APEC and Its Enemies the Failure of the New Regionalism in the Asia-Pacific

8/12/2019 APEC and Its Enemies the Failure of the New Regionalism in the Asia-Pacific

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Third World Quarterly

APEC and Its Enemies: The Failure of the New Regionalism in the Asia-PacificAuthor(s): Mark T. BergerSource: Third World Quarterly, Vol. 20, No. 5, New Regionalisms in the New Millenium (Oct.,1999), pp. 1013-1030Published by: Taylor & Francis, Ltd.

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ThirdWorldQuarterly, Vol 20, No 5, pp 1013-1030, 1999

APEC n d i t s e n e m i e s t h f i l u r e ot h n w regionalism n t hAsia PacificMARK T BERGERABSTRACT Thisarticle looks at the rise of APECas a vehiclefor thepromotionof free trade in the Asia-Pacific. It argues that, althoughthe Japanese govern-ment was more interested in trade cooperationthanfree trade, it played a keyrole, along with the Australiangovernment, n the establishmentof APEC, whilethe main challenge to APEC camefrom the MalaysianPrimeMinister,MahathirMohamed.During the 1990s, however,Mahathir'sproposalfor an East AsianEconomicBloc which excluded the USA,Australia,New Zealand and all other'non-Asian'nation-states,was incorporated nto APEC and took the name of theEastAsian EconomicCaucus.The accommodationof Mahathir'sproposal to theAPEC process, and his inability to get Japanese supportfor his pan-Asianinitiative, symbolised the limits on any and all regional challenges to UShegemony n theAsia-Pacific. The article also emphasisesthat,withthe comingof the East Asian crisis, theprospects of a successful regional challenge to UShegemonyhave become even more remote. In particular, the growing influenceof the IMF in the region since the crisis has made APEC irrelevant,while theinability of regional elites to deal with the crisis in a unifiedashion has throwninto sharp relief the serious obstacles which exist to any pan-Asian effort tochallenge neoliberalism. At the same time, although the East Asian crisis hasprecipitateda reassertionof US hegemonyand a consolidationof neoliberalism,thepresentjuncture may also herald the start of a crisis of neoliberalism,withregional and international mplications.The rise of the new regionalism has occurred against the backdrop of thegrowing trend towards globalisation and the end of the Cold War.' In theAsia-Pacific this was manifested by the establishment of the Asia PacificEconomic Co-operation forum (APEC)n 1989. In the context of the rise ofneoliberalism in the 1980s, influentialmembergovernments,such as the USAand Australia,ensuredthat APECwas orientatedfrom the outset towardstradeliberalisation and globalisation. This contrasted with the emphasis on tradecooperationadvocated by Japan, a long-standingproponent of some form ofregionalorganisation.While the Japanesegovernment,which played a key rolein the establishmentof APEC,onceded to the neoliberalagenda,the organisationwas vigorously challengedby PrimeMinisterMahathirMohamed of Malaysia.As an alternative o APEC,Mahathirproposedthe establishmentof a tradingbloc(initially called the East Asian Economic Bloc, EAEB),which would exclude theMark T Berger is in the Studiesin ComparativeDevelopmentProgrammeand the Departmentof SpanishandLatinAmericanStudies, Universityof New South Wales,Sydney,NSW2052, Australia.0143-6597/99/051013-18 1999Third World Quarterly 1013

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MARK T BERGER

USA, Australia and New Zealand and all other 'non-Asian' nation-states.Tounderline his oppositionto APEC, Mahathirrefused to attendthe organisation'sfirst heads of governmentmeeting in Seattle in 1993. However, by the time ofthe annualsummitin November1998, which was held in KualaLumpur,he wasthe presidinghost, and his East Asian Economic Bloc had been folded into APECunder the guise of the East Asian Economic Caucus.This article, which looks at the historyof APEC and its enemies in the contextof wider trends in the Asia-Pacific, emphasises that the domestication ofMahathir'span-Asianprojectduringthe 1990s reflects the failure of a significantregional challenge to US hegemony to emerge from outside or within APEC.Furthermore,n the wake of the East Asian crisis, the likelihood of an Asianchallenge to the neoliberal project and its main promoter, the USA, hasdiminishedeven further,while APEC itself has become irrelevant.The EastAsiancrisis has weakened the power and leverage of governments n the region andprovided the USA with a far more effective instrument in the form of the IMF)for the promotionof economic liberalism than ever was to be had underAPEC'Span-Pacificumbrella. The failure of governmentsand elites in the region tochallenge the IMF and tackle the crisis in a unified fashion, despite a decade ofpan-Asianpromotionby Mahathirand his supporters,has also drawn attentionto the profoundconstraintson pan-Asian regionalism as an alternative to theneoliberalismwhich underpinned he now redundantAPEC. At the same time, itwill be concluded that the failure of the new regionalismand the consolidationof neoliberalism n East Asia are linked to an emergingcrisis of neoliberalismwith regional and global implications.2

The origins and rise of APECBy the end of the 1980s it was being widely arguedthatthe twenty-firstcenturywould be the Pacific Century. The rising neoliberal narratives on economicdevelopment and internationalrelations increasingly represented the Asia-Pacific as destined to become an ever more integratedregion of prosperousfree-tradingnation-states.3These contemporary isions of a PacificCenturyhavea range of historical antecedents.In Japan,the origins of late twentiethcenturyvisions of the coming of a PacificCenturyareoften tracedto the end of the 19thcentury,when Japanese ntellectualsbeganto anticipatea 'Pacific Age' in globalhistory.4This was connected to celebratoryaccounts of Japan's industrial riseand its emergenceas a majorcolonial power by the early twentiethcentury.5 nthe USA powerfulideas about the growingimportanceof the Pacific also stretchback to the 19thcentury and are linked to wider ideas about the inexorabilityofwestwardexpansionin NorthAmerica. These earlier US visions of the dawningof a Pacific Century ncreasinglymeshed with the formaland informal colonialexpansion into the Pacific presidedover by the USA in the late 19th and earlytwentieth century.6 Thus, when APEC emerged as the major institutional ex-pression of the idea of a Pacific Century in 1989, it representeda revised andreconfiguredversion of various long-standing geopolitical and geo-economicvisions.'The rise of APEC has also been conditioned by the more recent history of1014



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APECAND ITS ENEMIESregional and subregional security initiatives in the cold war era, such as theSouth East Asian Treaty Organisation SEATO) and the Asian Pacific Council(ASPAC), both of which had disappearedby the 1970s. More importantly, theAssociation of SoutheastAsian Nations (ASEAN) was established in 1967 andnow encompassesevery government n SoutheastAsia, althoughthe questionofits effectiveness, particularly ollowing the East Asian crisis, has been raised.8Meanwhile, the Asian Development Bank (ADB) was set up in 1966, primarilyunderthe auspices of the Japanesegovernment.The USA initially opposed theestablishmentof the ADB, but, in the context of the escalating war in Vietnam,Washingtonsoon accepted that there was a need for a regional developmentbank.9However, it was the promulgationof an 'Asia-Pacific policy' by theJapaneseForeignMinistry n late 1966 which is seen by some observers to havesignalledthe real startof the effortto builda regionaltradeorganisation.Againstthe backdrop of its new 'Asia-Pacific policy' the Japanese government putforwarda proposalfor a 'Pacific Free TradeArea'. This representedan explicitreactionto the emergenceof the EuropeanEconomicCommunity EEC) now theEuropeanUnion (EU). This initiative did not gain widespreadsupport,but it didease the way for the PacificBasin EconomicCouncil (PBEC) in April 1967 whichis comprised of nationally based business organisations. Meanwhile, at thebeginningof 1968 a regionalorganisation or economists, the Pacific Trade andDevelopmentConference (PAFTAD), had its first meeting in Tokyo.'0During the 1970s the Japanesegovernment,with Australiansupport, floatedthe idea of a pan-Pacific rade organisationon more than one occasion. This ledin late 1980 to the formationof the Pacific Economic Co-operationConfer-ence-later Council-(PECC), which had its first meeting in Canberra andincludedrepresentatives rom the USA, Japan,Canada,Australia,New Zealand,Korea,Malaysia, Thailand,Indonesia, Singaporeand the Philippines. Duringthe1980s the governmentsof China, Taiwan, Brunei and the South Pacific Forumalso began sending delegates to the PECC. While the PECC brought togetheracademics, business and governmentofficials, a key characteristicof its oper-ation was the unofficial role played by governments. Although the PECC hasproduceda host of reportsand recommendationsover the years, they are notbinding.1 The rise of the PECC in the 1970s and 1980s paralleled a growingawarenessin the USA of the importanceof the Pacific. In the early 1980s theformer US ambassadorto Japan, Michael Mansfield, emphasised that tradeacross the Pacific was now more importantto the USA than trade across theAtlantic, while in 1984 Ronald Reagan publicly expoundedthat 'the Pacific iswherethe futureof the world lies'.'2 However,the US focus on the Pacific fadedsomewhatwith the initial decline of the Soviet Union, the economic recession,and growing US-Japanese trade friction in the late 1980s.'3 As the Cold Warcame to an end, elites in Northeast and Southeast Asia became increasinglyconcerned that the post-cold war internationalpolitical economy was shiftingtowardseconomic blocs centred on Western Europe (EU) and North America(North American Free Trade Agreement-NAFrA).Concerns were also beingexpressed aboutchanges in the US approach o security issues in the post-coldwar era.At the outsetWashingtonwas preoccupiedwith the situationin Europe,but in a 1991 visit to East Asia, GeorgeBush's Secretaryof State, JamesBaker,

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reaffirmeda US commitmentto the region, emphasisingthe continuedimport-ance of Washington'sbilateralsecurityarrangements.These arrangementsmain-tained, in a somewhat revised fashion, the basic bilateral politico-militaryarchitectureof the Cold War. 4This did not necessarily mean that the USA actively opposed regional andmultinational nitiatives;however, it was the Australiangovernmentwhich hadtakenthe lead, with Japaneseencouragement, n the establishmentof APEClessthan two yearsbefore. As alreadynoted, althoughthe Japanesegovernmentwasmore interested in trade cooperation than trade liberalisation, APEC quicklyemergedas a forumfor the latterfollowing its inauguralmeeting in Canberranlate 1989. Fromthe outset APECwas portrayedby its officials and supportersascommittedto 'open regionalism',in contrast o the preferential radingpracticeswhich characterisethe EU and NAFTA.15 he Eminent Persons Group (EPG),which laid down much of the early organisational ramework or APEC,made itclear that APEC would 'not be a community'like the EuropeanUnion, whichis 'characterisedby acceptanceof the transferof sovereignty, deep integrationandextensive institutionalisation'.By contrast t emphasised hatAPECwould 'bea communityin the popularsense of a big family of like minded economies'that are 'committedto friendship,co-operationand the removal of barrierstoeconomic exchange among membersin the interest of all' 6 At the same time,C FredBergsten(formerchair of the EPGand Director of the Washington-basedInstitutefor InternationalEconomics) emphasisedthat the organisationshouldnot only play a centralrole in regional tradeliberalisation,but should also actas a 'force for world-wide liberalisation'7 This perspective reflected a widerelite-drivenview thatAPECcould play a key role in the internationaldiffusionofeconomic liberalism. 8This vision was readily apparent at the first majormeeting in Seattle in late 1993, and the second major meeting in Bogor,Indonesia n November 1994. On the final day of the Bogor meetingthe leadersfrom the 18 member countriesagreed in principleto the virtual eliminationoftariff barriersand obstacles to capital flows within the APECregion by the year2020 (2010 for 'developed' nations and 2020 for 'developing' nations).19

The golden age of APEC and the emerging East-West synthesisIn retrospect his was APEC'Sgolden age. For example, on the eve of the Bogorsummit, President Clinton spoke enthusiasticallyabout his 'vision of a newAsia-Pacific communitywith no artificialdividing line down the middle of thePacific'20 This meshed with an increasingly influential strand of the PacificCenturynarrativewhich was groundedin the idea of a new East-West syn-thesis.21The public articulationof synthetic visions of the region's future byprominentpoliticians and intellectuals facilitated consensus-buildingaimed ateasing various tensions in and around APEC. The need for a new syntheticEast-West vision of the Pacific Century is outlined in Pacific Century: TheEmergence of Modem Pacific Asia, by Mark Borthwick, who worked as USdirectorof the PECC.Writingin 1992 Borthwickarguedthat,with the end of theCold War, Japannow 'aspires to the leadershipof a Pacific economic renais-sance' in alliancewith the USA, which continues to work to 'bind the region to1016



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its global political and economic foreign policy'.22And by the mid-1990s theidea of a new East-West synthesis for which the USA-Japan alliance served asthe explicit or implicit cornerstonehad become widespread.For example, in1995, Tommy Koh, former Singaporeanrepresentative o the United Nations,argued that the new 'Pacific Community' would be founded on a fusion ofvalues andpracticesdrawnfromAsia and the West.23Meanwhile,anotherseniorSingaporeangovernment figure, George Yeo, argued that 'an East Asian con-sciousness without the softening effect of Westernliberal ideas will not gel' 24The emergingEast-West synthesisin all its vaguenessand ambiguitycould mostreadily be discernedin a book written by JohnNaisbitt (while he was a fellowat the Instituteof Strategicand InternationalStudiesin Kuala Lumpur).Accord-ing to Naisbitt, a 'new networkof nations based on economic symbiosis' was'emerging'which was founded on both a 'spiritof working togetherfor mutualeconomic gain' and a new Asian consciousness. The 'catalyst' for all this, hesaid, was the 'free market', but the 'modernisationof Asia' was not the'Westernizationof Asia, but the modernisationof Asia in the Asian Way ,.25In the following year Anwar Ibrahim (former Deputy Prime Minister andFinance Minister of Malaysia, who was widely viewed as Mahathir'ssuccessoruntil 1998) also called for a synthesis of East and West. In a book entitled TheAsian Renaissance, he spoke of the need for a 'Symbiosis between East andWest', arguing hatthe 'renewed self-esteem' in Asia and the growingawarenessin the West thatAsia was 'a force to be reckoned with' ought to 'lead to greaterinterdependenceand genuine mutual consultationin the years to come'.26Anotherimportantexample of the new East-West synthesis is Asia PacificFusion: Japan's Role in APEC by Yoichi Funabashi,who is currently ChiefDiplomaticCorrespondentor Asahi Shimbun,and formerlyservedas head of itsWashington,DC bureau. Funabashi's book was, in part, a reply to SamuelHuntington,who had warned of the potentialfor a 'clash of civilisations' in thepost-coldwarAsia-Pacific and elsewhere.27 unabashi,who has close links to theInstitute or International conomicsin Washington,argued hat 'the Asia-Pacificexperimento bringthe greatestcivilisationsof the worldinto one dynamicsphereof confluencewill lead to a new era of prosperity nto the next century'. Writingin 1995 he emphasisedthat 'the economic and culturaldynamics in the Asia-Pacific, suggest that in at least this region, economic interdependence nd cross-fertilisationamong civilisations can perhapstranscendthe barriersof race andideology'. He concluded that 'the growingfusion of the Asia-Pacific is offeringJapan'and other countries n the region 'more room to harness elementsof bothEast and West'28 These sorts of exercises in culturaldiplomacy suggest that,before the East Asian crisis, APEC was emerging not just as an organisationalattempt o facilitatetrade liberalisationand advance the neoliberalproject,but asa possible embodimentof a new vision of the Pacific Centurywhich ostensiblysynthesisedEastand West. This view was particularly pparent t the annualAPECsummitin Osaka, Japanin November 1995. The Japanesemeeting producedan'ActionAgenda'which eschewedbinding radeagreementsn favourof what FidelRamos (presidentof the Philippines)called the 'Asian Way'. This amountedtoverbal assurancesby all membergovernments hatthey would make every effortto meet the economic liberalisationgoals of APEC.29 he representation f this

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MARKT BERGERresult as evidence of the 'Asian Way' at work was significant.Regardlessof thealleged antipathybetween a triumphantEast and a defensive West which was afocus of debate n the early 1990s,APEChademergedas a site for a widerprocessof elite integrationn theAsia-Pacific,and thiswas facilitatedby thedomesticationof influential East Asian narrativesof progressto the dominantneoliberaldis-courses in the name of a new East-Westsynthesis.Despite the continuedpreva-lence of conflicting ideas about Eastern versus Western modes of capitalistdevelopment,rising elites also sought to merge vague and ostensibly culturallyspecific formulationswith the dominantnternational eoliberaldiscourses.In thissense, the emergenceof APECwas indicative of the post-cold war transition o areconfiguredorm of neoliberalismwhich accommodatedpurportedlyAsianideasandpracticesagainstthe backdropof the continuedresilience of US hegemony.30This process was also apparentat the WorldBank, which played a significantrole in domesticating the East Asian Miracle to the influential neoliberalnarrativesof progress in the 1980s and 1990S.31 In the post-cold war era thedominant nterpretations f the East Asian Miracle andthe coming of the PacificCenturywere promoted,and the APECprocess unfolded, in the context of aninternationalpolitical economy in which the USA was the hegemonic power.Furthermore,despite the efforts at elite consensus-buildingand the emergingEast-West synthesis, the end of the Cold War and the continued spread ofeconomic liberalism contributedto considerable tension. For example, in thepost-cold war era, relationsbetweenthe US and Japanesegovernments, he keyaxis of the new East-West synthesis and the wider APECprocess, continued tobe beset by friction on a rangeof economic issues especially related to tradingpractices.32At the same time, the ostensibly consensualcharacterof agreementsmade at APECmeetings also pointedto the real limitations of such an organis-ation, as no enforcement mechanisms were set up and no legally bindingcommitments were made. While the annual meeting in the Philippines inNovember 1996 proceeded much as earliermeetings, the organisation's ack offormal and bindingdecision making,and its diverse membership,was about toface a seriouschallengefar beyondthe capabilitiesof APECto deal with. Before1997 the dominant neoliberal narrativeson the Pacific Centuryrested on theassumption hatthe rise of East Asia and the end of the Cold Warhadproducedincreased opportunities or greaterregional integrationand the spreadinganddeepeningof economic prosperityand political stability.APECwas grounded nthese optimistic visions and directly implicated in the view that the economictrends which were carrying the region forward were going to continueindefinitely,delivering prosperityto an ever growing number of people. Thiscelebratoryview of the PacificCenturyspecifically,andthe historyof capitalismmore generally,was dramatically hallengedas the financialcrisis which beganin Thailand in July 1997 rapidlyengulfed the region.

The East Asian crisis and the new East-West divideWithinmonths of the fall of the Thai baht in July 1997 commentators, uch asKishore Mahbubani(a prominentadvocate of the new East-West synthesis),were warningthat the crisis could 'split' the Pacific Ocean 'down the middle'1018



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and create 'an east-west divide'.33As long as the various leaders who attendedAPEC's annual summits were only being called upon to agree to relatively distanttrade liberalisation argets (so distantthat even those leaders who measuredthelength of their tenure in decades would probably not be in office when thedeadline was reached)the meetings had proceededwith few serious problems.By the time of the meeting in Vancouverin November 1997, however, the EastAsian crisis presentedAPECleaders with a serious and immediate problem,and,not surprisingly,the 1997 meeting produced little of substance. In fact, by thetime of the Vancouver summit,the organisationhad already become irrelevant.The prominent role the IMF began to play in the management of the crisisprovided the USA with the opportunity o pursue economic liberalisationandderegulation ar moreeffectively thancould ever have occurredwith APEC.In thesecond half of 1997, as APEC drifted to the sidelines, the IMF embarked onmajor efforts to restore financialstabilityto the region via loan packages to thegovernmentsof Thailand,Indonesiaand South Korea.IMFloans were conditionalon the implementationof a range of austeritymeasures and liberal economicreforms. The IMFset out to remakethe financialsystems of the various countries.It demanded the setting-up of new regulatoryprocedures, the shutting-downofa range of banks and financial institutions and the liberalisation of capitalmarkets.This includedallowingforeign capitalto embarkon hostile acquisitionsand mergers. The IMF'Ssolution to the crisis also resulted in an extendedperiodof deflation and an ongoing region-wide liquidity crisis because it insisted ontight restrictions on public expenditure and high interest rates for domesticborrowers.At the same time the IMFreassuredforeign bankers that they wouldbe able to collect the entiretyof theiroutstandingdebts. In concert with the USTreasuryand Japan's Ministryof Finance, the Fund brokered he conversion ofconsiderableshort-termdebt to long-termdebt, primarilyby forcing the govern-ments concerned to socialise private debt. The IMF also demanded that publicenterprisesbe privatisedand cartels be broken up. In South Korea, where theFund also pushed for the introduction of flexible labour markets, it initiallyfound a willing ally in the governmentof Kim Dae Jung, whose political andeconomic goals were strengthenedby the early IMFdemands.The same cannotbe said of the cuttingof food subsidiescarriedout by the Indonesiangovernmentwith IMF encouragement.The IMF's austerity package not only representedanassaulton patrimonialcapitalismin Indonesia,it also addeddramatically o themillions andmillions of the country'spopulationwho already ived at, or below,the poverty-line.34The overall approachtaken by the IMF reflected the dominant neoliberalperspective that the crisis flowed from the inefficiencies and distortionswhichwere characteristicof the variousstate-centredapproaches o capitalistdevelop-ment which prevailedin East Asia ('crony capitalism').35Of course, this viewwas challengedat the outset froma numberof quarters.Not surprisingly,PrimeMinister Mahathirwas quickto disputeIMFexplanations,at the same time as hisgovernment sought to avoid IMF support and interference. Mahathir and anumberof otherpoliticiansandcommentatorsplaced the blame for the region'sproblems at the door of foreign currency speculators, arguing that the tigereconomies of East Asia had been deliberatelyunderminedby foreign currency

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MARKT BERGERtraders. n particular,Mahathir ingledout GeorgeSoros, whom he chargedwithmaster-mindinga deliberateand premeditated ttempt o sabotagethe economicdynamismof Malaysiaandthe othercountriesof the region.36He also criticisedthe IMF's approach.Of course, long before the onset of the crisis, Mahathirandnumerousothergovernmentofficials andregionalideologues had questionedtherelevance of 'Western' ideas and practicesto the region. These critiqueswerelinked to the risingpan-Asianismwhich interpretedhe PacificCentury n termsof an Asian renaissancein which Asia would return to centre stage in worldaffairs unfetteredby the 'West' generallyand by the USA more specifically.37For example, in early 1994 the Malaysianchair of the Commissionfor a NewAsia, Noordin Sopiee, perceived the coming of a time when Asia would onceagain be 'the cradle of humancivilisation'. 8 The idea of an Asian renaissanceand the pan-Asianvisions to which it was linked rested on fixed racial/culturalconceptions of 'Asia' and 'Asians' on the one hand, and of the 'West' and'Westerners'on the other. This is apparentn Mahathir's1994 book writtenwithShintaro Ishihara.39 n his section of the book Mahathiremphasised that theregion and the world was at a turning point. He was dismissive of Westerndecadence and arguedthat 'it is possible for Asia to create a culturalregion ofunmatchedhistoricalgreatness.What is important s that we consciously striveto maintainourvalue systems. If we do so, we will never come underEuropeandominationagain.' Mahathirarguedthat Asia was 'awakening o a new era, andthere is no reason we cannotregain our formerglory'. He concluded that 'theWest would do well to learn from the success of East Asia and to some extentEasternize (Mahathir'semphasis)' 'that is it should accept our values not theother way around'.40 Mahathirreaffirmedthis view at the first Asia-EuropeSummit(ASEM) in Bangkokin early March 1996, when he assertedthat 'Asianvalues are universalvalues' while 'Europeanvalues are Europeanvalues'4The idea of an Asian renaissance and the resurgence of pan-Asianismprovided an importantbackdropto Mahathir'spromotion of an East AsianEconomicBloc (EAEB), which he first raised with Premier Li Peng on a visit tothe Middle Kingdom in December 1990. Mahathir sought to establish anexclusive 'Asian' tradingbloc on the grounds thatMalaysia and othercountrieswould lose out in any largergroupingwhich included countriessuchas the USA.The next year his idea of an exclusive regional bloc was presented to apost-ministerialmeeting of ASEAN, by which time it was being called an EastAsian Economic Group (EAEG). While some SoutheastAsia governmentswerewary of Mahathir'sproposal,it did lead directly to the formation of the ASEANFree TradeArea (AFrA) which was set up in June 1991. The EAEGcontinuedasan agenda item within ASEAN, with its name being changed again to the lessthreateningEast Asian EconomicCaucus(EAEC) in October1991.42 At the sametime, on the occasion of the firstAPECsummit for government eaders in Seattlein late 1993, Mahathirdeclined to attend. 3However, Mahathirdid attendtheAPECsummit in Indonesia n November 1994, at the same time as he reluctantlyallowed the EAEC to be incorporated nto APEC.44While Mahathir'sinitiativeflowed from concernsaboutthe membershipandorientationof APEC,as well asthe rise of NAFTAand the EU, it also representedan attempt o curbthe growingflow of Chinese-Malaysiancapitalto Chinaby linking Chinamore tightly into1020



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APECANDITSENEMIESa regional economic cooperation network.The EAECproposalwhich the ASEANsecretariatput forward envisioned a 'caucus' which enjoyed considerable inde-pendence within the frameworkof APECand was made up of the governmentsof ASEANplus Japan,South Korea and China. This line-up apparentlyreflectedthe perception n ASEANthat Japan and South Korea were the drivingeconomicforces in the region, both of which were the source of major investmentflows,while China was the main destination for overseas Chinese capital moving outof ASEAN. The exclusion of Hong Kong and Taiwan from this list also cateredto Beijing's sensitivities. At the same time, Mahathir'svision remainedfocusedon Japan as the leading economic power in the region, and a majoreconomicforce internationally:he foresaw the Japanesegovernmentacting as the 'voiceof Asia' at meetings of the G-7.4s

The rise and fall of the new 'Greater East Asia Co-Prosperity Sphere'Mahathir'sefforts to encouragea regional economic bloc centredon Japan arealso clearly groundedin the exigencies of dependent capitalistdevelopment inMalaysia. At the end of 1980, while still Malaysia's Minister of Trade andIndustry,Mahathiroutlined his 'Look East' policy which dramaticallyreorien-tatedMalaysia's political economy towardsusing state-runenterprises o spear-head the diversificationof the country's domestic industrialbase by embarkingon a range of import-substitution nd capital-intensiveindustries.46Mahathir'sshift made explicit reference to Japanand South Korea as models for Malaysia.This was linked to the way in which Japanhad begun to surpassthe USA as themost significant supplierof aid and investment to Northeastand Southeast Asia.By the firsthalf of the 1970s four times as much foreign directinvestment(FDI)was going to South Korea from Japanas from the USA. From the mid-1970s tothe mid-1980s investmentby Japanesecorporations n the region continued toincrease at a steady rate. Then, in the second half of the 1980s, the amountofJapanese FDi spreadingaround the region increased even more sharply. As aresult of the ratificationof the Plaza Accordin September1985-which reversedthe rising US trade deficit with Japan by getting the majorG-5 centralbanks toincrease the value of the Japanese yen against the US dollar-the value of theyen went from 238 to the dollar in 1985 to 128 to the dollar in 1988. Thisencourageda growingnumberof Japanesecorporations o move theiroperationsoffshore to bringdown productioncosts. At the outset Taiwan and South Koreawere the main destinations or FDI from Japanbut, following the appreciationofthe Taiwanese and South Korean currencies, the appeal of Southeast Asia toJapanese nvestors also increased.The entryof Japan-basednvestors into Chinaand Southeast Asia in the 1980s was also increasinglyfacilitatedby the transferof large quantitiesof official Japanesedevelopmentaid. In the 1970s and 1980sthe governments of Thailand, the Philippines, Malaysia and Indonesia weregiven roughly one-third of all bilateral aid distributedby the Japanese govern-ment. In the wake of the dramaticrise of Japanese nvestment to Southeast Asiafrom the mid-1980s, the total amountof Japaneseaid going to the region wentfrom a figureof US$914 million for 1986 to US$2.3 billion by 1990. For Chinathe figureswere $497 million in 1986 and $832 million in 1989. The spreadof

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Japanesecorporations o South Korea and Taiwan, and subsequentlyto South-east Asia and China, was linked to a growing, albeit highly uneven, effort toregionalise certainstructuralaspects of Japanese ndustry.By the 1980s it wasapparent hat the JapanesegovernmentandJapanesecompanieswere attemptingto build a 'regional production alliance'. While the overall coherence andsuccess of this projectcan be debated,by the end of the 1980s the growingtrendtowards regional economic integrationcentred on Japan was undeniable.Forexample, in 1986 $15.2 billion worthof exportsfrom the ASEANcountrieswentto Japan (13% of which were manufacturedgoods). By 1991 the figure was$30.26 billion and 32% of this was manufactured oods.47Regardlessof the increasingregionaleconomic integrationcentredon Japan,which was apparentby the end of the ColdWar,there were important onstraintson Japan'sabilityto become a regionalhegemonin EastAsia. TradewithinEastAsia had risen to surpass tradebetween the USA and East Asia, but the NorthAmericanmarketremainedvery important o all the economies in the region.Meanwhile, although influentialnarrativescontinued to generate an image ofJapan as a capitalistdevelopmentalstate characterisedby political stabilityandrelentless economic growth, this perceptionwas alreadya misleading one wellbefore the onset of the East Asian crisis.48The end of the Cold War coincidedwith, and reinforced, a growing array of economic problems linked to thedecrepit characterof Japanese politics. In fact, concerns in Japan about thecountry's position in post-cold war Asia were often overshadowed by therelative inertia of domestic politics and the waning of the Japanese 'economicmiracle'.9 The 1980s in Japan is now described as the era of the 'bubbleeconomy' (referring o the incredible'assetprice' inflationof this period).Then,at the end of the 1980s Japan went into recession, followed by a long periodofexceedingly low growth. In the second half of the 1990s various efforts tokick-startthe Japaneseeconomy via lower interest rates, tax cuts and publicspending continuedto be unsuccessful.With a political system drivenby moneyand a commitmentto the status quo, the prospects for a Japanese economicresurgencebefore 1997, withoutmajorpoliticaland social change, were alreadylimited.50With the onset of a full scale economic crisis in the region in 1997,the Japanese economy continued to unravel. Against this backdrop, and thewider context of the historyof the Cold War,thereis an inabilityon the partofthe Japanesegovernment(as well as virtuallyall other leaders in the region) tostandup to the USA and createan economic (or a politico-military) rameworkaimed at greaterregional integrationand autonomyvis-a'-vis Washington.Althoughthe 'Asia-first'approachemphasisedby Mahathircertainlymeshedwith the views of some influentialmembersof the Japaneseelite, the prevailingview in Japanbefore 1997 was thatthe end of the Cold War,combinedwith theeconomic dynamismof much of the rest of the region (if not of Japanitself),made it possible for the Japanese government to be 'internationalist'and'Asianist' simultaneously. n thepost-coldwarera it was widely assumedamongJapanesepolicy makers thatthe Japaneseeconomic presencecould be extendedever more deeply into the region without challenging either the USA-Japanalliance or liberal forms of economic regionalism representedby APEC andadvocated by the USA. Up to the mid-1990s this view (which was clearly1022



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APECANDITS ENEMIESarticulatedby commentators uch as Yoichi Funabashidiscussed above) meshedwith the visions of the coming Pacific Century being conjured with in NorthAmerica. However, with the onset of the East Asian crisis it became apparentthatthis was a fancifulview of the futureof the Asia-Pacific. The Japaneseelite,like the vast majority of their neoliberal counterparts,did not anticipate thecoming of the East Asian crisis and was unprepared or the wider crisis ofauthoritarian apitalism in parts of Southeast Asia, such as Indonesia, or themuchmorecontainedversionin Malaysia, which the financialcrisis precipitated.Nor was the possibility of political and social crises in China as a result of thedramatic and uneven economic developmentof the past 20 years given muchconsideration before 1997.51

Writingbefore the onset of the crisis, Takashi Shiraishiarguedthat in the faceof a crisis it would be 'better' for the Japanesegovernmentto try and deal withit 'collectively with the United States as the senior partnerrather than makingit an imperial ssue to be resolved by Japan alone'. 2 Certainly,this was moreor less what it did, quickly allowing the USA via the IMF in particular, o takethe lead. However, there were early efforts by the Japanese governmentto playa more significantrole. In September 1997 at a G-7 financeministers' meeting,Japan'sFinanceMinister,HiroshiMitsuzuka, proposed the establishmentof anAsian Monetary Fund (AMF) as a means of countering economic instabilitywithout the conditions attached o the IMFpackages.53 oon after,while Mahathirwas making his attack on currency speculatorsat the annual IMF-WorldBankmeeting in Hong Kong, the Japanese government again floated the AsianMonetaryFundidea, proposingthatupwardsof $100 billion be set aside and thatthe institutional nfrastructureo administer t be created,in order to be preparedfor any future crises of the kind that was destabilising Southeast Asia.54Notsurprisingly,representatives rom the USA, Europe and the IMF voiced strongopposition, while officials from Hong Kong, Malaysia and Thailandexpressedconsiderable enthusiasm.55 n a gesture of support, Thai Finance MinisterThanong Bidaya announcedhis government's intention of lobbying for a singleASEAN currency at the December 1997 ASEAN summit in Kuala Lumpur.56Meanwhile, other East Asian leaders, particularly those of Singapore andMalaysia,madeclear their frustrationwith the IMF's approach o the crisis.57TheAsian Monetary Fund proposal was notable in that there were to be noconditions attached.It would have maintained he restrictionson foreign owner-ship of financial nstitutionsand sustained he economic practicesthat EastAsianelites associatewith rapid capitalistdevelopment.However, the idea of an AsianMonetaryFund was defeated at the November 1997 APEC Finance Minister'smeetingin Manila,and the end resultof the ASEANsummit in KualaLumpur hefollowing month was a weak endorsementof the IMF'S plan for the crisis.58

The USA and the vicissitudes of neoliberal 'empire'Despite this trend,Mahathirdid not abandon the pan-Asianidea. However, hisprospects of success remained slight, even though by 1998 the IMF wasincreasingly being seen, inside and outside the region, to have compoundedthecrisis.59Influentialeconomistsandpolicy makersincreasinglytook the view that

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the East Asian crisis was not the result of 'crony capitalism'but flowed from'financial panic' which caused a major, but unnecessary, shift in marketconfidence and investor outlook. It was this which drove the dramaticmovementof capital out of East Asia and caused the currencycollapses in the region.60 nSeptember1998 the Wall StreetJournaldescribedthe growingreactionagainstIMF prescriptions in East Asia as 'the most serious challenge yet to thefree-marketorthodoxythat the globe has embraced since the end of the ColdWar'.6' With the Malaysiangovernment n the lead, a numberof governmentsappearedto be driftingin the directionof capital controlsby the end of 1998.In India and China, which had capital controls before the crisis started,and ina numberof countriesbeyond Asia, especially in Europe and Latin America,political support for controls on capital flows is on the rise.62Prominentadvocates of neoliberalism were also continuing to worry about the rise ofprotectionist tradepracticesas a global recession loomed.63There is evidence,however, that supportfor protectionism(at least among elites), even in manyEast Asian countries remains weak, even though the popularity of capitalcontrols is rising world-wide.6' n this context, renovatedversions of neoliberal-ism continue to providethe dominantnarrativeson economic developmentandno alternative o the IMF approachhas gained a position of influenceregionallyor internationally.Forexample,before the annualAPEC meetingin 1998 the ideaof an Asian MonetaryFund was again being discussed.65However, as in late1997, no effort to implement such a scheme materialised. And, if it didmaterialise,the US Treasurywould undoubtedlyoppose it, out of concern thatan Asian MonetaryFundwould undermine he high degreeof 'control' the USAnow exercises via the IMF.66n fact the IMF, as partof what some observers callthe 'Wall Street-Treasury-IMF omplex', has become a key instrument n thewider reassertion of US hegemony and a major force in the promotion andimposition of a neoliberal agenda.67By contrast, the November 1998 APECmeeting producedeven less of substancethan in previousyears, signallingto allthat events will unfold despite, ratherthan because of, APEC.68Nor did an important ASEAN meeting in December 1998 result in anysignificant initiatives to address the crisis.69It is clear that ASEAN, the mostsignificantregionalorganisation,does not have the institutionalcapabilityor thestature o react to the crisis in an effective fashion. The ASEAN countriesremainweakly integrated n economic terms insofar as trade between Southeast Asiannation-statesplays a minor role in the region's overall economic activity.70Atthe same time, the organisation's founding principle of non-intervention nrelationto the domesticissues of membergovernmentshas preventeda 'compre-hensive collective response' to the economic crisis, with or without Japanesesupport.7'Admittedlyhere has been a shift in ASEAN with regard to 'non-inter-vention' insofar as ASEAN membersrecently agreed that, if a problem in onecountryhad the potential to affect othermembers of ASEAN, it was appropriatefor the organisation o get involved. However, this shift does not foreshadowadramaticrise in collective action. As Sheldon Simon has argued, the economiccrisis has not been an 'impetus for closer security or political collaborationwithin ASEAN'. Furthermore, he crisis has cut into military spending andundermined he defence capabilitiesof individualnation-states n the region, in1024



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contrast o the Chinesegovernment'scontinuednavalbuild-up.This could resultin a more rapid shift in the balance of power in the region than previouslyexpected.72At the same time the Chinese leadership's pursuit of regionalhegemony is increasinglyconstrainedby its own looming economic crisis andthe social and political repercussionsof decades of rapid but uneven capitalistdevelopment.73All this pointsto the fact that the USA remainsthe mainregionalpower in Asia and the only truly world power in militaryand economic terms,at the same time as it exercises a broad and diffuse political and culturalinfluence.74US hegemony is mediated through an array of complex powerrelations, economic arrangements, ocial structuresand culturalpractices;how-ever, Washington maintains effective control over importantaspects of theregional and internationalpolitical economy. In East Asia, the US 'empire'continuesto rest on the conditions of 'semi-sovereignty'which the JapaneseandSouthKorean statesacceptedduringthe Cold Warera (andwhich also constrainvirtually all other states in the region).75While the East Asian crisis represents a moment of consolidation forneoliberalism, it has also signalled the onset of a crisis of neoliberalism. Evenbefore the East Asian crisis, the prosperous new post-cold war era remainedillusory for a significant percentage of the population of the Asia-Pacific.76This situation has worsened dramatically. Social and political unrest isgrowing as the governments of Indonesia, Thailand and South Korea attemptto meet IMF conditions. Economic restructuring generates new levels ofhardship and unrest as migrant labourersare sent home, workers are laid offand businesses are closed.77In the latterpartof 1998 the InternationalLabourOrganisation estimated that 15,000 people were losing their job everyday inIndonesia and that two-thirds of the population would be living below thepoverty-line by 1999.78 Food shortages have also become endemic because ofrapidly rising prices and the breakdown of distribution systems.79Meanwhilein South Korea, despite opposition from the powerful chaebols and concertedcampaigns by unions, unemployment rose from 2% in 1996 to 7% bymid-1998 as workerswere let go and the economy was restructuredaccordingto the IMFplan.80 More broadly, the processes driving post-cold warcapital-ism are contributingboth to integration and fragmentation,throwing up newand reconfigured fault lines against a global backdrop of politico-militaryrivalry, national and ethnic mobilisation and growing socioeconomic in-equality. Around the world the economic liberalisation,financial deregulationand uneven capitalist development of the 1980s and 1990s was paralleled byincreased concentration of income, high rates of underemployment andunemployment, widespread poverty and the marginalisation of a growingnumber of rural and urban poor.8' The increased levels of competitionbrought on by the shift to neoliberalism has not reversed the relativeeconomic decline which began in the major capitalist economies in the 1970s.In fact, neoliberal policies generally, and the emphasis on competition morespecifically, which were a response to the economic problems of the 1970s,can actually be seen to have played a role in the wider economic problemswhich have now engulfed East Asia.82

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Conclusion:APEC and its enemiesThis article has traced the way in which APEC emerged at the end of the ColdWar, against the backdropof the neoliberal ascendancyandthe widerprocess ofglobalisation,as a vehicle for the promotionof free tradein the Asia-Pacific. Ithas been emphasised that, althoughthe Japanese governmentwas more inter-ested in trade cooperation,it played a key role in the establishmentof APEC,while the main challenge to APEC came from the Malaysian Prime Minister,MahathirMohamed. Shortly after APEC was set up, Mahathiradvocated anexclusive East Asian tradingbloc. Duringthe 1990s, however, Mahathir'sEastAsian Economic Bloc was incorporatednto APEC and took the nameof the EastAsian Economic Caucus. The accommodation of Mahathir'sproposal to theAPEC process, and his inability to get Japanese support for his pan-Asianinitiative, symbolised the limits on any and all regional challenges to UShegemonyin the Asia-Pacific. And with the coming of the East Asian crisis, theprospects of a successful regional challenge to US hegemony have become evenmore remote.In particular, he growing influence of the IMF in the region sincethe crisis has made APEC irrelevant,while the inability of regional elites to dealwith the crisis in a unified fashion has thrown into sharp relief the seriousobstacles which exist to any pan-Asian effort to challenge neoliberalism.However, althoughthe East Asian crisis has precipitateda reassertion of UShegemony and a consolidationof neoliberalism, which has combined with thefailure of the new regionalism n the Asia-Pacific, the present uncturemay alsorepresentthe start of a crisis of neoliberalism in East Asia and beyond.

NotesSupportfor the research and writing of this article was provided by the Asia Research Centre (a SpecialResearch Centreon Social, Political and Economic Change in Asia) at MurdochUniversity, Perth,WesternAustralia,and a Special ResearchGrantand a Small AustralianResearchCouncil Grant from the Faculty ofArts and Social Sciences, the Universityof New SouthWales, Sydney, Australia.I would particularly ike tothankAnthonyAspden for comments andresearchassistance.This article also benefitedfrom the commentsof, or conversationswith, MortenB0as, Vedi Hadiz, Andrew Rosser, Tim Shaw and CatherineWaldby. Ofcourse, any errors are the responsibilityof the author.1B Stallings, 'Introduction: lobal change, regional response' in B Stallings (ed), Global Change, RegionalResponse: The New InternationalContextof Development,New York:CambridgeUniversity Press, 1995,pp 2-14; and A Payne & A Gamble, 'Introduction:he political economy of regionalismand world order'in A Gamble & A Payne (eds), Regionalismand WorldOrder, London:Macmillan, 1996, pp 2, 16-17.2M T Berger, 'Up from neoliberalism: ree-marketmythologies and the coming crisis of global capitalism',Third WorldQuarterly,20 (2), 1999; and D McNally, 'Globalizationon trial: crisis and class struggle inEast Asia', MonthlyReview, 50 (4), 1998.3S B Linder, The Pacific Century:Economic and Political Consequences of Asian-Pacific Dynamism,Standford, CT: Stanford University Press, 1986; D Aikman, Pacific Rim: Area of Change, Area ofOpportunity,Boston, MA: Little, Brown, 1986; W McCord,The Dawn of the Pacific Century: mplications

for Three Worlds of Development, New Brunswick:TransactionPublishers, 1991; S Winchester,PacificRising: The Emergence of a New WorldCulture,New York: Prentice Hall, 1991; F Gibney, The PacificCentury: America and Asia in a Changing World, New York: Macmillan, 1992; S Chan, East AsianDynamism: Growth,Order and Securityin the Pacific Region, Boulder, Co: Westview Press, 1993; and JRohwer, Asia Rising: How History's Biggest Middle Class WillChange the World,London: Butterworth-Heinemann, 1995. For critical analysis of the idea of a Pacific Century, see M T Berger & D A Borer,'Introduction-the rise of East Asia: critical visions of the Pacific Century' in Berger & Borer (eds), TheRise of East Asia: Critical Visions of the Pacific Century,London:Routledge, 1997. See also D Crone,1026



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APECAND ITS ENEMIES'Does hegemony matter?The reorganisation f the Pacific political economy', WorldPolitics, 45(4), 1993;R A Palat, 'Pacific Century:myth or reality?', Theoryand Society, 25(3), 1996.

4P Korhonen, 'The Pacific Age in world history', Journal of WorldHistory, 7(1), 1996.5M R Peattie, 'Japaneseattitudes owardscolonialism, 1895-1945', in R H Myers & M R Peattie (eds), TheJapanese Colonial Empire, 1895-1945, Princeton,NJ: PrincetonUniversity Press, 1984.6M Consuelo Leon W, 'Foundationsof the American image of the Pacific', in R Wilson & A Dirlik (eds),Asia/Pacific As Space of Cultural Production, Durham, NC: Duke University Press, 1995.H Soesastro, 'Pacific economic cooperation: he historyof an idea' in R Garnaut& P Drysdale (eds), AsiaPacific Regionalism: Readings in International Economic Relations, Sydney: Harper Collins, 1994. Themember governments of APEC in 1989 were Australia, Brunei, Canada, Indonesia, Japan, Malaysia, NewZealand, the Philippines,Singapore, South Korea, Thailand and the USA. China, Hong Kong and Taiwanjoined in 1991. Mexico and PapuaNew Guinea joined in 1993 and Chile joined in 1994.8J Funston, 'ASEAN: out of its depth?', ContemporarySoutheast Asia, 20(1), 1998. The members of ASEANat its foundingwere Indonesia, Malaysia,the Philippines, SingaporeandThailand.The currentmembers ofASEAN are the governments of Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines,Singapore,Thailand and Vietnam.9D T Yasutomo, Japan and the Asian Development Bank, New York: Praeger Publishers, 1983; and N KDutt, 'The United States and the Asian Development Bank', Journal of ContemporaryAsia, 27(1), 1997.10T Terada, 'The origins of Japan's APEC policy: Foreign Minister Takeo Miki's Asia-Pacific policy andcurrent mplications', ThePacific Review, 11(3), 1998.1 Hong Kong and thenMexico, Chile and Peru hadjoined the PEcc by 1991-92, while a numberof other LatinAmericancountries, along with the USSR (Russiaafter 1991) held observer status. L T Woods, Asia-PacificDiplomacy: NongovernmentalOrganisationsand InternationalRelations, Vancouver:UBC Press, 1993, pp41-65.

12 Michael Mansfield and Ronald Reagan are both cited in R Wilson & A Dirlik, 'Asia/Pacific as space ofculturalproduction'in Wilson & Dirlik, Asia/Pacific As Space of CulturalProduction, p 3.3 C L Connery, 'Pacific Rim discourse: the US global imaginary n the cold war years', in Wilson & Dirlik,Asia/Pacific As Space of CulturalProduction, pp 31-32, 54-56.

14 S Yamakage, 'Japan'snationalsecurityand Asia-Pacific's regional institutions n the post-cold war era', inP J Katzenstein& T Shiraishi(eds), NetworkPower: Japan and Asia, Ithaca,NY: CornellUniversity Press,1997, pp 291-292. See also J A Baker, 'Americain Asia: emerging architecture or a Pacific Community',Foreign Affairs, 70(6), 1991.15 'Open regionalism'is a much debated term. It is most commonly, and narrowly,defined as a concertedandunilateralprocess of trade liberalisationalong most favoured nationlines. See P Drysdale, D Vines & BHouse, 'Europeand EastAsia: a sharedglobal agenda?',in P Drysdale& D Vines (eds), Europe,EastAsiaand APEC:A Shared GlobalAgenda?, Cambridge:CambridgeUniversity Press, 1998, pp 6-9.16 Cited in M Beeson & K Jayasuriya, 'The political rationalities of regionalism: APEC and the EU incomparative perspective'. The Pacific Review, 11(3), 1998, p 327.17 C F Bergsten, 'APEC and the world economy: a force for worldwide liberalisation', Foreign Affairs, 73(3),1994.18 For example, see R Garnaut,Open Regionalismand Trade Liberalisation:An Asia-Pacific Contribution othe World TradeSystem, Singapore:Instituteof SoutheastAsia Studies, 1996.19J Walsh, 'Toward the Pacific Age', Time International,22 November 1993, pp 22-27; 'A dream of freetrade', TheEconomist,25 November 1994, pp 29-30; and C F Bergsten, 'The APEC: the Bogor Declarationand its implicationsfor the future', in D K Das (ed), Emerging Growth Pole: TheAsia-Pacific Economy,Singapore:PrenticeHall, 1996.20 Cited in M Gordon, 'APEC'S great leap forward?',The WeekendAustralian, 12-13 November 1994, p 21.21 M T Berger, 'A new East-West synthesis? APEC and competing narrativesof regional integrationin thepost-cold war Asia-Pacific', Alternatives: Social Transformationand Humane Governance, 23(1), 1998.22 M Borthwick(with contributionsby selected scholars), Pacific Century:TheEmergence of ModernPacificAsia, Boulder, Co: Westview Press, 1992, pp 1-3, 543-545.23 T T B Koh, The United Statesand East Asia: Conflictand Co-operation,Singapore:The Instituteof PolicyStudies, 1995, pp 107-108. See also K Mahbubani, The Pacific way', Foreign Affairs,74(1), 1995, p 107.24 G Yeo, 'A new GreaterEast Asia Co-Prosperity Sphere', in G Sheridan (ed), Living With Dragons:

Australia ConfrontsIts Asian Destiny, Sydney: Allen and Unwin, 1995, p 179.25 J Naisbitt, MegatrendsAsia: TheEightAsian MegatrendsThatAre Changingthe World,London:NicholasBrealy, 1995, pp ix-x.26 I Anwar, The Asian Renaissance, Singapore:Times Books International,1996, p 45.27 S P Huntington,'The clash of civilizations?', Foreign Affairs, 72(3), 1993; and Huntington,The Clash ofCivilizationsand the Remakingof WorldOrder, New York: Simon and Schuster, 1996.28 Y Funabashi,Asia Pacific Fusion: Japan's Role in APEC, Washington, DC: Institute for InternationalEconomics, 1995, pp 10-11.1027



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APECAND ITS ENEMIES44 Y Funabashi, Asia Pacific Fusion: Japan's Role in APEC, Washington, DC: Institute for InternationalEconomics, 1995, pp 68-69.45 G Hook, 'Japanand the constructionof Asia-Pacific', in Gamble & Payne, Regionalism and World Order,46 pp 194-195.T Gomez & K S Jomo, Malaysia's Political Economy: Politics, Patronage and Profits, Cambridge:CambridgeUniversity Press, 1997.47 T Shiraishi, 'Japanand Southeast Asia', in Katzenstein& Shiraishi, NetworkPower: Japan and Asia, pp175-188; R Stubbs, 'The political economy of the Asia-Pacific region', in R Stubbs & G R D Underhill(eds), Political Economyand the ChangingGlobal Order, London:Macmillan, 1994, pp 371-373; W Hatch& K Yamamura,Asia in Japan's Embrace: Building a Regional Production Alliance, Cambridge:CambridgeUniversity Press, 1996. R Steven, Japan and the New WorldOrder, London:Macmillan, 1996.48 C Johnson,Japan: WhoGoverns?The Rise of the DevelopmentalState, New York: W W Norton, 1995, pp8-9; and W K Tabb, The Post-WarJapanese System: CulturalEconomic and Economic Transformation,New York: Oxford University Press, 1995, pp 3-4. Of course, in the view of some commentators,writingbefore the onset of the East Asian crisis, Japanwas inexorably becoming more and more like the 'West'.See S Mallaby, 'Japan:orientalrenaissance',The Economist, 15 July 1994; and B Beedham, 'Tomorrow'sJapan', The Economist, 19 July 1996. The cover story in the Far Eastern Economic Review 31 July 1997was entitled 'The new Japan-in America's image'. See especially P Landers, 'American accents', FarEastern Economic Review, 31 July 1997, pp 46-49.49 H Fukui& S N Fukai, 'The end of the miracle: Japanesepolitics in the post-cold war era' in M T Berger& D A Borer(eds), The Rise of East Asia: Critical Visions of the Pacific Century,London:Routledge, 1997.50 F B Tipton, The Rise of Asia: Economics, Society and Politics in ContemporaryAsia, London: Macmillan1998, pp 415-420.51 Shiraishi, 'Japanand SoutheastAsia', pp 186, 191-194.52 Ibid pp 193-194.53 M Dwyer, 'Japanbacks $133bn Asia fund', Australian Financial Review, 22 September 1997, Internetedition: www.afr.com.au.Mitsuzukahas since resignedover a corruption candalat the Ministry of Finance.54 'Rumpusin Hong Kong', p 15; and 'An Asian IMF', The Economist, 27 September 1997, p 84.55 Sir DonaldTsungof the Hong Kong administrationwas particularly upportive.See M Dwyer & P Hartcher'East versus West: how the markets are uniting Asia against the US', Australian Financial Review, 27September 1997, Internetedition: www.afr.com.au.56 S Chupaka& K Chaipipat, 'ASEAN currencybid launched', The Nation (Thailand), 19 September 1997.57 'Asian crisis-global crisis', Pacific Rim Review, 20 December 1997, at http:\\pacificrim.bx.com/articles/12-20asian_crisis.htm58 Interestingly, t has been rumoured hat the idea of an Asian MonetaryFundmay have originatedwithin the

IMF and it was the US government,especially the US Treasury,rather han the IMF itself, which was mostadamantlyopposed to the creation of such a fund.59 J Sachs, 'The IMF and the Asian flu', The AmericanProspect: A Journalfor the Liberal Imagination,37,March-April 1998; and M Feldstein, 'Refocusing the IMF', Foreign Affairs, 77(2), 1998.60 J Sachs, 'Global capitalism: making it work', The Economist, 12 September 1998, pp 19-23. P Krugman,'Saving Asia: it's time to get radical', Fortune, 7 September 1998, pp 32-37.61 D Wessell & B Davis, 'Currency ontrolsgain a hearingas crisis in Asia takes its toll', Wall Street Journal,4 September1998, cited in R Wade & F Veneroso, 'The gatheringworld slump and the battleover capitalcontrols', New Left Review, 231, 1998, pp 19-20.62 Wade & Veneroso, 'The gatheringworld slump and the battle over capital controls', pp 20-21, 30, 41-42.63 'A bad time to be an ostrich', TheEconomist,19 December 1998, pp 15-16; and 'Could it happen again?',The Economist,20 February 1999, pp 19-23. This has been a concern from the onset of the crisis. 'Asia'sspreadingshadow', The Economist, 1 November 1997, pp 82-87.64 'Liberalism ives', The Economist,2 January 1999, pp 53-54.65 R Wade & F Veneroso, 'The resources ie within', TheEconomist,7 November 1998, pp 19-21; K Hamada,'Keeping alive the Asian monetary Fund', Capital Trends, 3(10), 1998, pp 8-9; M Shiroyama,'With IMFcash-strapped, oom for Asian MonetaryFund', Capital Trends,3(10), 1998, p 10; andY B Shin, P M KimsupportsAsian Monetary Fund', Korea Herald, 11 November 1998, at www.koreaherald.co.kr/khl30/ml 130/01.html66 D D Hale, 'The IMF, now more thanever', Foreign Affairs, 77(6), 1998, pp 12-13. At the end of 1998 CFred Bergsten proposed the establishmentof an Asia-Pacific Monetary Fund as a compromise. C FBergsten, 'Pursuingthe Asia-Pacific Monetary Fund', Capital Trends,3(13), 1998.67 R Wade & F Veneroso, 'The Asian crisis: the high debt model versus the Wall Street-Treasury-IMFComplex', New Left Review, 228, 1998, pp 18-19.

68'APEC'S family feud', The Economist,21 November 1998, p 41; and D E Sanger, 'Tongue-lashingsandbacklashes', New YorkTimes, 22 November 1998, p 5.69 'ASEAN looks to the new year', The Economist, 19 December 1998, pp 29-30.1029



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MARKT BERGER70 B Anderson, The Spectre of Comparisons:Nationalism,SoutheastAsia and the World,London:Verso Press,

1998,pp 15-16.

7' Y Funabashi, 'Tokyo's depression diplomacy', Foreign Affairs, 77(6), 1998, p 28.72 S Simon, 'The economic crisis and ASEAN political and security concerns', International Studies Notes,23(3), 1998, pp 1-2, 6.7 B Anderson, 'The last empires:the new world disorder',New Left Review, 193, 1992, p 5; G Achcar, 'Thestrategic triad: the United States, Russia, and China', New Left Review, 228, 1998, pp 102-105, 115-126;'Will Chinabe next?', TheEconomist,24 October1998, pp 13-14; 'Red Alert', TheEconomist,24 October1998, pp 19-22; and The ostrich's view of the world', The Economist, 19 December 1998, pp 75-76.7 A G A Valladao, The Twenty-FirstCenturyWill Be American, London:Verso, 1996.75 B Cumings, 'The Koreancrisis and the end of late development',New Left Review, 231, 1998, pp 45,71-72.76 Before the crisis the World Bankanticipated hat the total numberof people living in povertyin Asia, wouldonly dropfrom the 805 million which it recorded or 1985 to 435 million by the beginningof the twenty-firstcentury (and it shouldbe emphasised hat the World Bank defines anyone receivingmore than2150 calories

a day as living above the poverty-line).James H Mittelman,'The globalisation challenge: survivingat themargins', Third World Quarterly, 15(3), 1994, pp 439-441.77 N Cumming-Bruce, Millions of Asians face misery of forced repatriation',Guardian Weekly, 18 January1998, p 19.78 j Woodford & L Williams, 'Hungerfuels new crisis', Sydney Morning Herald, 5 September 1998, p 1.79 H Soesastro & M C Basri, 'Survey of recent developments', Bulletin of Indonesian Economic Studies,March 1998, p 16.80 UnitedNations StatisticDivision, MonthlyBulletinof Statistics,New York:UnitedNations,No 10, October1998, p 19.81 Between the end of the 1950s andthe beginningof the 1990s the wealthiest 20% of the world's populationexpandedtheirpercentageof overall global wealth from 70% to 85%. Over the same period the figure forthe poorest20%of the populationwent from2.3%to 1.4%. As of 1991 over 85%of the people in the worldreceived a mere 15%of global income. More dramaticallystill, the combined income of the 358 richest

individuals was equal to that of the poorest 2.3 billion people in the world. V Keegan, 'Highway robberyby the super-rich',Guardian Weekly,28 July 1996, p 13. More generally, see United Nations DevelopmentProgramme,HumanDevelopmentReport 1996, New York:Oxford University Press, 1996. See also UnitedNations Development Program,HumanDevelopment Report 1997, New York: Oxford University Press,1997; and United Nations Development Program,Human Development Report 1998, New York: OxfordUniversity Press, 1998.82 R Brenner, 'Uneven development and the long downturn: he advanced capitalist economies from boom tostagnation, 1950-1998', New Left Review, 229, 1998, pp 7-9, 258-262.

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APEC and Its Enemies the Failure of the New Regionalism in the Asia-Pacific

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