SAARC: No Trade-off For Trade

Updated: Nov 14 2003, 05:30am hrs
Will he, wont he The question still begs an answer. Will Prime Minister Atal Bihari Vajpayee go to Pakistan for the next summit meeting of the South Asian Association for Regional Cooperation (SAARC) The unilateral moves Mr Vajpayee has made to improve India-Pakistan relations suggest that he would be happy to go, provided Pakistan reciprocated, if not in full measure at least with genuine intent. If Pakistan sticks to its time-worn path of negativism, no one in India will lose any sleep if Mr Vajpayee decides not to go.

Such a decision would, of course, be momentous and force other South Asian countries to reconsider the relevance of SAARC and their bilateral relations with India. Maybe the time has come to call the bluff and wind up SAARC if the group shies away from acquiring a relevant and realistic regional economic agenda.

At a time when India has been talking trade all around, the virtual absence of any talk about trade in SAARC stands out in contrast. If there is any regional dialogue at all, it is often complaints, complaints, complaints. A constant whine, but no purposeful discussion about give and take.

SAARC has to deal with three problems to come alive again. First, at a time when trade and business is such an integral part of all regional economic dialogues, SAARC is unable to carry its trade dialogue forward. This is in part because of Pakistans intransigence, in part due to excessive whining by Bangladesh and in part due to Indian small-mindedness. Irrespective of what the smaller countries do, there ought to be more unilateral trade liberalisation by India.

Second, most SAARC members are hobbled with domestic problems and have not had time to focus on regional cooperation. In fact, as we approach the SAARC dates, it is not even clear if Nepal and Sri Lanka can be properly represented at the meet due to the domestic pre-occupations of their leaders.

Finally, and perhaps most importantly, SAARC was formed as a kind of trade union of Indias smaller neighbours and India is no longer so worried about their trade unionism. It is much like what has happened to organised unions in India with the casualisation of labour. No one is afraid of unions any more!

Apart from Pakistans dog-in-the-manger attitude towards operationalising SAARCs regional economic agenda, as put forward in the report of the Eminent Persons Group, envisaging a South Asian Economic Union, the fact that India has been able to pursue greater trade liberalisation within South Asia through bilateral agreements has also reduced the relevance of SAARC-level activity.

More importantly, Indias increasing economic engagement with South-East Asian economies, especially Thailand and Singapore, has also reduced the importance of SAARC in Indias quest for a regional trade association of its own in a world of increasing regionalism. Add to this the feverish pace with which India has been able to improve its trade relations with its principal trade partners and SAARC becomes even less important.

Clearly Indias economic neighbourhood is widening, even as its relations with some of its smaller neighbours like Sri Lanka are improving. So who needs SAARC If SAARCs other members fail to prevail upon Pakistan to alter its stance towards improved economic relations with India, and if India-Pakistan bilateral economic relations remain hostage to Pakistans blackmail tactics on cross-border terrorism and the so-called Kashmir issue, India would have no incentive in strengthening regional cooperation within the SAARC framework.

This could encourage India to give even more attention to its relations with the wider southern Asian neighbourhood, including ASEAN and the Gulf States. Indeed, in some ways this has already happened. SAARCs stagnation has increased the profile of BIMSTEC Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation forum. BIMSTEC is essentially an association of the Bay of Bengal rim countries and could be renamed more imaginatively as the Bay of Bengal Community (BOBCOM).

Going beyond BIMSTEC/BOBCOM, India is actively encouraging the idea of an Asian Economic Community (AEC) that would include ASEAN, China, Japan and Korea. The rapid increase in Indias economic engagement with Korea and China, apart from Japan and ASEAN, has given this process greater relevance from an Indian perspective.

One way in which SAARC members can try and rejuvenate this sub-continental organisation is to alter the first word in SAARCs name from South to Southern and invite Afghanistan, Iran and Myanmar to join a larger Southern Asian ARC. It would remain SAARC but would bring in Indias other important neighbours, especially Afghanistan and Myanmar into a larger association. The new SAARC will still not have much intra-regional trade happening, but could provide the basis for a more meaningful regional dialogue.

If one stretches ones imagination a bit and one takes cognizance of Thailands growing economic relations with India, Sri Lanka, Nepal and Myanmar, Thailand could also be brought into the new SAARC. This new SAARC would have a more important advantage over the old SAARC in that it would no longer be a trade union of Indias smaller neighbours. This would remove a thorn from Indias flesh and make the association more balanced. A group including both Thailand and Iran with India in it would reduce the burden of South Asian history that haunts SAARC today.

The time has come for some bold and innovative thinking on SAARC to lend it a new identity and impart some momentum to regional economic cooperation in this part of the world. If SAARC shies away from thinking along these lines, it faces the prospect of India losing interest in the association.

Regional associations are a dime a dozen these days and many have waxed and waned. Some have grown into meaningful organisations, others have died and even been forgotten. Just because SAARC has been around for a little over two decades, does not mean it will be there forever. Indias rapidly changing economic structure and the profile of its economic engagement with the outside world is such that it may not feel compelled to keep SAARC alive. If India loses interest in SAARC, it will die a natural death. Is that what the region wants If so, so be it.