Democratization in Southeast and East Asia 9789814376969

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Table of contents :
CONTENTS
FOREWORD
CONTRIBUTORS
1. Development and Democratization: A Theoretical Introduction with Reference to the Southeast Asian and East Asian Cases
2. Democratization: The Case of Indonesia's New Order
3. Democracy and Authoritarianism in Malaysia since 1957: Class, Ethnicity, and Changing Capitalism
4. Philippine Democracy: Promise and Performance
5. Economic Development and Political Change: The Democratization Process in Singapore
6. The Making of Thai Democracy: A Study of Political Alliances Among the State, the Capitalists, and the Middle Class
7. Myanmar Democratization: Punctuated Equilibrium or Retrograde Motion?
8. Liberalization and Democratization in Taiwan: A Class and Functional Perspective
9. Economic Dimensions of Democratization in South Korea
INDEX
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The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the many-faceted problems of stability and security, economic development, and political and social change. The Institute's research programmes are the Regional Economic Studies Programme (RES) including ASEAN and APEC, Regional Strategic and Political Studies Programme (RSPS), Regional Social and Cultural Studies Programme (RSCS), and the Indochina Programme (ICP). The Institute is governed by a twenty-two-member Board of Trustees comprising nominees from the Singapore Government, the National University of Singapore, the various Chambers of Commerce, and professional and civic organizations. A ten-man Executive Committee oversees day-to-day operations; it is chaired by the Director, the Institute's chief academic and administrative officer.

II

I Edited by Anek taothamatas

SILKWORM BOOKS

Trasvin Publications L.P. -Thailand Institute of Southeast Asian Studies- Singapore

Published by Institute of Southeast Asian Studies Heng Mui Keng Terrace Pasir Panjang Road Singapore 119596 Internet e-mail: [email protected] World Wide Web: http://www.iseas.ac.sg/pub.html All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. © 1997 Institute of Southeast Asian Studies, Singapore

First published in Thailand in 1997 by Silkworm Books 54/1 Sridonchai Road Chiang Mai 50100 Thailand E-mail: [email protected] World Wide Web: http://www.muang.com/silkworm/ Silkworm Books is a registered trade mark of Trasvin Publications Limited Partnership.

The responsibility for facts and opinions in this publication rests exclusively with the authors and their interpretations do not necessarily rejlect the views or the policy of the Institute or its supporters. Cataloguing in Publication Data --------------·----------·------··-----.

Democratization in Southeast and East Asia/edited by Anek Laothamatas. Papers originally presented to a Conference on Rapid Economic Growth and Democratization in East and Southeast Asia, organized by the Institute of Southeast Asian Studies, Singapore, 16 - 17 December 1994. 1. Democracy--Asia, Southeastern--Congresses. 2. Democracy--East Asia--Congresses. 3. Asia, Southeastern--Politics and government--1945--Congresses. 4. East Asia--Politics and government--Congresses. 5. Asia, Southeastern--Economic conditions--Congresses. 6. East Asia--Economic conditions--Congresses. I. Anek Laothamatas. II. Conference on Rapid Economic Growth and Democratization in East and Southeast Asia (1994: Singapore). III. Institute of Southeast Asian Studies. JQ28 D38 1997 sls96-91882 ISBN 981-3055-31-6 (softcover, ISEAS, Singapore) 981-3055-57-X (hardcover, ISEAS, Singapore) For the USA and Canada, a hardcover edition (ISBN 0-312-17:364-4) is published by St Martin's Press, New York. For Thailand, a softcover edition (ISBN 974-7100-:34-7) is published by Trasvin Publications L.P, Thailand. Typeset by International Typesetters Printed and bound in Singapore by Prime Packaging Industries Pte. Ltd.

CONTENTS

Foreword Contributors

vii ix

1. Development and Democratization: A Theoretical

Introduction with Reference to the Southeast Asian and East Asian Cases Anek Laothamatas

1

2. Democratization: The Case of Indonesia's New Order Amir Santoso

21

3. Democracy and Authoritarianism in Malaysia since 1957: Class, Ethnicity, and Changing Capitalism Khoo Boo Teik

46

4. Philippine Democracy: Promise and Performance Renata S. Velasco

77

5. Economic Development and Political Change: The Democratization Process in Singapore Heng Hiang Khng

113

6. The Making of Thai Democracy: A Study of Political Alliances Among the State, the Capitalists, and the Middle Class Surin Maisrikrod

141

Contents

vi

7. Myanmar Democratization: Punctuated Equilibrium or Retrograde Motion? Tin Maung Maung Than

167

8. Liberalization and Democratization in Taiwan: A Class and Functional Perspective Lo Shiu Hing

215

9. Economic Dimensions of Democratization in South Korea Chung-Si Ahn

Index

237

259

FOREWORD

In 1994, the Institute of Southeast Asian Studies held a Conference on Rapid Economic Growth and Democratization in East and Southeast Asia, inviting scholars from Northeast Asia (South Korea and Taiwan), ASEAN and Myanmar. The objective of the Conference was to understand and analyse the phenomenon and process of political change in the region, linking this to the rapid and far-reaching economic growth taking place at the same time. While there have been many similar projects undertaken by scholars in different intellectual centres in Europe, North America and Latin America, involving scholars in the region, we thought it worthwhile to have regional scholars take the initiative to examine this process in light of the prevailing wisdom that a democratization wave is sweeping the world in the wake of the end of the Cold War. Our project would be of special interest in that the study and analyses of the region are undertaken by scholars from the region who live and work there. Writing in 1994, and revising the manuscript in 1995 also gave the project the fullness of time to observe the direction of developments. The admirable volume, Driven by Growth: Political Change in the Asia-Pacific Region, edited by James W. Morley and published by M.E. Sharpe, Inc., New York, was started in 1986 and the papers were completed in 1990 just as some of the Southeast Asian economies reached the cusp of their take-off, shifting into a number of good years of rapid economic change. Holding another conference on roughly the same theme in 1994 gave the regional scholars more time to consider the empirical evidence and to discuss the direction and institutionalization of the political change.

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This volume of nine essays highlights two directions for the region: one of increasing democratization which coincides with rapid economic growth and change; while the other does not indicate the same parallel changes, though political changes are observed. On behalf of the Institute of Southeast Asian Studies, I wish to thank Anek Laothamatas for agreeing to co-ordinate the project and for making this publication possible. I would also like to thank Chandran Jeshurun for his contribution in supporting the project. To the authors of the essays, we would also like to express our greatest appreciation for participating in the project and making a contribution to the literature. The views carried in their essays are theirs and theirs alone. Most of all, we would like to thank the Konrad Adenauer Foundation for so generously providing the grant for this project. It is their faith that the scholars in the region should be encouraged to put together a volume on democratization that has resulted in the conference and the publication.

Chia Siow Yue Director Institute of Southeast Asian Studies

CONTRIBUTORS

Anek Laothamatas is Vice-Rector for Academic Affairs at Thammasat University, Bangkok. He has taught political science at Columbia University and Thammasat University. He is the author of Business Associations and the New Political Economy of Thailand (Westview/ ISEAS, 1992). Chung-Si Ahn is Professor in the Department of Political Science at Seoul National University, Korea. He is currently also Visiting Professor in the Department of Political Science, National University of Singapore, and Visiting Fellow at the Institute of Southeast Asian Studies, Singapore. He has served as Chairman of the Department of Political Science (1991-93) and later Director of the Institute of Social Sciences at Seoul National University, and is currently President of the Korean Association of Southeast Asian Studies. Professor Ahn has authored and edited a dozen books (including three in English) on South Korea's national and local politics, ASEAN and Southeast Asia, and has published over 100 articles and book chapters both in Korean and English. Heng Hiang Khng is a Fellow at the Institute of Southeast Asian Studies, Singapore. His area of research is the contemporary politics of both Vietnam and Singapore. He is currently working on the mass media in Vietnam. Khoo Boo Teik is a Lecturer in the School of Social Sciences at Universiti Sains Malaysia. A graduate of the University of Rochester, Massachusetts Institute of Technology and Flinders University of

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South Australia, he is the author of Paradoxes of Mahathirisrn: An Intellectual Biography of Mahathir Mohamad (Oxford University Press, 1995).

Lo Shiu Hing is a Lecturer in the Department of Politics and Public Administration at the University of Hong Kong. He previously taught at the Hong Kong University of Science and Technology and was Research Fellow at the Asia Research Centre, Murdoch University. His published works include Political Development in Macau (Hong Kong: The Chinese University Press, 1995); and The Politics of Democratization in Hong Kong (London: Macmillan, forthcoming). Amir Santoso is Director at the Center for Policy and Development Studies, Indonesia, and Lecturer in the Faculty of Social and Political Sciences, University of Indonesia. He obtained his Ph.D. at the Australian National University, Canberra. His area of interest is public policy formulation and implementation. Surin Maisrikrod is a Lecturer in Southeast Asian Politics in the Department of History and Politics, James Cook University, North Queensland. After graduating from Chulalongkorn University, he worked as a journalist in Bangkok for eight years. He obtained his Ph.D. in Political Science frrom the University of Hawaii in 1991. From 1991 to 1995 he was a Fellow at the Institute of Southeast Asian Studies. Tin Maung Maung Than is a Fellow at the Institute of Southeast Asian Studies, Singapore, and Co-ordinator of its Regional Strategic and Political Studies Programme. Renato S. Velasco is currently Chief of Staff of Congressman Manuel Roxas II at the House of Representatives, Philippines.

7] DEVELOPMENT AND DEMOCRATIZATION A Theoretical Introduction with Reference to the Southeast Asian and East Asian

Cases ANEK LAOTHAMATAS

Just as the advent of the Industrial Revolution in England set off the fascinating speculation in the West about the relationship between economic and political change, the awareness that Southeast Asia and East Asia have been the fastest growing economies of the world for three decades has revived the question of how economic development affects the process of democratization in these two regions. This book represents one of the latest efforts by scholars of Southeast and East Asian politics to answer this question. 1 We have collected essays on the democratization experiences of Myanmar, Thailand, Malaysia, Singapore, Indonesia, the Philippines, Taiwan, and South Korea. The authors of these essays have been asked to discuss the rise and fall or stabilization and modification of democracy amidst socio-economic change and class transformation in countries of their interest throughout the past few decades. Before the reader proceeds to these country-focused chapters, let me take stock of some major theoretical perspectives on the relationship between economic

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development and political democratization with reference to insights and findings produced by the country studies.

Perspective 1: Development 'Causes' Democratization Most prominent among theorists who hold that economic change or development will lead to the rise of democracy is Karl Marx. The historical scene providing the empirical background for Marx's assertion of the linkage between economic development and democracy is the revolutionary change in England and France in the seventeenth and eighteenth centuries." For Marx and his followers, the bourgeoisie, defined as the business, propertied class or the independent artisans or professionals living in towns, was historically the main agent for the rise of democracy in the West for a simple reason. The old regime was not only authoritarian, it was also anti-capitalist in that significant trades and industries were monopolized by royalty or the state, and serfdom was still retained in several parts of Europe. In other words, capitalist development gave rise to the bourgeoisie, who, in turn, found that the pre-existing monarchical regime stood in the way of their achieving economic power. The bourgeoisie thus turned to democracy as the alternative regime. In brief, the bourgeoisie needed capitalism, so they needed democracy. It should be pointed out that Marx's assertion of the link between capitalist development and democratization was well received even by Max Weber, regarded by many as the founding father of bourgeois social science. As pointed out by David Beetham, among others, Weber traced the illness of German parliamentary democracy during his time to the weakness of the bourgeoisie, implying that if, and only if, Germany had a strong and independent bourgeoisie, it would certainly have had a viable democracy. :J While Marx and his early followers focused exclusively on the bourgeoisie as the agent responsible for the success or failure of democratic transition, his later followers, particularly Barrington Moore, Jr, employed a multi-class analytical approach." For Moore, it was not only the bourgeoisie but, probably more importantly, the lords and the peasants, who held the key to successful democratization. Moore's thesis was that if the landlords succeeded in imposing or introducing a commercial, capitalistic order on the farming sector, then the ruling elite had no need for an authoritarian, repressive regime

1. Developrrwnt mui Democratization

3

to force the rural masses into their proper place and function. Democracy is therefore possible. On the contrary, if the landlords stuck to the old quasi-feudalistic agrarian economy, there would arise a need for a strong and repressive state. In this latter case then, democracy was not acceptable to the ruling elite which included the agrarian landed elite. 0 Whereas the Marx-Weber-Moore approach is methodologically comparative and historical, another major scholarly tradition which postulates the positive link between economic development and democracy, that is, the modernization-correlation school, is quantitative in approach and structural-functional in orientation. Among the prominent scholars of the modernization-correlation approach which has gained wide currency in the past three decades are S.M. Lipset, Philips Cutright, and Kenneth Bollen. 6 Employing high-powered statistical methods to national and particularly cross-national data, scholars of this bent find that there is a strong correlation between economic development and democracy. This, it must be added, has been the case for the industrial West historically and seems to be true of the industrializing East of the present.' In a nutshell, scholars in this tradition argue their thesis in the following way: 1.

2.

The Political Efficacy·Thesis. Economic development brings about better political communication and education among the citizens, a more mobile way of life, geographically and socially, and a career system of rewarding people by what work they do and how well they do it, rather than who they are. All this spills over into the political culture and political behaviour of a "modernized" people, resulting in their clamouring for a substantial role in politics and public affairs. The Pluralist Thesis. Meanwhile, economic progress turns a relatively passive and functionally homogeneous society into a wide range of socio-economic groupings vying for the attention of the state and, thus, necessitating a new political system which is more accountable to society and simultaneously capable of reconciling conflicting aspirations of societal groups in a fair and free manner.

It is safe to say that the modernization-correlation approach focuses on the socio-economic context of democratization rather than the question of agent and causation of democratic transition. 8 The latter concern is of course the strength of the comparative historical

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approach. Yet, certain writers of the modernization-correlation school of democratization attributes to the middle class the role of change agent. Samuel Huntington, for example, argues that modernization and economic development produce a middle class which in tum plays a pivotal role in bringing about democracy. 9 Moreover, unlike the Marx-Weber-Moore school, the modernization-correlation camp does not pay particular attention to the role of the business class in the democratization process. None of the eight country chapters assembled in this volume takes a quantitative correlation approach. Rather, most of them have adopted the historical-analytical approach. All entertain the idea that certain classes hold the key to democratization efforts. None of the authors of the country reports has singled out a particular class as the agent of democratization. Yet, several of them portray both the capitalists and the middle class as having an important role in the democratic transition. Surin Maisrikrod, for example, argues that in Thailand, democratic stability is heavily based on a compromise between the state and the capitalists, on the one hand, and the inclusion of the middle class in the political process on the other. 10 Surin writes that "the state and the capitalist class are crucial to consolidating democracy, but they could hardly be counted on to initiate the process". 11 On the contrary, in Surin's view, "the middle class has been more capable of installing a democratic regime ... than in consolidating it". 1 ~ In the case of the Philippines, Renata Velasco suggests that the fate of democracy during the Marcos period was decided by the middle class, the traditional landed oligarchy, and the new rich, non-landed elite, mostly affiliated with Marcos. 1 l Velasco also points to the enlargement of the middle-class voters and the emergence of top political leaders with a middle-class background as causes for optimism regarding the future of democracy in the Philippines. 14 Lo Shiu Hing in his chapter on Taiwan credits the middle class, the business class, and the working class for their role in the democratic transition in the past decade. 16 However, Lo states clearly that the contribution of the middle class was most crucial. In his words, "democratization in Taiwan could be seen as a petty bourgeois revolution that eventually transformed the entire party-state". w In recent years, as several parts of the Third World have undergone rapid economic growth which goes hand in hand with political democratization, certain writers have improved on the thesis which

1. Developrnen.t and Democratization

5

simply states that capitalist development leads to democratization. These writers have tried to pinpoint certain characteristics of ongoing capitalist development as sources of democratic breakthrough. Nigel Harris, for example, theorizes that once a Third World capitalist economy moves to export-oriented industrialization, a new kind of bourgeoisie emerges. 17 The new bourgeoisie, having to compete fiercely in the global market, press for a more liberal and privatized economy. Heavy state intervention in the economy is no more acceptable to this assertive class. The authoritarian development-oriented state which was once the darling of the bourgeoisie is now held in contempt. Harris writes, "Thus, the enemy of capitalism as it matures is not feudalism, but the state, whether this is the corrupt particularist State, State capitalism, or, as is more often the case, a combination of these". tB In other words, democratization is viewed as a means to get rid of a statist regime of the authoritarian state. In a similar vein Hewison et al. hold that an authoritarian state, no matter how well it performs economically, will be hard pressed for democratization by the powerful internationally oriented bourgeoisie. This occurs in two situations: 1.

2.

When conflicts among various segments or factions of the bourgeoisie become so intense that a transparent brokering or mediating system must be installed. A democracy is very often seen by contending groups, especially those that are not within the authoritarian ruling circle, as such a system. When the interest of the bourgeoisie as a whole as extracted from the existing neo-patrimonial authoritarian state (in terms of protection, subsidy, and patronage) is dwarfed by the interest reaped by the installation of a transparent, market-governed, democratic policy-making process. HI

In a non-Marxian vein, Harold Crouch and James Morley propose that it is not just economic development or economic growth that sets the process of democratization in motion. They argue that it is the level of growth or the level of development that matter much more. Crouch and Morley show with graphical and statistical figures that in the rapidly growing economies of the Asia-Pacific region, countries at the higher stage of economic development (more industrially advanced) in the main are also democratic, while those at the lower rung of economic development are authoritarian, and those at the intermediate level are semi-democratic. In other words, it is not mere

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existence of a capitalist economy or the achievement of a high economic growth rate per se that account for democratic transition. Rather, the attainment of a particular stage or degree of maturity of the capitalist development is crucial to the prying open of the authoritarian state and the launching of a democratic movement. 20 Lucian Pye, in explaining the collapse of the Soviet-dominated empire, sheds some light on the democratic transition in the Third World. 21 Pye believes that whether it is capitalist or socialist, once a country reaches a stage of maturity where highly educated technocrats or professionals constitute the mainstay of the system, a crisis will emerge if such a country is governed by a repressive authoritarian government, particularly one that intervenes aggressively in the economy. 22 Pye characterizes the present age as one fraught with the crisis of the authoritarian or totalitarian states. Thus, both Crouch and Morley and Pye take the attainment of a particular stage or level of economic development as the instigator of democratization, with the former stressing on how economic maturity fosters pro-democracy forces, and the latter emphasizing how this maturity undermines the governability of the authoritarian regime. Finally, attention should be paid to the fact that there is another line of analysis, dating back to the eighteenth and nineteenth centuries, which explains why the rise of the market society gives rise to democracy. As shown by Albert Hirschman, among others, a group of seventeenth- and eighteenth-century writers, Adam Smith included, praised the emergence of a market society for its role in civilizing the people, that is, making them more honest, reliable, friendly, helpful, moderate, and conciliatory. "'l Once people acquire these traits, the philosophers believed, their preoccupation turns from passion to interest and hence becomes more receptive or readily adjustable to the functioning of democracy. 24 The latter-day pro-market scholars such as Milton Friedman make it explicit that capitalist development is a necessary condition for the installation and consolidation of democracy. 25 A typical explanation offered by these writers is the following: [To] hold government really accountable, people need two types of independence .... Firstly a person must have economic independence, the ability to acquire at least the basic means of sunrival independently of government decision-making. This constitutes a fundamental countervailing power in the absence of which government can easily become tyrannical. Secondly, there is independence of mind and this

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7

itself is crucially dependent on there being sources of education, knowledge and opinion free from political power. Only in a market society can there be the requisite privately owned, non-state, means of mass communication. 26

In conclusion, to these writers pro-market development facilitates the rise, maintenance, and protection of a democracy. The preceding lines of analysis which focus on the maturity of the economy, the shift to export-oriented industrialization, and the privatization, liberalization, or marketization of the economy as the explanation for democratization find much support in our country chapters. The recent drive for democratization in Taiwan, South Korea, Thailand, and the Philippines could be well interpreted as resulting, at least in part, from the economic liberalization of these newly industrializing countries (NICs) or near-NICs in the sense that their economies have been relatively set free from government control and subject to much more competition in the world market. It is probably not a mere coincidence that the economic structural adjustment reforms that entail the privatization and globalization of the economy in East and Southeast Asia in the early 1980s were closely followed by the democratization wave of the late 1980s. Surin notes in the Thai case that the state has increasingly lost its control over the economy, particularly since the 1980s, as the Thai economy has become more internationalized. This has had a great impact on the reshaping of the state's position. The state has had to adjust itself to the rising independence of the local capitalists, and rising pressure from international capitalists. This means that, among other things, although the state remains very much at the centre of power, it has almost no choice but to form a strategic alliance with other groups or classes. 27

Surin also draws attention to the fact that, as the economy became more marketized and the public sector shrank in importance, the Thai middle class "found it more rewarding to join business corporations or to become entrepreneurs themselves" rather than join government service as they had before. 28 The growing political confidence of the middle class is, in brief, "due to their independence of government employment". 29 In conclusion, Surin suggests that the liberalization of the Thai economy in the 1980s has very much strengthened the middle class and the capitalists. In Taiwan, argues Lo, since the government shifted to exportoriented industrialization in the 1960s, "the private sector has expanded

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rapidly, particularly the Taiwanese small and medium-sized enterprises. With the emergence of these enterprises, the local Taiwanese petty bourgeoisie began to develop gradually".:Jo Lo suggests further that, with the rise of these local petty bourgeoisie, the state had to start its first phase of democratization by recruiting more local Taiwanese into the civil service and the ruling party, until then dominated by the mainlanders from China. :n A note of caution is warranted before we move on to the second perspective. That is, one should not hold a simplistic view that development leads to democracy by generating pro-democracy forces which always take the political initiative vis-a-vis the ruling authoritarian elite. In fact, often democracy comes into being because the rulers launch it from above or pre-emptively yield to certain demands of the pro-democracy forces, for they believe that it is in their long-term interest to gradually step down or to share power with the democratic elements in a new regime. Lo superbly illustrates this point in this volume.

Perspective II: Development Does Not Lead to Democracy or Further Democratization The thesis that links development and democracy together in a positive way is logically eloquent and empirically validated by several historical and contemporary cases. Yet, throughout the last couple of centuries the cases of development not leading to democracy or further democratization have not been uncommon. In fact, the denial of a positive linkage between development and democratization has an equally long and respectable tradition. No sooner had Marx and Engels observed the direct association between economic and political change in eighteenth century England and France, than they turned their eyes on the seeming anomaly of nineteenth century France and Germany. Under the rule of Louis Philippe Napoleon and Bismarck, there existed a situation where the bourgeoisie were weak and set against other classes, the result being that the state could take on an authoritarian political shell and display a high degree of autonomy vis-a-vis civil society, yet retain its capitalist economic essence.:32 Marx and Engels therefore envisioned this as exceptional to the general rule of capitalism breeding democracy. Marx and Engels reasoned that in times of war, or in a situation where contending social forces were

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9

equally strong and balanced one another off, the state or the ruling elite emerged independently of social forces and imposed an authoritarian rule, provided that it allowed the capitalist economy to operate. 33 What Marx and Engels implied was that, unlike the classical cases in the seventeenth and eighteenth centuries, nineteenth century France showed that there exists a possibility of political and economic liberalism being divorced. It was not only Marx and Engels who observed the cases of disjunction between wealth and power or between capitalism and democracy. Weber came to the same conclusion. What Marx and Engels saw in the 1846-53 Bonapartist regime in France, Weber also observed in the Bismarck regime of the newly united Germany towards the end of the nineteenth century - rapid capitalist transformation under the auspices of an authoritarian regime. 34 Weber spent much of his time pondering the question why despite the rapid rise of capitalism, the bourgeoisie failed to make an impact on the military-bureaucratic elite. In rapidly growing Germany, Weber noted, it was not the capitalists, but the military-bureaucratic elite that ruled. 3" In a sense, Weber anticipated the Riggsian bureaucratic model which has been widely used to describe several Southeast Asian regimes of the 1960s to 1980s. Barrington Moore, Jr is one of the prominent latter-day Marxinspired scholars who arrived at the conclusion that in getting their economies on the course of industrialization or modernization, modem nations could assume various political forms, ranging from bourgeois democracy as in England, the United States, or India, to fascism as in Japan, or communism as in China. Unlike Marx and Weber who maintained the necessary coexistence between democracy and capitalism at least in normal times or in the long run, Moore argues that what (bourgeois democracy) happened earlier in the West would not necessarily repeat itself in the late-developing countries of the present.:36 While Moore did not preclude the possibility of the Third World nations embarking on a democratic route to modernity, a batch of 'dependency' scholars of the 1970s, in watching a large number of post-colonial democracies go into decline or demise, held a rather deterministic view that democratic consolidation in the Third World was impossible. In their opinion, the Third World, being on the periphery of Western capitalism, is doomed to economic underdevelopment and authoritarian rule. In line with G. O'Donnell's study

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of Latin American bureaucratic authoritarianism which explicitly rejects the correlation between development and democracy, some "dependency" scholars went to great lengths to posit that Third World nations could not repeat the development pathway of the centre.:37 That is, economically they would never be fully-fledged capitalist systems, and politically never be a viable democracy. Hamza Alavi, for example, explains that most post-colonial democracies fail because there exists no single, unified ruling class as there once existed in the West. Instead, post-colonial societies have three contending ruling classes: the domestic bourgeoisie, the metropolitan bourgeoisie, and the landed elite. Because of this division a broker or mediator is needed to form a leadership which works for the benefit of these three contending classes. It is the militarybureaucratic elite which often serves this brokering or mediating role. A price must be paid, however, by the three ruling classes for having the military-bureaucratic oligarchy play this role. That is, the militarybureaucratic oligarchy becomes independent of the ruling classes and exerts its power in the form of a military authoritarian regime. 88 David Becker summarizes that the "dependency" writers of the 1970s based their conclusion about the incompatibility between capitalism and democracy in the Third World on two major assumptions. 09 First, the nature of peripheral capitalism presupposes economic strategies that result in a highly skewed distribution of wealth and income and hence an unbridgeable gap between the ruling elite and the masses. Such a huge social chasm precludes the chance of democratic rule. Instead, an authoritarian regime is often needed to maintain a capitalist order in the Third World. Secondly, the nature of peripheral capitalism presupposes a heavy participation of international capitalism in the local economy, resulting in the delegitimation of the domestic bourgeoisie. The latter appear to be servants of foreign interest rather than bearers of national interest. 4°For these two reasons, the domestic bourgeoisie could not institute democratic rule. Thus, the militarybureaucratic regime or the single-party state has become the prevailing political form for Third World peripheral capitalist nations. Persuasive as these accounts may be, waves of democratization have since the 1980s swept aside authoritarian regimes all over the world, East Asia and Southeast Asia being no exceptions. This has shattered the notion that democratization is impossible in the Third World and that capitalism and democracy are incompatible there. Yet, even if one dismisses the existence of perpetual and built-in obstacles to democratization in the developing world, one may resort to several

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11

contingent answers for the question why rapid development in some cases may not result in the rise of democracy. Statist economic development. Capitalist transformation that relies too much on public investment or financial support often leaves capitalists and the middle class politically impotent and thus severely undermines their role as democratic leaders or supporters. Several country-focused chapters assembled here prove this point quite well. In Singapore, Malaysia, and Indonesia, where the pace of economic change has been so quick, strong pro-democracy forces have yet to emerge because of the fact that economic development in these countries has been under tight government control. Heng Hiang Khng suggests in this volume, with several other authors, that the pro-democracy forces in Singapore have been weak because they are vulnerable to and restrained by sanction from the state, which has a tremendous influence on the economy. In housing, Heng cites, the state holds up to 90 per cent of the country's supply. 41 It has also been widely speculated that the Singaporean state has not nurtured a large domestic private sector (choosing instead to promote foreign investment as well as state capitalism) for fear of a political surge from the domestic bourgeoisie. Likewise, Khoo Boo Teik points to the same development in Malaysia: Whereas rapid economic growth and industrialization catalyzed the fall of authoritarian regimes in [South Korea and Taiwan], growth and industrialization in Malaysia formed the background for increasing authoritarianism" :12

Accompanying this long-term political trend away from democracy has been the Malaysian shift towards a much more statist economy since the late 1960s. For example, compared to the pre-New Economic Policy (NEP) First Malaysia Plan (1966-70), which had a public sector allocation of RM 4.6 billion, the allocation for the Second Plan (1971-75) was RM 10.3 billion while the Third Plan (1976-80) allocation rose to RM 31.1 billion. The number of public agencies rose from 22 in 1960 to 109 in 1970 and to 656 in 1980. Public expenditures as a proportion of the gross national product (GNP) rose from 28.7 per cent in 1970 to 61.2 per cent in 1982. Public sector employment (excluding military and police personnel) increased from 139,476 persons in 1970 to 521,818 persons in 1983. ~ In Indonesia, Amir Santoso attributes the smallness and weakness of the middle class to the fact that most graduates of schools and 41

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universities have to seek employment in government offices at either local or regional level, as in Jakarta. Likewise, Santoso argues, Indonesian business groups are yet to be the force for democracy not because they are still small in number, but because they are also "very dependent upon government support and facilities", and correctly described as "ersatz capitalists". 44 In Myanmar, Tin Muang Muang Than suggests, the very success of the socialist regime's measures to control civil society and marginalize the private sector has left the country with a dispossessed and dependent middle class. And, we may add, this fact says a lot about the failure of the pro-democracy movement of the late 1980s. 45 Statist economic development as initiated, directed, and controlled by an authoritarian regime results not only in the political weakness of potential pro-democratic forces, but its achievement also endows the regime with a degree of performance legitimacy which may for some time substitute for procedural legitimacy. In this sense it is arguable that until recently the quasi-authoritarian regimes of Taiwan and South Korea managed to escape the onslaught of the prodemocracy movement simply because they enjoyed a certain degree of performance-based legitimacy. In Singapore, Malaysia, and Indonesia, it is also reasonable to think that a further democratization struggle against the time-tested regimes which have succeeded in leading the countries to unprecedented prosperity has yet to find ways to garner support from the public who accord a substantial degree of performance legitimacy to these strong-handed regimes. Some countries achieve rapid development with minimal government intervention in the economy, yet fail to establish or consolidate a democratic regime for a long time because of non-economic reasons. Culture. Recently S.M. Lipset has claimed that culture is one of the most important reasons that explain the success or failure of democracy. 46 Of course, culture changes through time. Yet, it changes very slowly. Moreover, only certain cultures, until recently, only the Anglo-Saxon culture, succeed in maintaining a well-functioning democracy. Of all the post-colonial democracies that have emerged after World War II, those with an Anglo-Saxon legacy tend to outlive and outperform those with other coloniallegacies. 47 Certain indigenous cultures in the Third World, on the other hand, have been regarded as factors retarding or obstructing the process of democratization. In this volume, Amir Santoso turns to the Javanese

1. Development anri Democratization

13

cultural disposition among the elite and the mass alike as a possible source of Indonesia's democratic impasse.'8 To Santoso, Javanese culture accords too much uncritical respect for superiors or elders. He writes, "loyalty is given priority and disobedience is considered impolite". 49 Open conflict with and criticism of superiors are to be avoided as much as possible. All these legacies, Santoso suggests, do not provide a favourable cultural background for a political life which is democratic. Racial-ethnic division. It is widely held that "primordial" divisiveness, unlike "modem" class-economic conflict, is hard to reconcile and prone to political radicalism and hence stands in the way of democratization. Some scholars contend that countries which had historically succeeded in their nation-building (read getting rid of or coping successfully with primordial division) before they proceeded to democratization had a greater chance of maintaining their democracies. 50 In the Third World of today, democracy is hard to sustain because nation-building is as yet unfinished. Of course, India disproves this thesis for its democracy accommodates and referees the explosive primordial conflicts quite well. Yet, the vast majority of Third World democracies suffer badly from racial, linguistic, religious, and ethnic problems. Elsewhere, Don Emmerson draws our attention to the difficult relationship between racial-ethnic heterogeneity and democracy, citing that "among the twenty most homogeneous polities in the world perhaps half are more democratic than not, compared with perhaps 15 per cent of the twenty most heterogeneous ones". 51 In this volume, Khoo Boo Teik not only points out that the post1969 authoritarianism in Malaysia was triggered by the spectre of Chinese-Malay ethnic conflict, but also suggests that any attempt to liberalize the present quasi-democratic regime of Dr Mahathir is set to be thwarted by the public apprehension of the scenario in which fullswing democracy breeds racial-ethnic conflicts in the country. ~ In a similar vein, Heng Hiang Khng posits that the PAP (People's Action Party) government succeeds in deterring opposition efforts to destabilize its rule and pry open the Singaporean political system because it has well demonstrated to the ethnic Chinese that it, and only it, could safeguard their interest "in a sea of Malayness" which is their neighbouring countries. 6:1 On other hand, the PAP government has shown to the ethnic Malays that it is always prepared to move resolutely to control the ethnic Chinese chauvinistic demands on language and culture at their cost. 0

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Anek Laothamatas

As for Indonesia, although Amir Santoso does not focus on the ability or at least the claimed ability of the Soeharto regime in maintaining racial-religious peace among the highly diversified communities of Indonesia, Don Emmerson in a recent article proposes a theoretical argument, based to a large extent on his familiarity with the Indonesian case, that most authoritarian or quasi-authoritarian regimes are more qualified than democratic regimes to control or hold warring racial-ethnic groups together. 54 External factors. Countries do not undergo democratization in isolation of other countries or in the void of a world or regional order. The collapse of an old international order and the advent of a new one often results in a democratic set-back or breakthrough in countries constituting or bordering that order. The creation of the Nazi-Fascist Order and the Soviet Empire, for example, brought an end to some established democracies in Europe and thwarted democratic transition in several other countries. On the other hand, the collapse of the Soviet Empire and the end of the Cold War era allows for democratic transition in many parts of the world, East and Southeast Asia included. That the anti-communist regimes of Taiwan, South Korea, and Thailand bowed to the calls for democracy and allowed the pro-democracy forces to shape the post-authoritarian politics in these nations may be explained by the fact that the confronting communist blocs in East and Southeast Asia are no longer an ideological threat. It is safe to say now that the evolving international environment is favourable to further democratization of the East and Southeast Asian countries. Yet, whether this favourable trend will materialize in particular countries depends no less on the internal development of these countries. Political factors. Dramatic economic development may not bring about democratic transition just for political reasons. In the final analysis democratization is a political process and thus involves political actors. The road to democracy may be rocky and winding or even dead-ended should the pro-democracy forces adopt a wrong strategy. Authoritarian regimes with good political assets and shrewed strategies, on the other hand, may successfully freeze, resist, or harness any democratic movement. Regimes which manage to capitalize on their economic success, as said earlier, increase their legitimacy. Such are the cases of particularly Malaysia and Singapore where development is not only rapid but also evenly distributed, compared to the rest of the Third World. The present Malaysian and Singaporean regimes are endurable for another reason: they are the architects of

1. Development and Democratization

15

national independence and peaceful inter-ethnic co-existence. Finally, regimes that manage to keep a certain degree of legal and institutional legitimacy are more successful in their coping with rising democratic aspirations. For example, unlike Thailand, South Korea, and, to a lesser extent, Taiwan, where outright or quasi-military regimes ruled, in Malaysia, Singapore, and, to a lesser extent, Indonesia, it is the civilian, democratically elected regimes that are in power. As a result, these civilian regimes hardly face any large-scale, extra-constitutional, and confrontational opposition forces. Reading Heng Hiang Khng's vivid description of Singapore, one may easily conclude that a strong-handed government which enjoys a certain extent of performance legitimacy could contain any liberal challenge with its swift, effective, and selective, yet not so ruthless, measures designed to restrain or intimidate its political opponents. 55 One could draw a conclusion, following Samuel Huntington, that economic development at its best contributes to democratization simply by bringing a particular country to the zone of transition. 56 Once this zone is reached, it is likely but not necessary for a country to move towards democracy or proceed even further along the democratic routeY But here the political factors enter as a decisive factor. Opposing camps - the pro-change and the pro-status quo groups - try to direct or lead the forces unleashed by successful development for their political interest. The question of whether development will pave the way to democracy or not, up to this point, is still open-ended. In this book, we have gathered studies of eight countries: Myanmar, Thailand, Malaysia, Singapore, Indonesia, the Philippines, Taiwan, and South Korea. These country cases have been classified into three groups: Group I: Thailand, Taiwan, and South Korea Group II: Malaysia, Singapore, and Indonesia Group III: The Philippines and Myanmar In Group I, the cases suggest that rapid development leads to democratic transition. In Group II the pattern is that development does not lead to democratic breakthrough or further democratization. Although the reader is advised to apply critically certain perpectives outlined in this introductory chapter to empirical evidence offered in each country study to arrive at his or her own conclusions about the

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Anek Laothamatas

relations between economic development and political democratization, it is helpful to note at this stage that what accounts for the differring outcome of development in these two groups of countries seem to be as follows: Countries in Group I are relatively homogeneous in racial and ethnic terms. Put differently, they are without explosive primordial or quasi-primordial tension within their societies which poses a formidable obstacle to the rise of democratic forces or inspires the fear that the countries would be tom asunder once the political arena is open. On the other hand, these countries in Group I were ruled by outright military or quasi-military authoritarian regimes. Their repressive measures against the dissidents or opposition were, in addition, often ruthless and illegal. As a matter of fact, these antidemocracy regimes became an easy target for the pro-democracy forces. In all the three countries the pro-democracy forces adopted a wise, moderate, yet forceful, strategy while the regimes in power were willing to make a negotiated withdrawal from the pinnacle of power. All these help to explain why development paves the way to democracy. Countries in Group II, on the other hand, are fraught with volatile racial and ethnic tension. A large part of the population and the elite alike are apprehensive of potential racial and ethnic conflicts once full-fledged democracy is adopted. Also the regimes in power are procedurally legitimate to the extent that they provide a certain degree of rule of law, political and civil liberties, political competition, and freedom of expression. They are, in other words, civilian, democratically elected governments, providing some kind of legal and institutional protection to the people and allowing for a degree of freedom of opposition. As a result, these regimes have been resilient to the forces demanding further democratization. Our discussion up to this point treats economic development as a "cause" or independent variable and democratization as an "effect" or dependent variable. The only difference between Group I and Group II in this view is simply that in the former cause leads to effect, whereas in the latter this relationship does not hold true. In fact, democracy in various countries is not set in motion at all by economic success or growth. Myanmar and the Philippines, which make up Group III, are cases in point. It is non-development or underdevelopment, among other things, that triggered Myanmar's democratic movement of the late 1980s. The Philippines, on the other hand, shows that the

1. Development and Democratization

17

fruits of economic development as accumulated through the 1950s and 1960s did not lead to further democratization. Instead, it led to the collapse of post-war democracy and paved the way to the Marcos dictatorship of the 1970s. As for the late 1980s democratic transition, it should be remembered that it was the poor economic performance of the country, not its economic achievement, which set off the democratic movement. Indeed, Myanmar and the Philippines as portrayed in this volume represent a more typical Third World case in which economic failure causes frequent regime change, and very often this is the shift from an authoritarian regime to a democratic one. By contrast, the cases of South Korea, Taiwan, and Thailand are exceptional to the typical Third World pattern of regime change in that their democratization is driven in large part by economic success. However, the cases of Malaysia, Indonesia, and Singapore remind us that economic success does not automatically or easily usher in a democratic era. A whole range of other factors, economic and noneconomic alike, must be taken into consideration. In conclusion, helpful as economic development may be for the cause of democracy, our empirical scrutiny of East and Southeast Asian cases confirms that it is neither a necessary nor a sufficient condition for democratic transition. Among recent scholars who help us drive home this point is Francis Fukuyama, who contends that democratization is a political-ideological process, not a socioeconomic one. It arises out of people's "desire for universal and equal recognition".''s Even more trail-blazing is Robert Putnam who, drawing from his careful empirical studies of Italian regional governments of the past two decades, argues that it is not economic development (modernity, in his words) per se that accounts for the effectiveness of a local government."9 Rather, it is the proliferation and effectiveness of civic associations that count for both the economic and democratic success of a locality. 60 It is plausible then to extend Putnam's thesis into the realm of our discussion by positing that perhaps it is not economic development that "causes" democratization. Rather, democracy arises as a direct result of the strength of civil society as illustrated by the presence of numerous civic associations dedicated to the protection of public interest as well as enlightened partial interests. These recent findings and insights should take us to a more balanced position between a socio-economic approach and a political-ideological approach to democratization.

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Anek Laothamatas

NOTES 1. Among the earlier works on the subject of economic development and democratization in the East and Southeast Asian regions are: James W. Morley, ed., Driven by Growth (Armonk: M.E. Sharpe, 1993); Kevin Hewison, Richard Robison, and Gary Rodan, eds., Southeast Asia in the 1990s: Authoritarianism, Democracy, and Capitalism (St. Leonards: Allen and Unwin, 1993). 2. SeeK. Marx and F. Engels, "Manifesto of the Communist Party", in The Marx-Engels Reader, edited by Robert C. Tucker (New York: Norton, 1972), especially pp. 335-37, for a typical Marxist view on the necessary connection between bourgeois economic dominance and its rise to political power. 3. David Beetham, Max Weber and the Theory of Modern Politics (Oxford: Basil Blackwell, 1985), chap. 2 and 3. 4. Barrington Moore, Jr, Social Origins of Dictatorship and Democracy (Boston: Beacon Press, 1966). 5. Ibid., pp. 413-52. 6. S.M. Lipset, "Some Social Requisites of Democracy: Economic Development and Political Legitimacy", American Political Science Review 53 (1959); Philips Cutright, "National Political Development: Measurement and Analysis", American Sociological Review 28 (April1963); and Kenneth Bollen, "World System Position, Dependency and Democracy", American Sociological Review 48 (1983): 468-79. 7. See Bollen, op. cit., for the findings that development-democracy correlation holds true both in the West historically and the developing countries of peripheral capitalism at the present time. 8. Bollen is an exception for he focuses very much on the question of causation. 9. Samuel Huntington and Joan Nelson, No Easy Choice (Cambridge: Harvard University Press, 1976), pp. 43-44; and Samuel Huntington, "Will More Countries Become Democratic?" Political Science Quarterly 99, no. 2 (Summer 1984): 199-200. 10. Surin Maisrikrod, "The Making of Thai Democracy: A Study of Political Alliances among the States, the Capitalists, and the Middle Class", in this volume. 11. Ibid., p. 165. 12. Ibid., p. 164. 13. Renato S. Velasco, "Philippine Democracy: Promise and Performance", in this volume. 14. Ibid., p. 103. 15. Lo Shiu Ring, "Liberalization and Democratization in Taiwan: A Class and Functional Perspective", in this volume.

1. Development and Democratization

19

16. Ibid., p. 225. 17. Nigel Harris, "New Bourgeoisies?", Journal of Development Studies, 24, no. 2 (January 1988). 18. Ibid., p. 257. 19. Kevin Hewison, Richard Robison, and Gary Rodan, "Political Power in Industrializing Capitalist Societies: Theoretical Approaches", in Southeast Asia in the 1990s: Authoritarianism, Democracy, and Capitalism, edited by Kevin Herrison, Richard Robison, and Gary Rodan (St. Leonards: Allen and Unwin, 1993), pp. 27-29. 20. Harold Crouch and James W. Morley, "The Dynamics of Political Change", in Driven by Growth, edited by James W. Morley, pp. 277-82. 21. Lucian Pye, "Political Science and the Crisis of Authoritarianism", American Political Science Review (March 1990). 22. Ibid., p. 6. 23. Albert Hirschman, The Passions and the Interests (Princeton: Princeton University Press, 1977); Albert Hirschman, Rival Views of Market Society and Other Recent Essays (Cambridge: Harvard University Press, 1992). 24. Hirschman, Rival Views, p. 109; and Hirschman, The Passions, pp. 9-66. 25. Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962). 26. James L. Hyland, Democratic Theory (Manchester: Manchester University Press, 1995), p. 226. 27. Surin, op. cit., p. 147-48. 28. Ibid., p. 159. 29. Ibid. 30. Lo, op. cit., p. 223. 31. Ibid. 32. K. Marx, "The Civil War in France", in The Marx-Engels Reader, edited by Robert C. Tucker (New York: Norton, 1972); F. Engels, The Origin of the Family, Private Property and the State (New York: International Publishers, 1972). 33. Engels, The Origin, p. 231. 34. Beetham, op. cit., chap. 2 and 3. 35. Max Weber, "Parliament and Government in Germany under a New Political Order", in Weber's Political Writings, edited by Peter Lasman and Ronald Speirs (Cambridge: Cambridge University Press, 1994). 36. Moore, op. cit., pp. 413-14. 37. Guillermo O'Donnell, Modernization and Bureaucratic Authoritarianism (Berkeley: Institute of International Studies, University of California, 1973). 38. Hamza Alavi, "The State in Post-Colonial Societies", New Left Review 74 (1972); Hamza Alavi, "Class and State in Pakistan", in Marxian Theory and the Third World, edited by D. Banerjee (New Delhi: Sage, 1985). 39. David Becker, "Development, Democracy and Dependency in Latin America", Third World Quarterly 6, no. 2 (April 1984): 411-31.

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40. Ibid., p. 416. 41. Heng Hiang Khng, "Economic Development and Political Change: The Democratization Process in Singapore", in this volume, p. 118. 42. Khoo Boo Teik, "Democracy and Authoritarianism in Malaysia since 1957: Class, Ethnicity, and Changing Capitalism", in this volume, p. 72. 43. Ibid., p. 55. 44. Amir Santoso, "Democratization: The Case of Indonesia's New Order", in this volume, p. 39. 45. Tin Maung Maung Than, "Myanmar Democratization: Punctuated Equilibrium or Retrograde Motion?", in this volume, p. 187. 46. S.M. Lipset, "The Centrality of Political Culture", in The Global Resurgence of Democracy, edited by Larry Diamond and Marc Plattner (Baltimore: Johns Hopkins University Press, 1992), pp. 134-37. 47. Ibid., pp. 136-37. 48. Santoso, op. cit., pp. 36-37. 49. Ibid., p. 37. 50. For example, Myron Weiner, "Political Participation", in Crises and Sequences in Political Development, edited by Leonard Binder et al. (Princeton: Princeton University Press, 1971), pp. 180-81. 51. Donald K. Emmerson, "Diversity, Democracy, and the 'Lessons' of Soviet Failure," Pacific Review 4, no. 4 (1971): 1-11. See also Robert Dahl, Polyarchy (New Haven: Yale University Press, 1971), pp. 108-111, for a similar opinion: "Polyarchy" in particular is more frequently found in relatively homogeneous countries then in countries with a great amount of subcultural pluralism, (p. 108). 52. Khoo, op. cit., p. 48-49. 53. Heng, op. cit., p. 119-20. 54. Emmerson, op. cit., pp. 5-6. 55. Heng, op. cit., p. 120. 56. Huntington, "Will More Countries Become Democratic?", p. 201. 57. Ibid., p. 202. 58. Francis Fukuyama, "Capitalism and Democracy: The Missing Link", Journal of Democracy 3, no. 3 (July 1992): 106-7. 59. Robert D. Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton: Princeton University Press, 1992), pp. 91-99, 152-53. 60. Ibid., p. 154.

DEMOCRATIZATION The Case of Indonesia's New Order AMIR SANTOSO

Why has the process of democratization in Indonesia been so slow despite fast economic growth? What are some of the important factors that have accounted for this situation? This chapter attempts to answer these questions. Indonesia under the New Order has had at least two periods of quasi-democracy. The first was during the early years of the New Order (1966-74), and the second commenced from 1988. In the period 1966-74, Indonesia experienced what a noted Indonesian journalist Mochtar Lubis called a blossoming of freedom (Kompas, 8 March 1992). Power was shared among various power centres, and freedom of the press and expression was allowed. However, this period ended when students from various universities in Jakarta started to protest against the government. The first protest occurred in 1968 against the increase in the price of rice and resulted in the government regulating the price along with the establishment of logistics bodies (Bulog or Badan Urusan Logistik) to regulate the distribution of rice and some other basic commodities. The second protest involved student demonstrations in 1974 against visiting Japanese Prime Minister Tanaka on the role of Japanese investment in Indonesia and the rest of Asia. This protest was known

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Amir Santoso

as the Malari affair. All these protests were not handled by the government through participatory measures but by political engineering which tended to decrease public political participation (Mas'oed 1989; Muhaimin 1980; Sumitro 1991; Budiman 1991). Learning from the above incidents, the government tightened its grip during the period 1975-88. Critics were no longer tolerated, and the press were forced not to publish any news considered by the government as dangerous and which would threaten political stability. This policy of reducing political participation was supported by some leading economists who viewed stability as crucial to economic development. During the regime of Soekarno, the economy was in dire straits and by 1965 inflation was spiralling to over 600 per cent. Some argue that such a situation occurred because of government policies that gave too much attention to politics. The 1980s can be viewed as a period in the development of Indonesian politics under the New Order government. During this decade and beyond there were hopes for an acceleration of the democratic process since the government began to introduce what it called keterbukaan politik (political openness). However, although political liberalization has been effected, some remain sceptical about how far it will go and whether democratization can be felt by the people in their daily lives? There are some who believe that the position of the state remains much stronger vis-a-vis society, although there have been much progress in social and economic conditions. If this is the case then what factors are behind this situation? Or, why is the present state of Indonesia still categorized as semi-authoritarian in the midst of social and economic progress? To answer these questions, it will be necessary to describe the present economic and political situation.

The Growth of the Economy It is difficult to deny that under the New Order significant economic progress has been made. As stated above, the New Order inherited from Soekarno an economic system characterized by spiralling inflation of up to 600 per cent in 1965 and a scarcity of goods and services. In the 1990s, however, Indonesia has experienced consistently high or at least moderate economic growth. Even in 1982, when Indonesia was hit by the steep decline in international oil prices, its annual rate of

23

2. Democratization: The Case of Indonesia's New Order

economic growth was still above 2 per cent. The structure of the economy has changed gradually over the past two decades, as shown in Table 1. The New Order has also successfully reduced the incidence of poverty. In 1976, the proportion of poor throughout Indonesia was 40.36 per cent of the total population, while in 1987 it was 17.44 per cent. According to the Central Bureau of Statistics, in 1990 it was further reduced to 14.33 per cent (Syahrir 1992, p. 26). The increase in educational facilities and the growth in the number of students especially at the elementary school level has also been phenomenal. The proportion of the labour force which did not complete elementary education declined from 66.99 per cent in 1980 to 37.60 per cent in 1992, while the proportion of those who had completed elementary school increased from 21.26 per cent to 36.65 per cent over the same period (see Table 2). Table 2 also shows a significant increase in the proportion of the labour force with secondary or high school education. The proportion of the labour force which had completed secondary school increased from 5.17 per cent in 1980 to 10.97 per cent in 1992; while the percentage of high school graduates increased from 5. 75 per cent to 12.50 per cent over the same period. Facilities in public health have also improved. In every sub-district (kecamatan ), the government has established a Community Health Centre (Puskesmas) led by a medical doctor under a programme called TABLE 1 Sectoral Composition of GOP (In per cent)

Agriculture, Livestock, Fishery and Forestry Mining Manufacturing Electricity, Gas, Water Construction Transportation and Communication Trade, Hotel, and Restaurant Banking and other Financial Services Ownership of Dwellings Public Administration and Defence Other Services

1969

1979

1991

46.9 9.4 8.3 0.4 2.4 3.3

32.2 10.5 12.9 0.6 5.7 5.6 14.5 1.9 2.6 6.2 4.2

18.5 15.6 19.9 0.7 6.0 5.6 15.9 4.5 2.5 7.4 3.4

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Amir Swntoso

24

TABLE 2 Percentage of the Labour Force by Educational Level ----------

- - - -

1. 2. 3. 4. 5.

Educational

1980

1982

1985

1986

1987

1990

1992

No-Education Elementary Secondary School High School Tertiary Education

66.99 21.26 5.17 5.75 0.81

59.19 27.18 6.16 6.60 0.86

55.24 27.41 7.22 8.81 1.32

48.41 33.26 8.14 13.43 1.60

45.09 34.43 8.94 13.75 1.96

44.73 31.54 9.17 12.18 3.37

37.6 36.65 10.97 12.50 2.28

-----------------------

Total(%)

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Inpres Doctor (under which a medical doctor must serve in subdistricts as compulsory public service for three years after graduation). In each village there is one Posyandu (Community Service Centre) which provides services, especially medical services, for villagers. The centre is led by village officials who, among other things, have the task of calling for a medical doctor from the sub-district if the need arises. The flow of information has also increased significantly under the New Order. There are now at least one or two newspapers in each province, and two or three private radio stations. In Jakarta itself, there are four television channels run by private companies, compared with two government television channels. In addition, the public is not prohibited from having parabola antennae to access world information networks by satellite. Transportation has also connected villages and small towns and opened up remote areas. It is believed that many sub-district capitals that used to be small and isolated, have now become medium-sized towns with a relatively high rate of mobility for the population. The number of buses and private cars in 1992 was 12.12 million or an increase of 2.96 per cent compared to 1990 (President's Speech, 1992, p. 375). Train passengers increased from 53.8 million in 1988 to 60.3 million in 1991 (President's Speech, 1992, p. 381). The Indonesian economy has been forced to adjust to international economic change. Rising global economic competition and difficulties in obtaining international loans have forced the government to change some of its economic policies. For example, in fiscal policy, the government has had to reschedule a number of large projects. Meanwhile, state-owned companies are now open to market competition, operating with smaller subsidies from the government.

2. Democratization: The Case of Indonesia's New Order

25

Foreign investors have been given more freedom to invest over longer time periods and without the need to have local partners. Even more significantly, the government has tried to mobilize tax revenues through a reformed tax law in the wake of a shortfall in oil revenues. Tax campaigns are often launched to ensure that liable companies and individuals pay tax. Every year, the government publishes lists of individuals and companies paying the largest amount of tax in order to encourage people to pay taxes. Various changes have been made to monetary policy, one being to allow the private sector to establish banks. As a result, many private banks are now in existence, many of them with connections to big businesses. International banking is also promoted in Indonesia. Similar changes have taken place in investment policy, where more openness to foreign investment has been initiated. Foreign investment previously faced several limitations, as enforced by so-called government regulation No. 20/1994. In 1994, however, the government allowed foreign companies to invest in Indonesia without the need for local partners and without time limitations. The changes in fiscal as well as monetary and investment policies have made the government more dependent on society which, in turn, means that the window to democratization is now opened.

The Politics of Openness Since the mid-1980s, political participation has been allowed to increase through the process of so-called politik keterbukaan (political openness). The growth of the economy and improvement in the level of education of the people have impacted on the government's political attitude. One of the results of economic and educational development has been the increase in public political awareness over the last twenty years. Demands for more participation have also been strengthened by international pressure, related to foreign aid where donor countries look closely at a recipient country's record of democratization, human rights and environmental protection. Meanwhile, the academic community has been given more freedom to criticize the government. Academics are allowed to voice their opinions and criticisms on government policies in the mass media, a freedom they did not enjoy in the previous decade. Intellectuals and students have formed themselves into various discussion groups and

26

Amir Santoso

regularly give feedback to the government and the bureaucracy. The press also enjoys more freedom as can be seen in their relatively liberal selection, analysis, and presentation of articles. The government's attitude towards opposition groups has also changed significantly. An opposition group known as Petisi 50 which for more than a decade was barred from holding meetings, visiting foreign countries and even engaging in business activities, was given a chance to reconcile itself with the government. Minister for Research and Technology B.J. Habibie took the initiative in arranging a meeting between President Soeharto and the top leader of Petisi 50, Retired General A.H. Nasution in the presidential palace. Habibie also invited another leader of Petisi, Ali Sadikin (former Governor of Jakarta) together with other leading figures of the group to visit PT. PAL (a dockyard company, which is part of the "eight strategic industries" advocated and nurtured by Habibie) in Surabaya. This was the first invitation given to Petisi members by a high official, and though remaining critical of the government, their criticisms have not been as sharp as was previously the case. However, some people still doubt the intention of the government to democratize because, according to them, the government is not nurturing the tree of democracy. Some even suspect that the government has adopted a double standard. They argue that, on the one hand, the government allows the public to criticize the government but, on the other, it still maintains many restrictions. It is widely believed that whenever the government feels that critics have gone too far it will use force to limit freedom. The term "rubber-band" policy (Jakarta Post, 2 June 1994; Alfian 1991) clearly describes this approach. It should be remembered that some opposition leaders remain prohibited from organizing or taking part in seminars or meetings unless they secure permission from the police. Thus far, the opposition has not challenged this illiberal measure in court. Summoning government officials to court is considered useless because in most cases the government wins.

Press Freedom As stated above, the mass media in Indonesia have been allowed more freedom but some limitations remain. The government, for

2. Democratization: The Case of Indonesia's New Order

27

example, has the authority to ban any mass medium if its news or analysis has, according to the government, undermined the credibility of the government or threaten the stability and security of the country. Since 1970, some media have been closed down; the last occurred in June 1994 when the government stopped the publication of two popular magazines (Tempo and Editor) and one tabloid (Detik). Such power is reinforced by the fact that the Indonesian presses have to seek permission from the government for any publication. Additionally, the government has to approve the composition of the editorial board before letters of permission are issued. The government's closure of the three publications mentioned above met with protests from students. Yet, the protests lasted only a week and people quickly forgot about the issue. The editors of the publications were left with the view that they had to exercise selfcensorship. Such self-censorship is also occasioned by a stipulation in the press laws that "the national press has [both] the freedom as well as responsibility". The final say on press freedom and its responsibility lies, of course, with the government. Another factor behind the ban of the three publications was an intra-elite conflict involving three parties: the Muslims, the Nationalists, and the Catholics. The three publications were closed down after they continually wrote about Indonesia's acquisition of warships from Germany which, according to them, was too expensive. The three publications also reported that the key figure behind the acquisition was Minister for Research and Technology, B.J. Habibie, a minister who is strongly affiliated to the Muslim group through his position as Chairman of ICMI (lkatan Cendekiawan Muslim Indonesia or Association of Muslim Intellectuals). Reports on the warships were considered conspiratorial, aimed at undermining the reputation and political influence of Habibie as well as the Muslim groups by the mass media sponsored by the nationalists. Although, the chief editors of Tempo (Gunawan Muhammad and Fikri Jufri) were not connected to the nationalist groups, they were categorized (by their opponents) as nominal Muslims. Some members of the editorial board of the magazine, however, were considered nationalists and they were believed to have written the articles about Habibie. The Chief Editor of Detik tabloid was also considered by his opponents as a nationalist. Criticisms of Habibie were also made by the mass media owned by Christian, and specifically Catholic groups.

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Amir Santoso

Prior to the closing down of these publications, President Soeharto on his visit to Lampung (in south Sumatra) had explained that all accusations made by the media about Habibie were wrong because the decision to buy the warships was made by him and that Habibie did not know about it. The President claimed that he had given Habibie instructions to contact the German Government for the purchase of the ships. The President had heard about the possibility of buying the ships from a leading businessman close to him. In the speech in Lampung, the President indirectly asked the authorities to enforce sanctions on the media which were engaging in insinuations and spreading false information. The case of Tempo shows that the government still has much power over the press.

Political Institutions Today in Indonesia, political institutions are not free from government intervention. Although some changes have occurred over the last decade, politics and policy remain the monopoly of the highest levels of the civilian and military bureaucracies (Jackson 1980). The role of the legislative body (DPR or Dewan Perwakilan Rakyat) is limited although there is some improvement compared to the 1970s.

The Parliament Since the 1971 elections, Golkar has held the majority of seats in the DPR, leaving the PPP (Partai Persatuan Pembangunan or United Development Party) and the PDI (Partai Demokrasi Indonesia or Indonesian Democratic Party) as minority parties. Political domination by Golkar is strengthened by the presence of Members of Parliament (MPs) who have been appointed by the government: they are from functional or professional groups, with military officers accounting for about one-third of the total number of MPs (about 400 MPs). Furthermore, since 1971, the electoral system has been marked by a multi-member constituency or proportional system in combination with a list system. Enforcement of this system has caused the alienation of MPs from their constituencies. Under this system, MP candidacies are detern1ined by the Council of Party Leaders (DPP) of each political party. As such, some MPs may merely have access to or connections

2. Democratization. The Case of Indonesia's New Order

29

with the DPP and may not be familiar with their constituencies. Many MPs have no knowledge about their constituencies since they live in Jakarta or originally came from some regions but represent other regions. A candidate from West Java, for example, may represent East Timor although he has never lived in East Timor at all. As a result, not many MPs actually possess the requisites to become representatives of the public. To remain in office they merely need support from the party councils and not from the constituencies. Thus, their position in the DPR is not dependent on public support but on support from the party councils. On the basis of this fact, they tend to support party policies rather than the aspirations of the public. The dominant position of party councils is strengthened by the fact that the councils have the power to recall MPs from their positions in the DPR if they violate party discipline or if the councils receive a warning from the government. The mechanisms and procedures in the DPR also place limitations on MPs in proposing new laws. A proposal needs the agreement of two factions before it can be an agenda item for discussion. In fact, it is difficult for minority parties such as the PPP and the PDI to get the agreement of other parties, especially from Golkar as the majority party. This arrangement reduces the possibility of opposition in the DPR. As noted earlier, there have been changes in the attitudes of MPs over the last decade. They have been more vocal in criticizing the government. The Bapindo (Bank Pembangunan Indonesia, or Indonesian Development Bank) financial scandal, for example, was discussed in 1994 as a result of investigations by an MP from Golkar. But such MPs are few in number and come mainly from either the military faction or from Golkar. The majority of the MPs still prefer to keep silent to avoid being recalled by their party councils. In addition, for many younger MPs, especially from Golkar, their seats in Parliament guarantee them a good life for at least five years. In research on the performance of MPs in 1992, it was found that one of the motivations to be MPs was the need to have a job (Santoso 1993). Thus, it is easily understood why in many parliamentary debates MPs prefer to keep silent.

Political Parties The New Order government inherited the state's traumatic experience

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Amir Santoso

with political parties and this has strongly affected its attitude towards such parties. In the 1950s, the government was under a parliamentary system which suffered badly from political instability, which included regional rebellions. In that period of "Liberal Democracy" (1950-59), Indonesia had about fifty parties competing with one another on the basis of ethnicity and primordialism. No Cabinet lasted for more than six months because of the absence of a majority party. There was also suspicion in the regions that the centre had too much power in their hands, leaving only limited autonomy to the regions. Furthermore, the rapid development of the Communist Party caused anxiety among other parties and the majority of army leaders at the regional and local levels. These two factors, among others, were behind the regional rebellions during 1957-60 in West Sumatra and Sulawesi. When Soeharto took office in 1966, his attitude towards the role of political parties was a reflection of the earlier political trauma. The victory of Golkar (which is strongly supported by the military) in the 1971 elections (the first elections held in the New Order era) put the government in a good position to propose new political regulations. In 1973, the government reduced the number of political parties from ten to three through amalgamation. Some Islamic-based parties were grouped into the PPP while the nationalists, Christians and Catholics were grouped into the PDI. Soon, it became clear that forced regrouping like this would create serious internal conflicts among the parties. The traditional Muslim groups have always been in conflict with the modernist Muslims in the PPP, while the nationalists have always failed to come to agreement with the Christians and the Catholics in the PDI. Internal conflicts have also occurred in PPP and PDI party conferences, and this has usually invited the intervention of the government. The frequent conflicts have become a factor in the failure of the parties to consolidate or strengthen their organizations, while the government has steadily accumulated power through its party machinery, Golkar. Most parties have become very dependent on the government for several reasons. For example, financially, the parties would not be able to conduct party congresses or election campaigns without massive aid from the government. Thus, the government has easily dictated policies to the parties and exerted much influence on leadership selection within the parties. There is little chance for the parties to select their own leaders without the agreement of the government.

2. Democratization: The Case of Indonesia's New Order

31

The PPP and PDI have had difficult times in trying to raise funds from businessmen because their election prospects are uncertain. The public are unsure of the benefits they can obtain from their donations to the parties. Intellectuals also have the same question in mind when they are approached by the parties. Support for Golkar on the other hand is ample because it has the ability to provide facilities and protection to businessmen and even positions in government for intellectuals who support it. As noted earlier, since 1987 there have been changes in the attitude of businessmen and intellectuals. Some of them have begun to support, and get involved in, the management of the PPP and the PDI with the aim of defeating Golkar in the cause of democracy. However, their numbers are still small and it is likely they will not grow significantly in size by the time of the next elections in 1997.

The Issue of Human Rights The present constitution of Indonesia contains several chapters on human rights. Equal treatment before the law, non-discrimination among citizens, the right to have jobs and education, freedom of association and expression, and freedom of religion are all mentioned in the constitution. But in practice, some straying from these ideals have occurred. As in many Asian countries, Indonesia takes the view that human rights should be interpreted locally and that the country should not follow the Western interpretation of it blindly (Budiardjo 1991). Promotion and protection of these rights must be conducted in a way that balances individual and collective rights, with individual rights being second to collective rights. However, the problem arises about the meaning of collective rights and who has the authority to determine whether a right is individual or collective. This has often generated disagreement between the community and the government. For example, when the government needs land for urban development, the bureaucracy always employs the principle of public interest to "force" the people out of their land or to determine the compensation price for land at a low level, despite the fact that in many cases the land bought is then given to private companies to develop housing complexes or supermarkets. When conflicts arise between the government and the "forced" sellers of land, the court often sides with the government.

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Amir Santoso

In terms of labour relations, workers still have difficulties in protecting their interests. The state tends to over-protect industrialists so as to boost exports, leaving workers to protest for wage hikes and to demand their right to set up unions. Wages in Indonesia are considered one of the lowest in Asia (Werner International Management Consultant 1990). In 1992, the minimum wage set by the government for Jakarta was Rp 3000 (U$1.5) per day, while in other areas it was Rp 1,250 (US$0.50) per day. These wage levels are not sufficient to sustain the minimum human need. The situation gets worse when many industrialists fail to pay their labourers even the minimum wage level. According to the Labour Minister, in Jakarta about 3 per cent of industrialists do not pay the minimum level of wages (Tempo, 19 February 1994). The industrialists also tend to use child labour or refuse to give pregnancy leave for women workers (Tempo, 25 September 1993). To fight for their rights, workers have only one organization (SPSI, the All Indonesian Labour Federation) which is recognized by the government. Any effort to establish other labour organizations is quashed. This can be seen in the move made, for example, by Haji Princen to set up the Independent Labour Union Setiakawan (Tempo, 1991), and by Mochtar Pakpahan to establish the Indonesian Labour Welfare Union, both of which were blocked by the government. Worse still, there is a stipulation in law which says that workers who want to set up unions must obtain agreement from the management of industries or factories where they are working. In fact, not many owners allow their workers to set up labour organizations. In addition, strikes by workers and lay-offs by employers are prohibited (Budiman 1992). The Department of Labour is also actively involved in labour disputes, having the right to invite involvement by the military. In many cases, the military has taken over problems and handled the disputes in a way that has tended to protect the interest of the industrialists more than that of the workers. The prohibition of workers from setting up organizations has a historical basis. During the Old Order period (1950-65), labour organizations had been used by political parties, especially the Communist Party to mobilize workers against the government. Labour unrests were a major cause of political instability that inflicted great damage on the economy and contributed to the fall of the Old Order.

2. Democratization: The Case of Indonesia's New Order

33

Why Has the Democratization Process been So Slow?

To understand the slow process of democratization, we have to analyse some political, cultural, and economic factors. These include the role of the President and the military, Javanese culture, and the role of the middle class.

The President It is true that President Soeharto has been very powerful, but it is

incorrect to say that he has no ideas about democracy. His power is endorsed by the present constitution, "the 1945 Constitution", which puts the President of Indonesia in a very strong executive position. The President, according to the constitution, is not held accountable to the Parliament (Dewan Perwakilan Rakyat, DPR) for his implementation of state policies. He is accountable only to the Majelis Permusyawaratan Rakyat (MPR, Assembly of People's Congress), the highest body of the state which meets once every five years. The MPR, and not the Parliament, has the right to replace the President. The MPR today is dominated by Golkar, which gives full support to President Soeharto. The dominant position of Pak Harto (the name he is given by Indonesians) also lies in the fact that as President he, according to the constitution, is the Supreme Commander of the military (ABRI). At the same time, he is a retired army general who has strong charisma, in contrast to the majority of military officers. Pak Harto's domination of the military can be seen in the fact that he has personal influence over the choice of the Commander-in-Chief of ABRI and also the selection of commanders of each unit. In addition, Pak Harto has a large say over the choice of commanders for each province. To prevent a concentration of power in the hands of these commanders, they are rotated regularly, with each tour of duty not more than two years in length. There are some exceptions to this general rule however. General Feisal Tanjung, the present Commanderin-Chief, for example, has had his tenure extended although according to military rules he was due to retire in 1994. In some special cases the President may order the replacement of certain officers before the end of their term. For example, Lieutenant General Hariyoto PS., Head of ABRI's Social-Political Affairs was replaced in early 1994 after serving for only one year.

34

Amir Santoso

Another factor contributing to Soeharto's power is his ability to hold many posts at the same time. As chairman of the Golkar Advisory Board, President Soeharto determines the policies of Golkar and the leadership of the organization. There is no contest in the election of the Golkar chairmanship because prior to the party congress, the candidate for chairman has already been determined. The chairman of Golkar, since its inception in 1964, has usually gone to retired military officers. But in 1992, for the first time, a civilian (Minister of Information Harmoko) was elected as chairman. Some therefore believe that the appointment of Harmoko is the first step towards a political role for civilians in Golkar. Soeharto has also indirectly influenced the leadership selection of the PPP and PDI. At the first congress of Parmusi (a new Muslim party set up in 1968), many believed that Soeharto's hand could be felt when the duo of Djarnawi Hadikusumo and Lukman Harun were toppled by H.J. Naro, who is believed to have close ties to Soeharto and Golkar. At the PDI congress of 1988 also, Soeharto was able to place Suryadi as chairman of the party; but when many of Suryadi's statements were not welcomed by the President, efforts to replace him were seen during the PDI congress in Medan in 1993. However, while some analysts believe that Soeharto is responsible for the slow growth of democracy, it should be noted that better political conditions have resulted since the mid-1980s because of Soeharto's involvement. Political openness would not have been introduced without the acquiescence of Soeharto. Soeharto does not prevent criticism. He allows it but is sensitive to the way criticism is made. Like most Javanese, the President is very sensitive to open criticism but welcomes criticism made behind closed doors. This attitude is viewed by the opposition as undemocratic. According to his close allies, however, the President always makes decisions after private consultation with several people. This consultation process is called musyawarah dan mufakat (consensus). In addition, Soeharto has his own ideas about promoting democracy for Indonesia through various means. One of these is to conduct TV programmes through RCTI (Rajawali Citra Televisi Indonesia), a private TV channel owned by his son, Bambang Trihatmojo. This channel has programmes which attract many viewers because they show the daily problems of the people. One popular programme is "Seputar Indonesia" (Around Indonesia), a news

2. Democratization: The Case of Indonesia's New Order

35

programme focusing on the daily problems facing ordinary people, something which is not shown on official TV channels. Bambang, according to some sources, has also sponsored a daily newspaper, the Media Indonesia, which is vocal in its news coverage and its reports and analysis often tend to criticize the government. Again, the government has not taken steps to ban the newspaper. This shows that the President does have ideas about democracy but is not certain how to develop it in a traditional, feudalistic society. Perhaps he has concluded that democratization must be carried out step-bystep, using among other things the press as an effective agent of political socialization. Another action taken by Soeharto to promote democracy was illustrated by his recent instruction to LIPI (the Indonesian Institute of Science) to do research to find the best election system and on the future role of the military in social and political affairs. Many political analysts have criticized the inability of the Parliament to function properly as a people's representative body. The DPR is viewed like a rubber stamp. One of the factors behind this is the implementation of a proportional system of election that has given dominant power to the party's leadership council to determine candidates for the DPR, resulting in the alienation of the candidates from their constituencies because the majority of them do not know the people in their respective constituencies. Soeharto's directive to LIPI to conduct research on ABRI's role in social and political affairs is not a new one. Since mid-1994, Soeharto has frequently spoken about ABRI's role, namely, the need for its role to conform with the development of society. Soeharto's view is also shared by the military commanders. Defence Minister General Eddy Sudradjat has spoken about a "back to basics" concept for ABRI; and Commander-in-Chief General Feisal Tanjung has spoken about Tut Wuri Handayani, a Javanese style of leadership, that is, by leading the people from behind and not always by the front as it is today.

The Military The military is still the most influential group in Indonesian politics, and its recent internal development shows greater support for ideas of democracy. Although important policies are in the hands of the President, the military's political influence has been felt by various groups. For example, in Parliament, ABRI is respected as the prominent

36

Amir Santoso

and leading faction. Moreover, within the DPR it is the most vocal in criticizing government policies. It is also a fact that in daily life, ABRI members are respected and trusted by the public formally and informally. Many from the lower rungs have been chosen voluntarily by the public as village headmen or chairmen of social and sports organizations. One successful ABRI programme aimed at making friends with the people is called ABRI Masuk Desa (ABRI go to villages). Through this programme, ABRI helps in village improvement programmes. Some analysts have suggested that ABRI support for Soeharto may have diminished but this is no longer valid. Previously there had been rumours that General Benny Murdani was in conflict with the President, but General Feisal Tanjung (the present Commander-inChief) and General R. Hartono (Commander of the Anny) are Soeharto loyalists. It is natural that some ABRI leaders may be unhappy with Soeharto's policies, but this has not thus far resulted in any deep resentment. As stated above, ABRI is really not anti-democracy as long as the idea does not conflict with the state ideology, Pancasila. General Tanjung graduated from the army staff college in Germany, while General Hartono was from Fort Leavenworth, USA, and these experiences have provided them with Western democratic values which have an effect on their vision about ABRI's role in the democratic process in Indonesia. Both generals have spoken about the need for ABRI to reduce its involvement in social and political affairs and to let the civilians take over this role. This view is shared by many officers. This does not mean, however, that ABRI will end its dual role and its involvement in policy-making. Understanding about democracy is now on the rise among the younger generation in ABRI as they are allowed to continue their studies at universities inside and outside Indonesia.

The Role of Culture Another important factor affecting the democratization process is culture. Some believe that Indonesian society remains feudal, with a strong patron-client relationship. This pattern of social and political relationship is believed to be influenced by Javanese culture. A vast majority of the elite and bureaucracy today have adopted Javanese culture through inheritance or by education. Soeharto himself and many members of his circle are Javanese, and many government

2. Democratization: The Case of Indonesia's New Order

37

officials from the outer islands have been educated in Java and hence influenced by the culture. One of the main features of Javanese culture is the high respect given to elders or superiors. Parents and elders must be respected and children are asked to avoid conflict with their parents or elders by obeying all their instructions. Loyalty is given priority and disobedience considered impolite. Hence, conflict must be avoided because this will disturb the harmony of life. One of the sources of conflict, according to Javanese culture, is open criticism. Thus, respect is given to those who have the ability to avoid open criticism. If there is a need to criticize, the best way would be to discuss it privately with one's superiors. Open criticism and public debate are sources of conflict because they create embarrassment (Suyanto 1991, pp. 186-87). This cultural norm on the impoliteness of open debate has been used for the benefit of the elites. Opposition, as one kind of open criticism, is formally prohibited by the government on the grounds that it invites conflict and does not fit in with Indonesian political culture. In Indonesian political terminology, the PPP and the PDI are not opposition parties but partners of the government and Golkar. As partners they are expected not to attack the government but to give criticism in polite ways or if they wish to criticize the government, they must do it behind closed doors. There is also a stipulation prohibiting criticism of government officials because it will embarrass them. On the basis of this culture, the government issued a regulation stating that parliamentary debates must be conducted behind closed doors and be off-the-record. Reporters are usually invited to the meetings or debates, but prohibited from publishing the proceedings. This regulation underlines the unpopularity of the Parliament because the only open meeting of Parliament is the plenary session when all debates are over and agreement has been achieved. Hence, in the public eye, Parliament seems more like an institution that works only to give agreement to what the government has done. The traditional respect given by subordinates to their superiors is also strengthened by regulation which in the past created dependency by subordinates on their superiors. The career prospect of subordinates is very much dependent upon their superiors and, likewise, the economy of the regions is also dependent on the central government. With this kind of relationship, it is difficult to encourage people to criticize government officials.

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Amir Santoso

Weakness of the Middle Class Among various factors hampering the process of democratization, the most important one is the small size and limited power of the middle class. Despite the good performance of the economy, the number of intellectuals and business people is not sufficient to constitute an autonomous middle class. From Table 2 on the labour force it is clear that this group constitutes only about 20 per cent of the total labour force. According to Crouch, the 1980 census showed that only 3.2 per cent of the work-force was employed in professional and administrative occupations while another 3.2 per cent had clerical jobs. Of course, 12.9 per cent were sales people but, Crouch notes, most of them were engaged in informal sectors and could not be considered middle class (Crouch 1993, p. 80). By 1990, their numbers had increased, accounting for 3.9 per cent of professional and administrative jobs; 4.9 per cent of the clerical jobs; and 14.3 per cent of the sales jobs (Crouch 1993, p. 80). However, these numbers are too small to represent an independent middle class. In addition, the kinds of jobs most of them have chosen make it difficult for them to form independent groups. Most of the graduates from schools and universities have jobs in government offices either at the local and regional levels or in Jakarta. According to government rules, all civil servants must be members of KORPRI (Korps Pegawai Negeri Republik Indonesia, or Indonesian Civil Servants Corps), an organization set up in 1970 by the government to obtain support from civil servants for Golkar, the government-backed party, in every election. Moreover, all civil servants must sign a statement indicating their loyalty to the government through their support for Golkar. For new government employees, this statement must be signed at the time they are recruited as government employees. Sanctions would be imposed by superiors on those who violate the statement. Support for other parties is still possible legally, but it needs the agreement of the superiors, which makes it difficult for them to carry out. Wives of government employees and the military must be members of Dharma Wanita (for civilians) and Dharma Pertiwi (for the military). Activities of the wives in these organizations affect the careers of their husbands. Thus, these organizations become effective tools for mobilizing family members to support Golkar. Business groups are likewise susceptible to government intervention. Not only are their numbers still small compared to the total

2. Democratization: The Case of Indonesia's New Order

39

population, but most businessmen are very much dependent on government support and facilities. They have become successful businessmen through special connections with top and middle-rank government officials. Most of the big companies have grown through protection and provision of facilities by the government, thus making them fall under the category of what Kunio calls "ersatz capitalists" (Kunio 1988). Today, businessmen have become even more dependent on the government since the social situation shows a tendency of people to be anti-tycoon (or konglomerates) as a result of the gap between the rich and the poor. The presence of this gap cannot be separated from various economic policies of the government which favour those who are well connected with the elite circle. Thus, there is only a small minority who have the ability to become very rich. Table 3 shows that big business dominates more than 50 per cent of the total assets of the Indonesian economy. Although there is a reduction in the number of poor, if we analyse data at the provincial level, the number of people who were classified as poor in 1990 is still big. More than one-quarter of the population in West Kalimantan was classified as poor in 1990 (Simanjuntak and Santoso, forthcoming, p. 21; see also Table 4). Between 1984 and 1990, income distribution worsened in the major cities, as reflected in the increasing Gini ratios. The share in income of the richest 20 per cent of the population was 41.94 per cent, compared to 41.97 per cent in 1984 (Simandjuntak and Santoso, forthcoming, p. 21; see Table 5). TABLE 3 Business Configuration in 1994 (Estimated through Ratio to PDB*)

1. 2. 3. 4.

Big Companies State Companies Small Businesses Co-operative

(%)

(Rp billion)

55.8 24.4 5.5

141,652 62,0 14,0 6,8

2.7

Note: US$1 was equivalent to about Rp 2,200 in October 1994. *Produk Domestik Bruto (Bruto Domestic Product). Source: Fadel Muhammad, "Business Map of Indonesia at the End of the First Long Development Plan" (Lecture at the Military College in Bandung, 1993).

40

Amir Santoso TABLE 4 The Poor as a Percentage of Total Population Province Aceh North Sumatra West Sumatra Riau South Sumatra Lampung Jakarta West Java Central Java Yogyakarta East Java Bali West Kalimantan South Kalimantan North Sulawesi South Sulawesi 9 other provinces

Urban

Rural

Total

13.7 14.4 11.1 8.7 23.6 15.1 7.8 20.9 22.0 19.2 21.8 16.6 22.4 19.2 11.0 17.3 12.8

16.3 13.0 16.0 15.9 14.0 12.8

15.9 13.5 15.0 13.6 16.8 13.1 7.8 13.9 17.5 15.5 14.8 11.2 27.6 21.2 14.9 10.8 16.8

10.2 15.8 12.5 12.1 9.3 28.9 21.9 16.0 8.7 18.4

TABLE 5 Shares in Income in Selected Provinces 1984

1990

40% Lowest

20% Highest

40% Lowest

20% Highest

North Sumatra South Sumatra Lampung Jakarta West Java Central Java East Java Yokyakarta East Timor South Sulawesi

24.56 23.63 22.25 22.98 23.15 21.54 21.20 20.53 18.47 19.25

36.41 36.84 39.82 39.02 40.23 41.21 40.67 43.85 46.37 43.11

25.59 24.27 24.05 22.56 22.46 23.86 23.34 20.11 20.37 22.10

35.97 38.30 38.56 40.62 41.94 39.49 40.11 45.20 43.68 39.52

Indonesia

20.75

41.97

21.31

41.94

2. Democratization: The Case of!ncionesia's New Orcier

41

The situation has become dangerous because the social and economic gap is usually associated with nepotism and racialism. The fact that children of top officials are heading successful business activities has reinforced public suspicions about nepotism. Among the number of companies stated above, twenty-five of them are owned by families of top-ranking government officials (Forum Keadilan, 13 October 1994). Economic concentration in the hands of tycoons brings about another negative impact, namely, monopolies and oligopolies, which dominate the market and become price leaders. The shortage of cement in September 1994 could not be separated from the position of PT Indocement owned by Liem Sioe Liong and Sudwikatmono. Although the companies established by tycoons have provided jobs for thousands of Indonesians, their contributions have actually remained small. The number in the work-force who have jobs in these big companies is only around 1.5 million, or less than 1 per cent of the total population (Forum Keadilan, 13 October 1994). Furthermore, 90 per cent of business tycoons are from the Chinese minority who are very vulnerable to social discrimination, and hence cannot provide the political leadership with a potential pro-democracy movement. Democratization initiatives cannot be expected to come from the regions as well, since the regions are economically and financially very dependent upon the central government. A big portion of regional taxes must be provided to the central government with a view to sharing them more or less equitably among the regions in the form of subsidies. This rule was implemented ostensibly to close the gaps in income between the rich and poor regions, but in fact is used by the central government to act as Santa Claus by giving allocations to the regions, which has resulted in the dependence of these regions on the central government. This dependency, of course, reduces regional autonomy. In elections for regional heads, for example, the centre has the power to determine the appointment of regional heads although the regional legislative body is given the right to select the candidates. The power of the region is limited to selecting and proposing the names of the candidates (three, and up to five) to the central government which would in turn choose one of them. In many cases, candidates supported by the central government have a higher chance to be elected. The lack of regional autonomy then coincides with the fact that the centre of growth is in the island of Java, resulting in the dependence

Amir Santoso

42

of the outer islands on Java. Java has continued to have the largest share in economic activities since it has more advanced economic infrastructures than the outer islands. About 60 per cent of the total population live in Java and they have the best education and training among all the regions. On the other hand, the outer islands have a sparse population, the majority of whom have a low level of education. In terms of sectoral growth, Table 6 shows that in all but one sector the share of Java in gross national product is higher than 50 per cent (Simandjuntak and Santoso, forthcoming, p. 22). The small number of the middle-class and the excessive dependence of the outer regions on the central government have made them unlikely candidates for a pro-democracy leadership, at least in the near future. Meanwhile, the ersatz capitalists and the middle classes in Jakarta are also unlikely pioneers for democratization since the current situation is favourable to them. If democratization materializes, there is no guarantee that these groups can maintain their high social, economic, and political status (Tomagola 1993, pp. 71-72; Mochtar Lubis 1993, p. 119). TABLE 6 Share of Java in the Combined Regional GOP of all Provinces (In per cent) Sector

1983

1989

Agriculture Mining Manufacturing Utilities Construction Trading Transport and Communication Financial Services Dwelling Government and Defence Other Services

53.0 13.1 60.2 80.3 70.8 65.5 57.7 79.9 61.3 64.3 77.5

51.2 14.1 59.9 78.7 73.2 64.0 58.8 75.2 60.3 62.2 76.6

Conclusion

Under the New Order, the Indonesian economy has been classified by the World Bank as an economic miracle. There has been improvement

2. Democratization: The Case of Indonesia's New Order

43

in education, welfare, and the livelihood of the people. The number of middle class has increased significantly in the last twenty years. All these have affected the political attitude of the government towards a more open and liberal environment. Other factors influencing the change in government attitude have been the economic situation and international pressures. In 1984, the price of oil dropped and the government faced a shortage in oil revenues. This forced the government to review its economic policies. Taxes were increased, large projects were rescheduled and other measures were taken to maintain the financial ability of the government. These actions make the state less autonomous vis-a-vis civil society, and hence opened the gate for democracy. Yet, although the gate for democracy is open, it is not opened very wide. The position of the state remains strong in relation to society. President Soeharto still has overwhelming power. ABRI is still unified behind Soeharto. Although the President, Golkar, and ABRI all share the same opinion about the inevitability of democracy rising one day in Indonesia, they have to face two facts. First, culturally, feudalism and patron-client relationships remain strong factors governing the political behaviour of the public, and hampering the rise of independent political institutions. Secondly, the middle-class group is still too small to be the motivators of democracy and their dependence on the government remains strong. The middle-class in Parliament and in business circles prefer to maintain the status quo while those in universities face the fact that they are government employees and must obey government instructions. The prospects for democracy in Indonesia depends very much on the initiatives of the governing elites. Efforts are needed to spread political education, to allow more political participation, and to continuously establish political institutions needed for democracy to work

REFERENCES Alfian. Komunikasi Politik dan Sistem Politik di Indonesia. Jakarta: Gramedia, 1991. Budiardjo, Miriam. Pengantar Ilmu Politik. Jakarta: Gramedia, 1991.

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Budiman, Arief. Negara dan Pembangunan. Jakarta: Yayasan Padi dan Kapas, 1991.

_ _ _ . Negara: Teori dan Gejalanya di Indonesia. Jakarta: SPES Foundation, 1992. Crouch, Harold. "Democratic Prospects in Indonesia". Asian Journal of Political Science 1, no. 2 (December 1993).

Forum Keadilan, 13 October 1994. Ichimura, Shinichi, ed. Pembangunan Ekonomi Indonesia: Masalah dan Analisa, translated by Pandam Guritno et al. Jakarta: Ul Press, 1989.

Jakarta Post, 2 June 1994. Kompas, 8 March 1992. Lubis, Mochtar. "Kesemuan Kelas Menengah di Indonesia". In Kelas Menengah Digugat, edited by M.M. Billah, et al. Jakarta: Fikahati Aneska, 1993. Mas'oed, Mochtar. Ekonomi dan Struktur Politik Orde Baru, 1986-1971. Jakarta: LP3ES, 1989. Muhaimin, Yahya. Bisnis dan Politik. Jakarta: LP3ES, 1980.

Pidato Presiden Di Depan Dewan Perwakilan Rakyat [President's Speech before the Parliament], 16 August 1992. Santoso, Amir. "Political Perceptions of the DPR Members on the DPR". Paper prepared by the Research Institute for Development of Social Sciences (LPPIS), University of Indonesia, in cooperation with Tempo magazine, 1993. Simanjuntak, Djisman and Amir Santoso. State-Society Relations and the Prospects for Democratization in Indonesia. Forthcoming.

Suara Karya, 25 August 1993. Sumitro. Mengungkap Masalah, Menatap Masa Depan. Jakarta: Sinar Harapan, 1991. Suyanto, Isbodroini. "Budaya Politik dan Peranan Dewan Perwakilan Rakyat". In Pr-ofil Budaya Politik Indonesia, edited by Alfian and Nazaruddin Sjamsuddin. Jakarta: Grafiti, 1991. Syahrir. Rejleksi Pembangunan Ekonomi Indonesia 1968-1992. Jakarta: Gramedia, 1992. Tanter, Richard, and Kenneth Young. Politik Kelas Menengah Indonesia. Jakarta: LP3ES, 1993.

Tempo, 19 February 1994. Tempo, 25 September 1993.

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Tomagola, Tamrin Amal. "Mencari Motor Demokratisasi di Indonesia". In Kelas Menengah Digugat, edited by M.M. Billah et al. Jakarta: Fikahati Aneska, 1993. Yoshihara, Kunio. The Rise of Ersatz Capitalism in Southeast Asia. New York: Oxford University Press, 1988.

DEMOCRACY AND AUTHORITARIANISM IN MALAYSIA SINCE 1957 Class, Ethnicity and Changing Capitalism KHOO BOO TEIK

Malaysian Democracy: An Accounting Note The Malaysian political system that came into being with Malaya's independence from British rule in 1957 bore important contrasts with the "limited politics" permitted by the colonial state in British Malaya and the "traditional politics" practised by the ancien regime of the former Malay States. We may list the principal features of the postcolonial political system as follows: 1. a new Constitution with guarantees of personal security and private property, and provisions for freedoms of expression, worship and assembly; 2. a constitutional monarchy (in place of autocratic Malay rulers); 3. a close to universal suffrage (where there was none under the colonial state); 4. a system of elected federal, state and local government (which substituted for colonial government); 5. a machinery for free and periodic elections by secret ballot;

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6. an assumed separation of powers between the executive, the legislature and the judiciary; 7. a multitude of legal political parties displaying a high degree of political representation and organization; 8. a functioning and relatively independent press; 9. a relatively efficient bureaucracy; and 10. a professional army and police force (which were not expected to interfere in politics). In principle, all these features matched the requirements of a modern political system which, like so many other post-colonial political systems of the twentieth century, was modelled after the political system of the old mother country. And for some time after independence, the Malaysian variant of British democracy appeared to be alive, well, and functioning, as seen in the following: 1. relatively free elections were held within constitutionally stipulated periods - 1959, 1964 and 1969, to mention only those held up to the 1960s; 2. many political parties of different persuasions contested the elections; 3. elected governments were formed at federal, state and also local levels (the last until 1964); 4. a multi-party opposition debated freely against the party in power in Parliament; 5. the press was relatively unmuzzled; 6. the monarchy remained constitutional; 7. the judiciary was left alone; and 8. the army stayed aloof.

But after 1969, many observers of Malaysian politics would agree, the quality of Malaysian democracy declined. On 13 May 1969, two days after the general election, inter-ethnic violence in Kuala Lumpur brought Malaysian politics and democracy to a watershed. Since then, the original parameters of the Malaysian polity have been significantly altered. Some of the features and developments that were considered to have played a part in downgrading Malaysian democracy were: 1. the cavalier attitude of successive regimes towards the Constitution; 2. an expanding abuse of the powers of state and incumbency in elections;

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3. an increasing contempt for the opposition in and outside Parliament; 4. an intensifying intolerance towards dissent; 5. a widening reliance on police repression; 6. a steady diminution of the freedoms of expression and assembly; 7. an unabashed use of ethnically-determined electoral gerrymandering; 8. a tightening domination of the mass media by legislative prohibitions, bureaucratic control, police surveillance and outright ownership by the ruling party. These strictures and trends in Malaysian politics have led many academic observers to suggest - whether approvingly, apologetically or critically - that the post-1969 polity might be better regarded as a "democracy without consensus" (von Vorys 1975), a fettered democracy (Chandra 1989, p. 144), a quasi democracy (Zakaria 1989), a modified democracy (Crouch 1992, 1993), or a semi-democracy (Case 1993). Alternatively, it has been suggested, one could more accurately describe the Malaysian polity as a modified authoritarian state (Crouch 1992). Of course, trying to distinguish between "modified democracy" and "modified authoritarianism" is akin to choosing between six of one and half a dozen of the other. But after the political crises of 1987-88 (including the mass arrests of 27 October 1987 and the sacking of the Lord President and two other judges of the Supreme Court in 1988) the already uneasy democratic-authoritarian balance was further tipped towards the authoritarian end (Khoo Boo Teik 1995). In that, some would argue that the 1980s saw a more rapid attenuation of Malaysian democracy. Under Dr Mahathir Mohamad's premiership (now in its fourteenth year), newer and more antidemocratic features were imposed on the political system, the notable and more novel ones being:

vis-a-vis other organs of government (Ho 1992; Kershaw 1989, p. 158); 2. a disregard for the independence of the judiciary (Salleh Abas 1989); 3. a hardening of restrictions on already diminished freedoms of expression and assembly; 4. the use of a legislative majority to circumscribe judicial review of laws; 1. the executive's aggrandizement

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5. a resort to non-electoral methods of undermining elected opposition state governments; 6. the use of the mass media for outright propaganda; 7. the harassment of already limited oppositionist media; 8. a coincidence of politics and business involving the ruling party (Gomez 1994); and 9. a refusal by the executive to be accountable for alleged improprieties and irregularities (Khoo Boo Teik 1995). It is, therefore, not surprising that several recent studies of the state in Malaysia have chosen to characterize it as an authoritarian state (Crouch 1992; Johan 1987; Tan 1990) wherein democratic forms are still rehearsed while democratic institutions have been diluted in meaning and content. Multi-party elections, for instance, continue to be held but the opposition is too severely disadvantaged by electoral and extra-electoral restrictions to be able to offer any serious challenge to the ruling party. Majority rule as an underpinning of democracy is not only distorted by extensive gerrymandering but is employed to marginalize minority interests not aligned with the regime. The barely tolerated existence of a few opposition party newspapers - circulation of which has been legally restricted to party members - is proclaimed as evidence of the freedom of the Malaysian press. To that extent: the post-1969 system might be best seen as a form of authoritarianism in which an entrenched elite took whatever steps were considered necessary to ensure its continued control of the government ... apparently democratic practices were permitted only so long as they did not actually undermine the power of the ruling elite while they were quickly modified or abolished when elite interests were threatened (Crouch 1992, p. 21).

Conceptualizing Malaysian Democracy: Class, Ethnicity and Capitalism

Three Concerns of Democracy Historically, Malaysian democracy meant a particular political system by which the state, the ruling class and incumbent regimes, on the one hand, and the various social classes and ethnic communities, on the other, have tried to respond to certain critical questions about Malaysian society. Malaysian democracy may, therefore, be seen as a

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polity which emerged from the interstices of decolonization. The colonial administration departed from Malaya, under pressure from nationalist and anti-colonial movements of differing political shades, but not before sealing a compact with the domestic ruling class. That compact, frequently called the "Merdeka compromise" but which was in fact a pact of domination, established a polity that would address the concerns of the newly independent state of Malaya. This polity, the incipient Malaysian democracy (by which we mean the assemblage of political structure, institutions, ideology and practice) became the political answer to three key problems which concerned the state in Malaya then as they fundamentally occupy the state in Malaysia today: 1. the containment of class conflict (particularly working class

challenges to the state); 2. the management of inter-ethnic conflict (especially Malay-Chinese polarization); and 3. the preservation of capitalism (then in its neo-colonial form), or the advance of capitalism (now in its "newly industrializing" stage). If we understand Malaysian democracy in this light, then it appears as a double-edged political system. It offers the prospect of popular participation in public life - as democracy promises - but simultaneously limits the scope of that participation in order to contain conflicts which may challenge the underlying capitalist system or the state itself. 1 It is not implied that other concerns and other problems do not engage the attention of the state. Certainly, the state will always be occupied with issues of territorial integrity and defence, for example, but these are not typically central to discussions of democracy. There can also be dissidence of a religious nature, say, which cannot be straitjacketed into a class or ethnic mould by either politicians, scholars or policemen. Even so, religious dissidence in Malaysia tends to show connections to class, ethnicity and capitalism in the country. But if we concentrate on those three critical concerns of the Malaysian state, we can better analyse the double-edged character of Malaysian democracy and its changes over three phases in post-colonial Malaysian political history: the Alliance phase (1957-69), the New Economic Policy phase (1970-80), and the Mahathirist phase (since 1981).

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The Alliance Phase, 1957-69: Decolonization and the Meaning of Democracy

Incipient Malaysian Democracy: Some Paradoxes The incipient Malaysian democracy which lasted between 1957 and 1969 had a dual "ethnicity-and-class" character which can be seen from its various tensions and paradoxes. First, the new political system marked the birth of a newly independent nation in 1957. In reality, it also signalled the end of a class war, known officially as the Emergency (1948-60). The colonial state had just defeated a Communist Party of Malaya-led insurrection of (mainly Chinese) communists, left-wing Malay nationalists, former wartime partisans, radical sections of the (mainly Chinese) working class and squatter-farmers (Loh 1988; Stenson 1970, 1980). In this context, the new political system offered multi-party elections but only after the most radical opponents of the state were excluded from the formal political process. The experimental beginnings of Malaysian electoral politics were in fact conducted in politically safe urban constituencies far removed from the insurrectionary semi-rural areas. The "pilot project" of Malaysian democracy was the municipal elections held in Kuala Lumpur in 1955. Secondly, the incipient Malaysian democracy offered unconditional suffrage to the adult (indigenous) Malay male and female population, but, initially, only a limited enfranchisement for the (immigrant) nonMalay population. To that extent, the electoral system (despite its "one man, one vote" promise) was ethnically gerrymandered from the beginning. Universal franchise (largely, the extension of the vote to other non-Malay citizens), which came later, was in reality circumscribed by an ethnic "state security map" (Enloe 1980). In terms of "national security", the state relied on an ethnic (Malay) soldiery (Enloe 1980) and police apparatus, except for the recruitment of Chinese anti-communist officers in the Special Branch (Zakaria 1978). Thirdly, the Malaysian political system was considered an exemplar of multi-ethnic co-operation, as epitomized by the ruling Alliance coalition. In principle, the "consociationalism" of the Alliance was made possible by the presence of a relatively unified, mutually respectful, multi-ethnic elite whose leading members could mobilize "their" communities (von Vorys 1975). In practice, the Alliance was no less than an attempt by a multi-ethnic ruling class of foreign capitalists,

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Malay aristocrats, Chinese capitalists and Indian petit bourgeoisie to rule over a "race-and-class" society. The departing colonialists wanted to leave behind a stable neo-colony which had been Britain's post-war "dollar arsenal". The Malay aristocratic leaders of the United Malays National Organization (UMNO) led a conservative nationalist movement against radical Malay nationalists and a peasant-based Islamic opposition party (Kessler 1978; Khong Kim Hoang 1984). The Chinese capitalists, through the Malayan Chinese Association, sought to re-establish control over the Chinese working class (Heng Pek Khoon 1988). And the Indian petite bourgeoisie, through the Malayan Indian Congress, tried to wrest the leadership of the Indian working class from militant trade unionists (Arasaratnam 1982). Fourthly, the constitutional safeguards of freedom of speech, the press and assembly always lay under the shadow of emergency regulations, and in the 1960s, an increasing use of preventive detention, and police harassment of trade unions (Jomo and Todd 1994, p. 114) and the parliamentary left. One could say that the Malaysian political system was already "neither democratic nor authoritarian" (Crouch 1993) or that it was simultaneously "democratic and authoritarian".

May 13: Class, Ethnicity and Laissez Faire Capitalism It is important to note the actual limits to the incipient Malaysian

democracy and the interlocking ethnic, class and state features of the Malaysian polity because it is usually accepted that Malaysian democracy under the Alliance suffered a setback exclusively because of the inter-ethnic violence of 13 May 1969. Again, it is more complete to understand the 13 May violence and its implications for democracy in terms of class, ethnicity and the problems of capitalism in Malaysia. First, the Alliance regime was confronted not just by opposing ethnic cultural-linguistic demands, which were real and difficult enough, but also more generalized class pressures. The former set of demands have been well analysed, the latter less often elaborated. The class pressures arose as the Alliance's political economy of laissez jaire capitalism, reliance on primary commodity production, low-level import-substitution industrialization and limited state assistance to the rural sector fell into the familiar neo-colonial mould of underdevelopment. By the late 1960s, Malaysia's low growth, high unemployment and widening social inequality had undermined the

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Alliance's ability to meet popular expectations of what "democracy" should mean after "decolonization"- which had to be some form of "economic democracy" accompanying political independence. 2 For different sections of Malaysian society in that period, "economic democracy" meant different things in pursuit of which they could push the limits of political democracy. The marginalized Malay peasantry, seeking release from rural poverty, expressed its disaffection through the part-religious and part-Malay nationalist idiom of Partai Islam SeMalaysia (PAS, or the Pan Malaysian Islamic Party) (Kessler 1978). The Malay bureaucrats, intelligentsia and middle-class, led by some of the ruling UMNO's politicians, were impatient with the Alliance's laissez fa ire policies. They wanted an end to their relative backwardness vis-a-vis their Chinese counterparts (and Chinese capital in particular), and demanded a greater Malay share of the wealth of the Malaysian economy (Mahathir 1970). Middle-class and working-class non-Malays considered their opportunities for employment, education and mobility to have been prejudiced by the constitutional safeguard of certain "Malay special rights". The inability of the Alliance's laissez jaire capitalism to satisfy these demands accentuated the ethnic dimensions of Malaysia's decolonization and laid the conditions for the violence of 13 May 1969 (von Vorys 1975; Jomo, Khoo and Chang 1996). In the general election of May 1969, there was a significant swing against the Alliance (in Peninsular Malaysia) which gave the opposition parties unprecedented electoral gains. The Alliance was returned to power, but it had lost its customary two-thirds representation in Parliament and the state government of Penang, and came close to losing the symbolically critical state of Selangor. Indeed, the election results represented a democratic revolt against the Alliance's political economy which rested ideologically on the separatist formula of "politics for Malays" and "economics for nonMalays". Malaysia's crisis of decolonization, as demonstrated by the 13 May 1969 violence, was not exclusively an ethnically determined collapse of democratic politics, but simultaneously the collapse of the least regulated phase of post-colonial Malaysian capitalism. In that sense, the 13 May incident, which has often been taken to mean the breakdown of Malaysia's multi-ethnic consociationalism exclusively, also brought about a rupture in the balance between a Malay state, domestic non-Malay capital and foreign capital. That is to say, the "Merdeka compromise" was not simply the casualty of ethnic

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polarization and extreme communalism. It was also the victim of a "class" onslaught mounted by an immiserated Malay peasantry, an urban non-Malay working class suffering from unemployment, a nonMalay middle class clamouring for political and cultural liberalization (with implications for social mobility), and a Malay petit bourgeois demand for economic regulation (of non-Malay capital) and state inteiVention.

The NEP Phase, 1970-81: Interventionism and Authoritarianism

The National Operations Council, 1969-71 The 13 May incident had tom the democratic fabric of Malaysian politics. From May 1969 to March 1971, a National Operations Council (NOC) ruled by emergency powers. The NOC's rule was effective. It was able to confine the violence to Kuala Lumpur, and then end it within a matter of weeks. Within months, it had re-established a semblance of normalcy to Kuala Lumpur and the rest of the country. Within a year it had devised the New Economic Policy (NEP), a socioeconomic programme designed to tackle the class-ethnic conflicts of the 1960s. The NOC's rule was also authoritarian: Parliament was suspended, several oppositionist politicians, including elected Members of Parliament, were detained without trial. Other suspected opponents of the state, or threats to "law and order" were likewise arrested. The NOC could probably have extended its tenure, there being no apparent or serious challenge to its rule. But the NOC decided to restore Malaysian democracy. Parliamentary rule was re-established in March 1971. From then on, the post-1969 state maintained a degree of flexibility that was expressed as a political mix of effective regime rule, selective authoritarian impositions and limited democratic concessions. How does this characterization of an essentially democratic-authoritarian state fit with the problems of managing ethnic polarization, containing class challenges and preserving capitalism in the 1970s?

The New Economic Policy: Intervention and Hegemony We may begin with the problems of the economy. Laissez faire capitalism having brought grief to the Alliance, Tun Razak's regime

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had no more use for it. The Barisan Nasional's developmental strategy was to remake the Malaysian political economy in order to deal with the class pressures and ethnic demands which the Alliance was unable to satisfy. The NEP was actively pursued, beginning with the Second Malaysia Plan, 1971-75. The NEP's premises were that poverty, Malay resentment of inter-ethnic income inequalities, and an ethnic division of labour lay at the heart of the mass discontent with the Alliance. Accordingly, the NEP had two major objectives: "poverty eradication irrespective of race" and "restructuring to abolish the identification of race with economic function". For "poverty eradication", the NEP's "Outline Perspective Plan 1970-90" targeted a decline in the incidence of poverty from 49 per cent in 1970 to 16 per cent in 1990. "Restructuring" was targeted to raise the bumiputera (indigenous) share of corporate equity from 2.5 per cent in 1970 to 30 per cent in 1990. And in seeking to eliminate "the identification of race with economic function", the NEP envisaged a massive "affirmative action" programme which would favour the bumiputera and control non-bumiputera access to tertiary education and civil service recruitment. Within just the first decade of the NEP's implementation, the state radically reversed the Alliance's policy of leaving economics to private capital. Compared to the pre-NEP First Malaysia Plan (1966-70) which had a public sector allocation of RM4.6 billion, the allocation for the Second Malaysia Plan (that is, the first NEP five-year plan) was RM10.3 billion, while the Third Malaysia Plan (1976-80) allocation rose to RM31.1 billion (Jomo 1990, p. 106). In institutional terms, there was a proliferation of public "off-budget agencies", now more commonly known as "non-financial public enterprises" (NFPEs). The number of public agencies rose from 22 in 1960 to 109 in 1970 to 656 in 1980. State-led demand and investments by the NFPEs raised public expenditure, as a proportion of gross national product (GNP), from 28.7 per cent in 1970 to 61.2 per cent in 1982 (Mehmet 1986, p. 133). Public sector employment (excluding military and police personnel) increased from 139,476 persons in 1970 to 521,818 persons in 1983. This large-scale state economic interventionism was carried out without generating unsupportable pressure on the national budget because the first NEP decade coincided with an international commodities boom and Malaysia's discovery of offshore petroleum both of which greatly increased state revenues. Malaysia's petroleum exports grew from RM203 million in 1970 (when Malaysia first became a net petroleum exporter) to RM861 million in 1975, and to RM6,709 million

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in 1980. The value of Malaysia's non-petroleum commodity exports also rose from RM4.96 million to RM8.37 billion in 1975, and to RM21.46 billion in 1980. These petroleum and non-petroleum commodity receipts helped to maintain the economy at consistently high rates of growth. Between 1970 and 1980, the Malaysian economy registered an average annual (real gross domestic product [GDP]) growth rate of 7.6 per cent. The average growth rate for the Second Malaysia Plan period of 1971-75 was 7.3 per cent, while that for the Third Malaysia Plan period of 1976-80 was 8.6 per cent. One important consequence was that the high unemployment levels of the Alliance period declined steadily from 7.8 per cent in 1970 to 5. 7 per cent in 1980. Officially, the NEP called for a post-1969 "consensus" in order to attain long-term "national unity". Its "restructuring" objective was planned to be achieved in an expanding economy so as to assuage Malay resentment without provoking a non-Malay "sense of deprivation". But in political and ideological terms, the NEP meant imposing anew the state's hegemony on all social classes and ethnic communities. The NEP state strove to alter the character and balance of power within Malaysian capitalism even if it offended sectional interests within Malaysian capital itself. The NEP set out to restructure the pattern of corporate wealth ownership so as to increase the bumiputera share from 2.5 per cent in 1970 to 30 per cent in 1990- in other words, to reduce the formerly pre-eminent position of foreign and domestic (non-Malay) capital. To this end, the state performed "three roles in one". The state became a determined regulator of domestic and foreign businesses. Armed with the Industrial Coordination Act 1975 (ICA), and operating through the Foreign Investment Committee, it required local and foreign businesses to conform with the NEP's Malay equity and employment quotas, set at a minimum of 30 per cent. The ICA gave the Minister of Trade and Industry wide discretionary powers over licensing, ownership structure, ethnic employment pattern, product distribution quotas, local content and even product pricing (Jesudason 1989, pp. 136-37). The ICA was particularly unpopular with domestic Chinese capital which considered itself to be the principal target of regulation and control. The state also became an expansive provider by diverting state revenues and resources to a vast array of federal development agencies, state economic development corporations, state-owned companies, bumiputera trust funds, private Malay corporations and Malay individuals to accomplish the

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NEP's twin objectives. Finally, the state itself became an aggressive entrepreneur, especially after its revenues were boosted by petroleum receipts from the mid-1970s. The state bought into, bought out, or started key finance, mining, plantation and property development companies in order to secure Malay control over critical sectors of the economy. The first NEP decade did not yet spawn an independent or powerful Malay capitalist class but it was the heyday of bureaucrats and technocrats in whose hands was concentrated enormous economic wealth and power.

Barisan Nasional and Political Reorganization The political corollary to the state's economic interventionism was the combination of the NOC's (relatively short-lived) bout of authoritarian rule, the reorganization of the Malaysian polity around the Barisan Nasional, and the Razak regime's redefinition of politics as "administration". The 13 May violence never threatened the state's ability to rule. On the contrary, the NOC was able to contain the inter-ethnic violence quickly and effectively. Thus, the state never itself faced a direct threat from the inter-ethnic violence. Moreover, the NOC extracted major concessions from all the political parties as the price for restoring parliamentary rule. One of the preconditions for the restoration of Parliament was the amendment of the Sedition Act which removed several constitutional provisions - pertaining to the Malay rulers, Malay "special rights", Malay language, and non-Malay citizenshipfrom political discussion and even parliamentary debate. 0 These "ethnically and politically sensitive" issues, the source of much preMay 13 acrimony, and coincidentally the major planks of the opposition party platforms in the general election of May 1969, were legally placed beyond the limits of permissible politics. It was a critical ideological imposition in view of the state's plan to implement the NEP's fundamentally discriminatory programmes. Finally, Prime Minister Tun Abdul Razak moved to curtail politics further. He forged a new coalition, the Barisan Nasional (BN, or National Front), by co-opting the Gerakan Rakyat Malaysia (Gerakan, or Malaysian People's Movement, which formed the state government of the Chinese-majority state of Penang), 4 PAS (the major Malay opposition party which controlled the state government of Kelantan), and other smaller political parties. On the basis of the BN's "power sharing" framework, these parties traded

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their "politics" for a voice in "administration". 5 Co-optation brought Razak's ruling coalition the two-thirds majority in Parliament which had eluded the Alliance in May 1969. The former Alliance's most successful political opponents were strategically removed from the oppositionist front.

A Question of Ethnicity What were the ethnic ramifications for this re-delineated scope of Malaysian democracy? For the urban non-Malay electorate, the May 13 incident effectively brushed aside their ethnic-class demands which had cost the Alliance dearly in the May elections. Razak and his coterie of younger Malay bureaucrats and technocrats had fastened on Malay poverty, resentment and disaffection as the root cause of the ethnic violence. In policy terms, assuaging Malay disaffection implied tackling the problem of Malay economic backwardness. By the Razak regime's calculations after 13 May, the non-Malay (especially the Chinese) community had to endure the NEP's affirmative action programme in favour of the Malay community. This was a reality which was supposedly softened by the presence of the MCA - which had performed badly in the May 1969 general election - and the Gerakan - which had performed well - in the BN. Given their "junior" role as the "Chinese component parties" (as against UMNO's unchallengeably dominant role) and in return for their share of power, the MCA and Gerakan took the responsibility for securing the Chinese community's endorsement of the NEP. The Democratic Action Party (DAP) was left as the only credible opposition party. But its continuing successes in the elections of 1974 and 1978 showed that the EN's strategy of managing Chinese disaffection was only partially successful. Many of the political controversies of the 1970s- over the NEP's ethnic quotas in education, employment and business, the poverty of the Chinese new villages, the position of the Chinese independent schools, and the revival of the Merdeka University proposal - contained ethnic overtones. Such controversies arose partly as a reaction to the non-Malay community's having, in Mahathir's blunt language, to "pay" for the social restructuring envisaged by the NEP. 6 The Chinese middle class in particular saw its old avenues of social mobility - through education, civil service recruitment and promotion - partially blocked by the NEP's discrimination in favour of the Malays. Those controversies were also

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partly rear-guard cultural battles against the cultural strictures placed by the National Educational Policy and the National Cultural Policy which came together with the "Malay-dominance" framework of the NEP state. 7 Chinese capital, on the other hand, contended with the bureaucratic control, legislative impositions and the interventionism of the state in the economy. In retrospect, the non-Malay grievances were indirectly contained within politically manageable proportions. The consistently high economic growth of the 1970s did bear a semblance to the NEP's scenario of an "expanding economy" in which restructuring could be carried out without provoking (an unmanageable) "sense of deprivation". Some Chinese businesses capitalized on the still weak position of the emerging class of Malay capitalists to forge "Ali-Baba" partnerships whereby the Malay partner ("Ali") secured and rechannelled licences, contracts, projects and share allotments to the financially and technically stronger Chinese partner ("Baba"). At another level, large numbers of non-Malay students, whose access to scholarships and local university admissions had been restricted, found an alternative in self-financed overseas tertiary education. And an expanding labour market in neighbouring Singapore helped to absorb middle-class and professional non-Malays in search of better prospects or in flight from the NEP's ethnic discrimination. The conjuncture of successful state economic interventionism, curtailment of the limits of Malaysian politics, general workability of the BN and the containment of non-Malay discontent probably made it preferable for the state to maintain a form of rule (a "democracy without consensus") that was "neither democratic nor authoritarian". The alternative of outright Malay-dominated authoritarian rule would arguably have had to contend with desperate reactions from a lingering, though defeated, Chinese-dominated communist insurrection, discontented Chinese middle and working classes, and the considerable, though weakened, influence of domestic Chinese capital. Paradoxically, if ethnic calculations forced a circumscription of the limits of Malaysian democracy, the same calculations might also have compelled a return to modified democracy (Crouch 1993, pp. 151-53).

Questions of Class In class terms, the NEP relied on large-scale social engineering to transform Malay and Malaysian society, specifically to dismantle

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Malaysia's colonial legacy of a stark ethnic division of labour. The better publicized part of this social engineering programme involved the creation of a new class of Malay capitalists and professionals, or what officially came to be called a "Bumiputera Commercial and Industrial Community" (BCIC). The state regulated and controlled non-Malay and foreign capital in order to allow this nascent Malay capitalist class to emerge. But the state also nurtured would-be Malay entrepreneurs by providing training, financial assistance, easy credit, reserved share allotments, and preferential awards of state projects, government contracts and business licences. But there was a less exalted, less publicized and, ethnically, less resented dimension to the dismantling of the ethnic division of labour. It involved the creation of a Malay working class out of the Malay peasantry. That process went together with a switch from the importsubstitution industrialization of the 1960s to an export-oriented industrialization programme based on attracting multinational corporations (MNCs) to Malaysia. For the MNCs, part of the attraction of relocating their labour-intensive activities to Malaysia's free trade zones lay in the state's package of investment incentives. The incentives included cheap industrial land, adequate physical infrastructure, and pioneer status tax and fiscal incentives. The other attraction was the availability of a pool of low-waged labour, increasingly composed of young female Malay rural-urban migrants, presumably more pliant and more easily disciplined - but in any case legally prohibited from unionization. For the NE.P state, the MNCs offered mass employment and training opportunities for young Malays in a modem economic sector which (unlike the traditional local Chinese-dominated sector) was amenable to the idea of "abolishing the identification of race with economic function" (Jesudason 1989). Consequently, the historically and demographically young Malay working class encountered proletarianization on poor terms. Unlike the nascent Malay capitalist class which was sheltered from non-Malay and foreign competition by a mix of regulation and nurture, the emerging Malay working class was compelled to face international capital with scant social protection. Much of the NEP state's hostility towards the trade unions in the 1970s (Jomo and Todd 1994, pp. 129-30, 133-34)- including the use of preventive detention without trial against the Malaysian Airline System-Airline Employees Union (MAS-AEU) leadership (Jomo and Todd 1994, pp. 142-43) -may be traced to the state's determination

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to pre-empt the likelihood of Malay proletarianization being "undermined" by labour organization. 8 At yet another level of social transformation, the state rapidly enlarged its corps of Malay graduates and professionals. It accomplished this by setting up new universities and all-Malay residential colleges in the country and sending tens of thousands of young Malay students and mid-career officers to universities abroad. Malay graduates emerging from this programme were mostly absorbed into an expanding state bureaucracy. But this determined investment in Malay higher education encountered its own problems. The influx of young rural Malays into local and foreign universities and colleges engendered social dislocations which found their manifestations in the student and Islamic youth movements of the 1970s (Zainah 1987). On local campuses, for example, left-wing Malay student leaders and the leaders of the Angkatan Belia Islam Malaysia (ABIM, or the Islamic Youth Force of Malaysia) led several demonstrations against the regime between 1974 and 1975. At foreign campuses (in the United States, for example), members of Islamic dakwah movements competed with UMNO supporters for influence over the body of state-sponsored Malay students. Faced with the scenario of Malay students deviating from the role the state had mapped out for them - and probably to prevent the student movement from ever approaching the levels of militancy seen in Thailand in 1973- the police crushed the domestic student movement. Thereafter, the University and University Colleges Act 1975 removed what autonomy was left in the universities.

The Mahathirist Phase, 1981- Present: Advancing Capitalism or Democracy?

NEP Implementation: Some Contradictions After a decade of implementation, the NEP became a "fact of life" for Malaysian society. But it also engendered several problems. First, the NFPEs were generally inefficient. They suffered from poor management, hasty involvement in business, lack of accountability and a readiness to rationalize losses as the price for "bumiputera learning". For example, only 269 out of more than 900 NFPEs submitted their annual returns to the Ministry of Public Enterprises in 1984, and they recorded a collective accumulated loss of RM137.3 million.

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Secondly, the high failure rate among Malay businesses and the frequency of "Ali-Baba" arrangements caused concern that Malay businesses, nurtured by the state's preferential treatment and constructive protection, had become accustomed to receiving "subsidies", "handouts" and "bailouts". Malay professionals, trained at state expense, looked to the state for employment. Neither social group gave confidence that an independent BCIC had emerged which could hold their own vis-a-vis the non-Malays (Khoo Boo Teik 1995). Thirdly, the state's interventionism - in its roles as provider, regulator and entrepreneur - had resulted in a parting of ways between a "Malay public sector" and a "non-Malay (primarily Chinese) private sector". The public sector thought the private sector to be rapacious; the private sector had no doubt the public sector was incompetent. Domestic non-Malay capital, resentful of the heavy hand of state control, adopted a short-term investment outlook (Jesudason 1989, p. 163). Some potential foreign investors were discouraged from investing in Malaysia because of the restructuring requirements and other impositions related to the Industrial Coordination Act (Marican 1987). Fourthly, the NEP's implementation contained a persistent tension between economic "growth" and ethnic "distribution". Some critics of the NEP maintained that its restructuring retarded national growth (although it was virtually impossible to prove whether the high growth of the 1970s would have experienced even higher growth without the NEP's inter-ethnic distribution). But even UMNO and Malay business circles - the NEP's staunchest devotees - showed a polarity of opinion between "pro-growth" and "pro-distribution" advocates by the mid-1980s when the economy faltered (Marican 1987). These were serious problems for Dr Mahathir Mohamad when he became Malaysia's fourth Prime Minister on 16 July 1981, about midway in the NEP's two-decade span. He was conscious, too, that a potentially divisive and bitter inter-ethnic accounting - on the NEP's achievements and shortcomings - was in store as the official "end of the NEP" drew nearer. Moreover, these contradictions in NEP implementation stood in the way of Mahathir's own ambitious agenda for the nation.

Liberalism and the Democratic-Authoritarian State Early into the Prime Minister's term of office, Mahathir unveiled a

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vision of modernizing the Malaysian economy and transforming the nation into a developed country after the mould of Asia's newly industrializing countries - South Korea, Taiwan, Hong Kong and Singapore. In programmatic terms, Mahathir sought a private-sectorled, export-oriented and heavy industrialization-based economy. In nationalistic terms, he wanted Malaysia to reach parity with the rich, developed and industrialized nations of the world. Socially, his modernizing mission was predicated upon a four-cornered partnership of: an imaginative leadership (which he was confident of supplying), a hardworking people (whom he wanted to tum Malaysians into), a clean and efficient administration (which he tried to reform) and an innovative, competitive private sector (which he tried to woo). In summary, these constituted the vision behind the early Mahathirist campaigns and exhortations: bersih, cekap, amanah (clean, efficient and trustworthy), kepimpinan melalui teladan (leadership by example), "Look East", "Privatisation" and "Malaysia Incorporated", and penyerapan nilai-nilai Islam (assimilation of Islamic values). The early Mahathirist programme appeared to be a corporatistnationalist adventure which might also resolve the problems of NEP implementation. Mahathir and his deputy, Musa Hitam, instituted several reforms of the civil service which seemed to address the issues of bureaucratic ineptitude, lack of fiscal discipline and accountability. Privatization appeared to be a reasonable answer to the perennial losses of the NFPEs and offered a way to distribute state assets, especially to capable and successful bumiputera entrepreneurs. "Malaysia Incorporated" proposed to re-establish an alliance between the public and private sectors - in a way, to bridge an inter-ethnic gap - to realize a nationalist mission. "Look East" and the "assimilation of Islamic values" stressed a need for hard work and self-reliance as the corrective to Malay dependence on the state. In political terms, Mahathir offered a tentative dose of liberalism that appeared to be at odds with his views on democracy. Mahathir has never been much of a democrat by conviction. He liked to deride democracy - as an impracticable Western imposition on newly independent nations, for being captive to pressure groups and interest lobbies, as being susceptible to the machinations of charlatans and rogues (by whom he implied opposition politicians) (Mahathir 1986b), and, consequently, for being an important cause of inefficiency in government (Mahathir 1986a, pp. 117-20). If anything, Mahathir intermittently voiced a preference for authoritarian ways of government.

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But if he had no intention of dismantling the Internal Security Act and other repressive legislation, he none the less released most of the political detainees in Malaysia. If, on record, he frequently attacked the abuses committed by the "fourth estate", he proclaimed that his administration would more liberally grant press licences. If he was a staunch believer in strong executive power, he promised to respect the independence of the judiciary, and he reformed his bureaucracy as if it heralded a more open, more publicly accountable, style of government. If he, in an authoritarian manner, scripted a role for the people in his vision, he in populist fashion, predicated his modernization on the participation of the masses. These apparent contradictions of Mahathir's early liberalism are remarkable because they almost seem to be a personal reflection of the democratic-authoritarian character of the state. Once again, it might be asked, how did this state address itself to the critical tasks of managing class conflict, ethnic polarization, and the requirements of a changing Malaysian capitalism, this time under Mahathir's premiership? There were three sets of circumstances and developments which affected the democratic-authoritarian balance of the Mahathir regime: a spate of financial scandals, economic recession and the structural adjustment polices which followed.

Scandals, Recession and Structural Adjustment Several financial scandals made the mid-1980s the most sordid period in Malaysian financial history. Between 1981 and 1982, the Mahathir administration was involved in secret transactions in the international tin market which ended with an estimated loss of RM660 million. This disastrous transaction, long suspected by the public, was only admitted by the government in 1986. Between 1982 and 1983, Bumiputera Malaysia Finance, a Hong Kong-based subsidiary of Bank Bumiputra, lost an estimated RM2.2 billion as a result of highly irregular lending to a few Hong Kong property companies. The "BMF affair" became the rallying point for critics of the government who suspected corruption and collusion between BMF's senior officers and the borrowers in Hong Kong, and senior politicians in Malaysia. In November 1985, Pan Electric Industries, a company headed by Tan Koon Swan, the MCA's President, collapsed from insolvency, causing both the Singapore Stock Exchange and the Kuala Lumpur Stock Exchange to be suspended. Tan Koon Swan was subsequently

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convicted of criminal breach of trust in Singapore. Between 1985 and 1986, several government agencies started a fund to prop up the domestic stock market during a bearish phase. These agencies lost heavily, with the Employees Provident Fund, a principal member of the fund, sustaining "paper losses" of RM141 million. In August 1986, the assets of twenty-four "deposit-taking cooperatives" (DTCs) in Malaysia were frozen by the central bank Investigations by Bank Negara revealed extensive manipulations and misappropriation of the funds of the DTCs, most of which were headed by MCA leaders and businessmen associated with them. In 1987, Lim Kit Siang, the parliamentary opposition leader, took the government to court over its award of the RM3.4 billion North-South Highway project to the UMNO-owned United Engineering (M) Berhad. Mahathir's regime also bestrode a recession which began in 198283 and intensified in 1985-86. There were three basic parts to the recession: a collapse in commodity prices, a rising public debt, and a decline in private investment. Crude petroleum prices, for example, fell from US$36.50 per barrel in 1980 to US$14.70 per barrel in 1986 so that even higher volumes of petroleum exports in 1986 earned less revenue than in 1980. The tin industry in Malaysia had virtually collapsed by 1986 when tin exports barely exceeded 25 per cent of the value in 1980. Malaysia's economic planners - optimistic after a three-fold increase in export earnings between 1975 and 1980 - had forecast total export earnings to reach RM63.1 billion in 1985; the actual figure was RM37.6 billion. But Malaysia's public debt grew steadily, from RM34.16 billion in 1981 to RM46.18 billion in 1982, to RM57.83 billion in 1983, to RM 66.73 billion in 1984, to RM72.43 billion in 1985, and to RM87.06 billion in 1986, before it declined to RM82.43 billion in 1987. Total external public sector debt, as a proportion of gross domestic product (GDP), rose from 21 per cent in 1981 to 66 per cent in 1986. The increase in public debt was attributable to a bout of counter-cyclical spending from 1982 to 1983, the implementation of several "mammoth" projects, including heavy industrialization projects favoured by Mahathir, and the appreciation of the yen which affected Malaysia's yen-denominated loans. Private investments, on the other hand, declined from RM13.3 billion in 1984 to RM10.1 billion in 1986. Foreign corporate investment alone fell from RM3,262 million in 1982 to RM2,926 million in 1983, to RM2,138 million in 1984, to RM1, 725 million in 1985, and to RM1,262 million in 1986.

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The Malaysian economy contracted by 1 per cent in 1985 after nearly fifteen years of continued growth. Mahathir and Daim Zainuddin (appointed Minister of Finance in 1984 to replace Tengku Razaleigh Hamzah) decided to respond to the recession by instituting structural adjustment policies. The previous round of counter-cyclical spending ended when Mahathir and Daim imposed a severe restraint on public expenditure. The federal government's development expenditure was reduced from RM11.6 billion in 1983 to RM4.7 billion in 1987 while its operating expenditure was held down mainly by a job and wage freeze. Malay graduate unemployment became a problem for the first time since the NEP's expansion of tertiary educational opportunities. State agencies were instructed to close unprofitable NFPEs. Malay businesses facing financial difficulties were told that the state was no longer able (or willing) to rescue them each time they fell. Then came Mahathir's policy shift, encoded as "holding NEP in abeyance". At the end of September 1986, after instituting several measures to stimulate private investment, Mahathir liberalized the conditions for foreign investment in Malaysia. He suspended NEP equity restructuring requirements for companies which exported 50 per cent of its products or hired 350 workers. There was only the stipulation that the employment structure of the new or expanding foreign venture should approximately reflect Malaysia's ethnic composition. Subsequently, the Industrial Coordination Act was amended so that only firms employing more than 75 workers or having RM2.5 million in paid-up capital had to comply with its requirements. This was a major concession to domestic Chinese capital.

Accountability, Mismanagement and Revolt Mahathir and Daim used the recession as a pragmatic justification for trimming the roles of the state as a provider, regulator and entrepreneur. By 1987, the fiscal adjustment prompted by the recession, the economic liberalization in the hope of stimulating investment, and the deregulation exemplified by the amendment to the Industrial Coordination Act had altered the character of the Malaysian political economy. This time the change went in the direction of diminishing state intervention. Ideologically, these measures fitted in with Mahathir's "privatization" and "Malaysia Incorporated" policies because "rolling back the frontiers of the state", after all, pointed to a new state-capital alliance which the NEP had ruptured. Politically, these

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moves were supported by various social classes and ethnic groups. For example, the urban non-Malay classes were not unhappy with deregulation, economic liberalization and the disciplining of the bureaucracy. For the urban non-Malay middle class, privatization and deregulation implied greater (market) efficiency and a potentially higher level of local and foreign investment. There was every reason for foreign capital and domestic Chinese capital to welcome the relaxation of the Industrial Coordination Act. Indeed, even the bigger and more successful Malay capitalists - those nurtured by the state but who had become economically more resilient - supported holding the NEP in abeyance. The NEP's protection of the Malays was to them less critical now than the need to counter the NEP's negative impact on economic growth. But politically, Mahathir's modernizing agenda seemed to be in shreds. The financial scandals, with their hints of political corruption, generated a vociferous demand for executive accountability. There emerged an informal movement comprising the DAP, smaller opposition parties, and domestic non-governmental organizations which drew strong support from the urban non-Malay middle-class and workingclass electorate. In what was practically a no-confidence motion against the BN under Mahathir, this urban electorate spumed the MCA and the Gerakan in the large, urban, Chinese-dominated constituencies and gave the DAP its largest ever parliamentary representation during the August 1986 elections (Sankaran and Hamdan 1988). The economic recession brought on criticisms that Mahathir had mismanaged the economy. His favoured heavy industrialization projects -Proton (the national car) and Perwaja (steel mill in Trengganu)ran into demand and production problems, and were widely condemned for being exorbitant, inefficient, untimely and unprofitable. The "mammoth" projects (symbolized by the Dayabumi Complex in Kuala Lumpur and the Penang Bridge) were ridiculed as being ostentatious and wasteful during hard times. Arguments to this effect were widely heard but their most far-reaching political impact came in conjunction with an emerging party revolt against Mahathir's leadership of UMNO, and, by extension, his premiership (Kershaw 1989; Khoo Khay Jin 1992; Shamsul 1988). To a large extent, the revolt was economically motivated. Structural adjustment in the form of the Mahathir-Daim regime of fiscal austerity and contraction in state spending affected at least two important sections of UMNO's constituency and membership directly. The

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bureaucrats and technocrats managing the NFPEs experienced reductions in their benefits, found their performance criticized for inefficiency, incompetence and low productivity, and saw their prospects diminishing (Khoo Khay Jin 1992). Malay businesses, especially small companies habitually dependent on state contracts, were increasingly insolvent. Many of these small-scale contractors, many of whom were UMNO members and lower-echelon leaders, could no longer obtain government contracts and projects which had been their main source of business. Hence arose the charge of "cronyism" that was flung at Mahathir and Daim when available large projects were awarded to bigger and more successful Malay companies (Khoo Khay Jin 1992, pp. 56-57, 69). By then, UMNO and Malay business circles were split between those favouring "growth" (that is, holding the NEP in abeyance) and those preferring "distribution" (that is, continuing NEP restructuring) (Marican 1987), between those cushioned against recession and those suffering from structural adjustment. The social divisions within the emerging BCIC were now mediated through UMNO itself. Finally, these divisions intersected with many personal and political ambitions or disgruntlements at the apex of UMNO's hierarchy and produced a direct and unprecedented challenge to the party's incumbent leadership. The result was UMNO's irreparable split into "Team A" (led by Mahathir and Ghafar Baba, who became Deputy Prime Minister in 1986) and "Team B" (led by Razaleigh Hamzah and Musa Hitam, who resigned as Deputy Prime Minister in 1986).

Crises of Mahathirism, 1987-88 In August 1986, despite a rising tide of disaffection among the urban non-Malay electorate, Mahathir and UMNO won a stunning victory at the general elections. The opposition parties had been expected to perform very well in view of the widespread dissatisfaction with the Mahathir administration. Only the DAP did while PAS failed miserably in its attempt to challenge UMNO. But UMNO's electoral victory under Mahathir:'s leadership did not prevent Razaleigh Hamzah from challenging Mahathir for UMNO's presidency. Ghafar Baba contested Musa Hitam's deputy presidency. At the UMNO General Assembly on 24 April 1987, Mahathir triumphed over Razaleigh by a majority of 43 votes out of a total of 1479, while Musa lost to Ghafar by 40 votes in a contest that featured 41 spoilt votes. In the aftermath of the party

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election, Mahathir purged his Cabinet of Team B ministers and deputy ministers. The next six months of 1987 saw an intensification of inter-ethnic quarrels. The discredited MCA sought to retrieve its position among the Chinese community by the familiar path of ethnic championing. The DAP, which rode the wave of urban non-Malay discontent, continued its practice of highlighting Chinese disaffection. An irreparably split UMNO saw a way back to Malay unity by mobilizing against the MCA, the DAP and the Gerakan when these three parties made common cause over the Ministry of Education's move to promote Chinese non-Mandarin-speaking teachers in the Chinese schools. An UMNO Youth rally in October 1987 featured many incitements against the Chinese. Team A figures planned an UMNO "unity" rally of 500,000 UMNO members and their Malay supporters in Kuala Lumpur on 1 November 1987. This rally was widely feared to become a likely repeat of 13 May 1969. On 27 October 1987, Mahathir, as the Minister of Home Affairs, and the police launched "Operation Lalang" - mass arrests of leading oppositionist politicians, second-echelon MCA and Gerakan politicians, Chinese educationists, non-governmental organization activists, and a sprinkling of UMNO (Team B) politicians. The arrests were justified as a pre-emptive measure to forestall inter-ethnic violence, as was the cancellation of the 1 November UMNO rally. But UMNO's Team B refused to concede defeat, and took its fight for "party democracy" to the independent terrain of the judiciary. In a now famous court case, the UMN0-11, as the Team B litigants came to be known, sought to nullify the 24 April 1987 elections in court because of the presence of illegal delegates from unregistered branches during the elections. The Kuala Lumpur High Court, in its equally famous decision, ordered UMNO's deregistration as a political party in February 1988. The court decision tossed the Team A-Team B battle back onto the political arena. There Mahathir had the edge. He registered a new party, UMNO Baru (New UMNO) from which he excluded his implacable Team B opponents. The UMN0-11 tried to appeal against the High Court's deregistration ruling in the Supreme Court. But before the Supreme Court could hear the appeal, Mahathir's authoritarianism found its culmination. UMNO's continuing disunity and Mahathir's growing impatience with an "independent" judiciary intersected to bring about the suspension of the Lord President and two other judges of the Supreme Court (Khoo Boo Teik 1995). Shortly

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thereafter, the Supreme Court turned down the UMNO-ll's appeal. With that, Razaleigh and his allies formed a new party, Semangat 46 (Spirit of '46).

NIC-dom: Towards Democracy or Authoritarianism? Between 1987 and 1990, the Malaysian economy showed a strong turnaround from recession. The year 1987 registered a 5.2 per cent growth, but then came an average annual rate of growth of over 9 per cent from 1988 to 1990. Part of the turnaround was due to improved commodity prices which raised commodity export earnings to RM26 billion in 1990. By 1990, however, the value of manufacturing exports had risen to RM46.8 billion, compared with a value of RM12.47 billion in 1985. The previous trend of declining private investment was reversed. Foreign investments in approved industrial projects amounted to RM17.63 billion in 1990, compared to RM959 million in 1985. The main sources of these post-1987 investment flows were Taiwan, Japan and Singapore which were prompted to relocate some of their manufacturing activities because of rising production costs, tightening labour markets and stricter environmental restrictions at home. These factors combined with the liberalized and deregulated post-1987 investment regime in Malaysia, a substantial depreciation of the Malaysian ringgit and lower labour costs, to make Mahathir's vision of NIC-dom virtually a reality. Against this unfolding background of rapid industrialization and development, Mahathir felt confident enough to call for general elections in November 1990. By then he had released all political detainees arrested during Operation Lalang. On his part, Razaleigh Hamzah forged two coalitions to try to topple the BN from power. One coalition (Angkatan Perpaduan Ummah, APU, or Muslim Unity Force) brought Semangat 46 together with PAS. Semangat 46, the DAP, Sabah's Parti Bersatu Sabah (PBS), and smaller non-Muslim parties formed the Gagasan Rakyat Malaysia (Gagasan, or Malaysian People's Power). Once again Mahathir and the BN triumphed. Unlike in 1986, this time the DAP, PAS and the PBS performed well, while Semangat 46 failed to erode UMNO's base by much. With a new victory behind him, Mahathir unveiled his "Wawasan 2020", or "Vision 2020" two months later. Since then, its basic nationalist-capitalist ambition of turning Malaysia into a competitive developed country by the year 2020 has become the new political "consensus".

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Conclusion This chapter began by supplying several litanies of the main features of Malaysian democracy and the ways in which they have been undermined. The purpose was to highlight a common approach, scholarly or otherwise, to understanding the problems of democracy in Malaysia. It is reasonable to think of this approach as a form of political accounting that can be undertaken regardless of one's feelings about the state of Malaysian democracy. For example, one could consider the Malaysian record to have been one of retrogression- of a promising model gone west (so to speak) with a none too optimistic future left for it. From this view, one can begin with the list of democratic features mentioned at the outset and subtract from them - until what is left is more or less a shell (especially when it is measured against the ideals of democracy). One can logically count the costs, the losses and, assuming one is committed to the idea of Malaysian democracy, what further social and political investments are needed to bring it back to even keel. Equally, one could choose to regard Malaysian democracy to be sound, functional and relatively successful - especially when it is judged against the ruthlessness and lawlessness of so many Third World states. In that case, one can offer a similar balance sheet but counsel that the real or hidden benefits (of, say, a quasi democracy or semi-democracy) far outweigh the unimaginable costs (of, say, an untrammelled democracy). Put differently, the spectre of political instability and social implosion is exorcised by the depreciation of certain political rights or values - which may be written off with an accounting note to the effect that they are not terribly suitable for non-Western people anyway. (Lest one thinks this last observation smacks of old-fashioned orientalist bigotry, let us hasten to note that it has become rather popular in the "East" these days.) We cannot do away with political accounting altogether. But if we treat the incipient Malaysian democracy as a double-edged polity, perhaps we are less likely to regard naively the "original" condition of Malaysian democracy to have been a state of grace from which the nation has fallen (whether unfortunately or unavoidably). With that perspective as our point of departure, we have tried to trace the interplay between class, ethnicity and capitalism while we tracked the course of democratization in Malaysia from its incipient form in 1957 to its recent condition. But for students of comparative Asian

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democratization, Malaysian (de )-democratization may yet hold several points of contrast and interest. Clearly, the Malaysian experience of increasingly "less" rather than "more" democracy since 1969 differs from, say, South Korea and Taiwan, which recently underwent dramatic moments of democratization after decades of authoritarian rule. Whereas rapid economic growth and industrialization catalyzed the fall of authoritarian regimes in those nations, growth and industrialization in Malaysia formed the background for increasing authoritarianism. Malaysia's political tightening, too, occurred while the NEP state was heavily interventionist, but also when the Mahathir regime chose to roll back the frontiers of the Malaysian state somewhat. And, for that matter, the post-1969 authoritarianism which arose while the BCIC was just being born has not departed even as the BCIC in the latter part of Mahathir's premiership has consolidated into an increasingly independent class. Whether democracy in Malaysia will eventually prove to be the "best political shell" for capitalism in the country still remains to be seen. For now, we might best conclude that the simultaneously democratic and authoritarian Malaysian polity appears to be evolving towards a variation of the "strong state, free economy" mould which arguably is Mahathir's ultimate vision of Malaysian political economy.

NOTES 1. The theoretical arguments for this depiction of Malaysian democracy are derived from Ralph Miliband (1984) and Colin Leys (1983). 2. This point is made in opposition to an argument, specifically related to Malaysia, that references to "economic democracy" "risk confusing procedural and substantive variables, thereby losing analytical power" (Case 1993, p. 185). 3. Von Vorys (1975, pp. 417-22) gives the most complete account of how the NOC imposed this "decommunalization of politics" by amending the Constitution to allow laws to be passed prohibiting the questioning of ethnically sensitive issues. Tun Razak was quoted as saying: "I hope the amendments will be approved, otherwise I regret we cannot return to parliamentary democracy (von Vorys 1975, p. 419). 4. More accurately, it was the rump of Gerakan, led by Lim Chong Eu, which joined the BN after the party split over this and other issues. Key Gerakan leaders - Syed Hussein Alatas, Tan Chee Khoon, Tan Phock

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7.

8.

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Hin and V. Veerappen - refused to exchange opposition for government (Vasil 1987, pp. 145-47). There was another angle to treating "politics" as "administration", which was to restore "integrity in government" (von Vorys 1975, pp. 391-94). Sonny Yap, in "The Prodigal Who Made His Way Up" (New Nation, 9 March 1976), quotes Mahathir as having said in 1971: "The only thing to do is to admit that in giving the Malays their place in the sun, there must be denial for some non-Malays. Some non-Malays will have to be sacrificed in order to bring the Malays up. The thing to do is to be honest about it. The politics of fact is that the Chinese will have to pay, whether you say nice things to them or not. They will have to accept what the Malays want, otherwise they will have to pay the price of harmony". See, for example, the accounts of the independent schools and the Merdeka University issues in Kua (1985), pp. 131-80. It is instructive to note that Mahathir, writing after being expelled from UMNO, insisted that "in a schema to force Malay labour into the competitive field of skilled and semi-skilled work, trade unionism can find no place" (Mahathir 1970, p. 108).

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_ _ _ . ChaUenges and Choices in Malaysian Politics and Society. Penang: Aliran, 1989. Chandran Jeshurun. "Malaysia: The Mahathir Supremacy and Vision 2020". In Southeast Asian Affair-s 1993, pp. 203-23. Singapore: Institute of Southeast Asian Studies (ISEAS), 1993. Crouch, Harold. "Authoritarian Trends, the UMNO Split and the Limits to State Power". In Fr-agmented Vision: Cultur-e and Politics in Contempor-ar-y Malaysia, edited by Joel S. Kahn and Francis Loh Kok Wah, pp. 21-43. Sydney: Asian Studies Association of Australia in association with Allen and Unwin, 1992.

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_ _ _ . "Malaysia: Neither Authoritarian Nor Democratic". In Southeast Asia in the 1990s: Authoritarianism, Democracy and Capitalism, edited by Kevin Hewison, Richard Robison and Garry Rodan, pp. 133-58. Sydney: Allen & Unwin, 1993. Enloe, Cynthia. Ethnic Soldiers: State Security in a Divided Society. Harmondsworth: Pelican Books, 1980. Faaland, Just, J. R. Parkinson, and Rais Saniman. Growth and Ethnic Inequality: Malaysia's New Economic Policy. Kuala Lumpur: Dewan Bahasa dan Pustaka in association with the Chr. Michelsen Institute, Bergen, Norway, 1990. Girling, John. "Development and Democracy in Southeast Asia". Pacific Review 1, no. 4 (1988): 332-40. Gomez, Edmund Terence. Political Business: Corporate Involvement of Malaysian Political Parties. Townsville, Queensland: James Cook University of North Queensland, 1994. Ho Khai Leong. "Aggrandizement of Prime Minister's Power: The Transformation of the Office of the Prime Minister in Malaysia". Internationales Asienforum 23, nos. 1-2 (1992): 227-43. Jesudason, James V. Ethnicity and the Economy: The State, Chinese Business and Multinationals in Malaysia. Singapore: Oxford University Press, 1989. Johan Saravanamuttu. "The State, Authoritarianism and Industrialisation: Reflections on the Malaysian Case". Kajian Malaysia 5, no. 2 (December 1987): 43-75. Jomo, K. S. Growth and Structural Change in the Malaysian Economy. London: Macmillan, 1990. Jomo, K. S., Khoo Boo Teik and Chang Yii Tan. "Vision, Policy and Governance in Malaysia". In Governance, Leadership and Communication: Building Constituencies for Economic Reform, edited by Leila Frischtak and Izak Atiyas, pp. 65-89. Washington, D.C.: World Bank, 1996. Jomo, K. S. and Patricia Todd. Trade Unions and the State in Peninsular Malaysia. Kuala Lumpur: Oxford University Press, 1994. Kershaw, Roger. "Within the Family. The Limits of Doctrinal Differentiation in the Malaysian Ruling Party Election of 1987". Review of Indonesian and Malaysian Affairs 23 (1989): 125-93. Kesslar, Clive. Islam in a Malay State: Kelantan, 1839-1969. Ithaca: Cornell University Press, 1978. Khong Kim Hoong. Merdeka! British Rule and the Struggle for Independence in Malaya, 1945-1957. Petaling Jaya: INSAN, 1984.

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Khoo Boo Teik. Paradoxes of Mahathirism: An Intellectual Biography of Mahathir Mohamad. Kuala Lumpur: Oxford University Press, 1995. Khoo Khay Jin. "The Grand Vision: Mahathir and Modernisation". In Fragmented Vision: Culture and Politics in Contemporary Malaysia, edited by Joel S. Kahn and Francis Loh Kok Wah, pp. 44-76. Sydney: Asian Studies Association of Australia in association with Allen and Unwin, 1992. Kua Kia Soong. The Chinese Schools of Malaysia: A Protean Saga. Kuala Lumpur: United Chinese School Committees Association of Malaysia, 1985. Leys, Colin. Politics in Britain: An Introduction. London: Heinemann Educational Books, 1983. Lim Kit Siang. Crisis of Identity. Kuala Lumpur: Democratic Action Party, 1986. Loh Kok Wah, Francis. Beyond the Tin Mines: Coolies, Squatters and New Villagers in the Kinta Valley, Malaysia, c. 1880-1980. Singapore: Oxford University Press, 1988. Mahathir Mohamad. The Malay Dilemma. Singapore: Donald Moore for Asia Pacific Press, 1970.

_ _ _ . The Challenge. Petaling Jaya: Pelanduk Publications, 1986a. Translated from Menghadapi Cabaran (Kuala Lumpur: Pustaka Antara, 1976). _ _ _ ."Speech at the First ISIS National Conference on National Security", Kuala Lumpur, 15 July 1986. Foreign Affairs Malaysia 19, no. 3 (September 1986b): 1-5. Marican, Malek "The NEP from a Private Sector Perspective". Paper presented at the Seminar, "Dasar Ekonomi Baru Selepas 1990: Peranan Sektor Korporat Awam". Kuala Lumpur, 24-26 March, 1987. Means, Gordon. Malaysian Politics: The Second Generation. Singapore: Oxford University Press, 1991. Mehmet, Ozay. Development in Malaysia: Poverty, Wealth and Trusteeship. London: Croom Helm, 1986. Miliband, Ralph. Capitalist Democracy in Britain. Oxford: Oxford University Press, 1984. Moore, Barrington. Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World. Boston: Beacon, 1966. Robison, Richard, Kevin Hewison, and Gary Rodan. "Political Power in Industrialising Capitalist Societies: Theoretical Approaches". In

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Southeast Asia in the 1990s: Authoritarianism, Democracy and Capitalism, edited by Kevin Hewison, Richard Robison and Garry Rodan, pp. 9-29. Sydney, Allen & Unwin, 1993. Rodan, Garry. The Political Economy of Singapore's Industrialization. Kuala Lumpur: Forum, 1989. Salleh Abas. The Role of the Independent Judiciary. Kuala Lumpur: Percetakan A-Z, 1989. Sankaran Ramanathan and Mohd. Hamdan Adnan. Malaysia's 1986 General Election: The Urban-Rural Dichotomy. Singapore: Institute of Southeast Asian Studies (ISEAS), 1988. Shamsul, A. B. "The 'Battle Royal': The UMNO Elections of 1987". In Southeast Asian Affairs 1987. Singapore: ISEAS, 1988. Stenson, Michael. Industrial Conflict in Malaya: Prelude to the Communist Revolt of 1948. Kuala Lumpur: Oxford University Press, 1970.

_ _ _ . Class, Race and Colonialism in West Malaysia: The Indian Case. St. Lucia: University of Queensland Press, 1980. Tan, Simon. "The Rise of State Authoritarianism in Malaysia". Bulletin of Concerned Asian Scholars 22, no. 3 (July-September 1990): 32--42. Vasil, Raj. Tan Chee Khoon: An Elder Statesman. Petaling Jaya: Pelanduk Publications, 1987. von Vorys, Karl. Democracy Without Consensus: Communalism and Political Stability in Malaysia. Princeton: Princeton University Press, 1975. Zainah Anwar. Islamic Revivalism in Malaysia: Dakwah Among the Students. Petaling Jaya: Pelanduk Publications, 1987. Zakaria Ahmad. "The Bayonet and the Truncheon: Army/Police Relations in Malaysia". Journal of Asian Affairs 3, no. 2 (1978). _ _ _ ."Malaysia: Quasi Democracy in a Divided Society". In Democracy in Developing Countries: Asia, edited by Larry Diamond, Juan J. Linz and S. M. Lipset, volume 3, pp. 347-81. Boulder: Lynne Rienner Publishers, 1989.

4J PHILIPPINE DEMOCRACY Promise and Performance RENATO S. VELASCO

Introduction The 1986 EDSN revolt which saw President Corazon Aquino rising to power sealed the role of the Philippines in the global wave of democratization in the 1980s. Its peaceful and militant strategy provided inspiration and lessons for other democratic movements, notably in Poland, Nicaragua and South Korea. It survived no less than eight military coup attempts, a long drawn armed communist insurgency, foreign-backed Muslim secessionism, and a debilitating foreign debt. The preference for democratic ethic and process by post-Marcos elites combined with other important factors to keep the country in the democratic mode. In May 1992 - amidst repeated destabilization schemes, natural disasters and economic difficulties - the country passed through a clean and credible election, and saw the peaceful and orderly transfer of power from Aquino to Fidel Ramos. In the past, when commitment to human rights and civil liberties mattered most, this would have been cause for praise and support. But not anymore. New and newly-restored democracies are now judged in terms of whether they can achieve economic growth.

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The premise of this developmentalist view has been supplied by modernization theory. The latter posited that economic development - as it leads to urbanization and creates middle-class sectors that espouse political participation either as a means to gaining power or as an expression of enlightened values - engenders political democracy. There was a near unanimity that underdevelopment and stable democracy do not mix. 2 Though the causal relationship between growth and democratization was implied, other adherents of the theory, however, saw the need to revise this unidimensional link. Thus, what became a more popular modernist argument was that development is a necessary but not sufficient condition for democracyY The developmentalist view represents an instrumentalist slant on democracy. The latter, rather than being an end, is viewed as a means - to achieve growth which is the broader desirable goal. Interestingly, it also tends to focus on the inadequacies of democracy as a vehicle for development. This latent tendency is discernible in some variants of the developmentalist approach. One explanation, for instance, casts doubts on the efficacy of democracy as a means for growth and political stability. It cites the delays and other distortions often spawned by consensual decisionmaking and contrasts this with the rationality demonstrated by the authoritarian newly industrializing economies of Asia. Democratic politics, being often acrimonious and tedious, are said to hinder growth and stability. It is argued that the undemocratic regimes in South Korea, Taiwan, Singapore and Hong Kong were the key to their phenomenal growth and stability. Another related aspect is the right or proper sequencing between economic reforms and democratization. It is argued that democracy is ensured if the right economic measures are first put in place before embarking on political liberalization. Consistent with the modernist economic explanations of democracy, prospects of post-authoritarian regimes with weak economies are considered dim because of their ineptness in addressing social tensions and other difficulties found in underdeveloped states. This "weak state" thesis contends that authoritarian politics - as it enhances state capacity for bolder and far-sighted developmental policies - is necessary to address the crippling effects of weak social consensus and centrifugal efforts of private vested groups. 4 Expressing wariness on the prospects of new democracies, Samuel Huntington said: "it is much easier to organize elections than to

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organize markets . . . the shift from an authoritarian to a democratic political system can occur quickly, and even relatively, painlessly; the shift from a heavily state-controlled economy to a market economy is far more painful and time consuming". 5 The other variant is the so-called "cruel choice thesis", or the hard option between achieving economic expansion and promoting the democratic process. The premises are quite obvious: first, democracy is incompatible with rapid growth and, secondly, one cannot have rapid growth and democracy at the same time. 6 Singaporean leader Lee Kuan Yew, during his speech before the Philippine Chamber of Commerce and Industries in 1992, criticized his Filipino hosts for adopting a system which he claimed was the most disputatious and difficult to manage: the American-style democracy. Resurrecting the "cruel choice debate", Lee argued that today's imperatives are economic growth and stability. Goals other than these are secondary. Lee's winning formula is simple and clear: more discipline and less democracy. To what extent do these views and prognoses on democratization apply to the Philippine experience? Is democratic politics retarding growth and stability? What is the impact of economic growth on democratization? What have been the avowed goals of the Philippine government, and how did these aims or promises fare in actual performance? Which forces or classes have been instrumental or committed to the democratic process? Which groups in tum have acted as deterrents to democratic consolidation and deepening? What were the interests and motivations of these competing actors? What were the socio-economic conditions that sustained the views and efforts of these competing groups? How do current changes in the political economy affect the democratization process? What are the prospects of Philippine democracy? This chapter attempts to address these questions. To that end, it will describe the socio-historical context of Philippine democracy which impinges on its past and recent characteristics. It will analyse the avowed objectives and actual performance of three administrations, namely, the Marcos authoritarian regime (1972-86), the Aquino government (1986-92), and the two-year record of the Ramos administration. Each administration is evaluated in terms of the profiles of its leaders and the role played by their backgrounds and interests in their respective views and policy positions. The chapter argues that the records of the three administrations under study qualify the validity of the developmentalist view.

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Authoritarianism is not at all superior to democracy in fostering growth and stability. Fourteen years of Marcos' authoritarian rule did not lead to sustained growth or stability. Its much-vaunted rational administrative process failed to address the structural defects of premartial law society. In fact, it worsened many of them. Thus, the region's top growth performer of the early 1960s degenerated into the "sick man" of Asia by the 1980s. The relationship between rapid economic growth and democracy is also vague. Democracy is not directly anchored to economic growth. Higher production outputs which also saw the expansion of the middle classes did not lead to democratic consolidation. Instead, a militarybacked dictatorship was installed by the very elements with strong middle class backgrounds and weaker oligarchical linkages. The role of the middle classes in democratization is quite uncertain. In different particular events and periods in the Philippines, they demonstrated different political dispositions and stances. Before 1972, they sided with democratic politics as they legitimized the post-war liberal set-up through their active participation. During the martial law years, they acquiesced to the Marcos regime. It was only when the regime's performance faltered in the early 1980s, that the middle classes' disposition for democracy revived. They joined the opposition and eventually helped the Aquino-led forces in toppling the dictatorship. This democratic tendency has continued up to the present Ramos administration. What appears to be a critical factor in democratization is the democratic disposition or political culture preference not only of the politically-ambivalent middle classes but also that of the wider populace, especially those from the elite, the middle classes and organized groups of the population. Represented by a vibrant civil society, this popular democratic resolve traces its early roots to the anti-colonial revolt against Spain in the 1890s. It was nurtured by direct popular experience in liberal politics during the post-World War II years, and strengthened by the painful excesses of Marcos authoritarianism in the 1970s and 1980s. For better or for worse, the Filipino answer to economic difficulties has been democracy. The worst crisis during the Marcos regime was addressed through a democratic revolt. When the crisis persisted after the uprising, the response was not less but more democracy. This democratic track is still being pursued even though the economy has considerably improved.

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Neither is putting democratization ahead of economic reform untenable. The democratic process under Aquino may have slowed the pace of economic liberalization, but did not reject it altogether. Such delay seemed inevitable, given the nature and dynamics of coalition politics, and the value of forging some degree of consensus. Finally, the records of the Aquino and Ramos administrations debunk the cruel choice theory. Interestingly, they prove that democracies can have their cake and eat it too. While upholding the democratic process, the two administrations have posted modest but fairly respectable growth rates. Democracy is used in this chapter to refer to a political system that provides genuine political choices for the citizenry through basic freedoms and liberties (that is, freedoms of speech, assembly and organization) that make these choices real and meaningful. These civil and political rights are indispensable as they are the critical means by which citizens can empower themselves to achieve the desired political and economic goals. It is associated with a government that is founded on the rule of law, and in which principal public officials are subject to competitive elections (that is, periodic, with a fair voting system, and universal adult suffrage). 7 Democracy is said to be at the consolidation phase if the system's processes result in the increased capacity of citizens to address public concerns without dependence on, or abdication of their rights to the state and its agencies. Its direction is for "longer-term quality of the system's performance where quality refers to responsiveness, accountability, and orientation". 8 This tack, as used in this chapter, is associated with two complementary issues: broadening of the political elites and strengthening of civil society (that is, non-government and people's organizations (NGO-POs), co-operatives, the church and the mass media). Expanding the social composition of elites enhances the articulation of broader policy views. Developing a civil society promotes participative culture, thus undermining authoritarian tendencies. It fosters conditions that enable citizens to meet community needs without dependence. The state under this process becomes an enabler, and not a provider of services. 9

Socio-historical Context of Philippine Democracy A middle-income country with a population of 68 million, the

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Philippines is one of the few Asian countries with long experience in liberal democracy. Its independence struggle against 300 years of Spanish colonialism was strongly influenced by the libertarian ideas of the French and American revolutions. At the height of the anticolonial revolt in 1898, a republic had been set up whose constitution espoused the concepts of civil liberties, representative assembly and separation of church and state. Though short-lived as a result of the onset of the Philippine-American War (1899-1902), the republic was Asia's first. It somehow indicated early manifestations of the Filipinos' preference for and belief in freedom and democracy even before United States conquest. Under United States occupation (1902-1945), Filipinos were introduced to American ways in basically three different phases: first, as students in American-run schools; secondly, as staff and leaders of colonial government agencies, and thirdly, as subjects of the colonial government. The results of this tutelage were discernible after Philippine independence was restored in 1945. The country's system of governance was organized along the principles of American-style liberal democracy. Following the U.S. model, a presidential system was established with three distinct branches, namely, the executive, the legislative and judiciary, sharing equal powers under the principle of checks and balance. The 1935 constitution provided for universal suffrage and civil liberties such as freedom of speech and assembly. On the cultural front, Filipino religiosity - that was moulded by three centuries of Spanish rule - was supplemented by a high regard for American ways of life. Mass education, the "pensionado" system (scholarships for government personnel in American universities) and other U.S. policies proved effective in the so-called "Americanization" of Filipinos in which the United States' image was transformed from that of an aggressor in 1899 to that of a benevolent ruler in the 1920s and 1930s, a dependable ally and liberator during World War II, and a generous big brother in the post-war years. 10 The Filipino elites who deftly served as intermediaries between the Americans and the masses made U.S. tutelage possible. As bureaucrats in the colonial administration, they inevitably gained the necessary training, networks and patronage to dominate the country's post-war political system. Their political brokerage was in tum sustained by their business links with American traders and investors. As landlords engaged in export-crop production and trade, these landed

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families accumulated great wealth from preferential trade access to the United States. Estimated to comprise not more than 120 families, these pre-martial law elites controlled not less than 60 per cent of the national income. The prominent elites of the country included: the Laurel, Cojuangco, Imperial, Nepomuceno, Quirino and Crisologo families in Luzon; the Osmena, Cuenca, Lopez, Araneta, Durano, Montelibano Roxas and Ayala clans in the Visayas; and the Almendras, Florendo, Pelaez, Dimaporo and Tamano clans in Mindanao. 11 Post-war Philippine democracy, which lasted until the declaration of martial law in 1972, was conditioned by the above-mentioned events. Its important characteristics and features included the following: the origins and growth were either as a reaction to or after-effects of colonialism. It was a reaction against the absolutist reign of Spain which made liberalism a powerful bond and a weapon for Filipinos. It was a lasting after-effect of U.S. colonialism, the policies of which invariably led to wider dissemination of democratic values and practices; 2. the formal institutions and processes were patterned after the American model. There was universal suffrage and citizens were assured of civil and political liberties. As early as 1907, Filipinos had participated in national and local elections; 3. elections as the defining feature of democracy were not always competitive because of the schemes of oligarchic interests to manipulate and control electoral outcomes (such as control of the media, oligarchic parties and personalized campaigning, and electoral fraud); 4. land ownership was the principal source of wealth making rural elites the dominant political actor. These landed families thrived on access to the lucrative U.S. market through their linkages with the state apparatus. There was a clear fusion of wealth and power wherein the rich became so mainly because of political connection and patronage rather than productivity; 12 5. oligarchic control of government had undermined the state's capacity to undertake broad national goals. Once in power, the oligarchs simply protected their interests at the expense of longterm national goals. Thus, there were repeated failures in issues such as land reform, trade liberalization measures and progressive taxes because of strong resistance by landlords, cartels and monopolists. 1.

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Throughout the years, post-war democracy showed its cracks when the competition for wealth and power among the traditional and newlyemerging elites intensified. This intra-elite rivalry was accompanied by the emergence of an articulate and enlarged middle class. Composed of students, professionals and small businessmen, this sector became exposed to different radical movements in other countries during the 1960s and 1970s. Along with the writings of Filipino nationalists, they drew inspiration from these foreign movements to attack what they perceived to be a democratic yet corrupt, U.S.-dependent and elitist government. Ferdinand Marcos, who became President in 1965, was a major target of this anti-government movement. He succeeded in winning re-election but not without committing massive fraud and terrorism. His lust for power alarmed his political enemies who stepped up their campaigns against him, especially in Congress and through the mass media. They were later joined by students and workers' groups which launched massive rallies and demonstrations against Marcos' corruption and subservience to U.S. interests. Marcos used deceptive tactics and naked force to quell the mass protests, but to no avail. Threatened by the growing opposition to his administration, he dismantled the formal institutions of democracy by imposing martial law in 1972. He justified his regime through centrist and anti-oligarchic slogans, describing his regime as a "rebellion of the poor" and "a revolution from the center" which was against two extremes: the extreme right represented by the oligarchs and the extreme left represented by the radicals and communists. His avowed aims were to save the republic from these extremists, and to build a "new society". 13

The Promise of Authoritarianism: Rapid Growth and Stability While the authoritarian regimes of Korea, Taiwan and other Asian countries may have played a prominent role in the phenomenal growth of their respective countries, the Philippine record was clearly a different case. Under the authoritarian regime of President Marcos (1972-86), the country failed to replicate the celebrated economic strides of its neighbours. This is notwithstanding the important similarities it shared with its Asian counterparts. These commonalities included: an anti-communist and neo-Keynesian developmental

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philosophy; an export-oriented growth strategy; a close partnership with the military and technocrats; and strong economic, political and military support from the United States.

Policies and Performance of Marcos Authoritarianism "Constitutional authoritarianism" was the legitimizing framework of the Marcos regime. Marcos, as a shrewd lawyer, never failed to lace his actions with pertinent, albeit self-serving legalese. Using his martial law powers under the 1935 Charter, he steered the passage of the 1973 Constitution to bestow himself with extraordinary powers. These enabled him to establish a dictatorial Bonapartist state in which all forms of state authority were placed under his personal control and direction. The Philippine mass media, reputed to be among the freest in Asia, was put under state control and regulation. The erstwhile independent Congress was abolished, and the Supreme Court was packed with Marcos appointees. Civil liberties were suspended and thousands of critics and dissenters were arrested and detained. The military gained prominence as implementors of Marcos' coercive acts and several military officers were appointed to sensitive government posts. Strong-arm tactics were employed against the communist insurgency and the Muslim secessionist movement. In 1978, the Batasang Pambansa (National Assembly) was established for legitimation and mass mobilization aims. Described by critics as the world's most expensive rubber stamp, it was controlled by Marcos' party, the Kilusan ng Bagong Lipunan (KBL). Institutionally, it was also emasculated by Amendment No.6 which provided Marcos with unlimited law-making powers. The political opposition, none the less, found a few creative ways to use the Batasang as a vehicle for public dissemination of their criticisms and for organizing their resistance against the regime.

Leaders and Factions of the Marcos Regime The three pillars of the Marcos regime were groups with middle-class and corporatist, authoritarian backgrounds. Before martial law, they played a passive and ritualistic role in democratic politics, and were largely marginalized by pre-martial law governments. The key Marcos allies were the technocrats, his cronies, and the military.

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Headed by then Prime Minister and Finance Secretary Cesar Virata, the technocrats were academics and management consultants with impressive records from prestigious universities and multinational corporations. Their corporate background made them critical of the snail-paced and consensual feature of democratic decision-making. Having advanced academic degrees and professional credentials, not a few believed they were superior to politicians. Some also wanted a career stint in the government for greater professional and monetary rewards. Moreover, others were of the belief that with them in command, the country could match, if not surpass, the economic performance of its Asian neighbours. By introducing corporate goals and management techniques, they enhanced the regime's administrative efficiency. They were also particularly valuable - owing to their familiarity with the language and personalities of international finance - in accessing much-needed loans for the regime from creditors and multilateral agencies such as the International Monetary Fund (IMF) and the World Bank (WB). They used this access to enhance their clout over the economic protectionists in the bureaucracy and push for IMF-WB-sponsored liberalization and an export-oriented growth strategy. 14 Referred to by the left as "bureaucrat capitalists", the cronies were a small circle of business associates and relatives of Marcos. In a sense, they represented the rising commercial and industrial elites whose interests clashed with those of the landed elites. The latter's access to the lucrative U.S. market was disrupted by Marcos. The cronies supported Marcos in the hope of taking the place of the disfranchised elites, and to expand their business interests through state support and patronage. Thus, they calculatingly used their ties with Marcos to build private business empires. Fronting for Marcos, the cronies amassed enormous fortunes by creating monopolies and oligopolies through franchises, tax relief, low-interest state-guaranteed loans, restrictions against competitors and outright expropriation of private property such as the ABS-CBN TV-radio network of the Lopez family. Headed by Eduardo Cojuangco, Roberto Benedicta, Herminia Disini and then Defence Minister Juan Ponce Enrile, the cronies virtually controlled every major industry ranging from sugar, coconut, construction, food marketing and insurance to auto assembly, gambling and livestock. 1'' The military was the third political resource used by Marcos to match his opponents' sources of power (that is, social status, economic

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power and media control). His lower position on the oligarchic ladder did not stop Marcos from his ambition to be one of the elites and the most powerful and richest of them all. Whatever he lacked in socioeconomic standing, Marcos compensated well with awesome will and Machiavellian skills to capture the presidency in 1965, and be reelected in 1969. After taking office, he courted military support by projecting himself as a war hero and increasing the wages and other benefits of soldiers. His efforts proved successful when the military showed its willingness to collaborate in suppressing his opponents and critics. Marcos, in tum, allowed the military to have an expanded role in governance and appointed loyal generals to important civilian positions. Led by Marcos' province-mates and relatives -then Armed Forces Chief of Staff Fabian Ver and Philippine Constabulary Chief Fidel Ramos - the military was the most feared faction in the regime. Like the Marcos cronies, several military officers also enriched themselves through fat commissions from military supplies and procurements, franchises and joint-venture projects with Marcos' business associates. The military soon realized its decisive role in the maintenance and survival of the regime. Since the legitimacy of the Marcos regime was always challenged, military officers saw that Marcos' reign was largely dependent on them, especially in the late 1970s when support from the middle classes started to shift from the regime to the opposition. This fact bred a high degree of self-importance and morale among several military officers. 16 Marcos' vision of "building a 'New Society"' rested on the neoKeynesian precept of the state playing a direct and leading role in the planning and implementation of developmental programmes. Under this framework, he tried to build a "command bureaucracy" which employed the following measures: 1.

2.

3.

strengthening of economic, finance and trade agencies, with the National Economic Development Authority (NEDA) as the primus inter pares body on economic planning. greater opening up of the economy to foreign investments through liberal packages of incentives which ranged from the enactment of the Omnibus Investment Code of 1981 to the establishment of export processing zones in Bataan, Cebu and Mactan; introduction of agricultural development and equity programmes, crop export management which led to the creation of a monopoly

88

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(in sugar) and a monopsony (in coconut), and the celebrated promulgation of land reform (Farmers' Emancipation Act). The creation of agricultural monopolies indicated the emergence of "crony capitalism" under the Marcos regime. It presaged the disfranchisement of traditional and landed elites by Marcos and his allies who represented more diverse orientation and interests. It also dramatized the permeability of the regime to vested and parochial interests which prevented it from crafting goals and policies for broader national objectives. From only 70 in 1970, the number of state enterprises swelled to 120 in 1975 and ballooned to 303 in 1984. Many of these firms proved to be either mismanaged or unprofitable, thus causing a large drain on public funds. A study of thirteen such firms revealed that their losses from 1981 to 1984 were equivalent to 2.3-4.5 per cent of GNP. 17

As previously stated, Marcos' economic performance was a disappointment. The growth rates achieved in the first few years of the regime proved to be unsustainable. External shocks in the late 1970s and 1980s (the second oil crisis, recession in the OECD countries and a fall in commodity prices) only exposed its dismal failure to remedy the long-time flaws (protectionism, debt-led growth and monopolies, among others) of the economy. 18 Instead of supporting its ambitious programmes with measures to reform the obsolete tax and fiscal system, the regime simply intensified foreign borrowing. This tack proved popular as it spared the regime from dealing with protests from powerful vested interests over tax increases. Moreover, it also provided excellent opportunities for graft, bribe and fat commissions. Large chunks of foreign loans were apparently wasted, as indicated by the minimal improvements in important economic sectors. With the exception of mining and quarrying, growth rates of other enterprises barely improved (see Table 1). Productivity (ratio of GDP to employed labour force) in most sectors remained minimal if not retrogressive. Average annual growth rates in agriculture went down from 2 per cent during 1962-74 to 0.2 per cent in 1974-86; in manufacturing from 6 per cent to 2.1 per cent; in mining from a high of 7.2 per cent to -6.8 per cent; in construction from 4.9 per cent to 2.9 per cent; and in services from 0.8 per cent to -1.5 per cent (see Table 2).

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TABLE 1 Growth Rates (Percentage per annum) Agriculture

Manufacturing

Mining

Construction

Services

1962-74

4.3

8.9

11.4

9.5

5.5

1974-86

3.1

4.6

1.5

7.6

3.1

Services

Year

TABLE 2 Labour Productivity by Sector, 1962-86 (Growth Rates, percentage per annum) Agriculture

Manufacturing

Mining

Construction

1962-74

2.0

6.0

7.2

4.9

0.8

1974-86

0.2

2.1

-6.8

2.9

-1.5

Year

These figures underscored the deterioration of the country's performance in the export race. Leading Taiwan, Korea, Thailand and Indonesia in export earnings in 1960, the Philippines found itself overtaken by these countries by 1986 (see Table 3). The country was also saddled with a huge foreign debt that rose from only $599 million in 1965 to $2.2 billion at the start of martial law in 1972, and reaching a high of $26.5 billion in 1984. Neither did the regime improve the poverty picture and the distribution of national wealth. Families living below the poverty line increased progressively: from 41 per cent in 1965, it rose to 51.5 per TABLE 3 Exports of Selected Asian Countries (In US$ million) Country

1960

1970

1980

1986

Indonesia Malaysia Philippines Taiwan Thailand South Korea

841 1'189 560 164 408 33

811 1,680 1,062 1,428 697 835

21,909 12,941 5,744 19,775 6,505 17,505

18,590 15,441 4,607 39,756 8,794 34,715

·--·

Source: Asian Development Bank, Key Indicators, 1971, 1987.

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cent in 1975, and to 58.9 per cent in 1985. At the base of this record of poverty incidence was the skewed distribution of wealth which the World Bank described as "one of the most unequal income distributions among middle-income countries". Table 4 shows that the richest 20 per cent of Philippine families received more than half of total income, while the poorest 20 per cent got as little as 5. 7 per cent. The country's poor economic performance proved the failure of technocrats to liberalize the economy and develop its export sectors. What derailed this developmental project were Marcos' crony capitalists who hid behind the popular slogan of economic protectionism to build and expand their private enterprises. Moreover, the stability created by the regime was short-lived and fragile. Its Bonapartist power structure stifled initiatives and alienated several groups whose views and sentiments remained unheard and unventilated. The problem of succession also became a serious issue as Marcos' health deteriorated in the early 1980s. During this period, the United States, which had been a major supporter of Marcos, started expressing doubts about the regime's ability to secure its military bases in the country. Consider these facts: 1.

2.

3.

From less than 1,000 in 1968, the communist armed forces had grown sharply to reach a total strength of 22,500 in 1985. It posted a record rise of 110 per cent during 1982-85; The previously weak Muslim secessionism in Mindanao had metamorphosed into a full-blown war, with blatant acts of intervention by militant Arab states; The former few, weak and seasonal mass rallies and demonstrations became more frequent, widespread, militant and massive TABLE 4 Estimates of Income Shares of Upper and Lower Quintiles,

1956-85

Year

Share of bottom 20% of families

Share of top 20% of families

1956 1965 1978 1982 1985

4.9 3.6 3.3 3.0 5.7

54.8 56.5 57.6 58.8 50.3

Source: World Bank, World Development Report, 1961, 1971, 1988.

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especially after the assassination of former Senator Benigno Aquino in 1983; and The once pliant and co-operative sections of the Catholic Church, urban middle classes, business and labour groups started to criticize the regime and joined leftist legal organizations in denouncing Marcos.

Restoration of Democracy under Aquino The overthrow of Marcos via a military-backed uprising in 1986 saw the dismantling of the Marcosian centralized power structure to a more open and democratic set-up. Pre-martial law institutions of democracy - that is, Congress, free press, along with civil and political liberties- were quickly restored. Interestingly, the post-Marcos period also marked a significant economic turnaround. After declining growth during 1983-85, the country suddenly posted modest but still positive rates during 1986-92.

Promise of the Aquino Administration: De-Marcosification and Democratization President Corazon Aquino, upon taking office, embarked on a number of measures to accomplish two basic complementary objectives: first, to prevent the return to power of the deposed regime through the deMarcosification process; and secondly, the democratization of the body politic. A revolutionary government was put in place which adopted a Freedom Constitution in place of the 1973 Marcos Constitution. It abolished the Office of Prime Minister and the Marcos-controlled Batasang Pambansa, and set up the Presidential Commission on Reorganization to reform the bureaucracy, as well as replaced city mayors and governors with allies of the new government. A fiftymember commission was then created to draft a new Charter, which later replaced the Freedom Constitution and marked the end of the revolutionary state in favour of a democratic and popularly-elected government. The moves to destroy Marcos' political base and instruments of dictatorship were carried out through measures that undermined his

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economic base. The Presidential Commission on Good Government was set up to recover the ill-gotten wealth of Marcos and his cronies, estimated to be at least US$5 billion. It sequestered properties of the Marcoses in and outside the country and made representations with foreign governments, notably those of the United States and Switzerland where the embezzled money and securities were stashed away. In keeping with her election campaign pledge to bring about national reconciliation, Aquino released political prisoners, including Communist Party of the Philippines (CPP) chief Jose Ma. Sison. An unprecedented ceasefire and peace talks with the CPP and the Muslim secessionists were held, and the Commission on Human Rights was created to investigate and prosecute those who had trampled on human rights during the Marcos regime, especially those from the military. The main agenda of democratization was spelled out by the 1987 Constitution which was overwhelmingly ratified. It provided the general framework and mechanics by which the democratic process and structures were to be re-established. It legitimized the Aquino government by recognizing it as the de facto government. Most of the pre-martial law structures were restored, including the presidential system based on the principles of separation of powers, and checks and balance among the three co-equal branches of government: the executive, legislative and the judiciary. Members of the bicameral Congress were elected in hotly-contested but clean elections in May 1987. There were also elections for city and provincial governments. New members of the Supreme Court were appointed to replace the Marcos-tainted judges who resigned. Basic civil liberties, such as freedom of speech and assembly, were restored and the creation of autonomous governments for special regions such as the Cordilleras and Mindanao was also put in place. 19

Leaders and Factions in the Aquino Government Political consolidation follows political revolt. In this fashion the immediate task of the Aquino government was to consolidate its power. This was not an easy task considering the fourteen-year dictatorship (1972-86) that had skewed the orderly succession process, among other things. That the Aquino government did not represent the coming to power of a cohesive and programmatic political movement

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dramatized the problems of post-Marcos politics. It was a coalition of disparate groups and forces that united together behind Aquino, mainly on the basis of their opposition to Marcos. When the latter was overthrown, the glue that put these forces together became weak. Inevitably, there were signs of elite fragmentation. 20 The Aquino government found itself speaking in many voices as its leaders with competing backgrounds and interests put forward their respective views and agenda. There was intense competition for official posts, shifting alliances and open and covert campaigns against one another. While this fragmentation of the elites served as a basis for political pluralism, it also had uglier consequences, as seen when the Reform the Armed Forces Movement (RAM) broke up with Aquino and tried to oust her through military coup d'etat. What prevented the collapse of the fledgling democratic order was the democratic disposition of Aquino, the human rights activists, the Catholic Church, Congress, business groups and other members of the ruling elite. They had not forgotten the havoc and uncertainties wrought by the deposed regime, and their new access to power was too important to be given up. Together, they rallied behind Aquino to block the militaristic option of the Reform the Armed Forces Movement and persisted in their avowed critical goal and agenda: restoration of democracy. What were the bases of Aquino's commitment to democracy? How were they different from those of her core major allies? Did the Aquino government perform in accordance with its avowed goals and promises? These questions will be addressed in the following discussion. Aquino's commitment to democracy was evidently moulded and reinforced by the direct sufferings she experienced under the Marcos dictatorship. As the widow of Senator Ninoy Aquino who was imprisoned for years before being killed by Marcos' military men, she directly endured the naked repression and abuse of power by the dictatorship. Her family fortune also suffered enormously when her family-owned agricultural estate, Hacienda Luisita, was deprived of its former profitability by the agricultural monopolies of Marcos' cronies. The anti-Marcos business and land-owning groups represented by Finance Secretary Jaime Ongpin (later replaced by Jesus Estanislao), Trade and Industry Secretary Jose Concepcion, Central Bank Governor Jose Fernandez, Representative Jose Cojuangco, businessmen Jaime Zobel, Cesar Buenaventura and other personalities from the Makati

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Business Club and the Philippine Chamber of Commerce and Industry (PCCI), were major allies of Aquino. As beneficiaries of the old democratic process dismantled by Marcos, they represented the disfranchised elites during the Marcos regime. This bloc had enormous clout in the Aquino government, particularly in the field of economic and trade policies. It instituted important reforms such as dismantling monopolies run by Marcos' cronies, trade liberalization and privatization of state enterprises. However, it did not go far enough in restructuring the economy, apparently in consideration of its own vested stakes. It blocked measures aimed at destroying other monopolies and cartels since such schemes were threats to its own interests. 21 PCCI leaders and Raul Concepcion, twin brother and business associate of Trade Secretary Concepcion, for instance, blocked the implementation of Executive Orders 413 and 470 in 1990-91. These measures were designed to reduce and simplify the tariff levels of about 300 products, some of which, such as appliances, competed with those of Concepcion Industries. 22 Waging similar anti-liberalization campaigns were big labour groups such as the conservative Trade Union Congress of the Philippines (TUCP) and the leftist Kilusang Mayo Uno (KMU) whose leaders and members were b~neficiaries of the long-time protected industries and sectors. They ·launched familiar tirades against foreign domination and warned against the spectre of mass lay-offs, strikes and unemployment to exploit the populist stance of government. This common policy stance and economic interests of favoured business groups and established labour federations showed the strange but powerful de facto alliance between these two articulate advocates of protectionism. Simultaneously, the land-owning groups led by Congressman Cojuangco, who is Aquino's brother, introduced provisions in the new land reform law. These amendments emasculated the programme's original intent, apparently to save Aquino's agricultural estate, the Hacienda Luisita, from being subdivided among its tenants. This and other acts of Aquino's relatives led some critics to claim that Marcos cronyism had returned in the form of Kamag-anak (Relatives), Inc. The Catholic Church hierarchy, represented by Cardinal Jaime Sin, was a late convert to democracy, being a long-time ally of the dictatorship. Marcos was shrewd enough to spare the interests of the

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powe:rful Church. He continued to give the tax exemptions it got before martial law and did not touch its business enterprises. He also ingratiated himself with the Church by hosting a papal visit, and allocating huge government casino funds for the Cardinal's social projects. What seemed to have compelled Cardinal Sin to criticize and abandon Marcos were the activities of ordinary Catholic priests, nuns, seminarians and lay people. Through the activities and projects of groups like the Association of Major Religious Superiors of the Philippines (AMRSP), and the clandestine Christians for National Liberation (CNL), the excesses of Marcos were exposed inside and outside the Church. One such undertaking led to the formation of the celebrated Task Force Detainees of the Philippines, a service organization for political detainees that won recognition from international agencies like the United Nations and Amnesty International. The activities of AMRSP and CNL, which started to lean to the communist side, alarmed Sin who also became embarrassed by his association with Marcos. At the height of the protests in 1983, he threw his support behind the opposition, and played a prominent role in the 1986 EDSA revolt. Aquino's religiosity and personal closeness to Cardinal Sin further strengthened the latter's clout in the Aquino government. 2:3 Led by Defence Minister Juan Ponce Enrile, Colonel Gregorio Honasan and the RAM, the anti-Marcos faction of the military was also a late convert to democracy. Its immediate cause for fighting Marcos was the latter's attempt to dislodge them in favour of the group led by army chief General Fabian Ver and Marcos' wife, Imelda. Some of its members were likewise appalled by the corruption, nepotism and abuses of the regime. Moreover, Marcos' repressive measures had resulted in the dramatic growth of the communist New People's Army (NPA). Being staunch anti-communists, the prospect of the country falling into the hands of the communists was simply unacceptable to them. When their coup plot was discovered by Marcos, the RAM forces mounted a siege at Camp Crame. Luckily, the opposition and the Catholic Church, along with the faction led by Vice-Chief of Staff Fidel Ramos, supported their putschist action. These combined forces saved them from being massacred by Marcos' men, and eventually transformed what could have been a simple military hold-out into a successful popular uprising.

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Though they were rewarded with choice positions in the new government, Aquino's refusal to adopt its political agenda antagonized the RAM group. The latter was particularly enraged by Aquino's appointment of human rights activists in key positions and her orders to free top communist rebels, as well as her decision to hold talks with the communists and prosecute military men who violated human rights. The group saw Aquino as a weak, incompetent and manipulable President who must be replaced by RAM-appointed leader(s). Thus, this faction severed its ties with Aquino in 1987, and launched no less than seven failed but devastating coup attempts against her government. Led by Executive Secretary Joker Arroyo, Senators Rene Saguisag, and Aquilino Pimentel, Economic Planning Secretary Solita Monsod, Senate President Jovito Salonga, Environment Secretary Fulgencio Factoran and presidential speechwriter Teodoro Locsin, Jr., the human rights activists, pre-martial law politicians and cause-oriented nongovernmental organizations (NGOs) were another group among the allies of Aquino. They represented the middle class which had been active in the resistance against Marcos. They did not share the anticommunist stance of other Aquino allies, perhaps because of their broader political backgrounds, and personal dealings with leftist leaders. As Aquino's campaigners in the 1985 elections, they broadened the coalition's programme to include democratic and popular demands such as decentralization, dismantling of monopolies, land reform and a greater role for POs and NGOs in governance. Some of these measures provided the bases for democratic consolidation after Aquino's term of office. Their extensive political exposure to traditional politics and the Marcos regime made them critical both of traditional elites and the Enrile-Honasan-RAM faction. 24 The last faction among Aquino allies were the leftists, notably those led by the "national democrats". 2" The latter was the best organized and most committed resistance force during the Marcos regime. Adept in underground work, they successfully penetrated various sectors such as the students, workers, peasants, professionals and church personnel and organized them to resist the dictatorship. Its peasant-based New People's Army had also expanded its operations from only a few provinces in 1972 to over forty-five (out of seventysix) by 1985. Led by personalities with middle- and upper-class backgrounds, their anti-Marcos alliance with Aquino was a function of their

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ideological framework. The leftists regarded the alliance as a mere transitory part of their long-term programme for a national democratic Philippines, with socialist China as the model. They were opposed to the Marcos dictatorship not because they wanted to restore the old democratic order (which they regarded as elitist and subservient to United States imperialism) but because they wanted to replace it with what they called people's or socialist democracy. This ideological view was one factor that sealed the failure of their alliance with Aquino.

Policies and Performance of the Aquino Government The six-year term of Aquino was marked by undertakings which addressed the difficult legacies of Marcos and the new difficulties after the 1986 revolt. The most important measures included the following: 1.

The restoration of constitutional democracy. The 1987 Constitution was drafted and popularly ratified. It enshrines civil and political liberties, and defines the powers, limitations and the manner of selecting members of Congress and other representatives. Clean and credible elections were held in 1987, 1988 and 1992; 2. The dismantling of agricultural monopolies to check Marcos' cronies, promote efficiency in the sectors and win the support of the planters who were disfranchised and deprived of much income by Marcos; 3. The privatization of state enterprises through the Assets Privatization Trust (APT). As of December 1992, the APT had sold or otherwise disposed of 293 transferred assets, and 75 governmentowned and controlled corporations, generating gross revenues of P60 billion; 26 3. The liberalization of trade through the removal of distortionary protection and incentives which had hampered the growth and efficiency of several manufacturing and export-oriented industries. During 1986--89, about 1,473 items were deregulated, most of which were raw materials or intermediate inputs; 4. The enactment of the Local Government Code which provided more power and resources to local government units. For the first time in Philippine political history, this measure gave substance to decentralization as it devolved several functions and authority to

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local governments which the national government had formerly held on tightly; 27 The holding of peace talks with the communists and Muslim secessionist groups. While they did not have happy endings, these unprecedented talks opened new vistas and forms of actions and strategies to address the festering problems of insurgency and rebellion; and 28 The enactment of the Omnibus Investment Code and the Foreign Investment Act of 1991. The former lifted the export subsidies of the old Code while the latter lifted nationality restrictions on equity and land ownership in several areas of business.

These measures undertaken by the Aquino government brought various results. Both critics and supporters of Aquino have often disagreed on the specific merits or demerits of her different policies but the following can be considered the most significant: 1.

2.

3.

The dismantling of the structures of authoritarian rule and the restoration of democratic institutions. Post-Marcos democracy is characterized by the free election of legislators and local officials, a strong legislature, an independent and credible judiciary, a free press, a decentralized bureaucracy, and local government autonomy; 29 The breaking down of the wall of suspicion between civilians and soldiers that was built during the fourteen years of military-backed Marcos dictatorship. Her administration provided the military with excellent opportunities to win back public esteem through their active defence of the fledgling constitutional government against the onslaughts of military rebels, the communist insurgents and Muslim secessionists. The military likewise helped in keeping the elections of 1987, 1988 and 1992 generally clean and peaceful, thus hastening the crafting of a credible and orderly system of selection and succession of political leaders;:m The firm commitment of the Aquino government to stay on the democratic course. Despite serious and repeated destabilization schemes of military rebels, communist insurgents, Muslim secessionists and the unprecedented succession of a destructive earthquake, volcanic eruption and floods, President Aquino "never sought to skirt around the law and adopt autocratic methods although the times were tempting and there were always those around her who suggested she did";:31

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The reversal of the upward trend of the communist insurgency. The communists' peak strength of some 25,800 in 1988 was brought down to some 14,470 at the last quarter of 1992, a 44 per cent reduction; The improvement in poverty reduction, wherein the poverty incidence rate declined from 59 per cent in 1985 to 49.5 per cent in 1988. Unemployment was also reduced, from 12 per cent in 1985 to 8 per cent in 1992; The reversal of economic decline. The economy shrank by 4 per cent and 5 per cent in 1984 and 1985 respectively. With the restoration of investors' confidence in 1986, the economy grew by an average of 5.95 per cent annually in 1987-89, a growth rate unmatched then by other new democracies in Latin America, Eastern Europe and Africa, with the possible exception of Chile. Productivity in many sectors also recorded modest growth; and The crafting of democratic transition and reform. President Aquino took the necessary measures to ensure a peaceful and democratic transfer of power. She made good her oft repeated declaration not to seek re-election which pleased the major contenders. Honest and credible persons were then appointed to the Commission on Elections to supervise the elections. Finally, Aquino chose her own candidate for president: Defence Secretary Fidel Ramos who had helped her in putting down all the seven coup attempts.

This performance of the Aquino government indicates the fulfilment of its promise to restore democracy, by which it asked to be measured. Its gains in achieving an economic turnaround and alleviating civilian-military animosities, among others, can be considered as extra dividends. This is not to overlook Aquino's shortcomings, which are not few. Its poor record on the issues of electric power, land reform, foreign debt and political dynasty have been welldocumented by various studies. However, these shortcomings as well as the gains can be better appreciated if the following contexts, or constraints under which Aquino operated are taken into account. First, the trying circumstances in which the Aquino-led coalition operated. It was confronted with severe constraints left by the dictatorship and the daunting problems of transition from authoritarianism to democracy. In the face of these difficulties, the coalition had only six years to unmake what Marcos did during his twenty years of uninterrupted rule (1965-86), in the last fourteen of which he reigned

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as a dictator. Apart from dismantling the well-entrenched Marcosian structures and reviving democracy, the coalition had to address the pressing issues of economic recovery. The latter was particularly daunting in view of the economic burden left by the plunder and mismanagement of Marcos. The Aquino government was saddled with a $26.3 billion foreign debt, huge obligations caused by abandoned and bankrupt state enterprises, negative growth in the preceding three years (1983-85), poor credit-worthiness, recession in most OECD countries, mounting debt service, harsh IMF economic impositions, and mass poverty amidst an uncomfortable high rate of population growth. This task of economic recovery was to be undertaken amidst repeated coup attempts, communist insurgency, an unprecedented succession of natural calamities, and aid fatigue among foreign donors. Secondly, the unstable character and composition of the Aquino coalition. It was an explosive mix of traditional oligarchs, big business, military rebels, middle-class professionals, human rights activists, and old and new politicians. On every major issue, these various groups competed for Aquino's endorsement, resulting in intense policy debates. Owing to Aquino's lack of administrative experience and her strange leadership style of "staying above politics", these debates led to policy delay and stalemate in several cases.

Democratic Consolidation Under the Ramos Administration President Aquino's transfer of power to Fidel Ramos in May 1992 was significant in at least three ways. First, it marked the continuity and strength of the democratic process. The clean and fair national and local elections demonstrated the enthusiasm of candidates and voters, and the integrity and efficiency of the Commission on Elections (COMELEC). Secondly, it signalled the end of violent elite fragmentation (that is, coup attempts) that previously rocked the fledging democracy. Major competing elites and non-elites were drawn in to seek power and settle conflicts in a peaceful, orderly and democratic manner. The presidential candidates represented major groups and classes from across the whole political spectrum. The traditional elites, Marcos cronies and anti-Aquino rightists were represented by Eduardo Cojuangco and Imelda Marcos; the traditional anti-Marcos politicians by Salvador Laurel and Ramon Mitra; the nationalists and NGOs-POs by Jovito Salonga; the Aquino civilian and military supporters by

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Fidel Ramos, and the students, youths and professionals by Miriam Santiago. Thirdly, it ushered in the start of the consolidation of post-Marcos democracy. The previous reforms were continued with more vigour and better results. New and more groups have also assumed political roles and positions that were formerly reserved for old oligarchs. The latter's clout has also declined as new actors with diverse backgrounds and interests have taken control of the state apparatus. How are these cases of deepening reflected in the Ramos administration? Who are its principal players and how do they differ from previous actors?

Lessons of the 1992 Elections The 1992 elections saw a decline in the influence of traditional rural and landed elites and power brokers. Marcos cronies and businessmenlandlords Eduardo Cojuangco and Imelda Marcos were soundly defeated in the presidential race along with pro-Aquino Emilio Osmena who comes from an old political clan. Candidates endorsed by the Catholic Church like Ramon Mitra also lost while Ramos whose candidacy was opposed by Cardinal Sin won. This trend was also discernible in Congress. A 1994 study, for instance, revealed that the number of members of the House of Representatives from decades-old oligarchic families and political clans was reduced to 145 in 1992 from 164 in 1987. Landholding is no longer the main source of wealth among many House members as it was previously. At least 30 per cent of members are younger middleclass bureaucrats, professionals or entrepreneurs who entered politics after the 1970s. State power, recaptured by the landed elites after 1986, was significantly reduced by the expansion of the political clout of businessmen, professionals and entrepreneurs. 32 It is worth noting that the highest government positions are now being occupied by persons who do not belong to the old oligarchy and political clans. Most of them started as bureaucrats and professionals and attained fame and wealth via their professions before their election. A quick scan of the profiles of these officials reveals this fact. President Ramos hails from a middle-class family whose wealth and prestige expanded through success in a bureaucratic career. His father was a minor bureaucrat at the Department of Foreign Affairs

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before becoming its Secretary, and his mother a school teacher. He followed his parents' track by joining the military where he excelled, obtained a scholarship to West Point, and rose to become the Philippine military's Vice-Chief of Staff. His involvement in the 1986 anti-Marcos revolt and leading role in suppressing the coup attempts against Aquino earned him the latter's critical support and endorsement for the presidency. Vice-President Joseph Estrada ·has the same middle-class background. He studied in private schools but for some reason did not fmish college. His ticket to fame and wealth was through the movie world. Adeptly, he used his popularity as a movie actor to become a town mayor during Marcos' time, a senator during the time of Aquino, and eventually, Vice-President in 1992. Likewise, Senate President Edgardo Angara comes from a middleclass family from Quezon. He gained wealth through lawyering for big corporations but it was his appointment as President of the University of the Philippines that helped him gain national prominence. His involvement in the National Movement for Free Elections (NAMFREL) in 1985 served as the launching pad for his legislative career in 1987. House Speaker Jose De Venecia has a more upper-class background, but he does not come from the traditional oligarchy. He was a minor member of the pre-martial law Congress and a lawyerbusinessman. His way to wealth and power, apart from his legislative career, was by being a Marcos crony who secured huge loans for lucrative construction projects in the Middle East. An ordinary member of Congress during Aquino's time, de Venecia got the House speakership as a reward for his critical support of Ramos' candidacy. The Almonte-Carpio-Arenas group, the power bloc in the Ramos Cabinet, is represented by National Security Director General Jose Almonte, Presidential Legal Counsel Antonio Carpio, and real-estate businesswoman Baby Arenas. They are believed to be the most trusted, being long-time associates of Ramos and partly responsible for his electoral victory in 1992. Almonte, the leader of the group, also has a middle-class background. He was with Ramos in the military as a colonel who headed a Marcos think-tank, the Presidential Center for Advanced Studies (PCAS). He became disenchanted with Marcos after his dismissal from PCAS, and joined the RAM. During Aquino's time, however, he sided with Ramos against the RAM, which earned him closeness to both Aquino and Ramos.

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The Ocampo-Navarro-Habito group, composed of Finance Secretary Roberto Ocampo, Trade Secretary Rizalino Navarro and Economic Planning Secretary Cielito Habito, represents the business sector. Unlike the prominent and well-connected technocrats of the Marcos regime and the Aquino administration, the present crop of economic officials have weaker linkages with big business. Of the three, only Navarro has extensive linkages with big business, being a former senior partner of the country's biggest accounting firm, the Sycip-Gorres-Velayo. Ocampo was with the World Bank before joining the government-controlled Development Bank of the Philippines. He was only appointed to the Finance Department when banker Ramon Del Rosario was forced to resign as a result of the congressional rejection of his appointment. Habito on the other hand was an economics professor at the University of the Philippines before his appointment to NEDA. With such middle-class backgrounds and weaker oligarchical linkages, the Ramos administration has been less constrained in addressing the recurring obstacles to democratization. Thus, it has demonstrated stronger resolve and more coherence in pushing through with important liberalization measures than its predecessor. Moreover, their middle-class backgrounds are supplemented by popular apprehension about the abuse and dangers of authoritarianism. This lingering resistance to authoritarian politics directs the Ramos officials towards the democratic path. At the base of these political changes is a rapidly changing socioeconomic structure. Export crops which used to sustain the dominance of landed elites have progressively waned in significance as the economic share of garments, electronics, handicrafts, agro-industries and the service sector continued to expand. During the last two decades, the profile and class composition of the population have also been altered. The urban population has increased compared to the rural population. More and more Filipinos are getting secondary and tertiary education. There is also a significant expansion of overseas contract workers, the urban petty bourgeoisie and workers, and shrinking of the peasantry (see Tables 5-9). The 1992 elections point to the new emerging context of democratization in which the old oligarchic methods of mobilization have lost their effectiveness. The dominance of landed elites is fast being eroded by the ascendant classes of industrialists, entrepreneurs and professionals. There is also more diversity of views owing to the fact

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TABLE 5 Percentage Shares of Traditional and Non-Traditional Exports in Total Exports (In per cent)

Traditional Exports (commercial crops, etc)

1970

1980

1985

1988

92.0

53.7

28.4

23.0

8.0

46.3

71.6

77.0

Non-Traditional Exports (garments, electronics, etc)

Source: Reprinted from Filologo Pante and Erlinda Medal Ia, "The Philippine Industrial Sector: Policies, Programmes and Performance", PIDS, July 1990, p. 17. TABLE 6 Transformation of Philippine Employment, 1970-90 (Sectoral Employment Share, in per cent) Sector

1970

1980

1990

Agriculture Industry Manufacturing Services

53.7 12.6 11.9 32.1

51.4 11.6 10.6 36.5

45.2 10.7 9.7 44.0

Sources: Philippine Statistical Yearbook, 1990; World Bank, World Development Report 1993. TABLE 7 Number of Overseas Contract Workers Deployed, 1987-92 (In thousands)

Land-based Sea-based Remittances ($)

1987

1989

1991

1992

449 67 $791 M

458 103 $973M

615 125 $1.5B

686 136 $1.7B

Source: Department of Labour and Employment, 1992 Yearbook of Labour Statistics, 1993.

that most voters are younger, more educated, urbanized and exposed to the media. The last is perhaps the most important in terms of promoting democratic political culture. Access to more sources of information makes standardization of views and conformism via manipulation by would-be dictators extremely difficult if not impossible.

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TABLE 8 Population by Urban/Rural Residence (In million) Population

Year

Rural

Urban

----

1970 1975 1980 1990 1995

36.9 42.0 48.1 61.5 68.4

25.0 28.0 30.1 35.2 37.3

11.7 14.0 18.0 26.2 31.1

Source: World Bank, World Development Report 1993.

TABLE 9 Percentage of Age Group Enrolled in Education Primary

1970 10.8

Secondary

1990 11.1

1970 46

1990 73

Tertiary

1970 3

1990 27

Source: World Bank, World Development Report 1993.

Policies and Performance of the Ramos Administration The two avowed goals or promises of the Ramos government point to the direction of democratic consolidation: Philippines 2000, or making the country's economy globally competitive by the year 2000; and, secondly, people empowerment or promoting decentralization and strengthening the civil society. Thus far, significant initiatives undertaken to pursue these twin objectives include: 1.

2.

the holding of peace talks with military rebels, communist rebels and Muslim secessionists. In contrast with previous negotiations, more headway and consensus have been achieved, especially in talks with military rebels and Muslim secessionists. The fact that several RAM leaders such as ex-Colonel Honasan took part in the congressional elections in May 1995 dramatizes the gains of these peace initiatives;:3:3 the adoption of a firmer stance against monopolies and cartels. Under the slogan of "levelling the playing field", liberalization measures were undertaken to check decades-old protectionism

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and promote competition and efficiency. The measures have resulted in the extension of land leases for foreign investors from fifty to seventy-five years, solving of the electric power crisis, better service in telecommunications, greater competition in banking through the entry of more foreign banks, and more business activities through a reduction of interest rates; the holding of an unprecedented multisectoral economic and political summit involving the executive and legislative branches, business, labour and NGOs-POs. This summit forged a broad consensus on the country's pressing problems and the most suitable strategies to address them. Such consensus is contained in the Social Pact for Empowerment and Economic Development (SPEED) document; the forging of a political coalition with the erstwhile biggest opposition party, the Laban ng Demokratikong Pilipino (LDP), as well as with other smaller parties like the Liberal Party (LP) and the Pilipino Democratic Party (PDP). The coalitions are different from past parochial-oriented alliances because they are premised on a common commitment to pursue further the structural reforms for economic growth and political stability; the swift implementation of the Local Government Code which devolved much power and authority from the national government to local government units. It also significantly institutionalized representation of NGOs in the decision-making organs of local governance. The Code combined with other mechanisms on information and funds access to make the NGOs a very prominent actor, alongside government and business. Their number has swelled from about 3,000 in 1985 to over 20,000 in 1993, thus making the Philippines one of the few countries in the Asia-Pacific region with a large number of NGOs.

Performance Assessment of Post-Aquino Democracy It is still too early to make a credible assessment of the two-year

Ramos administration. As with other administrations, its record appears to be a good balance of impressive gains and lamentable shortcomings. On the one hand, its performance in solving the debilitating electric power crisis, in chalking up an average 5 per cent GNP quarterly growth since 1994, liberalizing important economic

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sectors, beefing up foreign reserves, promoting freedom of the press, designing programmes for social reform and equity, supporting NGOPOs activities, and bringing back armed rebels and insurgents to the negotiating table are certainly not insignificant gains. These initiatives have promoted the democratic political culture. They also strengthen civil society and other institutions of democracy (mass media, NGOs, religious groups and parties), thus firming up the bases of democratic consolidation. On the other hand, the problems of graft and corruption, trade and fiscal deficits, mass poverty, criminality, land reform, foreign debt, political dynasties, and failure in electoral reforms are too real to be ignored or overlooked. Complicating these problems are the authoritarian and rent-seeking tendencies of some Ramos officials, especially those from the Almonte-Carpio-Arenas group and some former military associates. Their encroachments in many policy issues outside their official duties, intimidation and dossier build-up on Ramos' critics, and the rapid expansion of their business holdings and interests are perceived to be threats to democratic consolidation. These harmful tendencies combined to renew campaigns by Marcos' son, Ferdinand Jr., and wife Imelda, to stage a dramatic political comeback via the May 1995 congressional election. But if recent citations of erstwhile Philippine critics and bashers are any indication, the Ramos government - in the main - appears to be on the right track. Reflecting a strong developmentalist bent, this assessment sees the Ramos administration in a very positive light, apparently because of its recent success in producing good growth rates. If the current performance is sustained and further improved, the prospects of democratic consolidation will be even better especially with regard to strengthening the democratic disposition of the middle classes. Thus, the usually reserved IMF-World Bank recently noted the "very encouraging gains achieved since 1992", and predicted the "good prospects for stable growth" of the country. Even more "bullish" were Barclays Bank, Morgan Stanley and Salomon Brothers which said: "Nevertheless, we maintain our view of optimism on the Philippines economy, with significant progress being made in external accounts, currency stability, price stability, and overall macroeconomic management". Finally, Newsweek magazine was visibly impressed by the signs of a booming economy ready to take off when it described it as "not yet a tiger economy but already a tiger cub".:34

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Some Concluding Remarks From the preceding discussion of the policies and performance of three administrations, the following findings are now presented. First, the Philippine experience challenges the validity of the developmentalist view. The link between authoritarianism and growth is uncertain, and in so far as the Marcos-type is concerned, it is inferior to democracy in attaining growth and stability. Secondly, democracy may be congenial to economic prosperity, but it is not dependent on growth as it is on the democratic disposition of sections of the elite, the middle class and the citizenry. For better or for worse, the Filipino answer to trying difficulties has been democracy. When the conditions were said to be inhospitable to democratic politics, the Filipinos firmly pushed it forward. Thus, the country's worst post-war crisis was addressed through a military-backed popular uprising. When the crisis persisted during the debt-ridden Aquino administration, the response was not less, but more democracy. There are many indications that the incumbent Ramos administration is bent on promoting this democratic track. The authoritarian tendencies of some of its officials have been exposed and opposed. Thirdly, putting democratization ahead of economic reform has been difficult but not untenable. The democratic process under Aquino may have slowed economic reforms but it certainly never discarded them. Policy clashes and delays were inevitable, given the nature and dynamics of coalition politics, and the value of forging some degree of consensus. Fourthly, the records of the Aquino and Ramos administrations debunk the "cruel choice theory". They seem to prove that democracies can have their cake and eat it too. While upholding the democratic process, the two administrations have posted modest but fairly respectable growth rates. Fifthly, the features of democratic politics are largely conditioned by the backgrounds and interests of the ruling elite. The latter, however, cannot do whatever it pleases because of objective constraints under which it operates. Pre-martial law democracy had strong oligarchic characteristics owing to the domination of a few political and economic clans. The impulse to monopolize power was ever present but the democratic process and structure handed down from the colonial years and imbibed by many somehow tempered these ambitions.

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Thus, Marcos had to dismantle the institutions of democracy to advance his ambitions. His natural allies were groups with weak democratic backgrounds that had also been largely marginalized by pre-martial law administrations. The military and the technocrats combined with his cronies to set the directions of his authoritarian regime. The latter's exclusivist character inevitably limited its policy vision to the sectarian interests of a very small circle of Marcos' associates. These self-serving policies combined with his overweening greed to drain the government coffers and plunge the country into a deep recession. The Aquino-led coalition was composed of disparate groups of anti-Marcos business and military groups, the Catholic Church and human rights groups. There were repeated cases of policy clashes, with the RAM later launching coup attempts to oust the new government. However, Aquino and other blocs which opted for the democratic track prevailed over this militaristic option of the RAM. The Ramos government is a more cohesive group, with weaker oligarchic interests and more diverse backgrounds. This fact represents the greater opening of the political system as more social classes are absorbed into the ruling elites. The broader policy thrusts in liberalization and people empowerment also seem to be the positive function of weaker oligarchic interests in the present government. What makes the middle-class backgrounds of Ramos and other incumbent officials more conducive to democratization than that of Marcos and his circle is the existence of a more vibrant civil society. This participative system is strongly complemented by lingering memories of the abuses and ineptness of Marcos authoritarianism. Finally, the prospects for democratic consolidation appear bright. The old oligarchic features of Philippine politics are on the wane. An urbanized, younger, more educated and media-exposed population is leading to greater diversity of views, and more informed citizens. Combined with a politicized and expanding middle class these voters represent the critical constituency for reforms and greater democratization.

NOTES 1. Named after the Epifanio De Los Santos Avenue, where some two million Filipinos gathered in February 1986 to demand Marcos' ouster.

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2. See, for instance, Seymour Martin Lipset, Political Man: The Social Bases of Politics (Garden City, N.Y.: Doubleday, 1963); and Samuel P. Huntington, Political Order in Changing Societies (New Haven: Yale University Press, 1968). 3. James M. Malloy and Mitchell A Seligson, eds., Authoritarians and Democrats: Regime Transition in Latin America (Pittsburg, Pa.: University of Pittsburg Press, 1987), pp. 1-9. 4. See Joel Migdal, Strong Societies and Weak States (Princeton, New Jersey: University of Princeton Press, 1988); and Donald Crone, "State, Social Elites, and Government Capacity in Southeast Asia", World Politics 40, no. 2 (January 1988). 5. Samuel Huntington, "Liberalization and Democratization", Harvard International Review (Winter 1992-93), pp. 32-34. 6. John P. Lewis and Valeriana Kallab, eds., Development Strategies Reconsidered (Washington, D.C.: Overseas Development Council, 1986), pp. 152-63. 7. United Nations, Universal Declaration of Human Rights, 10 December 1948. See also Guy S. Goodwin-Gill, Free and Fair Elections: International Law and Practice (Geneva: Interparliamentary Union, 1994); and Vernon Bogdanor and David Butler, eds., Democracy and Elections: Electoral Systems and their Political Consequences (Cambridge: Cambridge University Press, 1983). 8. Bruce Koppel and Chai-Anan Samudavanija, "Democracy and Democratization in Asia: Evolution or Imposition?" in Aid Policy Forum on Democratization and Official Development Assistance within the Asian Context: Open Policy Dialogue (Tokyo: Fair, July 1993), p. 40. 9. Rajesh Tandon, "Civil Society, the State and the Role of NGOs," in Civil Society in the Asia-Pacific Region, edited by Isagani Serrano (Washington D.C.: Civicus, 1994), pp. 118-36. 10. Renato Constantino, "The Americanization of Filipinos" (Quezon City: Malaya Books, 1971). 11. Dante C. Simbulan, "A Study of the Socio-Economic Elite in the Philippines, 1946-1963" (Ph.D. dissertation, Australian National University, 1965). The continuing hegemony of these post-war elites are documented by recent studies such as those of Temario Rivera, Landlords and Capitalists (Quezon City: University of the Philippines Press, 1994); and Eric Gutierrez, The Ties that Bind (Makati: Philippine Center for Investigative Journalism, 1994). 12. Manuel F. Montes, "The Business Sector and Development Policy", in National Development Policies and the Business Sector in the Philippines, edited by Aiichiro Ishii et al. (Tokyo: Institute of Developing Economies, 1988), pp. 23-75. See also Benedict Anderson, "Cacique Democracy in the Philippines: Origins and Dreams", New Left Review 169 (May-June 1988).

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13. Ferdinand E. Marcos, Today's Revolution: Democracy (Manila, 1972). 14. Robin Broad, Unequal Alliance, 1979-1986: The World Bank, the International Monetary Fund and the Philippines (Quezon City: Ateneo University Press, 1988). 15. Ricardo Manapat, Some Are Smarter Than Others: The History of Marcos' Crony Capitalism (New York: Aletheia Publications, 1990). 16. Carolina G. Hernandez, "The Extent of Civilian Control of the Military in the Philippines: 1946-1976" (Ph.D. dissertation, State University of New York at Buffalo, 1979); and Felipe B. Miranda, "The Politicization of the Military" (Quezon City: University of the Philippines, Center for Integrative and Development Studies, 1994). 17. Philippine Institute of Development Studies, "A Review of the Government Response to the 1983-84 Balance of Payments Crisis" (Manila: PIDS, 1985). 18. For a fuller account of the basic flaws of the Philippine economy, see Mario B. Lamberte et al., Philippine External Finance, Domestic Resource Mobilization and Development in the 1970s and 1980s (Makati: Philippine Institute for Development Studies, 1992). 19. 1987 Constitution of the Republic of the Philippines. 20. Rigoberto Tiglao, "Dilemmas of Economic Policymaking in a 'People Power' State," in The Politics of Economic Reform in Southeast Asia, edited by David G. Timberman (Makati: Asian Institute of Management, 1992), pp. 91-116. See also Charles Lindsey, "The Political Economy of International Economic Policy Reform in the Philippines: Continuity and Restoration", in The Dynamics of Economic Policy Reform in Southeast Asia and Southwest Pacific, edited by Andrew J. Macintyre and Kanishka Jayasuriya (Singapore: Oxford University Press, 1992), pp. 74-93. 21. Ibid. 22. Socorro Bautista and Jaime Faustino, AFTA and the Philippines: National Economic Policy-Making and Regional Economic Cooperation (Quezon City: Institute for Strategic and Development Studies, 1994), pp. 68-79. 23. James Clad, "Politics of the Cloth", Far Eastern Economic Review, 18 June 1987, pp. 45-47. 24. Randy David et al. "Coup d' Etat in the Philippines: Four Essays", Third World Studies, Series No. 44 (Quezon City: University of the Philippines, December 1986); and Renato S. Velasco, "The Anatomy of the People's Power Revolution", Diliman Review 34, No. 2 (1986): 13-17. 25. Filipino leftists are divided by ideological orientations, leaderships and posture vis-a-vis the Aquino government. The social democrats strongly advocated full support and co-operation with Aquino; the socialists and popular democrats, critical co-operation; and the national democrats, critical "tactical" alliance. 26. Committee on Privatization, RP, April 1993.

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27. Alex B. Brillantes, Jorge Tigno et al., "Redefining Governance and Operationalizing People Empowerment: NGOs, POs and the 1991 Local Government Code" (Quezon City: ISDS, June 1994). 28. Jose Abueva et al., "Ending the Armed Conflict: Peace Negotiations in the Philippines" (Quezon City: UP CIDS, 1992). 29. Jose Abueva, "Assessing the Presidential Leadership of Corazon C. Aquino," in Corazon C. Aquino: Early Assessments of Her Presidential Leadership and Administration and Her Place in History, edited by Jose Abueva and Emerlinda R. Roman (Quezon City: University of the Philippines Press, 1993), pp. 237-82. 30. Ibid. 31. Alex Magno, "The Aquino Administration Leaves Office With A Passing Mark", Manila Chronicle, 30 June 1992. 32. Eric Gutierrez, The Ties That Bind (Makati: Philippine Center for Investigative Journalism, 1994). See also Eric Gutierrez et al., All in the Family: A Study of Elites and Power Relations in the Philippines (Quezon City: Institute for Popular Democracy, 1992); and Paul Hutchcraft, "Oligarchs and Cronies in the Philippine State: The Politics of Patrimonial Plunder", World Politics 43 (April 1991): 97-117. 33. Jose Almonte, "Population Planning and National Security", 5th Rafael Salas Forum on Population and Planning and National Security (Manila: Rafael Salas Foundation, 1994). 34. Newsweek, 7 June 1994.

ECONOMIC DEVELOPMENT AND POLITICAL CHANGE The Democratization Process in Singapore HENG HIANG KHNG

Introduction The rapid and successful industrialization of many East and Southeast Asian nations has generated a discourse about the antecedent political changes that come with such economic transformation. A major question being posed is whether the development would lead to a greater demand for political participation within these societies. The connection between economics and politics is derived from the experience of Europe, where capitalism and democracy had their beginnings and were closely interrelated within a common historical process. Perceiving Asia's present through this particular prism of Europe's past presents contextual problems. The time frames of development are markedly different. The evolution of capitalism and democracy has taken Europe at least three centuries and through major social/political/economic movements such as the Enlightenment, the French Revolution and the Industrial Revolution. Where capitalism is concerned, the European legacy seems to have been competently replicated by the newly industrializing economies (NIEs) of South

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Korea, Taiwan, Hong Kong and Singapore (the more recent examples of Thailand and Malaysia would lend further strength to the empirical evidence). However, conclusions are more ambiguous when assessing how the Western liberal democratic model has been efficaciously transferred to the Asian polities. These discrepancies from the European experience would suggest that the nexus of interaction between economics and politics may be different in a non-European situation, arguing therefore for outcomes which are culture and history specific. This chapter seeks to examine some of these political/economic incongruencies in the case of Singapore but, in so doing, it may be impossible to avoid problematizing the issue of democracy. Such an intellectual premise is unlikely to enjoy a convergence of views among the community of scholars, politicians and observers with an interest in Singapore politics because of different perspectives on what is democracy and, arising from that, the extent to which that process can be regarded as problematic. Senior scholars within Singapore have posited an Asian democracy in variance with the liberal prototype of the West and, within that paradigm, the democratization of Singapore could be relatively problem-free. To obviate the polemics that can arise from such a difference in perspectives, this chapter will set down initially a definition of democratization which it intends to use. Once this is established, the chapter will chart the development of the democratic process since it took on an institutional form in 1948, with a view to identifying the forces that have shaped it. Finally, it will assess the extent of democratization manifest in a liberalization trend in the island state's socio-political life beginning in the 1980s.

Democracy: A Definition

The concept of "Asian democracy" has to be addressed when discussing Singapore's political system for two reasons. First, the term increasingly dominates the discourse on democracy within Singapore. Secondly, this is a term used by the State of Singapore in its ideological debate with the world outside. Asian democracy has been identified by Chan (1993, pp. 21-24) as comprising the following features: 1.

A communitarian approach which teaches that the individual is important as part of a group rather than the centrepiece of democracy. This will tend to place greater emphasis on common

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good rather than individual good and the notion of individual rights is not highly respected in this form of democracy. A greater respect and acceptance of authority and hierarchy. An effective dominant party that remains in power for long periods and an essentially strong state which is interventionist and runs a centralized bureaucracy as well as a large state sector.

The logical process inherent in this definition is, first, to claim democracy status for an Asian state by using a minimalist procedural definition (that is, it runs a form of election where some candidates would actually lose) and then to appropriate whatever political practices it follows into this genre called Asian democracy. In short, "Asian democracy" is as "Asian democracy" does, which traps the concept in a kind of tautological logic. Nevertheless, an intellectual debt to this concept of "Asian democracy" must still be acknowledged because its advocates, in setting the notion apart from the Western democratic prototype, have helped to focus the mind on what should be the essence of democracy. Ergo "democratization" becomes defined as precisely what Asian democracy is NOT, and that would comprise the following three criteria: 1. 2.

3.

a greater recognition of individual rights; an ability to resist entrenched authority and to reject hierarchy for more equality in status; and the dilution of power concentrated within the hands of one party which would mean the setting up of some meaningful checks and balances.

Such a model of democratic governance is unambiguously liberal in its ethos. This chapter, however, holds no position on whether governments should be more or less democratic, its sole purpose being just to document Singapore's democratization process and say whether it falls short of or meet the standards that have just been set out.

Democracy: The Process of Development The developmental process of democracy in Singapore can be divided into the following three phases: 1.

competitive multi-party phase: 1948-68

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2. 3.

one party system: 1968-81 democratization resumed: 1981 and after

Competitive Multi-party Phase: 1948-68 Going by Schumpeter's (1943, p. 269) basic condition for democracya competitive struggle for people's votes - Singapore's democratization experience would commence with the first Legislative Council elections in March 1948. Electoral history for the next twenty years was to see a growing multiplicity of political parties followed by a shortlived phase of two main political parties, the People's Action Party (PAP) and the Barisan Socialis (henceforth Barisan for short). The PAP won the 1959 elections and has remained in power since. The Barisan, which was a leftwing breakaway faction of the PAP, boycotted Parliament in 1965 and then resorted to street mobilization as a means of political opposition. By 1968, all prospects of a twoparty system was lost when it refused to take part in elections, which resulted in a PAP monopoly of parliamentary power. Throughout this period, the system maintained certain basic qualities of a democracy, which were to renew electoral mandate regularly and to preserve a political environment within which the competition for votes could remain meaningful and the outcome legitimate. This condition remains to this day. Except for the Communist Party of Malaya, opposition parties have never been banned and the Barisan was largely responsible for marginalizing itself by boycotting elections. However, critics of the regime have pointed to non-democratic practices which attenuated the system's claim to running fair elections. One of these was the commonly cited discretionary power to detain opponents. Another example would be the outright deregistration of the Barisan-sponsored trade union movement, the Singapore Association of Trade Unions in 1963 (Milne and Mauzy 1990, p. 97). This had undermined the opposition support bases among the students and workers. These and other instances where power was exercised with great latitude have been justified by internal security concerns (for example, the threat of communism and racial disturbances). Essentially, a post-colonial political culture was being nurtured which held stability and efficiency to be central, and abstract principles of democracy, peripheral. Commitment to democracy was honoured in the minimalist procedural way of holding elections to legitimize the regime as a popularly elected government. In addition, a custodial

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approach towards lifestyle and culture (for example, banning of certain pop songs and long hair) also signalled a circumscribed acceptance of democratic rights such as freedom of expression. The PAP inherited a colonial economy dominated by the island's entrepot trade. If the term "capitalists" is taken broadly to refer to wealthy private businessmen, then the capitalist class is one whose interests are commercial rather than industrial. Early State effort at implementing an import-substitution policy aimed at encouraging indigenous private capital to develop an industrial base did not take off. State-private capital contention within development strategy was, however, not focused on the issue of reliance on indigenous or foreign capital, or it was at least not apparent. Because legitimacy was franchise-based, the political strategy of the PAP was directed primarily at the constituency which was numerically the largest the poverty class comprising low-pay workers, job-seekers and the rural poor who had to be resettled to accommodate the imperatives of urban development within a small city-state. Such conditions were appropriated by the Communist Party of Malaya for its revolutionary paradigm based on class struggle. The PAP's founding ideology, socialism, was, however, equally appropriate as well as an essential ideological tool to fight the communist strategy of mobilizing the working class. Be that as it may, the PAP was never trapped by socialism as an ideology. Employers very quickly understood that the PAP, despite its socialist credentials, did not threaten their interest. This became evident when the PAP introduced major amendments to the law in 1966 and 1967 to curb trade union militancy. The Employment Act and Industrial Relations (Amendment) Act were introduced in 1968. Political opponents of the party would regard this as evidence that the PAP was aligned with the interests of employers against those of workers. But it would be too simplistic to view these developments entirely as competitive political patronage of class interests. If the PAP had maintained a soci