A Pair of Absolutists at ASEAN

The foreign ministers of the nine-member Assn. of Southeast Asian Nations are still buzzing in Kuala Lumpur over the opening-day outburst of Malaysian Prime Minister Mahathir Mohamad. Their host blamed evil Western speculators for the region’s current roiling currency markets. But the prime minister, who already had a track record for rhetorical rocket launching, may have outdone himself this time: Can this man be serious?

Mahathir, 71, one of Asia’s leading voices, charged that the recent intense speculation against Southeast Asian currencies--a run that started with the Thai baht--was the work of greedy speculators lurking behind the global-finance computer screens of rich Western nations. Pointing a finger at U.S. financier George Soros, who does indeed operate in the big leagues of weak-currency exploitation and whose nonprofit foundation has publicly condemned ASEAN for admitting Myanmar (Burma), Mahathir stunned his ASEAN pals with his broadside. He targeted “anarchists, self-serving rogues and international brigandage” who circle the world’s financial oceans like pirates, on the lookout for weak currencies to pillage. (This from the same Mahathir who was in the United States in January hustling funding for his high-tech visions back home.)

No, no, Mr. Mahathir: A currency becomes vulnerable to speculative pressures because the underlying national economy starts showing weakness; Alert opportunists simply exploit the vulnerabilities of governments and currencies.

That’s exactly the point Secretary of State Madeleine Albright made to Malaysia’s foreign minister after he said the region’s currency conniptions were due to “unholy actions [and] villainous acts of sabotage.”

The Malaysian didn’t appreciate the economics lecture but, in reality, the region’s troubles began in Thailand, where authorities had allowed serious debts and a current account deficit to hide for too long behind the skirt of the U.S. dollar, to which the baht was tied. When currency speculators called the baht’s bluff, the Thai central bank had few cards to play, and it played those few badly, delaying tough monetary and economic decisons. By contrast, Indonesia--and indeed Malaysia itself--moved quickly to minimize the damage of speculation. It’s certainly true that the amount of foreign currency that speculators can throw at a faltering ASEAN currency can exceed the resources of any one central bank. That’s why ASEAN leadership is needed to spur a regional reaction when a monetary or economic crisis hits. But ASEAN has been more preoccupied with expanding its membership than with getting its current members to work together better.

That expansion has been bumpy: The decision to admit Cambodia had to be put on hold after the recent coup, and the admission of Myanmar played right into the hands of Albright, who has all but declared sisterhood with world-famous regime opponent Aung San Suu Kyi. At the meeting, Albright did what she does best: lecture. Southeast Asian foreign ministers, who would prefer not to see ethnically diverse Myanmar come apart at the seams, much less drift into China’s penumbra, simply listened and chuckled or fumed. Albright’s aides sought to downplay the tension, letting it be known that she had asked Mahathir first, before scheduling her news conference. Explained aide Nicholas Burns, “You have to be good guests. You can’t always be the elephant that tramples on the grass.” Good advice.

In reality, ASEAN, whose member states collectively have almost twice the U.S. population, has the potential to be a heavyweight, too. To get there, ASEAN will need greater economic integration as a region and further domestic economic liberalization, country by country. ASEAN also needs to reflect on its operational style, which emphasizes deference to incumbent national authority, group-think super-caution, and quiet diplomacy. There clearly is virtue in consensus building, but the organization will need to move with quick and decisive teamwork when faced with serious diplomatic or economic challenges.

The West’s--and California’s--stake in a more stable and prosperous Southeast Asian is enormous. It can be argued that ASEAN potentially holds even more importance for America than does NATO. Asia is home to nine of California’s 15 top export markets. ASEAN, representing nations that add up to America’s fourth-largest trading partner, could well surpass Japan in trade clout before long. And, geopolitically, the ASEAN grouping represents a potential counterweight, along with India, to China.

True, the region has some brilliant leaders and, current setbacks notwithstanding, its economies have been doing well. But ASEAN needs more diplomatic stature and institutional heft and must move beyond being little more than a tony discussion group if it is to play a truly large role in the kind of world that eats up the disorganized and timid for lunch and then laughs out loud when the losers blame the winners for winning. In the end, Mahathir’s angry outbursts against perceived Western conspiratorial evil will do Malaysia and ASEAN no more good than Albright’s moralistic lectures.

Indeed, America or anyone else in the West can lecture all they want about human rights or whatever, but it is ASEAN that has got to do the job for its region. The meetings and issues it faced this session were perhaps the organization’s most trying, pivotal and potentially growth-inducing since its founding in 1967.