Made by : Himanshu Dixit

ALTERNATIVE CENTRES OF POWER

Chapter -4 [political science]

Made by : Himanshu Dixit

Factors responsible for European Integration:

**Second World War: Second World War shattered the European economy so badly that European

leaders were forced to cooperate among themselves not only to reconstruct their economy but also

regulate their international relations in a positive manner. This brought them together.

*Marshall Plan: Second World War was followed by the expansion of the cold war. The US feared the

expansion of communism in a financial shattered Europe. Therefore it not only created a new security

structure NATO but also extended massive financial aid to the European countries under the Marshall

Plan for reconstruction and development. This led to the formation of the Organization of European

Economic Cooperation (OEEC) in 1948 which became a forum for cooperation on trade and economic

issues.

*Formation of the Council of Europe in 1949 was another step towards political cooperation which

was further strengthened by the formation of the European Economic Community (1957) and the

European Parliament.

*Collapse of Soviet Union: The disintegration of USSR put the process of European integration on a

fast track as many Eastern European countries adopted capitalism and joined the EU which finally came

into existence after the signing of Treaty of Maastricht in 1992.

**EU as a supranational organization:

*Over the period of time European Union has evolved from an economic forum to a political organization

and has started to act more as a nation state.

*It has its own flag and an anthem.

*It has adopted a common currency Euro and a common market.

*There is a European Parliament which frames common policies for the member states.

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*It has also developed common foreign and security policies.

*It is trying to develop a common constitution but it is yet to take a shape.

**EU as an influential organization:

*Economic:*EU is the largest economy in the world with GDP around 12 trillion dollars in 2005.

*Its currency Euro can pose the real threat to the dominance of the US dollar in international trade.

*Its share in the world trade is three times more than that of the US allowing it to be more assertive in

trade disputes with the US and China.

*It also functions as an important block in the WTO.

*Political:*EU also enjoys political and diplomatic influence in the world politics.

*Two of its members Britain and France hold the permanent seat in the UN Security Council.

*Most of its members are the member of NATO which enables it to influence some US policies such as the

current US policies on Iran’s nuclear programme.

*Its diplomacy and economic investments have been effective in case of its dialogue with China on human

rights and environmental degradation.

*Military:* EU’s combined armed forces are the second largest in the world.

*Its total defence budget is the second highest after the US.

*Two of its members Britain and France have hundreds of nuclear warheads.

*It is also the world’s second most important source of space and communication technology.

*Limitations of European Union:

* Though EU has common foreign and security policies in many areas its members have their own foreign

and defence policies which are often at odds with each other.

*There is deep-rooted Euro-skepticism in some parts of Europe about EU’s integrationist agenda.

Therefore EU has failed to adopt a common constitution.

*Former British Prime Minister Margret Thatcher kept the UK out of the European market.

*Denmark and Sweden have resisted Maastricht Treaty and the adoption of Euro.

* There are also reservations about including some new countries in the EU.

**Factors responsible for the formation of ASEAN:

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*This region suffered repeated colonialism before and after the Second World War which led to its

economic backwardness.

* At the end of the war this region confronted with the problem of nation-building, poverty and the

pressure to align with one superpower during the cold war.

*Even international forums like Bandung Conference and Non-Aligned Movement failed to establish

conventions for informal cooperation and interaction in this region.

*Hence South-East Asians sought an alternative by establishing the Association of South East Asian

Nations (ASEAN).

**Features of ASEAN:

*Established in 1967 by, Indonesia, Malaysia, Singapore, Philippines and Thailand under the Bangkok

Declaration, its main objectives are to accelerate economic growth, social progress and cultural

development in South East Asian region.

*ASEAN countries have adopted an informal and non- confrontationist way of cooperation that is based

on respect for national sovereignty. This is known as the ASEAN way.

*In 2003 ASEAN member states established ASEAN Community comprising

a)ASEAN Security Community

b)ASEAN Economic community and

c) ASEAN Socio-cultural community.

*ASEAN Security community aims at solving outstanding territorial disputes to maintain

peace cooperation and respect for sovereign rights of nations.

*ASEAN Regional Forum set up in 1994, carries out coordination of security and foreign policy of member

states.

*The aim of ASEAN Economic Community:

* to create a common market and production base within ASEAN states,

*to ensure social and economic development in the region,

*to set up Dispute Settlement Mechanism to resolve economic disputes,

*to create a Free Trade Area (FTA) for investment, labour and services.

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*ASEAN socio-cultural community: The purpose of ASEAN Socio-Cultural Community is to make

ASEAN forum a people-centred and socially responsible body to achieve enduring solidarity and unity

among the people of ASEAN.

*To improve the quality of life of the people of ASEAN through sustainable development.

*To promote respect for cultural diversity in this region and emphasize common values to achieve unity in

diversity and above all to build an ASEAN identity.

*To narrow down the development gap among the ASEAN member states.

**ASEAN Vision 2020:

* In its Hanoi Plan of Action adopted in Dec. 1997, ASEAN adopted its Vision 2020 which defines an

outward-looking role for ASEAN in the international community, *To promote peace, stability and

prosperity in the region.

*To improve bonds of partnership in the dynamic development of the ASEAN region.

*To enhance ASEAN’S role as an effective force for peace justice and moderation in the Asia-Pacific and in

the world. To improve ASEAN‘s structures and mechanism.

*This vision document reconfirms ASEAN’s existing policy of negotiated settlement of regional conflicts.

*ASEAN has successfully resolved the Cambodian Crisis and East-Timor Crisis.

*Its member states meet annually to discuss East Asian cooperation.

**India’s role in ASEAN:

*During the cold war years India did not pay adequate attention to ASEAN.

*However in recent years ASEAN’s phenomenal economic growth rate has attracted India to trade and

invest in this region.

*India has signed FTA with Singapore and Thailand.

*India is trying to sign an FTA with ASEAN itself.

*India has been given the status of a` dialogue nation ‘in the ASEAN.

**The rise of the Chinese economy:

*In 1978 China set on the path of economic reform by adopting `open door policy’, a policy to generate

higher productivity by investments of capital and technology from abroad.

*Since then it has been the fastest growing economy in the world.
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*It is projected to overtake US economy (largest in the world) by 2040

*Its large population, vast resources, land mass and regional location, adds to its power in significant

ways.

*Hence, its outstanding issues with Japan, US, ASEAN and Russia has been moderated by economic

considerations.

**Factors responsible for the adoption of new economic policy:

* After the communist revolution of 1949, China adopted the Soviet model of economy and laid the

foundation of a sound economy. But by mid-1970s Chinese leadership decided to adopt a new economic

policy because of the following reasons:

*A respectable economic growth rate of 5-6 per cent was insufficient to meet the needs of a growing

population which was growing at a rate of 2-3 per cent.

*Agricultural production was insufficient to generate a surplus for industries.

*Industrial production was not growing at a fast rate.

*International trade was limited because of the closed economy.

*Per capita income was low.

**Transition from socialism to capitalism:

*China did not go for shock therapy rather opened its economy step by step.

*First agriculture was privatized in 1982 followed by the privatization of industries in 1998.

*Trade barriers were abolished only in Special Economic Zones (SEZs).

*State continued to play a central role in setting up a market economy.

**Benefits of new economic policy:

*Privatization of agriculture led to a remarkable rise in production and rural income.

*High personal savings in the rural economy led to phenomenal growth in rural industries.

*New trading and investment laws led to the phenomenal rise in foreign trade and foreign direct

investment.

*China became the most favourite destination for FDI.

*Large foreign exchange reserves allow it to make the big investment in other countries.

*China’s entry into WTO in 2001 has further boosted its trade prospects.

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**Limitations:*Impact of economic growth has remained uneven.

*Unemployment has increased.

*Female working conditions are as bad as 19th century Europe.

*Corruption and environmental degradation have increased.

*Social and economic inequalities have increased.

**Indo-Chinese relationship:

*Areas of conflict: * Border dispute and Chinese aggression on India in 1962.

*Asylum has given to Dalai Lama by India after the Tibetan takeover by China in 1950.

*Areas of cooperation: A series of talks were initiated in 1981 to resolve the border dispute.

*Visits of prime ministers of both the countries have improved the relationship

*Bilateral trade has increased many folds.

* In WTO both the countries have adopted similar policies.