The Asian Crisis Reconsidered

The Asian economic crisis in 1997-1998 marked a major watershed in the history of East Asia regionally and nationally. The crisis marked the beginning of East Asian regionalism and Japan's new regional engagement. It also marked the end of the authoritarian developmental state in Indonesia and the near collapse of its Malaysian counterpart. The crisis was dealt with at two levels. It was dealt with regionally and globally by the IMF, the US and Japan, and it was dealt with nationally by national governments in consultation and negotiation with the IMF. On the regional and global level, Japan became increasingly frustrated with the way in which the crisis was dealt with by the IMF and the US, in part because of the different understanding of the nature of the crisis and in part because of the different interests Japan had in the region. Japan worked with the IMF when Thailand fell in crisis, acquiesced with the IMF policy when Indonesia went to the IMF for assistance, and chose to support Mahathir in disagreement with the US when Malaysia fell in crisis in 1998. This cooperation and rivalry between Japan and the US (with the IMF as its proxy) affected the way in which the crisis ran its course in Thailand, Indonesia and Malaysia, even though the political economic structure in each country was of prime importance. In Thailand, a coalition government willing to work with the IMF and Japan had to be in place to introduce reforms as required by the IMF conditionality and was supported by Japan with the new Miyazawa Initiative; Soeharto's New Order regime in Indonesia was too rotten for any rescue measures and had to go; while in Malaysia Japan's support with the new Miyazawa Initiative was decisive in the survival of Mahathir and the NF regime under his leadership.