In 1997, Asia experienced its own financial crisis. In this guest post, Mi Park analyzes the root causes of the Asian crisis and the current Eurozone crisis and compares the politics of the anti-austerity movements in Asia and Europe. She asks what lessons Europe can learn from the Asian experience.
The Causes of Financial Crises
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Austerity Politics Compared: Asia and Europe
A comparison of the Asian case with the European one reveals a number of salient similarities and differences. The impact of austerity on society in both cases is catastrophic with massive unemployment and social unrest. They differ, however, as to how the state and civil society have responded to IFIs’ austerity politics.
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At the peak of the Asian crisis, millions of people were thrown out of work and faced abject poverty in Thailand, Indonesia, and South Korea (called the Asian Three thereafter). Due to the IMF’s insistence on austerity measures, the Asian Three found their hands tied, unable to help mitigate social unrest resulting from massive unemployment and increased poverty. The situation developed into full blown social crises, resulting in major political upheavals in the Asian Three. In Thailand, tapping into the pervasive anti-IMF populist nationalism during the Asian crisis, Thaksin’s Thai Rak Thai Party seized power with strong support from the wider population. Although neoliberal restructuring continued under his administration, the Thaksin government moderated destabilizing impacts of neo-liberalism by extending social welfare measures. In Indonesia, a nationwide anti-austerity movement eventually forced the pro-IMF Suharto regime to resign. The new administration, now more responsive to popular demands, did not implement many austerity measures previously planned. In South Korea, anti-IMF sentiments contributed to the electoral victory of the opposition party leader, Kim Dae-Jung who was most critical of the International Monetary Fund program. As in the case of Thailand and Indonesia, the Kim administration did moderate the scope of neoliberal restructuring and introduced an extensive social welfare program.
Similar to the Asian Three, massive protests against austerity measures have taken place in Greece, Spain and Portugal (the European Three thereafter). Unlike the case of the Asian Three, a large segment of the anti-austerity movement in Europe eschewed electoral politics. As a result, the politically elusive anti-austerity movements failed to forge a government with a popular mandate that is able to challenge the IFIs. The Indignados (‘the Outraged’), also known as the 15 M movement in Spain and the anti-austerity protesters in the Greek Syntagma square are cases in point.
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We can draw a valuable lesson from the Asian financial crisis for the Eurozone. As shown in the case of Asia, the ideology of austerity can be defeated. To this end, anti-austerity movements in Europe should not abandon the state as a site for social change.
This blog post is based on the article “Lessons from the Asian Financial Crisis for the Euro-zone: A Comparative Analysis of the Perilous Politics of Austerity in Asia and Europe”, Asia Europe Journal, Vol.11/2 (2013).
Mi Park is a visiting professor at the University of British Columbia, Canada. She can be reached at firstname.lastname@example.org