The Supply of Regionalism: Interests, Power, and Norms

It is universally acknowledged that in the era of globalization and proliferation of multilateral decision-making international cooperation requires political leadership and international institutions to work. The ability of global institutions to consolidate power is unrivaled and allows to overcome market failures and collective action problems. Nevertheless there are systematic attempts to prove that demand for regionalism is sufficient for it to emerge. Although everyone agrees that political factors that shape regionalism are of primary importance, there are a number of other determiners why states choose to pursue regional collaboration strategies. The decision to enter a regional institution or agreement rests partly on the preferences and political power of various segments of society, the interests of state leaders, and the nature of domestic institutions. But states do not make the decision to form alliances on the regional level in an international political vacuum. On the contrary, interstate power and security relations as well as multilateral institutions play key roles in shaping regionalism.

Studies addressing the links between power and regionalism have placed primary stress on the effects of political or hegemonic leadership. Various scholars argue that international economic stability is a collective good, suboptimal amounts of which will be provided without a stable hegemon. This argument is also invoked by many economists who maintain that the current wave of regionalism was triggered or accelerated by the U.S. decision to pursue regional arrangements in the early 1980s, once its economic power waned and multilateral trade negotiations stalled.

In contrast to this point of view, there is evidence that over the past fifty years the erosion of U.S. hegemony has stimulated a rise in the number of regional trade agreements and states entering them. Some observers argue that as a hegemon’s power recedes, it has a reason to behave in an increasingly predatory manner. To buffer the effects of such behavior, other states might form a series of political or trading blocs, thereby setting off a wave of regionalism. A number of scholars believe that this sort of process began to unfold during the 1980s, giving rise to a system of loose regional economic blocs that is coalescing around Western Europe, the United States, and Japan. They also point out that because of the inherent problems of ‘‘pluralist’’ leadership, these developments threaten the unity of the global trading order.

Hegemonic stability theory points to powerful states, which are willing to and capable of acting as regional paymasters, easing distributional tensions and thus smoothing the path of integration. Yet, they supply regionalism for different reasons. According to these teachings, the US, China, Russia, South Africa or Nigeria supported and engaged in region-building for their geostrategic and economic interests in strengthening military alliances, promoting stability in neighboring countries, or securing access to new markets, cheap labor, water, and energy resources. The US played a key role in the creation and prevalence of the European Community and ASEAN by mitigating the security dilemma in the region. It has also acted as a regional hegemon for NAFTA to counterbalance the Single European Market. Likewise, Brazil and Venezuela have championed MERCOSUR to make it a regional power and to contain US influence in Latin America. A similar competition for containing external and exercising regional hegemonic power through promoting different forms of regionalism can be observed between Iraq and Egypt in the League of Arab States, Malaysia and Indonesia in ASEAN, Japan and China in East Asia, Nigeria and South Africa in Sub-Saharan Africa, and Russia and Uzbekistan in Central Asia. Regional powers can be engines of integration, as France and Germany have been in the EU and Brazil and Argentina are in MERCOSUR, although the latter have been criticized for not providing sufficient regional leadership. Conversely, the absence or ineffectiveness of regionalism in the Middle East or Asia is often blamed for the absence of a regional or external hegemon.

However, while using regionalism to establish and affirm their regional hegemony, powerful states are reluctant to bind themselves by regional institutions. The intergovernmental nature of MERCOSUR and NAFTA and their limited scope of regional integration are largely explained by the unwillingness of Brazil and the US to delegate authority to regional institutions. At the same time, the US has agreed to a highly legalized and inflexible agreement that does not leave much levy to the member states. This degree of self-binding goes far beyond what other regional powers have committed to and poses a puzzle to power-based approaches. Powerful states do not always get what they want as the case of Nigeria in ECOWAS seems to suggest. Nigeria’s role as a state power comes hand in hand with growing doubts about its poor capacity to elaborate and implement public policies, provide conflict management and integration agenda.

One of the most obvious drawbacks of power-based theories of regionalism is that they have little on offer to explain the differential commitment of small states. Paraguay, Uruguay, Mexico and Canada may seek to bind their regional hegemon. However, by joining MERCOSUR and NAFTA, respectively, they also become even more vulnerable to its dominance. Moreover, it is not clear why some former Soviet republics decided to bandwagon with Russia and Uzbekistan while others are engaged in attempts to counterbalance their regional dominance.

Another explanation for the supply of regional institutions is based on the idea of regional distinctiveness or the existence of a collective identity which are connected to the political expression of regional interests and thus become central to the emergence of a regionalist movement. Regional identity seems to be a prerequisite of regionalism because cultural heterogeneity requires construction and maintenance of a regional community as well as politicisation and mobilisation of its members. An explicit example of how cultural identity impacts the process of regionalization is American strategy in forming regional alliances. The US was less enthusiastic to exercise hegemonic leadership in Asia than in Europe because of the lower cultural affinity. Cultural difference is also to account for the distinct approach ASEAN states have taken towards regional integration. The “ASEAN way”, which is based on informal consensus-building, organizational minimalism, and thin institutionalization, is incompatible with Western models of legalized institutions.

Regionalism also emerges due to the processes of diffusion. The supply of regional institutions can stem from other regions or international actors, which actively promote or passively provide blue-prints for region-building. “Pax Americana” and “Pax Europaea” are two “global scripts” on regionalism. The first one is based on regional trade cooperation promoted by the US and international organizations, including the World Trade Organization, the World Bank, and the International Monetary Fund. The second is advocated by the EU, striving for regional integration, which is broader in scope and infringes more strongly on the sovereignty of states.

Furthermore, market pressures or diplomatic barriers may increase the demand for regional institutions. But even if certain institutions effectively serve specific functions and help solve similar problems, states always have choices. Institutions can be “contagious” under conditions of uncertainty, policy failure and dissatisfaction with the status quo. Regional organizations that struggle to become more effective may look to other organizations that are considered as success cases for policies and rules that effectively solved similar problems and are transferable into their context. Next to lesson-drawing, regions may also emulate others for normative reasons, to increase their legitimization or to simply imitate their behavior because its appropriateness is taken for granted. Seeking international legitimacy and signaling commitment to trade liberalization motivated ASEAN to set-up a dispute settlement mechanism (DSM) that has been hardly used so far. Emulation also might be driving the recent deepening and broadening of ASEAN, whose new Charta bears some striking resemblance with EU institutions. Likewise, ECOWAS and LAS might be following a global script that entails the establishment of certain regional institutions and for which, at least in the case of ECOWAS, the EU provides a reference model. With the establishment of the Euro, the EU has become an example to follow for countries in Latin America, Africa and Asia, which may defy supranationalism but see a common currency as an anchor of regional stability. Whether the EU will continue to inspire other regions to seek economic and monetary integration will depend on the EU mastering the current financial crisis.

The comparative evaluation of mainstream theories reveals important drivers of regionalism. However, none of them is capable of fully explaining variation across time and regions. Nor have they much to say about why such diverse regional organizations as LAS and ECOWAS appear to develop similar institutions. Yet, different ontological assumptions could be seen as compatible since they shed new light on old puzzles, give rise to new questions and form the basis for new approaches that can account for the spread of regionalism.