establish most probably in the near future a sherpas-type of assistance to the summit for the leaders and we have established, of course, an East Asian vision group of eminent persons that is headed by Han Sung-Joo. The Foreign Ministers of the thirteen countries will meet for the first time in Bangkok in July of this year. Last year in Manila the three Northeast Asian leaders—Japan, Korea, and China—met for the first time.

Future Prospects
Well, what does the future hold and what can you expect? I think the efforts to support an East Asian cooperative institution will develop in the economic field, in the trade field, as well as in the financial field. There are so many bilateral free-trade efforts that have been going on, as well as sub-regional ones. AFTA, the ASEAN Free Trade Area, has been mentioned here, as well as bilateral efforts of which the most important one might be the Japan-Korea free trade arrangement. But all, of course, are part and parcel of a movement that could develop into an East Asian free-trade area in the medium and longer term. In the financial field, I think what has yet to be agreed upon is the basic principle that it should be in this field a coalition or a cooperation of the willing. Because we cannot in the financial field at this stage have Burma, Laos, or Cambodia included. The problem arises of how we should include Hong Kong and Taiwan in the future, and Australia and New Zealand come to mind.

It will be a step-by-step approach due to the diversity of the region. Quicker development will be partly dependent on how much the business sector and academia get involved in supporting the idea. That point is valid in the ASEAN context as well. This second track—the NGO, the civil society part—is going to be critical for the development of regional institutions.

Leadership in the context of East Asia will not be pronounced for obvious reasons, like in APEC. But I suspect that Japan, because of her economic power, and ASEAN, because of being ten and having some kind of diplomatic clout, will be critical to the process. The idea is also to strengthen China’s involvement in regional institutions and regionalism. In that way we hope that we can soften some of the sharp edges in relations between the United States, Japan, and China.

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So far, so good. All these changes, so fundamental in every field, have of course changed the country, and have been achieved as well as could be expected. In fact, with changes that are so fundamental and so far-reaching in every field of life, it is a small miracle that the cost we have to bear has not been as dramatic as everybody, including me, feared two or three years ago. President Abdurrahman Wahid’s leadership of course has been critical. He has the vision. He is an educator. He is at this stage definitely critical to move Indonesia to the next stage of democratization.

He has three main problems to face. One is the army, and I think on that he has done the most and the best. He has complete civilian control of the army. Of course the professionalism of the army will take some years, but I think it is a full control that he has.

Second, regional conflicts, especially Aceh, have been stabilized. It is not anymore a question whether Aceh is going to separate into an independent state. Hopefully the congress that the Acehnese themselves are organizing at the end of the month will come up with some proposal of what kind of special status they want to have in the context of one Indonesia. At least the situation has been stabilized to a very large extent, which is also due to I think the President’s effort to deal with the NGOs and elements of civil society there on his own and very frequently.

I think the economic problems could become his Achilles heel. They are fundamental; they are profound; and of course, you know, he has real problems there because he does not have an economic team, at the level of ministers at least, that is capable to solve the problems. He himself is limited because of his sickness and his blindness, and therefore he needs a team that he can trust that can do the job for him. We hope that there will be a cabinet reshuffle very soon.

On the other hand, with regard to the most important agencies he has done very well. He has picked the best people for them because he is not dependent on the coalition as much as he has to be in forming the cabinet. The Pertamina head is impeccable and strong. He has been the Caltex head for some years before; he worked for Caltex for over twenty years. The power plants—a critical part in the whole effort internationally because of problems with earlier contracts—are now under the best hand that you can have, who was the head before of the mines and gas department. He is the best man we could have. And also on banking restructuring the President has given the task to somebody who is hands on and can do the job. So on that he has done quite well.

Let’s hope—I have to pray every day of course—that his health is going to hold because that is the most critical part.