In recent years, economic reform has often been pursued by technocrats, aloof elitists who were turned out by their constituents at the slightest dip in economic indicators. This is why Fernando Henrique Cardoso’s heir apparent lost to Lula in the 2002 Brazilian elections, which made clear the growing need for a new breed of developing-world leaders. Initially, Lula’s victory brought fears of an economic “axis of evil” in Latin America, with left-wing leaders such as Hugo Chavez in Venezuela and Lucio Gutierrez in Ecuador joining Cuba’s Fidel Castro in power. Lula came to office with a loose agenda that included the threat of debt default, then surprised the world by showing a clear grip of the benefits of economic orthodoxy, along with the street credentials to secure public trust. Lula is enacting right-of-center reforms, and there is talk that other Latin American leaders may follow.
Thaksin is in a similar mold. He came to power on a strong nationalistic platform and contempt for the “Bangkok elite.” Many foreign investors who feared his campaign rhetoric now see that it only makes his reforms more likely to stick. Thaksin is creating a balanced-growth environment, with domestic demand contributing a greater share of economic growth than the export cycle. Thailand’s runaway economic growth is having a powerful ripple effect: Philippine President Gloria Macapagal Arroyo has called Thaksin a model, Singaporean officials express admiration and analysts see traces of Thaksinomics in Malaysia’s economic policies.
In Russia, Putin came to office emphasizing the rule of law, order and discipline, and critics say he has cut short Russia’s journey toward a more open society. Yet the real issue is one of style. Russia’s national ego was bruised by the collapse of its “empire,” so it looks to leaders who project an image of strength. Putin capitalized on this mood, and remains amazingly popular even as the international community frets over his jailing of Russia’s leading tycoon, Mikhail Khodorkovsky. Indeed, Putin’s run-ins with Khodorkovsky go down well with the masses, who have good reason to begrudge the way tycoons acquired state assets for low prices during the privatizations of the 1990s.
There is no easy way out of the ’90s mess. Nor should debate over Putin’s democratic credentials obscure the economic record. Aiming to double Russia’s GDP in 10 years, Putin has focused on cutting taxes, lowering government spending, rationalizing tariffs and reforming the courts. Russia now boasts one of the world’s fastest-growing economies, with one of the best-performing stock markets and a large fiscal surplus.
Like Putin, Thaksin gets his share of opprobrium for being heavy-handed. Putin put it succinctly in a recent interview, arguing that democratic values take time to establish, particularly for a nascent democracy like Russia. Putin and Thaksin may not be paragons of democratic virtue, yet they are working within evolving democracies that hold genuine elections. That puts them, along with Lula, in a class ahead of the last generation of reformers like Deng Xiaoping, Lee Kuan Yew and Mahathir Mohamad, who also put a priority on economic growth but had little faith in democratic values. Many Western analysts have underestimated the significance of the rise of Thaksin, Putin and Lula. Too much attention is paid to their nationalistic rhetoric, and too little to how much they are winning democratic support for real economic reform.
