Do States think in terms of Universal Gains or Relative Gains? Explain with reference to one or more state

Topic: Do States think in terms of Universal Gains or Relative Gains? Explain with reference to one or more state.

Abstract:

This paper basically concentrates on the question whether states think in terms of universal gains, or relative gains. The basic theories on which this paper would be based on are neoliberal institutionalism and structural realism. These two concepts determine the basic features of relative and universal gains, where one looks at the idea of absolute or universal gains, and the other looks at the reasons that prevent states to think in terms of relative gains. Apart from theoretical views that these two concepts introduce I have taken two case studies. The first one is the case of Roghun dam that is being built in Tajikistan, which has a negative impact to Uzbekistan’s economy, which shows that Tajikistan’s attitude is driven towards relative gains. My second case study is European Union, and in particular the example of EU-India relations in terms of trade and gains. In this case the concentration is dragged to universal gains. The reason why I took these two case studies is to compare the difference of relative and universal gains from one hand in a competitive, authoritarian space and on the other hand a liberal and more developed states to see if attitude towards gains is different, independent of one’s state regime. As a result of analyzing these two case studies and applying them to the theoretical concepts of neoliberal institutionalism and structural realism I have learned that even though the attitude of a state presented is based on universal gains, the way states think looks differently.

Introduction:

Basically all the countries want is to have advantage and always gain. But no such atmosphere and space can be fully implemented. The world countries are interdependent and the basic wealth and gain often comes from trade and other international relations. Therefore it is impossible to fully be confident to always win, unless it is planned and has to be well constructed. The way how people perceive each other and how certain foreign policies are implemented depend on states relations with each other. In previous times people used to fight for resources, in a way of military conquests, which basically happened when a state was not gaining very well and couldn’t reach a proper consensus with its opponent states. Nowadays, aggression would be one of the last things, if not the last, to deal with such problems. States basically make diplomatic agreements with each other and both receive gains. The relations in their term serve as an obstacle for the gains that states would advance and share. Another matter is how the gains would be distributed if states are in cooperation. Those countries would be the losers who would have less advantage of certain gain. In contrast the winner would have an advantage over the state and under its dominance the gains would expand. The statement that I would prefer to defend is that the states always think in terms of relative gains rather than universal or absolute. Even though there are states that have more or less succeeded having absolute gain with another states or number of states. Firstly I would describe the terms themselves and back it up with some case studies.

Neoliberal Institutionalism vs. Structural realism: 

The problem of absolute and relative gains divides neoliberal institutionalism and structural realism.¹ These two concepts are relatively different and contradict each other. The side of neoliberalism that shares the idea of absolute gains on first place is basically giving us the idea that states gain in an outcome of proper cooperation and have universal common gains. This means that both sides are better off and no other third side is worse off or fully worse off. The idea is that, singly for states it is harder to gain and always win. On contrast, some may say that states have succeeded by own self and without a need for long-lasting cooperation therefore shows there positive attitude towards relative gains. This may be considered good in some cases. The neoliberal institutionalism focuses basically on realm of individual absolute gains, which are indifferent to the gains of others.² This basically means that the costs that the state has to give up in a failed or not well developed cooperation are not very much considered, but rather are endurable since the absolute gains are realized. Hence the aim is closer to a friendly relationship and attitude within states who share common interest. Therefore the gains that one country gains in a cooperation have certain features.

One of the most important features is that, basically states gains and the way these gains are distributed fairly is holding on trust. The states have to be assured that they would not be fooled. Some countries may be able to develop in such circumstances but others may not. The matter is that not all countries are backed up with resources, which prevents them to think in terms of relative gains. In this case neoliberal view seems to be more positive and optimistic. The states are calmer and think of absolute gains. In contrast, if we look at this kind of issue from realistic view we would assume that stated do think more of relative gains. Because some states that are more dominant or have a possession of more resources would have to lose some share in a consequence of cooperation. Of course they would think in terms of relative gains and try to always take a bigger share if not whole. The same can be said in the case of the poorer countries. Seeing that other states are dominating over them, these less powerful sates would definitely think in a way of relative gain. If some fiscal or economic changes are given these states without any hesitations would definitely do their best to have all the gains in their own advantage. But any advantage or gain would be good for this one state but can be a loss for other states. Therefore in this messy kind of system where each state thinks of relative gains, cooperation is ought to be harder and harder to hold. Therefore a consensus or a middle class for these two concepts is hard to assume. Mainly every state has its own politics economics and interest towards their development. Therefore the more advantage a state would pursue the more it would be satisfied.

It will be impossible to explain the differences between neoliberal institutionalism and structural realism over, say, the prospects for international cooperation in the same way that economists explain the differences between outcomes in a perfectly competitive market and a monopoly.³ Basically in economics there is less space for trust and hope, and more perception for always winning. There should always be benefits, not depending on some consequences. The way the economy expands and develops depends on the state’s attitude towards relative gains. It seems that, the more the state thinks about itself the more the chances are that, it will succeed in economics. In this case the state is more self interested as it is assumed in the competitive market. Therefore if the state is self interested, its only way of holding into universal gains are present as long as the profits are growing. Looking from such perspective, we would say that the cooperation is kind of foggy and is just in a surface of little trust. In this way many opportunities get lost and much cooperation are therefore not very well designed. There are also other reasons that do not let states to think in terms of universal gains or even partly. These reasons may be linked to states greed, greater internal feasibility, richer resources, greater opportunities, and in some cases aggression and personal interest of a states governor. I would link these reasons mostly to Central Asian countries, especially Tajikistan and Uzbekistan as one of my case studies.

Rogun Dam: Tajikistan’s relative gain?

In my opinion one of the primitive example of relative gain, would be the case of Rogun Dam, which is being built in Tajikistan. The basic consequence of building Rogun would be touching Uzbekistan as one of Tajikistan’s neighboring countries. Tajikistan and Uzbekistan have been embroiled in a major dispute over life's most precious resource: water.⁴ Water is yet one of the most important resource that life on earth depends on. In this case Tajikistan has an advantage over water that flows through its territory to Uzbekistan. Basically if looking at the rich resources that each state was left with, after collapse of Soviet Union Tajikistan is one of the countries who was left with less advantages of resources. I would interpret this argument obviously not taking into consideration Tajikistan’s weak political power under autocratic regime, massive corruption and lack of proper allocation of resources. Therefore, the way Tajikistan thinks, when decided to build Rogun Dam can be seen as a relative gain. Some may say that its fair, because basically Tajikistan after Soviet Union lost its disciplined economic cooperation with the rest of Central Asia, and was backed down with its relatively poor resources. In these terms Rogun would be a chance for Tajikistan to develop its economic growth with the production of hydroelectric power, which shows that Tajikistan is certainly not fully located in a dead space. In other words Rahmon tries to show that he has some power over, and that now some other states would be depended on him in some way. Other important factor that contradicts Rahmons actions, regarding the construction of Rogun, is related to environmental issues. As we all know water one of the main resources is ought to be a kind of universal gain which has to be accessed by everyone. Basically it is a source of life, that is keeping life of nature and agriculture. Therefore if water would be lacking, then the amount of income from agriculture would decrease, which means that the economy of the country would be affected in any ways. On the other hand, it’s an efficient and feasible gain for Tajikistan, even though it is a relative gain.

Rogun would provide critical support for the Tajik economy, not only by providing more jobs through construction, but also by allowing the country to overcome its current electricity deficit (of around 2 billion kWh annually) and export surplus energy throughout the region.⁵ Under these positive advantages for Tajik economic development how would one think of, in terms of gains? Obviously states would think of relative gains, which would be efficient from economic side of view, effective from social, and constructive from political. Under the planned economy of USSR looked more likely as a universal gain, but now neither side would agree to a certain kind of rational for both sides consensus. In the old Soviet system, Rogun could have been a win-win project by producing electricity for Tajikistan while maximizing water flows for Uzbek irrigation system.⁶ This shows that neoliberal institutionalism is possible in this case of Rogun, if the states would concentrate on absolute gains. But, eventually reality is less rational and therefore relations of these countries worsen day by day.        

The goal of the international community is for Tajikistan and Uzbekistan to negotiate a mutually acceptable solution, possibly involving a water-for-gas trade, similar to the Soviet-era regional water-sharing arrangement.⁷ According to this imaginary consensus, the outcome would be an advantage for both sides. Even from the economic side of view it would be a gain for both sides. But somehow Karimov, and Rahmon are not able to realize this well alternative into actions. There are even rumors that they have really bad relations and even have gone into small scaled fight during some meetings. It is even said that often there are pressures from the side of Uzbekistan along with threats. Therefore even if the cooperation would be applicable to the sake of absolute gains, there are more ridiculous reasons for their misunderstanding which is bad for both sides. If the cooperation would be established, on one hand Rahmon would maybe gain less than he could gain without this cooperation, and on the other hand for Uzbekistan the cooperation is inevitably needed.

European Union, as an example of Universal Gains?

In my view one of the most exemplar case of universal gains could be the European Union. As we know in the EU there is a common market and the borders are relatively opened. Therefore free trade is available and is important within the EU. Thinking about the trade on the international level we can find out that tariffs are more or less common for all countries, which means that countries within the EU would have absolute gain out of each trade along with external actors. This clarification has been modified during the creation of the Customs Union. Analytically thinking, we could say that it makes it easier in terms of trade and cooperation efficient internally as well as externally. It is assumed that GDP per capita of the EU would have been approximately one-fifth lower today if no integration had taken place since 1950.⁸ Moreover we should take into account the fact that the members of the EU are independent states with own political and economic views and interests. Therefore, even if we don’t take into account external relations in terms of trade, of whole EU, the states that are within the union already could be considered to have absolute gains. Mainly because states are making free trade and bilateral agreement within each other, could be said that they are thinking in terms of absolute gains. This means that the level of trust in Europe is high enough for states to freely negotiate and at the same time receive benefits.

According to the modeling analysis shows modest income gains for all economies in all settings and scenarios, with the biggest absolute gains occurring in the EU and Colombia, where real incomes are projected to increase by up to €4 billion and €2, 8 billion respectively.⁹ It seems that EU is ought to be known as one state, rather than different stated in a union. This determines their common absolute gains in terms of income. The indication of income is very important which determines how well the state is successful and has common gains, which are well distributed within states.

Even so we have considered the gains that are accomplished interlineally, we should not forget about the external factors and a broader notion for universal gains. Basically, absolute gains for states are more or less implemented freely within the union. But how can this more or less perfect example of absolute gain be interpreted to the external relations of EU and giving a wider meaning and evidence for universal gains? One of such example could be EU-India Bilateral Free Trade Area. It appears that the EU-India FTA would result in welfare gains for both India and the EU, which shows that in absolute terms, the gains of EU would be much higher than that of India. However, in terms of share in GDP the gains of India would be much large than that of EU.¹⁰ In its overview the deal may seem efficient and productive for both sides. The basic feature that determines India’s gain is trade and how well trade is influencing the economy and GDP of the state. From the side of European Union it is another factor, which looks at the efficiency of gains. Therefor it is ought to be said that India has little to gain and much to lose from a free trade agreement with the EU if it merely involves tariff reduction in trade with the EU. ¹¹ The reason why this happens is explained by the way that, EU has had its soft power over India, showing the maximized economic development in terms of trade, which has prevented India to soften tariffs and limitations. Obviously this would be an advantage for EU. Therefore the image here is kind of foggy. EU thinks in terms of universal gains in developing relations with India, due to which both states are winning. Furthermore when the tariffs are softened EU would have more gains, which makes India worse-off in terms of pure absolute gains. Therefore officially the intentions are linked to universal gains for both states but in process different outcomes are seen.

Conclusion:

In terms of EU, I would say that, in the means of absolute gains, it is efficient and relevant within the union. But in terms of EU relations externally is looking to be different. Even though it may seem that EU has developed universal gain with some other states of the world, I would assume that the EU certainly thinks in terms of relative gains within this process. As long as the relation is bringing advantage a state would prefer to remain and expand, but whenever other opportunities are opened and a chance has been released for a better gain, certainly every state in this situation would think of a relative gain. The cases of Roghun and EU-India relations have been an evidence for this. The cases show that no pure attitude towards universal gain has been proven. Whether the relative gain is shown directly in the case of Tajikistan, or indirect and well-constructed universal gain in the case of EU, the basic assumptions show that not depending on how states act in these terms their attitude could be determined in terms of relative gains. Basic solutions could be implemented but again this would bring us to the matter of trust and rational choices. Doubt is present everywhere, therefore it in some way banes the path to pure universal gains. Personally I strongly support the idea of universal gains. But in terms of whether states think in terms of relative or universal gains, I would conclude that for every state internal development always stands on the first place.  

 

 

 

Bibliography:

Powell, Robert . "Absolute and Relative Gains in International Relations Theory." JSTOR. http://www.jstor.org/stable/1963947 (accessed April 26, 2013). 

Weil, Stephen. "Tit-for-Tat: The Evolution of Non-Cooperation over the Rogun Dam | Center for Strategic and International Studies." Center for Strategic and International Studies. http://csis.org/blog/tit-tat-evolution-non-cooperation-over-rogun-dam (accessed April 26, 2013).

Nichol, Jim . "Tajikistan: Recent Developments and U.S. Interests." fas.org. www.fas.org/sgp/crs/row/98-594.pdf (accessed April 26, 2013).

Badinger, Harald . "Growth Effects of Economic Integration: Evidence from the EU Member States." JSTOR. http://www.jstor.org/stable/40441034 (accessed April 26, 2013).

European Commission DG Trade. "EU-Andean Trade Sustainability Impact Assessment." europa.eu. trade.ec.europa.eu/doclib/docs/2010/april/tradoc_146014.pdf (accessed April 27, 2013).

Raihan, Selim . "EU-India Bilateral FTA: Potential Implications for the Excluded Low-Income Economies in Asia and Africa." purdue.edu. https://www.gtap.agecon.purdue.edu/resources/download/4780.pdf (accessed April 27, 2013).

 

 

 

¹ Powell, Absolute and Relative Gains.

² Powell, Absolute and Relative Gains.

³ Powell, Absolute and Relative Gains.

⁴ Weil, The Evolution of Non-Cooperation over the Rogun Dam.

⁵ Weil, The Evolution of Non-Cooperation over the Rogun Dam.

⁶ Ibid.

⁷ Nichol, Tajikistan: Recent Developments and U.S. Interest, 10.

⁸ Badinger, Growth Effects of Economic Integration

⁹ European Commission, EU-Andean Trade Sustainability Impact Assessment.

¹⁰ Raihan, Potential Implications for the Excluded Low-Income Economies, 2.

¹¹ Ibid, 12