Wednesday, August 3, 2005

'An Unavoidable Choice'

Moon Chung-in, Professor, Department of Political Science & International Studies, Yonsei University

A recent controversy over the government's proposed strategy to have Korea play the role of a balancer in Northeast Asia has been escalating ever since President Roh Moo-hyun introduced this notion during a commencement speech at the Korea Third Military Academy in late March. Views critical of this concept seem to be at the center of this controversy. Some people have even found it necessary to denounce the approach as an "anachronistic notion," "delusional idea," or a "naive concept likely to bring about diplomatic isolation."

While I believe that all such criticism and concern stems from a true love of country, critics need to assure that they have a proper understanding of the President's policy before expressing their opposition. In particular, the term "balancer" here does not refer to the British-style balancer strategy, under which Great Britain sought to pursue hegemony of Europe by means of a balance of power in the 19th century.

The limitations of Korea's national strength do not enable it to exert a decisive influence on the balance of power in Northeast Asia, as in the case of Great Britain, nor does it intend to sway the balance of power in Northeast Asia or to gain an upper hand by playing a balancer role. Korea's policy of promoting peace and prosperity in Northeast Asia is not a British-style strategy designed to attain a power equilibrium, but an approach that seeks to establish a multilateral security and cooperative structure in the region by engaging in confidence-building measures with all surrounding countries.

President Roh believes that Korea should take the initiative in bringing about regional peace and prosperity by overcoming the history of confrontation and enmity that had taken root in Northeast Asia since the late 19th century in the pursuit of hegemony. The essence of a balancer concept calls for Korea to promote efforts to transcend the lingering friction and disharmony and to create a new order based on regional cooperation and integration through open-minded diplomacy.

As such, this initiative is focused on the maintenance of regional peace through the establishment of a "balance and coordination of perceptions and values" to overcome the confrontation among states. This also is a manifestation of Korea's determination to transform Northeast Asia's long history, which has been dominated by the hegemonic rivalry between China and Japan, into an order that advocates co-prosperity and coexistence.

The theory of a balancer is by no means an anachronistic policy but a viable national strategy that is based on an objective awareness of history and reality. Why did Korea become such a passive outsider and onlooker to the history that unfolded at the end of the 19th century, which culminated in the loss of its national sovereignty? Above all, this resulted from Korea's lack of a proper sense of balance and the ability to objectively assess the situation at the time and to defend itself accordingly. Armed with such a perception of history, the Participatory Government intends to pursue a balanced and practical diplomacy, as well as a cooperative independent defense that contributes to a balance of power.

A balancer role is not a delusional notion, either. It is clear that South Korea cannot play the role of a hegemonic balancer, which Great Britain pursued in the 19th century. Nevertheless, Korea is no longer the insignificant and weak country that it was in the final years of the Joseon Dynasty. Moreover, Korea now possesses the soft power needed to carry out the role of a peace balancer in Northeast Asia. As a peace-loving nation that has never invaded a neighboring country and serves as a bridge situated in the geopolitical center of Northeast Asia, Korea is in a better position than any other country in Northeast Asia to selflessly and fairly initiate and play the leading role in promoting reconciliation and cooperative efforts region-wide.

In addition, a balancer role would serve to supplement, rather than undermine, the Korea-U.S. alliance. One of the policy goals of the Participatory Government is to create a security community that can assure lasting peace in Northeast Asia, which is based on a strong Korea-U.S. alliance. In other words, the objective is to develop the Korea-U.S. alliance into a more comprehensive security mechanism, upon which collective defense and multilateral security systems could be developed in Northeast Asia, similar to the arrangements in Europe.

The advent of a security community in Europe, in the form of the CSCE (Commission on Security and Cooperation in Europe), was made possible by the existence of NATO, which was at the forefront of assuring the region's security. Rather than being weakened by the creation of the CSCE system, NATO has been stabilized, along with its role as a permanent alliance mechanism being reinforced. Similarly, a solid Korea-U.S. alliance and Washington's active role in assuring regional peace are important prerequisites to the formation of a security community in Northeast Asia. Washington's positive participation and its exercise of capable leadership will contribute much to ensuring a bright future for the Korea-U.S. alliance, as well as the maintenance of peace and building of mutual trust throughout the region.

In this case, the problem is whether the United States might decide to move in a different strategic direction. If the United States launches a policy of containment based on a belief that China poses a threat, or seeks to push through regime change in North Korea, while encouraging Japan to emerge as a military power as part of its regional policies, this will unavoidably result in a serious crack in Northeast Asia's stability. If the United States, in this way, actually pursues a regional order featuring confrontation and division, this theory of a balancer and the Korea-U.S. alliance could be plunged into a relationship faced with serious contradictions.

However, the theory of a balancer in Northeast Asia is not intended, as some critics claim, to break up the Korea-U.S. alliance or replace the triangular South Korea-U.S.-Japan cooperative system, in favor of an alignment with China and North Korea. Rather, the balancer proposal is a kind of preventative diplomacy designed to forestall such an occurrence and to pave the way for a new order of cooperation and integration in Northeast Asia.

It is from this context and its vision of a Northeast Asian era that the Participatory Government has pushed for the holding of Northeast Asian multilateral summits and regional security cooperation. Moreover, the current effort to designate Jejudo a "World Peace Island," which would serve as a central venue for promoting peace in Northeast Asia, reflects this policy direction as well. Of course, a solid Korea-U.S. alliance is essential to such efforts, since cooperation and security in Northeast Asia will have greater chance of success when built upon a strong Korea-U.S. relationship.

To ensure national security amidst the current fluidity, we must discard the chronic inertia of defeatism and the fatalistic trap of Korea forever being a victim in the struggle to achieve a balance of power. Peace and common prosperity can be ensured in Northeast Asia only when the regional characteristics of discord and confrontation can be converted into a relationship based on cooperation and integration. To this end, Korea will have further build up its national strength and step up efforts to promote a more balanced diplomacy. Moreover, the success of such efforts will depend on a political environment that can transcend the ideological differences between the ruling and opposition parties as well as conservatives and progressives.

Korea Focus 2005 May-June issue. [The Chosun Ilbo, April 12, 2005] Text courtesy: Embassy of Korea in Kathmandu.

EXPERIENCES IN THE WEST

Peter Richter, Germany

Division overcome? Don't you be­lieve it! Not even in Berlin. Not even in the apartment ads: "Close to Bernauer Strasse U-Bahn station," it said. A girlfriend of mine excitedly phoned the real estate agent: "South or north of Bernauer Strasse?" The agent switched to delay tactics: "Fantastic apartment, big, cheap..." The girlfriend, impatiently: "South or north?" "Well, maybe a couple of metres north of Bernauer Strasse," the agent sighed, "but..."

No but. And no chance either. She'd hung up. The poor estate agent. The poor West. Of course, you have to know that the East is in the South and the West is in the North. Get it? I hope so, because that's the least com­plicated bit about the whole setup. Bernauer Strasse is the road that divides the district of Wedding, old West Berlin, from the district of Mitte that used to belong to East Berlin. And those few metres still divide worlds, even now! But now, things are the opposite way around, compared to when the Wall existed. It's here, at Bernauer Strasse, that almost all of those famous Wall photos were taken: of the people a couple of floors up suicidal­ly jumping from their later walled-up windows into the West, of the East Ger­man People's policeman making his last­ minute leap over the barbed wire as the Wall went up. And the strangest thing is: this osmotic pressure that, at the time, compelled people to change sides almost by law of nature - can still be felt today, after fifteen years without the Wall, the border guards with their orders to shoot on sight and the barbed wire. But now, thank goodness, it's taken on a far more harmless guise. The thing is that the dif­ference in living conditions and the as­sociated social prestige have changed di­rection.

Today, the promise of a better, brighter, more exciting life now resides on the east of the old Wall borderline, where newcomers from "West Ger­many" and the rest of the world cele­brate a never-ending Berlin-Mitte party in the renovated ruins of Socialism to­gether with the last surviving East Ger­mans.

In my case, my mind was boggled more or less the moment I set foot in the West. It was a week after the Wall was opened, when I finally got my very first chance to go "over the other side" - I could never have imagined for a second how incredibly difficult it would be to get rid of my money in this cold, insen­sitive capitalist world. The media in both the East and the West had constantly made quite the opposite ominous prophecies. Everyone is just after your money, and when it's all gone, you're finished as a human being, and you end up on welfare. But there you are with your "Welcome-to-the-West" hundred mark note stuck in your wallet, just like when West Germans visited the GDR with their compulsory exchange of twenty-five East marks that they just couldn't get rid of during their day trip to East Berlin. What could they buy any­way? As it happened, when I stepped into the West, I actually entered Wed­ding, and for the first few metres all I could do was stare in amazement at all the different western cars, although even then most cars in that area were second-hand Opels rather than brand new Mercedes limousines. But when you're so new, it takes a while to acquire the necessary fine tuning in such im­portant matters as status and prestige symbols.

But one thing was crystal clear: that the hundred mark note I'd just accepted a bit bashfully in the first bank I came to, my welcoming gift from the Federal gov­ernment, was different. The difference between these hundred D-marks and a hundred East marks was like the differ­ence between a valuable Durer drawing and a pathetic potato print. And apart from that, or maybe because of the spe­cial reverence attributed to it: this ban­knote was far too big for my puny little eastern wallet, so that it always stuck out over the edge and eventually ended up crumpled. I then tried to change the note on the bus. The driver saw my blue ­coloured GDR ID card - and just waved me on.

I got off at the New National Gallery. I'd be happy if I could tell you that I spent my first West cash on a museum visit rather than on bananas.

But for people from the East entrance to the museums was free too. Then, when I wanted to buy a postcard (Bar­nett Newman! Abstract!! Free West!!!), the sales assistant looked at me in amazement. The card cost fifty pfen­nigs. She then sold it to me for one East mark. At the end of this first day in the West I still hadn't spent any of my hun­dred-mark note, but I'd had a foretaste of the West's generosity and the lurk­ing resentments we'd be facing in the future.

Fifteen years later: there are still Westerners who have never once set foot in the East, and most likely never will. Those who come to the East and get in­volved sometimes meet with animosity. Even now. In 2004. Meanwhile, East Ger­mans find it hard to understand why they should have to work longer hours than colleagues in the West, but only be paid 80 percent of their wages. For a West Ger­man it's hard to understand why people in the East should even be getting 80 per­cent when productivity there is only 70 percent. Meanwhile, the number of bil­lions that have been poured into the East from the West is almost incalculable. But the number of places where the billions have really been effective is pretty easy to count.

In my opinion old West Berlin is the clear loser in the aftermath of change, compared with the East, which is where the money's going now. It doesn't bear thinking about, that originally the luxu­rious but no longer affordable social sys­tems of the Federal Republic may well have been a product of a social arms race between the two German states - and so they have to be dismantled just like all the other Cold War relics. The happy end of this Cold War, the miracle of the fall of the Wall - sometimes they seem so damned far away, now that everyday life and the intra-German mood are once again mundanely ruled by money. And the mood at the moment is extremely touchy.

The author is a bestseller who was born in Dresden in 1973 and now lives in Berlin

Text courtesy: Deutschland N4/2004. Embassy of Germany in Kathmandu. Ed.

Political Economy of Monetary Cooperation in SAARC

- Rahul Tripathi, Lecturer in International Relations Department of political science, Goa University, India

Introduction

As the South Asian Association for Regional Cooperation (SAARC) --liters the second decade of its existence, it needs a critical appraisal at two levels. First, ill its ability to forge a `regional' identity in South Asia, where the member countries could be seen as endorsing the idea of regionalism alongside their respective national orientations. Second, the regional idea being able to manifest itself in certain key areas where stakes as well as benefits are mutual for all the member countries. In other words, SAARC needs a reassessment of its form as well as content if at all a `new life' is to be injected in it.

Unfortunately for the grouping, the performance at both the levels has been a lot less than what the strong votaries of the idea of the regional grouping would have desired twenty years ago. Rapidly changing global political and economic scenario, the peculiar pace of' the operational mechanism of regional association and frequent differences among member nations have together imparted a unique image to the grouping. Unlike may other such initiatives across the world, SAARC appears to have got affected more by regional developments rather than having shaped them. One convenient reason behind this can be attributed to the fact that while SAARC was indeed seen as a regional economic grouping, it always had to depend on the political impulses for any major breakthrough. Regionalism therefore remained a political project in South Asia and not an economic one.

Stocktaking of the association therefore reflects both the highs and the lows that have come to be associated with the growth of the grouping in the last twenty years. SAARC has definitely articulated a vision of regional solidarity, allowed political Leadership to meet collectively over periodic (though irregular) intervals and brought regional integration at the core of deliberations within a short span of time. At the same time, it has appeared a house divided because of differences between its key constituents, remained by and large a forum for governmental or bureaucratic interaction and fell drastically short in matching the promise with the practice of regionalism when it has come to some of the key economic concerns. Often, the bilateral policy has been seen as coming in the way of the regional consensus that could have strengthened SAARC.

Seeking A Renewed Mandate

Keeping in mind the past experiences at regional consensus building within SAARC, it has become imperative that the grouping must redefine its role and objective if it is to remain a viable vehicle for collective well being. One way of accomplishing this would be to identify a set of sub-goals, which would be seen as consistent with the long-term vision that the grouping sets for itself, rather than a long checklist that is traditionally associated with SAARC meets. It will not be the first time such an agenda setting would be envisaged within the regional framework. The Colombo Summit (1991) and the Male Summit (1997) took some conscious decisions that would enable identification of certain core areas of economic cooperation. While the former set the tone for a more intensive discussion on key concerns such as poverty alleviation and trade liberalization, the latter appointed an Eminent Person's Group (EPG) to review and outline a future vision for SAARC, realizing that the past practices hadn't helped. While the substance of what was envisaged in both the cases was somehow followed up, but the spirit was somewhere lost in the intractable motions which the SAARC process went through subsequently.

Trade liberalization within SAARC became an endless exercise with the adoption of a preferential approach to tariff negotiations initially. With the growing unease with the slow pace of negotiations and their minimal impact on trade expansion after several rounds, it was finally decided to achieve a South Asian Free Trade Area with the adoption of a framework agreement at the Islamabad Summit in 2004, almost six years after the EPG had recommended the same (SAARC, 1999,p.53). The most far-reaching recommendation of the EPG, namely the creation of an Economic Union within SAARC by 2020 is yet to be taken up formally within the SAARC deliberations. The Report lays down the steps which would be necessary to attain the Economic Union and very rightly put the onus on the governments, academic community and civil society to initiate research and discussion at national and regional level on different aspects of the proposal. (SAARC, 1999,p.57)

Towards Monetary Cooperation

The proposed South Asian Economic Union is seen as a logical culmination of the South Asian Free Trade Area and a South Asian Customs Union, which arc envisaged over a specific timeframe. One of the critical components of an Economic Union is harmonization of monetary and fiscal policy among member countries which leads to greater policy coordination in exchange rates, interest rates and inflation (Sobhan, 2005,p.12). Such macro-economic policy coordination, if practiced perfectly prepares appropriate ground for the eventual monetary union, which would include a common currency within the region. Available literature shows however that opinion is divided oil whether South Asia does provide the appropriate environment for a full-fledged monetary union.

The issues at stake are both theoretical as well as practical. For a region to be Suitable for experimenting with common currency and therefore a common monetary policy it should satisfy the (Optimum Currency Area) OCA criteria which presupposes free mobility of labor and inflexibility of wages in the region. Some empirical studies conducted on SAARC as an OCA have shown negative results which suggest that it Should not pursue monetary integration immediately as that might lead to a crisis of adjustment and increase in economic costs. It has been suggested that a slow but sure path as pursued in Europe should be followed with the initial focus being on meeting the convergence criteria on broad macro-economic indicators. Other studies, which are less empirical and more policy prescriptive refer to the desirability of monetary cooperation in successive stages that could lead to an eventual monetary union which may entail individual countries surrendering their monetary sovereignty. Such studies talk of greater political cooperation and confidence building among member nations in order to move towards monetary cooperation. There has also been a logical extension of the idea at the broader Asian level particularly in meeting the challenges similar to the Asian financial crisis of late 1990s. This includes creation of a parallel currency, which could be used by all Asian Countries, which may retain their individual currencies, yet link it to the former. Under this dispensation, individual currencies could vary in relation to parallel currency within a broad band depending on the circumstances prevailing.

Text courtesy: IFA seminar held July 15-16, 2005 in Kathmandu. Ed