From the CIAO Atlas Map of Asia 

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CIAO DATE: 12/00

Regionalism and Globalism in Asia Pacific: The Interplay of Economy, Security and Politics

Joseph A. Camilleri

International Studies Association

41st Annual Convention
Los Angeles, CA
March 14-18, 2000

Fashionable though it has become, regionalism remains a multidimensional, ambiguous and highly elusive concept, which can obscure as much as clarify the modalities and implications of functional and institutional interaction. One of the more helpful theoretical expositions is that offered by Andrew Hurrell who subdivides the notion of regionalism into five categories: regionalization, regional awareness and identity, regional inter-state co-operation, state-promoted regional integration, and regional cohesion (Hurrell 1995, 37-73). By endowing each category with distinctive meaning and content, he is able to retain the richness and complexity of the concept, while highlighting the diverse and at times contradictory pressures to which it is invariably subjected in practice. Given that the third and fourth categories are closely connected in that they both focus on the role of the state, the intention here is to conflate them into one category, the emphasis being on the negotiation and development of inter-state agreements, régimes and institutions. As for the fifth category, it may be more helpful to postpone consideration of the potential for regional cohesion to a later stage, since it represents the combined impact of the other four categories. To these three categories borrowed from Hurrell's analytical framework a fourth will be added, which specifically draws attention to the emergence of dual-track diplomacy, foreshadowing the subsequent and more detailed discussion of the contribution of non-state actors and civil society more generally to the processes of regionalization.

Though regionalism clearly lends itself to comparative analysis, care must be taken to avoid the trap of assessing Asia-Pacific regionalism purely in terms of the European experience. Here it may be useful to distinguish between de jure integration which has made considerable headway in Western Europe and de facto integration which is perhaps more attuned to the circumstances of Asia Pacific. It is also well to remember that integrative processes in each of the three sub-regions are likely to proceed at a different pace, assume different forms, and have differential, even contradictory effects on the region as a whole.



Hurrell uses the term 'regionalization' to refer to the complex network of flows across state boundaries, involving the movement of goods and services, capital, technology, information and people. He lays particular stress on the role of markets and private economic actors, including transnational firms and regional business networks, in establishing higher levels of economic specialization and interdependence within a given geographical region. Trade and investment flows, international mergers and takeovers, and regional production alliances are seen as key indicators of regionalization. Trade is perhaps the most striking manifestation of Asia-Pacific economic regionalization. Intra-Asian trade now accounts for about 45 per cent of East Asia's total trade.

Between 1980 and 1992 Asia's share of exports originating in Asian newly industrializing economies NIES: rose from 32.2 per cent to 43.5 percent. During the same period the comparable share for the ASEAN countries fell slightly, but rose sharply for China from 52.9 per cent to 70.3 per cent, and the United States from 21.2 per cent to 26.3 per cent (Katzenstein 1996, 126). In the case of China, the last few years have seen much higher levels of economic interaction with the rest of Asia. Sino-Japanese trade reached $39 billion in 1993. Japan was now China's largest trading partner, while China was Japan's second largest trading partner. Hong Kong, Taiwan, South Korea, Singapore and Thailand are now also among China's top ten trading partners. Bilateral trade between China and Taiwan increased from $77 million in 1979 to $14.4 billion in 1993. According to one estimate, South Korea will displace Japan as China's largest trading partner by the end of the century, with bilateral trade expected to rise from $11.7 billion in 1994 to $56 billion in the space of six years (Hu 1996, 45-46).

The regional concentration of trade is but one of several indicators. Of particular significance has been the accelerated relocation of Japanese production in different parts of Asia, thereby establishing Japan as "the undisputed leader in Asia in terms of technology, capital goods and economic aid"(Katzenstein 1996, 128). Having achieved a secure foothold in Korea and Taiwan, Japan has since rapidly expanded its stake in the ASEAN economies, and is now developing a substantial presence in China and Indochina. In each case Japanese firms have taken advantage of lower labour costs and highly favourable fiscal and other regulatory conditions to meet the growing demand for producer and consumer goods in these countries. Another important factor contributing to regional economic integration has been the economic growth of 'Greater China', with overseas Chinese currently accounting for nearly four-fifths of direct foreign investment in the PRC. To give but one example, the four Special Economic Zones in Guangdong and Fujian have become increasingly enmeshed with the economies of Hong Kong, Macau, Taiwan and the Chinese business communities of Southeast Asia. China is now the third largest recipient of foreign investment from Hong Kong, Taiwan, South Korea, Singapore and Thailand. The interpenetration of national economies is also stimulated by the exponential growth of financial flows across national boundaries, coupled with the increasing dominance of intra-company as a proportion of bilateral trade. Intra-company trade currently accounts for nearly four-fifths of Japan's total exports and half of its imports (Encarnation 1994, 2). Complementing and reinforcing these transnational production structures is the emergence of such regional economic zones as the Johor - Singapore - Riau growth triangle, the Indonesia-Malaysia-Thailand Growth Triangle, the East Asia Growth Area, the Southern China growth triangle, and the Tumen River Delta Economic Zone (Thant, Tang and Kakaza 1995; Jordon and Khanna 1995, 433-462). Finally mention must be made of the increasing mobility of labour, with the strongly performing economies of the region attracting large numbers of legal and illegal immigrants. There are nevertheless clear limits to the extent, intensity and efficiency of these economic and functional linkages. There are many states (Cambodia, Laos, North Korea, several of the Pacific island states) and many areas within states (eg. non-coastal areas of China, parts of Burma and the Russian Far East), where these linkages are non-existent or at best tenuous. Moreover, many of the linkages which are said to contribute to regional interdependence (eg. Japan-ASEAN trade and investment flows) are acutely asymmetrical, and to that extent likely to promote social and political tensions both within and across national boundaries.


Regional Identity

Notwithstanding these unmistakable asymmetries and the domestic fissiparous tendencies which they mirror and reinforce, regionalization in Asia Pacific is also reflected in the development of a wide range of transnational flows and social networks. This trend is still very much at an embryonic stage, but there is enough evidence to suggest the emergence of new forms of identity, or at least new attitudes and perceptions, which bypass but also influence the conscious policies of existing territorially defined states.

For observers wedded to a Eurocentric perspective, national differences still seem pervasive. A case in point are the sharp tensions that still separate Japan from many of its neighbours, notably Korea and China for whom Japanese aggression and brutality in the Second World War remain a major source of friction. According to Aaron Friedberg, Asian nationalism rooted firstly in ethnic and racial differences is "a reflection of the region's diversity, its geographical dispersal, its troubled past and its lack to date of the soothing interconnections that have existed for some time in Western Europe (Friedberg 1993/94, 17). Numerous conflicts over the delineation of land frontiers or maritime boundaries, and disputed control over newly discovered natural resources are portrayed as the geopolitical or geoeconomic expression of deeper national animosities. History is itself a subject of disagreement, with different Asian societies (eg. China and Japan) intent on reconstructing the past in ways which serve national purposes and accentuate the national divide. The extreme sensitivity surrounding such issues as the content of history textbooks and the commemoration of past wars is seen as evidence of the absence of cultural affinities. A sharp contrast is thus drawn between Europe where "political similarities are supported by rough cultural unity", and the Pacific where "the similarities are barely skin deep" (Segal 1993, 179-181).

In recent years an opposing view has emerged highlighting the signs of a growing Asian identity, with frequent references to such notions as 'Asian values' (Zakaria 1994; Kausikan 1993), the 'Pacific Way' (Mahbubani 1995), and an Asian 'strategic culture'. Exponents of the Asian identity thesis have tended to reaffirm the principles of sovereignty and non-interference in inter-state relations, to challenge universalist claims of human rights, and to emphasise instead duties and obligations, respect for authority, and forms of economic and political organization which privilege social harmony and family and kinship ties. It is doubtful, however, whether this social cosmology, sometimes labelled as Confucian, accurately reflects the diversity of Asia's religious and cultural traditions, let alone the much wider cultural net which encompasses Australia, New Zealand, Canada and the United States.

There is reason, then, to question the facile formulations which depict the region as either culturally cohesive or hopelessly fragmented. A more plausible assessment is of a region which, though incorporating a great many ethical and normative influences, is nevertheless, by dint of increasing social and economic interaction, developing a heightened sense of common interests, perhaps common destinies. Contributing to this outcome is the consumerist culture of middle-class capitalism, coupled with the homogenizing impact of economic regionalization and globalization, and as a consequence of this an emerging cultural and political discourse which, though it cannot always reconcile differences, must in practice negotiate agreements across a wide range of issues, including trade, human rights, security and environment.


Inter-State Agreements, Regimes and Institutions

In the course of the last fifty years Asia pacific has witnessed a great deal of regionalist activity involving the negotiation and implementation of interstate norms, agreements and régimes. Even during the Cold War cooperative arrangements flourished on many fronts, although it is true that political and strategic cooperation was shaped largely by the dictates of ideological bipolarity, hence the proliferation of bilateral and multilateral alliances and security arrangements (eg. US-Japan alliance, ANZUS treaty, Sino-Soviet alliance, Southeast Asian Treaty Organization) within which the United States and to a lesser extent the Soviet Union exercised a hegemonic role. US hegemony was generally more solidly grounded for it rested on a number of economic arrangements reflecting in different forms and to varying degrees American preeminence within the world economy. By the same token, whereas a number of organizations established between 1945 and 1975 bore the imprimatur of the United States or had as their primary focus the containment of communism (eg. Far Eastern Commission and Allied Council for Japan, Asian Development Bank, Asian and Pacific Council), a great many other organizations were much less constrained either by the logic of Cold War antagonisms or the primacy of US strategic interests. Some institutional arrangements were directly or indirectly created by the United Nations (eg. Economic Commission for Asia and the Far East, Asia-Pacific Institute for Broadcasting Development), while others resulted primarily from the initiatives of Japan (eg. Asian Productivity Organization, Asia Pacific Parliamentary Union, Ministerial Conference for the Economic Development of Southeast Asia), Australia (eg. Colombo Plan, South Pacific Commission, Central Banks of Southeast Asia, Australia and New Zealand), or one or more Southeast Asian states (eg. Asia-Pacific Postal Union, Association of Southeast Asia, Association for Science Cooperation in Asia, Cultural and Social Center for the Asia and Pacific Region). To a greater or lesser extent, most of the organizations created during the 1950s and 1960s were subject to a number of limitations: geographical (ie. they were confined to a particular sub- region), temporal (ie. they operated over a relatively short timespan), functional (ie. their responsibilities extended to the performance of a few technical tasks), ideological (ie. they were designed to promote the interests or worldviews of a particular camp and were therefore exclusivist in membership). While they contributed to the development of regional diplomacy and a culture of technical and economic cooperation, it was only after the end of the Vietnam war and the decline of the Cold War rivalries, that the institutionalization of norms would gather pace over the entire Asia-Pacific region and across the spectrum of issues.

The 1970s are best characterized as a period of transition, during which ASEAN gradually assumed a pivotal role in regional institution-building. Though formed in 1967 with the express purpose of promoting active collaboration and mutual assistance in the economic, social, cultural, technical, scientific and administrative fields, ASEAN would over time develop a comprehensive security framework which Michael Leifer has aptly described as an institutionalized vehicle 'for intra-mural conflict avoidance and management' on the one hand, and "extra-mural management of order" on the other (Leifer 1995, 132-133). When the Bangkok Declaration was signed in August 1967, it could be argued that there was little binding together the five founding members of ASEAN except a common desire to contain threats to internal security, normally associated with the activities of revolutionary or secessionist movements. Anti-communism was perhaps the ideological glue which helped to cement an otherwise disparate group of states, whose elites were often suspicious of each other's intentions and until recently embroiled in serious territorial and other diplomatic disputes.

Partly in response to but also in anticipation of the decline of Cold War rivalries, ASEAN's conception of regional security cooperation gradually assumed a more encompassing perspective, with greater emphasis on uncertainties rather than external threats, and confidence-building measures rather than zero-sum perceptions. Increasingly, the accent was on inclusiveness, that is on ensuring maximum participation in the dialogue, regardless of differences in levels of economic development, ideological orientation or geostrategic location. As a consequence ASEAN membership was progressively expanded with a view to encompassing the whole of Southeast Asia and, as we shall see, the number of dialogue partners substantially increased, eventually incorporating the greater part of the Asia-Pacific region.

By the late 1980s several independent but closely interacting influences, not least ASEAN's catalytic role in regional diplomacy, were conducive to a number of region-wide proposals and initiatives, of which the most important were the ASEAN Post-Ministerial Conference (ASEAN PMC), the ASEAN Regional Forum (ARF) and the Asia Pacific Economic Cooperation (APEC) process. Throughout the 1970s ASEAN had established a series of bilateral dialogues - with the European Community in 1972, Australia in 1974, New Zealand in 1975, UNDP in 1976 and Canada, Japan and the United States in 1977 - as a means of promoting economic cooperation, in such areas as agriculture, fishing, forestry, communications, air transportation, shipping, trade and stabilization of commodity prices. With the progressive widening of ASEAN's membership and agenda, this dialogue framework eventually paved the way for the ASEAN Prime Ministerial Conference (ASEAN PMC) which, by bringing together all the dialogue partners at the same table, established an embryonic institutional infrastructure, including meetings of senior officials (SOMs) of the ASEAN states and the dialogue partners. The ensuing exchange of views on political and security issues signalled a broadening of the security dialogue in that it now encompassed the wider Asia-Pacific region. Several limitations were nevertheless still apparent. The ASEAN PMC has found it difficult to grapple with the more sensitive sub-regional issues (eg. Korea, Russo-Japanese territorial dispute), or to develop the principles which might guide and nurture the security dialogue. The task has proved especially difficult in the face of significant differences between ASEAN and its Western interlocutors, especially in relation to the unconventional aspects of comprehensive security (eg. environment, human rights, good governance). The decision to establish the ASEAN Regional Forum was taken partly with a view to overcoming some, though by no means all, of these limitations.

As in the field of security so in economic relations, the notion of an emerging 'Pacific Community' had been steadily gaining ground throughout the 1960s and 1970s, with Japan and Australia often taking the lead in encouraging the establishment of new institutions, notably the Pacific Basin Economic Council (PBEC) in 1967 and the Pacific Economic Cooperation Council (PECC) in 1980. These institutional developments, pioneered in many instances by business and academia as much as by government, prepared the ground for a major Australian diplomatic initiative in 1988, which came to fruition in 1989 with the formation of APEC (Higgott 1991; Hellman 1995). Operating initially as a purely consultative forum, APEC brought together representatives from Japan, the United States, Canada, the Republic of Korea, Australia, New Zealand and the six member states of ASEAN with a view to facilitating the exchange of information between member economies, pressing for a successful conclusion of the Uruguay Round of GATT negotiations, and fostering trade and investment liberalization within the Asia-Pacific region. By 1996 APEC's membership had been expanded to include China, Taiwan, Hong Kong, Papua New Guinea, Mexico and Chile. Though having only a minimal secretariat and a relatively small budget at its disposal, APEC soon developed an extensive network of ministerial and senior official meetings, committees and working groups. Under the impetus provided by its annual Leaders Meetings, the first of which was held in Seattle in November 1993, the APEC project entered a new phase, which is specifically aimed at trade liberalization through negotiated agreements for the removal of tariff and non-tariff barriers. At their fourth summit in Subic in November 1996 the APEC leaders were ready to launch the implementation phase of their free trade and investment agenda. Agreement was also reached on a number of business facilitation measures and the engagement of the business sector as a full partner in the APEC process. APEC was rapidly emerging as a private-sector driven multilateral process, but with the state performing a key coordinating and legitimizing role.


Second-Track Diplomacy

A distinctive feature of Asia-Pacific regional diplomacy has been the emergence of non-governmental exchanges and institutional linkages known as second-track diplomacy. These mechanisms, which involve academics, business people and government officials participating in their personal rather than official capacity, have provided a useful vehicle for 'unofficial' or 'quasi-official' dialogue (Harris 1996 and Woods 1993). Though such mechanisms have also emerged in other regions, in Asia Pacific there appears to have been greater acceptance of direct links between second-track and governmental processes, particularly with respect to policy development and even policy application. Second-track diplomacy first made its mark in the economic area, with the creation of the Pacific Trade and Development Conference, PBEC and PECC. The lack of inter-governmental institutions, particularly in the area of trade and investment, and the limited institutional expertise and bureaucratic infrastructure at the disposal of post-colonial governments, coupled with increasing pressures from regional business and academic elites for greater policy coordination, created a psychological climate highly favourable to the development of informal or semi-formal regional dialogues.

Second-track diplomacy has also been an important feature of ASEAN multilateralism, hence the active encouragement given to policy-oriented ASEAN scholars and analysts. ASEAN-ISIS, a non-governmental association comprising Southeast Asia's most important institutes and think-tanks on security-related issues, assumed a pivotal role in the development of second-track diplomacy, and in the generation of policy ideas that helped to shape the ASEAN PMC agenda, and eventually paved the way for the formation of the ASEAN Regional Forum. Quite apart from the support given to institutes and think-tanks, ASEAN has given its blessing to specific second-track initiatives designed to resolve, or at least contain, intractable regional conflicts. The two most important initiatives to date have both been spearheaded by Indonesia. In the case of the Cambodian conflict, the Jakarta Informal Meetings of 1988-89 enabled Indonesia to assume a limited mediating role, but with ASEAN performing a useful legitimizing and monitoring function. In response to the Spratly's dispute Indonesia has since 1990 hosted a series of unofficial workshops which have at least provided a forum acceptable to all the South China Sea states. Second-track diplomacy has in both instances served as a valuable confidence-building exercise and enabled ASEAN to assume a higher diplomatic profile than would otherwise have been possible.

ASEAN-inspired initiatives have been complemented by numerous other second-track mechanisms. Some have been region-wide in scope or participation (eg. Asia-Pacific Roundtable, Asia Pacific Peace Research Association), whereas others have had a geographically more restricted or sub-regional focus (e.g. North Pacific Cooperative Security Dialogue, Northeast Asia Cooperation Dialogue). Some have operated over a limited timespan (e.g. ASEAN-United Nations Workshops on Co-operation for Peace and Preventive Diplomacy), while others have a longer-term horizon (e.g. Pacific Symposium, ASEAN-Japan Dialogue, International Security Forum). Some are issue- or -conflict-specific (eg. Asia-Pacific Dialogue on Maritime Security), while others embrace a wide-ranging agenda (e.g. Commission for a New Asia, Asia Pacific Forum, Kathmandu Regional Centre for Peace and Disarmament in Asia-Pacific). Notwithstanding these differences in scope, geographical reach, and membership (Evans 1994, 132-136), non-governmental processes have added considerable breadth and depth to the regional security dialogue, spanning, as they do, every country in the region, a great many areas of expertise, and a wide spectrum of opinion. The inclusiveness of the second-track multilateral process, coupled with its relative informality, has facilitated the formation, cross-fertilization and refinement of ideas and proposals, many of which have subsequently percolated through to the more formalised institutions of first-track diplomacy (Evans 1995, 205-206).

Perhaps the most encompassing multilateral mechanism to have emerged from the rapidly developing non-governmental dialogue on Asia-Pacific security is the Council for Security and Cooperation in Asia Pacific (CSCAP) (Evans and Ball 1994). Established formally in 1993 by ten founding institutes, many of which belonged to or were clearly linked to ASEAN ISIS, CSCAP's principal function is described in its Charter as 'providing a structured process for regional confidence building and security co-operation" in Asia Pacific. It seeks to promote discussion between scholars and officials, convening regional and international meetings to consider political-security issues, establishing links and exchanging information with institutions in other parts of the world, and producing and disseminating publications arising from its various deliberations. Thus far its contribution to the security dialogue has revolved largely around the work of its Steering Committee, its national Member Committees (more than a dozen of which have already been formed), and four Working Groups (Maritime Cooperation, North Pacific Dialogue, Cooperative and Comprehensive Security, and CSBMs). Though it is far too early to tell how influential CSCAP's role will be, its claim to inclusiveness reinforced by China's participation, the support it enjoys from a number of governments, and its extensive contacts among the leading research institutions of the region, hold considerable promise for the future.


The Globalism - Regionalism Dialectic

Enough has been said to indicate the quantitative and qualitative growth of institutional processes and mechanisms which has characterized the Asia-Pacific region, especially over the last two decades. Regionalism, particularly in its more recent manifestations, can be understood largely as a response to globalization of the political and economic structures within which regions and states are embedded. Turning first to the international strategic environment, it is clear that over the last three decades the international configuration of power and 'the dynamic of power-political competition' have been substantially transformed. Whereas in the aftermath of the Second World War regionalist alignment tended to reflect the imperatives of ideological and strategic bipolarity, the more recent period has been characterized by the collapse or far-reaching re-organization of Cold War alliances, the dissipation of ideological tensions across the East/West divide, the break-up of the Soviet Union and with it the steep decline of Russian power, and a marked shift towards multipolarity. Perhaps the role and status of the United States constitutes the single most ambiguous element in these new geopolitical circumstances, for the world's only remaining superpower (ie. the only state capable of projecting force on a global scale) is finding it increasingly difficult to translate military capability into political influence. While it continues to enjoy a residual primacy in world affairs, which it is unlikely to surrender in the near future, the maintenance of a global military presence imposes a severe financial and political burden on the United States, hence the increasing emphasis which successive US administrations have placed on burden-sharing.

It is hardly surprising, then, that with the virtual disappearance of the Communist threat, the decline or at least qualitative retreat of 'Pax Americana', and the corresponding rise of new centres of power in Asia Pacific, notably China and Japan, small, middle and great powers alike should have reconsidered their response to the security dilemma. While the uncertainties posed by the disintegration of the Cold War system may have inclined a number of Asian governments to look favourably on a continuing US military presence, there has been an equally strong and widespread inclination to explore possibilities for a more inclusive security framework which would more accurately reflect the political realities of a multipolar world. With the end of the Cold War regional inclusiveness across the ideological and core-periphery divides became a more feasible and attractive strategy.

Indicative of the new trend has been the gradual shift in US and Japanese attitudes to the new regionalism. During the 1980s the United States could see little merit in any new arrangement which might erode its strategic, and especially naval, pre-eminence in the region, or which might weaken or delegitimize any of its existing security arrangements. The view in Washington, at least under Reagan and in the early years of the Bush Administration, was that a US-centred unipolar security system offered the best prospects for maintaining regional stability. By the early 1990s, however, a policy shift was under way. Secretary of State Baker now countenanced a new Asia-Pacific architecture, which would comprise a framework for economic integration, a commitment to democratization, and a revamped defence structure for the region (Baker 1991/92). For its part, the Clinton Administration embraced the concept of multilateral security dialogue as one of the four pillows of the "new Pacific Community", expressed support for several potential arenas of dialogue, including the ASEAN PMC and APEC, and called for the establishment of "new mechanisms to manage or prevent emerging regional problems" (USIS 1993). Several considerations had no doubt contributed to Washington's reappraisal of its options, but none was more important than its realization that US power could no longer perform the coordinating role characteristic of the Cold War period As Manning and Stern have argued, "the two traditional pillars of American predominance in Asia - US economic muscle from its markets and overall financial presence and US security muscle from its bilateral alliances and military bases - are both diminishing assets" (Manning and Stern 1994, 85). To put it differently, a continuing US military presence in Asia Pacific is not enough to contain Chinese power and influence, offer a comprehensive guarantee of regional security, provide acceptable opportunities for more substantially Japanese involvement in regional affairs, or more generally cope with the challenges of increasing economic interdependence and the realignment of power.

Though equally sceptical at first, the Japanese government became increasingly sympathetic to the advocacy of regional multilateralism. While still preferring a bilateral framework for dealing with such issues as the Northern Territories dispute with Russia or the alliance with the United States, Japan could now see advantages in both ad hoc and more permanent institutional mechanisms. These might, for example, help to legitimize a more assertive Japanese role in regional diplomacy, while at the same time allaying Chinese, Southeast Asian and Australian anxieties. Such mechanisms might also place additional constraints on Chinese or US unilateral action, which might otherwise prove highly damaging to Japanese interests, whether in the economic or strategic arenas. Significantly, at the ASEAN Post-Ministerial Conference of July 1991, the Japanese Foreign Minister, Taro Nakayama, while endorsing the ASEAN PMC's role as "the most important forum" for regional dialogue, but went on to advocate new mechanisms and frameworks, and in particular the establishment of an Asia-Pacific 'forum for political dialogue' designed to promote mutual reassurance. To this end, he proposed the formation of a senior officials meeting to consider options and report to a future meeting of the ASEAN PMC (Nakayama 1991). Conscious of the volatility of its post-Cold War environment, Japan was seeking to become a more independent actor, in part by embedding its role in both established and newly emerging global and regional institutions.

In due course even China became more amenable to multilateral dialogue, in part because it saw this as an opportunity to play a more active role in regional affairs and establish its credentials as a new centre of power in the region, but in ways which would not fuel fears of an emerging Chinese threat. In other words, by the early 1990s each of the three principal regional powers was willing, in response to the rapidly changing circumstances of global geopolitics, to entertain at least the modest development of regional and sub-regional arrangements. It was, however, left to small and middle powers, notably Australia and ASEAN, and to a lesser extent Canada, to take advantage of the more favourable political and ideological climate. Though activated by somewhat different objectives, they sought to promote, through a range of proposals and initiatives, new or expanded cooperative arrangements which might simultaneously restrain the exercise of actual or potential hegemonic power, and serve as a forum for negotiation, if not reconciliation, of the conflicting interests of actual or aspiring hegemons. Here it is worth stressing the leadership role of ASEAN and the particular diplomatic style most closely associated with ASEAN's practice, with its emphasis on longer-time horizons and policy perspectives, informal structures and processes, consensual approaches to decision making, multidimensional notions of security, and the principle of non-interference in the internal affairs of other countries (Ball 1993 and Hassan 1995, 12-13) - all of which helped to make multilateralism both more enticing and less threatening than might otherwise be the case. This is not to say that everyone in ASEAN marched to the same tune (witness, for example, the differences between Indonesian and Singapore on the degree of support to be extended to US air and naval capabilities in the region, not to mention the even greater differences separating ASEAN and Australia on preferred forms and levels of institutionalization and related questions of membership).

Systemic influences on Asia-Pacific regionalism were not confined to the geopolitical arena. The region could hardly remain immune to the globalizing impact of economic and technological change. Indeed, regionalism is in no small measure a response to the increasing globalization and deregulation of markets and the consequent erosion of national economic control. Global economic interdependence, precisely because it gives rise to global issues, networks and institutions, makes it increasingly difficult for states and communities to pursue interests that are nationally or culturally specific. Greater regional coordination thus becomes one of the few remaining instruments which states can use as they navigate across the turbulent and relatively unfamiliar waters of globalization. For Asian countries the regional option has an added attraction in that economic and technological globalization - and its institutional expression across the OECD world - tends to assume a distinctively 'Western' rather than Asian form and to exert a homogenising influence over the ever expanding flows of values, knowledge and ideas. The problems arising from ever-deepening integration are not, in any case, always amenable to global solutions. A regional approach may be politically more viable to the extent that it can more effectively draw upon "commonality of culture, history, homogeneity of social systems and values, convergence of political and security interests", and to that extent make more acceptable "the necessary levels of intrusive management, both in terms of standard-setting and regulation" (Hurrell 1995, 56). Though such issues as environmental degradation, refugees, piracy and the narcotics trade have an important global dimension, their effect may be more easily visible, and the incentives needed to implement efficacious policy responses more readily available at the regional and sub-regional levels. This factor has significantly shaped the development of ASEAN and the South Pacific Forum, and accounts for the emergence of such environment management schemes as the UNEP-sponsored Northwest Pacific Action Plan, the UNESCO-sponsored Intergovernmental Oceanographic Commission, the Northeast Asian Environmental Program, and the Sub-regional Technical Cooperation and Development Program (Hayes and Zarsky 1993).

Finally, it is worth noting in this context that economic globalization can also generate powerful pressures for mercantilist economic rivalry. Regional formations, including trading blocs of the kind spearheaded by the European Union and the North American Free Trade Agreement, may be interpreted as attempts to retain market share and especially competitiveness in important high-technology industries. These considerations have influenced the establishment of the ASEAN Free Trade Area and APEC, although a combination of internal and external influences has in each case ensured that neither institution operates as a closed trading bloc. Indeed, APEC, including as it does both Japan and the United States, may serve at least in part as a bridge between two of the world's three major centres of economic power. True enough, the East Asian Economic Caucus (a Malaysian proposal previously known as the East Asian Economic Grouping), is not without support and could gain considerable momentum should economic tensions escalate between the United States on the one hand and Japan, China and the other rapidly industrializing economies of East Asia on the other. The evidence thus far suggests the APEC experiment and other sub-regional groupings are seeking to increase the intensity of trade and investment relations by taking advantage of geographical proximity and functional interdependencies. In the foreseeable future at least, the continued dependence of the East Asian economies on the US market, not to mention the continued preeminence of US military power, will militate against the politics of closed regionalism. On the other hand, the East Asian financial crisis and its aftermath have prompted a number of governments to moderate their enthusiasm for trade and financial liberalisation and have given rise to renewel efforts to promote an East Asian regional grouping which Japan might play a leadership role. The abortive Japanese proposal for the creation of an Asian monetary fund demonstrated that the idea continues to have currency, and that, given more favourable circumstances, will give rise to embryonic institutionalesation over the next five to ten year.

Parallelling and at times reinforcing the systemic pressures acting on the Asia-Pacific region have been a number of sub-systemic (ie. regional or sub-regional) influences. Reference has already been made to the geographic concentration of production made possible by the emergence of technology complexes and sub-regional clusters, usually combining the mobility of finance and technology with ready access to raw materials, cheap labour, and especially favourable industrial and fiscal conditions. In all of this Japanese capital, technology and economic aid have played a key part in regional integration, although what is often referred to as the complementary relationship between the Japanese economy and the economies of Asia and Oceania is a euphemism for structural economic dependencies which may in due course set limits to further economic or political integration. Though Asian regionalism has been largely market-induced, highly complex institutional relationships between business and government have been decisive in shaping regional patterns of trade and investment, including the progressive extension of Japan's vertical keiretsu structures linking major industrial operations and their supplies to various parts of Asia (Stern 1996, 72-83, 92-103; Machado 1996). Parallelling these developments, the Japanese government has over the last three decades sought with varying degrees of success to institutionalize the process of economic regionalization, hence the prominent role it has played in the establishment of the Asian Development Bank, the convening of the Ministerial Conference on Economic Development in Southeast Asia, the proposal for a Pacific Free Trade Area, and the formation of PBEC, PAFTAD, PECC, and most recently APEC. All of these structures have to a greater or lesser extent provided avenues for incorporating business interests into the emerging intergovernmental régime, thereby replicating at the regional level one of the most important features of Japan's political economy.

Another important factor contributing to regional economic integration has been the economic growth of 'Greater China', to which reference has already been made. The complex web of ethnic, cultural and economic linkages between the Chinese mainland and Taiwan, Hong Kong, Macau, Singapore and the overseas Chinese (China Quarterly 1993) will in all probability assume even greater significance now that Chinese sovereignty has been re-established over Hong Kong and Macao. According to one estimate, the Chinese diaspora, though it constitutes only 4 per cent of the Chinese population finances, accounts for three-quarters of the 28,000 Chinese firms with significant foreign equity, and has a hypothetical national income which is perhaps the equivalent of two-thirds of China's gross domestic product (Katzenstein 1996, 134).

No discussion of the regional influences bearing upon multilateral processes and institutions would be complete without reference to the continuing sources of regional tensions and instability, many of them predating the Cold War. Des Ball has listed more than thirty "simmering and potential conflicts involving competing sovereignty claims, challenges to government legitimacy, and territorial disputes" (Ball 1994, 160). Included among these are the competing Russo-Japanese claims to the Kuril Islands (referred to by the Japanese as the Northern Territories), Japan - Korea tensions, the division of Korea, the sovereignty dispute between China and Taiwan, the competing Japanese and Chinese claims to the Senkaku (Diaoyutai) Islands, the Spratlys dispute, the separatist movements in Tibet, Bougainville, East Timor, Aceh and West Irian, the residual conflict in Cambodia, the political turmoil within Burma, not to mention numerous other insurgencies, and boundary disputes between China and India, China and Vietnam, and between ASEAN members.

Complementing and reinforcing the potential for regional conflict is the widespread trend towards rising military expenditures and acquisitions of potentially destabilising offensive weapons systems and platforms (Ball 1993/94, 79). During the greater part of the 1980s, military budgets in East Asia experienced much higher growth rates than in other parts of the world, including the Middle East. Between 1982 and 1991 Japan, South Korea, Taiwan, Singapore and Thailand increased their military expenditure by between 34 per cent and 100 per cent in real terms (SIPRI 1991, 260; SIPRI 1992, 362, 367, 373). Several years later the end of the Cold War had still not yielded any peace dividend. Between 1986 and 1995 the same four countries continued the upward trend of their military spending by between 24 per cent and 58 per cent in real terms (SIPRI 1996, 367). A clear, though by no means uniform, connection appears to exist between the competitive dynamic of economic growth and that of military procurement and deployment. Increased defence spending in Indonesia, Malaysia, South Korea, Singapore, Thailand and the Philippines has parallelled GNP growth, although there have been considerable variations between countries as to the timing and scale of military expenditures (Looney and Frederiksen 1990, 274; Camilleri 1993). Even after the 1997-98 financial crisis military expenditure in East Asia continued to increase though at a slower rate. Much of this increase it true was accounted for by China, Taiwan and Singapore which were least affected by the crisis, whereas the combined military expenditure of Indonesia, South Korea, Malaysia, the Philippines and Thailand fell by almost 7 per cent in real terms in 1998. While South Korea's defence budget for 1999 showed a slight decrease for the first time in fifty years, the five-year defence plan announced in early 1999 envisaged an average annual increase of 5-6 per cent between 1999 and 2004 a major arms procurement programe. A new surface-to-air missile system, attack helicopters, three destroyers and 60 fighter aircraft formed part of an ambitious arms procurement programme (SIPRI 1999, 285, 287).

Side by side with the steady expansion of conventional capabilities is the impetus towards horizontal nuclear proliferation which, though not as yet deeply entrenched, is nonetheless potent. Much recent attention has centred on North Korea's nuclear ambitions, but several other countries already have the capacity and may over time acquire the incentive to take up the nuclear option (eg. Japan, South Korea, Taiwan). Set in the context of the many unresolved regional conflicts, China's steady expansion of its nuclear arsenal, Indian and Pakistani nuclear tests, and the uncertainties surrounding North Korea's future intentions, may well compound the insecurity of neighbouring states and accelerate the dynamic of horizontal proliferation. The overt acquisition of nuclear capabilities may not, it is true, be the most probable scenario, at least in the short to medium term. A government may choose instead to use the development of commercial or research capabilities to signal to a potential adversary that it could with relative ease and at relatively short notice acquire at least a rudimentary nuclear weapons capability. Japan's already large and still growing plutonium stocks, coupled with the possible development of new reprocessing capabilities in different parts of Asia, could escalate the already worrying level of nuclear ambiguity.

To complete this brief overview of the region's security environment mention must be made of the developing scramble for resources and strategic advantage, fuelled specifically by territorial disputes and the establishment of exclusive economic zones (EEZs), but more generally by the competitive dynamic underpinning rapid industrialization. Partly as a consequence of the provisions of the UN Convention on the Law of the Sea (UNCLOS), particularly in connection with EEZs and archipelagic waters, maritime issues have assumed increasing significance in recent years. Of the thirty or so potential flashpoints in the region listed by Des Ball, about a third involve disputed islands, continental shelf claims, EEZ boundaries and other offshore issues (Ball 1994, 164). Recent attempts by China and other regional powers, including several ASEAN states, to develop their naval capabilities are closely related to these maritime rivalries, of which the Spratlys dispute is the most complex (with six states claiming partial or total jurisdiction over the islands) but also the most revealing of the challenges posed by the region's rapidly evolving geopolitical landscape (Tai To 1995; Valencia 1995)

In all of this China is emerging as the focus of regional concerns. The modernization of its navy and a series of recent actions, most dramatically in the South China Sea, have been described as "a progressive militarization of its claims" (Acharya 1995, 182). According to this view, the Chinese navy's increased long-range deployments and exercises reflect a desire to enhance China's control capability over the major sea lanes of communication between Southeast Asia and Japan. Whatever the validity of this assessment, it is clear the next ten to twenty years are likely to see a steady rise in China's economic and military power and with it an increasing challenge to American dominance of the region. The past few years constitute perhaps the early stages of a difficult transitional period likely to generate a good deal of friction and uncertainty and considerably tax the diplomatic skills and ingenuity of great and small powers alike.

At one level, the cumulative impact of the tendencies we have just outlined - the competitive dynamic of economic growth policies, ambitious military modernization programmes, acquisition of offensive military capabilities, the potential for horizontal nuclear proliferation, the scramble for maritime resources, shifts in the regional configuration of power - is likely to exacerbate regional tensions and threat perceptions, and to that extent hamper the development of a normative and institutional régime based on notions of cooperative security. At another level, however, the very same tendencies are likely to generate interest in and support for the kind of regional institutionalization which might prevent actual and potential flashpoints from degenerating into armed hostilities. Aaron Friedberg has aptly described the process as "a race between the accelerating dynamics of multipolarity, which could increase the chances of conflict, and the growth of mitigating factors that should tend to dampen them and to improve the prospects for a continuing peace." (Friedberg 1993/94, 27-28). Though how this race will unfold is ultimately unpredictable, three distinct yet clearly connected forms of contestation are likely to have a decisive influence.

The first has to do with the global and regional balance of power which is likely to remain in a state of considerable flux for some time to come. Though both Japan and China are rising powers, neither is likely to achieve a position of regional hegemony, either in political or structural, let alone ideological, terms. As for the United States, it has already abandoned its former role as "magnanimous economic mentor" (Overholt 1990, 20) in order to protect its own interests in a fiercely competitive world market, and will be less and less attracted to the unilateral deployment of military force in Asia. This, then, is a transitional period in which three complex but contradictory processes will remain in uneasy co-existence: residual US hegemony, increasing regional and global interdependence, and intensifying economic competition and geopolitical rivalry.

A second and closely related form of contestation is likely to dominate trade relations, most dramatically between the United States and the other East Asian economies. At the declaratory level all governments remain firmly wedded to the principles of free trade, but at the operational level there is a marked tendency for many of them to focus on the failure of others to eliminate quantitive and qualitative barriers to free trade, while turning a blind eye or even justifying their own protectionist practices.

At first sight, the conclusions of the APEC Leaders' Meetings since 1993 may be taken as evidence of rapid progress towards trade liberalization. Of particular importance in this regard was the 1994 summit where the developed and developing APEC member economies set 2010 and 2020 respectively as the dates by which they would remove all restrictions to trade. Yet no sooner had the agreement been reached than individual governments began putting their own interpretation on it and even questioning its feasibility. Malaysia made it clear that it did not regard the Bogor commitments as legally binding, and therefore not amenable to any kind of enforcement. Moreover, it continued to advocate the need for an Asian forum which would assist its members to develop common positions on international trade negotiations, provide them with a useful counterweight to the world's major trading blocs (ie. EU and NAFTA), and counter Western attempts to link trade and social issues, namely human rights, labour conditions and environmental protection. Though strongly opposed by the United States, Japan and Australia, the Malaysian position was not without support in other parts of Asia. In any case, the United States has also made it clear that it is not prepared to place all its eggs in the basket of multilateral trade liberalization, and that it reserves the right to apply, unilaterally if necessary, any number of unilateral punitive measures in a bid to open up Asian markets to American goods and services. Powerful transnational pressures, it is true, may help to keep open the doors of economic regions, but a good many states and some of the most influential interests groups they represent, including farmers and large corporations, may not be so easily persuaded to abandon the advantages of protection. The APEC commitment to open regionalism may yet prove more brittle than is often assumed.

A third form of contestation is likely to arise in relation to issues of governance, with far- reaching implications for institution-building at the regional level. The fall of the Suharto régime in Indonesia, the political tensions reflected in the saching, subsequent arrest and jailing of Anwar Ibrahim in Malaysian, the re-emergence of factional politics and military insurgency in the Philippines, the draconian measures taken by the Chinese state against the Falern Gong movement may well be a taste of thins to come. In much of the Asia-Pacific region the state remains a fragile institution, which the centralization of power and authority can obscure but not remedy. In several states indigenous minorities, overseas communities and ethnic separatist movements have continued to challenge either the legitimacy of existing political institutions or the meaning and substance of national identity. Periodic tensions in civil-military relations, leadership succession problems, regional inequalities in wealth and income distribution, varying degrees and forms of corruption, and systematic violations of human rights have all contributed in different places and at different times to varying degrees of political instability. While paying lip service to the virtues of democratisation, political elites, have periodically returned to more familiar authoritarian forms.

The centralization of authority has been justified, at least in the short term, as the only effective way of controlling ethnic tensions and pressing ahead with the priorities of economic development. In defence of their policies, governments have also appealed to Asia's cultural traditions, and in particular to the Confucian ethic, notably the primacy of community and family values and the importance of states and authority relations. These centralist tendencies have not, of course gone unchallenged. A sizeable and rapidly growing middle class eager to taste the fruits of its newly found wealth and political influence and, more generally, an increasingly assertive civil society have given rise to powerful countervailing pressures. The collision of authoritarian and democratic impulses, dramatically demonstrated in the Tiananmen events of 1989, and the resignation of Suharto in 1998, has become a distinguishing feature of political life in South Korea, Taiwan, Indonesia, Thailand, Burma and most other parts of the region. The political awakening of civil society promises to play a key role in shaping the pace and content of region-building, in part through the increasing regionalization of social flows, networks, movements and organizations, and less directly but no less effectively through its cumulative impact on the political apparatus of the state.

The combined effect of these various sources of contestation suggest that, if Asia Pacific is to become a more cohesive region with a distinct identity, a greater capacity for autonomous action, and more effective institutions, then the formal organizational framework will have to reflect and give effect to a larger normative project. In an era when "states are increasingly serving as instruments for adjusting domestic policy to the dictates of competition in the world market" (Cox 1997, 106-107), the great challenge before Asia-Pacific regionalism is whether it can overcome the separation of politics and economics, whether, in other words, it can subordinate economic activity to socially defined objectives and the logic of geopolitical rivalry to a programme of comprehensive security. To point to the enormous difficulties facing such a project is merely to state the obvious. It may, however, transpire that in this enterprise the cultural heterogeneity of the region and the uneasy tension between tradition and modernity will, to the extent that they foster a vibrant inter-cultural dialogue and the democratic reconstitution of civil society, prove distinct assets rather than liabilities.



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