Global Trend: Understanding International Relations PDF

GLOBAL TREND GLTR-102 CHAPTER ONE UNDERSTANDING INTERNATIONAL RELATION Introduction ❖ Comprehensive, broad and multi-disciplinary ❖ Studying IRs enables students and p...

GLOBAL TREND GLTR-102 CHAPTER ONE UNDERSTANDING INTERNATIONAL RELATION Introduction ❖ Comprehensive, broad and multi-disciplinary ❖ Studying IRs enables students and professionals to better understand the information we receive daily from newspapers, television and radio ❖ Today, IRs could be used to describe a range of interactions between people 1.1 Conceptualizing Nationalism, Nations and States Nationalism ✓ It is the most influential force in international affairs. ✓ It has caused the outbreak of revolutions and wars across the globe. Different scholars explain nationalism as: ✓ It is the doctrine that asserts the nation as the basic political unit in organizing society. ✓ A principle that holds that the political and national unit should be congruent ✓ Nationalism is an ideology which imagines the community in particular way (as national), and seeks political power in its name ✓ Nationalism is a social and political movement What do nationalists want? ❖ Nationalists doctrine has three main claims: Nations are distinct and unique Loyalty to the nation is more important than other interests and values The nation should have its own state The impact of Nationalism on global politics ❖ The rapid emergence of new kinds of nationalism, ❖ The formation, the formation of new nation-states and pg. 1 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ The violent conflicts has sometimes involved, have altered patterns of global politics ❖ They have stimulated new interventions by a variety of state and NSAs ❖ These interventions have been justified in universal terms: human rights, democracy Nation ✓ In common parlance, the words ‘nation’, ‘state’ and ‘country’ are used interchangeably ✓ Nations are historical entities that evolve organically out of more similar ethnic communities and they reveal themselves in myths, legends, and songs. ✓ A nation constitutes a community of people joined by a shared identity and by common social practices. ✓ Communities of various kinds have always existed but they now became, for the first time, a political concern. Description Type Definition Example Nation-state State A state with its own nation Iceland Multi-national state State A state with more than one nation Scotland & Wales in the UK Stateless nation Nation A nation that lacks its own state & whose Palestine, the Kurds people are spread across several countries pg. 2 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 States A political entity with certain observable characteristics An organized political community of people occupying a definite territory, and possessing internal and external sovereignty An abstract entity, which consists of sovereignty, population, defined territory, government and recognition. Attributes (Elements) of State Population-refers to a group of people residing in a definite territory who are claiming membership to the state. Government-refers to group of people who exercise political power. Territory-refers to part of the earth’s surface that marked off the areas occupied by a population of other states. Sovereignty-Sovereignty is the right of a country to exist. Or, the power of the state to rule over its territory. Origin of the State There are different theories advocated about the origin of the state. Some of them are the following: The Divine Right Theory This is the oldest theory of the origin of the state. It argues that God established the state. This notion prevailed in the ancient time when the rulers themselves were regarded as descendants of God. The Social Contract Theory This theory maintains that the state is an artificial creation based on the agreement or consent of people. pg. 3 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 The argument of this theory is based on popular sovereignty. Therefore, according to the social contract theorists, the state is established by the consent of the people for the purpose of securing their rights and their property. The Force Theory According to this theory, the state is the result of evil. It is created or emerged as a result of war and conflict. War of conquest resulted in the occupation of more territories and lead to the rise of the state. Therefore, the state is created through a process of conquest and coercion of the weak by the strong. The Natural Theory This theory maintains the idea that the state was created when humankind was created. According to Aristotle, Man is inseparable from the state. Aristotle further indicated that man by nature is a political and social animal that fulfill himself through the state. The Marxist Theory This theory indicates that the state is the result of the division of society into social classes with sharp and polarized economic interests. Hence, according to the Marxist theorists, the state is the result of class antagonism or the conflict between the rich and the poor. State Structure: Unitary; Federal; and Confederal The Unitary State Structure The unitary state structure is a political structure where the national government entirely controls the sub-national units. pg. 4 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 A political structure in which the central government is the only source of authority within the state A political structure in which the central government is legally supreme over the local governments. A political structure where sovereignty and law making activities are indivisible Features of a unitary state structure Supremacy of central legislature- in unitary state structure, the central legislature (parliament) is absolutely supreme in making laws whereas the local units are obliged to implement the laws, rules, regulations and policies. Absence of subsidiary law-making sovereign bodies- the national government is the only responsible body for making laws. Local governments can be created or abolished by the central government- the existence of local governments is determined by the will and interest of the central government. Local governments are weak- they do not have any power to make their own laws, policies, rules and regulations, financial power to implement laws and policies. The Federal State Structure  Federalism refers to a spatial or territorial division of power between two or more levels of government in a given political system.  A state in which two levels of government rule the same land and people. Each level has at least one area of action in which it is autonomous.  There is constitutional guarantee of the autonomy of each government in its own sphere.  Federalism is a political organization in which the activities of government are divided between regional governments and a central government in such a way that each kind of government has some activities on which it makes final decisions. Federalism can be achieved through two ways: ✓ “Coming together” federation- appear when sovereign states decide to form a federation voluntarily due to various reasons such as security purposes, governmental efficiency and so on. pg. 5 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ “Holding together” federation- mostly emerge after consensual parliamentary decisions to maintain a unitary state by establishing a multi- ethnic federal system largely to avoid or settle ethnic, regional and other type of group conflicts. Basic features of a federal state structure ✓ The existence of dual governments ✓ The existence of written constitution Confederal state structure ✓ Con-federations are voluntary associations of independent states to achieve their common interests without affecting the internal affairs of member states. ✓ Confederations establish for military and economic purposes. For example, the USA was a confederal state before it became a federal state. 1.2 International Relation ✓ International relations is not merely a field of study at university but is an integral aspect of our everyday lives. ✓ Originally, the study of international relations (a term first used by Jeremy Bentham in 1798) was seen largely as a branch of the study of law, philosophy or history. ✓ Today, international relations could be used to describe a range of interactions between people, groups, firms, associations, parties, nations or states or between these and (non) governmental international organizations. ✓ More obviously, events such as international conflict, inter-national conferences on global warming and international crime play a fundamental part in the study of international relations. ✓ Participation in international relations or politics is also inescapable ✓ IR is an integral part of our life. Now, we can not isolate our daily experiences and transactions from international dimension pg. 6 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ One crucial feature of the world in which we live is interconnectedness-geographically, intellectually and socially and thus we need to understand it. 1.3 Nature and Evolution of International Relation ❖ Today’s policy makers search the past for patterns and procedures to guide contemporary decisions ❖ Largely, major antecedents to the contemporary international system are found in European-centered Western civilization ❖ Thus, history of IR can be traced back to the Treaty of Westphalia in 1648, which ended the Thirty Years’ Religious War (1618–1648) in Europe between Catholics and Protestants ❖ The Thirty Years’ War, 1618–1648, was the bloodiest and most protracted military confrontation of the era. ❖ Until 1648, the Catholic Church in Rome was the only institution to determine war, peace and diplomacy and politicians were subject to it ❖ In Medieval Europe, small feudal fiefdoms largely unconnected had prevented the rise of centralized governmental authority ❖ However, following development of commerce/trading routes and emergence of new business class, technology, territorial expansion with new explorations, diplomacy, education, history of ancient Greece civilization, the need to separate church and state, and opposition to universalization of Christianity, and fragmentation of Europe began to rise ❖ N. Machiavelli (1469-1527), Italian Philosopher and author of The Prince, clearly articulated the need for the separation of state and church ❖ He argued that morality does not exist in politics and leaders should maximize state power through every means. Only state interest must prevail. ❖ Thus, he became the father of modern political philosophy ❖ The Westphalia Treaty ended hierarchical religious papal authority in Europe ❖ It transferred authority of determining the type of religion for the people from the church to monarchs pg. 7 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ Following Westphalia, monarchs gained authority to determine politics and religious affairs within a given territory i.e. territorial state emerged, leading to secular and modern state system ❖ Secular authority gave rise to the principle that provided the foundation for IR that has provided the foundation for IR ever since, i.e. the notion of the territorial integrity of states-legally equal and sovereign participants in an international system. ❖ The treaty enabled all small states in Europe to achieve sovereignty and leaders agreed not to either favor one religion over another or fight for the sake of religious differences ❖ It also led to institutionalization of diplomacy or diplomatic practices and commercial activities ❖ The Westphalia state system was exported to America, Africa and Asia via colonialism and ‘modernization’ ❖ However, following the carnage of the First World War there emerged an academic undertaking to understand how the fear of war was now equal only to the fear of defeat that had preceded the First World War. ❖ Although scholars wrote about international politics before, formal recognition of a separate discipline of IR occurred at the end of WWI with the establishment of a Department of IR of the University of Wales in 1919. ❖ Largely, it is impossible to separate the foundation of the discipline of IR from the larger public reaction to the horrors of WWI. ❖ At the outbreak of the WWI, the human cost of the war were linked with the wide spread notion that the old international order, with its secret diplomacy and secret treaties, was immoral. ❖ At the aftermath, a new academic discipline became essential- a discipline devoted to understand and prevent international conflict 1.4 Actors in International Relation ✓ Who are the dominant players in the International system? State Actors IRs traditionally focused on interactions between states Relations between all sorts of political entities, including IGOs, MNCs, societies and citizens pg. 8 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Non-State Actors Inter-Governmental Organizations (IGOs) Organizations whose members are national governments Fulfill a variety of functions and vary in size from just a few states to virtually the whole UN membership They are organized to accomplish various goals of economic and political nature Example IMF and WB have economic goals whereas AU and UN are founded for political reasons Non-Governmental Organizations (NGOS) Private organizations, some of considerable size and resources Some have political purpose, some economic or technical one More than 25,000 Multinational Corporations (MNCs) Companies that span multiple countries Often control greater resources and operate internationally with greater efficiency than many small states May prop up (or even create) friendly foreign governments but may also provide poor states with much-needed foreign investments and tax revenues Individuals Individuals with influential personality have also actively participated in the affairs of the world. Example: The Catholic Pope, the late Mandela etc; Atlet Haile Gebreselase pg. 9 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Types of Non-State Actors Type Who are they? Example IGOs Members are national governments UN; Arab League; NATO NGOs Members are individuals and groups Amnesty International, Red Cross MNCs Companies that span borders Toyota; Ford, Walmart 1-5 Levels of Analysis in International Relations ✓ Have you ever thought that a single international political phenomenon can be analyzed at different levels? How? Individual Level Analysis ❖ International relation can be analysed from the perspective of individuals ❖ For example, if you were to explain Germany’s decision to open its borders to hundreds of thousands of refugees in 2015 you might want to look at the personal motivations of German chancellor Angela Merkel. ❖ Focusing on the individual level and say particular actions of specific personalities in the public realm- be they politicians, diplomats or bankers. Group Level Analysis ❖ A group-level analysis focusing on foreign policy would look ❖ For example, at the role of lobbying groups and the way they influence national decision- making on an issue ❖ A group-level analysis could be interested in activist/pressure groups State Level Analysis ❖ Referred to as the relative ‘state-centrism’ of the discipline. ❖ This means that IR scholars would generally not only regard states as the central unit of analysis as such, they also conceive of the state as a point of reference for other types of actors. pg. 10 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ The state is seen as the framework that encapsulates society and as the main point of reference for the individual. ❖ Main location of power within the international sphere (cold war) ❖ It was an era in which much of international affairs appeared to be run via state channels and in line with particular state interests. ❖ States form the primary kind of actor in major international organizations such as the United Nations ❖ A state level analysis might be interested to look at any one of the following: it can consider states as actors in their own right as if they were clearly defined entities that have certain preferences look at their actions and decisions to find an answer to our analytical questions it may look at how states interact with each other to deal with the crisis – in other words, their foreign policy; how they build off each other’s suggestions and react to international developments and trends how they cooperate, say, in the framework of international organizations System Level Analysis ❖ Conceive the global system as the structure or context within which states cooperate, compete and confront each other over issues of national interest. ❖ Particularly important in that context is the distribution of power amongst states (unipolarity; bipolarity; and multipolarity). ❖ In this perspective, global circumstances are seen to condition the ability and opportunity of individual states and groups of states to pursue their interests in cooperative or competitive ways. ❖ Need to consider global linkages that go beyond single interactions between states. ❖ The issue outside the immediate control of any particular state or group of states, such as the global economy transnational terrorism or the internet. pg. 11 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 1.6 The Structure of International System ❖ International Relations scholars maintain that political power is usually distributed into three main types of systems namely: uni-polar system; bi-polar system and; multi-polar system. ❖ These three different systems reflect the number of powerful states competing for power and their hierarchical relationship. Uni-Polar International System A system dominated by one super power/empire There is one state with the greatest political, economic, cultural and military power and hence the ability to totally control other states. The hegemonic actor prevents or resolves conflicts by serving as- the police agent of the world The distribution of power is determined by the single super power Power structure is hierarchical in that power is concentrated in the hands of one powerful nation/empire No alliances exist because the hierarchy is ruled by one center of power (Roman and the Ottoman Turk) Bi-Polar International System A system dominated by two contending super powers which in turn dominate other states and the international system The less powerful states join either sides through alliance and counter alliance formations. The problem with bipolar system is that it is vulnerable for zero-sum game politics because when one superpower gains the other would inevitably lose. pg. 12 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 One typical historical example where the world was under bipolar system is the cold war period. Multi-Polar International System It is the most common throughout history. It is a system in which the distribution of the power to conquer is concentrated in more than two states It comprises of four or more powerful actors in the international system with relative equal political, economic and military powers There is no significant hierarchy among actors During the period around World War I it was a typical world system. It usually reflects various equally powerful states competing for power. It is not necessary for states to change their relationship with zero-sum game. In such system, it is possible to bring change without gaining or losing power. Basic Concepts in Understanding International Relation Power ✓ Power is the currency of international politics. ✓ As money is for economics, power is for IR (politics) ✓ In the international system, power determines the relative influence of actors and it shapes the structure of the international system. ✓ Power can be defined in terms of both relations and material (capability) aspects. ✓ The relational definition of power is formulated by Robert Dahl. Dahl’s definition understands power as ‘A’s’ ability to get ‘B’ to do something it would not otherwise do. Anarchy ✓ Anarchy is a situation where there is absence of authority (government) be it in national or international/global level systems. pg. 13 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ Within a country ‘anarchy’ refers to a breakdown of law and order, but in relations between states it refers to a system where power is decentralized and there are no shared institutions with the right to enforce common rules. Sovereignty ✓ It can be defined as an expression of: A state’s ultimate authority within its territorial entity (internal sovereignty) The state’s involvement in the international community (external sovereignty). 1-7 Theories of International Relations In order to understand IR, there are some theoretical foundations namely: Idealism/Liberalism ❖ Liberalism in IR was referred to as a ‘utopian’ theory ❖ Focus on the creation of a peaceful world by integration ❖ They also focus on the increase of freedoms ❖ States; IGOs; and NGOs as key actors ❖ Interdependent global society with international institutions facilitating cooperation Liberalism: Policy Prescriptions Multilateralism: IGOs and International Law ✓ “Enlargement”: Encourage Democracies-Liberal democratic peace theory Cosmopolitanism: Common humanity and foreign policy ✓ Foreign Aid/Human rights- humanitarian intervention pg. 14 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Components of Liberalism/Idealism Focus of Analysis Enhancing global economy & political cooperation Major actors ▪ States; IGOs; NGOs; & MNCs Behavior of States ▪ Not always rational actors based on self-interest calculations ▪ Compromise between various interests within states Goal of States ▪ Economic Prosperity ▪ International stability View of human nature ▪ Optimistic Conditions of International System ▪ Anarchic ▪ Possible to mitigate anarchy Major assumptions ✓ Human nature is essentially good ✓ There is a greater potential for cooperation among states ✓ States are sovereign, but not autonomous actors ✓ More optimistic about the prospect for peace ✓ IGOs can reduce the danger of war ✓ International law and morality as key sources of order in the international system ✓ NGOs represent different interests and facilitate collective actions ✓ The prospects for the elimination of war lay with a preference for democracy over aristocracy; free trade over autarky, and collective security over the balance of power system. pg. 15 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Realism ❖ Focus on states and their relations in relation with power (military and political power) ❖ State need to maximize their security and chances of survival ❖ Quest for military and economic security: Balance of power ❖ Based on self-interest (WWII as the justification of their theory) Realism: Policy Prescriptions Balance of power: Ignore culture, moral considerations in foreign policy; obey only dictates of maximizing your power relative to others Critiques It underestimates the role of international institutions, norms, rules in shaping behavior of states and promoting cooperation States are not the only actors and can not be unitary decision makers Components of Realism Focus of Analysis Struggle for power in Anarchic International System Major actors ▪ States Behavior of States ▪ Rational, unitary actors Goal of States ▪ Enhance Power ▪ Enhance Security View of human nature ▪ Pessimistic Conditions of International System ▪ Anarchic ▪ Self-help system pg. 16 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Major assumptions ✓ Human nature as flawed, egoistic and power-seeking ✓ State as the unitary, autonomous, power seeking and rational actor ✓ Skeptical about the existence of universal moral principle ✓ International system as anarchic ✓ States are in permanent state of insecurity and cooperation is difficult ✓ Skeptical about the role of IGOs, INGOs and International Law ✓ State power is the key and the only variable interests ✓ Law can be enforced via state power ✓ Balance of power is the predominant feature of the international system Structuralism/Marxism ❖ Marxism is an ideology that argues that a capitalist society is divided into two contradictory classes – the business class (the bourgeoisie) and the working class (the proletariat). ❖ The proletariats are at the mercy of the bourgeoisie who control their wages and therefore their standard of living. ❖ It was during the 1960s, however, that other perspectives came to constitute alternative modes of conceptualizing international politics. ❖ Scholars within what came to be known as the structuralist paradigm focused on dependency, exploitation and the international division of labor which relegated the vast majority of the global population to the extremes of poverty, often with the complicities of elite groups within these societies. ❖ The basis of such manifest inequality was the capitalist structure of the international system that accrued benefits to some while causing, through unequal exchange relations, the impoverishment of the vast majority of others. pg. 17 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Major Assumptions Human nature is motivated by self-interest, egoism and readiness to dominate others Actors in IR are the class The role of the state is doing the binding of corporations International Cooperation among the working class is bring just and fair international system There is no anarchy, rather hierarchy in the international system Economic power is crucial to dominate others Skeptical about IGOs, INGOs and International Law International Cooperation among the Proletariat will eventually bring a just and fair international system International Law is biased against the interests of socialist states, the weak and the unrepresented NGOs are largely based in the North and are dominated by members of the same elite that run the state and international organizations Constructivism ❖ The international system does not exist on its own ❖ It exists only as an inter subjective awareness among people: in that sense the system is constituted by ideas, not by material forces ❖ The international system is a human invention or creation not of a physical or material kind but of a purely intellectual and ideational kind ❖ It is a set of ideas, a body of thought, a system of norms, which has been arranged by certain people at a particular time and place ❖ To understand constructivism is to understand that ideas, or ‘norms’ as they are often called, have power. pg. 18 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Critical Theories ❖ Critical approaches established in response to mainstream approaches in the field, mainly liberalism and realism. ❖ Critical theories are valuable because they identify positions that have typically been ignored or overlooked within IR. ❖ They also provide a voice to individuals who have frequently been marginalized, particularly women and those from the Global South. pg. 19 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 CHAPTER TWO FOREIGN POLICY AND DIPLOMACY 2.1 National Interest (NI) Definition of National Interest (NI) Refers to set of values, orientation, goals and objectives a given country would like to achieve in its international relations. It has been the main driving force that determines the contents of foreign policy K.Holisti, defines as an image of the future state of affairs and future set of conditions…… Foreign policy can subordinate to a principle of national interest The total task of foreign policy is to preserve national interests peacefully and nationally The goals and objectives of any foreign policy constitute national interests as basis Although the national interests of states vary in that detail, core national interests are the same for different countries Criteria used in defining national interest: Moral and legal criteria Pragmatic criteria Ideological criteria Professional advancement Partisan criteria Foreign-dependency criteria Categories of National Interest Primary Interests: ✓ are central or core interests of a state such as preserving the sovereignty and territorial integrity of the state. pg. 20 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Secondary Interests: ✓ are crucial yet not vital as primary interests. ✓ These include protecting citizens living abroad and maintaining diplomatic immunity. Permanent Interests ✓ are almost fixed and constant interests which are not changing frequently like ensuring self- reliant economy and increasing the prestige of a country. Variable Interests ✓ denote vital interests of a state in times of certain conditions. ✓ Influenced by leaders, institutions, parties etc. General Interests ✓ are common interests shared by various states like promoting trade, diplomatic relations, etc. 2-2 Understanding Foreign Policy 2.2.1 Defining Foreign Policy Foreign policy refers to a course of action or set of principles adopted by a nation’s government to define its relations with other countries. A country’s foreign policy also sets forth its positions on a wide range of international issues. Foreign policy may reflect broad national objectives or represent a narrow and specific response to a particular situation. A country’s foreign policy is influenced by internal factors include: ✓ Geographic-strategic factors: these include locations, natural resources, size, climate, topography, soil, climate, etc. ✓ Historical traditions: from its history a state inherits a style and culture that influence its course of action taken in its external relations. ✓ National capacity: includes military power, level of technology, economic development, population, etc. pg. 21 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ Public opinion: refers to beliefs, views and attitudes of the people towards any political and economic institutions A country’s foreign policy is influenced by external factors include: ✓ International organizations: today various governmental and nongovernmental organizations play an important role in foreign policy. ✓ The success of the state’s foreign policy depends on how much it accommodates the main principles of world organizations and international law. ✓ World public opinion: can also exert strong pressure over the states’ foreign policy ✓ Relations with friendly states: while formulating foreign policy, policy makers usually take in to consideration the interests of friendly states. 2.2.2 Foreign Policy Objectives 1. Core Interest and Values (Short Range Objectives) ✓ goals for which most people are willing to make ultimate sacrifices ✓ Core interests and values are most frequently related to the self preservation of political and economic systems, the people and its culture, and the territorial integrity of a state. ✓ These are short-range objectives because others goals cannot be realized if the existence of the state and its political units are not ensured. ✓ to ensure the sovereignty and independence of the home territory and to perpetuate a particular political, social, and economic systems based on that territory 2. Middle Range Objectives ✓ Vary from nation to nation ✓ The variation is obviously due to the difference in the level of economic and technological progress, as well as the military capability, the middle range objectives of states. ✓ domestic economic and welfare needs ✓ Social welfare and economic development 3. Long Range Objectives ✓ Are those plans, dreams, and visions concerning the ultimate political or ideological organization of the international system, and rules governing relations in that system. 2.2.3 Foreign Policy Behaviour pg. 22 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Foreign policy behavior refers to the actions states take towards each other. It is important to note that these actions usually are not as ends in themselves, but are tied in some way with larger purposes, from long range objectives to short term objectives that leaders hope to achieve in their dealings with other countries. Foreign Policy behaviour has three patterns: (1) Self-preservation (maintaining the status quo); ✓ The foreign policy patterns of countries such as United States can be categorized as self- preservation. ✓ United States, following second world emerged as one of the strongest actor, super power in international relations. ✓ One can say, with no doubt, that the international institutions (IMF, World Bank, GATT/WTO) that were established following WWII have been strongly shaped by United States. ✓ The underlying philosophy of such institutions, and even the decision making procedures are all shaped to serve the global interests the country. ✓ Even the United Nations has been serving the interest of United State as the country has key position in the Security Council as one of Veto power among the few. ✓ Cognizance of all the advantages that accrue from the existing international system and international economic order, U.S has become the staunch supporter of the international order. ✓ Any attempt to reform the international system and the politico-economic order will face strong criticisms, if not threat or use force, and sanctions. ✓ These days U.S has become the sole defender of the international system and the liberal economic-political order after the collapse of USSR and decline of communist ideology. (2) Self-extension (revising the status quo in one’s own favor) ✓ The newly emerging powers such as China, India, Brazil, Germany and others are competing to restructure the international institutions and different regimes so as to create enabling environment to promote their national interest. 3) Self-abnegation (revising the status quo in some else’s favor) ✓ It reflects the foreign policy trends that are being displayed in Less Developing Countries (LDC). pg. 23 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ This can be seen in the weak states of the world which fail to defend and promote their national interests in their external relations. ✓ States that are weak and very much dependent on foreign aid are profoundly caught with many problems in order to pursue an autonomous policy. ✓ Such countries may surrender to such challenges and compromise its long lasting national interest for temporary and immediate benefits. ✓ Such policy trend can be termed as self-extension. 2.2.4 Foreign Policy Dimensions Foreign Policy Dimensions include alignment, scope and modus operandi. 1 Alignment ❖ Its tendencies like Alliance: are formal agreements to provide mutual military assistance; as such, they carry legal weight and certain benefits as well as risks. Neutrality: is a stance of formal non-partisanship in world affairs Non-alignment: It has been the foreign policy pattern of most developing state during cold war. 2 Scope ✓ A second foreign policy dimension is the scope of a countries activities and interests. ✓ Some countries have extensive, far-reaching international contacts, while other countries have more limited activities abroad. ✓ Three scope patterns of foreign policy: Global terms; Regional terms and policy of Isolationism. Global terms ✓ Major Powers in international relations have historically been those that have defined their interest in global terms, interacting regularly with countries in nearly every region of the world. pg. 24 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ A country such as U.S.A has often defined its national interest in global terms, and it has more or less the wherewithal and the capability to influence world events. ✓ Despite it has been declining in economic terms, the country’s military presence and diplomatic communication in every part of the world make her global actor. Regional terms ✓ Most countries in the world are essentially regional actors, interacting primarily with neighboring states in the same geographical area except for contacts, frequently concerning economic issues such as trade; with major actors like United States and China outside their region. ✓ For example, South Africa is a regional actor in Africa in general and in Southern Africa in Particular. ✓ It is the most important actor in regional organizations such as SADDIC and AU. Policy of Isolationism ✓ Some moments in history, such as key weakness or geographic remoteness, may cause the scope of a country’s foreign policy to become so narrow that isolationism results. ✓ This was the case with Burma in 1960 and 70s. ✓ Few countries have ever been totally cut off from the outside world, and in an age of interdependence, isolationism becomes an increasingly less viable foreign policy orientation. ✓ Some of the known global actors such as USA, China, and the ex-USSR all have passed through period of relative isolationism and of mainly regional interests, finally branching out in to global concerns. 3 Mode of Operation ✓ Some countries often rely on multilateral institutions to address different issues. ✓ Still others very much rely on unilateral means. ✓ They may choose to solve the problems by themselves. ✓ The more multilateralist a state is, the greater its tendency to seek solutions to problems through diplomatic forums in which several states participate, such as pg. 25 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 the United Nations, rather than utilizing purely bilateral, country to country approaches. ✓ Most developing countries used the multilateral approaches to address many issues of concern. pg. 26 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 2.2.5 Instruments of foreign policy State can achieve its foreign policy goals by means of instruments include: diplomacy; economic instruments; propaganda and subversion; terrorism; and war. Diplomacy ❖ Diplomacy can be defined as a process between actors (diplomats, usually representing a state) who exist within a system (international relations) and engage in private and public dialogue (diplomacy) to pursue their objectives in a peaceful manner ❖ Regardless of whether diplomacy is conducted openly or secretly, multilaterally or bilaterally, tacitly or formally, by ambassadors or leader-to-leader, the essence of diplomacy remains bargaining. ❖ Bargaining can be defined as a means of settling differences over priorities between contestants through an exchange of proposals for mutually acceptable solutions. ❖ There must be conflict over priority in order for bargaining to take place, for if there is total agreement there would be nothing to bargain. ❖ Diplomatic bargaining is used primarily to reach agreements, compromises, and settlements where governments objectives conflict Rules of Effective Diplomacy The following are some of the basic rules that diplomats have employed with greater effectiveness over the years: Be realistic Be careful about what you say Seek common ground Understand the other side Be patient Leave avenues of retreat open pg. 27 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ In general, states make considerable use of what are known to be “carrot and stick” approaches when they rely on such diplomatic tactics such as threats, punishment, promise, and rewards. ❖ Threats and punishment represent the stick approach, the former involving some hypothetical action and the latter area action. ❖ The other two tactics (promise and reward) represent the carrot approach. ❖ These also involve hypothetical and real action. ❖ Promise is a hypothetical action which aims at influencing the behaviors of state B based on the future hope of giving something. ❖ But reward is a promise in action. ❖ It is when state “A” gives reward to state “B” in advance or based on the promise done in the past. Economic Instruments of foreign policy ❖ Economic instruments can be used to achieve the foreign objective of a state ❖ States may reward or punish states via the manipulation of economic policies ❖ The specific techniques that can be used to reward or punish including: Tariff: Almost all foreign made products coming into a country are taxed for the purpose of raising revenue, protecting domestic producers from foreign competition, or other domestic economic reasons. Quota: The supplier usually sends his goods into the country at a favorable price, but is allowed to sell only a certain amount in a given time period. Boycott: A trade boycott organized by a government eliminates the import of either a specific commodity or the total range of export products sold by the country against which the boycott is organized. pg. 28 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Embargo: A government that seeks to deprive another country of goods prohibits its own business men from concluding its transactions with commercial organization in the country against which the embargo is organized. Loans, Credits and Currency Manipulations: Rewards may include favorable tariff rates and quotas, granting loans (favorable reward offered by the major powers to developing countries) or extending credits. The manipulation of currency rates is also used to create more or less favorable terms of trade between countries. Foreign Aid: The transfer of money, goods, or technical advice from donor to recipient-is an instrument of policy that has been in international relation. Military Aid: The oldest type of aid that had been used for buttressing alliances. 2.3 Overview of Foreign Policy of Ethiopia Foreign Policy During Tewodros II (1855-1868) Throughout his reign Tewodros tried to develop a dynamic foreign policy that reached out beyond the Horn Region. He sought the Western Christian world to recognize his country and help him to modernize his country. Moreover, as Keller has put it “he appealed specifically to Britain, France and Russia as Christian nations to assist him in whatever ways possible in his fight against the Turks, Egyptians and Islam”. The emperor attempted to establish his diplomatic relations to fight his immediate enemies claiming Christianity as instrument of foreign policy. However, the emperor’s passionate demand for modern technology and skilled man power from Britain was not concluded to his satisfaction as the latter sent religious missionaries. Despite his demand to be recognized as the emperor of Ethiopia and treated with respect and equal footing with the British Queen that was not reciprocated by Queen Victoria. pg. 29 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Consequently Tewodros took desperate measures by taking hostage of several British missionaries including the consul which was responded with the British Millitary Expedition. Tewodros’s Troops were easily defeated and the King did not surrender but tragically committed suicide. Foreign Policy During Yohannes IV(1872-1889) ✓ Yohannes IV succeeded Tewodros II. ✓ Like his predecessor, Yohannes considered Islam as a threat to the territorial integrity of the polity. ✓ Indeed Egypt tried to put a serious security threat in its continued attempt to invade the country under many pretexts, yet its motive was to control the source of Blue Nile. ✓ These, however, were not successful as Egypt faced subsequent defeat both in 1875 and 1876 at the Battle of Gundet and Gura respectively. ✓ In addition to Muslim threat, the emperor saw European expansionism as greater threat to the survival of the country. In fact his calculation of threat has turned out to be real as Italy got a foot hold at the port of Massawa in 1885. ✓ This colonial ambition of Italy was reflected by the Foreign Minister speech “The Red Sea is the key to the Mediterranean” implicating the strategic importance of Ethiopia (Novati). ✓ However, the emperor died fighting with the “Mahadists”. ✓ The Sudanese resistance groups against British rule happened to invade Western Ethiopia because of their presumption that Yohannes IV was collaborating with the British. Foreign Policy During Menelik II(1889-1893) ✓ Following the death of Yohannes, Menlik II of Showa has assumed to the throne. ✓ Menelik was the King of Shoa region before his coronation as the Kings of Kings of Ethiopia. He had expanded his sphere of influence towards the far South and East incorporating new areas and communities peacefully or otherwise. pg. 30 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ According to many Ethiopian historians, the southward expansionism policy of the King was mainly targeted to have access to Sea Port, Zeila. ✓ Minelik was aware of the strategic importance of outlet to the sea for the country as he felt that the country’s access to the sea in the North had fallen under Italy’s influence since the mid 1890s. ✓ Before the death of Yohannes Italy had good diplomatic relation with Menelik with the objective of weakening its immediate enemy in the North, Yohannes. ✓ Menilik comfortably exploited the opportunity to consolidate his power, perhaps to deter Yohannes and bolster its expansionist policy to the south. ✓ Menelik’s relation with Italy had disappointed Yohannes as witnessed by the absence of Menelik from participation in the war against Mahadists. ✓ Following the death of Yohannes, however, Italy continued to be the main challenge in the North. ✓ Moreover the King saw the other colonial powers surrounding all four corners of the country as the scramble of Africa was heightened. ✓ Italy expanded towards the hinterland of Ethiopia from its first hold of Bogess, later named Eritrea, and Missawa port crossing Tekeze river. ✓ Menelik was cautiously following such colonial expansionism of Italy. ✓ The emperor followed double track diplomacy to contain or reverse Italy’s expansion and maintain the territorial integrity of his country. Foreign Policy During Emperor Haile Selassie(1916-1974) ✓ The Emperor was dedicated to the creation of a stronger, centralized and bureaucratic empire with unquestioned respect by the international community ✓ When the Italian Fascists finally invade Ethiopia between 1936 and 1941, the Emperor fled to London and established a government in exile. ✓ In the immediate post-war period, Ethiopia was extremely dependent on British military, economic and technical aid ✓ Through diplomacy, Haile Selassie was able to regain complete administrative control over Eritrea pg. 31 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ British Military Aid was withdrawn in 1952, and the King moved quickly to firm up relations with the United States. ✓ In addition to the military aid Ethiopia received from the United States over the next 23 years, its armed forces also benefited from the presence of a Military Assistance Advisory Group, which was established in 1954 ✓ The United States contributed to the expansion of Ethiopian military as a hedge a against the Somalia threats and to suppress Eritrean Nationalism. ✓ Ethiopia also played significant role in Africa in fighting for African independence and to end colonialism and apartheid. ✓ In the United Nations, Ethiopia played its part in raising agendas and pressing for resolutions against colonialism in collaboration with some countries that supported the cause. ✓ Ethiopia also played a significant role in maintaining international peace and security by commit ting its troops for peacekeeping operations in Korea in 1951 and the Congo in 1961. ✓ The emperor’s strategic alliance with outside powers helped him to stay on power for decades. ✓ In this regard British military aid and assistance helped him to restore and consolidate his power again by eliminating his potential rivals at home. ✓ Directly or indirectly he distanced potential rivals first with help from the British & later on with the help of USA military assistance. ✓ Foreign Policy During Military Government(1974-1991) ✓ It adopted a foreign policy largely oriented to socialist ideology. ✓ The primary objectives of the foreign policy were survival of the regime and maintaining the territorial integrity of the country. ✓ Apart from these, restructuring the society along socialist lines was also considered as the foundation for the foreign policy motives at home. ✓ The major strategy to achieve the stated objectives heavily focused on building the military capability of the country. pg. 32 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ Force had been employed as the best strategy to silence dissent at home and deter the perceived external enemies of the country. ✓ Since socialism was the guiding philosophy of the country, friendship and alliance with socialist countries of the world was considered as a viable strategy for realizing socialism at home and perhaps in the world. pg. 33 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 CHAPTER THREE INTERNATIONAL POLITICAL ECONOMY (IPE) Introduction ❖ The study of Political economy has always been dominated by a national and international level debate over the responsibilities of the state with regard to the economy. ❖ At the domestic/national level of analysis, the debate poses such pressing questions as: Should the state be responsible for determining how the economy of a given country is to be organized and run? Should such responsibility be left to the market which is populated by self-serving individuals acting as private agents? Should, for example, housing, medical care, education, welfare be provided by private citizens using the resources they have available to them? Should they be provided by the state? ❖ At the international level of analysis, the debate also poses such pressing questions as: How should international trade be governed? How should international investment be governed? How should international finance be governed? What should/not be the role of international institutions like the IMF, WB and WTO in the governance of international finance, investment and trade? 3.1 Meaning of International Political Economy (IPE) What is International Political Economy (IPE) ❖ There is no universal agreement on how IPE should be defined. ❖ This in turn implies that defining the concept is not as simple or straight forward as one might expect ❖ Definitions are important because it is the definitions that tell us what to include in our analysis and want to leave out. pg. 34 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ Political Economy is the study of the intersection of politics and economy within a given country ❖ IPE is a field of inquiry that studies the ever-changing relationships between governments, businesses, and social forces across history and in different geographical areas. ❖ IPE examines the interdependence of politics and economics in the IS. 3.2 Theoretical Perspectives of IPE ❖ Theories are developed to answer the following questions How exactly does politics shape the decisions that societies make about how to use the resources that are available to them? What are the consequences of these decisions? Nationalism (Mercantilism) ❖ Foundation: Adam Smith’s (1723-1790) ❖ Friedrich List (1789-1846) as the intellectual father of the Mercantalist thought ❖ Defends a strong and pervasive role of the state in the economy – both in domestic and international trade, investment and finance. ❖ Emphasizes on the importance of BoP surpluses in trade with other countries ❖ To this end, it often promotes an extremely policy of autarky (economic independence) to promote national economic self-sufficiency ❖ Defended even a much more sophisticated and interventionist role of the state in the economy ❖ State should also play a disciplinary role in the economy ❖ Mercantalist thought in the contemporary IPE is found in the recent experience of the Japanese, South Korean, Taiwanese and Chinese ❖ However, these East Asian economies used the term ‘developmental state approach’ ❖ Mercantilists advocated self-serving states of favoring exports so that wealth could be accumulated Basic tenets include: The government should involve in the international trade International economic is competitive not cooperative Self-sufficiency pg. 35 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Protectionism pg. 36 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Modern mercantilism applies these three propositions to contemporary international economic policy in the following three propositions: ✓ Economic strength is a critical component of national power ✓ Trade is to be valued for exports, but government should encourage imports whenever possible ✓ Some forms of economic activities are more valuable than others ❖ Mercantilism, in general, argued that state should play a large role in determining how society’s resources are allocated Liberalism Foundations: David Ricardo Emerged in the 18th century Challenged all the three propositions of mercantilism It defends the idea of free market system Free market means free trade/trade liberalization and free financial and FDI flows Advocates of free trade believes that ✓ It reduces prices ✓ Raises the standard of living for more people ✓ Makes a wider variety of products available and contributes to the improvements in the quality of goods and services The concept that captures this idea is also known as comparative advantage However, the theory of comparative advantage has been undermined by the current wave of economic globalization The growth MNCs complicates global trading The production of goods and services is strongly influenced by costs, arbitrary specialization, and government and corporate policies These developments thus mark a shift from the conventional theory of comparative advantage to what is known as competitive advantage The purpose of economic activity is to enrich individuals, not to enhance state power Countries do not enrich themselves by running trade surpluses Efficiency and effectiveness- not just by producing manufacturing products rather than primary goods pg. 37 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 It is based on people’s natural inclination to cooperation The optimum utilization of resources such as land, labor, capital, and entrepreneurial ability worldwide This is reflected with in the economy ❖ The central propositions of liberalism include: ✓ Free trade ✓ Invisible hand ✓ Comparative advantage ✓ Trade brings peace Marxism ❖ Capital is concentrated in the hands of capitalists ❖ The capitalists control the state ❖ LDCs are exploited by the capitalist state ❖ The best example is the colonial structure ❖ Global economy does not provide benefit to all countries ❖ Global economy is a zero-sum game NB: Each perspective has different response to the questions: How politics shape the allocation of resources? Mercantilist: State guides resource allocation Liberalist: Politics play little role Marxist: Decision are made by large capitalist class What are the consequences of resource allocation? Mercantilist: to enhance state power Liberalist: to improve the welfare of the people Marxist: to concentrate wealth in the hands of capitalists pg. 38 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 Contemporary Theories of IPE Hegemonic Stability Theory ❖ It is a hybrid theory containing elements of mercantilism, liberalism, and even Marxism. ❖ Its closest association, however, is with Mercantilisim ❖ HST emerged because of economic troubles that bedeviled Europe and much of the world in the Great Depression of the 1920s and 1930s ❖ During its explanatory power to Great Depression, HST has thus influenced the establishment of the Bretton Woods institutions (IMF and WB) ❖ For them, the root cause of the economic trouble was the absence of a benevolent hegemon—that is, a dominant state willing and able to take responsibility (in the sense of acting as an international lender of last resort as well as a consumer of last resort) for the smooth operation of the International (economic) system as a whole Structuralism ❖ It is a variant of the Marxist perspective and starts analysis from a practical diagnosis of the specific structural problems of the international liberal capitalist economic system ❖ Centre-periphery (dependency) relationship between the Global North and the Global South is its main feature ❖ For them this relationship permanently resulted in an “unequal (trade and investment) exchange” ❖ It spread from Latin America to other countries in Asia and Africa in 1950’s ❖ It advocates import substitution based on protectionist policies and the domestic promotion of manufacturing over agricultural and other types of primary production Developmental State Approach ❖ It is a variant of mercantilism ❖ It advocates for the robust role of the state in the process of structural transformation. ❖ It refers to a state that intervenes and guides the direction and pace of economic development. ❖ Some of the core features of developmental state include: pg. 39 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ Strong interventionism: Intervention here does not imply heavy use of public ownership enterprise or resources but state’s willingness and ability to use a set of instruments such as tax credits, subsidies, import controls, export promotion, and targeted and direct financial and credit policies instruments that belong to the realm of industrial, trade, and financial policy. ✓ Existence of bureaucratic apparatus to efficiently and effectively implement the planned process of development. ✓ Existence of active participation and response of the private sector to state intervention ✓ Regime legitimacy built on development results that ensured the benefits of development are equitably shared and consequently the population is actively engaged in the process of formulating and executing common national project of development.... etc. 3.3 Survey of the Most Influential National Political Economy systems in the world 3.3.1The American System of Market-Oriented Capitalism Founded on the premise that: ✓ Economic activity is to benefit consumers while maximizing wealth creation; ✓ The distribution of that wealth is secondary importance. The American economy does approach the neoclassical model of competitive market economy ✓ The American neoclassical model rests on the assumption that markets are competitive ✓ Where they are not competitive, competition should be promoted via antitrust and other policies The American economy is appropriately characterized as a system of managerial capitalism pg. 40 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 The economy is profoundly transformed by the late 19th emergence of huge corporations and the accompanying shift from a proprietary capitalism to one dominated by large oligopolistic corporations Management was separated from ownership The role of the American government in the economy is determined not only by the influence of neoclassical model on American thinking But also by fundamental features of the American political system Authority over the economy is divided among the executive, legislative, and judiciary branches of the federal government and the 50 States’ Whereas the Japanese Ministry of Finance has virtual monopoly power over the Japanese Financial system In the USA this responsibility is shared by the Treasury, the Federal Reserve, and several other powerful and independent federal agencies Most of the American economists opposed to industrial policy Distribution of industries should be entirely left for the market This is the assumption that all industries are created equal and that there is no strategic sectors 3.3.2The Japanese System of Developmental Capitalism ✓ Neo-mercantilism; it involves state assistance, regulation, and protection of specific industrial sectors in order to increase their international competitiveness and attain the “commanding heights” of the global economy. ✓ Many terms have been used to characterize the distinctive nature of the Japanese system of political economy: Developmental state capitalism, Collective capitalism, Welfare corporatism, Competitive communism, pg. 41 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ The term “developmental state capitalism” best captures the essence of the system, because this characterization conveys the idea that the state must play a central role in national economic development and in the competition with the West. ✓ the state assumed central role in the economy and specifically the elite pursued rapid industrialization through a strategy employing trade protection, export-led growth, and other policies ✓ Industrial policy has been the most remarkable aspect of the Japanese system of political economy 3.3.3The German System of Social Market Capitalism ✓ The German economy has some characteristics similar to the American and some to the Japanese systems of political economy, but it is quite different from both in other ways. ✓ On the one hand, Germany, like Japan, emphasizes exports and national savings and investment more than consumption. ✓ However, Germany permits the market to function with considerable freedom; indeed, most states in Western Europe are significantly less interventionist than Japan. ✓ Furthermore, except for the medium-sized business sector, the nongovernmental sector of the German economy is highly oligopolistic and is dominated by alliances between major corporations and large private banks. ✓ The German system of political economy attempts to balance social concerns and market efficiency. ✓ The German state and the private sector provide a highly developed system of social welfare. ✓ The German national system of political economy is representative of the “corporatist” or “welfare state capitalism” of continental Europe in which capital, organized labor, and government cooperate in management of the economy. ✓ On the whole, the German political economy system is thus closer to the American market-oriented system than to the Japanese system of collective capitalism. 3.3.4 Differences among National Political Economy Systems pg. 42 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ National systems of political economy differ from one another in many aspects. ❖ The following are some of the driving force that states make differ its national political economy from one and the other (1) the primary purposes of the economic activity of the nation, (2) the role of the state in the economy, and (3) the structure of the corporate sector and private business practices. The American Case ❖ The primary purpose of economic activity is to benefit consumers by maximizing wealth creation of its people ❖ The American economy does approach the neo-classical model of a competitive market economy in which individuals are assumed to maximize their own private interests (utility), and business corporations are expected to maximize profits ❖ The American neo-classical model rests on the assumption that markets are competitive ❖ The role of the state tends to be minimal ❖ The predominant responsibility of the state in these societies is to correct market failures and provide public goods ❖ Concerning the system of corporate governance and private business practices, shareholders (stockholders) have an important role in the governance of American business ❖ Regarding business practices, whereas the largest American firms frequently invest and produce abroad The Japan Case ❖ Japan best characterized as neo-mercantilism; it involves state assistance, regulation, and protection of specific industrial sectors in order to increase their international competitiveness ❖ The Japanese frequently subordinate, the pursuit of economic efficiency to social equity and domestic harmony ❖ The role of the state is much more intrusive and interventionist in the economy pg. 43 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ Concerning the system of corporate governance and private business practices, banks have played a more important role in both Japan and Germany ❖ Japanese firms prefer to invest and produce at home The German Case ❖ The German economy has some characteristics from American and some from Japanese systems of political economy, but it is quite different from both in other ways ❖ German economy, like Japan, emphasizes exports and national savings and investments more than consumption ❖ Unlike Japan, Germany permits the market to function with considerable freedom ❖ The German system of political economy attempts to balance social concerns and market efficiency ❖ The German state and the private sector provide a highly developed system of social welfare ❖ In German, bank play a crucial role in post-war German economy pg. 44 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 3.4 Governing institutions and Governance of International Political Economy World Trade Organization (WTO) The World Trade Organization (WTO) is an international organization which sets the rules for global trade. This organization was set up in 1995 as the successor to the General Agreement on Trade and Tariffs (GATT) created after the Second World War. It has about 150 members. All decisions are taken unanimously but the major economic powers such as the US, EU and Japan have managed to use the WTO to frame rules of trade to advance their own interests. The developing countries often complain of non-transparent procedures and being pushed around by big powers. World Bank (WB) The World Bank was created immediately after the Second World War in 1945. Its activities are focused on the developing countries. It works for human development (education, health), agriculture and rural development (irrigation, rural services), environmental protection (pollution reduction, establishing and enforcing regulations), infrastructure (roads, urban regeneration, and electricity) and governance (anti-corruption, development of legal institutions). It provides loans and grants to the member-countries. In this way, it exercises enormous influence on the economic policies of developing countries. It is often criticized for setting the economic agenda of the poorer nations, attaching stringent conditions to its loans and forcing free market reforms. pg. 45 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 The International Monetary Fund (IMF) The International Monetary Fund (IMF) is an international organization that oversees those financial institutions and regulations that act at the international level. The IMF has 184-member countries, but they do not enjoy an equal say. The top ten countries have 55 per cent of the votes. They are the G-7 members (the US, Japan, Germany, France, the UK, Italy, and Canada), Saudi Arabia and China. The US alone has 17.4 per cent voting rights. 3.5 Exchange Rates and the Exchange-Rate System ❖ An exchange rate is the price of one national currency in terms of another. ❖ There are two main exchange rate systems in the world namely: fixed exchange rate and floating exchange rate. In a pure floating-rate system, the value of a currency is determined solely by money supply and money demand. In other words, this system exists only when there is absolutely no intervention by governments or other actors capable of influencing exchange- rate values through nonmarket means. A pure fixed-rate system, on the other hand, is one in which the value of a particular currency is fixed against the value of another single currency or against a basket of currencies. ❖ The question thus remains: How is the global financial system governed? ❖ The creation of the International Monetary Fund (IMF) provided the answer for this question. ❖ The IMF, which was set up as an ostensibly neutral international financial institution, was designed to clearly represent U.S. interests and power first and foremost, and the interests of the other major capitalist countries (the developed economies) secondarily while governing the global financial system. pg. 46 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ This can be seen, more concretely, from the way decision-making power within the IMF was designed-i.e. voting power is determined by what the IMF calls a quota. ❖ A quota (or capital subscription) is the amount of money that a member country pays to the IMF. ❖ Accordingly, the more a country pays, the more say it has in IMF decision makings. And, it is the US that tops up in this regard. pg. 47 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 CHAPTER FOUR GLOBALIZATION AND REGIONALISM Introduction ❖ Globalization and Regionalism are two major phenomena influencing global trend. ❖ Both as a form of integration and differentiation among states characterize a form of reorganization of interstate relations: formal and informal. ❖ Globalization is often understood as a process characterized by increasing interconnectedness or interdependence. ❖ In short, it is a supra regional process bringing the world into one global village. ❖ The economy, politics, and technology have been the driving forces of globalization. ❖ Regionalism, on the other hand, is conceived as a way of dealing with politico-economic, social, military and security issues affecting states in common. ❖ Both developments have continued to significantly shape the nature of global politics, peace and security. ❖ The mutual causation between regionalism and globalization is an area of unsettling debate involving convergence, divergence and overlap. 4.2 Defining Globalization ❖ Globalization can be defined as a multidimensional process characterized by: (1) the stretching of social and political activities across state (political) frontiers so that events, decisions, and activities in one part of the world come to have significance for individuals and communities in other parts of the world. For instance wars and conflicts in developing countries would increase the flow of asylum seekers and illegal migrants in to the developed countries; (2) the intensification or the growing magnitude of interconnectedness in almost every aspect of social existence from the economic to the ecological, the spread of HIV-AIDS, from the intensification of world trade to the spread of different weapons; pg. 48 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 (3) the accelerating pace of global interactions and process as the evolution of worldwide systems of transport and communication increases the rapidity of or velocity with which ideas, news, goods, information, capital and technology move around the world; (4) the growing extensity, intensity, and velocity of global interaction is associated with a deepening enmeshment of the local and global insofar as the local events may come to have global consequences and global events may come to have serious local consequences creating a growing collective awareness of the world as shared social space, i.e. globality or globalism. ❖ Although geography and distance still matters it is nevertheless the case that globalization is synonymous with a process of time-space compression-literally meant that in the shrinking world events or actions no longer coincides with the place in which it takes place. ❖ In this respect globalization embodies a process of deterritorialization, viz., as social, political, and economic activities are increasingly stretched across the globe they become in a significant sense no longer organized solely according to territorial logic. ❖ For example terrorist and criminals operate both locally and globally. Another example is that under the condition of globalization, national economic space is no longer coterminous with national territorial space since, as in the case of many U.S companies based their headquarters in Europe. 4.3 Debates on Globalization ❖ The role of state in the globalization process has led to many questions namely: Is the state being undermined? Has it retained its primacy? Is it becoming transformed in new ways? ❖ It is possible to understand the relationship between globalization and the role of state by examining three different well accepted theoretical perspectives of globalization ❖ These are the hyper-globalists; the skeptics; and the transformationalists pg. 49 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 The Hyper-globalists ❖ The role of the nation state is diminished by the existence of international organizations such as the United Nations and the IMF ❖ The world is on its way to a form of global governance, rather than a system the governance by powerful nation states ❖ Nation-states become obsolete to regulate their economy and boundary ❖ Economic globalization brought denationalization and deterritorialization of economies ❖ Economic globalization brings the decline of states ❖ IMF; World Bank and General Agreement and Tariff and Trade (GATT) organizations, have created a new economic order, which must be obeyed by nation states ❖ National governments unable to control trans-boundary movements and flow of goods, services and ideas ❖ Transnational organizations diminish the role of the nation state, and global governance will become the last frontier ❖ National states will eventually vanish/disappear, and will not transform any kind of structure in the future ❖ Uniform way of life by trivializing traditional culture The skeptics ❖ Nation states are shaping the nature of world politics ❖ Globalization is not a new process, but an ongoing form of internationalization ❖ Nation state is growing ❖ The role of the nation state is still alive and its borders are effective ❖ The organs of the UNs are instruments of powerful nation states and are designed to achieve their political aims ❖ The future of world politics will be related to national states and their implementation ❖ Anti-globalist movements- a large number of people in the world are not comfortable with the idea of global governance ❖ Reject the idea of global governance ❖ Reject the view of hyper-globalists as flawed, myth and politically naïve pg. 50 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ❖ States are central actors and agents of globalization ❖ States play central role in shaping and regulating economic activities ❖ What is happening in the name of globalization is internationalism, regionalism, and neo- liberal policies created by the capitalist order ❖ Globalization brings nothing new The Transformationalists ❖ Presents the middle ground between the hyper-globalists and the skeptics ❖ While there are still nation states that exist in the context of world politics, there structures are different from what they were, and the effect of globalization on nation state is irrefutable ❖ Globalization is a real phenomenon and is affecting nation states ❖ The nation state still plays a role in world politics ❖ External forces such as human rights, population policy, and factors such as the environment, education, labor, and immigration, all have an enormous role to play in reshaping the structures of nation states ❖ Although international laws and the implementation of international organizations press for national sovereignty, national institutions are major players who put these international laws and other strategies in to practice ❖ Globalization reconstitute/reengineer the power, function, and authority of a state ❖ A new sovereign regime is displacing traditional conception of state power as absolute, indivisible and territoriality exclusive power 4-4 Globalization and its impact in Africa Globalization seems to be leading inevitably to the homogenization of the world, with the United States as the model and the standard by which all other countries are to be judged. Participants were unanimously of the view that globalization is inevitable and its consequences pervasive. pg. 51 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 However, asymmetry in the distribution of power results in different perceptions and evaluation of the impact of globalization, especially with respect to the distribution of the benefits of globalization. In the case of Africa, its position in the international system has been considerably weakened by the fact that it has been losing the race for economic development in general, and human development in particular, to other regions. This poor performance by African countries accounts in part for the political and social instability and the rise of authoritarian regimes that have characterized much of postcolonial Africa further weakening the ability of African countries to deal effectively with globalization. The cold war has had significant consequences for Africa. During its height in the 1960’s and 1970’s, the cold war witnessed the emergence of authoritarian regimes in most African Countries in the form of one-party or military regimes. This was largely a result of the support of the two blocks to keep African countries in their respective camps. In any event, both one party and military regimes inhibited the emergence of democratic governance and developmentally oriented regimes in Africa. With the end of the cold war, support has been withdrawn by the major powers for many African countries considered no longer of strategic importance. This has entailed an increase in the number of so called “failed states” in Africa during the last two decades. This development has also been inimical to the emergence and consolidation of effective Democratic and developmentally oriented regimes in Africa. Specific impacts of globalization on Africa can be identified In the political sphere, the most important consequence is the erosion of sovereignty, especially on economic and financial matters, as a result of the imposition of models, strategies and policies of development on African countries by the International Monetary Fund, the World Bank and the World Trade Organization. On the other hand, globalization has promoted greater respect for human rights and contributed to the development of an African press. pg. 52 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 This has opened African countries to far greater scrutiny than in the past, making it somewhat more difficult for African governments to get away with blatant and excessive abuses of democratic governance and transparency. However, this positive development is negated by the fact that these principles of democratic governance and transparency tend to be applied selectively and subjectively. More important is the fact that globalization for the most part does not facilitate the establishment of the economic conditions necessary for genuine democracy and good governance to take solid roots and thrive. In this regard globalization has negative impacts on the development and effective governance of African States. One form of this is the reduction of the capacity of governments to determine and control events in their countries, and thus their accountability and responsiveness to their people, given the fact that the context, institutions and processes by which these decisions are taken are far from democratic. In addition, the fragmentation of national economies, polities, societies and cultures that are triggered by globalization weaken national consciousness and cohesion, leading to social divisiveness and instability, which in turn facilitate the emergence of authoritarian rule. 4.5 Ethiopia in a Globalized World ✓ Ethiopia like any other country found itself facing a fast track of multidimensional changes that positively and negatively affected its place in the globe. ✓ For instance, the triumph of western free market economy and liberal democracy has put the country’s defiant political economic policy in a head-on collision course with the requirements of Briton woods institutions and western powers. ✓ This indeed has its mark on the development aid and loan Ethiopia managed to secure to finance its national development projects and design its own economic policy independently. ✓ Nevertheless, with meticulous planning and strategic thinking, Ethiopia achieved amazing economic transformation and gained a lot from the positive opportunities of globalization. pg. 53 HOPE ENTERPRISE UNIVERSITY COLLEGE GLOBAL TREND GLTR-102 ✓ It has also benefited from the technological and knowledge transfer, free movement of ideas, people and finance. ✓ The other side of the globalization coin shows negative impacts on Ethiopia. ✓ Among others, the expansion of information communication opened the historically closed doors of Ethiopia to new religious and secular values that affected the religiosity and social solidarity of its people. ✓ This is reflected in the rise of religious radicalism of every sort and posture. Socio- cultural impact of western values is amply observed in urban centres. ✓ Furthermore, the glocalization dynamics contributed to the rise radical nationalism and ethnicity. ✓ The prevalence of human trafficking and migration is partly attributable to the onset of globalization. ✓ To sum up, Ethiopia has benefited less from globalization than its negative influences. 4.6 Merits and Demerits of Globalization Merit Expansion of democratic culture, human right and the protection of historically minority and subaltern groups. Innovation in science, medicine, and technology and information communication has enabled the improvement of quality of life. Agricultural technological expansion resulted in the lifting out of millions of people out of poverty. The technological and social revolution significantly contributed to