Internal Conflict and Regional Security in South Asia: Approaches, Perspectives and Policies

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Beyond this, he proposes other guiding principles, such as belief in a rules-based order, a desire to increase cooperation between law enforcement, government and civil society, and to create lasting connections in nodes of connectivity, knowledge and information-sharing, as part of the network. He then introduces the concept of horizontal and vertical connectivity, stating that it is difficult to find security challenges that are in itself completely isolated from other security challenges. In making his concluding remarks, Dr Kliem highlights that amongst other challenges such as SEA regionalism and domestic politics, distrust among ASEAN member states is the greatest hindrance to information sharing and the creation of multi-stakeholder networks.

He argues that there is a significant overlap and that this should encourage greater cooperation between regional institutions. In her keynote speech, Dr Sriprapha Petcharamesree first stressed that migration should be defined as a security challenge not merely about national security, but also cross-border security. Introducing the idea of people mobility, Dr Petcharamesree hinted at its problematic nature, being a concept that is limited to mobility of tourists, skilled labour and professions as well as students.

Firstly, it does not have a policy and clear agenda on migration, except ASEAN mutual recognition agreements and a few other declarations. Moreover, discussions on refugees and asylum seekers as well as statelessness have been nearly inexistent. Secondly, ASEAN policies have tended to label migrant workers, refugees, asylum seekers and victims of trafficking as a security threat, which has significant implications in terms of laws, norms, policies and procedures. She argues that in the migration context, this label has been used to justify harsh and restrictive policies such as border control, as well as greater surveillance and deportation.

These issues have raised concerns on the dangers of policy silence from a national security perspective as the invisibility of these millions of migrants leaves them in an insecure position. She recommends that ASEAN formulate a collective, coordinated regional response to issues associated with sudden and ongoing episodes of displacement regardless of the causes and status of migrants.

To conclude, she states that human security of migrants has to be included in the regional security connectivity to promote effective responses and ensure that all ASEAN peoples are secured. Dr Vannarith Chheang , in his keynote speech, raised that discussions about connectivity often refers to merely infrastructure, institutions and people, missing the dimension of security connectivity.

He stresses that this is a new dimension that should be brought into discussions. He recognised that water resource security is a sensitive issues, especially in light of the South China Sea dispute, in which it is difficult to find consensus amongst involved states, posing a challenge for regional cooperation. Accordingly, he proposes 4 recommendations, as follows. First, to connect stakeholders as individual states spend a lot of resources to analyse security issues in silo, and especially as water resource security issues are connected to food security, energy security and wider issues of climate change.

However, he states that by the end of , discussions on the Mekong river will advance to the summit level, and the engagement of actors will be significant. However, he acknowledges that while there is a need to be integrated to some extent, this is largely subject to the political will of actors. Second, to connect knowledge as knowledge and information sharing is critical for confidence building, despite some countries being reluctant to share information related to the water level within their sovereign country.

Dr Chheang stresses the need to ensure that hydroelectric power dams are managed properly and do not pose a threat to food security. Fourth, a code of conduct, which Vietnam is trying to include in conflict resolution mechanisms. Stressing that there is a need to push this agenda further as security connectivity is linked to conflict resolution, Dr Chheang states that based on the ongoing spirit of negotiations, it could be included in the ASEAN Regional Forum to build a rules-based ASEAN, in order to enforce whatever member states have agreed upon.

He notes that there have been and currently exist various threats to good order at sea, both traditional and non-traditional security challenges, and discussed these issues in relation to differing time period. From to , there were non-traditional security challenges, including terrorism, piracy and robbery and illegal trafficking. The period after was, and is, characterised by traditional threats which are state-based, as well as non-traditional challenges like rising tensions over territorial maritime disputes as well as environmental destruction of islands.

He raises another set of problems — transnational security problems, which include the rising number of instances of armed piracy and armed robbery, the fact that Southeast Asia is the main supplier of heroine and morphine to Oceania, as well as the depletion of fish stock due to destructive methods of fishing. First introducing the nature of maritime security as transnational and regional, multi-dimensional as well as involving multiple stakeholders, Dr Do raises several national security remedies, at a national level e.

He notes that these are very complex multi-level structures for maritime cooperation in Asia Pacific. Dr Do then provides certain observations on the gaps of these remedies, including i the lack of resources, facilities and insights, ii the return of geopolitics and the dampening of international law, with the advent of arbitral rulings as stipulated in UNCLOS, iii the crippled effects of sovereignty and national security paradigm due to the recognition of the state as the main security provider, iv the lack of a South China Sea costal state forum, v the sidelining of other stakeholders such as fishermen, scientists, businesses and socio-political organisations, and vi the rise of new technologies that have disrupting effects, for example, deep drilling technologies.

Lastly, he commented that there is a need for better use of resources, such as by consolidating existing mechanisms. In his closing remarks, Mr Henning Glaser brings up several learning points and insights to summarise the seminar.

In this section

First, there is a need for a perspective of change. Over the last 15 years regional trade agreements RTAs have become defining features of the modern economy and a powerful force for globalisation. The example of the European Union EU as an economically successful trade agreement and peaceful political arrangement has much to offer the world. While the EU is the product of a unique political and economic landscape, other RTAs also have the potential to build peace and prosperity. However, RTAs can also be divisive and exclusive, and their terms can embed regional tensions and power imbalances.

Particularly when negotiated between countries of differing economic power, trade agreements can exert powerful leverage on the political stability of the economically weaker partner.

Poorly designed and implemented RTAs can lead to heightened tensions between countries and increase the risk of inter-state conflict. At the same time, the political and economic adjustment costs involved in pursuing regional trade integration can undermine local livelihoods and create winners and losers, spurring competition between groups and leading to intra-state conflict. The repeated frustrations of multilateral trade negotiations have resulted in renewed energy being directed towards regional trade integration as a more flexible way of liberalising trade and pursuing other strategic goals.

While some agreements count as few as three member nations, the majority have ten or more signatories. Crawford and Fiorentino's study argues that there are four main emerging trends in regional trade integration: 4. On the one hand there are a growing number of cross-regional RTAs, which account for a large proportion of the total increase in RTAs. On the other hand, regional trading blocks that span continents are in the making.

The debate on RTAs has tended to revolve around the somewhat narrow topic of what the trend means for multilateral trade liberalisation; whether RTAs are a 'stumbling block' or a 'stepping stone' to multilateralism. However, as the EU shows, trade agreements can presage deep and profound economic, social and political changes. Aid donors and the international community have been particularly keen to promote regional integration in the developing world as a stepping stone towards greater interdependence, trade liberalisation and stability.

Yet, while the process promises much in terms of greater interdependence and stronger relationships between countries, it also presents very real dangers. In attempting to introduce the relationship between RTAs and violent conflict we chart the development of RTAs around the world, and question the extent to which the trend is an endogenously or exogenously driven process. We investigate some of the non-trade concerns that are being bundled into modern RTAs — particularly those that attempt to use trade agreements as a vehicle for good governance and interdependence as mechanisms to encourage peace.

Finally, we attempt to assess the positive and negative impacts of RTAs on peace and security around the world. There are a number of different types of trade agreement and a variety of ways to describe them. As these phrases are often interchangeable and confusing it is worth briefly noting what we understand by them in this chapter. A preferential trade agreement PTA is the same thing but the term highlights the point that the lowered trade barriers between partners are preferential to those offered to third parties.

A customs union CU is more politically ambitious requiring as it does a common external tariff and the harmonisation of external trade policies. Regional Trade Agreements RTAs simply refer to any of the three above when concluded within a regional group. RTAs are signed for a number of reasons. Increasing trade flows may be part of the story, but there are often other geostrategic and political motives at play.

The socio-economic and political 'drivers' of regional trade integration can be divided into 'internal factors' drivers that originate from within a particular region and 'external factors' drivers that come from outside a region or nation. New markets and trade opportunities: Typically, by expanding access to regional markets, RTA agreements promise increased and low cost intra-regional trade. They can also help promote foreign direct investment FDI , improve economic growth, improve a country's balance of payments position and bring new skills and technology.

Geostrategic and political interests: While economic interests may be the principal engines driving the growth of RTAs, such agreements are also increasingly being guided by political, strategic and security concerns. The fact that the negotiation and commitments of RTAs tends to be less transparent than multilateral trade negotiations makes such an approach easier.

There are several examples of south-south RTAs that reflect a combination of economic and security goals. Growing frustration with multilateral trade negotiations: There is mounting scepticism in the ability of negotiations under the framework the WTO to deliver sufficient progress towards trade liberalisation. The perception is that negotiating trade agreements within smaller blocs is both more flexible and quicker than attempting to bring the members of the WTO to consensus. In addition, RTAs can be more specific to the needs of a particular region than the 'lowest common denominator' solution often offered at WTO negotiations.

Counterbalancing the negotiating power of other blocs: Regional blocs are a powerful tool to negotiate common interests both within and outside the WTO. Increasingly, many developing countries are realising that their interests may best be served by integration with like-minded countries that have similar economies. Building on socio-cultural similarities: Sharing a common language and culture can encourage closer integration. While differing in terms of development and prone to intra-regional conflicts, the Commonwealth of Independent States CIS , which emerged from the collapse of the Soviet Union, was brought together, at least in part, by socio-cultural similarities.

Reducing illegal trade and smuggling: RTAs can establish the institutions for shared information and action to reduce illegal trade in drugs and weapons. Meanwhile, common tariffs for trade between members help to undermine the economic incentive for smuggling. This is backed up by EU funds to support regional organisations such as the African Union and the Pacific Forum with the specific expectation of contributing to the prevention, management and resolution of violent conflicts Council of the European Union 3. The same is true of the US. According to Edward Mansfield of the University of Pennsylvania, both the Clinton and Bush administrations have made spreading regional economic agreements a foreign policy priority Mansfield Pursuing strategic bilateralism: In the case of India and Pakistan, the fear that this region could continue to be unstable has motivated regional and global players such as ASEAN and the US to try to encourage a more stable trading relationship between the two countries.

The links between international trade and security have been recognised for centuries. As the French philosopher the Baron of Montesquieu said in , '[peace is a] natural effect of commerce' Humphreys 8. The Italian economist Vilfredo Pareto argued in that CUs could help to achieve peace between countries. At the most basic level, equitable trade promotes prosperity and reduces poverty.

But beyond that, free trade has also been seen as a vehicle to promote internationalism and end war. Recent empirical studies also seem to confirm the adage that countries that trade with each other on equitable terms are less likely to fight each other Humphreys 8; Mansfield Trade can be a powerful driver of growth, reducing poverty and creating jobs. In theory at least, there are a number of ways that regional trade integration can support peace:. Attacking a neighbouring economy becomes just as damaging as attacking one's own. Many agreements have instituted dispute settlement mechanisms to mediate economic conflicts that have also been used for managing political conflicts.

In practice several economic and trading arrangements have been established with the explicit purpose of preventing conflict between or within states. For instance:. Concerns about the threat of the spread of fundamentalism motivated the governments of Egypt, Morocco and Tunisia to negotiate regional agreements with the EU.

It also helped to avert a possible coup in Paraguay following reaffirmation by the presidents of the MERCOSUR member countries that democracy was a necessary condition for membership. The Stability Pact for South-Eastern Europe was created in to create a free trade area designed to promote economic recovery and integration in the war-devastated Balkan region. In December Israel and Egypt signed a trade protocol with the US designed to accelerate the two countries' rapprochement. The deal creates five special zones where Egyptian goods will have free access to US markets, as long as 35 per cent of the goods are the product of Israeli-Egyptian cooperation.

Moreover RTAs can play a role in promoting elements of good governance such as budget transparency, careful fiscal management and an independent judiciary. A notable trend in north-south trade agreements is the increasing inclusion of non-trade commitments as part of the agreement. It lists three so-called 'essential elements': respect for human rights, democracy and the rule of law.

If contravened, these conditions can lead to suspension of cooperation — including the cancellation of preferential access. Similar conditions are being currently attached to the trade agreements that are to succeed the Cotonou agreement. Former EU Trade Commissioner Pascal Lamy argued that trade agreements should contain even more extensive conditionality. He suggested that the agreements should allow the EU to ban any imports that do not meet the EU's 'collective preferences'.


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The term is deliberately broad and vague but would likely enable trade sanctions in cases of human rights abuse, poor governance or rigged elections. In short, rich countries are using trade agreements as an inducement for largely unrelated governance concerns. That this is possible at all is indicative of their negotiating power.

South-south RTAs have not gone as far down this path, perhaps because negotiations tend to be less onesided and are focused on extracting trade concessions rather than other commitments. Nevertheless several south-south RTAs do include such provisions.

Competitive Security Dynamics in Southern Asia: Conflicts, Challenges, and Choices

The trend seems to be catching on. Table 1. The majority of RTAs establish some degree of dispute resolution between signatories. The agreements also contained weak provisions on respect for democracy, human rights and the rule of law. The links between good governance and peace are well established. If south-south RTAs can encourage 'good governance' this could add a new dimension to their role in building peace between and within countries.

Mentioned in sufficient detail to be implemented under the agreement. Mentioned in agreement but with minor detail; no implementation procedure provided. Regional trade integration is progressing fast, propelled by a growing number of regional trade agreements and the encouragement of many Organisation for Economic Cooperation and Development OECD countries. The first thing to note is that an RTA may not be much of a 'brake' on conflict. Even when war is costly and the option of a negotiated bargain exists, rival states can nevertheless go to war, propelled by incentives to misrepresent or keep information private, commitment problems after a settlement, or indivisibility of issues.

Certainly, there are many examples of conflict between members of RTAs:. The EU's genesis was a unique set of circumstances: the devastation of the EU's productive capacity after the Second World War and the determination of its political leaders to banish any future prospect of war. Other regions may not be willing, or able, to pursue certain aspects of integration, such as opening labour markets and allowing the free movement of people across borders.

Most important, and in contrast to many other regional agreements, the EU and its predecessors have provided a means of redistributing income from rich to poor countries. This has proved to be an effective compensation mechanism for the losers from trade liberalisation: facilitating economic integration, promoting partnership between countries and preventing the marginalisation of certain groups and countries. Following the fall of the Iron Curtain, the EU concluded bilateral trade agreements with the Eastern European countries that helped stabilise them and prepared them for eventual inclusion as new member states.

So, while many liberal economists claim that RTAs build stability and encourage peace, there is also a convincing case for the reverse: that RTAs may even increase the chances for instability and conflict both between and within countries. There is no rule that says regional integration is an automatic force for mitigating tensions or conflict. Without careful negotiation and implementation, regional integration between countries of widely differing size, wealth and influence can cement inequalities, create tensions and trigger conflict.

This is perhaps particularly likely if there is a lack of transparency and accountability in the negotiation of the agreement and its subsequent implementation. Nor does membership of a trade institution automatically create bonds of trust. Envy can result from trade imbalances and result in the creation of social networks of memberships, resulting in social unrest. Trade ties can actually provoke hostilities between states. Gains are rarely felt proportionally and large inequalities in the relative distribution of gains can shift the balance of inter-state power. There may also be tensions between members of the RTA and non-members who may find that trade diversion within the RTA results in lost markets.

In a sense trade 'gives people something to fight about'. Neither are trade institutions necessarily the best mechanism to mediate disputes — especially if those disputes have wider social and political dimensions. In conflict prone areas, international institutions built around trade agreements can have adverse effects on conflicts among member states by mismanaging crisis situations and worsening conflict intensity, or producing rivalry among states due to their relative social positions Hafner-Burton and Montgomery During the s and s the EU encouraged rapid regional integration and structural adjustment policies on Francophone West Africa, urging the free movement of goods but not people and without providing for a redistributive wealth mechanism that would have helped surmount the adjustment costs of trade liberalisation and integration.

Some analysts argue that this uncompromising process, which drove up unemployment and undermined government social programmes, can explain much of the subsequent instability in Francophone West Africa. Finally, there is also a concern, though one without much empirical investigation, that trade integration may help to facilitate the illegal trade in conflict resources such as blood diamonds and illegal timber.

It may also increase access to weapons. After all trade agreements are about reducing barriers to trade: the increased trade that can result can be both legal and illegal. RTAs typically involve concessions to greater liberalisation. Trade liberalisation can result in painful adjustment to new tariff barriers, new regulation and the influx of fierce new competition. Over the short term trade liberalisation can lead to industrial contraction, unemployment and social unrest. If new market opportunities fail to materialise, this can set a trend of increased poverty and economic instability over the long term.

In addition, trade liberalisation creates winners and losers. The resulting increased wealth disparities can create tensions and lead to conflict. A reduced tax base as well as reduced receipts from duties on exports and imports can severely strain government revenues and undermine health and education spending. The costs of integration itself can be a further burden. In the case of the former East African Community the establishment and cost of suitable organisations to oversee trade integration proved to be contentious both within and between countries Wu In general, economic integration can be socially destabilising and promote processes of change that erode established identities, undermine established ways of conducting national politics and reduce state capacities to provide for poor and marginalised segments of the population.

Such socio-cultural challenges of integration are one element in the Zapatista rebellion in Chiapas. RTAs can help to reinforce both the perception and reality of trade dominance by an external power. Public perceptions of trade dominance can be a powerful force. Examples of such sentiment can be seen in the anti-globalisation riots of Seattle and Genoa or in the way US headquartered franchises based in developing nations are treated during times of protest against US foreign policy. In extreme circumstances, such strong domestic opinion can undermine peaceful relations between countries.

Finally, RTAs can generate high expectations of increased economic growth, new job opportunities and reduced poverty. However, RTAs between countries that are reliant on the export of primary resources and that have relatively undiversified economies can fail to live up to their proponents' rhetoric. Countries tend to exclude key goods from liberalisation agreements. When those countries trade in a similar, and narrow, basket of goods the net economic impact of the RTA can be limited.

For example, West Africa's reliance on cocoa and palm oil leaves little else to trade between countries. Consequently, mismanaged expectations coupled with the adjustment costs of joining an RTA can lead to the perception that governments have let their citizens down. The rise of the RTA is an important feature of the global economy, which is altering the political chemistry of entire continents.

RTAs are increasing both in number and in ambition. We are now seeing a complex, overlapping web of trade agreements stretching across the world. The received wisdom is that regional trade integration can be a powerful force for peace. Building interdependence between countries, creating economic incentives for peace and developing non-military means for resolving disputes are all goals of the proponents of trade integration. Using trade as the cement, RTAs help to bind countries' interests to a common future.

However, in the light of recent experience, this assumption requires scrutiny. The many conflicts between member countries of RTAs imply that regional trade integration is not an automatic brake on conflict. That said isolationism is also a risky strategy. A study by the US State Failure task force found that the likelihood of state failure is affected by international influences, particularly the openness to international trade and membership of international organisations. Those countries outside regional integration processes, or with no obvious regional 'club' to join, such as Myanmar, Afghanistan or Turkmenistan, are arguably more likely to suffer state failure and further isolation.

This book is the result of an month multi-regional study that investigated the promise of regional trade integration for conflict prevention. Research institutions in Chile, South Africa, Pakistan and Singapore investigated the institutional, political and economic implications of south-south RTAs and trade integration in each of their regions.

The following questions directed their analysis:. And how effective are these provisions at improving domestic governance and reducing the risk of future conflict? The book is divided into two sections. The first section takes a regional focus and looks at the institutional dimensions of trade integration, asking what it means for regional conflict prevention.

The second section focuses on country case studies in each of the regions. These case studies analyse in more detail the role of trade in conflict prevention and confidence building between countries with a history of tension and conflict: China and Taiwan; Peru and Ecuador; Pakistan and India; Zimbabwe and its neighbours. The concluding chapter attempts to weave together the key messages from the regional analysis and country case studies.

It addresses two fundamental questions: Is trade a cause or effect of peace?

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Internal Conflict and Regional Security in South Asia: Approaches, Perspectives and Policies

And how can the international community best contribute to the process of developing peaceful trading links between countries emerging from or at risk of violent conflict? The RISP ran between and Brown, O. Brussels: Council of Europe. Crawford, J. Hafner-Burton, E. Humphreys, M. Brack ed.

Mansfield, E. Mansfield and B. Sturgis, J. Free trade often has conflict connotations. These connotations stem from different takes on the subject. Different media, particularly newspapers, refer constantly to the positive and negative ramifications of trade; they also tend to polarise public opinion on the subject. In fact, free trade is part of an intricate web of complexities that can yield more than the two sides of the proverbial coin.

In other words, the outcome is never black and white. Hence studies, such as this one, which attempt to identify potential links between trade and conflict, as well as the incidence of conflict resolution in the context of increased interdependence, are important. Conflicts often stem from disagreements between two or more parties. These disagreements arise out of perceived threats to a party's interests.

In the context of diplomatic relations, the tension brought forth by disagreements can give way to international armed conflict, involving two or more states. We refer to these tensions as externally driven confrontations. Internal armed conflict henceforth referred to as IAC , is defined by the Geneva Convention as occurring in the territory of one of the parties. To qualify as an IAC, a conflict must take place 'between a [High Contracting Party's] armed forces and dissident armed forces or other armed groups which, under responsible command, exercise such control over a part of its territory as to enable them to carry out sustained and concerted military operations'.

The term 'internationalised armed conflict' describes internal hostilities that are rendered international. More specifically, the term includes 'war between two internal factions, both of which are backed by different states; direct hostilities between two foreign states that militarily intervene in armed conflict in support of opposing sides; and war involving foreign intervention in support of an insurgent group fighting against an established government' Stewart While distinguishing this type of conflict from an IAC makes analytical sense, in practice, IACs are seldom free from foreign involvement, although such involvement is not always immediately obvious Stewart Confidence building measures CBMs constitute measures taken to reduce military tensions between a set and sets of states, before, during or after actual conflict.

The European experience indicates that efficient CBMs draw upon two elements: 1 'stability and predictability in the region' and; 2 'the existence of a shared political culture amongst the states in question' Bromley and Perdomo 6. The first element is rarely found in Latin America see Figure 2. Most CBMs in Latin American are reached at presidential reunions that imply personal commitments understood as 'governmental policies', instead of 'state policies' Bromley and Perdomo Presidential voluntarism does not translate into an ability to fulfill commitments — much less where good governance is relatively, if not wholly, absent.

The Tlatelolco Treaty of Non-Proliferation was sustained by the fear and concern that arose in the aftermath of the Cuban Missile Crisis; it made the threat of nuclear war real. The treaty was ratified by 11 states at the time of its inception, in Argentina and Brazil chose not to be parties to the treaty since their mutual animosity had embroiled them in an arms race.

However, the treaty did pave the way for a future CBM between the two countries. The Joint Declaration of Nuclear Policy, signed in December , opened communication channels for consultation and the exchange of information on nuclear matters. Future CBMs will need to take into account a wide range of threats to security.

The declaration states that different perspectives regarding security threats and priorities are to be recognised. Trade also falls in the genre of 'non-traditional' threats to security. In the following sections, we will explore the extent to which selected RTAs have contributed to trade promotion and conflict mitigation. Both represent the most important regional integration agreements in Latin America. The agreements include countries with a long-standing history of bilateral conflicts that have come together voluntarily under an institutional arrangement that seeks to foster political and economic interdependence.

Representing 67 per cent of Latin America's land area, 4 47 per cent of its population and more than half of Latin America's gross domestic product GDP ; 5 it is the most progressive trade integration scheme in the developing world.

Climate change, regulatory policies and regional cooperation in South Asia

International relations scholars view the model as a crucial step to overcome the historic agenda of grievances, mutual distrust and diverging interests within the region notably by linking the Southern Cone's rival regional powers, Brazil and Argentina. They compare it to the European Union EU — the most important example of peace and regional political stability through economic integration O'Keefe The CAN, endowed with supra-national organs, embodies institutional depth.

The most prominent example of inter-state conflict is the persistent border dispute between Peru and Ecuador.

China’s Hollow Multilateralism and Weak Regional Multilateral Security Mechanisms

Examples of intra-state conflicts are the guerrilla conflict in Colombia and the indigenous movement in Bolivia. The analysis of these two regional blocs, with their distinct profiles and contexts, will help us understand the relationship between integration, trade and conflicts in the region. The second section reviews the general conditions and trends in relation to regional integration, trade, and conflicts in Latin America and the Caribbean.

The fourth section concludes with recommendations. In Latin America, trade integration initiatives are more likely to be based on political rather than economic considerations. As Kacowicz puts it: 'In contrast to the common theoretical assumption, the order of causality has been reversed in Latin America: economic interdependence became the consequence, not the cause, of political cooperation and of economic integration' Kacowicz The political component in the equation is what determines the outcome.

The situation is similar to South Asia in some ways. Khan et al. Both historical and extant intra-regional trade flows in Latin America have been low. A quick glance at regional trade statistics illustrates this point. This is in contrast to what the two regions export to other Latin American nations The level of intra-regional trade is also explained by the expected efficiency gains from trade. These are very low as '[t]rade among similar Latin American economies often heightens competition in primary goods, driving down profits.

It does little to increase technology or productivity, since competition among manufacturing firms remains meager' Aggarwal and Espach 20— This situation also makes bilateral trade agreements between neighbouring Latin American countries a rarity. Chile remains the lone exception. It has opted for bilateral agreements with its neighbours instead of joining their trade blocs. Both political and economic reasons motivate this stance.

On the one hand, Chile prefers the flexibility of choosing at will without having to subject itself to supra-national rules. On the other, 'Chile's stable and fast-growing economy and its increasing consumer market give it leverage over its poorer Andean neighbors, while the competitiveness of its exports and international corporations serves it well in the much larger Argentine and Brazilian markets' Aggarwal and Espach Such bilateral trade remains low nevertheless. In , only As a case in point, Bolivia refuses to sell natural gas to Chile. Historically, wars in Latin America have taken place due to foreign intervention wars of independence or internal struggles revolutions.

In addition, recurring disputes — often associated with unresolved border issues, erupt sporadically and continue to the present day. The clash between Peru and Ecuador over a section of the Amazon River basin is an example. Most tensions associated with geopolitical ambitions of certain regimes have cooled down, but others have increased recently.

Most observers express concern that such stockpiling goes beyond a revamping of Venezuela's military and that these purchases may affect the balance of power in the Andean region. However, the consensus is that the region 'no longer represents a global threat in terms of security' Narich 1. Indeed, Latin America is often held up 'as an example for the rest of the world when one deals with traditional security issues'. In the first place, the continent enjoys considerable religious and ethnic homogeneity.

His call sparked an inter-American cooperation process that eventually led to the creation of the OAS in , a predecessor to the United Nations UN and, according to some, much more effective than the latter. The IADB is the oldest international organisation of its kind in the world and is linked to the OAS through the latter's general secretariat. Other unprecedented diplomatic efforts include the formation of the Tlatelolco Treaty. It set the standard for all nuclear weapon free zone NWFZ agreements. Direct conflict mediation has also achieved hallmark status.

The Rio Protocol of , for example, put an end to the first war between Peru and Ecuador c. Although the s and s were particularly turbulent, '[t]he strengthening of democracies and the creation of trade blocks in the s and s in Latin America contributed to an atmosphere of growing trust and cooperation' Narich 6. Simultaneously, the military's role diminished dramatically in the Latin America. The end of the Cold War in marked the end of global bipolarity and the beginning of international and regional approaches to issues of security and economic concern.

Latin America ceased to look up to the United States as the command and control centre for regional security matters, mostly because the economic incentives to do so were withdrawn and, as expected, the political justification no longer existed. In the absence of a powerful benefactor, the challenges ahead seemed daunting for the individual Latin American states. Their reaction, prompted by emerging globalisation, was manifested in the shape of integrated responses.

As mentioned, the uniqueness of the inter-American cooperation system deters an escalation into full-scale war. Topographical and geographical restraints, weak military institutions and socio-economic factors also limit the capacity to engage in open warfare Saavedra However, tensions and disputes continue to persist and merit analysis. With this in mind, a distinction is made between traditional and non-traditional disputes. Traditional disputes are ancient in nature. These disputes 'have a higher probability of [leading states] to war than other kinds of disputes' Dominguez et al.

Non-traditional disputes are due to new or modern threats to security as a result of the weakening of the state and the consequent rise in internal delinquency and violence. Examples include terrorism and drug trafficking. Hence, these disputes are associated with the spillover effects of an internal problem that has been unsuccessfully contained by the afflicted state. The problem, then, becomes internationalised and, consequently, requires an international response. Again, ideological and institutional factors are behind this occurrence, which, in turn, also explains the relatively low levels of defence spending in the region.

Intra-state violence or turmoil is mostly explained by persistent political and economic instability. The most visible and damaging of these intra-state conflicts is Colombia's civil war. The intensity of the conflict there is such that some spillover effects are already evident in the neighbouring countries as discussed shortly.

According to a report by the US National Council on Intelligence USNCI , the main threat to security in the region is posed by the failure of governments to alleviate extreme poverty in spite of 'the greater integration into the global economy in the past decade' USNCI Such failure sparks populism and radical indigenous action. Recent estimates indicate that 'violence has increased in Latin America as a result of poverty-induced criminality. In the year , the crime rate in Latin America was twice the world average Addressing this violence presents a formidable challenge for many Latin American regimes.

Latin American countries have a long-standing, but erratic history of regional integration. The focus later switched to more pragmatic development-oriented economic goals. The Latin American Free Trade Association LAFTA , established in , aimed to overcome the inherent scale limitations of the small domestic markets by allowing industries to become competitive on a regional level.

The initial enthusiasm waned when sensitive sectors automobiles, textiles, agriculture came up for discussion; eventually, across the board industrial rationalisation was aborted. Although very ambitious politically, it was supported by supranational arrangements and institutionally viable. However, the pact did not achieve much by way of tariff reduction and trade promotion, collapsing shortly after Chile pulled out in The sub-region then fell into an extended ten-year long recession.

Subsequent sub-regional arrangements also did not fare much better. The oil price hike in , followed by the debt crisis and the global economic downturn, induced a deep recession and a severe contraction of intra-regional trade.

Regional Trade Integration and Conflict Resolution

The move towards a new wave of regionalism took place in the early s. The inward-looking policies had been largely discredited throughout the s, to be replaced by the neo-liberal 'Washington Consensus'. This was a major paradigm shift that promoted 'open regionalism' as the most viable option for developing states to integrate effectively within a global economy marked by increasing interdependence, liberalisation and competition for investments.

A spate of market-oriented reforms followed in the shape of privatisation, deregulation and budget consolidation. These reforms profoundly reshaped the political-economic landscape of Latin America. Except Cuba, all Latin American countries are now part of some regional bloc, ranging from bilateral and plurilateral free trade areas to customs unions CUs with ambitions of becoming a common market.

Figure 2. The arrangement has worked well. Politically, it has diffused tensions between Argentina and Brazil. Economically, it has stimulated intra-regional trade and growth by dismantling tariff barriers, reflecting a region-wide tendency, as evident in Figure 2. However, removing non-tariff barriers has proved more difficult, as has the forging of a common external trade policy. However, in institutional terms, it is relatively less developed compared to its Latin American counterpart, the CAN.

Its decision-making process remains exclusively intergovernmental, based on the principle of unanimity. Overall, countries in Latin America exhibit similar patterns of inter- and intra-regional trade flows, as indicated in Table 2. With regard to the latter, in , The recent increase in inter-regional trade across the south has been triggered by the high Chinese growth rates and the recovery staged by the Asian tigers after the crises. In contrast, as evident in Table 2. Table 2. With the onset of the global financial crisis, intra-regional trade declined steadily until The review of both cases offers the opportunity to identify similarities and differences.

MERCOSUR was initially founded with the ambitious goal to 'accelerate the process of economic development in conjunction with social justice' by amplifying each member's respective market through regional integration. However, the integration process appears to have lost its early momentum. In particular, the economic turmoil experienced in the — period demonstrated its vulnerability. External shocks, such as the Asian crisis, led to severe macro-economic disturbances and a drop in foreign direct investment FDI flows in the Southern Cone. MERCOSUR's rudimentary institutional structures were unable to produce the economic and monetary cooperation required to withstand these shocks.

In the absence of a mechanism to deal with trade imbalances, unilateral moves, such as Brazil's uncoordinated currency devaluation in , created strong tensions among the regional trading partners, endangered the integration process and the future of the customs unions Paiva and Gazel Although a slight improvement Vaillant points to the unequal distribution of benefits as a crucial obstacle to trade growth and full economic integration Vaillant Thus far, only Brazil has profited from intra-regional trade.

The three smaller countries, Argentina, Uruguay and Paraguay, have been unable to access Brazil's markets. Such inequities tend to make regional integration efforts counterproductive. Non-tariff barriers NTBs and rules of origin RO procedures act as an incentive to locate investment and production in the dominant market while leading to deindustrialisation in the peripheral ones.

The constant disputes and conflicts between Brazil and Argentina on the subject of asymmetries and inequalities have to be seen in this context. To date, they have hindered the formulation of a common trade policy as a precursor to the longer term goal of a common market. However, the windows of opportunity are small.

Uruguay, has taken advantage of the free access to the Brazilian and Argentine markets. It has also extracted concessions from Argentina and Brazil by employing its veto power. In an effort to address its regional partner's concerns, Brazil has channelled investment in their direction, particularly towards Argentina during the s. Its oil and gas company, Petrobras, is a leading investor.

Argentina has also invested in Brazil, especially in connection with various industrial products. These cross-investment currents have also extended to Paraguay and Uruguay.

1 Introduction

Still, such strategies cannot offset asymmetrical economic power within the region. Paraguay has even less leverage within the framework and can only fulminate against regional economic disparities. These actions aim to strengthen the social dimensions of the integration process and to reduce inequalities. The creation of a Permanent Court of Dispute Settlement in was another step in the right direction. Last but not least, the block has re-emphasised its commitment to macro-economic and monetary cooperation.

As Espino and Azar point out, 'although, this progress is very slow and fragmented', it represents an important 'chance of stepping forward to build a shared space for sustainable development' Espino and Azar 4. Despite the identified shortcomings in MERCOSUR's institutional framework and trade performance, its overall purpose of creating a common market has been steadily reaffirmed. In order to advance and institutionalise the process of economic and monetary integration, the four member states have created two collegiate and inter-governmental organs.

The Common Market Group CMG — coordinated by the Ministries of Foreign Affairs — represents its executive body, charged with the implementation of CMC's consensual decisions through the initiation of practical measures for trade promotion, the coordination of macro-economic policies, and negotiations with third parties. The CMG is assisted by ten working groups in the areas of trade and customs issues; standards; trade related monetary and fiscal policies; infrastructure; energy policy; and the coordination of macro-economic policies. This commission is responsible for the technical negotiations required to design and enforce common trade policy instruments.

Although MERCOSUR has evolved — in spite of its political roots — as a predominantly commercial initiative, based on the successful implementation of a trade liberalisation programme, it has gradually incorporated a variety of non-trade issues in its agenda. Referring to the inherent 'trade and cooperation linkage', which distinguishes its integration scheme from a purely free trade agreement, such as NAFTA, the block seeks a broad cooperation process in a wide range of socio-political areas such as education, justice, environment, energy, technology, health and foreign policy.

Addressing these areas is considered crucial for the establishment of a 'community sense' and a regional identity, based on shared values and principles Costa Vaz This charter addresses labour issues and improved working conditions. Made up of national representatives of the different economic and social sectors, the forum serves as an advisory board to the CMC. The main objective of this Fund for Structural Convergence of MERCOSUR FOCEM is to develop competitiveness; to encourage social cohesion, particularly in the smaller economies and least developed regions; to support the functioning of the institutional structure; and to strengthen the integration process.

Presently, the fund is undercapitalised in view of the large number of people living below the poverty line in the Southern Cone approximately 95 million according to ECLAC This framework aims to foster regional sustainable development through the harmonisation of national environmental standards, the sharing of information on environmental emergencies, and research promotion for clean technology. Entering into force in June , the agreement focuses on the intra-regional elimination of environmental NTBs; the implementation of a bloc-wide system of environmental information sharing; the creation of guidelines for environmental emergencies, as well as for international environmental standards; and the introduction of a region-wide system of eco-labelling.

As the regional integration process proceeds towards the integration of policy disciplines, there is an increasing need to embed them in a strong and supportive institutional framework, which is capable of resolving disputes arising from treaty obligations. A key imperative, driven by MERCOSUR's distinctive intra-regional power asymmetries, is that the dispute settlement mechanism serves not only to prevent the escalation of retaliation measures, but also guarantees that the bloc's weaker states can effectively push the stronger ones to comply with their obligations.

In the early stages of the integration process, the governments were reluctant to establish an independent judicial body, preferring a flexible and cost-effective inter-governmental process based on political negotiations and an ad hoc tribunal. The Protocol of Brasilia for the Solution of Controversies provided two diplomatic measures consultations and claims , but only one arbitration procedure. While consultations are supposed to settle minor disputes through direct negotiations, claims are designed to resolve more awkward conflicts.

Such claims need to be initiated by a national section within the Mercosur Trade Commission. If the plenary session of the commission does not resolve the case, it is sent to a technical committee, which issues a non-binding recommendation to the Trade Commission. If there is still no consensus, the claim may be forwarded to the CMG, which may, as a last step, activate the arbitration mechanism. The arbitration proceedings finally take part under an ad hoc tribunal composed of three members. After a series of negotiations under the intervention of the CMG, mandatory and final determinations are issued.

In the repeated event of non-compliance, retaliation may be the ultimate response. This minimalist jurisdictional architecture, based on consensus and diplomatic cooperation, proved to be effective at the initial stages when interdependence was relatively low and political commitment high. Its shortcomings became apparent in the aftermath of Brazil's currency devaluation in when Argentina imposed unilateral trade barriers in order to protect its domestic market from the flood of Brazilian manufactures, the affected private parties had no institutional bodies within MERCOSUR they could revert to in order to redress their grievances O'Keefe Other claims were raised by the smaller states, lacking sufficient political leverage to ensure their unrestricted market access.

In a climate of retaliation, the absence of an independent supra-national court with permanent arbitrators becomes a serious hindrance to intra-regional trade. In order to minimise such trade disruptions and its political ramifications, the Protocol of Olivos introduced a number of innovations. Among these, the establishment of a post-decision control mechanism and the creation of a permanent review court were the most noteworthy Pena and Rozenberg 9.

The post-ruling control strengthens the obligatory nature of the arbitration decisions by invoking possible compensation in case of a member state's non-compliance. The Permanent Review Court has a twofold responsibility: reviewing the tribunal's decision; and providing an alternative to ad hoc arbitration, where the parties may submit their disputes directly to the court without having to go through the arbitration process. In a recent case, the tribunal met in Montevideo, Uruguay, to arbitrate the ongoing dispute between Argentina and Uruguay over a water-contaminating pulp mill plant to be installed close to the Uruguay River, a natural border between both countries.

The tribunal, assembled in early September , included legal representatives from both countries and a neutral arbitrator. Admittedly these are preliminary initiatives, but they pave the way for strengthening supra-national arbitration institutions in the Southern Cone. Tensions among member states had declined noticeably. In conjunction with their neighbours, the member states had intensified efforts to settle territorial disputes, 14 and conflicts in the field of trade and investment were mitigated through enhanced political cooperation and the institutionalisation of CBMs.

As mentioned, the concept of 'open regionalism' underpinned the integration process emphasising external opening, privatisation, deregulation and democratic governance. This approach reduced implicit and explicit security threats. In fact, such intervention effectively put an end to the persistent threat of military coups in the whole region Vasconcelos O'Keefe noted that the so-called 'democracy clause' in the Treaty of Ushuaia provided 'a way to strengthen weak democracies by requiring liberal democracy and respect for human rights as a condition for entry and continued access to the benefits of membership' O'Keefe Social and political conflicts, induced by the trade in narcotics and international terrorism, become more prevalent and produced spillover effects.

The need for a concerted regional response is clearly evident but not forthcoming. A major obstruction is the combination of interdependency and inequality within the region Bodemer Hafner-Burton and Montgomery's condition that 'trade institutions can keep the peace … when they create ties among states with relatively equal social positions within the international political economy' is far from being fulfilled in the Southern Cone Hafner-Burton and Montgomery The lacunae in macro-economic and monetary integration are a symptom of the glaring inter-state asymmetries, which inhibit further progress towards conciliation and integration.

Compounding these asymmetries are the diverging foreign policy objectives, expressed inter alia by Argentina's efforts to counteract Brazil's lobbying for a seat in the United Nations Security Council UNSC Brown et al. The popular backlash against globalisation and free trade in Latin America has stalled the politico-economic convergence process even further. There has been a re-emergence of nationalistic rhetoric and a revival of old protectionist import-substitution nostrums. The MERCOSUR undoubtedly exemplifies the positive connection between regional economic integration and security, yet the process is far from being complete.

Only by strengthening it with efficient conflict-solving mechanisms and instituting a fair and equitable distribution of benefits for all, will its members be able to secure peace in the long-term future. Its goals were to improve the conditions for participation of the less developed countries encompassed by the LAFTA agreements, while simultaneously aiming at the gradual formation of a Latin American Common Market. The Andean Pact attempted to compensate for its inefficiencies by fostering further integration.

The pact did not make much headway either. Venezuela's entrance in and Chile's withdrawal in created disarray among the members. They countered through institutional initiatives such as the creation of the Court of Justice and the Andean Parliament in However, these institutions lacked real weight — in neofunctionalist terms, 'form took precedence over substance' Malamud 10— Nonetheless, they set the institutional groundwork for a viable regional bloc.

This constitutes a set of bodies and institutions 'designed to allow for an effective coordination between them in order to maximize subregional Andean integration, promote their external projection and strengthen the actions related to the integration process'. Still, the CAN has not been uplifted by its network of institutions. This is in addition to efforts such as intelligence sharing and ending arms trafficking.

While these provide some regional sense of security, they do little to forestall internal conflict. Indeed, a new instability cycle has emerged in the central Andes. Michael Weinstein refers to the 'massive protest marches, roadblocks, the taking of official installations, regional rebellions, government alienation and an attempt by governments to extend their powers in an unconstitutional manner' Gonzalez and Luis 1—2.

In all the member countries, with the exception of Venezuela, subversive groups run riot, revealing the substantial capacity of the indigenous population for mobilised action. Similarly, treaties and declarations have done little to erase tensions caused by border disputes. The case of Ecuador and Peru demonstrates that '[b]oundary-related conflict occurs even between partners to preferential trade agreements' Dominguez et al. Border disputes between these two countries date back to , 'based on the imprecise borders drawn by Spanish authorities during colonization' Cooper The —41 war was settled with a demarcation of the border by a third party a Brazilian mediator, Braz Dias de Aguiar whom Ecuador did not accept.

Subsequently, despite a status quo agreement in , war broke out between the two countries again in International intermediaries, mostly from South America, negotiated a resolution to the chagrin of some nationalist groups. Currently, there is insufficient evidence to link reduced tension and political instability with CAN membership.

Nor does it explain why, despite such membership, intra-regional commerce is low, constituting only 10 per cent of total trade. However, this figure was registered in , after declining for two consecutive years CEPAL While intra-regional trade flows fall below what would be expected in a trading bloc, they are still significant compared to those recorded prior to the establishment of the Andean Free Trade Area AFTA. The bloc's overall trade performance does more to justify its continuation.

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