Sovereignty Regimes: Territoriality and StateAuthority in Contemporary World Politics

John Agnew

Department of Geography, University of California, Los Angeles

I propose a concept of effective sovereignty to argue that states participate in sovereignty regimes that exhibitdistinctive combinations of central state authority and political territoriality. Two basic conclusions, drawing fromrecent research in political geography and other fields, are that sovereignty is neither inherently territorial nor isit exclusively organized on a state-by-state basis. This matters because so much political energy has been investedin organizing politics in general and democracy in particular in relation to states. Typically, writing about sov-ereignty regards sovereignty as providing a norm that legitimizes central state authority. Unfortunately, little orno attention is given as to why this should always entail a territorial definition of political authority and to whystates are thereby its sole proprietors. The dominant approach continues to privilege the state as the singular fontof authority even when a state’s sovereignty may be decried as hypocrisy and seen as divisible or issue-specificrather than ‘‘real’’ or absolute. I put forward a model of sovereignty alternative to the dominant one by iden-tifying four ‘‘sovereignty regimes’’ that result from distinctive combinations of central state authority (legitimatedespotic power) on the one hand, and degree of political territoriality (the administration of infrastructuralpower) on the other. By ‘‘regime’’ I mean a system of rule, not merely some sort of international protocol oragreement between putatively equal states. I then examine the general trajectory of the combination of sov-ereignty regimes from the early nineteenth century to the present. The contemporary geography of currencies(specifically exchange-rate arrangements) serves to empirically illustrate the general argument about sovereigntyregimes. Finally, a brief conclusion suggests that the dominant Westphalian model of state sovereignty in politicalgeography and international relations theory, deficient as it has long been for understanding the realities of worldpolitics, is even more inadequate today, not only for its ignoring the hierarchy of states and sources of authorityother than states, but also because of its mistaken emphasis on the geographical expression of authority (par-ticularly under the ambiguous sign of ‘‘sovereignty’’) as invariably and inevitably territorial. Key Words: states,effective sovereignty, territoriality, sovereignty regimes, dollarization.

The sovereignty of states has long been viewed asboth a source of and a response to inter- andintra-state conflict. Among political theorists,

most attention has been given to the relationship be-tween sovereignty and political authority: in particular,that state sovereignty has arisen to enforce internal orderlegitimately and to protect against external threat. Re-cently, the grounding of this claim about de jure or legalsovereignty in relation to assumptions of internationalanarchy and equality among states has been subject tosome examination (e.g., Badie 1999; Krasner 1999,2001; Lake 2003). Indeed, across a number of fields—from geography to law and sociology—there is a sharedsense that the conventional understanding of sover-eignty as unlimited and indivisible rule by a state over aterritory and the people in it is in need of serious criticalscrutiny (e.g., Camilleri and Falk 1992; Walker 1993;Murphy 1994; Anderson 1996; Biersteker and Weber1996; Luke 1996; Hashmi 1997; Ong 1999; Mason2001; Sidaway 2003; Stacy 2003). But the conceptualconnection between sovereignty and state territoriality

has enjoyed less systematic analysis (Murphy 1996; Ko-brin 1997; Biersteker 2002). Implicit in all claims aboutstate sovereignty as the quintessential form taken bypolitical authority are associated claims about distin-guishing a strictly bounded territory from an externalworld and thus fixing the territorial scope of sovereignty(Agnew 1994). Territoriality, the use of territory forpolitical, social, and economic ends, is widely seen as alargely successful strategy for establishing the exclusivejurisdiction implied by state sovereignty.

But effective sovereignty is not necessarily so neatlyterritorialized. In a landmark paper on sovereignty andterritoriality, Murphy (1996) distinguishes between dejure and de facto sovereignty to make this point. Thisdistinction, however, necessarily implies that there ac-tually is a pure de jure sovereignty from which de factosovereignty is a lapse or anomaly. My claim is that defacto sovereignty is all there is. The U.S. government, forexample, since 2001, has refused to recognize a denial ofrights to so-called enemy combatants from Afghanistanheld at the U.S. base in Guantanamo Bay, Cuba, on the

Annals of the Association of American Geographers, 95(2), 2005, pp. 437–461 r 2005 by Association of American GeographersInitial submission, March 2004; revised submission, September 2004; final acceptance, October 2004

Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, and 9600 Garsington Road, Oxford OX4 2DQ, U.K.

claim that the base is not within the jurisdiction ofAmerican courts and thus not subject to judicial reviewconcerning the constitutionality of holding people in-definitely without charge. But Guantanamo Bay is justone of a large chain of detention centers, an Americangulag, which the Central Intelligence Agency (CIA) andAmerican military operate worldwide with scarcely a nodto local claims of territorial sovereignty (Priest andStephens 2004). Indeed, local sovereignty is then a maskto allow treating prisoners in ways that would potentiallybe subject to judicial review in the U.S. proper. Re-markably, and subject to scarce commentary at the timeor since, under a Military Order of 13 November 2001,President Bush gave himself the right to detain any non-U.S. citizen anywhere in the world for as long as he choseif there were suspicion of involvement in anti-U.S.‘‘terrorist activity.’’ In the wake of so-called humanitar-ian crises, as in Somalia, Bosnia and Kosovo, the U.S.and other governments (sometimes under the mantle ofthe United Nations) have also intervened militarilyacross the globe, even when the states facing interven-tion have defended themselves against such ‘‘violations’’of territorial sovereignty (Mills 2000). Various threatsand dangers motivated repeated military interventionsby American and Soviet governments in states withintheir putative respective spheres of influence duringthe Cold War (e.g., Weber 1995). Most recently, thesupposed threat to the territorial U.S. from ‘‘weapons ofmass destruction’’ allegedly held by the Iraqi governmentwas the prima face reason for the U.S.-led invasion ofIraq in 2003. But it was clear that when the U.S.‘‘handed back’’ sovereignty to an Iraqi-staffed govern-ment on 28 June 2004 that effective sovereignty re-mained up for grabs. It is not just the so-called GreatPowers that have such an extended geographical reach,however. For example, through its heavy troop presence,the Syrian government exercises tremendous leverageover the government of Lebanon, and Australia has in-tervened militarily in the face of political instability invarious Pacific island states.

More specifically, the impact of globalization on statesis felt not only in the challenge it poses to their overall orissue-specific authority from other states, but also in itsconsequences for the territorialization of sovereignty(e.g., Zacher 1992; Cohen 1998; Agnew 1999; Hardtand Negri 2000; Slaughter and Burke-White 2000; Halland Biersteker 2002; Langewiesche 2004; Singer 2004).For example, the worldwide explosion in negative envi-ronmental externalities does not respect internationalboundaries; currencies, long seen as the badges of statesovereignty, are increasingly denationalized; many peo-ple hold citizenship in multiple states; borders are in-

creasingly porous to flows of migrants and refugeeswithout state regulation; knowledge and innovationnetworks no longer honor national boundaries; it is in-creasingly difficult to establish state origin for a largenumber of commodities in world trade as transnationalcorporations coordinate their activities across multiplelocations in different countries; a large number of publicand private organizations intervene, mediate, and en-gage in the provision of public goods across stateboundaries; perhaps the most important political inno-vation of recent times, the al Qaeda terrorist network,works across state boundaries while exploiting the lack ofterritorial sovereignty exercised by some of its host states(such as Pakistan); privateers (in the form of privatemilitary contractors licensed by powerful states) and pi-rates on the high seas (popular with local populations)have made serious comebacks that challenge the thesisthat states invariably monopolize the legitimate use ofviolence; and judicial regulation within states increas-ingly involves reference to supranational courts (as withthe European Union [EU]) or to the decisions of foreignones (as in the U.S.).

In other words, effective sovereignty is not necessarilypredicated on and defined by the strict and fixed territorialboundaries of individual states. In my view, the negotiationand redefinition of political authority in geographicallycomplex ways suggests the need to change the terms ofdebate about sovereignty. The purpose of this article is todo so by: (a) critical analysis of the conventional wisdomabout sovereignty, paying particular attention to theexpansion of sources of authority beyond states andthe attenuation of territoriality as sovereignty’s primarymode of geographical organization; (b) examining thehistorical and geographical incidence of different ‘‘sov-ereignty regimes’’ (capacities of states in different globalsituations to exercise de facto sovereignty internally andexternally); and (c) showing through the example of the‘‘geography of money,’’ or how currencies operate aroundthe world today, how these regimes have come to oper-ate in recent years.

The questioning of territorial de jure sovereigntymatters not simply because of the challenge to statepolitical primacy from globalization but because theequation of state with sovereignty is intrinsic to the waysin which politics in general and democracy in particularhave been considered in modern times. For one thing,democracy has been historically dependent upon thenation-state—the state as underwritten by a singularnational identity. Democracy and popular sovereigntygrew together after the American and French revolu-tions. The rise of nationalism further reinforced the link(Dallmyr and Rosales 2001). I and others have recited

Agnew438

the ways in which the deliberative nature of democracyas it developed seems to require territorial adjacencyamong citizens and in which its symbolic content restson common territorial histories of struggle and socialorganization (Thaa 2001; Agnew 2002, 166–67). But isthere a necessary conceptual dependence of each on theother? Statements such as ‘‘the ideals of citizenship clashwith the sovereign nation-state in which they were firstdeveloped’’ (Linklater 1998, 182) imply that they nolonger do. Indeed, much of the so-called cosmopolitanliterature on democracy (e.g., Linklater 1998; Held2004) holds to this viewpoint, rhetorically advocating amove beyond the state to world citizenship. But the onlyway that they can conceive of world citizenship withoutopening up to question the founding condition of dem-ocratic theory—the presumption of a territorialized po-litical community—is by ‘‘scaling up’’ from individualstates to the world as a whole. In this account, therefore,normative categories of consent and legitimacy based onterritorialization remain unaffected by globalization. Thisis because established democratic theory and practicehave required a necessary fiction to make them possibleat all, that is, that there is absolute popular sovereigntyvested in a national/territorial political community rig-idly marked off from all others (Nasstrom 2003; Runci-man 2003). Absolute sovereignty thereby continues tounderwrite democracy as it is typically thought of bycosmopolitan democrats, even as the contemporaryworld calls for attention to divisible sovereignty anddeterritorialized legitimacy. Democracy’s advocates willhave to respond to this challenge if democracy is tosurvive and prosper in a globalizing world (Anderson2002).

Sovereignty at Bay?

In conventional political discourse, sovereignty isabout central state authority. This is a relationship inwhich an agent of a state can make commands that arevoluntarily complied with by those over whom the stateclaims authority. In the typical story, such internal or‘‘domestic’’ sovereignty requires a source of authority(kingship, the nation, the-people-in-government, etc.)that operates effectively within the territory of the state.Explicitly, therefore, sovereignty is seen as state-basedand territorial. Currently dominant understandings ofstate sovereignty are based on older ones in which sov-ereignty was associated with the physical person of amonarch. Thus, the incorporeal realm of the state isoften described in Western thought as a ‘‘body.’’ In earlymodern European absolutism, the ‘‘body politic is alwaysan adult male body that has no history of birth and is not

subject to natural deterioration. This body, whose headis a king and whose limbs and organs are subjects ofvarious rank, can die only by violent attack or the in-fection of some of its parts’’ (Shemek 2002, 5). Thephysicality of the sovereign has been symbolicallytransferred from the monarch to the state territory(Bartelson 1995, 98; also see Kantorowicz 1957; Melzerand Norberg 1998). This metaphor resists the idea thatsovereignty can be deterritorialized. At the same time,and in the same story, sovereignty has an external di-mension. Any given state must be recognized as sover-eign by other states in order to qualify as such. Suchrecognition implies a formal equality between states inwhich none can exercise command over others. ‘‘Jurid-ical’’ or legal sovereignty, therefore, provides the neces-sary geographical condition for the operation of domesticsovereignty: a rigid distinction between the hierarchyexercised by the state within its territory from the an-archy that prevails beyond it.

From this viewpoint, state sovereignty may be un-derstood as the absolute territorial organization of politicalauthority. Most accounts of sovereignty accept its either/or quality: a state either does or does not have sover-eignty (see Lake 2003). They differ as to whether theysee this as a foundational principle (originating in, forexample, the seventeenth century with the Peace ofWestphalia or earlier) or as an emergent social practice.They also vary in accepting that there are actors in in-ternational politics (such as militarily weaker states) thatare not fully sovereign. From Hobbes (1651) and Locke(1690) to Schmitt (1985) and Agamben (1998), toname just a few, however, modern states and politicalauthority are seen as practically bonded together. EvenFoucault (1991, 93), a theorist with a less state-centeredview of the world, seems to see central state authority asachieving sovereign power in the modern world with ‘‘atriangle, sovereignty-discipline-government, which hasas its primary target the population and as its essentialmechanism the apparatuses of security’’ as the exclusivepolitical centerpiece. Of course, Foucault (1980) is alsothe theorist who pointed to the conflict betweenthe sovereign power of rules backed by sanctions and theactual daily experience of power exercised by a multitudeof nonstate sources as a fundamental element of dis-course and social practice. Unfortunately, this dualistvision has rarely prevailed in critical analysis of thepractices of state sovereignty. Rather, for example, whenstates show evidence of increasing economic and polit-ical interdependence, this is construed as either a choicethat they have made in pursuit of self-evident interestsrather than an exogenous challenge to them (Helleiner1994), or sovereignty is seen as totally under threat or

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 439

‘‘at bay’’ from ‘‘new technologies’’ of power (Luke and OTuathail 1998). But what if the absolute and indivisiblepolitical authority implicit in this story about state sov-ereignty and its presumed territorial basis is problematicto begin with?

The conventional story is based on giving the state anontological and a moral character equivalent to that ofthe individual person in classical liberalism (N. Jacobson1998; Agnew 1999; Skinner 1999). The state is thustreated as a ‘‘given.’’ It is rooted in a grammar of fixedboundaries and identities. As a naturalized abstract in-dividual, the state has acquired a personhood that thenunderwrites its special status as the locus of sovereignty.This depiction of the state is especially convincing be-cause a moral claim equating the autonomy of an indi-vidual person with that of the state is masked by thenatural claim that is made on behalf of the state as anindividual. In this way, the historical construction ofstatehood as a particular type of political enterprise isgiven a transcendental makeover. The sovereign stateis exalted as the singular solution to both the problem ofhuman aggression, by displacing that aggression fromwithin the territory of the state into the realm of inter-state relations, and to the problem of organizing eco-nomic life, by using its unique qualities to competewithin a global division of labor (Inayatullah and Rupert1994).

In fact, statehood and personhood alike are not thepregiven phenomena this story suggests. Rather, they areboth subjectivities formed out of social interaction andmutual recognition. Persons and states only form as suchthrough the interaction and recognition of households,tribes, dynasties, social movements, and such. Moreparticularly, statehood emerges out of struggles for con-trol; it is never a preexisting basis for those struggles. Inother words, a state is not ontologically prior to a set ofinterstate relations. A state emerges and is recognized assuch within a set of relationships that define the rules forwhat is and what is not a ‘‘state.’’ Statehood results frommutual recognition among states (Biersteker and Weber1996). It is not the outcome of ‘‘isolated states’’achieving statehood separately and then engaging withone another as abstract individuals. The importance ofthe Peace of Westphalia in 1648, for example, lay in themutual recognition among elites of the new Europeanterritorial states as a set of neutral centers of publicpower in the face of devastating religious wars. Yet, thelegitimation of state sovereignty also depended on the in-creased loyalty and support of populations through thecross-mapping of nation with state (Gottmann 1973). Inthe nationalist imagination, the state then becomessomething of a superperson (e.g., Schmitt 1985).

From the brief overview of dominant strands of con-temporary thinking about sovereignty three aspectsstand in need of particular scrutiny. The first two havereceived increasing attention. But the third has beenlargely neglected. The first is the assumption that sov-ereignty is acquired exogenously, or in a ‘‘state of nature,"rather than in an ongoing system of states. So-calledconstructivists have been especially concerned with thisaspect of contemporary thinking (e.g., Wendt 1999). Keyto their interpretation is the idea that sovereignty—bothdomestic and external—is socially constructed as statesinteract with, imitate, and conflict with one another.‘‘Domestic order’’ is thus premised on ‘‘external’’ disor-der and danger (Campbell 1992). In this understanding,sovereignty is a social fact produced by the practicesof states. So, rather than emerging from the ‘‘state-of-nature’’—the war of all against all—that ThomasHobbes (1651 [1968, 186]) used as the basis for positingthe origins of the state, sovereignty comes about as aresult of the ‘‘purposes’’ of states in interaction and caninvolve a wide range of actual practices and policies thatchange over time. This is all good and well, as I haveemphasized above, but it fails to address two furtherassumptions that are critical to the dominant views ofsovereignty.

One of these is that of an essential equality betweenstates claiming sovereignty, notwithstanding the obviousreality of hierarchy in power between actors in worldpolitics. The modern world is one of major inequalities inpower between states in different world regions (Slater1997). Much of this inequality is the result of imperial-ism in the past and the hegemony exercised by the U.S.and its allies in the present. Thus, although the as-sumption of equal sovereignty (both domestic and ju-ridical) may apply, at least to a degree, to the Europeanstates, their settler offspring states, Japan, China, and afew others, states in the rest of the world have a serioussovereignty deficit. For them, sovereignty is as yet ‘‘un-realized’’ (Inayatullah and Blaney 1995). They simply donot have the power resources to challenge seriously re-strictions placed upon them by more powerful states(and other actors such as international institutions,banks, and multinational businesses). Nor can they ex-pect ready recognition of their internal political au-thority when they have either inherited their claim torule from colonial powers or depend for their continu-ance in power on external support (Keene 2002). Ofcourse, a danger here lies in seeing state sovereignty as alargely realized phenomenon in the West and absentelsewhere when it is better thought of as ‘‘unrealized’’everywhere in the de jure form that it is usually allegedto take.

Agnew440

But the problem of lack of conformity to an absolutesovereignty is even more pervasive simply because hier-archical dominance in world politics is even morewidespread in its effects than just in the relation betweenimperial (or hegemonic) powers and subordinate ones(Krasner 1999; Lake 2003). More generally, situations of‘‘shared sovereignty’’ (such as one China, two systems inHong Kong, the emergence of supranational systemssuch as the EU, and the ceding of economic power intothe hands of international institutions such as the In-ternational Monetary Fund (IMF) in the case of heavilyindebted, undeveloping countries) and other anomaloussituations (such as that of the Palestinian NationalAuthority, the government of Bosnia, and the British/Irish collaboration over Northern Ireland) suggest howwidespread exceptions to the rule of absolute, indivisiblesovereignty exercised equally by all states can be. Sov-ereignty is divisible and seems increasingly so across theworld (Delbruck 2003; Stacy 2003). In this context,international lawyers increasingly distinguish between ahistoric insular sovereignty, which emphasizes a right toresist, and an emerging relational sovereignty, which isthe capacity to engage (e.g., Slaughter 2004). They usethis distinction as the basis for explaining the prolifera-tion of networks of government officials who shareinformation and coordinate their activities aroundthe world. This ‘‘disaggregated sovereignty’’ points to thewillingness of states to share authority in the face ofenvironmental, economic, and social problems that gowell beyond their individual capacity to manage on theirown.

The last problematic assumption, one that has re-ceived less attention, is the assumption that sovereigntyis invariably territorial or exercised over blocs of terres-trial space. Modern political theory tends to understandgeography entirely as territorial: the world is divided upinto contiguous spatial units with the territorial state asthe basic building block from which other territorialunits (such as alliances, spheres of influence, empires,etc.) derive or develop (Agnew 1994).1 This is the rea-son why much of the speculation about ‘‘the decline ofthe state’’ or ‘‘sovereignty at bay’’ is posed as the ‘‘end ofgeography.’’ Yet, the historical record suggests that thereis no necessity for polities to be organized territorially. AsSpruyt (1994, 34) claims,

If politics is about rule, the modern state is verily unique,for it claims sovereignty and territoriality. It is sovereign inthat it claims final authority and recognizes no highersource of jurisdiction. It is territorial in that rule is definedas exclusive authority over a fixed territorial space. Thecriterion for determining where claims to sovereign juris-

diction begin or end is thus a purely geographic one. Mu-tually recognized borders delimit spheres of jurisdiction.

Territoriality, the use of territory for political, social,and economic ends, is in fact a strategy that has devel-oped more in some historical contexts than in others.Thus, the territorial state, as it is known to contempo-rary political theory, developed initially in early modernEurope with the retreat of nonterritorial dynastic systemsof rule and the transfer of sovereignty from the person-hood of monarchs to discrete national populations(Neocleous 2003). That modern state sovereignty, asusually construed, did not occur overnight following thePeace of Westphalia in 1648 is now well established (e.g.,Osiander 2001; Teschke 2003). Territorialization ofpolitical authority was further enhanced by the deve-lopment of mercantilist economies and, later, by an in-dustrial capitalism that emphasized capturing powerfulcontiguous positive externalities from exponential dis-tance-decay declines in transportation costs and fromthe clustering of external economies (resource mixes,social relations of production, labor pools, etc.) withinnational-state boundaries (Kratochwil 1986; Teschke2002).

Absent such conditions, sovereignty—in the sense ofthe socially constructed practices of political authority—may be exercised nonterritorially or in scattered pocketsconnected by flows across space-spanning networks.From this viewpoint, sovereignty can be practiced innetworks across space with distributed nodes in placesthat are either hierarchically arranged or reticular(without a central or directing node). In the former case,authority is centralized, whereas in the latter, it is es-sentially shared across the network. All forms of polity—from hunter-gatherer tribes through nomadic kinshipstructures to city-states, territorial states, spheres ofinfluence, alliances, trade pacts, seaborne empires—therefore, occupy some sort of space (Agnew and Cor-bridge 1995; Smith 2003). What is clear, however, if notwidely recognized within contemporary debates aboutstate sovereignty, is that political authority is not nec-essarily predicated on and defined by strict and fixedterritorial boundaries.

Two issues are crucial here: that political authority isnot restricted to states and that such authority is therebynot necessarily exclusively territorial. Authority is thelegitimate exercise of power. The foundation and attri-bution of legitimacy to different entities has changedhistorically. By way of example, the legitimacy of rule bymonarchs in the medieval European order had a differ-ent meaning from that of later absolutist rulers and thatoperating under more recent democratic justifications

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 441

for state power (Bobbitt 2002). In no case, however, hasthe authority of the state ever been complete. Therehave always been competing sources of authority, fromthe church in the medieval context to internationalorganizations, social movements, businesses, and nong-overment organizations (NGOs) today. More specifically,transparency, efficiency, expertise, accountability, andpopularity are as much foundations of legitimacy as arenationality and democratic process (Delbruck 2003, 30–34; but also see Hudson 2001; Mulligan 2004). Thus,even ostensibly private entities and supranational gov-ernments are often accorded as great or even greaterauthority than are states. For example, in the U.S., thereis widespread suspicion of the efficiency and accounta-bility of the federal government. This often leads toperhaps excessive faith in the virtue of privatization ofwhat are elsewhere seen as ‘‘public’’ services. In Italy,much of the popular enthusiasm for the EU is driven bythe hope that Brussels will increasingly supplant Rome asthe seat of power most effective in relation to people’severyday lives.

Phrases such as ‘‘divisible’’ and ‘‘graduated’’ sover-eignty are often used to give the sense of an increasinglylabile sovereignty (political authority) not immediatelyassociated with territorialized state power. Thus, for ex-ample, Ong (1999, 217) claims that

Globalization has induced a situation of graduated sover-eignty, whereby even as the state maintains control over itsterritory, it . . . lets corporate entities set the terms forconstituting and regulating some domains. . . . Weaker andless desirable groups are given over to the regulation ofsupranational entities.

It is not the existence but the nature of sovereigntythat is transformed by the workings of graduated sover-eignty. Authority is vested in agents who manage flowsthrough space or through action at a distance as much asin those who manage territories. Adjacency and terri-torial division of space as modalities of power thus facethe challenge of coercive power and authority emanatingfrom scattered sites. The spatiality of authority, there-fore, cannot be entirely reduced to the territorial tem-plate of state sovereignty. Indeed, with globalization, thetransactional balance is increasingly tipping in favor of anetworked system of political authority that challengesterritorialized state sovereignty as the singular face ofeffective sovereignty (Appadurai 1996).

In this regard, the terms ‘‘territory’’ and ‘‘space’’ needto be very carefully distinguished from one another(Durand et al. 1992; Levy 2001).2 Simply because theformer might be superseded or supplemented in the or-ganization of political authority does not mean that the

latter disappears. Territory is not geography tout court.Indeed, ‘‘states’’ of one type or another can continue toserve as loci of political authority even as their power isdeployed by networked flows rather than by territorialcontrol penetrating other nominally sovereign states. Forexample, relatively powerful states today can supervisesecurity threats in distant places and financial transac-tions in ‘‘offshore’’ centers (even as they have little directregulatory control) by rewarding and/or punishing ac-tions that they judge in relation to the spatial efficacy oftheir authority (e.g., Roberts 1994; Hudson 1998; Palen2002). Of course, in such situations, sovereignty is notabsolute. But, then, as is increasingly clear, and as crit-icism of the first two assumptions about conventionalviews of state sovereignty implies, state sovereigntyrarely ever has been, or is, absolute, even when appar-ently neatly territorialized (Lind 2004).

The main issue is that territoriality is only one type ofspatiality or way in which space is constituted sociallyand mobilized politically (Durand et al. 1992; Offner andPumain 1996; Agnew 1999; Allen 2003). Territorialityalways has two features: blocks of rigidly bordered spaceand domination or control as the modality of power uponwhich the bordering relies (Gottmann 1973; Sack 1986).Such power may well be legitimate, i.e., exercised withauthority (either bureaucratic or charismatic), but itultimately rests on demarcation through domination.It works through territorial division of space, boundarycontrol, and the hierarchical dissemination of authori-tative commands. Yet, space and power have otherpossible modalities (Mann 1993; Allen 2003). Central-ized power, involving command and obedience, can op-erate between points over long distances as well as overterritorial blocs, for example, through the deployment ofmilitary assets, but this may have less possibility of sus-tained, and legitimate, impact on the people with whomit comes into contact. But this is then still a networkedform of power. It is based on flows through space-spanningnetworks, not privileged access to territories (blocksof space). On the contrary, diffused power refers to powerthat is not centered or directly commanded but thatresults from patterns of social association and interactionin groups and movements (as, for example, in NGOs andglobal social movements) or through market exchange(credit rating agencies such as Moody’s are one example,see Sinclair 2000). Diffused power can be territorializedand authoritative, but only in so far as the networks itdefines are territorially constrained by central state au-thority. Otherwise, networks are limited spatially only bythe purposes for which they are formed. In this way,power is generated through social and market-based as-sociation, affiliation, and reticular diffusion rather than

Agnew442

through authoritative command or domination. This ispower that comes into existence through association andassent as a result of human agency (Arendt 1958). Whennot sustained through legitimate collective action, how-ever, the power networks thus created will disintegrate.Today, both centralized and diffused powers are arguablyless territorialized by state boundaries than at any timesince the nineteenth century (Agnew and Corbridge1995; Paasi 1999).

Sovereignty as the legitimate exercise of power (asauthority), therefore, is necessarily about ceded, se-duced, and co-opted diffused power as well as coercionby (and acceptance of) centralized power. The precisecombination of power mechanisms (coercion, assent,seduction, co-optation, etc.) involved in the exercise ofauthority by different states can be the same for all issueareas (trade, security, currency, etc.) or may differ acrossthem and operate solely within a state’s territory or morewidely either territorially or nonterritorially. But withoutat least a modicum of active collaboration by collectiveactors on both sides of borders, state sovereignty can beneither sustained nor undermined. In short, as JohnAllen (2003, 159) remarks, ‘‘domination is not every-where.’’ Indeed, even demarcation by means of borders,the quintessence of state territoriality, relies to aconsiderable degree on the extent to which networksof association and affiliation parallel the boundaries ofdomination. Even the seemingly most Westphalianof states, then, are riddled with authoritative powernetworks (based on centralized and/or diffused power)whose extension beyond territorial boundaries can ren-der claims to absolute state sovereignty moot but whosecontinuing presence inside the boundaries is critical totheir apparent credibility.

Effective Sovereignty and SovereigntyRegimes

Political authority is the legitimate practice of power.In other words, it is the myriad effects of an ascribedasymmetry between actors that permits some actors notjust to command but also to enroll others in their desiresand activities. ‘‘Ascribed’’ is the key term. As BruceLincoln puts it, ‘‘Persuasion and coercion alike areconstitutive of authority, but once actualized and ren-dered explicit they signal—indeed, they are, at leasttemporarily—its negation’’ (Lincoln 1994, 6). Today, itrequires both communicative and infrastructural re-sources and a high degree of popular acceptance to op-erate effectively. More specifically, political authority quasovereignty requires: (1) a governmental apparatus to

serve as a final seat of authority and (2) an accepteddefinition of functional and geographical scope (territo-rial and nonterritorial) beyond which its commands gounheeded and unenforced. What has been lacking inefforts at understanding the range of practices associatedwith sovereignty has been a means of identifying theeffects of co-variation in the effectiveness of state au-thority, on the one hand, and its relative reliance onstate territoriality, on the other (e.g., Hurd 1999).

A useful approach to doing so comes from writing onthe historical sociology of power. Specifically, the termsdespotic and infrastructural power have been used byMann (1984) to identify the two different ways in whicha governmental apparatus acquires and uses centralizedpower. In other words, these terms identify, respectively,the two different functions that states perform and thatunderpin their claims to sovereignty: the struggle forpower among elites and interest groups in one state inrelation to elites and interest groups elsewhere and theprovision of public goods that are usually providedpublicly (by states). In Mann’s (1984, 188) words,

Let us clearly distinguish these two types of state power.The first sense [despotic power] denotes power by the stateelite itself over civil society. The second [infrastructuralpower] denotes the power of the state to penetrate andcentrally co-ordinate the activities of civil society throughits own infrastructure.

Historically, infrastructural power has risen in impor-tance since the eighteenth century. This is because eliteshave been forced through political struggles to becomemore responsive to their populations and, as a result,rising pressure groups have demanded more infrastruc-tural goods. In turn, the delivery of public goods gave aboost to the territorialization of sovereignty. Until re-cently, the technologies for providing public goods havehad a built-in territorial bias, not least relating to thecapture of positive externalities. Increasingly, however,infrastructural power can be deployed across networksthat, though located in discrete places, are not neces-sarily territorial in the externality fields that they pro-duce. Thus, currencies, systems of measure, tradingnetworks, educational provision, and welfare servicesneed not be associated with exclusive membership in aconventional nation-state. New deployments of infra-structural power both deterritorialize existing states andreterritorialize membership around cities and hinter-lands, regions, and continental-level political entitiessuch as the EU (Cox 1998; Scott 1998). Internationalorganizations, both private and state-run, likewise havedeveloped the capacity to deliver a wide range of publicgoods associated with infrastructural power. There is a

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 443

simultaneous scaling-up and scaling-down of the rele-vant geographical fields of infrastructural power de-pending on the political economies of scale of differentregulatory, productive, and redistributive public goods(e.g., Brenner 1998; Ilgen 2003). Consequently, ‘‘themore economies of scale of dominant goods and assetsdiverge from the structural scale of the national state—and the more those divergences feed back into eachother in complex ways—then the more the authority,legitimacy, policymaking capacity, and policy-imple-menting effectiveness of the [territorial] state will beeroded and undermined both within and without’’(Cerny 1995, 621).

At the same time, despotic power (in Mann’s sense)has historically come to rely much more on establishingits legitimacy than once was the case. Direct coercion issimply less effective as a mode of rule in modern states.Though it can be used against recalcitrant minorities,large segments of the population must be placated andpleased rather than coerced. Rulers need to establishat least a modicum of popular authority before theycan achieve their goals. Such legitimacy is also fragile. Itcannot be taken for granted. But establishing authorityneed not always involve a singular focus on fixed stateterritories if elites and pressure groups adjust theiridentities and interests to other territorial levels (such ascity-regions, localities, and empires) or shift loyalties tononterritorial entities such as international organiza-tions, corporations, social movements, or religiousgroupings (e.g., Gill 1994; Kobrin 1997; Cutler et al.1999). This shift could involve the enhancing of terri-torial hierarchy in pursuit of, for example, an imperium,or the attenuation of territorial sovereignty in the formof the diffusion of authority across a multinodal financialnetwork involving transnational corporations, banks,other states, debt-rating agencies, and NGOs. There isno necessary association, therefore, between despoticpower and central state authority. Both despotic-gov-ernmental and diffuse social power can work together tochallenge central state authority. Consequently, an up-scaling or a fragmentation of sovereignty can result aselites and social groups pursue their goals in ways thatpotentially territorially expand or nonterritorially un-dercut the authority of the central governmental appa-ratus, respectively.

By way of recent example, the use of American mil-itary forces to invade Iraq in 2003 without benefit ofsanction from the United Nations had a number ofshifting rationales: ‘‘weapons of mass destruction’’ thatthreatened the U.S., Iraqi ties to al Qaeda, and so on.Most of these turned out to be based on poor or falseintelligence. One outcome, however, has been to deploy

despotic American power towards a sort of imperium asthe U.S. government destroyed the authority (whatthere was of it) of the government of Iraq. But this de-struction in turn had a number of devastating side ef-fects, including a bitter war of resistance inside Iraq, theprospect of internal disintegration along ethnic andreligious lines, and a general worldwide diminution inrespect towards the U.S. government. This is becausethe invasion has been not only bereft of legitimacy in theeyes of most Iraqis but also in those of much of the rest ofthe world and of large segments of American publicopinion. Coercive power as an element of effectivesovereignty, therefore, has limited possibility of long-term success unless it can simultaneously enroll and gainthe consent of others. It can actually undermine effec-tive sovereignty, as it seems to have done for the U.S.in Iraq and more generally. Through its stimulus to re-cruitment of more members into anti-American terroristnetworks, it certainly seems to have made the territory ofthe U.S. itself an even greater target than it was beforethe events of 11 September 2001 that started the rushto war.

A second example indicates a different aspect of thesovereignty-territory nexus. In Britain, in the 1980s, fi-nancial elites, using their long-term political ascendancywithin the state, pushed the government for regulationsthat would enhance the performance of London as aninternational banking center (see Ingham 1994 on thelong-running City of London vs. Britain conflict of in-terests). Though such regulations (for instance, relaxingcapital controls and deregulating commodity markets)benefited London’s financial sector, they had generallynegative macroeconomic effects on the state territory asa whole. In the long term, they may also have had theunintended negative effect on the ability of the gov-ernment to move in contrary directions because theygenerated powerful interests whose loyalties now linkthem to other financial centers rather than to theirnominal home states. British government anxiety aboutjoining the European Monetary System has been exac-erbated by the despotic power now exercised most ef-fectively within British politics by London’s financialcenter, even though such a move might be helpful tomanufacturing and agricultural interests elsewhere inBritain. This conundrum is related to the ‘‘who is ‘us’?’’question raised about nominally U.S.-owned businessesin the early 1990s that paid low or no taxes in the U.S.,invested heavily in jobs in other countries, and yet de-pended on American consumers for final demand forwhat they produce.

But the recasting of the territorial basis to sovereigntyand the challenge to central state authority through

Agnew444

deterritorialization at the state level and reterritoriali-zation at local and supranational scales of infrastructuraland despotic power are uneven around the world (D.Jacobson 2001; Newman 2001). There is no one trendtowards what some have called the ‘‘migration of au-thority’’ (e.g., Kahler and Lake 2003). And, as notedpreviously, such trends are not invariably equivalent tothe erosion of state territorial sovereignty tout court.What is needed, therefore, is a typology of the main waysin which sovereignty is currently exercised to take ac-count of: (1) its social construction; (2) its associationwith hierarchical subordination; and (3) its deploymentin territorial and nonterritorial forms. The two basicdimensions to the typology are defined by the relativestrength of central state authority (state despotic power)on one axis and its relative consolidation in state terri-toriality (state infrastructural power) on the other. Theformer involves judgment about the extent to which astate has acquired and maintains an effective and legit-imate apparatus of rule. The latter refers to the degree towhich provision of public goods and operation of marketsis heavily state regulated and bounded territorially. Re-garded as social constructions, these dimensions defineboth the extent of state autonomy and the degree towhich it is territorial in practice. Intersecting continua,rather than discrete categories, the two dimensions de-fine four extreme cases that can be identified as idealtypes for purposes of theoretical discussion and empiricalanalysis. These are relational in character, referring tohow sovereignty is exercised effectively over time andspace, rather than discrete territorial categories intowhich existing states can be neatly slotted. I refer tothese four ideal types as sovereignty regimes, systems ofeffective sovereignty, recognizing that any actual real-world case need not exactly conform to one particularregime (Table 1).

Of the four exemplary cases, the classic example is theone closest to the story frequently told about state sov-ereignty, although even here there can be complications(for example, on Hong Kong and Taiwan for China). Thesense is one of both despotic and infrastructural powerstill largely deployed within a bounded state territory

(even if increasingly dependent on foreign direct in-vestment and overseas markets for its exports) and ahigh degree of effective central state political authority.Contemporary China is a good test case for how longabsolute sovereignty can survive pressures for divisibilityand the need to establish the state’s democratic legiti-macy when increasingly open to the rest of the world.The second case resembles most a story that emphasizeshierarchy in world politics but with networked reachover space as well as direct territorial control. This im-perialist regime is in all respects the exact opposite of theclassic case. Not only is central state authority seriouslyin question because of external dependence and ma-nipulation as well as corruption and chronic misman-agement; state territoriality is also subject to separatistthreats, local insurgencies, and poor infrastructural in-tegration. Infrastructural power is weak or nonexistent,and despotic power is often effectively in outside hands(including international institutions such as the WorldBank as well as distant but more powerful states). It isimperialist, if also reliant on the assent and cooperationof local elites, because the practice of sovereignty is tiedineluctably to the dependent political-economic statusthat many states endure in the regions, such as theMiddle East, sub-Saharan Africa, and Latin America,where it prevails.3

The other two cases are less familiar in relation toboth conventional and critical perspectives on statesovereignty. The third regime is the integrative, repre-sented here by the EU. In this case, sovereignty hascomplexities relating to the coexistence between differ-ent levels or tiers of government and the distinctivefunctional areas that are represented differentially acrossthe different levels, from EU-wide to the national-stateand subnational-regional. But the territorial characterof some of its infrastructural power is difficult to deny(consider the Common Agricultural Policy, for example),even if central state authority for both the entire EU andthe member states is weaker than when each of thestates was an independent entity. Quite clearly, many ofthe founding states of the Westphalian system havethrown in their lot with one another to create a largerand, as yet, politically unclassifiable entity that chal-lenges existing state sovereignty in functionally complexand oftentimes nonterritorial ways.

Finally, the fourth regime is the globalist. The bestcurrent example of this is the effective sovereignty ex-ercised by U.S. within and beyond its nominal nationalboundaries and through international institutions withinwhich it is particularly influential (such as the IMF).Certainly, Britain in the nineteenth century also fol-lowed a version of this regime. But, in both cases,

Table 1. Sovereignty Regimes

STATE TERRITORIALITY

Consolidated Open

Stronger Classic GlobalistCENTRALSTATEAUTHORITY

Weaker Integrative Imperialist

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 445

attempts have been made to recruit other states, by co-optation and assent as much as by coercion, into theregime. Indeed, globalization can be seen as the process(along with necessary technological and economicchanges) of enrolling states in the globalist sovereigntyregime. From this viewpoint, the globalist state relies onhegemony, in the sense of a mix of coercion and activeconsent, to bring others into line with its objectives. Therevolution in information technologies and telecommu-nications has allied with the end of the Bretton Woodsmonetary system in the early 1970s to lower transactioncosts in financial centers and spur the deregulation offinancial markets to the extent that various global fi-nancial centers (in New York, London, and Tokyo, inparticular) are increasingly the collective center of theglobalist regime (Martin 1994). Although Americancentral state authority remains relatively strong (not-withstanding the problems of its republican constitu-tionalism in coping with its global role), its centrality toworld politics catches it between two conflicting politicalimpulses: one that presses towards a scattered imperium(as in Iraq) and one that pushes towards keeping theU.S. as an open economy. The basis of its hegemony iswelcoming of immigrants and foreign investment andgoods and encouraging of these tendencies elsewhere,but at the same time being increasingly subject to fiscaloverextension as it endeavors to intervene globally yetalso serve the demands of its population for pensions andhealthcare benefits. States other than the hegemonicone that enter into the globalist regime are not likely toexperience the tension because they can restrict theirmilitary expenditures and thus can benefit from theglobalist regime as long as they retain a relatively highdegree of central state authority. In other words, openborders can be beneficial as long as states retain thecapacity to close them down. Otherwise, the danger isalways that the globalist regime becomes imperialist forstates other than the dominant one.

Historical Geography of SovereigntyRegimes

None of the sovereignty regimes is totally new, al-though the precise form that each takes varies over timeand from place to place. They are ideal types or modelsthat cannot map exactly onto real-world cases. Giventhis caveat, however, a strong case can be made for ahistorical pattern to their coappearance (Agnew andCorbridge 1995). The purpose of this section is to give asense of the historical geography of effective sovereigntysince the presumed emergence of the modern state sys-

tem in the early nineteenth century. Perhaps four periodscan be identified from the early nineteenth century tothe present in which different combinations of sover-eignty regimes have prevailed with distinctive geograp-hies to them. Not surprisingly, these periods coincidewith general trends in world history that result from acomplex mix of economic, geopolitical, and technologi-cal change. Needless to say, the periods are heuristicrather than definitive for the purpose of exploring therelative incidence of sovereignty regimes. Any periodi-zation is inherently contestable. The present purpose ismerely to historicize and contextualize the relative ap-pearance of sovereignty regimes over time and space, notto provide a total account of world history over the pasttwo hundred years.4

The classic regime is, of course, closely associated withthe so-called Westphalian version of state sovereignty,although it really only emerged as a potentially practicalform in the nineteenth century (Croxton 1999; Murphy1996). If the Concert of Europe is its main historicallegacy as new states formed a ‘‘balance of power’’ inEurope in the years after the defeat of Napoleon, it co-existed from the outset outside of Europe with imperi-alist regimes (such as the British in India, the French inAfrica, and the Dutch in the East Indies) and witha relatively weak British globalist regime that, through acommitment to free trade and a gold-sterling standard,deployed some types of infrastructural power well beyondBritain’s boundaries. This geopolitical order was under-mined in the late nineteenth century by the emergenceof a set of rival imperialist projects as Germany, the U.S.,and Japan in different ways challenged Britain’s globalistregime.

The net effect over 1875–1945 was to encourage theconsolidation of classic and imperialist regimes at theexpense of the globalist one. Borders hardened even asthey were threatened by the expansionism of thosepowerful states such as Germany and Japan that sawthemselves as closed out of or disadvantaged by theprevious imperialist and globalist regimes. The GreatDepression of the 1930s reinforced protectionist pres-sures to seal off territorial economies from foreign eco-nomic competitors. Plausibly, this simply deepened theeconomic misery. But it also encouraged nationalistsentiments. This period reached a crescendo with theSecond World War.

The outcome of that war ushered in a period in whichan overarching Cold War led to two competing imperi-alist regimes of which one (the U.S.) had incipientglobalist elements. The countries of Western Europeand Japan, however, retained a relatively high degreeof central state authority, and the rapid expansion of

Agnew446

welfare states across states in these regions createdsomething akin to the classic regime. The BrettonWoods monetary system, based on a fixed exchange-ratebetween the US$ (backed by gold) and the main cur-rencies of Western Europe and Japan, tended, until itsdisintegration in the late 1960s and early 1970s, to re-inforce the territorial basis to sovereignty in those stateswhose currencies were convertible within it. As formercolonial countries achieved independence from the late1940s down into the 1970s, they aspired to classicsovereignty. Unfortunately, the terms of trade for theirmain products and the weakness of their central stateauthority worked against this, reproducing in many casesthe imperialist regime. Only where states could steer acourse between their past dependence and the globalistregime incipient in American sovereignty (as in EastAsia) was this path avoided.

When the U.S. government acted in the early 1970sto protect its domestic economy from a series of externalshocks initiated in the 1960s (by abrogating the BrettonWoods Agreement of a dollar-gold standard), it inad-vertently furthered the opening up of the U.S. and othereconomies to relatively unregulated flows of capital,goods, and services. Along with the actions of a range ofnew policies from existing U.S.-dominated internationalinstitutions, such as the IMF and the GATT (after 1994,the WTO), this stimulated the worldwide spread of anew ‘‘market access’’ model of global trade and invest-ment. Together with the end of the Cold War, as theSoviet Union and its allies essentially abandoned theirimperialist regime because of its failure to deliver eco-nomic growth and political participation, this liberatedthe U.S. for unrestricted pursuit of a globalist sovereigntyregime. In many parts of the world, however, the per-ception is that this is simply a new version of the im-perialist regime. In Europe, the deepening of the EUsince the late 1980s represents the major example of theconstruction of an integrative regime. There are, how-ever, a number of possible candidates for such a sover-eignty regime should the U.S.-sponsored globalist regimefalter (e.g., the Free Trade Area of the Americas, theAssociation of South East Asian Nations [ASEAN],etc). States such as China, India, and possibly Russia, alllarge countries, remain as the best surviving examples ofthe operation of the ‘‘classic’’ sovereignty regime.

Previous periods faded away. There seems no goodreason to think that the present one has unlimitedstaying power. So, what might bring it to an end? Themajor conflict potential today lies between the globalistregime, on the one hand, and those trapped in the im-perialist regime, on the other. Even though asymmetricin orthodox security terms, this tension lies at the heart

of much contemporary global conflict in, for example,the Middle East and Latin America. Classic and globalistregimes, however, are also basically antithetical. Thecurrent U.S.-China conflict over trade and exchange-rate valuation is an example of this tension. If the in-tegrative regime in Europe gives rise to a globalist regimeincompatible with the current one, then this, too, couldproduce a major conflict of interests as globalist regimescompete for global reach.

Currencies and Sovereignty Regimes

This largely abstract argument needs empirical dem-onstration. In the context of state sovereignty, currenciesare interesting for three reasons. In the first place, theyare a key material and symbolic feature of central stateauthority (Cohen 1998; Simmons 2000). National cur-rencies only rose to prominence in the mid-nineteenthcentury as state authority in Western Europe and NorthAmerica was firmly established. They contributed tofirming up national identities, reduced transaction costswithin national economies, raised revenues through theminting of currency (seigniorage), and provided a meansfor states to pay for their purchases through taxes on theincreasing incomes emanating from industrial capitalism(Helleiner 2003b). As a result, currencies are also, then,one of the main examples of infrastructural power. Butmany currencies also seem to be losing their nationalcharacter either because they have much enlarged geo-graphic scope (because of electronic banking and theease of currency exchange across borders) or they havebeen effectively replaced by foreign currencies for a widerange of transactions (not least the storage of wealth).

Second, ‘‘it is in the monetary realm,’’ according toHelleiner (1999, 309), ‘‘where challenges to the practiceof [sovereign state] territoriality are particularly apparentin the present age.’’ Thus, the various impacts of glo-balization on the territoriality of state sovereignty shouldbe most immediately obvious in relation to the geo-graphical dynamics of national-state currencies. Becauseit is primarily a medium of exchange, ‘‘[m]oney is a beliefthat has to be shared with other people’’ (Goodwin 2003,4). This makes it a relatively fluid medium in whichauthority over its issuance and management is alwaysvulnerable to challenge from an array of actors (centralbanks, investment banks, transnational corporations,speculators, etc.) and yet, because of its symbolism (notleast that displayed on coins and banknotes), is fre-quently one of the most visible examples of statesovereignty.

Finally, decisions by governments and other actorsabout whether to maintain a national currency, share a

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 447

new one, substitute a national one with a global one, andhow to manage a global one provide a common metricfor examining the descriptive merits of the typology ofsovereignty regimes. In other words, the contemporarygeography of money provides a way of both illustratingthe typology of sovereignty regimes and showing theterritorial and nonterritorial ways these regimes work.

To be more specific about the connections betweenglobalization and monetary sovereignty first requiresidentifying the processes whereby currencies take ondistinctive relationships with particular states and map-ping these onto the sovereignty regimes identified pre-viously. Since the collapse of the Bretton WoodsAgreement in the early 1970s, no single worldwide ex-change-rate arrangement has prevailed.5 This suggeststhat monetary globalization involves a variety of politi-cal-economic processes, not simply a single imperialismor free-floating market capitalism (Bernhard and Le-blang 1999). There are four ways in which currenciestend to work with respect to any given national territory,paralleling the four sovereignty regimes. This fact, initself, suggests that, at least for the geography of money,there is something useful theoretically about the fourfoldschema of sovereignty regimes. The four currency pro-cesses are as follows:

(1) the territorial, in which a national-state currencydominates a state territory and the populationhas restricted access to currencies of wider cir-culation except through a fixed exchange rate, amanaged float, or other mechanism controlled bycentral state authority;

(2) the transnational, in which the currency issuedby one state (invariably a powerful one) circulateswidely among world financial centers, floatsfreely, is a standard (or reserve) currency in re-lation to which other currencies are denominat-ed, and is a preferred currency for transactingglobal commerce;

(3) the shared, in which a formal monetary allianceoperates either through full monetary union (aswith the Euro and the EU) or through an ex-change-rate union among economic equals withan internal managed float and, in both cases, anexternal floating exchange rate;

(4) the substitute, in which a transnational currencysubstitutes either officially or unofficially in all ormany transactions for the nominal territorialcurrency of a given state. The substitute currencyis particularly important as a store of wealth inlocal banks, a hedge against inflation in the na-tional currency, and a medium of capital flight to

foreign financial centers for local elites. Given thedominant economic role of the U.S. in someworld regions, this is usually a process of dollar-ization.

These processes map onto the four sovereignty re-gimes with the four cases taken from Table 1 (see Table2). They reflect decisions on the part of state and otherinfluential actors based on socialized understandings oftheir ‘‘monetary interests’’ (Widmaier 2004, 437). Theseunderstandings reflect, to one degree or another, views ofstate and market performance in relation to the differentstructural positions vis-a-vis the world economy thatstates and local actors find themselves in. Thus, theclassic case can be seen as based on the Keynesian logicthat states can mitigate market failures, the globalistrepresents a neoclassical approach that states shouldretreat and let markets work their magic, the imperialiststresses the classical monetary theory that state failurenecessitates radical decoupling of domestic and mone-tary policies, and the integrative is a mix of Keynesian/inside and neoclassical/outside the grouping of states inquestion. Currency processes, therefore, are not the di-rect result of materialist pressures but are mediated bythe understandings governments and other actors bringto their material situations.

In the contemporary world, there are still examples ofterritorial currencies that reflect ‘‘classic’’ state sover-eignty.6 But the net trend in recent years is away fromthis regime toward the others. One of the best examplesof a classic sovereignty regime is China, whose currency,the renminbi (or yuan), is pegged against the US$ in amanaged float and whose economy is thereby insulatedto a certain degree from monetary shocks emanatingfrom the wider world economy. The only contemporaryexample of an intersection between a transnationalcurrency process and a ‘‘globalist’’ sovereignty regime isthe U.S. The US$ is the main metric of transnationaltrade and commerce and the main currency that other

Table 2. Currency Processes and Sovereignty Regimes

SOVEREIGNTY REGIME

Classic Globalist Integrative Imperialist

Territorial ChinaDOMINANTCURRENCY Transnational USPROCESS

Shared EU

SubstituteLatin

America

Agnew448

states (including China) hold as a reserve. As a result,the US$ is also the currency that is the main instrumentof globalization. The exchange-rate mechanism associ-ated with the globalist regime is the free float.7 The onlycurrent example of a shared currency is the Euro, asso-ciated as it is with the project of pan-European unifica-tion. Historically, many national currencies such as theUS$ emerged out of the unification of more geographi-cally variegated currency systems (see, e.g., Helleiner1999; Broz 1999; Goodwin 2003). Finally, to the extentthat certain territorial currencies reflect the weakness oftheir national economies, they are substituted for by theuse of transnational currencies. Currently, the US$ isthe most important of the transnational currencies, eitherthrough informal or formal dollarization, and, more in-frequently, through so-called currency boards or somevariant thereof that insulate monetary decisions fromdomestic political pressures. In both cases, any pretenseat territorial monetary sovereignty is essentially sacri-ficed to dampen inflation, increase foreign investment,and reduce the proclivity for growth in governmentspending. Many Latin American countries have recentlyexperienced this intersection between currency substi-tution and what I call the imperialist sovereignty regime,even though relatively few countries have engaged infull-fledged or official dollarization.8 Each of the fourcurrency processes is discussed with reference to thespecific example.

But a second issue concerns how the currency proc-esses operate geographically under a given sovereigntyregime. The territorial and shared currency processes arethe most evidently territorialized. But even they arehardly totally closed monetary spaces. They must coexistwith a transnational currency that breaks down bordersand challenges the hold of national currencies over arange of transactions, not least by encouraging the de-velopment of currency markets at financial centerswithin their territories. This is an opening up of possi-bilities for the redistribution of political authority beyondcapital cities whose central banks and finance ministriesmust now work to share power with other actors in themonetary realm. Of course, much of the monetary flowacross territorial boundaries today tends to be betweenfinancial centers in the richest countries. Wall Street (inNew York) and the City (in London) are the key placesof authority with affiliates and collaborators scattered allover the world economy but with the densest presencein North American, European, and East Asian cities(Martin 1994; Thrift 1994). This is because most globalflows are involved in ‘‘diversification finance,’’ ‘‘intendedto reduce risk through the fine-tuning of portfolios’’(Taylor 2004, 31). One hundred years ago a significant

proportion of world capital flows moved from rich topoor countries. Of course, much of this was within co-lonial currency blocs that used the same or closely peg-ged currencies (Helleiner 2002). That this is no longerthe case suggests that the use of substitute currenciestoday is more a question of subordinate state eliteslooking for a monetary port in an economic storm thanof a hegemonic state actively looking to use currency as amechanism of subordination. Yet, susceptibility to thedemands of foreign capital provides a major incentive forsome states and local actors to find shelter, howeverproblematic, in the holding of a less volatile transna-tional currency such as the US$, as evidenced by thelarge domestic and foreign holdings of such currencies(in offshore and other ‘‘dollar salting’’ centers) by thenationals and governments of many countries.

China

If the industrialization of Asia was the ‘‘most spec-tacular economic happening of the second half of thetwentieth century’’ (Daly 1994, 165), then it has beenChina’s rapid emergence since 1978 as a major globaleconomic actor that is perhaps its most remarkablefeature. Closed off to the capitalist world economy from1949 until the late 1970s, China has quickly become amajor presence in both the world’s trading and financialeconomies. In particular, China has become an incredi-ble exporting machine based on massive foreign as wellas domestic investment. China’s exports grew eight-fold—to more than $380 billion—between 1990 and2003. Between 2000 and 2003 this represented an in-crease of from 3.9 to 6 percent of the world total. Alliedto domestic investment, this export explosion has gen-erated a huge demand for raw materials as local firms andforeign investors have vastly increased production ca-pacity in such sectors as steel and cement. As of 2002,China consumed more steel (25.8 percent of the worldtotal) than the EU (16.8 percent), or NAFTA (16.0percent). In 2002 China accounted for 16 percent of thegrowth in the world economy, second only to the U.S.(McGregor 2003; Hale and Hale 2003, 37–38).

Since 1978, but especially since 1987, the Chineseeconomy has gone from a command-and-control modelto a state-managed, but market-driven, one. Undoubt-edly, however, China has entered into the world econ-omy largely on its own terms. Much of its growth hasbeen driven by foreign direct investment (FDI), whichaccounts for over 40 percent of GDP (compared toa minuscule1.1 percent in Japan). But the centralgovernment has retained much more control over itsnational economy than is characteristic of most

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 449

contemporary states. One of the main mechanisms forcontinuing central control has been the managed float ofthe Chinese renminbi (the yuan) against the US$. Thiscontrol has served to both keep Chinese goods com-petitive in the American market as those of othercountries have become less so because of the apprecia-tion of their currencies against the US$ since 2001 andto build up massive US$ reserves which the Chinesegovernment has been investing in, inter alia, U.S.Treasury bonds, and thus helping to finance both theAmerican federal budget and current account deficits.Indeed, as the American trade deficit with China ex-panded monotonically between 1996 and 2003, theChinese purchase of U.S. Treasury securities climbed at amuch faster rate, especially after 2000 (Economist 2003).China, then, uses the monopoly of the renminbi withinthe country to keep out external currency shocks and tocultivate itself as a destination for massive foreign directinvestment premised on low labor costs and a stableexchange rate against the US$. Two major questionsarise: how does this work and is it sustainable in a worldwhere conventional state monetary sovereignty seemsunder considerable pressure?

The Chinese managed-float system began in 1994.Before that date, the renminbi was severely overvaluedat about 1.7 to the US$ to segregate the planned Chi-nese economy from the rest of the world. The officialexchange rate was pegged in 1994 at 8.4 to the US$, butonly in December 1996 did the Chinese governmentaccept IMF Article 8 and set about making the renminbiconvertible for current account transactions.9 Since1996, the rate against the US$ has been virtually fixed atRmb 8.28. The relatively fixed exchange rate encouragesboth exports to the U.S. and FDI inflows denominated inU.S. dollars. Much of China’s growth since the mid-1990s is owed to this exchange-rate system. It allowsChina to profit externally while maintaining internalcurrency homogeneity and stability. The renminbi is aterritorial currency whose value is more or less fixedagainst the currency of its main export market and themain currency of world trade.

By way of example for this critical monetary insula-tion, during the Asian financial crisis of 1997–1998, theChinese economy remained largely unaffected becausethe renminbi is not convertible on capital accounts, soinvestors could not suddenly withdraw their funds asthey could elsewhere. Though there was some pressurefrom international business to devalue the renminbi,not least from the ethnic Chinese business networksthat provide foreign capital for Chinese developmentfrom San Francisco and Vancouver, Canada, as well asfrom Taiwan, Hong Kong, and Southeast Asia, the Chinese

government resisted this. Wang (2003) claims that thiswas mainly a question of maintaining the government’sself-image of control and autonomy. But he also points tothe role of commitment to low inflation and the lack ofinfluence on government policy of local and foreign-owned enterprises in China that lobbied unsuccessfullyfor a devaluation. So, even in the face of increased de-pendence on FDI, the Chinese government was moreconcerned about other, largely political, goals thanpleasing its foreign investors.

Whether this currency system is sustainable is anopen question. One danger comes from overheating ofthe manufacturing sector. As fixed asset investment grewby 31.1 percent in China for all sectors in the first half of2003, three times the rate for the whole of 2000, con-sumption grew only at 8.8 percent (Hale and Hale 2003,39). This disparity indicates a high degree of excess ca-pacity. The fixed exchange rate encourages the growth offoreign exchange reserves, which then push up themoney supply (up from 12 percent in 2001 to 20 percentin 2003). In turn, this encourages more fixed asset in-vestment by speculative capital, thus exacerbating theproblem of shrinking profit margins as more investmentchases stagnant or shrinking demand. At this point, theChinese monetary authorities would have to strengthencapital controls and intervene in foreign exchangemarkets to suppress the appreciation of the renminbi(Kuroda 2003). As of November 2004, however, therewas no sign of either. Indeed, Chinese officials spokeopenly of easing—not of strengthening—capital controls(Kynge 2004).

A second threat comes from the efforts of foreignpolitical leaders, such as the U.S. Secretary of theTreasury, to persuade the Chinese government to moveto a freely floating renminbi in order to avoid the im-position of trade and financial sanctions. Disturbed byChina’s ability to exploit the US$ by ‘‘hiding’’ behind amanaged float, those who would change the Chinesemonetary system, however, should note how muchAmerican businesses investing in China lower labor costsand reap higher profits and American customers/workersreceive lower prices and low-paying jobs (both in thesame building at Wal-Mart) from the current system.China has also increased its imports (largely raw mate-rials) at a higher rate than its exports over the period1998–2003. But the pressure is likely to continue. Aterritorial currency and a globalizing world economy arenot easily harmonized, one with the other, particularlyfor a country such as China with an increasingly heavypresence in world trade (Leblang 2003). As of summer2003, the renminbi was approximately 40 percent un-dervalued against the US$ (Swann 2003). This hands an

Agnew450

enormous competitive advantage to businesses operatingin China versus businesses in the U.S., resulting in amajor loss of American jobs in relevant sectors. Many ofthe 2.8 million manufacturing jobs lost in the U.S. be-tween the beginning of the George W. Bush presidencyand summer 2003 disappeared because of competitionfrom China: an amazing one out of every seven jobs inAmerican manufacturing. No American president everpresided over such a hemorrhaging of jobs over such ashort period of time (Beddoes 2003). That this loss oc-curred at a time when even many service sector jobswere also becoming vulnerable to relocation overseasfrom the U.S. and Europe to countries such as India andChina (e.g., software programming and call centers) onlymade the political tension that much greater (Economist2003). Only a radical restructuring of the Chinesemonetary system through relaxing capital controls andallowing the US$ and other currencies to freely circulatebetween Chinese financial centers such as Shanghaiand Hong Kong and foreign ones is likely to assuage thecritics. Whether this is possible for a governmentseemingly still intent for political reasons on maintaininga classic sovereignty regime—keeping the political mo-nopoly exercised by the Communist Party and reestab-lishing the prestige lost when China was subject to thedepredations of colonial powers in the nineteenth andearly twentieth centuries—remains to be seen.

The United States

As one of the victorious powers after the SecondWorld War, the U.S. was the main agent of imposing afixed exchange-rate system on the international econo-my of the time. This system, known by the name of theplace in New Hampshire where it was negotiated(mainly between the U.S. government and British gov-ernment representatives in 1944)—the Bretton WoodsAgreement—pegged exchange rates against a dollar-goldstandard for the period from 1945 until 1971. Althoughfull convertibility of European currencies against theUS$ did not occur until 31 December 1958, politicalacceptance of the system in the U.S. and elsewhererested more on its stimulus to open, multilateral tradethan on its particular properties as a strategy for organ-izing international monetary relations (Eichengreen1996, 99). Although the system can be seen as part ofthe ‘‘embedded liberalism’’ that the U.S. extended to itssphere of influence during the Cold War (Ruggie 1982),it was a deeply territorialized way of managing curren-cies. It rested initially and finally on the capacity ofgovernments (and central banks) to regulate their cur-

rencies against an external standard provided by the US$pegged against a fixed price of gold.

By the 1960s, the system was in deep trouble. Theproblem was the increasing leakage of dollars beyondAmerican shores through the accumulation of dollarreserves by foreign central banks and the emergence ofthe so-called Eurodollar market. On the one hand, theeconomic recovery of Europe and Japan meant that theyaccumulated large dollar reserves but ‘‘this was attractiveonly as long as there was no question about their con-vertibility into gold. But once foreign dollar balancesloomed large relative to U.S. gold reserves, the credibilityof this commitment might be cast into doubt’’ (Eic-hengreen 1996, 116). As early as 1947, the economistRobert Triffin had predicted that this would be a prob-lem. By 1960, U.S. foreign dollar liabilities exceeded U.S.gold reserves. If foreign countries wanted to converttheir reserves, there would a rush to cash in dollars be-fore the American authorities could devalue. This threatbecame a major refrain of international monetary debatein the 1960s.

On the other hand, the dollar increasingly becamea transnational rather than a territorial currency in thesense it had to be for the Bretton Woods system tofunction properly. Beginning in 1958, a Eurodollar mar-ket had sprung up in London to service dollars beyondthe regulatory domain of both the U.S. and Britain. As aresult, dollars flowed into this market where they werethen lent out without reference to capital controls.Banking Regulation Q, which capped interest rates inthe U.S., encouraged investment in the Eurodollarmarket from the U.S. Multinational businesses parkeddollar funds in Eurodollar accounts to avoid Americantaxes and to gain interest-rate differentials relative toU.S.-located banks. Attempts by American governmentsto correct the imbalances by manipulating the U.S.capital account did slow down the development of theoffshore dollar market. But the Eurodollar market ‘‘en-abled private financiers to engage in exactly the type ofhot-money transactions that the Bretton Woods regimehad sought to eliminate. As predicted by Triffin’s di-lemma, the opportunity for arbitrage profits against thedollar and the other major currencies was overwhelming.Speculation consequently worsened, and ultimately thesystem collapsed’’ (Blyth 2003, 240).

The action taken by President Nixon in 1971 inunilaterally abrogating Bretton Woods can plausibly beseen as an attempt at reasserting classic sovereignty. Inother words, given that a fixed exchange rate systemseemed to deliver decreasing benefits to the Americanterritorial economy, then it would be best to abandon it(e.g., Gowa 1983). Whatever the intention, the outcome

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 451

was a system in which the dollar was liberated from gold,and after 1973, it floated freely against other majorcurrencies (Eichengreen, 1996). Rather than a return tothe US$ as a territorial currency, therefore, the US$ hasbecome an even more transnational currency than thataugured by the Eurodollar market of the 1960s.

Arranged in discussion among the finance ministers ofthe G-5 (the U.S., Japan, France, Germany, and Britain)in 1975, the floating exchange-rate system was formal-ized in 1978 by a second amendment to the Articles ofAgreement of the IMF. This removed the role of goldand legalized floating and obliged countries to promotestability in exchange rates by authorizing the IMF tooversee the monetary policies of members. This was allsomething of a ‘‘leap in the dark’’ (Eichengreen 1996,139). No one really knew how it would work. In the1970s, many established monetary policies coexistedwith the new system, such as capital controls and con-certed intervention. New financial devices, designed tocope with increased volatility in exchange markets, suchas futures and options, bred speculation and furthervolatility (Strange 1994, 59). The large quantity ofdollars introduced into world financial markets by theOPEC-inspired increases in the price of oil had an ad-ditional stimulative effect, given that world oil priceswere denominated in the US$. This increase led to thespate of lending by international banks that producedthe debt crisis for countries that received loans but thenwere faced with declining terms of trade plus large in-terest-rate increases in the 1980s, as the U.S. FederalReserve tried to wring inflation out of the Americaneconomy. But in the 1980s, partly in response to per-sisting stagflation and partly to the increased popularityof ideas of market superiority over state regulation, mostindustrialized countries moved toward greater exchangerate flexibility by abolishing targeting and reducing in-terest rate interventions. Policy coordination amongcountries did help to some degree in reducing volatilityin foreign exchange markets.

The net effect of the post-Bretton Woods turn ofevents, therefore, has been to make the US$ into atransnational currency. In a sense, the dollar has inher-ited its role from Bretton Woods when it was ‘‘the centralnumeraire’’ for the system as a whole (McKinnon 2001,3). As the currency of the world’s largest territorialeconomy with a long-established and dominant presencein world financial markets, the dollar was not ‘‘de-throned’’ when the official exchange rate parities col-lapsed in 1971. If anything, the opposite has happened.The US$ has become ‘‘the vehicle currency in the in-terbank spot and forward exchange markets, the cur-rency of invoice for primary commodity trade and for

many industrial goods and services, and the main cur-rency of denomination for international capital flows—particularly at short term and interbank. Outside ofEurope, governments use the dollar as their prime in-tervention currency—often pegging to the dollar—andU.S. Treasury bonds are widely held by foreign centralbanks and treasuries as official exchange reserves’’(McKinnon, 2001, 3). This is because, as McKinnon andothers have argued, providing transnational money tothe world economy is a natural monopoly. For one thing,in a world of about 150 potential territorial currencies,tremendous savings in transaction costs occur if just onecurrency is chosen as a vehicle currency. All foreign-exchange bids and offers can be made against the onecurrency. For another, significant economies of scaleaccrue from pricing and invoicing goods and services ininternational trade in one territorial currency. The factthat many of the world’s major commodity exchanges arealso located in the U.S., in Chicago and New York, givesa further fillip to the dollar.

The dollar, therefore, is not just a matter for America,because the dollar is not just America’s currency. Overone-half of all dollar bills are held outside U.S. borders.Almost one-half of U.S. Treasury bonds are held as re-serves by foreign central banks, particularly those ofJapan and the People’s Republic of China (Porter andJudson 1996; Davidson 2002). Other currencies cannot,at least as yet, rival this global reach. Consequently, tosome economists, the world is now on a de facto dollarstandard (McKinnon 2001; Davidson 2002). Certainly,more and more nominally territorial currencies now floatfreely against the dollar (and other currencies) with theUS$ as the common unit of comparison. The percentageof IMF members with pegged exchange arrangementsdeclined from about 77 percent in 1977 to 36 percent in1997 and 34 percent in 2001, while the percentage withfree-floating arrangements increased from 12 percentin 1975 to 25 percent in 1997 and to 32 percent in2001(IMF 1997; Hochreiter et al. 2002). But the trendfrom fixed exchange rates to more flexible arrangementscan be exaggerated both in general and with respect tofree floating against the dollar in particular. Rather thanfreely floating against the dollar, many currencies stilltake the form of managed floats or relatively fixed pegs.Moreover, the coming of the Euro offers a potential al-ternative currency of wider use to the dollar.

What is more important about the dollar than its roleas a monetary standard is the revolutionary hollowingout of other territorial currencies that it has facilitated. Itis now a direct means of exchange in many countriesthat still have their own territorial currencies. Indeed, inmany financial centers irrespective of country, it is the

Agnew452

currency of most transactions. Its authority, and that ofthose actors who command it, is often greater than thatof the nominally sovereign state. This is one of the mainfeatures of the transnational uses of the US$. At thesame time, the dollar is still also the currency of the U.S.Specifically, the U.S. uses its dollar to finance its largecurrent account and federal budget deficits (e.g., Cor-bridge and Agnew 1991; Wolf 2004). Of course, all thoseforeigners holding dollars have a stake in keeping up theflow of dollars into the rest of the world. They have aninterest in keeping the whole system in motion. For thisreason, as McKinnon (2001) argues, America’s creditorshave a stake in preserving the dollar’s role as a trans-national currency even as the U.S. current accountdeficit balloons. As a country with a large financialservices sector, the U.S. also benefits indirectly from theglobalist regime that the US$ serves as a transnationalcurrency. This sector has a vested interest in seeing useof the dollar expand around the world. They also arepowerful political proponents, as is the financial sector inBritain, the only other country that has both a chroniccurrent-account deficit and a major financial servicessector, of liberalized global capital markets (Blyth 2003,255).

The Achilles’ heel of the US$ as a transnationalcurrency is that although it gives the U.S. a ‘‘uniquelysoft credit line with the rest of the world’’ (McKinnon2001, 8), it also (as in relations with China) opens up theU.S. economy to competition in sectors where it is lesscompetitive internationally (as in labor-intensive man-ufacturing) and portends a future in which the U.S. willhave to rely on foreign-owned capital and foreign centralbanks (even if in dollars) to finance its domestic econ-omy. As a net importer of 69.2 percent of total globalcapital flows in 2001, the U.S. risks unbalancing its owneconomy (through the loss of certain kinds of jobs, etc.)in order to provide a transnational currency to the rest ofthe world. Foreigners may not need to care that muchabout the American current account deficit, therefore,but Americans are a different question entirely.

The European Union

Though what today is known as the EU can trace itsroots back to the European Coal and Steel Communityof the early 1950s and the European Economic Com-munity of 1957, it was not until the disintegration ofBretton Woods in 1971 that much effort was made toimplement some sort of managed currency system amongmember states. And it was not until the late 1980s, infact, that a fully-fledged monetary union became a majorobjective of the organization. European monetary unifi-

cation through the creation of a shared currency,therefore, has had two distinct origins. One is as aneconomic response to the end of Bretton Woods. Theother is much more clearly political: building Europeanintegration on monetary unification.

In the European Community (EC), attempts at re-ducing volatility among European currencies gave risefirst to ‘‘the Snake’’ or managed float in the early 1970s.This was a collective arrangement whereby the sixoriginal members pegged their exchange rates within2.25 percent bands. The Snake did not last long, mainlybecause the oil shock of 1973 had devastating effects onthe weaker currencies, and as governments adoptedexpansionary fiscal policies, such as France did in 1976,they had to leave the Snake. Eventually, by 1978, theidea of pegging currencies within unchanging bands hadrun its course, particularly when the European curren-cies were simultaneously floating against the dollar. TheEuropean Monetary System (EMS) replaced the Snakein 1979. Under this arrangement, the German markassumed the strong-currency role that the dollar hadperformed under Bretton Woods. Eight of nine ECcountries participated in the EMS from the outset(Britain was the sole exception). Italy was allowed tohave a 6 percent band for a ‘‘transitional’’ period becauseof persisting high inflation, whereas the system as awhole had one of 2.25 percent. There were no with-drawals during the 1980s, but the first four years wereturbulent mainly because the Mitterrand government inFrance embarked on an expansionary fiscal policy. Oncethis was abandoned, however, policy convergence acrossmembers made it easier for the system to respond to therelative strengthening of the dollar in the late 1980s.‘‘Europe’s ‘minilateral Bretton Woods’ appeared to begaining resilience’’ (Eichengreen 1996, 167).

It was precisely at this moment, however, that a set ofnonmonetary concerns emerged across the countriesof the EU. These included the ability of European firmsto compete with the U.S. and Japan, reduce unemploy-ment, maintain European welfare programs in the face ofpressures exerted through the floating dollar to liberalizelabor markets and pension programs, reinvigorate the‘‘European project,’’ and create a single European marketthrough the removal of capital controls. A new vision ofEurope based on these concerns found expression in theDelors Report of 1989 and in the Maastricht Treaty ofDecember 1991. Eliminating currency conversion costswas one of the ways of forging an integrated market.Concurrently, one way of liberalizing trade amongmembers without stimulating protectionism was to re-move the threat of member governments engaging inexchange-rate manipulation. The only way to do these

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 453

two things was to create a shared currency for the entireEU. Without moving forward to monetary union, thefear also was that the political project of European uni-fication would also founder in the face of the transna-tional threat to Europe from U.S. and Japanese economiccompetition.

The Maastricht blueprint for monetary union threwcontinuing political commitment to the EMS into im-mediate doubt. Along with the global recession of 1990–1992, the decline of the dollar against the mark, and therise in German interest rates following German reunifi-cation, this sealed the fate of Europe’s experiment inmanaging currencies (Eichengreen 1996, 171–81). Whatreplaced it in the 1990s was the movement toward ashared currency by declaring a set of fiscal and monetarycriteria for accession to monetary union. These crite-ria—freeing central banks from political control, settinginflation, government debt, and government spendingtargets, etc.—should be understood not just as goals inthe pursuit of price stability and trade benefits. Rather,‘‘European monetary integration can be best understoodas a political compromise involving divergent ideas andpreferences within Europe, specifically between Franceand Germany’’ (Chang 2003, 219). If the French gov-ernment desired to enhance France’s and Europe’s in-dependence from the U.S., Germany wanted to see itsreunification accepted as unthreatening to the rest ofEurope. If the Bundesbank-like role assumed by theEuropean Central Bank (ECB) represents what theGermans wanted out of the system, an independentbank devoted to keeping inflation under control, theFrench have acquired a currency that can potentiallychallenge the US$ as a transnational currency.

The transition to a shared currency has gone throughthree stages as foreseen in the Delors Report and agreedto in the Maastricht Treaty (Artis 1992). The first stage,from 1990 to 1994, saw the removal of capital controlsamong potential members, political independence forcentral banks, and convergence toward treaty obliga-tions. The second stage, from 1994 to 1999, saw theconvergence of macroeconomic indicators and policiesand planning for introduction of the new currency. Fi-nally, the third stage has seen the introduction of thenew currency, first alongside the existing territorial cur-rencies and then instead of them. The implementationwent remarkably smoothly. Since January 2002, the Eurohas been the sole legal tender in all of the then-EUcountries except Britain, Denmark, and Sweden, whichhave chosen to remain outside for the time being (Un-derhill 2002).

In a sense, of course, the shared currency is simply anew territorial currency for a larger area. But it also has

a couple of other features that do set it apart from beingjust that. One is that it is already a transnational cur-rency, in that, after the dollar, it is now the most im-portant currency for worldwide financial transactions.Critically, inside Europe, it has replaced the mark andthe dollar as the two previously most important cur-rencies in cross-border flows. Second, it is peculiar inthat individual states have retained control over fiscalpolicy even as they have ceded control over monetarypolicy to the ECB and the foreign exchange markets. Ifthe latter has tended to lead toward a more ‘‘Anglo-American’’ market capitalism in Europe’s financial cen-ters (Dyson 2002, 363), the former has created seriousproblems as some member countries, notably France andGermany, have violated the excessive government defi-cits rule (no more than 3 percent of GDP) that theyagreed to follow when planning the shared currency(Major 2003). The EU’s fiscal rules, therefore, appearsimultaneously unenforceable and unchangeable. Untilthere is some parallelism in Europe between the levels atwhich fiscal and monetary policies are made, this is likelyto be a continuing problem for the shared currency andany deepening of its role as a transnational one (Wachtel2003).

Latin America

The U.S. has long had a strong influence over mon-etary policy in Latin America. In the early twentiethcentury, this took the form of encouraging the use of theUS$ as part of a ‘‘gold standard diplomacy’’ (Rosenberg1985, 1999) that would bring monetary stability to theregion and make it easier for American business to op-erate if countries possessed currency units that wereidentical in value to the dollar. In Rosenberg’s (1999, 24)words, the idea was to ‘‘create a gold dollar bloc, cen-tered in New York, to rival the de facto [British] sterlingstandard.’’ At the same time, dollar diplomacy also couldinvolve encouraging straightforward adoption of thedollar itself. This dollarization, however, usually meantthe use of the US$ alongside the territorial currency, notexclusive use of the dollar in its place (Helleiner 2003c).By the 1920s, dollar diplomacy of both species hadlargely peaked. Increasing Latin American nationalism,the various advantages of issuing a territorial currency(identified earlier), and serious current account crisesthat the economic thinking of the time suggested neededactivist monetary policies conspired to limit the substi-tution of national currencies by the dollar.

After the Second World War, official American policywas to discourage use of the dollar as a substitute forterritorial currencies in the region. The new priority was

Agnew454

national economic development, so the best monetarypolicy should be an independent one with each countryhaving its own currency. Of course, this fit into theconventional economic wisdom of the times as mani-fested in the Bretton Woods Agreement and many otherU.S.-sponsored policies in the late 1940s and 1950s.Indeed, American governments even endorsed eco-nomic nationalist policies such as import-substitutionindustrialization, partly as a tool to undermine left-winggroups and co-opt nationalists to the American side inthe Cold War, but also because large American manu-facturing firms wanted to build factories behind hightariff walls to serve local markets (Maxfield and Nolt1990). This illustrates how much American monetarypolicy in Latin America at the time reflected Americanforeign policy interests and the relative influence oflarge-scale American manufacturers compared to foreignfinancial investors and American investors in mines andagriculture (Helleiner 2003c, 419). But it also suggestsstrongly that the state territories were seen by locals andAmericans alike as very much the basic building blocksfor all economic policies. In this regard, American policyin Latin America differed considerably from British andFrench policies in Africa and elsewhere that often pu-shed for currency blocs (such as the Franc CFA zonein former French colonies in West Africa) or currencyboards to limit the monetary discretion of the localgovernments (Helleiner 2003a).

Beginning in the 1970s, dollar diplomacy returned tothe American agenda in Latin America. Price stabilityreplaced economic growth as the central goal of Amer-ican policy toward the region. Adoption of this policywas obviously part of the ideological shift toward neo-liberalism that followed the freeing of currencies fromfixed exchange rates after the collapse of Bretton Woods.But economic conditions in Latin America also madethe change seem more imperative than it otherwisemight have appeared. In particular, a number of factorsplayed a role in making price stability a higher prioritythan formerly. Two were especially crucial: the extremelyhigh inflation rates in the countries of the region and thegrowth of export-oriented FDI as the motor of economicdevelopment in place of import-substitution. As a result,the elimination of exchange-rate risk has come to bewidely seen as likely to foster American trade and in-vestment throughout the region (Helleiner 2003c, 421).In 1999, a bill devoted to the spread of official dollar-ization throughout Latin America was actually intro-duced in the U.S. Senate. But after a flurry of interest,enthusiasm seems to have faded. Cohen (2002) main-tains that, from an American perspective, it is likely thatAmerican governments will remain passively neutral

about official dollarization. Although there are sei-gniorage, transaction cost, conversion cost, prestige, andgeopolitical advantages, many of these can be gained byunofficial and surreptitious dollarization. Official dollar-ization has the major drawbacks of exposing the U.S.politically if economic growth stalls and imposing costs ifthe U.S. has to intervene in financial crises. Only if theEuro came to challenge the status of the dollar asthe preeminent substitute currency in Latin America,the currency Latin Americans really want to have, doesCohen think that American policy might become moreaggressive in pushing official dollarization.

In Latin America itself, Ecuador and El Salvador haveenacted legislation in recent years to fully dollarize theireconomies. Panama has been largely dollarized from itsorigins as an American dependency at the time of theconstruction of the Panama Canal. Elsewhere, however,full dollarizations (either official or unofficial) have notoccurred. From 1991 until 2002, Argentina did employsomething like a currency board to maintain a fixedexchange rate between the peso and the US$ but thecharter of the board allowed considerable discretion tothe monetary authorities (Hanke 2003). This cannot beseen as a true case of official dollarization. Many otherLatin American countries in fact now float their cur-rencies against the dollar and other currencies (IMF1997; Berg et al. 2003). From this point of view, LatinAmerica is now relatively less dollarized officially thanit was in the late 1980s when many of its countrieshad currencies that were closely pegged to the dollaror adopted so-called intermediate mechanisms such ascrawling pegs and bands (Jameson 1990; more generallyon trends in adopting fixed versus floating exchangerates across developed and developing countries, seeBernhard et al. 2002; Joshi 2003). In other words, thecontinent is stuck between the globalist and the impe-rialist regimes, even though many governments, if givena choice, would aspire to classic sovereignty.

Unofficial dollarization is a different matter entirely.Although much more difficult to document than officialdollarization, this is clearly substantial in amount andeffects (Doyle 2000). For example, in Argentina in 1992,one study estimates that the dollars in circulationamounted to $26 billion or around 11 percent of Ar-gentine GDP (Kamin and Ericsson 1993). In Bolivia andUruguay in the same year, the ratio of paper dollars tolocal currency was reported as an incredible three or fourto one (Calvo and Vegh 1993). Bank deposits in differ-ent currencies are easier to track than physical flows ofcash. Many Latin American countries allow dollar-denominated deposits in domestic banks. Cohen (1998,112–13) reports figures that suggest perhaps as much as

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 455

80.9 percent of all deposits in domestic banks in Boliviain 1992 were of foreign currency (almost entirely dollars,one surmises). In the same year in Argentina, thecomparable figure was 41.5 percent. In 2000, the rangewent from a high of 92.5 percent of all deposits in US$ inBolivia to a low of 4.9 in Mexico with a mean of 49.2percent across all countries in Latin America that al-lowed foreign currency bank deposits (Berg et al. 2003).

All this adds up to a major unofficial (or spontaneous)dollarization. The reasons are not difficult to find. Theyrange from the fact that drug trafficking, one of theAndean countries’ main economic activities, is an en-tirely dollar business through remittances from migrantsto the U.S. (this is particularly important in CentralAmerica) to the salting away of dollars as a defenseagainst inflation and to aid in the acquisition of dollarassets abroad (i.e., capital flight to offshore bankingcenters in the Caribbean and to Miami). The fact thatmany states, particularly in Central and Andean Amer-ica, fail to raise enough tax revenue to pay for even thebarest of modern states, including adequate monetaryregulation, also leads their own elites to look to thedollar as the best guarantee of future wealth. Lying be-hind much of the unrealized sovereignty of LatinAmerican states is the fact that Latin America is noworiented almost completely toward the U.S. both as asource of investment and as the destination for many ofthe region’s commodity exports, migrants, and capital. Itis Latin America’s dependence on the American econ-omy that has produced the substitution of the dollar forterritorial currencies throughout the region. That this ismainly unofficial or the result of diffusion of the dollarinto the economic fiber of the region rather than theoutcome of a formal adoption of the dollar as a re-placement for territorial currencies is nevertheless asignificant strike against the possibility of real monetarysovereignty on the part of Latin American countries. Inthis regard, effective sovereignty lies to El Norte and isexercised through privatized network flows of U.S. dol-lars rather than through explicit state adoption of thedollar as a territorial currency.

Conclusion

The conception of sovereignty that has predominatedin modern political theory relies on the idea of exclusivepolitical authority exercised by a state over a given ter-ritory. This idea reflects the concept of sovereignty thatemerged from Westphalia and then developed along withEnlightenment and Romantic ideals of popular rule andpatriotism. Many governments continue to act as if theconcept is actually descriptive of the contemporary

world. But this standard conception is a poor guide topolitical analysis. It is a ‘‘truth’’ that has always hiddenmore than it reveals. In a globalizing world, this obfus-cation is particularly problematic. We cannot meaning-fully apply the orthodox conception of sovereignty tothe conditional exercise of relative, limited, and partialpowers that local, regional, national, international, andnonterritorial communities and actors now exert.

I have proposed an alternative to the orthodox ap-proach to sovereignty that draws from recent critiques ofthe orthodoxy’s understanding of political authority, towhich I have added a critique of its understanding ofspatiality as absolute territoriality. This alternative modelrelies on the idea of ‘‘sovereignty regimes,’’ or combi-nations of degrees of central state authority and con-solidated or open territoriality. I have empiricallyillustrated the efficacy of this approach to disentanglingthe impacts of globalization on state territoriality byexamining various ways in which monetary sovereignty,perhaps the most obviously symbolic as well as importantmaterial manifestation of state sovereignty, operates ef-fectively. I have identified four distinctive currencyprocesses under contemporary global political-economicconditions—territorial, transnational, shared, and sub-stitute—that may be mapped onto the four types ofsovereignty regime, respectively, classic, globalist, inte-grative, and imperialist. This typology has the virtue ofdistinguishing various ways in which globalization in-tersects with state territoriality to produce very differentmodes of actually existing or effective sovereignty in theworld today. We do not live in a world that is singularlyimperialist, globalist, integrative, or Westphalian. Thetypology also provides a way of gauging differences in themeaning of sovereignty over time and space and therebymoves beyond the sterile debate over whether some sortof universal ‘‘state sovereignty’’ is eroding. When as-sumptions about the fixed and universal nature of ter-ritoriality no longer work to locate sovereignty in place,we begin to see, for better and for worse, that there ispolitical authority beyond the sovereign construction ofterritorial space.

Notes

1. This is the opposite of the historical situation in the field ofgeography as a whole where, as Sack (1983, 56) once noted,‘‘conventional spatial analysis has largely ignored territorial-ity.’’ Fleeting, if important, exceptions such as Gottmann(1973) only help to prove the rule. More recently, however,particularly under the influence of a certain reading ofFoucault and the strange revival of interest in the Naziphilosopher Schmitt, it is as if power cannot be thought ofexcept in terms of territoriality (see, e.g., Hannah 2000 for an

Agnew456

example of the former and Barnett 2004 for a critique of thelatter), even though, as Allen (2003) persuasively demon-strates, it is Foucault who can provide the best theoreticaltake-off point for a much richer understanding of the com-plex spatialities of power and authority.

2. This conflation is not unusual in even the most sophisticatedof theoretical arguments. See, for example, Elden (2005,forthcoming).

3. This ‘‘regime of sovereignty’’ is addressed in moral not inpolitical-economic terms by Grovogui’s (2002) essay on Af-rica’s relations with Europe.

4. Bobbitt (2002), for example, provides a different periodiza-tion based on the outcomes of wars rather than any othercriteria such as economic downturns or the complex of po-litical-economic and discursive factors underpinning that ofAgnew and Corbridge (1995).

5. A good textbook survey of currencies and exchange-rateregimes is provided by Sachs and Larrain (1993).

6. As of 2001, thirty-nine countries had no independent cur-rency (i.e., relied totally on a foreign currency such as theUS$), fifty-one had currency boards or pegged exchangerates, seventeen had exchange rates adjusted by indicators(inflation or exchange-rate targets), thirty-one had managedfloats, and forty-seven freely floated (Hochreiter et al., 2002,29). The freely floating currencies are the most integratedinto the global economy with the most independently pow-erful financial centers where the US$ serves as the commonmetric of transactions. The countries with no independentcurrency obviously use substitute ones. The managed floatssignify those states in which state monetary authority (andother elements of authority) is relatively territorial. Thecountries with currency boards and pegged rates are ofteneither in macroeconomic crisis or in transition toward someother exchange-rate regime. ‘‘Network externalities,’’ thesnowball effect of surrounding countries operating with othersystems, make these ‘‘intermediate’’ exchange-rate regimesinherently unstable with financial globalization and will pushthem toward shared currencies (as with central Europeancountries awaiting admission to the Euro after joining the EUin 2004), substitute currencies (no independent currency) or,most likely of all in most cases under present conditions,towards free floating (Bubula and Otker-Robe 2002; Joshi2003). In other words, only thirty-one countries (plus theU.S.) could claim that they have the main features of‘‘classic’’ monetary sovereignty. As I later show, the U.S. caseis rather more complex than this. In most cases the retreat ofcentral state authority is paralleled by an increasingly com-plex spatiality of currency flows and regulation. Several re-cent studies show that a wide range of state economic policydecisions are fundamentally constrained by the type of ex-change-rate mechanism and monetary targets that statesadopt (e.g., IMF 2000; Dabrowski 2002; Hochreiter et al.2002; Joshi 2003).

7. Strangely, in some of the macroeconomics literature mone-tary sovereignty is associated with a free floating currency(e.g., Dabrowski 2002). Why giving up control over a cur-rency to the markets should be seen this way perhaps reflectsthe classical and neoclassical sensibility that a currencyshould either ‘‘stand and deliver’’ or go to the wall. It cer-tainly seems to have little or nothing to do with the reality ofcentral state authority as indicated by different exchange-rate mechanisms. In the contemporary world it is successful

managed floats, as the closest mechanism to fixed rates, thatsignify a high degree of central state authority in the mon-etary realm.

8. Recently in Canada a public discussion has erupted over themerits of dollarizing as one way of responding to the impo-sition of more restrictive border controls between the U.S.and Canada in the aftermath of the terrorist attacks in theU.S. of 11 September 2001. Emily Gilbert (2005) has ex-pertly explored the discussion in a recent issue of this journal.

9. A fully convertible currency is convertible by any holder forany purpose. Under current account convertibility, as pres-ently operative in China, holders of the renminbi have theright of conversion for purposes such as trade or travel butnot for capital account purposes such as making loans orbuying foreign assets. Absence of capital account converti-bility requires that national monetary authorities monitor theuse of all funds; under full convertibility, as prevails with fullyfloating and some types of managed exchange rates, this isnot necessary.

References

Agamben, G. 1998. Homo Sacer: Sovereign power and the bare life.Stanford, CA: Stanford University Press.

Agnew, J. A. 1994. The territorial trap: The geographical as-sumptions of international relations theory. Review of Inter-national Political Economy 1:53–80.

FFF, 1999. Mapping political power beyond state bounda-ries. Millennium 28:499–521.

FFF, 2002. Making political geography. London: Arnold.Agnew, J. A., and S. Corbridge. 1995. Mastering space: Hegem-

ony, territory, and international political economy. New York:Routledge.

Allen, J. 2003. Lost geographies of power. Oxford, U.K.: Blackwell.Anderson, J. 1996. The shifting stage of politics: New medieval

and postmodern territorialities? Society and Space 14:133–53.

FFF, ed. 2002. Transnational democracy: Political spaces andborder crossings. London: Routledge.

Appadurai, A. 1996. Sovereignty without territoriality: Notesfor a postnational geography. In The geography of identity, ed.P. Yaeger, 40–58. Ann Arbor: University of Michigan Press.

Arendt, H. 1958. The human condition. Chicago: University ofChicago Press.

Artis, M. 1992. The Maastricht road to monetary union. Journalof Common Market Studies 33:299–309.

Badie, B. 1999. Un monde sans souverainete. Les Etats entre ruseset responsabilite [A world without sovereignty: States be-tween tricks and responsibility]. Paris: Fayard.

Barnett, C. 2004. Deconstructing radical democracy: Articula-tion, representation, and being-with-others. Political Geog-raphy 23:503–28.

Bartelson, J. 1995. A genealogy of sovereignty. Cambridge, U.K.:Cambridge University Press.

Beddoes, Z. M. 2003. Flying on one engine. Survey of the worldeconomy. Economist, 20–26 September.

Berg, A., E. Borensztein, and P. Mauro. 2003. Monetary regimeoptions for Latin America. Finance and Development Sep-tember: 24–27.

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 457

Bernhard, W., J. L. Broz, and W. R. Clark. 2002. The politicaleconomy of monetary institutions. International Organiza-tion 56:693–723.

Bernhard, W., and D. Leblang. 1999. Democratic institutionsand exchange-rate commitments. International Organization53:71–97.

Biersteker, T. J. 2002. State, sovereignty, territory. In Handbookof international relations, ed. W. Carlsnaes, 208–26. London:Sage.

Biersteker, T. J., and C. Weber, eds. 1996. State sovereignty associal construct. Cambridge, U.K.: Cambridge UniversityPress.

Blyth, M. 2003. The political power of financial ideas: Trans-parency, risk, and distribution in global finance. In Mone-tary orders: Ambiguous economics, ubiquitous politics, ed. J.Kirshner, 239–59. Ithaca, NY: Cornell University Press.

Bobbitt, P. 2002. The shield of Achilles: War, peace, and the courseof history. New York: Knopf.

Brenner, N. 1998. Global cities, glocal states: Global city for-mation and state territorial restructuring in contemporaryEurope. Review of International Political Economy 5:1–37.

Broz, J. L. 1999. Origins of the Federal Reserve System: Inter-national incentives and the domestic free-rider problem.International Organization 53:39–70.

Bubula, A., and I. Otker-Robe. 2002. The evolution of ex-change rate regimes since 1990: Evidence from de factopolicies. IMF Working Papers, WP/02/155.

Calvo, G. A., and C. A. Vegh. 1993. Currency substitution inhigh inflation countries. Finance and Development 30:34–37.

Camilleri, J., and J. Falk, eds. 1992. The end of sovereignty? Thepolitics of a shrinking and fragmenting world. Aldershot, U.K.:Elgar.

Campbell, D. 1992. Writing security: United States foreign policyand the politics of identity. Minneapolis: University of Min-nesota Press.

Cerny, P. G. 1995. Globalization and the changing logic of col-lective action. International Organization 49:595–625.

Chang, M. 2003. Franco-German interests in European mone-tary integration: The search for autonomy and acceptance.In Monetary orders: Ambiguous economics, ubiquitous politics,ed. J. Kirshner, 218–35. Ithaca, NY: Cornell UniversityPress.

Cohen, B. J. 1998. The geography of money. Ithaca, NY: CornellUniversity Press.

FFF, 2002. US policy on dollarization: A political analysis.Geopolitics 7:63–84.

Corbridge, S., and J. A. Agnew. 1991. The US trade and budgetdeficits in global perspective: An essay in geopolitical econ-omy. Society and Space 9:71–90.

Cox, K. R., ed. 1998. Spaces of globalization. New York: GuilfordPress.

Croxton, D. 1999. The Peace of Westphalia of 1648 and theorigins of sovereignty. International History Review 21:569–91.

Cutler, A. C., V. Hauffler, and T. Porter. 1999. Private authorityand international affairs. In Private authority and interna-tional affairs, ed. A. C. Cutler, V. Hauffler, and T. Porter,3–30. Albany, NY: SUNY Press.

Dabrowski, M. 2002. Is there room for national monetary policyin the era of globalization? Eldis, 26 August.

Dallmyr, F., and J. M. Rosales, eds. 2001. Beyond nationalism?Sovereignty and citizenship. Lanham, MD: Lexington Books.

Daly, M. T. 1994. The road to the twenty-first century: Themyths and miracles of Asian manufacturing. In Money,power and space, ed. S. Corbridge, R. Martin, and N. Thrift,165–88. Oxford, U.K.: Blackwell.

Davidson, P. 2002. Financial markets, money and the real world.Cheltenham, U.K.: Edward Elgar.

Delbruck, J. 2003. Exercising public authority beyond the state:Transnational democracy and/or alternative legitimationstrategies? Indiana Journal of Global Legal Studies 10:29–44.

Doyle, B. M. 2000. ‘‘Here, dollars, dollars . . . ’’—Estimatingcurrency demand and worldwide currency substitution.Washington, DC: Federal Reserve Board of Governors,International Finance Discussion Paper Number 657.

Durand, M-F., J. Levy, and D. Retaille. 1992. Le monde, espaces etsystemes [The world: Spaces and systems]. Paris: Dalloz.

Dyson, K. 2002. Conclusions: European states and Euro eco-nomic governance. In European states and the Euro: Euro-peanization, variation, and convergence, ed. K. Dyson,335–66. Oxford, U.K.: Oxford University Press.

Economist. 2003. Tilting at dragons: China is being blamed fortoo many of the rich world’s economic problems. 25 Oc-tober: 65–66.

Eichengreen, B. 1996. Globalizing capital: A history of the inter-national monetary system. Princeton, NJ: Princeton Univer-sity Press.

Elden, S. 2005. Forthcoming. Missing the point: Globalization,deterritorialization and the space of the world. Transactionsof the Institute of British Geographers.

Foucault, M. 1980. Two lectures, in Michel Foucault: Power/knowledge: Selected interviews and other writings, 1972–1977.Brighton: Harvester Press.

FFF, 1991. The Foucault effect: Studies in governmentality.Chicago: University of Chicago Press.

Gilbert, E. 2005. The inevitability of integration? Neoliberaldiscourse and the proposals for a new North AmericanEconomic Space after September 11. Annals of the Associ-ation of American Geographers 95:202–22.

Gill, S. 1994. Structural change and the global political econ-omy: Globalizing elites and the emerging world order. InGlobal transformation: Challenges to the state system, ed. Y.Sakamoto, 169–99. Tokyo: United Nations University.

Goodwin, J. 2003. Greenback: The almighty dollar and the inven-tion of America. New York: Henry Holt.

Gottmann, J. 1973. The significance of territory. Charlottesville:University Press of Virginia.

Gowa, J. 1983. Closing the gold window: Domestic politics and theend of Bretton Woods. Ithaca, NY: Cornell University Press.

Grovogui, S. N. 2002. Regimes of sovereignty: Internationalmorality and the African condition. European Journal of In-ternational Relations 8:315–38.

Hale, D., and L. H. Hale. 2003. China takes off. Foreign Affairs82:36–53.

Hall, R. B., and T. J. Biersteker, eds. 2002. The emergence of pri-vate authority in global governance. Cambridge, U.K.: Cam-bridge University Press.

Hanke, S. H. 2003. The Argentine straw man: A response tocurrency board critics. Cato Journal 23:47–57.

Hannah, M. G. 2000. Governmentality and the mastery of territoryin nineteenth-century America. Cambridge, U.K.: CambridgeUniversity Press.

Hardt, M., and A. Negri. 2000. Empire. Cambridge, MA: Ha-rvard University Press.

Agnew458

Hashmi, S., ed. 1997. State sovereignty: Change and persistence ininternational relations. University Park: Pennsylvania StateUniversity Press.

Held, D. 2004. Global covenant. Cambridge, U.K.: Polity Press.Helleiner, E. 1994. States and the reemergence of global finance.

Ithaca, NY: Cornell University Press.FFF, 1999. Historicizing territorial currencies: Monetary

space and the nation-state in North America. Political Ge-ography 18:309–39.

FFF, 2002. The monetary dimensions of colonialism: Why didimperial powers create currency blocs? Geopolitics 7:5–30.

FFF, 2003a. Dollarization diplomacy: US policy towardsLatin America coming full circle? Review of InternationalPolitical Economy 10:406–29.

FFF, 2003b. The making of national money: Territorial curren-cies in historical perspective. Ithaca NY: Cornell UniversityPress.

FFF, 2003c. The southern side of embedded liberalism: Thepolitics of postwar monetary policy in the Third World. InMonetary orders: Ambiguous economics ubiquitous politics, ed.J. Kirshner, 55–77. Ithaca, NY: Cornell University Press.

Hobbes, T. 1651/1968. Leviathan, ed. C. B. MacPherson. Ox-ford, U.K.: Oxford University Press.

Hochreiter, E., K. Schmidt-Hebbel, and G. Winckler. 2002.Monetary union: European lessons, Latin American prospects.Santiago, Chile: Central Bank of Chile Working PapersNumber 167.

Hudson, A. C. 1998. Reshaping the regulatory landscape: Bor-der skirmishes around the Bahamas and Cayman offshorefinancial centres. Review of International Political Economy5:534–64.

FFF, 2001. NGOs’ transnational advocacy networks: From‘legitimacy’ to ‘political responsibility’? Global Networks1:331–52.

Hurd, I. 1999. Legitimacy and authority in international poli-tics. International Organization 53:379–408.

Ilgen, T., ed. 2003. Reconfigured sovereignty: Multi-layered gov-ernance in the global age. Aldershot, U.K.: Ashgate.

IMF. 1997. Exchange rate arrangements and currency convertibility:Developments and issues. Washington, DC: InternationalMonetary Fund.

FFF, 2000. Exchange rate regimes in an increasingly integratedworld economy. Washington, DC: International MonetaryFund.

Inayatullah, N., and D. L. Blaney. 1995. Realizing sovereignty.Review of International Studies 21:3–20.

Inayatullah, N., and M. E. Rupert, 1994. Hobbes, Smith and theproblem of mixed ontologies. In The global economy as po-litical space, ed. S. Rosow, N. Inayatullah, and M. E. Rupert,61–85. Boulder, CO: Lynne Rienner.

Ingham, G. 1994. States and markets in the production of worldmoney: Sterling and the dollar. In Money, power and space,ed. S. Corbridge, R. Martin, and N. Thrift, 29–48. Oxford,U.K.: Blackwell.

Jacobson, D. 2001. The global political culture. In Identities,borders, orders: Rethinking international relations theory, ed.M. Albert, D. Jacobson, and Y. Lapid, 161–79. Minneapolis:University of Minnesota Press.

Jacobson, N. 1998. The strange case of Hobbesian man. Repre-sentations 63:1–12.

Jameson, K. P. 1990. Dollar bloc dependency in Latin America:Beyond Bretton Woods. International Studies Quarterly34:519–41.

Joshi, V. 2003. Financial globalization, exchange rates and cap-ital controls in developing countries. Conference on re-inventing Bretton Woods, Madrid, 13–14 May.

Kahler, M., and D. A. Lake, eds. 2003. Governance in the globaleconomy: Political authority in transition. Princeton, NJ:Princeton University Press.

Kamin, S. B., and N. R. Ericsson. 1993. Dollarization in LatinAmerica. Washington, DC: Federal Reserve Board of Gov-ernors International Finance Discussion Paper 460.

Kantorowicz, E. H. 1957. The king’s two bodies: A study in me-dieval political theology. Princeton, NJ: Princeton UniversityPress.

Keene, E. 2002. Beyond the anarchical society: Grotius, colonial-ism, and order in world politics. Cambridge, U.K.: CambridgeUniversity Press.

Kobrin, S. J. 1997. The architecture of globalization: State sov-ereignty in a networked global economy. In Governments,globalization, and international business, ed., J. H. Dunning,146–71. Oxford, U.K.: Oxford University Press.

Krasner, S. D. 1999. Sovereignty: Organized hypocrisy. Princeton,NJ: Princeton University Press.

FFF, ed. 2001. Problematic sovereignty: Contested rules andpolitical possibilities. New York: Columbia University Press.

Kratochwil, F. 1986. Of systems, boundaries, and territoriality:An inquiry into the formation of the state system. WorldPolitics 34:27–52.

Kuroda, H. 2003. How to help the renminbi find its own level.Financial Times, 17 October: 15.

Kynge, J. 2004. China flags easing of capital controls. FinancialTimes 9 November: 6.

Lake, D. A. 2003. The new sovereignty in international rela-tions. International Studies Review 5:303–23.

Langewiesche, W. 2004. The outlaw sea: A world of freedom,chaos, and crime. New York: North Point Press.

Leblang, D. 2003. To devalue or defend? The political economyof exchange rate policy. International Studies Quarterly47:533–59.

Levy, J. 2001. A user’s guide to world-spaces. In From geopoliticsto global politics: A French connection, ed. J. Levy, 67–84.London: Frank Cass.

Lincoln, B. 1994. Authority: Construction and corrosion. Chicago:University of Chicago Press.

Lind, M. 2004. Popular sovereignty, divisible sovereignty and thefuture of world order. New Haven, CT: Yale Legal TheoryWorkshop, 6 May.

Linklater, A. 1998. The transformation of political community.Cambridge, U.K.: Polity.

Locke, J. 1690/2003. The second treatise. In Two treatises ofgovernment and a letter concerning toleration, ed. I. Shapiro,100–209. New Haven, CT: Yale University Press.

Luke, T. W. 1996. Governmentality and contragovernmentality:Rethinking sovereignty and territoriality after the ColdWar. Political Geography 15:491–507.

Luke, T. W., and G. O Tuathail. 1998. Global flowmations, localfundamentalisms, and fast geopolitics: ‘America’ in an ac-celerating world order. In An unruly world? Globalization,governance and geography, ed. A. Herod, G. O Tuathail, andS. Roberts, 72–94. London: Routledge.

Major, T. 2003. Duisenberg warns EU ministers over deficitrules. Financial Times 31 October: 3.

Mann, M. 1984. The autonomous power of the state: its origins,mechanisms and results. European Journal of Sociology,25:185–213.

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 459

FFF, 1993. The sources of social power, Vol. II: The riseof classes and nation-states, 1760–1914. Cambridge, U.K.:Cambridge University Press.

Martin, R. 1994. Stateless monies, global financial integrationand national economic autonomy: The end of geography?In Money, power and space, ed., S. Corbridge, R. Martin,and N. Thrift, 253–78. Oxford, U.K.: Blackwell.

Mason, M. 2001. Transnational environmental obligations: Lo-cating new spaces of accountability in a post-Westphalianglobal order. Transactions of the Institute of British Geogra-phers 26:407–29.

Maxfield, S., and J. H. Nolt. 1990. Protectionism and the in-ternationalization of capital: U.S. sponsorship of importsubstitution industrialization in the Philippines, Turkey, andArgentina. International Studies Quarterly 34:49–81.

McGregor, R. 2003. Beijing fails to dent steel industry’s rapidexpansion. Financial Times 30 October: 14.

McKinnon, R. 2001. The international dollar standard and sus-tainability of the U.S. current account deficit. BrookingsPanel on Economic Activity: Symposium on the U.S. CurrentAccount. Washington, DC: Brookings Institution.

Melzer, S. E., and K. Norberg, eds. 1998. From the royal to therepublican body: Incorporating the political in seventeenth andeighteenth century France. Berkeley and Los Angeles: Uni-versity of California Press.

Mills, K. 2000. Sovereignty eclipsed? The legitimacy of human-itarian access and intervention. Journal of HumanitarianAssistance. http://www.jha.ac/articles/a019.htm (last access-ed 28 June 2004).

Mulligan, S. 2004. Questioning (the question of) legitimacy inIR: A reply to Jens Steffek. European Journal of InternationalRelations 10:475–84.

Murphy, A. B. 1994. International law and the sovereign state:challenges to the status quo. In Reordering the world: Ge-opolitical perspectives on the 21st century, ed. G. J. Demko andW. B. Wood, 209–24. Boulder, CO: Westview Press.

FFF, 1996. The sovereign state system as political-territorialideal: historical and contemporary considerations. In Statesovereignty as social construct, ed. T. J. Biersteker and C.Weber, 81–120. Cambridge, U.K.: Cambridge UniversityPress.

Nasstrom, S. 2003. What globalization overshadows. PoliticalTheory 31:808–34.

Neocleous, M. 2003. Off the map: On violence and cartography.European Journal of Social Theory 6:409–25.

Newman, D. 2001. Boundaries, borders, and barriers: changinggeographic perspectives on territorial lines. In Identities,borders, orders: Rethinking international relations theory, ed.M. Albert, D. Jacobson, and Y. Lapid, 137–51. Minneapolis:University of Minnesota Press.

Offner, J-M., and D. Pumain, eds. 1996. Territoires et reseaux.Significations croisees [Territories and networks: Intersectingmeanings]. Tour d’Aigues: L’Aube.

Ong, A. 1999. Flexible citizenship: The cultural logics of transna-tionality. Durham, NC: Duke University Press.

Osiander, A. 2001. Sovereignty, international relations, and theWestphalian myth. International Organization 55:251–87.

Paasi, A. 1999. Boundaries as social processes: territoriality inthe world of flows. In Boundaries, territory, and postmodernity,ed. D. Newman, 69–88. London: Frank Cass.

Palen, R. 2002. Tax havens and the commercialization of statesovereignty. International Organization 56:151–76.

Porter, R. D., and R. A. Judson. 1996. The location of U.S.currency: How much is abroad? Federal Reserve Bulletin 82/10:883–903.

Priest, D., and J. Stephens. 2004. The secret world of U.S. in-terrogation: Long history of tactics in global constellation ofdetention centers is coming to light. Wall Street Journal Eu-rope 12 May: A3.

Roberts, S. 1994. Fictitious capital, fictitious spaces: the geog-raphy of offshore financial flows. In Money, power and space,ed. S. Corbridge, R. Martin, and N. Thrift, 91–115. Oxford,U.K.: Blackwell.

Rosenberg, E. 1985. Foundations of US international financialpower: Gold standard diplomacy, 1900–1905. Business His-tory Review 59:169–202.

FFF, 1999. Financial missionaries to the world: The politics andculture of dollar diplomacy, 1900–1930. Cambridge, MA:Harvard University Press.

Ruggie, J. G. 1982. International regimes, transactions, andchange: Embedded liberalism in the postwar economic or-der. International Organization, 36:379–415.

Runciman, D. 2003. The concept of the state: The sovereigntyof a fiction. In States and citizens: History, theory, prospects,ed. Q. Skinner and B. Strath, 28–38. Cambridge, U.K.:Cambridge University Press.

Sachs, J., and F. Larrain. 1993. Macroeconomics in the globaleconomy. Englewood Cliffs, NJ: Prentice Hall.

Sack, R. D. 1983. Human territoriality: A theory. Annals of theAssociation of American Geographers 73:55–74.

FFF, 1986. Human territoriality: Its theory and history. Cam-bridge, U.K.: Cambridge University Press.

Schmitt, C. 1985. Political theology: Four chapters on the concept ofsovereignty. Cambridge, MA: MIT Press.

Scott, A. J. 1998. Regions and the world economy. Oxford, U.K.:Oxford University Press.

Shemek, D. 2002. Intro. to Stately bodies: Literature, philosophy,and the question of gender, by A. Cavarero, 1–11. Ann Arbor:University of Michigan Press.

Sidaway, J. D. 2003. Sovereign excesses? Portraying postcolonialsovereigntyscapes. Political Geography 22:157–78.

Simmons, B. A. 2000. The legalization of monetary affairs. In-ternational Organization 54:573–602.

Sinclair, T. J. 2000. Reinventing authority: Embedded knowl-edge networks and the new global finance. Environment andPlanning C: Government and Policy 18:487–502.

Singer, P. W. 2004. Corporate warriors: The rise of the privatizedmilitary industry. Ithaca, NY: Cornell University Press.

Skinner, Q. 1999. Hobbes and the purely artificial person of thestate. Journal of Political Philosophy 7:1–29.

Slater, D. 1997. Geopolitical imaginations across the North-South divide: Issues of difference, development and power.Political Geography 16:631–53.

Slaughter, A-M. 2004. Disaggregated sovereignty: Towards thepublic accountability of global government networks. Gov-ernment and Opposition 39:159–90.

Slaughter, A-M., and W. Burke-White. 2000. Judicial global-ization. Virginia Journal of International Law 40:1103–15.

Smith, A. T. 2003. The political landscape: Constellations of au-thority in early complex polities. Berkeley: University of Cal-ifornia Press.

Spruyt, H. 1994. The sovereign state and its competitors: An anal-ysis of systems change. Princeton, NJ: Princeton UniversityPress.

Agnew460

Stacy, H. 2003. Relational sovereignty. Stanford Law Review55:2029–59.

Strange, S. 1994. From Bretton Woods to the casino economy.In Money, power and space, ed. S. Corbridge, R. Martin, andN. Thrift, 49–62. Oxford, U.K.: Blackwell.

Swann, C. 2003. US risks paying high price for calls over cur-rency flexibility. Financial Times 26 September: 6.

Taylor, A. M. 2004. Global finance: Past and present. Financeand Development March: 24–31.

Teschke, B. 2002. Theorizing the Westphalian system of states:International relations from absolutism to capitalism. Eu-ropean Journal of International Relations 8:5–48.

FFF, 2003. The myth of 1648: Class, geopolitics and the makingof modern international relations. London: Verso.

Thaa, W. 2001. ‘‘Lean citizenship’’: The fading away of the po-litical in transnational democracy. European Journal of In-ternational Relations 7:503–23.

Thrift, N. 1994. On the social and cultural determinants ofinternational financial centers: The case of the City ofLondon. In Money, power and space, ed. S. Corbridge, R.Martin, and N. Thrift, 327–55. Oxford, U.K.: Blackwell.

Underhill, G. R. D. 2002. Global integration, EMU, and mon-etary governance in the European Union: The politicaleconomy of the ‘‘stability culture.’’ In European states and

the Euro, ed. K. Dyson, 31–52. Oxford, U.K.: Oxford Uni-versity Press.

Wachtel, H. M. 2003. Not yet the almighty Euro. Le MondeDiplomatique, October: 12.

Walker, R. B. J. 1993. Inside/outside: International relations as po-litical theory. Cambridge, U.K.: Cambridge University Press.

Wang, H. 2003. China’s exchange rate policy in the aftermath ofthe Asian financial crisis. In Monetary orders: Ambiguouseconomics, ubiquitous politics, ed. J. Kirshner, 153–71. Ithaca,NY: Cornell University Press.

Weber, C. 1995. Simulating sovereignty: Intervention, the state and sym-bolic exchange. Cambridge, U.K.: Cambridge University Press.

Wendt, A. 1999. Social theory of international politics. Cambridge,U.K.: Cambridge University Press.

Widmaier, W. W. 2004. The social construction of the ‘‘impos-sible trinity’’: The intersubjective bases of monetary coop-eration. International Studies Quarterly 48:433–53.

Wolf, M. 2004. A global market economy needs a global cur-rency. Financial Times, 4 August: 11.

Zacher, M. W. 1992. The decaying pillars of the Westphaliantemple: Implications for international order and govern-ance. In Governance without government: Order and changein world politics, ed. J. N. Rosenau and E-O. Czempiel, 58–101. Cambridge, U.K.: Cambridge University Press.

Correspondence: Department of Geography, University of California, Los Angeles, Los Angeles, CA 90095-1524, e-mail: jagnew@geog.ucla.edu.

Sovereignty Regimes: Territoriality and State Authority in Contemporary World Politics 461