At the moment it is impossible to say where the downward spiral in the Far East will be arrested. The rest of the world has escaped relatively lightly so far, though investors in Asian growth funds might not think so. Some Western consumers are looking forward to cheaper electronic goods and holidays in Bali that cost less than a fortnight in Spain. It will be a different matter, however, if seven years of economic stagnation in Japan turns into outright depression, or if a nuclear-armed China, where the masses have been bought off with nationalistic slogans and better living conditions as a substitute for political freedoms, suffers a sudden reversal. The region already faces the dismal prospect of millions of migrant workers being sent home as their once-tigerish employers cut back. Our Business pages report that George Soros, the seer of Wall Street, fears that the Asian slump may be the prelude to world deflation and depression. We ought not to ignore the fact that it may become that bad.
However the crisis turns out, it is clearer than ever before that political development in East Asia has not kept pace with its breakneck economic growth, and that this is not just part of the problem but one of its principal causes. For some years Western politicians and businessmen have been expected to listen penitently as East Asian leaders such as Lee Kuan Yew in Singapore and Mahathir Mohamad in Malaysia have lectured them on the supremacy of "Asian values", by which they mean a fairly free-market economy controlled by a tightly knit political elite which the people fail to elect at their peril. Tony Blair, who is in Japan, called yesterday for "proper transparency and accountability", a demand Western countries lacked the confidence to make when Asian nations were the source of billions of pounds' worth of infrastructure contracts. Britain, indeed, violated its own standards of transparency and accountability in a cynical manner to appease an arrogant Malaysian prime minister by spending pounds 234m of public money on the Pergau dam.
Lack of democracy in many of the Asian "tigers" has led to loans and contracts being awarded to political cronies rather than on economic criteria. When investments have gone sour, losses have been covered up, as the IMF is now discovering in more than one of the countries it is trying to help. Even where corruption is not involved, there has been indiscriminate investment in projects of dubious value - again Pergau comes to mind - because of the absence of mature public institutions. The region is also behind in developing international institutions to contain conflict, such as Nato, which may be needed if economic privation leads to friction among Asian neighbours.
It is up to the West to point out that much of Asia's prosperity has been built on fragile political foundations, and that this defect just might bring the whole edifice down. One opportunity will come in April when Britain hosts the annual summit between the EU and the Association of South-East Asian Nations. While it is in everyone's interests that the immediate crisis is overcome, there should be persistent and unequivocal pressure on the "tigers" to achieve political pluralism, not just raw growth. There must be no more Pergaus.
Sooner or later the Asian economies are likely to revive, although the failure of many governments to recognise the scale of the problem, let alone their part in it, will delay recovery. Next time, however, we must not allow ourselves to be fobbed off with talk of "Asian values" or deterred by claims that attempts to strengthen democracy constitute unacceptable interference. Mr Blair is saying the right things, and should keep on saying them.