Monday, February 07, 2005

BANGLADESH: Does India need SAARC?

+ While there was much goodwill for Bangladesh within India for many years, this goodwill is fast eroding. The unwillingness of Bangladesh to acknowledge the continuing illegal immigration of its nationals into India, the assistance that Indian insurgent groups are receiving from the Khaleda Zia government and the targeting of democratic and secular parties by anti-Indian Islamic fundamentalists linked to the ruling Bangladesh Nationalist Party, are now leading to demands that harder options need to be looked at, in dealing with the present dispensation in that country. +

Does India need SAARC?
By G. Parthasarathy

When President Zia ur Rahman of Bangladesh mooted the idea of a South Asian Association of Regional Cooperation (SAARC) in 1981, prime minister Indira Gandhi was both sceptical and suspicious of the proposal.

Her reservations were well founded. The proposed organisation was one where India alone shared common borders and had extensive trade and economic cooperation with other members. None of the other member states shared common borders, or had any worthwhile trade or economic relations.

The only thing that Bangladesh and Pakistan shared in common with some other members of SAARC was that they had some "grievance"- real or imaginary, about India. It was also evident that in course of time Pakistan and Bangladesh would use the forum primarily to embarrass India.

Indira Gandhi's skepticism about SAARC is now proving to be well founded. There has not yet been a single economic project that has been implemented in SAARC.

Every SAARC meeting has achieved precious little in promoting trade and economic cooperation. It was largely at Indian insistence that a "Group of Eminent Persons" (EPG) was established in 1997 to suggest measures to give some dynamism to SAARC.

The EPG came forward with wide ranging recommendations to promote South Asian Economic Integration, as it is precisely such economic integration that has led to a shared quest for peace and prosperity in Europe and elsewhere. The EPG suggested that action should be taken to establish a South Asian Free Trade Area (SAFTA) by 2008-2010, a Customs Union by 2015, ultimately leading to a South Asian Economic Union by 2020.

A reluctant Pakistan was finally forced to sign a SAFTA Framework Agreement at the January 2004 SAARC Summit. But the agreement contained provisions that Bangladesh insisted on for compensating it for loss in customs revenues. This unprecedented provision has made the agreement virtually impossible to implement.

It is also now evident that Pakistan has no intention of liberalising its import regime to enable early across the board tariff reductions. SAFTA thus appears to be a virtual non-starter.

Anticipating these developments, New Delhi sought other avenues for regional economic integration. The Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation comprising Bangladesh, India, Myanmar, Sri Lanka, Thailand, Nepal and Bhutan (BIMSTEC) was formally launched in Bangkok on July 31, 2004.

The BIMSTEC is not only project oriented in areas like transport, communications, tourism and terrorism but has also agreed in its very first summit on the framework for a free trade agreement in both goods and services.

Bangladesh knows that if it makes demands for compensation for tariff reductions in BIMSTEC as it does in SAARC, it could well be left out of the emerging free trade arrangement in the Bay of Bengal Basin. BIMSTEC will also see the construction of a 1360 km highway linking Moreh in Manipur with Mae Sot in Thailand.

This highway will traverse through the ancient and magnificient Myanmar "Kingdom of Temples," Bagan and boost tourism and trade between India and ASEAN. BIMSTEC will complement India's rapidly expanding trade and economic ties with ASEAN. Two-way trade exchanges with ASEAN, with which a Free Trade Area covering both investment and trade will become effective in 2011, substantially exceeds India's trade within SAARC and is growing rapidly.

India-ASEAN trade is presently $ 14 billion annually and is expected to reach $ 30 billion in 2007.

India realises that its future economic progress is linked to increasing economic integration with the fast growing economies of East and South East Asia and not with neighbours in South Asia like Bangladesh that keeps complaining about trade deficits while deliberately refusing to address this deficit by energy exports, or Pakistan that denies India even basic MFN facilities.

It is in recogniton of the dynamism of the economies of East and South East Asia that Prime Minister Manmohan Singh proposed the establishment of an Asian Economic Community encompassing ASEAN, Japan, China and India during the ASEAN Summit in November 2004. India recognises that as it embarked on the path of economic liberalisation over a decade and a half after China did, it needs to work hard to emulate the success that China has achieved in boosting its annual trade with ASEAN to over $ 100 billion in 2004.

New Delhi's interest in SAARC as a forum for regional economic cooperation is steadily diminishing. There has never been any undue optimism in India about the prospects of Pakistan discarding its constant rhetoric on Kashmir and embarking on a common quest for economic prosperity through increased economic integration with India.

While there was much goodwill for Bangladesh within India for many years, this goodwill is fast eroding. The unwillingness of Bangladesh to acknowledge the continuing illegal immigration of its nationals into India, the assistance that Indian insurgent groups are receiving from the Khaleda Zia government and the targeting of democratic and secular parties by anti-Indian Islamic fundamentalists linked to the ruling Bangladesh Nationalist Party, are now leading to demands that harder options need to be looked at, in dealing with the present dispensation in that country.

When Prime Minister Manmohan Singh decided to inform the Bangladesh government that he would not be able to attend the SAARC summit on February 6 as earlier agreed upon, the decision was widely welcomed in India.

There is a view within the Indian strategic establishment that very little is achieved by the ritual of annual SAARC summits. It is true that in the past two decades civil society institutions of journalists, doctors, economists, writers, academics, rotarians and others in SAARC member states have developed friendly links.

These people to people initiatives naturally need to be encouraged. But rather than waste time and energy on SAARC summits, India's interests would be better served by greater bilateral interaction with interested South Asian neighbours and increased attention to cooperation within BIMSTEC, with ASEAN and with major Asian economic powers like China, Japan and South Korea.

(G. Parthasarathy is a former diplomat who has been Indian envoy to several countries, including Pakistan)