CRE: (Economic) Power and Geopolitics

1. Comparative Regional Economy <Lecture Note 7 > 13.12.05 CRE: (Economic) Power and Geopolitics * Most parts of this note are borrowed from the references for teaching purpose only. Semester: Fall 2013 Time: Thursday 9:00-12:00 am Class Room: 114 Professor: YooSoo Hong Office Hour: By appointment Mobile: 010-4001-8060 E-mail: yshong123@gmail.com 1

2. Basics

3. Introduction • Nations and states are different things, and often coexist uneasily • Political tension is common around an enclave or exclave, particularly if the population is culturally similar to the majority in a neighboring state • Geopolitics is the study of power relations between states for nationalistic (patriotic) or scholarly purposes (the latter being critical of the former) • Geopolitics also involves the effort to understand diverse elements of other cultures as these shape and interact with political elements at the nation and state level. • Transnational political entities are growing in number and importance. • Countries have both nations and states. Countries become friends and enemies, depending on the relational interests. Since these interests change overtime, the friend and enemy relations may change over time.

4. National Power • Foundation of National Diplomacy • Essential element of diplomacy in a system based on state sovereignty • Power is the ability of actor A to get actor B to perform A’s wishes. • Politics is based on power. • The Nature of Power • National capabilities plus attributes • Multifaceted: Tangible and intangible elements • Power as money: A ‘political currenc’y, sometimes used in a charitable way, most often used to further self-interest

5. Power in International Relations Hard Power • Coerce with political, economic or military power. • (Realism: force, military capability) Soft Power • Ability to get what you want though attraction and not coercion (Nye, 2004). • (Liberalism: education, art, sports, values)

6. Hard and Soft Power • Hard Power Ability to make someone else do something, or suffer the consequences  Rests on negative incentives (“sticks”) and positive • Soft Power  Ability to persuade others to follow your lead by being an attractive example  Iraq may have damaged U.S. soft power  Realists dismiss soft power • Measuring Power − Difficulties in creating a formula for what counts toward national power: Weighing military power might versus economic capacity and leadership capability versus national infrastructure, and easy to identify criteria but hard to weight − Difficulties in quantifying some aspects of power: e.g. leadership or perceptions (and misperceptions of power)

7. Characteristics and Diplomatic Application of Power • Characteristics of Power (Measurement is difficult)  Dynamic, constantly in flux: Coercive power, and persuasive power  Both objective and subjective  Relative: In comparison to whom?: Zero-sum game  Situational: Power that can realistically be brought to bear varies depending on the situation  Multidimensional: Need to consider all facets and context • The Nature of Diplomacy: Diplomacy as Applied Power − Direct diplomatic application of power Includes the use or threat of economic sanctions and the threat of military force − Indirect diplomatic application of power Involves a communications process of a country skillfully advancing its policy preferences, arguing the merits of its position, and persuading others to join it in promoting those goals or at least to accede to them

8. State and Nation  State • A state is an independent country (though the term indicates a part of a country in common speech) . An independent country is afforded sovereignty by international laws, agreements, and precedents. Internationally recognized boundaries • States supply public goods (like roads and education), regulate economic relations, seek legitimacy in the eyes of citizens and others, and direct relations with other states • Nation • A nation is a group of people with a claim to a shared past, common culture, and collective destiny • Some nations are virtually coextensive with states, forming nation-states (e.g. Japan, Sweden, Mongolia) • Some nations are struggling for autonomy/sovereignty and may lie entirely within a state (Quebec's situation in Canada) or across state borders (Kurdistan's situation in Iraq, Iran, Turkey, Syria region) • Nationalism • The passionate defense of national interests, either in a nation-state framework (where it is also called patriotism) or outside of such framework (where it is called by various names such as treason and terrorism, and usually suppressed violently)

9. Theories and Approaches Isolationism /Nationalism vs. Internationalism RealismIdealism liberalism Wilsonianism Balance of power Hegemonic realism

10. Alliances  Positive • Two or more states combine military capabilities; formal agreements to coordinate behavior • Increase deterrence • Increased defense capabilities • Allies don’t ally with enemies  Negative • Can increase capabilities of aggressive states • Provoke formation of counter-alliances • Can draw in otherwise neutral states • Must try to control behavior of allies • Today’s ally may be tomorrow’s enemy • Entangle states in disputes of allies • Stimulate envy of states outside the alliance

11. Balance of Power • Peace most likely to be maintained when military power is distributed so that no single power or bloc can dominate • An ambiguous concept • Weakness invites attack, so countervailing power must be used to deter potential aggressors • Size principle: competing alliances are roughly equal in power • Stay vigilant—identify potential threats and opportunities • Seek allies when you cannot match the armaments of an adversary • Remain flexible in making alliances • Oppose any state that seeks hegemony • Be moderate in victory

12. Criticisms of Balance of Power Theory • The theory’s rules are contradictory • It assumes that policymakers possess accurate, timely information about other states • The tendency of defense planners to engage in worst-case scenario planning can spark an arms race. • It assumes that decision makers are risk averse • It has not been effective Alternatives to Balance of Power • Hegemonic Stability Theory • A concert of great powers • Common sense of duty • Normative consensus is fragile

13. Balance of Power Models • Uni-polarity • United States just after World War II • United States now?—Bush doctrine • Bipolarity • United States/Soviet Union 1949–1989 • NATO–Warsaw Pact • Extended deterrence • Multi-polarity

14. (Super)powers • “The Big Three” (Empires/Superpowers) - The United States - The European Union - China • The “Swing States” (Balancers) - Russia - India - Japan • “Regional Powers”: Brazil, Saudi Arabia, Iran, South Africa, Nigeria, Australia

15. Economic Power of Three Powers (%) * 2012 Source: Adapted from ParagKhanna.

16. Growth and the Development Experience: GDP of Major Economies: 1960-2010 Source: World Development Report

17. Growth and the Development Experience: Major OECD Economies’ GDP Per Capita: 1970-2010 Source: World Development Report

18. Growth and the Development Experience: Major OECD Economies’ GDP Per Capita: 1970-2010 Source: World Development Report

19. Growth and the Development Experience GDP Per Capita of BRICI: 1970-2010 Source: World Development Report

20. Growth and the Development Experience Major Traders’ International Trade in Goods Sources: IMF (1990-2008), World Bank (2009-2010)

21. Growth and the Development Experience Chinese and Indian Growth: 1990-2010 Sources: World Development Report, World Bank (2009), IMF(2010)

22. Chinese and Indian Annual Growth Rates Source: World Development Report

23. Globalization • Economic Integration - U.S.-China: U.S. is China’s largest export market - Transatlantic area: World’s largest trading zone - China - E.U.: E.U. is China’s largest trading partner • Political Integration - Democratization - 123 electoral democracies in 2007 vs. fewer than 70 in the 1980s • Demographic Integration - Blending - U.S.-Latin America: Latinos are 14% of the total U.S. population (expected to grow to 29% by 2050) - E.U.-Arab world: 50% of first-generation Arab emigrants go to Europe - China - Asia: 35 million overseas Chinese across East Asia, with disproportionate wealth and influence (e.g. 1% of Philippines population, but control 60% of the economy)

24. Competing for “The Second World” • Eastern Europe: Russia, Ukraine, Balkans, Turkey, Caucasus • Central Asia: Kazakhstan, Uzbekistan, Afghanistan, Pakistan • Latin America: Mexico, Venezuela, Colombia, Brazil, Chile • Middle East: Morocco, Libya, Egypt, Levant, Iraq, Saudi Arabia, UAE, Iran • South/East Asia: Malaysia, Indonesia, Thailand, Vietnam, India

25. Competition for Regional Power  Eastern Europe: Russia, Ukraine, Balkans, Turkey, Caucasus • Russia: EU member or Chinese petro-vassal • Ukraine: Mitteleuropa or Osteuropa • Turkey: “Marching east to west” or neo-Ottomanism • Balkans: Member-state-building • Caucasus: The cork in the Caspian  Central Asia: Kazakhstan, Uzbekistan, Afghanistan, Pakistan • Kazakhstan: “Happiness is multiple pipelines” • Uzbekistan: The Silk Road’s blocked artery • Afghanistan: Taming south-central Asia • Pakistan: “The most dangerous country in the world”

26.  Latin America: Mexico, Venezuela, Colombia, Brazil, Chile • Mexico: NAFTA plus • Venezuela: Bolivar’s revenge • Colombia: The Andean Balkans • Brazil: The Southern Pole • Chile: Entering the First World • Middle East: Morocco, Libya, Egypt, Levant, Iraq, Saudi Arabia, UAE, Iran • Morocco: Greater Mediterranean Union • Libya: From green to blue • Egypt: Bureaucrats and theocrats • Levant: Road maps • Iraq: Buffer, black hole, and broken boundary • Saudi Arabia: Gulf streams • UAE: Las Vegas meets Singapore • Iran: Virtues and vices

27.  South/East Asia: Malaysia, Indonesia, Thailand, Vietnam, India, Japan, Korea • Malaysia and Indonesia: Playing all sides • Thailand and Vietnam: The inner triangle • India: Looking east • Japan, Korea, and Australia: China’s first world seduction  Hot Spots • Iraq • Iran/Straits of Hormuz • Israel/Palestine • Gulf of Aden • Afghan-Pakistan border • North Korea • Straits of Malacca

28. International Issues and Approaches  Hot Issues • Economic imbalances • Terrorism • Energy security • Climate • Sovereign Wealth Funds • Poverty • Failed States • Approches • Bottom-up, then scale-up • Comparative advantage and division of labor • Global network governance • Mutual accountability • “People Power"

29. The New Global Governance  The New Geo-Psychology • From Non-alignment to Multi-alignment • Doing it “Our Way” • The New Regionalism • The Anti-imperial Belt • South-South cooperation  The New Global Governance • Adjusting to geopolitical dynamics • Globalization and the diffusion of power • Where dot.gov meets dot.com meets dot.org

30. United Nations • Security Council: Reform, expansion, legitimacy • Peacekeeping • Specialized Agencies: UNDP, OCHA, UNHCR, WFP, UNICEF, etc. • Bretton Woods: IMF, World Bank, IFC, ILO • New Partnerships: Global Fund to Fight AIDS, Tuberculosis, and Malaria; Global Compact • The Millennium Development Goals (MDGs)

31. Multilateral Organizations • Financial Stability Forum • Bank for International Settlements (BIS) • G8 • G20 • OECD • International Criminal Court • Interpol • Organization of American States (OAS) • Asia-Pacific Economic Cooperation (APEC) • European Bank for Reconstruction and Development (EBRD)

32. Modern History and Geopolitics

33. Imperialism • Late 1400s: Europe used transportation and military technology to conquer colonies • Mercantilism: Trade should increase state wealth; increase exports, decrease imports; used to take advantage of colonies • 1880s: Final burst colonizes most of Africa • China divided into spheres of influence

34. Imperialism Declines: 20th Century • Self-determination: Woodrow Wilson, Treaty of Versailles • League of Nations mandates • World War II saps strength of colonial powers, demonstrates that colonial powers can be defeated • Decolonization from 1947–1960s • Neocolonialism: Continued domination of the Global South by the Global North through economic means

35. European Control of the Globe 1800 One-third 1915 Four-fifths 1878 Two-thirds

36. Global Imperialism 1914

37. Towards World War II • Japan • Global conflict began with Japanese invasion of Manchuria, 1931 • League of Nations condemned action; Japan simply withdrew from league • 1937, Japan launched full-scale invasion of China • 1937 War In China Resumed • Nationalists and communists formed "united front" against Japanese • Unable to effectively work together, they conducted guerilla attacks • Japan, Germany, Italy ally 1940; neutrality pact with USSR, 1941 • Italy, Germany, and Russia • Italy after the Great War • Italians felt slighted at the Paris Peace Conference • Mussolini promised national glory, empire • Invaded Ethiopia (1935-1936), killed 250,000 Ethiopians; annexed Albania

38. Germany: deep resentment at Treaty of Versailles • Harsh terms: reparations, economic restrictions, depression helped Nazis • Hitler blamed Jews, communists, liberals for losing war, Versailles Treaty • After 1933, Hitler moved to ignore terms of peace settlement • Withdrew from League, 1933; Rebuilt military, air force; reinstated draft • Militarized Rhineland, 1936; Austria, 1938; France and Britain did nothing • Spanish Civil War 1936 - 1939 • Spanish fascists stage coup against republic; socialists, communists fight • Italians, Germans, Russians helped each side but fascists won • The Munich Conference: Peace for our time? • In 1938, Germany "appeased" by taking Sudetenland • Britain and France desperate to avoid war, appeased Hitler • Russian-German Non-Aggression Treaty, 1939, shocked world

39. War Leaders Vs.

40. GDP Trends in WWII

41. Towards the Cold War • The origins of the cold war (1947-1990) • Unlikely alliance between Britain, USSR, USA held up for duration of war • Not without tensions: Soviet resented U.S.-British delays in European invasion • Postwar settlement established at Yalta and Potsdam • Each Allied power to occupy and control territories liberated by its armed forces • Stalin agreed to support United States against Japan • Stalin's plans prevailed; Poland and east Europe became communist allies • President Truman took hard line at Potsdam, widened differences • Postwar territorial divisions reflected growing schism between USA, USSR • Soviets took east Germany, while United States, Britain, and France took west Germany • Berlin also divided four ways; by 1950 division seemed permanent • Churchill spoke of an "iron curtain" across Europe, separating east and west

42. Similar division in Korea: Soviets occupied north and United States the south • Truman doctrine, 1947: USA would support "free peoples resisting subjugation" • Perception of world divided between so-called free and enslaved peoples • Interventionist policy, dedicated to "containment" of communism • The Marshall Plan, 1948: U.S. aid for the recovery of Europe • Idea to rebuild European economies and strengthen capitalism • Soviet response: Council for Mutual Economic Assistance (COMECON) for its satellites • NATO and the Warsaw Pact: militarization of the cold war • 1949, United States created NATO, a regional military alliance against Soviet aggression • 1955, Soviets formed the Warsaw Pact in response • Two global superpowers protecting hegemony with alliances • United Nations, established 1945 to maintain international peace and security

43. Beginning of the Cold War • Postwar Europe • Divided into competing political, military, economic blocs • NATO, European Economic Communities; Warsaw Pact, COMECON • Western Europe • U.S. allies supported by permanent presence of American army • Parliamentary governments, capitalist economies • Eastern Europe • Dominated by Soviet Union, Red Army, secret police • Communist governments modeled after USSR dominate countries • Germany divided east and west in 1949 • Soviets refused to withdraw from eastern Germany after World War II • Allied sectors reunited 1947-1948, Berlin remained divided as well • Berlin blockade and airlift, 1948-1949 • The Berlin Wall, 1961 • In Asia • Turkey, Greece, Iran pressured by USSR, allies: US responds with Truman Doctrine • Communist Chinese armed by USSR, drive Nationalists out of China by 1949 • Korea divided into Communist North, Pro-Western South: North invades South in 1950 • Communists influence Viet Minh in Indo-China

44. International Organizations • Post-1945 • Era of international cooperation • Many global problems cannot be solved by national governments • Nongovernmental organizations (NGOs) • Red Cross, an international humanitarian agency, founded 1964 • Greenpeace, an environmental organization, founded in 1970 • Amnesty International and Human Rights Watch • The United Nations • Founded 1945 "to maintain international peace and security" • Security Council • Permanent Veto Nations: UK, US, France, Russia, China • Not successful at preventing wars, for example, Iran-Iraq war • Often can diffuse tense situations • General Assembly • Each nation has one vote; poor, 3rd world nations dominate • Cannot legislate, but has influence in international community • Often used as a sounding board for world concerns, ignored by West • ECOSOC, UN Commission of Refugees, WHO • More successful in health and educational goals • Eradication of smallpox and other diseases • Decrease in child mortality, increase in female literacy • Human rights: an ancient concept, gaining wider acceptance • Nuremberg Trials of Nazis • Established concept of "crimes against humanity“ • Permanent court sits in Hague, Netherlands for war crimes trials • UN Universal Declaration of Human Rights • Forbids slavery, torture, discrimination • Guarantees basic human rights, freedoms

45. Global Military Spending SIPRI data http://www.sipri.org/research/armaments/milex/factsheet2010

46. Soviet Union and Communism

47. US Strategy • Nuclear Deterrence • Forward Presence • Peacetime Military Buildup • Own the sea • NATO • Limited War

48. Forward Presence

49. Limited War • Korean War 1950-1953 • Fight locally • Prevent escalation • Geography • Weapons • Objectives • Negotiate and fight