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Analysis
EU still offers example for Asean

EU still offers example for Asean

Crab-like deal-making in Southeast Asia

by National University of Singapore authors

Fri 21 Jul 2017

For a long time, the European Union was the ideal model for countries looking to strengthen ties with neighbours. But the appeal of globalisation and cross-border integration appears to be lessening in some parts of the world. Britain's vote to leave the EU, Donald Trump's election to the US presidency and his dismissal of the Trans-Pacific Partnership signal a turn towards populism in advanced economies. The European experiment, too, is under pressure, tested by the rise of nationalist politics.

For the Association of Southeast Asian Nations, the EU serves as an example of what might one day be possible. This makes the current travails of the EU especially significant and sobering for Asian policy-makers, even if Europe and Asean have not tread identical paths towards union. The Asean Economic Community offers far looser integration than the EU. Its agreements focus on freedom of movement of goods and services, rather than of people.

Monetary union or a common currency are not on the Asean agenda. Instead, the bloc is approaching integration with an eye towards creating room for its diverse and rapidly expanding economies to grow. This has meant embracing flexibility – power is decentralised and there is no one-size-fits-all policy.

Europe's troubles have reinforced convictions among some Asean policy-makers to ignore the EU example, according to Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy in Singapore. 'The EU has always been rigid and legalistic, while Asean has always been flexible and pragmatic. Asean believes in the principle of "Asean minus X". Countries that are ready will proceed first – other Asean members can join in later.'

Arguably, this kind of pragmatism is necessary to accommodate the significant cultural diversity and much wider range of economic development in Southeast Asia. In Europe the income gap between the richest (Denmark) and poorest country (Bulgaria) is around eight times, while in Asean it's more than 30 times (between Singapore and Laos).

'Asean often moves like a crab: it takes two steps forward, one step backwards and one step sideways,' says Mahbubani. 'Viewed in slow motion, it might look like a crab moving around in circles. Yet, miraculously, when one analyses Asean's progress decade by decade, it makes great strides.'

Bilateral deals with patron states like China can present challenges to Asean cohesion, but the bloc has a way of diffusing simmering tensions. Ultimately the group's success will be judged by the stability it can bring to the region, whether on economic, political or security grounds. Brussels' renewed efforts towards reforming the EU show that political discord need not be fatal.

The Asean Economic Community will help bring member nations closer together as they contend with shifts in the global economy. Its size and diversity present promising opportunities: Asean GDP is projected to more than double by 2020, and the bloc could become the world's fourth largest economy by 2050. To achieve this end, more crab-like deal-making will be critical.

This is an edited version of an article from Global-is-Asian, the digital platform of the Lee Kuan Yew School of Public Policy, and reproduced here with the permission of the National University of Singapore.

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