Regional integration as a resource or challenge: the Nordic / Baltic case Baldur Thorhallsson with...
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Transcript of Regional integration as a resource or challenge: the Nordic / Baltic case Baldur Thorhallsson with...
Regional integration as a resource or challenge: the Nordic / Baltic case
Baldur Thorhallsson with Alyson Bailes University of Iceland
Workshop - Economic Challenges:
Smallness, Strategy, Solutions?
Reykjavík 18 November 2011
Structure
• Small states• Vulnerability• Alliance-making / shelter• Our case: the Nordic / Baltic States• Regional and sub-regional shelter• Benefits• Costs• Summary – questions to address…
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Small states
• Objective variables
• Subjective variables
• Difference
• Small in comparison with others
• Relational conceptualization
3
Vulnerability
• Political problems !
• Economic problems !
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Economic Vulnerability
• Open and dependent on other economies
• Specialized economies
• Economic fluctuations
• Fewer resources to pursue their interests
• Less leeway for risk
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Theory of weak states
• Four elements determine the strength of states– Geographical character– Material resources– Human resources– Organizational capabilities
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Small states in the international system
• Limited international power• Reactive
• A stable international system• Small states show a high level of support for legal
norms
• Small states as norm setters• Small states as mediators
Seeking shelter
• Bilateral or Multilateral
• Compensate for greater vulnerability
• Compensate for the fluctuation of their economy
• Limits political and economic constraints
• Most European states have sought multilateral / supranational shelter
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Shelter
• reduction of risk before the crisis event
• assistance in absorbing shocks when risk becomes severe
• help in recovering after the event
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Economic Shelter
• direct economic assistance
• a currency union
• help from an external Central Bank,
• beneficial loans
• favourable market access
• common market
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Different choices of the Nordic and Baltic states
• Only Finland+Estonia in EU+Euro
• Latvia, Lithuania seeking Euro
• Denmark: EU + Euro opt out• Sweden: Euro opt out
• Norway and Iceland: only EEA+Schengen
• Faroes and Greenland fully ‘opted out’
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EU / Euro / EEA
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Sub-regional groups
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Sub-regional inclusiveness
• ‘Soft governance’ groups• Tackle local agendas
• No regulatory force• Limited resources
• More important for infra-structure plans, border control, civil security
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Explanations • Finland + Baltics
– economic reasons– exposure to a large neighbour
• Sweden + Denmark– less exposed
• Norway– exposed– own wealth
• Iceland/Faroes/Greenland – less exposed– vulnerable
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So not just smallness…
• Elsewhere in Europe, the small seek maximum integration– The EU– The smallest and bilateral relations
• Different in the North– Cost and benefits by taking EU ‘shelter’
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Benefits• Larger and more stable markets - competition• Freedom of trade• Assure supplies – more stable prices• Share and spread risks
– draw in investments, invest abroad, share /diversify ownership
• Emergency help
• More co-control than with a 1-state shelter • Exploit supranational features
– influence via Commission, EP, Court, lobbying etc
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External benefits
• Part of a larger trading bloc– better leverage over terms + rules of trade
• with individual large partners• in international organizations
• Part of a larger currency bloc
• Chance of defence if economic interests ‘attacked’ by an outsider
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Costs
• Sovereignty• Identity
• Still a small voice• Help in trouble! - Harsh conditions !
• Burden• Conflicts• Harder to get out / shift sides
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Summary…. questions to address
• All sought shelter
• The source and extent of shelter differ
• Why?
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