Broadening the actors of the 'crisis-institutional change' causal mechanism in ASEAN and Mercosur

Abstract

After reviewing the literature on crisis and institutional change, this article compares the responses of two regional organizations, the Association of Southern Asia Nations (ASEAN) and the Southern Common Market (Mercosur), to the economic crisis of 1997 and 1999-2001 and the global financial crisis (2008). The aim is to incorporate the influence of powerful actors of their regions in the causal mechanism of those changes. The selection of case studies follows two criteria: 1. different institutional designs (market integration or the so called “Asian way” and a relatively more formal Mercosur design that attempts to emulate the stages and agencies of the European model, albeit without supranational or effective decision-making power) and 2. similar economic crises (the 1997 and 1999-2001 crisis were endogenous because they started in a member of the group and spilled over to the rest, while the global financial crisis began in the United States and the European Union, EU, and affected mostly any nation). These criteria help isolate and highlight elements such as the agency of members of the regional organization and other powerful actors.

This article departs from a path dependence approach and posits that the regional context, understood as a combination of their actors’ agency and interrelationship, is a key factor in explaining why regional organizations change. Accordingly, it employs an actors’ institutionalist approach that combines ideas and interest.  This can be situated within the perspective of Wendt (2004), who considers governments’ agency in a context favorable to change as the main explanatory factor of institutional transformation, and also, within the Keohane & Nye (1987)’s notion that governments’ interrelations are dynamic because their interests change along time. Thus, analyzing the regional context as the product of governments’ decisions affected by changing interests and interrelationships helps identify the circumstances that make institutional change possible, and point out the key role of powerful regional actors.

Methodologically, the article uses, first, comparative analysis to identify differences in institutional changes of ASEAN and Mercosur after 1997, between 1999-2001, and 2008-2009, and to follow the evolution of changes- with an emphasis on differences that cannot be explained by their institutional designs. Secondly, it applies process tracing based on empirical knowledge provided by the literature to detect what other factors have influenced those differences, and especially what actors had power to affect the outcomes.

The article pays attention to the causal mechanism linking crisis to changes in order to open up the “black box” between the two and explain why changes took place. It describes first the situation at two specific historical moments (before and after the crisis) and reconstructs afterwards the sequence of events leading from one to another, with emphasis on relations between agreements and regional contexts. The article does not include a detailed study of all the actors, events, actions, and conditions of the causal mechanism, but relies on published works that have applied process tracing to some institutional changes in ASEAN and Mercosur and also develops one additional sequence. Thus, it is able to pinpoint the main role of China and Brazil in ASEAN and Mercosur and to zero in on changes in regional power configurations and the reorientations of their aims and objectives to explain institutional change.

According to our findings, the reorientation of Brazilian foreign policy priorities from the regional to the global level since 2003 and the changing power relations between the United States, Japan, and China in Southeast Asia between the end of the twentieth century and the 2010s have key explanatory capacity in the causal mechanism between crisis and change in Mercosur and ASEAN. Powerful actors like China and Brazil represent more than intervening variables of the causal mechanism because without their influence institutional changes would not have been made or might have assumed a different format.

Comparative analysis results show that in the first crisis ASEAN and Mercosur behaved differently, though both reoriented their objectives after the crisis – ASEAN emphasized economic objectives and got closer to Asian powers (Japan, China) without diminishing links with external ones (United States, European Union), while Mercosur took temporary measures, mostly abandoned, or postponed later on, and switched from economic objectives to sociopolitical ones. An enhanced proximity to Asian economic partners led to establish ASEAN+ agreements such as bilateral currency swaps, and to approve an ASEAN Charter that facilitated the group’s engagement in wider agreements. In Mercosur, as decisions to deal with the crisis were not implemented, they had little bearing in the final outcome, i.e., the group’s economic situation improved due to the beginning of the commodities exporting boom in 2003, and not due to decisions taken. At the same time, the reorientation of Brazilian foreign policy from the regional level to an attempt to achieve global recognition contributed to the creation of agencies without initiative and decision-making power, and the displacement of Mercosur by new organizations (the Southern Community of Nations, CSN, and the South American Union of Nations, UNASUR).

In the second crisis, ASEAN and Mercosur behaviors were rather similar because both undertook pragmatic answers, and their governments applied a combination of counter-cyclical and pro-cyclical policies. However, ASEAN national answers did not affect their members’ interdependence, enhanced by measures like turning the previous bilateral currency swap into a multilateral one with the support of an Asiatic reserve fund. In Mercosur, joint decisions were not implemented again, and national answers became the norm. Even though the end of the exporting boom led to pay more attention to Mercosur, Brazilian internal problems since 2012 prevented its government from playing an active role in restoring the group’s dynamism.

In the crisis of the 1990s and the 2000s, the original institutional design of ASEAN and Mercosur did not seem to be the force behind changes because both agreements behaved somewhat contradictorily to what it could be expected from them – ASEAN as a market integration example would have been expected to resort to measures to satisfy their national governments interests and disregard those of the group, but they maintained their interdependence and most measures already approved. In Mercosur, with more formal institutions, answers were mostly national and joint decisions, fewer. Those outcomes can be associated to different interests of China and Brazil vis-à-vis ASEAN and Mercosur – in 1997 China wanted to organize ASEAN into a first circle of economic and political influence in Eastern Asia in competition with Japan, while Brazil, after 2001, lost interest in Mercosur supplanted in economic and political importance by CSN and UNASUR. After the global financial crisis, China was able to develop wider regional agreements such as RCEP replicating mechanisms of ASEAN +3. When the global crisis affected Brazilian after 2012, changes in Mercosur were few and individual because Brazil had lost its economic and political dynamism and could not impose all of its preferences upon its partners.

Besides widening the actors who intervene in the causal mechanism between crisis and institutional change, this article corroborates different elements of the literature on crisis and institutional change. The article contains an introduction and three sections: a review of the recent literature on crisis and change; the answers of both organizations to the crisis; and a comparison of institutional changes and discussion of the influence of China and Brazil on them. The  onclusion section brings the paper to a close.