Globalization and the State: Assessing the Decline of the Westphalian State in a Globalizing World

By Sagnik Guha
2017, Vol. 9 No. 03 | pg. 1/2 |

In the year 1648, two treaties signed in the cities of Osnabruck and Munster, collectively known as the Treaty of Westphalia, brought into creation a notion of statehood that would go on to shape and influence the formation of nation states across the world for centuries to come. The Westphalian state is widely believed to be characterized by two distinctive features: Territoriality and Sovereignty. Territoriality is understood as the recognition of humans being organized into exclusive territorial communities that are political in nature and have fixed borders. The Westphalian notion of sovereignty was brought forth to answer the much debated issue of who carried authority and jurisdiction within a nation. Westphalian sovereignty is largely understood as a ruler’s “rightful entitlement to exclusive, unqualified, and supreme rule within a delimited territory” (McGrew, 2014).

According to Morgenthau, it is with this notion of sovereignty and the territorial state that the modern conception of sovereignty has developed. Indeed, as borders were restructured throughout the 19th century in Europe and large-scale decolonization took place across the 20th century, empires broke into nations proudly bearing the flag of sovereignty. The absolute and exclusive authority of a state within its territorial boundaries can, in Arnold Wolfers’ notion of national interest and foreign policy, largely be considered a part of its ‘possession goals,’which shape the very environment in which the nation functions.

Westphalian sovereignty is largely understood as a ruler’s rightful entitlement to exclusive, unqualified, and supreme rule within a delimited territory. Globalization presents a fundamental challenge to the Westphalian ideal of sovereign statehood.

However, despite the seemingly priceless nature of the Westphalia inspired notion of state sovereignty, a potential threat has emerged in the form of the phenomenon of Globalization that has gripped the world since the 1990s. Several scholars posit that globalization presents a “fundamental challenge to the Westphalian ideal of sovereign statehood” (McGrew, 2014) and that major dynamics working in the global economy have the capability to undo the forms of sovereignty and territory embedded in the modern state system (Sassen, 1996). Globalization is a complex and nuanced process to be sure and it is important to try and gauge how far the interconnectivity it has ushered in has affected the quintessential Westphalian notion of state sovereignty.

Globalization and Territoriality

In order to understand how globalization has affected Westphalian territoriality, it is imperative to gain an understanding of globalization as a process. Steve Smith, Patricia Owens and John Baylis define it as “a process of increasing interconnectedness between societies such that events in one part of the world increasingly have effects on people and societies far away” (Baylis et al. pp 8). Jan A. Scholte conceptualises globalization as, “the spread of transplanetary – and in recent times also more particularly supraterritorial – connections between people” which involves “reduction in barriers.” In their paper, “Globalization and Sovereignty,” Julian Ku and John Yoo define globalization as, “various processes of economic, social, cultural, and political integration across national borders.”

No matter how scholars choose to describe, conceptualize and define globalization, they are largely united on the fact that it implies greater interconnectivity across the world. Baylis et al. assert that this interconnectedness is present almost all spheres of social existence, whether one considers international organisations like the IMF and WTO, the activities of Microsoft (through the rapid advancements of technology), Hollywood (through cultural globalization and the internet), as well as spreading of harmful microbes like SARS, Ebola and Zika (through easier transport facilities) and the trade of arms and weapons of mass destruction (through international smuggling).

Transcontinental communication is not new to the 20th and 21st centuries, but has been ongoing since ancient times. However, the modern world is witnessing a level of interconnectivity that has never been experienced before. Scholte describes it very eloquently when he expresses that in the contemporary era, “More people, more often, and more intensely engage with the world as a single place.”

This leads us to conclude that physical territory has become much less important when explaining an individual’s identity and culture (Ku and Yoo, 2013). Man’s identity in the 21st century is no longer limited to what is within the physical boundaries of his nation. This is seen in how film stars in the USA may have fans in countries as far apart as South Africa and Japan or in how Brexit evoked statements of concern and reassurance from a wide variety of countries from Chile, Turkey, Mexico and several more. Scholte’s notion of supraterritoriality posits precisely this point: mankind’s social relations are increasingly transcending borders and assuming a ‘supraterritorial’ nature i.e. one that transcends national borders.

The Treaty of Westphalia brought into existence this clearly demarcated, territorial notion of a state with one clear sovereign holding absolute jurisdiction within the territory. It is this precise understanding of the state that is now steadily declining. It is no longer viable to neatly separate the domestic sphere of influence, upon which a Sovereign has complete authority, from the international sphere which is making inroads into the domestic sphere. The domestic and international spheres of political life can no longer be understood as two rigidly separate entities functioning on different logic and rules. (Baylis et al., 2014).

It is also important to note that the shrinking distinction between the domestic and international spheres of political life is not an observation made only by academics, but by world leaders engaged in the day to day act of politics. Former US President Bill Clinton stated:

“Let me say again, the once bright line between domestic and foreign policy is blurring. If I could do anything to change the speech patterns of those of us in public life, I would almost like to stop hearing people talk about foreign policy and domestic policy and instead start discussing economic policy, security policy, environmental policy, you name it.

When you think about the world and the way that you live in it, you readily see that the foreign-domestic distinction begins to evaporate in so many profound ways.

When the President of Mexico comes here in a few days and we talk about drug problems, are we talking about domestic problems or foreign problems? If we talk about immigration, are we discussing a domestic issue or a foreign issue? If we talk about NAFTA and trade, is it their foreign politics or our domestic economics? We have to understand this in a totally different way. And we must learn to speak about it in different ways.”  
(Freedom House Breakfast, 1995).

It would appear, based on the discussion so far, that globalization has adversely affected the importance of this important feature of the Westphalian state. This is not to suggest that territoriality has been rendered obsolete. Borders are very much a reality of our contemporary world which is far from becoming a pure ‘global village’ independent of borders. Territoriality has retained its importance in terms of one’s political identity. Man still identifies as an American, Egyptian or Chinese. However, he is pluralistic by nature and when it comes to his economic, cultural and spiritual identity among others; physical borders have come to mean little.

Shangquan observed that as far back as 1997, MNCs accounted for 1/3rd of the total world trade. Moreover, the effects of economic globalization have been greatly felt in the financial sector. The value of average daily transactions of foreign exchange has grown from about $ 200 billion in the mid 1980s to about $ 1200 billion in 2000. In Shanquan’s view, economic globalization suggests the “expansion and mutual integration of market frontiers, and is an irreversible trend.” Total cross-border financial assets have more than doubled, from 58 percent of global GDP in1990 to 131percent in 2004 and world trade has grown 5 times in real terms since 1980, with its share of world GDP rising from 36% to 55% over this period (IMF).

Advancements in telecommunication, transport and the Internet have facilitated large-scale cultural globalization. Baylis et al. posit that a global culture is emerging, largely in the urbanized areas of the world which are beginning to resemble one another more closely. American culture has dominated the field, wielding weapons of soft power largely emanating from Hollywood. Some say that globalization has facilitated the McDonaldization or the CocaColonisation of the world. Well-known Hollywood stars and musicians are household names in large parts of the world. However, cultural globalization extends even beyond the USA and is a reciprocal process. Indian and Chinese dishes are now staple in the US, UK and across Europe, Pokémon – a Japanese export- has taken the world by storm as a form of entertainment, yoga has become a standard physical and spiritual practice in the US and the list keeps flowing. It is possible to say that in several countries Man’s indigenous cultural identity has been coloured by foreign cultures. This has been facilitated through cultural globalization.

Territoriality thus remains an essential part of Man’s political identity. Its importance is considered to have declined significantly when it comes to his economic and cultural identities which have been affected by the agents of globalization. Physical boundaries of the nation have been helpless to prevent the rise of supraterritorial forces which seek to transcend the territorial boundaries. Westphalian territoriality may not be defunct yet but is undoubtedly in decline.

Globalization and Sovereignty

But what of the notion of sovereignty born out of the Treaty of Westphalia? Has the notion of an undisputed rule over a given territory been affected in the era of Globalization? The answer could simultaneously be yes and no.

No nation, at least overtly, has or will agree to their sovereignty being compromised. For a nation, sovereignty signifies its very essence without which it doesn’t amount of much of a nation at all. That being said, scholars have observed that forces of globalization often make inroads and affect domestic matters in subtle but impactful ways. The sovereignty of nations is not blatantly compromised for that would evoke riots and international condemnation but rather, is slowly surrounded, enveloped and dissolved by external forces. These forces are usually not other states but either international organizations or non-state actors like MNCs.

In most democratic nations, the Constitution is held sacrosanct as the source through which all power within the state emanates. While no external force has been allowed to touch the sanctity of the Constitution, it goes without a doubt that globalization has affected the ability of governments to regulate, control and shape the economy, society and politics of their nation without any form of external influence.

Effects of Economic Globalization

No modern economist can afford to label economics as a purely domestic matter anymore. Nations cannot regulate and value their own currency and being a part of the global financial network means that currency is vulnerable to fluctuations in the international markets, which can have devastating consequences upon the domestic economy. Integration with the international market and uncertainty over currency valuation may discourage nations to pursue independent macroeconomic programmes (Ku and Yoo, 2013).

There are two main ways in which a nations’ sovereignty has been affected by economic globalization.

The first path involves the rising amount of foreign investment which coincides with the role played by Multinational Corporations (MNCs) in influencing foreign economies. Global Foreign Direct Investment (FDI) flows increased by 36% in 2015 (UNCTAD) and is projected to continue rising in the coming years. When it comes to FDI and MNCs there is considerable debate about the effect they have on developing and underdeveloped countries.

John M. Kline notes that, “the rise of multinational corporations (MNCs) seemed to threaten governmental prerogatives, especially in nations whose resources were dwarfed in size and scope by MNCs.” MNCs are massive corporations with billions of dollars of financial backing and structural support from their home countries. Invariably the proliferation of MNCs in the developing world adversely affects the space available for domestic enterprises and the autonomy enjoyed by the government of the country in question.

In her article “Reluctant Missionaries,” Marina Ottaway, compares modern MNCs to the charter companies of early modern Europe such as the British East India Company which brought large swathes of India under British rule by playing off local Princes against each other. Similarly international companies today chose to operate in poor and unstable countries where the GDP is often one tenth that of the company’s annual revenue. In the face of international criticism from NGOs due to Human Rights and environment violations, such companies are now being expected to maintain Human Rights, consider the environment and even carry out socio-economic development in their areas of operations. In this they are often encouraged by their home governments as it presents excellent and cost-effective means of gathering data about the host countries.

Ottaway presents the example of the Canadian oil company Talisman’s dealings in Sudanese oilfields. Due to civil war between north and south Sudan and conflicting claims over the oil revenue, Talisman was forced to abandon their initiative and flirt with bankruptcy. To avoid this, the Canadian government offered help, allowing Talisman to stay in Sudan provided they assisted in ending the civil war and ensuring that the oil revenue was used by the Sudanese government for their people.

MNCs may also assume the role of a ‘surrogate sovereign’ and carry out public services in local communities (again mostly in poorer countries) by taking over from the government (Kline, 2006). This model would require the entire local economy of an area to be dominated by a single employer, by virtue of which he gains control over the locality’s political and social life as well. Kline presents the example of Chevron’s oil project in Papua New Guinea where they built a 66 mile mountain highway. Unfortunately, this facilitated theft and poaching thus leading to Chevron being asked to police the highway as well.

The second way, in which a nation’s sovereignty may be affected, is by means of international monetary institutions like the IMF, World Bank and WTO. Lowenfield observes that at the time of their inception, institutions like the IMF were created to look into the exchange rates and balance of payment issues of the member states and were not concerned with their domestic priorities. However, over time the distinction between domestic and international has dissolved. Lowenfield states that IMF’s practice of attaching conditionalities for the use of its resources has become a contentious issue. For instance to solve its drastic balance of payment problem in 1991, India borrowed from the IMF. The IMF conditionalities required the Indian government to liberalize its markets and increase competitiveness in the economy. Under these conditionalities, the Indian government carried out large scale economic reforms by reducing import tariffs and eliminating quotas from most fields and allowed foreign investment to flow in from companies like McDonalds, Coca-Cola, General Motors etc. (Kaushik, 1997). IMF conditionalities effectively facilitated the gradual transformation of India’s semi-socialist economy into the western laissez-faire model. The IMF’s purpose in this regard was not to facilitate the welfare and development of the Indian people but to integrate India’s vast market into the global economic network.

Effects of International Organizations and International Law

International Organizations (IOs) are institutions with formal procedures and formal membership from at least three or more countries (Baylis et al., 2014). These organizations are subject to the absolute authority of their constituent members and in some cases, have legal authority to pass laws regarding global issues, provided it is ratified by a sufficient number of constituent member states.

Issues such as border disputes which could earlier have been settled bilaterally are seeing the involvement of IOs. In 1949 the United Nations Military Observer Group for India and Pakistan (UNMOGIP) was sent to supervise the ceasefire surrounding the chaotic situation at the border after the partition of India and Pakistan. Additionally one cannot forget the important role played by the United Nations in the Korean War through the historic ‘Uniting for Peace’ Resolution.

The United Nations was created with a strong regard for the sovereignty of a state, however, due to various incursions by powerful states like the US and the Soviet Union into the sovereignty of smaller nations, it was considered that some amount of intervention might be mandated (with the consent of the country in question). In 1991 a General Assembly resolution implicitly relaxed the principle of strongly upholding the sovereignty of member states. During the 2005 World Summit, the General Assembly authorized the international community to take action against the internal conflicts of a nation provided the national authorities failed to protect their citizens and if peaceful means were inadequate (Taylor and Curtis, 2014).

Ku and Yoo observe that IOs may threaten the sovereignty of a nation by achieving greater independence and heightened powers. Each nation represents their own viewpoints within these organizations and this allows the organization to attain a certain degree of independence though there are exceptions. Additionally, in some cases IOs have been given sovereign powers that that are traditionally held by nation states. For instance, the Flaminio Costa v. E.N.E.L case mediated by the European Court of Justice (ECJ), emerged as a landmark case as the ECJ established the supremacy of the European law over national law.

International Law is yet another sphere where national sovereignty appears to be compromised. The original purpose of international law began with attempting to maintain order in the international arena as well as to provide a legal basis to arbitration that took place on disputes beyond the national level. Christian Reus-Smit observes how international law can be perceived as an expression of western imperialism. He notes that there is an “Anglo-European dominance of peak legal intuitions, most notably in the United Nations Security council, and international human rights law, which is said to impose a set of Western values about the rights of the individual on non-Western societies where such ideas are alien.”

Reus-Smit mentions the rise of a new ‘supranational law’ which has taken the place of traditional international law. According to Ku and Yoo, there are two major differences between the traditional international law and the ‘new’ international or supranational law.

Contrary to traditional international law, supranational law is openly concerned with the relations between a nation and its people. This is best manifested in international human rights law. In July, 2016, the US government imposed sanctions on North Korea for alleged violations of human rights. The rationale was that, "Under Kim Jong Un, North Korea continues to inflict intolerable cruelty and hardship on millions of its own people, including extrajudicial killings, forced labour, and torture.” Under the Westphalian understanding of sovereignty, North Korea’s treatment of its citizens should not be of concern to the United States; however, because of the all-encompassing understanding of human rights and the belief that they are enjoyed by all, foreign nations now have opportunities to take action against a nation if the law is violated. Such is the supranational nature of the law.

The second difference involves the change in the methods of how international law is formulated and enforced. Ku and Yoo mention the notion of the Jus cogens obligations which, “consist of those clear and well- established international obligations, such as the prohibitions on genocide, torture, and piracy, which bind nation-states even without their consent.” One of the best examples of this is Article 53 of the Vienna Convention on the Law of Treaties (1969) which asserts that:

“A treaty is void if, at the time of its conclusion, it conflicts with a peremptory norm of general international law. For the purposes of the present Convention, a peremptory norm of general international law is a norm accepted and recognized by the international community of States as a whole as a norm from which no derogation is permitted and which can be modified only by a subsequent norm of general international law having the same character.”

This implies that there are certain conventions developed and agreed upon by the international community and if a treaty or policy of a member nation should clash with that of the international convention then it should be declared null and void. For the ruler of a nation, the treaty of Westphalia accords absolute power to the sovereign. However, with globalization and the proliferation of supranational law, rulers can no longer adopt policies and principles contrary to international norms without facing condemnation and sanctions.

Thus it can be said that the forces of globalization have in many ways limited the Westphalian notion of sovereignty. Nations still retain the power to govern their land; however they are sovereign insofar as they are in line with the norms agreed upon by the international community. MNCs and economic globalization have slowly but surely integrated the economies of most nations into the global economic network controlled by organizations like the IMF and WTO which follow a decidedly liberal-capitalist agenda. Regardless of the desires of the nation, if one is a part of the global economic network, then their economic agenda can no longer be created keeping only domestic concerns in mind. Globalization has limited the extent to which nations can effectively exercise their political and economic sovereignty; the wide expanse of jurisdiction that Westphalia promised is now shrinking.

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