Wednesday, June 25, 2008

Boom, bane or bluster? Regional blocs in question

If you're Asian, chances are your country is a member of one of many acronyms: ASEAN, APEC, BIMSTEC, BIMP-EAGA, IMT-GT, SASEC, SAARC, SESCA, CAREC, SCO. Your president or prime minister attends any one of these annual meetings or sends the appropriate minister to discuss issues that affect your country and the rest of Asia, whether these be tourism, trade, finance, or cross-border health.

They are regional blocs mobilised in the aftermath of the 1997 financial crisis. Plus the IT revolution, integrated production networks, and the rise of China and India as potentially very large markets provide the logic for bringing Asian economies closer together.

Free trade agreements (FTAs) have proliferated throughout the region and it's easy to get lost in the ''Asian noodle bowl'' of inter-country relationships.

But what are these truly worth beyond the front-page photo-ops of heads of state, arms linked and dressed uniformly in the host country's national dress?

Two regional integration programmes funded by the Asian Development Bank (ADB) seem worthy of closer scrutiny: the Greater Mekong Sub-region (GMS) and the Central Asia Regional Economic Cooperation (CAREC) Programme.

Under the aegis of the GMS, the East-West Corridor, once completed, will connect Vietnam all across to Burma thereby linking Thailand, Cambodia, Laos, Vietnam and Burma to facilitate the movement of goods and services among them.

Once-upon-a-time sleepy Savannakhet in central Laos is poised to become an economic hotbed as Thai and Vietnamese goods and products pass over the Savannakhet-Mukdahan bridge.

Under the Central Asia Regional Economic Program (CAREC), an ambitious infrastructural grid will restore, rebuild and revive the ancient Silk Road.

Plus additional investments for airports, railways and ports will create a transport route linking Europe and Asia.

The total bill: a whopping US$18 billion.

The optimist's argument to membership in a regional body is an upbeat message of deliverance: by setting up favourable trading policies and adopting market-based reforms, the Promised Land of economic growth will surely be arrived at.

Further, member countries can leverage their strengths to overcome domestic bottlenecks.

Regional cooperation and integration bring otherwise isolated communities into the fold of economic activity.

In tandem with working markets are positive social spillovers: peace and stability, social inclusion, shared norms and values, community-building.

A good script thus far, so reads the ADB regional newsletters.

But decades-long animosities brought on by conflict among countries are proving difficult to erase.

Despite the so-called ''peace dividend'' _ ADB's mantra that serves as a default response to queries about GMS social stability _ negative perceptions persist, and provide fodder for continuing fear and mistrust among supposedly chummy neighbours.

Not too long ago, a falsified rumour about a statement by a Thai actress on the historical ownership of the Angkor Wat closed down the borders and suspended flights between Thailand and Cambodia.

Or the current spat-in-the-making, once again, between the two countries over the Preah Vihear temple issue that has now gotten Unesco potentially involved.

And what to do about the intransigent Burmese generals who continue to plague the ADB, which officially does not support the regime yet manages to ''smuggle'' support to the country vis-a-vis the GMS programme _ a sore point raised by a coalition of Burmese Civil Society and Movement Support Organisations?

Further north in the region is Tajikistan's recent civil war _ a recent historical baggage worthy of continuing concern within the country.

There are ongoing tensions among all countries on the control and distribution of water resources _ an agenda item that is perpetually off the table during bi-annual discussions among senior officials in Central Asia.

So much for ADB's ''Good Neighbours, Good Partners, Good Prospects'' banner slogan.

For both regions, economic inequities are pervasive.

In the GMS, the average regional income in 2002 was approximately US$4,000. An average Thai will have an income almost four times more than their Laotian, Cambodian or Burmese counterpart.

In Central Asia, oil-rich Kazakhstan enjoys a per capita income five times higher and has a land mass more than twice the size of all the Central Asian republics combined.

Human capital indicators are hardly promising.

Life expectancies in Laos, Burma, Tajikistan and the Kyrgyz Republic are among the lowest in the world, averaging between 60-65 years, almost at par with their African counterparts.

Governance practices remain a challenge. Not surprisingly, a number of countries in both regions score very low in the Governance and Stability Indicators as well as in the Corruption Perception Index.

All these suggest that for all the hype over regional cooperation, these countries suffer from internal fragmentation. This begs the question of whether countries facing domestic fracture can cooperate amongst each other to deliver the promised cargo.

The ADB certainly has a lot more thinking to do when it mulls over the next self-congratulatory regional newsletter, even while the request for proposals for consultants to the next big infrastructure loan project has already been issued.

Tess Cruz-del Rosario is a Senior Research Fellow at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy, and former ADB consultant on capacity development for the GMS and CAREC programmes.

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