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Thailand’s Foreign Policy During the Economic and Social Crises

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Keynote address by H.E. Dr. Surin Pitsuwan
Minister of Foreign Affairs of Thailand
at the Seminar in Commemoration of the 49th Anniversary
of the Faculty of Political Science, Thammasat University
June 12, 1998

Distinguished Guests,
Ladies and Gentlemen,

Whenever I return to Thammasat, I am always glad to see familiar faces. I wish to thank Ajarn Corinne for inviting me back, which allows me to reminisce and meet old friends. I am also glad to see that a lot has changed since my time here -- new buildings, new faces, and now a new program of study. As an alumnus and former faculty member, I wish to congratulate the Faculty of Political Science for taking another important step forward by launching the English-language master’s degree program in international relations. This initiative is a good example of the ways we Thais can and should adapt to today’s fast-changing world. 

Indeed, change is a normal part of life. But it seems that lately change has been occurring just a little bit too fast for us to keep up. Today I would like to talk about what kinds of changes are represented by the crisis facing Thailand and many of our partners in East Asia, the questions the crisis poses for Thai foreign policy, and some of the challenges ahead of us. 

I think that as time passes, it has become clearer that the ongoing economic crisis is the severest in Thailand’s history. Not even the Great Depression affected the Thai economy so much. Back then, our integration into the world economy was relatively superficial. Now we are much more deeply plugged in, with all the rewards and risks that entails. 

In some ways, it isn’t all that surprising for a fast-growing economy to suffer the kind of economic troubles that have battered Thailand since last July. While it is certainly painful, we are hardly the first to suffer this kind of fate. Even the United States, that bastion of capitalism, has lived since the mid-19th century through several financial crises involving crony capitalism, investor panic, stock market crashes, and assorted speculative bubbles. 

What is surprising, however, is the speed with which a sneeze turned into an epidemic. The East Asian downturn began as a local financial crisis in Thailand, a medium-size economy not traditionally known to be a regional mover of markets. So by all rights, this should have been a containable brushfire. Instead, it quickly escalated into a crisis of regional proportions, bringing down currencies, stock markets, and even governments. With Japan now feeling the crunch, we have to be even more vigilant in the days ahead. But if we make the right moves, if we learn the right lessons, we can emerge stronger, sadder perhaps, but a little bit wiser.

The crisis is the first clear sign that perhaps we are not as well prepared for this phenomenon of globalization as we should be. Although Thailand has gradually opened up our economy to the outside world, the pace of change in the global economy has been much more rapid. The exponential advances in digital technology have allowed capital and information to be moved across the globe at the speed of light, shortening reaction times and multiplying outcomes, subjecting domestic economies to rapid ebbs and flows of capital governments are ill-equipped to deal with. 

For emerging markets, this can mean huge infusions of capital over a relatively short period, as investors vie to get a piece of the action. But the stampede goes both ways: at the first sign of trouble, capital can just as quickly rush out. The complex web of trade and investment ties within the region and with the rest of the world means that the contagion effect is a reflection of the darker side of increased interdependence in the new global economy. 

What does this mean for Thailand? Since a crisis of this magnitude has never happened to us before, there are growing calls for a retrenchment, a withdrawal inward to self-sufficiency. But if we remember our history, something similar has happened before, but to someone else. After the Great Stock Market Crash of 1929, the United States Congress passed the Smoot-Hawley tariff bill, which levied average import duties of 50 percent. In response, other countries sought to shield themselves by adopting policies of protectionism, self-sufficiency, competitive devaluation, export price reduction, exchange controls and creation of regional economic blocs. World trade collapsed, unemployment skyrocketed, and nationalism spun out of control. The Great Depression ended with the outbreak of World War II.

I am not saying that history will necessarily repeat itself, for certainly Thailand does not carry the same economic weight as the United States. But let us not forget its lessons. We have already seen that in the globalized economy small events can have disproportionately large effects. In today’s world, which is even more closely interconnected than that of the 1930s, a beggar-thy-neighbor policy can lead us down a slippery slope that is just as disastrous. 

Our responsibility as a member of the international community is one reason we cannot afford an inward-looking policy. Yes, we should practice moderation and not get too caught up in the web of consumerism, but that is not to say we should renounce our links to the world. 

Another reason we cannot afford to be inward-looking is that such a policy is not sustainable over the long term. Would-be self-sufficient economies tend to be unable to provide the material well-being that open economies provide. The examples are everywhere around us, and even the biggest of aspiring self-sufficient economies have found it necessary to open up to the world.

Of course it may be argued that we Thais are blessed with a natural abundance of resources, and hence an inward-looking policy might just work. But our integration into the world economy is too deep. Foreign capital and technology are vital to growth and competitiveness, and to building our own technological base for development. Natural bounty alone does not guarantee survival. Indeed, history is littered with the debris of bountiful societies which failed to adapt to irresistible outside forces. 

Thailand has adapted to such forces before. But surviving globalization is likely to require a somewhat different set of skills from those used to survive Western colonialism. This time we are not dealing with governments, but with formidable impersonal forces that heed no borders and obey only the laws of the market.

We are faced with a stark choice: Either we reform ourselves to meet international standards, or we can resist and be overwhelmed in the end, with no control over the pace or direction of change. 

By international standards, I mean those standards that we need to adopt, both in the private and public sectors, if we are to thrive in the global economy. I do not mean we have to abandon somtam and grilled chicken in favor of some generic global standard like McDonalds. We have unique strengths that we must build on. But at the same time we also have unique weaknesses that must be addressed.

What we need to do is to reassess the way we do things. Can anything be improved that will make us more competitive? Are our processes, practices and institutions as efficient and effective as they can be? How can we introduce greater transparency and accountability to powerful institutions such as the bureaucracy and the banking sector, which have a responsibility to uphold the public interest?

Such questions should be asked not only of the government and public servants, but of everyone in the country, because the answers cannot come from the top as before, but need to come from everyone. Reform of our economic, social and, yes, political institutions to meet international standards and expectations is an enormous task, and it requires the cooperation of all sectors of society.

One of the jobs of the Foreign Ministry during the economic crisis is to serve as an interface for understanding between Thai society and the outside world. As I noted earlier, protectionist sentiment is a natural response in times of financial crisis. But it is by no means a satisfactory response because it can lead to the impoverishment of all, others and ourselves. On the domestic front, therefore, we try to educate the Thai people at all levels of society about international affairs, and what they mean for their lives. We believe that when the people recognize how interconnected the world we live in really is, they will agree that we need to transform ourselves to meet international standards. 

On the international front, the Foreign Ministry tries to convey to the world what our intentions are and what our approach towards resolving the crisis is. Because market confidence seems to be a rare commodity these days, we try to let investors know what steps we have taken towards reform, what we are doing to transform our structures and institutions in line with the demands of the new age. We recognize that the days when confidence was freely given are over. Now we have to earn every bit of it back. The crisis is not simply economic in nature. It is a crisis of confidence in the way we have managed our economy in the past.

We can take some comfort in the fact that we are in a relatively good position to bounce back. Thailand has always been one of the more resilient countries in Asia when it comes to adjusting to powerful outside forces. Our society has enjoyed great diversity from the beginning. Since ancient times, we have been receptive to influences and ideas from outside – from India, from China, from the West. With our long-standing tolerance for diversity and openness, all levels of Thai society are experienced in adapting to cross-pressures from abroad. We recognized early on that survival depended not upon closing ourselves off from the rest of the world, but upon absorbing external influences and making them our own. Thus, we have never felt the need to assert whether our values are Asian or universal, as long as they are positive values. Our policies, be they in trade or other matters, have always been open. 

While our national development has moved steadily towards a more open, diverse, and pluralistic society, we recognize that it is the outcome of our unique circumstances and the choices we made. In Southeast Asia, the kind of openness and freedoms Thailand enjoys tend to be the exception rather than the rule. Most of our neighbors are still grappling with the dilemma of the need for a more open society and the need for domestic order and stability. 

But we cannot divorce ourselves from the rest of the region. Our strength lies in regional cohesion, as in our efforts on the Cambodia issue. Instability in our neighboring countries is bound to affect the region.

There are thus those who urge Thailand to move more quickly and aggressively in pressing for greater democracy and human rights in the region. But there are also others, including border business interests and the bureaucracy, who stand to lose out from such a course of action. The task of balancing the interests between the more progressive and entrenched establishment interests is a delicate one. Foreign policy cannot get ahead of social factors, but must reflect the existing social structure. If foreign policy is internally contradictory, the benefits gained would fall short of their potential. For example, if our policy of promoting human rights and democracy hurts the interests of our traders along the border, the policy will encounter domestic political resistance and be ultimately unsustainable. 

We must remember that each country is the product of different circumstances, opportunities and constraints. Thailand has been at that stage before, when political repression was the order of the day. The advances we made towards greater democracy and human rights were paid for in blood and tears. It is a process that each country must work out for itself, in its own way, in its own time. 

The region’s economic crisis has thrown such contradictions into stark relief. It is generally accepted that the answer to the region’s economic ills lies in reforming structures and institutions so that they are more in line with market forces. The dilemma some countries face is how to reform the economy without also granting more political freedoms. For example, as I noted earlier, information is one of the three crucial factors in the new globalized economy. During Asia’s boom, the restriction of information did not seem to pose undue difficulty for the countries concerned. Now that the credibility of the region’s institutions has been cast into doubt by the crisis, however, freedom of information is likely to assume much more importance for prospective investors. 

We therefore believe that the region, if it is to maintain its dynamism, has no choice but to move in the direction of greater openness. The economic crisis is exerting greater pressure on East Asian countries to reform, but just when reform is needed most, it is also the hardest to carry out. Institutions have become entrenched, and powerful vested interests are naturally against any but the most superficial reforms. The danger lies in the fact that while reform is by and large a domestic process, delays or setbacks in one country can affect the recovery of the region as a whole, especially if that country has extensive trade and investment ties with others in the region. 

So what the economic crisis has done is that it has made openness no longer a choice countries can embrace or reject as they see fit. Openness has become necessary not only for Thailand but for the region as a whole if we are to survive this crisis together.

The rapid spread of the economic crisis throughout the region tells us that perhaps a change in our thinking is in order. Perhaps it is time that ASEAN’s cherished principle of non-intervention is modified to allow ASEAN to play a constructive role in preventing or resolving domestic issues with regional implications. This is, of course, a sensitive subject, as states tend to be instinctively reluctant to yield to others on what it sees as sovereign matters. But when a matter of domestic concern poses a threat to regional stability, a dose of peer pressure or friendly advice at the right time can be helpful. 

Non-interference does not mean turning our backs on our neighboring countries or turning a blind eye to the plight of their people. Lending a helping hand in times of need even on domestic matters should not be interpreted as interference in internal affairs. Non-interference does not mean that we cannot espouse the values of our society, though of course we should not seek to impose them upon others. If there is a general consensus among the ASEAN members on the kinds of situations that warrant constructive intervention and the modalities of such intervention, the process should become easier. The trick lies in how we can achieve the right balance between the often conflicting demands and imperatives of this crucial juncture in history.

I confess I have no ready answers. I believe we are entering some extremely challenging times for Thailand and the conduct of foreign policy. The times call for both domestic reform and new thinking in our foreign policy. The capacity of states to respond effectively to situations will be sorely tested. International relations will be conducted not only between states, but at all levels. Technologies such as the Internet will transform the face of international relations as we know it by opening up the policy process to public participation. The future is therefore not only in the hands of an elite few, but of everyone.

Thailand cannot meet the challenge alone; the region as a whole must rise to the occasion. The past has proved that we are no stranger to adversity. With clear, critical thinking, with vision, and with that most indispensable of ingredients, luck, I believe that together we can overcome these challenges. 

Thank you.

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