Democratization and Financial Reform in Taiwan: The Political Economy of Bad-Loan Creation

This study shows that many bad loans now burdening Taiwan's financial institutions are interrelated with the society's democratization which started in the late 1980s. Democratization made the local factions and business groups more independent from the Kuomintang government. They acquired more political influence than under the authoritarian regime. These changes induced them to manage their owned financial institutions more arbitrarily and to intervene more frequently in the state-affiliated financial institutions. Moreover they interfered in financial reform and compelled the government to allow many more new banks than it had originally planned. As a result the financial system became more competitive and the qualities of loans deteriorated. Some local factions and business groups exacerbated the situation by establishing banks in order to funnel funds to themselves, sometimes illegally. Thus many bad loans were created as the side effect of democratization.

The Evolution of the "One China" Concept in the Process of Taiwan's Democratization

This paper investigates how Taiwan's "one China" concept evolved during the democratization process that occurred under the leadership of former President Lee Teng-hui. The author argues that there was a crucial evolution of the "one China" concept and that the transformation of the concept resulted from changes in Taiwan's internal political circumstances. The evolution of the concept creates a real possibility that the "status quo" sought by the ROC in the Taiwan Strait both during and after the Cold War might be destroyed. In addition, any further evolution of the "one China" concept will surely make the "status quo" of Taiwan untenable, in that it would induce Taiwan to seek de jure instead of de facto independence, possibly initiating a conflict between the PRC and the ROC. To prevent such a conflict in the Taiwan Strait, the international community must persuade the ROC not to go beyond the "status quo" and to stay within the framework of de facto independence. At the same time, both the PRC and the ROC should be urged to maintain an open conduit of communication for productive talks on the reunification of China.

Politics of the 1945 Constitution:Democratization and Its Impact on Political Institutions in Indonesia

Introduction : Before 1998, no one could think about the amendment of the 1945 Constitution. The 1945 Constitution was a product of nationalist who had hard fought for independence from the Dutch colonization. This historical background made it the symbol of independence of the Indonesian nation. Thus, it has been considered as forbidden to touch contents of the 1945 Constitution whereas political leaders have legitimized their authoritarian rulership by utilizing a symbolic character of the Constitution. With the largest political turmoil since its independence, that is, a breakdown of authoritarian regime and democratic transformation in 1998-1999, however, a myth of the "sacred and inviolable" constitution has disappeared. A new theme has then aroused: how can the 1945 Constitution be adapted for a new democratic regime in Indonesia? 　　　The Indonesian modern state has applied the 1945 Constitution as the basic law since its independence in 1945, except for around 10 years in the 1950s. In the period of independence struggle, contrary to the constitutional provision that a kind of presidential system is employed, a cabinet responsible for the Central National Committee was installed. Politics under this institution was in practice a parliamentary system of government. After the Dutch transferred sovereignty to Indonesia in 1949, West European constitutionalism and party politics under a parliamentary system was fully adopted with the introduction of two new constitutions: the 1949 Constitution of Federal Republic of Indonesia and the 1950 Provisional Constitution of Republic of Indonesia. Since a return from the 1950 Constitution to the 1945 Constitution was decided with the Presidential Decree in 1959, the 1945 Constitution had supported two authoritarian regimes of Soekarno's "Guided Democracy" and Soeharto's "New Order" as a legal base. When the 32-year Soeharto's government fell down and democratization started in 1998, the 1945 Constitution was not replaced with a new one, as seen in many other democratizing countries, but successively reformed to adapt itself to a new democratic regime. In the result of four constitutional amendments in 1999-2002, political institutions in Indonesia are experiencing a transformation from an authoritative structure, in which the executive branch monopolized power along with incompetent legislative and judicial branches, to a modern democratic structure, in which the legislative branch can maintain predominance over the executive. However, as observed that President Abdurrahman Wahid, the first president ever elected democratically in Indonesian history, was impeached after one and a half years in office, democratic politics under a new political institution has never been stable. 　　　Under the 1945 Constitution, how did authoritarian regimes maintain stability? Why can a democratic regime not achieve its stability? What did the two constitutional amendments in the process of democratization change? In the first place, how did the political institutions stipulated by the 1945 Constitution come out? Through answering the above questions, this chapter intends to survey the historical continuity and change of political institutions in Indonesia along with the 1945 Constitutions and to analyze impact of regime transformation on political institutions. First, we examine political institutions stipulated by the original 1945 Constitution as well as historical and philosophical origins of the constitution. Second, we search constitutional foundations in the 1945 Constitution that made it possible for Soekarno and Soeharto to establish and maintain authoritarian regimes. Third, we examine contents of constitutional amendments in the process of democratization since 1998. Fourth, we analyze new political dynamics caused by constitutional changes, looking at the impeachment process of President Abdurrahman Wahid. Finally, we consider tasks faced by Indonesia that seeks to establish a stable democracy.

Post-decentralization regional economies and actors -- putting the capacity of Local governments to the test

Decentralization in Indonesia was introduced institutionally in 2001, with a democratization drive promoted by international donors and by the intention of the new government to clear away the centralistic image of Soeharto. Decentralization has had some effects on regional economies and on local government administration. Compared to the period before decentralization, the share of gross regional domestic product and local government finance has increased in Java, though investment and bank borrowing have expanded to the outer islands. In qualitative aspects, decentralization has transferred not only administrative authority but also many new vested interests from the center to regions. Local governments have become more extensive economic actors in regional economies. Regional economic actors now compete actively for such vested interests and have missed the opportunity to create market-friendly regional economies. The government sector should not be a mere rent-seeking economic actor, but should play a role as a facilitator promoting private sector activities in regional economies.

An Institutional Analysis of Environmental Pollution Disputes in Taiwan: Cases of 'Self-Relief'

During the late 1980s and early 1990s in Taiwan, people's protests against environmental pollution often took the form of "self-relief," meaning that they attempted to fight polluters using their own resources, without relying on legal or administrative procedures. Why did such an extreme form of disputes become so widespread? What institutional changes did these movements bring about? These questions are analyzed using the analytical framework of "law and economics." Our research shows that "self-relief" functioned to a certain extent as a means of realizing quick compensation for victims, and for reflecting the opinions of local people concerning development projects; in addition, it served to promote the formulation of law and administrative systems. However, as it was based on direct negotiations between the parties concerned, the outcome of each dispute only reflected the transient balance of forces, and the experience gained in negotiations was not accumulated as a social norm.

Structural Changes and Formation of Rusta-shahr in Post-Revolutionary Rural Society in Iran

The following paper is based on the author's two-year research and fieldwork in Iran and examines the process of political and social changes since the Iranian Revolution of 1979 and the subsequent impact of the Iran-Iraq War of 1980-88. This paper focuses on the transition of traditional, small villages into rusta-shahr or small rural cities and the first and second nation-wide elections of shoura or councils which were the first steps toward self-government. The author is guardedly optimistic regarding this democratic process but warns of possible future social unrest if changes are not more "balanced" between cities and rural areas and if the employment needs of the burgeoning younger generation are not met, political and social consequences may be catastrophic.

Public Support for Enlargement: Economic, Cultural, or Normative?

The current research questioned whether public opinion on enlargement can be adequately explained only by economic calculation and cultural/community identity. When the analytical viewpoint was expanded from the conventional individual level to state level, it was revealed that constructivist considerations-such as the democratization and reunification of Europe-play a critical role in pushing forward enlargement. Drawing on the perspective of international relations, this study introduced a synthetic model to analyze public opinion on enlargement in the EU's 15 old member states. The analysis using a Eurobarometer dataset showed that on public support for enlargement, constructivist attitudes held as much sway as cultural/community attitudes. In fact, expectations of democratization were the most important determinant of support for enlargement in the case of Turkey.