It's the political aftershock of Asia's economic earthquake: Three years after the region's descent into financial crisis, a leadership crisis is buffeting the region from Bangkok to Tokyo. Now investors are stuck trying to figure out if the upheaval will tilt Asia into yet another business maelstrom--or if the dramas being played out across the region are a necessary prelude to the creation of healthier governments.

The signs aren't encouraging. Japanese Prime Minister Yoshiro Mori, a political mediocrity, has just barely won a no-confidence vote in the Diet. He will likely be replaced by party elders, but that won't make the ruling Liberal Democratic Party any more capable of serious reform. In Indonesia, President Abdurrahman Wahid lurches from crisis to scandal, amid calls for his resignation.

Taiwan President Chen Shui-bian, under threat of impeachment over the cancellation of a nuclear power plant, now is fending off reports of an affair with a presidential aide. Meanwhile, Thailand Prime Minister Chuan Leekpai looks set to lose his mandate in upcoming elections, despite a reputation for incorruptibility and substantial progress in bringing his country back from crisis.

ADRIFT. This state of political drift is impeding the region's ability to cope with the lingering effects of the economic crash. A bank crisis much like Japan's is unfolding in Taiwan. In Bangkok, politically powerful companies are resisting bankruptcy and tying up precious bank capital as they refuse to pay back loans. In Indonesia, the Wahid regime seems unable to sell off seized banks, fully neutralize the army, or put out the fires of secessionist movements. Promises to sell government stakes in companies ranging from mines to telecom companies have been broken.

Foreign direct investment in these beleaguered regimes is slowing. In the Philippines, where President Joseph Estrada is battling impeachment, investment plunged from a peak of $1.6 billion in 1998, to just $120 million in the first half of this year. Close to $1.5 billion in capital flowed out of Indonesia in the first quarter, compared with peak investment into the country of more than $6 billion in 1995.

Meanwhile, most stock markets in the region are down sharply. Thailand, Indonesia, and the Philippines were each off about 40% for the first 10 months of the year. In Thailand, "no matter what party wins, it will be very difficult to solve the persistent problems we have," worries Siripan Nogsuan, professor of political science at Bangkok's Chulalongkorn University. She contends that Thailand still hasn't overcome the effects of the economic crisis--lingering nonperforming loans and chronic corruption.

This chain of mini-crises underscores the weak political systems reformers such as Wahid and Chuan inherited from their predecessors. Asia depends too much on individual leaders rather than enduring institutions. Local battles all too often become destabilizing national clashes rather than part of the normal alternation of power in more established democracies.

It's possible that all this turmoil is marking a passage to a more stable era. It takes time to build normal political institutions, and new rulers such as Wahid and Chuan have to contend with powerful vested interests. The fact that they and reformers such as Korea's Kim Dae Jung are in power is testimony to Asians' desire for real restructuring.

Leaders such as Kim have made some progress in opening their economies and shoring up financial systems. Taiwan's Chen, for example, is rightly exposing the corruption in Taiwan politics. Maybe these leaders can lay the groundwork for more effective, mature politics in the region.

But how much time do Asian politicians have to get things right? Imagine this scenario: The U.S. and European economies start to slow in the second half of 2001. Asia's exports, already weakening, swoon. Regional growth stalls, and Asia's banks, never fully mended from the crisis, start going under.

It's hard to imagine the current crop of Asian leaders, beset as they are by foes in business and politics, dealing effectively with such an emergency. The most well-meaning of Asia's political chiefs want something better for their people. The fear is that their people will get something a lot worse.

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