INDO-PAK CHILL, CHINA’S SHADOW


INDO-PAK CHILL, CHINA’S SHADOW

650454-710x465Sheel Kant Sharma

The spell cast by the India-Pakistan chill proved hard to overcome..

The 18th Saarc summit in Kathmandu struggled to produce a modest set of agreements to save itself from cynical disdain. The spell cast by the India-Pakistan chill proved hard to overcome. Without the assurance of a prime ministerial meeting with India, Pakistan fell back to blocking consensus on draft agreements otherwise ready for adoption. These draft framework agreements, on motor vehicles and railways, have been in the works for the past eight years, aiming to enhance cargo and popular transport and facilitate trade and people-to-people connectivity. An agreement on energy trade was also set to emerge. The draft summit declaration, too, needed massaging of the text at the retreat on November 27, possibly about the future role of observers like China.

The host and Pakistan had, in the run-up to the summit, particularly pitched to expand China’s role, including giving it full membership.
Nepal as host should have sensed the lack of traction the proposal received and dropped it for a smooth and successful summit. However, a Chinese news agency circulated a special bulletin with speeches made by Nepali leaders, upping the ante and distracting focus from a substantive agenda of regional cooperation.

The inconclusive documents form part of the incremental Saarc process since a group of eminent persons in 1998 in South Asia recommended working out ambitious steps for deeper integration for peace and prosperity, the motto of this summit. These measures included, inter alia, a South Asia Free Trade Agreement (Safta), which was concluded at the Islamabad summit in 2004 and entered into force in 2006. Bilateral trade issues between Pakistan and India have held back Safta’s full potential, which required, by an already lapsed deadline, drastic tariff reductions and pruning of negative lists, removal of non-tariff barriers, harmonisation of standards and customs procedures, and progress on investment and banking. For all these steps, suitable mechanisms have been at work for years but at a desultory, inconclusive pace, largely due to the reluctance of some members. As a result, Safta has to its credit a meagre aggregate trade of about $3 billion from 2006-13.

indpak-leadIt is hard to see how China’s entry in Saarc would remove the obstacles to full-fledged trade facilitation and reverse the dismal trend. China does not belong to South Asia. China’s own trade with all Saarc members is heavily skewed against them. Its promised investments on infrastructure are not likely to balance trade. Since the Dhaka summit in 2005 agreed to admit China and Japan, the number of observers had increased to nine by 2010, among which Japan’s contribution over two decades of nearly $16 million tops observers’ funding of Saarc activities and programmes. China promised $3,00,00 in 2010, while Australia announced a million for a specific agriculture project and South Korea has spent about six million. As far as Saarc countries are concerned, their total funding of all activities and programmes over the past 20 years does not exceed $100 million. In contrast, funding from institutions like the World Bank and ADB, to even individual states like Nepal or Bangladesh, exceeds the total Saarc members’ contribution to Saarc so far.

Since 2007, India has asymmetrically increased funding, with a grant of $100 million to the Saarc Development Fund (SDF), in addition to its assessed share of close to another $100 million. But the SDF has disbursed barely $25 million over the past six years. Given such low commitment from Saarc members themselves and their meagre utilisation record, is it realistic to expect an external power, howsoever flush with funds, to really speed up Saarc’s integration? External investments on the bilateral track are no guarantee for closer regional cooperation, and Saarc does not come in their way in any case.

China has far greater trade and economic relations with Asean, but there are no membership issues there. China’s dialogue partnership and summit relationship with Asean commenced only after internal Asean cohesion was already much advanced in the 1990s — far beyond Saarc’s record to date. Another example is the European Union’s historic evolution during the Cold War. In the 1970s, the Soviet Union commenced large gas deals with erstwhile West Germany as part of the latter’s ostpolitik. But no one then thought of Moscow joining the European Commission nor, for that matter, the EU, after the Cold War, trade ties notwithstanding. Rhetoric apart, raising the prospect of China’s entry seems to divert attention away from the insistent negativity of some Saarc members regarding deeper integration.

If misapprehensions persist about India’s size and increasing commitment to Saarc, how would China be immune to them? “The gap between the promise of Saarc and the reality of its accomplishments,” to quote Pakistan Prime Minister Nawaz Sharif, can be bridged by member states only by concerted action, not procrastination.

As for India, it seeks to energise Saarc as the forum for beneficial regionalism. Its enlightened interest lies in good neighbourly relations, as stressed by successive governments in Delhi and reflected in generous unilateral initiatives like the South Asian University or Saarc satellite and trade-related offers of zero tariffs for LDCs and drastic reductions for all others. It is up to Saarc member states to tap the win-win regionally or subregionally. Further, offers of visa facilitation for business and medical purposes and the creation of the special purpose vehicle to upgrade domestic transport should boost India’s peace narrative.

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The writer was secretary general of Saarc from 2008-11
NOVEMBER 29, 2014

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About Ehsan Abdullah

An aware citizen..
This entry was posted in CHALLENGES, CURRENT ISSUES, ECONOMY, FOREIGN RELATIONS & POLICY, REGIONAL COOPERATION, Regional Policy, SAARC. Bookmark the permalink.

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