Realism, institutionalism, and the Asian economic crisis.

• Author: Acharya, Amitav

Introduction

The economic crisis in Asia has created a deep sense of gloom about the prospects for order and stability in the region. Most assessments of its political and security implications tend to be pessimistic.(2) In April 1998, a report prepared for the U.S. Congress by the Congressional Research Service warned that "a prolonged economic decline could fuel nationalism, undermine regional co-operation, and foster confrontation over long-standing territorial and other disputes."(3) The downfall of the Soeharto regime and the subsequent anarchy in Indonesia, the unravelling of efforts to bring North Korea into a cooperative framework, and the increased climate of inter-state tension in Southeast Asia are indicative of the far-reaching impact of the crisis on regional stability. Added to these is the potential of the crisis to reshape the balance of power in the region. Asian misgivings about the U.S. role in helping the region out of the crisis, the failure of Japan to provide decisive leadership, and China's ability to project itself as a responsible power by promising not to devalue its currency, are reshaping perceptions about their relative position and role in the regional strategic equation.

In conceptual terms, the crisis brings into sharp focus the competing visions of regional order put forward by Realism and Institutionalism.(4) Prior to the crisis, especially in the early 1990s, Institutionalism had challenged the traditional dominance of the Realist security frameworks in the Asia-Pacific. Now, Institutionalism is facing a serious credibility problem, largely because of the conflict-causing effects of the economic downturn and the weak response of regional institutions in dealing with them. While it is tempting to see the crisis as a triumph of Realism over Institutionalism, this article argues that their respective merits must be seen in a broader, long-term context. While Realist pessimism prevails in much of the region today, the crisis also presents opportunities for the Institutionalist cause, especially in view of the uncertainties about the balance of power and the demands for political change and institutional reform which it has generated. The Asian crisis is a double-edged sword. While delivering a powerful blow to the pillars of the old regional order, it has also opened up new possibilities for change, which, if properly exploited, might enhance regional stability in the long-term. To understand the prospects for this transformation, this article reviews the Realist and Institutionalist arguments before the crisis, and then assesses how the crisis has affected their respective positions.

Before the Crisis: Realism, Institutionalism and Regional Order

The Realist perspective(5) on regional order in the Asia-Pacific can be summed up in four general arguments. These arguments predate the Asian crisis,(6) although the latter has seen them reiterated with even greater vigour. First, Realists believe in great power primacy and the dependence of smaller and weaker states of the region on great power security guarantees. The management of regional order is more or less the exclusive preserve of the great powers. Smaller and weaker states, whether acting individually or through multilateral institutions, lack the capacity to play a managerial role in international crises and must therefore depend on the resources and leadership of the great powers. Realists dismiss the possibility of security self-reliance by weaker states. In the Asia-Pacific region, this scepticism had marked much Realist assessment of the drive towards self-reliance since the British withdrawal from "east of Suez" and the U.S. declaration, contained in the Nixon Doctrine, urging its Asian allies to assume a greater burden of their own defence. Moreover, neither national self-help, as manifested through the major effort at military modernization since the 1980s, nor Institutionalist strategies, such as ASEAN's idea of a Zone of Peace, Freedom and Neutrality (ZOPFAN), could, from a Realist standpoint, deliver small and weaker states from their dependence on external security guarantees.

A second strand of Realist thinking is the centrality of balance of power in the regional security architecture. In an anarchic international system (in the sense that a central governing authority is lacking), security is sought primarily through self-help. The prospect for order at the global or regional level depends critically on how power is distributed among the major actors. All self-help systems are characterized by power-balancing behaviour. Stability can only be ensured through equilibrium of power, while its absence results in war. In the Realist universe, neither domestic politics (such as democracy or authoritarianism) nor co-operative multilateral institutions can have much effect in managing the security dilemma. Stronger states seek to balance their rivals either through domestic means, and/or through alliances with other strong powers. Weaker states cannot balance stronger powers through domestic means - hence their tendency to rely on alliances with great powers who must provide credible security guarantees and general protection through their military presence and power-projection capabilities.

While the notion of balance of power generally means a rough parity among the major powers, in the Asia-Pacific region it had become a short-hand of U.S. military preponderance. Using a balance of power prism, Realists viewed the security and stability in the Asia-Pacific region as a function largely of U.S. strategic dominance. The latter served to balance the expanding Soviet presence in the 1970s and 1980s and kept regional conflicts under check. But as the Cold War, a rough but stable bipolar balance in the international system, came to an end, Realists foresaw the unleashing of conflicts that had been suppressed by superpower dominance. Moreover, the prospects for a new balance looked uncertain owing to the contraction of Soviet and U.S. forces in the region, and the rise of China. The latter was likened by some to the rise of Germany in the latter part of the nineteenth century, with predictions of similar catastrophic consequences. Regional order was seen to hang precariously on a U.S. military presence that was diminishing in size and declining in credibility against post-Cold War threats, although it still remained a better guarantee of stability than the fledgling experiment in multilateral security institutions.

A third element of the Realist view of regional order concerns the alleged pacific effects of interdependence. Borrowing from the liberal tradition that has evolved since Immanuel Kant, Adam Smith and Cordell Hull, Institutionalists argue that economic interdependence makes war less likely by increasing the costs of the use of force relative to non-military instruments.(7) Realists, on the other hand, see economic competition as a key dimension of anarchy, which keeps the state system locked into a perennial security dilemma. States in an interdependent regional or international economy do not forego the use of force against other states when the latter's actions are perceived to be damaging to the former's core national security interests,(8) such as sovereignty and territorial integrity.

In the Asia-Pacific region, the rapid proliferation of transnational economic links since the 1970s had been seen by Institutionalists as a positive force for regional stability. Realists, on the other hand, not only refused to accept any significant impact of interdependence in constraining military competition, but they also pointed to its substantial conflict-causing potential, including trade wars, and competition for resources and investment.(9) The Institutionalist argument that such competition would make regional governments even more willing to rely on regional co-operation and conflict management mechanisms such as the Asia-Pacific Economic Co-operation (APEC), failed to impress the Realists. Moreover, the presumed benefits of interdependence in the Asia-Pacific region were negated by economic asymmetries and the general incongruence of political values among the regional societies.

Fourth and finally, Realists are deeply sceptical of the ability of regional institutions in managing conflict and preserving peace. Realists acknowledge the existence of co-operative institutions, but view them as peripheral. Institutions merely reflect, rather than shape, the distribution of power. John Mearshimer, a contemporary neo-Realist, has argued: "institutions are ... based on the self-interested calculations of the great powers, and they have no independent effect on state behaviour. Realists therefore believe that institutions are not an important cause of peace. They matter only on the margins."(10) In the Asia-Pacific region, the ASEAN Regional Forum (ARF) had been viewed by some Realists as a mere "talk shop", even at birth. Michael Leifer likened the ARF to a "brick made without the straw", arguing that to succeed, multilateral institutions require "the prior existence of a stable balance of power".(11) Viewing ASEAN's leadership of the ARF as a structural flaw, Realists questioned whether multilateralism, initiated and led by weak states, could regulate the balance among the major powers of the region.

Before the economic crisis, Institutionalists(12) could respond to these assessments with some degree of optimism and confidence. Institutionalism in Asia had gained considerable momentum, especially during the first half of the 1990s, when ASEAN took on a more direct managerial role in regional security while the ASEAN Regional Forum was set up to help manage the strategic uncertainties of the post-Cold War period. To be sure, the claims of Asian Institutionalists concerning the pacific effects of multilateralism were more qualified than Western theories of liberal-institutionalism. They saw...