Optimism Is a Fatal Pill
- By Tom Plate
- Sep. 08 1999 00:00
The cruelest trick the West can play on Asia is declaiming that our friends in the East are over the economic flu for good.
For when the Western news media overemphasize the positive about the recovery, serious negatives can result. Asia won't take the medicine that even it knows is necessary if it is lulled into the complacency of false health.
The Western media share in the responsibility. They are now decreeing official redemption for most of Southeast Asia and South Korea. Asia needs to be wary of absolution from respected journals like the Economist, which bang out stories about miracle recoveries: "Asia's Astonishing Bounce Back" was a sunny cover line recently.
The Western media's sunshine policy for Asia will only delay the true passing of the clouds. Unless a sense of crisis remains, internal domestic reform is unlikely. The best of the Western monitoring institutions understand full-well what is going on. The World Bank, the premier multinational financing institution, has been, along with the International Monetary Fund, monitoring the economic horror in Asia for two years. If like the rest of us, the bank has made its share of mistakes, it is no one's fool.
"Reform fatigue," warned Julian Schweitzer, a top Asia Pacific official, in an interview in the World Bank's Washington offices, is the biggest worry now. "The inherent risk of recovery is that reform efforts will be relaxed. It's politically difficult to do difficult things when things otherwise are going well."
Western media headlines insist that everything looks so much better now - and, to some extent, things do. But too many Asian nations retain Model-T banking systems; too many have courts and laws that are ill-equipped to cope with the overwhelming pressures of financial globalization. And while political corruption is rampant almost everywhere on Earth, it's hardly a coincidence that it has been especially rampant in those countries, such as Indonesia, which have been the most severely sidelined by Asian flu.
Knowledgeable and honest Asians know the real score. Any dilution in economic reform triggered by new-found complacency is the functional equivalent of a time-release suicide capsule. A concerned editorial in the Japan Times, one of the region's most respected newspapers, warned all Asian nations, including Japan, against believing everything they read about how the worst is over.
"Without a stable financial system," the newspaper flatly warned, "another crisis is inevitable."
New political crises threaten to undermine whatever reform progress has been made. China is bogged down with spiraling deflation, falling exports, rising unemployment and declining foreign investment. Premier Zhu Rongji, the innovator, finds his freedom to maneuver undermined by grim political enemies determined to shelve his reform ideas to protect encrusted special interests.
His reformist soulmate in South Korea, President Kim Dae-jung, may also be in trouble, gasping for air under a tidal wave of traditional Korean factionalism, partisanship, and fierce counterattacks from the chaebols, the country's powerful conglomerates. In Japan, the miraculous political resurrection of Prime Minister Keizo Obuchi in public opinion polls has not been matched by economic recovery. Indonesia remains the recovery laggard of Asia and, worse yet, now teeters on the edge of political abyss as violent anti-independence militias roam East Timor.
Next week, the annual summit of the Asia Pacific Economic Cooperation forum convenes in New Zealand. Will APEC try to come to grips with Asian reality? Not likely. Without an overarching sense of crisis, little can be expected except the usual backslapping and vacuous reform communiques.
This would be a tragic missed opportunity. Looming problems like banking modernization, corruption control and fiscal reform won't go away. Happy headlines in the Western press won't replace hard work and new institutions, wiser policies and better laws. That's why the true enemies of Asia are the optimists of the Western media - sincere though they may be.
Asia's true friends are those who will not flinch from saying - nicely, in private - that it must get off the bottle of complacency, go cold turkey for reform and save people from more misery down the road.
Tom Plate teaches at the University of California, Los Angeles. He contributed this comment to the Los Angeles Times.