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Asia's path

History may judge that 2011 was the year when the 21st century really began. Back in 2000, continuity seemed assured, with the US consolidating power and primacy. One decade on, the changes have the potential to upend the global balance.

The financial crisis that began in the West in late 2008 is entering a second and more dangerous phase. The euro zone has revealed not only sovereign financial problems but also the difficulties in exercising collective leadership.

The United States is not in acute crisis and its economy showed better demand in the last quarter of 2011. And everyone agrees something needs to be done. Yet Washington is gridlocked - witness the failure to agree on ways to cut the budget deficit. From very different ends of the American spectrum, the 'tea party' revolution and the Occupy Wall Street movement are evidence of a well of restiveness.

Across the Middle East, the Arab spring has turned into a longer season of uncertainty. Some celebrated Muammar Gaddafi's end and are calling for a resolution in Syria. But, beyond old autocracies, the emerging concern is who will govern next, and how. With the landslide win for Islamist parties, Egypt's December poll brings that question into sharp focus.

How has Asia coped? Growth continued for much of last year. Some commentators have predicted that this is the time when the region will soon catch up with and then surpass the West. The reality is more complex.

Asia has not been unaffected by troubles elsewhere. Markets are in tumult, and economic growth rates across the region have been shaved. Prospects for 2012 are mixed, even for those like China and India with large domestic markets, let alone the smaller economies.

Politically, there is no Asian spring. But governments across the region have had to deal with new expectations from citizens. In the erstwhile pariah state of Myanmar, the newly installed government has freed political prisoners and will allow long-detained Aung San Suu Kyi to contest elections. Thailand, Malaysia and Singapore have also seen changes that make for greater participation and more complex politics.

For established Asian democracies - Indonesia, the Philippines and India - the challenge goes beyond electoral issues. Demands in the past year have grown for less corrupt and more effective governance. Public protests and a number of high-profile prosecutions have been the result.

Outside of some copycat demonstrations, the Occupy Wall Street movement has not shown much strength across Asian cities. But the political imperative from Singapore to Bangkok and Beijing is to close the stark gap between the haves and have-nots. Asset bubbles in housing and inflation in the basics of food and energy have been testing governments to make growth more inclusive.

With its economy still running ahead, China has loomed larger this year in the expectations of others. Yet Chinese leaders grapple with many of these same issues, and on a much larger scale. External conditions are becoming more difficult, as are domestic issues.

Measures put in place to maintain growth have distorted the market with too much easy credit. With a dip in growth, social unrest is growing. With its upcoming leadership transition, China's rulers must do all they can to prevent an economic hard landing and shore up political legitimacy.

As the Chinese military builds up and a more assertive diplomacy is heard, however, acceptability is also an issue with its near neighbours.

Global changes in 2011 have been quick and complex - a political, economic and social vortex. Asian states have not been immediately caught in that swirl. But they feel the pull more than many admit.

This shows up an ongoing problem in the region's relationship to the global system. Despite economic growth, Asians are currently more influenced by global trends than they are able to influence what happens. As the US and Europe weaken, gaps in global governance are showing: witness the G20's current lack of co-ordination, and the lack of success in the Doha trade talks. Even the acclaimed success in the climate change meeting only starts off negotiations towards a later agreement and we should expect continuing differences.

The world at the end of the year was no better than it was at the start. Indeed, conditions - especially in the last quarter - have become increasingly difficult. Asians may make a New Year wish for the United States and Europe to put their houses in order. But, looking ahead, Asians must consider what they can do and resolve to secure peace and prosperity for themselves and the wider global system.

Simon Tay is chairman of the Singapore Institute of International Affairs and author of Asia Alone: The Dangerous Post-Crisis Divide from America

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