Contemporary Centres of Power
1. Chapter Overview
2. The European Union (EU)
🏛️ Formation — Step by Step
💪 Influence of the EU
Economic Influence
EU’s GDP projected at approximately $19.35 trillion (2024). Its share of world trade far exceeds that of the US, making it assertive in disputes with the US and China. The euro can challenge US dollar dominance.
Political & Diplomatic Influence
France, an EU member, holds a permanent UNSC seat. Several EU states are non-permanent UNSC members. EU influences US policies (e.g., on Iran’s nuclear programme) through diplomacy and economic leverage rather than force.
Military Influence
EU’s combined armed forces are the second largest in the world. Defence spending is second only to the US. France possesses approximately 335 nuclear warheads. EU is the world’s second most important source of space and communications technology.
Supranational Character
The EU has its own flag, anthem, founding date, and currency. It intervenes in economic, political, and social areas. Though a constitution attempt failed, it functions increasingly like a nation state in international dealings.
⚠️ Limitations of the EU
- Member states retain their own foreign and defence policies, which are often at odds — e.g., Britain supported the Iraq invasion while France and Germany opposed it.
- Euroskepticism in several countries — Britain kept itself out of some policies; Denmark and Sweden resisted the Maastricht Treaty and the euro.
- People in many countries are reluctant to give the EU powers that were historically exercised by their own governments.
- There are reservations about including new member states, especially from the former Soviet bloc.
3. Association of South East Asian Nations (ASEAN)
🏛️ Formation and Membership
- ASEAN was established on 8 August 1967 by five countries — Indonesia, Malaysia, the Philippines, Singapore, and Thailand — through the Bangkok Declaration.
- Later members: Brunei Darussalam, Vietnam, Lao PDR, Myanmar (Burma), and Cambodia — bringing total membership to ten.
- The ASEAN Regional Forum (ARF), established in 1994, coordinates security and foreign policy among members.
🎯 Objectives
Primary Objective
To accelerate economic growth and, through it, achieve social progress and cultural development among member states.
Secondary Objective
To promote regional peace and stability based on the rule of law and the principles of the United Nations Charter.
🤝 The “ASEAN Way”
🏗️ ASEAN Community (2003)
ASEAN Security Community
Based on the conviction that territorial disputes should not escalate into armed conflict. Members uphold peace, neutrality, cooperation, non-interference, and respect for national differences.
ASEAN Economic Community
Aims to create a common market and production base within ASEAN; aid social and economic development; create a Free Trade Area (FTA) for investment, labour, and services; improve Dispute Settlement Mechanisms.
ASEAN Socio-Cultural Community
Aims to foster social cohesion and cultural understanding among the diverse peoples of Southeast Asia.
🌐 ASEAN’s Growing Role
- ASEAN’s Vision 2020 defines an outward-looking role for ASEAN in the international community, building on its policy of encouraging negotiation over conflict.
- ASEAN has successfully mediated the end of the Cambodian conflict and the East Timor crisis, and holds annual meetings to discuss East Asian cooperation.
- It is the only regional association in Asia providing a political forum where Asian countries and major powers discuss political and security concerns.
- The US and China have both moved to negotiate Free Trade Agreements (FTAs) with ASEAN, underlining its economic weight.
🇮🇳 India and ASEAN
- During the Cold War, India’s foreign policy did not pay adequate attention to ASEAN.
- India’s ‘Look East’ Policy (since early 1990s) and ‘Act East’ Policy (since 2014) led to greater economic interaction with ASEAN, China, Japan, and South Korea.
- India signed trade agreements with Malaysia, Singapore, and Thailand. The ASEAN–India FTA came into effect in 2010.
4. EU vs ASEAN — A Comparison
🇪🇺 European Union
- Founded 1992 (Treaty of Maastricht)
- Evolved from economic to political union
- Supranational structures and institutions (Parliament, Court of Justice, ECB)
- Common currency — the Euro
- Common foreign and security policy (partial)
- Schengen — borderless travel zone
- Constitution attempt failed
- World’s second largest military force
🌏 ASEAN
- Founded 1967 (Bangkok Declaration)
- Primarily an economic association
- No supranational structures — sovereignty respected
- No common currency
- Security cooperation through ARF (1994)
- ‘ASEAN Way’ — informal, consensus-based
- Three-pillar Community launched 2003
- Economy growing faster than EU/US/Japan
5. The Rise of the Chinese Economy
📜 Phase 1: The Soviet-Style Economy (1949–1970s)
- After the communist revolution (1949), China’s economy was modelled on the Soviet system — state-owned heavy industry, collectivised agriculture, minimal foreign trade.
- China severed ties with the capitalist world and relied on its own resources (and briefly on Soviet aid).
- Employment and social welfare were assured; China made progress in education and health. Economy grew at 5–6% annually.
- Problems: 2–3% population growth meant insufficient economic growth; food shortages; per capita income very low; industry not growing fast enough; minimal international trade.
🔓 Phase 2: Opening Up (1970s–Present)
✅ Outcomes of the Reforms
- Phenomenal rise in foreign trade; China became the most important destination for Foreign Direct Investment (FDI) anywhere in the world.
- China built large foreign exchange reserves, enabling big investments in other countries.
- Chinese economy — both industry and agriculture — grew at a much faster rate after reforms.
- China projects growing influence in Latin America and Africa, positioning itself as a global partner for developing economies.
❌ Challenges & Inequalities
- Benefits of reforms have not reached everyone — nearly 100 million people are unemployed.
- Poor conditions of female employment, comparable to 18th–19th century Europe.
- Rising environmental degradation and corruption.
- Growing economic inequality — between rural and urban residents, and between coastal and inland provinces.
6. India–China Relations
📉 Tensions and Conflict
- Initial hope of solidarity after independence faded quickly; the slogan ‘Hindi-Chini bhai-bhai’ proved short-lived.
- Tibet (1950): Chinese takeover of Tibet led to early differences; India gave asylum to the Dalai Lama.
- Border War (1962): Conflict over territorial claims in Arunachal Pradesh and the Aksai Chin region of Ladakh. India suffered military reverses.
- Diplomatic relations between the two countries were downgraded until 1976 following the 1962 war.
📈 Path to Improvement
- After Deng Xiaoping’s rise in the late 1970s, China’s policy became more pragmatic and less ideological. It was prepared to put off contentious issues and improve relations.
- Border talks initiated in 1981.
- Rajiv Gandhi’s visit to China (December 1988) provided a major impetus for improvement. Both governments committed to maintaining ‘peace and tranquility’ on the border.
- Four border posts opened for trade; agreements signed on cultural exchanges and cooperation in science and technology.
💼 Post–Cold War: Growing Ties
🤝 Areas of Cooperation
- India–China trade grew at 30% per year since 1999
- Bilateral trade rose from $338 million (1992) to over $84 billion (2017)
- Both countries adopted similar positions at the WTO
- Cooperation on energy deals abroad to avoid competition
- Military-to-military cooperation is increasing
⚠️ Contentious Issues
- Unresolved border disputes (Arunachal Pradesh, Aksai Chin)
- China’s support to Pakistan’s nuclear programme
- China’s military ties with Bangladesh and Myanmar
- China–Pakistan Economic Corridor (CPEC)
- China’s support to Pakistan at the UN on counter-terrorism
- Taiwan — China regards it as a renegade province
7. Other Emerging Centres — Japan & South Korea
🇯🇵 Japan
- Third largest economy in the world (2017); only Asian member of the G-7
- Joined the OECD in 1964; rapid post-WWII growth despite almost no natural resources
- The only nation to have suffered nuclear bombing
- Article 9 of its Constitution renounces war — yet military expenditure is the seventh largest in the world (1% of GDP)
- Security alliance with the US since 1951
- Second largest contributor to the UN regular budget (~10%)
- Known for high-technology global brands: Sony, Toyota, Honda, Canon
🇰🇷 South Korea
- Divided from North Korea at the 38th Parallel after WWII; Korean War 1950–53
- Both Koreas admitted to the UN on 17 September 1991
- Rapid development from 1960s–80s called the ‘Miracle on the Han River’
- Joined OECD in 1996; 11th largest economy in the world (2017)
- HDI rank of 18 (Human Development Report 2016)
- Military expenditure — tenth largest in the world
- Global brands: Samsung, LG, Hyundai — widely known in India
8. Mind Map — Chapter 2 at a Glance
Economic + Political
Euro · Schengen
France — UNSC
$19.35T GDP
Bangkok Declaration
10 members
Sovereignty focus
No supranational body
SEZs · FDI
WTO 2001
Rajiv Gandhi 1988
Trade $84B (2017)
Article 9 · G-7
OECD 1964
11th economy
OECD 1996
9. Summary — Quick Revision
After the end of bipolarity, alternative centres emerged to limit US dominance. The key ones are the EU in Europe and ASEAN in Asia, alongside the dramatic rise of China as an economic power. Japan and South Korea are also significant emerging centres.
European integration started with the ECSC (1951), moved to the EEC (1957), and culminated in the European Union (1992) via the Maastricht Treaty. The EU has its own flag, anthem, currency (euro), Parliament, and a common foreign and security policy.
The EU has enormous economic influence (GDP ~$19.35 trillion, largest trading bloc), political influence (France on UNSC, leverages US policy), and military influence (second largest armed forces, France has nuclear weapons). It also has significant Euroskeptic limitations internally.
ASEAN was founded in 1967 through the Bangkok Declaration by five nations. It now has ten members. Unlike the EU, ASEAN avoids supranational structures — the ‘ASEAN Way’ prioritises informality, consensus, and national sovereignty.
In 2003, ASEAN agreed to establish an ASEAN Community with three pillars — Security Community, Economic Community (common market, FTA, dispute settlement), and Socio-Cultural Community. ASEAN Vision 2020 defines its outward-looking global role.
China’s economy (1949–1970s) followed the Soviet model — state-owned industry, collectivised agriculture, minimal trade. After China established ties with the US in 1972 and Deng Xiaoping’s Open Door Policy (1978), it adopted gradual economic reforms — privatisation of agriculture (1982), industry (1998), and WTO accession (2001).
China’s reform model differed from shock therapy — it was step-by-step, with SEZs for foreign investment and the state retaining a central role. This produced rapid growth: China became the world’s top FDI destination and holds large foreign exchange reserves. However, it also created unemployment, inequality, and environmental problems.
India–China historical relations involved limited contact. Post-independence, the 1962 border war (Arunachal Pradesh + Aksai Chin) severely damaged ties. Diplomatic relations were downgraded until 1976. Rajiv Gandhi’s 1988 visit marked a turning point. Trade grew from $338 million (1992) to $84 billion (2017). Unresolved issues include border disputes, CPEC, and Pakistan-related concerns.
10. Important Terms to Remember
- European Union (EU): A supranational political and economic organisation of European states established by the Treaty of Maastricht (1992). It has its own flag, anthem, currency (euro), Parliament, and common foreign and security policy. Evolved from purely economic cooperation (EEC, 1957) to a political union.
- Schengen Agreement (1985): An agreement that abolishes border controls among member states, allowing free movement of people across most of Europe with a single visa.
- ASEAN Way: The style of interaction adopted by ASEAN members — informal, non-confrontationist, and cooperative, with strong emphasis on national sovereignty and consensus rather than supranational authority.
- ASEAN Regional Forum (ARF): Established in 1994, ARF is the body within ASEAN that coordinates security and foreign policy cooperation among member and dialogue partner states.
- Open Door Policy: China’s economic reform policy announced by Deng Xiaoping in 1978. It opened China to foreign investment and technology while introducing market mechanisms gradually — beginning with Special Economic Zones (SEZs).
- Special Economic Zones (SEZs): Designated areas in China where trade barriers were eliminated and foreign investors could set up enterprises, driving China’s spectacular export growth and FDI inflows.
- Four Modernisations: Proposed by Premier Zhou Enlai in 1973 — modernisation of agriculture, industry, science and technology, and the military — as the roadmap for China’s development.