The past year unfolded with Japan’s unprecedented triple disaster and closed with U.S. Secretary of State Hillary Clinton’s historic trip to Myanmar. Moving into 2012, Europe’s economy creaks along uncertainly and China gears up for a major leadership change. In an interview with the Ukranian magazine Glavred, political science professor Phillip Lipscy discusses landmark Asian economic and political events of 2011, and what they could mean in the coming year.

What was the most significant event in terms of Asia’s economy in 2011?

The March 11 Great Tohoku earthquake and tsunami: Besides the tragic loss of life and property, the disaster disrupted global supply chains and plunged the Japanese economy into a recession. The nuclear meltdown in Fukushima also led many countries to question the future of nuclear energy—this will have long-lasting consequences for global energy markets and efforts to deal with climate change.

What was the most significant political event?

Signs of political opening in Burma/Myanmar could have profound consequences not only for that country but for the rest of Asia as well. Hillary Clinton became the first U.S. Secretary of State to visit the country in 50 years. Aung San Suu Kyi has been released from detention and the National League for Democracy has re-registered as a political party. If this leads to democratization, it will be remembered as an important turning point.

What new policy and economic trends appeared in 2011? Which of them will continue into the coming year?

There seems to be a subtle shift in views towards China's economy. Chinese government officials are deeply concerned about the "middle income trap." China has reached a level of development where many countries saw their economic growth slow down sharply. Rising incomes are eroding China's advantage in low-cost manufacturing. There is much talk of multinational companies relocating their operations to even cheaper countries, such as Vietnam. This is an important transition for China, and it will remain an important issue in coming years.

In terms of people, who do you feel was the most notable, and who was
the most disappointing this past year?

The people of Japan, who responded with remarkable perseverance, order, and discipline to such a tragic natural disaster.  

The most disappointing were the political leaders of Japan, who could not set aside
their differences and come together for the sake of their country.

Will China continue to spread its influence in 2012, and might any countries oppose this process?

China is now the second largest economy in the world and an important military power. It is inevitable that China will rise in international stature and influence. However, Chinese leaders also face some important challenges—rising inequality, an overheated housing market, and bad loans in its financial system. The focus of international attention should be on integrating China into the world order as a peaceful, responsible stakeholder—not on confrontation.

What impact could the economic crisis in Europe have on the economics and international policy of the Asia-Pacific region?

If the financial crisis in Europe is mismanaged, nobody will escape the consequences. Europe is a crucial export market for Asian countries, and European financial institutions are major lenders to emerging economies in the region. Equally as important, repeated financial crises and political mismanagement in the United States, Japan, and Europe could begin to undermine perceptions of democratic government and capitalism.

What will be most important event in Asia next year?

China's leadership transition, particularly given the many immediate challenges the country faces.

The Southeast Asia Forum experienced an embarrassment of riches in 2009-2010.  In no previous academic year had the Forum enjoyed the intellectual company of so many first-rate scholars working on Southeast Asia at Stanford.  They were six in all—Marshall Clark (Australia), James Hoesterey (US), Juliet Pietsch (Australia), Thitinan Pongsudhirak (Thailand), Sudarno Sumarto (Indonesia), and Christian von Luebke (Germany)—three for the full academic year and three for two months apiece.  All six visitors shared their findings and thoughts on Southeast Asia in talks hosted by SEAF.  Not least among the pleasures of having them at Stanford was a Spring 2010 seminar in which they read each other’s work in progress and shared ideas as to how it might be improved.  These conversations gave specific, heuristic, and collegial meaning to the abstract notion of “a community of scholars.”

Here are brief updates on all six as of the end of June 2010:  

Marshall Clark

A lecturer in Indonesian studies at Deakin University in Australia, Dr. Clark came to Stanford on sabbatical to spend two months at Stanford in Spring 2010 writing up and sharing his research findings with US-based colleagues.  Publications associated with his stay at APARC include two books, Maskulinitas:  Culture, Gender and Politics in Indonesia (Monash University Press, 2010) and Indonesia-Malaysia Relations:  Media Politics and Regionalism (co-authored with Juliet Pietsch and forthcoming in 2011), and two articles, “The Ramayana in Southeast Asia: Fostering Regionalism or the State?” in Ramayana in Focus, and (with Dr. Pietsch) “Generational Change:  Regional Security and Australian Engagement with Asia,” The Pacific Review  During his time with SEAF he presented papers at venues including the Association for Asian Studies convention in Philadelphia in March 2010.  In April at the University of California-Berkeley at the Islam Today Film Festival he moderated a discussion of the ins and outs of making movies in Indonesia and Malaysia. (2010).

He returns to his position on the faculty of Deakin University.

James Hoesterey

Dr. Hoesterey was awarded the Walter H. Shorenstein Fellowship to spend the academic year at APARC working on several projects, including revising his University of Wisconsin-Madison doctoral dissertation into a book.  Based on anthropological research in Indonesia on media-savvy Muslim preachers, Sufi Gurus and Celebrity Scandal:  Islamic Piety on the Public Stage should be under review in 2010 for possible publication in 2011.  Also in the pipeline are an essay, “Shaming the State: Pop Preachers and the Politics of Pornography in Indonesia,” to appear in a volume he is co-editing with political scientist Michael Buehler, and chapters in Muslim Cosmopolitanisms and Digital Subjectivities:  Anthropology in the Age of Mass Media.  During his fellowship he spoke to audiences at several US universities.  In March 2010 he was elected incoming chair of the Indonesian and East-Timor Studies Committee of the Association for Asian Studies.

In Fall 2010 the BBC-Discovery Channel series “Human Planet” will feature Dr. Hoesterey’s work as a cultural consultant with documentary-film makers in West Papua.  He will spend AY 2010-11 in Illinois as the Andrew W. Mellon Postdoctoral Fellow in Islamic Studies at Lake Forest College.  

Juliet Pietsch

Dr. Pietsch is a senior lecturer in the School of Politics and International Relations at the Australian National University.  During her two-month sabbatical at Stanford in Spring 2010 she worked on two books:  Indonesia-Malaysia Relations: Media, Politics and Regionalism (with Dr. Clark) and (with two other co-authors) Dimensions of Australian Society (3rd ed., Palgrave Macmillan, 2010).  In April, jointly with Dr. Clark, she spoke at the Berkeley APEC Study Center on “Indonesia-Malaysia Relations and Southeast Asian Regional Identity.”

Dr. Pietsch returns to her faculty position at the Australian National University.

Thitinan Pongsudhirak

Dr. Pongsudhirak is an associate professor in the Department of International Relations in the Faculty of Political Science at Chulalongkorn University, whose Institute of Security and International Studies he also heads.  He was selected to spend a month at Stanford in Spring 2010 as an FSI-Humanities Center international scholar, and was supported for a second month by FSI’s Center on Democracy, Development, and the Rule of Law.  During his time on campus he focused on the turbulent politics of Thailand—in an article drafted for the Journal of Democracy, in a number of shorter pieces, in lectures at various venues, and in interviews with media around the world.  (For a filmed interview on 4 June 2010, see http://absolutelybangkok.com/thitinan-on-continuity-change/.)

Dr. Pongsudhirak will briefly rejoin some of his Stanford colleagues at a conference on Asian regionalism to be hosted by APARC in Kyoto in September 2010.  Meanwhile he continues his scholarship and teaching at Chulalongkorn.

Sudarno Sumarto

An Indonesian economist specializing on poverty reduction, Dr. Sumarto spent AY 2009-2010 at APARC as an Asia Foundation fellow writing up research, lecturing on and off campus, and advising Indonesian officials on anti-poverty policy.  Notable among the publications resulting from his residence at Stanford is a book, Poverty and Social Protection in Indonesia (Singapore / Jakarta:  ISEAS / Smeru Institute, May 2010), which he co-edited and most of whose chapters he co-wrote.  Noteworthy, too, is a co-authored essay, “Targeting Social Protection Programs:  The Experience of Indonesia,” in Deficits and Trajectories: Rethinking Social Protection as Development Policy in the Asia Region (forthcoming, 2010).  Indonesia-related subjects of writing in progress include lessons from the cash transfer program, how such transfers have affected political participation, and the impacts of violent conflict on economic growth.  During his stay at Stanford, Dr. Sumarto was chosen to co-convene the September 2010 Indonesia Update conference in Canberra on “Employment, Living Standards, and Poverty in Contemporary Indonesia” and to co-edit the resulting book. 

Dr. Sumarto returns to Jakarta to become a senior research fellow at the Smeru Institute, which he co-founded and directed, and to continue his work on poverty alleviation in Indonesia.

Christian von Luebke

Former Shorenstein fellow Dr. von Luebke completed the first year of a two-year German Research Foundation fellowship at Stanford writing a book on democracy and governance in Southeast Asia.  Before the end of 2010, Gauging Governance:  The Mesopolitics of Democratic Change in Indonesia should be in the pipeline toward publication.  Other relevant work includes “Politics of Reform:  Political Scandals, Elite Resistance, and Presidential Leadership in Indonesia,” Journal of Current Southeast Asian Affairs (2010), and a co-authored piece on current economics and politics in the Bulletin of Indonesian Economic Studies (2010).  Pending revision and resubmission is an article on the political economy of investment climates in Indonesia.  In the course of the year he spoke on his research before audiences in North America, Europe, and Southeast Asia, and co-organized a panel on Southeast Asian politics to be held at the annual conference of Oxford Analytica in the UK in September 2010.

Dr. von Luebke’s plans for AY 2010-11 at Stanford include research and writing on Indonesia and the Philippines and teaching a course on Southeast Asian politics

Jim Castle is a friend of mine. I have known him since we were graduate students in Indonesia in the late 1960s. While I labored in academe he went on to found and grow CastleAsia into what is arguably the most highly regarded private-sector consultancy for informing and interfacing expatriate and domestic investors and managers in Indonesia. Friday mornings he hosts a breakfast gathering of business executives at his favorite hotel, the JW Marriott in the Kuningan district of Jakarta.

Or he did, until the morning of July 17, 2009. On that Friday, shortly before 8am, a man pulling a suitcase on wheels strolled into the Marriott's Lobby Lounge, where Jim and his colleagues were meeting, and detonated the contents of his luggage. We know that the bomber was at least outwardly calm from the surveillance videotape of his relaxed walk across the lobby to the restaurant.

He wore a business suit, presumably to deflect attention before he blew himself up. Almost simultaneously, in the Airlangga restaurant at the Ritz Carlton hotel across the street, a confederate destroyed himself, killing or wounding a second set of victims. As of this writing, the toll stands at nine dead (including the killers) and more than 50 injured.

On learning that Jim had been at the meeting in the Marriott, I became frantic to find out if he were still alive. A mere 16 hours later, to my immense relief, he answered my e-mail. He was out of hospital, having sustained what he called "trivial injuries", including a temporary loss of hearing. Of the nearly 20 people at the roundtable meeting, however, four died and others were badly hurt. Jim's number two at CastleAsia lost part of a leg.

The same Marriott had been bombed before, in 2003. That explosion killed 12 people. Eight of them were Indonesian citizens, who also made up the great majority of the roughly 150 people wounded in that attack - and most of these Indonesian victims were Muslims. This distribution undercut the claim of the country's small jihadi fringe to be defending Islam's local adherents against foreign infidels.

But if last Friday's killers hoped to gain the sympathy of Indonesians this time around by attacking Jim and his expatriate colleagues and thereby lowering the proportion of domestic casualties, they failed. Of the 37 victims whose names and nationalities were known as of Monday, 60% were Indonesians, and that figure was almost certain to rise as more bodies were identified. The selective public acceptance of slaughter to which the targeting of infidel foreigners might have catered is, of course, grotesquely inhumane.

Since Susilo Bambang Yudhoyono was first elected president in 2004, Indonesia's real gross domestic product has averaged around 6% annual growth. In 2008 only four of East Asia's 19 economies achieved rates higher than Indonesia's 6.1% (Vietnam, Mongolia, China and Macau). In the first quarter of 2009, measured year-on-year, while the recession-hit economies of Malaysia, Singapore and Thailand all shrank, Indonesia's grew 4.4%. In the first half of 2009, the Jakarta Stock Exchange soared.

The economy is hardly all roses. Poverty and corruption remain pervasive. Unemployment and underemployment persist. The country's infrastructure badly needs repair. And the economy's performance in attracting foreign direct investment (FDI) has been sub-par: The US$2 billion in FDI that went to Indonesia in 2008 was less than a third of the $7 billion inflow enjoyed by Thailand's far smaller economy, notwithstanding Indonesia's far more stable politics.

Nevertheless, all things considered, the macro-economy in Yudhoyono's first term did reasonably well. We may never know whether the killer at the Marriott aimed to maximize economic harm. According to another expat consultant in Jakarta, Kevin O'Rourke, the day's victims included 10 of the top 50 business leaders in the city. "It could have been a coincidence," he said, or the bombers could have "known just what they were doing".

Imputing rationality to savagery is tricky business. But the attackers probably did hope to damage the Indonesian economy, notably foreign tourism and investment. In that context, the American provenance and patronage of the two hotels would have heightened their appeal as targets. Although the terrorists may not have known these details, the Ritz-Carlton Hotel Company is an independently operated division of Marriott International, Inc, which owns the JW Marriott brand, and both firms are headquartered on the outskirts of Washington DC.

Second-round revenge against the Marriott may also have played a role - assaulting a place that had rebuilt and recovered so quickly after being attacked in 2003. Spiteful retribution may have influenced the decision to re-attack the Kuta tourist area in Bali in 2005 after that neighborhood's recovery from the bomb carnage of 2002. Arguable, too, is the notion that 9/11 in 2001 was meant to finish the job started with the first bombing of the Twin Towers in 1993. And in all of these instances, the economy - Indonesian or American - suffered the consequences.

Panic buttons are not being pushed, however. Indonesian stock analyst Haryajid Ramelan's expectation seems plausible: that confidence in the economy will return if those who plotted the blasts are soon found and punished, and if investors can be convinced that these were "purely terrorist attacks" unrelated to domestic politics.

Sympathy for terrorism in Indonesia is far too sparse for Friday's explosions to destabilize the country. But they occurred merely nine days after Yudhoyono's landslide re-election as president on July 8, with three months still to go before the anticipated inauguration of his new administration on October 20. That timing ensured that some would speculate that the killers wanted to deprive the president of his second five-year term.

The president himself fed this speculation at his press conference on July 18, the day after the attacks. He brandished photographs of unnamed shooters with handguns using his picture for target practice. He reported the discovery of a plan to seize the headquarters of the election commission and thereby prevent his democratic victory from being announced. "There was a statement that there would be a revolution if SBY wins," he said, referring to himself by his initials.

"This is an intelligence report," he continued, "not rumors, nor gossip. Other statements said they wished to turn Indonesia into [a country like] Iran. And the last statement said that no matter what, SBY should not and would not be inaugurated." Barring information to the contrary, one may assume that these reports of threats were real, whether or not the threats themselves were. But why share them with the public?

Perhaps the president was defending his decision not to inspect the bomb damage in person - a gesture that would have shown sympathy for the victims while reassuring the population. He had wanted to go, he said, "But the chief of police and others suggested I should wait, since the area was not yet secure. And danger could come at any time, especially with all of the threats I have shown you. Physical threats."

Had Yudhoyono lost the election, or had he won it by only a thin and hotly contested margin, his remarks might have been read as an effort to garner sympathy and deflect attention from his unpopularity. The presidential candidates who lost to his landslide, Megawati Sukarnoputri and Jusuf Kalla, have indeed criticized how the July 8 polling was handled. And there were shortcomings. But even without them, Yudhoyono would still have won. In this context, speaking as he did from a position of personal popularity and political strength, the net effect of his comments was probably to encourage public support for stopping terrorism.

One may also note the calculated vagueness of his references to those - "they” - who wished him and the country harm. Not once in his speech did he refer to Jemaah Islamiyah, the network that is the culprit of choice for most analysts of the twin hotel attacks. Had he directly fingered that violently jihadi group, ambitious Islamist politicians such as Din Syamsuddin - head of Muhammadiyah, the country's second-largest Muslim organization - would have charged him with defaming Islam because Jemaah Islamiyah literally means "the Islamic group" or "the Islamic community".

One may hope that Din's ability to turn his Islamist supporters against jihadi terrorism and in favor of religious freedom and liberal democracy will someday catch up to his energy in policing language. Yet Yudhoyono was right not to mention Jemaah Islamiyah. Doing so would have complicated unnecessarily the president's relations with Muslim politicians whose support he may need when it comes to getting the legislature to turn his proposals into laws. Nor is it even clear that Jemaah Islamiyah is still an entity coherent enough to have, in fact, masterminded last Friday's attacks.

Peering into the future, one may reasonably conclude that the bombings' repercussions will neither annul Yudhoyono's landslide victory nor derail the inauguration of his next administration. Nor will they do more than temporary damage to the Indonesian economy. As for the personal aspect of what happened Friday, while mourning the dead, I am grateful that Jim and others, foreign and Indonesian, are still alive.

Donald K Emmerson heads the Southeast Asia Forum at Stanford University. He is a co-author of Islamism: Contested Perspectives on Political Islam (Stanford University Press, November 2009) and Hard Choices: Security, Democracy, and Regionalism in Southeast Asia (Stanford/ISEAS, 2008).

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