The irrelevance of Saarc

South Asian leaders must put their money where their mouth is

Sanjaya Baru

There is more funding for research on regional economic cooperation in South Asia coming from sources outside the region than from governments of the region. Thereby hangs a tale. The leaders of the governments of the South Asian Association for Regional Cooperation who are meeting this week in Nepal must first put their money where their mouth is before waxing eloquent on the virtues of regional cooperation.

Why, even a businesslike organisation like the Saarc Chamber of Commerce which produces an optimistically titled publication called “Saarc means Business”, thanks the Friedrich-Naumann-Stiftung, a German think-tank and funding organisation, for supporting its work! There is probably more European, Japanese, World Bank and Asian Development Bank funding for cooperation within Saarc than from all Saarc governments put together.

So who in South Asia cares for Saarc? The irrelevance of the association is best exemplified by the status of an “unofficial” website, www.saarc.org, put up by some Saarc enthusiasts which is five years out of date — according to the website, India’s President is Shankar Dayal Sharma and Prime Minister is I K Gujral! The yearning for Mr Gujral is understandable. He’s probably done more for the organisation than all Indian prime ministers put together, but to what effect? With enthusiasts like that who needs detractors. Saarc is a debating society that gets worked up every time the host country’s political leadership wants a photo-op for good effect. Nepal’s beleaguered leaders can do with some regional back-slapping and bonhomie. So ‘chalo’ Kathmandu!

Regional cooperation in the modern world is all about trade and the movement of people. There is a lot of movement of people in South Asia, mostly from outside India into India, but very little trade either way! The total intra-regional trade of Saarc member countries with each other is just about 3 per cent of their trade with the rest of the world in the past decade. India, the largest country in the region, enjoys an important share of the trade of Nepal only. Even little Maldives trades more with the outside world than with India. With such little economic interaction what exactly is Saarc all about?

Saarc is an association of India and her neighbours. Nothing more, nothing less. Since the neighbours are all small countries they feel comfortable dealing with India as a group. Nothing wrong in the principle. Question is, what are they dealing in? Every now and then Saarc leaders have had to invent an agenda to underscore the organisation’s relevance. This time it will be terrorism. Economics is there on the agenda, more for fashion not with passion.

Saarc-level economic cooperation has gone nowhere. India has done much more for regional trade through bilateral deals and through non-Saarc groups than it has been able to do in Saarc. This is largely on account of Pakistan’s negative attitude to regional economic cooperation and to doing business with India. Saarc is permanently handicapped by its structural imbalance — one big country which alone shares its borders with all others. Leave India out, and no two other members of Saarc are each other’s neighbours.

There is so far only one regional association with a similar structure, namely the North American Free Trade Agreement. In Nafta, both Mexico and Canada have arrived at a modus vivendi with the United States of America. In Saarc, many of India’s neighbours have yet to come to terms with their geo-political, geo-economic and historical reality and destiny. When they do, Saarc may make sense. Till then, it will remain a talk shop.

In all other successful regional economic or political groups, there is an internal equilibrium and a relationship of mutual dependence which becomes very one-sided in Saarc. In the European Union, notwithstanding Germany’s dominance, France, Britain, Italy and now even the Scandinavian and East Europeans offer a balance. So is the case with Asean.

Even China is fortunate to have for its neighbours countries with impressive economic and political weight so that when it is in Apec or in Shanghai Five or in Asean-plus-3 it does not feel the embarrassment of its size nor does it feel threatened by the size of some of its neighbours. India is among the few countries in the world with disproportionately small neighbours in her immediate “South Asian” neighbourhood.

In this lies the answer to Saarc’s future. It must evolve from being a South Asian association to a “Southern Asian” association, including Afghanistan, Iran, Myanmar, Thailand and Singapore. In such a grouping lies balance that may in part resolve the problem of India’s dominance. Neither Iran nor Thailand and Singapore would feel intimidated by India and their presence can impart internal balance to Saarc. While Saarc need not close shop and it has marked enough time to have moved somewhat in some areas, the real regional grouping with any meaningful future will be an association of India and her eastern neighbours, a kind of Saarc-minus-Pakistan plus the rim countries of the Bay of Bengal. We could call it a Bay of Bengal Community. If our western neighbours, including the Gulf countries, would like to be part of a regional group then Saarc will have to grow into a “Southern” aarc, rather than be a “South” aarc.

The future of Saarc is tied to increased economic interaction between India and her neighbours. If India’s economic engagement with her neighbours remains limited and if our neighbouring economies find themselves drawn into greater economic interaction with countries to the east and west of India respectively, then Saarc will become increasingly irrelevant. Already, Bangladesh and Pakistan do more trade with China than with India. The same could happen with Sri Lanka and Nepal. Where does that leave Saarc? Indeed, China could then demand Saarc membership as a country actively engaged in the trade of most Saarc members!

To a large extent, the burden of action rests squarely on India’s shoulders. Unless we pursue policies that not only increase our trade with the rest of the world but also with our neighbourhood, Saarc will remain a talk shop and one day the Western funders of research will just go away. Who’ll then fund all the Saarc-enthusiasts in the many think-tanks across South Asia?