Re-Evaluating Regional Organizations Evgeny Vinokurov • Alexander Libman Re-Evaluating Regional Organizations

Re-Evaluating Regional Organizations Evgeny Vinokurov • Alexander Libman Re-Evaluating Regional Organizations

Behind the Smokescreen of Official Mandates Evgeny Vinokurov Alexander Libman Centre for Integration Studies Ludwig Maximilians University of Munich Eurasian Development Bank Munich, Germany St. Petersburg, Russia

ISBN 978-3-319-53054-3 ISBN 978-3-319-53055-0 (eBook) DOI 10.1007/978-3-319-53055-0

Library of Congress Control Number: 2017937050

© The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publica- tion does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Cover image © LazyPixel / Brunner Sébastien, Moment / Getty Images

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Acknowledgment

The authors thank Samuel Pinson for his help in preparing the final version of the manuscript. We appreciate diligent technical assistance of Anna Isakova. Andrey Medvedev, head of cartography laboratory of the RAS Institute for Geography, produced a set of illustrative maps of regional organizations we feature in this book. We are also thankful to Anna Reeve, the editor at Palgrave Macmillan, for her efficient proces- sing of this volume and constant support. We are particularly indebted to Harley Balzer, Gaspare Genna, and Sergei Shatalov for their numer- ous helpful remarks, which have been invaluable for the development of this book. All mistakes remain our own.

v Contents

1 Introduction 1 1.1 Motivation for the Book: Research Plan 1 1.2 Approach and Methodology 4 1.3 Structure of the Book 6

Part I Regional Organizations: An Analytical Framework

2 Typology of Regional Organizations 9 2.1 Terminology 9 2.2 Heterogeneity of ROs in the Extant Research 14 2.3 Four Sets of Goals 16 2.4 The Universe of ROs 19 2.5 Possible Evolutionary Paths 27 2.6 Driving Factors 31

3 Historical Factors 43 3.1 Holding-together Regionalism 44 3.2 Economic and Social Interdependence 49 3.3 Path Dependence 52

vii viii Contents

4 Economic Development and Crises 55 4.1 Long-Term Economic Development 55 4.2 Economic Crises 59 4.3 Asymmetric Economic Development and Crises 63

5 Power Asymmetries 67 5.1 The Leading Country’s Preferences 69 5.2 The Smaller Countries’ Preferences 72 5.3 Power Asymmetry and RO Type 74

6 Political Regime 77 6.1 Democracies and Autocracies in Regional Integration 77 6.2 External and Internal Regime Constraints 81

Part II The Universe of Regional Integration Organizations

7 Determinants of RO Type: Large-N Evidence 93 7.1 Correlates of RO Type 93 7.2 RO Type Indicators 107

8 ‘Straight Path’ Alive and Kicking Regional Organizations 119 8.1 Introduction 119 8.2 Southern Common Market (Mercosur) 120 8.3 Southern African Customs Union (SACU) 126 8.4 Cooperation Council for the Arab States of the Gulf (GCC) 133

9 Alternative Path: A Regional Organization’s Rebirth 139 9.1 Introduction 139 9.2 Economic Community of West African States (ECOWAS) 140 9.3 Association of Southeast Asian Nations (ASEAN) 147 Contents ix

10 Integration Rhetoric 157 10.1 Introduction 157 10.2 The Bolivarian Alliance for the Peoples of Our America – Peoples’ Trade Treaty (ALBA): Barter Based on Socialist Solidarity 158 10.3 The Organization for Democracy and Economic Development (GUAM) 167

11 Talking Club 175 11.1 Introduction 175 11.2 Asia-Pacific Economic Cooperation (APEC) 176 11.3 Shanghai Cooperation Organization (SCO) 181 11.4 Latin American Integration Association (LAIA) 187

12 Zombies and Coma 191 12.1 Introduction 191 12.2 Interstate Bank (ISB) 194 12.3 Organization of Arab Petroleum Exporting Countries (OAPEC) 200 12.4 Eurasian Economic Community (EurAsEC), 2011–2014 204

13 Dissolution of Regional Organizations 211 13.1 Introduction 211 13.2 Central Asian Economic Community (CAEC) 213 13.3 African and Malagasy Union (AMU) 219

14 Conclusions 223

Annex 1 RID Data 229

References 245

Index 269 Abbreviations

ACF EurAsEC Anti-Crisis Fund (since 2015 – Eurasian Fund for Stabilization and Development, EFSD) ACIA ASEAN Comprehensive Investment Area ACS Association of Caribbean States ACT Amazon Cooperation Treaty Organization AFAS ASEAN Framework Agreement on Trade in Services AFC asian financial crisis AICHR ASEAN Intergovernmental Commission on Human Rights ALADI Asociación Latinoamericana de Integración ALBA Bolivarian Alliance for the Peoples of Our America - Peoples’ Trade Treaty AMU African and Malagasy Union AMU Arab Magreb Union APEC Asia-Pacific Economic Cooperation APTI Arab Petroleum Training Institute ARF ASEAN Regional Forum ASA Association of Southeast Asia ASEAN Association of South-East Asia Nations ASEM Asia–Europe Meeting AU African Union BALBA Banco del ALBA BCEAO Banque Centrale des Etats de l’Afrique de l’Ouest

xi xii Abbreviations

BIMSTEC Bay of Bengal Initiative for MultiSectoral Technical and Economic Cooperation BLNS Botswana, Lesotho, Namibia, and Swaziland BOAD Banque Ouest Africaine de Développement BRICS Brazil, Russia, India, China and South Africa BSEC Organization of the Black Sea Economic Cooperation CAC Central Asian Cooperation CACM Central American Common Market CACO Central Asian Cooperation Organization CAEC Central Asian Economic Community CAEC Central Asian Economic Cooperation CAEU Central Asian Economic Union CAEU/GAFTA Council of Arab Economic Unity/Greater Arab Free Trade Agreement CAN Andean Community CAREC Central Asia Regional Economic Cooperation CARICOM Caribbean Community CBSS Council of the Baltic Sea States CEE Central and Eastern Europe CEFTA Central European Free Trade Agreement CEI Central European Initiative (Eastern Partnership) CEMAC Economic and Monetary Community of Central Africa CEPEA Comprehensive Economic Partnership for East Asia CEPGL Economic Community of the Great Lakes Countries CEPT common effective preferential tariff CET common external tariff CETA Comprehensive Economic and Trade Agreement CGS Council of Gulf States CILSS Permanent Interstate Committee for Drought Control in the Sahel CINC composite index of national capability CIS Commonwealth of Independent States CMA Common Monetary Area CMI Chiang Mai Initiative COMECON Council for Mutual Economic Assistance COMESA Common Market for Eastern and Southern Africa CSO civil society organization CSTO Collective Security Treaty Organization Abbreviations xiii

CU Customs Union D8 Developing 8 DR-CAFTA Dominican Republic-Central America Free Trade Agreement EAACM Euro-Asian Association for Coal and Metals EAC East African Community EAEU Eurasian Economic Union EAFTA East Asian Free Trade Area EAS East Asia Summit EBID ECOWAS Bank for Investment and Development ECB European Central Bank ECCAS Economic Community of Central African States ECLAC Economic Commission for Latin America and the Caribbean ECO Economic Cooperation Organization ECOALBA-TCP Economic Space of ALBA-TCP ECOWAS Economic Community of West African States EDB Eurasian Development Bank EEA European Economic Area EFTA European Free Trade Association EIU Economist Intelligence Unit EMU European Monetary Union EPA Economic Partnership Agreement ESF ECOWAS Standby Force EU European Union EurAsEC Eurasian Economic Community FDI foreign direct investment FOB (value) free on board (value) FSU (states) former Soviet Union (states) FTA free trade agreement FTAA Free Trade Area of the Americas FTAAP Free Trade Area of the Asia-Pacific G3 Group of Three (Colombia, Venezuela, and Mexico) GATT 1994 General Agreement on Tariffs and Trade 1994 GCC Gulf Cooperation Council GCI Global competitiveness index GDP Gross domestic product GERD Gross expenditure on R&D xiv Abbreviations

GIC Gulf Investment Corporation GMS Greater Mekong Subregion GUAM Organization for Democracy and Economic Development ICAS Interstate Council of the Central Asia States on the Aral Sea Basin Problems IDB Islamic Development Bank IEA International Energy Agency IGAD InterGovernmental Authority on Development IMF International Monetary Fund ISB Interstate Bank LAFTA Latin American Free Trade Association LAIA Latin American Integration Association LAS League of Arab States LCBC Lake Chad Basin Commission MERCOSUR Southern Common Market MFN most favoured nation (regime) MRC Mekong River Commission MSG Melanesian Spearhead Group MU Monetary Union NAFTA North American Free Trade Agreement NATO North Atlantic Treaty Organization NBA Niger Basin Authority NC Nordic Council NGO Non-governmental organization OAPEC Organization of Arab Petroleum Exporting Countries OAS Organization of American States OAU Organization of African Unity OCAC Organization of Central Asian Cooperation OECS Organization of Eastern Caribbean States OLADE Latin America Energy Organization OMVG Gambia River Basin Development Organization OMVS Senegal River Basin Development Authority OPEC Organization of the Petroleum Exporting Countries OSCE Organization for Security and Cooperation in Europe PA Pacific alliance PICE Argentina-Brazil Integration and Economics Cooperation Program PRC People’s Republic of China Abbreviations xv

R&D Research and development RATS Regional Antiterrorism Structure RBK CU Russian Federation – Belarus – Kazakhstan Customs Union RCEP Regional Comprehensive Economic Partnership RI Regional integration RIA Regional integration agreement RID Regional Integration Database RO Regional organization RSA Revenue sharing arrangement RTA Regional trade agreement SAARC South Asian Association of Regional Cooperation SACU Southern African Customs Union SADC Southern African Development Community SAM Single Aviation Market SCO Shanghai Cooperation Organization SELA Latin American and Caribbean Economic System SPARTECA South Pacific Regional Trade and Economic Cooperation Agreement SPECA United Nations Special Programme for the Economies of Central Asia SPS Sanitary and phytosanitary measures SREB Silk Road Economic Belt STI Straits Times Index SUCRE Sistema Unitario de Compensación Regional de Pagos SWIFT Society for Worldwide Interbank Financial Telecommunications TAC Treaty of Amity and Cooperation TBT Technical barriers to trade TBTF Too-big-to-fail (financial institutions) TPP Trans Pacific Partnership TPSEP/P4 Trans-Pacific Strategic Economic Partnership Agreement TTIP Transatlantic Trade and Investment Partnership UAE United Arab Emirates UEB Benelux Economic Union UK United Kingdom (of Great Britain and Northern Ireland) UN United Nations UNMIL United Nations Mission in Liberia xvi Abbreviations

UNSD United Nations Statistics Division US United States (of America) USSR Union of Soviet Socialist Republics VER Voluntary export restraint WAEMU West African Economic and Monetary Union WAMA West African Monetary Agency WAMI West African Monetary Institute WAMZ West African Monetary Zone WAPP West African Power Pool WTO World Trade Organization ZOPFAN Zone of Peace, Freedom, and Neutrality List of Figures

Fig. 1 Types of regional organizations 20 Fig. 2 Likely evolutionary paths based on RO type 28 Fig. 3 Regional River Basin organizations 95 Fig. 4 Visibility (Google) versus RO budget ((a) – full sample without EU and AU, (b) – excluding other outliers) 110 Fig. 5 Visibility (Google) versus intra-regional exports as a percen- tage of the ROs’ total exports ((a) – full sample without EU and AU, (b) – excluding other outliers) 112 Fig. 6 Major Alive-and-Kicking ROs 121 Fig. 7 Alternative path ROs 141 Fig. 8 Rhetorical ROs 159 Fig. 9 Major ‘Talking Clubs’ 177 Fig. 10 ‘Zombies’ and ‘Coma’ 193

xvii List of Tables

Table 1 Reasons why various non-traditional RO types exist 40 Table 2 Autocrats’ willingness to cooperate based on external dependence and internal constraints 88 Table 3 Mean comparison, RO types versus various indicators 99 Table 4 Determinants of RO type, ‘Straight Path’, logit 100 Table 5 Determinants of RO type, ‘Alternative Path’, logit 101 Table 6 Determinants of RO type, ‘Integration Rhetoric’, logit 102 Table 7 Determinants of RO type, ‘Talking Club’, logit 103 Table 8 Determinants of RO type, ‘Zombie’, logit 104 Table 9 Determinants of RO type, multivariate logit 105 Table 10 Non-monotonic effects 106 Table 11 Mean comparison, types of ROs versus the rest 114 Table 12 Determinants of RO type, dep. var.: High visibility low budget dummy 114 Table 13 Determinants of RO type, dep. var.: low visibility high budget dummy 115 Table 14 Determinants of RO type, dep. var.: high visibility low intra-regional trade 116 Table 15 Determinants of RO type, dep. var.: low visibility high intra-regional trade 116 Table 16 SACU revenue contribution in 2009/2010 130

xix