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Regional Infrastructure Systems
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© Colin Turner 2018 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA
A catalogue record for this book is available from the British Library Library of Congress Control Number: 2018944033 This book is available electronically in the Social and Political Science subject collection DOI 10.4337/9781786430588
ISBN 978 1 78643 057 1 (cased) ISBN 978 1 78643 058 8 (eBook)
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Contents Preface List of abbreviations
vi viii
1
The rise of regional infrastructure systems
1
2
The European infrastructure system
31
3
The Asian infrastructure system
70
4
The African infrastructure system
108
5
The Americas’ infrastructure system
157
6
Regional infrastructure systems: a conclusion
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Index
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Preface One of the pre-eminent trends within the post-war global economy has been the move towards regionalism. Whilst there are a multitude of forms of regionalism across the global economy of varying depth and coverage, all were motivated by the desire to enhance trade (and frequently investment) across a group of states who occupy a contiguous/semicontiguous space. Across many such arrangements the need to adapt national infrastructure systems or even create dedicated regional systems has become an increasingly salient territorial strategy. This is based on a belief that without such regional systems the full economic and political benefits of regionalism cannot be realised. The development of, progress towards and state motivations for such systems is the core theme of this book. The process of developing such structures is viewed through the lens of territoriality as such a constant theme throughout the work is to assess the extent to which this process of regional infrastructuring supports states in the attainment of their territorial objectives. In some states, this is a process of adapting national systems to the new reality of the international system. For other states, regional infrastructure is used as a platform to promote the development of immature national systems. This book seeks to add to increased academic attention paid to the development of international infrastructures. By focusing on the region, there is a need to account for all processes of international infrastructural integration occurring within that regional grouping. In beginning to examine the issue, the units of study (i.e. regions) were equated to the main geographic continents, with the Americas treated as a single region of study. The book focuses on four regions (Europe, Asia, Africa, and the Americas). The potential for an analysis of the fifth (Oceania) was explored but was dropped due to the combination of a lack of material, space and time. Moreover, within those regions studied, formal regional integration frequently takes place with a series of regional subagreements. In many cases, these are the main focal points of formal policy programmes to develop regional infrastructure systems. As mentioned above, core to these processes is the state-based system and often core developments in the evolution of regional infrastructure lie outside the formal regional integration agreements. There has been a long vi
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Preface
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precedent of states engaging in interstate agreements to connect national infrastructure systems. There are also processes where interstate agreement leads to dedicated trans-national infrastructures (notably in energy). Finally, there is the role of the global/regional hegemon in the development of such systems. In the past, colonial powers have proved powerful drivers in shaping regional infrastructure systems. In the contemporary environment, China is proving to be a high-profile catalyst for the development of intraregional connectivity, especially in Asia. In writing a book addressing contemporary events and processes, there is always a danger that what gets written gets overtaken by events. I have tried to keep the material analysed as up to date as possible, but the danger of dealing with what could be obsolescent is ever present. To this author, infrastructure and infrastructuring are not only highly relevant to contemporary debates but tend to lack a clear coherence of any underlying political/economic narrative underpinning their examination. My hope is that this book (along with others I have written and co-written) goes some way to offering a more coherent analysis of this fascinating subject.
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Abbreviations ADB
Asian Development Bank
AfDB AfIS AHN AIF AIIB AIS AmIS AMU ANCOM APEC APG ASEAN AU Bcfd CARICOM CEC CEF CEMZA CEN-SAD COMESA DAE EAC EAEU ECCAS ECOWAS EIB EIS
African Development Bank African infrastructure system Asian highway network Asian Infrastructure Fund Asian Infrastructure Investment Bank Asian infrastructure system Americas’ infrastructure system Arab Maghreb Union Andean Community Asia-Pacific Economic Cooperation ASEAN power grid Association of South East Asian Nations African Union billion cubic feet per day Caribbean Community Commission of the European Communities Connecting Europe Facility Common economic maritime zone of Africa Community of Sahel-Saharan States Common Market for Eastern and Southern Africa Digital Agenda for Europe East African Community Eurasian Economic Union Economic Community of Central African States Economic Community of West African States European Investment Bank European infrastructure system viii
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Abbreviations
E-PENS EU GCC GDP ICA ICT IEA IEM IGAD IIRSA IPE ITU LAIA LNG LPI LSCI mb/d MDB Mercosur NAFTA NIS NRI OBOR PEN PIDA REC RIS SAARC SADC SEM SKRL SREB TAGP
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pan-European energy networks European Union Gulf Co-operation Council gross domestic product Infrastructure Consortium for Africa information and communication technology International Energy Agency Internal Energy Market Intergovernmental Authority on Development Initiative for the Integration of the Regional Infrastructure of South America international political economy International Telecommunications Union Latin American Integration Agreement liquefied natural gas Logistics Performance Index (World Bank) Liner Shipping Connectivity Index (UNCTAD) million barrels per day multilateral development bank Mercado Común del Sur (Southern Common Market) North American Free Trade Area national infrastructure system Network Readiness Index One Belt, One Road pan-European network Programme for Infrastructure Development in Africa regional economic communities (Africa) regional infrastructure system South Asian Association for Regional Co-operation South African Development Community Single European Market Singapore–Kunming rail link Silk Road economic belt trans-ASEAN gas pipeline
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TAH TAR TAZARA TEN TENS-E TENS-T T-PENS UAE UNASUR UNECA UNECE UNECLAC WEF
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trans-African highway trans-African railway Tanzania–Zambia Railway Authority trans-European network trans-European energy networks trans-European transportation networks pan-European transportation networks United Arab Emirates Union of South American Nations United Nations Economic Commission for Africa United Nations Economic Commission for Europe United Nations Economic Commission on Latin American Countries World Economic Forum
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1. The rise of regional infrastructure systems The rise of regionalism has been a major trend in the international political economy (IPE) during the post-Second World War era. Accompanying the maturing of this phenomenon, and as a result of other parallel processes, regional infrastructure systems (RIS) have emerged. These RIS have arisen from the increased interaction between national infrastructure systems (NIS) across mainly contiguous territories and are enabled by the systemic interoperability and physical interconnection between the systems. The development of these regional systems has been compounded by ease of user access to the constituent NIS, enabling trans-national relations to be formed which, in turn, further legitimise RIS establishment and evolution. As such, RIS are not stand-alone entities but composite systems derived from the interconnection and integration of state-based systems. This reflects the position taken throughout this book that states remain the primary drivers of the development of RIS and are driven by a need to secure and enhance their territoriality within an internationalising economic system. The advocacy of state primacy positions this work within a broad neo-realist framework, but it must also be recognised that, although the state might be the dominant actor in the development and evolution of RIS, it is not the only actor. This chapter builds on the themes in the above paragraph and explores more fully the core characteristics and drivers of RIS as a prelude to the specific regional chapters that make up the majority of this work. Initially, this focuses on identifying the form and nature of infrastructure. Thereafter, the link between states and infrastructuring is explored, largely through the prism of territoriality. Finally, the chapter links these themes with regionalism and explores the main drivers and motivations for the development of RIS.
THE INFRASTRUCTURAL FORM Infrastructure is an increasingly amorphous concept with its definition varying with the nature of the role for which it is designed. Such 1
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ambiguities are driven by the flexible and evolving nature of the systems which infrastructures are designed to support. Most conventional definitions focus on infrastructure’s physical manifestations (see Neuman, 2006 for a review). In this approach, infrastructures are those physical structures that are embedded within socio-economic systems that enable these systems to operate effectively. Such definitions often refer to the interconnected nature of infrastructure to the extent that they operate as a single network (that is, as a system of infrastructures – see below). The focus on the network as the core unit of analysis stresses that the role of infrastructure is to facilitate and channel flows through the establishment of the necessary supporting physical links and hubs (to store, redirect or process flows) within and across the space where the network has reach (Edwards et al., 2009). Such definitions lead inevitably to the equating of infrastructure with economic infrastructure: that is, those interconnected physical assets that enable and support the economic system and include energy, transport and information networks (Organisation for Economic Co-operation and Development 2008). In this volume, it is these networked economic infrastructures that form the bedrock of the analysis as they have the strongest regional dimensions. However, although these economic infrastructures are undoubtedly at the core of conventional understanding of what comprises infrastructure, there is also a growing awareness that systemic approaches to infrastructure need this definition to be extended to soft infrastructure. Soft infrastructure represents – as defined here – the institutions required to maintain and upgrade physical infrastructure including rules of use, interoperability standards, legal systems, financing, etc. The increased focus on soft infrastructure highlights how hard infrastructure depends on social, legal and institutional systems for their operation and territorial efficacy (Markard, 2011). It also underlines how important users are to the sustainability of the system through their adherence to rules of usage, education in effective and improper usage and how their general behaviour in the utilisation of physical infrastructure is central to its effectiveness (Edwards et al., 2009). As will be highlighted throughout this volume, soft infrastructure has become a salient factor in the interconnecting of national systems that lie at the core of many RIS strategies. According to La Porte (1996), networked infrastructures are characterised by a number of features which underscore their systemic nature.1 First, these infrastructures are ‘tightly coupled’, meaning – in practical 1 This systemic treatment underscores that a network of infrastructures is more than simply the sum of its parts.
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terms – that they are covered by a number of rules regarding their operation and usage which, if not adhered to, can either lower the benefits of the system or create harm within it. This is most evident within the notion of functional complexity created by the cyber systems noted below. Second, network effects are a powerful factor driving the extensiveness and socio-economic penetration of infrastructure (Jackson et al., 2007). This suggests an in-built dynamic in network extension as the more users and/or greater reach of a network, the higher the value that users obtain from, and attach to, it. The higher the value those users obtain from a network, the more it creates an internal dynamic towards expansion and structural complexity (see below). Third, these systems offer public services that cannot usually be offered through any other channel. This can result from issues of natural monopoly and also from the imperatives of social and economic cohesion. Fourth, these infrastructures are the source of public concern when they fail (Starr and Ruhleder, 1996). This is also reflected within a fifth (and final) characteristic; namely, that infrastructures are a source of apprehension arising from the legacy of operating failures (Zimmerman, 2001). The consequence of this anxiety is that public bodies need to constantly monitor and assess the performance of these systems which are core to state territoriality (see below). This systemic approach to infrastructures has found currency in the literature where a consensus has formed around the treatment of infrastructures as complex systems operating not as a single entity but as a composite of interacting components (for a review, see Rinaldi et al., 2001). Hughes (1987) arguably led the field in such approaches, claiming that infrastructures need to be positioned as large technical systems that exhibit momentum towards perpetual growth, with each progression in their evolution adding extra complexity. However, increasing complexity can come up against bottlenecks or reverse salients given that change within a system can create new conflicts between its component parts. Despite such caveats, it is useful to delineate infrastructural complexity in the following two basic forms. 1)
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Functional complexity: this is a reflection of the phenomenon that infrastructure often has other infrastructure embedded within it which creates the simultaneous usage of infrastructures at any single point in time or place. This can give rise to the three types of interdependence identified by Rinaldi et al. (2001): physical interdependence (where the state of one infrastructure depends on the outputs of another); cyber interdependence (the dependence of a
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given infrastructure system on embedded information infrastructure); and logical interdependence (where the condition of one infrastructure depends on the state of another through a link that is not directly physical (such as through soft infrastructure). Spatial complexity: these are interdependencies within infrastructure systems created by events and/or processes within one piece of infrastructure and/or infrastructure system that impact on the effective operation of another where the two are not co-located. This implies no assumptions about the degree of physical separation between infrastructures nor can the lag effects of impact be predicted: they can be significant within energy and transport systems but almost immediate in the case of information infrastructure. The impact also depends on the options for alternative routes to militate against such failures (see Johnson and Turner, 2017).
At the core of this functional and spatial complexity is the conception of infrastructure systems as a more distributed set of activities comprising technical, social and institutional factors, reflecting the reality that infrastructure is not formed from a simple act of being but from the relationships formed between users. The ability of infrastructure to build and sustain relations gives evident support to Neuman’s (2006) position that infrastructure is empowering. Infrastructure transforms relations between users into something that has greater capacity, enabling these relations to be further expanded and transformed. This transformative capacity reflects how flows between users and the value created by phenomena such as network effects can have a broad impact on socioeconomic systems. Starr and Bowker (2006) see user groups as central to this process as they generate learning as a ‘community of practice’ which stimulates proper usage and engagement between users. However, Starr and Bowker (1995) argue that such a relational treatment of infrastructure has to acknowledge that any piece of infrastructure only becomes and operates as infrastructure at the point in time and/or place of usage and that the usefulness of infrastructure varies across different socio-economic groups. This means that, by establishing universal and ubiquitous infrastructure, the state (as the primary infrastructuring agent – see below) has to build infrastructure that will not be used by all and may be underused or offer limited advantages to some segments of the population. Thus, as a relational system, infrastructure is characterised – for any given user – by intermittent usage but which is accessible on demand. Moreover, Starr and Bowker (1995) argue that because usage is often an implicit act, infrastructure relations are embedded within socio-economic and technological structures to the
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extent that the infrastructure is often hidden in many of the tasks they perform and support. This is especially so when infrastructures operate and interoperate through standardised interfaces which blur or render invisible the demarcation between different infrastructures. The legacy of this embeddedness results in a tendency to understate and misunderstand the level of infrastructural complexity and its impacts at any given point in time and/or space. As a result of this embedded complexity, infrastructure only becomes visible when it breaks (i.e. when its stops acting as infrastructure).
THE ROLE OF INFRASTRUCTURING The notion of infrastructuring reflects the idea that there is a need to organise space through the provision of the necessary physical structures. It is through these structures that territoriality is realised by enabling the maintenance of the central relations between the state and civic society (Brenner, 1999b). Embedded within the logic of infrastructuring is what van der Vleuten (2004) terms the ‘ideology of circulation’, which suggests that socio-economic systems prosper through their ability to facilitate and secure resource circulation. For states, this ideology represents a powerful metaphor for the process of infrastructuring as territoriality requires such circulation to secure relations and its territorial space (Krüger, 1969). However, as the ideology of circulation is primarily focused on economic systems, it can be criticised for its limited approach. Hugill (1995) notes that polities engage in infrastructuring for reasons of political control, stressing that the importance of infrastructure systems lies not only in their existence but in how they are used. This is also evident in the literature on large technical systems (Hughes, 1983), which developed the idea that infrastructures are of strong social as well as economic significance. Van der Vleuten (2004) sees these narratives as potentially contradictory. However, the rationality of state territoriality does offer a unifying framework. As Mann (1984) identified, a state is defined by its socio-economic configuration which, in turn, is shaped by its territoriality and centrality. The state radiates its resources from its centre but will stop (in most cases) at the defined territorial borders. At the core of understanding the state-infrastructure nexus is the fact that states strategise. Such strategies are long-term efforts made by the state to sustain its territoriality (defined here as ‘the behaviour that uses a bounded space, a territory, as the instrument for securing a particular outcome’ (Taylor, 1995, p. 151)). Some authors find direct parallel in such territorial strategies with their corporate equivalent (for example,
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Auster and Silver, 1979; Stopford et al., 1991) as states position themselves in an increasingly competitive system (Palan et al., 1996). Whilst such contributions are valid, they tend to be one dimensional, stressing the logic that the state sustains its territoriality through improvements in the economic wellbeing of its citizens. Much of this analysis focuses on growth as a source of welfare of a state’s population. However, a population’s welfare also depends on security and socioeconomic cohesion. Moreover, in addition to these positive strategic drivers, there are also negative forces that propel state action, namely (as mentioned below) those strategies based on attaining territorial control. Thus, infrastructuring emerges out of the strategies developed and deployed by states to assert and sustain their territoriality. It is, as Brenner (1999b) noted, a means through which the state turns space into territory to serve its own ends and to meet the needs of itself and of the population within its borders. State strategies to enable and sustain territoriality are supported through the process of infrastructuring which seeks not merely to facilitate usage to build relations that enable the infrastructural mandate (see below), but also to set the terms of usage, limits and controls and outlaws or deters those that are contrary to this objective. This pattern suggests infrastructural relations are dynamic and reflect the learning processes within communities surrounding and utilising these systems as technologies and user groups change (Starr and Ruhleder, 1996; Starr and Bowker, 1995). However, using relational systems as a means of attaining territoriality has been made more complex through what Graham and Marvin (2001) term the ‘splintering’ of user demands: that is, not only do infrastructural relations vary between users over space and time (Starr and Bowker, 2006), but also within and between communities/user groups. Users will focus on those infrastructures they need as part of their membership of communities and their immediate or semi-immediate functioning (Frischmann, 2012). The centrality of the state to the infrastructuring process stands alongside the conventional market failure logic that is often used to justify state-based involvement in infrastructure provision and management (Schneider and Jäger, 2003). Whilst market failure has to some degree been militated through new models of infrastructure management (such as those informed by contestable market theory), this has also been compounded by clarity over regulation that allows pre-competitive agreement between the modular components of infrastructure to militate giant fragmented systems. However, the territorial themes remain consistent. Howe et al. (2015) argue that infrastructure systems have within them a number of paradoxes which, by implication, will shape their impact on
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state territoriality. The first is that whilst infrastructure is generative (that is, it enables flows) it also degenerates and – as it is often taken for granted – reinfrastructuring is often neglected. Second, as much as infrastructure reflects path dependencies, it has also to reflect changing trends and contexts. This manifests itself in the retrofitting of infrastructure in response to unanticipated flows and technological/economic developments. However, these infrastructure systems (due to path dependencies) are often difficult to adapt, leading to a diminishing of their ability to serve the purpose for which they were designed. Third, as much as infrastructures are used to mitigate risk, they also introduce new risks into socio-economic and political systems, especially as their complexity grows. Such narratives are partially reflected in how the complexity of infrastructure creates a number of challenges for the sustained operation of the NIS as a support to state territoriality. The main challenges as identified by Johnson and Turner (2017) are: 1)
2)
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Obsolescence: where infrastructure is no longer relevant to the needs of the state as the infrastructure becomes divorced from its shifting context (that is, economic growth and development, productivity, climate change and environment, population and demography and technology, etc.). Senescence: the erosion and degradation of infrastructure as a result of the ageing process. Systems are often too slow to change. Consequently, infrastructure begins to fail more often and with greater disruptive effects. Complexity catastrophe (Kauffman, 1996): this occurs where infrastructure and its interlinkages grow so complex that they can fail in a multitude of ways, many of which are not readily evident at the point of construction and/or usage. This can often stem from the fact that systems can change rapidly, creating new interconnections without full comprehension of the risks created by such complexity. Failing soft infrastructure: this is reflective of the inability of the supporting institutional systems to stimulate NIS adaptation through strong state–infrastructure owner ties; limits to modular-driven innovation and systemic liberalisation; absence of enforcement of appropriate regulation; failure to build user groups; etc. Failing nodes (McKelvey, 2002): this is based on connectivity failure where human failure generates a loss of capability and an inadequate coverage to sustain the system. This can be created by the absence, failure and obsolescence of social infrastructure which is central to creating institutional capability.
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INFRASTRUCTURING AND THE NATIONAL INFRASTRUCTURE SYSTEM The role of infrastructuring as a territorial strategy is to secure and promote the development of the NIS where the NIS is the totality of networked infrastructure located within the borders of a state. The salience of the NIS emanates from its ‘infrastructural mandate’ which is based on the requirement for a NIS to support state-centred territoriality, thereby enabling the state to establish and sustain its relationships with civil society and business that facilitate its sovereignty over a demarcated space (Brenner, 1999a). Using a multi-disciplinary approach, Johnson and Turner (2017) maintain that the relationship between the state and the NIS can be synthesised into the four interrelated processes of the infrastructural mandate: control, integration, security and growth/ development. This approach – which will be followed here – reflects a neo-Weberian perspective of the state, namely that the state is a social body/social organisation that pursues specific goals through the provision of structures that enable it to enhance the welfare of its population (Palan et al., 1996). The components of the infrastructural mandate are examined in more detail below. Control Mann (1984) argues that only those spaces that are covered by spatially extensive and intensively used infrastructures can be regarded as territory. More explicitly, Mann refers to the importance of infrastructural power to states as a means of enabling them to penetrate civil society and to facilitate power relations between the state and all the agents within a territory (Brenner, 1999a; Elden, 2010, 2013). As such, infrastructure can operate as a channel for social regulation through which the state acquires the capacity to assert power over other users within a territory. The efficacy of such capacity is a reflection of the state’s ability to generate and move resources (both tangible and intangible) around a territory. As Mann (1997) notes, it is through such channels that ideological, economic, military and political power are exercised and state failure is often accompanied by the loss of control or erosion of this infrastructural power (Eriksen, 2011; Brenner and Elden, 2009). In this context, infrastructure is not always a positive force as it can provide channels through which structural violence (see below), repression and internal dissent can occur.
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For the realisation of infrastructural power, states have often conventionally felt the need to control infrastructure (especially communications systems) via direct ownership. However, the rise of neo-liberalism has challenged this convention as ownership of key infrastructures has frequently switched to non-state actors. To some (such as Strange, 1996), this represents the retreat of the state; to others it is a pragmatic strategy to upgrade the NIS when the state is financially constrained (Schneider and Jäger, 2003). However, the emergence of such polycentric systems (Turner, 2017) is only realised through state sanction given that the state maintains its influence through conditions of ownership, regulation, direct finance and other methods. In short, even though the state may not own these systems, it can still steer owners and users towards specific aims that support its territorial objectives (Braithwaite and Drahos, 2000; Moran, 2003). In policy and state strategy terms, the most salient expression of this has been the rise of critical infrastructure strategies (Brown, 2006). Control through the NIS depends on infrastructural relations by users becoming dependent on that infrastructure system for social, economic and political functioning. This control is realised through both formal and informal methods, such as the shaping of social, cultural and personal norms, which influence the form and intensity of the infrastructural relationship (Rose and Miller, 1992; O’Malley, 1996; Rose, 1996; Henman, 2004). Thus, control is not simply about realising political stability but is also about promoting individual responsibility in infrastructure interactions, with the state exercising its power to influence the behaviour of agents within the context of its mandate (O’Malley, 1996; Rose, 1996). This involves users understanding the social goods aspect of beneficial infrastructure usage and what runs contrary to this in their everyday interactions within the system (Rose and Miller, 1992). As an extension of this control function of NIS, Rodgers and O’Neill (2012) refer to the concept of infrastructural violence whereby infrastructures can be used by state and non-state agents to promote violence and inflict suffering. The literature on structural violence (see Farmer, 2004) suggests infrastructures can act as mechanisms for the systemic assertion of violence by those in control of infrastructure usage. This can occur through the use of or, more so, through the absence of infrastructure. Thus, at the confluence of territorial control and integration, control can be asserted by the absence of infrastructure which intentionally excludes users. In the latter case, suffering comes not through military control but through the absence of infrastructure which provides core social services. In such contexts, infrastructure preserves internal security through the absence, degradation or denial of access to infrastructure. This can
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intentionally isolate social groups and act as a means of inoculating the rest of the social system from perceived or actual harm from specific segments of the population. Conversely, such exclusion from infrastructure systems can create the conditions for internal security threats. Integration The integrative aspect of NIS lies in their ability to generate the spatial and temporal compression that promotes territorial economic, social and political cohesion (Edwards, 2003; Munnel, 1992; Rietveld, 1995). It has long been argued (for example, Hartshorne, 1950) that the role of the state is to bind together assorted social and territorial segments into an effective whole through a mix of vertical (for social groups) and horizontal (for territorial groups) processes (Martin and Rogers, 1995). In policy terms, the infrastructural mandate as a means of territorial integration involves the convergence of a range of policies such as social and regional policies that facilitates the emergence of a scalable NIS that allows all parts of a state’s territorial domain to access essential infrastructures. Implicit in this strategy is Lefebvre’s notion of abstract space which stresses that the role of the state is to create territorial homogeneity through the enabling of social, political and economic relations (Brenner, 1999a, 1999b). Conventionally, integration themes reflected a ‘welfarist’ approach (Gramlich, 1994) to NIS development as encapsulated within a ‘modern infrastructural ideal’ (Graham and Marvin, 2001). However, there has been a shift towards a more market-driven NIS that favours growth over inclusion (Rose and Miller, 1992; Estache and Fay, 2007; Majone, 1997). The result has been a splintering of the NIS where infrastructure provision varies according to user requirements rather than being guided by principles of universality (Graham and Marvin, 2001). The resultant variation in quality and quantity of infrastructure across socio-economic strata creates the risk of power asymmetries across a territory (Massey, 2005) with the potential to inhibit territoriality (Mann, 1997; Offner, 1999). This latter point indicates that infrastructure provision is a unifying force for social solidarity with this cohesion based on the notion of the aforementioned infrastructural ideal. There is a danger that erosion of the integrative element of the NIS in circumstances in which there is a large private-sector involvement in the NIS can undermine consensus within it and result in fragmentation as a result of the de facto withdrawal of public goods (Willke, 1992).
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Security NIS have a strong external dimension whereby they interact and interconnect with other NIS (Held et al., 1999; Scholte, 2005). At this interface, security (defined here as external threats to the military, political, societal, environmental and economic security of the state that can be mobilised through the interaction between and within NIS – Williams, 2003) emerges as a strategic challenge to state territoriality. States have had to adapt NIS to economic, technological and environmental changes (either singularly or in combination) that have rendered these complex NIS vulnerable to man-made and naturally occurring events and processes. These events/processes create the potential to disrupt infrastructural relations and thereby undermine NIS functioning and compromise the state’s infrastructural mandate (Rinaldi et al., 2001). Security is core to the legitimacy of the state. In its absence, citizens potentially face a multitude of threats and dangers arising from the way complexity and global change have created uncertainty over the stability and sustenance of relational infrastructure systems (Moteff, 2012). The rise of the polycentric NIS underlines the above point that the state will sustain a strong legitimisation function, especially where such infrastructures are deemed critical to state territoriality (Turner, 2017). In most cases, the state will tightly regulate to ensure its interests are met with the option of expropriation should non-state providers violate its mandate (Organisation for Economic Co-operation and Development, 2008). Such concerns have proved especially relevant in border and gateway infrastructures where externally sourced flows are filtered or subject to illicit flows. These ‘supra-structures’ are those structures that are intentionally visible (rather than embedded within socio-economic structures as mentioned above) for the purposes of conveying the power of the state to control and assert its territoriality (Larkin, 2013). For example, the rhetoric over the building of a wall between the US and Mexico is about demonstrating state territoriality over rights of access. It is a shifting narrative: states are conventionally focused on infrastructures that facilitate flows, but the wall is about more effective monitoring and channelling of flows and increasing transaction costs for flows that occur across this border (see Chapter 4). The US border wall debate reflects a new dimension of critical infrastructure systems whereby nativism asserts influence over the form and shape of the NIS. The narrative on external-facing threats and how they impact on infrastructure systems (via concerns on state security) extrapolates the theme identified by Graham (2010) regarding infrastructural warfare. This confirms that states need infrastructure to protect themselves from harmful external
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flows that result from the intentional targeting of infrastructural networks which can have a system-wide impact, resulting in suffering. Growth/development Contemporary policy narratives are heavily shaped by the nexus of growth and infrastructure as informed by the logic of endogenous growth theory (Romer, 1994). This reflects a Foucaultian perspective that the core welfare focus of the state is to generate economic growth. Infrastructure plays a major role in organising and rationalising resources within a state by fostering communication and exchange and by shaping the state’s economic geography (Canning and Pedroni, 2004; Aschauer, 1989; Easterly and Rebelo, 1993; Canning et al., 1994; Sanchez-Robles, 1998). These themes have been raised in debates surrounding the competition state and how the NIS is a platform for the global positioning of the state (Romp and de Hann, 2007; Röller and Waverman, 2001). In this context, the role of the NIS is to enable markets to work efficiently by facilitating and stimulating flows, both within and external to the state (Palan et al., 1996). By implication, this challenges cohesion as the state is incentivised to develop and push users towards those parts of the NIS that have a positive impact on economic performance. Pressure from the competition state should, in theory, lead states to develop those systems that reflect and stimulate traffic flows both within the states and between states (Agénor and Moreno-Dodson, 2006). The prevailing narrative on infrastructure in international economic systems reflects a desire to militate against the impact of the absence of and/or deterioration of infrastructure upon transaction costs and thus on interactions between states (Glykou and Pitelis, 2011). The logic is that investing in infrastructure decreases the cost of undertaking trade, thereby increasing the potential for trade. This narrative on economic growth/development reflects that the function of the NIS – especially within the logic of the competition state – is a key component of the state’s export system. The NIS is the means through which commodities and fully and part-finished products are moved to and through the state’s gateways (i.e. through points in the NIS where flows are deterritorialised and reterritorialised). These gateways are shaped by the economic need to interact with the global system where the NIS is seen as a catalyst of value-creating relationships. ***
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Expressed within the terms of the infrastructural mandate (and its intimacy with state territoriality), the creation of RIS starts to emerge as strategic acts by states to reinforce and/or secure one or more of the core facets of the infrastructural mandate. Implicit within such an approach is that the state cannot capture all the relations necessary to secure its mandate within its own demarcated space and that there is a degree of extra-territoriality embedded within the NIS (Painter, 2010). This theme of extra-territoriality within the infrastructural mandate is a subject which will be returned to later as the clear logic underpinning much of the analysis within the volume is that the state feels compelled to regionalise the NIS as a means of fulfilling its infrastructural mandate. However, before this is addressed, it is necessary to address the contextual changes placed on NIS by the forces of regionalism. It is through understanding such processes that the logic of regional infrastructuring emerges.
THE RISE OF REGIONALISM Regionalism is defined by Bhagwati (1992) as a process of intergovernmental collaboration between multiple states largely motivated by the processes of economic integration driven initially by preferential trade agreements between partners (Wei and Frankel, 1998). The nature of the region (as utilised within this work) is developed at the level of interstate agreement where the focus (due to the nature of infrastructure) is on trans-national formations based on contiguous or semi-contiguous space (that is, where states are in close geographic proximity but do not necessarily share a border) (Baldwin, 2006). Whilst recognising the extensive literature based on regionalism and regionalisation (for a comprehensive introduction see Ravenhill, 2014), it is not the intention here to review these themes extensively; as such, the main political and economic motivations for regionalism are summarised in Table 1.1. The main focus of this section is merely to understand regionalism as a process that is shaping the contextual drivers behind the evolution of NIS and RIS. Palan et al. (1996) view the trend towards regionalism through the lens of the competition state and suggest that it is motivated by a belief that state-based territoriality is not always the most effective method of enabling the state to attain its core objectives. As European integration, for example, has advanced, states have come to see their collective economic power as an effective counterweight to the hegemonic economic power of the US and, increasingly, of China. The European states
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Table 1.1 Drivers of regionalism Political drivers
Economic drivers
Economic co-operation facilitates security + Builds confidence between participating states + Improves interstate relations + Protects against external threats + Addresses non-traditional security threats such as environmentalism + Operates as a means of exercising power within the international system (especially for smaller and/or less developed states) + Embeds and secures political reform + Pacifies internal political forces + Simplifies negotiation and implementation of international agreements
+
+
Offers more scope for protection than multilateralism + Promotes and secures economic reform + Exposes inefficient domestic producers to competition and so promotes reform + Offers scope for deeper integration than available at the global level + Enables agreement on difficult issues + Leads to larger markets and higher levels of foreign direct investment
seek to use the collective power of integrated internal regional markets as leverage to enhance their economic and political power. States look at the experience of the rise of these hegemonic powers and of their ability to harness scale as a means of promoting economic growth and development. The academic literature identifies three broad characteristics that have generated momentum towards regionalism within the global economy. First, regionalism is seen as an extension of the multilateral trading system. Second, the trend towards regional integration is viewed as a political strategy to enhance and secure the competitive position of the constituent states. Third, regionalism is regarded as a structural response to problems generated by economic globalisation. According to neo-classical logic, the move towards scale is created by economic forces and not by simple government promotion of regional champions. In strategic terms, fragmentation of industrial structures within regions renders these locations at a competitive disadvantage. According to Porter (1990), scale emerges through competition: it is the intensity of competition that drives regional competitiveness and consolidation. In turn, this push to scale – it is argued – will improve the terms of trade and act as a strong magnet for investment. Realist interpretations of regionalism treat it as being politically motivated by these regional powers as a means of enhancing their bargaining positions in the global economic and political system (Gilpin and Gilpin, 2000). In this view,
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states combine their collective interests through the sharing of sovereignty to further advance their combined interests. The final perceived driver – and one that has been advanced by many neo-liberals – is that the move towards regionalism is driven by the power of business interests to encourage states to merge markets to generate greater efficiency through reducing transaction costs. The pursuit of economies of scale has played a powerful factor in legitimising the process of political integration and larger economic units, even if the gains from such measures are not always immediately obvious. Palan et al. (1996) criticise realist views which treat both the state and, as a consequence, the region as a ‘black box’ without any serious attempt to explain how such positions emerge. As such, they argue a more eclectic approach has to be taken to help understand the regionalisation process where the main drivers interact to push the process forward. However, regionalism has to be seen as more than a simple strategy for state competitiveness. It also creates supporting institutional frameworks to support the process, it drives state restructuring and it is becoming a key tool of governance within the global economic system. In this context, Hettne (1997) argues that the move towards regionalism reflects a neo-mercantilist position. Regionalism is a set of policies rather than a policy based on the single theme of trade. Regionalism is not based on the notion of the closed economy but on the need of states to position themselves within the global system and acts as a source of stability within it. Since the 1990s, there has been an increasing theme within the literature about what has become known as ‘new-regionalism’ (Ethier, 1998; Schirm, 2002). Whereas ‘old regionalism’ emerged from the impact of interstate nationalism and the legacy of the Second World War and spread from Europe to other continents throughout the 1960s and 1970s, new regionalism developed from the liberalising trends associated with the European single market initiative, the influence of which also spread across other continents (Söderbaum, 2003). In reality, the newness of this process is more imagined than real as new regionalism built on foundations created by more traditional forms of regional integration (Ethier, 1998; Hettne, 1999). These new forms of regionalism do, however, differ from conventional forms as they are more geographically extensive and have a stronger degree of embeddedness within the broader international system. The newer forms of regionalism are also often vastly different to conventional forms, especially regarding structure and form which also extend beyond the traditional focus on preferential trade and security. Arguably, the main shift is in the differing context in which such moves have occurred, notably within an environment shaped by the
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hegemonic influence of neo-liberal globalisation. This shift was also reinforced by the end of the Cold War which opened up new forms of regionalism, especially in eastern Europe and Asia. In many cases, the shift towards regionalism during the 1990s reflected a desire to enhance competitive positioning through deepening integration. These neo-liberal and political drivers were also compounded by: + difficulties in reaching multilateral agreements resulting in the ‘second best’ option of regional agreements; + contagion effects whereby the growth of regionalism in one area spreads to other regions of the global economy; + the changing US position on regional integration where such agreements aid its political objectives; + the rendering of regional trade agreements as harmonious with the constituent state requirements under the World Trade Organization; + advances in trade theory, especially in strategic trade theory which stresses that protectionism can be rationalised through the realisation of economies of scale which, in turn, can enhance competition in global markets where scale is a requisite (Krugman, 1986); + the geographic dispersion across regions of industry value chains, especially as many multinational corporations are focused on a limited number of regions (Rugman, 2005). A major focus for political economists is the dynamics of regionalism (Walz, 2012); that is, the forces generated by the stimulation of regionalism that can drive a process of inexorable deepening. Most regional agreements are shallow intergovernmental agreements based on trade and do not require the establishment of supporting regional institutions as any disputes can be settled by intergovernmental negotiation (Schiff and Winters, 1998; World Trade Organization, 2016). However, where integration deepens, the rationale for a separate set of institutions at the regional level strengthens. This has had its most evident expression in the case of the European Union, the experience of which has often formed the basis for much of the theoretical developments in regionalism (Wallace, 1990). This regional dynamic has arguably had its most effective expression within the concept of neo-functionalist ‘spillover’ where co-operation in one area increases pressures to co-operate in other areas (for example, Gehring, 1996). This in-built momentum within the process is sustained by an awareness of the costs of divergent, uncoordinated policies. The process can also be reinforced by the opportunistic activity of regional institutions. However, state primacy and the sustenance of intergovernmentalism openly questions this ‘internal’ dynamic
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approach (Moravcsik, 1993). Authors from the intergovernmental approach see the delegation of decision making to supranational institutions as a rational, self-interested act in the assertion of national economic interests. Whilst such debates are beyond the scope of this work, the forces that drive regional infrastructuring will be a pivotal factor in explaining how RIS emerge and evolve. According to Hettne (1997), trans-national regionalism can involve the expression of a regional identity similar to that of nationalism. As such, regionalism (especially the new regionalism) can be seen as an extension of nationalism. Thus, although many of the narratives in the literature are focused on trade, there is a clear underpinning that regionalism has clear political dimensions. This political dimension can be shaped by local forces bubbling up from below or by hegemonic power seeking to stabilise the international system. In practice, new regionalism tends to be characterised by the former. Furthermore, Hettne (1997) argues that regionalism is of increasing complexity and, as the process deepens, a stronger sense of territoriality emerges out of closer organised co-operation, the emergence of regional civil society and of a region as a unit with a stronger expression of regional territoriality. The logic – in terms of territoriality and of infrastructuring – is that in a deeper form of regionalisation, national systems become subsumed into a regional network of networks. Such hyper-regionalism represents an extreme position as states continue to be dominant. Nonetheless, regionalisation does imply higher degrees of homogeneity across cultural, economic, security and political spheres.
INFRASTRUCTURING AND THE REGIONAL IMPERATIVE Whilst it is argued here that states are the primary forces driving territorial infrastructure, the rescaling of relations across borders highlights a need for the state to adapt to the shifting context within which NIS operate. The steady erosion of the exclusivity of state territoriality as the only meaningful form of territory has been noted in the work of authors such as Taylor (1994) and Agnew (1994) who, despite approaching the subject from different disciplinary perspectives, both acknowledge that, although the state remains a primary force in the international system, territoriality cannot be neatly confined within the borders of the state. The state has become what Taylor (1994, 1995) has termed a ‘leaking, bordered power container’ whose power to control all activity within its borders is being diluted by a mix of economic, social, political
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and environmental processes. Agnew (2005) argues that the focus on the state as the unit of territoriality tends to be both ahistorical and obscures processes occurring on other scales (in this case, regional). In terms of the analytical framework deployed here, the suggestion is that the state’s infrastructural mandate cannot be realised solely from infrastructure located within the borders of the state and that, as a consequence, it will need to capture externally sourced flows to enable its territoriality. This places an emphasis on the state to adopt strategies which reflect extra-territorial components and influences. It can achieve this by integrating external dimensions into the NIS or by becoming involved in extra-territorial infrastructure systems. Regionalism within NIS implies that there are segments of the infrastructural mandate that, if not externally determined, are at least influenced by external forces. These extra-territorial forces do not challenge state primacy but merely reflect that it is one force amongst many shaping the attainment of the state’s infrastructural mandate. According to Agnew (1994) and reflecting Mann’s notion of infrastructural power (Mann, 1984), the ability of the state to assert control depends not only on its ability to penetrate its territory but also to offer public services that sustain the legitimacy of this function over these systems. In an international system of flows, it cannot be ruled out that powers other than the state can penetrate civil society. As Brenner (1999b) argues, territoriality is historically specific and, as a result, infrastructures are under a constant process of updating and reconfiguration as the demands placed on them alter. Infrastructural relations can no longer be confined within the borders of the state (Glassman, 1999; Painter, 2010): increasingly, infrastructural relations are being extended, especially where local processes are integrated into global value chains in which actors selectively participate. Consequently, Painter (2010) argues that territory can be understood to be the result of both ‘networked social-technical practices’ and the network of relations which, according to Sassen (2013), means that many infrastructures can no longer be conceptualised as purely national as they function across a larger operational space. Keating (2013) suggests that whilst this does not render states obsolete (as proposed within more extreme deterritorialisation theses), they are not necessarily cornerstones of the system. According to Brenner (1999a), the emergence of RIS involves NIS adapting to the forces of regionalisation as the freedom of flows embedded within such processes has to be enabled and supported through the production, reconfiguration, redifferentiation and transformation of infrastructure to facilitate this expanded and augmented movement. Conventional analysis has tended to treat state territoriality (as expressed
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within its sovereign rights) as a polar opposite to global processes where the rise of the latter erodes the territoriality of the former (Ohmae, 1999). However, it has been increasingly recognised that such a ‘zero sum’ perspective is misleading (for example, Weiss, 2005) as the relationship between the state and the market is increasingly one of mutual dependence. The neo-Weberian state pursues a number of objectives to ensure its survival and prosperity: tapping into global flows is an increasingly powerful enabler of this strategy (O’Tuathail et al., 1998). Much of the literature has emphasised the role of economic interactions as a major adaptive force (Johnson and Turner, 1997, 2007). However, it is becoming increasingly apparent that these adaptive tensions are also evident in other aspects of the state’s infrastructural mandate, notably in relation to political/economic security and integration (Buzan and Waever, 2003). A related theme in the drive towards RIS is the extent to which they emerge through the processes of old or new regionalism or a mix of both. Old regionalism is clearly aligned with the state-based approach in which infrastructuring is an intentional strategy deployed to reflect the shifting context of NIS (Macleod, 1999). The logic of new regionalism suggests that these RIS are generated by forces bubbling up from below that necessitate a stronger degree of integration. As such, these infrastructures are less about state territoriality and more about enabling cross-border interaction. In this vein, RIS are more the product of outward-looking notions of new regionalism in which integrating NIS is a means of dealing with increasing interdependence. Hettne and Söderbaum (1998) refer to the idea that intergovernmental co-operation based on individual states acting in concert for mutual benefit has been a common form of agreement in areas such as infrastructure. Such arrangements can be formal but also very loose. However, if RIS are seen as reactive, then other forms of integration come into play as drivers in the process. Nye (1997) refers to state-promoted regional integration whereby the respective economies become intertwined with minimal loss of sovereignty. It is evident that such processes necessitate the fuller integration of NIS to facilitate this process. As such, the move towards regionalism within infrastructure systems reflects an adaptive response by states to the external pressures upon them (Weiss, 1998). In short, states interconnect infrastructures to form complex regional systems. Glassman (1999) takes issue with the conclusions of Weiss (2005) by arguing that these systems do not emerge so much through a process of adaptation but through the internationalisation of the state which he defines as the need for the state to facilitate capital accumulation for investors. This can be loosely related to themes engendered in narratives informed by the logic of the competition state.
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As stated above, RIS are treated not as separate systems existing above the level of the state but as a network of NIS across contiguous or semi-contiguous space (that is, in close proximity). As such, the core research issue is why states – in pursuing their own interests – seek to integrate into RIS. The approach here reflects basic realist approaches to the study of IPE as there is evidently no body above the state actively involved in infrastructuring (a point explored in later chapters) and, whilst there are an increasing number of private and other non-state infrastructures, these systems remain commercially and politically dependent on the territorial control exercised by the state. Thus, whilst there is an evident case that infrastructural relations can no longer be solely captured within the confines of the borders of the state (for a review, see Keating, 2013), they still depend on the state-based system, either as a source, destination or for transit. Murphy (2013) suggests that states have been unwilling to cede territoriality strategies to supranational bodies. As such, RIS emerge out of state territorial needs. In a regional system of flows, the state is the body that has the desire/need to control the intensity of the deterritorialisation and reterritorialisation of crossborder flows. Addressing the extra-territorial determinant of the infrastructural mandate is central to its realisation. At best, supranationality focuses on promoting intergovernmental co-ordination to stimulate the development of ‘missing links’ between NIS rather than on stimulating territorial systems (De, 2006). Given state primacy in the development of infrastructure systems, it is evident that RIS are most likely to emerge out of intergovernmentalism (Börzel, 2010). The realist tradition stresses that RIS emerge out of the need of the state to protect and secure its territorial interests (Puchala, 1999; Guzzini, 2013) and that integration will be limited to a few areas that do not impinge of state territoriality (Söderbaum, 2012). Consequently, intergovernmentalism implies that RIS emerge out of the needs of states to recognise (regional) extra-territoriality within its infrastructure system by co-operating with other states that are experiencing similar trends. In such cases, integration is a recognition that one state’s NIS is dependent on another and that – in the absence of a regional infrastructuring authority – states need to co-operate for mutual advantage. Finally, there is a pattern whereby powerful states undertake extra-territorial infrastructuring as a means of enabling its own mandate (Börzel, 2016). Part of the rationale for the state-centred approach to regional infrastructure is that there is little evidence of regional territoriality, of a regional infrastructuring capability and of any delegation (or desire to delegate) of power to these ends. In these circumstances, a
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major theme of this book is that RIS are an extension of state-based territoriality (Schneider and Jäger, 2003). In view of the above narratives, RIS emerge as a rational act by states as a means of securing or reinforcing the infrastructural mandate, notably in terms of growth and security (Hettne and Inotai, 1994). In developing an analysis of RIS, this volume does not offer a single definition of a RIS but focuses on two main forms of RIS. These are: + The interworking, interoperation and interconnection of separate national systems across a contiguous space to the extent that they create a virtual regional system of national systems. This recognises that the respective NIS are the core building blocks of the system in which existing national systems begin to operate as a network of networks by investing in capacity at key pinch points (notably via investment in national gateways) and by aligning soft infrastructure across systems in areas such as standards and trade facilitation to enhance flows of goods, services and factors of production across internal regional borders (Niskanen, 1991). + A single infrastructure that operates across multiple contiguous territories where such territories are the source, destination and/or place of transit for trans-national flows. These infrastructures are explicitly designed to enable trans-national flows rather than simply emerging from the interconnection of existing systems and tend to be limited to the energy sector where cost factors drive this mode of transmission. In a state-based system, such trans-national systems remain heavily dependent on state legitimisation. As such, although infrastructural relations exist beyond state borders, they continue to be dependent on states, either for transit or de/reterritorialisation. The treatment here is to align regional systems with formal processes to push economic integration within a regional grouping. RIS are positioned as state-based systems as there is no regional grouping that possesses an infrastructural mandate and, as such, infrastructure emerges out of interstate co-operation. Whilst development agencies that co-finance such systems clearly exist (see Chapters 3 and 4), they are largely incidental to state-based sources and there is no body above the level of the state that makes any meaningful contribution to the development of RIS. In this sense, regionalism represents tension within NIS to which states have to adapt. In response, it is apparent that these tensions emerge through a number of channels, including one or more of the following:
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+ Integration through formal processes of integration: the shift towards RIS occurs as a reaction to increased cross-border flows that have been directly stimulated by formal economic integration agreements between states. These find direct parallels in the processes that form and shape the emergence of RIS that emerge out of new regionalism. This formality arises from state-based agreements to lower barriers to interstate flows. This is in contrast to informal processes that are largely shaped by market-driven processes whereby RIS emerge out of market-driven flows. However, it is evident that the differentiation between these two drivers (especially with regards to regional infrastructuring) is more apparent than real as formal agreements can create more informal pressures by facilitating trans-national markets that require supporting infrastructure. + Integration through bilateral agreement: this driver is shaped by agreement between two states to interconnect their respective NIS. Whilst they are usually formal agreements between states, they frequently exist outside (or alongside) more formal regional economic integration agreements in which such states participate. The agreements tend to occur when the states involved share a common border across contiguous space and/or where one of the states involved is not part of a more far-reaching formal integration process. + Global/regional hegemonic pressures: one of the main roles of a hegemon within the regional/global system is to preserve and/or enhance the stability of the international system. The hegemon can do this via extra-territorial infrastructuring whereby it becomes involved in another state’s infrastructure in a location beyond its borders. Evidently, such infrastructuring finds international legitimacy in those cases where the state involved is located at a key ‘pinch point’ in the global economic system and where that state does not possess the necessary capabilities to develop, secure or enhance this key infrastructure. Furthermore, the hegemon can become involved in extra-territorial infrastructuring as a means of generating the public good of international security. This is especially relevant with regards to the exercise of maritime power. Finally, the hegemon – on either a global or a regional level – can engage in extra-territorial infrastructuring to support or enhance its own infrastructural mandate. This is evident where it develops regional infrastructure in contiguous space to enhance the integration of its own peripheral regions into the global economy or to facilitate access to raw materials. Thus, the hegemon’s involvement
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in RIS does not necessitate geographic proximity to the state where it is active. + Multilateral agreement outside formal agreements: these are multilateral agreements between more than two states which lie outside formal economic integration agreements. The status of such agreements outside formal arrangements can be because one or more of the states involved do not participate in such arrangements. These agreements are most common within the energy sector and can involve multiple states apart from those which represent the source and ultimate destination of the flows. In this circumstance, thirdparty states often become involved because of the requirement for transit rights which are usually granted in return for transit fees. The list of RIS types discussed above is by no means definitive but it does highlight that there can be a disconnect between the emergence of RIS and the process of formal regionalism. Formal regionalism suggests conventional spillover in the process of RIS formation. However, states infrastructure for more reasons than simply reactive pressures to regional flows, notably for security, etc. The diversity of drivers in the formation of RIS is reflected in chapters where the relative importance of formal and informal integration drivers of RIS are addressed.
CONCLUSION This chapter introduces the main concepts and issues involved in the creation and development of RIS. In understanding the nature of infrastructure, it is important to consider elements of infrastructure systems beyond their physical components. As such, there is an increased focus within the literature on soft infrastructure which is central to enabling the operation and integration of infrastructure systems. In focusing on state primacy within the development of such systems, it is necessary to consider infrastructuring as a component of state strategy in which states infrastructure to preserve their position both within – and where needed – beyond their territory. This is reflected in the infrastructural mandate which identifies those key characteristics which a state requires of an infrastructure system to enable it to fulfil its core functions. The focus has been on regionalism as an adaptive driver of change within infrastructure systems. The argument is that the process of regionalism (both formal and informal) represents an adaptive tension on NIS to which they are expected. This adaptive tension is not merely about scaling up the system but is also about interconnecting national systems as a means of
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enabling, supporting or enhancing the infrastructural mandate. As such, RIS represent a rational act as states seek to adapt to the state’s shifting context. Moreover, the formation of infrastructure within the contemporary system is best seen as a state-based system. Therefore, regionalism is not simply a scaling up of national systems but also the establishment of dedicated systems and regional infrastructure. The key issues to address are why states look to scale up domestic systems to interconnect with those of other states and how such measures fit with a state’s infrastructural mandate. The final section brings regionalism and infrastructuring together to explore the trend towards regional infrastructuring. The themes within the section, notably regarding the patterns and processes shaping RIS, are returned to throughout the following chapters.
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2. The European infrastructure system The European infrastructure system (EIS) can be defined as the totality of networked infrastructure within the geographic space of Europe. In a state-based system, this represents the entirety of national infrastructure systems (NIS) which exhibit high degrees of interconnection and – in some cases – outright integration to the extent that they can be considered part of a de facto regional/international system. The EIS has been largely developed from the bottom up given that the state-based system became the dominant form of territoriality across Europe and as states adapted structures to reflect existing and emergent processes between individual territorial states (Van der Vleuten and Kaijser, 2005). However, these binational processes in the evolution of the EIS are increasingly being shaped by the emergence of infrastructuring at the supranational level. Of all the regions examined within this book, it is in Europe where the process of economic and political integration has progressed the furthest. This has generated the development of distinct infrastructuring strategies at the supranational level by the European Union (EU) as it asserts what has been termed its ‘aspirant territoriality’ (see below). Whilst it is inappropriate to revisit the extensive literature on European integration here, it is worth reflecting on this ‘aspirant territoriality’ as a means of understanding the adaptive tensions within the EIS that have led to the rationalisation of the development of the trans-European networks (TENs) programme which reflect an emerging (but ultimately limited) infrastructural mandate at the supranational level of governance. In terms of regional infrastructure systems (RIS), TENs are unique as a stand-alone programme for infrastructuring above the level of the state, even if, in reality, it seems to merely reinforce interconnections between state-based systems. Consequently, much of this chapter is devoted to this policy programme, underscoring the pivotal role that the EU plays in the development of the EIS. However, the development of the EIS extends beyond TENs to include all elements of international infrastructuring within the European continent. As such, the chapter also focuses on how the infrastructuring of the EU is not only bound up in long-term processes of bilateral interconnection between EU states but also in linking the economic bloc with states beyond its formal borders, notably 31
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through the creation of pan-European infrastructure systems (that is, those within the broadly defined continental land mass of Europe which extends from the Atlantic Ocean to the Urals and Caucasus).
INFRASTRUCTURE AND THE EU’S ASPIRANT TERRITORIALITY The EU, especially compared to other formal regional integration arrangements, has a relatively mature and developed infrastructure system. However, there is an evident split in NIS maturity within the region, with those in northern and western Europe possessing more developed NIS than those in southern and eastern Europe. This trend is supported by figures from both the World Economic Forum (WEF) and the World Bank. The developed northern states of the EU are heavily represented in the top 25 of the WEF’s infrastructure rankings: five of the EU-15 are in the top ten (WEF 2016); only Greece (37), Finland (26) and Ireland (29) of the EU-15 are outside the top 25. All EU-15 states, bar Greece, are in the top quartile globally. This finding is replicated in the World Bank’s Logistics Performance Index in which several EU states perform even better in terms of infrastructure: EU-15 states occupy the top five positions globally with all EU-15 states, bar Portugal (49th) and Greece (37th), appearing in the top 25 slots (World Bank 2016). When the EU’s performance is extended to the 13 states that have acceded to the EU since 2004, less development in terms of NIS is evident. Of these newer member states, only Estonia (33) outperforms a member of the EU-15 (Greece). Of the rest, the central eastern European states (the Baltics, Poland and the Czech and Slovak Republics) perform best, all tending to appear within the top 50 positions in WEF rankings. This pattern for the newer member states is broadly mirrored in the World Bank’s ratings with central and eastern Europe performing better than the Balkan states. In this ranking, seven of these states outrank the worst performing of the EU-15 (Portugal). Within the EU, the Balkan states (notably Bulgaria and Romania) tend to lag in terms of infrastructure. When looking beyond the EU (which becomes relevant, especially where non-EU states feed into broader pan-European systems), there is again a broad east–west split: Norway, Switzerland and Iceland generally perform on a par with the EU-15 whereas the states of the former Soviet Union and in the Balkans have infrastructure systems that are broadly equivalent to the middleincome states in Latin America. Policy debates about the EIS and its evolution are increasingly shaped by the growing disconnect between the European states’ desire to sustain
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a high level of infrastructuring (to replace/upgrade depreciating/ obsolescent systems) and the capability of the state to generate the necessary funds to enable this process (CEC 2010a). These gaps are created not merely by system senescence and obsolescence but also by an increased disconnect from the contextual drivers of the system as Europe’s population ages and as environmental challenges become more apparent. The Commission of the European Communities (CEC) (CEC 2011a) estimates that EU governments collectively spend 1 per cent of their gross domestic product per annum on infrastructure investment. This is well below the 3 per cent estimated by the Organisation for Economic Co-operation and Development (2011) that these states needed to spend on average to update and maintain their NIS in the face of shifting contextual drivers. Increasingly, a consensus has formed that EU members’ underinvestment in their infrastructure represents a structural supply-side weakness: a problem reinforced by the euro crisis (Subacchi et al., 2014). It was estimated that between 2013 and 2020, the EU needed to invest €2 trillion more than planned with this gap expected to grow to €15 trillion over a longer time frame to 2030, as existing systems deteriorate or need upgrading (CEC, 2013a). The European Investment Bank (EIB) estimates that EU states need to invest €470 billion per annum with a total investment of €8.4 trillion up to 2030 (Inderst, 2013). This requires as much as 6 per cent of EU gross domestic product to be invested in infrastructure within this time frame. Whilst (as mentioned below), there are longstanding bilateral connections between EU states, there is also a major adaptive tension within the regional bloc as a whole created by deeper economic and political integration (Eichengreen, 2008). The increased flows associated with closer formal and informal EU integration are creating infrastructural relations that can no longer be neatly confined to the borders of the state (Bouzarovski et al., 2015). Indeed, it is argued that the intensity of these flows poses a direct challenge to the distinctiveness of an EIS based on national systems as the deterritorialisation and reterritorialisation of flows between states becomes indistinct to the extent that separate NIS become interchangeable due to the absence of border retardants (such as formal gateway infrastructures) (Brenner, 1999a). Perhaps the crudest and most straightforward indicator of this adaptive tension is indicated by trade flows (see Table 2.1). When compared to other regional groupings, the EU has a considerably larger volume of intraregional trade. Though this fell as a percentage of total trade between 1995 and 2015, the value of this trade – as indicated in Table 2.1 – has more than doubled for many EU sub-groupings (UNCTAD, 2017). These figures reflect that although trade between EU states has increased, it has not increased as fast as
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trade between the EU and non-members. With regards to the EIS, these pressures create an adaptive tension between NIS as pressure to adapt to the flows leads to issues regarding the most appropriate level of infrastructure governance, especially where the state-based system has not removed systemic fragmentation between the respective NIS. Table 2.1 Intra-EU trade between sub-groupings (% of total trade) EU grouping (sub-grouping)
EU-151 EU-252 EU-273 EU-284 Euro area5
1995
2015
Change in intragroup trade value (1995–2015)
64 67 68 68 54
51 60 61 62 44
85 123 130 131 99
Notes: 1 EU-15 is Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom. 2 EU-25 is the EU-15 plus Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. 3 EU-27 is the EU-25 plus Bulgaria and Romania. 4 EU-28 is the EU-27 plus Croatia. 5 Euro area is Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain. Source: UNCTAD, 2017
Such pressures began to draw attention to the territorial dimension of the EU. Badie (1995), Vitale (2011) and Boedeltje and van Houtum (2008) argue that the signing of the Maastricht Treaty was a clear step in the evolution of the EU towards a territorial model of the contemporary state. Moreover, these authors argue that the state is no longer the sole relevant force of European territoriality. Bartolini (2005) argues that whilst the EU has undergone substantial territorial expansion since its formation, it remains weak in terms of territoriality. This weakness is expressed through a number of channels. The first is the nature of enlargement which leaves the external boundaries of the EU ill-determined and open-ended, resulting in limited territorial fixity and exclusiveness within what is an ill-defined space (Heeg and Ossenbrügge, 2002). As such, the EU has no pre-defined borders and any borders it does have are those of the member states – the only borders that matter in the international
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system. However, in one sense, the EU has impacted on territoriality by seeking to downgrade internal borders between states into ‘domestic borders’ (Mamadouh, 2004). Second, there is no uniformity between the component states as to territoriality of the EU. This is most evident in debates on multispeed Europe and the opt-outs from treaty requirements offered to some states. Thus, the scope of the territoriality of the EU can be defined by the states themselves. This is compounded by direct territorial exclusions by states which can define which parts or subregions of their domains are subject to EU territoriality, most notably where a state has overseas dependencies. EU territoriality is also challenged by the international treaties that many states are subject to beyond those of the EU. Such treaties are not forbidden by EU law. Third, the EU has no capital city that operates as a command centre, national showcase and cultural arena. In the case of the EU, while there are evident key nodes, the command centres are dispersed throughout the EU and are prone to relocation (Allmendinger et al., 2014). Authors such as Mamadouh (2004) argue that conventional territoriality cannot be applied to the EU. Indeed, Bialasiewicz et al. (2005) differentiate between hard territoriality (realised through border controls and the broad exercise of sovereign rights) and aspirational territoriality (an expression of the softer elements of territoriality as, in the case of the EU, a space of values and cohesion) (Burgess and Vollaard, 2006). The notion of the EU’s aspirational territoriality (as opposed to conventional ideas on hard territoriality) is also evident in those areas where it has a competence which it has a difficulty in enacting due to the absence of ‘hard power’ (Faludi, 2009; Healey, 2002, 2004). It is evident that territoriality as a term used within EU documentation is used as an aspiration for even more territorial development rather than the more conventional concept developed within Chapter 1 (Damsgaard et al., 2011; CEC, 2008b; Bialasiewicz et al., 2005). As a result, EU territoriality is markedly different from that of the state as the former has no element of control and (as mentioned) very limited exercise of hard power (Goldthau and Sitter, 2015). As such, territoriality lies with the states and – according to Murphy (2008) – this territoriality is reinforced by meta-geography which places identification with the state as the primary unit of attachment in the minds of Europeans. This has led some to argue that it is more of a ‘smart’ (Moravcsik, 2010) or ‘normative’ power (Hyde-Price, 2006). Indeed, Scott and Van Houtum (2009) suggest that the EU operates less through state-like exercise of power and more through channels that affect gradual social and economic transformation.
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This notion of aspirant territoriality is directly relevant to the contextualisation of the EU’s role in developing the EIS. To the EU, infrastructure is a means of scaling up the European economic system (alongside the internal market) that facilities EU competitiveness (Picciotto, 2004). For states, the impact of the deterritorialisation and reterritorialisation of flows is the need for the adaptability of NIS to have higher degrees of integration to support and enable these flows without compromising their own infrastructural mandate. This does not imply that such flows compromise these strategies, merely that states need to adapt. On that basis, EU strategies that support this adaptability by states create a legitimate context for its aspirational territoriality. Typical of this aspirational territoriality was the 2011 Infrastructure Growth Strategy.1 Building on existing themes of cohesion within integrating markets, on the legacy of the EU’s collective underinvestment in infrastructure and on the need to stimulate growth in the post-financial crisis era, the Investment Growth Strategy promotes the widespread reinfrastructuring of the EU (Annoni and Dijkstra, 2013). The strategy offers the EU a direct financial stimulus designed to benefit both the demand and supply sides of the European economy. Its focus is on stimulating cross-border programmes where the EU sees itself filling a gap as state infrastructuring strategies will focus on domestic needs and tend to limit investment where there are cross-border spillovers. The EU suggests that the integration of the system is necessary to prevent ‘leaking by linking’ – that is, the fear that by linking states, wealth will leak across borders and create spillovers to other parts of the EU with the result that the EU infrastructure remains fragmented and that member states have an incentive to keep it that way. However, this does not always allow an enabling role for the EU as states have a long history of promoting systemic integration on a bilateral level (see Kaijser and Van der Vleuten, 2006 for a fuller history of this process). Arguably, the best demonstration of the aspirational nature of EU territoriality regarding infrastructuring stems from the fact that the EU, as a supranational institution, has not acquired any meaningful infrastructuring capability or distinct infrastructure mandate. In the example of the EIS, its ability to infrastructure is curtailed to the point of non-existence as it can do nothing without the consent of member states and, as such, has no clear uncontested infrastructural mandate. This raises the prospect 1 This was not the first infrastructure initiative. Formal powers in this area were granted by the Maastricht Treaty and more latterly in Articles 170–2 and 194(1)(d) of the Treaty on the Functioning of the European Union (the latter with specific reference to energy). The first guidelines were established in 1996.
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that the EIS emerges through interstate action, frequently through EU frameworks, to attain aspects of their infrastructural mandate by operating across the EIS (Picciotto, 2004; WEF, 2015). In this context, the role of supranational bodies within the evolving EIS is to ensure national infrastructure mandates are supported or, at the very least, not compromised as the process of integration evolves. Therefore, the focus of the EU as a supranational organisation is to co-ordinate/steer national policies through converging soft infrastructure, completing missing links between member states and/or supporting those states/regions with a relatively underdeveloped infrastructure system. Consequently, the EU can only be considered as engaging in infrastructuring insofar as it is able to attract/facilitate commercial investment into projects of ‘common interest’. It has no clear independent infrastructure mandate separately from that of member states and operates within the context established by state-based infrastructuring – as indeed do private commercial interests that invest in such systems. This lack of hard territoriality is reflected in the absence of EU resources to stimulate and build infrastructure in its own right: a position worsened by the 2013 budget agreement (see below).
THE TRANS-EUROPEAN NETWORK INITIATIVE TENs were launched by the 1990 Action Plan (CEC, 1990) as a flanking policy to the Single European Market (SEM) through three sets of actions: namely, the identification of priority infrastructure projects; a set of ‘horizontal supporting measures’ (which by and large are confined to adapting soft infrastructure systems) and financial measures to attract commercial funding for priority projects (CEC, 1992, 1993). The Commission argued that a state-driven system would remain fragmented so long as infrastructure finance were used solely to serve national needs. These arguments, on reflection, seem naïve (Johnson and Turner, 1997). The action plan laid the foundations of the formal legal basis for a common infrastructure policy to be included within the EU treaties and led to the EU pushing for the development of TENs within successive growth plans throughout the 1990s and 2000s. By the mid-1990s, many expected TENs to be the ‘big idea’ of the early part of the twenty-first century. This turned out to be wildly optimistic. Johnson and Turner (2007) argue that the multisector TENs programme is built around four core principles:
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+ Interconnection: the national networks of the EU states would develop the physical links to allow flows created by the SEM to be supported by sufficient capacity at the interface between and within these systems. + Interoperability: separate national systems should have the capability to act as a de facto single system through the adoption of common standards and protocols which allow seamless flows. + Access: networks must be accessible to all parts of the European space with no formal discrimination between users or non-network service providers. + Open and competitive markets: TENs should evolve in response to need and reflect broader trends with regards to traffic flows across Europe. It is these forces which should determine which parts of TENs are developed and which are not. These principles reflect a limited direct infrastructuring role for the EU focused on the adaptation of NIS to support a broader set of European objectives alongside those defined within their infrastructural mandate. The strategic emphasis of the EU is that the advent of the SEM has shifted priorities within NIS with more cross-border flows (both actual and anticipated) requiring increased investment in frontier infrastructure and also generating the need for sufficient capacity between and within systems to enable and enhance trans-European mobility through quality services and ensuring no socio-economic group is excluded from these developments (Johnson and Turner, 1997). Within national infrastructure strategies, TENs are legitimised across states by the need to integrate into a wider European system to generate secure supplies, to integrate to lower trade and investment costs and to secure flows from Europe through closer integration with these systems. The novelty of TENs lies in its attempts to offer a systemic perspective on a collection of individual – often state-driven – projects as a means of advancing its integration agenda (see below). This perspective builds on a longstanding involvement in infrastructure by the EU. Much of this dates back to the Common Transport Policy which, in practice, focused on soft infrastructure rather than on physical links and systems in response to the desire to aid and stimulate flows by removing institutional inconsistencies between states. As such, the emphasis is on liberalisation of services through common rules and the creation of a common market for transport services. Consequently, there was little more than an expressed desire to co-ordinate infrastructure investment and to foster formal integration of the respective national systems. Throughout the 1960s, the EIB began its involvement in the co-financing of national transportation systems in
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disadvantaged regions (EIB, 2015). The 1960s also saw an increased extension of EU involvement in energy as a natural extension of its concerns about secure transport systems. In 1966, the EU gained the right to be consulted on national projects that were of community interest. However, the real sea change came in the 1970s when new Common Transport Policy guidelines referred explicitly to a common transport network under which it could offer limited support to those projects of community interest: that is, those that created a new cross-border link, removed a bottleneck or appreciably increased the capacity of exiting systems. However, this role was still largely confined to the right to be consulted, which remained the case until the mid-1980s. A common narrative, as mentioned above, within the EU’s limited infrastructural strategy is that it occurs within the context of market forces. The market-led dimension of the TENs strategy reflects not merely a desire to attract private finance into projects prioritised by the EU but also by the requirement that finance of the priority projects is built on evident and sustained traffic flows that facilitate commercial investment. Moreover, the desire to attract private investment reflects not just the current reality of public-sector austerity but also militates against state resistance to funding those portions of the EIS that have ambiguous benefits for any single state’s infrastructural mandate. Finally, the marketled process allows the EU to concentrate its limited funding on identifiable areas of market failure, especially regarding project risk or uncertainty over traffic flows, etc. Across the respective sectors, the main themes and issues within the respective sectors are noted below. Transport TENs Trans-European transportation networks (TENS-T) is that part of the TENs strategy that has the longest precedent through the EU’s territorial strategies to promote mobility and social and economic cohesion. It is beyond the scope of this chapter to offer a full history of the TENS-T strategy (Johnson and Turner, 1997, 2007), but it is worth reflecting on the history of the policy insofar as it informs its drivers. In developing a coherent infrastructure policy, the CEC always felt that the case was strongest within transport not only in terms of supporting existing transport policies but also by reflecting more fully what EU member states would or should already be doing (that is, forming interconnections with neighbours to enable trade/investment). Transportation links had a strong history within what was to become the EU through bilateral/ interstate action (see below). However, the CEC felt that the SEM
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changed the context of the existing system of trans-national links with more investment needed to support the actual and anticipated increased in freight and passenger traffic associated with the four freedoms. These trends related to the SEM have been compounded by the expansion of the EU to central and eastern Europe throughout the lifetime of the TENS-T programme. The 1994 proposal for TENS-T was an ambitious multimodal strategy proposing 70,000 km of rail track (of which nearly a third was to be for high-speed trains); 58,000 km of new roads; 267 airports of common interest and networks of inland waterways and seaports (CEC 1994). This ambition was in response to the conclusions of the 1993 White Paper on Growth Competitiveness and Employment (CEC, 1993) and to the need for a demand stimulus to the EU economy in the aftermath of the early 1990s economic slowdown. However, the financing schemes offered were illusory and the EU was forced to rethink its strategy. This led to a more scaled-back approach offered within the 1996 Christopherson Group Report2 which focused on just 14 projects which were already relatively mature in their development (Sichelschmidt 1999). Sichelschmidt (1999) argues that the TENS-T suffers from a number of problems. The first is that projects tended to be selected for political reasons rather than for their practical contribution to integration. This point was also noted by Van Exel et al. (2002) who argued that the assessment of TENs projects was based more on national cost–benefit analysis with the result that cross-border effects were left underexplored as localised effects were given priority. Moreover, the selection of projects of common interest was also a political process as access to EU funding was tied to the acquisition of this designation. Second, the economic effects of the programme were grossly overestimated. This was compounded by the fact that adjustment in TENS-T after the 2004 enlargement was not as effective as proposed (CEC, 2009) and that regulatory change has only partially been implemented by states, most notably in the rail sector. Overall, TENS-T, despite its declared objective, remains a nationally focused policy. Indeed, Brian Unwin, head of the EIB, argued that TENS-T was at best a gimmick promoted as something new but which was actually not.3 The programme was full of political compromises with the result that the systemic perspective that was a major benefit of the initiative was largely secondary to the needs and 2
For a review see Johnson and Turner (1997). Unwin attacks flagship TENs transport projects as ‘gimmicky’: www. politico.eu/article/unwin-attacks-flagship-tens-transport-projects-as-gimmicky/, accessed 3 May 2017. 3
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desires of the states. Given that states often dictated project selection, short-term issues overtook longer-term strategic issues in TENS-T development (High-Level Group on TENS-T, 2003). Despite this, the EU points to a number of success stories within the TENS-T programme over the first 20 years, notably the improved links between east and west Europe (CEC, 2016). However, the focus within TENS-T – despite claims that it offered a systemic EU-wide approach – was on individual infrastructures. As mentioned below, changes in the TENS-T since 2014 are designed to overcome such weaknesses. In the review of the TENS-T (CEC, 2010b, 2010d), the EU’s Group of Experts felt that, despite the complementarity of transport policy and TENS-T, they were following separate patterns of development, most notably in the rail and freight corridors. These links were to be made explicit within the reforms to TENS-T noted below. Moreover, the Group of Experts felt that there was a high degree of ambiguity in what was considered to be a project of ‘European’ interests with states dominating a process of network development that was more bottom up than top down as required by the desired systemic approach (Schade et al., 2015). The main ‘European’ projects are trans-national but experience indicates that the cross-border sections are rarely completed or remain an afterthought within project development. Indeed, 26 of the 30 initial TENS-T projects were in border areas or had some cross-border dimension but, in all cases, the international dimension was implemented last (EP, 2011). Also, the success of the TENS-T has been hampered by its reliance on state budgets which, in turn, have been curtailed by economic austerity. This was compounded, first, by the EU’s inability to attract the levels of private-sector funding desired for projects of common interest and, second, by the frequent failure of the EU’s different means of supporting infrastructure to work in concert (CEC, 2011b, 2011c). Finally, it was felt that the focus by the EU on a market-driven strategy led to a concentration of TENS-T on the ‘core’ states of the EU, resulting in the relative neglect of the EU’s peripheral states and an unintended increase in regional disparities (Spiekermann and Wegener, 1996). Thus, such problems directly contravened one of the EU’s main territorial objectives (Schade et al., 2015). The result was a shift in the TENS-T programme away from the network-based approach (which was generally bottom up) towards an approach based on multimodal corridors (CEC, 2016). These corridors are bundles of infrastructure that link two or more states (Priemus and Zonneveld, 2003; Dionelis et al., 2008). Building on existing infrastructures, these corridors (in the EU case) involve the creation of unhampered passages across a combination of states that are both institutionally and
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technically fragmented. Thus, according to Priemus and Zonneveld (2003), the EU’s corridors are more institutional than physical. At the heart of the EU’s corridor strategy is the deployment of a more discriminatory approach deployed by the EU as it differentiates between a ‘core’ and a ‘comprehensive’ network. The ‘core’ network (to be attained by 2030) is central to the realisation and persistence of the SEM and, as such, carries the highest levels of intra-EU traffic (reflecting the market-led approach to TENS-T development) and interconnects at least three states, although in practice it involves between four and nine (CEC, 2010d). The ‘core’ network consists of 30 corridors of which 18 are rail, three are mixed road and rail and two are for inland waterways (CEC, 2013c). These are complemented by the ‘motorways of the sea’ initiative, a global navigation system (Galileo) and a single motorway programme. These are all designed to fit in with the nine core network corridors identified in Table 2.2. The role of the ‘comprehensive’ network is to support and enhance the ‘core’ network through feeding traffic into the core arteries at the national and regional levels. The aim is that, within a long-term time frame (by 2050), no person within the EU should be more than 30 minutes from the comprehensive network. It is estimated that the cost of the core network is between €700 and €750 billion with substantial economic costs expected for the EU economy should it remain incomplete by 2030 (Schade et al., 2015). However, the new TENS-T remains heavily reliant on state competences and finance: the role of the EU will be to promote co-operation between states (CEC, 2013c). This suggests that the new TENS-T suffers from the same overambition of the old TENS-T initiative (Proost et al., 2011). The difference between the ‘core’ and ‘comprehensive’ networks seems largely illusory as the latter are based on national networks whilst the former merely allude to European planning in the creation of the EIS, further underlining the aspirational territoriality of the TENS-T initiative (CEC, 2016). Telecommunications TENs TENS-Telecom has undergone a drastic transformation since they were launched in 1994. They were initially conceived as networks focused on plotting the migration of users towards integrated broadband communications systems from conventional technologies as well as promoting interoperability and interconnection of existing networks (Turner, 1995).
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Table 2.2 The nine core transport corridors of the EU Corridor
Area
ScandinavianMediterranean Corridor
This north–south axis crosses the Baltic Sea from Finland to Sweden, passing through Germany to Italy. The corridor will link the major urban centres and ports of Scandinavia and northern Germany to the industrialised high production centres of southern Germany, Austria and northern Italy as well as to the Italian ports and Valletta (Malta). This connects the eastern Baltic ports with North Sea ports. It will link Finland and Estonia by ferry with an upgrade in road and rail transport links between and within the Baltic states. The corridor will also fully connect Poland, Germany, the Netherlands and Belgium, notably between the Oder River and German, Dutch and Flemish ports. Stretching from Ireland and the north of the UK through Benelux to the French Mediterranean ports, this is a multimodal corridor that connects the North Sea ports, the Maas, Rhine, Scheldt, Seine, Saone and Rhone river basins and the French Mediterranean ports. This corridor connects the Baltic with the Adriatic Sea via southern Poland, Austria, Slovakia, the eastern Alpine region and northern Italy. This corridor connects the North, Baltic, Black and Mediterranean Seas, improving the links between northern Germany, the Czech Republic, the Pannonian region and south east Europe from Greece to Cyprus. This multimodal corridor connects Rotterdam and Antwerp to Genoa, via Switzerland and some of the major economic centres in the Rhine-Ruhr, the Rhine-Main-Neckar regions and Milan. This corridor links the Iberian Peninsula and the northern French ports to northern Europe. It will include both high-speed and conventional rail lines as well as a maritime dimension.
The North Sea-Baltic Corridor
The North Sea-Mediterranean
The Baltic-Adriatic Corridor The Orient/East Med Corridor
The Rhine-Alpine Corridor
The Atlantic Corridor
The Rhine-Danube Corridor
The Main and Danube waterways act as this corridor’s backbone, connecting Strasbourg and Frankfurt to Vienna, Bratislava, Budapest and the Black Sea.
The Mediterranean Corridor
Linking the Iberian Peninsula with the Hungarian–Ukrainian border, this corridor links the Mediterranean coastlines of France and Spain to the Adriatic coast via the northern Alps. This is mainly a road and rail system with some minor maritime and inland waterway stretches.
Source: CEC, 2013c
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However, with the rise of the internet as the dominant technological platform, the emphasis has shifted away from physical networks per se towards ensuring access to alternative mechanisms (such as mobile) and the service environment with a focus on enabling cross-border interoperability of services (Turner, 1997). This reflects a desire that the emerging internet economy does not reinforce existing socio-economic divides and actively contributes to efficient public service delivery. These themes are encapsulated within the Digital Agenda for Europe (DAE) which is part of the EU’s long-term industrial strategy (CEC, 2011a). The DAE seeks to stimulate up to €200 billion in investment by 2020 to create a digital commercial ecosystem that mirrors that of rival economies. EU funding for TENs-Telecom is a mere €0.3 billion, indicating that the EU will be a limited direct player in the realisation of TENS-Telecom and that these infrastructures will be constructed almost solely by private finance, reflecting in part the progressive liberalisation of telecommunications across the EU (CEC, 2013a, 2013b). The DAE seeks universal access to broadband (defined as speeds exceeding 30 mbp/s) with over half of households accessing and utilising infrastructure at above 100 mbp/s (CEC, 2014b). Currently (2017) 97 per cent of EU households have access to broadband services, although take-up is only 72 per cent, suggesting discrepancies between the more digitally advanced economies of north west Europe compared to those in the south and east (CEC, 2014c). The deeper challenges for the EU lie in the changing nature of the global treatment of traffic flows. There is plenty of evidence that the early perception of the internet as a ‘digital wild west’ is being increasingly circumscribed by states seeking to control traffic flows across borders and is driven by exposure to different cultural norms and priorities across states (Turner, 1997). Thus, within Europe, the freedom to move information has retrospectively become the ‘fifth freedom’ (Johnson and Turner, 2007). However, as the system has matured, European states have begun to back away from free flows (increasingly seen as contradicting the state’s infrastructural mandate, most notably in terms of control and security). Consequently, the EU has been proactive in seeking to promote common standards for the protection of data, both within and beyond its borders. This reflects a shift towards increased state control where states deem information infrastructures as critical, not just in their own right but also given that these infrastructures also underpin transportation and energy infrastructures and, as such, their vulnerabilities could create complexity cascades throughout the NIS (Dueñas-Osorio and Vemuru, 2009; Duit and Galaz, 2008). As a result, states have become increasingly assertive within their segment of the
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European information infrastructure as they seek to challenge threats to (and inconsistencies within) the infrastructural mandate from such comprehensive networks. As such, debates within the Europe-wide information infrastructure have morphed from those of economic opportunity to those based on political threats. Energy TENs The issue of mobility within the European energy system encompasses broader themes than other networks. The European energy system is based on the scaling up of local systems that morphed into regional, then into national and, eventually, into an international system of state-based systems (Johnson and Turner, 2007); a process that many argue is being reversed by the fragmentation of energy systems away from large-scale infrastructure (Egyedi and Mehos, 2012). This change is driven by growing links between states, fuelled by freer markets in energy services and strategic security of supply issues. The latter driver links EU systems into broader global and pan-European systems. Increasingly integral to both security of supply and the broader issue of growth are the evident gaps within the interstate EU system, which remains relatively fragmented. It is this internal fragmentation, despite the full integration of the European energy system being a longstanding EU policy objective, that forms the focus of this section. EU energy strategy is based on the idea that security of supply does not rely solely on access to sufficient extra-EU energy resources but also on the most effective use of its own reserves and capacity (CEC 2010c), resulting in a dual role for transEuropean energy networks (TENS-E) within the EIS to attain its core objective of securing reliable supplies of energy at competitive prices. Given the lucrative nature of energy transmission, this sector has been able to attract significant commercial finance and has relied less on state-based finance. Thus, unlike transport and, to a lesser extent, telecoms, there is little direct need for state involvement. However, states still attempt to steer the development of energy systems to support their respective infrastructural mandates. In many senses, TENS-E exists as a complement to this state-based process of integration. As a consequence, the main function of TENS-E is to overcome non-financing problems. In this context, the main issues are authorisation problems, especially where a network crosses multiple jurisdictions, or faces challenges on environmental grounds. The landmark document for TENS-E was the 1992 EU communication entitled ‘Electricity and natural gas transmission infrastructures in the community’ (CEC, 1992) which outlined a strategy to adapt national energy systems to serve a broader EU-wide agenda. Grid
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development, though, remains a national competence. In the electricity sector, the focus is on making interconnections to create a more open market for trade in this energy source. This relies on increased interconnection between national systems, increased capacity between these systems where bilateral connections already exist and, finally, on establishing links to external systems. In gas, the aim is to extend the reach of the network, to develop new routes and enhance existing links and to increase links to external sources of gas. By 2014, there had already been significant progress in integration across both gas and electricity networks, although this tended to be more prevalent in northern Europe with significant gaps remaining, notably in the Baltic states and in south east Europe (CEC, 2014a, 2014d). Consequently, there is a sustained focus on building cross-border interconnections at an estimated cost of €200 billion by 2020. Two thirds of this is for high-voltage electricity transmission systems, storage and smart grid applications; the remainder is mainly for gas pipelines, storage, liquefied natural gas (LNG) terminals and reverse flow infrastructure (to allow gas to flow in both directions). However, the CEC estimates that the market can deliver, at best, half of this figure without further reform of the enabling soft infrastructure. The 2013 guidelines for energy infrastructure sought to close this funding gap by prioritising a number of energy corridors (CEC, 2014a). As identified in Table 2.3, the EU has identified 12 priority networks (of which nine are geographic and three are thematic) to be achieved by 2020. The main thrust of the new TENS-E strategy was to establish rules to identify projects of common interest. This mechanism, and the consequent designation as a project of common interest within a corridor, facilitates access to EU funding (CEC, 2014b). However, the funding, at just over 2 per cent of the total, is largely incidental to overall TENS-E costs and, thus, it seems unlikely that it will be a determining factor in project feasibility (CEC, 2013b). These priorities for 2020 are seen as groundwork for longer-term development of networks up to 2050. Building on these corridors, the CEC seeks to prioritise the creation of ‘electricity highways’ to enable the transmission of surplus wind generation in and around the northern and Baltic Seas as well as facilitating increased renewable generation in the east and south of Europe, improved storage capacities in Nordic and central European states and the ability to cope with decentralised electricity demand and supply. To accelerate the development of the short- and long-term priorities, the EU is seeking to create regional clusters; faster approval mechanisms; improved speed of information exchange between decision makers and the creation of a stable financing framework.
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Table 2.3 Priorities for EU energy corridors Priority corridors for electricity
Priority corridors for gas
Priority corridor for oil
Thematic areas that relate to the entire EU
+ An
+A
+ Improving
Increased deployment of smart grids to help integrate renewable energy and allow consumers to better regulate their energy consumption. The construction of electricity highways – large grids that allow electricity to be transported over long distances across Europe (e.g. from wind farms in the North and Baltic Seas to storage facilities in Scandinavia and the Alps). The development of transport infrastructure for captured CO2.
offshore grid in the northern seas and transmission lines to northern and central Europe to transport power produced by offshore wind to consumers and energy storage centres. + Transmission lines in south western Europe such as between Spain and France to transport power between EU countries. + Transmission lines in central eastern and south eastern Europe to strengthen the regional network. + Integration of the Baltic electricity market – Lithuania, Latvia and Estonia – with the rest of the EU.
southern corridor to deliver gas directly from the Caspian Sea to Europe. + Integration of the Baltic gas market and connecting it to central and south east Europe. + North–south gas pipelines in western Europe to remove internal bottlenecks and enable the best use of external supplies. + North–south gas pipelines in central, eastern and south eastern Europe, including regional connections in the Baltic Sea region, the Adriatic and Aegean Seas, the eastern Mediterranean and the Black Sea to help diversify gas sources and increase security of supply.
interoperability of oil supply connections in central eastern Europe to increase security of supply and reduce environmental risk.
Source: CEC, 2014a
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The financing of TENs There is arguably no greater demonstration of the EU’s ‘aspirant territoriality’ than the financing of the priority projects, especially in transport. Throughout the sectoral sections above, it is evident that the TENs programme remains an overwhelmingly national strategy with many states merely seeing TENs as a means of accessing supranational funding for national infrastructure rather than a coherent EU-wide territorial strategy. Despite the CEC’s repeated attempts to develop innovative financing initiative (for example, by attracting more finance from the private sector and/or sovereign wealth funds), it is nonetheless a truism that TENs will be largely funded by states. It is estimated that over 80 per cent of the funding for these projects was to come from member states: when combined with sources from the EIB the figure was over 90 per cent (EIB, 2015). Even the most optimistic scenario sees the private sector providing at most 15 per cent of the finance required (Freshfields, 2012, 2014). Set against a background of public-sector austerity which has led to a scaling back of capital investment by the state, it is evident that the financing gaps in the TENs programme were always going to be substantial (CEC, 2013a, 2013b). Public investment in the EIS has been reduced sharply since 2010, especially in those states most adversely affected by the sovereign debt crisis and the consequent austerity programmes. In these states, infrastructure investment fell by more than a fifth (Freshfields, 2014). Across the EU as a whole, Ammermann (2015) estimates that investment fell by 11 per cent between 2010 and 2015 with the states investing €400 billion – less than a quarter of the €1.75 trillion that the EU estimated needed to be spent in the ten years to 2020. The EU’s direct financial contribution was always going to be limited. In its initial proposal for budgetary resources for the period 2014–20, the EU wanted a budget of €50 billion for TENs, of which €40 billion was to come from the proposed Connecting Europe Facility (CEF) and €10 billion from the Cohesion fund (CEC, 2013a). This was 10 per cent of the overall figure needed. During the budget negotiations for this, these figures were scaled back substantially with the CEF being awarded €29.3 billion (CEC, 2013a). TENS-Telecoms took the biggest reduction: its budget was reduced by almost 90 per cent whilst TENS-T had its budget cut by 38 per cent, which has led to the abandoning of some priority projects (CEC, 2013b). To overcome such barriers, the EU (often in collaboration with the EIB) has been proactive in developing innovative financing devices to attract private finance into TENs largely by seeking to reduce the risk
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faced by private-sector investors (CEC and EIB, 2009). This is the function of both the EU 2020 Project Bond programme and European Fund for Strategic Investment through which the CEC attempts to utilise public funds to cushion the risk within priority projects (CEC, 2014c). Both of these initiatives have had a limited impact to date (EIB, 2015). This was also the ultimate role of the CEF which combined assorted sources of finance from the Cohesion Fund and TENS-T for transport into a single facility with a more explicit focus on cross-border projects rather than on the conventional practice of promoting projects within states that are deemed to have a ‘European dimension’ (EP, 2011). The CEF adheres to the principles of subsidiarity whereby the EU only acts where there is a clear case to do so. However, its effectiveness as a source of infrastructure finance was, as mentioned, curtailed when its 2014–20 budget was cut from a proposed €50 billion to around €30 billion (CEC, 2013b). This reduced the potential contribution of the EU to the EU’s infrastructure needs from 10 per cent to 6 per cent of the total. Alongside the EU is the EIB, which invests 63 per cent of its funds in infrastructure of which, unsurprisingly, transport is the largest recipient, but again these funds are largely facilitatory and, as such, incidental to the overall funding of TENs (CEC, 2014b). The EIB uses its good credit rating to borrow and then relend to infrastructure projects. In an era of austerity, financing from the EIB gained greater significance but its €20 billion per year is less than 5 per cent of that required for TENs (EIB, 2015). In addition, in the aftermath of the 2007–2008 financial crisis, many of the non-state sources channelling funds into infrastructure were scaled back, most notably in Germany and the UK. The more risk-averse climate that has arisen post-2007–2008 has meant that the private sector is unwilling to take on the necessary debt over the time frame required without more public-sector support to militate against the risks faced. This support has not been forthcoming, due to public-sector austerity (Subacchi et al., 2014). Indeed Ammermann (2015) estimates that there is potentially nearly €1 trillion available for investment in EU infrastructure which is being held back by these risk issues, especially in greenfield projects. These risks are often created by the prolonged lag between investment spending and anticipated returns and are compounded by the fragmented and complex soft infrastructure systems across the EU which are still divided along national lines (CEC, 2014d). It requires a deep knowledge of the evolving national regulatory systems as a means of fully assessing the risk and benefits from a project and has been compounded by shifts in the regulation of the financial sector which, unintentionally, work against investment in infrastructure. This reflects
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the conclusions of the TENS-T Group of Experts, who argued that infrastructure planning within the EU tends to reflect national priorities rather than systemic needs (see Johnson and Turner, 2007). As a result, infrastructure often fails to reflect user needs and has weak commercial viability. This lack of network thinking, especially with regards to transport, is endemic within TENS-T with the result that links may not make commercial sense to either users or project promoters (CEC, 2010b). The role of EU finance in TENs is by and large facilitatory: that is, it is not used to build infrastructure itself but to militate against the risks within projects as a means of stimulating commercial investment within the EIS. This has failed in practice as the state – able to borrow at lower rates – was more able to offer finance and to contribute the vast majority of funds to these projects. It reflects the absence of any hard power by the EU to stimulate change between states and that its limited finance was really most effectively felt in adjusting the soft infrastructure systems needed to generate the volumes of finance desired. This further reflects the EU’s ‘aspirational territoriality’ and its curtailed infrastructural mandate which lies solely in facilitating the creation of innovative financial instruments to leverage funds into TENs projects. However, the efficacy of the role still depends on states offering sufficient supporting guarantees.
CRITICALITY AND THE EU Another major thrust of the EU’s infrastructure strategy is in promoting the co-ordination of the governance of member states’ critical infrastructure (Pursiainen, 2009). What actually counts as critical infrastructure varies widely, with many states including sectors beyond conventional physical economic infrastructure, such as banking (Organisation for Economic Co-operation and Development, 2008). Indeed, the CEC defines critical infrastructure as: an asset, system or part thereof located in Member States which is essential for the maintenance of vital societal functions, health, safety, security, economic or social wellbeing of people, and the disruption or destruction of which would have a significant impact in a Member State as a result of the failure to maintain those functions. (Council of the European Union, 2008, p. 2)
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Under these terms, there was debate as to the nature of the ‘Europeanness’ of national systems which focused on where failure would significantly affect two or more states or a single member state if that piece of infrastructure were located in another member state (CEC, 2013c). This reflects a belief that deeper integration increases the risk of infrastructure cascade effects in which the failure of one component of one NIS can lead to multiple failures across other EU states (Burgess, 2007). A clear example of such a failure was the 2006 ‘blackout’ of the European electricity system in which damage to a piece of cable across the Rhine by a passing ship caused systemic failure for 15 million users in Poland, Benelux, France, Portugal, Spain, Morocco, Greece and the Balkans (Van der Vleuten and Lagendijk, 2010). Critical infrastructure concerns are also raised by broader geopolitical events such as the 2006 and 2009 gas supply crises in which the Russia/Ukraine transit disputes threatened supplies to EU states. In these cases, it was more the perception of the risk of disruption that led to concerns over interstate vulnerabilities within respective NIS (Kandiyoti, 2012). As a response to such threats, both actual and perceived, an action area on critical infrastructure was initiated in 2006 (CEC, 2006). To the EU, such threats legitimised a role for itself in enhancing its co-ordination capabilities between states and in setting minimum levels of resilience amongst states to ensure that failure in one state does not lead to systemic failure or that one state’s problems can be overcome by resources within another interconnected system (Silva, 2013). The initial programme was launched against a background of increased terrorist threats to the EIS. Reflecting themes of subsidiarity, the programme sought to focus on trans-national issues to foster co-operation on issues of common concern (Egan, 2007). Hämmerli and Renda (2010), whilst not arguing for pro-activism in the development of EU-wide critical infrastructure policy, nonetheless propose a role for the EU to coordinate disparate strategies which is consistent with subsidiarity. However, ultimate power is retained by the states who have demonstrated a willingness to limit trans-national flows if critical infrastructure is endangered (Gheorghe et al., 2006). Ultimately, the role of the EU is to ensure that threats to the EIS do not end up fracturing systems through the independent, discretionary actions of states. In practice, only 20 European critical infrastructures were designated; others that were deemed to have a clear European dimension, notably energy, were excluded. Moreover, the EU’s actions have tended to encourage bilateral engagement rather than outright co-operation (by Högselius et al., 2013). These rules were revised in 2012 with a view to offering a more holistic view on
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critical infrastructures by reflecting the spatial and functional interdependencies within these systems. As with TENs, criticality strategy reflects the aspirational territoriality of the EU. There is evidently no compulsion on states to adopt such EU-wide strategies. The EU merely offers an awareness of opportunities where co-ordination might be in their own national territorial interest, especially where there is a lack of capability at the state level and the EU can be effective in spreading best practice. However, Van der Vleuten et al. (2013a) have noted that vulnerabilities in trans-border infrastructures within Europe have a long precedent, which has allowed the main infrastructure sectors to develop the necessary strategies for cross-border co-operation. Such interstate co-operation, they argue, negates any notion that the EU is a natural forum for intra-European co-ordination. They also note that European vulnerabilities within critical infrastructure cannot neatly be contained within the borders of the EU. The power grids of Europe, for example, extend into neighbouring states, underscoring the vulnerability to non-EU events and processes. This reflects a longstanding process of hidden integration that lies outside the formal mechanisms of the EU. Van der Vleuten and Lagendijk (2010) argue, as indeed the industry does, that existing structures work well and that decentralisation reinforces system security as they work to state-based concerns and structures. Thus, whilst not disputing that critical infrastructures are often, by nature, international by design, it does not follow that centralisation is the best way for the risk to be managed and for system resilience to be attained. Indeed, Hommels et al. (2013) suggest that the move to EU-level governance would represent a new level of risk within the system. Whilst some states may see integration as a means of supporting and enhancing the resilience of the NIS; for others the best form of security is fragmentation and strategies to promote selfsufficiency. In energy, many states have been building up spare capacity and storage facilities to counteract risks from interdependence.
THE EIS AND BILATERAL INFRASTRUCTURE INTEGRATION Whilst TENs remain the high-profile expression of the EU’s involvement in the development of infrastructure, it is by no means without precedent in terms of the development of international infrastructure in Europe. Van der Vleuten and Kaijser (2005) and Badenoch and Fickers (2010) point to a widely acknowledged system of interstate collaboration between
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national network operators across transport, energy and telecommunications prior to the creation of the TENs programme. As Johnson and Turner (1997) also indicate, TENs were already part of the continent’s architecture prior to the establishment of the EU. For as soon as this network infrastructure began to be established within European states, the continental dimension was included. Moreover, co-evolving with these physical structures were the institutional systems to govern them (Schot, 2010). The supporting institutions were explicitly defined as European institutions, although they were often distant from explicitly political arenas. This places the integration of infrastructures, largely through attaining interoperability, as a long-term trend across Europe. Within the expansion of the powers and territorial scope of the EU, these interstate processes have been subsumed within broader EU-wide policy initiatives (Darian-Smith, 1999). This is evidenced by the plethora of interstate rail lines crossing Europe, many of which pre-date TENs and the EU itself, such as in the Benelux states and the links between Northern Ireland and the Irish Republic. These constitute interstate agreements to promote interconnected systems which have become the backbone of the EU-wide rail system. The fact that trans-national infrastructure remains largely an interstate-based process within the EU again underscores the aspirational territoriality of the EU. It is the states pursuing their own interests that are responsible for sustaining and managing the flows across borders and for security of both the structure and the flows: formal integration was a secondary issue. Thus, whilst pan-European infrastructures and interconnection between national systems have been long-term trends within Europe, they did not stop states pursuing their own self-interests within this process. Moreover, these processes did not stop states when undertaking infrastructuring (either initially or in upgrading) from developing their systems in isolation and sometimes to their own standards and designs, which had to be retrospectively rendered interoperable. Van der Vleuten and Kaijser (2005) argue these trans-national infrastructures were not given any systemic treatment until the emergence of the TENs initiative. This reflects ideas expressed by Dülffer (2009) that European integration (in this case through the development and establishment of an EIS) is more complex than simply a focus on the gradual expansion of the EU. Across Europe, the trans-nationality of flows has only ever been partially circumscribed by states and in many circumstances (due to history and fragmented structures) it has actively been encouraged by them (Badenoch and Fickers, 2010). Many of these trans-national projects were initiated by private bodies and many were designed to be international from the outset. Whilst these were often superseded by the creation of state
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monopolies, the international element was still evident as international institutions were established to ensure interoperability of these otherwise fragmentary systems. All this underscores a process of hidden infrastructural integration that co-existed alongside the more formal integrative arrangements exemplified by the creation of what became the EU. Schipper and van der Vleuten (2008) argue that the existence and persistence of this interstate system places into perspective the alleged failure of the EU to develop a coherent infrastructure policy. The existence of these state-based programmes means that such failures are largely illusory, for states will develop the systems if they perceive it is in their interest to do so (Van der Vleuten et al., 2013b). According to these authors, the problem lies in the fact that the EU sees European integration merely as the sum of its own relative success and failure. The fact that states have been (and still are) capable of developing trans-national systems tends to be ignored within the process of European integration. Thus, the EU is not the only option for trans-national infrastructuring within Europe.
PAN-EUROPEAN NETWORK INFRASTRUCTURE As implied by the name, pan-European networks (PENs) are networks that are designed to cover a wider geographical area of the European space than that represented by the EU (though the EU is often the instigator or focus of such infrastructures). In terms of the EU, PENs are shaped by broad geostrategic considerations based on what Walters (2004) views as a shared responsibility (in this case, for the security of flows) that transcend conventionally defined borders. This not only reflects neo-liberal geostrategies based on free trade but also issues of security and control (Browning and Joenniemi, 2008). PENs tend to be of two types. The first is based on the interconnection of national systems to create a pan-European system of national infrastructures: these tend to be more common within the transportation sector. The second is dedicated international infrastructure designed to transport flows across multiple states and are based on pan-European spatial disparities in the availability of resources (most notably, in this case, energy). In the former, the motives are interconnection to lower the transaction costs created by fragmented infrastructure systems. In the latter case, PENs are shaped by the desire of users for access to secure flows of resources and of suppliers for reliable and secure markets for resource exports (Kandiyoti, 2012). Thus, PENs tend to focus on two main sectoral infrastructures: energy and transport.
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Pan-European energy networks Pan-European energy networks (E-PENS) are co-operative trans-national infrastructures that are largely based on east–west links across the European space (north–south links to Norway also exist). The east–west links, the focus of this section, represent a longstanding interconnection between western European energy systems and the extraction and distribution of landlocked resources (or where littoral access is prohibitive) in the states of the former Soviet Union. Bouzarovski et al. (2015) suggest that the emergence of E-PENS reflects a shifting territoriality in which relations between energy users and consumers cannot neatly be confined to the state-based system (Högselius et al., 2013). In this sense, E-PENS reflect what has been termed a process of informal or invisible European integration, a legacy of energy diplomacy which utilises bilateral or multilateral channels through which states realise their security of supply via long-term supply agreements (Aalto, 2016). This process was historically resisted by the US, which was hesitant to endorse the reliance of European North Atlantic Treaty Organization states on the Soviet Union (Kandiyoti, 2015). Despite such hegemonic concerns, E-PENS have been sustained, even through the dissolution of the Soviet Union, with the resultant complexity of relations that has emerged as flows are now sourced from and have to transit multiple independent states. These disputes had their most evident manifestation in the Russia–Ukraine dispute of 2009, which had a knock-on effect for energy security across the European continent. E-PENS reflect the broad mutual interest of suppliers who want secure market access with those of the consumers who want secure supplies of energy. As such, they match the demand for energy within western Europe with the abundance of resources within the states of the former Soviet Union (Kandiyoti, 2012), given that western Europe has – and continues to run – large energy deficits. In 2015, the EU’s annual deficit for hydro-carbons was $400 billion: the International Energy Agency has estimated that by 2030 the EU will import 70 per cent of its energy requirements (IEA, 2016). E-PENS reflect a particular dependency on crude oil, of which almost 90 per cent is imported, and natural gas (66 per cent imported), which together account for over 60 per cent of EU energy consumption (IEA, 2016). As a consequence, the EU is seeking to reduce the salience of E-PENS for its economy through a betterfunctioning and integrated internal energy market (IEM) and, correspondingly, to increase indigenous energy production, especially through renewables. For the EU – as highlighted by its energy strategy – the existence of E-PENS is more a necessity than a desire. The EU is also
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aware that these infrastructures are critical infrastructures that are vital to European states that lie outside its borders and over which it has seemingly little direct influence. Table 2.4 Pan-European energy networks E-PENS oil pipeline system
Source
Transit
Destination (import hub)
Druzhba
Russia
Ukraine, Belarus, Poland, Hungary, Slovakia, the Czech Republic and Germany
Norpipe
Norway
Northern branch (Poland) Southern branch (Ukraine) n/a
UK
E-PENS gas pipeline corridors North eastern corridor
Russia
Poland, Slovakia
North western corridor
Norway
UK (Langeled, Cats, Seal, Sage, Pulsmar), Belgium/ Germany (Europipe I/II, Norpipe, Zeepipe)
South western corridor (gas)
Algeria
The GPDF pipeline via Morocco to Spain and the trans-Mediterranean pipeline to Italy
South eastern corridor
Caucasus/ central Asia/ Middle East
External links
Turkey/the Black Sea
Under development
Source: CEC, 2010c
There are two sets of E-PENS: gas and oil, as outlined in Table 2.4. EU energy supplies are moved through three corridors; namely, the north western (that is, Norwegian sourced energy); the eastern (that is, Russian sourced energy) and the Mediterranean corridors (that is, energy sourced from Africa which enters the European system through Spain or Italy). In addition, there is increasing utilisation of LNG from extra-European sources, such as Qatar. However, despite this diversity, some states remain dependent on a single source of energy supply. Consequently, the
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EU seeks to co-ordinate state-based action to ensure that all states have access to at least two different energy sources: some eastern European states are seen as especially vulnerable in this regard (CEC, 2014c). For gas, the result is the prioritisation of four sub-regional infrastructure systems; namely, the further development of the southern corridor (to bring more supplies from the Caspian Basin, central Asia and the Middle East); the interconnection of the Baltic, Black, Adriatic and Aegean Seas; further development of a north–south corridor in central and south eastern Europe and enhanced efficacy of the north–south system in the western part of the continent (for example, through the expansion of LNG facilities). It is evident that central to the EU’s energy strategy is the extension of the European energy system beyond the dependence on the E-PENS (especially those from Russia into the EU). As such, there is intent to develop existing extra-European links to Africa and the Middle East. One core objective of this strategy is to build more LNG terminals to increase imports of LNG supplies from Africa and, especially, the Middle East. Another aspect of the core strategy is the intent to expand the southern corridor from the Caspian region via Turkey. The co-ordination of national systems and strategies, not the independent action of the EU, lies at the heart of these strategies. This limited role for the EU (effectively as a forum for members to manage their respective systems co-operatively) reflects that – until 2005 – states were keen to exclude the EU from the development of E-PENS as they did not want the EU’s IEM agenda to undermine domestic energy security by deterring investment. However, the EU’s ‘Third Energy Package’ (see Romanova, 2016), which sought to split infrastructure ownership and transmission of gas by the same company, posed a direct challenge to E-PENS, notably to Gazprom, Russia’s main gas producer and exporter, and was a direct cause of the cancellation of the South Stream pipeline system which represented a new transit route to the EU’s southern states and was designed to bypass the potential choke point of the Ukraine. This reflects the conclusion of Goldthau and Sitter (2014) who argue that the EU gained power over E-PENS via the rules of the IEM which dictated the supply conditions to the European market and to which supplier states have to conform. However, ultimate power within E-PENS lies with states as they have the capability to conclude bilateral energy deals. This control is also evident through the power of national energy champions and their ability to shape this environment. Transit states are powerful within the design and operation of E-PENS as their permission is required to establish these trans-national systems. When the physical systems are built, the supplier states need to monetise this asset which the users – if they are
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able to diversify supplies – are able to militate against. However, the efficacy of such power, when the links are state to state and when no transit is required – seems up for debate as supplier states have the ultimate word. There is still an open question as to what exactly would happen should the CEC’s application of the principle of the IEM come up against the needs of the states and their respective infrastructural mandate. There is no effective EU steer or power over such strategies which remain the function of state discretion over their energy mix and consequent infrastructure needs (Dreyer and Stang, 2014). In this context, the IEM only makes sense in terms of co-ordinating national priorities for energy security (Aalton and Korkmaz, 2014). Also influential is the Energy Charter Treaty (this essentially trades energy for investment) which the EU states use to seek to protect (through international law) existing east–west energy flows and the west to east investment flows (Konoplyanik and Walde, 2006). The Energy Charter sets the terms for which an integrated European energy space can be created through generating certainty of rules and transit. However, as Konoplyanik (2014) notes, the transit and consuming countries are keener on the Energy Charter than the producing states (especially Russia, which has yet to ratify the agreement) (CEC, 2014a, 2014d). It is evident that the EU perceives that many of the major impediments to the development of E-PENS lie within the domain of the soft infrastructure system, especially in terms of planning and permit granting procedures (Konoplyanik, 2009). Solutions can involve placing time limits on the application process, a clearer system of accountability and a more stable financing framework. This problem is compounded in the case of E-PENS given that some states are not only outside the EU and the IEM but have also not signed up to the Energy Charter Treaty. As such, it has become widely accepted that E-PENS are subject to the complexities created by differing soft infrastructure, especially where there are issues arising from divergent regulatory regimes leading to the absence of established frameworks for conflict resolution, differing priorities for respective stakeholders across states, divergent market rules and conditions and the deployment of deviating security of supply strategies (CEC, 2008a). E-PENS have long been perceived as vulnerable to the shifting geopolitics of eastern Europe. As a result, the EU has sought to create new corridors to militate against such threats (Whist, 2009). For example, the EU has long proposed infrastructure to bypass ‘troublesome’ transit states as highlighted by the Nord Stream and the proposed Nord Stream 2 pipelines, as well as the now cancelled South Stream pipeline. All of these were/are designed to bypass the Ukraine which has been a
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persistent challenge to the transit of Russian gas to its major export markets. However, such pipelines (notably Nord Stream and Nord Stream 2 which also bypass eastern European states with a high dependence on Russian gas) risk dividing EU states due to a fear that supplies could be diverted and deny these states important transit fees (Liuhto, 2009). This reflects differences between European states as to the perceived reliability of Russia as a supplier of energy. There can be little doubt that, despite the rhetoric, Nord Stream is more bilateral than multilateral as it serves Germany’s interests more than any other state (even though the project gained support under TENS-E). The proposed Nord Stream 2 pipeline (which seeks to deliver Russian gas to Germany via the Baltic Sea) is designed to reduce transit risk and render Germany a core European hub for Russian gas. Other EU states (notably Poland) are resisting this link as the increase in capacity is designed to assert power over other transit states and therefore reinforce Gazprom’s dominance over the supply of gas to central and eastern Europe. However, this pipeline is also a response to the increasing LNG import capacity of these eastern European EU states. In the light of the decision by the Polish competition authority, five of the partners for Nord Stream 2 have pulled out. However, Gazprom was quick to assert that the project will still go ahead. It has long been believed that E-PENS operate as a locus for geopolitics between Russia and western Europe, despite mutual dependence between suppliers (who need the market) and customers (who need the energy). However, many remain uneasy about European dependence on Russian energy which would render the EU vulnerable to shifting geopolitics (Casier, 2016). Such reductionist views seem increasingly simplistic and understate the complexity of the structure of the process. E-PENS are complex systems which reflect long-term relationships between eastern and western Europe (Högselius, 2013). They reflect a legacy of sunk investments by Russian businesses on which Russia relies for a large portion of its exports. Thus, other than outright conflict, there seems little incentive for Russia to restrict energy flows (Kandiyoti, 2012). This is compounded by the fact that Russia cannot quickly switch to other markets as the enabling infrastructure to do so is absent and will remain so for the foreseeable future (for example, it would take almost two decades to build a new pipeline to China). Thus, there are strong path dependencies within EU–Russia energy relations which underpin its durability and which have already survived a number of crises (Dannreuther, 2016). Moreover, Kandiyoti (2015) argues that Russia has derived soft power benefits from the E-PENS through differential pricing in favour of western markets and from the prestige of supply. However, it
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can be argued that Russia has been keener to strike a harder bargain for its energy to reverse what it sees as poor deals struck at moments of political and economic vulnerability. This partly explains its reluctance to ratify the Energy Charter Treaty. Nonetheless, it is evident that the structure and evolution of E-PENS have been shaped by issues and disputes of transit, especially those between Russia and the Ukraine in 2006 which was a direct driver in the development of the Nord Stream pipeline that offered a direct link between Russia and Germany. Romanova (2016) argues that Russian energy strategy reflects its perception of energy as a social good and not a simple commodity to the extent that Russian companies deserve special treatment. Also influential over the shape of E-PENS was the concern that – with the dissolution of the Soviet Union – the newly independent former Soviet states (such as Turkmenistan and Azerbaijan) remain under Russian control if the transit was to be through Russia. The result was an emphasis on developing E-PENS pipeline routes which bypassed Russia, especially to the south and involving Turkey for the most part. Pan-European transport infrastructure systems Pan-European transportation networks (T-PENS) differ markedly from E-PENS in that they are not dedicated infrastructures but are corridors based on the interconnection of existing systems to create a panEuropean network of transport networks, although the Chinese ‘One Belt, One Road’ initiative (OBOR) may alter this to some degree (see below). Like E-PENS, T-PENS have been part of TENs through the desire to integrate central and eastern Europe more fully into the western part of the continent. In 2011, the European Commission (CEC, 2011c) outlined its new emphasis on external co-operation in transport through the framework of its Neighbourhood Policy. Initial actions were focused on the creation of a free trade area between Europe and its neighbours for which the efficiency of transport services is seen as a necessary complement. In most transport sectors, the aim is to achieve convergence of soft infrastructure as a prelude to promoting the harmonised transmission of flows across borders. In hard infrastructure, the EU works with neighbouring states to identify those infrastructures that are core to panEuropean mobility (Kartal, 2007). These conclusions were reflected in the TENS-T expert review which identified a need to consider the external dimension of the transport system as a means of enabling flows within and beyond the EU (High-Level Group on TENS-T, 2003). To this end the group identified five main axes, namely for T-PENS:
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+ Motorways of the seas: to link the major maritime components of the European space, namely the Baltic, Barents, Atlantic, Mediterranean, Black and Caspian Seas. Also included are the littoral countries within these areas and an extension towards parts of the Middle East. + Northern axis: to interconnect Norway with the EU’s Baltic regions and beyond into Belarus and Russia. + Central axis: to link the core of the EU to the Ukraine and the Black and Caspian Seas. Further extensions beyond this are also envisaged. + South eastern axis: to link the EU to the Balkan states (including Turkey), to the states of the former Soviet Union as well as to Egypt. + South western axis: to connect south western EU with Switzerland and north Africa. Alongside the external dimension of the TENS-T programme, the main organisation that has been pushing T-PENS has been the United Nations Economic Commission for Europe (UNECE), which has promoted the trans-European motorway and the trans-European railway projects. The initial plans were proposed in 2006 and brought together EU member states, the candidate states and other members of UNECE (UNECE, 2011). The focus of the plans was to identify a series of road and rail projects to enable pan-European mobility. UNECE has no direct power itself but acts as a guide to states (especially in eastern, south eastern and central Europe) regarding the evolution of national infrastructure to support the longer-term strategic aim of integrating all parts of the European space into the main European transport system. The plan, despite its grand statements, was, in practice, limited in terms of its ambitions with a greater focus on soft infrastructure systems than on developing large physical structures per se, which were the concern of the states. In total, the report examined nearly 500 projects to support trans-European railway and trans-European motorway projects (of which nearly 300 are road projects) with success in the former (which met 45 per cent of its priorities) being greater than in the latter. In addition, UNECE launched a programme to extend this pattern of trans-national co-ordination to trans-continental Eurasia links (UNECE, 2012). The Europe–Asia Transport Links project involves 27 states from eastern Europe to China and has a strong maritime focus with more than 70 per cent of the high-priority projects being port (both sea and river) or water links. This reflects the dominance of the maritime routes for trade between Europe and Asia: a process driven by the sheer distance to be
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covered as well as by the numerous border crossings, political instability, rent-seeking practices and poor security which work against more extensive use of land transportation. This also reflects the big differences in soft infrastructures across this diverse range of states. It is open to debate as to the extent to which the new pro-activism of China in its OBOR project will further push the development of these terrestrial aspects of the Europe–Asia Transport Links project (UNECE 2012). It is evident that much of the OBOR programme is motivated by establishing trade links with Europe. China has already invested in the Greek port of Piraeus as well as in high-speed rail from Piraeus to Budapest and from the Black Sea port of Constanta to Vienna via Bucharest and Budapest (EP, 2016). Such investments have begun to narrow the investment gap between eastern and western Europe. These new links are expected to reduce shipping times for Chinese goods by ten days. It is evident that both maritime and terrestrial components of the OBOR programme are seeking to connect major European logistical hubs (notably Rotterdam and Duisburg). What this means in investment terms is – at the moment – opaque.
CONCLUSION Europe is arguably the region that seems best suited to the development of RIS. It is an area that is politically fragmented across a largely contiguous economic space with longstanding bilateral infrastructure links between states. In addition, this is the region of the global economy in which integration has progressed the furthest. With the development of the TENs programme, there has been a coherent attempt by supranational authorities to create a network of economic infrastructure to support and enable the process of integration. However, as mentioned throughout, this strategy reflects an aspirational territoriality on behalf of the EU as its strategic intent is not matched by its execution; it has no significant independent financial means to secure the physical development of these infrastructures. Thus, states remain the main infrastructuring force across the EU as they continue to offer the main sources of infrastructure finance. Purely statist approaches to infrastructuring in Europe, though, do not reflect the reality of an integrating region and, as a result, intergovernmental approaches are tending to push the development of more cross-border systems (Brenner, 1999b). In Europe, more than in any other region, whilst the RIS has not generated any widespread reorganisation of territoriality, it has led to states recognising that NIS rely on regional flows to secure infrastructure mandates.
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3. The Asian infrastructure system Conceptualising the notion of a single Asian infrastructure system (AIS) is made difficult by the sheer scale and diversity of the states on the Earth’s largest continental land mass. Asia is bounded to the east by the Pacific Ocean, to the south by the Indian Ocean and to the north by the Arctic Ocean. The western boundary with Europe is more ambiguous as there is no natural demarcation line between these continents. However, convention suggests that the western limits of the Asian continent lie to the east of the Suez Canal and the Ural Mountains and south of the Caspian and Black Seas and the Caucasus Mountains. Given the diversity of the continent, there is not surprisingly a multitude of economic integration agreements. These agreements broadly cover all boundaries of the Asian continent with the Association of South East Asian Nations (ASEAN) to the east and south; the Gulf Co-operation Council (GCC) to the west and south; the Eurasian Economic Union (EAEU) to the north and west and the South Asian Association for Regional Co-operation (SAARC) to the south. It is three of these four agreements (ASEAN, GCC and SAARC) that form the core analysis of this chapter.1 However, in understanding the context facing the AIS, the chapter also examines the role played by the Asia Pacific Economic Co-operation (APEC) group in shaping narratives on regional connectivity. The AIS represents the amalgam of the efforts between the states within these respective sub-regions and also the interconnections between the areas. An increasingly prominent driver in the development of the interconnections between these disparate sub-regions is China and its increasingly proactive role in the development of pan-Asian and Eurasian connectivity through its ‘One Belt, One Road’ (OBOR) initiative (see below). In the main, these Asian regional integration agreements are fuelled by trade and by the states using such interconnections as a tool of development and growth. However, the ability of the states to fully realise these benefits are often hindered by the uneven level of economic development 1 The EAEU agreement is excluded from the analysis due to the absence of a coherent infrastructural dimension to the union at the time of writing.
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across national infrastructure systems (NIS), especially within the aforementioned regional economic agreements (Bhattacharya et al., 2012). This reflects the view that, for much of Asia, infrastructure is a major economic problem given that it is either underdeveloped or has not evolved to cope with the emergent pressures created by increasing growth and populations on these systems. Indeed, the Asian Development Bank (ADB) (2016) estimates that Asian states, as a whole, need to spend an estimated $1.7 trillion annually on developing the AIS. This represents about 60 per cent of the total required global infrastructure spending for any given year. Despite the unevenness of the development of many NIS, a recurrent strategic theme for many states across the region is connectivity. This theme of connectivity has become central to the assorted sub-regional integration agreements as states seek to leverage physical interconnections to enable state-defined infrastructural mandates. Consequently, the formative sections of this chapter examine the notion of connectivity in more depth, notably through the promotion of subregional connectivity and its contribution to the development of the AIS based around the infrastructural components of the formal integration agreements across the continent. Thereafter, the chapter moves on to examine the infrastructural components of ASEAN, SAARC and the GCC. This is then followed by an examination of the growing links between these sub-regions, promoted both by the regional groupings themselves and by the aforementioned influence of China as the regional hegemon.
THE APEC REGIONAL CONNECTIVITY AGENDA As reflected below (and with notable exceptions), there is a general perception that Asian states lag behind in the development of NIS. In this context, the push towards regional infrastructural connectivity is seen as a policy strategy that acts as a catalyst for investment within NIS. Narratives formed in the aftermath of the late twentieth-century Asian financial crisis pointed towards infrastructural integration as an enabler of trade and investment across the Asian sub-regions as a key strategy in restoring growth within these economies (Brooks, 2008). As such, policy narratives on pan-regional and sub-regional Asian infrastructure have been heavily shaped by growth and development issues (Brooks and Menon. 2008). The narratives have also been shaped by organisations such as the ADB and the APEC agreement (see below). This neo-liberal narrative reinforces the notion of a trickle-down effect from regional connectivity to national economic development strategies (APEC, 2012).
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Within the context of the AIS, the issue of connectivity has best been synthesised by APEC (APEC, 2013a, 2013b). APEC was established in 1989 with the aim of enabling economic growth across the Asia-Pacific region. To this end, it has been a powerful factor shaping regional interaction and interconnection through the liberalisation of trade and investment, enhancing supply chain connectivity and trade facilitation (APEC, 2013a, 2013b). As a forum for open regionalism, APEC is most effective as a mechanism for promoting economic integration, even if its own ambitions in that area remain limited. Its impact has been through imbuing member states with the confidence to deal with the major issues that can affect closer economic integration. The leading Asian states of APEC (China, Japan and Korea) see open regionalism as a device that will secure better trading relations between themselves and the ASEAN states (see below). APEC’s narrative is that it aims to work ‘at’, ‘across’ and ‘behind’ borders. In that context, it has been an important force for Asian integration generally as its agenda filters down to other states via the larger Asian APEC states as well as the ASEAN states (APEC, 2015). Thus, where a single APEC free trade zone is absent, APEC has been a force promoting more localised agreements. Although not a formal integration agreement,2 APEC – as an intergovernmental forum – has proved to be an important force in shaping Asian connectivity given that the majority of ASEAN members (bar Cambodia, Laos and Myanmar) are members of the group and, in combination with the big three Asian APEC states, have been a powerful force pushing regional integration across the region, especially in east Asia (APEC, 2014). These debates have had a pan-Asian reach as drivers in encouraging broader intraregional infrastructural integration; for example, by shaping debates on intergroup connectivity such as the links between ASEAN and SAARC states (see below). The development of Asian infrastructures reflects both a ‘behind’ and ‘cross-’border reform in which the aim is to enable states to develop their own NIS as well as to improve the links between them. This is encapsulated within APEC’s core connectivity framework which defines the concept along three core dimensions (APEC, 2014):
2 Whilst not a formal agreement as such, APEC does seek to work towards becoming a trans-Pacific free trade area.
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+ Institutional connectivity: increased interaction between state-based institutional systems involved in the trade-facilitation aspects of soft infrastructure. + Physical connectivity: the conventional understanding of interconnectivity based on physical integration of NIS. + People-to-people connectivity: the facilitation of both the mobility of international business people and academics as a means of spreading ideas, investment and trade opportunities. With regards to the AIS, the focus is largely on physical connectivity (Elek, 2013). Whilst this physical connectivity agenda is short on project specifics, the broad aims are to develop trade routes and corridors that enhance regional trading systems; to improve regional energy infrastructure integration; to push universal broadband; to encourage reliability of infrastructure systems; and to diversify sources of finance (Panennungi, 2013). However, in so doing, APEC recognises this as a state-based issue and that its role is to enable the establishment of intergovernmental co-operative forums. Nonetheless, in 2014, the group identified key transport projects to enhance regional connectivity. This represents an ideal as APEC – as an organisation – has no mandate to achieve such structures and merely seeks to facilitate their realisation through focusing efforts at the state and interstate levels to realise them (APEC, 2012). Arguably, the main focus of the physical interconnectivity agenda is the group’s efforts to direct private-sector finance into core components of the regional connectivity system. To that end, APEC has had a marked impact on institutional connectivity, especially by enabling progress in soft infrastructure connectivity through the promotion of trade facilitation (de Mel et al., 2012; Hertel and Mirza, 2009). The group has, to date, launched two trade-facilitation action plans which have lowered interstate trade costs by 10 per cent (APEC 2015). These connectivity themes – whilst defined by integration in the east of the continent – find echoes in the strategies followed across the continent by other sub-regional groupings (see below). They reflect a common concern that the absence of or underprovision of connected NIS generate high transaction costs, especially in Asia’s landlocked states (Hummels, 2009). Whilst all themes highlight connectivity, at the sub-regional level at least, as a public good in political, economic and social terms they are not suggestive of grand schemes of pan-regional infrastructuring but of simple easing of flows across borders based on the linking of NIS. As such, there is no sense of a sub-regional infrastructural mandate. In practical terms, whilst physical connectivity is shaped by a shifting
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context evolving at multiple levels (nationally, sub-regionally and panregionally) and also by processes in those sectors who directly provide, use or are enabled by infrastructure (ASEAN, 2011a, 2011b), it remains a largely state-driven strategy. In this context, connectivity between NIS is driven by the desire to promote economic development/growth, state integration and, in some cases, security. Connectivity therefore offers benefits, not merely in terms of access but also in allowing states to benefit from positive externalities created by links and, also, through realising the national benefits that are derived from economies of scale and their ability to participate within regional production networks. However, international connectivity is promoted in a context in which there are vast differences in the quality of NIS, both within and between states. This is not simply a process of the repositioning of mature NIS but also of using connectivity as a catalyst for NIS development (Kwon and Yoo, 2013). Historically, infrastructural connectivity has not been a major policy issue for Asian states as many prioritised their underdeveloped NIS (ADBI, 2014). It was only as the logic of the competition state became embedded within these states that the complementarities between NIS were acknowledged and promoted as a tool of national economic development and the catalytic effects of connectivity for NIS development became accepted (ASEAN, 2011a). States recognised that stronger external links could operate as a catalyst for broader enablement of the domestic infrastructure mandate (Das, 2013). However, connectivity faces a number of barriers in its development, not least of which is the differing mindsets and priorities of participating states. This is compounded by the difficulties faced by many states in raising the necessary finance to enable connectivity, especially in the absence of cross-border traffic and the alignment of the necessary supporting soft infrastructure (UNCTAD, 2015, 2016). This is compounded by structural weaknesses in the NIS of Asia’s less developed states arising from low responsiveness to users, organisational inefficiencies, insufficient funding, dependence on development finance and the absence of environmental awareness (Nordas and Piermartini, 2004). Overall, UNESCAP (2015) has found that APEC’s act of pushing connectivity up the agenda has rendered infrastructural interconnection a salient policy issue for many states (see also Janow, 2015). This is true both within and between sub-regional groupings. Connectivity has become a regional public good and, as a result, there has been a rising demand by states for transport and energy infrastructures that physically interconnect NIS. This is especially true where the local NIS is underdeveloped or where the state is landlocked.
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ASSOCIATION OF SOUTH EAST ASIAN NATIONS (ASEAN) ASEAN is a sub-regional group of ten south east Asian states (the members are, as of 2017, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) promoting closer intergovernmental co-operation and limited economic integration among its members (Narine, 2008). Trade between ASEAN states has – over the 20 years to 2015 – remained broadly static at about 25 per cent of total trade flows. However, trade with the rest of Asia has risen from 35 per cent of total ASEAN trade in 1995 to 43 per cent in 2015. Overall, these figures demonstrate that, by 2015, over two thirds of the trade of ASEAN was with other Asian states (UNCTAD, 2017). Infrastructure has become increasingly central to the group as it seeks to develop its broad set of objectives across a diverse set of economies (WEF, 2016b): developing and interconnecting the respective members’ NIS has become a focal point for eradicating a widely acknowledged ‘development divide’ between its members (ASEAN, 2016). This became especially relevant when the group expanded in the late 1990s to include Cambodia, Laos, Myanmar and Vietnam. The legacy of this expansion was ASEAN’s initiative to stimulate development across less economically developed members (Kuroda et al., 2006). The initiative had a strong focus on infrastructure development which was to be financed by a range of institutions and developed states (Goh, 2008). As a proxy for the ‘development divide’, Table 3.1 sets out the relative rankings of the ASEAN states (as well as the leading east Asia states (the so-called ASEAN plus 3) as devised by the World Economic Forum (WEF). In simple terms, it underscores the diversity of the development of NIS across the ASEAN group. At the forefront of the development of ASEAN’s infrastructural sub-system is the masterplan for ASEAN connectivity (initially designed to cover the period 2010 to 2015 but which has been updated to cover the period up to 2025). Building on the above definition of connectivity offered by APEC (APEC, 2013a, 2013b), the ASEAN plan seeks to interconnect the respective NIS of its member states to achieve not only the broad development and commercial objectives linked to the ASEAN economic community but also to support broader political security and social objectives. This reflects an embedded logic of enabling not only freight flows but also passenger flows and of seeking to address the common security issues that flow from deeper integration. Furthermore, ASEAN’s ‘people connectivity’ strategy reflects a belief in the positive relationship between connectivity and community building where the
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Table 3.1 The variable state of infrastructure across ASEAN and the ASEAN plus 3 states State
Infrastructure ranking (WEF criteria) (out of 140)
Indonesia Philippines Singapore Malaysia Brunei Laos Cambodia Vietnam Myanmar Thailand ASEAN plus 3
60 95 2 24 78 108 106 79 137 (2014) 49
Japan South Korea China
5 10 42
Source: WEF, 2016a; World Bank, 2015
latter is seen spreading the benefits of growth through integration. The connectivity strategy reflects the market-driven, bottom-up nature of ASEAN integration (Bhattacharya, 2009, 2011). The 2025 masterplan built on the previous plan, stressing the above connectivity themes but with a new emphasis on sustainable infrastructure, digital innovation, regulatory excellence, seamless logistics and people mobility (ASEAN, 2016). Reflecting the development divide, the connectivity emphasis for ASEAN stresses not only the capacity and capabilities of frontier infrastructure but also the wide variance in domestic infrastructure insofar as they affect ASEAN’s objectives. Within the ASEAN masterplan, it is estimated that the sub-region needs to invest over $110 billion a year between 2015 and 2025: a figure that is approximately six times the historical average of infrastructure investment (ASEAN, 2015a, 2015b). Nearly 90 per cent of this proposed investment is focused on the energy and transport sectors with the work to be financed by a variety of resources, including multilateral development banks (MDBs; for example, the Asian Development Bank, World Bank and Islamic Development Bank), bilateral development partners and national governments. The actual mix of funding
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will vary on a project-by-project basis. In 2011 – and in support of these objectives – ASEAN established an Asian Infrastructure Fund (AIF) to enable ASEAN states to channel their excess savings into infrastructure investment (De, 2010). In practical terms, the AIF’s impact is minimal as it offers, at most, 2 per cent of the amount needed for any given project (Abidin, 2010). Consequently, over 80 per cent of the finance for the ASEAN masterplan will come from the states themselves (Ray, 2015). However, as these states are only spending around 1–2 per cent of gross domestic product (GDP) on infrastructure (less than a third of that required), large financing gaps within the plan are expected (ASEAN, 2015b). The ASEAN infrastructure plan encompasses a broad set of themes across all economic infrastructures up to 2025. The plan runs in parallel with the reform of soft infrastructure as a means of legitimising thirdparty funding (both from development bodies and developed economies) into these hard infrastructures. Table 3.2 highlights the main projects within the ASEAN masterplan for hard and soft infrastructure. Table 3.2 Key projects in ASEAN masterplan Hard infrastructure priority projects
Soft infrastructure priority projects
+ Completion
+ Develop
of the ASEAN highway network missing links and upgrade of transit transport routes. + Completion of the missing links of the Singapore– Kunming rail link. + Establish an ASEAN broadband corridor. + Melaka–Pekan–Baru interconnection (IMT-GT: Indonesia). + West Kalimantan–Sarawak interconnection (Indonesia). + Study of the roll-on/roll-off network and short-sea shipping. + Establish an efficient and integrated inland waterways network. + Accomplish an integrated, efficient and competitive maritime transport system. + Establish integrated and seamless multimodal transport systems to make ASEAN east Asia’s transport hub. + Accelerate the development of ICT infrastructure and services in each of ASEAN’s member states.
and operationalise mutual recognition arrangements for prioritised and selected industries. + Establish common rules for standards and conformity assessment procedures. + Operationalise all national maritime single windows by 2012. + Options for a framework/modality towards the phased reduction and elimination of scheduled investment restrictions/impediments. + Operationalise the ASEAN agreements on transport facilitation. + Prioritise the processes to resolve institutional issues in ASEAN energy infrastructure projects. + Implement initiatives to facilitate interstate passenger land transportation. + Develop the ASEAN single aviation, logistics and shipping markets. + Enhance border management capabilities.
Source: ASEAN, 2011a
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In transport, connectivity is promoted through two core projects: the ASEAN highway network (AHN) and the Singapore–Kunming rail link (SKRL) (ASEAN, 2011a). These projects – once completed – are designed to operate as the main channels for cross-border land transport linking the region’s capitals, seaports and airports as well as potential high-growth areas for investment and tourism (ASEAN, 2016). The AHN passes through all ten ASEAN states for a length of 38,400 km and has three designated transit transport routes. By 2015, over 97 per cent of AHN had been completed but key missing links remain and large stretches are of poor quality, notably in Myanmar, Laos and Indonesia, which have struggled to finance their sections of the network (ASEAN, 2015a, 2015b). Indeed, over 70 per cent of priority projects for the AHN are in one state: Myanmar (Ray, 2015). The SKRL passes through six states with spur lines into other states. By 2015 (the anticipated completion date), there are just over 4000 km of missing links or links in need of upgrade, notably in Cambodia, Laos, Malaysia, Myanmar, Thailand and Vietnam. However, once again finance (and shifting political and economic priorities) have hit the progress of the SKRL (ASEAN, 2016). This process has not been aided by the poor implementation of tradefacilitation agreements (Bayley, 2016). ASEAN has designated 47 ports as central to the ASEAN maritime system. However, with the exception of Singapore and Hong Kong, many of these ports rank poorly regarding their overall connectivity to the international system (ASEAN, 2015a). Alongside transport, the major infrastructural theme of ASEAN is to promote the internal development of and interconnections between national energy systems (IEA, 2013). Overall, it is estimated that around a trillion dollars needs to be spent on ASEAN’s energy infrastructure: according to the IEA (2016) this is more than half that needed for the continent as a whole. There are two elements to energy connectivity in ASEAN: the trans-ASEAN gas pipeline (TAGP) and the ASEAN power grid (APG). The TAGP seeks to develop an ASEAN-wide gas grid by 2020 by interconnecting existing and planned gas grids and will involve an extra 10,000 km of pipelines (ASEAN, 2016). The APG reflects a longstanding process of energy co-operation in electricity with the APG seeking to formally interconnect all national systems. However, by 2015, only six of 16 APG interconnection projects had been completed with a further six expected to be completed by 2017 (ASEAN, 2016). The main cause for the slow pace of the APG is a shortage of finance from both states and private investors. Big differences in the way the ASEAN states run their sectors is a major factor shaping this hesitation of commercial investors, in particular (Kitano, 2015) with their aspirations to create a single ASEAN power
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market alongside these new interconnectors. These initiatives exist alongside ADB-sponsored co-operation agreements between members of ASEAN (ADB, 2010). One such example is the Greater Mekong subregion comprised of Cambodia, China, Laos, Myanmar, Thailand, Vietnam (Speed, 2016), which has sought to build economic corridors for the sub-region based on enhanced connectivity (ASEAN, 2015a). The main projects for connectivity in ASEAN are highlighted in Table 3.3. Table 3.3 ASEAN electricity grid interconnection projects linking member states Project
Earliest commercial operation date
1 Peninsula Malaysia–Singapore (new) 2 Thailand–Peninsula Malaysia + Sadao–Bukit Keteri + Khlong Ngae–Gurun + Su Ngai Kolok–Rantau Panjang + Khlong Ngae–Gurun (2nd phase, 300MW) 3 Sarawak–Peninsula Malaysia 4 Peninsula Malaysia–Sumatra (Indonesia) 5 Batam (Indonesia)–Singapore 6 Sarawak (Malaysia)–West Kalimantan (Indonesia) 7 Philippines–Sabah (Malaysia) 2020 8 Sarawak–Sabah–Brunei Darussalam + Sarawak–Sabah + Sabah–Brunei Darussalam + Sarawak–Brunei Darussalam 9 Thailand–Laos + Roi Et 2–Nam Theun 2 + Sakon Nakhon 2–Thakhek–Then Hinboun + Mae Moh 3–Nan-Hong Sa + Udon Thani 3–Nabong (converted to 500KV) + Ubon Ratchathani 3–Pakse–Xe Pian Xe Namnoy + Khon Kaen 4–Loei 2–Xayaburi + Nakhon Phanom–Thakhek + Thailand–Laos (new) 10 Laos–Vietnam 11 Thailand–Myanmar 12 Vietnam–Cambodia 13 Laos–Cambodia 14 Thailand–Cambodia (new) 15 East Sabah–East Kalimantan 16 Singapore–Sumatra
Post-2020 Existing Existing TBC TBC 2025 2020 2020 2015 2020 2020 Not selected 2018 Existing Existing 2015 2019 2019 2019 2015 2019–23 2016–tbc 2018–26 tbc 2017 Post-2020 Post-2020 Post-2020
Source: ASEAN, 2015b
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SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION (SAARC) Founded in 1985, SAARC3 was based around stimulating intraregional trade through the creation of a preferential trading area by 1995. This subsequently evolved into moves to create a more fully evolved south Asian free trade area which was to be attained by 2015. In practice, the free trade area is limited and covers just over half of regional trade: much of the rest remains subject to the extensive use of non-tariff barriers (Ahmed et al., 2010). As such, the process of economic integration is weaker in south Asia than elsewhere in Asia. Moreover, trade between India and Pakistan, its two largest members, is stymied by regional geopolitics and, as a consequence, there is no reciprocal ‘most favoured nation’ status between them (ADB, 2006a). The only significant trading relationship within the group is between India and Sri Lanka. Consequently, the economic case for SAARC is weak: its members are low-income states with low levels of development and a broadly similar trade pattern as a result of specialisation in the export of low-value goods. As a result, the anticipated benefits from intraregional trade liberalisation are marginal (Sally, 2010). Indeed, between 1995 and 2015, intra-SAARC trade had only risen from 5 per cent to 7 per cent of the total trade of these states (UNCTAD, 2017). This reflects a number of factors including a fear of smaller countries that India, the dominant state in SAARC, would flood their markets; the persistence of protectionist policies by smaller countries to protect their markets, especially manufacturing; the absence of complementarities in goods produced by SAARC states; inadequate cross-border infrastructure links; competition between SAARC states for non-SAARC markets; and the geopolitical issues between India and Pakistan (Ahmed et al., 2010). This has led many SAARC states to seek independently to enter into agreements with other groups, notably ASEAN, thereby further eroding the logic of SAARC (Desai, 2010). Thus, many of the benefits of the agreement may actually lie in reshaping the geopolitics of the sub-region, especially with regard to promoting better relations between the group’s two big players, India and Pakistan, who in combination represent over 90 per cent of the group’s GDP. Indeed, India alone accounts for some 80 per cent of the group’s GDP (UNCTAD, 2017). 3 As of 2016, SAARC’s members are Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.
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India’s dominance of SAARC enables it to use the agreement as a platform for its own growth strategy and it has often unilaterally opened up its market to its partners without reciprocal agreements. Rahman et al. (2012a) argue that the other member states see SAARC through the prism of their bilateral relations with India and that Pakistan and Bangladesh, in particular, tend not to want to overcommit to the agreement for fear of ceding too much power to their larger neighbour (Chandra and Kumar, 2010). The smaller states of Bhutan, Nepal and Sri Lanka have adopted a more proactive attitude. This is reflected in the group’s infrastructural connectivity strategy which has been driven by India but has tended to falter due to the mistrust between the states. For example, Bangladesh’s denial of transit facilities to India is blocking transport integration in south Asia. This is compounded by the limited cross-border investment within SAARC. Furthermore, the movement of people across borders is low due to conflicts and security concerns. However, according to Bhattacharyya and Chakraborty (2010), official trade figures are likely to be understated as much commercial activity occurs via informal channels because of the absence of infrastructure (Taneja, 2002). Thus, better infrastructure would lead to an increase in reported trade. This presumption is questionable as not all trade seeks to be legitimate. Infrastructure has been a focal point of SAARC from its inception, but it only became a point of consensus once the development opportunities for SAARC became more apparent. As such, the infrastructural component of SAARC is shaped less by a need for integrated systems than by a common interest in the upgrade of NIS (Muni and Jetly, 2008). As a result, the infrastructural programmes are not really sufficient for the needs of the states; Table 3.4 underlines the collective poor condition of the respective NIS of SAARC states. However, India, with its ‘Look East’ policy (since 1991), has started to build regional links but this has been less with SAARC and more with ASEAN states as a means for the promotion of development within its landlocked regions. The combination of low intra-SAARC trade, the high volume of informal flows and the limited implementation of trade-facilitation measures by member states has meant that sub-regional connectivity is poor. NIS has developed almost exclusively along national lines with many states building their systems around the fragmentation of colonial infrastructural systems and using these as a basis for the NIS. In this sense, these states, like many African states, have gone from an integrated system to a fragmented system which is acting as a restraint on growth and development. However, political and economic factors have also created a fragmented system. In road transport there are longstanding
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Table 3.4 SAARC member state rankings State
WEF ranking (out of 140)
Logistics Performance Index ranking (2016) (out of 160)
Afghanistan
n/a
150
Bangladesh
114
87
Bhutan
92
135
India
68
35
Maldives
n/a
107
Nepal
130
124
Pakistan
116
68
73
89
Sri Lanka Source: WEF, 2016a and World Bank, 2015
issues regarding the lack of common agreements that have led to bottlenecks at border posts (Chandra and Kumar, 2010). The relatively poor state of NIS has directly led to a lack of strategic interest in developing pan-regional infrastructure (Roy and Banerjee, 2010). Whilst some states inherited extensive regional infrastructure systems upon independence, many have failed to upgrade, maintain and/or renew such structures, often as a direct result of the desire to intentionally restrict overland road and rail flows between states. In the case of rail, connectivity is hindered by differing standards and gauges with little ambition and/or capability to overcome such fragmentation. This precludes the creation of regional hubs to improve the efficacy of the system and is reflected in the divergence within the logistic performance indicators in Table 3.4 and the disadvantages facing landlocked states in such circumstances. The establishment of sub-regional RIS within SAARC are regarded more as a platform for poverty alleviation and development than as a direct reaction to trade (Srinivasan, 2012). Cross-border economic interaction is low and the core strategy is based on the notion that crossborder links can aid trade and development but would not act as a catalyst for the emergence of these states as a collective regional power. The logic of states (though arguably not India) is that the narrative of regionalism offers a platform to stimulate the desired level of investment within this region, especially where there is a gap between the rhetoric of infrastructure as a platform for development and territorial integrity and
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the ability to realise such flows. As such, regionalism in NIS supports the development of the NIS rather than regionalism as a positive externality per se. Despite these embedded problems, SAARC has sought to be proactive in stimulating sub-regional connectivity, pushing both transport and energy infrastructure towards the top of its agenda (Bhattacharyya and Chakraborty, 2010). In 2006, the SAARC Regional Multimodal Transport Study identified ten regional road corridors, five regional rail corridors, two regional inland waterways corridors, ten maritime gateways and 16 aviation gateways as central to promoting widespread development across the group (RIS, 2007). The selection criteria for the projects were driven by the following range of considerations: access for landlocked states; ability to support intraregional traffic; enhanced efficiency of intraregional operation; shorter access to main markets; ability to carry future traffic.
+ + + + +
The SAARC plan has targeted five key rail corridors which are seen as especially important to the development of intraregional connectivity given the poor state of the road system and the prominent role rail plays within the current, notably Indian, freight transport system (De, 2009). The programme seeks to develop links for landlocked states such as Bhutan which has, historically, not had a rail system to connect into the Indian system and on to the main Indian ports (Taneja and Pohit, 2002). To a lesser extent, this is also true of Nepal which only has a single link. Consequently, the prioritised rail corridors are: + Delhi–Siliguri–Guwahati–Imphal (all India)–Tamu (Myanmar) with feeder linkages from Nepal at Kakarbhitta and Birgunj, and from Bhutan through Phuentsholing; + Varanasi–Mumbai (both India) with linkages from Nepal via the Nautanwa (India)–Sunali (Nepal) border; + Birgunj (Nepal)–Kolkata/Haldia (India); + Kolkata (India)–Dhaka–Chittagong (both Bangladesh)–Sittwe (Myanmar); + the old ‘Stillwell Road’ linking north east India with northern Myanmar via Ledo (India). However, these projects are subject to substantive funding gaps: neither the ADB nor the minute infrastructural finance facility within the
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SAARC framework offers enough to support their development. Whilst India, Pakistan and Bangladesh have established vehicles to raise private finance into infrastructure, these strategies are overwhelmingly statebased with regional systems fitting around the development of NIS which are at the core of state strategy (RIS, 2006, 2007). The interlinkages between states are so low that states have no real incentive to prioritise these links other than to support domestic objectives. The only real catalyst for the SAARC RIS is India, which has been proactive in the development and finance of a number of cross-border links: it can be argued that these links can provide a hub for the regional system given that India shares a land border with many of the other states and has close maritime links to the island-based economies. This lack of progress in regional co-operation is also evident in the energy sector. Whilst there are arrangements to increase regional co-operation, these have been slow to be put into practice. Alongside this are a series of bilateral deals, notably between India and landlocked states, which have been more successful, but a fully evolved co-operation has been limited by the same uncertainties that bedevil the other sectors, notably political risk, the absence of a means for cross- border communication and tariff and non-tariff barriers (Singh et al., 2015). Much of the energy trade and co-operation between SAARC states is in electricity, with India having a central role given that the system is based on trade between India and Bhutan, and India and Nepal (Rahmatullah, 2010). The centrality of India to the SAARC energy system is reinforced by its role as a hub in the regional oil markets via its importing and refining capabilities (Rahman et al., 2012b). Slowly, the energy infrastructure network is being extended, not only by a series of short oil pipelines between India and Bangladesh but also by a long-distance electricity transmission system between the same two states and the proposal of a similar link between India and Sri Lanka (Timilsina et al., 2015). It is widely mooted that, in order to enhance trade, the region needs to undertake widespread reform supported by a regional hub energy infrastructure (Ebinger, 2010). According to the ADB (2013), the main regional energy infrastructure requirements are: + an India–Sri Lanka power interconnection (a feasibility study is being carried out jointly by the governments of India and Sri Lanka); + an India–Nepal power interconnection from Gorakhpur to Butwal; + a central Asia–Afghanistan–Pakistan power interconnection; + an Iran–Pakistan–India gas pipeline; + a Myanmar–Bangladesh–India gas pipeline;
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+ a Turkmenistan–Afghanistan–Pakistan–India gas pipeline; + expansion of the regional power market; + establishment of a regional crude oil refining facility and creation of a SAARC strategic petroleum reserve; + establishment of a liquefied natural gas terminal for the region and associated natural gas distribution facilities; + establishment of bulk power generation for regional consumption. In terms of soft infrastructure, it is widely acknowledged that the SAARC states possess underdeveloped systems but, given the aforementioned political issues and the structure of trade, this might not be as big an impediment as supposed. However, according to the World Bank, India, Pakistan and Bangladesh rank 143rd, 172nd and 173rd (out of 190), respectively, in terms of ease of doing business across borders (World Bank, 2016). This suggests that the ability of the major ports to operate as effective regional hubs will be problematic as the median time and cost to import goods is higher than for other ports in Asia, especially in East Asia. Whilst there has been progress in the decade up to 2014 (the median time to import goods into India has been reduced by 20 days in India; by 30 days in Bangladesh and 18 days in Pakistan), SAARC still compares unfavourably to its Asian rivals (World Bank, 2016). Moreover, in other SAARC states, notably Afghanistan, Bhutan and Nepal, importing times remain unchanged. This reinforces the disadvantage of landlocked SAARC states reflecting the conclusions of De (2009) that what is required to stimulate the development of regional systems is a common transport policy. Given the internal limitations to the development of an integrated RIS for SAARC states, many are looking beyond the borders of the subregion to establish the necessary international connectivity (Gautrin, 2016). This is reflected in SAARC flanking initiatives such as South Asian Economic Co-operation, which includes SAARC members and other states, notably Myanmar, and institutions such as the ADB (Wignall and Wignall, 2016). The aim of the programme was to both improve internal transport and energy infrastructures within and between SAARC states and also to improve external links and trade-facilitating soft infrastructure. The role of the ADB was to give added impetus to existing programmes which were underdeveloped due to the absence of financial expertise (De et al., 2010). It will also work with other co-operative agreements such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, which fosters co-operations between states with a coastline on or are dependent on flows into the Bay of Bengal.
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GULF CO-OPERATION COUNCIL (GCC) The GCC was established in 1981 between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). The GCC’s role is based on the perception of a special relationship between these states arising from their similar political systems, Islamic beliefs and geographic proximity (Aluwaisheg, 2004). Over time, the GCC has evolved into a regional common market which has agreements in areas such as mutual security, reflecting common geopolitics and faith. Their social and political similarity is compounded by common economic characteristics such as high export and state revenues, dependency on hydro-carbons, small internal markets and a dependence on foreign labour despite these states possessing relatively young populations where unemployment is high. In combination, these restrict industrial development and curtail importsubstitution strategies (Ramady, 2012). Moreover, for all these states, most goods need to be imported and domestic industries rely heavily on international markets (Cammett, 1999). The states rely on external producers for consumer goods, further exposing GCC states to external pressures and limiting their budgetary flexibility (Sturm et al., 2008; Sultan, 2012). Trade between GCC states is relatively low due to their dependence on energy exports which comprise over 70 per cent of exports (UNCTAD, 2017). According to UNCTAD, intra-GCC trade oscillates around 3 per cent of GCC GDP (UNCTAD, 2017). Given the aforementioned vulnerabilities, the states are seeking to diversify away from commodity-based strategies which are vulnerable to oscillations in price and regard the GCC as a platform to achieve this objective. On the basis of social, economic and political similarities, it was proposed by Saudi Arabia that the current pattern of integration be deepened to create a Gulf economic union. However, such efforts have been undermined by the desire of states to protect their sovereignty in trade issues. Overall, it is fair to conclude (given the figures in Table 3.5) that, compared to other parts of Asia, the GCC’s infrastructure is well developed. These states generally have good aviation, maritime and terrestrial transport systems with core gateways (notably in maritime and aviation) attracting substantial investment to enhance their capacity. Indeed, when compared to other states, there are no vast differences in the quality of NIS, as highlighted in Table 3.5. Despite this, Estache et al. (2013) suggest that, although the GCC states are well infrastructured compared to other Middle Eastern states, they will still need to invest 5–6 per cent of their GDP annually in their NIS per year until 2020. In the
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Table 3.5 GCC infrastructure rankings State
WEF infrastructure ranking
Saudi Arabia Kuwait Bahrain United Arab Emirates Oman Qatar
31 52 32 4 38 18
Source: WEF, 2016a
1990s, GCC investment in infrastructure was 6 per cent per annum rising to around 8 per cent per annum in the 2000s. Of the 5–6 per cent of GDP, it is estimated that the GCC needs to spend over half of this on electricity and an upgrade of unpaved roads accounting for the second largest segment (Estache et al., 2013). Compared to other Asian sub-regions GCC connectivity is high, but there are evident gaps and problems within the RIS arising from the underdevelopment of key bilateral and cross-border links (Rouis and Tabor, 2013). Moreover, these links are prone to disputes which can interrupt terrestrial and maritime transport systems and are especially evident in bridges and pipelines in the planning of projects in the coastal waters between Bahrain, Qatar, Saudi Arabia and the UAE, confirming the low strategic priority placed by these states on sub-regional systems and the continuing prominence of national priorities within the GCC integration process. This is evidenced by the slow progress made by GCC in establishing transport corridors across the region, despite the existence of an extensive road network. Nonetheless, the strategic narrative emerging from the GCC positions infrastructure as a means not only of promoting interregional connectivity but also of ensuring capacity for exports and promoting diversification of the economy away from its reliance on hydro-carbons (Ramady, 2012). There has, for example, been a significant investment in airport capacity to support a shift towards tourism and the region has one of the highest passenger seat capacities per head of population globally (ICAEW, 2013). This investment in airport capacity also operates as a platform for the growth of the region as an international logistics hub between Asia, Africa and Europe. Indeed, international logistics is widely seen as a success story in the process of economic diversification. Investment has also been evident in port infrastructure such as the facilities opened in
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Oman and Abu Dhabi. These states have invested in rail and have opened up the Etihad line which integrates maritime and aviation hubs with the developing industrial base, such as the petrochemical industry in Saudi Arabia. For these states, infrastructuring ensures that hydro-carbon revenues are recycled back into the non-commodity economy to promote development and socio-economic cohesion in states given their high rates of youth unemployment, which have the potential to bring security and control challenges. As such, a large percentage of the infrastructures within the GCC (with the exception of the UAE) is realised by state investment. However, there are disputes over the extent to which these investments in infrastructure have led to significant performance gains in logistics (World Bank, 2016). Table 3.6 shows that in relative terms the UAE and Qatar have made significant relative improvements whereas Saudi Arabia, Kuwait and Bahrain have fallen back and Oman has maintained its position. Moreover, these rankings also suggest that despite the relatively high infrastructure investment by these states, they have actually fallen further behind developed states who head the list in terms of logistical systems performance. This suggests the improvement in physical infrastructure has yet to be matched by improvement in soft infrastructure, such as in trade facilitation and air traffic control. However, ICAEW (2013) believes that increased rail investment will improve this global performance insofar as it improves flows across the region. For example, the Saudi land bridge project for rail freight (which will link the Red Sea to the Gulf) will cut a five to seven-day maritime voyage to an 18-hour rail journey. In terms of logistics, the issue of connectivity has emerged once again. In this case, connectivity is not only about a platform for GCC integration but is also about enabling the region to operate as a global logistics hub. Thus, the focus is on connectivity for east–west trade flows and on being able to offer sufficient capacity to operate as the most effective conduit for flows of human and freight traffic. The region has developed extensive connectivity in liner and airport systems. In airports, the hub connectivity traffic of Dubai, Abu Dhabi and Doha airports has increased by 495 per cent, 1913 per cent and 1861 per cent, respectively (ACI, 2014). To support the integration process, the GCC states have launched a number of interconnecting projects for electricity, water and transport. In the transport sector, in 2003 the GCC launched a region-wide rail system to interconnect GCC states – the aforementioned ‘Etihad line’ (Lowe and Altrairi, 2013). The aim was to build 3000 km of rail between the states, with a possible extension to Yemen at a cost of $20–25 billion. The line
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Table 3.6 GCC Logistics Performance Index (global ranking) (out of 160)
Saudi Arabia Oman Bahrain Kuwait UAE Qatar
2007 ranking
2016 ranking
41 48 36 44 20 46
52 48 44 56 13 30
Source: World Bank, 2015
will link four states from Kuwait via Saudi Arabia and the UAE to Oman, with loops to Bahrain and Qatar. For many GCC states, the transportation of bulk solids and liquids as well as containerised cargo is cheaper by rail only when the journey is over 500 km; the high overhead costs make little commercial sense as many domestic trips are a maximum of 250–300 km (Lowe and Altrairi, 2013). However, if intraregional trade flows increase, the logic for an integrated rail system also increases, especially where this is coupled with a shift away from commodities towards industrial products. The project is state funded with each state paying a proportion of the cost as determined by the proportion of the rail system that passes through its territory, with the exception of Oman’s contribution which is expected to be supported by other GCC states (Hertog, 2007). However, the viability of the project depends very much on the realisation of the increased traffic flows anticipated from freer trade among the GCC states. Moreover, although the first phase has been completed (linking the ports of Abu Dhabi and Dubai to the rest of the UAE), its further development has been dogged with difficulties over issues such as visas, illegal immigration, where the tracks should meet (despite the establishment of a Gulf rail authority in 2011) and questionable support from states who favour their own domestic systems. In part, the appetite for such big regional projects has fallen by the wayside as the sharp fall in the price of oil since 2014 has lowered anticipated revenues for the GCC states. Moreover, the price of the products being transported have often fallen, further undermining the case for big transport projects. It is also arguable that the commitment to such projects has waned as the GCC states are competing more intensely with each other as they jostle to position themselves in a new diversified economy. This is demonstrated by the competition between states to
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develop the national infrastructure to become the dominant hub for international logistics within the region. Ironically, the GCC states need to increase investment in energy infrastructure to cope with the emergence of energy-intensive industries such as aluminium, petrochemicals and steel (Saif, 2009). The IEA (2016) estimates that by 2030, the GCC will be one of the leading centres for energy demand growth. Electricity demand in the GCC region is expected to increase by over 3.3 per cent per annum between 2013 and 2040, the highest of any region across the globe. This suggests a need for increased generating capacity and for stronger interconnections between these states. As a response, the GCC has promoted extensive electricity interconnections: a process guided by the establishment of the GCC Interconnection Authority in 2001 (Hertog, 2007), which sought to develop this grid in three phases. Each phase represents a gradual extension of the process: the development of the separate northern and southern sections constitutes the first two phases and the interconnection of these sections comprise the final phase which was completed in 2013 (Bhutto et al., 2014). The function of the connectivity of these systems was to promote energy security so that, in case of an emergency, any single state would be able to call on capacity elsewhere within the GCC system. In so doing, it has reduced the need for any individual state to invest in excessive spare capacity. However, so far, trade among GCC countries in energy has been limited.
FROM SUB-REGIONAL INFRASTRUCTURE SYSTEMS TO PAN-REGIONAL INFRASTRUCTURE SYSTEMS The first part of this chapter explored sub-regional infrastructuring processes linked to the development of infrastructure as integral to the formal processes of economic integration within and across a group of states who have entered into such agreements. At the sub-regional level, the approach to regional infrastructuring is highly varied in terms of drivers and strategies. In some cases, the development of sub-regional RIS is driven by a desire to promote development, whilst in others it is a platform for both development and an upgrade of existing systems. However, such processes do not allow for consideration of other drivers, either at the sub-regional level, at the interregional level (that is, those between different regional groupings) or at the pan-region level (that is, those designed to promote continental connectivity). It is these panregional forces that are the focus of the rest of this chapter. Although there have been longstanding agreements to promote interconnection
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between NIS, such as the Asian Highway, the Trans-Asian Railway and the facilitation of land transport projects through intermodal transport terminals (dry and inland ports) which have been driven by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, 2006, 2011), it is two other drivers of connectivity that are the focus of the analysis within this section. The first is the role of the ADB and its increasingly prominent role in Asian infrastructure. The second is the regional hegemon, China, which has been increasingly proactive in shaping these infrastructuring processes. Whilst there are evident synergies between the respective actors, the former tends to be more active in intersub-regional elements and the latter is proving powerful in shaping the agenda on a pan-regional level. Asian Development Bank and connectivity The ADB is a multilateral institution that is dedicated to the Asia-Pacific region (though it does operate across all of Asia) and which has sought to generate finance for investment in infrastructure. Frequently, this has been on a project-by-project basis linked to individual states (and sub-regions) and their developmental needs (Fujimura and Adhikari, 2012). However, the 2009 document Infrastructure for a seamless Asia (ADB and ADBI, 2009) reflected an initiative by the ADB to move from sub-regional infrastructuring to broader pan-regional infrastructuring (ADBI, 2016). The narrative within the document mirrors themes in the EU’s (see Chapter 2), and to a lesser extent Latin American, plans in seeking to push pan-regional connectivity up the policy agenda as a means of aiding regional competitiveness. The theme was thought to be as especially important for Asia’s landlocked states, widely seen as being at a disadvantage regarding access to the global trading system.4 In practical terms, the ADB was seeking to establish a forum for co-operation and dialogue for states to replace the conventional ‘bottomup’ strategy for regional infrastructure development (based on bilateral relations and market-driven) with a top-down approach that is proactive in creating market forces and in inducing demand (ADB, 2012). The plan itself is short on specifics; arguably its greatest impact is less through the strategic rhetoric of ‘seamless Asia’ and more through the interconnection between separate regional systems that creates an AIS through proxy mechanisms. However, this process will still be driven by the states with 4
These are the 12 landlocked developing countries in Asia, namely Afghanistan, Armenia, Azerbaijan, Bhutan, Kazakhstan, Kyrgyzstan, Laos, Mongolia, Nepal, Tajikistan, Turkmenistan and Uzbekistan.
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the ADB looking towards innovative financing methods to support the process. To this end, the ADB developed the AIF to mobilise Asian and overseas resources into the AIS. This confirmed that the ADB’s ability to support the AIS is limited to around 25 per cent of the total project cost; its primary role is to facilitate financing from other sources by lowering risks, especially within the formative stages of project development. These efforts can be supported through co-ordination with other MDBs such as the World Bank or via governmental financial institutions in the wealthier Asian states such as the Korean Import-Export Bank and the Japanese Bank for International Co-operation. Overall, though, the development of pan-regional systems will largely be by states as national public sectors still contribute 70 per cent of infrastructure financing, the private sector around 20 per cent and multilateral agencies the remaining 10 per cent (ADB, 2016). Despite these efforts, the main trend in the evolving pan-regional AIS is the growing links between the respective sub-regional systems, of which links between the states of SAARC and ASEAN have been most evident (ADB and ADBI, 2013, 2015) and which have also been a key focus of the work of the ADB. This is apparent in the growth in regional trade, notably between south and south east Asia, which increased from $4 billion in 1990 to $90 billion by 2013 (UNCTAD, 2017). During this period, south east Asia’s share of south Asian trade rose from 6 per cent to 10 per cent, whereas south Asia’s share of south east Asian trade doubled from about 2 per cent to 4 per cent (UNCTAD, 2017). Arguably, the catalysts for expanding links between the sub-regions were India with its ‘Look East’ policy from 1991 (Asher and Sen, 2008) and the opening up of Myanmar which operates as a land bridge between the regions (Plummer et al., 2016). This has been complemented by a series of free trade areas between states of the respective regions. By 2015, there were six free trade areas between south Asian and ASEAN states. However, these have not been supported by the creation of the necessary hard and soft infrastructure. The connectivity problem between these regions is not the existence of links per se but the frequent insufficient capacity or poor quality (notably of roads) of these links and, in the case of ports, poor connections into the main corridors or, in the case of rail, the lack of any connection at all. For these and other reasons, much of this trade is conducted via maritime channels. However, low traffic and low demand suggest that market-led finance for such links is difficult to justify. Given that most of the trade between the regions is moved through maritime channels, this also places an emphasis on the reform of port-based soft infrastructure systems (François et al., 2009).
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The ADB has been proactive in pushing the links between these sub-regions up the policy agenda of states and multilateral and statebased development banks (ADB, 2012). It regards the absence of infrastructure as a direct impediment to trade between sub-regions and views the low level of trade as a direct consequence of low connectivity. Building a supporting infrastructure to enable trade requires upgrading the land bridge infrastructure within Myanmar, the absence of which is regarded as a serious deficiency, and upgrades in Bangladesh. The ADB estimates that the total cost of the infrastructure needed to create closer ASEAN–SAARC interaction is approximately $73 billion, which includes $18 billion for roads, $34 billion for railways, $11 billion for port projects and $10 billion for energy projects (ADB, 2016). Of the numerous projects proposed, the ADB argues that the 4430 km Kolkata–Ho Chi Minh City corridor is the most feasible priority project (ADB and ADBI, 2015). As an actor in promoting pan-regional connectivity, the ADB has been proactive in pushing forward the infrastructural components of economic co-operation between states to create frameworks for connectivity outside formal economic agreements (ADB, 2006b). This has been through programmes such as the South Asia Sub-regional Economic Cooperation, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation between ASEAN and SAARC states and the Central Asia Regional Economic Co-operation between landlocked central Asia states (as well as China and Pakistan). Whilst the power of the ADB to develop these infrastructures is limited in financial terms, it can – through these frameworks – establish the means for states to co-operate in the mutual upgrading of NIS through the establishment of multistate corridors. However, such co-operative agreements can only go so far if they are not reinforced by finance that incentivises the upgrade of infrastructure (Kitano, 2015). In some cases, areas with low population densities are not going to attract vast amounts of commercial funding. As such, these programmes are often high on rhetoric but low on what is practical in terms of time frames, political context and economics. The role of China in the Asian infrastructure system Arguably a greater force for the creation of pan-Asian (and even Eurasian) infrastructure systems are the activities of the regional hegemon – China (Kennedy and Parker, 2015). China has launched its OBOR strategy through which it is engaging in extra-territorial infrastructuring at a time when many states across the Asian continent (especially in south and central Asia) are facing up to the need to replace
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crumbling colonial infrastructures or simply build new infrastructure to support their territoriality (Blanchard and Flint, 2017). Central to this initiative is the idea that both central Asia and western China would benefit from more transport and energy infrastructure, something China has been pushing for within international financial institutions for some time. Some of this would be facilitated by Chinese investment, mainly through loan financing channelled through its own banks and the emerging Asian Infrastructure Investment Bank (AIIB). Most states along the planned routes are developing economies and China sees the absence of infrastructure in these states as holding back the development of the Asian continent (PWC, 2015). This is especially true for the region’s landlocked states which tend not to be large economies and, as such, their ability to generate overland traffic to justify commercial investment in NIS is limited and still compares unfavourably – in cost terms – to maritime transportation. As a consequence, China has coupled territorial connectivity with maritime connectivity within its plan seeking to establish a pan-Asian/Eurasian infrastructure system from China to Europe via south Asia and the Indian Ocean – a route which is already a focal point for global trade (NDRC, 2015). According to Khanna (2015), China has set about establishing infrastructural alliances built around the needs of mutually beneficial connectivity. China believes that a regional transportation network and trade promotion will tighten recipient countries’ economic ties to China, which it believes will translate into enhanced strategic influence throughout the region (Blanchard, 2017). According to Djankov and Miner (2016), the push for OBOR has been driven by four factors: China’s desire to lower its dependence on infrastructure investment-driven growth; assistance in China’s push for a greater global role for the renminbi as a reserve currency; promotion of China’s energy security through new pipelines and deep water ports across the region; and increased growth in neighbouring economies as a means of stimulating Chinese exports. China sees great potential in economic co-operation through a variety of tools, including conventional free trade agreements, sub-regional co-operation, economic corridors, special economic zones, connectivity projects, trans-national transportation systems and financial co-operation. However, such a strategy is clearly not an act of charity but is central to placing China at the hub of economic activity in the region and of enabling it to use its hard power to assert influence over nearby sub-regions (Jianping, 2015). This positions OBOR as an expression of the Chinese state’s strategic focus on its firms to ‘go out’ in search of new markets or investment opportunities in overseas markets (Blanchard and Flint, 2017). It is coupled with a desire by China to build an extensive extra-territorial infrastructure system that
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protects against its core vulnerabilities, notably in terms of a reliable and secure energy supply to all parts of China. OBOR also has the function of enabling China to deal with excess capacity within industries such as iron and steel and construction that were key to the building of China’s NIS, although the ability of China to foist surplus supplies onto these states is likely to be mixed. In addition, there is a clear territorial integration function to the OBOR as it reflects a desire to use these infrastructures to integrate China’s western provinces more fully into the global economy. Given that 16 of the country’s 27 provinces are covered by OBOR, and with the other provinces stating a desire to be included within the strategy, the OBOR represents a clear assertion of Chinese territoriality. This desire for inclusion is driven by the need to stimulate development in China’s interior and, as a consequence, to promote enhanced political stability and control within regions that have often been restive. OBOR has two interlinked tracks: the ‘Silk Road economic belt’ (SREB) and the ‘21st-century maritime Silk Road’. The former focuses on enabling land-based trade across Eurasia whereas the latter focuses on port infrastructure in ASEAN states and beyond (see Table 3.7). The plan envisages work beginning in 2021 for completion by 2049 with priority being given to the SREB and seeks to foster stability in the region and promote trade links and secure energy for China’s peripheral western provinces (Blanchard, 2017). The SREB (as reflected in prioritised corridors in Table 3.6) will start in Xian in central China, move to the western provinces of China (Gansu and Xinjiang), before continuing south west through Kazakhstan to northern Iran and then moving into Eurasia (going through Iraq, Syria and Turkey) before reaching Europe and finishing in Rotterdam. From Rotterdam, links are planned to Venice, where it is planned to connect with the maritime Silk Road. The maritime corridor is regarded as less important by China which has a more limited advantage on such routes and is also involved in disputes in the South China Sea with several of the member states of OBOR. The success of OBOR depends on enabling co-operation and economic benefits for all partners from end to end of the trading corridors (Bloomberg, 2015). The programme’s success also depends on trade facilitation between OBOR states, notably regarding the development of efficient supply chains. The maritime Silk Road starts in Fujian province connecting to the Chinese ports in Guangzhou, Beihai and Haikou, before heading south to ASEAN and south Asian states, with connecting routes planned to east Africa before finishing and connecting with the land-based Silk Road in Venice. Inevitably, links will be drawn between the maritime Silk Road and the overlapping ‘string of pearls’ policy whereby China is investing in a
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series of facilities across the Indian Ocean to support both its commercial and military interests in the region (Pehrson, 2006). However, there is a growing consensus that the interests within this ‘string of pearls’ are overwhelmingly commercial (Economist, 2013) and that within the OBOR these facilities are secondary to overland routes (Brewster, 2017). Table 3.7 The main OBOR corridors Corridor
Details
New Eurasian land bridge
Planned to run from Jiangsu on the eastern Chinese seaboard to Rotterdam via Mongolia, Kazakhstan, Russia, Belarus, Poland and Germany. Comprises high-speed rail and road links between these states: the links are already in place but require upgrading. Mainly an energy corridor based on existing (for example, the China–central Asia gas pipeline) and new pipelines to the Middle East. The corridor will also have maritime dimensions with new gateways for hydro-carbons planned. Focused mostly on the development of rail lines (but also some roads) linking the Pearl River Delta economic circle (around Guangzhou, Hong Kong and Shenzhen) with the south east Asian countries of Cambodia, Laos, Myanmar, Thailand and Vietnam. A mix of transport and energy projects from western China to the Pakistani port of Gwadar. However, the corridor passes through Kashmir, which has led to opposition from the Indian government. Involves construction of road, rail and maritime infrastructure connecting China with south Asia. Involves pipelines, highways and rail projects from south China through Myanmar to its port at Kyaukpyu.
China–Mongolia–Russia corridor
China–central Asia–western Asia corridor
China–south east Asia/Indo-China corridors
China–Pakistan corridor
Bangladesh–China–India–Myanmar corridor China–Myanmar corridor
Source: EIU, 2015
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Table 3.8 The port infrastructure dimension of the maritime Silk Road Port
Country
Investment value (US$ billion)
Kuantan Batam Kyaukpyu Chittagong Colombo Hanbantota Gwadar Djibouti Port Bashir Lamu Bagamoyo Suez Canal corridor Piraeus
Malaysia Indonesia Myanmar Bangladesh Sri Lanka Sri Lanka Pakistan Djibouti Sudan Kenya Tanzania Egypt Greece
2.0 2.0 2.4 8.7 1.3 1.0 1.6 0.185 0.215 0.480 10.0 1.8 0.880
Source: EIU, 2015
Energy security is a key driver in the development of OBOR and has driven China into closer involvement in infrastructure within the GCC to facilitate flows of energy from this region (Thorpe and Mitra, 2008). It has been a long-term objective of China to build a pan-Asian continental oil bridge based on a network of pipelines that links China to a range of suppliers from the Middle East, Russia and central Asia. Within the OBOR, there are clear links with longstanding energy security projects: in terms of central Asia and Myanmar, for example, new routes for energy that bypass the vulnerabilities posed by the Malacca Strait are evident (Brewster, 2017). However, such projects have often fallen by the wayside as oil flows were of such low value that the costs of extraction and transmission were not justified (Feng, 2015). In this context, more extensive involvement could enhance China’s influence in these regions (Economist, 2016) and, by linking the maritime Silk Road to longstanding interests and new investments in the GCC states, enhance energy security and diversify flows (World Bank, 2010). In many senses, the inclusion of the GCC states in the OBOR reflects longstanding links driven by dependence on energy from this region and the energy infrastructure within this part of the continent (Daojiong and Meidan, 2015). In addition, an arguably unintended consequence of OBOR is that it creates a pan-Asian system by interconnecting sub-regional systems through what is, in effect, a hub-and-spoke RIS based on the Chinese
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system (ECFR, 2015). OBOR will interconnect EAEU, the GCC, ASEAN and SAARC states (Palit, 2017). Some OBOR strategies underpin and support existing links, notably those between SAARC and ASEAN. In other cases, the OBOR will enhance the capacity for these sub-regional systems to interact. For example, the new port facilities in ASEAN and SAARC will increase the potential for interaction between these groups even if the prime objective is to enhance China’s infrastructural mandate through supporting its trade and energy security. As such, OBOR potentially offers positive spillovers for these sub-regions. However, it can be argued that such developments reflect the needs of China and not of the sub-region. China already has extensive experience of the development of extraterritorial infrastructure. In 2014, it was involved in nearly 350 overseas rail construction projects which boosted exports of rail construction equipment by over a fifth between 2013 and 2014 (NDRC, 2015). Indeed, by 2015, there were 900 deals worth $890 billion under way. The total transport infrastructure investment in the covered region is estimated to reach $5 trillion between 2015 and 2020. This will be financed by China converting its surplus savings into credit for neighbours to buy Chinese raw materials and know-how in the development of their NIS. To channel funds into OBOR, China will rely on Chinese-only institutions such as its Silk Road Fund, the China Development Bank, the ExportImport Bank of China and other policy banks. By 2016, China had committed a total of about $100 billion to a trio of new infrastructure funds: $40 billion to the central Asia-focused Silk Road Fund; $50 billion to a new AIIB and $10 billion to the Brazil/India/China-led New Development Bank. However, this is only a fraction of the total amount needed to fully realise OBOR. The AIIB – despite being led by China – has a multilateral framework (57 members) to push the development of infrastructure across Asia, especially in projects which existing international financial institutions are unwilling to fund. The AIIB plans to increase operations gradually, investing $1.5bn–$2bn in infrastructure in 2016, $3bn–$5bn in 2017 and around $10bn in 2018 (Bob et al., 2016). The bank’s status as a multilateral institution means that China will not be able to use the AIIB to pursue its interest at the expense of others but it will have over 30 per cent of the shares in the bank (Wihtol, 2015). The AIIB seeks to offer $100 billion for the OBOR project, of which half will come from China. It is believed that this financial commitment by China reflects that the AIIB could offer ‘softer’ benefits to China through easing diplomatic tensions and preventing the emergence of Chinese-unfriendly policies
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(Nye, 2009). However, there are close links between OBOR and the AIIB as both focus on connectivity and infrastructure (Dollar, 2015). Whilst China sees the AIIB as a complement to other MDBs (notably the ADB and the European Bank for Reconstruction and Development which are regarded as precedents), it was created because there was a perceived need for a dedicated Asian infrastructure bank to offer the region a better voice on such issues, especially given there was a growing disillusionment with the multilateral system that tended to be unresponsive to emerging economies and that competition between MDBs could result in more beneficial terms for loans. The AIIB enables China to use its estimated $4 trillion in reserves (which is more than can be absorbed by its economy) to generate financial and non-financial benefits (such as furthering its geostrategic interests) for the Chinese economy (Fidelity International, 2015). Overall, there appear to be four main drivers behind the creation of the AIIB: namely, closure of the Asian infrastructure gap; a counterbalance for the perceived failure of existing MDBs; the pursuit of China’s domestic infrastructural mandate; and the exercise of smart power across the region to secure China’s foreign policy objectives. However, some states (notably Japan) have questioned the value of the AIIB given that the dominance of China over the bank could lead to reckless lending in pursuit of its geostrategic objectives, thereby undermining the sustainability of the institution. Ambiguity over the governance of the AIIB is a common concern where the pressure is on China to find the resources to make the institution effective, which could grant it an effective veto over the bank’s decision making (EIU, 2015). OBOR is a grand scheme to create an integrated AIS that extends into Eurasia and beyond. As mentioned, one of the seemingly unintended consequences of the strategy is to interconnect many of the sub-regions across the Asian land mass. However, this highlights one of the main problems of creating an AIS based on OBOR: namely, that it is being established across many states where NIS are frequently underdeveloped and that the emphasis on cross-border interconnections says little about how it stimulates the broader development of NIS through which the prioritised infrastructure passes (Hu, 2015). Thus, OBOR is less of an upgrade and more a greenfield investment to stimulate the necessary transit systems (EIU, 2015). Second, both human and physical geography are against the project as the areas targeted by the programme are both sparsely populated and often possess difficult topography, which can necessitate the bypassing of high mountain ranges, for example, and difficult terrain such as dense rainforest. This renders the project very costly in terms of per kilometre of transportation infrastructure constructed. Furthermore, there are long-term geopolitical issues in the
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region which cannot be ignored, notably along the China–Pakistan corridor which passes through a number of restive regions and which local governments have not always been able to control. It is already evident that attempts to go through Kashmir will be resisted by India. Third, there could also be local resistance and corruption to external control of critical infrastructure. China should not assume that its involvement will always be welcome: some states are in territorial disputes with China and may resist the formation of the Sino-centric continent implied by OBOR. Fourth, there are concerns over the clarity of the governance of OBOR projects. Such fears are already evident in Sri Lanka where – in 2015 – the government threw the US$1.4bn Colombo port project into doubt because of concerns over corruption in the awarding of contracts for the port’s development. Furthermore, in Cambodia and Myanmar, OBOR projects have been held up on environmental grounds. Problems have also been evident in OBOR project planning, where the extension of high-speed rail from China through to Singapore met with resistance from Thailand over project finance.
CONCLUSION The development of the AIS represents a more disparate process than that for the EU. The sheer scale and diversity of the continent means that a single integrated infrastructure system is unlikely. However, at the sub-regional level, from those agreements studied, there is clear evidence that the desire to interconnect national systems is regarded as a regional good. APEC has been a strong influence in placing connectivity on the state and sub-regional agenda, something that China has taken on board within the ‘hyper-connectivity’ of its OBOR strategy. At the sub-regional level, there are commitments to integrate systems but these remain uneven with many states, especially in ASEAN and SAARC, prioritising NIS over regional connectivity. Arguably, it is in the GCC states where there is a higher degree of consensus on the need to develop connectivity as each state seeks to diversify its economy away from hydro-carbons. However, as the disputes in 2017 between Qatar and the other GCC member states have shown, even where there is economic consensus, the political environment can still easily shape sentiment away from subregional connectivity.
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Thorpe, M. and Mitra, S. (2008) ‘Growing economic interdependence of China and the Gulf Cooperation Council’, China and the World Economy, 16(2), 109–24. Timilsina, G., Toman, M., Ahmad, A., Iqbal, M. and Shrestha, R. (2015) How much could South Asia benefit from regional electricity cooperation and trade? Insights from a power sector planning model, Washington, DC: World Bank policy research working paper 7341. United Nations Commission on Trade and Development (UNCTAD) (2015) ASEAN infrastructure investment and economic connectivity (research notes), DIAE, Geneva: UNCTAD. United Nations Commission on Trade and Development (UNCTAD) (2016) World investment report: www.unctad.org, accessed 5 March 2017. United Nations Commission on Trade and Development (UNCTAD) (2017) http://unctad.org/en/Pages/statistics.aspx, accessed 5 April 2017. United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) (2006) Priority investment needs for the development of the Asian Highway Network, Bangkok: United Nations. United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) (2011) Priority investment needs for the development of the trans-Asian railway network, Bangkok: United Nations. United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) (2015) Review of developments in transport in Asia and the Pacific, Bangkok: United Nations. Wignall, D. and Wignall, M. (2016) ‘Infrastructure to support seaborne trade between south Asia and southeast Asia’, in Plummer, M., Morgan, P. and Wignaraja, G. (eds), Connecting Asia: infrastructure for integrating south and southeast Asia, Cheltenham: Edward Elgar, 70–95. Wihtol, R. (2015) Beijing’s challenge to the global financial architecture’, Georgetown Journal of Asian Affairs, 2(1), 7–15. World Bank (2010) Economic integration in the GCC, Washington, DC: World Bank. World Bank (2015) International Logistics Performance Index: http://lpi.world bank.org/international/global, accessed 3 May 2018. World Bank (2016) Ease of doing business report: www.worldbank.org. World Economic Forum (WEF) (2016a) The global competitiveness report, 2016–2017: www.wef.org, accessed 5 November 2016. World Economic Forum (WEF) (2016b) Shaping the ASEAN agenda for inclusion and growth: www.wef.org, accessed 7 May 2017.
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4. The African infrastructure system Although promoting connectivity between contiguous, or sometimes semi-contiguous, national infrastructure systems (NIS) is a recurrent theme across many regional infrastructure systems (RIS), this is of secondary importance in the case of Africa. The development of RIS across the continent is driven less by themes of connectivity and more by the immaturity of the constituent NIS. As a territorial strategy, the push towards the development of an African infrastructure system (AfIS) is regarded by states as, at best, a partial means of alleviating the deficiencies of national systems. Thus, in contrast to other regions – especially those with more developed NIS – infrastructure is not created to enhance the state infrastructural mandate but to enable and sustain state infrastructuring. In this case, infrastructural integration is a means to generate the traffic that spills over into widespread investment within the AfIS as a whole. Moreover, the main focus of the NIS is on stronger external links rather than on support for regionalism (especially where formal crossborder flows are relatively low) and to enable states, notably those that are landlocked, to become more fully integrated into the global economy (UNCTAD, 2014). Initially, this chapter examines the infrastructural deficiencies across the African continent which states are seeking to rectify. The so-called ‘infrastructural imperative’ reflects the relative immaturity of NIS across the region and is widely regarded as a major factor in the continent’s lack of development. Thereafter, the chapter analyses how pan-African regionalism is utilised as a framework to promote the broader infrastructuring of the region. In Africa, regionalism is a multilevel process with pan-African initiatives (via the African Union (AU)) supported by overlapping sub-regional initiatives. Consequently, throughout this chapter the focus is on both pan-African programmes and initiatives as well as on sub-regional strategies, with a particular focus on the interaction of the various regional levels. Within the framework of the pan-regional initiatives, the chapter then analyses sectoral programmes across economic infrastructures. The chapter concludes with a brief examination of China’s increasingly prominent role in African infrastructure. 108
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AFRICA’S INFRASTRUCTURAL IMPERATIVE The majority of narratives on the relative underdevelopment of African infrastructure have tended to adopt the perspective that the absence of mature/developed infrastructure systems retard economic development within this region (for example, Calderón, 2008; Calderón and Serven, 2008; World Bank, 2010). Indeed, Calderón (2008) estimates that Africa’s infrastructural immaturity lowers gross domestic product by around 2 per cent and that, with adequate NIS, African firms could achieve efficiency savings of up to 40 per cent (AfDB, 2010a, 2010b). This view is also supported by the narrative developed within practitioner communities such as multilateral development banks (for example, the World Bank and African Development Bank (AfDB)) and international organisations (for example, the World Economic Forum). Although the majority of this section views the infrastructure imperative through this lens of development and growth (especially relevant given the current focus on trade costs – Jouanjean et al., 2015), the framework of the infrastructural mandate suggests that the impact of infrastructure underdevelopment across the region poses a wider challenge for African states. This has become evident within the emerging literature on state failure (Taylor, 2013). Overall, any given state’s infrastructural needs differ according to its degree of development, its access to the global trading architecture and political stability (Collier, 2000). Where states are fragile, needs are great as infrastructure tends to be neglected and private finance deterred. These problems are less acute for resource-rich states with stable political and economic systems. Moreover, across Africa there are states subject to civil wars and other forms of internal conflict that limit their infrastructuring capability (Ayogu, 2007). A key problem for Africa is not so much its absolute position but the relative underdevelopment of its stock of infrastructure compared to that of east Asia which has advanced markedly (Yepes et al., 2008). Throughout the 1960s to the 1980s, Africa’s infrastructure system was not much different from those in comparable economies in south/east Asia (notably China). However, whereas Asia’s NIS matured as a result of substantial investment during the 1990s and 2000s, Africa’s infrastructure systems remained broadly static (World Bank, 2010). In some cases, such as energy and parts of the transport system, they have even declined because of a lack of maintenance. This is especially noticeable in the case of colonial-era infrastructures (mainly developed to transport primary products to ports) bequeathed to many states at their independence and which have often deteriorated badly in the post-colonial era (Ayogu, 2007). In
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some cases, these systems (especially cross-border links) have been deliberately allowed to decline as states sought to assert their postcolonial territoriality. Consequently, in terms of the development and maturity of NIS, the previous three to four decades have seen African states fall behind other emerging/developing states, such as China and South Korea, where there has been heavy infrastructure investment. This dearth of investment in African RIS and NIS also reflects that much of the revenue earned from commodity exports has not been reinvested into infrastructure systems but has been either misappropriated and/or used to pay off national debt (AU, 2009). According to Simuyemba (2000), in the 30 years to the end of the 1980s, Africa underwent a relatively rapid process of infrastructuring as the leaders of the newly independent states sought to assert both their post-colonial territoriality as a demonstration of the benefits of independence. This was often financed by bilateral and multilateral sources which were keen to support NIS development within a context of open regionalism across Africa. However, this trend had declined by the late 1980s when the evolving NIS across Africa had become more of a hindrance than a driver for regional integration. This was due to the absence of pan-African interoperability across systems, retained monopoly control and poorly managed soft infrastructure systems. The problem was often compounded by the poor maintenance of the infrastructure that did exist (Yepes et al., 2008). In part, this occurred as a result of the aforementioned rush to build infrastructure to demonstrate a post-colonial dividend that was carried out without the development of the necessary support to manage and maintain these systems. According to Vanheukelom (2016), Africa’s infrastructural challenge (notably regarding the need for trans-national infrastructure) is shaped, both positively and negatively, by several factors. First, Africa has more landlocked states (16) than any other continent, indicating that the region requires a significant amount of trans-national infrastructure to allow these landlocked states access to the main maritime gateways so that they can engage with global markets (AfDB, 2016). Second, Africa has a relatively large number of small states which – in conjunction with Africa being the continent with the highest ratio of land border to total border length and that, on average, African states have borders with 4.5 states – underlines the territorial fragmentation of Africa. Third, Africa has a relatively low population density (41 people per km2 in 2016) compounded by low urban populations (40 per cent of the total population in 2016 (AfDB, 2016)). This implies that Africa has a relatively dispersed population, despite the distortion of Africa’s average population density by high population densities in states such as Nigeria and Rwanda.
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Fourth, Africa has low levels of intraregional trade (in 2017, intra-African trade was about 12 per cent of total African trade), thereby reducing the need for cross-border infrastructure. This can be both a cause and effect of low trans-national infrastructure development (AU, 2009). Bofinger (2011) maintains that colonialism left a distinct legacy for African infrastructure. First, both national and trans-national networks were left incomplete. As the colonists were merely concerned with access to natural resources, they built infrastructure systems that were high on reach but low on penetration. The system was geared to export and not to supporting and enhancing the territoriality of these newly independent states (Ndulu, 2006) and linked maritime infrastructure to the source of materials of interest. Second, rail was prioritised for the movement of bulky items and, as such, investments were focused on rail and port systems (AU, 2012b). Moreover, speed was not a major concern for these systems and, as a result, the rail systems were built to limited technical standards, resulting in infrastructure that has struggled to cope with the challenges posed by the emergence of more extensive road systems. Third, the process of independence introduced fragmentation into the system with trans-national systems becoming fragmented into national systems (Collier and Venables, 2008). This limited the opportunities for scale economies and slanted the system towards localised production and consumption (especially in terms of the reliance on agriculture) and led to wasteful investment as small, geographically proximate states duplicated systems and ignored the potential for co-development. This was accentuated by mutual suspicions between states which inhibited co-operation in transport, notably where it had already existed, as in west Africa where a regional system of rail management was replaced by nationally governed systems. To some degree, however, this was counterbalanced by the actions of selected regional economic communities (RECs). Fourth, state enterprises were inefficient and too controlling, leading to the suppression of market forces within system governance. Fifth, corruption was endemic: independence redirected control of resources to political leaders and was a major source of wealth and means of control for the elite with little of either trickling down to the rest of the economy. Sixth, civil wars were commonplace which led to attacks on infrastructure and also limited the ability to maintain and upgrade existing infrastructure systems (Jacobs, 2014). Finally, the AfIS was not prepared for the rapid urbanisation of Africa. This was compounded through the aforementioned emphasis on rail (which was frequently inadequate in density and poorly maintained and managed) and by the poor management of public transport where price controls undermined private provision which tended to sway the implementation/
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development of the NIS towards operators and away from users (World Bank, 2009a, 2010). Thus, when viewed in its entirety, Africa’s economic geography and political economy have worked against widespread regional and national infrastructuring and, for these reasons, the AfIS has developed in a fragmentary manner which has made scale economies difficult to attain (Calderón and Chong, 2004). The problem is compounded by the big differences between African states in the condition and efficiency of NIS, infrastructure policies, legal frameworks, rules and regulations, standards, documentation requirements and procedures and processes, not to mention differences in skills and administrative capacities (Te Velde, 2015). In addition, their position in the global economy can often mean that African states have no strong historical intra-African links and that NIS are geared to gaining access to global systems via ports, etc. rather than by building mutually supporting infrastructure systems (McCord et al., 2005, p. 37). As a result, cross-border connectivity is low across Africa and does not act as a platform for deficiencies within NIS as it seeks to do in Asia. Figures from the Infrastructure Consortium for Africa (ICA) in Table 4.1 give an initial indication of the condition of African infrastructure, especially in relation to Sub-Saharan states. It is evident from the table how poorly these states compare to other, mainly Asian, low- and middle-income states across the main types of economic infrastructure. Indices developed by the WEF (2016a) underscore the poor relative condition of African NIS: in a ranking of 135 states to ascertain the relative condition of NIS, the average ranking for those African states for whom data are available (just 40 of the 53 states) is 109. The best-placed state was Mauritius which ranked 41st (2015) with the Sub-Saharan states performing worst with 12 of these states being in the bottom decile (WEF, 2016a). This situation was confirmed by the World Bank’s Logistics Performance Index (LPI) (World Bank, 2016), according to which 12 of the bottom 20 (and six of the bottom 10) in terms of the operation of national logistical systems were from Africa: Somalia was the worst-performing African state at 158 out of 160) and Kenya, ranked 42nd, was the best performing. In terms of the infrastructure component of the Logistics Performance Index (which measures the relative state of transportation infrastructure across all modes), five of the bottom ten are Sub-Saharan African states. This is not only an issue of hard infrastructure but also an issue of soft infrastructure which inhibits the ability of African states to form and connect into global production networks (Jouanjean et al., 2016). In part, the problem for many Sub-Saharan states is that there is an absence of data to offer a coherent analysis.
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Table 4.1 Key African infrastructure statistics Indicator
+ Paved + Total
road density road density
Sub-Saharan Africa
Low-income states
Roads (km/1000 km 1) 49 134 152 211
Telecommunications (lines per 100 population) line density 1 1 + Mobile density 71 57 + Internet density 19 6 + Main
Middle-income states 461 757
10 100
Electricity + Generation
capacity (MW/million population) + Electricity Coverage (% of population with access)
37
326
100
35
41
90
Source: ICA, 2016
Calderón and Serven (2008) have observed that a single infrastructure is often used as a proxy for the infrastructure system as a whole. This infrastructure problem is also evident in information infrastructure where, in a ranking of 143 states in terms of readiness for the information economy, 17 African states are in the bottom 20 and the average ranking of states on mainland Africa is 118 (ITU, 2016). These development problems in African NIS are also apparent within the energy system. Indeed, Jouanjean et al. (2016) argue that Africa’s infrastructure deficit is most evident in energy given that the 48 SubSaharan states only generate as much electricity in total as a mid-size European state. In 2010, it was estimated that these states, with a combined population of 800 million, generated as much electricity as Spain which has a population of around 50 million. International Energy Agency (IEA) figures (2014) indicate that, on average, only 45 per cent of African citizens can access electricity: a figure which falls to 38 per 1
The Great Uhuru Railway was originally developed in the 1970s to free Zambia from a blockade by Rhodesia but fell into disrepair as traffic fell, its rolling stock deteriorated and locomotive capacity declined.
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cent in Sub-Saharan Africa. There is also an urban–rural split: only 19 per cent of the rural population of Sub-Saharan Africa can access electricity compared to 63 per cent of the urban population. In contrast, figures for north Africa show near universal coverage. In total, the IEA (2014) estimates that 620 million people in Sub-Saharan Africa in 2014 were living in energy poverty. This was largely caused by the absence of a mature developed energy infrastructure system, especially in terms of electricity-generating capacity. Moreover, those states that do have access to an electricity grid often find that supply is intermittent, leading to the widespread use of costly back-up generators based on the inefficient use of hydro-carbons. Part of the problem is that, although Africa has a large supply of indigenous primary energy resources, these are often exported to non-African markets. Moreover, the difficulties of intercontinental transmission are compounded by the absence of supporting infrastructure. Indeed, it is estimated that between 1990 and 2005, the quality and quantity of Africa’s power infrastructure declined (Foster and Briceño-Garmendia, 2010). These hard infrastructure deficiencies across Africa are accentuated by the immaturity of soft infrastructure systems which act to inhibit crossborder flows (explored more fully below). The WEF (2015) indicated the scale of this problem in that 17 of the bottom 20 states across the world ranked by ease of doing trade across borders were from Sub-Saharan Africa. This poor performance has been driven by a combination of the cost of border administration, the poor quality and availability of transport infrastructure (16 out of the bottom 20 globally ranked states were African) and by the paucity of ICT usage for trade enablement (17 out of the bottom 20 states were African). Once again, it is the island economies that perform best (notably Mauritius) and Sub-Saharan African states that perform worst. This is also confirmed by the World Bank’s Ease of Doing Business Index where, once again, Sub-Saharan Africa fares poorly across all major indicators such as cost to export, time to export, etc. (World Bank, 2016). Overall, the gap between the development of hard and soft AfIS and those of other developed and developing states is clear (WEF, 2014). Much of the literature has focused on how the absence of such systems hinders growth and development through reinforcing Africa’s geographic remoteness from the main global trading arteries and market centres, especially for landlocked states which accommodate an estimated 40 per cent of Africa’s population (Behar and Manners, 2008). This infrastructural trade effect is compounded by infrastructure deficiencies that act as a deterrent to inward investment (Lumbila, 2005). Such infrastructural deficiencies, both within and between states, can hinder their integration
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and limit political control and security, notably through links between infrastructure development and territorial inequality and poverty (Estache et al., 2002). In addition, the relatively poor state of regional connectivity further exacerbates geographic disadvantage by accentuating the relatively high cost of services provided by NIS (Oyejide, 2000; USITC, 2009). This is evident across freight, the internet and especially power systems. It is not only a derivative of the continent’s infrastructure deficit but also of the absence of reform within these markets (IEA, 2014). Much of the narrative for AfIS has focused on the logic of the competition state whereby states, either individually or in concert, act to build an infrastructure system that enables them to create an effective competitive position within the global economy (AfDB, 2010b). These debates stress infrastructure as an economic enabler through the lowering of transaction costs, the stimulation of investment and trade and integration into global/regional value chains (Calderón and Serven, 2004). It reflects the historical continuity of themes engendered by the legacy of colonisation for the evolution of the AfIS: investment in both regional and national systems is frequently driven more by the need to export mineral resources than to enable intra-African trade (AfDB, 2010a). This pattern has been reinforced by international financial institutions which – in their push for rapid economic development – have pushed those components of the AfIS that enhance export performance, something also evidenced by China’s involvement in African infrastructure (see below). The central point is that the focus has not been on building RIS or NIS but on moving materials, largely commodities to the ports and then onto main trading markets (ICA, 2014). Such infrastructures were not built for balanced development and national territorial integration or to meet their broader needs and aspirations. Thus, many of the states have come to be termed ‘line of rail economies’ whereby development follows the arteries without wider effects on the rest of the state. However, broader, relevant themes are highlighted within the literature on state failure which draws heavily on African experience (Taylor, 2013). As the number of African states rose in the post-war era (Helman and Ratner, 1992), there was an increased focus on state failure created by a loss of legitimacy of or the inability to secure the infrastructural mandate. This represents a failure of internal security, territorial deconstruction, loss of political control, etc. Taylor (2013) accepts that a key driver in this process was the inability of the state to offer universal access to key infrastructural services; this is seen as a direct challenge to the state to ensure the welfare of the population within its borders. The process can also be generated, first, by the collapse of infrastructural systems due to a lack of maintenance and/or the systems falling into a
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state of disrepair and, second, by the use of NIS to disrupt the operation of the state, suggesting that the provision of territorial infrastructures can be used to deterritorialize the state (Ajakaiye and Ncube, 2010). The most evident expressions of this are in the cyber systems and in intentional damage to the core critical infrastructures that underpin state territoriality. Herbst (2000) argues that the absence of infrastructural power was a major factor driving state instability across the region arising from the inability or unwillingness of states to build territorially extensive penetrative infrastructure systems (ICA, 2015). The development of a mature AfIS based on a set of developed NIS faces a long list of political and economic problems which appear endemic to the region (Oyejide, 2000) and represent a longstanding infrastructure funding problem for African states (ICA, 2014). Figures on the exact amount needed to be invested in the AfIS vary widely. For example, Africa Infrastructure Country Diagnostics estimates that SubSaharan Africa needs an annual spend of about $93 billion up to 2020 (UNECA, 2014), two thirds of which is needed for capital expenditure and the rest for maintenance. However, by 2015, actual spending was less than half this total (UNECA, 2016a). The gaps have occurred because the main financiers of infrastructures remain the states who lack the financial resources to develop NIS fully, let alone the means or motives to interconnect them (ICA, 2015). As of 2015, in terms of the amount invested in the AfIS annually, 34 per cent was from national governments, 9 per cent from the private sector, 24 per cent from ICA members, a mix of international intuitions and developed states and 25 per cent was from China (see below) (ICA, 2015). This pattern was evident within the Programme for Infrastructure Development in Africa (PIDA) initiative which was launched in 2011 by the AU to close Africa’s infrastructure gap (UNECA, 2013). PIDA is a multi-agency programme involving the African Union Commission, the New Partnership for Africa’s Development, the AfDB, the United Nations Economic Commission for Africa (UNECA) and RECs. The scheme aims to spend $360 billion between 2011 and 2040 (largely through public-private partnerships) to develop the core components of the AfIS (NEPAD, 2002a, 2002b). The PIDA action plan prioritises 51 projects across all sectors and requires $68 billion of investment by 2020; 60 per cent of the total spend (up to 2020) is targeting energy (NEPAD, 2014). ICT is not seen as a significant priority as the basic core infrastructure was, by 2016, regarded as in place (ITU, 2016). However, there appears to be little interest in these projects by private investors. Much of the finance is state-driven by international institutions and sovereign wealth
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funds. Private investors, which are central to PIDA, represent less than 10 per cent of the finance going into the AfIS (ICA, 2015).
REGIONAL INTEGRATION IN AFRICA As with other chapters, it is not the intention to dwell too deeply into the form and nature of economic integration across Africa but only to do so insofar as it informs the process of regional infrastructuring. Generally, regional integration in Africa is rationalised on the basis that the continent is characterised either by small, sometimes landlocked countries and small economies and/or small markets (UNECA, 2004a, 2004b). In this context, regional integration potentially offers African states an ‘inward-looking’ strategy to facilitate integration as a means of scaling up the component economies as a precursor to positioning themselves in the global economy and enables them to diversify away from a dependence on commodities (World Bank, 2012). The geopolitical configuration of Africa has been largely determined by the continent’s European colonial powers and, as such, has little to do with the patchwork of identities that exist within and across nation states. This latter point recognises that regional integration in Africa has always had a strong political component with states seeing it as a means of establishing a pan-African identity and of establishing coherence between states: a view championed by the AU which was established in 1963 (Chirisa et al., 2014). With its origins in establishing a post-colonial order, the AU has gradually evolved its agenda towards deeper economic integration across the continent (Hartzenberg, 2011), most notably expressed within the 1991 Abuja Treaty which aimed to create an African economic community by 2025. The strength of the AU is helped by its universal membership, although it is not unusual for the AU to suspend states’ membership following coups and reinstate them when they return to constitutional rule. This broad universality is enabled by the absence of the same strict membership criteria that the European Union and other organisations possess. The process of economic integration has been championed by UNECA which, through assorted supporting initiatives (notably the Lagos Action Plan) sought to divide the continent into separate sub-regions to address the common problems facing states as they adapt to the needs of the global economy (Okhonmina, 2009). The strategy was to promote sub-regional integration as a basis for the creation of a pan-African economic system. Currently, there are eight sub-RECs in Africa (see Table 4.2). Nearly 90 per cent of African states are a member of more
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than one REC: for example, Congo belongs to five and Kenya and Burundi belong to four. Only six states are a member of one REC only. Table 4.2 Sub-regional integration in Africa Group
Members
East African Community (EAC)
Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda. Benin, Burkina Faso, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo. Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.
Economic Community of West African States (ECOWAS)
Southern African Development Community (SADC)
Common Market for East and Southern Africa (COMESA)
Economic Community of Central African States (ECCAS)
Burundi, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Equatorial Guinea, Gabon, Republic of the Congo, Rwanda, and Sao Tome and Principe.
Arab Maghreb Union (AMU)
Algeria, Libya, Mauritania, Morocco and Tunisia.
Community of Sahel-Saharan States (CEN-SAD)
Benin, Burkina Faso, Central African Republic, Chad, the Comoros, Côte d’Ivoire, Djibouti, Egypt, Eritrea, Gambia, Ghana, Guinea-Bissau, Libya, Mali, Mauritania, Morocco, Niger, Nigeria, Senegal, Sierra Leone, Somalia, Sudan, Togo and Tunisia.
Intergovernmental Authority on Development (IGAD)
Djibouti, Ethiopia, Kenya, Somalia, Sudan and Uganda.
Source: UNECA, 2016a
These sub-regional agreements are underpinned by neo-liberal ideals of integration to aid trade and development and, ultimately, economic
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transformation. The logic is that the wider competition and regulatory reform associated with the process can act as a catalyst for development by lowering transaction costs and enabling intraregional trade, thereby stimulating investment in these economies (AU, 2013). This comes as a partial by-product of scaling up markets and of allowing local firms to become integrated into regional value chains. Integration is attractive to states as it offers a context for national economic development which relies more on mutual support than on external-facing strategies (Collier and Venables, 2008). States have promoted more consolidated structures as highlighted by the tripartite agreements between COMESA, EAC and SADC to encourage free trade between the member states of these groups (Vanheukelom and Bertelsmann-Scott, 2016). This consolidation is also reflected in overlapping forms of these agreements as one of the pillars of the AU’s integration strategy is that integration within subregions is a pre-cursor to a fully integrated Africa. As such, the main thrust for the process of driving integration lies with these sub-regional entities but their actions are co-ordinated by the AU, although the latter has no formal power over the RECs. However, there is scant evidence that the process of regional integration has been successful (De Melo and Tsikata, 2015). Most evidently, intra-REC trade remains relatively low (see Table 4.3). This is a result of structural factors such as low incomes and large intrastate distances rather than an in-built bias against regional trade. Also, many African states are geared towards external trade with developed economies rather than towards intra-African trade flows. As a result, the infrastructural focus has been on extra-African flows rather than intra-African flows. This is reinforced by the half-hearted attitude of many states to the process of intra-African integration – a reflection of the belief by many states that RECs are not necessarily the most appropriate mechanisms for promoting economic development leading to a reluctance by several states to implement REC agreements fully. Moreover, the process of regional integration has done little to arrest the long-term economic problems endured by these states arising from economic issues such as foreign debt service burdens, overvalued currencies, lack of trade finance and a narrow tax base. In addition, the import-substitution strategy followed by many states since independence has restricted trade with the result that the economic context has failed to embed regional integration and its concurrent commitments into state strategies. This is compounded by the non-compliance of inward-looking economic development strategies with the needs of regional integration and the tendency of benefits to fall unevenly across states without mechanisms to compensate states that are at a disadvantage. These factors have been accentuated by the
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dependence of many of these states on former colonial powers, the absence of popular support for regional integration amongst civil society groups and business and in the context not only of weak states but also of limited institutional systems to drive the process forward. Table 4.3 Intra-REC trade Sub-region
Intragroup trade (1995) (as % of total)
Intragroup trade (2015) (as % of total)
Africa AMU COMESA EAC ECCAS ECOWAS IGAD SADC CEN-SAD
7 4 6 17 1 10 12 15 8
12 4 12 19 2 11 14 21 9
Source: UNCTAD, 2017
Even though cross-border trade in Africa is relatively low, it is the longer-term development of an African economic community as a means of generating the cross-border traffic that justifies the cross-border investment in hard and soft infrastructure (Sore, 2010). However, this requires that the strategy is underpinned by political good will, equitable partnerships between states and the necessary institutional frameworks. Thus, a core political consensus between states on both the form of the infrastructure and the management of cross-border flows is essential. In this context, the AfIS operates not only as a means of promoting regional integration per se but also as a broader longer-term catalyst promoting the development of NIS through establishing and upgrading interconnections with sub-regional and RIS (ICA, 2016). Thus, spillovers act as a catalyst for trade by lowering transactions/transport costs and therefore defragmenting Africa (Portugal-Perez and Wilson, 2012; Brenton and Isisk, 2012). However, regional infrastructuring is not solely focused on creating a platform for regional integration but also on enabling small states to gain scale which can, ultimately, help them integrate into the global economy (Sekkat and Varoudakis, 1999). Indeed, debates on RIS seem more heavily focused on the global over the regional dimension (for example, Buys et al., 2006). The small size of many African
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economies often means they have difficulty overcoming the large sunk costs linked to infrastructuring, a factor compounded by the high dependence of Africa’s 16 landlocked states on regional neighbours for access to global markets. In such cases, it can be argued that regional infrastructure has a strong public good component which explains a longstanding set of actions to drive regional infrastructure by both states and international organisations such as the United Nations and a series of AU-led initiatives such as ICA, PIDA and the New Partnership for Africa’s Development’s Infrastructure Project Preparation Facility. The World Bank (2009a) argues that three core principles should guide regional infrastructure in Africa: start small (do not be too ambitious at the outset), think global (link with the global economy rather than the route of import substitution) and compensate the least fortunate to ensure that infrastructures do not reinforce existing inequalities (WEF, 2014). To this end in 2014, UNECA adopted 16 projects specifically designed to aid development through regional infrastructural integration. Following the European Union’s lead, these projects were prioritised to raise their political profile and to attract finance from private-sector sources. UNECA directly linked the ability to attract this finance to wider exploitation of the region’s natural resource base and its ability to raise public-sector resources for RIS. The 16 projects are identified in Table 4.4 and were selected because of their strategic, political and economic importance to AU states. They focus on three themes: + ‘Powering Africa’ aims to improve access to electricity by developing appropriate infrastructure. + ‘Moving Africa Forward’ promotes the development of terrestrial links and some hubs across Africa to offer better access for both actual and de facto landlocked states as well as offering generic improvements to global supply chains. + ‘Connecting Africa’ focuses on intra-African fibre optic backbones rather than on external links. Big differences exist with regards to readiness across these projects. Four of the 16 are at an advanced stage of funding but significant gaps remain across the projects as a whole.
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Table 4.4 UNECA’s 16 infrastructure projects of African integration Project (sector)
Sector
State(s)
REC(S)
Ruzizi III Hydropower Project
Energy
Burundi, Democratic Republic of Congo, Rwanda
COMESA, 600 EAC million
200 million
Dar es Salaam Port Expansion
Transport
Tanzania
SADC, EAC
384 million
350 million
Serenje–Nakonde Road Project
Transport
Zambia
COMESA, 674 SADC, million EAC
620 million
Nigeria–Algeria Gas Project
Energy
Nigeria, Algeria, Niger
CEN-SAD, 23.7 ECOWAS, billion Arab Maghreb Union (AMU)
10–13.7 billion
Modernisation of Dakar–Bamako Rail Line
Transport
Senegal, Mali
ECOWAS, 3 billion CEN-SAD
n/a
Sambangalou Hydropower Project
Energy
Gambia, Guinea Conakry, Guinea Bissau, Senegal
ECOWAS, 1108 CEN-SAD million
324–524 million
Abidjan–Lagos Coastal Corridor
Transport
Nigeria, Benin, Togo, Ghana, Cote d’Ivoire
ECOWAS, 67.6 CEN-SAD million
35 million
Lusaka–Lilongwe, ICT Terrestrial Fibre Optic
Information Zambia, Malawi
SADC, COMESA
1.5 million
Zambia Tanzania Kenya Transmission Line
Energy
n/a EAC, COMESA, SADC
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Project (sector)
Sector
State(s)
REC(S)
Cost (US$)
Funding gap (US$)
North Africa Transmission Corridor
Energy
Egypt, Libya, Tunisia, Algeria, Morocco
AMU
376 million
n/a
Abidjan Ouagadougou Rail Road Projects
Transport
Cote d’Ivoire, Burkina Faso
ECOWAS, 600 CEN-SAD million
600 million
Douala Bangui Ndjamena Corridor, Rail Road Project
Transport
Cameroon, Central African Republic, Chad
ECCAS, 356 CEN-SAD million
246 million
Kampala Jinja Road Upgrading
Transport
Uganda
EAC, 74 COMESA, million IGAD
n/a
Juba Torit Kapoeta Nadapal Eldoret Road Project
Transport
South Sudan
IGAD, EAC
420 million
Batoka Gorge Hydropower Project
Energy
Zimbabwe, Zambia
SADC, 6 billion COMESA, ECCAS
n/a
Brazzaville Kinshasa Road Rail Bridge Project and Kinshasa–Illebo Railways
Transport
Republic of Congo, Democratic Republic of Congo
1.65 ECCAS, COMESA, billion SADC
1.65 billion
420 million
Source: UNECA, 2016b
Alongside the pan-continental programmes identified above are the sub-regional programmes for infrastructural integration insisted on by the RECs. These programmes can run both parallel to and feed into the wider continental initiatives and are, arguably, where trans-national integration of infrastructure systems has been most effective. The overlapping nature of the RECs means that regional infrastructure is often not neatly isolated within a particular REC (see Table 4.4). More often, the overlapping nature of infrastructure can also mean that infrastructures are duplicated. This accentuates an already difficult financing position for these infrastructures by using resources inefficiently. The most ambitious of the
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RECs is the SADC, which has proposed over $100bn spending on infrastructure (Vanheukelom and Bertelsmann-Scott, 2016). The EAC has adopted a corridor approach which utilises a range of corridors to connect this region and its core gateways into the rest of Africa (Tyson, 2015); these include the central corridor (Tanzania to the Congo); the northern corridor (Kenya to the Democratic Republic of Congo/Sudan); the north–south corridor (Egypt to South Africa); the Tanzania-Zambia Railway Authority (TAZARA) corridor and corridors in the Horn of Africa (Addis Ababa–Djibouti, Kenya–Ethiopia, Kenya–South Sudan and Uganda–South Sudan) (Gadzeni, 2013). This represents a heavily proactive strategy by the EAC to position itself as a core regional logistics hub and the states have invested, with the help of Chinese finance, in container terminals, notably in Mombasa and Dar es Salaam, as well as in improving the ease of access to and from these hubs. The north–south corridor is an agreement between multiple RECs (EAC, SADC and COMESA) to offer a coherent programme for upgrading this route via multiple initiatives (across both hard and soft infrastructure) that are mutually reinforcing and effectively sequenced (Woolfrey, 2016).
TRANSPORT INFRASTRUCTURE AND THE AFRICAN INFRASTRUCTURE SYSTEM The transport infrastructure challenge for Africa is multifaceted. Given the number of landlocked states, this challenge is not simply about providing infrastructure within the territorial state but also about allowing all states access to global logistical systems (Ondiege et al., 2013). Transport costs across the continent are among the highest in the world (AfDB, 2010b): in 2015, ICA estimated that trade costs for African states were six times higher than for east Asian states with a container taking ten times longer to import than for Singapore. Another estimate suggests that African transport costs can be between 50 and 175 per cent higher than the global average (ICA, 2016) and can consume as much as 20 per cent of a state’s export earnings and lower productivity by up to 40 per cent. This is even more of a problem for landlocked states where the cost of trade is 50 times higher and the volume of trade is 60 per cent lower than for Africa’s coastal countries. This forces businesses to keep higher inventories, thereby limiting the possibility of efficiency savings from ‘just-in-time’ production methods (Collier, 2000). The focus on regional connectivity is regarded by states as more effective than purely national programmes and this has been at the core of the regional Aid for Trade agenda (OECD, 2004).
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The focus of this section is on the creation of trans-national corridors and cross-border infrastructure: the latter is largely set within the context of RECs but there is inevitably overlap between the two. The focus on corridors reflects their status as core strategic objectives: PIDA (AU, 2012a) argues that well-developed intermodal corridors would increase traffic by 6–8 times for maritime states and up to 14 times for some landlocked states, with port traffic potentially rising as much as 750 per cent up to 2040. As a result, potential exists for at least $172 billion of savings in transport costs and could be much larger should these trade corridors fully mature. On this basis, this section examines strategies for the creation of regional road and rail corridors in Africa. Trans-African highway Arguably Africa’s greatest challenge is its road network which suffers in terms of both quality and quantity but which dominates the AfIS as it accounts for 80–90 per cent of all freight and passenger movements (UNECA, 2014). By 2011, the ‘official’ road network was 1,052,000 km alongside an unclassified network of 492,000 km and – when combined with urban road networks – gives a total network of 1,735,000 km (AU, 2012a). However, over half of this network is unpaved with the density of the road network varying widely from as little as 1 km of road per 100 km2 in Niger and the Sudan to 53 km of road per km2 in Rwanda (World Bank, 2015). In 2015, the average road density for Africa was just below 15 km2 per 100 km2: for south Asia the figure is over 102 km2. According to the World Bank (2015), less than 40 per cent of the rural African population live within 2 km of a paved road. This problem is compounded by population densities across the continent as well as by low maintenance spend and limited or non-existent reform of transport services which keep freight charges high and therefore deter traffic flow (AfDB, 2010a). The trans-African highway (TAH) was proposed by the AU in the 1970s to begin to knit together national road networks, largely through connecting Africa’s capital cities, and also to act as a catalyst for economic cohesion by facilitating both trade and economic development through regional integration (AfDB and UNECA, 2003). The TAH is planned as a series of all-weather roads that provide not only direct access between the continent’s capitals but also support the broader social, political and economic aims of regional integration (AfDB and UNECA, 2003). The routes of the TAH were a compromise between its competing objectives: notably, between the most direct routes and the need to include the most important population and production centres.
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The TAH consists of nine main corridors (see Table 4.5). Indeed, in 2010, the main interstate corridors carried over $200 billion of goods over a network that is just 10,000 km long. However, where the TAH does exist it is often in a poor state of repair, which reflects Africa’s problem that the financial burden of maintenance forms a high percentage of gross domestic product for many states, a problem that is made worse by low levels of traffic on roads outside main urban areas and, in the case of the TAH, by low levels of formal cross-border traffic. Across Africa, however, informal cross-border trade remains high: the Organisation for Economic Co-operation and Development (2009) estimates that it can be up to 90 per cent of the value of cross-border trade. Table 4.5 The trans-African highway composite routes Highway Highway Highway Highway Highway Highway Highway Highway Highway Highway
Route 1 2 3 4 5 6 7 8 9
Length km
Cairo–Dakar Algiers–Lagos Tripoli–Windhoek Cairo–Gaborone Dakar–N’djamena N’djamena–Djibouti Dakar–Lagos Lagos–Mombasa Beira–Lobito Total length 54,120 km Overlapping 1670 km
8640 4500 9610 8860 4500 4220 4010 6260 3520
Source: AU, 2012a, 2012b
TAH routes traverse both north to south and east to west but most of the missing links are in central Africa. Extending the TAH to all Sub-Saharan African cities with populations over half a million would require an extra 50,000 km of road (AU, 2012a). However, the costs of developing this network are more expensive than simply developing a series of corridors which provide access to maritime infrastructure. Moreover, monies devoted to the TAH have been used more for maintenance than for upgrades and for filling in the missing links. Early estimates in 2006 put the cost for the TAH at $20 billion with an annual maintenance cost of $1 billion (Buys et al., 2006). Not surprisingly, states have had difficulty financing this project and, by 2010, over half of the TAH that did exist
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was in poor condition. Indeed, the AfDB’s analysis (2013) of the main border links revealed a third were unpaved with a further 20 per cent paved but in poor condition. Moreover, the state of these links varied markedly between regions: the EAC had the most integrated system with only 10 per cent of sections having missing links, whereas the ECCAS was the least integrated with less than 50 per cent of links in existence (AfDB, 2013). Table 4.6 demonstrates the state of development of the TAH across the main RECs. Table 4.6 Road and rail transport in selected RECs REC
Trans-African Highway Total links (km)
Missing links (km)
Trans-African rail network
COMESA 15723
2695
Missing Links (% of total) 17
Total length (km)
EAC ECCAS
3841 10650
523 4953
14 47
7588 7605
ECOWAS 10578
2970
28
10190
IGAD
8716
2423
28
9000
SADC 11454 AMU 5923 CEN-SAD n/a
2136 1110 n/a
19 21 n/a
45321 9625 n/a
32558
Type of gauge used (mm) 1067; 1000 1000 1435; 1067; 1000 1067; 1000 1067 1435 n/a
Maritime Major maritime ports 9
Landlocked states served 10
2 2
4 4
4
4
7
2
8 11 n/a
6 n/a n/a
Source: UNECA, 2016a
Much of the work towards the creation of the TAH is done within the context of RECs which have experienced mixed success in the development of cross-border transport infrastructure (see Table 4.6), with each REC developing their own segment of the TAH almost in isolation. The EAC and the SADC have progressed the most with the completion of their respective segments of the TAH but in west and central Africa REC implementation has been slow with the process hindered by uneven implementation of IT systems in cross-border links. The AMU is working towards creating a trans-Maghreb highway but these links are also incomplete. RECs play an important role at the sub-regional level,
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offering forums to enable the interconnection of national road systems. They are proving effective to some degree as they have good contacts with state administrations and are a useful source of technical advice on road transportation. There is an argument that the success of the RECs in developing links between their respective capitals has left key segments of the TAH largely irrelevant. Despite the push by the EAC and other RECs towards the creation of the TAH, and of complementary subregional systems, many states have the attitude that the responsibility for the domestic road network belongs to them alone. Thus, although they are prepared to accept suggestions for reform; the responsibility for the timing, implementation and financing remains with the state (Gutman et al., 2015). By 2015, over a fifth of the TAH was still to be built, with the central African section 65 per cent incomplete. Indeed, only one of the nine roads identified in Table 4.5 (the 4400 km stretching across the Sahel, connecting Dakar, Senegal to Ndjamena, Chad) has been fully completed. The remainder have missing links. In some cases, due to the absence of maintenance, the standard of roads in the TAH is actually declining. This is not because of the paucity of funding for states and difficult terrain and climate conditions, but because of internal conflict which often impacts on infrastructure. Trans-African rail systems Unlike the TAH, there is little coherent strategy for a single, integrated African rail system (Bullock, 2009) and this has been in long-term decline since colonial days. Today, it largely operates as a secondary system to road freight transmission. Despite this long-term shift, rail still depends on freight for over 70 per cent of its traffic (AfDB, 2015), most of which is coast-bound, involving high-volume, low-value commodities such as logs, crops and minerals. The trade in commodities, as a legacy of colonialism, has shaped the rail system as it requires the connection of sites of extraction to major ports: cross-border links are not an explicit objective of the system. Overall, Africa is underdeveloped in rail transportation, accounting for only 2 per cent of global rail traffic and with both passenger and freight traffic falling (International Union of Railways, 2011). Thus, from being an important, albeit not dominant, mode of transport in the 1970s, the performance of the African rail system has since been in decline: for example, average rail speed throughout the African network has remained broadly static at between 20–40 km per hour from 1905 to 50 km per hour today (AfDB, 2015). It is only South Africa that possesses anything like a developed rail infrastructure system,
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as highlighted by its Spoornet set of lines that are designed to enable the flow of minerals around its territory (Vanheukelom and BertelsmannScott, 2016). In general, African rail systems within and between states have tended to develop along corridors and to be isolated from broader national and regional transportation systems. This has created a cycle of underdevelopment as rail has evolved to serve narrow needs and can therefore struggle to generate traffic. The African rail network is an estimated 89,380 km long, with a density of 2.96 km per 1000 km2: this compares with 400 km per 1000 km2 in Europe (AfDB, 2015). Up to 14 African states do not have a rail system and throughout Sub-Saharan Africa, with the exception of part of the South African system (see below), these national systems operate independently of each other. This is, to an extent, inevitable given the existence of nine different rail gauges across Africa (AfDB, 2010a), a reflection of the break-up of trans-national systems into separate national systems in post-colonial Africa, thereby reducing their reach and economies of scale. Moreover, there is increased evidence that national networks are falling into a state of disrepair: for example, it is estimated that as much as three quarters of the rail system in Uganda and over 70 per cent in Angola are out of operation (AfDB, 2015). In addition, the poor state of bridges and other enabling infrastructure frequently renders other parts of the system inoperable. The poor state of national rail network development can be explained, in part, by the lack of revenue in the face of low traffic density and the struggle to fund operations and maintenance adequately (AfDB, 2013). Moreover, the road sector is often prioritised by states and is offered greater support for maintenance and upgrading. The limited support the rail systems do get tends to go to limited maintenance and rolling stock and not to the development of connectivity and/or new lines (Simuyemba, 2000). However, it does not always follow that low infrastructural development of the rail system means that there are large gains to be obtained from its development on a regional basis (AU, 2006). It could be that the main benefits from rail infrastructure are local and benefits would not be sufficient to justify the cost of improving connectivity, especially in areas of low population density (AU, 2012b). For example, the World Bank (2010) estimated the cost of a single-track, non-electrified railway on flat terrain to be between $1.5 million and $5 million per km. Thus, the expansion and creation of a pan-African rail system of 26,000 km would cost around $39 billion. Lowe (2014) estimates that there is a need to spend $200 million annually on Africa’s rail system simply to maintain existing services, money that would come almost solely from impoverished national governments. This patch-and-mend strategy is evidently
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more attractive to states than the large-scale investment required to upgrade the system fully. There is no real justification for a truly extensive trans-African system given that the demand for rail tends to be limited to specific segments/areas, notably densely populated metropolitan areas, mining basins, economic corridors and from ports to inland markets. As a consequence, African rail infrastructures are targeted where the impact will be greatest, namely the industrialised clusters of north Africa; the mining basins of west and central western Africa and the industrialised and mining areas of southern Africa. This pattern reflects a continuation of the trend to build structures to support global rather than regional connectivity (AfDB, 2015). Not surprisingly, cross-border rail links between African states are poor, especially in central and west Africa where there is a generic shortage of rolling stock (AU, 2006). This fragmentation is compounded by diverse operating rules and technical standards. Nonetheless, plans for a pan-African system were proposed in 1976 by the African Railways Union: the initial proposal included 18 projects that covered 26,000 km of new lines (AU, 2012b). Although the original plan was approved by the AU, it was simplified to ten in 2001 and later to three in 2003 (AfDB, 2015). The three main corridors are: + Libya–Niger–Chad–Central African Republic–Republic of Congo– Democratic Republic of Congo–Angola–Namibia (6500 km); + Senegal–Mali–Chad–Djibouti (7800 km); + Kenya–Tanzania–Uganda–Rwanda–Burundi–Democratic Republic of Congo, with possible extensions to Ethiopia and Sudan (5600 km). In practice, these and other proposals for trans-continental lines (such as those proposed between east and central Africa) have yet to move beyond the proposal stage. However, there has been an upsurge in investment in Africa’s rail infrastructure resulting from Chinese finance and where the extraction of raw materials has strengthened the economic case for such links. Typical of these links is the Tanzanian–Zambian Rail (the ‘Great Uhuru Railway’) which is being upgraded by China and is designed to operate coast to coast from Tanzania, Zambia and the Congo and to link up with investments in Angola.2 2 According to UNCTAD (2016) the LSCI is generated from five components: the number of ships, the total container-carrying capacity of those ships, the maximum vessel size, the number of services and the number of companies that deploy container ships on services from and to a country’s ports. For each of
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There are, in practice, few cross-border rail links in Africa: where they do exist, they tend to be based on bilateral rather than on multilateral agreements as typified by the Great Uhuru Railway which is run by TAZARA, jointly owned by the governments of Tanzania and Zambia. Links also exist in north Africa where the trans-Maghreb rail line is being upgraded to high speed. However, widespread upgrades of this line have been hindered by the political unrest stimulated by the Arab Spring (AfDB, 2015). The most evident example of rail connectivity in Africa is within the SADC but this is still overwhelmingly based within South Africa. However, links between the SADC and the EAC, another relatively proactive REC in rail connectivity, is made difficult by differences in gauges between states and sub-regions which requires freight travelling between these systems to be shifted to different rolling stocks. In 2006, the AU Assembly sought to relaunch the trans-African railway (TAR) through the creation of a hub-and-spoke rail network of 20,000 km. This high-speed rail system is a centrepiece of the AU’s modernisation Agenda 2063 programme (AU, 2013). Initial efforts were to focus on spanning out from north Africa across the Sahara towards Namibia. The second leg was to link west Africa to central Sahara and the third to link east and central Africa (International Union of Railways, 2011). However, a single rail system for Africa remains a pipedream. The only international system is, as mentioned, within the SADC, but there is a view that given the low levels of interindustry trade between these regions (they trade in the same commodities and, therefore, do little trade with each other), these lines would be underutilised if they were developed (Lowe, 2014). Accurate figures on the cost of creating an extensive TAR are largely elusive: in any case, there seems little need for such a strategy given current traffic trends other than deeper political integration. However, in 2016 China and the AU agreed to develop a pan-African system and this may add impetus to the TAR (see below). The soft infrastructural component Trade facilitation between African states remains relatively underdeveloped, meaning that the direct and indirect costs of both intra and these, a value is derived based on ‘the maximum value of that component in 2004, and for each country, the average of the five components is calculated. This average is then divided by the maximum average for 2004 and multiplied by 100. In this way, the index generates the value 100 for the country with the highest average index of the five components in 2004’ (www.unctad.org).
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extra-African trade are disadvantageous to African integration (UNECA, 2004a). It has long been assumed that the time-consuming aspects of border crossing (often involving exporters facing a multitude of checks by police and customs officials) combined with a lack of uniformity/ harmonisation in customs processes and documents have directly hindered Africa’s trade performance (Portugal-Perez and Wilson, 2009; Lisinge, 2004). Jouanjean et al. (2015) estimate that the trade costs encountered by African states can be three times higher than intraEuropean Union trade and up to eight times higher than intra-north American trade. The Organisation for Economic Co-operation and Development (2004) suggests there is a strong correlation between trade facilitation and actual trade flows but as inter-African trade is relatively low, it is difficult to discern what is cause or effect. Nonetheless, a review of studies undertaken by UNECA in 2014 (UNECA, 2014) suggests that for many African states trade facilitation would have positive economic effects, but whether this would facilitate more transit to destinations beyond Africa or if the final customers would be located within the continent is uncertain (Cadot et al., 2015). The World Bank’s Logistics Performance Index (World Bank, 2016) confirms how poorly African states perform within the global rankings system given that the lowest quartile was dominated by African states. This poor relative performance indicates that local soft infrastructure systems have not adjusted to changing global trends and technologies, notably in areas such as automation for customs processes. This poor performance in soft infrastructure is also reflected in the WEF’s Enabling Trade Index in which African states occupy 14 of the last 20 positions (WEF and GATF, 2016). The best-performing state was Mauritius with a ranking of 39 and, of the 190 states surveyed, the average placing of African states was 130. Indeed, only 33 of Africa’s 53 states had sufficient data to be included. The worst performers were central and west African states, of which only two appeared outside the bottom ten (WEF and GATF, 2016). Nonetheless, the WEF argues that, despite the poor level of soft infrastructure, Sub-Saharan Africa is making progress in the trade-enablement process, notably in the landlocked states of Rwanda and Botswana which – along with Kenya – have invested heavily to improve border processes and reduce border transmission costs. Indeed, the WEF (2016a) argues that Africa is the region that has shown the biggest improvement in soft infrastructure, albeit from a low base. For Africa, the problem is less about soft infrastructure and more about a set of NIS that have not been built with high degrees of interaction with each other in mind, and whose governments seemingly have little direct interest in stimulating such integration (Cadot et al., 2015).
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Part of the problem in improving African soft infrastructure is that there are simply too many vested interests that benefit from keeping logistics prices high (Shepherd, 2015). This problem is especially acute in west and central Africa where trucking cartels persist. The absence of standards also causes problems: for example, in relation to axle loads, overloading can damage both roads and vehicles and add extra costs to the logistics process. This is especially problematic as road tolerances vary markedly by state (Shepherd, 2015). The WEF (2013) identified five main soft infrastructure issues limiting the commercial-led development of the AfIS: + Finance: in addition to the limited quantity of finance available, there are also issues regarding risk sharing and the allocation of costs and benefits and implementation. For example, there can be problems assessing future revenues and costs across longer-term cross-country projects. + Technical: this concerns problems rendering systems interoperable due to divergent infrastructure standards across states, particularly regarding rail gauges. + Regulatory: there is a need to not only create appropriate supporting structures but also to ensure that such structures are managed consistently across multistate systems. + Governance: differing priorities between states regarding political, technical and financial support can create divergence, not only between states but also within states as political systems shift. + Political risk: the support for infrastructure can vary across a political cycle. Much of the work designed to enable trade facilitation has been at the level of the REC, with all sub-regional groupings pushing towards trade facilitation within their respective regions (Shepherd, 2015). This has been evident in establishing common standards for vehicles, for example. However, differences in standards remain between RECs (UNECA, 2013). Indeed, in order to support corridors, many RECs have established secretariats to harmonise soft infrastructure along them to improve logistical flows. For example, the EAC has supported the creation of ‘one-stop’ border posts under the East African Trade and Transport Facilitation Project initiative. The first one-stop border was opened in 2007 and by 2015 border crossing times had fallen by 50 per cent (World Bank, 2016). However, such initiatives will tend to fall short where there is no commitment by states to upgrade infrastructure in the light of any agreements to reform soft infrastructure.
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MARITIME INFRASTRUCTURE AND LANDLOCKED STATES The focus on maritime infrastructure is linked to the regional system and its role as a facilitator of regional integration (World Bank, 2009b). In Africa this is driven first by the dominance of maritime infrastructure in enabling global connectivity by African states and, second, by the preponderance of landlocked states across the African continent (UNCTAD, 2016). Thus, the key ports take on regional significance within multiple modal RIS: maritime transport accounts for 92–97 per cent of Africa’s international trade by volume, the vast majority of which passes through its major ports of which Africa had over 100 in 2015 (WSC, 2016). However, also in 2015, only 52 had the facilities to handle containers and various forms of cargo on any meaningful scale (WSC, 2016). Indeed, in 2012, these ‘larger’ ports handled only 6 per cent of worldwide water-borne cargo traffic and approximately 3 per cent of worldwide container traffic (AU, 2012b). This lack of volume and scale in maritime infrastructure results from the small and medium size of many Sub-Saharan ports: many of the major African ports are located in the Maghreb, such as Tangiers in Morocco and Port Said in Egypt, both of which lie on major transit shipping routes (WSC, 2016). Sub-Saharan ports also suffer from poor relative connectivity. According to the World Bank’s Liner Shipping Connectivity Index (LSCI), Egypt and Morocco have Africa’s highest rates of connectivity at 64.7 to 62.5. South Africa has a score of 37.1 but most African ports have connectivity scores in single figures: Eritrea, for example, has a connectivity score of 3.5. Moreover, even larger African states such as Nigeria and Kenya have relatively low LSCI scores of 21 and 13, respectively. These low scores reflect peripherality, an absence of operational efficiency and an absence of capacity. The low connectivity matters: ports in Sub-Saharan Africa that anchor the main transport corridors radiate trade flows to and from the interior and the 16 landlocked countries whereas the north African ports tend to serve specific countries. In east Africa, Mombasa and Dar Es Salaam are evident trans-shipment ports, although both are subject to capacity constraints. However, Djibouti is an emerging hub for east African traffic. In South Africa, Durban is the main trans-shipment port but it is struggling to cope with rising container traffic (Styan, 2013). In west Africa, Abidjan has been the most developed containerised port but many of the main carriers are tending to service west Africa from European ports.
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Despite the centrality of ports to Africa’s development strategy, they remain underdeveloped both in terms of handling capacity and in allowing the speedy throughput of traffic (AU, 2012b). Most African ports are small and few are able to handle the mega-ships that dominate international maritime flows. This is compounded by poor geography and siltation which further hinders capacity, as do trade-facilitation issues (see above). The capacity problems are also challenged by inadequate hinterland infrastructure in terms of road, rail and inland waterway systems. This absence of connecting infrastructure, when compounded by the absence of capacity at the port itself (through lack of storage facilities, for example), means that the main African ports remain some 80 per cent underutilised (AfDB, 2013; Foster and Briceño-Garmendia, 2010). Africa’s maritime infrastructure problem is also evident through the uneven development of an intermodal containerisation strategy across the continent: South Africa is the only Sub-Saharan African state showing any meaningful signs of such a development. Whilst the deregulation of African ports has encouraged them to become more fully integrated into global logistical systems, these ports nonetheless remain low-volume, high-cost points of access (Engel and Jouanjean, 2015). This reinforces the position of many of these ports as mere feeders into the global system (AfDB, 2010a). Although a number of African-based hubs are emerging, these are mainly in north Africa (such as Tangiers) and tend to focus on non-African traffic. Moreover, several hubs serving Africa are located outside Africa such as Algeciras in Spain and Salalah in Oman which provide hubs for west and east Africa, respectively. In partial response to these failures, the AU launched an integrated maritime strategy through to 2050 (AU, 2012b). The policy is wide ranging, in terms of port infrastructure and aims to upgrade and improve connectivity. At the core of programme is a common economic maritime zone of Africa (CEMZA), the aim of which is to improve intra-African maritime trade, and is largely designed to upgrade soft infrastructure systems across Africa’s ports to allow goods to flow more easily into and out of them. CEMZA is seen as a necessary measure to support the pan-African common market. The AU’s integrated maritime strategy seeks to prioritise inland waterways as a means of developing a hinterland transportation system that is energy-efficient and environmentally friendly. However, these inland waterways remain an Achilles heel of the system and are widely acknowledged as underutilised by landlocked states (see below). The main waterways are based around five rivers (the Nile, Congo, Niger, Senegal and Zambezi) and three lakes (Victoria, Tanganyika and Malawi). Overall 29 states possess navigable waterways
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but their effective utilisation has been hindered by political and social upheaval, most notably in relation to the Congo. The importance of such strategies reflects the dependence of Africa’s landlocked states on the maritime system to engage in international trade and their ability to interconnect with other modes (Collier 2006, 2007). By definition, the main issue for these landlocked states is the absence of access to maritime infrastructure with the result that these states suffer from inflated costs that impede their ability to position themselves effectively in the global economy. This absence from the global trading infrastructure is either a direct cause of or accentuates the absence of development (Limao and Venables, 2001). Evidence from UNECA suggests that transit costs can be as much as 77 per cent of the value of exports for these states. For example, the Kenyan port of Mombasa accounts for 90 per cent of Uganda’s exports and 78 per cent of its imports (Mathieson, 2016). Moreover, these landlocked states are among the least developed. The link between the absence of effective access to the global system as a cause of underdevelopment is supported by a simple comparison with landlocked European states which have considerably better access to such facilities (Arvis et al., 2010). African landlocked states depend on the good will of neighbours to overcome this impediment but, with many of the transit states also being developing states, there is often no evident direct advantage or disadvantage to themselves from granting or limiting access for landlocked states (Mbuli, 2008). In the case of African landlocked states, lack of access to maritime infrastructure is compounded by the peripherality to global trade routes of many of those states on whom they depend for access to international trade systems. Table 4.7 underlines the relatively poor development of logistical and infrastructure systems for these landlocked states. According to Naudé (2009), these states consequently experience a ‘proximity syndrome’ generated by long distances to markets and suboptimal agglomeration patterns. Furthermore, Behar and Venables (2010) estimate that being landlocked increases trade costs by 50 per cent and reduces trade volumes by 30–60 per cent. Gallup et al. (1999) argue that such disadvantages are reinforced by two factors: namely, that coastal countries may have military or economic incentives to impose costs on landlocked countries; and the greater difficulty of arranging infrastructure development across national borders compared to similar investments within a country. Transit states have little incentive to develop infrastructure generated by neighbouring states, especially where these states are in competition or where transit fees are difficult to agree (AfDB, 2013). Their strategies will focus on developing infrastructures that meet their
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Table 4.7 The infrastructure ranking of Africa’s landlocked states State
LPI ranking (out of 160)
Infrastructure ranking (World Bank) (out of 160)
Infrastructure ranking (WEF) (out of 138)
Botswana Burkina Faso Burundi, Central African Republic Chad Ethiopia Lesotho Malawi Mali Niger
57 81 107 134 (2014)
54 71 147 93 (2014)
90 140 (2014) 134
145 126 154 73 (2014) 109 100
136 133 149 48 (2014) 109 121
137 115 119 135 112
62 n/a 58 114 151
76 n/a 67 113 123
97 n/a 126 125 123
Rwanda Swaziland Uganda Zambia Zimbabwe
Source: World Bank, 2016 and WEF, 2016a
own needs. This reflects the conclusion of Collier (2007), who argues that these states are in a trap whereby their isolation from major points of entry to the international logistical system is compounded by bad neighbours. Indeed, Collier (2007) estimates that for every 1 per cent its neighbours grow, a landlocked state can expect to grow by 0.7 per cent. Yang and Gupta (2005) argue that landlocked countries could gain more from regional integration if the remaining administrative and physical non-tariff barriers to trade imposed by coastal countries were eliminated; these barriers result in excessively high costs of transit and can be considered double taxation at the point of entry. However, it is also important to differentiate between physical and effectively landlocked states wherein the latter state may have a maritime border but the majority of the population lives so far from the coast that the state is effectively landlocked. At the heart of alleviating the problems facing landlocked states is the creation of transit corridors intended to enable intra- and extra-African
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trade. These interstate corridors are conduits for over $200 billion in goods transported annually along more than 10,000 km of routes (mainly road) that comprise the main geographic corridors in Sub-Saharan Africa. By placing a seaport at either the starting or terminal point, the corridors focus on improving both infrastructure and the quality of the service offered over them. The main corridors identified by UNECA are: + The northern corridor: this links Burundi, the Democratic Republic of the Congo, Rwanda and Uganda to the Kenyan seaport of Mombasa. It also serves northern Tanzania, southern Sudan and Ethiopia. The corridors are financed by the states, either directly or through a tonnage levy. + The central corridor: this multimodal corridor is based on the port of Dar es Salaam; the 1254 km Dar es Salaam–Kigoma railway; water transport on Lake Tanganyika to Bujumbura and the Democratic Republic of the Congo; and the road network linking Dar es Salaam through Dodoma, Singida, Nzega and Lusahunga to Rwanda and Burundi. + The Dar es Salaam corridor: this multimodal system connects the aforementioned port in Tanzania to Lusaka in Zambia and Lilongwe in Malawi via the TAZARA railway line and the TANZAM highway. + The Walvis Bay corridor: this links Botswana, Zambia and Zimbabwe to the port of Walvis Bay in Namibia. The corridor comprises three sub-corridors: the trans-Kalahari corridor; the transCaprivi corridor; and the trans-Cunene corridor. + The Maputo corridor: this links the port of Maputo in Mozambique to South Africa. + The Abidjan–Lagos corridor: this links five states – Cote d’Ivoire, Ghana, Togo, Benin and Nigeria – through the port cities of Abidjan, Accra, Lomé, Cotonou and Lagos. Corridors are normally developed at the level of the REC and enabled through public-private partnerships. However, there are increased instances of inter-REC activity in the development of corridors. Particularly noteworthy is the north–south corridor which involves three RECs (EAC, SADC and COMESA) and which serves as a pillar for the creation of a 26-state free trade area. The corridor crosses eight states and includes two existing corridors based around the ports of Durban and Dar Es Salaam. In practice, relatively few road corridors allow landlocked states sustained access to the main gateways to the global trading system (De Beer, 2001). Indeed, in total, the salient corridors for landlocked states are less than 10,000 km in length (AU, 2012b). As a result, these
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schemes do not match expectations as infrastructure provision lags behind the needs of states and of these corridors (UNECA, 2014). Moreover, the corridors tend to be radial in nature meaning there is little or no connection between them (especially in rail). In central Africa, landlocked states are dominated by multimodal corridors that give access to the port of Douala (Cameroon) for Chad and the Central African Republic. The options are more diverse in west Africa where there are gateways in Benin, Côte d’Ivoire, Ghana, Guinea, Senegal and Togo serving the landlocked countries of Burkina Faso, Mali and Niger. However, these routes remain vulnerable to infrastructural risk as demonstrated by the disruption to international channels from Abidjan due to the crisis in the Côte d’Ivoire which led states to seek alternative routes. In east Africa, Mombasa (Kenya) operates as the main gateway serving the EAC and beyond. Problems are less acute for landlocked east African states as they have better port infrastructure, a history of co-operation and options regarding the choice of corridor (BriceñoGarmendia et al., 2008). Landlocked states in other sub-regions also face a range of corridor options. In southern Africa, for example, there are four significant trade routes based around Durban, Dar Es Salaam, Beira and Walvis Bay (Wilson, 2008) and the five landlocked countries in west Africa have 15 transit possibilities. The choice of channel is not simply about proximity: cost, often driven by poor trade facilitation, can be a pivotal factor. For example, many states in southern Africa use Durban as their main outlet (despite often entailing a longer route) because of better trade facilitation.
ENERGY Africa is not short of energy. North and west Africa have vast reserves of gas and oil; South Africa has large coal deposits and central, west and east Africa have vast hydro-power potential (AU, 2009). Moreover, there are large geothermal resources in the Red Sea and the east African Rift Valley (World Bank, 2011). However, these resources are unevenly spread and much of Sub-Saharan Africa depends on traditional biomass for primary energy supply. In some states, biomass accounts for between 70–90 per cent of primary energy supply and 95 per cent of total consumption. However, intra-African trade in energy is limited and most exports are focused on extra-African markets (WEC, 2005). Although Africa has attracted substantial levels of investment in energy since 2000, the IEA (2014) estimates that 75 per cent of this is in oil infrastructure and has mainly been developed for extra-African export
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markets. The combination of uneven distribution of resources and low intra-African energy trade has forced many countries to adopt technically inefficient forms of electricity generation fuelled by expensive imports to serve their small domestic power markets (AU, 2012a). In addition, customers often have to endure high tariffs for unreliable supplies. As a result, many depend on diesel generators: embedded power generated by diesel generators accounts for over a third of installed capacity in Sub-Saharan Africa, but this is both environmentally unfriendly and costly to operate. In addition, the low demand in individual states means that the cost of procuring energy can be high (AfDB, 2016). Transmission in primary energy is not where the major need for the integration of regional energy systems lie, although Africa does need to increase the storage and transmitting capability in primary energy supplies, notably with regards to oil. Its primary integration need lies in electricity system interconnection. The focus of regional energy integration on secondary transmission systems (i.e. electricity) reflects an endemic weakness in Africa’s electricity transmission system where, according to KPMG (2016), only seven of Africa’s 28 Sub-Saharan states have electricity penetration rates of over 50 per cent. The IEA (2014) estimates that 30 African states face severe constraints on their electricity generation and that more than 620 million people in Sub-Saharan Africa do not have access to electricity, almost half the global total of those without access to electricity. Indeed, per capita generation capacity within the region is 39 MW – the lowest of any developing region. Moreover, this figure is increasing as the population grows faster than its generating and transmission capacity and, on current trends, only 40 per cent of the continent will have access to reliable electricity by 2040. The situation is exacerbated given that over 60 per cent of existing capacity needs upgrading and an annual 10 per cent increase in capacity is needed to meet anticipated demand (McKinsey, 2015). For much of the two decades leading to 2010, the increase in capacity was less than 2 per cent per annum. The problem is further accentuated by the location of some of the most cost-effective energy sources at a distance from the major sources of demand. For example, over two thirds of current hydro-power is located in Congo and Ethiopia. KPMG (2016) estimates that Africa will need investment of $835 billion by 2040 to meet its rising demand which is largely fuelled by industry. Indeed, power demand is expected to increase six-fold between 2010 and 2040, an average annual growth of nearly 6 per cent. To keep pace, installed power generation capacity must rise from present levels of 125 gigawatts to almost 700 gigawatts by 2040. Sixty per cent
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of the required investment is in generating capacity: transmission infrastructure comprises most of the rest. Much of the finance for this will have to come from the respective states (Jouanjean et al., 2016). A frequently mooted solution to the problems in both primary and secondary supplies is regional integration. This is regarded as offering major benefits in terms of security of supply, greater efficiency, improved environmental quality and facilitation of renewables development. The lack of regional scale is a particular constraint on the development of Africa’s hydro-power: the size of the domestic markets of countries with large hydro-power potential (Cameroon, DR Congo, Ethiopia, Ghana, Guinea) are not sufficient to justify major project development. However, the core strategy of scaling up national systems into regional systems encounters resistance as many states remain reluctant to rely on neighbours with whom relations are often fractious. Consequently, states often focus on obtaining security of supply from domestic sources (Muntschick, 2013). Despite this, there has been progress in the development of regional energy systems. In the oil and gas sectors, several pipelines have been (or are being) built, namely: + the west African gas pipeline, a 678 km pipeline to supply gas from Nigeria to Benin, Togo and Ghana; + the trans-Saharan gas pipeline, a 4128 km pipeline to export dry natural gas from Nigeria to the European market through Niger and Algeria; + the Tanzania–Zambia oil pipeline, a 1710 km pipeline, connecting the port of Dar es Salaam to the Zambian Indeni oil refinery at Ndola; + the Kenya–Uganda oil pipeline, a 352 km extension into Uganda of the existing Mombasa–Eldoret, Kenya pipeline; + the Mozambique–South Africa gas pipeline, part of the Maputo development corridor, operating since the 1990s; + the Tunisia–Libya gas pipeline, chiefly for the export of gas to Europe. In electricity, African states have sought to create regional power pools to overcome the absence of generating capacity and to improve energy trade between participating states. The logic of these pools is to share costs, generate greater efficiency in grid development and to act as a platform to generate higher levels of investment in African energy infrastructure, especially within Sub-Saharan Africa. The AU (2013) estimates that – should the scaling up of national power systems be fully realised – states
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could save around 20 per cent of power costs. Much of the cost benefits would be realised through the need for lower capital spending at national levels with knock-on effects of lower prices for consumers. This pooling in trade between utilities in bordering states also enables states to secure supply through shared resources and agreed common rules (AfDB, 2013). The creation of regional grids would enable several states (such as the Democratic Republic of the Congo in hydro-electricity) to become major energy exporters (Muntschick, 2013). In addition, more than 20 states possess a national energy system below the minimum efficient scale of a single plant. For such states, the sharing of capacity seems rational. To date, across the continent, there are several regional pools, notably the Southern African Power Pool, the West African Power Pool, the Central African Power Pool and the Eastern Africa Power Pool. However, the pools remain poorly interconnected and fail to operate as truly integrated regional power markets (IEA, 2014). Indeed, KPMG (2016) estimates that less than 8 per cent of power is traded across borders in any sub-region. In the most advanced interstate transmission (the southern pool), trade is only 7.5 per cent of total, of which the vast majority is comprised of one transmission link between South Africa and Mozambique. In the central African and eastern systems, less than 1 per cent of power is traded. This is unsurprising given the chronic lack of capacity across the continent. Indeed, the figure for interstate trade has declined since the south African energy crisis in 2007/2008. In part, the low trade levels are a result of the absence of cross-border infrastructure. However, the sustained dominance of incumbent energy utilities promotes a strong investment focus on national energy systems which can often be out of alignment with regional initiatives, especially when it comes to undertaking necessary sectoral reforms (AfDB, 2013). This has resulted in a continuing focus on domestically generated security of supply in national energy strategies, reflecting doubts about the reliability of supply or the political consequences of import dependence. There is a lack of trust between states as importing states remain suspicious as to whether exporting states will offer secure supplies or use their position as a political tool (Kambanda, 2013). As a result, none of the pools have been successful in stimulating the cross-border flow of electricity in any meaningful sense. In part, this has been driven by the failure of many states to invest in sufficient generating capacity at the national level, resulting in few having surplus energy to trade. This is typified in east Africa where attempts by Ethiopia to develop its extensive hydro-electric resource have been hindered by Egypt and Sudan. Moreover – as typified by the southern pool – generating states always put their own interests first. Thus, in 2017, when South Africa, the energy hegemon for the
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SADC REC, was facing a capacity crunch, cross-border trade was sacrificed first. In addition, a simple assumption that more cross-border energy trade will act as a catalyst for broader regional integration seems misplaced as energy integration needs to be supported by flanking policies to ensure economic diversification and human capital formation so that these economies do not remain commodity-based.
AFRICAN INFORMATION INFRASTRUCTURE As with other elements of the AfIS, the priorities for information infrastructure tend to be national rather than regional. Although there has been substantial progress in African information infrastructure, this has been mainly in voice services (driven by the expansion of mobile services across the continent) with internet services tending to lag behind those of other developing states (ITU, 2016). The disappointing rate of change, especially regarding fixed-line services and infrastructure, is often blamed on the sustained power of incumbents and the consequential slow pace of regulatory reform. By 2012, 30 mainly central African states had limited national networks and there is a clear regional broadband gap between the northern and southern regions and western, central and eastern Africa. This lack of development is demonstrated by the relative position of African states in the WEF’s Network Readiness Index (NRI) (WEF, 2016b), which indicates the state’s ability to leverage ICTs for state competitiveness and wellbeing. African states occupy 18 of the bottom 20 positions of the NRI: the top African performers were island states, notably Mauritius, and the best-performing mainland African state was South Africa which was almost 20 places above Rwanda, the next best performer. In terms of information infrastructure, of the 34 African states included in the WEF’s ranking system (out of 138), the average ranking score was 112 (WEF, 2016b). The International Telecommunications Union’s (ITU) Information Development Indicators (ITU, 2016) confirm this situation: out of 179 states measured, 19 of the bottom 20 states in terms of information infrastructure development were African – Mauritius was, again, the top African performer. Nevertheless, the development of African information infrastructure is increasingly seen as a growth driver as the vast majority of infrastructureled growth in Africa between 1990 and 2005 was driven by the spread of telecommunications services (Foster and Briceño-Garmendia, 2010). This narrative has driven information infrastructure development at the regional level and the systems have been used as a means to facilitate Africa’s transition to the information economy. On a less rhetorical level,
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the spread of these networks has been prioritised as a means of enabling the interstate information flows that are core to enabling trade between states and the much vaunted free trade area. In practice, regional bodies have been most proactive in relation to soft infrastructure by encouraging reform and usage to enable more mature markets to emerge at the national level. This was evident in the 2003 Tunis Declaration on E-Commerce which sought to enable state-based activities (AfDB, 2013). At the level of the REC, there has been a focus on trade facilitation through electronic channels. The shift to mobile telecommunications is also attractive to many states as it seems to negate the need for widespread information infrastructuring. Consequently, the hard infrastructure components of the process tend to be the subject of limited activism. The African Information Society Initiative was launched in 1996 to serve as a framework for the building of an information infrastructure (AU, 2012a). Responsibility fell mainly to the RECs to establish regional strategies for the building of regional information infrastructures. However, this has not closed the gap in the fixed-line communications systems. The ITU (2016) estimated in 2016 that Africa needed around 92,000 km of terrestrial and maritime fibre optic links to bridge regional and international broadband gaps at a cost of $2.6 billion. Arguably, the most significant regional impact in terms of information infrastructure has been the development of Africa’s submarine cable system. This system only started to develop in any meaningful sense after 2000 when the initial Mediterranean cables were laid. Up to 2009, Africa was served by a single submarine cable. This poor interconnectivity was compounded by unreliable satellite services. Indeed, by 2010, 85 per cent of inter-African traffic had to flow via Europe to reach its final destination and of Africa’s 53 states, only 16 coastal states were connected to the global submarine cable system: a further four were connected through transit agreements and 20 coastal states had no access the system (Miller, 2017). Since then, substantial capacity has been added and, by 2016, only one state did not have access to the submarine cable system. Thus, although Africa was largely absent from the submarine cable building boom of the 1990s, the correction of this omission began in the latter part of the first decade of the twenty-first century: between 2009 and 2012, seven submarine cables were established on the west and east coasts of Africa. This change was driven by Africa’s sharp rise in mobile traffic; as well as falling prices, rising international traffic and commodification of capacity in other markets. Table 4.8 shows Africa’s main submarine cables in 2016.
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Table 4.8 African undersea cables Mediterranean
West coast
East coast
Atlas Offshore (320 gbs) SAS 1 (1280 gbs) SEA-ME-WE 4 (1280 gbs) I-ME-WE (3840 gbs) IG 4 (3840 gbs)
SAT3/SAFE (800 gbs) GLO-1 (2500 gbs) ACE (5120 gbs) MainOne (10 tbs) NCSCS (12.8 tbs) WACS(14.5 tbs) EULALink(30 tbs) CSBS (32 tbs) SACs (40 tbs)
SEAS (320gbs) TEAMs (1280 gbs) SEACOM (1280 gbs) Lion 2(1280 gbs) Lion (1300 gbs) EASSy (10 tbs) DARE (30 tbs)
Note: gbs (gigabits per second) and tbs (terabits per second) refer to the speed of network infrastructure. Source: Telegeography, 2017
This expansion of submarine cable access has been supported by the development of more extensive terrestrial networks. The number of Africans living within 25 km of a fibre node rose from 30 per cent of the region’s population in 2010 to 44 per cent in 2014. However, this reflects the spread of networks in urban areas, coinciding with the rapid urbanisation of Africa rather than a more territorially extensive development (ITU, 2016). There is little reason to believe that this urban-based process will spill over into other areas given the low intensity of traffic driven by the low rates of usage of personal computers and smart phones resulting from low income levels, low concentration of advanced mobile telephony and the poor condition of domestic infrastructure. In short, low levels of demand underpin Africa’s longstanding problem regarding the development of terrestrial information infrastructure (WEF, 2016b). In order to overcome this problem, RECs have drawn up proactive strategies to develop regional broadband infrastructure systems. The development of regional terrestrial systems was a major theme in the PIDA programme for ICT (AfDB, 2013), the logic of which was to utilise the catalyst of expanding international capacity to create a set of RIS. The main regional initiatives proposed were: + the central African backbone: this aims to link domestic systems to SAT3, using a cable deployed alongside major oil pipelines between Cameroon, the Central African Republic and Chad;
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+ the east Africa broadband network: this aims to integrate the five national networks of the EAC states and link up with global gateways; + maritime communications for safety on Lake Victoria: this is a dedicated system to promote secure movements across Lake Victoria involving three EAC states; + the South Africa region backbone: this aims to connect all SADC states and to link them into global submarine systems (see Table 4.8); + the west Africa network: this aims to improve the management of the REC by connecting the administrative bodies of the participating states (this is more of a private intranet); + the ECOWAS power pool-based fibre network: this aims to expand broadband access across ECOWAS by utilising the regional power pool’s infrastructure and linking this into national systems.
CHINA AND THE AFRICAN INFRASTRUCTURE SYSTEM Since 2005, and as part of its ‘going out policy’, China has made substantial investment in the AfIS resulting in over 2500 Chinese businesses operating across the continent (AU, 2013). In 2015, China invested over $20 billion in the AfIS, a significant amount but only 5 per cent of the total Chinese overseas investment (Manrique Gil, 2015). This investment is usually supported by infrastructure finance from China’s policy banks, much of which is concentrated in the extractive sectors of Angola, Sudan, Democratic Republic of the Congo and Zimbabwe (Manrique Gil, 2015). China’s strategy is not to build regional infrastructure as a strategic goal in itself but to develop NIS through bilateral agreements which can coincide with the needs of the regional system (AfDB, 2011). Apart from facilities based in the port hubs of Suez and Djibouti, Africa was initially excluded from the ‘One Belt, One Road’ (OBOR) initiative. However, Africa has rather belatedly been included in it as the continent is seen as an outlet for China’s extra-territorial infrastructuring activity (Ayenagbo, 2015). This has focused on three areas. The first is the north east African high speed rail network that connects Ethiopia to Djibouti. The second is the planned east Africa rail system radiating from Mombasa to Rwanda, Uganda, South Sudan and southern Ethiopia. The third is existing and planned transport infrastructure crossing southern Africa from Lobito in Angola to Dar es Salaam in Tanzania (Zafar, 2007). These projects add existing resource-focused
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links retrospectively in the OBOR programme. Africa’s initial exclusion may be historical given that the continent was largely peripheral to the ancient trade routes or it may simply be that Africa is not ready to participate fully because of the inadequacy of its soft infrastructure (ICA, 2015). The recent development of African economic infrastructure developed by China has tended to be by market tender, whereas social infrastructure tends to be aid-driven (Hanauer and Morris, 2014). However, China’s bundling of loans and aid finance makes it difficult to determine the exact motives for any given investment (Schiere and Rugamba, 2011). Over two thirds of Chinese investment in African infrastructure is bundled in this way (Foster et al., 2008). The ‘infrastructure for resource model’ (also known as the ‘Angola mode’), whereby loans for infrastructure are made to local governments with repayment made in the form of resources and a procurement process tied into the use of Chinese input, has been widely deployed by China in Africa. The AU (2013) disputes the idea that the ‘Angola mode’ drives this investment: it argues that (up to 2011) only seven of 141 infrastructure projects were driven by the needs of resource extraction. However, resources are an important driver of this process as China imports about 20 per cent of its oil from Africa (Ayenagbo, 2015). This has grown in strategic importance to China, which is seeking to diversify its sources of oil away from the Middle East (Zweig and Jianhai, 2005) and explains why Chinese investment in Africa was initially targeted at the main oil-exporting states of Nigeria, Sudan, Angola, Egypt, Chad and Niger (AfDB, 2011). Overall China’s infrastructural investment has focused on two types of infrastructure: hydro-electricity and rail. Road projects undertaken by Chinese investment tend to be relatively small in terms of cost. Nonetheless, road investments are important in a number of states (such as Angola). Alden (2005) argues that this emphasis on resources is but one factor that has driven China’s increasing investment in Africa and cites other reasons such as market seeking, diplomacy and development and the creation of new partnerships (AU, 2013). In short, there appears to be a consensus around the view that China’s strategy is not altruistic but self-interested as it seeks to include Africa in its broader development strategy, to seek markets for export and access to resources to sustain its development and growth (Kaplinsky and Morris, 2009). The strategy also reflects a Chinese model of investment in which foreign policy objectives coalesce with its economic growth objectives. To this end, China has used cheap loans as part of its contract-bidding strategy, often winning concessions with a commitment to build advanced NIS and RIS. African states seem to prefer a system in which Chinese support does not come
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with conditions requiring neo-liberal reform as can be the case with the World Bank and other investment in their NIS (Sautman and Hairong, 2007). Although there are undoubted benefits from this relationship, there are downsides from the impact of such investment on Africa’s natural resources and from the controversial behaviour of some Chinese companies regarding social and environmental issues (Kaplinsky and Morris, 2010). Moreover, there is some doubt in China about the ability of African states to pay back the infrastructure loans. The degree of this indebtedness and the extent to which it becomes a problem is a derivative of stages of the commodity cycle (Konings, 2007). A long-term suppression of commodity prices will cause problems, as will a sustained reduction in Chinese demand for these commodities. As a result, in 2015 China offered some debt relief to some states, including longer repayment periods and an element of write-off. To many states, the China’s debt-driven model compares unfavourably to aid-based systems and to foreign direct investment where the investor bears the risk. However, the private sector has not, to date, been a large investor in African infrastructure. Furthermore, accusations of neo-colonialism have been directed at the Chinese, notably in relation to the focus on resource extraction and the objective of building infrastructure, not for local, but for export needs (Anshan, 2007). Criticism has been intensified by a lack of investment in social infrastructure and low rates of utilisation of local labour, resulting in much of the money generated not staying in the local economy.
CONCLUSION It is evident that Africa has a severe infrastructure problem. In part this lack of investment is due to simple poverty, but it also reflects long-term historical trends of colonialism and low levels of intra-African trade. In this context, the development of the AfIS is seen by many states as a legitimate strategy to overcome the impediments originating from the underdeveloped NIS. Regionalism in Africa is a multilevel process with both the AU and the RECs acting and overlapping to scale up NIS. However, progress in this area has been patchy. Although there are pockets of interstate infrastructure across the continent, these tend to be the exception. As such, the AfIS remains very much a rhetorical strategy rather than something that has had a tangible impact on the development of NIS. The concentration on development at the national level has been reinforced by external state and non-state investors who overwhelmingly
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focus on state-based investment based on bilateral agreements rather than dealing with the complexity of multistate systems.
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5. The Americas’ infrastructure system There is no real sense of pan-Americanism in the Americas’ infrastructure system (AmIS). The closest approximation is the pan-American highway, which is not a single infrastructure but a virtual infrastructure of national road systems that is largely incomplete and of varying quality throughout its route. As such, this chapter’s focus is on sub-regional systems but, as will become apparent, the formal contribution of these sub-regional systems to a continent-wide system is minimal to the point of non-existence. Consequently, the focus is on separate sub-regional infrastructure systems in North, Central and South America. Apart from North America, where the emphasis is inevitably on the North American Free Trade Area (NAFTA) states, there is a degree of ambiguity over sub-regional systems given the multiplicity of regional agreements in Central and South America. In each case, the chapter focuses on those regional groupings in Central and South America where the infrastructural component is strongest. In the case of Central America, the chapter examines the efforts by Caribbean states within the framework of the Caribbean Community (CARICOM). As such, for reasons of brevity, infrastructural strategies within the Central American Integration System (though having an infrastructural component) will be unexplored in this chapter. In the case of South America, the focus is on the Union of South American Nations (UNASUR) as opposed to more longstanding, tradefocused agreements (see below). UNASUR is both near universal in its membership of South American states and has an explicit infrastructural component. Initially, the chapter examines regional infrastructuring issues and trends in North America and is followed by a brief examination of the infrastructural component of the CARICOM agreement. The chapter concludes with an examination of infrastructure efforts in South America with a focus on initiatives under the auspices of UNASUR.
NORTH AMERICAN FREE TRADE AREA (NAFTA) NAFTA was signed in 1992 by the US, Mexico and Canada, largely as a measure to liberalise trade between these states. However, the agreement did extend to non-traditional trade issues such as labour standards, 157
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environmental and workplace safety, which were largely included at the behest of the US as a result of its perennial ‘zero-sum fear’ that differing levels of economic development, notably between the US and Mexico, would lead to investment flows from high- to low-cost locations (AFL-CIO, 2015). This fear was also evident in the exemptions of several sectors (notably automobiles, textiles and agriculture) from the initial agreement. It was argued that US–Mexico trade relations created a ‘whipsaw’ effect according to which labour tends to compete rather than collaborate across borders and which led to the accusation that NAFTA facilitates social dumping from mobile capital competing wages and social provisions downwards (Krugman, 1993). The relevance of such debates for the sub-regional infrastructure system is that they have – to some extent – been heavily shaped by such scepticism, resulting in some seeking to use local infrastructure as a means to increase transaction costs in the transmission of trade and investment flows. It is not the purpose of the chapter to assess these arguments but to address them insofar as they influence regional infrastructuring, which can happen as a result of shifting political sentiment (PIIE, 2014; Weisbrot et al., 2014). It is widely accepted by trade economists that NAFTA has been successful, both in promoting trade and in facilitating growth (for example, Villarreal, 2015). In 1995, intragroup trade was about 46 per cent of total trade of these states; by 2015, it had risen to 50 per cent (UNCTAD, 2017). Canadian exports to the US are 75 per cent of the total value of its exports whilst its exports to Mexico just 1.5 per cent (World Bank, 2016a). For Mexico, exports to the US in 2015 formed 81 per cent of its total exports by value and Canada was under 3 per cent. For the US, Canada represents about 19 per cent of its total exports and Mexico about 16 per cent (World Bank, 2016a). These figures demonstrate that – despite its intent – NAFTA is more of a series of bilateral deals as the majority of trade is between Mexico and the US and the US and Canada, implying that NAFTA operates as a US-dependent trade system (Blank et al., 2007). Differences between the states reflect a legacy of divergent economic development. This is also apparent regarding the state of their respective national infrastructure systems (NIS), with the NIS of Canada and the US exhibiting greater maturity than that of Mexico. Whilst Mexico is ranked by the World Economic Forum (WEF) as having the 57th best infrastructure globally, Canada and the US are ranked 15th and 11th, respectively (WEF, 2016). This divergence is also confirmed by the World Bank’s Logistics Performance Index which ranks the US and Canada 8th and 9th, respectively, compared to Mexico’s ranking of 54. In Mexico, the ratio of paved roads to the total network is 36 per cent compared to
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65 per cent in the US (World Bank, 2016b). Moreover, the penetration of the road network is three times higher in the US than in Mexico. In terms of rail, the US has double the penetration of Mexico, which has a rail network which is less extensive than that of France (which is three times smaller) (World Bank, 2015; CIA, 2016). These differences matter. Whilst infrastructure has never been a core theme within NAFTA, it is nonetheless seen by many as missing from it (Weisbrot et al., 2014). To date, much of the adaptive tension to modify NIS to NAFTA has come through domestic strategies and limited co-ordinated actions (PIIE, 2014). However, such adaptations have proved controversial, leading to slow progress in NIS modifications to the contextual pressures generated by NAFTA. This has been caused by a number of factors such as a stronger emphasis on infrastructural border security in post-9/11 US, which works against aggressive promotion of harmonised soft infrastructure to support freer trade, and a debt crisis in Mexico which widened intragroup infrastructure gaps. There is a longstanding position that the respective NIS of and between the NAFTA states were not sufficient to realise fully the anticipated benefits from the agreement (Milner, 1998). NAFTA – as an agreement – offered no commitment by the signatories to infrastructure on a multilateral basis, nor did it create any agency mandated to assess infrastructure maintenance or future requirements in the light of the agreement (Brooks, 2000; Prentice and Ojah, 2001). NAFTA has to adapt to the priorities of national governments and funding and there are clearly vast differences between states on their infrastructuring strategies regarding regional trade. However, a consensus was evident that there needed to be better cross-border NAFTA infrastructure so as not to sacrifice trade and growth benefits for the sake of more secure borders and increasingly stringent NIS gateways1 (Klindworth, 1998). Blank et al. (2007) argue that NAFTA has three basic infrastructure failings: first, the system is outdated; second, there is weak governance to upgrade capacity and third, there are state-level institutional barriers to formal integration. Generally, NAFTA-related infrastructure is of two types. The first has been driven by the agreement through increased traffic flows (i.e. transportation) and the second facilitates flows between NAFTA states but is largely incidental to the formalities of the agreement, as is the case with energy.
1 Whether this consensus still holds with the Trump presidency’s hostility to NAFTA is – at the time of writing – a matter of conjecture.
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North American regional transportation infrastructure Freight flows between the NAFTA states are dominated by the road system, although the relatively low flows between Mexico and Canada occur mainly through maritime channels (Villarreal, 2015). In 2015, 80 per cent of US–Mexico trade was via surface transport (road and rail), with road comprising 68 per cent of that total. For US/Canada trade in 2015, surface transport comprised 83 per cent of the total with road comprising 56 per cent, rail 17 per cent and pipelines 15 per cent (United States Bureau of Transportation, 2015). Rail tends to be stronger in Canada and Mexico due to their increased reliance on exports of bulk commodities. Many (for example Blank et al., 2007) argue that the NIS have become increasingly divorced from their contextual drivers as the development of NAFTA-wide value chains has placed pressures on national systems to adapt (Villarreal, 2015). However, this expected adaptation has been largely absent. This is evidenced by the case of the maquiladoras which involve the creation of a manufacturing system on the Mexican side of the US border that is based largely on servicing North American supply chains (Barton-Aschman and La Empresa, 1998). The maquiladoras interface with the US transport system through a series of land gateways (mainly centred around southern California, El Paso and Laredo) which are connected into corridors of continental freight circulation. This adaptation (especially in transport) has frequently been protracted and has, in other cases, actually diminished. The fact is that the perception and (disputed) long-term goal of an increasingly integrated North American economy based on increased cross-border links is not easily reconciled with nationally focused and designed infrastructure systems (Hufbauer et al., 2014). This has drawn attention to two facets of the national infrastructural components of NAFTA: border/gateway infrastructures and transportation corridors (Klindworth, 1998). Border/gateway infrastructure These infrastructures exist at the point where freight/people move from one territorial jurisdiction to another. They are the means of filtering flows between systems so as to enable states to control and monitor flows between states (DOT, 1994). Generally, the assumption (as is the case with the European Union) is that regional integration – through, for example, the adaption of national soft infrastructure systems to an agreed cross-jurisdictional norm – would begin to erode the salience of these gateways. This is especially important in the case of NAFTA as terrestrial transportation systems are the main channels through which regional
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trade occurs. In terms of NAFTA, the main concern of gateways is between the US and Mexican systems where the issue is less over the discrepancy in the relative development in NIS and more over the political economy of allowing freer movement both in freight and people (GAO, 1991). Convention dictates that border infrastructure across contiguous territories tends to be underdeveloped by states for a number of reasons. First, states regard these gateways as barriers to trade (Nijkamp et al., 1994). Second, low cross-border traffic does not appear to justify the investment required to upgrade gateways. Third, these areas may simply lack the physical space to expand. Fourth, potential externalities with bordering states can mean that a neighbour can benefit from a piece of infrastructure without having to bear the cost. Synergistic benefits are not uppermost in the minds of transport authorities (GAO, 1993). These problems are compounded by a lack of redundancy (or spare capacity through the existence of alternative channels) within the system meaning that a blockage in one part can create cascade effects across the entire system (DHS and TC, 2014). In the initial period after NAFTA was signed, the US and Mexico were working for a greater degree of regulatory harmonisation to speed cross-border flows. This was to be achieved through initiatives such as the Twenty-First Century Border Initiative (Villarreal, 2015). However, progress has been slow due to the political controversies that have surrounded the US–Mexico border (see below). Since the early 1990s, gateway infrastructure has been seen as a problem because of capacity constraints which were largely related to the need for NAFTA to be supported by a flanking common transport policy. Milner (1998) argues that there was an initial failure within NAFTA to consider fully the need for an integrated transport policy. Since then, it has become increasingly evident that issues of capacity were limiting the gains from NAFTA as the border infrastructure was not coping with rising traffic flows. This reflected not only the capacity of the gateways themselves but also the inadequacy of hinterland systems, especially in Mexico (Gerald, 2014). Indeed, at the time of the signing of NAFTA, there was a consensus that both border gateways and hinterland infrastructure on both sides of the border needed to be expanded to cope with anticipated rises in traffic flows. In 2016, there were 26 US/Mexico points of entry: the Port of Laredo covered about 35 per cent of total traffic and, as such, is the main bilateral artery for trade between the US and Mexico, handling almost three times more traffic than the next busiest point of entry, El Paso (CIA, 2016). However, the Port of Loredo, as the main gateway, was built to handle only 1000 vehicles per day, but by 2014 was dealing with more than five times that number (Gerald, 2014). NAFTA states are focused on
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the needs of their respective NIS which are linked together where needed but there is no overall sense of integration, or even interoperability, between them at any stage of the infrastructure development, implementation and operation process. The US Customs and Border Protection has argued that on both southern and northern borders there needs to be $6 billion of infrastructure investment to enable the systems to fully adjust to new traffic flows (CBP, 2012). These hard infrastructure problems were compounded by softer issues related to poor staffing, incomplete and inaccurate paperwork, inefficient inspection, lack of infrastructure co-ordination and planning and erratic traffic flows that peak at certain times of the day. Thus, without a commitment by states to upgrade the physical capacity of gateways, there was an emphasis on reforming the underpinning soft infrastructures (Hufbauer et al., 2014). However, progress in improving both hard and soft systems has come up against the US objective to restrict these cross-border flows in the post-9/11 security environment (Gerald, 2014). The post-9/11 narrative is to treat the US–Mexico border as the soft underbelly of the US (Wilson, 2014). As a result, gateways have tended to develop independently and the US, driven by its desire to restrict illegal immigration, has sought to become stricter on flows, thereby raising transaction costs for trade between NAFTA states. For the US, the underinvestment in gateways was a security threat to which it responded, first, by increased co-operation (through for example the ‘smart border’ initiative) and, second, by effectively seeking to thicken the border between these states. Between 2001 and 2015, the US spent $186 billion on ‘thickening’ borders (through increased restrictions and monitoring of flows) whereas only a small fraction of this amount was spent on the upgrading of gateway capacity. These measures have inevitably impacted on US–Mexican trade flows with the growth rate slowing from nearly 20 per cent per annum in the years to 2001 to less than 5 per cent in the following decade (United States Bureau of Transportation, 2015). However, the volume of these flows would also have been influenced by other factors such as the economic slowdown and the rise of China as a manufacturing power. Against this background of tension between increasing flows and increasing security, the US and Mexico launched the aforementioned 21stCentury Border Initiative which aimed to increase capacity at border crossings. This has resulted in three new cross-border bridges, the first new cross-border infrastructure built in nearly two decades. The initiative has also expanded road capacity at major checkpoints, increased inspection facilities and enhanced the capacity of existing bridges (Ribando Seelke and Finklea, 2017).
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The desire of the US to stop illegal flows and the perceived inadequacies of NAFTA for the US led to the agreement becoming a prominent theme in the 2016 presidential election campaign. Although at the time of writing the campaign rhetoric has yet to turn itself into concrete measures, it does imply, at the very least, that there will be a hiatus on reforms and investment that will facilitate easier trade flows between the US and Mexico. In terms of infrastructure itself, a central theme in the campaign rhetoric was the building or reinforcing of existing suprastructure2 to impede illegal flows and tighten the security of legal flows through the upgrading of the border wall (Krouzil, 2011). The plan for the wall was to upgrade existing barriers (such as replacing fencing with concrete walls) at an estimated cost of $8 billion, although other estimates put the cost at $15–25 billion (Ribando Seelke and Finklea, 2017). However, after the election, this piece of infrastructure seems to have fallen out of favour with the administration. The US–Canada border has a different dynamic: the gateway in this case is simply a transit point for medium-/long-distance truck traffic (with some rail traffic largely for commodities) between manufacturing and consumption areas (DHS and TC, 2014). The border region itself, even near gateways, has not seen a significant accumulation of logistical activities, largely because the Canadian and US economies exhibited a high degree of integration prior to NAFTA and the bulk of Canadian economic activities are located within 150 km of the border. Consequently, the NAFTA agreement has not induced significant development in border regions compared to what took place along the US–Mexican border. The US and Canada have developed the ‘Beyond the Border’ strategy to channel funds towards soft and hard infrastructure systems to facilitate flows between the two states that do not threaten security and therefore can move between NIS without any large security concerns (PIIE, 2014). The ‘Beyond the Border’ plan aims to monitor and upgrade all existing border crossings in the north with an initial focus on the five most in need of support. In addition, the governments have agreed to create a new major border crossing at Detroit-Windsor to handle a quarter of all cross-border traffic between the US and Canada, resulting in the top four border crossings handling over 60 per cent of US–Canada traffic (DHS and TC, 2014). There are also measures to 2
Suprastructures exist in contrast to infrastructures: the former are designed to be explicit – rather than embedded – structures whose intent is to exercise state power over flows.
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co-operate on cross-border investments through a five-year Border Infrastructure Investment Plan which seeks to secure funds for investment in infrastructure upgrades. However, cross-border infrastructure – even between Canada and the US – has endured persistent financing problems because of the US’s alternative border priorities. Indeed, 75 per cent of US border infrastructure finance goes to the southern rather than the northern border. Corridors The main transportation focus of NAFTA from the beginning has been to support the development of road/rail corridors that facilitate north–south trade by national governments (NACEC, 2000). Over time, trade corridors have become an increasingly pivotal part of the sub-regional system as states seek to refocus major national routes on enabling this north–south trade (Harrison, 2007). This represented a watershed in the development of Canadian and US national transportation systems that had hitherto tended to develop along east–west rather than north–south lines. This is less true of Mexico, which has a historical north–south development trajectory, but does tend to be more centralised than the other NAFTA states (Kopinak, 1993). The consequence of these development patterns is that border areas tend to be relatively underdeveloped in terms of transportation infrastructure: a pattern that is out of step with the changing traffic flows stimulated by NAFTA (Krouzil, 2011). In practical terms, much of the effort on corridors focuses on those infrastructures adjacent to border gateways in order to add capacity in those areas where traffic coalesces prior to moving between adjacent NIS. As of 2017, the main trans-border corridors are: + + + + +
the the the the the
Toronto–Windsor–Detroit–Chicago corridor (US–Canada); Laredo corridor (US–Mexico); Vancouver–Seattle corridor (US–Canada); Los Angeles–San Diego–Tijuana corridor (US–Mexico); Montreal–New York corridor (US–Canada).
Since 1994, there have been a series of bilateral agreements between NAFTA states but these have fallen far short of expectations, resulting in corridor planning remaining an overwhelmingly national affair: the development of true continental corridors has been made difficult by an absence of regional perspective in NIS, especially given the variance in quality and quantity of road systems (Bradbury, 2002). Through the 1991 Intermodal Surface Transportation Efficiency Act in 1991, the US sought
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to generate a series of corridors, largely to serve its own internal needs. To this end, over 30 corridors were identified which sought federal funding (Harrison, 2007). The designation of these corridors was mostly driven by local stakeholders who aimed to use them to offer international connectivity (Blank et al., 2008). This bottom-up process underscores, especially on the part of the US, that there is no single strategy for NAFTA infrastructure, especially since the development of these corridors merely sought to increase traffic flows to border areas which did not have the capacity to cope with such flows. However, such limitations have not stopped narratives surrounding the creation of a NAFTA super-highway (Cook, 2009). This has been championed by organisations such as the North American Super Corridor Coalition, a non-profit body formed by eight US states, two Canadian provinces and one Mexican state, which places the US interstate highway – I-353 – as the backbone of the system supported by feeder interstate highways 29 and 94 (Hufbauer et al., 2014). The main aim is to connect all members of the North American Inland Ports Network, many of which are located on I-35 or on linked Canadian or Mexican systems, to the main US/Canadian (Detroit) and US/Mexican (Laredo) land gateways. There has also been an expansion of the Kansas City rail hub to gain a share of north–south traffic to exploit its advantage over trucking, especially regarding the investment locations of the automotive industry (Harrison, 2007). The development of the NAFTA super-highway is not without its critics. Aside from the uneven development of parts of the system, there are concerns that such infrastructures should not trade off lower transaction costs against higher security risks in both political and economic terms (Cook, 2009). At the extreme end, some argue that the development of a sub-regional infrastructure system will merely stimulate illegal flows (Krouzil, 2011). In part, this reflects an increased scepticism about NAFTA by those who believe that better infrastructure only further deindustrialises the US by lowering trade costs. Such arguments tend to misunderstand the NAFTA super-highway as it is an upgrade of existing routes rather than a new pan-NAFTA high-capacity highway system. Indeed, in the short term, the highway was conceived as a reform of soft infrastructure through technology and streamlined border procedures rather than an upgrade of physical systems. 3
Interstate 35 (I-35) is the major highway that crosses central US stretching from Laredo on the US–Mexican border to the Canadian border in Duluth (Minnesota).
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North American regional energy infrastructure Although provisions for energy were included within NAFTA, North America’s regional energy infrastructure has tended to evolve in parallel to the broader integration process. Strong energy interdependencies exist between states because of the level of development of their respective systems, the geography of these resources and the ease of getting these resources to processing and distribution facilities (Table 5.1 identifies the main energy trade flows between NAFTA states). The links are especially strong between Canada and the US where extensive interconnections between their respective energy systems exist (Blanchard and Jacobson, 2012). Despite these links, energy trade between NAFTA states has been clouded by issues of domestic energy strategy with each state obstructing full integration between their infrastructures for reasons of political and economic security (Bradley and Campbell Watkin, 2003). Wood (2014a) argues that although there are interconnections across borders, they have not evolved in a systemic fashion. NAFTA liberalised trade without investment: a particularly important issue in relation to Mexico, which sought to protect domestic incumbents from US oil majors. Accordingly, interstate infrastructure is arguably not as developed as might be anticipated. Thus, whilst NAFTA (and the Canadian–US free trade area) facilitated increased energy trade and investment, it did not allow for the fuller integration of energy markets and policies at the national and sub-national levels with the exception of the close integration of the US and Canadian electricity systems (see below). Nonetheless, away from primary energy trade, there is an emerging institutional system in electricity helped by the establishment of a regional body – the North American Electric Reliability Corporation,4 which is working on systemic interoperability. Although all NAFTA states are energy producers, the region as a whole has historically been a net importer of energy as a result of high levels of US energy demand. Energy trade is based on bilateral agreements between Mexico and Canada with the US: Canada and Mexico trade little energy with each other (EIA, 2017). In 2016, crude oil constituted the US’s largest single import at 11 per cent of the total with refined petroleum at 3.2 per cent. Refined petroleum is the single biggest export by product grouping at 7.2 per cent (EIA, 2017). Of the 4 This seeks to secure the reliability of bulk power transmission between the US, Mexico and Canada.
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Table 5.1 NAFTA energy trade Crude oil (mb/d)
Refined products (mb/d)
Natural gas (bcfd)
Electricity (GW h/d)
Imports
Exports
Imports
Exports
Imports
Exports
Imports
Exports
US/ Canada
2579
133
563
155
7.6
2.5
158.4
31.1
US/ Mexico
850
0
532
68
0
1.8
3.5
1.6
Source: EIA, 2016
9.2 million barrels per day (mb/d) imported by the US in 2014, Canada supplied 3.4 mb/d (37 per cent): more than the combined imports from the next two largest suppliers – Mexico and Saudi Arabia (EIA, 2016). Between 2006 and 2015, imports of crude oil from Canada to the US increased every year, from 1.8 mb/d in 2006 to 3.2 mb/d in 2015, Overall, the net draw of the US on crude oil from the world market declined by about 37 per cent between 2006 and 2015, and remains about 7 mb/d. Canada and Mexico currently supply about 50 per cent of this total, contributing to US energy independence from countries outside North America (EIA, 2017). In 2015, 60 per cent of Mexico’s energy exports by value were to the US, which is only 4 per cent of the total value of its exports to the US (EIA, 2017). In addition, 95 per cent of Canada’s fuel exports are US-bound – around 24 per cent of its total exports. In contrast, the US exports little crude oil, largely due to a trade ban that was only lifted in 2015. Mexico and Canada are the two biggest recipients of US energy exports (20 per cent and 18 per cent, respectively, of such exports by value): together, however, this represents less than 14 per cent of total US exports to these states. The broader utilisation of unconventional oil and gas resources is expected to reverse this trend (Verrastro et al., 2015). Indeed, by 2020, the US is expected to be a net exporter of energy (IEA, 2016). In total, the value of the energy trade between the US and its North American neighbours exceeded $140 billion in 2015, with $100 billion in US energy imports and over $40 billion in exports. Canada depends almost entirely on the US as an export market for energy (EIA, 2017). In 2013, 97 per cent of Canada’s oil exports went to the US, cementing the latter’s position as the number one supplier of crude oil to Canada.
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The above pattern of primary energy flows is reflected by the pipeline system which flows north to south rather than east to west, as is the case with the transport system (Verrastro et al., 2015). Western Canada exports to the US while eastern Canada imports from the US, reflecting both the north–south pipeline system and also different consumption patterns between the two areas (McKinney, 2008). As Canada increases oil production, it is also seeking to establish new pipelines into the US to increase its capability to refine its crude. This pattern is also evident in gas where 97 per cent of Canadian gas is exported to the US. Again, the gas flows in pipelines to the US rather than across Canada (Bradley and Campbell Watkin, 2003) reflecting a north–south pipeline system and a dependence on the US for Canadian processing and exports. The number of cross-border interconnectors between NAFTA states in 2016 is highlighted in Table 5.2. Table 5.2 NAFTA region border connectors Oil/other petroleum
Gas
Electricity
US/Canada
14
25
27
US/Mexico
5
15
9
Source: EIA, 2016
According to Parfomak and Ratner (2011), the US and Canada are a de facto single energy market connected by high-capacity pipelines for crude oil, other petroleum products and natural gas. This is reflected in Table 5.2 which also highlights, by comparison, the relative underdevelopment of cross-border links between the US and Mexico. Following Canada’s expanded energy production, the need for more US-bound infrastructures has become apparent. Canada moves 95 per cent of its oil by pipeline (Verrasto et al., 2015) but plans to extend the US–Canadian pipeline system have been dogged by controversy, as exemplified by the Keystone XL pipeline which aims to allow new Canadian sources of oil better access to Gulf Coast refineries. The XL pipeline is planned to run from Alberta in Canada to the US mid-west (OES, 2014). The infrastructure is justified by the need to transmit Canadian, as well as US shale production, to the US Gulf processing and refining facilities (Parformak et al., 2015). The XL link would also connect with the existing pipeline network in the US mid-west. However, the extension has been dogged by
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environmental concerns from the US which have complicated the bilateral relationship. In response, the Canadian government has been considering new pipelines east to west via a northern gateway and pipelines west to east to ports in eastern Canada (Parformak et al., 2013, 2017). Mexico depends on US refineries to process its crude oil because of the lack of its own new refinery capacity in the past two to three decades (WHTF, 2015). Mexican oil is extracted offshore and moved to refineries in the southern US from where it is either sold to the US or re-exported to Mexico, meaning that Mexico has been a major importer of refined product from the US, with a particular dependence on gasoline imports. However, if Mexican shale oil comes onstream in any meaningful quantity, there is likely to be a need for oil pipelines to transmit this oil to the US for processing. Between 2006 and 2015, exports of crude oil from Mexico to the US declined from 1.6 mb/d in 2006 to 0.7 mb/d in 2015. Transportation of natural gas among the US, Canada and Mexico is almost entirely by pipeline (Wood, 2014b): over 50 natural gas pipelines link the US and Canada at 25 border crossings and 15 border crossings between the US and Mexico. The Interstate Natural Gas Association of America (2014) argues that it is essential to the NAFTA energy system to adjust to new sources of energy, especially shale gas. In terms of gas, that implies an anticipated 43 per cent increase in pipeline capacity. To this end, many of the major cross-border infrastructure developments between the US and Mexico, particularly over the last decade, have been natural gas pipelines. Since 2000, US exports of natural gas have increased six-fold and are projected to continue to increase through 2030. To this end, in the five years to 2016, natural gas pipeline capacity between the US and Mexico has grown significantly, almost doubling from approximately 3.7 billion cubic feet per day (bcfd) in 2011 to 7.2 bcfd in 2016. According to the Energy Information Agency, cross-border pipeline capacity to Mexico is projected to double again through 2018 – to over 14 bcfd – based on four new projects currently under construction and two in the planning stage. To support these developments, the reform of Mexico’s energy sector is seen as pivotal in allowing a more fully integrated system between the US and Mexico to emerge. This is important for as much as US production has increased so Mexican production has declined sharply – slightly more than 25 per cent production in the decade since 2004 (WHTF, 2015). To reverse this decline and to allow Mexico full integration into the North American energy grid, Wood (2014b) argues that cross-border, as well as Mexican gas infrastructure, needs to be enhanced as does the refining capacity in the Gulf of Mexico.
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Electricity The electricity systems of the US and Canada are so highly integrated that it makes sense to think of them as one system (CEA, 2006). There are nearly 30 active interconnections between these states with the value of electricity traded worth approximately $3 billion (2015). Canada’s electricity exports to the US have, in the long term, comprised 5–10 per cent of its total generating capacity (Parfomak et al., 2017). Canadian exports of power to the US totalled 58bn kWh in 2012 whereas the US exported 11.4bn kWh northwards. Both Manitoba and eastern Canada, especially Quebec, are major sources of power for the mid-west and north east US whereas the Pacific north west exports large amounts of hydro-electricity to British Columbia during high water periods in the spring and early summer. US net imports of electricity from Canada have increased from 18.1 TWh in 2006 to 59.8 TWh in 2015 (Parfomak et al., 2017). Although this is a small proportion of total US power consumption, it is nonetheless core to the US supply mix, especially in border regions – most notably New England (CEA, 2016). Canada’s links with the US reflect the north–south nature of the Canadian grid as it seeks to generate security through links with the more densely developed US electricity system (Blanchard and Jacobson, 2012). It is also helped by the design of Canada’s electrical transmission system which facilitates the transport of electricity more easily on a north–south basis to the US than it does on an east–west basis across the Canadian provinces (Parfomak et al., 2017). These systems are based on different types of fuels: the Canadian system is largely hydro-based (around 60 per cent) whereas the US is based on thermal energy (over 70 per cent) (CEA, 2016). However, the long-term trend towards increased trade between the US and Canada has been thrown into uncertainty by the emergence of unconventional gas in the US which suggests that links might not be as fully utilised in the future, despite planned upgrades in cross-border infrastructure which will be significantly increased. At the time of writing (2017) there are at least another 11 interconnections between the US and Canada in the planning stage. This hesitation regarding fuller integration to some degree reflects the legacy of vulnerabilities created by such arrangements. For example, the near seamless integration of the US–Canadian electricity grid has occasionally resulted in blackouts spanning the border (CEA 2006, 2013). However, co-operation among federal, state, provincial and local governments, utilities and regulators has enabled fast recoveries with cross-border assistance for emergency response occurring regularly in the electric
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sector. This helps the mutual resilience of the respective sectors, not only through power backups but also through staff exchanges, etc. Electricity trade between the US and Mexico is more limited. Limited flows occur between Baja California and California and limited imports move into northern Mexico from Texas, but the limited capacity of cross-border interconnectors prevents more fulsome exchange. In 2015, US exports to Mexico were just 2 per cent of its annual generating capacity, whilst US reciprocal imports were less than 1 per cent of its energy needs (EIA, 2017). However, the US and Mexico are seeking to upgrade these links with at least eight new cross-border transmission projects in development. This also reflects the emerging gap between Mexican demand and its ability to supply from domestic sources. In 2014, Mexico was a net exporter of electricity, largely through interconnections into California but, as its demand grows, there will be a need for new interconnectors to allow Mexico access to electricity exports from the US. Currently, this cross-border transmission infrastructure is limited (see Table 5.1) and, despite efforts to develop new links, progress has been slow.
CARIBBEAN COMMUNITY (CARICOM) CARICOM is a group of 12 islands and three larger coastal nations in and around the Caribbean Sea.5 Established in 1973, CARICOM has followed a progressive path to integration whereby its members have moved from a free trade area to a single market (Fawcett, 2005). In the case of CARICOM, regional integration has emerged as a tool of political independence and as a means of enabling territoriality of these small and relatively underdeveloped states (Bishop et al., 2011; Payne and Sutton, 2001). The integration process is shaped not only by their relative size (12 of the 15 states are designated by the United Nations as microstates) but also by the previous incarnation of most of them as British colonies (Grenade, 2007). As such, the motives for CARICOM and for the consequent development of regional infrastructure systems (RIS) were driven by a search for scale and by structural weaknesses created by high import dependency, vulnerability to natural disasters, low 5 The member states are, as of 2017, Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Suriname and Trinidad and Tobago.
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volumes of exports from a limited range of products and remoteness from main trading routes and partners (Venables, 2003; Farrell, 1981; Briguglio, 1995). Trade between the CARICOM states on its own does not justify regional infrastructuring on economic grounds. Between 1995 and 2015, there has been no marked shift in trade flows between these states. In 1995, intra-CARICOM trade was 15 per cent of total trade flows of these states; in 2015, it was 14.5 per cent (UNCTAD, 2017). Moreover, some argue that these figures are heavily influenced by intraregional trade oil exports from Trinidad and Tobago and that a more realistic long term figure for intra-CARICOM trade is closer to 6 per cent (Hornbeck, 2008). This pattern reflects the high dependence of these states on external trade which is seen as the legacy of their lack of development and the practicalities of integrating states with divergent interests and cultures (Bishop et al., 2011). It is compounded by what has been termed an ‘implementation deficit’ within CARICOM as members often lack the political commitment or finance to make the agreement work (Grenade, 2007). Overall, CARICOM is best viewed as a framework for regional development through the long-term creation of a common economic space. In short, it is an almost classic example of ‘new regionalism’ as a state strategy for those smaller states which are often peripheral to the global economy and who use such agreements to militate against such disadvantages (Axline, 1977). CARICOM transportation infrastructure The development of infrastructure within CARICOM reflects a different set of challenges as CARICOM – as a set of islands or sea-locked6 states – interacts across non-contiguous space7 (Moreira and Mendoza, 2007). In terms of infrastructure, transport is seen as a particular problem due to 6 These are states that, despite being on the main continental landmass, depend on maritime infrastructure for international interaction due to the poor state of land-based cross-border infrastructure. In the case of CARICOM, this refers to Belize, Guyana and Suriname. 7 In infrastructural terms, the CARICOM states are bound together in their designation as small island developing states (SIDS). In this designation used by the United Nations as part of its Millennium Development Goals, the definition of SIDS is extended to Belize and Guyana that are on the main Americas landmass. The land-based members of CARICOM are seen as SIDS in the absence of any alternative terrestrial infrastructure that means that maritime is realistically the sole means through which goods can be traded between them and other states.
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expensive sea and air transportation and the high cost of shipping (Briceño-Garmendia et al., 2015). The respective NIS tend to be unevenly developed with the microstates tending towards centralised hubs of activity and only the larger states, such as Jamaica, Haiti and Trinidad and Tobago, having in any sense an extensively based NIS. For many of these microstates, national infrastructuring is closely tied into regional processes as a means of enabling global connectivity which is the focal point of national infrastructure strategies (Briguglio, 1995). In this case, authors such as Nijkamp et al. (1994) have identified regional infrastructure systems as attractive, especially where there is open trade with geographically proximate partners interoperating to facilitate the development of regional hubs through which traffic to low-volume, remote locations can be coalesced and served more frequently through multiple stopping services than via a simple point-to-point system (Fay and Morrison, 2005). In maritime flows, peripherality is determined less by sheer geographic distance and more by economic factors such as connectivity and market structures (Wilmsmeier et al., 2011; Sánchez and Wilmsmeier, 2006). For example, nearly all Caribbean countries run trade deficits, relying heavily on imports for vital goods such as food and energy and exporting little in return. This situation has led to a ‘backhaul’ problem for logistics service providers since there is more cargo coming into these states than going out, thereby increasing transportation costs for CARICOM states. The fact that the main trade routes bypass these economies seems especially ironic given their proximity to maritime traffic flows as they pass east to west through the Panama Canal (Fay and Morrison, 2005). CARICOM’s ports are unable to benefit from such flows due to the proximity of the main US container ports that attract this traffic. However, the United Nations Conference on Trade and Development (2014) argues that CARICOM ports can use proximity to the US as an advantage through using its rules in areas such as cabotage and security to enable their ports to accept container vessels (Wilmsmeier and Sánchez, 2010). As such, the main CARICOM ports (namely, Freeport-Bahamas; Kingston, Jamaica; and Port of Spain, Trinidad and Tobago) are able to operate as trans-shipment/relay ports through offering connections with nonCaribbean locations. The ability of the aforementioned ports to operate as regional hubs reflects the investment these locations have made in both hard and soft infrastructure to render them attractive for trans-shipment and container lines (Notteboom, 2005): these ports can handle ships five to six times the size of ports in smaller states (Hoffman and Wilmsmeier, 2008), resulting in traffic that can be up to 20 times greater between these
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locations. This is also reflected in the Liner Shipping Connectivity Index for these states as shown in Table 5.3. Table 5.3 CARICOM connectivity Liner Shipping Connectivity Index (max = 100)
CARICOM member Antigua and Barbuda Bahamas Barbados Belize Dominica Grenada Guyana Haiti Jamaica Montserrat St Kitts and Nevis St Lucia St Vincent Suriname Trinidad and Tobago
Container port traffic (TEU – 20 ft equivalent unit)
2004 2.33 17.48 5.47 2.19 2.33 2.3 4.54 4.91 21.32 n/a 5.49 3.7 3.56
2016 4.22 27.67 4.92 7.8 2.05 4 4.52 6.31 20.05 n/a 2.35 4.63 5.22
2014 31,718 1,399,300 71,468 41, 693 n/a n/a n/a n/a 1,638,100 n/a n/a 71,364 24,693
4.77
4.98
n/a
13.18
17.39
738,630
Source: UNCTAD, 2016
The growing power of both freight operators and cruise liners has led to some degree of dependency between port infrastructure development and the network strategies of these operators. In the Caribbean, the maritime network is a multilevel series of ports with global hubs and regional hubs feeding each other which, in turn, feed the smaller ports throughout the region (Hoffman and Wilmsmeier, 2008). Of the ten CARICOM ports of any size, two (Kingston and Freeport, the Bahamas) are global hubs; a further three are sub-regional hubs (Port of Spain and Port Lisas, both Trinidad; and Kingston Wharves, Jamaica). These sub-regional hub ports are responsible for inter-Caribbean trade. Regional services operate from a further five – Bridgetown (Barbados), Georgetown (Guyana), St Johns (Antigua) and Castries and Vieux Port (both St Lucia). These ports
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provide interisland services to islands with limited infrastructure and limited connections to larger ports (Hoffman and Wilmsmeier, 2008). This reflects a hub-and-spoke system throughout the region to ensure network coverage (Witter et al., 2002). There are around a further 20 small ports which merely serve their island hinterland. Trans-shipment in the Caribbean is difficult as it has to cover large feeder distances with small domestic container trade (Notteboom, 2009). Thus, whilst CARICOM states are a key market for trans-shipment services, ports within the region (notably Kingston and Freeport-Bahamas) have been losing market share to ports on the main Americas landmass, notably those in Panama and Colombia. In fact, the main trans-shipment port for the Caribbean is Colon in Panama which is outside CARICOM. State security, integration and prosperity are all dependent for ports in peripheral locations on their ability to generate a diversity and frequency of flows (Briceño-Garmendia et al., 2015). Thus, they have to adapt to the changing nature of traffic as exemplified by the increasing size of cruise ships and the impact of containerisation, including its subsidiary impact on IT and supporting institutional frameworks (Olivier and Slack, 2006). However, ports face elements of path dependency within their systems as they have to deal with the legacy of past decisions (as reflected in the ability of smaller Caribbean states to adapt to containerisation) (Ducruet and Notteboom 2012; Strambach, 2010). The strategy for CARICOM states to enable connectivity through a hub-and-spoke system is constrained by lack of traffic and the size of ship that can enter these ports. This is compounded by the absence of transport sector reform which can also inflate given transport costs. These states also need to offer a maritime infrastructure that supports cruise liners (especially important given that tourism comprises 15 per cent of Caribbean gross domestic product (GDP)) so that they do not compete with freight traffic flows for berthing spots. In a study by the Caribbean Development Bank of 12 major CARICOM ports outside the major global hubs identified, the most common problem was outdated infrastructure developed in the era of break bulk cargo and where there is limited space for containerization (CDB, 2016). Only two of the ports in the study had no significant infrastructure problems. These problems start to become more acute given the anticipated increase in container flows at all major CARICOM ports up to 2025 (CDB, 2016). However, investment in port capacity to attract freight or cruise ships comes up against the competition between ports to attract traffic and the strategies of cruise liners to extract the best deal from respective destinations (CDB, 2016). The other dimension of infrastructural connectivity for CARICOM states is aviation, which is especially important for those remote locations
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with low-volume/-value traffic where this mode of transportation is important for both freight and passenger traffic (Briceño-Garmendia et al., 2015). In 2015, the CARICOM states had 67 airports: the bigger islands, benefitting from a series of bilateral agreements, offer connectivity to the main global hubs in the US. This infrastructure is spread unevenly across the region with the Bahamas having 16 commercial airports and Belize 12. Many of the remaining states have a single or two airports (CDB, 2015) and have been developed on the basis of only seeking to cover operational costs as the infrastructure is regarded as too important to leave to commercial forces alone. However, although there is no shortage of airports, limits exist on the ability of airports across CARICOM to handle larger aircraft and more frequent arrivals and departures. There is also the perennial problem that some states generate such low levels of traffic that connectivity remains thin and many carriers are loss making. In addition, the creation of hub or mini-hub operators have also been curtailed due to a lack of connecting potential or the unwillingness of airlines to create consistent links to expand the number of passengers. The inability of these airports to effectively scale up is creating longer-term connectivity problems for CARICOM states. Indeed, the need to create hubs and consolidation among airlines seems widely accepted as a precursor to better connectivity but is currently underdeveloped across the region (CDB, 2015). Not surprisingly, hub airports dominate scheduled intraregional traffic with five airports responsible for over 60 per cent of intraregional flights (World Bank, 2015). Across the Caribbean (both CARICOM and nonCARICOM states), there are five main hubs: Puerto Rico, the Dominican Republic, Jamaica, Bahamas and Martinique. These capture 82 per cent of air passenger movement across the region and offer connectivity to the global hubs in the US (CDB, 2015). However, an increasing number of extra-regional flights (overwhelmingly charter-based tourist aviation) are point to point between an island and external destination (mainly US and UK) without passing through regional hubs. Where there is an important tourist sector, there is a tendency for states to eschew regional or sub-regional hubs in favour of maintaining their own infrastructure. In terms of scheduled aviation, the CARICOM system is experiencing precipitous falls in air traffic as a result of the long-term decline of intraregional traffic. This suggests an unstable regional network with states prioritising direct links with the rest of the world (largely for tourism). Indeed, intra-CARICOM traffic is dominated by interisland traffic between the islands of the Bahamas and Trinidad and Tobago (who together comprise almost 80 per cent of intraregional traffic), thus, small islands states are not well served in this case (CDB, 2015). This also
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underlines the difficulties with the practice of regional integration: tourists tend to fly to their destination rather than island hop. Island hopping only tends to occur where there are infrastructural contrasts between islands that makes a point-to-point flight elusive (BriceñoGarmendia et al., 2015).
THE SOUTH AMERICAN UNION OF NATIONS (UNASUR) Whilst there are three longstanding sub-regional agreements in South America (the Latin American Integration Agreement (LAIA), the Andean Community (ANCOM) and the Southern Common Market (commonly known by the Hispanic acronym, Mercosur), the focus in this section will be on a more recent agreement: UNASUR (the South American Union of Nations) (Baumann, 2008). This was formed in 2004 as an agreement between Mercosur and ANCOM as well as Chile, Suriname and Guyana,8 but was largely created under Brazil’s leadership and instigation. The main aim of UNASUR is to pursue integration as a tool for seeking common solutions to common problems in non-trade issues such as economic development and geopolitical/geostrategic power (Briceno{Ruiz, 2010; Garzón, 2015). Unlike Africa, where the sub-regional systems emerged as a tool of the larger body, the position of UNASUR is that the sub-regional bodies are still relevant insofar as they feed into the integration of the regional body; indeed, UNASUR utilises the institutions of ANCOM and Mercosur to push forward its agenda (Borda, 2014). However, its strategy represents a move away from the open regionalism of LAIA, ANCOM and Mercosur (Sanchez, 2011). The fact that UNASUR emphasises national development and sovereignty stresses that it is not a supranational organisation. Indeed, the body seeks to codify existing state strategies as a means of achieving their mutual interests (Tussie, 2009). Whilst UNASUR does not mention trade or economic integration (which is covered by other areas so is an implied force underpinning its strategy), that does not mean it completely disavows it as UNASUR runs parallel to such explicitly trade-focused agreements (Baumann, 2008; Sela, 2015). It is also argued that the trade was explicitly excluded from the agreement as these states, at the time of the signing of the UNASUR agreement, were enjoying an export boom (driven by commodity exports 8 The only non-member state in Latin America is French Guiana, an overseas region of France and therefore not a sovereign state.
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to China). Consequently, the need for an agreement in trade was less of a priority (Briceno{Ruiz, 2010). In 1995, trade between what would become UNASUR members was just 25 per cent of total trade of these members. By 2015, whilst overall trade between these members had risen by over 250 per cent, intra-UNASUR trade had actually fallen to 18 per cent of the total (UNCTAD, 2017). This can largely be explained by the rise in trade by many of these states with China over this period. Regional infrastructure in South America When viewed at the level of the state, the conclusion regarding South America is that these are largely a collection of middle-income states whose infrastructure systems are seen to have fallen behind states at a similar level of development (Devlin and French-Davis, 1998). Indeed, it is argued that the region’s NIS tend to be more akin to states at lower levels of economic development than that necessary to support what is largely a set of upper-middle-income economies (Fawcett, 2005; Perry, 2014). Across these states, investment in infrastructure peaked in the 1980s but fell from the 1990s and especially lagged behind those of emerging economies, most notably China and South Korea, states with comparable (or worse) levels of development throughout the 1980s. The relative position of UNASUR members is highlighted in Table 5.4. The decline in position is highlighted in that China is ranked 24th, Korea 10th, Malaysia 24th and Turkey 48th. Indeed, only Chile (ranked 44th by the WEF) has maintained the level of investment that is comparable to that of other emerging economies (Calderón and Servén, 2010). In 1980, the region had more developed NIS than east Asia’s high-growth economies in all areas of economic infrastructure, but over time, most notably in terms of energy and transportation, the South American states have allowed NIS to lose efficacy as a tool of territoriality (Calderón and Servén, 2010; UNECLAC, 2011). The problem has been driven by a decline in public investment in national infrastructure; driven in no small part by the ongoing debt crisis of these states (Cerra et al., 2016). The infrastructure investment rate did recover with the export boom up to 2008 but as the financial crisis hit the investment rate fell back again (UNECLAC, 2013). This position has not been aided by the response of many of the South American states to cut infrastructure investment as their economies turned down as the commodity super cycle ended (UNECLAC, 2014). With regards to particular sectors, Latin America’s infrastructure problems are overwhelmingly in transport and energy, which have exhibited increased signs of obsolescence and senescence right across the
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region (Devlin and French-Davis, 1998). In the late 1990s, telecommunications infrastructure investment was relatively abundant. However, it is thought that this came at the price of other economic infrastructure sectors (Borda, 2014). For example, there has been a decline in electricity generation (Argentina), roads (Argentina, Chile and Venezuela), ports (Argentina, Brazil and Venezuela), air transport (Argentina, Brazil and Chile) and railroads (Argentina, Brazil and Venezuela) (UNASUR and UNECLAC, 2012). Table 5.4 The ranking of UNASUR infrastructure State Argentina Bolivia Brazil Chile Colombia Ecuador Guyana Paraguay Peru Suriname Uruguay Venezuela
WEF infrastructure ranking (out of 138)
LPI infrastructure ranking (out of 160)
85 102 72 44 84 71 108 (2015) 122 89 86 (2014) 47 121
59 134 47 63 95 88 118 92 75 n/a 61 134
Source: WEF, 2016 and World Bank, 2016b
According to the United Nations Economic Commission on Latin American Countries (UNECLAC) (2014), there is both a vertical and a horizontal gap in the South American infrastructure systems. The vertical gap reflects the disparity between needs and provision within infrastructure systems as a means of simply sustaining current levels of traffic growth. The horizontal gap refers to the relative gap with reference to other states. To close these gaps, the states of the region would need to spend up to 8 per cent of its GDP per annum up to 2020 (UNECLAC, 2016). Between 2002 and 2013, it is estimated that South America invested 2.4 per cent of its GDP in infrastructure (UNECLAC, 2016). This is not just below the east Asian states but also below that of mature, developed economies (such as the US and the EU). Over a longer time
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frame (between 2011 and 2040), UNECLAC estimates that the region needs to invest between 4 and 8 per cent per year. At 2015 levels of output, this is an estimated $13 trillion per annum (UNECLAC, 2016). In the past 20 years, the aforementioned commodity boom for Latin American states has not been translated into increased infrastructure investment which, in turn, has limited the potential for inward investment to help the development of a more diverse economic base (notably with regards to an indigenous manufacturing sector) (Cerra et al., 2016). Indeed, the connectivity to main markets for many South American states remains underdeveloped, with UNECLAC (2016) estimating that freight costs are on average nearly 8 per cent higher to the US than to China, despite the relative proximity (UNECLAC, 2016). However, these costs also reflect that UNASUR states are mainly commodity exporters. The commodity exports tend to be heavier and as such incur higher freight costs. These gaps are only expected to widen as the demand for infrastructure is expected to rise both as a result of an increased urban population and external trade flows (Fay and Morrison, 2005). Transport issues Road infrastructure is at the core of the regional plans in South America, reflecting the problem that supply has simply not kept pace with demand (UNECLAC, 2009). Road transport amounts for 80 per cent of intraregional trade and its development lags behind other states, with South America having just 156 km of roads for every 1000 km2 compared with the world average of 240 km (UNECLAC, 2014). Moreover, South America has less than 16 per cent of its road paved compared to a global average of 57 per cent: Organisation for Economic Co-operation and Development states have near universality in paved roads (World Bank, 2015). In this measure, South America is outperformed by all regions bar Sub-Saharan Africa. The problems are also evident in other modes such as constrained maritime capacity (both in terms of ports and sea lanes), limited or missing rail links and rail systems that are unable to cope either by capacity or by design with the volume and form of traffic generated by these states (UNECLAC and UNASUR, 2012). Rail is seen as especially problematic as this is a sector that has suffered long-term neglect. Port infrastructure is a problem with many of its leading ports suffering congestion as capacity has not grown to meet demand. This has been compounded by the underdeveloped hinterland system across the region needed to support this rise in traffic (Fay and Morrison, 2005; Sánchez and Wilmsmeier, 2006). Overall, the region’s ports tend to be relatively small with only one (Santos in Brazil) being amongst the
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world’s top 50 container ports (World Bank, 2016a). In addition, of the other ports, only six are able to handle traffic in excess of 1 million TEU containers per year. The only area where the region does comparably well is in inland waterways (largely due to its landlocked states – see below), though actual utilisation of this resource remains relatively low. According to the Liner Shipping Connectivity Index (World Bank, 2016b), the major economies of the region do not have major connectivity problems, although as many are peripheral to the main maritime transmission channels they do rank poorly when compared to other states at comparable levels of development (Perry, 2014). Moreover, the problem is compounded by the fact that port infrastructure quality for these states is poor. The WEF ranking for the Latin American states (WEF, 2016) suggests that whilst these ports are not underdeveloped they are a long way from being well developed (UNECLAC, 2013). Transport issues are compounded not just by remoteness from main maritime transmission channels but by the fact that two of the region’s states (Paraguay and Bolivia) are landlocked. As highlighted in Table 5.4 both Paraguay and Bolivia suffer from poor logistics, not just due to geography as politics has also proved to be a problem. For example, Bolivia has had access to Chilean ports limited due to ongoing disputes with this state (UN, 2015). However, both of these landlocked states have benefited as neighbouring states have improved their infrastructure systems, notably in the case of Argentina and its border systems. Moreover, they can be expected to at least militate to some degree the disadvantages from their poor logistics performance by adhering to regional and global agreements on trade facilitation. For these states, the benefits of bodies such as Cosiplan and the Initiative for the Integration of the Regional Infrastructure of South America (IIRSA; see below) become more evident as the states have more at stake in developing co-operation and co-ordination in infrastructure (UNASUR and UNECLAC, 2012). Projects involving landlocked states’ interconnection into the global economy under IIRSA are only 13 per cent of projects within this programme, however, with the ability of both states to finance this and the ability to attract finance being limited (IIRSA, 2011). This suggests a long-term connectivity issue (UNECLAC, 2016). The focus of infrastructure for trade is more extra- than intraregional. Intraregional pressures are not strong as the trade and investment links between these states do not place adaptive pressure on NIS. In addition, intraregional links have also suffered from longstanding historical animosity between states (see below) and also the desire of states to exhibit high levels of self-reliance that has tended to eschew a need for strong
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strategic links with neighbouring NIS. However, with the foundation of UNASUR there has, to some extent, been some change in this national focus. Energy infrastructure issues In energy, there is more evidence of longstanding international links between UNASUR states, although these cannot be said to yet form a single integrated system. The region is rich in primary energy (it has 11 per cent of global reserves of oil, 12 per cent of global hydro potential and 5 per cent of global gas reserves) but these are distributed unevenly across South America. In terms of secondary power, about a third of all South America’s electricity is derived from hydro-electric power, which is also unevenly distributed with the main resources being in Brazil and Argentina. Not surprisingly, Brazil has been very active in pushing regional energy integration since the 1960s, though gaps within the region’s energy infrastructure remain evident. Cross-border interconnection in electricity is driven by bilateral agreements rather than by a desire to create an integrated regional system. As a result, these infrastructures tend to be for the use of a specific operator rather than for open market access, which further limits a market-led integration (Fay and Morrison, 2005). Overall, the integration of energy systems across the region has tended to be on an ad hoc basis rather than as the result of a coherent plan. Such regional systems are notably evident in the gas and electricity sectors (Pierce, 2011). With regards to gas, before the mid-1990s there was only a single gas pipeline in South America: the Yabog pipeline between Bolivia and Argentina (WEC, 2008). Between 1997 and 1999, a further seven gas pipelines were built, notably those across the Andes between Argentina and Chile (EIA, 2017). Over time, the region created a ‘gas ring’ of interconnected infrastructures across the Southern Cone9 states. By 2011, there were 19 bilateral interconnections in cross-border energy systems with Argentina exhibiting the highest number of bilateral agreements with ten; Chile and Peru are the least interconnected with a single agreement each. Indeed, the links in gas transmission infrastructures tend to be strongest amongst the Mercosur states. There have also been advances in bilateral interconnections with the discovery of resources in Bolivia and the development of a trans-national pipeline between this 9
The Southern Cone is the southernmost region of South America (covering Argentina, Chile and Uruguay), based south of and around the Tropic of Capricorn.
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landlocked state and Brazil. Despite the patchy network of gas interconnectors, gas trade between states has not been without disruption, most notably between Argentina and Chile. In 1995, they signed an interconnection agreement to increase the number of links substantially to seven (Pierce, 2011). Chile invested heavily in generating capacity built on the imports of Argentinian gas. However, Argentina began to cut supplies as internal demand took off with its worsening economic crisis and as the Argentinian government reduced natural gas exports. Chile has had to wean itself off this gas by creating liquid natural gas plants. Moreover, almost half of gas exports are extra-regional as they are bound for the US (IEA, 2016). Across the region there are a number of incidences where the promotion of regional energy integration schemes have run ahead of the political commitment to the process. There is not just the case of Chile and Argentinian gas (see above), but also disputes between Venezuela and Brazil, first over a refinery’s construction and then over a gas field. There have also been disputes over the inability of Bolivia to meets its contracted gas requirements to Brazil and Argentina. Such problems were largely driven by domestic disputes over how revenues from hydrocarbons were to be shared but also from public policies that were designed to deal with factors that were exogenous to the energy sectors such as economic instability (Fay and Morrison, 2005). All these increased the risk for operators who were driving this infrastructural interconnection process and made states more wary to commit to bilateral deals with their neighbours. For many states, the experience underlines that energy exports are bogged down by political sensitivities within the export market (Tussie, 2009). This has been especially notable with the rise of energy/resource nationalism throughout the 1990s and into the early twenty-first century, and was especially evident in the case of Argentina who espoused an especially strident form of energy nationalism which initially restricted exports (WEC, 2008). The rise of shale gas (as well as the discovery of new sources of conventional gas) could shift this dynamic as South America (most notably Brazil, Argentina, Paraguay and Uruguay) potentially faces a crossroads as the sharp rise in regional gas supply could either stimulate a new push for gas exports or push states further towards more isolated energy security strategies where they have decided to rely more on domestic sources and eschew closer interconnection with their neighbours (Pierce, 2011). If the latter is chosen then states are likely to embed bilateral agreements mainly for the servicing of isolated locations. Alternatively, some states (especially smaller states) may push ahead with closer integration for political reasons. Indeed, there have been discussions between Peru, Colombia
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and Chile to further integrate systems to largely counteract the growing power of Brazil. However, the economic case is not strong due to distance, low demand and evident cost disadvantages. All these suggest progress could be slow or limited to specific projects than a large strategic plan. With regards to electricity, services in South America have reached 93.4 per cent of the population, with an urban coverage of 98.8 per cent, and in rural areas of 74 per cent (IEA, 2016). This is comparable to many developed states though there are variances between states. However, the commodity boom of the early twenty-first century highlighted the inadequacy of the regional system as many of these commodities (notably copper in Chile which takes a third of all its electricity output) required large amounts of electricity that national systems struggled to cope with. Overall, it is estimated that rising demand for energy means that the region needs new installed capacity of around 700 mw a year up to 2020 (EIA, 2017). In the area of generation, there is a great emphasis on hydro-electricity. As mentioned above, South America has large hydro-electric resources with the potential for 590 GW of capacity, with Brazil alone representing over 40 per cent of this capacity (IEA 2016). The hope is to build this generating capacity and use it as a base for regional interconnection. The process is being led by Brazil, which not only has the largest installed capacity but also expects the biggest increase in demand. The move also reflects that most states across the region are net energy importers with links to hydro-electric resources at the forefront of this strategy. Indeed, these hydro-electricity links are one of the more common forms of energy interconnection initiatives with longstanding links via interstate dams such as the ones between Brazil and Argentina (Itapúa), Brazil and Paraguay (Yacyreta) and Argentina and Uruguay (Salto Grande). At the sub-regional level, there are limited interconnections such as those between the ANCOM states; in 2011 they started a formal initiative to integrate electricity networks, though its success – despite its comprehensive nature – is by no means secure (Udaeta et al., 2015). There are also important interconnections between Colombia and its neighbouring states. This has been aided by the establishment of interstate agreements such as that advanced by Mercosur in 1998 to create an integrated electricity market. This involved new transmission lines between these member states to support longstanding energy links between states such as those mentioned above. In turn, both ANCOM and Mercosur have developed agreements with Chile, which is not a member of either.
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Developing regional infrastructure: UNASUR policy programmes In 2000, 12 South American states created IIRSA. IIRSA prioritised 524 energy, transport and communications infrastructure projects across the region at a cost of over $95 billion over a ten-year period (UNECLAC, 2009). IIRSA operates as a co-operative mechanism among its members through which states are able to exchange information and co-ordinate policies to promote the broader aims of the group. The programme sought to overcome the major barriers to physical integration of NIS as a means of facilitating growth and development with the longer-term aim of driving foreign direct investment (FDI) away from investing in infrastructure for commodity extraction towards those infrastructures that enable the development and establishment of more broadly based economic structures (UNECLAC, 2009). However, there is a clear consensus that IIRSA has failed to live up to its promise. IIRSA was based on principles aligned to open regionalism, namely developing infrastructure to enable exports as IIRSA was designed to serve those sectors that are integrated into global markets. In practice, this means integration for the movement of raw materials and commodities (Serebrisky et al., 2015). As such, it did little to remove inequalities or to develop a more diverse economic base. In addition, IIRSA states tended to prioritise national over regional needs, and there was no real emphasis within the programme to promote reform of enabling soft infrastructure (IIRSA, 2011). Indeed, of all the projects, some 83 per cent were nationally focused (75 per cent of the value of such projects) with only 15 per cent being binational and 2 per cent being multinational in character. Most of the money was for road projects (some 90 per cent) but by 2010 only 12 per cent of these prioritised projects were built, with a further 30 per cent in the process of being executed (IIRSA, 2011). IIRSA was later subsumed into UNASUR’s COSIPLAN (South American Infrastructure and Planning Council) programme. This programme sought to integrate NIS with the explicit territorial objective of enabling socio-economic development, regional integration and security. To UNASUR these seemed to be lost under IIRSA, which focused on the needs of the state and its competitive positioning in the global economy (UNASUR and UNECLAC, 2012). Like IIRSA, COSIPLAN is an intergovernmental approach to infrastructural integration: although, under the latter the intergovernmental council has stronger capabilities in project implementation but still has little formal power in its own right. COSIPLAN identified nine regional hubs to form the core of its regional strategy, which it defined as ‘a multinational territorial space involving specific natural resources, human settlements, production areas
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and logistics services. Transportation, energy and communications infrastructure serves as its link, as it facilitates the flow of people, goods and services, and information within this territorial space and from/to the rest of the world’ (Cosiplan, 2015, p. 19). The role of these hubs is to enable the identification of needs and enable agreement on a shared strategy in regionalising infrastructure systems. The choice of hubs does not merely reflect trade flows but also pre-existing commitments by states to these hubs, notably in terms of the needs of the local stakeholders and social and environmental sustainability. These hubs are highlighted along with the number of sub-projects within each theme in Table 5.4. The table underlines the relative priority given to the Mercosur–Chile axis and the Peru–Bolivia Axis within Cosiplan. This prioritisation reflects that these corridors are seen as especially vulnerable due to their higher levels of traffic (both domestic and international) which are subject to disruption (from adverse climatic conditions). However, common to all hubs (and their consequent prioritisation) is that these are a reflection of longstanding concerns with regards to where capacity crunches are within the regional system. For some hubs (notably those involving Paraguay, as a landlocked state, and in the Amazon), the development of maritime distribution channels is seen as key. In these areas, it has long been recognised that the region has high potential for inland water traffic but that this has been poorly exploited (IADB, 2000). As of 2015, Cosiplan consisted of 593 projects in 48 project groups across the nine integration and development hubs, with a total investment need of an estimated $160 billion. Approximately three quarters of the finance is expected to come from the respective governments with private and public/private partnership offering 12.5 and 13 per cent, respectively (UNECLAC, 2016). The transport sector had the highest number of projects (96 per cent). Though there were relatively few energy projects (12 per cent of the total) these tend to be higher cost and – as such – their investment total is a disproportionate 42 per cent of the scheme. Of these there is an overwhelming national focus (83 per cent of projects are purely national) with almost a quarter of these in one state (Argentina), although each is seen as important in enabling regional integration (UNASUR and UNECLAC, 2012). Of the rest, 96 are binational and five trinational and only two are multinational (this is in telecommunications in the Andean hub). This reflects that bi or trans-national projects tend to be bigger and/or more costly than national projects and that public sectors (as the main financiers) will be seeking to maximise the impact of these schemes on their respective states. As of 2016, around 10 per cent of the projects had been completed, with around 48 per cent at the execution phase, 13 per cent at the profiling stage and 30 per cent at
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the pre-execution phase. Of those projects that were completed, 90 per cent are in transport and 9 per cent in energy (UNECLAC, 2016). Within the framework, Cosiplan established a list of 31 ‘structured’ projects (which comprises 100 individual projects) that were deemed to have an especially high impact on integration. These cut across eight of the development hubs and represent 17 per cent of the project portfolio and 12 per cent of all investment. These are mature projects with high levels of government commitment, both political and financial, towards their completion as well as a strong impact on regional connectivity. The notion of these projects being structured is that they are individual projects with a strong degree of synergy, a strong regional dimension and alignment to the interconnectivity agenda of UNASUR. Nonetheless, eight of these 31 projects are purely national with limited cross-state spillover. The process has been largely pushed by Brazil whose businesses were seen as especially keen on enhancing interconnection and exploring new trade links. This was notably in the agricultural and mining regions of Brazil’s north and west who promoted the so-called ‘run to the Pacific’ so as to get to ports at the lowest cost. In practice, Brazil’s enthusiasm for these projects seems to be driven more by the close links between construction companies and the mining/agri-business than by broader themes of socio-economic development (Verdum, 2011). The list of Cosiplan projects are identified in Table 5.5. As mentioned, transport dominates these regional infrastructure initiatives. Of the over 500 projects in transport, 46 per cent are roads, 13 per cent rail, 15 per cent river, 5 per cent air, 6 per cent sea, 4 per cent multimodal and 10 per cent cross-border facilities. In the road sector, the vast majority of work involves the maintenance and upgrade of existing facilities (notably the paving of existing links) rather than building new roads: this is at least two thirds of the projects. This is similar to rail and maritime where, again, most of the focus is on upgrades of existing routes. The only area where there is expected to be new infrastructures is in upgrading border infrastructure to aid the flow of traffic at congested points: three quarters of projects in this area are for the setting up of border control centres. As of 2015, only 13 per cent of these transport projects have been completed. As highlighted above, energy is not a major thrust for UNASUR in terms of sheer project numbers, though it is disproportionate in terms of finance (Serebrisky et al., 2015). Of the energy projects prioritised by UNASUR, more than half tend to be in two hubs: the Mercosur–Chile hub and the Andean hub. This represents longstanding commitment by these states to the integration of their energy systems. Most of the investment (nearly 75 per cent) is focused on electricity generation; grid
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Table 5.5 Cosiplan portfolio of projects (at September 2015) Number of projects Hub
States
Amazon
Estimated investment
No. of projects
% of total
US$ millions
% of total
Colombia, Ecuador, Peru, Brazil
74
12.4
22420.7
12.3
Andean
Venezuela, Colombia, Ecuador, Peru, Bolivia
67
11.2
28613.9
15.7
Capricorn
Antofagasta/ Chile, Jujuy/Argentina, Asuncion/ Paraguay, Porto Alegre/Brazil
82
13.8
16314.7
8.9
Guyanese Shield
Venezuela, Brazil, Suriname, Guyana
20
3.3
4581.2
2.5
Paraguay-Parana Waterway
Bolivia, Brazil, Paraguay, Argentina, Uruguay
92
15.5
7328.1
4.0
Central Interoceanic
Peru, Chile, Bolivia, Paraguay, Brazil
63
10.6
11614.8
6.4
MERCOSUR– Chile
Brazil, Uruguay, Argentina, Chile
124
20.9
56158.9
30.8
Peru–Brazil– Bolivia
Peru, Brazil, Bolivia
24
4
31431.8
17.2
Southern
TalcahuanoConcepción/ Chile, Neuquén-Bahía Blanca/ Argentina
49
8.2
4146.6
2.3
Total
593
100
182435.7
100
Source: Cosiplan, 2015
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interconnection is very much a secondary concern. The investment in generation is mainly focused on building and/or refitting hydro-electric plants (nearly 60 per cent of all investment). However, in terms of grid interconnection projects, nearly all (97 per cent) are new cross-border links (Cosiplan, 2015). This playing down of energy interconnection within UNASUR reflects that the organisations see its mandate in energy as supporting development and eradicating poverty, rather than not economic integration per se. Interconnection is only pushed where it meets these broader socio-economic objectives (Pierce, 2011). However, to support a more holistic approach, UNASUR has established a South American Energy Council whose objective is to promote the development of energy infrastructure across the region, although this seems to have had limited success to date, especially in terms of creating the marketbased frameworks for regional energy integration. Such frameworks are seen as a core catalyst for the more fully integrated regional energy system (IEA, 2016). Raineri et al. (2014) argue that energy integration in the region has proved especially difficult due to two main causes. The first is the weakness of key stakeholders to benefits of understanding the perceived benefits of energy integration. Second, longstanding suspicions between states have occasionally flared up into disputes between states (as in the aforementioned case of Bolivia and its disputes with Chile). The latter has been largely fermented by factors such as longstanding border disputes, a desire by some leaders to have full energy independence, to avoid dependence on neighbours with whom there is a longstanding mistrust (Mares, 2004) and diverging geopolitical interests (Mares and Martin, 2012). There may also be the fact that national incumbent energy companies benefit from a fragmented market and, as such, have no real incentive to seek to integrate it. In addition, major supplier and consumer states have backed away from the use of neo-liberal logic to integrate energy systems via the creation of regional energy markets. The rise of resource nationalism has led to states backing away from the private finance of such projects.
CHINA AND THE AMIS Looking across the AmIS, the involvement by China in the AmIS tends to be patchy with seemingly little direct involvement in regional schemes with the focus tending to be on opportunities within the national systems (with regional impacts being indirect and often unintended). Across the different sub-regional components of the AmIS, Chinese involvement
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across both NIS and RIS differ markedly. This is largely due to a mix of political and economic factors. Whilst the involvement of China in AmIS (at the national level) is extensive, this section will retain a focus on the areas examined above, namely NAFTA, CARICOM and UNASUR and the extent to which China is shaping the respective RIS in these regions. In terms of NAFTA, the ability of China to become involved in the development of RIS is limited by the default position of the US to attempt to resist overseas ownership of its critical infrastructure. Such debates have found precedent within the P&O ports case in the aftermath of the 9/11 attacks (Cox, 2008). This approach has been extended to China where its investments in the US NIS have been subject to the extra scrutiny of national security reviews under the Committee on Foreign Investment in the US process. These proceedings are initiated where there is foreign involvement in critical infrastructure or technology. Moreover, they are more likely to be triggered if the investor is a state-owned/controlled entity or if the investment is close to sensitive military assets. To date, Chinese businesses have had to divest assets where this has occurred, such as a wind farm located near a navy facility in Oregon (Paulson, 2016). The process had its most high-profile exemption in the case of Huawei and ZTE who were both barred from owning US information infrastructure assets for security reasons due to the believed proximity between these firms and the Chinese military (Jiang et al., 2016). These restrictions tend to be considerably less onerous in both Canada and Mexico, with both welcoming foreign investment in their NIS. Not surprisingly, Chinese investment has been welcomed in the CARICOM states where there has been extensive investment in maritime and tourism-related infrastructure. Again, there is no direct investment in RIS (with the effects on regional systems being an afterthought), with China signing a series of bilateral investment deals across the region.10 In port infrastructure, Chinese investment has focused on upgrading Bahamian and Jamaican facilities to take advantage of the upgrade of the Panama Canal and is part of an effort to improve its accessibility to major western logistical channels (Campbell, 2014). These investments (notably in port projects) tend to be funded by Chinese loans with work undertaken by Chinese construction firms; this has proved controversial due to the low level of local involvement (Campbell, 2014). 10 As of 2017, China has signed bilateral deals with the Bahamas, Barbados, Jamaica and Trinidad and Tobago.
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There is a longstanding record of investment in South American infrastructure by foreign investors (notably from western Europe and the US) which has mainly been driven by the desire to access the region’s commodities. UNASUR and UNECLAC (2012) suggest that over three quarters of FDI into the region is in energy extraction with more than half being invested in Brazil. This trend has continued with a sharp rise in Chinese investment in South America over the past two decades. It has also mainly been driven by Angola Mode sentiment as China has sought to access commodities and has built the infrastructure to support that objective. Between 2010 and 2013, 90 per cent of Chinese investment in South America went on commodities (Gransow, 2015). However, as with the ‘One Belt, One Road’ programme (of which the region is not a part), it is evident that China is extending beyond that commodity-driven strategy to proactively sell its infrastructuring expertise. In Brazil, the Chinese – through the Three Gorges group – have been aggressively acquiring and building hydro-electric-generating capacity. Indeed, in 2013–15, it spent $42 billion on infrastructure in the region. However, these tend to be focused on upgrades of national systems rather than seeking to build a multinational asset directly. Between 2000 and 2010, China’s investment in the region rose by 500 per cent (some $100 billion, with a further $250 billion planned up to 2020 (Gransow, 2015). Thus whilst the US dominates the region in terms of trade and investment, the infrastructural component is not something the US often gets directly involved in. China has proved willing to invest in those economies where western investors have been hesitating to invest. However, the involvement by China within this region should not be overstated as much of the investment belongs to mega-projects and the region only accounts for a small percentage of the overall FDI undertaken by the Chinese. The most pivotal actions in South America by China with regards to infrastructure are in promoting co-operation in investment, financing and construction in transport systems. In 2014, China signed 56 co-operation agreements with states mainly in transport and electricity transmission. Assistance tends to be of three types: FDI, loans on favourable terms and engineering and construction contracts. Gallagher (2013) suggests that the Chinese focus on infrastructure is in contrast to those of international organisations (such as the World Bank) which have a stronger social dimension to their assistance. To these authors, the focus on infrastructure is driven by a number of factors. The first is that the Chinese models of development favour such approaches. Second, that these investments are linked to its own geostrategic interests in gaining access to the desired commodities necessary to sustain its own growth strategy. Third, Chinese financial institutions prefer to support growth rather than social
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welfare per se. Fourth, that the Chinese are copycatting the Japanese strategy of offering concessional loans which are resource-backed. Under these terms, infrastructure across their regions is either carried out as a gift (financed by China but undertaken by Chinese companies) offered in return for access to resources, carried out by local governments but financed by China and those paid by Chinese investors. Arguably, the Chinese project with the strongest regional emphasis is the Central Bi-Oceanic Railway between the ports of Santos (Brazil) and Callao (Peru). The project (which is part of IIRSA) is still at the proposal stage but is already meeting resistance from the states over costs and environmental issues. This has been compounded by political uncertainty within Brazil which has diverted attention away from the project. The project replaced the initial Twin Ocean Railroad which also hit barriers with the choice of route remaining controversial. The route would require new lines to be laid (as Brazilian and Peruvian rail systems are of a different gauge) and a new city to be established to service the development and operation of the line.
CONCLUSION As stressed at the outset of this chapter, there is no single AmIS, nor is there any concerted attempt to develop one. Of the regional groupings addressed, only one is making any concerted attempt to develop an integrated regional system (UNASUR) and this has met with very mixed success, largely due to the absence of financial resources by states to develop such ambitious projects. However, there is evident potential (and arguably willingness) to develop such systems and a mature transnational electricity system looks like it could provide a catalyst for such measures. In other places, notably the US, any desire to develop regional systems seems, at face value, to have taken a step backward, especially within transportation. However, such conclusions are countered by energy agreements that run parallel to NAFTA and where interconnections are increasing. Indeed, in parts of the RIS outright integration is evident. This should not disguise the hostility of some parts of the US to fuller transportation integration as they seek to build more secure borders. CARICOM stands in contrast to these larger-scale integration schemes. Its focus is on integration as a means of counteracting its perceived peripherality to the global economy. In this case interstate co-operation seeks to militate against the low traffic volumes generated by these states to create regional transport configurations that allow many
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of the small island economies to achieve some degree of connectivity to major markets and trade routes.
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6. Regional infrastructure systems: a conclusion INTRODUCTION The trend towards regionalism has become an accepted feature of the modern global economy. The strategy by states (especially smaller states) in shared localities to seek to engage in closer interaction if not outright integration is seen, at least in part, as a means to counteract a perception of state peripherality (in geographical, economic and/or political terms) in the global economy. For authors such as Palan et al. (1996), in geostrategic terms, the push towards regionalism in a system of ‘competition states’ is about realising the benefits of scale as a means of enabling states (and the firms within them) to compete (see for example Rugman, 2003). In this sense, the region is a platform for the expression of state interests and that regionalism is often not pursued as a means in its own right (Keating, 1998). However, regionalism as a strategy for the external positioning of states requires some degree of internal reorganisation of national systems to enable the anticipated geopolitical/ geostrategic benefits of the process to be realised (Grygiel, 2006). Integral to this internal reordering is the refocusing of constituent national infrastructure systems (NIS) to enable the reordering of supply chains and facilitate market access. For this reason, many regional schemes have included an infrastructural component or, at the very least, a set of flanking policies in areas such as transport and energy to facilitate this process. It is this process that has been the theme of the research undertaken within this book.
THE STATE AND REGIONAL INFRASTRUCTURE SYSTEMS As argued throughout this volume, the notion of a regional infrastructure system (RIS) is of a network of interconnected NIS. This position stresses that RIS are mainly an amalgam of state-based systems and not systems in their own right. Whilst some authors (see for example 201
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Bouzarovski et al., 2015) have argued that there is some regionalism in infrastructure systems emerging, the position here is that, although such systems reflect that infrastructural relations can be seen (in some instances) to be regionalised, such systems are still heavily dependent on state-based infrastructure, even if it is just for the purpose of transit. Such infrastructures are especially evident in the energy sector (see Kandiyoti, 2012). Consequently, it may often be necessary to consider the notion of RIS beyond the notion of the formal economic grouping. This reflects further the conclusions of Agnew (1994) and Brenner (1999) (amongst others) that territoriality cannot neatly be defined by demarcated borders either of the region or, especially, the state. The latter point highlights that the state (in a regional context) can be subject to a multitude of integrative forces. Some of these regional forces will emerge from the formal processes of integration generated by interstate agreements. These are suggestive of market-driven adaptions of NIS to increasing trade and investment flows but also of a need for states to enhance domestic infrastructure systems to attract and be the source of such flows (Arrighi, 1990; Genschel and Seelkopf, 2015). Frequently alongside these formal processes are a set of informal (or parallel) agreements. These involve states within the regional grouping engaging in bilateral or multilateral agreements which stand outside of the formal processes. Across all of the RIS that have been examined within this work, there are distinct processes generating NIS interconnection through these informal processes. Indeed, in most cases (see for example NAFTA), these bilateral processes tend to be a stronger force for integration than those developed by the institutions of formal integration. This was a point reiterated, in the case of the European system, by Van der Vleuten and Kaijser (2005). Nonetheless, throughout the research the constant theme has been that the NIS is the core building block of the RIS. The centrality of the NIS reflects that territoriality – despite the fact that its power can leak across borders (Taylor, 1994) – is still very much state-based. As a consequence, infrastructuring as a strategy remains very much a state-based process. Looking right across the different sets of regional groupings examined within this research, it is evident that there are an increasing number of players involved in the regional infrastructuring process. Notable amongst these are the regional development banks (such as the European Bank for Reconstruction and Development, Asian Development Bank and Inter-American Development Bank) (Griffith-Jones et al., 2008) which have been proactive within such systems (Ougaard, 2017). However, their funding – which tends to focus on underdeveloped NIS rather than cross-border infrastructure – is largely peripheral to the overall funding
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levels required for such systems. Overwhelmingly, across all the regions examined, it is the state that remains the main financier of infrastructure. Across all types of economies (developed, emerging and developing) market-driven finance remains the exception, reflecting a mix of factors that deters such commercial investment as low traffic flows and perceived risk. The pre-eminence of state territoriality within RIS is also evidenced by the absence of any alternative body that has a mandate (see below) to develop infrastructure at a level above that of the state. In most cases (bar the European Union (EU)), the primary focus of these bodies is to promote intergovernmental co-ordination between states on a multilateral basis to agree on the need to interconnect national systems (see Mattli, 1999) or to facilitate private finance into infrastructures of ‘regional significance’ (Ougaard, 2017). As such, the focus for many of these regional organisations was to promote the interconnection of NIS and to highlight the missing links between systems rather than being able to offer any independent means to realise these systems (Johnson and Turner, 2007). In examining these regional bodies, notably in Asia, Africa and South America, there is an evident strategy to push infrastructure up the agenda of states as a means of channelling funding into those structures that support the objectives of the regional organisation. Even in those cases where integration has developed the furthest with the development of supranational organisations (i.e. the EU) there is still a very limited infrastructuring capability beyond the state. It is evident from its prolonged policy announcements since 1989 (Johnson and Turner, 1997) that the EU has aspirations towards some degree of territoriality (see for example Vitale, 2011). The development of its trans-European network initiative was a clear attempt to stimulate the ‘missing links’ within the European infrastructure system independent of states (see for example Kanellakis et al., 2013). However, this project has also suffered from a lack of independent financial power by the EU. In addition, much of the finance was used to support infrastructure within states (Johnson and Turner, 2007). Despite the convention that encouraging and facilitating regional mobility is positive for states, there is evidently no consensus on the issue (see for example Limao and Venables, 2001). There are notable cases across the global economy where regions have both proactively and passively resisted the trend towards closer infrastructural integration with bordering states. One case is the US and the development of cross-border links with Mexico, where fears of immigration and the political controversy surrounding trade and investment flows has shaped debates surrounding infrastructural integration. In this case, the US has
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underinvested (Mexico is limited in its financial and practical capabilities to remove these constraints) in its southern cross-border links, allowing them to become increasingly divorced from its core contextual drivers. The result has been that the cross-border links do not have sufficient capacity to cope with the actual and anticipated cross-border traffic (see Gerald, 2014). In addition, narratives from the current (2017) administration suggest an intent to further restrict flows through more restrictive border infrastructure. Less proactively are many African states whose main focus in developing international infrastructure is to connect into global rather than regional systems. This strategic focus is compounded by the fact that many African states have a history of conflict with their neighbours and as such have little incentive to deepen infrastructural links with them (Brenton and Isisk, 2012; Simuyemba, 2000).
REGIONAL INFRASTRUCTURE SYSTEMS AND THE INFRASTRUCTURAL MANDATE Given the retention of infrastructuring strategy at the level of the state, the question should then be raised as to why states feel a need to interconnect into regional systems across contiguous space. The answer to this in the evidence offered in the research lies within what Johnson and Turner (2017) term the infrastructural mandate as an underpinning to the state’s infrastructuring strategies, as well as acknowledging how such actions are reshaped by the shifting context of territoriality identified by authors such as Agnew (1994). This suggests that effective territorial strategies depend, at least in part, on the ability of the state to capture, manage, process, filter and transmit flows that are either territorially externally sourced or destined. Across the four criteria identified within the infrastructural mandate (control, security, integration and growth), the evidence suggests that the move towards RIS (through both formal and informal channels) tends to reflect a desire to facilitate interconnection between NIS as a means of supporting the overlapping themes of growth, security and integration. The only case where there was evidence where states used RIS as a means of control was in the EU’s Critical Infrastructure Strategy, where the mutual support between NIS is hoped to sustain control should one (or more) territorial systems fail (Hämmerli, 2010). However, even in these cases, the policy initiatives are merely designed to serve as a forum for interstate co-ordination and information exchange. Across the respective chapters, core benchmarking devices have been used to gauge the comparative state of NIS within regional groupings.
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These benchmarking methods by both the World Economic Forum (2016) and the World Bank (2016) are arguably not the most comprehensive assessment of the state of NIS as the infrastructure rankings are relative. However, they do reflect – as they are based on perceptions of NIS by the international business community – an embedded neo-liberal logic in infrastructuring (Fougner, 2008). In short, the logic of these benchmarking lists is a narrow focus on infrastructure systems as a means of determining, in part, a state’s external competitive positioning. As such, they only reflect one dimension of the infrastructure mandate. The danger of such lists is that the influence over state infrastructuring strategies could lead to states developing NIS in a manner that suits a narrow set of neo-liberal objectives as required by the needs of the competition state (Fougner, 2006) and not of the broader objectives required of NIS. However, in terms of the growth objectives of NIS, such benchmarking devices can be a useful device, highlighting what states need to do to aid flows across borders and how national systems need to consider external dimensions within their design and development. They can also be a useful method of assessing the respective development and performance of the constituent NIS within a RIS. Such differences can have an influential effect on how regional systems develop as borne out by the experience of all of the regions examined bar the Gulf Co-operation Council. A recurrent theme across all of the regional groupings explored (arguably with the exception of UNASUR in South America) is the desire to promote regionalism as a tool of economic integration through facilitating trade and investment. This reflects a neo-liberal consensus that economic growth and development emerge from freer trade and investment (Fougner, 2008) and that if this could not be attained on a global basis then attaining it on a regional basis is the next best thing (see for example Taylor, 2008). This neo-liberal consensus on the benefits of regional integration on what are normally contiguous (or semicontiguous) spaces represents a core contextual driver in the shift towards adapting NIS towards an interconnected RIS. It is evident from the research that – as a consequence of formal integration processes – these economic processes have been a primary driver shaping the evolution of RIS in the EU and sub-regional groupings in Asia, the Americas and Africa. In the more developed economies, RIS seem a logical adaptive response of NIS to these changes. In less developed economies, there is often an alternate focus for trade that can drive RIS as they can emerge for reasons of transit and not for sub-regional trade (UNECA, 2014). Despite such an apparent consensus between the regional groups (and their component states) with regards to these contextual pressures on NIS
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and the perceived benefits of adapting, there are notable differences in priorities between states with regards to infrastructural needs and priorities in attaining growth and development. In the EU, for example, the focus is not just on the physical missing links between what are often mature and developed NIS but on reforming what can often be divergent soft infrastructure systems to allow easier cross-border movement and the emergence of trans-national supply chains (Johnson and Turner, 2017). Furthermore, there are other states who eschew these links by placing security above infrastructure-based trade enablement and investment facilitation. The US, despite NAFTA, has shown reluctance bordering outright hostility to adapting components of its NIS to the shifting regional context. This is not just with regards to the border infrastructure noted above but also to the development of internal transport corridors (the so-called NAFTA superhighway), where there has also been some protectionist-driven hostility (see for example Hayes, 2007). Through more frequently informal than formal integration, states engage in the development of regional systems for reasons of security (Schot, 2010). The most frequent utilisation of RIS for security is through energy infrastructural integration. This integration is evident in the long-distance transmission of both primary (i.e. oil and gas through pipelines) and secondary (i.e. electricity through cross-border interconnections) energy supply. In many cases, notably in the case of Europe and Asia, these links are developed through a mix of formal and informal channels (Konoplyanik, 2009). For example, the EU has been using the TENs initiative to seek to develop missing cross-border interconnections in electricity to create a single grid to ensure security of supply across the EU where there are divergences in generating capability (Aalto and Korkmaz Temel, 2014). Parallel to these supranational measures are longstanding intergovernmental agreements largely based on hydrocarbon pipelines into western Europe from Russia and other Eurasian states (Kandiyoti, 2012). Some argue that such intergovernmentalism renders supranational measures irrelevant as a mix of state and commercial forces are able to deliver such structures without the need for formal EU-level policy strategies (Van der Vleuten and Kaijser, 2005). These trans-national energy links – as part of the formal integration process – are also evident in Asia (notably the Gulf Co-operation Council and Association of South East Asian Nations states in electricity) and South America. However (like Europe), these exist alongside – and are largely secondary to – intergovernmental measures. Interestingly, given the attitude to transport infrastructure, energy systems interconnection between NAFTA can be very well developed with close interconnection. The US–Canada system is a virtually integrated single market based on a
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large number of cross-border interconnections across both primary and secondary energy systems (McKinney, 2008). There are also a large number of links between the Mexican and US systems (if not the same degree of integration between the systems) (Wood, 2014). As NAFTA did not include any specific provision for energy trade (many of these links pre-date the agreement) and infrastructural integration these have been created by a series of bilateral agreements. However, the development of integrated energy systems is not without its risks. Aside from the geopolitical problems that the EU, for example, has faced from being at the end of a complex pipeline system that often traverses states that can be hostile to the transmitting state (Kandiyoti, 2012), there are also concerns of the emergence of complex energy systems where the nature of the embedded risk is poorly understood. There have been separate incidents in both the North American and European electricity systems (Kanellakis et al., 2013), where a routine failure of a single component has generated cascade effects throughout the regional system generating widespread disruption in supply (Amin, 2005). Whilst these were isolated events that led to a better understanding of system complexity, they have given some states reason to rethink the logic of tight energy system integration. In some regional groupings – notably in Africa – there is overt hostility to integrating energy infrastructure as a means of facilitating system security. For these states, true security is realised through energy independence and control of indigenous resources and means of production, generation and transmission (World Bank, 2011). A final less common reason for the drive towards RIS, through both formal and informal channels, is to promote integration. The nature of integration here is not regional integration but the ability of states (especially less developed states) to overcome what some perceive as their peripherality to the global economy (Vanheukelom, 2016). As such, the incentives for the development of RIS are only legitimised insofar as they enable integration in the global economy (World Bank, 2010). The issue has been especially prominent amongst landlocked, sea-locked and/or micro-states (UNCTAD, 2014). These are states for whom geography, domestic infrastructure, dependence and/or market size does not create the justification for independent links to the extent that they will depend on neighbours and/or partners to facilitate the desired connectivity. Of the regional groupings examined, these concerns were evident in the Caribbean, South America and in Africa where the states were either small or landlocked and were therefore pushed to develop RIS. These connectivity themes were also stressed within south east Asia, where infrastructural connectivity (driven by the themes pushed by the Asian
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Pacific Economic Co-operation) was evident (APEC, 2014). In this case, the aim was to enable the emerging and less developed states to connect to large regional markets as part of their development strategies (ASEAN, 2016). These themes also became engendered within the China’s ‘One Belt, One Road’ (OBOR) strategy.
HEGEMONIC-DRIVEN TRANS-REGIONAL STRATEGIES There has been a longstanding degree of extra-territoriality by global powers in the infrastructure of territories beyond their own borders (see Johnson and Turner, 2017). In the era of colonial powers, there was extensive investment by colonial powers in the creation of RIS as a means of both establishing control (what Mann (1984) terms ‘infrastructural power’) and to allow for the extraction of valuable commodities from these locations (Grier, 1999). In the post-colonial era (and with the break-up of the empires and rise of more independent states), there has to some degree been a move away from these legacy systems (see for example Darwin, 2008). In some cases, this has been created by benign neglect, in others by a focus on the needs of the territorial states and, finally, some states (notably in Africa and south Asia) intentionally broke up regional systems as a means to assert territorial control and external security (Slater, 2008). These processes reflected that state formation often took place in turbulent environments where neighbouring states had (and often continue to have) fractious relationships. In the post-colonial era, extra-territorial infrastructure emerged through a variety of channels and for a number of objectives. First, there were military strategies deployed by the global hegemon (the US) to establish military facilities to secure and sustain global flows through major bottlenecks (see for example Rodrigue, 2004). Second, there was the infrastructure developed by global multinationals (often supported by local state bodies) as part of the foreign direct investment process. This, in some sense, reflects a continuation of the colonial ‘extractive’ infrastructure, but in competing for foreign direct investment states felt compelled to support or even facilitate the process. The third channel has been through international aid and development agencies such as the World Bank and assorted development banks (see Bourguignon and Pleskovic, 2008). These investments follow the logic of the competition state in that such investments were narrowly focused on enabling development and growth and were overwhelmingly state-focused with regional systems often being an afterthought. Moreover, the funding
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offered was often only a fraction of the resources needed to develop underdeveloped NIS. As reflected throughout the book, the new force for infrastructural integration across a number of regions (but especially Eurasia) is China. This is not just through its OBOR strategy (Blanchard and Flint, 2017), but also through stand-alone opportunistic investment. One of the less acknowledged impacts of this highly ambitious extra-territorial infrastructuring strategy is how it will serve to create a pan-Asian infrastructure system based on the interconnection of evolving sub-regional systems across the continent. The intentions of the OBOR have been much debated. Any pretence that this is an Asian Marshall Plan can be easily dismissed as it is evidently motivated by China’s long-term geostrategic interests in promoting its internal political, social and economic cohesion, but also in ensuring it has markets for its infrastructuring capabilities and has multiple channels for getting its goods to market and in accessing the core raw materials (notably energy) to sustain its growth and development (Blanchard, 2017). There is also ambiguity over the link between the maritime dimensions of the OBOR and the more explicitly geopolitical ‘string of pearls’ strategy of the build-up of Chinese military presence throughout the Indian Ocean and beyond (Djankov and Miner, 2016). The impact of the OBOR on the Eurasian region is, at this point in time, a matter of conjecture. There is a fear by many of the states on the terrestrial routes that the loans offered by China to upgrade NIS as part of the OBOR strategy may saddle these states with higher levels of debt (which could not be easily absorbed) with very little prospect of the infrastructural upgrade being anything other than a transit system which offers little prospect of such investments as a catalyst for growth. There is also a fear by some states that they may end up ceding control of critical components (such as port infrastructure) of their NIS. Whilst the plan is still in its formative stages, it is already evident that the OBOR’s rhetoric is running ahead of its practical impact, especially in terms of the plans for high-speed rail networks across Asia. There is the fear that the idea of developing modern (developed world) infrastructure systems runs ahead of the practical infrastructure needs of some developing/emerging economies where the need of a NIS is more of a focus on upgrading and maintaining existing road networks, for example. In this case, the OBOR infrastructure makes more sense for China (and the state at the other end of the infrastructure) than it does for the host state, which is reduced to being a mere transit point. There are also investments in RIS beyond Eurasia. In Europe, the links to TENs remains unclear, although the port-focused investment will be a
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core component of the ‘Highways of the Sea’ programme. In North America, there are a series of stand-alone projects in each of the NIS with seemingly little regional dimensions being evident. This is also true largely for South America where – other than the much vaunted and frequently postponed coast to coast railway – there has been little regional infrastructuring. The investments in hydro-electric capacity will only deliver regional benefits if states successfully manage to interconnect national electricity networks as planned. Arguably, the region that has had the most tangible impact in terms of Chinese investment in RIS is Africa (Zafar, 2007). In part, such trans-national infrastructures are driven not by a desire to develop such systems per se but are a more pragmatic response to the state of NIS and of the interconnections between them (Schiere and Rugamba, 2011). In fact, Africa was only included in OBOR rather belatedly, but there can be little doubt that much of this investment in Angola is based on the need to secure access to maritime facilities for inland sources of the raw materials necessary for China’s growth (Kaplinsky and Morris, 2010). An exception to this is China’s plans for an African high-speed rail system, but again this has met with mixed success.
CONCLUSIONS Overall, it is evident that the development of RIS across the international system is unevenly developed. As a state-driven process, there seems to be no consensus between states as to the benefits of such systems. In developed economies with mature NIS, regions like Europe see a rationale to RIS, but again the approach seems more pragmatic than strategic. It is also evident that RIS seem harder to justify where there are discrepancies in the relative state of NIS between partner states. In these cases, as with states where NIS are underdeveloped, the priority has been investment in national over regional systems. The strategy advanced by some (such as the development banks) that investment in RIS could act as a catalyst for investment in NIS has failed to convince many (if any) states.
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Slater, D. (2008) Geopolitics and the post-colonial: rethinking north–south relations, Chichester: John Wiley. Taylor, C. N. (2008) ‘Regionalism: the second-best option’, St. Louis University Public Law Review, 28, 155–99. Taylor P. J. (1994) ‘The state as container: territoriality in the modern worldsystem’, Progress in Human Geography, 18(2), 151–62. United Nations Conference on Trade and Development (UNCTAD) (2014) ‘Landlocked developing countries: facts and figures’, UNCTAD/ALDC/ 2014/1: www.unctad.org, accessed 24 April 2017. United Nations Economic Commission for Africa (UNECA) (2014) Assessing regional integration in Africa IV: enhancing intra-African trade: www.uneca. org, accessed 3 May 2017. Van der Vleuten, E. and Kaijser, A. (2005) ‘Networking Europe’, History and Technology, 21(1), 21–48. Vanheukelom, J. (2016) ‘The political economy of regional integration in Africa: the African Union report’: http://ecdpm.org/peria/au, accessed 23 May 2017. Vitale, A. (2011) ‘The contemporary EU’s notion of territoriality and external borders’, European Spatial Research and Policy, 18(2), 17–27. Wood, D. (2014) ‘Integrating North America’s energy markets: a call for action’, Wilson Centre Mexico Institute, working paper, December: www.wilsoncenter.org/, accessed 3 April 2017. World Bank (2010) Africa’s infrastructure: a time for transformation: https:// openknowledge.worldbank.org/, accessed 12 June 2017. World Bank (2011) Africa’s power infrastructure: investment, integration, efficiency: www.worldbank.org, accessed 23 April 2017. World Bank (2016) Logistics Performance Index: http://lpi.worldbank.org/, accessed 9 May 2017. World Economic Forum (WEF) (2016) Global competitiveness report 2015– 2016: www.wef.org, accessed 12 April 2017. Zafar, A. (2007) ‘The growing relationship between China and Sub-Saharan Africa: macroeconomic, trade, investment, and aid links’, Washington, DC: World Bank Research Observer.
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Index abstract space 10 Abuja Treaty (1991) 117 access issues 11, 38, 44, 55, 57, 113–114, 124, 136, 140, 182, 201 Action Plan (CEC, 1990) 37 action plan (PIDA) 116–117 adaptive tensions 19, 21–23, 23–24, 31, 33–34, 159 Afghanistan 82, 84, 85 Africa 57 Africa Infrastructure Country Diagnostics 116 African Development Bank (AfDB) 109, 116, 127 African Information Society Initiative 144 African infrastructure system (AfIS) 108–149, 205 China’s role in 115, 131, 146–148, 210 energy 139–143 imperative for 108, 109–117 information 143–146 maritime 134–139, 145, 146 regional integration 117–124, 137, 141 transport 124–133 African Railways Union 130 African Union (AU) 117, 121, 125, 131, 135, 141, 147 African Union Commission 116 Agnew, J. 17, 18, 202, 204 aid-driven infrastructure 147, 148, 208 Alden, C. 147 Algeria 56, 118, 122, 123, 141 Americas’ infrastructure system (AmIS) 157–193, 205, 210
Caribbean Community 157, 171–177 China’s role in 189–192 North American Free Trade Area 157–171 Union of South American Nations 157, 177–189 Ammermann, H. 48, 49 ANCOM (Andean Community) 177, 184 Angola 118, 129, 130, 146, 147 Angola mode 147, 191 anxiety, about infrastructure 3 Arab Maghreb Union (AMU) 118, 120, 122, 123, 127 Argentina 179, 181, 182, 183, 184, 186, 188 ASEAN Highway Network (AHN) 78 ASEAN power grid (AGP) 78 Asia 16, 56, 70 Asia Pacific Economic Co-operation (APEC) 70, 71–74 Asian Development Bank (ADB) 71, 76, 79, 83, 84, 85, 91–93, 99 Asian Infrastructure Fund (AIF) 77, 92 Asian Infrastructure Investment Bank (AIIB) 94, 98–99 Asian infrastructure system (AIS) 70–100, 205 APEC connectivity agenda 71–74 Association of South East Asian Nations 75–79 China’s role in 70, 93–100 from sub-regional to pan-regional 90–93 Gulf Co-operation Council 86–90 South Asian Association for Regional Cooperation 80–85
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aspirant territoriality 31, 32–37, 48, 50, 52, 53, 203 assessment of TENs projects 40 Association of South East Asian Nations (ASEAN) 70, 72, 75–79, 92, 93, 95, 98, 206 austerity 39, 41, 48, 49 Austria 43 aviation sector the Americas 175–176, 179 Asia 83, 87, 88 Europe 40 Azerbaijan 60 ‘backhaul’ problem 173 Badenoch, A. 52 Badie, B. 34 Bahamas 174, 176, 190 Bahrain 86, 87, 88, 89 Balkan states 32, 51, 61 Baltic states 32, 46, 47 Bangladesh 81, 82, 84, 85, 93, 96, 97 Barbados 174, 190 Bartolini, S. 34 Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation 85, 93 Behar, A. 136 Belarus 56, 61, 96 Belgium 43, 56 Belize 172, 174, 176 benchmarking methods for NIS 204–205 see also individual national infrastructure systems Benelux states 51, 53 Benin 118, 122, 138, 139, 141 Beyond the Border 163–164 Bhagwati, J. 13 Bhattacharyya, A. 81 Bhutan 81, 82, 83, 84, 85 Bialasiewicz, L. 35 bilateral agreements/deals 22, 202 Africa 146, 149 the Americas 158, 164, 166, 176, 182, 183, 190, 207 Asia 84
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bilateral infrastructure integration (EU) 39, 52–54 biomass 139 blackouts 51, 170 Blank, S. 159 Boedeltje, F. 34 Bofinger, H. 111 Bolivia 179, 181, 182, 183, 186, 188, 189 border-crossing times, Africa 132, 133 border/gateway infrastructures 11, 12 Africa 112, 130, 131 the Americas 11, 159, 160–164, 168, 169, 187, 203–204 Botswana 118, 132, 137, 138 Bouzarovski, S. 55 Bowker, G. 4 Brazil 177, 179, 180, 182, 183, 184, 187, 188, 191, 192 Brenner, N. 6, 18, 202 broadband 42, 44, 73, 77, 143, 144, 145, 146 Brunei 75, 76 Bulgaria 32 Burkina Faso 118, 123, 137, 139 Burundi 118, 122, 130, 137, 138 business interests 15 Calderón, C. 109, 113 Cambodia 72, 75, 76, 78, 79, 96, 100 Cameroon/Douala 118, 123, 139, 141, 145 Canada 157, 158, 160, 163–164, 166, 167, 168, 170–171, 190, 206 Caribbean Community (CARICOM) 157, 171–177, 190, 192 cascade effects 44, 51, 207 Central African Republic 118, 123, 130, 137, 139, 145 Central American Integration System 157 Central Bi-Oceanic Railway 192 central and eastern Europe 16, 32, 40, 46, 57, 59, 60, 61 Chad 118, 123, 128, 130, 137, 139, 145, 147 Chakraborty, D. 81
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cheap loans 147 Chile 177, 178, 179, 182, 183, 184, 186, 187, 188, 189 China 110 and the African infrastructure system 115, 116, 124, 130, 131, 146–148, 210 and the America’s infrastructure system 189–192 and the Asian infrastructure system 70, 93–100 electricity co-operation 79 EU integration as counterweight to hegemonic power of 13 as a force for integration 209 investment in Piraeus 62 national infrastructure system 76, 178 China Development Bank 98 Christopherson Group Report (1996) 40 civil wars 109, 111 co-operation 19, 20 the Americas 164, 170–171, 181, 185, 191, 192–193 Asia 75, 78–79, 84, 85, 93, 94 Europe 42, 51, 52, 60 regionalism and 16, 17 co-operative forums 73, 91 co-ordination 20, 203, 204 Africa 119 Asia 92 Europe 37, 38, 50, 51, 52, 57, 58, 61 UNASUR states 181, 185 coastal countries African 136 see also Caribbean Community cohesion 3, 6, 10, 12, 35, 36, 39, 88, 125, 209 Cohesion Fund 48, 49 Cold War 16 collaboration 13, 52–53 collective power 13, 14 Collier, P. 137 Colombia 179, 183, 184, 188 colonial infrastructure 94, 109–110, 111, 128, 208
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colonial power(s) 117, 120, 208 Commission of the European Communities (CEC) 33, 39, 46, 48, 49, 50, 58, 60 Committee on Foreign Investment 190 commodity cycle 148 commodity-driven investment 191 Common Economic Maritime Zone of Africa (CEMZA) 135 Common Market for East and Southern Africa (COMESA) 118, 119, 120, 122, 123, 124, 127, 138 common standards 38, 44, 133 Common Transport Policy 38, 39 community of practice 4 Community of Sahel-Saharan States (CEN-SAD) 118, 120, 122, 123, 127 competition 14, 16, 80, 89–90, 99, 119, 175 competition state(s) 12, 13, 19, 74, 115, 201, 205, 208 competitiveness 14, 15, 36, 91, 143 complexity catastrophe 7 ‘comprehensive’ network, EU corridors 42 concessional loans 192 Congo 118, 122, 123, 130, 136, 138, 140, 141, 142, 146 Connecting Europe Facility (CEF) 48 contagion effects 16 container infrastructure 124, 134, 135, 173, 175, 181 control 204 infrastructuring and 5, 8–10, 18, 20, 44–45, 54, 57, 95, 115, 160 of resources, Africa 111 see also price controls; territorial control ‘core’ network, EU corridors 42 corruption 100, 111 COSIPLAN 181, 185–189 costs EU ‘core’ network 42 infrastructural link, SAARC and ASEAN 93 of a pan-African rail system 129
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procuring energy, Africa 140 of the TAH 126 TENS-E 46 see also trade costs; transaction costs; transit costs; transport costs Côte d’Ivoire/Abidjan 118, 122, 123, 134, 138, 139 critical infrastructure 9 Africa 116 Europe 50–52, 56, 204 United States 11, 190 cross-border infrastructure see border/gateway infrastructures cross-border trade/flows 22 Africa 120, 126, 142, 143 Europe 38 NAFTA 160, 161, 162, 166, 167, 170, 171 crude oil 55, 85, 166, 167, 168, 169 Customs and Border Protection (US) 162 cyber systems 3–4, 116 Czech Republic 32, 56 data protection 44 De, P. 85 debt/debt relief 148 degeneration of infrastructure 7 deterritorialisation 20, 36, 116 Detroit-Windsor border crossing 163 development agencies 21, 208 development divide (ASEAN) 75, 76 Digital Agenda for Europe (DAE) 44 Djankov, S. 94 Djibouti 97, 118, 130, 134, 146 Doha 88 domestic energy strategy, NAFTA states 166 Dominican Republic 176 Dubai 88, 89 Dülffer, J. 53 dynamics infrastructural 3, 6 of regionalism 16–17
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Ease of Doing Business Index 85, 114 East African Community (EAC) 118, 119, 120, 122, 123, 124, 127, 128, 131, 133, 138, 139, 146 East African Trade and Transport Facilitation Project 133 Economic Community of Central African States (ECCAS) 118, 120, 123, 127 Economic Community of West African States (ECOWAS) 118, 120, 122, 123, 127, 146 economic geography 12, 112 economic infrastructures 2, 147 economic integration 13, 21, 22, 23, 205 Africa 117–124, 137 the Americas 177, 189 Asia 70, 72, 75, 80, 86, 90 Europe 31, 33 economic interactions 19, 82 economies of scale 14, 15, 16, 74, 111, 112, 129, 201 Ecuador 179, 188 Egypt 61, 97, 118, 123, 124, 134, 142, 147 Electricity and natural gas transmission infrastructures in the community (CEC) 45–46 electricity sector Africa 113–114, 121, 122, 123, 140–141, 141–142, 147 the Americas 166, 170–171, 179, 182, 184, 187–189, 191, 210 Asia 78–79, 84, 88, 90 Europe 45–46, 47, 51, 52 embeddedness 2, 3, 4, 5, 15 empowerment 4 Enabling Trade Index 132 Energy Charter Treaty 58, 60 energy corridors Africa 123 Asia 79 Europe 46, 47, 56, 57 OBOR program 96 energy demand 55, 90, 140, 166, 171, 183, 184
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energy exports 86, 114, 139, 166, 167, 168, 169, 172, 183 energy imports 55, 147, 166, 167, 183 Energy Information Agency 169 energy infrastructure Africa 113–114, 121, 122, 123, 139–143, 207 the Americas 166–171, 178–179, 182–184, 187–188 Asia 78–79, 83, 84–85, 90, 93 Europe 51, 52 energy integration 206 Africa 140, 141 the Americas 170 Europe 46 resistance to 207 UNASUR 182, 183–184, 187–189 energy PENs (E-PENS) 55–60 energy poverty 114 energy security 45, 55, 57, 58, 90, 94, 97, 98, 141, 142, 183, 207 Energy TENs (TENS-E) 45–47 Eritrea 118, 134 Estache, A. 86 Estonia 32, 43, 47 Ethiopia 118, 130, 137, 138, 140, 141, 142, 146 Etihad line 88–89 Eurasian Economic Union (EAEU) 70, 98 European Bank for Reconstruction and Development 99 European Fund for Strategic Investment 49 European infrastructure system (EIS) 31–62, 205, 206 aspirant territoriality 32–37 bilateral integration 52–54 coordination of critical infrastructure 50–52, 204 pan-European network 54–62 policy debates 32–33 trans-European network initiative 37–50 European integration 13–14, 16, 31, 33, 53, 54, 55, 62 European Investment Bank (EIB) 33, 38, 48, 49
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European Union aspirant territoriality 31, 32–37, 48, 50, 52, 53, 203 energy relations, Russia 59 hydrocarbon deficit (2015) 55 infrastructure failure 207 see also individual countries Europe–Asia Transport Links 61–62 Exel, J. van 40 Export Import Bank of China 98 external trade 119, 172, 180 extra-territoriality 13, 18, 20, 22, 93, 94–95, 98, 146, 208, 209 failure see infrastructural failure; market failure; state failure Fickers, A. 52 financial institutions 92, 94, 98, 115, 191–192 Finland 32, 43 foreign direct investment (FDI) 148, 185, 191, 208 foreign policy (Chinese) 99, 147 formal control 9 formal integration 22, 23, 38, 53, 71, 72, 202, 205, 206 formal regionalism 23 Foucaultian perspective 12 fragmentation industrial structures 14 see also infrastructural fragmentation; territorial fragmentation France 43, 47, 51, 159 free information flows 44 free trade 54, 119, 205 free trade areas 60, 72, 80, 92, 138, 144 see also North American Free Trade Area functional complexity 3–4 Gallagher, K. 191 Gallup, J. 136 Gambia 118, 122 gas sector see oil and gas sector
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gateways see border/gateway infrastructures Gazprom 57, 59 geography 16, 35, 115, 135 geopolitics 51, 58, 59, 80, 99–100, 117, 177, 189 geostrategy 54, 99, 177, 191, 201, 209 geothermal resources 139 Germany 43, 49, 56, 59, 60, 96 Ghana 118, 122, 138, 139, 141 Glassman, J. 19 global hub ports 174 global positioning 12, 15, 16, 117, 136, 185, 201, 205 Goldthau, A. 57 governance EU-level 52 limiting of African soft infrastructure 133 of OBOR projects 100 regionalism as a tool of 15 Graham, S. 6, 11 Great Uhuru Railway 113, 130, 131 Greater Mekong region 79 Greece 32, 51, 97 greenfield investment 49, 99 gross domestic product (GDP) 77, 80, 86, 109, 175, 179 Group of Experts (EU) 41, 50 growth/development 12–13, 204, 205–206 Africa 115, 119, 125, 147, 148–149 the Americas 158, 177 Asia 70, 74 Europe 36 and investment 208–209 Guinea 122, 139, 141 Guinea Bissau 118, 122 Gulf Co-operation Council (GCC) 70, 86–90, 97, 98, 100, 205, 206 Gupta, G. 137 Guyana 172, 174, 177, 179, 188 Haiti 173, 174 Hämmerli, B. 51 hard infrastructure 2 Africa 112, 114, 120, 124, 144
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the Americas 163, 173 Asia 77, 88, 92 Europe 60 hard territoriality 35, 37 hegemonic power 14, 17 hegemonic pressures 22–23 hegemonic-driven strategies 208–210 Herbst, J. 116 Hettne, B. 15, 17, 19 hidden integration 52, 54, 55 high speed rail 40, 62, 96, 100, 131, 146, 209, 210 Hommels, A. 52 Hong Kong 78, 96 Houtum, H. van 34, 35 Howe, C. 6 Huawei 190 hub and spoke infrastructure 97–98, 131, 175, 176 Hughes, T. 3 Hugill, P. 5 Hungary 43, 56 hydro power Africa 122, 123, 140, 141, 142, 147 the Americas 170, 182, 184, 189, 191, 210 hyper-connectivity 100 hyper-regionalism 17 Iceland 32 ‘ideology of circulation’ 5 illegal trade flows 11, 162, 163, 165 implementation deficit 172 import-substitution strategy 119 India 80, 81, 82, 83, 84, 85, 92, 96, 100 Indonesia 75, 76, 78, 97 industrial structures, fragmentation 14 informal control 9 informal integration 22, 55, 202 information and communication technology (ICT) 114, 116, 143, 145 Information Development Indicators (ITU) 143 information infrastructures 3–4 Africa 113, 121, 122, 143–146
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the Americas 179, 190 Europe 42–45 infrastructural complexity 3–4, 5, 7, 11, 58, 207 infrastructural failure 3, 7, 51, 207 infrastructural fragmentation 10, 36, 52, 81–82, 111, 112, 130 infrastructural ideal 10 infrastructural investment Africa 110, 111, 116–117, 120, 124, 133, 139, 142 the Americas 164, 178, 179–180, 187–189 Asia 76–77, 87–88, 89, 90, 91 Europe 33, 38–39, 44, 48–49, 209–210 and growth/development 12, 208–209 see also China; foreign direct investment; private finance; required expenditure; state finance; underinvestment infrastructural mandate(s) 6, 8–13, 18, 19, 20, 21, 23 Africa 109, 115 Asia 71, 74 Europe 31, 36, 37, 38, 39, 44, 50, 58 regional infrastructure systems 204–208 see also control; growth/development; integration; security infrastructural power 8, 9, 18, 116, 208 infrastructural relations 4–5, 6, 9, 11, 18, 20, 33, 59, 202 infrastructural violence 8, 9 infrastructural warfare 11 infrastructure(s) 1–5, 6–7 Infrastructure Consortium for Africa (ICA) 112, 116, 121, 124 Infrastructure Growth Strategy (2011) 36 Infrastructure Project Preparation Facility 121 ‘infrastructure for resource model’ see Angola mode
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Infrastructure for a seamless Asia 91 infrastructuring national infrastructure systems 8–13 the regional imperative 17–23 state territoriality 5–7, 8, 23 supranational 31 Initiative for the Integration of the Regional Infrastructure of South America (IIRSA) 181, 185, 192 inland waterways Africa 135–136 Europe 40, 42 SAARC states 83 UNASUR states 181, 186 innovative financing 48, 50 Institute of Chartered Accountants in England and Wales (ICAEW) 88 institutional connectivity 73 integrated maritime strategy (AU) 135 integration 10, 19, 202, 204 cascade effects 51, 207 and competitiveness 14 and erosion of gateways 160 resistance to 203–204, 207 see also individual regions interconnection 1, 2, 7, 21, 203, 204 see also individual regions interdependence 3–4, 166 Intergovernmental Authority of Development (IGAD) 118, 120, 123, 127 intergovernmentalism 13, 16, 17, 19, 20, 52–53, 73, 75, 185, 203, 206 Intermodal Surface Transportation Efficiency Act 1991 (US) 164–165 internal conflict, Africa 109, 128 Internal Energy Market (IEM) 55, 57, 58 International Energy Agency (IEA) 55, 78, 90, 113–114, 139, 140 international political economy 1, 20 International Telecommunications Union (ITU) 143, 144 international treaties, and EU territoriality 35 internet 44 interoperability 1, 21
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Africa 110, 133 the Americas 162, 166, 173 Europe 38, 42, 44, 47, 53, 54 interstate agreements 13, 53, 184, 202 see also bilateral agreements/deals Interstate Natural Gas Association of America 169 intra-regional trade Africa 111, 119, 120, 131–132, 140, 142 the Americas 158, 160, 172, 173, 178 Asia 75, 80, 81, 86, 89, 92 Europe 33–34 investment in economies, Africa 119 see also infrastructural investment Investment Growth Strategy 36 ‘inward-looking’ strategy 117 Ireland (Republic of) 32, 53 Islamic Development Bank 76 island economies African 114 see also Caribbean Community Italy 43, 56 Jamaica 173, 174, 176, 190 Japan 76, 99 Japanese Bank for International Co-operation 92 Johnson, D. 7, 8, 37, 53, 204 Jouanjean, M.-A. 113, 132 Kaijser, A. 52, 53 Kandiyoti, R. 59 Kashmir 96, 100 Keating, M. 18 Kenya/Mombasa 97, 112, 118, 122, 124, 130, 132, 134, 136, 138, 139, 141, 146 Khanna, P. 94 Konoplyanik, A. 58 Korean Import-Export Bank 92 KPMG 140, 142 Kuwait 86, 87, 88, 89
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La Porte, T. 2 Lagendijk, V. 52 land bridge infrastructure 88, 92, 93, 96 landlocked states 207 African 108, 110, 114, 117, 121, 124, 125, 127, 132, 134–139 Asian 73, 74, 81, 82, 83, 84, 85, 91, 93, 94 South American 181 Laos 72, 75, 76, 78, 79, 96 Latin America 32, 180 Latin American Integration Agreement (LAIA) 177 Lesotho 118, 137 Libya 118, 123, 130, 141 Liner Shipping Connectivity Index (LSCI) 130, 134, 174, 181 liquefied natural gas (LNG) 46, 56, 57, 59, 85, 167, 169, 183 logical interdependence 4 logistics, GCC states 87 Logistics Performance Index Africa 112, 132, 137 the Americas 158, 179 Asia 82, 88, 89 Europe 32 ‘Look East’ policy 81, 92 low income states 112, 113 Lowe, M. 129 Maastricht Treaty 34, 36 Maghreb 134 Malawi 118, 122, 137, 138 Malaysia 76, 78, 97, 178 Maldives 82 Mali 118, 122, 130, 137, 139 Mamadouh, V. 35 Mann, M. 5, 8, 18 maquiladores 160 maritime infrastructure Africa 111, 122, 127, 134–139, 145, 146 the Americas 173–175, 179, 180–181, 187, 190 Asia 78, 83, 87–88, 93, 94, 96, 98 Europe 40, 42, 61–62, 209–210
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maritime Silk Road 95, 97 market access 55, 182, 201 market failure 6, 39 market-driven infrastructure 10, 22, 39, 41, 147, 202 market-driven integration 76 Martinique 176 Marvin, S. 6 masterplan (ASEAN, 2025) 76, 77 Mauritius 112, 114, 118, 132, 143 Mercosur (Southern Common Market) 177, 182, 184, 186, 187 meta-geography 35 Mexico 11, 157, 158–159, 160, 161, 162, 163, 166, 167, 168, 169, 171, 190 Middle East 56, 57, 61, 86, 96, 97, 147 middle income states 112, 113, 178 Milner, H. 161 Miner, S. 94 mobility 38, 39, 45, 60, 61, 73, 76, 81, 203 Modernisation Agenda 2063 (AU) 131 monopoly control 110 Morocco/Tangiers 51, 56, 118, 123, 134, 135 ‘motorways of the seas’ 42, 61 Mozambique 118, 138, 141, 142 multilateral agreements 16, 23, 202 multilateral development banks (MDBs) 76, 92, 98, 109 see also individual banks multimodal infrastructure Africa 138, 139 the Americas 187 Europe 40, 41–42, 43 multispeed Europe 35 multistate corridors 93 Murphy, A. 20, 35 Myanmar 72, 75, 76, 78, 79, 83, 84, 85, 92, 93, 96, 97, 100 Namibia 118, 130, 131, 138 narratives of infrastructure 5, 7, 11, 12 Africa 109, 115, 143
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the Americas 162, 165, 204 Asia 71, 82, 87, 91 national energy champions 57 national infrastructure systems (NIS) adaptation/adaptive tension 7, 18, 19, 21–23, 23–24 Africa 108, 110, 112, 137 the Americas 158, 159, 160, 173, 178, 179 Asia 74, 75, 76, 81, 82, 86, 87 China 95 complexity and challenges for 7–8 Europe 32 infrastructural mandate 8–13 and regional infrastructural systems 1, 20, 202 regionalism and 18, 21–23 nationalism 17, 183, 189 natural monopoly 3 Naudé, W. 136 Neighbourhood Policy 60 neo-colonialism 148 neo-functionalist ‘spillover’ 16 neo-liberalism 9, 15, 16, 54, 71, 118–119, 148, 189, 205 neo-mercantilism 15 neo-Weberian state 8, 19 Nepal 81, 82, 83, 84, 85 Netherlands 43, 96 network effects 3, 4 Network Readiness Index (NRI) 143 network relations 18 networked infrastructures 2–3 Neuman, M. 4 New Development Bank 98 New Partnership for Africa’s Development 116, 121 new regionalism 15, 17, 19, 22, 172 Niger 118, 122, 125, 130, 137, 139, 141, 147 Nigeria 110, 118, 122, 134, 138, 141, 147 Nijkamp, P. 173 nodes, failing 7 Nord Stream 58, 59, 60 North Africa 61 see also individual countries
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North American Electric Reliability Corporation 166 North American Free Trade Area (NAFTA) 157–171, 190, 192, 206, 207 North American Inland Ports Network 165 North American Super Corridor Coalition 165 Northern Ireland 53 Norway 32, 56, 61 Nye, J. 19 obsolescence 7, 33, 178 oil and gas sector Africa 122, 139–140, 141 the Americas 166–167, 168–169, 172, 182–183 Asia 78, 84, 85, 97 Europe 46, 47, 51, 56, 57, 58–59 old regionalism 15, 19 Oman 86, 87, 88, 89, 135 ‘One Belt, One Road’ (OBOR) initiative 60, 62, 93–100, 146, 147, 191, 209, 210 ‘one-stop’ border posts 133 O’Neill, B. 9 open and competitive markets 38 opportunism 16, 209 Organisation for Economic Co-operation and Development (OECD) 33, 126, 132, 180 ownership of infrastructure 9, 57, 190 Painter, J. 18 Pakistan 80, 81, 82, 84, 85, 96, 97, 100 Palan, R. 13, 15, 201 pan-African regionalism 108 pan-American highway 157 pan-Asian regional infrastructure 90–100 pan-European networks (PENs) 45, 53, 54–62 paradoxes of infrastructure 6–7 Paraguay 179, 181, 183, 184, 186, 188
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Parfomak, P. 168 patch-and-mend strategy 129–130 path dependencies 7, 59, 175 people-to-people connectivity 73, 75–76, 81 peripherality 22, 41, 95, 134, 136, 147, 172, 173, 175, 181, 192, 201, 207 Peru 179, 182, 183, 186, 188, 192 Philippines 75, 76 physical connectivity 73 physical interdependence 3 pipeline systems Africa 141 the Americas 168–169, 182–183 Asia 84 Europe 56, 58–59 Piraeus 62 Poland 32, 43, 51, 56, 59, 96 policies infrastructural, UNASUR states 185–189 regionalism as a set of 15 and territorial integration 10 political economy 1, 16, 20, 112, 161 political integration 15, 31, 33, 131 polycentric systems 9, 11 population densities 93, 110–111, 125, 129 port infrastructure Africa 111, 122, 134, 135 the Americas 173–175, 179, 180–181 Asia 78, 87–88, 93, 95, 97, 98 Europe 61–62, 209–210 Port of Laredo 161 Porter, M. 14 Portugal 32, 51 post-colonialism 110, 117, 208 power of business interests 15 see also colonial power(s); empowerment; soft power; state power power asymmetries 10 price controls, African public transport 111 Priemus, H. 42
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private finance Africa 116, 117, 148 Asia 73, 84 Europe 39, 41, 44, 48–49, 53 pro-activism Africa 124, 131, 144, 145 the Americas 191, 203 Asia 81, 83, 84, 91, 93 Chinese 62, 70, 91 Europe 44, 48 of regional development banks 202 Programme for Infrastructure Development in Africa (PIDA) 116, 121, 125, 145 Project Bond programme 49 protectionism 16, 80, 206 proximity syndrome 136 public good(s) 10, 22, 73, 74, 121 public-private partnerships 138, 186 Puerto Rico 176 Qatar 56, 86, 87, 88, 89, 100 rail infrastructure Africa 111, 113, 122, 123, 127, 128–131, 146, 147 the Americas 159, 160, 165, 179, 180, 187, 192 Asia 78, 82, 83, 88–89, 93, 96, 100 Europe 40, 42, 53, 61 Raineri, R. 189 Ratner, M. 168 realism 14–15, 20 refined petroleum 166, 167, 169 reform, investment without conditional 148 regional agreements 16, 157 regional development banks 202–203 regional economic communities (RECs) 111, 116, 117–118, 123, 127–128, 133, 138, 144, 145, 146 see also individual communities regional hubs, UNASUR 185–186 regional infrastructure systems composite nature of 1 emergence of 1, 13, 18, 19, 20
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infrastructural mandate 204–208 as a network of national infrastructure systems 20 the state and 201–204 two main forms 21 regional institutions 15, 16, 53 Regional Multimodal Transport Study (SAARC) 83 regional power pools 141, 142 regionalism Africa 108, 148 Asia 72 and infrastructuring 17–23, 24 rise of 1, 13–17, 201 regulation 6, 8, 9, 133 regulatory reform 119, 143 Renda, A. 51 required expenditure Africa 116, 140 the Americas 162, 180 Asia 71, 76, 78, 86, 93 Europe 33 resilience of infrastructure 51, 52, 171 resistance to integration 55, 203–204, 207 resource-focused infrastructure 146–147, 148, 192 resource nationalism 183, 189 responsibility 9, 54 reterritorialisation 20, 36 Rinaldi, S. 3 risk(s) 7, 50, 51, 84, 133, 183, 207 risk-averse climate 49 road infrastructure Africa 113, 122, 123, 125–128, 129, 133, 147 the Americas 157, 158–159, 160, 165, 179, 180, 185, 187 Asia 78, 81–82, 83, 96 Europe 42, 61 Rodgers, D. 9 Romania 32 Romanova, T. 60 ‘run to the Pacific’ 187 rural population, Africa 114, 125 Russia 51, 55, 56, 57, 58, 59, 60, 61, 96, 97
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Rwanda 110, 118, 122, 125, 130, 132, 137, 138, 143, 146 Sassen, S. 18 Saudi Arabia 86, 87, 88, 89, 167 scaling up 36, 45, 117, 119, 141–142 Schipper, F. 54 Scott, J. 35 sea-locked states 172, 207 secretariats (REC) 133 security 6, 9, 11–12, 52, 54, 75, 175, 185, 204, 206, 208 see also energy security self-interest 17, 53, 147 self-sufficiency 52 Senegal 118, 122, 128, 130, 139 senescence 7, 33, 178 Serven, L. 113 services, liberalisation of 38 shale energy 168, 169, 183 shared responsibility 54 Sichelschmidt, H. 40 Silk Road economic belt (SREB) 95 Silk Road Fund 98 Simuyemba, S. 110 Singapore 75, 76, 78, 100 Singapore–Kunming rail link (SKRL) 78 Single European Market (SEM) 35, 37, 38, 39–40 Sitter, N. 57 Slovak Republic 32, 43, 56 small island developing states (SIDS) 172 small-sized states/economies, Africa 110, 117, 120–121, 207 social solidarity 10 socio-economic systems 2, 5, 7 Söderbaum, F. 19 soft infrastructure 2, 4, 7, 21, 23 Africa 110, 112, 114, 120, 124, 131–133, 135, 144, 147 the Americas 163, 165, 173, 185 Asia 73, 74, 77, 85, 88, 92 Europe 37, 38, 46, 49, 50, 58, 60, 61, 62, 206 soft power 59
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Somalia 112, 118 South Africa/Durban 118, 128–129, 134, 135, 138, 139, 142–143, 146 South American Energy Council 189 South Asia 125 South Asia Sub-regional Economic Cooperation 93 South Asian Association for Regional Co-operation (SAARC) 70, 80–85, 92, 93, 98 South Asian Economic Co-operation 85 South Korea 76, 110, 178 South Stream pipeline 57 Southern African Development Community (SADC) 118, 119, 120, 122, 123, 124, 127, 131, 138, 143 Southern Cone states 182 southern and south-eastern Europe 32, 45, 57, 61 sovereignty 8, 15, 19, 86, 177 Soviet Union 32, 55, 60, 61 Spain 43, 47, 51, 56, 113, 135 spatial complexity 4 spillovers 16, 23, 36, 98, 120, 187 splintering 6, 10 Sri Lanka 80, 81, 82, 84, 97, 100 stability/instability 9, 11, 15, 22, 62, 95, 109, 116, 183 standardised interfaces 5 standards 21, 38, 44, 133 Starr, S. 4 state(s) animosity/suspicion between 111, 142, 181–182, 189 control see control infrastructuring 4, 5–6 see also infrastructural mandate and regional infrastructure systems 1, 201–204 and territoriality see territoriality see also competition state(s); neo-Weberian state state enterprises, Africa 111 state failure 8, 109, 115, 142 state finance 9, 203
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Africa 116–117, 138, 149 the Americas 178 Asia 88, 89 Europe 41, 48 state monopolies 53–54 state power 8, 13–14, 15, 17–18, 57, 59, 163 see also infrastructural power state primacy 1, 16, 18, 20, 23 state restructuring 15 state-level institutional barriers 159 strategic influence 94 strategies (state) 5–6, 9, 13, 14, 23, 84, 172, 177 ‘strings of pearl’ policy 95–96, 209 structured projects (COSIPLAN) 187 sub-regional hub ports 174 Sub-Saharan Africa 112, 113, 114, 116, 129, 132, 134, 135, 139, 140 see also individual states submarine cable system (Africa) 144, 145 subsidiarity 49, 51 Sudan 97, 118, 123, 125, 130, 138, 142, 146, 147 sunk investments/costs 59, 121 super-highway, NAFTA 165, 206 supplier states 57–58 supranational institutions 17, 20, 36, 37, 62, 203 supranationalism 31, 36, 206 suprastructures 11, 163 Suriname 172, 177, 179, 188 Swaziland 118, 137 Sweden 43 Switzerland 32, 43, 61 systemic nature, of infrastructures 2–4 Tanzania/Dar es Salaam 97, 118, 122, 124, 130, 131, 134, 138, 139, 141, 146 Taylor, A. 115 Taylor, P. 17 TAZARA 131
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Te Velde, D.W. 132 technical issues, limiting of African soft infrastructure 133 telecommunications 113, 144, 145, 179 Telecommunications TENs (TENs-Telecom) 42–45, 48 terrestrial information networks, Africa 144, 145 territorial control 6, 9, 20, 208 territorial exclusions 35 territorial fragmentation 110 territorial integration 10, 95, 115 territorial integrity 82 territoriality 13, 202 border infrastructures and 11 conventional analyses 18–19 E-PENS and shifting 55 infrastructuring and 5–7, 8, 23, 178 post-colonial 110 regionalism and 17 RIS and 1, 203 security and 11 the state as unit of 18 see also aspirant territoriality; extra-territoriality territory 18 Thailand 75, 76, 78, 79, 96, 100 Third Energy Package 57 threats 10, 11–12, 51, 58 Three Gorges Group 191 ‘tightly-coupled’ infrastructures 2–3 Togo 122, 138, 139, 141 trade costs 38, 73, 124, 131–132, 136, 165 trade deficits, CARICOM states 173 trade enablement 71, 132 trade facilitation 21, 205 Africa 131–132, 133, 139, 144 Asia 72, 73, 81, 85, 88, 95 trade flows trade facilitation and 132 see also cross-border trade/flows; intra-regional trade trade liberalisation 72, 80, 157, 166 trade theory 16
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Trans-African Highway (TAH) 125–128 trans-African rail systems 128–131 Trans-African Railway (TAR) 131 trans-ASEAN gas pipeline (TAGP) 78 trans-European networks (TENs) 31, 37–50, 53, 62, 203, 206 trans-national flows 21, 53 trans-regionalism 17, 208–210 trans-shipment/relay ports (CARICOM) 173, 175 transaction costs 11, 12, 15, 54, 73, 115, 119, 120, 158, 162, 165 transformative capacity, infrastructures 4 transit costs, Africa 136, 137 transit disputes (Russia/Ukraine) 51, 55 transit states 57, 58, 59, 136 transport corridors Africa 122, 123, 124, 125, 126, 130, 137–139 Asia 83, 87, 92, 93, 95, 96, 100 Europe 41–42, 43, 60 NAFTA states 164–165 transport costs 120, 124, 125, 173, 175, 180 transport infrastructure Africa 111, 113, 114, 121, 122, 123, 124–133, 146–147 the Americas 158–159, 160, 172–177, 178–179, 180–182, 185, 186, 187 Asia 78, 81–82, 83, 85, 88–89, 93, 98 Europe 38–39, 53 Transport PENs (T-PENS) 54, 60–62 Transport TENs (TENS-T) 39–42, 48, 49, 50 Treaty on the Functioning of the European Union 36 Trinidad and Tobago 172, 173, 174, 176, 190 Tunis Declaration on E-Commerce 144 Tunisia 118, 123, 141 Turkey 56, 57, 61, 178
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Turkmenistan 60, 85 Turner, C. 7, 8, 37, 53, 204 Twenty-First Century Border Initiative 161, 162 Twin Ocean Railroad 192 Uganda 118, 123, 129, 130, 136, 137, 138, 141, 146 Ukraine 51, 55, 56, 57, 58, 60, 61 underinvestment 33, 36, 162, 204 Union of South American Nations (UNASUR) 157, 177–189, 191, 192 United Arab Emirates/Abu Dhabi 86, 87, 88, 89 United Kingdom 49, 56 United Nations Conference on Trade and Development (UNCTAD) 86, 130, 173 United Nations Economic Commission for Africa (UNECA) 116, 117, 121, 122–123, 132, 136, 138 United Nations Economic Commission for Europe (UNECE) 61 United Nations Economic Commission on Latin American Countries (UNECLAC) 180, 191 United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) 74, 91 United States 2016 campaign rhetoric, illegal flows 163 border infrastructure 11, 161, 162, 163–164, 203–204, 206 Chinese investment 190 energy sector 168, 170–171, 207 EU integration as counterweight to hegemonic power of 13 NAFTA trade 158, 160, 162, 167 national infrastructure system 158 position on regional integration 16 resistance to E-PENS 55 road infrastructure 159
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JOBNAME: Turner PAGE: 15 SESS: 2 OUTPUT: Wed Aug 15 11:15:40 2018
Index
as signatory to NAFTA 157 universal access 44, 115 universal infrastructure 4 Unwin, B. 40 urban populations 110, 114, 180 urbanisation, Africa 111, 145 Uruguay 179, 182, 183, 184, 188 users/usage of infrastructure 2, 3, 4, 6, 9, 10 value chains 16, 18, 115, 119, 160 Vanheukelom, J. 110 Venables, A. 136 Venezuela 179, 183, 188 vested interests 133 Vietnam 75, 76, 78, 79, 96 Vitale, A. 34 Vleuten, E. van der 5, 52, 53, 54 vulnerability of infrastructure 11, 51, 52, 58, 139 Walters, W. 54 wasteful investment 111 Weiss, L. 19 welfare 6, 8, 10, 12, 115, 192 ‘whipsaw effect’ 158
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White Paper on Growth Competitiveness and Employment (CEC) 40 Wood, D. 166, 169 World Bank 76, 92, 109, 121, 125, 129, 148 see also Ease of Doing Business Index; Liner Shipping Connectivity Index; Logistic Performance Index World Economic Forum (WEF) 109, 114, 132, 133, 181 infrastructural rankings see national infrastructure systems see also Enabling Trade Index; Network Readiness Index XL pipeline 168–169 Yang, Y. 137 Zambia 118, 122, 123, 130, 131, 137, 138, 141 Zimbabwe 113, 123, 137, 138, 146 Zonneveld, W. 42 ZTE 190
Job: Turner-Regional_infrastructure_systems
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Division: Index
/Pg. Position: 15 /
Date: 27/7
JOBNAME: Turner PAGE: 16 SESS: 2 OUTPUT: Wed Aug 15 11:15:40 2018
Columns Design XML Ltd
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Job: Turner-Regional_infrastructure_systems
/
Division: Index
/Pg. Position: 16 /
Date: 27/7