SAARC: Translating Potential into Performance and Progress

Cover Story

The future of SAARC will be bright if its members will heed the call for compromises, as well as show patience and understanding of each other’s constraints

The emerging situation in South Asia, the strength of the Indian economy, as well as global scene today is markedly different from the time when SAARC was born. Earlier, there was very little possibility of intra-industry trade in goods. Now complementarities have widened. The possibility of asymmetric distribution of trade gains is now much less compared to 1985. There are now possibilities of horizontal specialisation and vertical integration. South Asian countries are now gaining importance in the world trade arena at a rate that is greater than the speed with which the region has increased its importance for South Asian countries in their trade. This indicates that there is potential for greater intra-regional trade. Trade in services, especially in tourism has great potential than it was 25 years ago because of the service revolution in South Asia and fast development of tourism industry.

Earlier there was complete lack of investible resources, limiting possibilities of investment cooperation. With reduced problem of resources, several possibilities of investment cooperation for building supply capabilities, trade and creating joint ventures have emerged. Consequently, there are better prospects for intra-regional trade, sub-regional cooperation and economic partnerships in the region.

Private sector interest is now no longer peripheral, but direct and substantial. Many in the private sector in South Asia also see India’s rise as an opportunity. There is hope for better business climate in India and for economic reforms that will, in turn, reinvigorate the Indian economy. The overarching challenge for SAARC in the future is for translating the opportunities in the relationship into outcomes, and the potential into performance and progress.

Emerging Prospects for Regional Economic Integration

Earlier, regional economic integration did not figure much in SAARC literature. Now prospects and challenges for regional economic integration is a hot topic for policy and research, with Asian Development Bank (ADB) taking the lead and SAARC Chamber of Commerce and Industry showing enhanced interest in the matter. Strategy 2020 of ADB includes regional integration, as one of its three development agendas, other two being inclusive economic growth and environmentally sustainable growth. Further, there are now numerous possibilities of location specific bilateral and sub-regional cooperation for energy, food, environment and water than before.

South Asian Economic Union

The 2011 Summit directed the South Asia Forum to continue to work towards the development of the ‘Vision Statement’ for South Asia and its future development, including on the goal and elements of a South Asian Economic Union, as may emerge from its subsequent meetings. For South Asia with all its problems, this appears as a tall order. It is better not to be overly ambitious, but take baby steps. However, it is timely to think about setting in motion a process for going beyond SAFTA and negotiating the contours of a SAARC Comprehensive Economic Partnership agreement by 2016. It may be recalled that ASEAN decided only last year to set up a committee to commence detailed negotiations aimed at concluding Regional Comprehensive Economic Partnership (RCEP) by the end of 2015 between its 10 Member States and its Free Trade Agreement Partners. In case of South Asia, an intergovernmental group could examine ways to expand the present framework provided by SAFTA, and SATIS can be expanded into a Comprehensive Economic Partnership Agreement by including provisions for cross-border and intra-regional investments, legally binding code for joint ventures both for rights of home country and investors, and fast track approval for regional projects.

Confluence of Global Issues and Future Priorities

Healthcare, disaster management, climate change, protection and preservation of environment, energy and food security and water management are now global issues as well as priorities for future of SAARC. SAARC needs to set up Expert Groups in each of these areas to discuss in-depth and make recommendations to SAARC leaders with regard to:

a) The kind of intra-SAARC cooperation for meeting challenges in these areas as well as;

b) Global assistance and cooperation required in each of these areas.


Poor connectivity has constrained progress in a range of public goods; climate change, water management, communicable diseases, disaster management in addition to creating problems for trade, transport and transit in the region. In fact, connectivity has now emerged as a necessity for regional cooperation as also for SAARC to profit from the Asian resurgence. A high-level group should be set up to have an in-depth examination of all issues relating to connectivity within the region and to South East Asia, Central Asia and East Asia.

Channelling Growing Influence and Strength of Stakeholders

There is growing influence and strength of stakeholders i.e. of governments, civil society and private sector in matters related to SAARC. There is exponential growth in Civil Society Organisations (CSOs). There is now increasing awareness that weak regional cooperation is hurting a greater number of poor people, especially those residing in border areas. Even leaders are now actively seeking multiple inputs beyond governments into consideration for the future of SAARC and have agreed at the last SAARC Summit to form a ‘South Asia Forum’ for the generation of debate, discussion and the exchange of ideas on South Asia and its future development.

Interest within the International Community

There is now growing interest in SAARC within the international community as is evident from the number of important countries with observer status. World Bank and Asian Development Bank are now taking greater interest in matters relating to SAARC. Further, there are also other regional bodies such as Bay of Bengal Multi Sectoral Technical and Economic Cooperation (BIMSTEC), Mekong Ganga Cooperation (MGC), Indian Ocean Rim Regional Organisation for Cooperation (IOR-ROC), East Asian Summit, Shanghai Cooperation Organisation. Bangladesh, India, Sri Lanka, Nepal and Bhutan are members of BIMSTEC. Pakistan and Afghanistan are members of Economic Cooperation Organisation (ECO), while Pakistan is also a dialogue partner of ASEAN. ADB now formally supports South Asian Growth Quadrangle (SAGQ) that includes four countries: Bangladesh, Bhutan, India and Nepal.

Contentious Issues

With rising disparities between the rich and the poor and rural and urban growth, inclusive growth in South Asian countries has emerged as an important issue that demands urgent attention. Organised terrorism now poses a threat to the peace, security and economic stability of the South Asian region. It calls for addressing the problems in a comprehensive manner and more frequent and intensive consultations at all levels.

Reinventing SAARC

The changes over the last 25 years in the socio-economic-political landscape of South Asia and global situation and the wide gap between promise and performance, rhetoric and action, policy formulation and implementation, all call for rethinking and reinventing of SAARC. South Asian needs to rise above the past in order to conquer the future. Civil society and governments both have to acquire the power to shape the future of SAARC and any proposed change for SAARC has to enable the group to make accelerated progress.

There has been a distinct change in India’s strategy and approach towards SAARC. It has implemented three projects relating to a telemedicine network, a SAARC Textiles and Handicrafts Museum, and South Asian University. Another recent one relates to sharing of satellite data.

Here are eight suggestions for reinventing this grouping. First and foremost, the trust deficit, and problems arising from mistrust and suspicion have to be addressed earnestly and seriously at the highest levels. One important objective mentioned in the SAARC Charter is ‘to contribute to mutual trust, understanding and appreciation of one another’s problems.’ Obviously, political dialogue, consultations and cooperation are required for achieving this objective. It is important not to attempt to formalise the process and not to neglect important bilateral processes. We need to move at a pace that is comfortable to all participants. Also, such informal consultations may cover regional, multilateral and global issues. The SAARC Charter has proved its own utility. We should neither tinker with it nor allow it to become ossified. Political disputes need to be either resolved or not allowed to hold in hostage progress of SAARC in matters where technical solutions exist. There is a need to change political dynamics.

Second, the looming problem of inclusive growth needs to be tackled head on. South Asia needs to focus its efforts to achieve the millennium development goals. For this purpose, all possible efforts should be made by SAARC countries to promote and mobilise investments in infrastructure, education, microfinance and other areas that are critical to inclusive growth. SAARC should examine policy approaches that are required in consultation with ADB, including promotion of growth through regional cooperation.

Third, interested countries may set up working groups which may develop projects for location specific cooperation in disaster management, climate change, environment, healthcare, energy, food security and water management.

Fourth, a holistic approach needs to be adopted for enhancement of intra-regional connectivity in South Asia in the remaining decade of 2010-2020. For this purpose, its regional governance institutions need to be strengthened. Regional Transit Agreements and Multi modal Transport Arrangements need to be agreed upon. Appropriate border management policies and sub-regional and regional projects that will enhance connectivity need to be devised. The objective is to have borders that are safe from terrorists and at the same time smart for efficient movement of people, goods, services and ideas. In order to make the most of Asian resurgence, SAARC countries will have to take immediate measures for preparing themselves for pan-Asian connectivity.

Fifth, Track I and Track II processes in SAARC need to work in a synergistic manner. Track II needs to go beyond advocacy and prescriptions and provide inputs with regard to modalities to carry out such prescriptions. Individual stakeholders in various Track II initiatives also need to work with policymakers in their respective countries for resolution of issues relating to regional cooperation through proactive steps based on informed knowledge and debate. In turn, governments should encourage the private sector and other stakeholders to assume their role and responsibilities in making their due contribution to the implementation of SAARC decisions. All necessary information should be shared and appropriate dispute settlement mechanisms need to be devised wherever possible. The civil society must create its independent mechanisms for monitoring the implementation of various SAARC decisions. In this connection, the practice of annual gatherings since 2008, such as the South Asian Economic Summit (SAES), which brings together business, academia, SAARC secretariat officials and politicians from member countries, needs to be strengthened and continued.

Sixth, the growing interest of important Observer Countries makes it imperative for SAARC to devise modalities for fostering dialogue and consultation on matters of common interest, and for briefing the Observers about priorities of SAARC where their cooperation may make some difference. The ‘one-size-fits-all’ approach may not work and separate meetings may be advisable.

Seventh, given the position of India, it is of utmost importance that there is adequate coordination between bilateral, regional and multilateral cooperation and that these cooperation are consistent with and complement each other. The overall objective should be to work for a South Asia that is ultimately regionally integrated and globally connected.

Eighth, SAARC countries need to emphasise to concerned authorities that the integration process in East Asia should be comprehensive, and suggest expanding the Chiang Mai Initiative (CMI) among ASEAN+3 countries to include India and other South Asian and Central Asian countries.

The future of SAARC will be bright if its members will heed the call for compromises, as well as show patience and understanding of each other’s constraints. Its members need to give each other the benefit of the doubt when things get tough. Differences need to be managed by seeing each other as part of the solution and not just part of the problem – at the bilateral, regional, multilateral, and global levels.

Finally, even though India and other SAARC members may not always agree, India’s neighbours will do well to understand that India’s rise is unquestionably a net positive for the prospects for peace, progress, and prosperity in the 21st century and above all for strengthening regional cooperation in South Asia and for rintegrating South and East Asia. India has to be cognisant that history and geography both have bestowed a special responsibility on it for the development of South Asia as a whole.

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