Many of Asia's once-unstoppable "tiger" economies are losing their claws.
In Thailand, which triggered a regional crisis after a plunge in its currency three months ago, economic woes have put the government on the brink of collapse this week and forced Thais to begin accepting Western-driven reforms that undercut the once-revered Asian economic model.
In neighboring Malaysia and Indonesia, too, leaders are scrambling to hang on to political stability once taken for granted. The ranks of the jobless are expected to rise. And the old ways of financial mismanagement, corruption, and nonviable pet projects of the elite are under tight scrutiny by nervous investors and international financial watchdogs. American leaders worry that many Asian nations might try to restore their economies by pumping up exports to the United States.
Economic forecasts for Southeast Asia have slumped. Instead of 7.3 percent growth this year, gross domestic product will be between 4.9 percent and 5.7 percent, according to the Manila-based Asian Development Bank.
Right now, though, the regional jitters depend much on what happens in Thailand, whose market troubles ricochet across borders.
At the center of the Thai crisis is Prime Minister Chavalit Yongchaiyudh, a former general who came to power last November promising Thais they would "live well and eat well" under his rule. His promise is now tinged with bitter irony as he fights to stay in power and people eye tough times ahead.
"The good times are over," exclaims Puttipong Kusalaphirom, who lost his job as a stock trader this month. Mr. Puttipong has already put plans to buy a new car on hold and sold his Rolex to help replace his $2,000 monthly salary.
"If you compare our economy to a car," quipped a Thai presenter as he opened a fashion show in Bangkok. "It's like we've gone from driving a Porsche to driving a Mini. But, hey! Things could be worse. At least we've still got an engine in the car."
This week, thousands of middle-class protesters, toting pagers and mobile phones, took to the streets of the Thai capital, calling for the resignation of Prime Minister Chavalit.
They were spurred by reports that the prime minister nearly ordered a state of emergency to retain power and the crowd vowed yesterday to keep demonstrating until he resigned.
As rumors and counterrumors swirled, local newspapers reported that Army Commander Gen. Chettha Thanajaro warned Chavalit in a meeting of senior government leaders Tuesday not to impose a state of emergency to stop protests, which have so far been peaceful.
About 500 people braving monsoon rains had gathered by midday yesterday outside the main government buildings as news sank in of how close Thailand had come to a return to martial law. Since 1992, Thailand has tried to end a long era of military involvement in politics.
It's not only in Thailand that "people power" has been on the move. The economic malaise that has taken the region by surprise has made people all over Southeast Asia restive and is likely to have far-reaching political ramifications.
As they watch their currencies plummet and their markets sag, Southeast Asian leaders would clearly rather blame "global capital" than domestic mismanagement for their problems. Even so, most recognize that now is not the time to retreat from the world's markets.
"Malaysia remains committed to keeping its economy and markets open. We are not about to put up new barriers," said Malaysia's Deputy Premier and Finance Minister Ibrahim Anwar, in an interview earlier this month.
The trigger for the current trouble began last July when Thailand's central bank announced it would de-link its currency from a dollar-dominated basket of currencies. Since then the Thai baht has lost up to 50 percent of its value against the US dollar.
As the baht tumbled, international speculators took their cue, launching attacks across the region. When the smoke lifted, Malaysia's ringgit had fallen to a nine-year low, the Philippine peso had slid around 26 percent, while Indonesia's rupiah has so far lost approximately 40 percent of its value against the US dollar.
And it's not over yet. Worst hit, Thailand has already accepted a rescue package from the International Monetary Fund (IMF) that will provide a $17.2 billion credit lifeline to its ailing economy.
A measure of the damage, the Ministry of Finance has suspended the operations of 58 of Thailand's 91 financial institutions, a move that will see more than 10,000 finance sector workers out of a job.
If the IMF package has provided a lifeline, it certainly won't provide a quick fix. Thailand's GDP growth is expected to be little more than 2 to 3 percent this year, down from more than 7 percent last year. Analysts in Bangkok predict that recovery is at least two years away. The Asian Development Bank's estimates that inflation in Southeast Asia will jump up from 9 percent this year to 11.4 percent next.
"It has been a terrible shock," says Sariwan Suetrong, who works at a Japanese bank in Bangkok. "It has affected me a lot. I never thought I'd be in a situation where everyone is feeling so insecure about their careers. The atmosphere is terrible."
And as millions of Southeast Asians grapple with the reality of the economic downturn, many are pointing their fingers at the politicians who have been at the wheels of their economies. In Thailand, where a free press and grass-roots democracy movements galvanize public opinion, the message is clear: The political system must be reformed. "I blame those who are in power. It was their responsibility to regulate the markets," rails Mr. Sariwan.
Last month, thousands of Thais took that message to the streets in support of a new constitution aimed at cleaning up Thailand's political system, long overshadowed by vote buying and corruption.
"Corruption is like a sandstorm. It gets into everything," commented the late Kukrit Pramoj, a social critic and former Thai prime minister.
Clearly cowed by the public's show of defiance, Thailand's politicians reluctantly passed the new Constitution on Sept. 27. "I'm voting for it, but I don't much like it," grumbled one Thai parliamentarian as he raised his arm in favor of the new charter. Among a number of measures to rein in political graft, the new Constitution requires that Cabinet members declare their assets to a special Counter Corruption Commission before taking office.
HOW Southeast Asia's politicians cope with their nations' economic difficulties will be a crucial litmus test for their popularity in the years to come.
In the late 1980s and early 1990s, during the government of Chatchai Choonhavan, the Thais joked about their government being comprised of a "buffet cabinet," because politicians would simply help themselves to public funds. Corruption, thought many, was just a part of politics.
Today, most people realize that corruption and mismanagement is a luxury they can no longer afford. Southeast Asia is dotted with the costly but unproductive icons of its boom. In Thailand, property developers borrowed millions of dollars to build condominiums and hotels that now stand disused or half empty, while investors played the stock market.
In Malaysia, Prime Minister Mahathir underlined his country's economic success by launching massive building projects. Economic pressures have now prompted him to put some of these projects on hold. Among his more ambitious mega-projects that are now frozen is a proposal to build the world's longest building. More than a mile long and 10-stories high, the structure was to have been built over a river that runs through Kuala Lumpur.
In Indonesia, President Suharto had his own pet projects, too. Reinforcing a pattern of letting friends and family control many businesses and industries, he entrusted one of his sons with the task of developing a national car. This and a plan to develop an indigenous aircraft have become potent symbols of national pride, so much so that Indonesia has said it will refuse an IMF aid package if it must comply with an IMF request that it scrap these two projects.
While many Southeast Asian nations are hoping that the fall in value of their currencies will kick-start their sagging exports, the challenge of instituting more far-reaching political reforms is increasingly urgent. To many, however, the future still looks predictably bleak. "If Chavalit goes we can expect more of the same. The new guy will just be a front for the old system," commented Khun Prapan, a finance executive who was among the demonstrators calling for the prime minister's resignation on Tuesday.