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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

NATIONALISM AND GLOBALIZATION

Who needs the nation-state? We all do - to reconcile the priorities of global markets with social cohesion and sound ecosystems

By Fidel V. Ramos President of the Philippines


EVEN IN AN AGE of globalization, the often-reported death of the nation-state (like that of Mark Twain) is an exaggeration. For four hundred years, the nation-state has been the focus of communal loyalty and individual identity. Nationalism in its various expressions has been the most compelling political force of this century and it is likely to remain so in the next. It was nationalism that destroyed the colonial system, and bent even Communism to its purposes. In our time there is no greater moral and emotional objectification of ordinary people's primordial attachment to family, clan and community than the nation.

The Japanese business strategist Kenichi Ohmae asks: "If the Cold War is over and money flows around the world beyond the reach of governments, who, indeed, needs the nation-state?" The short answer is that we all do. The nation-state will continue to be needed - if only to mitigate the downside of globalization (such as the devastating effect of short-term capital flows on East Asia). Because nationalism is focused on a specific place or community, it is the perfect counterpoise to the universality that globalization represents. I expect nationalism to adapt to this new age simply by cultivating a larger sense of national self-interest.

Nor has globalization removed the need for strong and efficient states, particularly in the new countries. The spread of market values in all areas of life is breaking up the family, destroying traditional cultures, and provoking the rise of sometimes radical and fanatic localisms. No authority can deal with these disturbances more efficiently than the nation-state.

REDEFINING PHILIPPINE NATIONALISM

What future do I see for the nation-state? It will have to adapt to changing circumstances, and share power with other political actors, both smaller and bigger than itself. I can see its sublimation in larger entities such as the European Union or ASEAN, but I do not see the nation-state withering away. In fact the age of globalization will need effective states more than ever before - to reconcile the priorities of global markets with humankind's need for social cohesion, and for development that protects the earth's ecosystems.

In the Philippines today, we are redefining nationalism to enable us to look at the world in a new way. Introspective during the colonial and postwar periods, our nationalism is being turned into one of self-confidence. Through market-opening reforms, we have begun to break up the old order which had stifled the spirit of enterprise and penalized export industries. We now realize the need to align our economy with that of the world. And despite the currency crisis, we are determined to embrace the global system even more closely.

Filipino nationalism was the first to emerge in colonial East Asia. The Centennial we celebrate this month is that of Asia's first free republic - proclaimed by Filipino revolutionists against Spanish authority in a small town outside Manila on June 12, 1898. In the new countries, nationalism is commonly the sense of community nurtured by shared suffering under colonial rule. We Filipinos became a community because of this common historical memory. In the words of the 19th-century French philosopher Ernest Renan, we are "a people which has suffered together."

Before the political persecutions of 1872, we were just a collection of Indios, mestizos and Creoles and the archipelago we inhabited was just a place-name. But after the execution by strangulation of the martyr-priests Gomez, Burgos and Zamora in February of that year, no further repressions could prevent the Filipino nation from being born. Jose Rizal is called - correctly - "the first Filipino." He was the first to conceive of all the peoples of the archipelago as one grand union transcending tribe, ethnicity, religion, language, culture - ang sambayanang Pilipino, "one Filipino nation." Rizal and his generation of heroes gave our 7,107 islands, scattered on the South China Sea between Taiwan and Borneo, the sense of being one.

Twentieth-century Filipino nationalism has been shaped by the overpowering presence of the Americans. In pursuit of its "manifest destiny," the United States had succeeded Spain as our colonial ruler after the Filipino-American War of 1899. Fear, resentment and admiration of the United States - coupled with a recognition of our utter helplessness and even dependence on it - produced self-doubt and turned Filipino nationalism inward.

Like its counterparts in Latin America, it became a nationalism of weakness, crippled by the lack of a firm national identity. Economically, this nationalism came to express itself in autarky and "Filipino First." And, as in Latin America, the closed economy perpetuated itself long after it had outlived its usefulness. By multiplying the opportunities for rent-seeking from the economic benefits that government was in a position to bestow, the closed economy reinforced the traditional patronage system.

Until now, the tenets of this nationalism of weakness dominated political discourse in the newspapers and in our country's academic communities. They are also enshrined in the 1987 Constitution. For instance, the charter still reserves even book-publishing as a prerogative of nationals. And in early 1997 the Supreme Court overturned a public bidding which had awarded the Manila Hotel to a Malaysian corporation, in favor of its Filipino rival.

DEALING WITH THE CURRENCY TURMOIL

Despite setbacks like this, my government has tried to redefine Filipino nationalism - to make it responsive to the new technologies and ideologies reshaping the globe. Thus we have begun to dismantle the cartels and monopolies that dominated the closed economy; to open our home markets to competition; and to lift the dead weight of an intrusive bureaucracy from the back of business people. These initial reforms enabled us to exit from 35 years of International Monetary Fund supervision in March - despite the currency turmoil which has buffeted East Asia since July last year.

For a year now, the region has been experiencing - painfully - the speed with which the new digital technologies can move portfolio investments out of (as well as into) any region. This demonstration of the downside of globalization triggered a currency crisis that has not abated even now. In the market frenzy to get where the action was, even the world's most sophisticated fund managers had overlooked the faultlines of the East Asian "economic miracle." And in the panic that followed the floating of the baht in Thailand, they scrambled out of every East Asian country without discriminating between financial markets.

We in the Philippines have not escaped the contagion, but we have avoided its worst consequences. The peso has not fared as badly as some of the ASEAN currencies. Our stock market has been doing better than its counterparts. And while interest rates rose and our industries felt the financial squeeze, we experienced no wholesale closure of corporations and banks.

East Asia's currency crisis will obviously deter other developing countries from moving rapidily to open their financial systems to migratory capital. It can even set off a political backlash against free trade and capital flows. But in the Philippines we have chosen to respond positively to this episode of currency volatility. We have taken to heart the lesson it taught - that global interdependence is a fact of life (since no country can isolate itself from the spread of the new technologies) and that global markets punish policy mistakes severely. In dealing with the currency crisis we have also been helped by the openness of national society. That public policy is made so publicly - and then subjected to sharp popular scrutiny - results in a transparency of governance which inhibits the kind of crony capitalism that had flourished under strongman rule.

While there can be no doubt the crisis will soon end, I believe its resolution will be slower than its onslaught was. The pace of recovery will vary from country to country. And the first to recover will be those countries which impose transparency in the conduct of business, allow the market system to function freely, and generally depoliticize the economy. There can be no backtracking from reforms that foster competition, efficiency and productivity.

But the currency turmoil - a crisis unlike anything the world economy has ever experienced - cannot be solved simply by each country putting its house in order. Because all countries are now linked irrevocably, and not just by trade but tidal flows of capital, the international monetary system must itself carry out some reforms. A new monetary order must be laid down. The physicians of the world economy must heal themselves.

HOW THE STATE SUPPORTS GLOBALIZATION

The multilateral institutions should develop quick-response mechanisms - to contain a local financial crisis before its contagion spreads - and new policy frameworks to replace the conventional policy tools that have failed to work. In fact the International Monetary Fund's formula for stabilizing an economy - tight-money policy - might have unwittingly worsened Thailand's problem by accelerating the rate of corporate and banking failures. And in Indonesia, the raising of fuel prices required by the IMF triggered the Jakarta riots that forced President Suharto to step down.

Perhaps it is time the Asian Development Bank - whose traditional role has been to support IMF-World Bank initiatives - defined its programs to suit its Asian constituency more closely. Industrial countries themselves must take a more active part in bailout programs. After all, globalization means everybody having an interest in everyone else's continuing economic health. Fund managers should also begin to care for the social consequences of their investments in developing countries, where political systems are still so fragile that economic crisis can break them.

There is obviously also a need for more transparency in economic information. Governments should agree to provide accurate and current data on their basic indicators and those that reflect the health of their banking sectors. Finally, the crisis has also dramatized the need for more liberalization and deregulation of economies. No mechanism can allocate resources as efficiently as the market does. Nor is there any mechanism as effective in fostering investment discipline and in rewarding creativity, intelligence and hard work.

But there are many things the market cannot do. It cannot supply in equitable manner the public "goods" such as primary health care, basic education and protection from crime which must be provided for every citizen. It cannot ensure that producers stop to consider the social costs of the technologies they use. Throughout history the uninhibited pursuit of self-interest has resulted in social inequities and political instability. Now these side-effects of the market system are being worsened by the reach and velocity of the technologies that have created the global economy.

Meanwhile the global market is also obliterating the specificities of local cultures. Note how both China and India are trying to resist (in the end perhaps vainly) the inroads of the fast-food icons of the dominant Western culture. In both these great countries - virtual civilizations by themselves - nationalism could still turn virulent, if their economies should experience a severe downturn or if their claims to great-power status become frustrated.

Seeking refuge from intrusive forces beyond their comprehension and control, ordinary people everywhere are turning to familiar, protective communities - whether ethnic, religious or ideological - for solace and support. In the Philippines, personalist Christian churches are attracting large followings. But the community of the nation still is the most easily available refuge to ordinary people seeking some transcendent meaning for their lives. Only the state can restrain the rise of the market culture. Thus effective government is more than ever necessary - to shore up the face-to-face communications on which neighborliness depends; to organize economic growth that is in keeping with the carrying capacity of the environment; and to nurture a capitalism that cares for those whom development leaves behind.

BUILDING THE GLOBAL ARCHITECTURE

The concern often expressed over the state's loss of autonomy and authority to the global economy is, I think, overstated. Governments still can do a great deal to prevent their monetary policies from being constrained by the scale and international nature of the market. They still have a positive function - that of providing the rule of law needed to enforce market transactions and of helping mobilize the nation's resources for competitiveness in the global economy. The challenge for the state in our time is to seize the opportunities that globalization presents, while minimizing the nation's vulnerability to its risks. Its first task is to strengthen the nation's economic structures - to enable them to contain volatile flows of migratory capital and to withstand unstable growth.

For all these reasons, I do not see the nation-state withering away. I can see its sublimation in larger entities like the European Union - into which the French, the Germans, the Italians and the British have subsumed their nationalisms (not always successfully), in their need to end their civil wars and to counteract American and Russian influence. Southeast Asia's own venture into ASEAN originates from a similar impulse. Like the European Community, ASEAN was built not out of some grand design but step by step and bit by bit - by its member-countries working together on practical programs of common usefulness that have accustomed them, over 30 years, to habits of transnational cooperation.

This is probably how the architecture of the world will be constructed - in the same mundane manner - by the functionally distinct components of the nation-state linking up with their foreign counterparts in a web of networks that will eventually constitute a veritable transgovernmental order. Already these cross-border networks of both government and non-government organizations are well established. We have regional and global networks of parliamentarians, jurists, finance and trade ministers, police officers, chiefs of staff, intelligence services and so forth.

The network of East Asian central bankers did a great deal to mitigate the effects of the currency turmoil. And even now our finance ministers and central bankers are consulting to enhance the regional surveillance system in order to enable Asian leaders to spot future financial problems before they reach a critical stage. Eventually regional networks like these can be extended and enlarged until they form a framework for global regulation of currencies, capital movements, trade, and conservation of the environment that works to stabilize the world economy and harnesses it to humankind's needs.

All the complex interconnections that come under the heading of "globalization" create instability and stress. But they also create conditions that will allow human societies to become better. The increasing permeability of formal national borders does not mean the nation-state should abdicate its historical role. Indeed the new conditions of dynamism demand a higher degree of competence on the part of government. In the middle of epochal changes, the nation-state must build social harmony, create prosperity and protect the vulnerable. Our appreciation of the value of the national community will continue to evolve. But people will increasingly view nationalism through the prism of the economic freedom and the quality of political rule it brings about.

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