21st June 1998
Eye of the ongoing Asean storm
By Mervyn de Silva
How like the Trotskyists. Revo lutionaries to the last, and "World Revolution" no less. Indonesia: For Workers Revolution: That's the banner headline of the Australasian Spartacist, a partner I believe of the International Communist League, New York.
The revolutionary fervour apart, the information gathered by the trade unions in particular, is quite useful to South Asian observers who watched the South-east Asian (ASEAN) economic "miracle" with admiration and envy. They marvelled at the growth rates of these "Asian Tigers", and envied the glamour of ASEAN cities....... the night life in the capitals, the casinos and the "clubs", the Italian cars and the Benzes, a "nirvana" for the upper class and the rich tourist, certainly from the a poverty-stricken SAARC. Of all these countries, Indonesia was the most resource rich. It had another claim to fame... ..President Shuharto, the Godfather, the man responsible for the law and order, the political stability that made the spectacular growth possible. Of course there were critics and dissenters but the international press and the western news agencies rarely focussed on the 'other side' of paradise. Even the sole superpower demanded some respect for human rights and democracy.
Of course some communists and radical leftists spoke of revolution, people's war, insurrection etc. But Suharto's regime seemed stable, and no "workers peasants" revolution was in the making. In this era, however, it is the students, the radical intelligentsia, some brave trade union leaders who take to the streets, prepared to sacrifice their lives. And then came the currency crisis, of South-east and East Asia, the so-called Asian "Tiger" NICs, an extraordinary phenomenon.
Indonesia and the Shuharto regime were in trouble. That was clear despite his unanimous re-election, that is a seven five year term! "Although the country's economy was a shambles, his support from the military remained unwavering. And his growing number of vocal critics could offer no viable alternative to his rule," Wrote the Washington Post correspondent, Keith Richburg. Though he has written on the mounting regional crisis quite often, Richburg did not grasp fully the sheer power of the pent-up passions, the dam about to burst.
He should have known better. The Economist read the situation correctly as early as December when ASEAN leaders met in Kuala Lumpur, President Suharto was a conspicuous absentee. "In power ever since ASEAN was founded President Suharto of Indonesia stayed home to nurse a mysterious ailment., while reports of his illness drove his country's stockmarket and currency lower......"
Today, the stockmarket may be the clearer mirror of a regime's stability and popularity than the conventional opinion poll conducted by the media. This is another interesting sign of the newly emergent forces that are shaping national and international politics in the fag-end of the 20th century."
"Shares in London slid remorselessly lower as Asian concerns increased their influence, "said a mid-June market survey conducted by Peter John. But the US market was not seriously affected after a statement by Alan Greenspan, Chairman of the Federal Reserve. Though he did admit that he may be compelled to "Tighten monetary policy, if domestic demand were to show few signs of slowing" but he added that "the rate of rise remains quite moderate overall." The sole superpower, not so vulnerable to disturbance in Asia as Europe, demonstrated that its strength on the economic front matched the military capabilities.
It was truly No.1....... fortified by its own home-spun wisdom.
The Economy Stupid.....!
The cousins across the Atlantic could not certainly tackle the situation with the same savvy. But back to Asia and Indonesia.
President Suharto did build Indonesia, wise enough not to imitate the grandiloquent Soekarno who enjoyed striding proudly on the regional and the world (NAM) stage. But he had a wide exposed flank..... his family, his son and son-in-law most of all. Suharto's second son, Bambang Trihatmodjo was the first to tell the press that he had resigned his post (president-director) of Bimantra Citra, described by correspondent Gwen Robinson, as the flagship of "a diversified conglomerate, and one of the country's largest listed companies."
Since the resignation of President Suharto, the company's share price had plunged. Another board member to resign was Indra Rukmana, who is married to Suharto's eldest daughter. The stockmarket's reaction is very much part of the big picture....... the share price soared 65% an hour after the news had been picked by radio and TV.
The new administration has been quick in its confidence building measures.
Yes, economics in command...... and high finance a major player in the new Asian Drama. And finally to Hong Kong.
The first quarter of this year saw a two-percent drop in GDP. No need for the alarm bells......?
In any other place, no. But this is Hong Kong and this is the first decline, says Louise Lucas, in 15 years. "We have suffered pain before. We can stand the test....... I urge the community not to let over-pessimism lead us to despair" is the confidence-building message of Hong Kong's chief executive, Tung Cheehwa. No more Marxist mantrams, no more stirring slogans.
The signs are quite disturbing. "The downturn absolutely creates pressure for the peg to go" says Peter Everington, Chairman, Regent Fund Management. "But if you let the peg go now, it is going to create a global crisis" observed Mr. Dong Tao, Senior Regional Economist at Credit Suisse First Boston.
"Hong Kong has to suffer through until the region stabilises."
Please send your comments and suggestions on this web site to