Argentineans Should Look to Asia for Crisis Solutions

Catharin Dalpino
Catharin Dalpino Fellow, Foreign Policy Studies,<br>The Brookings Institution<br> Deputy Director, CNAPS

July 15, 2002

Two events on opposite sides of the world worked in strange symmetry recently.

In Argentina, caretaker president Eduardo Duhalde moved presidential elections forward to March, having come to the conclusion that political reform is required to recover from the present economic crisis, and that there is no point in postponing that process. His announcement set political parties scrambling to identify candidates and prepare campaigns that are bound to focus exclusively on the crisis.

At the same time, Thailand marked a dubious anniversary of its 1997 currency collapse, which lit the fuse for the multi-country Asian economic crisis. At the five-year mark, the political effects of that crisis are still unfolding in the region.

Argentinean politicians contemplating a run in March would do well to consider the lessons of the Asian economic crisis for insight into policies and their own political fate.


Play ball with the IMF

Inevitably, nationalism will be a strong undercurrent in the coming campaign, since some Argentineans are inclined to look outward and blame the crisis on the agents of financial globalization.

The International Monetary Fund, and the demands for reform that accompany its bail-out packages, will be a shadow foe in the campaign.

This was a common trend in Asia, as well. Leaders who made their views on cooperation with the international community clear from the beginning fared better than those who simply rode the waves of nationalist resentment for their own gain. Chuan Leekpai of Thailand and Kim Dae-jung in South Korea were firm that an IMF bailout was necessary, and those two nations were among the first to recover.

President Suharto of Indonesia vacillated on IMF relief for the better part of a year. He was pushed out of power, and Indonesia has yet to recover from the crisis.

Involve others in reforms

Reforms to curb political and bureaucratic corruption and to make the state more efficient will be painful, particularly to a population already devastated by prolonged crisis. For these changes to be implemented, much less to succeed, politicians must garner as much popular support as possible.

In Thailand, the reformist constitution promulgated in the wake of the economic crisis was drafted with the help of non-governmental advocacy groups and hearings at the grassroots level throughout the country. Successful reform will require an organized push on society’s part, as well, beyond the riots and strikes that have rocked Argentina for months.

In South Korea, reform of the corporate conglomerates did not begin until a minority shareholders’ movement pursued change through a series of lawsuits.

A blessing in disguise?

Profound economic crises, such as the 1997 Asian one and the present one in Argentina, issue a number of wake-up calls that ultimately offer a road map for reform.

It is unlikely that Indonesia would have entered into a democratic revolution in the late 1990’s without the catalyst of the crisis. In Thailand, establishment of the first real instruments of government accountability, such as the Counter-Corruption Commission, would have taken several years longer without the shock of 1997.

In South Korea, the crisis moved voters to make the first alternation of power, electing an opposition leader for the first time and moving Korean democratization up a notch.

The revolving door

The plummeting economy, combined with customary Argentinean political restlessness, has given political administrations a very brief lifespan. The country went through four presidents in two weeks at the onset of the crisis, and it is hardly surprising that Duhalde has accelerated his exit.

The successful candidate in March might expect that his tenure will be secure if he can stem the economic hemorrhage and launch needed reforms. The Asian experience suggests that may not be the case. Voters inevitably view post-crisis leaders as the purveyors of quick fixes; when reform proves to be longer and more difficult than expected, disillusionment is quick to set in. Prime Minister Chuan in Thailand, elected on his reformist credentials, was turned out on the next round.

Moreover, the crisis may bring new political players into the arena who are long on reformist zeal but short on experience. Abdurrahman Wahid, Suharto’s successor in Indonesia, was Suharto’s opposite in many ways but not, it turns out, an effective statesman.

Candidates for the March election in Argentina can rightly expect some credit, even glory, if they can untangle the economic and political problems that precipitated the crisis.

They should not, however, expect job security.