Analysis of Chiang Mai Initiative (CMI) Within ASEAN+3 Framework
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Multilateralism in East Asia 101 Jurnal Kajian Wilayah, Vol. 1, No. 1, 2010, Hal. 101-118 © 2010 PSDR LIPI ISSN 021-4534-555 Multilateralism in East Asia: Analysis of Chiang Mai Initiative (CMI) within ASEAN+3 Framework M. Sigit Andhi Rahman1 Abstrak Sektor finansial merupakan sektor kerjasama yang paling intensif di dalam ASEAN+3. Penandatangan Chiang Mai Initiative (CMI) pada Mei 2000 dan kemudian diperluas melalui Chiang Mai Initiative multilateralization (CMIM) atau Common Fund Agreement pada bulan Mei 2009, menandakan sebuah babak baru dalam relasi antara negara-negara tersebut dan juga dalam perdebatan akademik mengenai multilateralisme dan regionalisme di wilayah Asia Timur. Makalah ini menganalisis CMI dalam konteks multilateralisme, bukan dengan cara membandingkan dengan Uni Eropa misalnya, akan tetapi dari segi prinsip-prinsip multilateralisme itu sendiri sebagaimana diformulasikan oleh John Gerard Ruggie. Kata kunci : Chiang Mai initiative, multilateralisme, regionalisme, ASEAN +3 Introduction The ASEAN+3 framework (China, Japan, and the Republic of South Korea)2 has broadened and deepened in many areas of cooperation (20 areas). It ranges from political cooperation and security to youth and women. Researchers have been debating whether ASEAN+3 can be considered as multilateralism in East Asia or not (See Acharya 2008, Liu and Yan 2004, Mahbubani 2008, 1 Master Program of IRIO RUG (International Relations & International Organizations), the Netherlands. He can be reached at [email protected] 2 Although many discussion on whether East Asia Community should include Australia, New Zealand, and India as stated in the first East Asia Summit (EAS) in 2005, ASEAN+3 has being considered as the main vehicle for East Asian regional integration and carrying out many cooperative activities compare to EAS. 10 M. Sigit Andhi Rahman see also the concept of soft institutionalization in Qin 2007). The signing of the Chiang Mai Initiative (CMI) in May 2000 and then its extension-Chiang Mai Initiative Multilateralization (CMIM) or Common Fund Agreement in May 2009- has brought new discussion to the debate. CMI is one of cooperation within ASEAN+3 framework in term of finance and monetary.3 This paper wants to address the question: to what extent CMI within ASEAN+3 framework can be considered as multilateralism in East Asia? Several studies on East Asian multilateralism have tried to compare ASEAN+3 to European Union (EU) as a model for regional cooperation (See for example Baldwin 2003 and Stubbs 2002). But it is important to focus the discussion on the definition and criteria of multilateralism itself. It should not make conclusion only by comparing the CMI with the European Monetary Cooperation Fund (EMCF). Multilateralism has indeed existed in many different forms long before the formation of EU. ASEAN is considered different with EU in term of institutionalization process. ASEAN has characteristic of informal agreement, lack of binding rules and procedure in its process than to EU. ASEAN focuses on trust building and maintain good relations. Qin Yaqing called ASEAN style as soft institutionalization (Qin 2007). This different style does not imply that ASEAN is not multilateralism. John Gerard Ruggie defines multilateralism as the practice of coordinating relations among three or more states in accordance with certain principles (Multilateralism Matters: The Theory and Praxis of an Institutional Form 1993, 8). The “certain principles” are the key point that differentiates multilateralism with bilateralism. It is not differentiated by the number of states as Keohane described (Multilateralism:An Agenda for Research 1990, 755. Those principles of multilateralism are non-discriminatory, indivisibility and diffuse reciprocity. The paper will examine whether CMI has those principles. Section 2 after the introduction will present briefly the CMI. This will be followed by Section 3 which consists of 3 parts. Part 1 will examine the existence of non- discriminatory principle, part 2 will examine the principle of indivisibility and part 3 will deal with the principle of diffuse reciprocity. Section 4 is the conclusion that will answer whether CMThe importance of this study is also to understand the condition of peace in East Asia after the Cold War especially after Asian financial crisis. Mahbubani stated that Asian financial crisis was predicted as fuel of conflict between East Asian States (79). As in the early 1980, Ruggie argued that multilateralism was crucial to the stability of relations among states in the West after second World War. An extended period of cooperation and economic growth among states in Europe, US, 3 Chiang Mai Initiative (CIM) which launched together Asian Bond Market Initiative (ABMI) was signed after Asian Financial Crisis. Multilateralism in East Asia 10 Japan and some of other Asian states are made possible by multilateral arrangement of Bretton woods (Griffiths 999, 97). If this study concludes that CMI is multilateralism, it will contribute to the previous studies on the role of APT in East Asia peace building. This paper uses the constructivist approach of Ruggie. Ruggie gives strong critique to the realist approach who neglects the importance of institutionalization process in international relations. The interaction between states helps them to institutionalize certain rules of behavior and conducts. These rules later on guide them how to behave toward each other. International relations are not merely the struggle of power between states in the anarchical system. In this respect, Ruggie perspective is in line with the liberal institutionalist such as Goldstein and Keohane. Despite of the agreement on institutionalization aspect of liberal institutionalist, Ruggie criticizes the nominal aspect of institutionalization from Keohane. As mentioned before, it is not the number of states who interact determine relations between states as multilateralism or bilateralism, but the existence of certain principles. Ruggie also criticizes Keohane in the neglect of ideational factor in the institutionalization processes. Keohane only focus in the mutual interest between states, while Ruggie stresses the importance of idea in transcending their national interest. The role of ideas in international relations will be presented in the discussion concerning diffuse-reciprocity principle. Chiang Mai Initiative (CMI) In ASEAN+3 annual meeting in Chiang May, Thailand, May 2000, financial ministers of ASEAN+3 member states, agreed in principle to pool their hard currency resources. This multilateral currency swap arrangement was called as Chiang May Initiative (CMI). CMI was a response to the 1997-1998 Asian financial crisis. There are three tracks of cooperation in the agreement: currency swap, surveillance and early warning system for future financial crisis, and exchange views among the ASEAN+3 members on reform needed to international financial structure (Stubbs 2002, 449-450). Currency swap is an agreement to exchange one currency for another and to reverse the transaction at a date in the future. It builds the expanded intra-ASEAN US$ 1 billion standby swap arrangement. Miyazawa Initiative put in place by Japan in the late 1998 to assist Asian countries. The surveillance and early warning system will be in form of exchange of information on short-term capital movements in East Asia. It will make governments aware of potential problems. The last track will become the basis for recommendation to international forums on the international financial structure reformation. CMI in the first stage combined the previous ASEAN Swap Arrangement (ASA) and new Bilateral Swap Arrangement (BSA). The ASA started in 1977 10 M. Sigit Andhi Rahman which allowed ASEAN members to exchange local currency for US dollars on a short term basis to alleviate “temporary international liquidity problems.” BSA is a network of new bilateral agreements consists of 30 agreements between the 3 States (Japan, China, South Korea) and each 5 ASEAN members (Malaysia, Thailand, Indonesia, The Philippines, Singapore), plus agreements among the 3 states themselves. Table 1. Bilateral swap agreement underTable Chiang . Mai Initiative Bilateral swap agreement under Chiang Mai Initiative status Amount (billion of Countries as of July 2002 dollars)a Currency Japan-South Korea signed July 4, 2001 2 Dollar-won Japan-Thailand signed July 30, 2001 3 Dollar-Baht Japan-Philippines signed August 27, 2001 3 Dollar-peso Japan-Malaysia signed October 5, 2001 1 Dollar-ringgit China-Thailand signed December 6, 2001 2 Dollar-baht Japan-China signed March 28, 2002 3 Yen-renminbi South Korea-China signed June 24, 2002 2 Dollar-renminbi or dollar-won South Korea-Thailand Announced, not signed 1 Dollar-baht or dollar-won South Korea-Malaysia expected 2002 [1] Dollar-ringgit or dollar-won South Korea-Philippines expected 2002 1 Dollar-peso or dollar-won Japan-Singapore in progress [3] Dollar-Singapore dollar China-Malaysia in progress [1] Dollar-ringgit China-Philippines in progress [1] Dollar-peso Japan-Indonesia in progress [3] Dollar-rupiah a. Brackets indicate provisional figures Source: http://www.piie.com/publication/chapter_preview/345/3iie3381.pdf CMI CMIhas become has become a framework a framework for ASEAN+3 for meASEAN+3mber states member to make statescontract to between make contract between themselves bilaterally. All arrangements generally swap US themselves bilaterally. All arrangements generally swap US dollars for local currency. For dollars for local currency.