If 1998 was the year of economic crisis, 1999 was the year of recovery. The pervasive gloom of 1998 receded somewhat, but Southeast Asia still, at best, presented a mixed picture. Economic recovery among the older members of the Association of Southeast Asian Nations (ASEAN) generated a palpable sense of optimism. Even Indonesia, with its battered economy, could inspire some hope after it held a relatively peaceful and fair parliamentary election, followed by a presidential election which resulted in the establishment of a democratic government with the moral and political legitimacy to govern. But there was also tragedy, followed by humanitarian intervention, in East Timor and, for Indonesia, enormous uncertainties remained. Elsewhere, the reforms needed to deal with the weaknesses in state and corporate governance which the crisis had highlighted were only partially addressed, raising doubts about the sustainability of the recoveries. Conditions in Laos, Myanmar, and Vietnam were worse than in 1998. The durability of the new democracy in Indonesia was not assured, while in the rest of Southeast Asia, progress towards more tolerant, enlightened, and democratic societies was patchy, mixed with stasis, even regression.

ASEAN sought to overcome a crisis of credibility. The broader Asia-Pacific strategic environment remained relatively benign. There were, however, more signs of Sino-American competition. China's claims and posture in the South China Sea remained a troubling long-term strategic lever against Southeast Asia.

The Association of Southeast Asian Nations

A Question of Credibility