Pakistan is the Spanner in South Asia’s Works
Our Correspondent | Apr 11, 2007 |
Although the 14th summit of the eight-member South Asian
Association for Regional Cooperation summit in New Delhi last week raised hopes
hope that finally the politics and economics of the region would be transformed,
it is going to take a long time.
The primary reason is Pakistan’s increasing instability after
the sacking of Supreme Court Chief Judge Iftikhar Mohammed Chaudhry, for
“misuse of authority,” by President Pervez Musharraf, which made it necessary
to bring the issue of Kashmir, however obliquely, back to the association forum
and to put economic cooperation on the back burner. The suspension in early
March triggered protests and has snowballed into a political crisis for
Musharraf in the run-up to his expected attempt to seek another term.
Trade, terror and connectivity were the major themes of this
year’s summit. It was thought cooperation would bring the region closer and
improve the living conditions for millions of people through a South Asia Free
Trade Agreement (SAFTA). It is not the case.
Intra-regional trade is crucial for the continued economic
upsurge of the region. The absence of most-favored nation status between Pakistan and India
has kept intra-regional trade at about five percent of South
Asia’s total trade. The World Bank has some revealing statistics
that highlight the challenges for closer regional cooperation in South Asia. According to the bank, intra-regional trade
is less than 2 percent of GDP, compared to more than 20 percent for East Asia. The
cost of trading across borders in South Asia
is one of the highest in the world. The region has minimal cooperation in the
field of energy, despite India,
one of the most energy-hungry nations in the world, being situated next to
three energy-surplus countries ‑ Bangladesh,
Nepal, and Bhutan.
All the member countries have implemented SAFTA in full,
except Pakistan, which is
still trading with India
on the basis of a “positive list” of items. When SAFTA came into effect in June
last year, Pakistan allowed
tariff reductions on the import of 4,872 products from Sri Lanka, Bangladesh,
Bhutan, Nepal and Maldives
but limited India
to concessions on 773 items. In November last year, it expanded this list to
1,075 items.
India on
the other hand has offered most-favored nation status to Pakistan and expects reciprocity, which Pakistan
so far has refused. Pakistan
wants the resolution of the Kashmir issue
first before moving wholeheartedly on SAFTA, which has kept the trade agreement
in limbo. Though SAFTA has been implemented from June last year, south Asia has not been able to draw the full benefits of
agreement.
Throughout its history, the association has been hamstrung
by the Indo-Pakistan rivalry. However, in recent times it has managed to
somewhat improve its image especially after the ongoing composite dialogue
between India and Pakistan. Perceptions
about the association have also changed because of the expansion of the
organization and inclusion of Afghanistan
as the eighth member. Moreover, this was the first time that five observers ‑ China,
Japan, South Korea, the United States and the European Union – attended the
summit's opening and closing sessions and some meetings as observers. Iran
has also been added to this list of observers.
There have been some positive moves. Outside the
association, although there has been little movement on Kashmir, Indian and
Pakistani officials were meeting late last week to seek ways to resolve border
disputes in the Siachen glacier area in the Himalaya
and the Sir Creek marshland, the 11th round of talks between the
defense secretaries over the 23-year history of the Siachen dispute. The two
nuclear-tipped countries have fought three wars since 1947, two of them over Kashmir.
Hopes were thus increasing that the organization could
disentangle itself from the Indo-Pakistan rivalry and give a major impetus to
trade and economic relations. But this did not happen. Pakistani Prime Minister
Shaukat Aziz stymied the chance of any progress even before reaching New Delhi. On the eve of
the summit, in an interview in Islamabad he said
that for Pakistan, Kashmir was still the core issue.
In New Delhi, addressing the summit,
Aziz, without naming Kashmir, said it was
essential to remove "obstacles of the trust deficit which has hampered
meaningful cooperation in the region". He pointed out that the South Asian
grouping has failed to make the desired progress due to an "environment of
disputes and mistrust" and called for resolution of differences and
disputes through "dialogue and compromise".
He agreed with the association’s goals rhetorically, saying there
should be enhancement of trade and economic activity, which "must show
sensitivity to the need for creating a level-playing field, market access and
requirements of development in each member state." He favored a "truly
open environment for regional trade ‑ devoid of all types of barriers." He
backed a level playing field for a "truly effective regional division of
labor and production.”
India, on
the other hand, contented itself once again by granting unilateral favors,
though this time only to the least-developed, announcing that it will allow
zero-duty access to the least developed countries of South
Asia by the year-end.
India
also made other concessions to increase connectivity in South
Asia, in keeping with one of the major themes of the SAARC summit.
It announced unilateral liberalization of visas for students, teachers,
professors, journalists and medical patients from SAARC countries. It also
proposed to double the intra-SAARC flow of tourists in the next five years.
There was a definite change in the attitude of India,
which wanted to bring the region closer. Some thought that attitude was due to
newfound confidence because of India’s
economic growth, while others considered it a “soft Indian” policy to increase
its influence in a region where China
is gradually extending its reach. Whichever, it appears clear that India
this time wanted to walk the extra mile to make the conference a success.
Economic integration and across-the-board implementation of
the South Asian Free Trade Area (SAFTA) hold the key to unlocking the economic
potential of the region. In their report before the New Delhi summit, the foreign secretaries
recommended early and full implementation of the South Asian Free Trade Area
and finalizing a draft agreement on the promotion of investment in the region.
These recommendations, though, are of no use unless the leaders are willing to
accept them.
Sri Lankan President Mahinda Rajapaksa said that it was high
time there was a single South Asian currency to “enhance the productivity of
the region and improve trade without barriers.” He expressed his concern at the
failure of SAARC to realize its potential. He also sought “a sincere commitment
and a strict timetable” to implement the South Asia Free Trade Agreement
(SAFTA) to make South Asia “one massive region
for enhancement of trade.”
For the last 22 years SAARC has been a paper-shuffling
organization. On the eve of the New
Delhi summit the grouping was poised to intensify
economic cooperation. It was hoped that this time it would be transformed from talk
to implementation. These hopes were
dashed due by Pakistan over Kashmir, though in a roundabout way.
By talking of Kashmir on such occasions, the rulers of Pakistan manage
to serve their short term interests, but it has made their country and the
region suffer. So SAARC, for the time being, remains jinxed and will remain so
until Pakistan
becomes stable enough to risk crossing its borders for trade. A weak Pakistani
leadership concerned about its own security will never have the courage to take
those steps.
Anand Kumar is an
independent researcher/writer based in New
Delhi.
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