Heading South?

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In November 1971, foreign ministers from five Southeast Asian countries—Singapore, Thailand, Indonesia, Malaysia and the Philippines—gathered in Kuala Lumpur to confront a frighteningly changed world. Richard Nixon had declared the famous Nixon Doctrine, which said, in effect, that Asians were on their own: the U.S. wasn't going to protect them anymore. War was raging in Vietnam, and the communists were winning. Four weeks earlier, Mao Zedong's China had wrested away Taiwan's seat in the United Nations.

To deal with such tectonic shifts on their own geopolitical map, the ministers labored hard—and created an acronym you've probably never heard of. Southeast Asia, they professed, was a Zone of Peace, Freedom and Neutrality, or ZOPFAN. Then, presumably, they went to lunch.

There was a touch of platitude in the declaration, but even more hypocrisy: two of the five nations, Thailand and Indonesia, were out-and-out dictatorships, and the Philippines would become one 10 months later. Prosperity wasn't even cited as a goal: with the exception of tiny Singapore seemingly born with Asian Tiger DNA, the remaining countries were populous, poor and going nowhere in a hurry. ZOPFAN, on the face of it, had as little long-term potential as it did euphony.

But before three decades were out, Southeast Asia had fulfilled all those 1971 promises. In 1998 the last of the military dictators, Indonesia's Suharto, was shoved off his throne by angry masses. Democratically elected governments now ruled throughout the original membership of the Association of Southeast Asian Nations (ASEAN), created in 1967. Cold war legacies were in the dustbin: the Philippines tossed out two giant U.S. military bases, and the Soviets were gone from Vietnam's Cam Ranh Bay. The intraregional conflicts that had once flared—between Indonesia and Malaysia in the 1960s, Vietnam and Cambodia in the late 1970s—had become almost unimaginable. Southeast Asia was free, neutral, at peace—and economically booming to boot.

This was a giddy era. Malaysia had eight consecutive years of 8% economic growth—a record in Asia bested only by China—and to announce its arrival as an economic power, it built the world's tallest pair of buildings. A Thai tycoon announced plans to launch his own telecommunications satellite. Just about every Southeast Asian country started a national car project; Indonesia went further, declaring that it would produce passenger jets. Singapore was asked by Beijing to in essence annex a part of China to try to teach the mainland—of all places—how to run a tightly controlled industrial zone. No Goliath was too intimidating to ASEAN's original members, and by 1999, the group had expanded to include Vietnam, Cambodia, Laos, Burma and Brunei. The confident hope was that the Southeast Asian miracle would inevitably spread: that economic development models could be stamped into existence as easily as computer chips on a Malaysian factory line. Political pluralism, surely, would follow as day follows night.

Today, the miracle is looking more like a muddle—or perhaps a mirage. The 1997 Asian economic crisis—sparked this very week six years ago by the collapse of the Thai baht—was the pin that pricked the bubble. If you want to see business fizziness nowadays, you have to look north to China, which isn't taking lessons from anyone anymore. Indonesia, thanks to billions of dollars in foreign investment, grew its economy at annual rates of nearly 8% in the '90s. Today, growth is at 3%, thanks to persistent corruption in the country's courts and bureaucracy. The Philippines, the region's perpetual underachiever, is starting to suffer widespread power cuts in the provinces—a scourge it believed it had vanquished in the mid-1990s. "We can kiss our economic gains goodbye," says Allan Ortiz, president of the state-run energy concern Transco.

Politically, the era of People Power and reformasi has given way to something far less liberal: a not-so-subtle return of the Iron Fist. Last month, the junta in Burma grabbed long-tormented Nobel Peace Prize-laureate Aung San Suu Kyi and spirited her away to an unknown location, which might be Rangoon's notoriously brutal Insein Prison. Suu Kyi has been in and out of house arrest for the most part of a decade, but until now she has never been tossed in the clink. In May, Indonesian President Megawati Sukarnoputri abandoned a peace process with separatists in Aceh province and launched a full-scale military invasion. (Her popularity has skyrocketed since she sold the offensive as the only way to keep the nation whole.) Earlier this year Thai Prime Minister Thaksin Shinawatra ordered a three-month campaign to wipe out drug pushers in Thailand; it has since claimed the lives of nearly 2,300 supposed miscreants. (His ratings have also risen, largely with a middle class sick of the country's drug scourge.) The hard-liners are now engaging in mutual backslapping. Thaksin enthusiastically supports Megawati's war in Aceh. Philippine President Gloria Macapagal Arroyo recently said she was "inspired" by Thailand's war on drugs and promised to "do a Thaksin" in her own nation.

A sinking—or stuck—Southeast Asia creates enough of its own worries even without consideration of the region's most real and present danger: terrorism. The Bali attack was Southeast Asia's 9/11, and the subsequent arrests and ongoing trial of its perpetrators give an illusion of a threat contained. The opposite is true. Bali exposed Jemaah Islamiah (JI) as a region-wide Terror Inc., which, according to terrorism expert Rohan Gunaratna, is al-Qaeda's "most successful attempt to create a direct but largely independent and self-financing proxy." JI has been dented by the Bali arrests but hardly defeated. In fact, its reach seems only to grow. In recent weeks, suspected JI operatives have been nabbed for the first time in Thailand and Cambodia. Phnom Penh police detained four suspected terrorists, and Cambodian Prime Minister Hun Sen said there was evidence they planned an attack on a meeting of visiting foreign ministers last month, which was attended by U.S. Secretary of State Colin Powell.

Terrorism, of course, is fueled in part by economic malaise and harsh politics. The '80s and '90s were Southeast Asia's glorious adolescence, which was supposed to lead to a 21st century golden era of prosperity and Western-style freedoms. Instead, the region has stepped into an age of living dangerously.

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