Trade as a Security Currency for Small Powers
The strategic behaviour of small powers in the international system can be described in one word: dependence. While a single, universally accepted definition of the term âsmall powerâ remains debatable, nonetheless, the extant literature reveals recurring features of their behavioural approaches to world politics. 1 First, small powers clearly recognize that it is both futile and reckless to rely exclusively on their own capabilities to obtain security, let alone influence the conduct of world politics to work for their advantage (Toje 2010, 2011). Nevertheless, through concerted actions and efforts, small powers are able to steer the general course of the international politics by manipulating the workings of the system but with limited success. Since small powers do not enjoy a decisive and indispensible role in great powersâ wide range of political and military resources, their policy options are limited to either neutrality or alliance (Mares 1988; Toje 2010, 2011). Under regional hegemony, small powers are bent to pursue a policy of neutrality given the small likelihood of punishment. 2 Whereas within an alliance, small powers are compelled to conscientiously follow the directives of the alliance leader and throw all their support to gain favours and avoid upsetting the latter. 3 Mares (1988, p. 456) notes that those âlocated in geopolitical regions critical to maintaining a great powerâs position in the international system tend to opt for allianceâ.
Second, small powers tend to favour the status quo, preferring to operate within the existing arrangement instead of plotting to thwart and revise it (Rothstein 1968; Archer et al. 2014). The reason for this according to Vital (1967, p. 134) is that small powersâ policies are primarily designed to âreduce the unfavourable discrepancy in strength, broaden the field of manoeuvre and choice, and increase the total resources on which the state can count in times of stress.â Their limited resources, peripheral locations and the international system itself oblige small powers to set clear priorities. Once these priorities are established, security risks and threats are then ranked according to their severity and importance. Without the military capacity to protect their interests, small powers bid to âglobalizeâ those issues that they deem to pose the most lethal threats to their existence (Posen 2004; Toje 2010, 2011).
Third, small powers tend to have high regards for international laws and institutions as these instruments help them reduce the costs of conducting foreign relations, on the one hand; and add weight to their foreign policies, on the other (Keohane 1969; Barston 1973; Elman 1995). Naturally, small powers are active supporters of various international organizations, adopting their normative value and spreading their moral aspirations. To improve their less than ideal position, small and weak states lobby to institutionalize formal rules and regulations in the hopes of restraining the influence and actions of great powers (He 2008; Pempel 2010).
Fourth, and lastly, given their size and position in the international system, small powers tend to display high levels of paranoia (Bull 1977; Kassimeris 2009). They view foreign politics as a pernicious activity that brings more risks than opportunities. Being the risk averse that they are, small powers take a defensive rather than an offensive approach when discussing their grievances with great powers to avoid grave consequences (Toje 2010, 2011; Archer et al. 2014). Their key strategy is to reduce the uncertainties of the risks that they have identified and ensure that their uncontrollable effects are mitigated. While great powers are projecting their power and authority on a global scale, small powers are mainly concerned about how to extract demands from their immediate environment (Fox 1959; Toje 2010, 2011). Such behaviour reflects the narrowness of small powersâ range of interests and their lack of independence to decide and execute these decisions on their own. Based on the foregoing, it can be inferred that the strategic behaviour of small and weak states is largely focused on the pursuit of multilateral, non-military resolutions to their security dilemmas as opposed to the unilateral, coercive use or threat of force.
These strategic disadvantages can force small powers to take more innovative approaches to security although not all do so. Exploring how weaker states use trade to solve their security concerns and the trade-offs they make to do so can provide insight into when strategic innovation takes place and when such approaches are more or less effective. This is a particularly important path of inquiry given the changes in the nature of both trade and security. On the one hand, trade is no longer simply the exchange of commodities and finished products. On the other, understandings of security now encompass not just the survival of the state but also considerations of human safety. Such shifts mean that reassessments of the relationship between trade and security are timely. To this point very little has been done in explaining the impetus and dynamics behind the linking of security and trade based on the overarching idea of âcohabitative securityâ or the view that security encompasses both state and human elements. Furthermore, there is a dearth of comprehensive theoretical and empirical analyses concerning the linkage efforts and strategies particularly by small powers.
This book addresses those gaps by providing an in-depth, intensive analysis and a narrative presentation of the security-trade linkage process that is defining East Asiaâs (the Northeast and the Southeast) contemporary security environment. For all states in the region, trade has become a vital platform for pursuing various components of their national interests. One of the key outcomes of this trend is the increase in formal institutional linkages in both the economic and security arenas of East Asian countries (Pempel 2010). As such, reversing back toward protectionism that unnecessarily destroys existing economic, political and strategic networks is unlikely to be the preferred policy approach despite the problems associated with trade. The insecurities induced by the domestic security context, which a host of external factors amplify, compel East Asian states â particularly the small and weak ones â to liberalize even further by proactively engaging in various trade negotiations and agreements. Hence, the region as a whole provides an idyllic backdrop for testing the theories and hypotheses about the cohabitation between the security interests and trade agendas of small powers.
Using Taiwan, Singapore, the Philippines and Malaysia as my primary case studies, I propose to theorize and produce new empirical knowledge about: (a) why and how small powers link their security interests and trade agendas; (b) how traditional/non-traditional security threats/issues influence the facilitation and outcome of the small powersâ trade activities; and (c) how statist/humanist linkages affect the small powersâ primary security referents and overall security. In answering these questions, I perform two main tasks. First, I theoretically reconfigure the security concept by amalgamating state and human dimensions of security to establish the cohabitative security framework. Second, I empirically analyze the linkages between cohabitative security referents and various forms of trade engagements. Third, and lastly, I outline three key themes that will help elucidate the presence of small power linkages: namely: (a) high levels of internal and external insecurities; (b) marginal geo-economic size and peripheral geopolitical position; and (c) multidimensional and multidirectional security contexts and threats.
I argue that in their quest to promote and enhance their âstatistâ (state-centric) and âhumanistâ (human-centred) security referents, the small powers have learned to re-imagine and re-invent the utility of free trade. Borrowing Buzan et al.âs (1998) definition, the term âreferentâ pertains to things that are seen to be existentially threatened and that have a legitimate claim to survival. Amid their marginal size and peripheral position, trade has become an integral function of their security policies and strategies. Depending on the nature and origin of security threats, on the one hand; and the underlying security contexts observed, on the other, trade performs a multifaceted function. In Taiwan, trade is a sovereignty-upgrading mechanism; in Singapore, a defense-upgrading tool; in the Philippines, a development-upgrading instrument; and in Malaysia, a diversity-upgrading apparatus.
However, as will be illuminated in this book, these linkages work like a double-edged sword that produces mixed outcomes. As such, states attempting to link their security interests and trade agendas are essentially âtrading securityâ. The reason is that for every additional security that a linkage provides a specific referent a corresponding insecurity is reflected in other referents. Put differently, for every security enhancement that a linkage creates, a consequent insecurity is generated. This will be illustrated in the four cases examined in the book. With respect to statist linkages, Taiwanâs linkage efforts might lead to the islandâs complete assimilation with China; while Singaporeâs linkage attempts can result in the city-stateâs failure to strategically balance conflicting American, Chinese and Japanese interests in the region. With regard to humanist linkages, the Philippinesâ linkage attempts have preserved the uneven economic security and further reinforced its oligarchic system and patronage culture; while Malaysiaâs linkage efforts have exacerbated racial inequalities and further legitimized the Malay-centric rule of the Barisan Nasional coalition.
Nevertheless, despite the new forms of risks and uncertainties generated by these linkages, the small powers are bent on maintaining (if not reinforcing) them due to their underlying belief that the future will be miserable unless these are undertaken, or at least a strong conviction that their security outcomes will be inferior than the likely ones produced by the linkages. Through a systematic and in-depth analysis of the experiences, perspectives and meanings derived from the small powersâ linking efforts and strategies, the book provides a comprehensive and updated understanding of: (a) the motives and impetus behind small power linkages; (b) the limitations and challenges encountered when facilitating these linkages; and (c) the effectiveness of these linkages in providing the desired security outcomes.
Linking security and trade: the story so far
Security experts and trade analysts have long recognized the profound and multifaceted relations between their respective domains. Despite the insistence of some liberal economists to exclude politics from their analyses, however, they acknowledge the underlying connections between security and trade in the foreign policies of states. As the global security environment continues to evolve, new forms of trade arrangements have emerged. And with the passing of time, the linkages between the realms of security and trade have become more complex than ever.
The first strand of research on security-trade nexus emphasized the relationships between level of economic interdependence and incidence of interstate conflicts. While some analysts tested whether higher levels of economic interdependence led to lower rates of conflict, others examined whether higher rates of conflict diminished the overall level of economic interdependence. 4 Despite the use of highly sophisticated statistical techniques in analysing the correlations between trade and conflict, however, findings remained largely inconclusive. This led Aggarwal and Govella (2013) to argue that the operationalization of the terms âtradeâ and âconflictâ, as well as the identification of ârelevantâ cases, influence the quality and type of results generated by the studies. The argument is particularly relevant with respect to the contradicting results derived from dyad-level quantitative studies of the effects of trade vis-Ă -vis international conflict behaviours. While some researchers found that bilateral trade increased the likelihood of militarized interstate disputes (MIDs), others offered evidences that bilateral trade reduced the probability of MIDs in economically liberal dyads. 5
The primary source of inconsistency has been the subject of considerable debates including: differences in data collection; econometrics and model specification; control variables; and the choice of temporal and spatial domain. As Gartzke and Li (2003, p. 567) pointed out, âdiscrepant results about interdependence and conflict can be explained by variable construction, even without data inconsistenciesâ. In other words, the manner through which researchers construct their measures of dyadic interdependence significantly affects the types of outcomes that are generated by empirical analyses. Barbieri et al. (2009, p. 488) questioned assumption by illustrating how the issue of missing data distorts the analysis of trade-conflict nexus by generating results that âmay paint a picture that stands in sharp contrast from realityâ. Contending that no one has found the optimal solution to the problem of missing data, they introduced the Correlates of War (COW) Trade Data Set which included dyadic and national trade figures for state system members beginning in 1870. 6 Meanwhile, Dorussen (2006) suggested that not all trade is the same since trade in some goods could have a much larger impact on the likelihood of conflict than trade in others. By studying trade per industrial sector, he was able to account for the varying effects of trade on conflict while moving away from the assumption that nation-states act as unitary and rational actors. He then concluded that âeconomic interdependence mobilizes a large number of interests that vary not only greatly in their influence on government but also in their preferred policiesâ (Dorussen 2006, p. 104.)
Similarly, mixed results were gathered from the analyses of conflictsâ impact on aggregate levels of trade. While some experts argued that the presence of conflict adversely affected trade, others claimed that there was no evidence of systematic relationship between the two variables. For example, Anderton and Carter (2001) showed how trade promoted peace by raising the cost of war. Although the results generated were far from being homogenous, the evidences gathered supported the liberalsâ trade disruption hypothesis or the view that war carried with it an opportunity cost of forgone trade. Their findings were further substantiated by Oneal et al.âs (2003) study of the causes of peace that provided evidence of how economically important trade reduced dyadic militarized disputes even when controlling for the influence of past conflict. They concluded that âthe pacific benefits of democracy and trade are statistically significant, substantively important, and robustâ (Oneal et al. 2003, p. 387). These findings were heavily criticized by some sceptics including Barbieri and Levy (2001) who claimed that Anderton and Carter went too far when they suggested that the evidences they found proved the trade disruption premise. They cited three main reasons why the assumptions about the pacific effect of trade were incorrect: the lack of attention on the political dimension of either trade or war; the attribution of greater specificity to commercial liberal theory than what actually exists; and the mixed support for liberal theory generated by empirical findings (Barbieri and Levy 2003).
Meanwhile, the second strand of research on security-trade nexus explores the role of military alliances and partners with respect to the trade activities of states. These studies assessed whether the overall levels and patterns of trade were determined by alliances and partnerships. Based on the review conducted by Aggarwal and Govella (2013), the manner through which alliances and partnerships impacted trade was contingent on other important factors such as the type of trade and the form of grouping. For example, Gowa and Mansfield (2004) claimed that alliances supported optimal levels of trade in cases where scale economies (rather than differences in relative factor endowments) motivated it. Meanwhile, Long (2003) demonstrated how defense pacts were typically associated with higher trade levels among alliance members; and why trade between members of non-defense pacts was statistically indistinguishable from trade between non-allies. Long and Leeds (2006) offered a two-pronged hypothesis about the relations between trade and alliance formation: (a) allies whose agreements include economic provisions tend to trade more than both non-allies and allies who do indicate economic links as part of their alliance; and (b) allies who decide not to tackle economic issues explicitly in...