The Financial Crisis and Regional Integration

This is a thought that I’m going to try to develop more over time. But this Ralph Peters takedown of the EU’s response to the financial crisis (via today’s WPR Media Roundup) is a good place to start.

Over the past ten years, there have been twin trends towards integration, in some ways parallel but in many others overlapping: globalization and regional mulitlateral organizations. Both have created economic and political forces that transcend the traditional limits of state sovereignty. (See Samuel Makinda’s WPR feature article for a discussion of regional integration and state sovereignty.)

As the global financial crisis has rippled outward, we’ve seen two contradictory impulses: on the one hand, a recognition that sound economics demands a regional and even a global response; on the other, a retreat towards the political instincts of every state for itself.

Now, I think it’s unfair of Peters to single out the EU, but it does make for an effective illustration of the tension at play. Regional and global integration was easy when it created — or coincided with — a domestic climate that responded to the needs of political constituencies. And even so, it still had its share of opponents, mainly among those in the developed world who lost out in the globalized exchange. It will become both more necessary and more difficult to maintain now that the very forces it has unleashed have created the climate for a backlash.

The political pressure for a return to the traditional frontiers of state sovereignty is only going to grow as the downturn turns further down, and it is unlikely to be limited to Europe. And resisting it in the name of the technocratic know-how that in many ways got us into the bind we’re in is going to be a significant political challenge.

So far President Barack Obama, who was pegged by some as a protectionist during the campaign, has done an admirable job of resisting it. But we’re early into this thing.