(A paper prepared by Kamal Malhotra, Co-Director, Focus on the Global South, Chulalongkorn University Social Research Institute, Bangkok, Thailand for presentation at the 7th General Assembly of the Asia Partnership for Human Development (APHD), Marbel, South Cotabato, Philippines, 26-28 November, 1997.)
Introduction to Overall Regional Situation
Asia is clearly amongst the most diverse regions in the world and this is reflected in the very different sizes, roles and histories, political wills, capacities and abilities of states and governments across the region. Sizes vary from China and India, on the one hand, to small island countries such as Sri Lanka and the Maldives, on the other.
Roles and histories vary from centrally planned, command communism and socialism to the most laissez-faire, free market capitalism while political wills, capacities and abilities have and continue to vary among all categories and typologies of states and governments in the region. Asia, therefore, defies any simple generalisation either in respect of states and governments or the roles that NGOs and civil society organisations (CSOs) can realistically play.
The situation is made more complex by the fact that the task of both governments and CSOs in Asia is daunting and urgent given the scale and enormity of the unique and particular social development problems and issues that confront the region in the remaining years of this century. These will continue to challenge the region well into the next millennium.
These include staggering urban and environmental problems associated with high speed growth and concentrated industrialisation in parts of East and Southeast Asia. Such problems are becoming more acute in this sub-region as are problems of relative poverty, inequality, environmental degradation and human displacement in the context of both existing and planned large-scale infrastructure projects.
Significant levels of unemployment and underemployment remain throughout the region and Asia is also witnessing the major simultaneous transition of a number of centrally planned, command economies to market ones both in the Lower Mekong River Basin region, and in the People’s Republic (PR) of China and in Mongolia which are leading to unprecedented rates of migration (currently estimated at between 100-150 million “floating” population in PR China alone). This is contributing to further absolute and relative poverty, unemployment and under-employment and social tension and family and community level disintegration for what, at best, appears to be a very long transition period of pain for those groups in society who are already the most poor and vulnerable.
New economic and natural resource based conflicts are also emerging, from the Mekong river basin to the islands of the South Pacific, as a consequence of the contest over increasingly scarce resources which are needed to fuel economic growth at the high-speed rates that East and Southeast Asia have witnessed over the past few decades while old Cold War conflicts such as those on the Korean Peninsula linger and get more unstable.
These inequalities and conflicts will remain formidable ones to overcome despite the high economic growth rates and absolute poverty reduction “miracles” achieved by some of the countries of East and Southeast Asia over the previous two to three decades. While some of these governments must be credited for the quality of their interventions which have reduced the population in poverty in these sub-regions from 400 million to 180 million over the last quarter century (ie. by 220 million, which is approximately equivalent to the total number of poor people in Sub-Saharan Africa), the speed and nature of the growth process followed by them has not benefited social development as it should have, has treated the environment as a sacrificial lamb at the altar of high-speed economic growth and has worked against democracy, labour, civil and political rights and social equity. As a result, even the real gains achieved by these countries may not be sustainable in the long-run.
The current severe financial and environmental crises sweeping the second generation aspiring NICs (Thailand, Indonesia and Malaysia) and now even the Republic of Korea, the world’s 11th largest economy, is illustrative of the long-term structural problems which exist even in the so-called “miracle” economies of this sub-region.
The current patterns of development in this sub-region are impacting particularly negatively on those who can least afford it since the strategies of achieving phenomenal growth rates, while ameliorating absolute poverty and employment for certain population groups, have served to exacerbate already prevailing income and other economic wealth inequalities, in addition to stimulating great social upheaval and disintegration for many already vulnerable population groups.
South Asia, in general, has fared worse on both growth and equity criteria but has done better on democracy ones, when compared with East and Southeast Asia.
The urgency of these overall regional problems and issues is reinforced by the fact that approximately 60% of the world’s population lives in Asia, including two-thirds of the world’s poor. Collectively, they comprise the largest number of people in absolute poverty, the majority of whom continue to reside in South Asia.
Any analysis of how these problems and issues can be addressed or the current and potential roles of civil society organisations will, however, be impossible without both an understanding of the fast changing global and regional context and an elaboration of its particular manifestations in the different sub-regions of Asia, to which this paper now turns.
2. The Fast Changing External Global and Regional Context
The past 15 years have seen some of the most rapid paces of change in both the external and regional (eg. Asia) environments in recent human history.
The “Third World” external debt crisis which emerged in the early 1980s; the subsequent fundamental restructuring of economies and societies through the enforcement of structural adjustment programs (SAPs) in over 100 countries around the world; the rapid economic growth “miracle” of first and second generation Newly Industrializing Countries (NICs) in East and Southeast Asia and its current unravelling in important economic and financial respects; the dramatic continuing transition of many countries from command communism and socialism to market economies; and the end of the Cold War are but some examples of the momentous changes that have taken place globally and regionally during this relatively short period in world history.
The supposed victory of the neo-liberal economic and political agenda; its associated accelerating economic globalisation and regionalisation processes and agendas; their concomitant processes of privatisation, and the weakening and fragmentation of the nation state as the fundamental unit of sovereignty in an increasing number of critical areas (eg. business, investment and capital flows, the environment, human rights and possibly even social development); the revolution in computing and other aspects of information technology; corporate transnational and other capital flows of unprecedented magnitude unevenly spread around the globe which are increasingly dwarfing the role of ever diminishing Overseas Development Assistance (ODA); and escalating regional and intra-national conflict in the absence of new appropriate, global, regional or national mediation institutions or mechanisms in a post-Cold War world are just some aspects of this new scenario which some have called the New World Order and others the New World Disorder.
3. Global Capital Flows and Asia
The current dominant processes of globalisation are led by the forces of market economics and finance.
For example, total private capital flows (foreign direct investment, portfolio speculative capital and others) to developing countries have increased a phenomenal sixfold from US $ 48 billion to US $ 244 billion in just this decade i.e. between 1990 and 1996. Global ODA during the same period , on the other hand, has declined to around US $ 40 billion from US $ 61 billion with the total global ODA in 1996 representing less than private capital flows to just one Asian country i.e. the People’s Republic of China which received a record US $ 42.3 billion in such flows last year.
A larger and larger portion of total capital flows now consists of short-term capital (only US $ 129 billion of the US $ 244 billion private capital flows in 1996 were longer-term foreign direct investment—-FDI) so that even portfolio speculative capital (“hot money”) to developing countries in 1996 exceeded global ODA, having grown rapidly after financial liberalisation took hold in many “emerging market” countries in the early 1990s.
Asia alone accounted for 53% of such flows in 1995 with significant negative, volatile currency and other financial and economic impacts on SE Asian countries over the past few months when it has as rapidly flown out. Indeed, the role and impact of short-term, speculative portfolio capital in the 1990s has become increasingly important in the “emerging market” countries of East and Southeast Asia (and to a lesser degree in India in South Asia), and has contributed to both a short-term “boom” and now a big “bust” in many of the former countries.
FDI to developing countries has also concentrated in Asia with approximately two-thirds of the 12-15 “emerging market” countries which received such flows being located in Asia. All of these, with the exception of India, are in East and Southeast Asia. Indeed, total FDI to South, East and Southeast Asia rose by 25% to US $ 81 billion in 1996, representing two-thirds of all FDI into developing countries. Even among the world’s least developed countries, Cambodia, the Lao People’s Democratic Republic and Myanmar in Asia claim three of the top six positions as the largest FDI recipients.
4. The Changing Role of the International Financial Institutions (IFIs) in Asia
The IFIs which are active in the Asian region (ie. World Bank, Asian Development Bank, International Monetary Fund) have dilemmas of a multiple nature which are impacting on both their identity and role in Asia, especially East and Southeast Asia but also other sub-regions such as the Lower Mekong River Basin sub-region and India and Pakistan in South Asia.
First, on the one hand, key multilateral development banks (MDBs) such as the World Bank are faced with dwindling resources for the International Development Association (IDA), its concessional lending arm which allows it to say that it is the world’s single largest provider of aid for poverty reduction. On the other, however, the International Finance Corporation (IFC), the World Bank Group’s private sector lending arm, (renowned for its transnational corporation rather than direct poverty reduction preferences), has been growing at double digit rates, far surpassing the growth rates of the rest of the Bank Group put together.
Secondly, as should be evident from the previous section of this paper, the Bank’s overall (including IFC) financing potential (approximately US $ 20 billion per annum) is becoming marginal when compared with the officially proposed or projected infrastructure needs of Asia. These, especially in East and Southeast Asia (including the Mekong sub-region), are estimated by the Asian Development Bank (ADB— with annual lending of about US $ 5 billion per annum) at approximately US $ 1.3-1.5 trillion over the next decade.
The private sector resources available in this region, at least till the recent SE Asian financial crisis, were much larger in volume compared with IFI resources, were readily available and quite willing to flow to even uncreditworthy countries as long as the World Bank is willing to financially guarantee all so-called “sovereign” risks (eg. as in the current controversial Nam Theun II dam in Lao PDR).
Shifts in the MDB (eg. World Bank, ADB) identity and role, especially in the ADB created Greater Mekong sub-region (GMS), other parts of Southeast Asia and countries such as India and Pakistan need to be analysed against this changed context.
The MDBs believe that their survival in Asia will depend on a major reconfiguration of their role and identity. The new roles identified by the World Bank and the ADB in response to the changed regional context are primarily two-fold: those of simultaneously providing strategic policy advice to their government clients and stimulating large-scale private capital flows by guaranteeing private investors against “sovereign” default by the very same governments they are giving policy advice to! Both these roles, especially the latter, are very different from the more traditional role of project funding to governments that the MDBs have played over the last three to four decades.
The IMF, on the other hand, has different dilemmas which have been compounded in the region and globally by the current SE Asian financial crisis. Established as a financial institution (not a developmental one) in Bretton Woods, New Hampshire, USA over 50 years ago, it has increasingly, (through, for example, its Enhanced Structural Adjustment Facility, ESAF, which has been used in the Philippines and Cambodia, and now as a result of the current SE Asian crisis) involved itself in longer-term structural reform in which it neither has experience or expertise. As such, it is increasingly vulnerable to both criticism and to the making of fatal errors in its advice. Moreover, since it is no longer able to keep up with financial markets and their signals despite its wholehearted advocacy on their behalf, the IMF is in the vulnerable position of merely reacting to them. As a result, it is quite unable to play its surveillance role effectively.
5. East and Southeast Asia
This region of the world (excluding the lower Mekong river basin countries of Lao PDR, Cambodia and Vietnam but including the People’s Republic of China) has been celebrated as the economic growth “miracle” of the world for much of the last 15 years. Most of the literature on which this judgement is based has reflected the mainstream paradigm of development and its view that the first generation (S. Korea, Taiwan, Singapore, Hong Kong), aspiring second generation (Malaysia, Thailand, Indonesia) countries of this region and now the People’s Republic of China represent the economic development model that other developing countries in Asia, Africa, Latin America and the Pacific should seek to follow.
While the Philippines, often called the “sick man of SE Asia” (because of its slide from number one economic and social position in the sub-region in the 1960s to the bottom of the heap by the mid-1980s) has been left out of the “miracle” club, it has, of late, been attempting to catch up in economic growth rate terms under President Ramos’ Philippines 2000 program.
However, the current financial, environmental and underlying structural crises that have overtaken all the aspiring second generation “miracle” economies and the Philippines since earlier this year make it timely to revisit the “miracle” and also explore the myths and mirages that surround it.
Critiques of the “miracle” so far have focused primarily on its severe environmental, democracy and social consequences and costs. Some of these are no longer that controversial even in mainstream debate. Without seeking to de-emphasize their importance, I will, however, not revisit them in this paper.
Rather, I will focus on other underlying structural problems of the model which relate to weaknesses in the economic strategy itself. I believe it is both important and timely to do this if we are interested in understanding current trends in the region and how the processes of accelerating globalisation and regionalisation and their concomitant financial and trade liberalisation and integration regimes have impacted and continue to impact on Asia.
To understand the crisis today one needs both to understand how addicted to capital the East and Southeast Asian countries have been and currently are (and the pivotal role of Japan in providing such capital, especially after the 1985 Plaza Accord which resulted in the appreciation of the value of the Japanese yen against the US $), and the fact that both the first and second generation “miracle” economies started on their trajectory of high speed growth before the dramatic acceleration of economic globalisation and regionalisation and their accompanying processes of increased trade and financial integration which became more evident only in the late 1980s and 1990s.
They were, perhaps, fortunate in the latter, because states and governments had both the possibility and the capacity and ability to play strong interventionist roles in the economy in the 1960s, 1970s, and even the early 1980s without which their economic growth and poverty reduction “miracles” would not have been possible. This is now less and less possible for even the first and second generation “miracle” economies.
Establishing export-competitiveness in those decades was also possible simply on the basis of politically controlled cheap labour and natural resource exploitation. Moreover, concessional overseas development assistance was much more plentiful than it is today and external capital came much more in the form of long-term Japanese FDI than short-term portfolio speculative flows.
All of this has changed as a result of current patterns of globalisation and regionalisation. For example, export-competitiveness on the basis of cheap labour and low-end value products is now less and less possible, even for the strong economies of this region. Indeed, this is an important direct consequence of trade and financial liberalisation and integration in the context of current patterns of globalisation. This also implies, as is increasingly evident at the country level, that even relatively strong developing country “emerging market” economies such as the “tigers” or “dragons” in this region are not immune from major crises.
The current crisis in Thailand, for example, is both a consequence of an outdated export competitiveness strategy based on cheap, relatively unskilled labour used for low-end value products on the basis of which the country can no longer compete (eg. with China) and premature, ill-prepared and unregulated financial liberalisation which has compounded the country’s underlying structural economic woes.
International financial institutions such as the International Monetary Fund (IMF) and World Bank (WB) encouraged and applauded Thailand’s financial liberalisation in the early 1990s (eg. when it created the Bangkok International Banking Facility—-BIBF—- the major financial liberalisation mechanism). The BIBF was created without adequate safeguards and both the central Bank of Thailand (BOT) and IMF failed in providing adequate surveillance in time.
If countries that have had decades of high economic growth rates and still have relatively strong states and governments such as the Republic of Korea, Malaysia, Thailand and Indonesia are so vulnerable in this fast changing globalisation context, what chance do the much weaker, small transition countries like Lao PDR and Cambodia have?
If even the near universalisation of primary education and access to public health care leaves an economically vibrant, medium-sized country such as Thailand both non-competitive and without recourse to short or medium-term strategies apart from competitive devaluation of its currency, what are the realistic prospects of countries which have neither invested in primary, secondary or tertiary education or research and development?
It should be clear from the recent events in East and Southeast Asia and from the preceding paragraphs that in this new global context even economies which are relatively strong in growth terms but are small or medium-sized developing countries, have less and less control over their future destinies. Likewise, those with weaker economies or dependence on only low-end value added labour-intensive exports are likely to be even more vulnerable to shocks than larger countries such as China and India.
In addition, countries with higher dependency on export markets and external trade and financial flows (eg. Thailand whose trade as a % of GDP is approximately 80% and Malaysia, whose equivalent ratio is approximately 200%) are likely to be much more vulnerable than those that have large internal markets and for whom trade is a relatively small proportion of their GDP (eg. China, India). These two countries have been relatively insulated from the negative effects of the current crisis in the region both because of these two factors and because neither have financially liberalised their economies—-they allow only partial capital account convertibility.
Since it is widely agreed that financial markets tend to exaggerate shocks and overreact negatively in times of crisis, more damage is also likely to external trade and capital dependent economies such as those in Southeast Asia in times of crisis (eg. the current exaggerated depreciation of some SE Asian currencies).
Moreover, trade liberalisation is likely to impact negatively even on food security in East and Southeast Asia. For example, through the “minimum access” clause of the Agreement on Agriculture of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), the trade liberalisation agreement currently under implementation by the World Trade Organisation (WTO), even trade in rice, SE and NE Asia’s staple diet, will be liberalised.
“Minimum access” is defined as 3% of domestic consumption of the product in the first year, rising to 10% in the third year. Quotas are allowed for one major staple (eg. rice) but “minimum access” is necessary even for that staple. This is defined as entry at low tariffs of 1% of domestic consumption in the first year, rising to 4% by the tenth year.
As a result, many small rice farmers across the region will go bankrupt. The Japanese and South Koreans who have traditionally disallowed imported rice must now allow in such minimum quantities. Indeed, it is likely that “minimum access” for staples such as rice is merely a transition phase to full “tariffication”. It certainly provides a valuable foot in the door for rice exporters such as Australia and Thailand but resulted in protests by small farmers in both Japan and South Korea.
Yet these agreements are now mandatory for all signatories of the WTO to follow. National laws and legislation are now subordinated to the WTO’s rules and agreements and if the latter are not adhered to, WTO sanctioned trade retaliation on any other product (ie. cross-retaliation) is now possible.
The potentially grim future for small, South Korean rice farmers as a consequence of the GATT agreement is highlighted by one report from inside the country ie. ” with 4% of domestic consumption supposed to be brought in from foreign countries by 2004, it is predicted that the price competitiveness of domestically produced rice will fall dramatically, dealing a serious blow to farmers dependent on rice cultivation.” Indeed, South Korea faces a potentially very serious social explosion and the “disintegration of the rice farming household.”
Likewise, in the Philippines, the GATT mandated “minimum access” requirement of 59000 metric tons of rice is expected to translate into the displacement of 15000 farming families annually.
While Thailand may be a net beneficiary of the GATT agreement in aggregate terms for rice because it is a major exporter, the fate of small farmers in Thailand has not been and is not likely to be terribly different from their South Korean and Filipino/a counterparts because of land displacement and the sharp distortions and inequities of rice production in the country. The continued and escalating demands and rallies of the Forum of the Poor in Thailand (which is a people’s coalition bringing together directly affected—mainly rural—people) over the last few years is vividly illustrative of this.
6. Asian Economies in “Transition”
The Asian countries normally included in this category include Lao PDR, Cambodia, Vietnam, PR China and Mongolia. They have very different recent histories and current conditions to the previous grouping, especially in relation to the role of the state, market and civil society. While there are also important differences and nuances within this category of countries (eg. between Cambodia and Vietnam), they all share a similar set of historical and current characteristics, common to most centrally planned economies, in terms of the role of the state in the economy and society.
All of these countries are in the midst of fundamental transitions from central planning to market orientation, hence the term “transition” economies. Everyone from the family to the government is feeling its effects.
Transition in these countries has largely been market economics led. It is occurring more rapidly in some countries (eg. Mongolia) and more gradually in others (eg. Vietnam). However, in all cases, such transition policies which are externally supported have four main objectives, the first of which involves “shedding central planning to build a thriving market economy.” According to the World Bank, a second objective of such a transition should be the creation of a substantially reduced but more effective government/state role which in practice appears to be one whose function is to support and protect key market actors.
Transition’s third and fourth objectives are to restructure the institutional basis of each country’s social system (objective three) leading to the fourth i.e. reform and systemic change in the fundamental rules of how society works, including the behaviour of and relationship between different institutions (eg. state, market, civil society).
Indeed, it is these four objectives which most distinguish this type of transition process from economic reform programs (ie. SAPs) in other countries which are/were not centrally planned.
The key aspects of this transition process in practice, however, have not been terribly different from SAPs in other countries since the latter is the core of such a process, even though the two are not the same.
Economic transition in these countries has so far included liberalisation (freeing prices, trade, allowing free market entry); stabilization of inflation and interest rates; privatisation (clarifying property rights in land and privatizing them to give clear “ownership” rights); creation of institutions that support market exchange (eg. private banks) and the rule of (market) law; the reshaping of social services (eg. health, education) and the restructuring of social safety nets both to meet the demands of a market economy system and to ease the pain of transition to such an economic system (eg. since the transition, among other outcomes, implies a shift from job security but labour immobility to labour mobility but no job security); reinventing government and limiting its role to one which is largely regulatory; and accelerating international (regional, global) economic integration.
While it needs to be acknowledged that, especially with the collapse of the erstwhile Soviet Union, economic reform was urgent in all these countries, key issues and challenges raised by such policy prescriptions and the resultant transition process and outcomes in these countries include:
the overriding emphasis on reducing the role of the state and government in the economy. As a result, the transition process in practice has had a narrow market economy bias and has been based on the erroneous assumption that people are primarily driven by material incentives.
related to the above, transition, in reality, is taking place rapidly in some areas (especially macro-economic reform) and very slowly in others (social, institutional, some economic reforms). There is, therefore, a serious tension between the economic reform process and the needs of the social change process which needs urgent attention. This tension is particularly serious in the case of a largely subsistence economy such as the Lao PDR where the conceptual leap in understanding necessary for such a transition (eg. alternative notions of public and private) has been greatly underestimated. Moreover, little attention has been placed on the broader institutional changes necessary to maintain stable societies other than on those (eg. banking, legal) which are necessary to create a market economy.
current transition policies are seeking to support and achieve economic liberalisation without political liberalisation, taking hope, ironically from the “miracle” economies and its politically controlled, cheap labour export competitiveness strategies. As in the case of the “miracle” economies, there are serious negative impacts on the environment and natural resource base of the countries, as a result.
there has been a failure, in practice, to take political realities into account. For example, civil service reform, if carried out quickly and comprehensively, could be politically and socially explosive because of its potential to create mass unemployment in transition countries. Indeed, key objectives of the transition process may not be achieved and, in fact, may be undermined if it is not undertaken gradually. PR China’s experience of 20% underemployment in the civil service may well be a more efficient and effective strategy in the long-term.
the transition process in practice has the real potential, at least in some countries, of stripping the state without creating strong, vibrant markets or civil society institutions. For example, in both Cambodia and Lao PDR, the state is clearly unable to play even the four functions allowed it by the World Bank ie. it cannot establish a strong regulatory framework; it is increasingly looking, through Build-Own-Operate-Transfer (BOOT) schemes, to privatize the provision of public goods; it does not have the capacity to help new institutions develop; and it cannot even provide an effective social safety net in health and education with these services increasingly subject to privatisation as well. At the same time, long-held community support practices and values are being irretrievably undermined.
Privatisation is being seen as the only option, a solution for all problems. As a result, “political control” rights in the old system are too often being transformed into “property control” rights in the process of economic transition, leading to benefits being concentrated in the hands of very few people. These inequities in wealth and poverty are undermining both trust in the state as an institution and the transition process. Such trust cannot be regained simply by having high GDP growth rates, especially since these are not likely to benefit the majority of the populations in these countries.
No serious attention has been paid to participation and capacity building issues with the result that there is no broad based ownership or even understanding of the transition reform process, let alone an ability of the majority population to help or contribute to it.
The approach to social policy is very traditional (eg. welfare, social safety nets, human resource development) and is defined only in terms of income and services within a market economy framework. It is neither culturally or socially appropriate or based on a socially inclusive approach. The definition of social when used is narrow and not defined in broader terms to include participation, the right to information, security and well-being.
Women and poor children are among the main losers of the current transition process. Women, for example, are undermined in terms of their status in the transition process from a subsistence to monetary economy and they absorb most of the hidden costs of transition reflected in the breakdown of state support for women (eg. Mongolia). Their time loss costs are also not recorded in national accounts. More generally, progressive social, gender and child benefit laws are either eroding or being dismantled with severe consequences for poor and vulnerable children in particular and for income and asset inequality in general.
South Asia has, of late, been the focus of much attention and analysis in the world press on the occasion of the 50th anniversary of independence of India and Pakistan from the British Empire. In some ways this is a welcome development because the “miracle” economies of East and Southeast Asia and the PR China have tended to eclipse the region in the international media over the past two decades.
Indeed, the little analysis and writing on the region in the international media in recent times has been grim. The harshest judgement on the region, however, comes from well renowned people from the region itself such as the former Finance Minister of Pakistan and initiator and coordinator of the famous UNDP Human Development Report series, Dr. Mahbub-ul -Haq, who recently wrote that “South Asia has emerged as the poorest, the most illiterate, most malnourished, and least gender-sensitive region of the world.” His comments were particular directed to the current situation in Pakistan.
According to Dr. ul-Haq, even though Pakistan has had the fastest growth rates in South Asia, its economic system has produced “one of the most scandalous divergences between economic growth and human advance.” Comparing Pakistan to other countries in the sub-region, ul-Haq notes that while India is poorer than Pakistan in per capita income, it is ahead in terms of education and health indicators. The situation of Sri Lanka is starkly better, as are some indicators in Bangladesh. To quote, “It (Sri Lanka) has roughly the same per capita income as Pakistan, but there is a world of difference in the living conditions of the people in the two countries. Pakistan’s adult literacy rate is only 36% compared with 90% in Sri Lanka; its life expectancy is 10 years lower than Sri Lanka’s. And Bangladesh enjoys half the income per capita of Pakistan, yet it has succeeded in lowering the population growth rate to 1.7% a year.”
Indeed, there have been many remarkable achievements in South Asia. Both Kerala in India and Sri Lanka (till the late 1970s) have seen some of the world’s most impressive advances in meeting the challenges of poverty, through a combination of government political will, commitment and positive practical intervention, in addition to constructive civil society action.
In recent times, India and the other countries in the sub-region as a whole have been undergoing economic liberalisation and SAPs and looking East to ASEAN, APEC and the “miracle” economies for lessons about where they went wrong. It is hoped that earlier sections of this paper and other writings by Focus on the Global South and other organisations based in East and Southeast Asia will be read seriously before India and other countries in the region make the same errors.
While the “New Economic Policy” (NEP) has increased the economic growth rate in India to an average of 6.3% per annum since 1991 when it was implemented, it has also exacerbated social tensions and inequalities. India, however, can be pleased that it did not financially liberalise as did the SE Asian economies currently in crisis.
It is also likely that given the size of its effective market, it will continue to attract significant long-term foreign direct investment despite its refusal to move to full capital account convertibility. This will continue to happen despite the increasingly obvious bankruptcy of its formal democratic political system which has repeatedly created a crisis of credible leadership, despite its claim to fame as the world’s largest and enduring democracy.
It is harder to predict a bright economic future for other countries in the sub-region for reasons argued on pages 7 and 8 of this paper and because the smaller countries of South Asia neither have India’s size, market attraction, human resources or technological capacity.
However, they all have fairly vibrant democratic systems and civil societies when compared with most countries in East, Southeast and “transition” Asia. Indeed, it is in civil society action that the potential and actual performance of this sub-region has far surpassed other parts of Asia and the developing world.
The potential of this “third sector” in the future, while great, can however never be a substitute for positive governmental policy and action. This is where South Asia has failed in comparison to some of the “miracle” economies of East and Southeast Asia and the PR China. Civil society’s greatest challenge in this sub-region currently is to transform the state into an accountable, transparent and activist promoter of sustainable social development. Given past history, this is a formidable challenge which will require a South Asian “miracle” different from that of East and Southeast Asia. Civil society, not the free market should lead this “miracle” if the future is not to turn into yet another disaster for the poor and vulnerable of this region who are the largest, in absolute numbers, in the world.
Some Citizens’ Responses and Alternatives
Citizens’ responses and alternatives, while continuing at local and national level are now increasingly taking place or being presented at the regional and global levels as well, because while local and national level responses remain important, they are not adequate by themselves in this context of accelerating economic globalisation and regionalisation and its concomitant trade and financial integration regimes.
It would be in the best interests of countries and their citizenry if governments and bilateral and multilateral institutions took such citizens’ initiatives more seriously and supported them, rather than, as is too often the case especially in East and Southeast Asia, declare their opposition to them or even attempt to ban or otherwise suppress them.
Such regional and global level citizens’ action and alternatives are likely to become more and more important and frequent in the future in our fast changing world. This is because governments and intergovernmental financial institutions are increasingly working not merely on important national projects but on even more strategic regional agendas. These may be through the Asia Pacific Economic Cooperation (APEC), Asia Europe Summit Meeting (ASEM), the Greater Mekong Sub-region (GMS) or the South Asian Association for Regional Cooperation (SAARC).
As a result, it is increasingly crucial for citizens groups in the region to have their own regional projects and proposals, not just in reaction to the official projects but in a proactive manner with well thought out process and content alternatives to the various official initiatives. Such a need is not specific to the Asian region but is nevertheless increasingly necessary on multiple issues here.
Such citizens initiatives should not be restricted to the regional level but must, in addition, be forged at the global level, especially around strategic initiatives of international financial and trade institutions such as the World Bank, International Monetary Fund and World Trade Organisation.
For example, the current Structural Adjustment Participatory Review Initiative (SAPRI) and its accompanying SAPRIN is much more a global citizens initiative and is emerging with clear proactive potential to democratize the economic reform decision-making processes in the countries involved. Bangladesh is the Asian country which is part of SAPRI.
Nascent work around the WTO and financial liberalization and integration issues as they relate to the current and future role of the IMF also have the potential to grow into full blown citizens initiatives at the global level in the next few years.
This section will seek to outline key elements of a few of the regional and global initiatives mentioned in the preceding paragraphs, especially using those that FOCUS is or has been actively part of for illustration purposes since we obviously know them better than others which may also be taking place (eg. ASEM, APEC, SAPRI).
The Asia-Europe Meeting (ASEM)
Focus on the Global South, the Transnational Institute (TNI) in Amsterdam and our other Thai, regional and European co-sponsors led in organizing an NGO Summit just before the first, historical Asia-Europe Summit (ASEM) in Bangkok on March 1-2, 1996 which brought 15 leaders of European Union member states, the President of the European Commission and 10 of their Asian counterparts together for the first time.
Approximately 300 NGO and civil society participants from Asia and Europe came together as equals for three days in Bangkok (February 27-29,1996) to speak on panels on security, human rights, and economic and trade issues, touching equally on the current situation and historical record in Europe (eg. Bosnia and Ireland on human rights, UK on economic justice) and Asia.
Traditional Northern or Asian funding NGOs were only marginally represented and did not lead or participate in the substantive panel discussions, even though some of them (especially those from the Netherlands), provided significant funding. The same was, by and large, true for development NGOs from the South. Labour, policy research and advocacy groups from both North and South, in addition to some grassroots people’s organisations, were the ones who actively participated in the discussions. Since there was no funding relationship between such groups, a more equal and genuine dialogue appears to have emerged, forming the basis for the meeting’s statement of alternative vision and proposals which were handed to the official ASEM participants through the Thai Foreign Minister.
The ASEM II Summit will be held in London, UK in April 1998. Preparations for an alternative citizens’ summit in the UK just before the official summit are currently underway through a similar partnership between FOCUS, Forum Asia and other Asian groups, on the one hand, and European groups such as TNI, Catholic Institute of International Relations (CIIR), One World Action and a broad cross-section of British NGOs, including many funding ones like Christian Aid, Oxfam UKI, and even Action Aid and Save the Children Fund UK, this time.
A first preparatory meeting for the citizens’ ASEM II was held in Bangkok during the last weekend of September 1997, with mainly Thai and some European groups attending, while another bigger regional meeting took place in Bangkok during the last week of October, 1997.
The Asia Pacific Economic Cooperation (APEC)
APEC has been of even more central concern than ASEM for FOCUS and other citizens groups in APEC member countries (these are 18 in number and include all those in East and Southeast Asia in addition to China, Japan, Papua New Guinea, USA, Australia, Canada, Chile and Mexico) over the past few years.
In Kyoto, Japan, in November 1995, on the occasion of the Third APEC Summit, FOCUS played a central role in bringing to the Asia-Pacific civil society and NGO community, an understanding and analysis of APEC while Japanese citizens’ groups led in the organizing of the alternative people’s summit around the official meetings.
FOCUS’ contribution consisted of bringing out a book together with ARENA in Hong Kong entitled APEC and the Asia-Pacific Development Debate, in addition to playing a central role in the Kyoto NGO Forum and helping draft the “Kyoto NGO Declaration on APEC”.
As agreed at the Kyoto Forum, FOCUS became the NGO information center for APEC, and as part of this role, we began bringing out FOCUS-on-APEC, an electronic bulletin, from March 1996. This bulletin (now renamed FOCUS-on-Trade to cover other trade related issues as well) reaches almost 1000 subscribers regularly, and has come to be seen as an indispensable source of information and analysis for NGOs and other civil society groups throughout the Asia-Pacific.
In the months leading up to the Manila People’s Forum on APEC (MPFA) in November 1996, which was held to coincide with the Fourth APEC Summit hosted by the Philippines in Subic Bay, FOCUS worked with a range of regional and Filipino citizens’ groups to organize a major alternative gathering from around the world. Once again, FOCUS was called upon to play the key analytical role which led to the production by it of the 311-page book APEC: Four Adjectives in Search of a Noun for the MPFA.
The MPFA comprised a conference attended by about 500 Filipino and international participants and a “People’s Caravan” to Subic Bay, the site of the official summit. While there were three other conferences on APEC, reflecting the Philippine political reality on the civil society side, the MPFA was the only one to focus on regional, as opposed to Philippines-specific issues. The MPFA prepared its “Manila Declaration” and “Manila Action Agenda” which detailed not just an alternative vision for APEC but had a fairly detailed set of alternative proposals for regional economic integration in the Asia-Pacific. They were presented by an MPFA delegation to a high-level Philippine Cabinet delegation who promised to submit it to the 18 APEC “economy” leaders meeting in Subic Bay for the official Summit.
It has been judged that the MPFA was a very successful effort, if assessed against its main goal of providing a platform for NGOs, people’s organisations and other citizens’ groups to discuss problems being ignored by the official APEC process and present their ideas and proposals on an alternative framework for people’s cooperation across the Asia-Pacific region.
More than in previous APEC summits, the coverage of the parallel conference by the media was much more extensive this time. At first, this was because Jose Ramos-Horta, the recent Nobel Peace Prize laureate on East Timor, had been denied permission to speak at the conference by the Philippines government, but later the press began to cover the more substantive issues to do with trade liberalization and foreign investment which preoccupied the MPFA.
Coverage by CNN and other international media organisations allowed the parallel conference to state its main points of opposition to an international audience, while in the Philippines local media devoted considerable attention to the MPFA’s critique of trade liberalisation. The MPFA critique, widely aired in the press, can in fact take partial credit for placing the Philippines government on the defensive since it had done very little work to justify the merits of trade liberalisation to the Filipino people but instead relied on a slick advertising campaign with slick images but little substance.
The one drawback of the parallel conference was that it was unable to draw all of the Philippines’ diverse NGO and civil society groups together in one forum. Three other parallel conferences were held alongside the MPFA, two which were hard line left conferences that were based on traditional anti-imperialist analysis and rhetoric and one conference by NGOs closer to the government’s position on APEC who felt that the best course was to try and influence the language of the official APEC documents by engaging directly with the official process.
This fractured situation stemmed not from lack of trying on the part of the MPFA to bring local groups together but from the historical and deep-rooted divisions in the Philippine progressive movement. Unlike the other three conferences, however, the focus of the MPFA was consistently regional (Asia-Pacific) and not national (Philippines). Even when Philippines-specific issues were discussed, there was an effort to place them in a regional context.
The official 1997 APEC meeting is being held in Vancouver, Canada later this month and citizens groups in that country are organizing a series of alternative events around the official meetings. FOCUS and other groups from APEC member countries will be actively participating in these events and activities.
The Structural Adjustment Participatory Review Initiative (SAPRI)
The SAPRI and its growing, broad-based global network (SAPRIN) which currently comprises approximately 1000 civil society organisations (CSOs) and includes NGOs, trade unions, human rights and environmental organisations from both the South and North is significant both because it is global (and not just regional in scope and coverage) and also because for the first time agreement has been reached with both the World Bank and selected governments at the highest levels to engage in a two-year tripartite review of the record of structural adjustment and related economic liberalisation and reform programs which have swept the world over the past two decades in particular.
The SAPRI, whose global launch took place on July 14, 1997 after almost two years of intense negotiation and discussion between a global steering committee of civil society groups (of which FOCUS has been an active member) and the World Bank, will be based on 10 country case studies from Africa, Latin America, Asia and Eastern Europe which includes Bangladesh in South Asia.
An in-country consultation process (including unprecedented official information disclosure of hitherto confidential country economic memoranda and other documents), together with a progressive political economy approach and the use of participatory field level methodologies are key elements of SAPRI. Both of these, which are significant departures from standard Bank and government practice, were proposed by the global civil society steering committee and technical team and have now been agreed, more or less in their entirety.
Key principles agreed include that SAPRI will consciously attempt to give voice to those who are traditionally marginalized from decision-making processes and that quantitative and qualitative data will be treated with equal respect. In essence, SAPRI will be a participatory exercise with a research component rather than a research exercise with a participation component.
The SAPRI exercise in-country is premised on the formation of National tripartite Steering Commitees (NSC) which will be made up of representatives of CSOs, government and the World Bank, and if possible the IMF. Membership in the NSC is based on the inviolable principle that while both the civil society side and governments and the World Bank can suggest changes in their respective proposed representation on the NSC, in the end, neither side has veto rights over any representation proposed by the other side. A key guiding principle for the selection process, however, is that each side must strive to obtain the broadest possible representation.
The NSCs will rely on Public Forums for input and advice, as well as for a mandate on which issues to investigate in the field. Directly affected groups (eg. poor farmers, labour, women) will be the main participants in such a Forum.
The field investigations are expected to take from between 6-9 months in each country and will be carried out by jointly agreed in-country technical teams. Draft findings will be widely discussed in-country before being finalized in a report to be presented first at another national public forum and later at a global forum, together with similar reports from all countries participating in the SAPRI exercise.
SAPRI, in essence is an exercise which is aimed at democratising the economic reform policy formulation, decision-making and implementation processes both inside countries and in global IFIs such as the World Bank and IMF who have disproportionate influence in this area, especially in small and medium-sized developing countries.
On the civil society side, SAPRIN (which includes planned, but non-tripartite civil society CASA exercises in those countries like Mexico and the Philippines whose governments have refused to participate in SAPRI or Cambodia and Canada who wish to participate but for a variety of reasons cannot be part of SAPRI) has become a stimulus for mobilizing CSOs across traditional boundaries (both geographically and in terms of different types of organisations), indicating that if the issue is seen as important enough, it is possible to bring not just NGOs but broader groups of CSOs together voluntarily and globally on a strategic platform of collaboration. Distance and different constituency bases can be overcome in the interests of forging a common strategic alliance to achieve an overall common goal.
While SAPRI is still at a relatively early stage, much has already been achieved and many lessons on both alternative process and content issues can be learned from it. While teething and other problems will remain, and there may even be conflict from time to time, as has already been true in the SAPRI case both between the Bank and governments, on the one hand, and CSOs on the other (and, in one instance, among CSOs themselves), the overall SAPRI dialogue, consultation, coordination and networking processes continue to show promise for a genuine democratization of the economic reform policy- making processes, both within countries and in some global international financial institutions. One challenge will be to institutionalize and sustain these incipient processes well beyond the current SAPRI exercise. The global civil society SAPRI network (SAPRIN) will be crucial to achieving this in the long run.