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.

Over the last 15 years the world's largest developing countries have initiated market reforms in their electric power sectors from generation to distribution. This book evaluates the experiences of five of those countries - Brazil, China, India, Mexico, and South Africa - as they have shifted from state-dominated systems to schemes allowing for a larger private sector role. As well as having the largest power systems in their regions and among the most rapidly rising consumption of electricity in the world, these countries are the locus of massive financial investment and the effects of their power systems are increasingly felt in world fuel markets. In-depth case studies also reveal important variations in reform efforts. This accessible volume explains the origins of these reform efforts and offers a theory as to why - despite diverse backgrounds - reform efforts in all five countries have stalled in similar ways.

-The first study to cover the big emerging economies of China and India whose development will be crucial to world energy markets

-Comprehensive up-to-date reviews and assessments allow readers to learn easily about diverse reform experiences

-Rigorous case study analysis follows sound political science methods without jargon

Contact Rose Kontak or the publisher for purchase.

A generous gift from Susan Ford Dorsey has allowed FSI and the School of the Humanities and Sciences to establish the Ford Dorsey International Policy Studies program (Ford Dorsey IPS). The gift, which has been matched by the university to give the program a multi-million dollar endowment, will expand the longstanding International Policy Studies program from a one-year to a two-year course of study, with more full-time faculty, new seminars, training in policy advocacy, and new policy specializations. These new changes to the program will link IPS students more closely with Stanford's international policy research centers and programs in FSI.

Dedicated to the study and analysis of the international system, the Ford Dorsey IPS program seeks to expose students to the full range of complex policy issues they will face in the 21st century and to develop the knowledge and analytical capabilities they will need to address those issues successfully. The program provides a group-based practicum involving real-world problem solving, allowing students to focus on the expansion of the global economy, problems of developing and transitioning societies, security issues, and the global environment. Stephen J. Stedman, Ford Dorsey IPS director and FSI and CISAC senior fellow, notes that "these changes will further enhance the quality of the program while maintaining a dynamic, intimate student learning experience."

A private dinner was held on Feb. 7 to celebrate Susan Ford Dorsey's magnificent gift. Gareth Evans, president and CEO of the International Crisis Group, addressed Ford Dorsey supporters, faculty, and students with a talk on "Making Idealism Realistic: The Responsibility to Protect as a New Global Norm."

Ford Dorsey's enduring investment in training future policymakers at Stanford fulfills one of the key priorities of the International Initiative of the Stanford Challenge, to address global international problems by leveraging Stanford's cross-disciplinary and collaborative research and teaching.

Almost every facet of modern life - from driving to the grocery store to turning on a light - relies on inexpensive and abundant fossil fuels. When burned for power, these fuels yield emissions of carbon dioxide that accumulate in the atmosphere. They are the leading cause of global warming.

Assuring ample energy services for a growing world economy while protecting the climate will not be simple. The most critical task will be curtailing emissions from coal; it is the most abundant fossil fuel and stands above the others in its carbon effluent. Strong lobbies protect coal in every country where it is used in abundance, and they will block any strategy for protecting the climate that threatens the industry. The only practical approach is to pursue technologies that burn coal much more cleanly.

Such new technologies exist on the drawing board, but governments and regulators are failing to bring designs into practice with deliberate speed. Instead, most of the policy effort to tackle global warming has focused on creating global institutions, such as the Kyoto Protocol, to entice change. Although noble, these global efforts usually fall hostage to the interests of critical countries. After negotiating the Kyoto treaty, for example, the United States refused to sign when it found that it could not easily comply with the provisions. Australia did the same, and Canada is also poised to withdraw. Nor have treaties like Kyoto crafted a viable framework for engaging developing countries; these countries' share of world emissions is rising quickly, yet they are wary of policies that might crimp economic growth.

Breaking the deadlocks that have appeared in the Kyoto process requires, first and foremost, a serious plan by the United States to control its emissions. The United States has a strong historical responsibility for the greenhouse-gas pollution that has accumulated in the atmosphere, but little has been done at the federal level. (A few states are implementing some policies, and they, along with rising political pressure, might help to catalyze a more aggressive federal approach.) It will be difficult, however, for the United States (and other industrial countries) to sustain much effort in cutting emissions unless its economic competitors in China and the other developing countries make some effort as well. Without a strong policy framework to contain emissions throughout the world, levels of greenhouse-gas pollution will reflect only the vagaries in world energy markets. We need a proper strategy for moving away from harmful emissions.

A few years ago, many analysts thought that market forces were already shifting away from coal. They predicted the growth of natural gas, a fuel prized for its cleanliness and flexibility. That vision was good news for the climate because electricity made from natural gas leads to half of the carbon-dioxide emissions of electricity from coal. But natural-gas prices, which tend to track oil prices, have skyrocketed over the past few years, and, unsurprisingly, the vision for the growth of natural has dimmed. Natural-gas plants, which accounted for more than 90 percent of new plants built in the 1990s, are harder to justify in the boardroom. Most analysts now see a surge in the use of coal. One hundred new coal-fired plants are in the planning stages in the United States. Absent an unlikely plunge in gas prices, coal is here to stay.

Despite the challenges of handling coal responsibly, the potential of research and deployment of advanced technologies to help the United States and the major developing countries find common interest on the climate problem is great. In advanced industrialized countries, the vast majority of coal is burned for electricity in large plants managed by professionals - exactly the setting where such technology is usually best applied. In the United States, for example, coal accounts for more than four fifths of all greenhouse-gas emissions from the electricity sector.

Most of the innovative effort in coal is focused on making plants more efficient. Raising the temperature and pressure of steam to a "supercritical" point can yield improvements in efficiency that, all told, can reduce emissions about 20 to 25 percent. Boosting temperature and pressure still again, to "ultra-supercritical" levels, can deliver another slug of efficiency and lower emissions still further. Encouraging investments in this technology is not difficult: most countries and firms are already searching for gains in efficiency that can cut the cost of fuel; a sizeable fraction of new Chinese plants are supercritical; India is a few steps behind, in part because coal is generally cheaper in that country, but even there the first supercritical unit is expected soon. Across the advanced industrialized world, supercritical is the norm, at least for new plants. A few companies are taking further steps, investing in ultra-supercritical units. Two such plants are going up outside Shanghai, using mainly German technology, evidence that the concept of "technology transfer" is becoming meaningless in the parts of the world economy that are tightly integrated. Markets are spreading the best technologies worldwide where their application makes economic sense. In other countries, technologies to gasify coal - which also promise high efficiency - are also being tested.

But power-plant efficiency alone won't account for the necessary deep cuts in emissions. Already the growth in demand for electricity is outstripping the improvements in power plants such that the need for more plants and fuel is rising ever higher, as are emissions. This is spectacularly true in fast-growing China.

A radical redesign of coal plants will be needed if governments want to limit emissions of carbon dioxide. Here, the future is wide open. One track envisions gasifying the coal and collecting the concentrated wastes. Another would use more familiar technologies and separate carbon dioxide from other gases. All approaches require injecting the pollution underground where it is safe from the atmosphere. This is already done at scale in oil and gas production, where injection is used to pressurize fields and boost output. The consequences of injecting the massive quantities of pollution from power plants, however, are another matter. Regulatory systems are not in place or tested, and public acceptance is unknown.

While these technologies can work, they won't be used widely before they progress on two fronts. First, they must become commercially viable. Despite the huge potential of adopting them, it is striking how little money is being spent on advanced coal technologies. The U.S. government has created some financial incentives to build advanced coal plants, but much of that investment is slated for plants that are not actually designed to sequester CO2. In fact, the uncertainty of American policy gives investors in power plants an incentive to build conventional high-carbon technology, because it is more familiar to regulators and bankers. Worse yet, increased emissions today might actually improve a negotiating position in the future when targets for controlling emissions are ratcheted down from whatever is business as usual. Some private firms, such as BP and Xcel, are putting their own money into carbon-free power - but the totality of the private effort is small compared with the size of the problem. There are good mechanisms in place for encouraging public research and private investment in such technologies; the real shortcoming is in the paucity of the effort.

The second problem is that countries such as China, India, and other key developing nations won't spend the extra money to install carbon-free coal. Yet these countries' share of global coal consumption has soared almost 35 percent over the past ten years.

The inescapable conclusion is that the advanced industrialized countries must create a much larger program to test and apply advanced coal technologies. Electricity from plants with sequestration might eventually cost half more than from plants without the technology. That's not free, but it is affordable and is less than the changes in electric rates that many Americans already experience and accept.

State and federal regulators need to create direct incentives - such as a pool of subsidies - to pay the extra cost until the technology is proven and competitive with conventional alternatives. That subsidy, along with strict limits on emissions, will set a path for cutting the carbon from U.S. electricity without eliminating a future for coal. They must also extend the same incentives to the major developing countries, which have no interest in paying higher rates for electricity because their priorities do not rest on controlling CO2. Yet these countries' involvement now is essential. Averting emissions has a global benefit regardless of where the emissions are controlled. And developing countries are especially unlikely to shoulder more of the burden themselves, in the more distant future, unless they are first familiar with the technologies.

Solving the climate problem will be one of the hardest problems for societies to address - it entails complicated and uncertain choices with real costs today, and benefits in the distant future. Yet the stakes are high and the consequences of indecision severe. Serious action must contend with existing political constituencies and aim at existing resources that are most abundant. The technologies needed to make coal viable will not appear automatically. An active policy effort - pursued worldwide and initially financed by the industrialized world - is essential.

Originally published in the January/February 2007 issue of Boston Review.