Category Archives: Economics

Book Review: Chinese Politics in the Era of Xi Jinping

May 21, 2015

Phnom Penh

BOOK Review

Book Review: Chinese Politics in the Era of Xi Jinping

by John Berthelsen

Renaissance, reform or retrogression?  By Willy Wo Lap Lam. Routledge, 323 pp, softcover, available in local bookstores

China by JBIt often appears there are two Chinas – one fast-rising, showing an aggressive face to the world, building an infrastructure empire, a network of Silk Roads that stretches from Pakistan’s Gwadar Port to the corners of Southeast Asia, dominating the South China Sea, pillaging resources from as far away as Africa, with all roads leading to Beijing much as they led to Rome in the Roman Imperium.

There is a second China, however, that is in a welter of ferment.  It is this China that preoccupies Willy Wo Lap Lam, a widely recognized authority on China, who has formerly held senior editorial positions with the South China Morning Post, CNN and Asiaweek and is now an academic. From the very introduction of this book onward, it is clear that he is a pessimist on China and is not a fan of Xi Jinping, who has battled his way to the top.

“While China is on course to overtake the United States as the world’s biggest economy soon,” he writes, “Chinese who do not belong to the ‘red aristocracy’ – a reference to the unholy allowance between top cadres and their offspring, on the one hand, and big business groups, on the other, see no cause for optimism.” 

Certainly Xi represents a dramatic change from his predecessor Hu Jintao, who with Premier Wen Jiabao presided over historic economic change while the party stultified and fell into a stew of venality. But although Xi has kicked off the biggest anti-corruption campaign since the advent of Communist government, with as many as 200,000 people arrested or otherwise disciplined, it is still unclear whether the cleanup masks a surgical expedition to clear out Xi’s enemies and potential rivals.  The  biggest to fall is famously Zhou Yongkang, “Uncle Kang,” the former head of China’s security apparatus and an ally of Bo Xilai, the now-imprisoned boss of Chongqing and a major opponent.  Zhou is the highest public official ever to be prosecuted. But Xi has also cleared out the entire top of the country’s oil and gas sector – where Zhou’s son was a top official.

Lam’s 323-page analysis of Xi’s rise to power is deeply detailed and essential reading for anybody who is interested in the China that lurks behind the confident consolidation of government that has gone on since he became the head of the government in November 2012.  In particular,  of interest is the reversal of philosophy from that put in place by Deng Xiaoping, who in the wake of the terrors and capricious actions that characterized Mao Zedong’s later years, created a collegial and collective leadership. 

Xi is clearly having none of that. He has sidelined or pushed aside most of his rivals. The first to go was Li Keqiang, the prime minister put in power as his Sancho Panza, who quickly learned that he was a distant number two. Li rose through the ranks in the Communist Youth League and was an ally of Hu Jintao, the former leader. Hu was unceremoniously dumped by Xi in the 2013 party conference that brought Xi to power, unable to retain any of his former titles including those connected to the military. Although Li is a trained economist and touted “Likonomics” at the outset of his premiership, Xi is clearly in charge of economics, along with everything else.

“…Compared to both ex-presidents Jiang Zemin and Hu, the leader of one-fifth of mankind is a relatively simple person committed to defending what he regards as self-evident truths,” Lam writes. Including those is a notion that “the nature of the Party will never change.”  There has been no  thought of democratization and no letup on the war on intellectuals, the press and those who do not believe in communist orthodoxy. “Any idea that the party will undergo ‘peaceful evolution’ is out of the question.”

The Internet, perhaps the most opportunistic venue for subversion, is being tightened even further. Since Lam’s book has come out, the “great cannon” has been added to the “great firewall” as a new tool for censorship, pouring massive sprays of traffic against enemies in an attack called “distributed denial of service or DDOS target two anti-censorship sites in the US and closing them for days.

David Shambaugh, for decades one of China’s most optimistic backers in the west, shocked the world of sinologists by saying the China system was inevitably doomed.  Is Lam that pessimistic?

“Even more than factors such as shifts in China’s foreign and defense policies,” Lam writes, “the most important determinant of the trajectory of China’s development in the twenty-first century will be domestic questions. Foremost is whether China will pick a development path that favors the construction of a real market economy and a just and passionate society that embraces values such as the rule of law and equal opportunity.”

The next decade of China’s development under Xi probably isn’t going to meet those goals. Lam quotes Xi as saying the country could be undermined by “subversive mistakes.” What he meant, Lam says, “are economic, social or political policies that would compromise the monopoly on power that is enjoyed by the CCP – or more specifically, the party’s ruling elite, also known as the “red aristocracy.”  That is not a cause for optimism.

Triumph of the Unthinking

May 13, 2015

Triumph of the Unthinking

by Paul Krugman

John-Maynard-Keynes-190Words,” wrote John Maynard Keynes, “ought to be a little wild, for they are the assault of thoughts on the unthinking.” I’ve always loved that quote, and have tried to apply it to my own writing. But I have to admit that in the long slump that followed the 2008 financial crisis — a slump that we had both the tools and the knowledge to end quickly, but didn’t — the unthinking were quite successful in fending off unwelcome thoughts.

And nowhere was the triumph of inanity more complete than in Keynes’s homeland, which is going to the polls as I write this. Britain’s election should be a referendum on a failed economic doctrine, but it isn’t, because nobody with influence is challenging transparently false claims and bad ideas.

Before I bash the Brits, however, let me admit that we’ve done pretty badly ourselves.It began very early. President Obama inherited an economy in free fall; what we needed, above all, was more spending to support demand. Yet much of Mr. Obama’s inaugural address was given over to boilerplate about the need to make hard choices, which was the last thing we needed right then.

It’s true that in practice Mr. Obama pushed through a stimulus that, while too small and short-lived, helped diminish the depth and duration of the slump. But when Republicans began talking nonsense, declaring that the government should match the belt-tightening of ordinary families — a recipe for full-on depression — Mr. Obama didn’t challenge their position. Instead, within a few months the very same nonsense became a standard line in his speeches, even though his economists knew better, and so did he.

So I guess we shouldn’t be too harsh on Ed Miliband, the leader of Britain’s Labour Party, for failing to challenge the economic nonsense peddled by the Conservatives. Like Mr. Obama and company, Labour’s leaders probably know better, but have decided that it’s too hard to overcome the easy appeal of bad economics, especially when most of the British news media report this bad economics as truth. But it has still been deeply disheartening to watch.

What nonsense am I talking about? Simon Wren-Lewis of the University of Oxford, who has been a tireless but lonely crusader for economic sense, calls it “mediamacro.” It’s a story about Britain that runs like this: First, the Labour government that ruled Britain until 2010 was wildly irresponsible, spending far beyond its means. Second, this fiscal profligacy caused the economic crisis of 2008-2009. Third, this in turn left the coalition that took power in 2010 with no choice except to impose austerity policies despite the depressed state of the economy. Finally, Britain’s return to economic growth in 2013 vindicated austerity and proved its critics wrong.

Now, every piece of this story is demonstrably, ludicrously wrong. Pre-crisis Britain wasn’t fiscally profligate. Debt and deficits were low, and at the time everyone expected them to stay that way; big deficits only arose as a result of the crisis. The crisis, which was a global phenomenon, was driven by runaway banks and private debt, not government deficits. There was no urgency about austerity: financial markets never showed any concern about British solvency. And Britain, which returned to growth only after a pause in the austerity drive, has made up none of the ground it lost during the coalition’s first two years.

Yet this nonsense narrative completely dominates news reporting, where it is treated as a fact rather than a hypothesis. And Labour hasn’t tried to push back, probably because they considered this a political fight they couldn’t win. But why?

Mr. Wren-Lewis suggests that it has a lot to do with the power of misleading analogies between governments andDr Paul Krugman households, and also with the malign influence of economists working for the financial industry, who in Britain as in America constantly peddle scare stories about deficits and pay no price for being consistently wrong. If U.S. experience is any guide, my guess is that Britain also suffers from the desire of public figures to sound serious, a pose which they associate with stern talk about the need to make hard choices (at other people’s expense, of course.)

Still, it’s quite amazing. The fact is that Britain and America didn’t need to make hard choices in the aftermath of crisis. What they needed, instead, was hard thinking — a willingness to understand that this was a special environment, that the usual rules don’t apply in a persistently depressed economy, one in which government borrowing doesn’t compete with private investment and costs next to nothing.

But hard thinking has been virtually excluded from British public discourse. As a result, we just have to hope that whoever ends up running Britain’s economy isn’t as foolish as he pretends to be.

Why Social Progress Matters

May 6, 2015

Phnom Penh by The Mekong

Why Social Progress Matters

by Michael Porter

CAMBRIDGE – Economic growth has lifted hundreds of millions of people out of poverty and improved the lives of many more over the last half-century. Yet it is increasingly evident that a model of human development based on economic progress alone is incomplete. A society which fails to address basic human needs, equip citizens to improve their quality of life, protect the environment, and provide opportunity for many of its citizens is not succeeding. Inclusive growth requires both economic and social progress.

Michael_porterThe pitfalls of focusing on GDP alone are evident in the findings of the 2015 Social Progress Index, launched on April 9. The SPI, created in collaboration with Scott Stern of MIT and the nonprofit Social Progress Imperative, measures the performance of 133 countries on various dimensions of social and environmental performance. It is the most comprehensive framework developed for measuring social progress, and the first to measure social progress independently of GDP.

Drawing on 52 indicators of a country’s social performance, the SPI offers a practical tool for government and business leaders to benchmark country performance and prioritize those areas where social improvement is most needed. The SPI thus provides a systematic, empirical foundation to guide strategy for inclusive growth.

The data reveal that many aspects of social progress, not surprisingly, tend to improve with income growth. Wealthier countries, such as Norway (which holds the top spot on this year’s SPI), generally deliver better social outcomes than lower-income countries.

But a striking finding is that GDP is far from being the sole determinant of social progress. Costa Rica, for example, has achieved a higher level of social progress than Italy, with barely a third of Italy’s per capita GDP.

And Costa Rica is not an isolated case. Across the spectrum of countries, from rich to poor, we see examples, such as New Zealand and Senegal, that are far more successful at translating their economic growth into social progress than others, such as the United States and Nigeria. Many of the fast-growing emerging economies, including China and India, have also not yet been able to attain the level of social progress that their economic progress enables.

Where there is an imbalance between economic growth and social progress, political instability and unrest often arise, as in Russia and Egypt. Lagging social progress also holds back economic growth in these and other countries that fail to address human needs, build social capital, and create opportunity for their citizens. Countries must invest in social progress, not just economic institutions, to create the proper foundation for economic growth.

In my own experience, I have seen how Rwanda made investing in social progress – including gender equity, a 61% reduction in child mortality in a single decade, and 95% primary school enrollment – integral to its economic development strategy. Rwanda’s positive economic performance would not have been possible without improvement in these and other dimensions of social progress.

Focusing on social progress in this way leads to better development strategies, and builds political support for the controversial steps sometimes needed to increase prosperity. Rigorous measurement of social performance, alongside traditional economic indicators, is crucial to starting the virtuous circle by which GDP growth improves social and environmental performance in ways that drive even greater economic success. And, by avoiding narrow debates, such as GDP versus income inequality, the SPI provides an essential tool with which to craft a feasible agenda that does just that.

Interest in the SPI has grown exponentially since its beta release in 2013. Findings are being shared among millions of citizens around the world, making it a tool for citizens to hold their leaders accountable.

Moreover, strategic initiatives to drive improvement in social progress are underway in more than 40 countries. Paraguay, for example, has adopted the SPI to guide an inclusive national development plan for 2030. And the SPI is being used not just at the national level, but by regional and municipal authorities as well. States such as Para in Brazil, along with cities like Bogota and Rio de Janeiro in Latin America and Somerville in the US state of Massachusetts, are starting to use the SPI as a measure of development success.

This year, the European Commission will roll out regional SPIs across Europe. And companies, such as Coca-Cola and Natura, are using the SPI to inform their social investment strategies and build collaborative relationships with public and private partners.

GDP has been the benchmark guiding economic development for more than a half-century. The SPI is intended to complement (not replace) it as a core metric of national performance. Measuring social progress offers citizens and leaders a more complete picture of how their country is developing. And that will help societies make better choices, create stronger communities, and enable people to lead more fulfilling lives.

What did ASEAN Summit 2015 achieve?

April 29, 2015

What did ASEAN Summit 2015 achieve?

by Prashanth Parameswaran

With the conclusion of the 26th ASEAN Summit chaired by Malaysia, what did this series of meetings achieve?

Leaders at ASEAN Sunnit 2015When evaluating ASEAN summits, it is useful to consider not only measures actually adopted – whether in the form of documents, housekeeping items, or proposals being forwarded on to other bodies – but also established ideas put off until future meetings and newer ones tabled for discussion in order to get the full picture. Since the ten-member grouping operates by consensus and rotating chairmanships, there are usually different speeds at which it moves depending on the issue in question and the extent of agreement or disagreement therein.

Aside from the chairman’s statement usually adopted – with the obvious exception of Cambodia in 2012 – a few other documents were adopted at the 26th ASEAN Summit. One was the Langkawi Declaration on the Global Movement of Moderates, an initiative championed by Malaysia over the past few years to promote moderation as a tool for bridging differences. The Declaration was viewed as one of ASEAN’s contributions to global peace and security. Another was the Declaration on Institutionalizing the Resilience of ASEAN and its Communities and People to Disasters and Climate Change. This builds on the ASEAN Joint Statement on Climate Change 2014 adopted at least year’s summit in Myanmar. The region is also extremely susceptible to natural disasters, and Malaysia was on the receiving end of this last year with the worst flooding in decades affecting hundreds of thousands of people.

Malaysia also continues to use its ASEAN chairmanship year to strengthen regional cooperation against the Islamic state threat, which it has been busy countering at home including during the run-up to the summit itself. As I have written earlier, Malaysia was already set to convene a Special ASEAN Ministerial Meeting on Radicalization and Extremism in October. But there were also discussions over the past few days about potentially holding an informal ministerial meeting with Brunei, Indonesia, the Philippines, Thailand, Australia and New Zealand next month as well.

Some measures that some had hoped would move forward were put off until future meetings. One of these was the proposal for a common ASEAN time zone. ASEAN currently has four different time zones, and the idea would be to get other ASEAN members to adjust their time to a single agreed one, most likely the current time zone in Brunei, Malaysia, the Philippines and Singapore, which is GMT + 8 and similar to the one in China. The alignment would facilitate business dealings and would help forge a more cohesive ASEAN Community expected by the end of 2015. The idea was originally proposed by Singapore back in 1995, but differences still remain within the grouping on the matter.

IMT - GTOther ideas were also floated that were significant. According to Malaysian Foreign Minister Anifah Aman, several proposals in the form of “non-papers” were discussed. Among these was an idea to streamline ASEAN meetings – including reducing the number of ASEAN summits from two to just one per year – which is reportedly still under discussion. Another was on strengthening the East Asia Summit (EAS), which I touched on briefly here. This year is the 10th anniversary of the EAS, and several countries have been suggesting ways to make it a more effective institution, which they hope will take place under Malaysia’s chairmanship.

As expected, the South China Sea question received significant attention but saw little progress. The media did release parts of a draft ASEAN statement where the group did share concerns expressed by some states on China’s extensive land reclamation activities in the South China Sea, which it said threatened peace, security and stability. And Najib also repeated the call for an “expeditious resolution” of a code of conduct while stressing that ASEAN would engage China in a “constructive way. But beyond these steps, little progress looks likely at this stage, which is not surprising considering ASEAN’s lowest common denominator position on the issue, China’s continued stonewalling on a code of conduct, and the balance Malaysia tends to strike in its own policy, all of which I have addressed before in separate pieces (see here, here and here).

26th ASEAN Summit hosted by Malaysia is a logistical nightmare

April 22, 2015

Published: Wednesday April 22, 2015 MYT 12:00:00 AM
Updated: Wednesday April 22, 2015 MYT 7:20:00 AM

26th ASEAN Summit hosted by Malaysia is a logistical nightmare

by S Paul

ASEAN SUMMIT KE-26I READ with concern the report “Tale of two locations at this ASEAN Summit” (The Star, April 21). [Read ]

Malaysia is playing host to the 26th ASEAN Summit this weekend. All the previous 25 ASEAN AnifahAman2summits were held in one location but Malaysia has chosen to be different. The said meeting will be held both in Kuala Lumpur and Langkawi, which is giving everyone a massive headache.

In these trying times, the Government has time and again pleaded with the rakyat to be frugal and advised us to spend prudently. At the same time, the Government should “walk the talk”. Hence, I cannot understand why the Foreign Affairs Ministry has chosen to incur unnecessary expenditure not only for its officials but also the members of the other ASEAN delegations, media personnel and the ASEAN Secretariat personnel.

 Mind you, some 3,000 officials and secretariat staff will be involved in the summit so one can imagine the cost, as well as the inconvenience, in moving from one location to another. The Foreign Ministry owes the rakyat an explanation.


Najib’s Slow Death

April 4, 2015

Najib’s Slow Death

by Roger Mitton@

Living under the tawdry and sinking regime of Prime Minister Najib Razak must seem to Malaysians like death by treacle.

Rosmah and Najib 1mdbThey are drowning in a gluey black sea of venality the likes of which has not been seen in this region since the days of President Ferdinand Marcos in the Philippines.

The mounting litany of shameful episodes that have riven that nation all appear to be traceable to the hapless Prime Minister, who is also the head of the dominant political party, the United Malays National Organisation (UMNO).

Things are so bad that last week the UMNO-owned newspaper, Utusan Malaysia, carried an outrageous editorial that tried to exonerate Najib and shift the blame elsewhere.It failed, of course, because it was arguing against facts that indicate to all Malaysians that Najib is steadily sinking into the treacly pit of corruption and maladministration into which he has plunged his country.

If you think this is over the top, just consider a few of the more damning indictments against the Prime Minister and his band of gangsters, cheats and philanderers. First, there are the missing billions of taxpayers’ money. It is hard to truly comprehend the full magnitude of this gigantic, nepotistic malfeasance, and even the illustrious New York Times took three pages to try to do it.

Riza and Jho LowSuffice to say that Najib’s stepson, Riza Aziz, the offspring of the PM’s second wife Rosmah, is the man apparently responsible for most of the woes brought about by this debacle – otherwise known as 1MDB.

The initials stand for 1Malaysia Development Berhad, a sovereign wealth fund that has lost billions due to corruption and mismanagement, and is still weighed down by massive nonperforming loans. The fund appears to be almost entirely controlled by Najib, Aziz and a flamboyant Penang conman called Jho Low – no relation to Jennifer Lopez, though he mixes with Paris Hilton and other Hollywood starlets.

Why and how? There is no clear answer, except to recall that Najib is under the sway of Rosmah, a shopaholic wrecking ball, who shrugs off ridicule and ignores how her actions thwart her husband’s premiership. In truth, the personal damage to Najib is piffling compared to the disastrous effect the huge 1MDB losses are having on the already fragile Malaysian economy.

An opposition MP has called the fund fiasco “the mother of the mother of the mother of all scandals in the history of Malaysia”. He may be right. Certainly, there are already worries that if and when 1MDB collapses, the nation’s financial system may take a hit that will dwarf the effect of the Asian Financial Crisis in 1997.

And bear in mind that Malaysia’s resource-dependent economy is already in trouble due to the depressed price of its key exports, petroleum oil and palm oil. Last month (January), Najib announced US$1.5 billion in spending cuts and said Malaysia’s economic growth would fall from 6 percent to between 4.5pc and 5.5pc this year. The economic woes have been compounded by diminishing political support at home.

In the last general election two years ago, Najib vowed to reverse the drop in votes that his UMNO-led coalition had witnessed under his predecessor, PM Abdullah Badawi.It did not happen. His government ceded even more seats and lost four state assemblies and the overall popular vote to the opposition People’s Alliance, led by Anwar Ibrahim.

Since that chastening experience, Najib has clung onto the UMNO leadership by appeasing his key support base, the nation’s Malay-Muslim majority, and marginalising the minority Chinese and Indian communities.

This shocking move was his only option, or else he would have faced the same fate as Abdullah, who was elbowed out after his election failure by UMNO party men.Concurrently, Najib has reversed his promise to dump the colonial-era Sedition Act, and instead applied it with increasing frequency against oppositionists, lawyers, journalists and academics.

Most recently, Anwar has been jailed for five years after a dubious sodomy conviction, while one of the nation’s popular cartoonists has been detained for drawing caricatures that lampoon the farcical Anwar trial.

Not only do these actions signal a premier running scared – as would be expected after the 1MDB catastrophe and his election setback – but they are grotesquely hypocritical.

1MDB-The ScandalTarring Anwar with sodomy conveniently distracts attention from the fact that Najib, a notorious philanderer in his early days like most UMNO leaders, may be complicit in the murder of a Mongolian model. The demise of this woman, the lover of the PM’s closest adviser and many Malaysians suspect also Najib’s mistress, is under investigation due to a $155 million kickback in an intertwined submarine deal negotiated when Najib was Defence Minister.

All of this led Utusan to issue its absurd editorial that – wait for it – blamed America for the country’s woes. It even accused Washington, which has criticised Anwar’s jailing, of copying the opposition leader’s behaviour.

According to Utusan, “The US wants to ‘sodomise’ our legal and judicial system, even though the majority of Malaysians agree with the court’s decision.” Well, that is a moot point. Certainly the voting pattern suggests most Malaysians would happily accept Anwar as their next PM.

daim-mahathirIn any case, Najib’s survival may depend more on UMNO elders like former PM Mahathir Mohamad, and former Finance Ministers Daim Zainuddin and  Tengku Razaleigh Hamzah. Since they have all turned against him, though, the omens are not good.

Time for Indonesia to play a bigger role in ASEAN

April 1, 2015

Time for Indonesia to play a bigger role in ASEAN

by Pattharapong Rattanasevee

Jokowi 5ASEAN would benefit from stronger leadership. But Indonesia, best placed to take up that role, appears unwilling despite the fact that it could be the leader that ASEAN needs. However, it intentionally refrains from asserting its influence over the association.

This is due to Indonesia’s internal weaknesses, ASEAN’s norms of non-interference and equality among members, and the remaining antagonism among ASEAN member countries. While President Joko Widodo has shown an increasing willingness to play on the international stage with statements urging the country to become a maritime power, the situation leaves a power vacuum within the association and intensifies the academic debate about leadership in integrating regions.

There are three possible and intertwining explanations of leadership in ASEAN. Sectoral leadership refers to leadership exercised through areas or sectors of competence, or depending on which country is in a better position to take the lead at the time. Indonesia’s foreign-policy orientation is frequently concerned with political and security issues. For example, it greatly influenced ASEAN positions on the Cambodian conflict and the South China Sea dispute. Thailand, Malaysia and Singapore like to push economic issues. These countries played a vital role in moving onto the path of economic integration. All were notable proponents of the ASEAN Free Trade Area. The Philippines is often more concerned with social and cultural issues, demonstrated by its initiation of ASEAN Socio-Cultural Community (ASCC).

ASEAN-10Cooperative leadership is formed among a group of countries that share a common vision and wish to play a strategic role in the region. This is based on the notion that no single ASEAN country can fulfill the leading role, so it should be built on the basis of two or three countries that are able to forge solid cooperation among their leaders and consolidate their domestic politics. This form of leadership is perhaps similar to the case of the European Union where Germany and France appear as a coalition leader.

Periodical leadership assumes that leadership is attached to individuality or charisma. This notion is heavily centered on some notable leaders of ASEAN, such as Indonesia’s President Suharto, Singapore’s Prime Minister Lee Kuan Yew and Malaysia’s Prime Minister Mahathir Mohammad.

Soeharto-LeeKuanYew-MahathirThe sectorial explanation of leadership may be prevalent because Indonesia still lacks competence, for example in socio-economic areas. The cooperative model may have emerged because ASEAN is actually a collection of weak and vulnerable countries domestically. The periodical leadership is also visible because ASEAN is arguably an elitist organization and very much attached to leader’s charisma. But, without a doubt, ASEAN requires the presence of undisputed leadership for which Indonesia seems to be the only candidate.

ASEAN requires a clear and dominant leader that can serve as an institutional focal point and regional paymaster to facilitate and drive regional projects. Most multi-lateral or regional organisations include a country with more power relative to its other members. In every international bargain with competing national interests, there is an influence of structural powers (derived from material and resource capacity such as the size of land, population and economy).

Even the European Union, which has much more solid and effective institutions to drive decision-making, is heavily influenced by French and German leadership. Regional integration is a scene of competing national interests and the position of leadership is normally taken by the governments of large, prosperous and powerful member states.

As the world’s fourth largest state in terms of population and the region’s largest country, which comprises about 40 percent of ASEAN’s total population, Indonesia is the elephant in the room. Indonesia initiated and proposed the foundation of ASEAN as a means to end regional conflict. As a consequence of a painful experience of colonization, it was the country that continued to stress non-alignment, with the hope of removing the exercise of external powers from the region. While the coercive action towards East Timor and the severe financial crisis in the late 1990s spelled the decline of Indonesia’s position in ASEAN, its recent democratic consolidation is bolstering its reputation in regional affairs.

The invisibility of leadership in ASEAN is a result of Indonesia trying to ensure regional unity. Without the low-posture politics of Indonesia, the association would not be able to create multilateralism and a neutral context in which smaller states could feel more comfortable when dealing with bigger countries. But, considering the remaining antagonism among members and its considerable institutional weaknesses, this raises the importance of leadership in ASEAN.

ASEAN’s future cannot rely wholly upon Indonesia’s structural leadership. It has to be invested with some sort of soft power that could help amplify international images and credibility, as well as tone down antagonism and resistance within the organisation. Indonesia should seek to play a more active leading role and exercise more of its power over the association.

In the foreseeable future, ASEAN will continue to be shaped by the politics of Indonesia. The recent political developments in Indonesia will provide a vital ingredient in building up confidence and credibility, as well as enhancing the pursuit of leadership in ASEAN.

Pattharapong Rattanasevee is a lecturer at Burapha University, Chonburi, Thailand.This originally appeared on the East Asia Forum, a platform for analysis and research at the Crawford School of Public Policy at the Australian National University.