JULY 28, 1997
International Cover Story: Asia


The weeklong Association of Southeast Asian Nations (ASEAN) meeting in Kuala Lumpur set for late July is supposed to be a 30th anniversary celebration of Asian unity, Asian values, and the Asian model of development. For Malaysian Prime Minister Mahathir Mohamad, playing host to all 10 countries of a united Southeast Asia was to have been the fulfillment of his ASEAN dream: self-confident, assertive countries acting together to counterbalance the U.S., Europe, and China.

But suddenly, Mahathir's ASEAN dream is in question. Instead of standing up in the world as a pillar of economic progress and cooperation, ASEAN has become riven with conflicts. As long as Asia's economic growth was hot, there were few serious issues to drive ASEAN members apart. But the easy growth is over, and the temptation for each member to pursue its own interests is overwhelming. Competitively devaluing their currencies to keep the advantage in global export markets is just one example. And instead of presenting a united political front, its members are divided over an eleventh-hour decision to exclude coup-riven Cambodia from membership, as well as tensions over admitting Burma to their ranks.

At a time when ASEAN was to have celebrated its achievements, it is instead defending itself. That's a pity, for ASEAN's potential is huge. Its population of 482 million is a larger market than the European Union--and the region's economy is growing three times as fast. A stable, growing ASEAN is also vital to the region's security, as China's economy--and military might--continues to grow.

But ASEAN has been trying to stretch too quickly to reach its goals. Several members of ASEAN opposed letting repressive Burma join but went along with Mahathir's wish to include everyone in the region. But adding countries for the sake of adding them and forging ahead despite divisions just weakens ASEAN's credibility. ''It ignores the question of the quality of ASEAN's voice and who's going to listen to that voice,'' says John Bresnan, a scholar at Columbia University's East Asian Institute.

ASEAN's economic differences may be even more destabilizing than political disputes. Since the beginning of July, Thailand, Malaysia, the Philippines, and Indonesia have failed in their pledges to support each others' currencies. It's not that they didn't try. Several countries strained foreign currency reserves trying to prop up the Thai baht. But they simply were too weak to fight the market.

ASEAN has set a goal of establishing free trade by 2000. But right now, only 20% or so of ASEAN trade is among its members--and most of that is accounted for by Singapore's role as a jumping-off point for Malaysian and Indonesian exports to the world. On top of that, some countries are now putting up trade barriers instead of removing them. Thailand, for example, feels a threat to its inefficient steel and chemical industries--so it has sharply raised import duties to protect them. Malaysia and Indonesia are still trying to incubate their fledgling national carmakers, and have import duties as high as 100%. So much for free trade.

From its inception, ASEAN has defined itself by what it was not--a region that refused to fall into the communist sphere and that stood, nonaligned, in opposition to China and the West. But with ASEAN under stress, it needs to use its 30th anniversary celebration to begin defining exactly what it is and what it can do. That means focusing on free trade between core, stable economies rather than trying to include such second-tier economies as Laos. It also means setting the bar higher, making entry for countries such as Burma and Cambodia conditional upon achievements rather than geography. If ASEAN can play to its economic strengths, its pledges of unity will then ring true--and gain respect worldwide.

By Sheri Prasso