How Should the Atlantic Community View the Asian Community?

Before the recent Asia issue of Internationale Politik, the emerging Asian community did not receive much attention in the Atlantic Community. Inversely, European integration as inspired by American functionalism has attracted intense Asian interest for decades. The imbalance of attention is not in the Atlantic community’s own best interest. Here are six proposals to reduce the Atlantic deficit.

The first concerns political theory. The postwar international order was inspired by American idealism: Atlantic Community, United Nations, Bretton Woods system, Europe’s integration. Asia’s integration should therefore appear familiar and welcome, if not to political realists, at least to idealists. Instead, today’s contending Hobbesians and Lockeans agree on one thing: discounting Asian integration. Realists consider functional integration unrealistic anywhere, be it in Europe or Asia. European idealists perceive Asia as divided by power politics, cultural diversity or nationalism, and therefore incapable of applying the European pattern. Both schools should prepare themselves for refutation by Asian evidence.

Second, we need to revisit functionalist integration theory. If its (American) founding fathers could see the Asian evidence today, they would classify it as an advanced stage in the promotion of peace and prosperity between former enemy nation states through mutually advantageous exchange of goods, capital, services, infrastructures and information. Like Europe’s nation states, most ASEAN and ASEAN+3 states are former enemy states. The Philippines, Malaysia and Indonesia, on the brink of war over Borneo, thought better of it and, prodded by Singapore and Thailand, instead became cofounders of ASEAN in 1967. Today, China and Vietnam are linking their portions of the “Asian highway” at Lao Cai, theater of their bloody war for influence in South East Asia in 1979. However, the Asian case of functional integration exhibits a sequence of trade integration and institution-building strikingly different from the European case. Asia’s integration began with a classic functionalist pattern: enterprise-driven flows of foreign direct investment and trade despite tariff barriers. By 1997 already, intraregional trade accounted for 51 percent, close to Europe’s 62 percent. Asia’s economic institution building began only in 1997 in reaction to the Asian financial crisis. By contrast, Jean Monnet’s Europe needed first neo-functionalist strategy, i.e. the building of supranational institutions, before two-thirds of Europe’s trade finally flowed into the bed prepared by the customs union, the single market, and the currency union. This difference is certainly not a sign of dysfunctional weakness in Asia’s pattern of integration.

Third, we must realize what the Asian community may mean for the world economy and the international system. With Japan, it includes the second largest mature economy after the US, with China and India, the biggest emerging economies. American Palmerstonians have globalized the model of Europe’s 19th century balance-of-power pentarchy: US, Russia, China, India and Japan. Europe has disappeared in the process. Asia emerged with the majority of the players. American idealists may focus on the peaceful, autonomous spread of democracy in Asia and the free trade opportunities in ASEAN’s project to create an Asian trade zone of 3 bn people with an annual production of $ 9.000 bn. In the US subprime crisis, investors considered Asia’s emerging markets for the first time as “safe haven”, one sign this crisis may be a turning point for the world. Eminent economists discuss an Asian monetary regime. America continues to wield the greatest power and wealth for the foreseeable future, but it can no longer manage the world order alone, not even with Europe’s undivided support.

Fourth, ideological rearmament such as Robert Kagan’s vision of a struggle of Western liberalism against Chinese and Russian autocracies or Edouard Balladur’s plea for a “union occidentale” circling the wagons against Asia’s rise is certain to feed the media’s hunger for big words. The convergence of neo-conservative and Gaullist paranoia is striking. But like all paranoia, it is full of risks and empty of solutions. The Atlantic Community should heed the lessons of the Iraq war and return to a more rational path.

Fifth, the Atlantic and Asian communities’ interests overlap functionally. For any of the most pressing multilateral issues, from climate change to non-proliferation, Asia’s contribution is indispensable. Foreign Minister Steinmeier’s call for partnership should be heard.

Sixth, the Asian case contains useful lessons. Asia’s functional integration avoids the contention between idealism and realism. It is the result of political and entrepreneurial decisions with strategic pragmatism. Europeans dismissing pragmatism as opportunism err. According to Kant, the necessity to decide exceeds the possibility to know. This makes strategic pragmatism ethically superior to dogmatism. As a philosophy, pragmatism was developed in America by Charles Peirce, William James and John Dewey. Today’s Asia stands out by strategic practice of that philosophy: Setting ambitious goals, but without ideological bombast, working with long-term horizons, but always ready for trial and error. Inspired by America’s best philosophy, Europe should learn from Asia.

Is Asia’s integration less functional than Europe’s ?

If we are asked, whether there are any differences between Asian and European integration processes, our answer is yes. There are strikingly different sequences of classical functionalist and neo-functionalist processes and evidently different levels of strategic reliance on one or the other of these two patterns of integration.

Is Asia’s integration less functional than Europe’s because it follows similar patterns in a different sequence and with a different emphasis than Europe ? Our answer is no.

Many of the eminent Asian authors cited in our previous post and in the November 2007 issue of Internationale Politik—Global Edition refer to the European experience when analyzing Asian integration. Ong Keng Yong emphasizes the discerning use of “low politics” in functional cooperation and “high politics” on strategic issues. This is precisely the differentiation the American creators of neofunctionalist integration theory led by Ernst B. Haas had recommended to the Europeans for overcoming inevitable crises of trust in the process of building a community.

Ong Keng Yong and Qian Qichen underscore the tension between unity and diversity. This sounds like a variation on a European theme, though the differences between development stages and political systems are still much larger in Asia than in Europe. Both authors underscore the necessity of a step-by-step process similar to the “incremental” approach recommended by American integration theorists to European policy makers.

Nonetheless, the ASEAN Charter, which will be signed at the ASEAN summit in Singapore in November 2007, is a document that can be termed a “constitutional framework,” as it is by Ong Keng Yong. It will presumably go into effect before the European reform treaty, which, since the rejection of the European draft constitution, may no longer be called a constitution. Perhaps that is because ASEAN has a much leaner institutional structure than the European Union, doing without a supranational commission of the European type. The ASEAN Charter is content with a standing committee of the permanent representatives of member states in Jakarta, comparable to the European Union’s Committee of Permanent Representatives (COREPER) in Brussels. The secretary general has a mandate to monitor the implementation of ASEAN agreements and decisions.

Does this leaner institutional structure mean that functional integration and community-building in Asia have less potential than the same processes in Europe? This would be a premature conclusion. To be sure, the Asian case exhibits a sequence of economic integration and institution-building strikingly different from the European case. As early as 1997, intraregional trade accounted for 51 percent of total foreign trade conducted by all the states in East and Southeast Asia, surpassing NAFTA’s 45 percent and coming within range of the European Union’s 62 percent. Asia’s integration began with a classic functionalist pattern: enterprise-driven flows of trade and foreign direct investment even across customs boundaries.

By contrast, Jean Monnet’s Europe had to start with neofunctionalist strategy and the building of supranational institutions before two-thirds of the trade flows posted by European member states finally flowed into the bed prepared by the customs union, the single market, and the currency union. This difference is certainly not a sign of dysfunctional weakness in Asia’s pattern of integration.

Asia’s interest in creating institutional structures in the economic realm was first triggered as late as 1997 by the Asian financial crisis. Haruhiko Kuroda was among the authors of the Chiang-Mai initiative for cooperation on monetary policy, the response by ASEAN+3 to the sudden drain of international capital. It was reminiscent of the numerous neofunctionalist spillovers through which Europe rallied and converted dangerous crises into ever-higher levels of institutional integration.

If the enormous currency reserves held by China and Japan are added together, the swaps that the two countries can provide to the other ASEAN+3 countries have the potential to eclipse the resources of the International Monetary Fund by far. Initiatives to create an Asian bond market as a way to channel Asian savings into Asian investments are being continually enhanced. See the article “How ‘Asian’ will Asia be in the 21st Century” offered for download on our website.

In carefully weighed words, Kuroda describes the possibilities for cooperation on financial and monetary policy in Asia. The brevity and cautious formulation of his paragraph on a common currency basket for ASEAN or ASEAN+3 (the latter including Japan and China) is understandable after the stir caused last year among Western observers by his proposal for an Asian currency unit patterned on the European currency unit in an earlier phase of Europe’s monetary integration. But one needs to read between the lines. Kuroda comments that Asia, unlike Europe in the run-up to the currency union, has no anchor currency like the German mark. This is not a rejection of the idea of Asia’s having its own model of currency integration, however. He diplomatically leaves unsaid that Asia has not only one but two anchor currencies—China’s and Japan’s.

A “common currency” does not need to be a single currency like the euro; national currencies need not be surrendered. It can be based on a basket of several anchor currencies provided it is possible to overcome the kind of competition for political prestige seen in the period predating the European currency union.

The fact that the exchange rate between the yen and renmimbi has meanwhile become remarkably stable (and that both currencies tend to move parallel to the dollar and the euro) can be explained by the economic interdependence of the two countries. (China is now Japan’s most important trading partner, surpassing even the United States.) Japanese economists like Kuroda have not been the only ones who have been thinking about Asian monetary integration for some years. Chinese economists have been pondering it too, and they are encouraged by the American “father” of the theory of optimal currency areas, Robert Mundell. At a conference organized by Beijing University in May 2002 on the subject of Asian economic cooperation in the new millennium, he was asked whether Asia needed a common currency. His response: “My answer is yes.”

Are the prospects for conciliation between Japan and its Asian neighbors as good as those between Germany and its European neighbors ? Our answer is yes, although we hasten to add, particularly to our German compatriots, that Germany’s and Japan’s burden of history are not comparable, since Japan’s history does not contain anything like the Holocaust.

In his essay in the November 2007 issue of Internationale Politik, the Editor of the liberal Japanese daily Asahi Shimbun, Yoshibumi Wakamiya disagrees with European skeptics of Asian integration who are still inclined to forecast that any Asian integration attempt will run aground on the rocks of Japanese and Chinese nationalism. He points out that it was Shinzo Abe who broke the political ice on the economically so hot Sino-Japanese relationship at the beginning of his short premiership in 2006 by visiting Bejing and abstaining from worship at the Yasukuni shrine. Rather than discounting this success as the result of opportunistic tactics of a political novice, we should extend the analysis to the remarkable fact of the Chinese willingness to accept Abe’s conciliatory gesture. Seen from this angle , it looks like Hegels’s “cunning of history” that it was left to Abe, grandson of Nokusuke Kishi, and thus heir to a political family associated with Japanese nationalism, to reopen the path to Sino-Japanese reconciliation. Wakamiya describes the long sequence of Japanese efforts to address the burden of Japanese history in relation to China and Korea.

The task of reconciling Japan’s former wartime enemies is in good hands with the present Prime Minister, Yasuo Fukuda, who succeeded Abe in September 2007. He can be expected to revive the “Fukuda doctrine” of his father, Takeo Fukuda, who was the first to place national policy toward Japan’s neighbors on an ethical basis, when he was Japan’s Prime Minister in 1978. Together with Helmut Schmidt, Takeo Fukuda later founded the Interaction Council whose aim is the global promotion of an ethical orientation of policy.

Read more in our article “The Road to an Asian Community” offered for download on our website.

Why Europeans discount Asia’s integration, wrongly

On the rare occasions that Europeans think about Asia’s integration, they seem to suffer from amnesia. Forgetting the impediments, setbacks, and crises that Europe had to overcome in the course of its own integration, they do not see much chance of success for functional integration and community-building in Asia. Rivalries between the great powers are said to be too great, nationalism too sensitive, cultural differences too large, ideological rifts too deep, markets too controlled, monetary cooperation too implausible, and competition for energy sources and raw materials too intense.

What many Europeans forget is that in 1945 few would have held out much hope for something like the Coal and Steel Community, which was established just six years later. And after the founding of the Fifth Republic in 1958, few figured that the French would consent to the United Kingdom entering the European Community (EC) in 1973. After all, had de Gaulle not resolved to bind Germany to France in the European Economic Community in order to counterbalance the Anglo-Saxon powers?

Few recall today that the project of forming a currency union seemed dead after the Werner Plan foundered on French mercantilism in the 1970s.1 Then it would have been unimaginable that a socialist president of France, François Mitterand, —fearing German preponderance in Europe after the fall of the Berlin Wall—would become the driving force behind a European currency union. His motive, to wrest the Bundesbank’s monetary policy hegemony from united Germany, has also been forgotten, in Germany the more so since German industry benefited hugely from the introduction of the Euro.

Europe’s loss of memory concerning its own experience of successful integration may also be understandable in view of present anxieties. Once again, with Nicolas Sarkozy, France has a rather mercantilist president, and he expresses dissatisfaction with a European Central Bank which, though led by a Frenchman, “outbundesbanks the Bundesbank” in the view of most anglo-saxon economists. Belgium, a founding member of the European Community as well as host to the “capital” of the European Union, threatens to disintegrate on the basis of language. “New Europe” seems driven by very old instincts of nationalism. “Idealism is mugged by reality”, a British realist writes triumphantly, though just a little worried. No wonder the rest of the world is seen through this prism, too.

But as confirmed by eminent Asian authors in the November 2007 issue of Internationale Politik, the trend is going in the opposite direction in Asia, where functional integration and community-building are understood as a strategy for the future. What had to be initiated in Europe with the political theory of idealism is in Asia the result of political and economic decisions inspired by strategic pragmatism. European idealist with a dogmatic frame of mind wrongly mistake strategic pragmatism as opportunism. As explained in more detail in our first post and in our web site www.schmiegelowpartners.com, pragmatism was developed as a philosophy by Charles Peirce, William James and John Dewey in the late 19th and early 20th century. But in more recent decades, the most impressive patterns of strategic pragmatism can be found in Asia. Since according to Kant, the necessity to decide excedes the capacity to know, strategic pragmatism is ethically superior to dogmatism.

Seeking the “win-win situations” described in Internationale Politik by both ASEAN’s former Secretary General Ong Keng Yong and China’s former Foreign Minister Qian Qichen, such strategic pragmatism has created impressive results over time.
The economic, sociocultural, and security policy ties of East and Southeast Asia described by Asian Development Bank President Haruhiko Kuroda and the President of the Japan Foundation, Kazuo Ogura, are strikingly reminiscent of the functionalist and neofunctionalist strategies of the European Community’s founding fathers, albeit in a different sequence. Whoever thinks Asian monetary cooperation is inconceivable should carefully read Kuroda’s essay. Building on ASEAN, ASEAN+3, and the East Asian Summits (EAS), the method of community-building established by the ASEAN states links the political, economic, and ecological objectives explained by Ong Keng Yong. It does so with an impressively realistic sense of the balance of power among Asia’s great powers. The fact that the heads of government of India, Australia, and New Zealand have been invited to the EAS since 2005 demonstrates a pragmatic usage of the geographical term “East Asia”. The network of asymmetrically overlapping regional organizations is developing as dynamically in Asia as in earlier phases of European integration.

Kazuo Ogura’s analysis of the historical commonalities of Asian cultures, their displacement by Western modernization in the form of colonialism, and their resurgence now casts doubt on the assertion by Western observers that the very lack of a shared culture prevents Asia from becoming a community. Yusuf Wanandi’s idea of an East Asian Community sharing the responsibilities of global governance is a strong indication that the concept of a forward-looking policy that Germany’s foreign minister, Frank-Walter Steinmeier, expounds once more in the same Asia issue of Internationale Politik as a way to manage the global challenges of the future will find receptive partners in Asia.

Read more at our web site or download the article “The Road to an Asian Community” by Michele Schmiegelow and Henrik Schmiegelow offered on our site or at www.internationalepolitik.de.

Asia is shaping the International Order

If the western community of values is complaining today about the decline of the international order, it has two cognitive problems. One is with itself and one is with that part of the globe it senses, with mixed feelings, will shape the economics of the 21st century—Asia. The West’s problem is a crisis of classical American idealism. It had inspired the international order after World War II: the United Nations, the financial system of Bretton Woods, the functional integration of Europe, and the determination to overcome colonialism as demonstrated in the U.S. rejection of Great Britain’s and France’s intervention during the Suez crisis.
Of course, political realism never yielded entirely as a countervailing doctrine among the elites of America and Europe. Under Nixon it even determined American foreign policy for the first time. But when Henry Kissinger played the “China card” in the then-bipolar play of forces, he remained committed to the maintenance of international order, especially arms control policy with the Soviet Union. Despite various differences, the same was true for the Reagan and George Bush administrations.
The rupture came in the George W. Bush administration, with its mix between balance-of-power policies and the belligerent idealism of the neoconservatives. In 2003 this mix discharged in the Iraq war. Robert Kagan interpreted idealistic America as a “dangerous nation.” To Europeans, who until then had been putting Kant’s paradigm of democratic peace into practice in Europe, realism suddenly suggests itself as an antidote to dangerous idealism. The western community of values is no longer always of one mind even in the international order it created and for that reason speaks of its decline.
All the while, Asia is showing the world that the international order’s decline or continued development is not a matter for the West alone to decide. At the multilateral level the West already knows that it depends on and is even pressed by Asian involvement, particularly by China, India, and Japan . The West’s greatest cognitive challenge, however, is the process of functional integration and regional community building in Asia, which is becoming an ever more attractive pattern of international order for half of the world’s population and the most dynamic part of the global economy. To the extent that western elites are aware of this process at all, most of them do not believe anything can come of it. Political realists consider functional integration unrealistic in both Europe and Asia. European idealists perceive Asia as molded by balance-of-power politics, cultural diversity, or nationalism, and therefore do not think the region capable of applying the European pattern. Both realists and idealists of the West have to prepare themselves for an uncomfortable refutation of their somewhat condescending assumptions by Asia’s strategic pragmatism and transcultural values.

Read more at our website or download the article “Asia’s International Order” here.

What is Strategic Pragmatism?

We coined this concept in 1989 when writing our book “Strategic Pragmatism: Japanese Lessons in Economic Theory“

In terms of philosophy of science we are indebted to Karl Popper’s critical rationalism, which approaches any problem solving with the insight of human cognition being fallible. From this insight follows the necessity of seeking solutions to problems with what we call “strategic pragmatism”. The pragmatism we advocate is a philosophy developed by Charles Pierce and John Dewey, which considers theory to be in the service of practice and not the other way around. This philosophy eschews dogmatism. It reflects the awareness that all human knowledge is always just temporary. It demands readiness to act across the cleavages of dogmatic dissension, but also to correct and adjust one’s own action as soon as dysfunctions are recognizable.

A distinctive mark of Strategic Pragmatism is its focus on echeloned time horizons for what can be achieved short term with immediate impact based on the newest and best available knowledge, what requires more structured development over the medium term with constantly adjusted knowledge, and what can only be set as a long-term target involving fundamental reform or innovation, but with still high degrees of scientific uncertainty. If a goal is not immediately attainable, this does not necessarily justify the conclusion that it is impossible to attain. Strategic Pragmatism distinguishes itself from static dogmatism by its intensive focus on each phase of the time horizon.

Visit our website if you want to read more about examples of Strategic Pragmatism in the following areas:

• Foreign policy
• Economic policy
• Business strategies
• Environmental strategies
• Location strategies
• Development policy
• Legal transformation policy

We are pleased to see that many others have come to use the term for the last ten years though rarely in the full sense of the philosophical concept as we defined it almost twenty years ago. Once more, Strategic Pragmatism as we define it requires of policy makers:

1. Awareness of the fallibility of one’s own judgment
2. Eschewing dogmatism of any kind
3. Readiness to correct and adjust one’s own action as soon as dysfunctions are recognizable
4. Focus on echeloned time horizons: short / medium / long
5. Using newest and best available knowledge in the short term
6. Seeking more structure development over the medium term with constantly adjusted knowledge
7. Long term targets even though it means working under scientific uncertainty

Some people confuse Strategic Pragmatism with unprincipled “muddling through”. That is wrong for two reasons:

1. Strategic Pragmatism is based on critical rationalism, that is the universally accepted standard of science.
2. Strategic Pragmatism as we define it is not unprincipled, but guided by transcultural ethical standards (if you want to learn more about this, read “Preventing the Clash of Civilizations: A Peace Strategy for the Twenty-First Century” or the chapter ‘Cultures, Power, Economics and Civilisation’ in “Democracy in Asia“).

This post is intended to explain our method in our work as Analysts & Policy Advisors. It may also clarify some of the misunderstandings of the term Strategic Pragmatism that may have arisen from its use by others in the past 10 years.

Don’t hesitate to comment or offer any constructive criticism.

Henrik and Michèle Schmiegelow (Schmiegelow Partner GbR)

About us

Having retired from public service, we (Henrik & Michèle Schmiegelow) have founded Schmiegelow Partners in response to demand for international policy analysis and advice from both public and private sectors. Our aim is to make 25 years of experience in public service and academic research available for international policy analysis and advice.

We have created this Blog to offer a forum of discussion about policy analysis in the following areas:

1. Foreign policy
2. Economic policy, focusing on German, Japanese and US patterns
3. Business strategies
4. Environmental policy
5. International Legal policy

More about us:

Henrik Schmiegelow: former German Ambassador to Japan, Head of Policy Planning and Foreign Policy Advisor of German Presidents von Weizsäcker, Herzog and Rau.

Michèle Schmiegelow: Professor of Political Science and International Relations at the University of Louvain, Louvain-la-Neuve, Belgium.

In our previous work for the German Foreign Office, the President’s Office, the University of Louvain and the Global Economic Strategy Center asbl, Blanmont, respectively, we have each focused on issues of foreign policy, economic policy, business strategies, development and transformation policies, environmental protection, and location policies. As a method, we have developed “Strategic Pragmatism” guided by transcultural ethical standards.

To learn more about us and our ideas, we kindly invite you to visit our website where you will find an explanation of our method and a list of all our previous publications and previous advisory work.

Please feel free to comment or contact us directly (info@schmiegelowpartners.com) for any question you may have.

Enjoy your reading,

Henrik & Michèle Schmiegelow