SAARC: Time to Build Stronger Relations

Cover Story

Dr Avilash Roul insists that the time is right for India to bridge the existing trust deficit and lead the creation of a stronger SAARC federation

After years of foreign policy paralysis, especially with regard to India’s neighbourhood, the new government at the helm has rekindled a pragmatic and proactive regional policy. With one, fine stroke of faith in regional cooperation, Narendra Modi surprised all by inviting the heads of South Asian Association for Regional Cooperation (SAARC) countries and Mauritius for the swearing-in ceremony of his government on May 26.

While the reciprocity from India’s neighbours was surprisingly warm, the Indian foreign office led from the front to host leaders and prepare the timing and sequence of bilateral meetings with a compact strategy for re-energising SAARC. The grand swearing-in ceremony was followed by a series of events, which included the President’s address to the Joint Session of Parliament (June 9), Prime Minister’s first foreign visit to Bhutan (June 15-16), conclave of Heads of Mission of India’s neighbours and beyond (June 23) and the External Affairs Minister’s visit to Dhaka (June 25-27). All these important events have put the emphasis on Narendra Modi’s immediate foreign policy priorities in developing the region as a whole and providing mutual dividends to India and others. Strong one-to-one relations with neighbouring countries and reviving the spirit of SAARC are top priorities.

South Asia, which came into existence due to geophysical (plate movement) and political violence (independence struggles), is one of the least integrated regions in the world despite shared geography, history, culture, cuisine and aspirations. Since its establishment in 1985 with the purpose of uniting the region, SAARC as a group has been riddled with mutual mistrust rather than mutual cooperation. Even former Prime Minister Dr Manmohan Singh rued that despite well-established telecommunication networks, the region has less trade volume as compared to other geographical groupings like ASEAN. Bhutan’s Prime Minister’s comment that the number of meetings under the SAARC banner had not transformed into results, only reinforces the lack of trust.

Daunting Challenges

The region, which is infested with terrorism, extremism, sectarian violence, and insurgency and organised crime, is also home to the largest population of poor people in the world. The region also faces grave environmental threats of climate change, cross border movement of climate change induced displaced people, increasing pace of natural disasters, illegal wildlife trade and loss of biodiversity, shrinking of natural resources, dwindling water resource and energy insecurity, decreasing agriculture output. On the face of such mounting threats, the daunting task for all member countries is to sustain economic growth through greening the economy. Despite unparalleled similarities of threats and challenges, SAARC leaders have not been able to cooperate and collaborate as a unit. The potential of mutual dividends is huge, but remains largely unaddressed.

A Vision for the Region

There could not have been a better time for South Asian countries to help each other and repose faith in SAARC. India under Modi begins a new chapter for the common good of the region. The Prime Minister envisions a region built on partnerships for development and mutual prosperity. India, due to its geographical position that borders all SAARC countries, must not be perceived as a challenge to other countries, as professed by strategists in the neighbourhood, but must be viewed as a catalyst to fulfil the region’s potential as an economic powerhouse. As outlined in the president’s address to the Joint Session of Parliament, India will pursue its foreign policy ‘based on enlightened national interests’ leading to mutually beneficial relationships. Barely a month in office, the government has explicitly indicated its leadership role in SAARC to its neighbours.

Economic Integration

Just as a strong and prosperous India is in favour of SAARC countries, prosperous and stable governments in our neighbourhood are in India’s favour. A strong India can ensure inclusive growth in the neighbourhood. The 2014 elections have provided Prime Minister Modi the mandate to lead India on the economic pledge of infrastructure led growth, job creation and large investment. This must be reflected in the government’s spill over effects towards neighbouring countries. In a peaceful neighbourhood, a resurgent SAARC is more favourable than G20.

Despite 29 years of its existence, SAARC has not fulfilled one of the major goals of economic integration. SAARC has failed to reach its trade potential, which is crucial for regional economic growth. Intra-SAARC trade and investment is abysmally low. In 2011, intra-SAARC trade touched $19.18 billion. India’s trade with the seven SAARC countries reduced in 2013 from the previous year. At the same time, China’s economic growth has translated into an increase in Chinese investment in strategic sectors of SAARC member countries.

There has been much speculation on the potential of India-Pakistan bilateral trade to touch $40 billion per annum. Pakistan is still to grant the elusive Non-Discriminatory Market Access (NDMA) – previously the Most Favoured Nation (MFN) – status to India. Presently, only India and Sri Lanka have free trade agreements (FTA) since 1998.

The inception of the South Asian Free Trade Area (SAFTA) in 2006 raised new hopes for greater economic cooperation and integration within the region. The presence of five Least Developed Countries impedes economic integration. To boost intra-regional trade, India has taken several measures since 2008, including providing duty-free access to goods from LDCs. India can reduce sensitive lists and resolve non-tariff barriers. Other SAARC members can reciprocate with an Agreement on Trade in Services and a possible South Asian Economic Union.

India must expand and increase its financial backing to SAARC countries in crucial sectors like power generation, microfinance, road and railway connectivity, education, irrigation and health infrastructure. India must assist and ensure LDCs diversify their export basket. A SAARC infrastructure fund on the lines of the Asian Infrastructure Fund or BRICS Development Bank would have immense value.

Energy Connectivity

The establishment of a regional electricity grid since the 2008 SAARC Summit has provided electricity across the region. India took the lead to draft a Framework Agreement to develop power generation from hydro and other thermal energy sources. Negotiations by the working group and expert group under SAARC have provided a concrete shape to the project. PM Modi’s recent visit to Bhutan has highlighted Indian support for hydropower generation in that country, and the development of an economically viable 24,000 MW hydropower project. Rivers in South Asia have attracted both public and private investors for their hydropower generation capacity. International financial institutions like World Bank and ADB, and countries like the US, China, Russia, and Japan are willing to provide financial support.

Coal power projects have already been exported to Bangladesh and Sri Lanka by the previous government, and talks are underway for the transfer of thermal power to Pakistan. With the backing of leading investors in power generation, PM Modi should be able to provide that leverage in other South Asian countries, including Pakistan. Presently, an international funded project to transfer electricity produced in Central Asia to South Asia (CASA) is under implementation.

The forthcoming SAARC Summit in Nepal is expected to see member countries formally endorse the regional electricity grid connectivity. Besides, India is in a position to promote and invest in renewable energy, especially wind and solar energy, in neighbouring countries through information and experience sharing, human resource development, technology transfer and market development.

Environmental Diplomacy

The region has yet to exploit potential environmental diplomacy to forge a common approach to address environmental threats. Interestingly, the first SAARC regional study was commissioned on greenhouse gases and natural disasters in the early 90s to evolve a common South Asian stand at the Earth Summit. The next common stand emerged only in 2009 at Copenhagen. The Colombo Declaration and Thimphu Declaration are examples of a unified approach on climate change. As SAARC has been elevated to the status of an observer at the UN-sponsored climate change negotiation, all countries must maximise this space effectively. Are we looking forward to a robust, frequent, effective, and efficient regional dialogue on the environment front?

Water resource management, especially for trans-boundary rivers, must be addressed within SAARC. So far, all bilateral water treaties are project-specific and bereft of addressing comprehensive river ecology. The Inter Basin Water Transfer (IBWT), famously known as the river-linking project, is set to be revived under this government. To begin with, the new leadership should demonstrate its rationality towards multilateralism and must take the lead to put the river-linking project on the SAARC platform. The secretaries of the water ministries of SAARC governments must meet regularly to move forward on this critical issue.

South Asian governments must also discuss the cost effectiveness of hydropower and coal power projects in the interest of the environment, and the South Asian population before sealing such projects. SAARC countries have the opportunity and momentum to move out of traditional security thinking, which has fuelled exorbitant military expenditures, and focus on human development.

Protecting the Sunderbans and its tigers under the 2011 India-Bangladesh Memorandum of Understanding (MoU), is a way forward to accommodate other pressing environmental issues. South Asian countries have the momentum to help each other in addressing grave environmental threats. The increased frequency of regional environmental diplomacy can bring people together for mutually beneficial solutions. Clearly, providing a leadership in SAARC on the environmental front will be a litmus test for the Modi government.

The general election for the 16th Lok Sabha, the longest and largest in the world, has consolidated the ethos of democracy in India. India has conveyed that democracy wins and fuels development. PM Modi has won the trust of SAARC leaders very early in his 5-year tenure. It is now time to bridge the existing trust deficit and lead the creation of a stronger SAARC federation.

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Dr Avilash Roul

Dr Avilash Roul is Senior Fellow (Energy, Water and Environment) at Society for the Study of Peace and Conflict (SSPC), New Delhi.

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