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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

PERILOUS WATERS

After a stormy passage, the region has some hard steering ahead


NINETEEN NINETY-EIGHT WAS ASIA'S year in the abyss. It was possibly the darkest, most stressful 12 months that Asian nations have experienced since the region emerged from the depredations of world war half a century ago. Yet, as the Year of the Crisis drew to a close, signs were finally appearing that the worst could be over. The Thai baht, whose flotation and subsequent devaluation in July 1997 triggered the devastation, has climbed substantially off its lows - as have stock markets regionwide. And tourism is making a notable comeback. Even morose Japanese analysts are starting to inject a note of hope into their commentaries, based on such indicators as a revival of housing starts and an uptick in consumer spending.

It was the collapse of financial markets in 1997 that had presaged the severe recession of 1998. So their rebound might herald, it is hoped, the beginnings of a recovery, slow as it will likely be, in 1999. But these encouraging signs are tenuous, at best. Throughout the region, unemployment is at record highs. Job insecurity, combined with shrinking incomes, continues to dampen retail sales. Over-capacity and heavy debt plague many industries. No doubt about it: the Asian ship of state has suffered a ruinous blow, and it will take sustained effort in the year ahead just to keep it afloat and steer it home.

Not everyone made safe passage in 1998. The biggest casualty was Indonesian president Suharto. He quit in May after 32 years at the helm, driven overboard by vicious riots in Jakarta. At times, it seemed his entire country might sink with him; as the new year opened, Indonesia was still treading water. It was certainly a shaky maiden voyage for one of the region's newest and least experienced skippers, Hong Kong Chief Executive Tung Chee-hwa. He often seemed all at sea, plagued by everything from deadly bird flu and a bungled airport opening to rapacious currency speculators.

Other Asian leaders appeared to navigate the year's hazards with a steadier hand. South Korea's Kim Dae Jung ended 1998 notably stronger than when he began it as a squeak-through president. He made a credible shift in Seoul's attitude of unbending hostility toward North Korea and a solid start at reforming the economy. In Thailand, another ward of the International Monetary Fund, Prime Minister Chuan Leekpai also showed considerable dexterity in office during a trying year. Both ended 1998 with high approval ratings.

Another big survivor was Malaysia's Mahathir Mohamad. After letting his longtime deputy and heir apparent Anwar Ibrahim run the government for a while in 1997, the veteran prime minister stormed back onto the bridge. Mahathir stunned the world by firing Anwar, having him expelled from the ruling UMNO party, jailing him and putting him on trial for sodomy and corruption. Their divergent views on how to deal with the Crisis sparked the bust-up, but their confrontation involved broader national directions - as well as a bitter personal feud. Mahathir was roundly criticized at home and abroad, but he was nothing if not assertive.

Collectively, though, Asia was unable to act effectively in face of the Crisis. Too often, it seemed like it was every country for itself. The pressures of the times strained the surface cohesion of the main regional groupings to breaking point, most evidently during the Kuala Lumpur summit of the Asia-Pacific Economic Cooperation forum. Distracted by political rhetoric over the Anwar affair, the conclave made little concrete headway on its economic agenda. And the triennial summit of ASEAN, which ended last week in Hanoi, was able to agree only on limited measures to combat the Crisis.

The year's tensions exacerbated traditional rivalries. Malaysia and Singapore sparred repeatedly, often over such seemingly trivial matters as sovereignty over a railroad station and flights by Singapore's air force over its neighbor's airspace. Nor were matters helped by the publication, on Lee Kuan Yew's 75th birthday, of the Singaporean patriarch's memoirs, which were full of blunt comments about some Malaysian icons. Kuala Lumpur's ties with Manila were also strained after Philippine President Joseph Estrada decried the fate of his "good friend" Anwar, whose wife he met during the APEC summit in the Malaysian capital.

The past year saw Asia's economic troubles impinging on the rest of the world. As the rot spread, Western leaders could no longer think of the "disease" as being safely quarantined in one corner of the globe. Soon it infected Russia and parts of South America. Despite its buoyant economy, the United States was not entirely immune either. Numerous industries, from aircraft and computer manufacturing to agriculture, are hurting from lost sales to Asia. Such concerns, which frightened the bull on Wall Street, spurred the Federal Reserve to cut interest rates, benefiting markets worldwide.

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