Hub-spokes relations and economic injustice in SE Asia

opinion December 08, 2012 00:00

By Sarinna Areethamsirikul

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During the Cold War, the economic and political ties of the United States and smaller countries could be described as a hub-spokes relationship. The United States was the hub and the other countries were spokes. The relationships were based on bilateralis


Under this system, spokes often supplied raw materials or provided cheap labour to produce goods for the domestic market of the hub economy. The hub could re-export those goods to other spokes under different trade agreements. In this scenario, both earned revenue from trade. However, the spokes seemed to be the ones who bore more environmental and social costs than the hub.
The hub-spokes model thus reflects an asymmetric relationship in terms of political and economic power that the hub has over the spokes. This can also refer to the "North-South conflict" issue.
Today, however, trade between South-South economies can also epitomise the classic hub-spokes relationship. And it is apparently evident in the Mekong region. China has begun to aggressively play the role of the hub economy and mega-financier to the less-developed Mekong economies - Cambodia, Laos, Myanmar and Vietnam - which are ostensibly spokes for the Chinese economy.
For instance, China has invested heavily in dam construction and mining in the spokes economies in order to gain cheap electricity and raw materials, which are supplied to industries in southern Chinese provinces. These agreements and investments provide a large amount of revenue for the spokes economies, while China exports cheap cars, motorcycles, electronic appliances and miscellaneous goods in return.
Besides the Chinese hub, Thailand and Vietnam have emerged as smaller hubs and as financiers in the Mekong region. A Thai company, Ch. Karnchang, is the major investor in the construction of the controversial Xayaburi Dam in Laos. This dam will generate revenue for the Lao government, and Thailand will enjoy cheap electricity. It sounds like a win-win situation. However, this dam is being built on the Mekong River system, which will inevitably affect the waterway's ecosystem, resulting in damage to the fish population, biodiversity and agricultural land. This project is expected to destructively affect millions of people in the lower riparian countries.
In the case of sugar, Thailand's sugar companies have invested in plantations in Cambodia, aiming to increase sugar production and exports to the Thai and European markets. Consequently, hundreds of families in Koh Kong province have been forcibly evicted from their land, and local people have had no choice but to involuntarily become labourers in the plantations. Also, several cases of violence against and threats to local people and communities have been reported. Sugar from Cambodia is now tainted as "blood sugar".
Vietnam has also taken on a new role in this region by becoming both an investor in and an importer of natural resources from its neighbours, in the hope of further stimulating its rapid economic development. The Environmental Investigation Agency (EIA) based in London has reported on the transportation of illegal raw timber from Laos to Vietnam. Currently, Vietnam's wooden furniture industry is one of the top exporters to the world. On the other hand, ironically, furniture factories in Laos have an inadequate supply of wood needed to develop that sector of the country's industry.
This year, before the 21st Asean Summit in Phnom Penh, the 1st Asean Grassroots People's Assembly (AGPA) was held to focus on the negative affects of economic development and other related issues such as labour rights, democracy and food security. Unfortunately the AGPA meeting and the Asean Civil Society Conference/Asean Peoples' Forum (ACSC/APF) were interrupted by the authorities. Civil society organisations and activists were warned not to discuss these issues or organise activities centred around them. Regardless of that, they managed to rearrange and continue their meetings.
For several years, Asean has boasted about transforming Southeast Asia from a simple FTA grouping to a more sophisticated economic community by 2015. Several regional projects have been launched to improve trade and labour flows, such as tariff elimination, Asean "connectivity", the "Asean Single Window", the Asean visa and the Asean Mutual Recognition Agreement (MRA).
However, Asean has yet to tackle the problem of economic injustice, which is the most apparent problem that will impede Asean integration. So far has this issue has not been seriously recognised by Asean leaders.
If Asean wants to build a regional economic community, it cannot afford to ignore the transnational effects of economic development, including environmental degradation, land grabbing and violations of human rights and community rights. It cannot afford to ignore the grassroots people, because they are the backbone of the Asean economy.
Without addressing and solving these issues of economic injustice, it is impossible for Asean to be acknowledged as a people-oriented organisation, or for it to accomplish its goal of becoming a regional economic community.
Sarinna Areethamsirikul is a Siam Intelligence columnist and independent researcher based in the United States.