Sunday, January 28, 2007

An EU-like pact for Asean: A distant dream? - International Herald Tribune

An issue I keep an eye on if for no other reason I think something along these lines is inevitable if not in my lifetime, then my hypothetical children's lifetimes. And further, I believe the question becomes really an extent to which this becomes reality.

I think the present inequities and disparities between the nations (not least due to geographical distances between and within nations) make any true EU style association and cooperation more of a pipe dream than anything else.

And I don't think it can be understated how much these disparities make it difficult, if not downright impossible for there to be the sort of political organization that people think of associated with the EU. It's one thing after all for there to be a regional trade bloc since these disparities form the very basis of comparative advantages to advance trade. But it would be a nightmare to try to create a common currency given the economic and political differences between nations.

After all, a common currency is going to require a central bank which in turn will be imposing a single interest rate across South East Asian nations. Given the different business cycles and stages of economic development these nations are in, it's impossible for a single interest rate to be imposed that would not either cripple some economies or hurt all economies involved.

And let's not forget that one of the central tensions within the EU and surrounding the EU Constitution is the balance of voting power between the larger and smaller nations. At this point, I don't necessarily trust the larger nations to vote or govern in such a way that would not be detrimental to the smaller nations. Conversely, the larger nations would not be pleased should the smaller nations be able to stiffle any political/economic moves that are in the favour of the majority of people involved.

The biggest problem as I see it is that it is intrinsic within the system and not necessarily one that can be solve through a tweaking of the policy mechanisms. I may yet be proven wrong of course...but let's see how it goes from here on.


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