“Theoretically speaking, various forms of regional cooperation are touted as suitable

responses for developing countries to foster sustainable economic growth within the
context of a globalized economic system. Nevertheless, the primacy of domestic politics
and constituent interests must always be considered when analyzing the prospects for
such regional cooperation. Given South Africa's current socio-political and economic
structure, how do you envisage the prospects for regionalism in the contemporary global
economic climate?”

This essay will argue for the prospects of regionalism in the Southern African region,
taking into account the contingencies of the global economic climate in which the region
finds itself. Additionally, attention will be drawn to the domestic socio-political and
economic structure of South Africa, highlighting the effects that these conditions have in
the region and the more broad consequences they might have for the regionalism project.

Modern world history from at least 1648 to the present day is in essence the history of an
increasingly globalized world. This history is not teleological in the sense that it “assumes
the existence of an inexorable historical process leading to a universal human community”
(McGrew, 1993 : 73). Rather it can be seen as the interaction of discontinuous dialectical
processes that consist in “mutually opposed tendencies”(Giddens, 1990 : 64). Before an
analysis of the Southern African region can be made, this contextual history - in which the
region exists - must be elucidated.

Seventeenth century Europe was a mess with war and strife as the “lands of what had
been called the Holly Roman Empire, religious and dynastic forces battled for control”
(Lieber, 2001 : 23). The 1648 treaty of Westphalia brought the thirty year wars to an end,
and laid the foundation for the rise of the era of the nation state. As modern states started
to form through a process marked by both integration and disintegration of earlier political
authority, the current world system (such as we find it) began to develop. “With the
sovereign state at its core, the newly evolving system was anarchical” (Rourke, 1999 : 49).

Mercantilism is the view that “emphasizes the states role in managing international trade
and delivering prosperity to its polity” (Haywood, 2007 : 156). For the next three centuries,
Europe enjoyed increasing global dominance with the leading countries extending imperial
control over much of the world, while developing strong military forces. This period is
understood as a mercantilist period in world history as “European states sought to
generate trade surpluses as a source of wealth … through discouraging imports if these
imports meant that people were less likely to buy locally manufactured goods” (Balaam et
al).

By the end of the Nineteenth century, much of the non-European world had seen the
culmination of the European rivalry for world power, and there was little territory left in the
non-European world to satisfy the demands for later emerging European powers. By
1871, through the unification of Germany, Otto von Bismark had created Western and
Central Europe's most economically vigorous and militarily powerful state. (Lieber, 2001 :
27)

A multi-polar moment was experienced in Europe during this time, with treaties and
alliances holding war at bay in an anarchical system of states, whose leaders were
operating under mercantilist ideologies. By 1914 a sequence of events followed in quick
succession, requiring national leaders and strategists to “make good” on their military
treaties and alliances, which saw Europe fall into all-out war. “The European balance of
power had failed disastrously” (Lieber, 2001 : 27). By 1918 America had entered the war
and turned the tide against Germany. However, with the European allies unable to
constrain the threat of fascism, World War Two broke out in 1939. By the end of the war in
1945, the European nation-state system and infrastructure lay in ruins. This sees the first
shoots of the global economic context in which the Southern African region finds itself
today.

Two world powers emerged from the war, namely the United Soviet Socialist Republic
(USSR) and the United States of America (USA). Both powers pursued fundamentally
different economic and socio-political strategies and the world political system became
increasingly bi-polar, with the USSR as one pole touting a socialist paradigm and the USA
forwarding an increasingly liberal capitalist system. With the great depression of the 1930's
barely passed and American commitment to the war hitting home, the Allied states realised
firstly that the system needed to be altered so that a world war such as that which had just
been won should never happen again, and secondly that Europe had to be rebuilt. “In
1944, 44 states met in Bretton Woods, New Hampshire to devise new rules and
institutions to govern the postwar international trading and monetary system” (Haywood,
2007 : 156). Two major structures emerged from the Bretton Woods conference, namely a
production structure and a financial structure.
The financial structure consisted of the International Monetary Fund (IMF) and the
International Bank of Reconstruction and Development (IBRD), which is now know as the
World Bank. The World Bank or IBRD was initially setup as a fund to rebuild the
demolished European infrastructure. The IMF was designed to act as a “lender of last
resort” to bail out countries experiencing balance of payment problems. “At the heart of the
Bretton Woods [financial structure] was the proposal to establish a fixed system of
exchange rates” which were backed by the only strong currency remaining after the war,
namely the United States Dollar (Heywood, 2007 : 156).

The production structure was constituted by the General Agreement on Trade and Tariffs
(GATT). It was founded on the fundamental principles of non-discrimination and reciprocity
among trading nations. Ultimately it was designed to impede the emergence of unilateral
trade barriers, and issue thought to be an efficient cause of war. GATT rested firmly on the
“most favoured nation” clause requiring nations to trade with nations that could offer the
best price. GATT was later subsumed as a single article under the more broad World
Trade Organisation (WTO) articles. (Heywood, 2007 : 157).

Although these new institutions were focused on “opening up” the international trading
system, they also accepted the important roles played by states in managing economic
affairs, as represented in the theories of John Maynard Keynes, the leader of the British
delegates to the conference (Heywood, 2007 : 157). In this way, the system promoted a
liberal international trading system, which contained an implicit “Keynesian compromise”
that accounted for the “mercantilist impulse” that fueled state intervention in the market
when necessary. (Stephan, 2006)

The Bretton Woods system worked well as long as the US economy was strong and
“countries held Dollars on the basis of their being 'as good as gold' because the system
operated on the basis of fixed convertability into gold”. With a declining US balance of
payments position and a resulting over-supply of Dollars held by foreign banks and
businesses, the Bretton Woods system weakened and the collapsed entirely with the US
allowing the Dollar exchange rate to “float”. (Rourke , 1999 : 475)

The collapse of the Bretton Woods system “instituted a major policy and ideological shift”
(Heywood, 2007 : 157) on all levels – individual, state and system. The collapse coincided
with the collapse of the Soviet Union – and hence the end of the Cold War. This marked
the end of the Socialist economic project and created a space where international and
supranational organisations such as the IMF and WTO became increasingly neoliberal –
espousing principles of free-trade and free-markets. Individual political actors such as
Thatcher and Regan began touting the virtues of market driven economic systems, and
slamming the state intervention mercantile policies of the previous era. In policy terms, this
dialectical synthesis gave rise to the writings of John Williamson who outlined the
principles of the Washington Consensus - “The name given to a list of ten neoliberal policy
recommendations for countries willing to reform their economies”(Nafm, 2000). It is in the
wake of this policy that Southern Africa (and infact the global economy) finds itself today.
Over time, through the legacy Bretton Woods institutions – now revamped to conform to
the policy dictates of the Washington Consensus – countries wishing to interact on the
global stage have been expected to adjust their economic policy in line with free-trade and
free-market principles – leaving no space for the state to regulate or intervene in the
market. Pressure on countries in regions such as Southern Africa to conform to the policy
is not managed by traditional realist “power models”, but rather through more coercive
measures such as loans from the IMF and World Bank being contingent on Structural
Adjustments as laid out by these institutions (Rourke , 1999 477).

Having laid out an historical description of the system in which the Southern African state
finds itself, attention is now turned to regionalism and how state and non-state actor's
projects manifest regionally within this historically contingent framework.

Regionalism as a theoretical framework can be understood as being divided into two

teleological divisions, namely old regionalism and new regionalism. As Stephan et al point
out, “Early theories of regionalism were almost entirely Eurocentric, and many of the ideas
which first emerged in response to the European experience are still influential today”
(Stephan, 2008).

Further, old regionalism can be seen as having two intellectual frameworks – functionalism
and neofunctionalism. Functionalism was designed as a normative device for the
establishment of mechanisms in Europe to ensure peace. Mitrany, a key advocate of
functionalism, says “the task facing us is how to build up the reality of a common interest in
peace … not a peace that would keep nations quietly apart, but a peace which would
bring them actively together” (Stephan, 2008). Functionalism claimed that governments
creating technical agencies could unite people across borders as a way to “side step …
national loyalties” (Stephan, 2008). Haas – generally regarded as the father of
functionalism – built on this to eliminate the disjunction of politics and economics by
introducing the concept of “functional spillovers” (Stephan, 2008). Essentially this insight
suggests that cross border interaction would not just unite people around one particular
technical project, but rather that these interactions would increase international
interdependence, creating functional spillovers which would allow integration to deepen
under its own momentum.
New regionalism “moves away from conventional state-centric and formalistic notions of
regionalism... and is characterised [by the new roles] played by civil society, market forces,
transnational actors and professional and business associations.” (Stephan, 2006 : 271).

Within new regionalism there are two perspectives found. The first perspective – referred
to as “open regionalism” - conforms broadly to the dictates of the Washington Consensus
and calls for the liberalization of trade and implementation of free-market principles in the
region. This perspective, mapping so closely to the contingent world-order as described in
the historical context above, “enjoys a dominant status within policy making circles today”
(Stephan, 2006 : 272). However, a second new regionalism also emerges, led by writers
such as Bjoern Hettne, which “attempts to bring the political back” into regionalism. This
approach is referred to as the “developmental integration approach” and arose with the
growing realization that economists analyzing regionalism tend to look primarily at market
factors of production, and “assume away the relevance of institutional and political force”
(Stephan, 2006 : 272). Where “open regionalism” can be seen as causing globalisation –
through the liberalization policies of the Washington Consensus schematics – the more
critical second approach often sees “regionalism as a response to globalisation …
sometimes going as far as saying its the only response to global market forces” (Stephan,
2006 : 272).

Old regionalism played out – in line with the historical context above – during the cold war
era. It was thus characterised as inward looking, protectionist (as the Keynesian
compromise would support) and concerned with security. For developing countries such as
the ones in the Southern African region, “regionalism seemed to offer a route where they
could protect themselves from the [effects] of world market conditions, while allowing infant
industries to take advantage of expanded regional markets behind walls of protectionist
barriers” (Stephan, 2006 : 266).
With the subsiding of the Cold War, the collapse of the Bretton Woods system and
consequent surge in globalisation through neoliberal policy perpetuation, and the rising of
the world context as described above, the new wave of regionalism was far less
concerned with the security dilemma of the past and much more concerned with dealing
with the “sense of vulnerability of marginalization from world markets through the
fashioning of new and more effective regional organisations” (Stephan, 2006 : 270).

According to the Global Economic Perspectives and Developing Countries World Bank
report, Sub-saharan Africa represents the least economically dynamic region in the world
(Arnold, 2005 : 952). South Africa is the largest, most dynamic country in the region, but
this does not alter the fact that it belongs to a region that in world terms is marginal
(Arnold, 2005 : 952). In 1994 the South African government changed, as the apartheid
regime was voted out of power, and a new era for South African politics dawned with the
election of the ANC government headed by a president Nelson Mandela. The new regime
was elected on the back of a policy called the Reconstruction and Development
Programme (RDP). (Arnold : 2005, 786)

However, after setting up a ministry to oversee and implement RDP, the new South African
government switched away from RDP towards a new policy called the Growth,
Employment and Redistribution strategy (GEAR). Whereas RDP was developed in a
coalition framework with wide consultation of the political and social structures inherent in
South Africa, GEAR was developed by a focused group of economists and politicians.
GEAR was seen as the neoliberal policy alternative guided by principles of privatization of
state assets and free-trade (Arnold, 2005 : 952). The adoption of GEAR was not an
instance of the state acting as a unitary actor – and when Finance Minister Trevor Manual
announced its adoptions, it was criticized by both COSATU and the Communist Party,
setting the stage for a national tension between the neoliberal dictates of GEAR and the
labour organizations that are a significant portion of the ANC electoral vote (Arnold, 2005 :
786).

In 1994 South Africa joined the Southern African Development Community (SADC). As a
result of the dictates of GEAR and its focus on trade liberalization and the relaxation of the
controls of foreign investment, South Africa has seen significant growth in its exports and
trade into the region. This ties up with the theory above espoused as “open regionalism”.
As Stephan et al point out, the neoliberal reforms in the region have largely failed to live up
to their promises. They have certainly created a more stable macroeconomic condition and
freer markets, but this has not been accompanied by investment or increased growth. This
has resulted in the benefit of the regionalism practiced in SADC being largely to the benefit
of private companies in South Africa. This is due to the significant lack of intra-regional
trade, as well as the fact that trade in the region is skewed in South Africa's favour, in
extremis. (Stephan, 2006 : 300)

However, it is also true that “open regionalism” is increasingly not the only case of
regionalism in SADC. Although given the world context that has been described above,
“open regionalism” is almost guaranteed to be in existence wherever there is regionalism
in the world today, “a number of sectoral initiatives have been embarked on which differ
significantly from traditional neoliberal notions of how this should occur. These involve
significant state intervention and explicit political co-operation” (Stephan, 2008). This ties
up closely with the ideas of the “developmental integration approach”, described above as
the critical second version of “new regionalism”. An example of this kind of interaction and
integration can be seen in the analysis of the Southern African Power Pool (SAPP) by
Stephan et al in the article “new regionalism in southern Africa: functional
developmentalism and the Southern African Power Pool”.

The SAPP came into being and moved towards implementation in December 1995 when
the national utilities of nine SADC countries joined an Inter-Utility agreement. “It was the
first formal international power pool established outside Europe or North America … and in
terms of its constitution, only utilities, not individual power stations, are allowed to join”
(Stephan, 2008 : 69). From this it can be seen how this represents a move away from
open regionalism towards development integration regionalism, by constraining and
controlling the process through mechanisms of the sovereign nation state. “The SAPP is
based on cooperative principles wherein the utilities coordinate and cooperate in the
planning and operation of their systems to minimize costs and maintain reliability and
[ensure that cost recovery is effective and efficient]” (Stephan, 2008 : 69)

Further, SAPP has allowed for the emergence of the Southern African Grid - “an ingenious
and effective way of countering crippling shortages of electricity by moving power around
the sub-continent. This has helped free electricity supply in the SAPP countries from the
impact of drought and other natural disasters, particularly as the interconnections allow for
the routing of power under almost all circumstances” (Stephan, 2008 : 70).

Thus it is seen that regionalism in the SADC region IS somewhat of a two-pronged

approach. There is the necessary and contingent process of “open regionalism” driven by
powerful global market forces and interests. But similarly there is the fork of the
“developmental integration approach” to regionalism, driven by the state to guide markets
and effect functional political spillovers.

The spillovers for regionalism in the Southern African region is the ability for the
developmental integration approach to redress some of the imbalances that exist in the
region as it stands, and herein lies the hope.

Domestic political concerns are of key importance when considering the effectiveness and
posibilities of regionalism. South Africa faces significant domestic hurdles to open
regionalism, because of the neoliberal slanting towards free-trade and free-markets. As
mentioned earlier, a significant percentage of the ANC political support is located in the
trade unions of COSATU and the Communist Party. In two level games terminology
(Putnam, 1988), the South African leader finds himself sitting with his domestic
requirements to be pro-labour and politically left on the one hand, as well as business
calling for increased ability to export into the region, and hence politically right, on the
other. The international game-board plays out in the world context constructed in the first
part of this essay, in a neoliberal framework calling for free-trade and open markets. The
leader (president Mbeki or president Zuma have both faced this same problem), faced with
a seemingly unresolvable dilemma must give away significant side payments in order to
progress.

Giving in to the pressures of “open regionalism” and globalisation, business is satisfied but
domestic labour interests are unhappy with an insecure and relaxed labour market. To
overcome this, our fearless leader turns, as well, to the “developmental integration
approach”, an approach wherein the process can be controlled to a greater degree.
Creating regional initiatives, such as SAPP, enables the leader to give away side
payments in the “currency of the negotiation” (Putnam, 1988) with labour, namely... jobs.

The functional spillover is that the imbalances brought about by unconstrained open
regionalism can be managed. To extend the SAPP example... “there will be an opportunity
to generate significant revenue through the export of power to other member states
connected to the power pool, as well as countries outside the pool in northern Africa and
Europe. South Africa should be a net importer of electricity … and if the country is able to
source more electricity from beyond its borders, this will hopefully go some way towards
alleviating the chronic trade imbalances between South African and the rest of SADC, and
encourage other forms of regional trade in which non-SADC countries have significant
comparative advantages” (Stephan, 2008).

In conclusion, it has been shown how the Southern African region exists in an historically
contingent world system. Further it can be seen how the interaction at the domestic level
of South Africa, the regions largest economy, effect the interactions in the region. Through
carefully planned “developmental integration” the prospects for regionalism of this kind
bring new hope to the developing world, through the increase of regional trade, access to
large regional and international markets. Further, creating large, politically coherent and
stable regions will enable Southern Africa to negotiate from a stronger position on the
world stage. But all of this is only possible through an iterative processes of continual
integration, and not just by allowing the market to dictate direction and progress.
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