The New Penguin History of the World (216 page)

Taiwan, moreover, was only one source of uncertainty and nervousness in East Asia. An increasing instability and volatility was apparent in the region after the Cold War ended, even though these trends did not reach the same levels as in Europe. What the closing of that relatively well-defined and therefore clarifying struggle might mean was at first very hard to see. In Korea, for example, it changed very little, North Korea remaining obstinately locked in a confrontation with the United States and with the Republic of Korea in the south by its rulers’ determination to maintain a command economy in virtual isolation. Economic mismanagement, the ending of Soviet aid in 1991 and, it appeared, some straightforward dynastic exploitation of power by the ruling dictator, brought North Koreans to the edge of starvation by early 1998. The North’s problems remained unusually specific, detached somewhat from the regional trends, as South Korea could not be. That country was by the mid-1990s an established democratic regime with high growth figures and an impressive involvement in international trade.

While all of East and Southeast Asia, China excepted, went through a deep but, for most countries, temporary financial crisis in 1997 and 1998, Japan entered a recession after the Cold War that was to last for more than a decade. The economy often hailed in the 1980s as the world leader in productivity and product development was by the end of the century a shadow of its former self. Property speculation and huge investment in non-productive activity or sectors generating very small returns, had
encumbered its banks and financial institutions with unserviceable debts. The currency weakened sharply; speculation against it was immediate and crippling in a world of financial transactions more rapid than ever before. The prevailing business culture of Japan, firmly embedded as it was in official and financial networks that now proved unable to give decisive leadership, made solutions harder still to achieve as conditions worsened. The Japanese economy became a laggard in international terms, with deflation and unemployment the result. The rapidly shifting governments seemed unable to stem the process, and some of them began pandering to nationalist sentiments to strengthen their authority. The recession in Japan meant that it could not be counted on to help pull the other economies out of their economic difficulties in the late 1990s, and even though the region as a whole was growing again in the early 2000s, some countries – such as Indonesia and the Philippines – did not regain their earlier growth rates. Millions of people from Hokkaido to Bali lost their savings and sometimes their livelihoods in the process.

The political shifts in Southeast Asia that followed the crisis were also significant. Authoritarian governments in some countries had exploited public resources in the interests of cronies of those in power and their families. In May 1998, after the Indonesian economy had shrunk by more than 8 per cent since the beginning of the year and the currency had lost four-fifths of its dollar value, riots drove the president from power. Thirty-two years of a firmly controlled, corrupt, but formally ‘democratic’ system came to an end. The successor governments made Indonesia a much more open society, but had little luck with rebuilding the economy. The result was increasing ethnic and religious strife in a country divided as Indonesia was between a large Islamic majority and significant Hindu, Christian and Chinese communities. The second most populous country in the region, Vietnam, moved in the opposite direction, further centralizing its politics while intensifying Chinese-style economic reform, in Vietnam called
doi moi
(renovation). By the early 2000s Vietnam was the world’s second-fastest-growing economy, but large parts of the country were still very poor and – as in China – the exploitation of the workforce in the name of capitalism with Communist characteristics was intense. Altogether, what the extraordinary highs and lows of the East Asian economies had shown in first decade of the twenty-first century was how integrated the global economy was becoming: Economic shifts in Beijing or Jakarta would have an immediate effect on the world, and vice versa.

THE INDIAN SUBCONTINENT

India, like China, did not at once share the violent financial and economic cycles of many East Asian countries. In this respect, undeniably, past policies favoured her. Congress governments, though moving away somewhat from the socialism of the early years of independence, had long been strongly influenced by protectionist, managed, nationally self-sufficient, even autarkic ideas. The price had been low rates of growth and social conservatism, but with them came also a lower degree of vulnerability to international capital flows than other countries.

In 1996 the Hindu and nationalist Bharatiya Janata Party (BJP) inflicted a major defeat on Congress and became the largest single party in the lower house of parliament. It was not able to sustain its own government, though, and a coalition government emerged that did not survive another (very violent) general election in 1998. This, too, was inconclusive in that no clear parliamentary majority emerged, but the BJP and its allies formed the biggest single group in it. Another coalition government was the outcome, whose Janata supporters soon published an ominously nationalist agenda that announced that ‘India should be built by Indians’. Some found this alarming in a country where nationalism, though encouraged by Congress for a century or so, had usually been offset by prudent recognition of the real fissiparousness and latent violence of the subcontinent. Eventually, though, the new government surprised many by avoiding Hindu-nationalist excesses domestically and by stepping up the liberalisation of the economy, leading to increased economic growth in some parts of the country. This growth continued under the new Congress-led government that – in another example of India’s functioning democracy – surprisingly was voted into office in 2004. The new prime minister, Manmohan Singh – an economist of Sikh origin – stepped up the attempts at opening India’s economy and making it more competitive internationally. By the mid-2000s, India seemed to be at the beginning of rapid economic expansion.

Though it seemed consistent with a determination to win domestic kudos by playing the nationalist card, it was nonetheless in the context of the running sore of the old quarrel with Pakistan that the world had to strive to understand the Janata government’s decision to proceed with a series of nuclear test explosions in May and June 1998. They provoked the Pakistan government to follow suit with similar tests of its own; both governments were now members of the club of nations acknowledged to have deployable nuclear weapons. Yet larger contexts in which to set this fact (the Indian prime minister pointed out) were those of Indian fear of
China, already a nuclear power and remembered by Indians as the victor of the Himalayan fighting of 1962, and a growing sympathy shown by the Pakistan government to Islamic fundamentalist agitation in other countries – notably, Afghanistan, where 1996 had seen the establishment of an intensely reactionary government in Kabul, under a Pakistani-supported faction named
Taliban
. Some gloomily pondered the notion that a Pakistan bomb might also be an Islamic bomb. In any case, there had been a huge setback to the curbing of nuclear proliferation so far achieved; there was universal alarm, ambassadors were withdrawn from Delhi and some countries followed the lead of the United States in cutting off or holding up aid to India. Such action, though, did nothing to deter Pakistan from following India’s example. The world, evidently, had not rid itself of the danger of nuclear warfare by ending the Cold War. That danger, too, had now to be understood in a world that some thought much less stable than the 1960s had been and with India–Pakistan relations still bedevilled by the Kashmir issue.

A NEW RUSSIA

Russia, the biggest and most important of the CIS states, elected Boris Yeltsin president of the republic in June 1991 with 57 per cent of the votes cast in the country’s first free election since 1917. In November the Russian Communist Party was dissolved by presidential decree. In January 1992, after the dissolution of the Soviet Union, a programme of radical economic reform was launched, which in one bold stroke led to an almost complete liberation of the economy from previous controls. The economic result of this was, for almost all Russians, an unmitigated disaster. While a few insiders got very rich, most people lost their savings, their pensions, or their jobs. Energy consumption fell by a third, accompanied by rapidly rising unemployment, falls in national income and real wages, a drop in industrial output by half, huge corruption in government organs and widely ramifying crime. To many Russians, these abstractions were brought home in the savage detail of personal misery. Public health and life expectancy declined to less than sixty years for males in the early 2000s, a drop of five years in less than a decade.

In 1993 a new parliament containing many of his enemies had been elected to add to Yeltsin’s difficulties. Others were posed by relations with non-Russian republics of the CIS (in which there lived 27 million Russians) and by the clans of political interest which had emerged around bureaucratic and industrial foci in the new Russia, as well as by disappointed
ex-reformers, of whom he had sacked a great many. It was not long before it began to be recognized that Russia’s troubles were not solely attributable to the Soviet legacy, but owed much to the general state of Russia’s historic culture and civilization. In 1992, Russia had itself become a federation and in the following year a presidential and even autocratic constitution completed the country’s constitutional framework. But Boris Yeltsin soon had to face the challenge of opposition from both left and right and, eventually, of insurrection. After he had suspended parliament’s functions by decree ‘on gradual constitutional reform’, over a hundred people were killed in the worst bloodshed in Moscow since 1917. Like his earlier dissolution of the Communist Party this was seen as presidential high-handedness. No doubt the president’s personality made forceful action more congenial to him than patient diplomacy. Nevertheless, considering he had so little to offer Russians in the way of material comfort, as the economy was exploited by corrupt officialdom and entrepreneurs on the make, it was to the credit of his government, and to the Russian’s love of their new-found political freedom, that he managed to fight off the neo-Communist challenge and achieve re-election as president in 1996.

Two years before that a new problem had emerged, a national insurrection in land-locked Chechnya, an autonomous republic in the Russian federation with a predominantly Muslim population. Some Chechens deplored and would avenge, they said, the immorality of their conquest and suppression by Catherine the Great in the eighteenth century and the genocidal policy carried out by Stalin in the 1940s. Their anger and resistance was stiffened by the brutality with which the Russians, alarmed by the dangerous example that might be set to other Muslims, reduced the Chechen capital to ruins and the countryside to starvation. Thousands were killed, but Russian casualties reawoke memories of Afghanistan and there were all-too-evident dangers of fighting spilling over into neighbouring republics. Ever since 1992, after all, a Russian garrison had been propping up the government of now-independent Tajikistan against the danger of its overthrow by Islamic radicals supported from Pakistan. Against this doubtful background, not much was left by 1996 of the hopes raised by perestroika and glasnost, and additional gloom was cast over the situation as it became clear that President Yeltsin’s health was poor (and probably made worse by heavy drinking). By then events outside Russia, notably in former Yugoslavia, prompted gestures and very vocal reminders to western powers that the country still aspired to play the great power role it felt was its due, as well as of the growing concern Russia felt over the implications of intervention there in the affairs of an independent sovereign state.

By 1998, however, the Russian government could hardly gather taxes and pay its employees. The year 1997 had been the first year since 1991 in which GDP had registered a real, if tiny, increase, but apparently the economy was still abandoned to the mercy of special interests as the state sold off more and more of its investments to private business, often on a corrupt and favoured basis. Huge fortunes were rapidly made by some, but millions of Russians suffered unpaid wages, the disappearance of daily necessities from the markets, continuing price rises, and the irritations and hostilities that inevitably arose as high levels of consumption for some confronted poverty face-to-face in the streets. Then, in 1998, came a financial crash and a repudiation of foreign debt. Yeltsin had to replace a prime minister he had chosen for his commitment to market economics and to accept one imposed upon him by his opponents. Yet the next parliamentary elections returned a parliament less likely to quarrel with him and on New Year’s Eve 1999, he felt able to announce his resignation.

His successor was already at that moment serving as his prime minister. Boris Yeltsin duly announced that the next president should be Vladimir Putin, and accordingly he took up office after the election of March 2000. A former member of the KGB, Putin by then had to his credit in the eyes of many Russians a – temporary it turned out – success in pacifying Chechnya and the decline of the danger that its turbulence might spread beyond its original borders. It seems likely that outcry abroad over threats to human rights in Chechnya further helped to rally patriotic support behind Vladimir Putin, but he had also made a favourable impression in western capitals. In spite of the misfortunes of a series of accidental disasters in his first months as president, which indicated the rundown state of Russia’s infrastructure, there was a new sense that grave problems were at last going to be surmounted. In a more narrowly personal sense, that was no doubt true also for Yeltsin, who, with his family, was assured by his successor of immunity from prosecution for offences committed during his presidency.