1997 was the year Laos entered the Association of Southeast Asian Nations (ASEAN) as a full member, and persisted with a more outward-looking — albeit still relatively reserved — stance towards the enveloping region, and the international community as a whole. Unfortunately, the country's opening up coincided with a marked dip in the economic fortunes of Southeast Asia, particularly Thailand, on which land-locked Laos remains heavily dependent for essential inputs. The first ripple effects emanating from regional turbulence was felt by Laos in mid-1997, when the local currency shadowed the Thai baht in depreciating markedly. And further adverse consequences will undoubtedly be felt in 1998, most notably with regard to much-needed foreign investment inflow pledges, which are likely to decline. Looking forward, the small scale of the country's economy — and its relative detachment from the region's financial markets — may help buoy Laos in weathering this economic storm, although the country will certainly not be wholly immune. Much will also depend on the extent of Vientiane's volition and competence in pushing ahead with the sorts of economic reform that provide the best guarantee of sustaining domestic economic growth. Notwithstanding the considerable progress made under the decade-long “New Economic Mechanism” reform programme, the leadership remains somewhat ambivalent about the prospect of moving ahead with a wholly new and coherent tranche of economic reform measures, preferring instead to take a familiar gradualist approach.

Political Developments: National Assembly Elections

After the drama of a Sixth Party Congress in 1996, developments in Laos' political sphere returned to relative normality throughout much of 1997. However, the pace of events picked up again towards the end of the year as Laos held nation-wide elections in late December for seats in the fourth legislature of the National Assembly. Polls for the National Assembly are held every five years, and approximately 2.5 million people were eligible to vote in 1997.

There is no way of getting around it and little point in being excessively diplomatic about it. This has been one of the most difficult, if not downright unsuccessful, years for the Association of Southeast Asian Nations (ASEAN) since the triumph of communism in Indochina in 1975, if not since the founding of ASEAN itself in 1967. The regional economic crisis, the political breakdown and fighting in Cambodia, the failure of Cambodia's attempt to join ASEAN, Western reaction to Myanmar's membership of ASEAN, and the smoke-haze phenomenon which literally shrouded much of the region in gloom in the latter part of 1997, all combined to make this an annus horribilis par excellence (to mix up my European languages).

Of course, we need a little corrective context here. One reason why ASEAN's travails have been so vexing in 1997 was that we have come to expect ASEAN to be associated with success. This kind of good reputation represents a significant achievement in its own right. But ASEAN's achievements are much more than just reputational. It has become one of the most successful and, in its way, effective regional bodies in the world.

In 1967 ASEAN was founded, much like the European Economic Community had been, with two more or less immediate purposes in mind. These were avoiding conflict among its member-nations and creating a more resilient community to withstand the potential strategic challenges posed by communism during the Cold War. ASEAN, too, had its visionaries and its founders did not put any limits on what it might eventually achieve, although there were strict operational limitations observed, especially in the early days. But the main original ambitions were modest and defensive. Of course ASEAN was always much more ambiguous than the European Economic Community (which later came to be known as the European Union) for the simple reason that Southeast Asia is a vastly more diverse and complex region than Western Europe.

1997 was for Thailand a hectic year of crises and opportunities. Its economy was the first in East and Southeast Asia to exhibit the financial crisis after years of exceptional boom, a crisis which forced the Chavalit Yongchaiyudh government belatedly to put the baht on a “managed float” on 2 July, a float which soon proved to be unmanageable. The nation's foreign reserves were badly drained and an International Monetary Fund (IMF) rescue package became a necessity. Yet the crisis, in shocking people to their senses, opened up opportunities, particularly on the political front. The brand-new Constitution which the Constitution Drafting Assembly, autonomous of Parliament, was drafting for the first eight months of the year was approved by Parliament on 27 September amidst fears that its rejection would catapult a political crisis to add to the economic one and lead to spiralling instability. Continuous vigilance by civil society forces made sure that the charter's contents put on track a political reform agenda wherein civil liberties are better safeguarded, more public participation in decision-making is allowed, new and more competent people can enter national politics, politicians are held more accountable, government becomes more transparent and cleaner, and decentralization is begun.

Civil society activities were also important in forcing the reluctant Chavalit to resign on 6 November. A tense period of political uncertainty followed, with some calls for the suspension of parliamentary politics so that technocrats could hold the reins of government to deliver the country out of the economic quagmire. However, parliamentary and democratic procedures prevailed. The Democrat Party (DP) managed to beat the attempt by outgoing parties to return to power, and Chuan Leekpai, its leader, formed a coalition on 14 November. At year end his government was riding on widespread public support.

The Assembly of the Poor's Encampment

The year 1997 in fact began with a major happening which vividly reflected another, deeper, adverse effect of the boom years in which export-led industrialization was pursued with little heed to the natural environment and the livelihood of those at the bottom of the agricultural sector.

1997 was to be the year that ASEAN reached several goals worthy of its thirtyyear anniversary. Moving along a course set largely to achieve goals recently articulated to account for the end of the Cold War, the ASEAN members had charted out a strategic shift towards enhancing the political foundations of the Association. The elements of the new strategy included enlargement to ten members, taking a more active role in Asian regional affairs, and continuing to build national and regional resilience by stimulating domestic economic development and regional economic linkages. The strategic goal was to build on the region's remarkable run of rapid economic growth and transformation to situate the Southeast Asian countries favourably for the twenty-first century.

Early in 1997, it appeared that much of this agenda would be achieved. The prestige of ASEAN was riding high as its members continued to be the favourites of the international business and financial community. A successful meeting with the European Union was held, initiating a new and important link. Midyear economic forecasts called for continued high growth, and even increases for next year, led by returned export expansion, ending the slump of 1996. The ASEAN Regional Forum (ARF) had put the members at the centre of an Asia-wide vehicle for building security that was establishing its continuity and extending its geographic reach. Planning for the expansion of ASEAN through the admission of Laos, Cambodia, and Myanmar was moving ahead, with Vietnam already participating fully. Regional initiatives to address some of the problems arising from successful rapid development, such as widening income disparities and continuing poverty, were set in motion. Plans for progressing towards a much more meaningful degree of economic integration were set. ASEAN seemed to be moving from success to success, building beyond the original vision of the Association as the foundation for peace and development in the region, towards a greatly enhanced role for its members in the Asian regional political and economic systems.

Thailand was the centre of international attention in 1997. No longer was it confused with Taiwan, or completely unrecognized, by journalists at international fora. Unfortunately this was not a triumph of foreign policy, but a tragedy of financial mismanagement. Economic problems that led to the floating of the baht in July triggered attacks on currencies and stock markets throughout much of Southeast Asia, then spread to East Asia and impacted on much of the world.

This was not the type of recognition Thai leaders had sought. Early in his rule, Prime Minister Chavalit Yongchaiyudh lamented that Thailand no longer played a leadership role in the Association of Southeast Asian Nations (ASEAN), and pledged to correct this. After Chuan Leekpai became prime minister, the Nation newspaper declared that Thailand was “resuming its long-lost leading role in ASEAN affairs”. New Foreign Minister Surin Pitsuwan asserted confidently that Thailand had become the architect preparing ASEAN to meet the challenges of the twenty-first century.

These views all reflect a deep conviction among Thai leaders and foreign policy analysts that in the 1980s Thailand enjoyed a golden age of foreign policy when the rest of ASEAN followed its lead. In the 1990s others have taken the initiative.

The following account argues that in a broad sense this characterization is correct. However, claims of foreign policy leadership in the 1980s need some qualification. And the 1990s has not been the foreign policy disaster many perceive it to be. Chavalit helped strengthen ties with regional neighbours. Chuan, forced to look to the United States for assistance in addressing the country's financial problems, has returned Thailand to a more traditional balancing of regional and great power interests.

1980s — A Mixed Record

Thailand's pre-eminence within ASEAN during the 1980s derived from its being the “front-line” state to Cambodia.

To the military State Law and Order Restoration Council (SLORC), renamed the State Peace and Development Council (SPDC) on 15 November, 1997 was probably viewed as a year of significant achievements even as it encountered some set-backs. Internationally, Myanmar entered the Association of Southeast Asian Nations (ASEAN), much to the chagrin of the regime's internal and external opposition, thereby conferring on the government an important added degree of international legitimacy it badly wanted and needed. Ethnic insurgencies continued to decline, removing a serious military drain on, if not threat to, the Yangon regime; only the Karen rebellion remained active, but it also was in increasing disarray. In these two areas SLORC was significantly strengthened.

Yet there were serious internal and external problems that were exacerbated during this same period. A monetary crisis occurred when the exchange rate temporarily collapsed by almost one-half in June–July, but whether this reflected the general financial crisis in Southeast Asia or incessant internal economic anomalies, or both, is a matter of some dispute. This was followed by a devastating flood in lower Myanmar that was said to be the worst in fifty years and that destroyed a significant portion, some estimates say up to 20 per cent, of the total national rice crop. Rice in Myanmar is not simply the staple and a major traditional source of foreign exchange; its price is a critical indicator of political stability or crisis. SLORC internally seemed to underplay the severity of the losses, apparently for this reason.

Although urban economic expansion was evident, the opposition claimed that the economy was in an emergency. The government asserted that foreign investment of over US$6.3 billion had been approved, but only perhaps onethird had actually been invested. Political stasis seemed evident internally, with the military-mandated Constitutional Convention in recess from approving the principles of a new Constitution mandated by the military, and no dialogue between SLORC and the leader of the opposition National League for Democracy (NLD), Aung San Suu Kyi, a process advocated by the latter.

Nineteen-ninety seven was an eventful year for Vietnam. Leadership changes took place in the National Assembly, the government, and the Politburo of the Vietnamese Communist Party (VCP). In July the people went to the polls to elect their representatives to the law-making body, but throughout the year Vietnamese farmers staged a series of protests, the largest so far, in reaction to rampant corruption and abuse of power by local party and state officials. Signs of an economic slow-down that had emerged in 1996 persisted into 1997, and the political leadership's hope for a higher growth rate was further frustrated by the financial crisis throughout Southeast Asia.

The debates in 1997 among party leaders over the rebuilding of a postcentral planning political and economic order unfolded within the context of mounting domestic social and economic problems. The Third Plenum of the Central Committee in June focused on the reform of the administrative state and the promotion of socialist democracy. The Fourth Plenum of the Central Committee in December concentrated on socio-economic issues including capital mobilization, rural industrialization and co-operativization, the balance between export-oriented growth and import-substitution strategies, and socioeconomic stratification.

Confirming a trend that emerged in the 1990s, the VCP leaders in 1997 continued to emphasize the strengthening of state organizations under the leadership of the party. In addition to the general call for the development of a clean administrative system, emphasis was given to the management of the state-controlled mass media. To counter corruption and the abuse of administrative power, the party leadership revived a “mass line” strategy in the form of both “direct” and “representative” democracy. Economically, different sectors of the leadership had voiced their agreement to expedite the “corporatization” of the state sector as a means of mobilizing domestic investment capital. Rural development and rural stability became prominent issues, and the year saw campaigns to revive the co-operative structure to cope with rural problems.

The year 1997 was significant for Singapore's domestic politics. In January the People's Action Party (PAP) secured some 65 per cent of the total votes cast in the general election and arrested the erosion of its electoral support, which appeared to be in exorable decline since 1980. A number of structural changes for political contestation, in particular the enlargement of the Group Representation Constituencies (GRCs) and ensuing reduction in the number of single-member seats, also proved to be important. Other significant developments included the expansion of the Nominated Member of Parliament (NMP) scheme, the creation of Community Development Councils (CDCs), and the restoration of the mayoralty system. Taken in its entirety, many of the structural and procedural changes associated with domestic political contestation and administration point to two discernible trends. The first of these trends, movement in the direction of decentralized politics and administration, is part of an ongoing process which began with the establishment of the Residents' Committees (RCs) in 1978 and the formation of Town Councils (TCs) in 1988. The second trend is the gradual empowerment of the TCs through an expansion of their scope and the somewhat overlapping jurisdiction of the CDCs, which involves the invocation of politics in the realm of administration since the mayors of these councils are elected Members of Parliament (MPs) from the PAP.

This article is divided into five parts: the first part examines domestic political developments while the next examines economic developments. The third part analyses other significant developments. The fourth examines foreign relations, in particular the tensions with Malaysia, while the final part examines the linkages between seemingly unrelated developments in the city-state.

Domestic Political Developments

The 1997 general election was a much anticipated affair, partly because the government was running on a mandate that was longer than previous ones, partly because a special budgetary appropriation had to be made in the event that the elections were called after March 1997, partly because the six NMPs had their two-year appointments renewed by the President before the elections, and partly because of mounting general anxiety regarding the actual date of the elections.

The economic crisis which swept through East Asia in the second half of 1997 was a sobering reminder that markets have little respect for national politics or national borders. In Indonesia the crisis in large measure reflected the fundamental shortcomings of a political system that has failed to keep abreast of economic and social developments. Likewise with the forest fires that sent palls of smoke billowing over much of Indonesia and its immediate neighbours. The fires were partly due to the El Nino cycle but they also demonstrated lax enforcement of environmental management laws. Both events followed the general elections of May 1997 which gave the government an overwhelming vote and defused opposition to President Soeharto's re-election for another five-year term in March 1998.

Quick to recognize the possible implications of an economic downturn for his re-election, Soeharto has once again shown his innate survival instincts by accepting assistance from the International Monetary Fund (IMF) and the mild reform package associated with it, but it is doubtful that he will, or can, implement the fundamental changes required to harmonize the regime with the social and economic changes of the last thirty years. Nevertheless, his residual political authority will probably see him re-elected. It might also see him select a vice-president with the credentials to assume the leadership midterm or at the will of fate.

His successor, however, is unlikely to have the same unquestioned authority and will be open to pressures from a number of sources. Global economic forces will provide an imperative for reform. The élite will be jostling for a redistribution of patronage. The middle class will be seeking more open political structures, and all will be seeking mass support for their causes. How might the succession proceed and what challenges will Indonesia face in making its inevitable political transition once the Father of Development has gone?

Nineteen ninety-seven represented a year of adjustment and introspection for Malaysia. The year was heavily dominated by events, particularly in the economic realm, during the second half. After years of rapid and consistent economic growth rates hovering above the 8 per cent mark, the economic slow-down was a rather rude awakening for Malaysia. Malaysians were informed that they must now learn to live with a lower growth rate and exhorted to spend less, be more selective at the supermarket, and buy Malaysian-made and -assembled products. A number of government projects (particularly those that have high import content), including the mega Bakun Dam project, were either scaled down or put on hold. These painful adjustments were necessitated by an unprecedented regional currency crisis that plagued the ringgit and other regional currencies, including the baht, the peso, the rupiah, and the Singapore dollar. While the national focus was understandably directed towards the country's economic slow-down, the year also witnessed several other key developments in Malaysian society including Anwar Ibrahim's two-month stint at the helm of the country, a viral infection outbreak, a regional haze problem, and a debate on Malay morality.

Politics and the Question of Succession

An interesting and important development in the Malaysian political arena in 1997 was the decision by Prime Minister Dr Mahathir Mohamad to give the reins of government to his deputy, Anwar Ibrahim, for a period of two months from mid-May to mid-July. This unprecedented move by Dr Mahathir was a hot topic of conversation from the coffeeshops to the boardrooms of the nation. During his two-month stint, Anwar was concurrently the Deputy Prime Minister, Finance Minister, acting Prime Minister, acting Home Affairs Minister, and, perhaps most importantly, acting President of the United Malays National Organization (UMNO), widely acknowledged as the most powerful post in the country. During the two-month period, Dr Mahathir was overseas promoting the Multimedia Super Corridor (MSC), Malaysia's latest and most ambitious project to propel itself into the ranks of the developed nations by the year 2020.

Introduction

In June 1997, Prime Minister Goh Chok Tong called for the promotion of civil society for Singapore. The call came in a major speech in Parliament, newly constituted after the triumph of the People's Action Party (PAP) in the 2 January 1997 general election under Goh's leadership as party secretary-general. The election had seen the PAP sweep all but two seats, reverse its decline in the popular vote and, perhaps most significantly, retake two seats from the opposition. The reassertive and triumphant PAP may have been expected to read the results as a vindication of its concept of good, strong government. Indeed, in a post-election statement, Goh asserted the election evinced a rejection of “liberal democracy” as seen in the West. The victory might then have provided a mandate for the continuation of the PAP's existing style, with a minimum of democratic consultation and participation. Why then the call for civil society? And what exactly is it?

At its core, civil society refers to the layer of institutions and arrangements that lie between the state and the individual. It refers, more specifically, to the voluntary associations citizens form in society that are not political (such as political parties), economic (companies and business associations), or assumed to be natural (such as the family). Civil society includes the associations, societies, and clubs that citizens organize for themselves to further their common cause or interests. This in itself would not seem significant. But civil society has come to imply more than just citizens forming voluntary associations. It has come to signify political change. In the experience of Eastern Europe leading up to the late 1980s, civil society played a major role in creating indigenous movements that supplemented, opposed, and in some cases replaced the then incumbent socialist states. At the international level too, civil society and nongovernmental organizations (NGOs) have come to play increasingly important roles, especially in areas of transnational concern, such as the environment and human rights. In this context, what does Prime Minister Goh's call for civil society in Singapore signify? What are the implications for politics and for society in the nation-state?

Nineteen ninety-seven will be remembered as the year of Asia's economic bust. On a fateful first Wednesday in July Thailand unpegged its currency to the U.S. dollar, causing a massive withdrawal of foreign funds and sending the local currency into free fall. By year end the baht had lost around 40 per cent to the U.S. dollar, and the stock market had declined by about the same amount. A similar pattern quickly repeated itself in Indonesia, the Philippines, and Malaysia, and the ripples expanded to the rest of Southeast Asia and beyond. Called in to assist, the International Monetary Fund (IMF) arranged a bailout package of US$17.2 billion for Thailand, the second largest IMF package ever, followed by a much bigger package of US$43 billion for Indonesia (then a US$57 billion package for South Korea). After a decade of exceptionally high growth, dubbed the Asian Miracle by the World Bank and others, the economic crisis of the second half of 1997 was quite unexpected.

Debate over the origins of the crisis focused on whether it was caused by weaknesses in the fundamentals of the ASEAN economies, or risks associated with open capital and financial markets. Declining competitiveness, weak financial sectors, and a lack of good governance in both the public and private sectors all contributed to the crisis. Such factors were evident in Thailand, though not uniformly apparent, initially, in other Southeast Asian countries. But the massive inflow of foreign capital in preceding years and the volatility of international financial markets were also part of the problem. Distinguishing this crisis from others preceding it, the massive debts run up in the region were mainly private, not government.

With no agreement on the causes of the crisis, it is hardly surprising that experts differed over solutions. The IMF approach, which focused on stabilizing currencies by reforming financial institutions, maintaining high interest rates, and enforcing government austerity, was accepted by many in the region; but it was criticized by those who believe that such contractionary policies would aggravate liquidity problems for the private sector.