5-11 December 2014 #735

Forget SAARC

Go for other options like bilateralism or sub-regionalism
Pradumna B Rana
SINGAPORE -- One of the biggest impediments to SAARC’s progress since its inception in 1985 has been the continued conflict between India and Pakistan. Before last week’s summit in Kathmandu there was hope that some positive results would come out.

Indian Prime Minister Narendra Modi’s first day in office after his election in May was dedicated exclusively to bilateral meetings with the leaders of the SAARC countries. His first state visit was to Bhutan and then to Nepal. During his visits abroad and even when engaging domestic audiences, Modi had stressed the need for increased regional cooperation.

In 1947, trade among South Asian countries accounted for around 20 per cent of their total trade. Presently, it stands at a mere 5 per cent – South Asia is the least integrated region in the world.

In the run-up to the Summit, three agreements on energy, easier access for motor vehicles, and railways we readied for signing to reverse declining trend of regional economic integration in South Asia. But this time, too, tensions between India and Pakistan took center-stage and only one of the three agreements was signed.

Pakistan was unwilling to sign all three agreements because the ‘internal processes’ had not been completed. It was only under pressure from his colleagues during the retreat on the last day that Pakistan Prime Minister Nawaz Sharif relented and signed the framework agreement on regional electricity connectivity, the details of which have yet to be worked out.

A frustrated Modi remarked that regional integration in South Asia would go ahead ‘through SAARC or outside it, among all of us or some of us’. South Asian countries should listen to him and go for bilateralism and sub-regionalism outside SAARC.

A case in point is bilateralism between India and Nepal which is fruitful for Nepal despite the statemate on regional issues at the Summit. In the sidelines of the Summit, the $1 billion credit that India had promised to Nepal was operationalised. Hydropower cooperation was enhanced by the signing of a power development agreement of the Arun III and public bus services between various Indian and Nepalese cities were flagged off.

Sub-regionalism in South Asia should be market-led and target East Asia, its largest market. South Asian countries need to implement the second round of their ‘Look East’ policies to link themselves to production networks in East Asia.  Such policies would not only lead to higher economic growth in the concerned countries, they would also reinvigorate economic integration in South Asia through the following moves:

1. Complete economic reform programs begun in the 1990s mainly in governance and institutional reforms

2. Improve their information, communication, and technology systems to coordinate supply chains efficiently

3. Reduce logistics costs as this is a key determinant of their competitiveness

4. Support Trans-Himalayan Economic Corridors between India-Nepal-China to connect South Asia, with Central Asia, and East Asia seamlessly

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is the appropriate institutional framework to support the above policies because it connects South Asian countries (except Pakistan and Afghanistan) with several East Asian countries (Myanmar and Thailand).  Nepal as the present Chair of BIMSTEC should push regional connectivity and integration in Asia.

As China steps up efforts to forge trade and connectivity with Central and Southeast Asia, South Asian countries will need to pursue bilateral and sub-regional arrangements to promote integration. They should not wait for SAARC, as time is not on their side.

Pradumna B Rana is Associate Professor at S Rajaratnam School of International Studies at Nanyang Technological University in Singapore.

Read also:

SAARC’S raison d’être

Pride and prejudice at SAARC

Reimagining South Asia, Anurag Acharya

The New Silk Roads, Pradumna B Rana

Land-locked to land-linked, David Seddon

Greater expectations, Anurag Acharya

The second coming, Editorial

An (inter)national disgrace, David Seddon

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