Making Headway on the “Economic-Security Nexus”: Contributions from Southeast Asia

What is the relationship between economic growth, interdependence, and competition on the one hand, and geopolitical security and stability on the other? Do international trade, production, and investment linkages intensify interdependence and foster common interests and values to the extent that they inhibit conflict? Or, is economic competition an inevitable extension of underlying geopolitical contests? These questions are particularly salient in contemporary East Asia, which has been at the receiving end of a “rapid and massive redistribution of world industry and economic power” in the past few decades.¹ The region has experienced a corresponding decline in inter-state war during this period, but China’s rapid ascendance, the onset of international economic crises, and the threat of slowing growth in the Chinese economy threaten to undermine optimistic liberal beliefs in interdependent peace.

Within Southeast Asia, this lingering debate about the effects of economic growth and integration on geopolitical relationships is uniquely salient because of the ASEAN states’ prominent claims to, and record of, fostering economic and political interdependence as the explicit path to longer-term cooperation and peace among regional states and great powers. The proliferation of ASEAN-led regional institutions creates an impression of multi-layered cooperation, interdependence, and governance, but their primarily political imperatives and doubts about the substance of the economic enterprises leave open questions about the economic-security relationship.² At the same time, the long-standing difficulties with creating intra-ASEAN economic integration among members with competing economic profiles and low economic interdependence in an essentially outward-oriented regional production structure continue to hamper plans for a meaningful ASEAN Economic Community by 2015.

There has been a recent resurgence of scholarly interest in the so-called “economic-security nexus” in East Asia and the Asia-Pacific more broadly. At least two useful edited volumes have been published addressing precisely this topic, and a range of other scholarly and policy publications have contributed strong arguments pertaining to the debate. Avery Goldstein and Edward Mansfield’s 2012 edited volume deals with the economic-security nexus in East Asian international relations, while T. J. Pempel’s 2013 edited volume focuses on the nexus in Northeast Asia more specifically.³ Each volume boasts a good group of specialist contributors and useful essays that examine the relationship between economics and security in a variety of ways. Three common themes are prominent: the security implications (and possible spillover) of regional economic and financial cooperation and institutions; the effects of geopolitical competition and conflict (changes in the distribution of power, history, and territorial conflicts) on economic ties; and the potential for renewed rivalry in new economic and security arenas. On the final theme, the Goldstein and Mansfield volume contains three particularly strong essays on the “cult of energy insecurity” fuelling economic and geopolitical rivalry, the effects of China’s growing economic interests on its military operations and strategy, and the correlations between growing economic resources and the acquisition of new military technologies facilitating conflict.⁴

As one would expect, these groups of authors reach a variety of conclusions about the relationship between economics and security. Those in the Goldstein and Mansfield project are more mixed, with comparable distributions of optimistic and pessimistic outlooks on the likelihood of the contemporary nexus driving conflictual rather than peaceful outcomes. By comparison, Pempel suggests that his project highlights the “compelling reality” that Northeast Asian elites now value economic security on par with regime security, and indeed view them as so intertwined that “despite periodic bursts of nationalist bombast and occasional military skirmishes, a shared Northeast Asian prioritization of economic development continues, for the moment at least, to hold official precedence and to serve as a powerful check on irredentist territorial conflicts and on military freelancing.”⁵ His argument resonates with a strong thread of current scholarship and commentary that sees economic interdependence as the key to East Asia’s post-Cold War inter-state peace. Within the last year, Steve Chan has examined in detail how “interlocking” domestic and international bargains motivated by economic interdependence have sustained order in the region, while others have reiterated the argument that economic interdependence dampens Sino-Japanese conflict, and suggested that US-China economic competition is heating up precisely because their economic profiles are becoming less complementary and interdependent and more directly competitive with each other. ⁶

While contributing new and interesting analyses, this recent literature remains narrowly focused on whether economic factors (prosperity, interdependence) or security factors (geopolitical competition or stability) are the independent variable explaining peace and conflict. As the editors of the above volumes note, there is no consensus—indeed no prospect of a definitive answer—to this causal question. And yet, almost all existing works treat the liberal assumption that economic interdependence leads to security, implicitly or explicitly, as the leading theory to prove or disprove. Hence the raging controversy between those pessimists convinced that geopolitical competition will undermine the potential for economic cooperation, and optimists who see economic positive-sum games promising incentives for mediating or moderating geopolitical conflict. As both projects clearly recognised, one way out of this theoretical deadlock is to marshal more empirical data and analysis. But they fall short on not taking it a step further in seeking more empirically-driven ways of understanding the nature of the economic-security nexus and its complex dynamics. These works remain relatively conservative in unpacking how precisely economics and security are related. In other words, the focus on peace/conflict as the dependent variable hampers a serious investigation of the economic-security nexus. For instance, the Pempel volume retains the traditional focus on showing how economic links and interdependence have been forged for functional, market, and geographical reasons in spite of geopolitical problems, and examines the political spillover of economic cooperation or the security implications of economic relationships. The Goldstein and Mansfield volume’s strength is in exploring the growing range of economic tools of security competition, and the expanding security sectors or manifestations of economic contests, but, nevertheless, retains the clear boundary between the two categories: economics and security are still perceived as distinct and juxtaposable. Furthermore, all these studies largely remain state-centric.

Notably, Southeast Asia does not feature significantly in these studies except for the examination of ASEAN-led regional institutions. This is an interesting gap given that the more varied nature of Southeast Asian international relations and scholarship can make potentially useful contributions to unpacking the economic-security nexus. Scholarship about the sub-region touches upon the relationship between economics and security in two main ways. First, there is a general consensus that Southeast Asian political actors have an exceptionally well-articulated stance on stability being achieved through conflict avoidance and cooperation, particularly on issues that lend themselves to absolute gains, including trade and investment. But this Southeast Asian logic of cooperative, institutionalist peace stems not simply from economic interdependence, but a combination of political socialization and rationalist strategic calculations.⁷ In this regard, the oft-aired disputes over the effectiveness of ASEAN-led economic cooperation and institutionalisation in reducing regional political tensions reveal more about the limits of analyses that cleave to a rigid division between economics and security, than about the undeniably substantive limitations of ASEAN’s economic endeavors.⁸

The second—and arguably more interesting—way in which studies of Southeast Asia contribute to investigating the economic-security nexus lies in the exceptionally comprehensive notions of security prevalent in the sub-region. On the one hand, the experiences of these post-colonial “developmental states” have pushed interconnections between economic development and security to the forefront.⁹ On the other hand, the complexity of the economic-security nexus has been well explored in the plethora of studies about “non-traditional” security challenges in the region more broadly. Focusing on non-military, non-state-centric security issues, including economic and development dimensions, this literature contains similar assumptions and debates about the relationship between interdependence and peace, but it significantly muddies the waters by taking into account human, social, and ecological aspects of security. As these issues tend to highlight the negative reinforcing dynamic between economic development and conflict, these ‘NTS’ studies have led the field in questioning liberal assumptions.¹⁰

Among the welter of recent publications on the economic-security nexus are articles by two scholars of Southeast Asia—Helen Nesadurai and Natasha Hamilton-Hart—, whose work has long engaged with the above themes.¹¹ Both pieces were commissioned as part of a broader regional project to interrogate the nature of Asian security, the economic-security portion of which was led by John Ravenhill. Like the two edited volumes discussed above, this portion of the project basically sought to shed light on whether economic interactions enhance security. However, Ravenhill’s collection differs in having two clear and useful foci. First, these essays try explicitly to unpack the economic-security nexus itself, by focusing on how economics and security become intertwined in the processes by which policy actors securitize economic issues. Second, they contain explicit findings about how economic issues can be a significant source of interstate and intrastate conflicts, thereby highlighting the negative rather than positive relationship between economics and security.¹² The two papers on Southeast Asia by Nesadurai and Hamilton-Hart make a notable contribution by transcending the artificial boundaries between domestic and international politics on the one hand, and economics and politics on the other. In so doing, they upset cosy liberal assumptions about economic interdependence or incentives reducing the prospects for conflict, but more importantly establish in their place rich, interesting and empirically-grounded studies of the complex dynamics at work in the messy economic-security nexus.

Nesadurai’s paper analyses the complexities of economic interdependence and security in the vital but emotive arena of international labor migrants in Southeast Asia. Her comparative study of how Malaysia managed its political tensions with the Philippines and Indonesia in 2002 over the latter’s migrant laborers shows that the greater economic interdependence between Malaysia and Indonesia did not help to moderate the conflict, while Manila and Kuala Lumpur managed their bilateral conflict despite their lower levels of interdependence. Nesadurai’s analysis makes two contributions in advancing our understanding of the economic-security nexus. First, she demonstrates that the challenge does not end at simply expanding the concept of security to include economic security, for which cheap migrant labor is essential for a country like Malaysia. Instead, there are limits whereby the threat of over-dependency and thus vulnerability to a significant external source of economic resources begins to pit economic security against national security. This is the point at which securitization occurs. Second, the study unpacks the idea of interdependence beyond statistics of trade, investment, and labor flows. The two cases here suggest that a moderate level of interdependence is more likely to provide incentives for conflict management, while a high level and growing trend of interdependence tends to breed fears of asymmetrical dependence and social backlash. The issue of foreign labor migrants is particularly trenchant for illustrating these variables: as Nesadurai notes, Malaysian concerns about Indonesian workers are underpinned by worries that “over-reliance on cheap unskilled labor has prevented economic upgrading and will undermine Malaysia’s plans to become a high value-added, high-wage economy.” ^13. This general prospect is exacerbated by the long-standing bilateral discord between Malaysia and Indonesia. But Nesadurai also emphasises that it is often the political element which determines outcomes in the economic-security nexus: the main difference she finds in the two cases lies in the Philippines’ better political capacity and approach in dealing with the conflict with Malaysia.

Hamilton-Hart’s article is broader and more ambitious in targeting the assumption of economic interdependence creating peace. While it may well be true that growing interdependence has been correlated with declining incidence of armed conflict in the international realm, Hamilton-Hart’s starting point is the empirical reality that violence in Southeast Asia is now more prevalent at the domestic rather than international level. Focusing on the centrality of property rights claims to sovereignty, she argues that significant economic incentives exist for both organized political violence and relatively disorganized conflicts over property rights at the domestic level in these post-colonial states. On the one hand, Southeast Asian elites have bought into internationalist economic interests and plugged into global economic production and supply chains, and, thus, experience the economic interdependence incentives to avoid costly international conflict. However, at the domestic level, Hamilton-Hart convincingly asserts that the partial and selective nature of how authoritarian states in the region have reallocated property rights in the post-colonial era, has both incentivized conflict and hampered its resolution. As foundational aspects of political order, property rights regimes reflect the nature of the social compact in a political system—and those within many Southeast Asian states reflect “specific… bargains with a restricted class of investors,”¹⁴ including state and military agencies and so-called “crony capitalists.” The insecurity of these regimes—the way in which property rights are arbitrarily protected or selectively enforced—creates conflict. Moreover, Hamilton-Hart’s analysis suggests a sophisticated connection between such domestic violence and international economic interdependence: if the ability of state and business elites to participate in global economic activity and reap the fruits of international interdependence depends upon the protection of their asymmetrical property rights privileges at the domestic level, then domestic conflict is at least partly correlated to international interdependence. This troubling potential connection amply illustrates the value of such studies based on the regional experience and transcending rigid levels of analysis.

Thus, both Nesadurai and Hamilton-Hart’s articles contain significant wider implications for our understanding of the economic-security nexus. They contain some shortcomings—notably, a limited number or discussions of the relevant cases, and, probably, unnecessarily complicated conceptual framing. But the first can be boosted by further case studies, while the second reflects the limitations of a currently over-polarized field that, thus, requires extensive explanation and defense of a more holistic approach. Against the background of the other works in the current resurgence of interest in the economic-security nexus in East Asia, the emphasis on domestic variables and complex causality in these studies of Southeast Asia is the hallmark of two scholars who have successfully crossed the boundaries between political economy, international relations, and area studies.¹⁵ They suggest that the most important ways to advance the state of the art is to develop rigorous empirical studies at the regional and domestic levels, which take for granted neither theoretical assumptions nor categorizations of discrete levels of analysis, and are able to put forward innovative analysis of the complex relationships between economics and security.