South China Morning Post
2012-02-16
Insight
Phar Kim Beng says the unfolding crisis in a Europe beset with doubts about its single currency, and even the union itself, will only deter Asians from attempting similar regional integration
No fewer than 12 political leaders have fallen in Europe due to the economic problems in the region since 2009. More are likely to go in the coming months given that the crisis has yet to be resolved. After several rounds of austerity measures, Greece continues to shrink economically. The same goes for Britain, which has decided to embark on its own cost-cutting programme without significantly involving the European Union.
Although Germany is doing its utmost to redeem the continent, Chancellor Angela Merkel has brought Europe ever closer to the brink. By insisting on tight monetary and fiscal policy – at a time when a further credit squeeze could send millions of workers and unemployed onto the streets – she has the world wondering whether economic prudence is really needed at a time when spending seems more vital.
Nor are Germany’s finances all that strong to begin with, should more financial assistance be required by the EU. According to figures from the International Monetary Fund, gross government debt in Germany is close to 83per cent of gross domestic product. As such, there is ultimately a limit to what Germany can do.
Germany’s leadership is not necessarily received with good faith, either. In fact, some claim the crisis began in Germany. As the Portuguese European MP Ana Gomes recently told the Germans: “Our governments, banks, companies and citizens were encouraged to become dangerously indebted by your banks, businesses, your official representatives, and by all who made the euro extremely affordable, at low interest rates, and who encouraged us to procure submarines, cars, equipment and diverse technology we probably did not need. And to buy all of that in Germany, of course.” Germany’s budget surpluses, she said, were “in fact the mirror image of our deficits”.
If Gomes’ assertions take hold throughout the continent, there will be three results. First, citizens in Europe will detest Germany’s ostensible attempt to impose its economic values on the rest of the continent. The rise of anti-German feelings will inevitably lead to the weakening of the EU. Even the presence of France at its side could not prevent it.
Second, initiatives and ideas that come from Merkel’s inner circle would only be embraced as and when other member states no longer had a choice. Such a Europe will be riven by the erstwhile realism that has historically seen Europeans battling each other, rather than propelled by the idealism of a single continent.
Third, to the degree that Germany becomes a liability on a single Europe, the ambit of Europeanism will focus solely on retaining the euro and, by extension, only on keeping the euro zone together. Thus, while Germany may be able to retain the fabric of Europe by compelling all others not to abandon the common currency, it cannot go beyond expanding the zone into a larger Europe – other than by paying lip service to it.
Such a “Europe-lite” would have a serious impact on East Asia, too. To begin with, Asian leaders and policymakers would have assumed that Europe’s integration has failed, or was unable to go beyond a single currency. In that case, there would be little that Asia could learn from the EU. As such, East Asia would also fall back on its own initiatives and ideas to create an East Asian community with no inspiration from the EU. While there is nothing wrong with relying on one’s own ideas to pursue Asian regionalism, such an edifice would be constructed on the basis of exceptionalism and caveats. In other words, East Asia would do its best to tolerate the local peculiarities of each country. Instead of a common market, for example, the region would accommodate protectionism.
Second, with the tendency to ignore the EU, the inspiration and template that once kept the idea of Asian regionalism buoyant and popular would fall exclusively on Asean. While the Association of Southeast Asian Nations has often been seen as the second most successful regional organisation after EU, there is no telling whether it could actually lead the region.
As such, China, Japan and South Korea would be wont to attempt their own form of regionalism in the northeast first. Asean, in other words, may be eclipsed by its more powerful neighbours, essentially because Asian-wide regionalism had fallen out of vogue in light of the difficulties witnessed in the EU. Indeed, China, Japan and South Korea have already tried to set up a secretariat to look into common issues of concern to Northeast Asia.
Finally, Asian regionalism – fresh from the problems in the EU – would be attempted on a small, limited and unambitious scale, although the rhetoric that characterises such endeavours would, as always, be grandiose.
This would lead to the erosion of the intellectual credibility of the idea. Given the advent of the EU’s problems, Asian regionalism will be affected in various, subtle ways, but especially by the general disillusionment with the concept of one region, let alone one market and one currency.
This is already happening, to the detriment of the region.
Although the idea of Asian regionalism has been around for more than a century, there is still a low general acceptance of its practical value. In view of the difficulties being experienced by the EU, Asia may well be left with a thin community.
Phar Kim Beng is director of the Centre for Trans Asia at the Asian Strategy and Leadership Institute in Kuala Lumpur
