The time has come for Asian leaders to capitalise on the shift in global political power that accompanies the ongoing shift in global economic power so as to wrest control of the future.
The return of the Asians will not be without adverse effects and strains on the region, particularly in the matter of the demand for global energy and food. Finding an appropriate food-energy-water nexus is an immense challenge — along with other local concerns. For example, by 2025 world oil consumption will increase to 120 million barrels. Eighty per cent of this increase will be to supply the demands of Asian economies. Since the bulk of these oil supplies have to pass through the Straits of Malacca and the Straits of Hormuz, Asia's strategic importance will be tremendous. Some 50,000 ships pass annually through the Straits of Malacca, which is only 2.5 km wide at its narrowest point. And the Straits of Hormuz (situated between Iran and Oman) through which the Gulf oil passes, is only 89 km wide. The vulnerability of these straits to terrorist attacks is a matter of grave concern to economic and military planners.
The surge in economic growth will lead to a swell in the demand for other commodities and minerals such as uranium, iron, and coal, to mention some. In 2009 alone, China accounted for 39 per cent of the world consumption of aluminium, copper, iron and nickel. Thus resource-rich countries will be the natural beneficiaries; and as the demand for energy and minerals keep rising, many poor countries in Africa and Latin America will also develop alongside Asia.
The global food balance will be determined by Asia's economic and population growth. In other words, there will be additional numbers to feed not only because of the mounting population but also because of higher levels of domestic consumption — due to the expanding middle classes. Asia will dominate both demand and supply.
Two things are certain by mid-century: much higher food prices and greater stress and strain on the already limited water resources. We are already aware of the intensifying problem of water scarcity. The per capita availability of water is limited in West Asia, South Asia and South-East Asia. The Indian Network of Climate Change Assessment (INCC) says India could get warmer by 2° Celsius by 2030, leading to changes in rainfall patterns and vulnerability to more severe floods, droughts and other natural disasters. Already, periodic floods hit South and South-East Asia. Cyclical droughts have intensified due to widespread weather changes. Rising sea levels continue to threaten the Maldives and the Mekong Delta. North China, including Beijing and the Hai River basin, has seen wells and rivers drying up and groundwater levels falling by two metres a year.
During the last few years, experts and scientists have warned that unless the growing energy demand is not matched by a commensurate level of de-carbonisation to mitigate climate change there will be devastating consequences on human life in the region. While all Asian countries need to pay heed of these predictions, the regional giants of China and India have a singular responsibility to safeguard the region's climate security. In the long run it will be the energy, de-carbonisation and the emission targets of China and India that will determine the success or failure of this effort. This is why many of us were disappointed with the stand taken by India and China at the Copenhagen Summit last year. On the other hand, Japan has shown the region how to tackle climate change — by balancing demand and de-carbonising. The media and civil society in many countries have taken the lead in creating awareness of climate change. The time has come to exert greater pressure on governments to ensure that the impulse for economic growth does not compromise on other imperatives.
When I visited India recently, my Indian friends jokingly referred to their country as the Scam Raj. This was in reference to the two big corruption scandals dominating local news. One is the 2G spectrum issue where the Indian government's loss of revenue in the allocation of telecom spectrum is deemed to be Rs.1,76,379 crore ($38.6 billion). This comes two months after another scandal where Rs. 7,000 crore ($1.5 billion) was alleged to have been misappropriated during the Commonwealth Games. Being an open society, Indians are able to discuss these corruption scandals freely, while the Indian media are able to report their views fearlessly. Unfortunately, this is not so in many of our countries.
Yet, the challenge of human greed — corruption — is not limited to India. Corruption is also unchecked in China where party cadre and bureaucrats make so much money that it is today called ‘a predatory state'. The following doggerel by Chinese peasants from ‘The Blue Book' provocatively sets the tone in China: “Seven hands, eight hands, everybody extends hands to the peasants/You collect, I collect, he collects, and peasants are distraught;/You solicit, I solicit, he solicits, and peasants are upset./Demand grain, demand money, and demand life;/ Guard against fire, guard against theft, and guard against cadres.”
In my own country, political power has become the quickest avenue to amass wealth. On the other hand, in many Asian countries there is a new development: that of leading business enterprises seeking to capture political power. In this context, civil society needs to take its responsibilities more seriously and become more strident and effective in demanding right to information laws and their strict enforcement by Parliament. Corruption is not an issue that is divorced from society; nor can it be ignored as many of us tend to do. Corruption touches all of us as it delays, detracts and destroys human development and promotes inequity.
This brings me to the next critical side-effect of the current economic system of growth — social inequity. We are all aware of marked income disparities between the industrial urban areas and the backward rural areas; the large pockets of poor migrant workers living in slums in big cities; the poverty of female-headed households; the neglect of street children; and those who have regressed into poverty due to the global economic recession.
Tackling social inequity
After decades of ineffective welfare and poverty alleviation schemes and scams, how should Asia address this issue so that it can make a real difference in the lives of people? One example can be from the Grameen Bank in Bangladesh. Though micro-credit schemes sometimes take a generation or so to bear fruit, GrameenPhone empowered the poor in Bangladesh to purchase cellular phones. This sparked a revolution as people utilised cellular phones in their daily life and businesses to become more productive. For the people of Bangladesh, there were tangible results in their quality of life. This was also reflected in a two per cent increase in the country's GDP. This, however, is an exception as most poverty alleviation programmes do not empower the poor. Rather, they only seek to redistribute wealth.
A case in point is the Philippines. In the 1980s the Philippines government offered housing loans to the poor at interest rates well below market rates. While on the surface the programme seemed to be a success, a World Bank evaluation found that it had been hijacked by rich and middle-income households, with only 21 per cent of the beneficiaries being from among the poor. Meeting the aspirations and frustrations, hope and despair of the poor in Asia remains a massive challenge, particularly as recent reductions in government spending have affected health and education services, two sectors the poor have always been able to access. Thus it is doubtful that many Asian countries will reach the targets set by the Millennium Development Goals.
There is a common stereotype in the West that Asians are submissive animals due to our past histories. The myth is that Asia will accept the inequalities that have arisen due to market predominance. I seriously doubt if this is the case. Already there are social protests taking place in China. The Naxalite movement is growing in India and the Maoists are rising in Nepal.
We in Asia have shown our opposition to inequality in alternative ways for thousands of years. The spread of Buddhism in India, the dispersion of Theravada Buddhism in South-East Asia and the expansion of Islam were basic responses to social and economic inequalities that existed at that time. Today, however, in the midst of a system that has resulted in sharp divisions in wealth, we need a remedy that will satisfy the basic needs of the underprivileged. There is no other way than for the winners to look after the losers and the marginalised. In other words, Asians have to take the leadership in ensuring that socio-economic systems are in place that can take care of those in need. Examples can be found in the Nordic countries and among the Japanese who have developed such fallback systems to care for the sick, the homeless, the poor and the disabled.
This is imperative especially because the International Monetary Fund (IMF) has failed Asia — first during the Asian crisis of the late-1990s and then during the global economic meltdown of the last couple of years. The bottom line, then, is that a system in which the market punishes the poor and the middleclass for mistakes that they are not responsible for and rewards the wrongdoers is abominable. It is time to deal with the hard fact that uncontrolled financial markets will only increase social and other inequalities. Asian leaders have to face the challenge to restructure the global economic system. It will require great courage and control; fortitude and thinking afresh.
In the next few decades, we in Asia have to spend more on accessing clean water, health, education, poverty alleviation and modernising agriculture for our peoples.
The G20 — the self-appointed global leadership committee — has so far not advocated such reforms. Nor have the Asian leaders within the G20 displayed any boldness in suggesting reforms. Rather, they have merely perpetuated the existing system of inequity. In contrast, German Chancellor Angela Merkel showed singular courage when she stated on November 23 that “the primacy of politics over the markets should be enforced.” The need of the hour is not the additional voting power in the IMF that seems to be the focus of the G20 but a far-reaching restructuring of the global financial architecture.
The time has come for Asian leaders to capitalise on the shift in global political power that accompanies the shift in global economic power so as to wrest control of the future. Today, as we face the promise of an Asian resurgence, we cannot afford to ignore the warning signs of inequity and social dissent, environmental degradation and depleting resources.
Kishore Mahbubani, in his book The New Asian Hemisphere, refers to a remark by Larry Summers that during the Industrial Revolution living standards in Europe improved by 50 per cent in one lifetime. But the super cycle boom driven by Asia will increase our living standards not by 50 per cent, nor by 100 per cent, but hundred-fold — in one's lifetime. If this occurs, then the return of the Asians will indeed be one of the biggest revolutions in history.
This is the concluding part of the text of a speech made by Sri Lanka's Leader of the Opposition and former Prime Minister, Ranil Wickremesinghe, at the South Asia conference of the Rotary International in Bangkok on November 27.
The first part was published on December 2, 2010.