The new unequal treaties

The anti-US and anti-IMF sentiment brewing in Southeast Asia arises from the perception that with very little at stake, the West (read America) is using Asia's financial crisis to maintain global and regional hegemony by forcibly opening markets and securing unlimited US military access in the region.

Southeast Asia governments have signed a flurry of agreements and treaties in recent weeks. Let us call them the "New Unequal Agreements".

A century and a half ago, western naval powers came to Asia and, from 1842 to about 1943, forcibly opened China and Japan under a system of "unequal treaties". History recalls how frustrated British merchants pushed their way into the Chinese market by selling opium to soldiers, scholars and officials who became increasingly addicted to the drug.

Distressed Chinese authorities tried to clamp down on the smuggling but the situation led to a showdown that culminated in the First Anglo-Chinese War of 1839-1842, or the Opium War.

The British demolished the Chinese at sea with superior ships and devastating firepower. The losers were forced to sign a set of humiliating treaties that kept China a bitter semi-colonial state for nearly a century.

A decade after the "opium wars", Commodore Matthew Perry sailed into Edo (now Tokyo) Bay with his fleet of legendary "Black Ships". The Japanese had heard of China's defeat and eyed Perry's steam-powered ships, the first they had ever seen, with apprehension. Perry cordially demanded a series of concessions that led to the 1854 Treaty of Kanagawa effectively ending Japan's 200-year-old policy of exclusion and isolation.

These appropriately named "unequal treaties" forced the East Asians to make overwhelmingly one-sided concessions to the West. Japan and China had to open trading ports, ensure rights of extraterritoriality, grant most favoured nation clauses, and accept tariff-fixed trade.

Fast forward to 1998. The agreements and treaties signed by regional leaders in recent months are the modern day equivalent of the 19th century "unequal treaties". To be fair, the cast has changed as well as the context. But the plot is eerily familiar.

In the 1830s and 40s, China's addiction to opium (and the subsequent outflow of Chinese silver to purchase that opium) contributed to a destabilised currency and an internal fiscal crisis.

Thailand and its neighbours are not addicted to opium, but something far more potent and corrupting: money, in the form of foreign direct (and indirect) investment. Southeast Asia's economic growth has been fuelled by enormous capital infusions driven by a policy of fixed exchange rates, high interest rates and highly mobile capital.

Exactly how reliant Thailand is on foreign capital was revealed when the Bank of Thailand announced its decision to float the baht. There was a panicked, massive, herd-like capital flight which has crippled the economy and left Thais stunned and resentful. Non-performing loans in the property and real estate sectors, among others, and subsequent financial speculation demonstrate how vulnerable Thailand is without its routine injections of investment.

In the 1840s, people like Commissioner Lin Tse-hsu insisted China must eliminate its overwhelming reliance on opium. Today, it is the likes of Dr Mohamed Mahathir and George Soros who counsel that Southeast Asia should ease its addiction to capital by promoting regulation of international capital flows or by mobilising more domestic capital.

Oddly, today's "Unequal Agreements" are imposed not directly by the British or Yankees but by the international Monetary Fund and other international institutions in the form of reform pacts, packages and letters of intent. These "agreements" require sweeping economic liberalisation and heavily curtailed government spending.

There are two interrelated concerns here. First, the IMF is prescribing the wrong medicine, blaming and punishing governments for crimes perpetrated by the private sector. Second, many feel that the IMF policies are designed (intentionally or not) to benefit western powers who have been frustrated traditionally by tariff and non-tariff barriers in the region.

But its more than just about trade. The new "Unequal Agreements" are also about US dominance in the Pacific. If the old treaties fulfilled US aspirations to be a trans-Pacific power, the new ones firmly maintain that embedded power structure.

Under the original treaties, western citizens were bequeathed extraterritoriality, meaning they were not subject to the laws of the country where they lived. This tradition of inequality continues with the network of military bases and access arrangements the US has with Japan, South Korea and the Philippines.

Okinawans must tolerate the danger of accidents associated with routine flights, live fire exercises and other annoyances because of US bases. The abduction and rape of a 14-year-old girl in 1995 also initiated a large anti-bases movement these. But certainly, an equal proposal - say a Japanese military base in the United States - would be considered absurd.

The United States hates equal treaties and agreements because they threaten America's regional dominance. The US traditionally encourages regional transparency and confidence building mechanisms. But when such measures inhibit the movement of its naval forces in any way, it strongly opposes confidence building and transparency.

The US consistently refuses to accede to the Southeast Asia Nuclear Free Zone established in 1995. It argues such a treaty restricts freedom of movement for the US Navy's Seventh Fleet. The treaty curtails freedom of transit for ships and submarines that bear nuclear weapons in "non-territorial waters".

Citing its usefulness in the demilitarised zone (DMZ) dividing the two Koreas, the US strongly opposes a global ban on the production, stockpiling and use of landmines unless there is an exemption clause for American forces in South Korea. Supporters of the international treaty scoffed at such a notion and America has since refused to support the astoundingly popular Ottawa Plan.

It doesn't help matters when President Bill Clinton declined to help bail out a struggling old friend and ally with financial assistance. US insistence that Thailand purchase American-made F-18 jet fighters isn't too popular either.

American credibility in the region is eroding, and its smug trimphalism is infuriating Asian leaders who have fallen from the wings of miracle growth and crashed overnight into a sea of stagnation. The US underestimates the degree the IMF is associated with the process of globalisation led by America, for America.

It will be argued that an American presence has been good for Asia. This is in many ways true. But as much as the US military presence has maintained peace and stability in the region, it has also stunted the growth of a regional security mechanism independent of external dominance.

The airy beggars-can't-be-choosers, take-it-or-leave-it attitude embodied in the IMF and America (now frequently referred to in the same breath) is bound to foster resentment, particularly when proposed solutions end up inappropriate and harmful.

What, one may ask, can America do?

For starters, support regional confidence building measures, even if it requires prior notification of US vessels. Accede to the Southeast Asian Nuclear Free Zone, even if it means leaving nuclear missiles at home. Support the Ottawa Plan to ban landmines, even if it means the DMZ has a few less mines (among the millions already strewn about). And support Thailand in its crisis with financial resources.

Such actions will begin to show America's true commitment to the region, a commitment that is driven not by self-serving interests but by genuine concern for the people of Asia.

The perception that the US is exploiting the crisis to its advantage through unequal agreements will persist, particularly in troubled times. America can risk weathering it or deal with the problems as equals in a just, fair manner.

* Ehito Kimura is a research associate at Focus on the Global South based at Chulalongkorn University.