Analysis — drivers, spoilers, and dissolvers of regional institutions
Regional core states and external hegemons
The AFC triggered a critical juncture for East Asian regionalism. Two distinct institutional responses can be identified. Looking at Southeast Asia and ASEAN, the crisis provided the catalyst for the gradual emergence of a more institutionalised intergovernmental framework for settling disputes and strengthening regional cooperation. The crisis raised questions regarding the functionality and effectiveness of Southeast Asian regionalism. In the end, ASEAN endured and re-enforced its institutional cooperation. Moreover, the crisis drew attention to the institutional deficit in the wider East Asian region and was instrumental in the consolidation and institutionalisation of the APT process, that is ASEAN, including South Korea, Japan, and China (Telô, 2017, pp. 26—27). This is an important development as it includes the first East Asian institutional framework bringing Japan and China together. As regional core states, they alone have the material capabilities (economic and financial weight) and non-material resources (legitimacy, credibility, or reputation) to address distributional problems, provide collective goods, and assume leadership roles, making their involvement essential to the success of regional institution-building initiatives. While East Asian regionalism developed first at the regional periphery of Southeast Asia, European regionalism emerged from the centre, driven by the interests of the core states: France and Germany (and, to a lesser extent, the UK), with reconciliation between the two being an important driver. To date, this form of rapprochement has yet to happen between Japan and China. Relations remain strained by historical animosities and territorial disputes. In addition, Tokyo has become increasingly suspicious of China’s rise, and there is mounting evidence of Japanese balancing efforts (Hughes, 2016). Indeed, rivalry between East Asia’s two core states has been increasing in recent years against the backdrop of a rapidly changing balance-of-power and an upswing of nationalism in both countries (Kim, 2018).
China’s economic development offers significant benefits for its regional neighbours. At the same time, it provides Beijing with the capabilities to challenge the distribution of power in the region and beyond. For some, a burgeoning China, therefore, poses a long-term security threat to East Asia (Mearsheimer, 2006, 2010). Chinese regional initiatives may be interpreted as an endeavour to resurrect the tributary state system. There is some suspicion, for example, that Xi Jinping’s Belt and Road Initiative, encompassing more than sixty countries, is an attempt to create a Chinese ‘debt trap’, a strategic plan to extent Chinese hegemony (Ching, 2018). Beijing’s concept of a Community of Common Destiny has similarities with the Greater East Asian Sphere of Co-Prosperity which was used to provide the ideational underbelly of Japan’s imperial aspirations. Such concerns have prompted several regional states to engage in various ‘hedging strategies’ (Shambaugh, 2005, p. 41).
The Eurozone crisis also unveiled institutional deficiencies at the heart of the EMU and triggered a demand for institutional correction. Leadership was provided by France and Germany. Indeed, Franco-German cooperation effectively sidelined the Commission by dominating agenda-setting in the Council. The European Financial Stability Facility (EFSF) and later the European Stability Mechanism (ESM) as well as the TFSC represented the outcome of Franco-German compromises in general and Germany’s interests as a creditor state in particular. From 2010 onwards, Germany pushed for more stability and became notorious as a defender of austerity; France, in contrast ‘strived for more political discretion’ (Degner, 2016, p. 29), favouring recalibration of the ECB independence in guise of the gouvernement économique.
The role of the US remains important as well. In the emerging post-Cold War order, US foreign policy has been driven by a desire to promote liberal internationalism, maintaining US hegemony in the bargain. Thus, Washington actively undermined regional initiatives that were seen to challenge its own position in East Asia, such as Malaysia’s East Asia Economic Caucus (EAEC) or Japan’s Asian Monetary Fund (AMF) proposals. Instead, the US continued to promote its ‘hubs and spokes’ system of multiple bilateral alliances (with Japan, South Korea, the Philippines, Thailand, Australia, and New Zealand) with itself at the centre and the ‘Asia-Pacific’-style regionalism in the form of the Asia Pacific Economic Cooperation forum (APEC).
Resentment against the US-centred international order grew during the 1990s. What was regarded as a ‘Western values offensive’ generated a backlash in the form of the debate over so-called Asian values. This was only reinforced during the AFC. For some, the IMF bailout packages and conditionalities amounted to a concerted Western attack on East Asia and core values such as sovereignty and non-intervention. Leaders in Southeast and Northeast Asia were dismayed by the dependency of their economies on Western-dominated global financial institution. This helps to explain the rejuvenation of ASEAN as well as the APT process - East Asian post-financial crisis regionalism is ‘aimed at restoring to Asia a greater degree of political power and autonomy vis-à-vis the rest of the word, and the United States and international financial institutions it controls, in particular’ (Bowles, 2002, p. 245). ASEAN and wider East Asian regionalism have been positioned as defensive institutional structures, shielding Southeast and East Asia somewhat against US (and Western) hegemony.