Although the process of globalization of the world economy started in a small way in the nineteenth century before World War I, it has subsequently gained momentum since the early nineties. This is reflected in the rapid pace and widening scope of economic activities that have been taking place across national boundaries, increasing in both pace and scope. Globalization has led to an increased integration of financial and capital markets among different countries, irrespective of their levels of development. This in turn has had far-reaching implications for the economic, social, and political systems, both within and between these countries. It is this process which has thus increased the need for consultation and co-operation among different countries in small geographical regions in order to have greater sub-regional co-operation within a multilateral framework. “Regionalism”, defined by the World Trade Organization (WTO) as “actions by governments to liberalize or facilitate trade on a regional basis through detailed negotiations” thus emerged as an alternative to the rule-based multilateral trading system for all its members. It was first advocated by the General Agreement on Tariffs and Trade (GATT) and now by the WTO, consisting of 146 countries as of 4 April 2003, including the ASEAN countries except Lao PDR and Vietnam.

Regional trading agreements (RTAs) (also known as preferential trade agreements or PTAs) became an instrument to foster regionalism. The simplest variant became known as the free trade agreements (FTAs), given the freedom that such agreements provided to its member countries in terms of pursuing their trade policy vis-à-vis non-members.

FTAs were thus the first building blocks for regional economic integration. They specified a set of rules or standards that governed trade among the members that were a signatory to those FTAs. In the initial years, FTAs focussed almost solely on providing preferential treatment for trade in goods among the members, by specifying a set of across-the-board and product specific rules of origin (ROOs) that identified the originating point of a product, in order to ascertain whether it qualified for preferential tariff treatment under a specific FTA.

Since the completion of this manuscript, the following developments have taken place with respect to the proliferation of FTAs in Southeast Asia:

1. The USSFTA has now come into force with effect from 1 January 2004. Further, two more Middle Eastern countries, viz. Egypt and Bahrain, have agreed to forge FTAs with Singapore. It may be reminded that Jordan has been the first Middle East country to express an interest in forging an FTA with Singapore.

2. Singapore is also involved in a trilateral FTA called Pacific 3 or P-3 FTA involving Chile and New Zealand. This agreement was launched at the sidelines of the APEC Leaders' Economic Meeting in Los Cabos, Mexico in October 2002, and the first round of negotiations was held in Singapore from 24–26 September 2003. The aim is to conclude the P-3 FTA by November 2004, when the APEC Leaders meet in Chile. Significantly, the P-3 FTA is the first trilateral FTA involving Southeast Asia that spans across three different continents. This FTA will be comprehensive and forward-looking, with the aim of having 98–99 per cent of all commitments being three-way and with flexibility to allow for new members on similar terms and conditions.

3. The Joint Study Group (JSG) on the Korea–Singapore Free Trade Agreement (KSFTA) has submitted its recommendations to the Heads of State of the Republic of Korea and the Republic of Singapore on 7 October 2003. The report indicates that there is significant scope for expansion of economic linkages between Singapore and Korea through the KSFTA. The scope of the agreement should encompass comprehensive liberalization and facilitation of economic relations between Korea and Singapore, which would include trade in goods and services, investment, government procurement, and intellectual property rights. The KSFTA should also include a comprehensive range of economic co-operation elements covering an array of areas including financial services, ICT, human resources development, trade and investment promotion, and broadcasting, and have an in-built consultation and dispute settlement mechanisms to deal with issues arising from the interpretation and application of the agreement.

The preceding chapters have indicated a clear and emerging trend towards bilateralism in Southeast Asia. It is also observed that on a bilateral basis, these FTA initiatives are likely to be beneficial for its members in terms of greater market access in goods and services due to reduction in trade barriers, increased investment opportunities in overseas markets, and reduction of business costs arising from the dismantling of tariffs and non-tariff barriers. However, given that the economies of ASEAN are highly interdependent among themselves, it is important to analyse whether the proliferation of such bilateral FTAs would benefit the grouping and the Southeast Asian region as a whole and the possible adjustments it may require in order to reap those benefits.

The spate of bilateral FTAs in ASEAN raises the concern as to the extent to which such FTAs could complement the ongoing economic integration process in ASEAN that was initiated through AFTA in 1992. This concern is particularly pertinent given that prevailing economic diversity among ASEAN members calls for a concerted approach towards economic integration. The economic integration process is supposed to culminate towards an ASEAN Economic Community by the year 2020. A Concept Paper on the ASEAN Economic Community prepared by the Institute of Southeast Asian Studies in Singapore envisages free movement of goods, services, capital, and labour among ASEAN members.

The economic crisis of 1997–98 has made this task of economic integration difficult, with resultant slow progress in liberalization of their economies in both goods and services through AFTA and the ASEAN Framework Agreement on Services (AFAS) respectively. Although AFTA has been implemented for the ASEAN-6, tariff barriers on all goods are still not dismantled, while AFAS has not been able to significantly increase the pace of service sector liberalization.

Therefore, one of the principal challenges for economic integration among ASEAN members is to increase the pace of liberalization and undertake necessary structural and institutional reforms in member countries, wherever required. This would help them to enhance and sustain competitiveness in the global market.

As observed, Singapore has been the first mover towards bilateral FTAs in Southeast Asia. Other regional efforts in ASEAN include the formation of the ASEAN Free Trade Area (AFTA), which is now implemented for the association's six founding members. Although other ASEAN members were initially sceptical of Singapore's moves towards bilateral FTAs, the interest in taking the bilateral route to free trade has gradually found favour within the grouping as a whole as well as within the individual members. The individual FTA initiatives from other ASEAN members include a Thai-U.S. FTA, with Thailand having already signed an FTA framework agreement with Bahrain and India. Thailand is also well on the way to conclude similar bilateral deals with Japan and Australia. Malaysia, the Philippines, and Vietnam have been contemplating bilateral FTAs with Japan.

Although there are a number of possible economic and strategic motivations for these ongoing FTA initiatives involving ASEAN countries, the primary motive appears to be to strengthen ASEAN's competitiveness as a regional grouping and to make it more attractive to investments from its major trading partners and the emerging markets of China and India. As in the case of Singapore, slow progress in multilateral trade talks within the WTO and the setback to regional economic integration due to the economic crisis of 1997-98 have been the reasons behind other ASEAN members and the grouping to go for the third best option for advancing free trade through bilateral FTAs.

Singapore has been the most active country with respect to negotiations of bilateral FTAs in ASEAN on an individual country basis. This chapter analyses Singapore's ongoing bilateral FTA initiatives on an individual country basis, and then focuses on the ongoing bilateral FTA initiatives by other ASEA N members, specifically Thailand, Malaysia, and the Philippines. These three countries have already announced or are contemplating negotiating bilateral FTAs with their major trading partners outside ASEAN. Since detailed information on most of these initiatives are not yet available, the expected benefits from these FTAs cannot be clearly spelt out as was done in the case of Singapore's concluded FTAs.

Diversification of the economy from dependency on the oil and gas sector was a preoccupation during 2003. Several major government measures were announced to instil confidence among foreign investors and the local population that the economy was being well managed. There was also emphasis on promoting efficiency and productivity in the Civil Service. There was little development in the political and social arenas and the country remained peaceful and stable. The claim by Malaysia to Brunei's exclusive economic zone (EEZ) was becoming an irritant in the otherwise warm bilateral ties between the two countries.

Economy

The overall economic performance for the year 2003 was positive. The estimated growth rate of the gross domestic product (GDP) for the year was between 3 and 4 per cent. However, this was mainly due to the 7.9 per cent growth in the oil and gas sector in the first half the year compared with the same period in 2002. The non-oil and gas sector grew only by 1.4 per cent in the second quarter of 2003 compared with the same period last year. Sectors such as transport and communications, banking and finance, fisheries, agriculture, and construction all experienced contraction. Because of the SARS epidemic in the region the hospitality and travel industries were hard hit and registered negative growth.

The policy to diversify the economy from over-dependence on oil and gas has been pursued since the 1980s. However, after the Asian Financial Crisis diversification became more urgent. The Brunei Darussalam Economic Council (BDEC) was established in September 1998 to recommend short- and longterm measures to revitalize the economy that had been affected by the crisis, the fall of the oil price, as well as the collapse of the Amedeo conglomerate. One of the recommendations of the Council was that an investment promotion drive be launched to attract foreign direct investment (FDI) to Brunei in order to develop industries and create jobs.

Of all the images generated by Indonesia since the downfall of Soeharto in 1998, those of radical Islam have been perhaps the most vivid and enduring. These have taken various forms: white-robed and turbaned Muslim militiamen marching through city streets brandishing scimitars and exhorting jihad against Islam's foes; Arab-Indonesian Islamic “clerics” threatening to “sweep” foreigners from Indonesia; and noisy rallies to the gates of Parliament demanding the immediate implementation of shari'a law. Most dramatic of all are the images of charred and mangled nightclubs and hotels bombed by terrorists and the sight of the perpetrators smiling carelessly or shouting Allahu Akbar (God is Most Great) as they are sentenced to death.

Such images have helped to redefine perceptions of Indonesian Islam. In the past, journalists and scholars were wont to describe Indonesian Muslims as among the most peaceable and tolerant of the Islamic world. In so far as Indonesia had radicals, they were kept in close check by the authoritarian regimes of Soekarno (1959–66) and Soeharto (1966–98). Seldom were there stories, much less images, to suggest that Islamic extremists were engaged in violent or intimidating activity. Since 1998 the reverse has been the case. The lifting of restrictions on the freedom of the media and right to organize led to a proliferation of radical groups and a dramatic expansion of Islamist media, including newspapers, magazines, books and websites. In the post-Soeharto era reformasi, emboldened radical movements could publish long-banned texts, form militia units, and take to the streets espousing causes that would, a few years previously, have landed their leaders in jail. Though many non-Muslims and foreign observers may have looked on with disquiet, the emergence of such groups was proof that meaningful political and social reforms were taking place and that repressed groups were at last able to organize freely. Furthermore, those interested in the complex jigsaw puzzle that is Indonesian Islam could behold the missing “radical pieces”; a fuller picture of Islamic diversity was now in view.

The year 2003 turned out to be a year of several shocks for Southeast Asia. First was SARS, followed by an increase in terrorist threats. Both led to a depressed economic situation. ASEAN responded by moving towards an integrated economy by 2020. The landmark Bali Concord II was signed in October 2003.

The articles in this volume of Southeast Asian Affairs reflect these and other developments. I commend the editors for the speedy publication of this volume.

I hope, as in the past, Southeast Asian Affairs will continue to be a journal of interest to scholars, policy-makers, the business community, and the media.

Introduction

When the Iraq war started in March 2003, Prime Minister Thaksin Shinawatra quickly declared Thailand's neutrality because he did not want to upset the estimated six million–strong Thai Muslim community living in southern Thailand. After his stand was reported by the international media, he had second thoughts. In May 2003 he reversed his position and pledged full support for the U.S. war effort in Iraq, saying that Thailand is one of the five U.S. allies in the Asia-Pacific region and was obliged under the Thai-U.S. defence treaty to help the United States.

Such flip-flopping was not uncommon during the first three years of his premiership. Before the start of the Iraq war, Thaksin consistently denied the existence of terrorist cells inside Thailand. After the 11 September 2001 terror attacks in the United States and the Bali bombing in October 2002, numerous foreign reports claimed that groups of terrorists with links to the regional terror group Jemaah Islamiyah (JI), and, by extension, Al-Qaeda had passed through Thailand. For almost ten months after the carnage in Bali, the Thai government was tight-lipped on the issue of terrorism. Thaksin dismissed these reports as groundless, saying they were the work of crazy reporters. However, in the later half of 2003, Thaksin and the Thai military leaders started to admit that some international terrorists might have visited Thailand while in transit or possibly even stayed in the country to regroup. This article focuses on Thailand's policy towards international terrorism following the September 11 attacks as well as the implications of these policies on the Muslim-dominated southern provinces of Narathiwat, Pattani, and Yala.

Out of the Blue: Thai Jemaah Islamiyah

The arrests of JI suspects Maisuri Haji Abdullah, aged fifty, his son Muyahi Haji Doloh, aged twenty-two, and Dr Waemahadi Waedao, aged forty, on 10 June 2003 were a watershed development in the Muslim-dominated South Thailand. The men were charged with attempting to plot terrorist attacks on several embassies and tourist attractions in Bangkok and other places.

Introduction

There were relatively few surprising or significant developments in Laos during 2003, although various events served to underline the rather unique character and specific challenges that confront one of Southeast Asia's least developed countries. And although the gradual pace at which events tend to occur in Laos did not accelerate in 2003, there were some interesting twists and turns to be observed during the year.

Economic and Business Developments

The Lao economy probably grew by about 5 to 6 per cent in 2003, broadly in line with the average annual growth rate of its gross domestic product (GDP) in the last decade. The local currency held broadly steady in 2003, appreciating marginally against the U.S. dollar and depreciating slightly against the Thai baht, the two foreign currencies most widely used in Laos. Inflation was running at around 11 per cent in 2003, due in large part to higher prices for rice and fuel, as well as continued growth in the money supply. In the first half of 2003, Lao exports were up by around 23 per cent (to US$175 million) and imports burgeoned by 17 per cent (to US$263 million), resulting in a trade deficit of almost US$90 million. Despite the consistent trade and current account deficit, Laos' foreign exchange reserves held broadly steady in 2003, at around US$200 million, or the equivalent of five months' import cover.

Cabinet changes and re-shuffles are quite rare in Laos, but new appointments to the posts of governor of the Bank of the Lao PDR (the central bank) and the minister of finance were made in January 2003. Chansy Phosikham moved from the central bank governorship role to that of finance minister, and was replaced as central bank governor by former trade and tourism minister Phoumi Thaipphavone. Meanwhile, former finance minister Soukan Mahalith became provincial governor of Xiang Khoang, in the northeast of Laos.

Politics in East Malaysia is different from Peninsula Malaysia — both in terms of content, motives, and rhetoric. The different history, culture, and ethnic configurations ensure that politics in both states are dictated more by local factors than the simple Malay–non-Malay; Muslim–non-Muslim dichotomy found in peninsula politics.

Sabah

The two main features of Sabah politics have been political patronage and shifting loyalties. Those in power commonly use the state's natural resources, especially the awarding of timber concessions and business opportunities to loyal supporters and financial backers, to cement political ties. Another feature has been the rapid shifting of electoral loyalty. The ruling party in Sabah usually holds office for roughly a decade before being rejected by the voters. In the 1970s Sabah politics was dominated by Mustapha Harun and his party, the United Sabah National Organisation (USNO). Mustapha ruled Sabah as an autocrat from 1967 to 1975 before he was rejected by the electorate in favour of “Berjaya” also known by its full name as Parti Bersatu Rakyat Jelata Sabah (Peoples Racially-United Front of Sabah). Berjaya's rule lasted until 1985, when it was dislodged by Parti Besatu Sabah (PBS, or Sabah Unity Party). The PBS government lasted until 1994, when defections caused its downfall. Since then, Sabah has been ruled by a Barisan Nasional (BN) coalition. The predominant ethnic group in Sabah is the Kadazan-Dusun (18.4 per cent), followed by Bajau (17.3 per cent), and Malays (15.3 per cent). The Chinese constitute only about 11 per cent of the population.

Coalition Pains

The year 2003 started with the replacement of six community development leaders by representatives of PBS which rejoined the Sabah BN the previous year but did not get any political posts in government for a year as part of its rehabilitation process. The PBS-6 replaced United Pasok Kadazandusun Murut Organisation (UPKO) and Parti Bersatu Rakyat Sabah (PBRS) representatives. All three parties — PBS, UPKO, and PBRS claim to represent Kadazan-Dusun political interests and the move to appoint PBS representatives caused ripples within the coalition.

Introduction

When John Maynard Keynes discovered that in the long term we are all dead, he stumbled on an excellent piece of economic news. It enables plebes and patricians to make love and laws while they can and leave the future to its own devices. Yet, Keynes the metaphysical economist was only half right. Individuals and even their habits of thought turn to dust, but generations arrive, to go on imagining and inventing the future.

Keynes has even less currency in Singapore. Here, in an unlikely country that willed itself into being, time is not a fact of nature but an act of will. While intimations of immortality, inherited from thousands of years of self-affirming survival, drive civilizations such as China and India to seek greatness, mortality is the city-state's stalking companion. In characterizing Singapore as a trading emporium, Philippe Regnier, for example, refers to the “chronic fragility” of an emporium, which has no agrarian base or large internal market. For Michael Leifer, Singapore is an “exceptional state” in economic performance but also in an innate sense of vulnerability.

Leifer encapsulates Singapore's reality neatly. The country's character derives from the fact that it is, exceptionally, a product of globalization. Singapore saw itself as a global city long before it became fashionable to either lubricate or jam the wheels turning the world into a single factory. Ejection from Malaysia — the basis of an unwanted independence in 1965 — meant the loss of a natural economic hinterland. Therefore, argued former Singapore Minister S. Rajaratnam in 1972, it could no longer be the Change Alley of Southeast Asia but would have to find a role as a global city. What favoured its quest was the trading world of post–World War II international relations. In a book on the subject published in the mid-1980s, Richard Rosecrance saw the world since 1945 as poised between two historic possibilities: a territorial system of power which went back to the landscape of Louis XIV and was now presided over by the Soviet Union and to some extent the United States; and an oceanic or trading system of power left as a legacy by Britain in the 1850s that had now formed itself around the Atlantic and Pacific basins.

Despite gloomy prognoses at the end of 2002, the war in Iraq and the emergence from China of a life-threatening Severe Acute Respiratory Syndrome (SARS), 2003 has turned out to be a year of reasonable economic progress in most parts of the ASEAN region. Preliminary estimates of growth in gross domestic product (GDP) by the Asian Development Bank (ADB) indicate that most countries have achieved faster growth in 2003 than in 2002 (Table 1).

The main exceptions are Laos and Cambodia, where the SARS outbreak had an adverse impact for tourism and Singapore where both SARS and the weak global demand for electronics caused a sharp decline in output in the second quarter, although there was some recovery in the second part of the year. Growth in Malaysia and Thailand in 2003 was well above that achieved in 2002, although Indonesia saw little improvement over the previous year, and in the Philippines economic growth is predicted to be slower than in 2002. Over the five years from 1998 to 2002 the fastest-growing economies in the region were Vietnam, Laos, and Cambodia. Vietnam in particular is expected to continue to grow rapidly in 2004. These three economies are the only ones in the ASEAN region whose growth rates over the past five years have come close to those achieved by China (Table 1).1 The stellar achievements of the Chinese economy since the mid-1990s, and the challenges which they pose for the ASEAN economies, continue to attract much attention in the region, and in most debates about future developments in the wider Asia-Pacific area. The success of China in attracting foreign direct investment and in expanding exports has inevitably raised fears about the longer-term competitiveness of the ASEAN economies. These fears are reinforced by the evidence from several countries that the growth recovery, to the extent that it is occurring, appears to be consumption-led rather than investment-led, and that export performance continues to be sluggish in spite of the considerable declines that have occurred in real exchange rates since 1995 (Table 2).

Since the Asian economic crisis of 1997–78 the usefulness of the Association of Southeast Asian Nations (ASEAN) and, indeed, even the need for it to exist at all have been hotly debated. Both the Asian economic crisis and the expansion of ASEAN to include Vietnam in 1995, Myanmar and Laos in 1997, and Cambodia in 1999 exposed ASEAN's weaknesses and created tensions, which undermined ASEAN's credibility both within Southeast Asia and internationally. During the first few months of 2003, ASEAN's value to its members was further questioned as a series of events overtook the region. The fall-out from the 12 October 2002 Bali bombings was still being felt and there appeared to be limited regional co-operation in order to confront the terrorist threat. The attack on Iraq by the American and British forces further divided ASEAN. And then came the outbreak of Severe Acute Respiratory Syndrome (SARS), which threatened to bring the economy of the region, which was already faltering because of problems with the U.S. and EU economies, to its knees. The year did not start well.

However, by the end of 2003 ASEAN had once again proven of value to its members. The turnaround in ASEAN's fortunes owes much to the new Chinese leadership, which has given priority to cultivating links to its neighbours in Southeast Asia. But ASEAN members themselves also demonstrated that they are willing to develop policies aimed at strengthening the organization. The signing of the ASEAN Concord II, at the Bali summit in October 2003, paves the way for the ASEAN members not only to develop a more integrated regional community but also to encourage neighbouring countries to adopt many of the Association's goals and values. In light of all the challenges that preoccupied the ASEAN members during 2003, the year ended on a much more positive note than it began. Indeed, by the end of 2003, despite the problems that remained, ASEAN was once again starting to provide distinct benefits to its members.

The 12 October 2002 bomb blasts that obliterated two packed nightclubs in Bali and killed 202 mainly Australian tourists, riveted international attention on the threat of radical Islamist terrorism in Southeast Asia. In an ominous echo of previous bombings in the Middle East, Chechnya, and elsewhere, the tactic of suicide bombing was employed in the attacks. Worryingly, moreover, Bali was not the only attack. Throughout 2003, a series of smaller blasts rocked the southern Philippines and Indonesia, culminating in the 5 August 2003 car bombing of the American-owned JW Marriott Hotel in Jakarta. Another eleven people were killed and about 150 injured this time. Indonesian police investigations quickly uncovered the role of yet another suicide bomber. Ominously, it was revealed that had the suicide bomber not detonated his bomb prematurely, he might have killed 200 people in the Marriott. Both the Bali and Jakarta Marriott attacks were said to be the work of the shadowy radical Islamist terror network Jemaah Islamiyah (JI). The global media lost little time in declaring that the JI and its putative patron, the global jihadi network Al-Qaeda, had together “turned Southeast Asia into a terrorist haven”.5 Even the arrest of the Indonesian Riduan Isamudin, alias Hambali, the operational commander of the JI, in Thailand on 11 August 2003, did not appear to calm jitters. U.S. Deputy Secretary of State Richard Armitage declared publicly that “a general threat” still existed.

One compelling reason why the “general threat” of radical Islamist terrorism still exists, despite the capture of senior terrorist leaders such as Hambali, is the vitality of the underlying ideology animating jihadi networks such as the JI and Al-Qaeda. This brief article attempts to lay bare the main tenets of the radical Islamist ideology that drives jihadi networks in Southeast Asia. It will also explore the regional and global political elements that fuel Southeast Asian jihadi ideology. For reasons of space, the article will focus on the most important of the jihadi networks in the region, the JI.

Introduction and Background

The conclusion of the 1996 Final Peace Agreement (FPA) between the government of the Philippines (GRP) and the Moro National Liberation Front (MNLF) did not terminate the Muslim secessionist movement in the island of Mindanao and Sulu archipelago, in southern Philippines. Nur Misuari's (founder and chairman of the MNLF) assumption as regional governor of the Autonomous Region in Muslim Mindanao (ARMM) and as chairman of the Southern Philippines Council for Peace and Development (SPCPD) for five years (1996–2001) has not brought about the promised peace and development in Mindanao, Sulu, and Palawan.

The ignominious failure of Misuari to effectively wield governmental powers to attain Muslims' quest for lasting peace and sustained development led to his ouster not only as ARMM governor and SPCPD chairman but also as MNLF chairman. Misuari's expulsion from government was followed by his incarceration and is currently facing trial for charges of sedition and corruption.

The MNLF, the revolutionary organization that Misuari led for thirty years both in war and peace, is now under a new leadership. Led by the “Council of 15”, it “retired” Misuari and rendered him powerless by euphemistically naming him as “Chairman Emeritus”. Through a resolution it issued on 29 April 2001, Misuari was declared as “incompetent” to remain as MNLF's chairman. The Council later proclaimed itself as the legitimate Central Committee of the MNLF which was eventually recognized both by the Organization of Islamic Conference (OIC) and the Philippine government. Support for the new MNLF leadership was reiterated in the OIC 10th summit meeting held in Putrajaya, Malaysia, on 15 October 2003, claiming it to be the sole “representative of Muslim community in the Philippines”.

Despite OIC's and the government's acknowledgement of MNLF and the ARMM as the Muslims' organizational expression and spokesperson in the Philippines, they nevertheless recognize that the Muslims' quest for political autonomy and self-governance has not been fully satisfied.

Hedging

At the dawn of the twenty-first century, while the Association of Southeast Asian Nations (ASEAN) heavily promotes trade and investment with the People's Republic of China (PRC) to help it integrate into the world trading order, several member states have also made themselves available in various ways to help the United States retain a military presence in East Asia, as well as acceded to Japan's desire to complement its economic weight in Southeast Asia by playing a more active role in international peacekeeping or regional attempts to fight piracy. ASEAN is aware that it is a small player in the East Asian economic-cum-security arena where the presence of the United States, Japan, and an increasingly powerful China are not only unavoidable, but also keenly felt. By striving for a distribution of power that allows regional countries to maintain a stable external environment conducive to the maximization of trade and investment opportunities, but at the same time deny a potential hegemon the ability to assert undue dominance, Southeast Asian governments hope to achieve essential policy goals such as maintaining national independence, foreign policy autonomy, regional peace, and economic growth.

If ASEAN states are engaging in a form of pragmatic “hedging” behaviour, this is principally motivated by the need to optimize economic benefits and minimize security risks in response to an environment of uncertainty, primarily driven by the rise of China as an economic and military power. The region hopes to maximize economic opportunities with China, but is uncertain as to its future foreign and security policy orientation.

Will China as a strong country behave like a threatening military hegemon or a friendly economic partner to countries in the region that are, vis-à-vis China, militarily weak, economically unsteady, and beset by ethnic, religious, and boundary problems? ASEAN governments strongly believe that increasing the interdependence of the Chinese economy with that of Southeast Asia and the rest of the world has the effect of giving Beijing a stake in the peace and stability of the region.

Introduction

The main political strategies of the coalition government led by the Thai Rak Thai (TRT) during the first two years of the Thaksin administration (2001–2002) have evidently included both the neutralization of domestic political challenges and the consolidation of Thaksin's political power base within the Thai polity. Relying on his party's multi-pronged populist policies and initiatives, Thaksin's determination to dominate Thai politics has remained unabated, and unchallenged by the opposition. He openly declared that his TRT ruling party will remain in power for the next twenty years. The year 2003 provided him with golden opportunities to flex his political muscle through grandiose political initiatives both at home and abroad. He launched wars on the chronic problems of drugs, terrorism, and poverty. The implementation of the Chief Executive Officer (CEO) concept at both the provincial governorship and ambassadorship levels, and the initiative for the Asian Cooperation Dialogue (ACD) served his political objectives. Thaksin was praised by some circles as the most visionary leader in Southeast Asia, even though it was too early to come to such a conclusion. Others have contended, however, that only fortuitous circumstances have made Thaksin a regional leader.

Thaksin and Domestic Politics: Thinking the Unthinkable

Throughout 2003, the Thaksin government was preoccupied with new domestic social and political agendas. His confidence bolstered by the success of his previous populist policies like the rural debt moratorium, the revolving village fund, and the 30-baht healthcare system (per hospital visit), Thaksin's slogan “Think Anew and Act Anew” was again put into practice by his declaration of wars on drugs, poverty, shanty towns, and illiteracy. On the surface, the Thai public generally showed support for ridding society of these social problems. What remained a matter of great concern, however, was how the state authorities tackled these problems. Moreover, the rigid time-frame set to win these “holy wars” raised the eyebrows of almost every-one in Thai society.