Towards 1996

As 1995 approached its end, many Malaysia watchers might have been led by several factors to expect the year 1996 to be full of political excitement.

To begin with, Prime Minister Dr Mahathir Mohamad's attempt to replace Osman Aroff with Sanusi Junid as the Menteri Besar of Kedah had reached an impasse when Osman Aroff pointedly refused to resign from his post. That impasse coincided with the failure of some of Mahathir's staunchest allies in his United Malays National Organization (UMNO) to gain control of their divisions in the state party structure. It hovered like a prelude to further and desperate manoeuvering by the parties to the conflict. In addition, UMNO was due to hold its triennial party election in late 1996. Already there had been persistent rumours of impending battles for high positions in the party hierarchy as a result of the break-up of the triumvirate of party vice-presidents assembled by Deputy Prime Minister Anwar Ibrahim, when he successfully challenged then UMNO Deputy President, Ghafar Baba, in 1993. Two subordinate component parties of Malaysia's ruling coalition, the Barisan Nasional — the Malaysian Chinese Association (MCA) and the Gerakan Rakyat Malaysia (Gerakan) — were also scheduled to hold their party elections in 1996. For the MCA, there was the possibility of contests for high party positions, although the party was not expected to repeat the MCA's torridly divisive experience of the mid-1980s.

But equally as 1995 came to an end there were at least three fundamental reasons why it would have been quite safe for anyone to predict that 1996 would be a staid year for mainstream Malaysian politics.

First, the April 1995 general election had resulted in such a huge triumph for the Barisan Nasional, and had so depleted the strength of the opposition parties that the latter were unlikely to trouble the ruling coalition (at any rate not until the next general election). Second, the 1995 UMNO General Assembly had resolved not to accept any contest for the party's presidency and deputy presidency in the party election of the following year.

Malaysia is increasingly seen to be one of the more promising emerging markets after having charted an impressive annual economic growth of at least 8% since 1988. The performance of the Malaysian economy in the last decade is all the more spectacular when seen in a global context. As indicated in Figure 1, Malaysia's economic growth over the last decade was higher than many developing countries and far eclipsed those of OECD countries.

The year 1996 served as a reminder, if any was needed, of the crucial importance of great power relationships to the stability and prosperity of Southeast Asia. The region heaved a sigh of relief when U.S.–China tensions over the Taiwan Straits crisis abated. The reaffirmation of the U.S.–Japan defence alliance and the U.S. decision to keep troop levels in the Western Pacific to around 100,000 were reassuring to most countries. China remained a vexing issue in the minds of many in Southeast Asia notwithstanding the economic opportunities it presents, and the genuine desire on the part of Southeast Asians to have good neighbourly relations with their giant neighbour. Its actions in the South China Sea continued to cause concern.

In the shadow of these great power manoeuvres, Southeast Asian regionalism seemed on track despite some anxieties related to the admission of Myanmar into ASEAN and the desire of some countries to seek more exemptions from the proposed regional tariff cuts to establish the ASEAN Free Trade Area. Still the ASEAN Six are well on the way to meeting the 2003 deadline: by the year 2000, 88% of CEPT products will already have 0–5% tariffs and by 2003, 40% will have zero tariffs. The informal ASEAN summit in November ruled out phased admission of the remaining three Southeast Asian countries (Cambodia, Laos, and Myanmar) — they would all be admitted together, more likely in 1997 than later.

ASEAN had its hands full, not only with issues of expansion and those related to the ASEAN Free Trade Area, but also with the ASEAN Regional Forum (ARF) and Asia-Europe matters. The ARF acquired two new members in 1996, India and Myanmar, and maintained its coherence as the only official Asia-Pacific wide security forum. ASEAN also continued to play a leading role in Asia-Europe relations, following the historic summit meeting between the leaders of the two continents in Bangkok in December 1995.

Economic growth in Singapore, Thailand, Malaysia, and Indonesia slowed down in 1996, mostly for cyclical reasons.

Introduction

Indonesia experienced a turbulent year in 1996, as events and circumstances brought both continued economic progress and new security challenges to the country. At the same time the people and leaders of the world's fourth most populous country are preparing for one of the most important transition periods in Indonesia's fifty-one years of independence. Such roller-coaster developments are unusual in Indonesia, which values consensus and order, and which strives in both private and governmental life to arrange a harmonious passage of events.

Events of the past year have inevitably tied the Indonesian government and society in general to the future of the Indonesian Armed Forces (ABRI — the acronym for the Armed Forces of the Republic of Indonesia). The events of 1996 illustrate dramatically how ABRI influences, and is influenced by, the society of which it is a part.

ABRI's New Professionalism and Confidence

ABRI approaches the 21st century with strong leadership, an emphasis on improved professionalism, and a spirit of confidence. These aspects date, for the most part, only to the early 1990s. The change in senior leadership that occurred at that time was a watershed in the development of ABRI's military professionalism as well as in the broad general context in which ABRI functions within the complex Indonesian society.

At the same time there is an almost unprecedented debate within ABRI concerning the role of the armed forces in society, particularly the future of its unique dwifungsi (dual function) concept which immerses ABRI in society as a “socializing and dynamizing force”. This debate is occasioned by fast moving changes in Indonesian society caused by rapid economic development, social and economic pressures strongly influenced by that development, as well as increased demands for relaxation of the tight political discipline enforced on society by the New Order government.

The rise to the top of the ABRI leadership of General Feisal Tanjung, a consummate military professional, is a key development in recent ABRI history.

For Myanmar, 1996 was a year in which constraints to the managed political transition from a one-party “socialist” rule to a “multi-party democracy” became apparent in the domestic political scene, while opportunities for closer regional co-operation appeared to have been successfully exploited by the ruling State Law and Order Restoration Council (SLORC). It turned out that the persistant political opposition continued to be a thorny problem for the military government. On the other hand, the economy enjoyed substantial growth with one of the highest annual inflow of foreign direct investment (FDI), in terms of approved amounts, since the Foreign Investment Law came into force in late 1988.

Politics of Managed Transition

The SLORC has enunciated four political objectives which have been widely publicized in the state-controlled media. They are defined as:

1. stability of the state, community peace and tranquillity, prevalence of law and order;

2. national reconsolidation;

3. emergence of a new enduring state constitution;

4. building of a new modern developed nation in accordance with the new state constitution.

The realization of the fourth objective appears to have been premised upon the attainment of the first three goals. Incidents which were perceived by the military authorities as not only threatening to their agenda for political transition but also as hindering the progress towards these objectives have elicited a strong response from the government.

Since her release from house arrest in July 1995, Myanmar's foremost dissident Daw Aung San Suu Kyi had been conducting weekend political assemblies in front of her residence in which she delivered speeches covering wide-ranging issues. Almost single-handedly assuming control of the National League for Democracy (NLD) she was giving many interviews to the Western print and broadcast media while occasionally meeting sympathetic foreign officials and envoys. Almost all her interviews and speeches were disseminated quickly throughout the world via Internet by exile groups and human right activists.

Since 1959, when the People's Action Party (PAP) came to power, Singapore has been among the world's most successful countries “by any measure” at improving its citizens’ welfare. The result is that after thirty-seven years, Singaporeans expect — almost by “right” — clean, efficient and effective government and a continually growing economy and increasing prosperity. However, over time the people have become a little less willing to make the political trade-offs and sacrifices (for example, partially constrained political freedoms) that have helped make the dominant party, the PAP, so adept at “delivering the goods” while not catering to popular demands. The paradox that hits a dominant party, if history is a guide, is that over time growing numbers of people simply want a change, regardless of the performance of a government. The PAP's dilemma has been to overcome this burden of history, and to reverse the slow decline since 1980 in its percentage of the popular vote in general elections.

Politics: Preparing for the General Election

This was the year (1996) the general election was expected — virtually all year — but was not called until late in December. Nomination day was December 23, and polling day set for nine days later, the legal minimum for the campaign, on 2 January 1997. The prolonged preparation for this election monopolized the political agenda. This was a year when the PAP applied itself, with all its considerable energy and creativity, to meticulously and systematically planning and laying the groundwork for the election.

The issues, actions, strategies that emerged, and the constitutional changes that were enacted, offer a glimpse of the kind of society that is emerging in Singapore as it heads into the new millennium. The groundwork consisted of three facets: (1) publicly addressing many of the difficult issues directly in the hope of defusing them; (2) party recruitment, election strategies and constitutional electoral changes;

When Fidel Ramos took his oath of office as President in 1992, the Philippines was going through difficult times. The economy had stopped growing as a result of a major belt-tightening programme designed to rein in double-digit inflation and rising interest rates. Industries were beginning to feel the crippling effects of power shortages, which were to reach their peak a year later. The dampening impact on investor confidence of the December 1989 coup attempt launched by military rebels still lingered on.

The series of natural disasters that hit the Philippines — a destructive earthquake in 1990 and a volcanic eruption in 1991 that unleashed mudflows burying surrounding towns and villages — left thousands of people and businesses dislocated in the Central Luzon region. Meanwhile, the government continued to face a persistent communist insurgency operating from jungle bases, an armed separatist movement in the Muslim-dominated provinces of Southern Philippines, and an underground military rebel group that was waiting for another opportunity to launch a coup d’état.

Nevertheless, the foundations had already been laid for the Philippines’ recovery. In the last three years of its term, the Aquino Cabinet had initiated a series of important economic and administrative reforms. Liberal reformers in the Cabinet succeeded in launching a tariff reform programme designed to reduce import tariffs over a five-year period. A massive privatization programme was undertaken. The Congress passed laws liberalizing foreign investment rules and devolving financial authority to local governments. The government weathered heavy criticism to implement unpopular but much needed economic stabilization measures.

Extremist groups were considerably weakened by defections to the political mainstream as opportunities for political action within the country's democratic framework expanded. They also suffered from internal divisions and adverse external circumstances. A leadership struggle divided the Communist Party of the Philippines (CPP), even as the military and police continued to decimate its ranks and drive its guerrilla forces deeper into the jungle.

When historians from the near future write about Southeast Asia's passage through 1996, they may sketch out for their readers a number of common threads which, invisible at present, served to link seemingly unconnected events. For example, the progress of 1996 revealed a regional cohesion which seemed to march from strength to strength: ASEAN membership expansion, limited ASEAN free trade (the AFTA agreement), and the ASEAN Regional Forum (ARF) security dialogue all continued without break. Path-breaking events, such as the first Asia-Europe Summit (ASEM), also brought leaders from fifteen European Union (EU) and ten Asian countries (including from all seven ASEAN member states) to Bangkok from 1–2 March. An ASEM Foreign Ministers’ meeting was planned for February 1997, in Singapore.

On the other hand, however, disquieting domestic events occurred in major regional countries while the increasing intensity of interplay between the region's major outside powers provided a dispiriting reminder, if any was needed, that Southeast Asia's prospects still rest on the outcome of familiar questions such as domestic stability and Asia-wide power struggles. Southeast Asia as a region has little direct influence over the outcome of these events. By definition, both problems — domestic political transitions or the chess play of Great Powers — lie mostly outside the regional calculus, at least as currently crafted.

Regional Hubris?

After the heady years following the 1991 Cambodian settlement, many reminders of the transience of regional diplomacy emerged during 1996. Indonesia's end-of-1995 understanding with Australia, (about which Indonesia's ASEAN partners — Brunei, Malaysia, Philippines, Singapore, Thailand and Vietnam — had no foreknowledge) was a significant departure from traditional Indonesian foreign policy and indicated less than full confidence in Southeast Asian regionalism by itself as an insurance against a resurgent China. Likewise, the Australian Liberal-National coalition government, elected on 2 March, moved to reassert the primacy of its security pact with the United States rather than rely just on co-operative security mechanisms.

Introduction

Laos in 1996 was uneasy about accepting all the consequences of the New Economic Mechanism (NEM). This was the main message of the Sixth Congress of the Lao People's Revolutionary Party. At first sight, the political forces that oppose rapid economic transformation seem to have reinforced their position. It remains to be seen, however, whether this change will be strong enough to stop — or at least to significantly slow down — the reform process and the integration of the Lao economy in the Southeast Asian region. On the other hand, the Sixth Party Congress seems to have strengthened the position of representatives of ethnic minorities in the political élite. It is an open question, however, whether this second change will increase the attention paid to remote areas and correct the pro-urban bias of the economic and foreign aid policies, thereby improving the prospects for a more balanced growth in Laos.

The Sixth Party Congress: Not too Far, not too Fast

The Lao People's Revolutionary Party has the monopoly on political power in Laos, with complete control over the election process and the National Assembly. As in other one-party states, changes in the balance of power occur between different groups or individuals who belong to the same party. Political changes in such political systems are highly personalized and associated with alterations in the hierarchy of the ruling party. Party congresses generally provide good indications of such alterations. The Sixth Party Congress was held in Vientiane on 18–20 March 1996, five years after the Fifth Party Congress. It was attended by some 381 delegates representing over 78,000 party members (some 1.7% of the population).

From the point of view of reform policy, the most striking result of the Congress concerns the change in the balance of power between “reformers by conviction” and “reformers by necessity”. The weakened position of the former group of reformers is illustrated by the eviction of Khamphoui Keoboualapha, one of the most active advocates of rapid and comprehensive reforms, from the party's political bureau and central committee.

After two decades, the secessionist conflict in Mindanao has finally subsided. With the signing of the Peace Agreement 2 on 2 September 1996 between the Moro National Liberation Front and the Philippine Government, the Moros (for Muslims in the Philippines) have started a new journey that may chart peace and progress in the south. How did this come about? What are the implications of and prospects for a lasting peace? This article explores these queries in the light of existing conditions in the Philippines.

History of Ethnic Conflict

The strife in the southern Philippines, or Mindanao, began as an ethnic problem associated with nation-building. Prior to 1946, when the Philippines was recognized as an independent state, the north-south divide was apparent as a result of colonial and imperial designs. Much earlier (before 1565), Mindanao was an autonomous periphery. It had a relatively simple, homogenous social differentiation. Pre-Spanish and pre-Islamic conditions pointed to the existence of self-contained, independent tribes and datuships which were later consolidated into larger communities when Islam came during the 14th century.

Spain prevented the Islamic inroads to the north as it colonized the islands for over 300 years (1565–1898) and attempted to incorporate Mindanao into what would become a Christian Philippine state. By the 16th century, Spanish influence in the Philippines brought about massive Christianization among the natives in Luzon and the Visayas as well as in northeastern Mindanao. Thus, by the beginning of the 20th century, Mindanao's people comprised three major groups: the natives who accepted Islam (Moros), those who became Christians (Filipinos), and others who stayed away from these two modern religions (Lumads). This bipolar religious transformation created a sense of divided peoplehood or “ethnicity” in Mindanao, which has survived to this day.

Recent official statistics (1990) on the southern Philippines (Mindanao, Sulu and Palawan) show that of the total population of 14.7 million inhabitants, the Moros constitute 17.5%, the Lumads 5.3%, while the Christianized Filipinos command a hefty majority of more than 70%.

Paradigm Lost — Changing Foreign Policy Models

During the mid- to late-1980s, a major transformation took place in how Vietnam's policy elité conceptualized foreign policy. The roots of this transformation are twofold. They lie in domestic circumstances arising from the socio-economic crisis which confronted Vietnam at that time. And secondly, they lie in external influences arising from the “new political thinking” fashionable in Gorbachev's Soviet Union. Vietnam turned from a foreign policy model heavily structured by ideological considerations to a foreign policy model which placed greater emphasis on national interest, balance of power and realpolitik. Vietnamese analysts now tend to emphasize global economic forces and the impact of the revolution in science and technology over military aspects of power when weighing the global balance. The old and new foreign policy models are not mutually exclusive. Ideology and national interest are not dichotomous terms; they can and do overlap and co-exist.

The influence of ideology on Vietnam's foreign policy prior to the mid- to late-1980s may be illustrated as follows. From the inception of the Democratic Republic of Vietnam as an established state in Southeast Asia in 1954, its élite accepted the “two camp” thesis that the world was divided between the forces of socialism and imperialism. In the late 1960s Vietnam adopted a framework known as the “three revolutionary currents”. According to this model, global order was determined by three trends (or revolutionary currents): the strength of the socialist camp headed by the Soviet Union; the strength of the workers’ movement in advanced industrial countries; and by the strength of the forces of national liberation in the Third World. In practical terms, Vietnam allied itself with the Soviet Union as the “cornerstone” of its foreign policy. Hanoi's leaders also viewed Indochina as a strategic entity and sought to develop an integrated alliance system with Laos and Cambodia. Vietnam's 1978 invasion of Cambodia and 25-year treaty of friendship and co-operation with the Soviet Union were logical end products of this orientation.

Following elections in November 1996 a new coalition government took office in Thailand, led by incoming Prime Minister and New Aspiration Party leader General Chawalit Yongchaiyut. The new administration began its work in an atmosphere of great concern about the state of the Thai economy. Throughout 1996 Thai economic commentary was dominated by signs that the export-led boom that began in the late 1980s may be coming to an end. Most important of these signs were an apparently dramatic slow-down in the annual rate of growth of total exports and revelations that some investment and securities institutions may be unable to meet interest obligations. Confidence in Thailand's capacity to sustain high levels of economic performance was seriously damaged. The economic situation had clearly contributed to the downfall of the previous government of Banharn Silpa-Archa and posed immediate dangers for the new government. Identifying the causes of these and other economic problems is the central theme of this article.

Economic Boom, 1988–95

The background to the economic gloom of 1996 was the unprecedented boom which began in 1988. Over the eight years ending in 1995 the Thai economy was the fastest growing in the world (Table 1). The average rate of real GDP growth was unprecedented, at 10.4%, and inflation was low, averaging 5.3%. Two factors produced the dramatic growth: growth of exports, especially exports of labour-intensive manufactured goods; and very high inflows of foreign capital, including direct foreign investment. The two went together, in that much of the foreign investment was in the labour-intensive manufacturing sector. Export growth over this period averaged an extraordinary 28% per annum and as a share of GDP exports surged from 23% in 1988 to 34% in 1995. Economic inequality increased during this period but this should not be taken to mean that the benefits of growth were confined to the rich.

The idea of an Asia-Europe Summit Meeting originated at the 1994 Europe- East Asia Economic Forum organized by the Geneva-based World Economic Forum. This was picked up by Singapore's Prime Minister, Mr Goh Chok Tong, who discussed the idea with the then French Prime Minister, Mr Edouard Balladur. Supportive of this initiative, France worked to secure the in-principle support of the other European Union (EU) member states. Under the French Presidency of the EU, the EU General Affairs Council met on 6 March 1995 and endorsed the idea. Meanwhile, Singapore was able to get the commitment of its fellow members of ASEAN (Association of Southeast Asian Nations) plus Japan, China and South Korea for such a summit meeting. Hence, the first Asia- Europe Meeting (ASEM) comprising the fifteen EU member states, the seven ASEAN countries (Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam), Japan, China and South Korea, was held in Bangkok in March 1996. All the twenty-five countries except for Denmark, Greece, Spain and Sweden were represented by their Heads of Governments/States in this historical meeting.

When ASEM was initially conceived, there were two very basic and modest objectives. The first was to promote economic relations between Asia and Europe, and second, to develop direct and personal contacts between Asian and European leaders. It was meant to be an exploratory meeting with no fixed agenda. Although some differences over the agenda of the meeting, for example on human rights issues, did appear during the preparatory stage, these were finally played down, and both sides agreed to focus on the big picture. As momentum gathered, more and more initiatives and ideas surfaced, culminating in a successful meeting where a comprehensive range of activities were suggested for follow-up.

The significance of ASEM (which is sketched below) should not be underestimated. The very fact that it was held in the first place was of critical value. It was a high-profile kick-start to Asia's and Europe's rediscovery of each other.