EU-China relations: balancing political challenges with economic opportunities

During 2005, the European Union and China marked 30 years of diplomatic relations with much fanfare. Celebrations surrounding the anniversary however belied the fact that throughout most of this period the European Union and China remained largely aloof from one another. The strengthening of EU foreign policy over time, as well as the economic reforms and new outward orientation exhibited by China have changed the dynamics of the relationship. Both sides are increasingly recognizing the potential mutual benefits that can be accrued from a closer relationship. This paper assesses EU-China relations from both economic and political perspectives. In terms of economics, it is clear that the EU must build stronger relations with China if it is to accrue the benefits of access to an expanding market with over one billion people. To do so successfully however, the EU will have to reconcile the economic and political components of its foreign policy. The EU continues to challenge the Chinese government to reform its practices on a number of issues including human rights, democratic reform, and Tibet, all of which remain bones of contention. How the EU achieves the balance between political constraints and economic opportunities is the primary focus of this paper.

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The EU/China relationship: not seeing eye to eye?

I consider the endeavours exerted by the EU to develop the relationship with China which it formalised in its 1995 document ‘A Long Term Policy for China-Europe Relations’ (COM(1995) 279 final). I then examine China’s responses which culminated in 2003 when China produced its first ever ‘China’s EU Policy Paper.’ The reasons for this long gap between initiation and response are then explored. Since, obviously, the EU has been driving the relationship, the rationale for this is then looked into and detailed data is provided to support it. Finally, the nature of China’s reciprocation is entertained before the paper concludes that the relationship appears to mean more to the EU because China perceives the EU as only having a limited role within China’s overall global aspirations, of becoming a world power in economic terms, resulting from its impressive rate of economic growth, increasing R&D expenditure, and continually enhancing sophistication of its technology, and politically with its developing links and military prowess.

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Operational oceanography in Indonesia

In 2005 Indonesian and European institutes joined to start the first step for the implementation of an Ocean Operational System in the Indonesian archipelago. The system will support the decision making process for the sustainable use of marine resources, providing useful information and added value products as well as a service for an improved management of the sea with high business impact to targeted groups as public authorities and commercial operators (coastal managers, fishermen, shipping companies). In this paper the System is shortly described with its potential benefits and economic and social impacts.

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The European Union, the Doha Round, and Asia

Agriculture has been the most contentious issue in the Doha Round of multilateral trade negotiations, and the European Union (EU) intervenes substantially in agricultural markets. This paper reviews these interventions in light of the EU’s participation in the Doha Round of multilateral trade negotiations with specific attention to Asia. It concludes that the offers made by the EU were designed precisely to avoid any real liberalization in its agricultural markets and have undermined the development aspirations of the round.

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Regional energy cooperation in North East Asia: Lessons from the European Experience

The three major oil importing countries of Northeast Asia—China, Japan and South Korea—are concerned about future security of energy supplies to fuel their dynamic economic activity. Currently all three countries are highly dependent on imports of oil from the Middle East, a region with inherent political instability. Russia’s rich reserves of oil and gas in Eastern Siberia and the Russian Far East offer an obvious alternative. Given the geographical proximity of Russia and its desire to increase its energy exports to Northeast Asia, there is huge potential for cooperation. So far there has been no real intra-regional cooperation and no common external policy towards Russia. Despite obvious differences between Europe and North East Asia, the European model of energy cooperation, developed over the past 50 years, offers some useful lessons.

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IMF conditionality: An approach based on the theory of special interest politics

Financial assistance provided by the International Monetary Fund (IMF) and other International Financial Institutions (IFIs) aims to help member countries reduce their economic policy distortions. Because these distortions are endogenously generated, it is important to understand how IFI assistance interacts with the domestic political economy. In this paper, we review recent models of IFI conditional assistance that are based on the theory of special interest politics (Grossman and Helpman 2001). In these models, governments adopt inefficient economic policies and instruments because of lobbying by interest groups. IFI assistance helps reduce these inefficiencies, at least under perfect and symmetric information, and provided IFIs are representative of the general public in creditor and debtor countries. Factors limiting the effectiveness of conditional assistance as an incentive system are also identified. These are related to information asymmetries, the potential for political instability in debtor countries, and the IFIs’ own financial solvency.

Knowledge hubs along the Straits of Malacca

World history has known areas of relative isolation and areas of high intensity of cultural interaction. The Mediterranean Sea, the Silk Road or the Straits of Malacca can be cited as such crucial contact zones. Within these areas, centres sprung up that served as interfaces between cultures and societies. These “hubs” as we would like to call them, emerged at various points throughout the contact zones, rose to prominence and submerged into oblivion due to a variety of natural calamities or political fortunes. This paper assesses the rise and fall of trade and knowledge hubs along the Straits of Malacca from before colonialisation until today. Historical hubs of maritime trade and religiosity today increasingly establish themselves as educational and knowledge hubs. This leads us to speak of the Straits of Malacca as a chain of—not pearls—but knowledge hubs with Singapore as the knowledge hub in the region shining the brightest of all, as the data suggest. We aim to conceptually grasp this development by suggesting a model or at least a hypothesis about the rise and movement of knowledge hubs in general.

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European presence in Indonesia

This paper describes the European Union (EU) presence in Indonesia. It firstly discusses the reorientation of EU relations with Indonesia. It might be argued that the reorientation has been supported dominantly by economic and political motivations as consequences of the EU’s internal dynamics (such as single market; CFSP), the global dynamics and the rise of inter-regionalism. Secondly, current economic relationships show that the EU presence has been very significant for Indonesian economy, in term of international trade, investments, foreign exchange rate, debt, development assistance and business activities.

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From intergovernmental to global: UNESCO’s response to globalization

Whilst there is an ever-growing literature on the economic and political aspects of ‘globalization,’ at present there are few studies analyzing how intergovernmental organizations have reacted to this phenomenon. This article aims to fill this gap by analyzing the response to globalization of UNESCO, one of the least studied organizations of the UN constellation. Addressing the global orientation of some of the current programs, this article shows how a recent re-evaluation of scientific humanism—the main philosophical framework contributing to the creation of UNESCO—has influenced both UNESCO’s self-understanding and its understanding of globalization. Scientific humanism is a philosophical utopia that couples the advance of scientific knowledge with the diffusion of a common philosophical framework and promotes a universal system of education in order to establish a global community. Based on the philosophical appeal of a culture of peace based on science, humanism and human rights, UNESCO’s representation of globalization represents an intriguing example of how our global future may be conceived and, to some extent, realized.

The implementation of IMF programs: A conceptual framework

IMF supported programs have conventionally been assessed by examining their effects on intermediate variables and final outcomes. More recently greater attention has been paid to their implementation, on the assumption that in order to work programs need to be implemented. Empirical studies have begun to include political economy variables in an attempt to explain implementation. They have used the concept of ‘ownership’ to provide a theoretical foundation. This paper provides an alternative and simple conceptual framework based on the marginal benefits and costs of implementation. It goes on to discuss policies that might be expected to improve implementation based on this framework.

Should it be curtains for some of the IMF’s lending windows?

Increasing attention is being paid to IMF governance and operations, but not to how IMF programs are differentiated under the array of available lending windows. This paper examines empirically the economic and political circumstances associated with the use of IMF facilities. It therefore extends existing research into the determinants of IMF arrangements by investigating the extent to which different influences are at work in the case of different facilities. Focusing initially on extended arrangements as compared to stand-bys, the results indicate that although initially the facilities were used in different economic circumstances, since the mid 1980s these differences have largely disappeared. Instead the differences between user countries have become more political than economic. There are, however, some differences between concessionary and non-concessionary facilities beyond the income levels of countries using them. The policy implications for the range and design of the Fund’s lending windows are discussed.

Peace and community building in Northeast Asia

This topic involves some difficulties, one of which is about the concept of “Northeast Asia”. Broadly speaking, Northeast Asia should include China, Japan, Korean Peninsula, Russia’s Far East, and Mongolia. It is obviously not possible to address complex issues in such a broad region within several pages. Therefore, this paper shall focus on the main part of Northeast Asia, i.e., China, Japan, and Korea.

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Exit, voice, and loyalty in international organizations: US involvement in the League of Nations

Recent challenges to traditional international relations theory have questioned the nature of international organizations (IOs) as agents of powerful state-members and have examined various conduits through which non-state actors can voice their concerns. Yet little work has focused on participation in IOs when a powerful state’s official position contradicts the goals of actors within it. This article examines the archival record of American involvement in the League of Nations’ economic section to explore such a circumstance. I correct the prevailing historical view of American isolationism in the interwar period and argue that participation by advanced, industrial democracies can better be understood as combinations of exit, voice, and loyalty on the part of individual components of state and civil societies.

The EU’s refusal to grant China ‘Market Economy Status’ (MES)

Although relations between the EU and China have considerably improved over recent years, Brussels and Beijing still disagree on a number of key issues. These include the EU embargo on arms sales to China, various bilateral trade disputes, problems of illegal migration and, last but not least, Brussels’ refusal to grant China MES. It is this last point that this essay will scrutinise. In doing so, it will firstly present the Chinese point of view on the question. The Chinese believe that, in view of all the efforts they have made in the course of their ongoing transition towards market economy, they deserve to be granted MES without delay. Indeed, Beijing has lately put this issue very high on its list of foreign policy priorities and, claiming that it is victim of discriminatory treatment, has been exerting ever stronger political pressure on the EU and its Member States. Yet Brussels, arguing that China does not yet fulfil the necessary requirements for being granted MES, has until now resisted this pressure.

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A Chinese perspective on Lisbon Strategy

The Chinese interpretations of the Lisbon Strategy fall mainly into two different aspects: one focuses on the more or less neo-liberal orientation of the Lisbon Strategy, the other tries to assess the implications of this orientation toward the norms of national social welfare states. This article focuses on one of the main tool deployed by the Lisbon Strategy, i.e., the “innovation”, discussed its definitions, contents, practices and constraints. The article concludes that the direction of the Lisbon Strategy is more important than the quantitative goals it has set up to achieve, and China can in many ways learn from European experiences reviewed in designing and implementing the Lisbon Strategy.

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Trust in international organizations: An empirical investigation focusing on the United Nations

The literature on social capital has strongly increased in the last two decades, but there still is a lack of substantial empirical evidence about the determinants of international trust. This empirical study analyzes a cross-section of individuals, using micro-data from the World Values Survey, covering 38 countries, to investigate trust in international organizations, specifically in the United Nations. In line with previous studies on international trust we find that political trust matters. We also find that social trust is relevant, but contrary to previous studies the results are less robust. Moreover, the paper goes beyond previous studies investigating also the impact of geographic identification, corruption and globalization. We find that a higher level of (perceived) corruption reduces the trust in the UN in developed countries, but increases trust in developing and transition countries. A stronger identification with the world as a whole also leads to a higher trust in the UN and a stronger capacity to act globally in economic and political environment increases trust in the UN.

Are economic forecasts of the International Monetary Fund politically biased? A public choice analysis

The paper shows that the economic forecasts of the IMF are frequently distorted by political bias. Longer-term growth forecasts for the industrial countries reveal an absolute as well as relative optimism bias and a significant correlation with election dates in the US. Furthermore, the IMF projections for the developing regions are strongly biased toward optimism. The significant relationship between forecast errors and IMF net credit flows to a region supports the hypothesis that the IMF staff tries to legitimize its lending activities with overly optimistic forecasts.

Congressional voting on funding the international financial institutions

The United States is the largest contributor to the International Monetary Fund (IMF) and the World Bank, providing resources in exchange for voting power in these international financial institutions (IFIs). While the Treasury Department manages the day-to-day aspects of US participation in these institutions, Congress retains authority on funding. With the aim of understanding the microincentives of US support for the IFIs, I analyze congressional voting on bills to fund the IFIs. I argue that members of congress are more likely to support a funding increase (1) the more “liberal” their ideology, (2) the larger the share of campaign contributions they get from banks that specialize in international lending, and (3) the larger the share of voters that gain from economic globalization that reside in their districts. Statistical analyses of voting on five IFI funding bills since 1977 provide support for these arguments.

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Building a strong nation, how does China perform in science and technology

A common perception is that China has relied on the expansion of labour-intensive industries and flooded the world market with cheap but low to medium level technology products. Although it has become the third largest exporting nation, China has failed to create a large number of big businesses that can compete with the world’s leading multinational companies (Nolan (2004)). The Chinese government has long been aware of the weakness of its development strategy and has been trying to improve its own technological capacity through investments in basic research, innovations and the application of new technologies, utility models and designs. China’s strategy on science and technology can be best described by the so-called ‘walking with two legs’ principle. The first leg is based on building up domestic research and innovative capacity. This is through investments in research institutes, universities and LMEs. China’s second leg has been to build up its technology capacity through its open policy and attracting FDI and technology. China has made significant advances in the following areas regarding science and technology.

Indonesia and Southeast Asian territorial peace processes

This article offers an Indonesian perspective to the analysis of peace processes. The Indonesian experiences from territorial peace processes in the South China Sea, Mindanao and Aceh can offer ideas and inspiration. But if there is an overarching conclusion that may be derived from the experience of Indonesia, it is that there are no hard and fast rules. The approaches will have to depend on the general situation, the disposition and perceptions of the parties in conflict, the external environment of that conflict, and the capabilities and credibility of the entity carrying out the preventive diplomacy initiative. Ambassador Sastrohandoyo Wiryono, Indonesian Governor in the ASEF Board and formerly Indonesia’s Chief Negotiator in Aceh Peace Talks (2002–2003), and mediator of conflicts in Mindanao.

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