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Stanford University
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Stanford, CA 94305-6055

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Nae-Young Lee is a Professor of the Department of Political Science and Director of Asiatic Research Center at Korea University. He also serves as Director of Center for Public Opinion Research at the East Asia Institute, and an Executive Board Member of the Korean Political Science Association. Professor Lee received his Ph. D. from the University of Wisconsin-Madison and was a professor at Kyung Hee University, a research fellow at the Sejong Institute, and a member of the Presidential Policy Planning Committee.

As an expert on Korean and Comparative Politics, Electoral Studies, East Asian Political Economy, he has coauthored and edited various books and published numerous articles in international and Korean scholarly journals. His recent works include 5.31 Local Elections and Changing Korean Voters (2007), Is Rising China Threat or Opportunity?: Analysis of Cross-National Opinion Survey (2007), Changing ROK-US Alliance and Public Opinion (2005), Democratization and Historical Rectification in East Asia: Comparison of South Korea, the Philippines, and Thailand (2004), 2002 Presidential Election and Tasks of Roh Moo-hyun Government (2003), Dilemma and Choice of Roh Moo-hyun Government (2003), "Issues and Partisan Realignment in South Korea" (2007), "Changes in Korean Public Perception of the U.S. and Korea-U.S. Relations" (2005) and "Fluctuating Anti-Americanism and the Korea-U.S. Alliance" (2004).

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Meyer Library, 4th Floor
Stanford University
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Kyungmi Chun began her work as the Korean Studies Librarian at the East Asia Library in February 2007. Her responsibilities include collection development and management and reference and public services for the Korean collection. Before joining Stanford, Chun served as the Korea Specialist Librarian in the University of Hawaii at Manoas Asia Collection for over 14 years. She earned her doctorate in information science from the University of North Texas, an MLS degree from the University of Tennessee, Knoxville, and a bachelor's degree in history from Hanyang University in Korea.

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Chang's presentation seeks to understand the emergence and evolution of social movements during the 1970s in South Korea. During the authoritarian years when Korea was ruled by Park Chung-Hee, various social groups participated in the movement to restore democracy and ensure human rights. Their activism was instrumental to democratic changes that took place in the summer of 1987 and they continued to play an important role even after democratic transition. Utilizing the novel Stanford Korea Democracy Project Datasets, Chang traces the increasing diversification of South Korea's democracy movement in the 1970s.

Chang is currently a Ph.D. candidate in the department of sociology at Stanford University. Chang's paper "Differential Impact of Repression on Social Movements" won the Robert McNamara Paper competition from the Association for the Sociology of Religion and the Goldsmith Paper Award from the Stanford Center on Conflict and Negotiation. He has published papers in Sociological Inquiry, Journal for Korean Studies, and Asian Perspective. Chang graduated from University of California, Santa Cruz where he double majored in psychology and religious studies. He received masters degrees in Sociology from both UCLA and Stanford University, and in Theological Studies from Harvard Divinity School.

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Paul Y. Chang Ph.D. candidate in sociology, Stanford University Speaker
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The talk will explore conceptions of nation and national identity in both North Korea (DPRK) and South Korea (ROK) and the ways in which the two Koreas demonstrate areas of convergence and divergence in this all-important arena. While many Koreans still claim to be unified by primordial bonds of blood, language, and culture, differing ideals and priorities in the ROK and the DPRK have the potential of pushing the two Korea's further apart.

Larsen teaches undergraduate and graduate courses on the history of North and South Korea, East Asia, and the world, at the George Washington University. His book, Tradition, Trade and Empire: The Qing Empire and Choson Korea, is forthcoming. He has published, presented, and commented on a variety of contemporary issues including North Korea, nationalism and elections in South Korea, and Sino-Korean relations. He has appeared on ABC, MSNBC, VOA, the Canadian Broadcast System, and Al Jazeera. Dr. Larsen is the director of the Sigur Center for Asian Studies at the George Washington University. He received his PhD in history from Harvard University.

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Kirk Larsen Associate Professor of History and International Affairs Speaker The George Washington University
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In the debates surrounding genetically modified organisms in the food supply, the issue of labeling has become ever more salient. The EU is developing regulations to require labeling and traceability for all foods containing or derived from GMOs. Other countries, including Australia, Brazil, Japan, New Zealand, Russia, South Korea and Thailand are also in the process of developing voluntary labeling guidelines. In January of 2000, 130 countries adopted the Cartagena Protocol on Bio-safety which calls for bulk shipments of GMO commodities, such as corn or soybeans that are intended to be used as food, feed or for processing, to be accompanied by documentation stating that such shipments "may contain" living modified organisms and are "not intended for intentional introduction into the environment." Will these labeling systems prevent trade disruptions and enhance the international trading system established by the WTO? Or will they act as non-tariff barriers that obfuscate consumer decisions and lead to greater expense, confusion and ultimately to new trade wars?

Any GMO labeling debate must take into consideration the political, economic, legal, operational and administrative aspects of such labeling. The political considerations include the maintenance of confidence in the food system and how policy makers balance the demands of domestic constituencies against their various international obligations, such as under WTO Technical Barriers to Trade Agreement. The economic questions focus on a cost/benefit analysis of segregation and identity-preservation and whether labels provide information or capture a premium for producers. The legal issues include the possible challenge of discrimination in trade and the extent of liability under domestic law for misleading or incorrect labels. Operational adn administrative questions center on whether to make labels mandatory, whether to take a product or process approach, how feasible and costly are particular approaches and whether it is necessary it is necessary to require full traceability.

The workshop will be hosted by the European Forum of the Institute for International Studies at Stanford University. The goal of the workshop is to make a significant contribution to the ongoing policy debate. Participants will include academic, government and private sector specialists and bring expertise in economics, law and political science.

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On March 18, 1871, Taewongun (Grand Prince) who held real power when King Kojong (r. 1863-1907) assumed power at the age of 12, issued a historical order that was enforced nationwide: All Confucian private academies ever built, except for the forty-seven royal-chartered ones, were to be destroyed. To justify this unprecedented repression, Taewongun argued that the academies were "the fundamental causes for the decaying nation." During the period from 1865 to 1871, over 800 academies were abolished and these intermediate organizations largely disappeared from the central scene of the Korean history and politics. Taewongun's startling regulation of private academies was rather surprising. From the sixteenth to the eighteenth centuries, Choson monarchs enthusiastically encouraged and sponsored the establishment of the academies on the ground that the academy growth would contribute to country's moral reform and state-building. Why did the dramatic change of governmental policy on the academies occur? How can we resolve this historical enigma? To answer these questions, Koo situates this historical drama in a broader -structural- sociological context involving political competition between the state and nascent civil society, in association with his aim of overcoming the current historical explanations emphasizing more imminent causes of the abolition, such as military and fiscal abuses of the academies.

Jeong-Woo Koo is a visiting scholar at the department of sociology, Stanford University. He received his Ph.D. in Sociology from Stanford University in 2007. His interests include comparative-historical sociology, organizations, sociology of education, political sociology, quantitative method, and East-Asian studies. His dissertation explores a long term political competition between state and civil society in Choson Korea. He is currently working on two projects, one on the worldwide expansion of international human rights and its impact on nation-states (with John Meyer and Francisco Ramirez), and the other on the formation of regionalism in East Asia (with Gi-Wook Shin). His publications include "The Origins of the Public Sphere and Civil Society: Private Academies and Petitions in Korea, 1506-1800," Social Science History 31: 3 (Fall 2007), and "World Society and Human Rights: Worldwide Foundings of National Human Rights Institutions, 1978-2004," Korean Journal of Sociology 41: 3 (Spring 2007).

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Jeong-Woo Koo Visiting Scholar, Department of Sociology, Stanford University Speaker
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Stanford University seeks candidates for a tenure-track faculty position in the social sciences at the junior professorial rank, whose teaching and research are focused on contemporary Korea. All applicants in the social sciences with expertise in Korea will be considered.

Applications are now being accepted for a new Junior Appointment in Korean Studies (deadline October 31, 2007).

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Gi-Wook Shin
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The year 2007 marks the 20th anniversary of South Korea's June 10 civil uprising of 1987, and the 10th year since the 1997 Asian financial crisis. To commemorate these occasions, the Korea Herald published a series of contributions from prominent foreign scholars to analyze the significant changes that Korea has undergone during the past two decades. Shorenstein APARC Director Gi-Wook Shin wrote the op-ed below, on the problems of Korean nationalism.

When the Virginia Tech massacre shook American society, Koreans and Korean-Americans alike nervously responded with a deep sense of collective guilt. Many first-generation immigrants took it upon themselves to apologize for the actions of gunman Cho Seung-hui on the grounds that they all share the same Korean ethnicity (meaning blood).

South Korea's ambassador to Washington, Lee Tae-shik, went so far as to say that the Korean- American community needed to "repent," suggesting a 32-day fast, one day for each victim, to prove that Koreans were a "worthwhile ethnic minority in America." The South Korean government offered to send an official delegation to the funerals of the victims.

This episode may seem bizarre or perplexing to non-Koreans since most ethnicities (including Americans) don't have that strong sense of collective responsibility. Yet this incident well illustrates Korea's psyche, i.e., deeply rooted ethnic national identity, which remains strong today.

Korea has been democratizing and globalizing for the last two decades but neither force has weakened the power of nationalism. On the contrary, it has only become stronger.

How can we explain this phenomenon of persistent ethnic nationalism in a country at the forefront of globalization? Where does such a tradition of collectivistic, ethnic identity come from? What are the positive and negative aspects of ethnic nationalism in Korea? How can Korea, as it is becoming a multiethnic society, deal with it in a globalizing world?

Origins and History

Historically Koreans have developed a sense of nation based on shared blood and ancestry. The Korean nation was "ethnicized" or "racialized" through a belief in a common prehistoric origin, producing an intense sense of collective oneness.

Ethnicity is generally regarded as a cultural phenomenon based on a common language and history, and race understood as a collectivity defined by innate and immutable phenotypic and genotypic characteristics. However, Koreans have not differentiated between the two. Instead, race served as a marker that strengthened ethnic identity, which in turn was instrumental in defining the notion of nation. Koreans are said to believe that they all belong to a "unitary nation" ("tanil minjok"), one that is ethnically homogeneous and racially distinctive from its neighbors.

This sense of ethnic homogeneity, contrary to the popular "prehistoric origin" belief, took root in the early 20th century. Faced with imperialist encroachments, from both the East (Japan) and West, Koreans developed the notion of a unitary nation to show its autonomy and uniqueness. For Korea, which had a long history of political, linguistic, and geographic continuity, the internal issues of political integration or geographic demarcation were less important than the threat of imperialism. Enhancement of collective consciousness and internal solidarity among Koreans against the external threat was more urgent. As a result, the ethnic base or racial genealogy of the Korean nation was emphasized.

Sin Chae-ho, a leading nationalist of the time, for instance, presented Korean history as one of the "ethnic nation" ("minjoksa") and traced it to the mythical figure Tangun. According to him, the Korean people were descendants of Tangun Chosun, who merged with the Puy of Manchuria to form the Kogury people. This original blend, Sin contended, remained the ethnic or racial core ("chujok") of the Korean nation, a nation preserved through defense and warfare against outside forces. The nation was defined as "an organic body formed out of the spirit of a people descended through a single pure bloodline" that would last even after losing political sovereignty.

The need to assert the distinctiveness and purity of the Korean nation grew more important under colonial rule, especially as Japan attempted to assimilate Koreans into its empire as "imperial subjects." The assimilation policy was based on colonial racism, which claimed that Koreans and Japanese were of common origin but the former always subordinate.

The theory was used to justify colonialist policies to replace Korean cultural traditions with Japanese ones in order to supposedly get rid of all distinctions and achieve equality between the two nations. Yet colonial assimilation policy meant changing Korean names into Japanese, exclusive use of Japanese language, school instruction in the Japanese ethical system, and Shinto worship. Koreans resented and resisted the policy by asserting their unique and great national heritage. Yi Kwang-su, a leading figure at the time, claimed that bloodline, personality, and culture are three fundamental elements defining a nation and that "Koreans are without a doubt a unitary nation ("tanil han minjok") in blood and culture." Such a view was widely accepted among Koreans: to impugn the natural and unique character of the Korean ethnic nation during colonial rule would have been tantamount to betraying Koreanness in the face of the imperial challenge of an alien ethnic nation. Ironically, Japanese rule reinforced Koreans' claim to a truly distinct and homogeneous ethnic identity.

After independence in 1945, and despite peninsular division into North and South, the unity of the Korean ethnic nation or race was largely taken for granted. Neither side disputed the ethnic base of the Korean nation, spanning thousands of years, based on a single bloodline of the great Han race. Instead, both sides contested for the sole representation of the ethnically homogeneous Korean nation.

Even today, Koreans maintain a strong sense of ethnic homogeneity based on shared blood and ancestry, and nationalism continues to shape Korean politics and foreign relations. Many ethnic Koreans overseas share this sense of ethnic homogeneity, which can explain the response by the Korean American community to the Virginia Tech massacre.

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Ethnic nationalism has been a crucial source of pride and inspiration for the Korean people during the turbulent years of their nation's transition to modernity that involved colonialism, territorial division, war, and dictatorship. It has enhanced collective consciousness and solidarity against external threats and has served Korea's modernization well. Nationalism is also the underlying principle of guiding the current globalization process in the South.

In the North, ethnic national consciousness offered the grounds for the formation of a belief that Koreans are a chosen people, a position that became the epistemological basis for the juche ideology and the recent "theory of the Korean nation as number one." Ethnic nationalism could also play an integrative role in a unification process, as this self-ascribed identity of homogeneity can serve as the basis for the initial impetus toward unification, if not as the stable foundation of a unified Korea.

At the same time, such a blood-based ethnic national identity became a totalitarian force in politics, culture, and society. Individuals were considered only part of an abstract whole, and citizens were asked to sacrifice individual freedom and civil rights for the collectivity.

Nation was also used as a trump card to override other competing identities as well as to justify violations of human and civic rights in both Koreas in the name of the "nation." The power of nationalism has thus hindered cultural and social diversity and tolerance in Korean society.

The dominance of collectivistic, ethnic nationalism constrained space for liberalism in the public sphere. In its formative years of nation building, nationalism developed in opposition to liberalism and these two ideologies were mistakenly positioned against each other. This historical legacy led to the poverty of modern thought in Korea, including liberalism, conservatism, and radicalism. A lack of a liberal base, for instance, made Korean conservatism highly vulnerable to manipulation by authoritarian leaders.

Ironically, the very belief in ethnic unity has also produced tension and conflict between the two Koreas over the last half-century. The prevailing sense of unity in the face of territorial partition has provoked contention over who truly represents the Korean ethnic nation versus who is at fault for undermining that Korean unity. This battle for true national representation helps to explain highly charged inter-Korea conflict, including the Korean War that killed millions of fellows in the name of "national liberation."

Challenges and Future Tasks

Ethnic nationalism will remain an important organizing principle of Korean society. Neither democratization nor globalization has been able to uproot the power of nationalism. It would thus be wrong and dangerous to ignore or underestimate its power, treating it as a mere myth or something to pass away in due course. At the same time, we can't remain simply content with its current role, either.

Instead, it should be recognized that ethnic nationalism has become a dominant force in Korean society and politics and that it can be oppressive and dangerous when fused with racism and other essentialist ideologies. Koreans must strive to find ways to mitigate its potential harmful effects and use it in constructive manner. In particular, Koreans must promote cultural diversity and tolerance, and establish democratic institutions that can contain the repressive, essentialist elements of ethnic nationalism.

This important task is urgent because Korea, on the contrary to popular perception, is becoming a multiethnic society. Today about a half-million migrant labor workers, with the majority coming from China and Southeast Asia, live in the South. Only a decade ago, the number was less than one hundred thousand. Similarly more than one out of 10 marriages is "international," meaning that the spouse is nonethnic Korean (reaching 13.6 percent in 2005). Considering that the figure was only 1.7 percent in 1994, Korea is fast becoming a multiethnic society.

Despite new realities, however, perception and institutions are slow to change. Most Koreans still have stronger attachment to "ethnic Koreans living in foreign countries" than to "ethnic non-Koreans living in Korea." It is also much easier for a Korean-American who to "recover" Korean citizenship than for an Indonesian migrant worker living in Korea to obtain Korean citizenship. This is true even if the Indonesian worker might be more culturally and linguistically Korean than a Korean-American.

The principle of "bloodline" or jus sanguinis still defines the notions of Korean nationhood and citizenship, which are often inseparable in the minds of Koreans. In its formative years, Koreans stressed the ethnic base of nation without a corresponding attention to its civic dimension, i.e. citizenship. After colonial rule, neither state (North or South) paid adequate attention or made serious effort to cultivate a more inclusive notion of citizenship.

Social institutions that can address issues of discrimination against ethnic non-Koreans (e.g., ethnic Chinese known as "hwagyo") have been overlooked and underdeveloped. The Korean nationality law based on jus sanguinis legitimizes consciously or unconsciously discrimination against foreign migrant workers by explicitly favoring ethnic Koreans.

Korea needs to institutionalize a legal system that mitigates unfair practices and discrimination against those who do not supposedly share the Korean blood. Koreans need an institutional framework to promote a national identity that would allow recognition of ethnic diversity and cultural tolerance among the populace, rather than appeal to an ethnic consciousness that tends to encourage a false uniformity and then enforcing conformity to it.

They should envision a society in which they can live together, not simply as fellow ethnic Koreans but as equal citizens of a democratic polity. In fact, it is only a matter of time before Koreans will face serious challenges living in a multiethnic society (e.g., children of ethnically mixed couples, civic rights of migrant labor workers) that it is unprepared to resolve. Preparing for such challenges through public education and legal institutions won't be an easy task and should be an integral part of democratic consolidation processes that are currently under way.

Discussion of unification is premature and problematic if unification occurs without such adjustments. As the German unification experience shows, a shared ethnic identity alone will not be able to prevent North Koreans from becoming "second-class citizens" in a unified Korea. Even worse, because of higher expectations resulting from a shared sense of ethnic unity, a gap between identity (ethnic homogeneity) and practice (second-class citizens) will add more confusion and tension to the unification process.

All said, Koreans should strive to promote ethnic diversity and cultural tolerance, and develop proper legal institution so that all can live together in a multiethnic or unified Korea as equal citizens of a democratic polity. This task will be all the more important and urgent as Korea consolidates democracy, globalizes its economy, and prepares for national unification.

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The events of September 11, 2001 have heightened concerns about the potential for terrorist actions involving nuclear or radioactive materials and facilities. Questions about the vulnerability of such materials and facilities have forced governments to implement new security measures at the national level; however, such measures are of limited value in addressing influential factors in play beyond national boundaries. The existing nuclear weapons among states, is insufficient to address this new threat. A new, broader international nuclear security regime needs to be constructed. This regime must also take into account the growing influence of sub-state, trans-national actors. A key element in this new nuclear security regime is the important role international organizations can play in shoring up the weakness of the nation-state in a chaotic, post-Cold War international environment.

Ron Stansfield is current Coordinator of International Programmes at the Canadian Nuclear Safety Commission (CNSC) in Ottawa. Mr. Stansfield has over a quarter century of experience in international security issues, including non-proliferation, arms control and disarmament. Prior to joining the CNSC in 1991 as Senior Advisor on Non-proliferation, he served as Director Parliamentary Affairs at the Canadian Department of National Defence from 1988-1989. From 1975-1988, he held several positions at the Canadian Department of Foreign Affairs and International Trade (DFAIT), including Head of the Conventional and Nuclear Arms Control Section of DFAIT's Defence Relations Division (1986-1988) and diplomatic assignments in the Netherlands (1981-1985) and South Korea (1977-1979). From 1998-2001, Mr. Stansfield was seconded to the International Atomic Energy Agency in Vienna as a Senior Policy Office for nuclear non-proliferation and safeguards issues in the Agency's Office of External Relations and Policy Coordination. Mr. Stansfield is a graduate of the University of Saskatchewan and the Norman Paterson School of International Affairs at Carleton University.

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Ron Stansfield Canadian Nuclear Safety Commission Speaker
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WASHINGTON, May 24 (IPS) - This year the Association of Southeast Asian Nations celebrates its 40th birthday, and it has big plans. After four decades of being largely a political and security alliance, ASEAN is accelerating its plans for economic integration.

ASEAN leaders are so eager to pull together into an economic community that they recently decided to move the goalposts. The economic benchmarks originally planned for 2020 have been moved up to 2015.

"The mission of this economic community is to develop a single market that is competitive, equitably developed, and well integrated in the global economy," says Worapot Manupipatpong, principal economist and director of the office of the Secretary-General in the ASEAN Secretariat. He was speaking last week at an Asian Voices seminar in Washington, DC, sponsored by the Sasakawa Peace Foundation.

The single market of 2015 would encompass all ten members of ASEAN: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), Philippines, Singapore, Thailand, and Vietnam. According to the projections of the ASEAN Secretariat, the single market will be accomplished by removing all barriers to the free flow of goods, services, capital, and skilled labor. Rules and regulations will be simplified and harmonised. Member countries will benefit from improved economies of scale. Common investment projects, such as a highway network and the Singapore--Kunming rail link, will facilitate greater trade.

Although there will not be a single currency like the European Union's euro, the ASEAN countries will nevertheless aim for greater currency cooperation.

"ASEAN's process of economic integration was market-driven," says Soedradjad Djiwandono former governor of Bank Indonesia, and it was influenced by the "Washington consensus" favoring increased liberalisation. "It is a very different framework from the closed regionalism of the Latin American model," he continues. With multilateral talks on trade liberalisation stalled, efforts have largely shifted to bilateral negotiations. "There has been a proliferation of bilateral agreements that developed countries use as a way to push a program for liberalising different sectors," Djiwandono concludes.

So far, ASEAN points to increased trade within the ten-member community as an early sign of success. But, overall trade share -- 25 percent -- pales in comparison to the 46 percent share of the North American Free Trade Agreement countries or the 68 percent share of EU countries. And with intra-ASEAN foreign direct investment rather low -- only 6 percent in 2005 -- financial integration lags behind trade integration.

The ASEAN approach differs in several key respects from the EU model, which originated in a 1951 coal and steel agreement among six European nations. ASEAN's origins, in contrast, have been primarily political and security-oriented, observes Donald Emmerson, director of the South-east Asia Forum at the Shorenstein Asia-Pacific Research Center at Stanford. "The success attributed to ASEAN is that it presided over an inter-state peace ever since it was formed. There's never been a war fought between ASEAN members."

Also distinguishing ASEAN from EU is the latter's institutionalisation. "ASEAN is radically different," Emmerson continues. "The much discussed ASEAN way is consultation, not even voting, since if they vote, someone will lose. Sometimes the consultation goes on without result. Sometimes decisions are reduced to the lowest common denominator. It also means that rhetoric predominates." This consultative process will be tested in November, when ASEAN leaders gather to adopt a charter, something that the EU has so far failed to accomplish.

Another difference with Europe is the enormous economic disparities among the ASEAN members, with Singapore and Brunei among the richest countries in the world and Laos among the poorest. These economic disparities are reproduced within the countries as well.

Worapot Manupipatpong points to two ASEAN initiatives for closing the gap. There is help for small and medium-sized enterprises. And the Initiative for ASEAN Integration,"basically provides technical assistance to Cambodia, Laos, and Myanmar so that they can catch up with the rest of the ASEAN members," he says. "Attention will be paid to where these countries can participate in the regional networks, what comparative advantage they have, and how to enhance their capacities to participate in the regional development and supply chain."

Then there are ASEAN's efforts to address "public bads," according to Soedradjad Djiwandono. "When there is a tsunami or a pandemic," he argues, "the worst victims are the marginalised or the poor. Addressing that kind of issue has some positive impact on reducing inequality."

"The gap between the early joiners and the later joiners will continue to be substantial because ASEAN has always been more of a forum and less of a problem-solving organisation," observes Karl Jackson, director of the Asian Studies Program at the School for Advanced International Studies at Johns Hopkins University. "As a result one would expect that these gaps would be closed only as individual countries increase their rates of growth." He attributes the inequality within countries to the middle stage of growth experienced by almost all societies: "Inequality increases before the state becomes strong enough to redivide some of the pie and take care of the gross inequalities caused by rapid economic growth."

ASEAN is banking on financial and trade liberalisation increasing the overall regional pie. On paper it is an ambitious project. But "the low hanging fruit have been plucked," says Donald Emmerson. Tariffs on the "easy commodities" have already been reduced to less than 5 percent. But non-tariff barriers to trade remain, and member countries are very protective of certain sectors.

Also tempering the region's optimism is the memory of the Asian financial crisis. The crisis began in Thailand in 1997 and spread rapidly to other countries in the region. One school of thinking holds that capital mobility -- "hot money" -- either caused or considerably aggravated the crisis. Since the ASEAN integration promises greater capital mobility, will the region be at greater risk of another such crisis?

"One consequence of the economic dynamism of the Asia-Pacific region," notes Donald Emmerson, "is that the accumulation of vast foreign exchange reserves -- obviously in China, but in other countries too -- more than anything else represents an asset that can be brought into the equation as a stabilising factor in the event of a financial crisis." Also, he continues, as a result of the ASEAN plus Three network, which adds China, South Korea, and Japan to the mix, the 13 countries have "made serious headway toward establishing currency swap arrangements that would come into play in an emergency on the scale of an Asian financial crisis."

Karl Jackson also looks to currency reforms as a hedge against future crisis. The Thai baht and the Indonesian rupiah are now unpegged currencies. "You will not have a situation in which the central bank of Thailand loses 34 billion US dollars defending the baht," Jackson argues. "Instead, the baht will appreciate or depreciate according to market forces."

But Jackson still remains cautious about the future. He points to the large number of non-performing loans in the Chinese banking sector. Also, there is "this anomaly of the U.S. absorbing two-thirds of the savings coming out of Asia, plugging it mostly into consumption rather than direct investment," he observes. "Eventually there has to be some kind of readjustment. The real value of the dollar must fall." (END/2007)

Reprinted by permission from IPS Asia-Pacific.

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