A Serious Teenager - CALD Turns 15

The Council of Asian Liberals and Democrats (CALD) celebrated its 15th birthday with an anniversary conference in Bangkok on 28 March 2009. The conference was devoted to the topic “Liberal Responses to the Global financial Crisis,” in keeping with CALD’s tradition of tackling current events that affect the whole region, where mutual learning and joint action are called for.

Event and topic attracted a high-powered group of speakers and participants, led by the Thai Prime Minister, Abhisit Vejajiva, the Thai foreign minister, Kasit Piromya, and the former Indonesian President, Abdurrahman Wahid. President Wahid became an individual member of CALD during the conference, being recognized for his contribution to democratic development in Indonesia and the region.

The conference looked at the impact of the crisis on the region and especially on the vulnerable sectors, the policy responses of the Asian governments, especially the stimulus packages, and the challenges of balancing urgent action with economic prudence. The format called for a dialogue between politicians and economists, with speakers and reactors in each session from both sets. Since many of the economists had been former ministers themselves, the discussion stayed close to practical political and economic issues.

A sense of both grievance and pride was evident in the debate. Many parts of Asia are suffering severely from a crisis that is not Asia’s fault, and the countries most open to globalization have been the worst hit. However, Asia’s export-oriented economies have been hit by the falling global demand. The financial crisis that caused the world economy to tank has been largely confined to the US and Europe; Asia’s financial systems have proven to be more resilient, an outcome of the Asian crisis of 1997/98 that has instilled caution and triggered reform.

With this experience in mind, Prime Minister Vejajiva and others pointed out that the crisis also presented an opportunity to adapt our economic systems. In good times, institutional change is often neglected, because there is not sufficient pressure to fix things that need fixing. Both he and others warned of going overboard, though. While reforms are needed, especially in the financial systems, care should be taken to balance better regulation with an appreciation of the dynamism of the market economy that should not be stifled. Moreover, the need for stimulus packages should not lead to total abandonment of fiscal responsibility. Several speakers warned that the current stimulus packages in the region were often vulnerable to capture by powerful vested interests, to “leakage” due to weak governance and to political misuse and manipulation. Globally, the danger of protectionism is seen as both real and deeply dangerous. World trade is shrinking fast already, harming Asian exports. The last thing the region needs is global protectionism that would shrink trade catastrophically. That had been the mistake in 1930 during the Great Depression. We should not make that mistake a second time –especially since free trade did not cause this crisis.

Sam Rainsy, the former Finance Minister of Cambodia, put forth a more fundamental critique of current stimulus packages that seemed to recycle Keynesian recipes without taking into account that the structure of our economies has changed a lot in the last 80 years. International integration is far deeper than in the 1930s, and services play a much bigger role, making traditional Keynesian deficit spending far less effective.

Martin Lee, the respected long-time leader of the democratic movement in Hong Kong, added a dose of long-term vision to the debate: The crisis has to be endured, and like all crises, it will pass. We cannot avoid it by spending programs; we should mitigate the long-term impact of the crisis by spending on things that will improve the economic strengths of the country in the long term. Other contributors, in a similar vein, stressed the need to spend on human resources and on helping the most vulnerable.

Last but not least, speakers looked at the political implications of the crisis. The Chairman of CALD, Dr. Chee Soon Juan, put the conference topic in a wider context: “As we tackle the questions of stimulus packages and financial reforms in this conference, let us not forget the political impact of a crisis. In Asia, there are still a number of countries that use the argument of economic development as a shield against political progress.