GS-2, International Relations, Uncategorized

First cargo truck under BBIN pact reaches Delhi

First cargo truck under BBIN pact reaches Delhi

The first cargo truck under the Bangladesh, Bhutan, India and Nepal (BBIN) Motor Vehicle Agreement for cross border movement reached Delhi recently.

Key facts:

  • The cargo truck was dispatched from Dhaka on August 27 as part of a trial run and arrived at the Inland Customs Depot (ICD).
  • According to the Ministry for Road Transport and Highways (MoRTH), the trial was organised to develop the protocols for implementing the agreement.
  • In India the truck travelled for more than 1,850 km through the states of West Bengal, Jharkhand, Bihar, Uttar Pradesh, Haryana and Delhi to reach the customs depot at Patparganj.

bbin

http://www.insightsonindia.com/wp-content/uploads/2016/09/BBIN.jpg

 

Significance of this test run:

The trial run has demonstrated that time and cost can be saved through facilitation of seamless transport through the sub-region. Cargo trucks often had to be off-loaded at the border and also go through customs clearance. This led to delays and often also caused damage to the goods. The steps being taken to facilitate seamless movement of cargo vehicles will give a major boost to trade and business in the sub-region.

Background:

The BBIN agreement was signed on June 15 last year in Thimphu, Bhutan to facilitate cross border movement of both passengers and cargo vehicles. Protocols to implement the agreement are being negotiated by the four countries for passengers and cargo vehicles separately.

GS-2, International Relations, Uncategorized

India & the growing salience of South Asian nations

Examples of the new developments based on strategic interests—

China is catching up in its trade and investment, and in some cases, its economic diplomacy has been accompanied by expanded strategic cooperation with India’s neighbours

  • The $ 46 billion China-Pakistan economic corridor—a vision to link western China by road and rail down to the Gwadar deep water port
  • Status of a “dialogue partner”— Accorded to Colombo and Kathmandu in the Shanghai Cooperation Organisation by Beijing
  • Through Silk Road “belt and road” vision, it can splurge extensive resources on initiatives such as the Asian Infrastructure Investment Bank
  • Has emerged as a top exporter of goods to the region, breaking into South Asian markets with its export-led growth strategy
  • Financially—
  • Major donor to the AIIB (capital pool of $100 billion), and to the reserve fund of the New Development Bank (the “BRICS bank”),
  • Has created its own Silk Road Fund of $40 billion in capital

India & the unfolding globalisation of the Subcontinent—Diminishing role of India

South Asian Region: The South Asian region is one of the least economically integrated regions in the world—

  • Below potential intraregional trade due to high transport costs, protectionist policies, and political tensions
  • Broader regional trade expansion also has been affected due to deep enmity between India & Pakistan

Size:

  • Bangladesh: Eighth largest in the world (more than 160 million)
  • Afghanistan (33mn), Nepal (29mn) and Sri Lanka (21mn) are at 40th, 46th and 57th positions respectively
  • Mini States: Only Bhutan and Maldives, with their populations below 1 mn

 

Current Dynamics with India—

Much weight given to Pakistan:

India needs to reinvent its discourse w.r.t. Pakistan as other regions are getting pushed aside with the maximum space being occupied by one country owing to an increased focus on tackling—

  • Islamic identity,
  • Ever-emerging issues related to the critical geopolitical location,
  • Close association with the Western military alliances
  • Their possession of nuclear weapons

Rebuilding Afghanistan— has exhausted India off considerable amount of energy and focus. In fact, the underlying issues are mostly in continuance with issues related to Pakistan— India’s strategy towards Pakistan and the battle against violent religious extremism.

 

The misses—

Bangladesh:

  • This eighth largest country is also one of the fastest growing economies of the world and is open to massive investments in the infrastructure sector. Its position can be utilized strategically as a bridge between South Asia, China and South East Asia.
  • China in Bangladesh: Around 2005, China overtook India as Bangladesh’s top trading partner—displaced many Indian goods in Bangladesh, offering cheaper Chinese products (especially cotton and other fabrics central to the garment industry) without the visa, transport, and customs challenges that had limited trade between India and Bangladesh
  • India has been a major economic partner to Bangladesh since its independence in 1971, and Bangladesh enjoys duty-free access to Indian market for almost 98 per cent of its products since the end of 2011. India should thus, encash the current peaceful situation (the 2015 Land Boundary Agreement), to address border issues affecting trade in the near future as well as widening and deepening the traction for creative and sustainable initiatives.

Bhutan and Nepal:

Nepal has been blessed with an important strategic position (important for both India & China) and likewise, India and Bhutan share “mutually beneficial economic inter-linkages” too.

  • A 1996 trade agreement between India and Nepal increased bilateral trade volume, which now accounts for more than half of Nepal’s total trade
  • But in 2005, at the peak of Nepal’s Maoist insurgency, a low point in its relations with India, Sino-Nepali relations shifted both economically and politically. Chinese goods flooded Nepali markets as Nepal diversified its imports and lessened its dependence on India.
  • However, India’s recent announcement of an additional $1 billion to Nepal for post-earthquake reconstruction can add a sweet spot in the age-old friendship
  • China & Bhutan— Increased influence of China in Bhutan can lead to China moving further South to occupy the Doklam plateau and attain strategic leverage and an advantage over the Chumbi Valley. This, in the long term, could make the Siliguri corridor—the point that connects mainland India to its North East—vulnerable.

Sri Lanka:

India signed its first free trade agreement with Sri Lanka and the impact of Indian investments in projects like housing and railways have continuously benefitted the local population over the past decade.

China in SL:  Since 2005, Chinese exports to Sri Lanka have quadrupled to close to $4 billion, coming closer to Indian levels (dramatic gap between Indian and Chinese contributions)

  • Chinese development assistance to Sri Lanka—mostly in the form of concessional loans—began in 2009 after the Sri Lankan civil war and then spiked dramatically in 2011.
  • Chinese support for a port, airport, and cricket stadium in Hambantota also speaks of an increasingly close relationship between the two countries— The Colombo port of call of two Chinese submarines in late 2014 and reports that Sri Lanka granted Chinese state-owned enterprises operating rights at the Hambantota port (matter of concern for India)
  • Features prominently in China’s Maritime Silk Road project

Note: Sri Lanka’s new president, Maithripala Siresena, has however suspended several Chinese projects, including the $1.4 billion Colombo port city due to the opacity of financing terms.

Maldives: is a highly coveted piece of maritime real estate and thus, there exists no doubts that China is trying to make inroads into the Maldives to fulfil its strategic objectives. Indian government has rightfully been worried of possible Chinese reclamation in the Maldives keeping events in the South China Sea in mind. India should take efforts to urgently revitalise and expand the ‘Trilateral Maritime Security Cooperation’ as well, given the growing maritime security challenges in the area and to safe-guard and further consolidate strategic influence in the extended neighbourhood.

 

Way Ahead:

A future of cooperation and competition is definitely possible with an overlap in the efforts of both India and China—

  • The development of the Bangladesh-China-India-Myanmar economic corridor (new opportunities for constructive cooperation)
  • India’s “Act East” policy converging with China’s focus—aiming to facilitate commerce, culture, and connectivity throughout Southeast Asia
  • The pressing infrastructure needs can demand greater convergence in their resources and efforts to generate greater connectivity enabling both China and India to tap further into Asian markets through trade and investment

India should sail over the challenges posed by the new geopolitical dynamism by—

  • Reducing the gap between its own perception of being superior and addressing the huge gap that is being filled by China – economically, politically and militarily
  • The past mistakes and losses owing to the Partition, the inward economic orientation of socialist India, and the neglect of connectivity and commerce at and across the frontiers must be left behind and should be taken up with a fresh perspective (to not only perform damage control but also rein in various other hidden possibilities)
  • The nature of intervention in other countries internal affairs need to be double-checked before coming down to conclusions. Moreover, India should in its ‘neighbourhood strategy’ also adopt a balanced outlook towards these disturbances and only after a proper calculation should take a step ahead with the consent of the major stakeholders.

Connecting the Dots:

  1. Has the ‘right to unilateral means’ been an overarching policy of India’s neighbourhood relations with its neighbours? Discuss.
  2. Comment on India’s “neighbourhood first” strategy.
GS-2, International Relations, Uncategorized

India’s neighbourhood policy

Article Link

India’s neighbourhood policy, in recent years, has managed to make more friends in the region in a surprisingly short span of time. Few projects including Salma Dam in Afghanistan and Chabahar port in Iran show India’s renewed interests in the region.

The new government’s priorities and strategic objectives are essentially five-fold:

  1. Prioritizing an integrated neighbourhood; “Neighbourhood First.”
  2. Leveraging international partnerships to promote India’s domestic development.
  3. Ensuring a stable and multipolar balance of power in the Indo-Pacific; “Act East.”
  4. Dissuading Pakistan from supporting terrorism.
  5. Advancing Indian representation and leadership on matters of global governance.

However, there is considerable scepticism within the strategic community regarding India’s material and political wherewithal to stay the course vis-à-vis these long-term projects, especially in the context of India’s not-so-impressive record when it comes to delivering on strategically important projects in the region and beyond.

Main problems in this regard:

  • India lacks the financial resources to invest in crucial projects in a sustained manner due to budget constraints and compulsions of domestic priorities.
  • There is also a problem of severe attention deficit resulting from an inability to commit diplomatic and political capital to pursue key strategic objectives.
  • Many of India’s strategic initiatives in the region, Chabahar for instance, often get portrayed in competitive terms, thereby getting into the cross hairs of adversarial/insecure neighbours.
  • The problem is compounded by the fact that India has traditionally displayed a self-imposed “unilateral bias” in addressing key challenges in the neighbourhood and near abroad.

How can these problems be addressed?

  • By adopting a grand strategic approach in addressing key strategic challenges. There should be a clear rationale guiding India’s strategic engagements.
  • By moving from a unilateral approach to tackling problems to a multilateral approach.
  • By creating a regional/global consensus on key challenges.

What needs to be done now?

  • India should partner with Japan or European countries in Chabahar port development. This would save us some money, enable us to complete the project on time, and ensure more security and acceptability to the project.
  • If India’s Afghan policy is to be meaningful and sustainable, it needs to do two things: get like-minded countries on board India’s reconstruction efforts in Afghanistan, and support and engage in the Afghan reconciliation and peace-building process.
  • Indian reactions to China’s One Belt, One Road (OBOR) project need not be either dismissive or worried, nor should we dismiss it as a “Chinese national project” and look the other way. Our objective should be to see how we can utilise the many economic, infrastructural and other opportunities opened up by OBOR.

Conclusion:

It is important for India’s strategic planners to recognise that when it comes to dealing with key regional challenges and opportunities, unilateralism is not the way. We need to create alliances and coalitions to confront challenges and better utilise opportunities, and in today’s “loose multipolar” world, our alliance behaviour should be guided by clear strategic objectives rather than traditional friendships alone.

GS-2, International Relations, Uncategorized

Regional India, global South Asia

Indian Express

Issue

  • GLobalisation of the Indian sub-continent

 

Recent events which highlights the importance of the Indian sub-continent on the international stage

  • Presence of Bangladesh and Sri Lanka at the G-7 summit at Ise-Shima, Japan.
  • China has already begun to integrate India’s neighbours into its larger international and regional strategies.
  • The $ 46 billion China-Pakistan economic corridor,  “dialogue partner” status to Sri Lanka and Nepal in Shanghai Cooperation Organisation are some examples.

 

India must come to terms with the unfolding globalisation of the Subcontinent

  • Much of the international discourse on South Asia often gets reduced to the India-Pakistan relations; this only helps mask the significance of the other nations in the region.
  • And the reference to them as “smaller nations” of the region is largely inaccurate.
  • With its focus on the Af-Pak region, however, India has tended to miss the growing strategic significance of the other nations in the neighbourhood.

 

Strategic importance of other nations

  • Bangladesh is today one of the fastest growing economies of the world and is open to massive investments in the infrastructure sector, and China and Japan are competing vigorously for project contracts in Bangladesh.
  • Long viewed as India’s buffers to the north, Bhutan and Nepal have now become theatres of contestation with China.
  • Sri Lanka is rediscovering its central location in the Indian Ocean, as all major powers like China, US and Japan pay unprecedented attention to Colombo.
  • Maldives, which straddles the vital sea lines of communication in the Indian Ocean, has now become a highly coveted piece of maritime real estate as China turns its gaze upon the Indian Ocean.

 

Wake up call

  • India must begin to recognise the growing gulf between its claims of primacy in the region and the growing economic, political and military influence of China in the Subcontinent.
  • Two, the new international opportunities have allowed the ruling elites in our neighbourhood to pursue greater “strategic autonomy” from India. This means Delhi will have to work harder than ever before to retain its historic leverages in the neighbourhood.
  • Three, the economic geography of the Subcontinent was inherently in India’s favour. Partition, the inward economic orientation of socialist India, and the neglect of connectivity and commerce at and across the frontiers has seen India lost many of the inherited advantages.
  • Four, India’s “neighbourhood first” strategy is complicated by its deep involvement in the internal politics of the South Asian nations. Those who are affected , they have learned to counter it by seeking intervention of other powers.
  • Last but not the least, India must stop seeing itself as the “lone ranger” in South Asia. While it must necessarily compete with rival powers when they threaten its interests, it must also learn to collaborate with friendly powers, wherever possible, in shaping the regional environment.
Editorials, GS-3, Indian Economy, Uncategorized

With connectivity comes growth

Livemint

Issue:

  • The paramount measure of power in the 21st century is connectivity, specifically to global infrastructure networks, trade flows, capital markets and the digital economy.
  • India is now getting connected in each of these arenas and is thus taken much more seriously as a long-term pillar of the global system.

India in its neighbourhood:

  • India and Pakistan should move forward with the Most Favoured Nation trade agreement, Iran-Pakistan-India (IPI) gas pipeline from Iran, and even by revitalizing and upgrading the railway connections between Delhi and Lahore, and Karachi and Mumbai.
  • The ancient Grand Trunk (GT) Road from Kabul to Kolkata should be actively resurrected as a Central to South-East Asian trade artery which will enable Indian commercial leadership across this high-growth region in ways traditional moribund groups such as South Asian Association for Regional Cooperation never could.
  • Indians must remember that India’s neighbours are not waiting for it to take a leadership role in leveraging connectivity for influence.
  • The Chinese-led Asian Infrastructure and Investment Bank will strengthen China’s connectivity with Central and West Asia, while the China-Pakistan Economic Corridor reaching Karachi and the port of Gwadar will effectively make China an Indian Ocean power through its client partner Pakistan.
  • To not connect to Pakistan and beyond is to further cede strategic ground along the 21st century’s new Silk Roads.

In South-East Asia:

  • Despite the long border India shares with Myanmar, trade relations and airline connections are minimal.
  • The country still depends on China for most of its exports and most of its inbound investment.
  • Not only should the future GT Road extend through Bangladesh all the way to Yangon, but the three governments should accelerate efforts to construct a gas pipeline stretching from Sittwe on the Bay of Bengal through India’s northeastern states of Mizoram and Tripura and across central Bangladesh to Kolkata.
  • The BCIM (Bangladesh, China, India, Myanmar) trade corridor along the old Stilwell Road should also be upgraded more rapidly in order to facilitate trade connectivity between India, Bangladesh, Myanmar and China, uplifting the neglected populations along the route.
  • The Association of Southeast Asian Nations region has half the population of India but a larger gross domestic product, and now attracts more foreign direct investment (FDI) year on year than China does. South-East Asia is now the world’s factory floor.
  • India too is expected to surpass China in inward FDI this year, complementing its now higher growth rate as well.
  • The combination of fast growth and rising FDI are mutually reinforcing, with global markets bearish on China and favourable towards India’s long-term demographic fundamentals, opening economy and long overdue focus on infrastructure.

Ties with China:

  • Ties with China is also essential to any grand strategy premised on connectedness.
  • China ranks as the top trade partner of more than 120 countries in the world, double the number for the US (56), and far higher than for India (only one).
  • Even as India seeks to boost trade relations with countries along the Indian Ocean periphery, it must remain focused on improving its trade balance with China through higher value-added exports, while also attracting ever more FDI from China into power, transportation and other sectors.

What government can do?

  • So long as commodities’ prices remain low, Current government can keep inflation in check and continue its major commitments to roads and railways, ports and airports, and modernizing dozens of cities across the nation.
  • All of these are investments in making India more connected both internally and externally so that its population can reach its full potential.

Beyond transportation and energy, the third category of connectivity is, communications:

  • India and China represent the two largest online populations in the world—but as a percentage of the total population, only about half of Indians have functional Internet access.
  • And yet, developing countries gain a 1-2% increase in GDP with every 10% of the population that gets online.
  • The Indian government and major telecom firms may not want Facebook to be the agent of digital connectivity, but then they should step up and fulfil the responsibility themselves.
  • The Digital India initiative, which aims to boost 4G coverage and deliver last-mile Internet connectivity, is a good step in this regard, but India still ranks 44 on Huawei’s most recent 2016 Global Connectivity Index.

Conclusion:

  • The 21st century will be permanently multi-polar, with the US, Europe, China, India, Russia and other powers all playing crucial roles.
  • But it will also feature an intense tug-of-war over global financial flows and industrial supply chains.
  • Make in India is a strong example of how India can become more relevant by becoming more intertwined with global production networks in the manner that the Indian software industry has already achieved.
  • Ultimately, it is this commercial and technological connectivity with the rest of the world that will enable India to earn—and retain—a commanding position on the world stage.
GS-2, International Relations, Uncategorized

India, US and an eastward tilt

Indian Express

Issue

  • India-US foreign Policy

Context

  • Author has raised a question that, Why does India-US military cooperation not include northern Arabian Sea and Persian Gulf — a region of great importance for India’s security?

Background

  • The US is pressing India to sign a number of what it calls “foundational agreements” to operationalise India’s military commitments implicit in the Joint Strategic Vision for Asia-Pacific and the Indian Ocean arrived at during President Barack Obama’s visit to New Delhi in January 2015.

US has ignored India in the  Arabian sea and the Persian Gulf

  • India is dealt with in the US politico-military system by the Pacific Command, headquartered in Hawaii, and whose responsibilities extend up to Diego Garcia.
  • The Central Command, headquartered in Florida, “looks after” the Persian Gulf, Central Asia, Afghanistan and Pakistan.
  • Technically speaking , the Joint Strategic Vision should cover northern Arabian Sea and the Persian Gulf.
  • But US has shown lukewarm approach to an Indian connection in Afghanistan or, for that matter, the Persian Gulf and the Saudi peninsula.
  • Whereas it has shown eagerness for Indian participation in action in the South China Sea.

Importance of  northern Arabian Sea and the Persian Gulf for India

  • Both from the geo-economic and geo-strategic view, this is the most important external region for India’s security.
  • We source 70 per cent of our oil from there, and 7 million Indian citizens working there send back $30 billion in remittances.
  • As our energy needs increase, this area will only become more important.
  • In the past, we have had to carry out large-scale evacuations of our nationals because of war-like situations in this region, most recently from Yemen in 2015. The prognosis for the stability of the whole region is not particularly good.
  • Yet, somehow, there are no drills, joint exercises or planning between the US, which is the dominant power, with a fleet headquartered in Bahrain, and India for conflict contingencies.
  • India should  keep national interest firmly in mind.

Where do we need US?

  • Given the rapid rise of China and our own considerable difficulties with Beijing, having the US as a security partner is useful.
  • But India does not really need the US for its existential security, certainly not from any direct threat from China.
  • India  needs the US as a guarantor of a secure and stable world system, but especially as a security provider in the Persian Gulf region, where we have no military capacity.
GS-2, International Relations, Uncategorized

Indian-Ocean Rim Association (IORA)

When was IORA conceived?

1997 in Ebene Cyber City, Mauritius

Origins:

  • First established as Indian Ocean Rim Initiative in Mauritius on March 1995 and formally launched in 1997 by the conclusion of a multilateral treaty known as the Charter of the Indian Ocean Rim Association for Regional Cooperation.
  • It is based on the principles of Open Regionalism for strengthening Economic Cooperation particularly on Trade Facilitation and Investment, Promotion as well as Social Development of the region.

Members:

20 member states (including India) and 7 dialogue partners, the Indian Ocean Tourism Organisation and the Indian Ocean Research Group has observer status. 20th member was Comoros (latest added in 2012).

iora

Objectives:

  • To promote sustainable growth and balanced development of the region and member states
  • To focus on those areas of economic cooperation which provide maximum opportunities for development, shared interest and mutual benefits
  • To promote liberalisation, remove impediments and lower barriers towards a freer and enhanced flow of goods, services, investment, and technology within the Indian Ocean rim
  • In recent years, new and emerging issues for the better management and governance of Indian Ocean resources have begun taking shape.
  • Such issues include blue economy development and sectoral integration

Six priority areas:

  1. Maritime safety and security
  2. Trade and investment facilitation
  3. Fisheries management
  4. Disaster risk management
  5. Academic science and technology cooperation
  6. Tourism and cultural exchanges

First IORA Ministerial Blue Economy Conference –

  • In 2015, First IORA Ministerial Blue Economy Conference, titled as, Enhancing Blue Economy Cooperation for Sustainable Development in the IORA Region, was held in Mauritius
  • Blue Economy is a new comprehensive concept, incorporating the Ocean Economy, environment and sustainability to provide basic human needs such as potable water, food, jobs and habitable shelter
  • Conference aims to act as an ideal platform to bring together Member States and Dialogue Partners of the IORA to promote Blue Economy in the Indian Ocean region

Conference focused on 4 priority areas namely :

  1. Fisheries & Aquaculture
  2. Renewable Ocean Energy
  3. Seaports & Shipping
  4. Seabed Exploration & Minerals

China’s thrust for IORA membership: Is it push for Go Global policy?

  • China is the second-largest economy after the USA, among the current dialogue partners of the IORA (China, Egypt, Japan, the USA, the UK and France)
  • Recently, China is even reported to have expressed its interest in becoming a full member of the IORA
  • China’s dialogue with the IORA has been propelled by trends of globalisation and the process of regional integration, where she can play a leading role
  • China vigorously implements the ‘go global’ strategy by encouraging well-established Chinese enterprises to invest in and cooperate with countries in the Indian Ocean Rim region
  • While pushing ahead a going global strategy, China urges companies with proper capabilities to go to Indian Ocean Rim countries to invest
  • China would pursue active participation with the IOR-ARC in light of economic globalisation and regional economic integration

What is the real significance (geostrategic and geoeconomic) of IORA for China?

  • As a connector between Africa, Asia and Oceania, it is the most important transport zone, almost 80% of the global oil and liquid natural gas shipments pass through it
  • Three strategic chokepoints – the Strait of Hormuz, Bal-el-Mandeb and the Strait of Malacca, connect the IOR with the Persian Gulf, the Red Sea and the South China Sea resp.
  • They have 7 adjacent IORA member countries, namely Oman, the UAE, Iran (Strait of Hormuz), Yemen (Bal-el-Mandeb), Indonesia, Malaysia and Singapore (Strait of Malacca)
  • Almost 85% of China’s oil and gas supplies and most of its maritime cargo, trade and transport pass through these choke-points

Do It Yourself (DIY)– Learn more about other major choke points of the world.

Future Ahead for India

India along with IORA could transform the region, and focusing on Security and Growth for All in the Region (SAGAR), as envisioned by Prime Minister Modi during his recent visit to Mauritius.

UPSC ke Sawaal

#1. With reference to ‘Indian Ocean Rim Association for Regional Cooperation (10R-ARC)’, consider the following statements : (IAS pre 2015)
I. It was established very recently in response to incidents of piracy and accidents of oil spills.
2. It is an alliance meant for maritime security only.
Which of the statements given above is/are correct?
(a) I only
(b) 2 only
(c) Both I and 2
(d) Neither I nor 2

#2.   Between India and east Asia, the navi-gation-time  and distance can be greatly reduced by which of the following ? (IAS pre 2010) #importance of map marking

  1. Deepening the Malacca straits between Malaysia and Indonesia.
  2. Opening a new canal across the kra isthmus between the gulf of Siam and Andaman sea.

Which of the statements given above is/are correct ?

(a) 1 only. (b)  2 only. (c) Both 1 and 2. (d) Neither 1 nor 2

#3. Which one of the following can one come across if one travels through the Strait of Malacca? (IAS pre 2011) #importance of map marking

A. Bali
B. Brunei
C. Java
D. Singapore

GS-2, International Relations, Uncategorized

SAARC

As of Feb 2016, MGC has 6 member countries & 0 observers. BIMSTEC has 7 member countries & 0 observers.

But our next guest – SAARC, has  8 member countries and 9 observers (including China, US, EU, Japan).

The South Asian Association of Regional Cooperation (SAARC) completed 3 decades of its existence in 2015. While it is impossible to compressits evolution in a single post, we will do well to get you upto speed and be aware of the major controversies surrounding SAARC (analysis, analysis and more analysis).

saarc

When? 1985

Origins:

Member countries – Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined SAARC as its eighth member state in April 2007.

Observers – States with observer status include Australia, China, the European Union, Iran, Japan, Mauritius, Myanmar, South Korea and the United States

After independence, the countries of South Asia, which under British colonial rule, functioned like a composite whole that had both transport linkages and economic inter-dependence, wanted to portray a more independent image.

They began functioning as autonomous economic units with protective trade regimes for the fear of political, economic autonomy in the region. These countries were often mired in bilateral conflicts (Indo – Pak, Pak – B.Desh) and that took a toll on region’s growth and prosperity. Hence, SAARC charter was build around a common goal of improving the foreign relations within the region.

As a founding philosophy, SAARC prudently kept bilateral contentious issues out of the scope of the regional cooperation. It was believed that the inclusion of bilateral issues would hamper multilateral initiatives. SAARC was not set up as a bilateral dispute settlement mechanism. Did that really help evolve SAARC into a better organisation? We shall see.

Why do nations come together to form groupings?

Short answer – Economics & power struggle!

Long answer

  1. Nepal – had difficulties with India on various issues. Harnessing Nepal’s river water was one of the key considerations. Nepal wanted to diversify technical cooperation on hydroelectricity with other countries (to avoid complete dependence on India)
  2. Bangladesh – Another country which was suspicious of India and wanted to diversify its foreign relations. At that time Bangladesh had serious problems with India on the issue of the sharing of the Ganga water. Even though bilateral struggles were kept outside the purview of SAARC, Bangladesh had a hope to become a major player in the region
  3. Sri Lanka – was initially reluctant to join SAARC. However, due to its own ethnic crisis it became interested in the association expecting it would help assuage some of its apprehensions regarding India
  4. Pakistan – Only one goal – counter India’s influence
  5. Bhutan & Afghanistan – Let’s leave them for time being!

Feel good about India’s overarching influence in the region for a moment.

What were the mandates for SAARC and how far has it come to fulfill them?

The SAARC Charter clearly lays down that cooperation among member-states will be based on sovereign equality, territorial integrity, political independence and non-interference in internal affairs.

The Charter further states that such cooperation will not be an obstacle to other bilateral or multilateral cooperation or be inconsistent with them.

Brings us back to the point that SAARC chose to keep bilateral disputes out of discussion and focus on the multilateral (economic, strategic) issues. This did not always work in its favour. Smaller member countries often found it difficult to overcome their political goals and limited national agendas. This often stalled progress.

Want to read about one such issue with SAARC?

How does SAARC carries on with its activities?

On the administration side, the SAARC Secretariat established in Kathmandu is supported by Regional Centres established in Member States. They are quite a few and not so relevant for your exam prep. Suffice to say that, SAARC members are supposed to meet every year (Annual Summits).

In the last 30 years, we have witnessed 18 summits. The last one was held at Kathmandu in 2014 and the motto was – ‘Deeper Integration for Peace and Prosperity’.

 The 19th SAARC summit is to be held in Pakistan sometime in 2016.

How did the 18th Summit (2014) go?

  1. The theme of the summit was “Deeper Integration for peace and prosperity.” But member countries failed to sign two major agreements on rail and road connectivity
  2. The pact on energy was signed though! This will enable greater cooperation in the power sector
  3. Why were the rail and road connectivity agreements not signed? Pakistan held back, saying it still had to complete its “internal processes” regarding these pacts
  4. Any new initiative proposed by India? 
    • India promised to launch a satellite for the region by SAARC Day in 2016
    • Set up a Special Purpose facility in India to finance infrastructure projects in the region
    • Ease business visas by launching a SAARC business traveller card
    • Suggestions for establishing a SAARC regional Supra Reference laboratory to fight common diseases (TB, HIV)

China’s intrusion into SAARC?

  1. Pakistan called for a more prominent role for observers in the future—mostly China
  2. Nepal and Sri Lanka also support this, and China itself is actively seeking a greater role in SAARC
  3. India responded by saying that economic cooperation between the existing members must be strengthened before expanding membership. Close shave!

Comparing ASEAN with SAARC

#1. SAARC is a lost cause – The motivation for launching these two forums – ASEAN (for south east asia) & SAARC (for south asia) were almost similar. Both were guided by a common hope to resolve disputes and a thirst for economic growth.

Asean members had serious interstate disputes which they decided to forget. On the other hand, Saarc members insisted that disputes be resolved first, before economic cooperation could start. Asean nations were inclined to be trading nations; Saarc nations were inclined to be warlike. Asean moved to conflict-avoidance mechanisms; Saarc refused to discuss bilateral disputes.

Saarc had to suffer an Indo-Pakistan war at Kargil started by Pakistan in 1999, which prevented three Saarc summits from taking place. India has given Pakistan the most favoured nation status but Pakistan has not reciprocated.

#2. It’s unfair to compare SAARC with ASEAN – The ASEAN countries did not have contested ideologies, such as the one based on two-nation theory (Indo-Pak). The countries comprising ASEAN came together to defend themselves from the communist threat. Such external threat was absent in the case of SAARC. Rather as you see above, India was considered as a threat by some member countries.

Fair enough! Let’s move to the economics of SAARC.

South Asia Free Trade Agreement (SAFTA) and the complexities surrounding it

New to FTAs/ PTAs/ trade agreements in general? Read about the different types of trade agreements.

Safta was signed by the South Asian Association of Regional Cooperation (SAARC) countries in January 2004, in Islamabad. The agreement was a migration from SAPTA to SAFTA (Preferential to Free).

India allows duty-free access to goods from Sri Lanka, Nepal, Bhutan and Bangladesh.We also reduced the ‘sensitive list’ it maintains for these countries to 25 items.

South Asian countries in general have competitive economies. The trade structure is mostly tilted towards primary goods. The countries of the region in general target their finished goods to foreign markets. Primary products are goods that are available from cultivating raw materials without a manufacturing process.

SAFTA was expected to bring down illegal trade

It was expected that SAFTA would bring much of the illegal trade in the region to the official level boosting all-round regional trade figures. Due to the lowering of tariff, many of the high custom duty items that are smuggled would become part of official trade. But that did not happen (to the satisfaction).

As reality would have it, SAFTA faces an existential dilemma

  1. The volume of trade in actual terms (between SAARC nations) could is very small
  2. Intra-regional trade is still at a dismal 5% — compared to 66% for the EU and about 25% for the ASEAN. Read more – here
  3. The countries of South Asia have long negative lists and their protective trade regimes inhibit free flow of goods. Negative lists = lists of items kept outside the purview of agreement
  4. Such obstacles and restrictions have given rise to smuggling and unofficial trade
  5. The ‘rule of origin’ is a problematic clause since there are no efficient mechanisms to monitor and certify goods originating from the member countries

What’s the silver lining for SAARC?

Thankfully, with India pursuing its “Act East policy” with a new vigour, all is not lost. If you have been a regular with the Civilsdaily App’s Newscards, we have been closely following Indo-SAARC updates:

If you have 20 minutes to spare, watch this RSTV sponsored discourse on 30 years of SAARC

If you have 20 minutes to spare, watch this RSTV sponsored discourse on 30 years of SAARC