ASEAN Adopts 'Peer Surveillance' to Monitor Risk
International Herald Tribune
December 2, 1997
Thomas Fuller

The Association of South East Asian Nations said Monday that it would begin monitoring Southeast Asia's domestic economies in order to prevent future financial crises, modifying its 30-year legacy of staying out of members' affairs.

Finance ministers from the nine members of ASEAN decided on a system of "peer surveillance" that would evaluate "potential economic and financial risks of member countries, highlighting policy options and implications and encouraging early action to minimize such risks."

ASEAN also endorsed a decision made in Manila last week for a separate rescue fund for the region.

Although the notion of peer surveillance may seem far from revolutionary elsewhere, it would be a big step for ASEAN members, which have prided themselves on keeping out of their neighbors' business. The group's mantra has been so deeply rooted that, several months ago, as choking smog blanketed many parts of Southeast Asia, neighboring governments were loath to publicly criticize Indonesia, the source of the fires causing the pollution.

"The present circumstances and the contagion and systemic risks facing the region [make] it necessary to move forward to develop a regional surveillance mechanism within ASEAN," the ministers said in a statement.

Coming just a few weeks before ASEAN's 30th anniversary — which until recent months was slated to be a celebration of the members' economic success stories — the meeting Monday allowed the group's finance ministers to discuss the causes of the regional financial crises and possible solutions.

Malaysia's finance minister, Anwar Ibrahim, said the meeting was "positive, open and frank." It was Mr. Anwar who suggested in a magazine article in July that ASEAN take on a policy of "constructive intervention" and evolve from its historic role as a reactive grouping. The idea was quickly dismissed by Mr. Anwar's boss, Prime Minister Mahathir bin Mohamad.

Also skeptical of a more proactive ASEAN is the region's other prominent statesman, Lee Kuan Yew, Singapore's senior minister. Mr. Lee said last week that ASEAN members could have a hard time pressuring others into action.

"Let me put it in a very succinct way," he said. "I'd rather the IMF tell the Thais what they have to do than me and my ASEAN neighbors clubbing together, putting up $17 billion, and telling the Thais 'If you don't do this, we won't give you $17 billion.' We won't be friends for a very long time."

The ASEAN finance ministers seemed to take Mr. Lee's advice to heart Monday when they recommended that a rescue fund for troubled economies in the region be provided "in consultation with the IMF."

This contrasted with earlier efforts to create an Asia-based fund that would have been outside the purview of the International Monetary Fund. The issue of the IMF's involvement is important because of the strict conditions usually attached to IMF money.

Mr. Mahathir said Monday that IMF packages resulted in "a lot of difficulties for the countries concerned and their economies."

Mr. Mahathir also seemed to contradict the statement issued by the finance ministers earlier in the day when he said the Asian standby fund was "not necessarily a supplementary fund that will be subject to the same conditionalities as the IMF."

Richard Hu, Singapore's finance minister, asked to clarify the point, said: "It is a facility to supplement the IMF and it will only be invoked if the country signs up with an IMF program."

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