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Redefining regionalism

By Vince Hooper - posted Wednesday, 9 January 2013

The current world order is in disarray with broken nations and fragmented regions, combining together to form a disjointed amalgam of social, economic, political, religous and environmental attributes, we term the global village. Uncertainty, as measured in terms of volatility is ubiquitous and rages across all frontiers regions are imploding. However, new proposals will be put on the table later this month by David Cameron in his ‘Big Europe’ speech which is likely to be about redefining regionalism rather than a knee-jerk reaction to the current malaise. Australia is well placed to benefit from such paradigm realignment as it is a strong supporter of ‘Open Regionalism’.

Globalization failed long ago and hence the rise of regionalism in the world was viewed as a means to better state actualization by building more manageable economic entities that had more bargaining power at the trade negotiation table through regional integration. Strong experimental regionalism as that exhibited by the EU is under siege because monetary union has been pushed faster than political union can bind the long memory, path-dependent cultural heritage and hang-ups of independent nation states.  Federalists versus Statist Rights agendas have often recruited unsuitable members to the jolly EU band of groupies and misfits when they were probably better off on their own. I recently was working in Tirana, Albania and the cafes were swarming with bureaucrats from EU member states talking loudly about mandates and targets Albania should achieve before it is let into their economic and political asylum. Stay out Albania. You are virtually self-sufficient in terms of hydro-electrical power generation and agriculture and the EU may bring you down, like it has some nations that have made incompatible bed-fellows.

The heart of the problem is the fact is that you cannot slap down a convergent federal or linear system on underlying divergence and discord.  Europe is strong as a region because of its diversity and not because of uniformity. There is a delicate balance between being deeply integrated and being completely nationally aloof.


In terms of EU experimental regionalism which has partially failed, a new consensus is emerging in London. David Cameron recently said that a ‘two speed European Union’ is inevitable and his speech writers are now busy preparing for an important ‘Big Europe’ statement on a new settlement for the EU.

As world trade has grown, the EU accounts for a far less proportion of world trade than it did 40 years ago and trade negotiations are drafted in line with WTO directives. Therefore David Cameron will attempt to update the mandate of the crumbling union. Someone must take the continental bull by the horns. By doing so he is taking a lead in redefining regionalism. Cameron’s approach is well supported in the economic literature that has a takes more rigorous look at whether they grow too large for their own good by looking at marginal benefits and costs as opposed to a socio-political perspective.

Laced with David Cameron’s dry and wicked sense of humour it is sure to be quite a surprise to many continentals as his speech will throw down the gauntlet on a new tiered structure of EU membership, which makes it stronger rather than weaker. This new tiered structure proposal, in my mind will form the basis of regional integration from henceforth, around the globe. One of the reasons why the world economy is in such a mess is because of overzealous regional integration in the EU through the formation of monetary union without the political union, which was an after-thought. This has led to major distress and hard ship for many of the citizens of nations around the periphery of the centre of gravity of trade integration, namely the PIIGS [Portugal, Italy, Ireland, Greece and Spain] who may have benefited from a looser affiliation to Europe rather than being bound up in an economic strait-jacket.

Indeed, research in finance shows very weak financial integration, a basis for monetary union of these countries on the outskirts of Europe in terms of their bond and equity markets. Greece should never have been let in to monetary union in the first place. Never, in the history of mankind has there been monetary union without a strong form of political union. Some may acceptably leave the Union in a self-managed way.

Regionalism has always been more fruitful when it has taken more loosely in the form of ‘Open Regionalism’, something very strongly supported by Australia in the Asia-Pacific, particularly by Ross Garnaut in his role as both academic and diplomat. In many respects David Cameron’s  model is likely to be a ‘fixed-variable’ one which will allow some countries to adopt a more integrated stance and those like Britain that favour looser ties but who all work together to maintain the viability of the overall system. David Cameron’s brilliant model is likely to be a hybrid between ‘Open Regionalism’ and ‘Political Union’ allowing the region to evolve when it has to and remain stable. It also resolves the differences between Statist Rights and Federalists quite nicely. Cameron’s model, when it becomes a reality, and it will, be good for Australia’s trading relationship with Europe.  

No doubt the Cameron model of regional integration will become the gold standard of how regional integration will unfold across the globe in the forthcoming decade. Hopefully, we will see countries integrating using the fixed-variable effects model that balances the forces of convergence and divergence selectively. This model will allow for greater inter-regional connectivity across the globe and to mop-up some of the failures and hardships of the current brand of regionalism within the EU.


There’s something magical about the white cliffs of Dover. 

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About the Author

Dr Vince Hooper is an associate professor at the Prince Mohammad bin Fahd University, Saudi Arabia.

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