Chiang Mai Inititative: now in Singapore

Despite its name and its origins lying in Thailand, the Chiang-Mai Initiative Multilateralization will have its surveillance mechanism, and the attendant secretariat, housed in Singapore.

For Thailand this is a bitter pill to swallow, as since 2000 (when the CMI begun), Thailand was the assumed country to house the secretariat. Political instability has cost Thailand dearly again, as this set-back is more than simply embarassing. Unlike the failure to successfully host the East Asian Summit in late 2008 (a farce that saw the EAS rescheduled four times), failure to win the secretariat will cost Thailand influence in the region. The secretariat would have attracted finance and central bank officials to Thailand, and been a site at which Thailand local officials could interact with the region more widely. Instead, Singapore has reinforced its position as a financial hub.

It will be interesting to see how the surveillance mechanism (so-called ASEAN-plus-three Macroeconomic Research Office or AMRO) will work, it is scheduled for activation in May of next year. Already Zheng Xiaosong, Director General of the International Department at China's Ministry of Finance has noted that, "we should prevent it [AMRO] from intervening in other countries' internal affairs, because the so-called monitoring function is, in other words, only a supervision or performance tracing role in order to provide necessary consultation to relevant countries," - suggesting that China still is - at best - disinterested in developing a rigorous surveillance mechanism, with all problems that brings with it.

Japan’s political vacuum, some thoughts.

The Yomiuri Shimbun has just released the results of its latest public opinion poll. Questions included “Do you support the DPJ”, and “who is the most suitable as Prime Minister.” Even though the DPJ (together with its coalition partners) holds a super-majority in Diet, and is therefore theoretically in a position to push through any and all reforms it sees fit, slipping popular support threatens to undermine the psychological basis for successful political leadership. Recall that former PM Koizumi’s ability to go over the head of his own party and directly appeal to the Japanese people was crucial to allowing his reforms to be successfully passed. Thus, the answers to the current polling questions are important in charting where the DPJ goes from here. The chart below summarizes the last six months; the blue line is “do not support Hatayama Cabinet.”

As you can see, the DPJ has fallen from a high of 75% support (red) to 33% and the blue line of “do not support” has gone from 17% to 56% - implying that most Japanese have gone from optimism to pessimism about this administration (see also here). That was certainly the feeling on the ground last month, but why?

The poll result supports Tobias Harris’s argument that the problem with the DPJ and its popularity is Hatoyama himself. In response to the question, “who is the most suitable as Prime Minister?”, Hatoyama name comes not first, but sixth. Indeed, even more bitterly for the DPJ, the opposition LDP Masazoe Yoichi comes first at 29%. This result gives Masazoe further ammunition in his struggle to become Leader of the Opposition against the incumbent Tanigaki. Hatayama even scored lower than his Foreign Minister Okada, Transport Minister Maehara, and Deputy Minister Kan but none exceeded 10% approval in any case.

There are various causes of this decline, but management of the Global Financial crisis seems not to be one of them. Rather domestic issues such as the corruption scandals plaguing the DPJ (focused mostly on Ozawa but Hatayama himself is also under scrutiny) are center stage. Problems relating to the relocation of the US military base at Futenma are also important, as is postal savings reform.

But overall the problem is a lack of “getting things done” – indeed 44% of Japanese cited this as the biggest problem of the Hatoyama administration. So rather than focusing on a project such as the East Asian Community which may or may not “succeed” (and how to even measure that), Hatayama’s next few months ought to focus on getting a clear success. Given his domestic situation, there are opportunities and risks for other countries wishing to cooperate with Japan, but overall Japan’s biggest contribution to East Asia will be to get its ship back in order.