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Economic Crisis Is Proof That Asias Need Democracy
 
Hong kong-Philip Tose, chairman of what was until last week Asia's largest
investment bank outside japan, was one of the biggest fans of what came to
be known as "Asian values."
 
In 1992, one of the boom years, Mr. Tose extolled the virtues of "strong
government- some would call it dictatorship," which delivered "much better
economic growth." His Hong Kong-based Peregrine Investment Holdings Ltd.
went into bankruptcy this Jan.12 because it has placed too large to bet on
one of those strong governments, Indonesia's.
 
He was not alone in his preference for unrepresentative governments
admired for their "efficiency." Other prominent Asian and Western business
leaders shared his admiration for authoritarian countries such as
Indonesia and China, and mocked the "inefficiency" of democracies such as
India and the Philippines.
 
 It is no accident that Indonesia is now suffering the most from the Asian
financial flu. Its causes? A despotic ruler who learned to cash in on his
absolute political control, investors who relied on cronyism instead of
market forces, and a lack of accountability and commonsense financial
controls.
 
Last week, under IMF pressure, President Suharto finally signed on to
economic reforms, including dismantling the monopolies controlled by his
friends and family.
 
Let us hope that the region's economic reckoning and Indonesia's
disastrous path will help put to rest the myth of "Asian values": that
democracy and human rights are "western" concepts inimical both to Asia
and to economic growth. Now across Asia, people increasingly see the
advantages of having open and accountable government and are beginning to
demand it.
 
The countries that have weathered the Asian financial storm best are
democracies- Taiwan, the Philippines and Japan. And those nations that are
in the process of recovering, including South Korea and Thailand, have
done so only after jettisoning their corrupt former regimes through a
democratic process.
 
The first lesson from the Asian crisis is that a government that is not
answerable its people will not be likely to have open markets or the
institutions required to impose discipline to overcome a financial crisis.
 
A second lesson is that guanxi, or connections, are never a substitute for
the rule of law. Why is it a shock to discover that rulers in Indonesia,
Thailand and China had taken advantage of the wealth created by foreign
investment and their own people to line their pockets?
 
It is important for the west to seek not only economic restructuring from
Asia's teetering autocratic regimes, but substantial political reform as
well. A failure to diagnose the need for democratic and accountable
government will bring only more economic misery.
 
[The writer is chairman of the Democratic Party of Hong Kong. He
contributed this comment to New York Times.]
 
 
Burma Info.
New Delhi.