Economic crises forcing states to seek common solutions to grave threats

Europe and Asia are facing crises of transition in economic and security issues in a wider global context of changing geopolitical realities. Their world is no longer quite as ordered by American hegemony as before since US relative power has shifted and other powers are emerging.

Europe and Asia are having to adopt to those changes in a context of economic globalisation and interdependence deeply affected by the 2007-9 global financial crisis. A shift in US foreign policy focus and priorities towards Asia after the end of the Iraq and Afghanistan wars was determined by China's rapid emergence as a potentially competing regional hegemon, having overtaken that role from Japan in the 2000s. These changes pose challenges also for Europe, which fears being marginalised if it does not adapt EU and Nato structures to the emerging multi-polarity.

The two regions have responded differently to these economic and security crises. That is natural given the deep differences between them. Such differences and several similarities were explored this week at a lively symposium in Trinity College Dublin on what drives regional integration. Asia is much more diverse culturally and politically, with quite distinct attitudes towards sharing sovereignty, arising largely from its historical experience as a subject of (mainly European) colonialism and its more recent nation-building, whereas European integration originated in a collective effort to escape from the disastrous consequences of its own competing and mainly imperial nationalisms.

Nevertheless such crises do drive integration in both regions. Critical moments characterised by extreme threat and short time horizons can be distinguished from longer term innovative transitions allowing more opportunity for creative solutions. The economic crises of 1997-8 in Asia and from 2010 in the euro zone saw leaders and states driven to seek common solutions to extreme financial and economic threats. Their ability to find more creative longer term solutions has depended in good part on how they dealt with the initial threats.

There was no necessary positive outcome in either case, as talk of failure, disintegration or sub-optimal outcomes continue in the euro zone. But as one speaker argued, there is no euro crisis if major macro-economic aggregates are compared with the US or the UK; but there is a need for a rules based banking union to avoid taxpayers taking the hit and for a greater common politics to underwrite solidarity.

Compared to 1997-8 Asian responses to the global financial crisis in 2007-9 were more measured, tending more to consolidation than innovation, but fundamentally geared to preserving the huge increases in prosperity made possible by greater regional and global economic interdependence in Asia.

The security issues are more pressing in Asia than in Europe, determined by China’s emerging role and how that is managed by the US and neighbouring powers. The realist literature on multi-polarity and on power transitions in international relations tends towards pessimism as to whether this major change can be handled peaceably.

The perspective arising from comparing their regionalisms takes more account of economic interdependence and the possibility of finding political solutions to such security dilemmas. Crises as threat should be extended from the security to the economic and political spheres. Asian efforts to balance off economic imperatives to engage China and security ones to counteract it led by the US can be seen in the proliferation of regional fora, some including both powers, some only one of them. We are still living through this transition and it is yet to drive deeper political integration in the region, as distinct from a jostling for position and voice.

Those who see the economic and security agendas in Asia as contradictory or presenting zero-sum options need to ask whether such a fateful choice can attract political legitimacy for increasingly democratic polities or for authoritarian ones that nonetheless rely on output legitimacy to justify their rule. Their populations will not thank them if prosperity is jeopardised by much higher military spending or a drift to regional war.

A different kind of contradiction faces European leaders as they grapple to save the euro zone by deepening transnational regulation, thereby creating greater integration of their economic systems. Unless they can carry their electorates and populations with them in this endeavour the socio-political integration required will be in contradiction with the systemic integration needed to save the euro, raising the spectre of disintegration of the EU itself.

The chances of creating a more coherent European security and foreign policy posture towards the rest of the world will be much diminished if the contradiction endures.Such tensions between economic and security imperatives in Asia and system and social ones in Europe can fruitfully be compared and contrasted, academically and in policy and political dialogue. European experts on Asia are now more modest about putting forward the EU as a model others must follow. They are also much less inclined to Euro-centrism. As anAustralian diplomat said of the term “Far East”: “Far from where, east of what? From Sydney Europe is the Far West. Where you sit is where you stand”.

Both regions have a common interest in finding a way out of these dilemmas in a more interdependent and multi-polar world. A stable euro zone free of the threat of disintegration provides an opportunity to boost the EU’s potential as an actor in global affairs. Asian markets beckon, while the euro zone’s role as an alternative outlet for Asian savings and capital to the dollar is a long term mutual interest. A peaceable US transition to such a more balanced world order gives Americans an interest in such an outcome too.