There’s a better explanation. Though leaders along the Pacific Rim insist that fundamentals in Asia continue to be strong, their constituents are not so sure. Crowds of antigovernment demonstrators have marched in Bangkok. Bank depositors have jostled with police in Jakarta. And from Malaysia to South Korea, populists are railing against hardships they blame on the ““imperialist’’ West.
Twenty years of prosperity under a U.S. security shield transformed East Asia into a global model of political stability. Times were good, and the region’s leaders regularly boasted about superior ““Asian values’’ of hard work, frugality and family solidarity. The question now is whether hard times will wound the Asian tigers badly enough to create instability–and endanger U.S. interests. ““The world is asking,’’ noted Secretary of State Madeleine Albright in Vancouver, ““will our partnerships fall apart, or will we pull together?''
The price of pulling together is growing fast: so far, the International Monetary Fund has come up with an estimated $70 billion in rescue plans for South Korea, Indonesia and Thailand. There are other, less tangible, costs as well. As Tokyo launches into urgent economic repairs, Washington’s latest grumblings about the rising trade deficit between the two countries are getting little attention. Japan has also signaled cuts in its defense budget–again contrary to U.S. appeals that it take on greater responsibilities. Among other things, Japan will trim back its support payments for the 43,000 U.S. troops based in the country. ““So far, we haven’t heard any complaints from the U.S. side,’’ says a senior Japanese official. But he warns that if Japan’s economic problems deepen and the country is forced to make further budget cuts, ““we may have to face disagreement with the United States.''
Japan’s role as the keystone of East Asian prosperity and stability is also suddenly shaky. Japanese direct investment is down by 60 percent in China alone, and Japan’s foreign-aid budget is also shrinking. Though it remains the world’s largest donor, Japan’s grants plunged by 35 percent last year to less than $9.5 billion, and Tokyo plans to cut the foreign-aid budget by 10 percent next year. That’s bad news for developing countries that use the money to help take the edge off poverty and social inequalities.
Japan also has a major stake on the Korean peninsula. Pyongyang recently agreed to peace talks with Washington, Seoul and Beijing in which North Korea will attempt to trade peace for economic aid. That worked when the North gave up its nuclear-weapons program in return for peaceful reactors financed mostly by the South, with help from Japan. But the cost of that deal has escalated to $5.2 billion, and Kim Dae Jung, a front runner in this month’s South Korean presidential elections, says he will ““ask the U.S. and Japan to contribute more.’’ With Asia’s richest powers on the rocks, an ambitious North Korean deal could be very expensive for Washington.
If that’s not enough, consider the nightmare of chaos in Indonesia. During the go-go years of the early 1990s, the giant of Southeast Asia took a regional leadership role, quietly positioning itself as a balancing force against Chinese expansion. All the while, Indonesia ranked as the region’s flamboyant example of nepotism and corruption. President Suharto seems willing to cap the fortunes of his friends and children as part of an IMF bailout; but tensions are rising in a nation where the gulf between rich and poor remains wide. Officials in Jakarta privately fear disturbances during the Muslim holy month of Ramadan early next year.
Panic and unrest among the Asian tigers? A Great Depression in Japan? The collapse of South Korea? Six months ago, such scenarios would have been written off as the imaginings of doomsayers. The assumption then was that Seoul and Tokyo would finance stability on the Korean peninsula. China’s prosperity would draw it into the international system (a trend still on track for now). The Southeast Asian achievers, meanwhile, would rise to the rank of developed nations, inspire countries from Burma to India to follow their example and continue their partnership of progress with the United States. With some emergency patches applied to ““a few glitches in the road,’’ as Clinton puts it, Washington hopes that happy scenario will still prevail. It might, but America’s partnership with East Asia will be less certain from now on, and, without question, more expensive.
