Asia-Europe Pilot Project: Global Governance in Asia: Through the Looking Glass of the European Sovereign Debt Crisis
The question of how to address collective action problems in the 21st century needs to be discussed in the context of the debate about the future of the Western liberal order. The United States led order is becoming increasingly challenged by the gap between hugely increased geographical, functional, and normative ambitions of international society and the lack of means to deliver them. On the one hand, the complexity of the post-Cold War economic and security environment seemed to generate the demand for stronger states, stronger international institutions, and new forms of global governance. On the other, we have seen the re-establishment of concert-like structures – G-x groupings such as the G-20 and the BRICS – to promote a more traditional, top-down management of risk, uncertainty, and conflict. The tensions between new forms of institutionalised governance and older forms of diplomatic action, especially involving established Great Powers and rising ones, are the defining features of the contemporary global order.
The challenges of global governance have become particularly evident in the wake of the recent global economic and financial crisis marking the end of the so-called Washington Consensus and raising questions about the underlying principles of future global governance. Many predict a shift of power towards the East, and argue that the Western liberal order has lost its legitimacy. With the rise of China, India, and Brazil, new centres of gravity are emerging. The capacity to shape outcomes will be more dispersed in a global multipolar order.
The Asia-Europe Pilot Project (AEPP) takes up these challenges. We narrow the focus of the excessively broad global governance discourse by examining a specific collective action problem, that is, the European Sovereign Debt Crisis. While the debt crisis can be considered a regional problem of the European Union, the repercussions are global, given the complex interdependence of our international economy. The crisis epitomises the paradox underlying 21st Century global governance: we increasingly rely on state government and regional and global institutions at a time when their authority to deliver is severely eroded. While regional integration in post-World War II Europe has demonstrated the potential of state sovereignty pooling in order to lower transaction costs and maximise Pareto-benefits, the European Sovereign Debt crisis in the early years of the 21st Century illustrates the limits of collective action problem-solving amongst like-minded democracies.
What are the implications and lessons to be learnt for East and Southeast Asia? What is Asia’s answer to the pressing demands for closer cooperation and deeper integration resulting from growing intra-regional trade and investment? With the problem-solving capacities of Asian regional fora still relatively underdeveloped, the need to engage in a major debate on how to strengthen collective action is particularly strong in this part of the world.
