Illustration: Jayachandran/Mint
Illustration: Jayachandran/Mint

Pakistan has crippled Saarc; time to reassess

India has the option of pulling the plug from further investments in Saarc

Since assuming power in New Delhi, Narendra Modi and his administration have consistently focused on a “neighbourhood first" policy as far as external relations are concerned. Giving an early signal of things to come, the heads of state of all Saarc (South Asian Association for Regional Cooperation) nations were invited to Modi’s swearing-in ceremony. Modi’s first two state visits were, appropriately, to Bhutan and Nepal. Another visit to Nepal for the Saarc summit followed soon.

During this period, Modi has announced a slew of initiatives for the Saarc group of nations, all of which were reiterated by both foreign secretary S. Jaishankar and external affairs minister Sushma Swaraj last week at the 42nd Saarc Standing Committee Meeting and the 37th Saarc Council of Ministers’ Meeting, respectively, in Pokhara, Nepal. Some of the Indian government’s prominent initiatives include a Saarc satellite that will have applications in areas such as health, education, disaster response, weather forecasting and communications, a Saarc-wide knowledge network to connect students and academic communities, and a Saarc annual disaster management exercise. The cumulative impact of these developments, many hoped, would resuscitate the Saarc back into action and vitality. But this project has not progressed as hoped. The reason for the lack of progress is also nothing new—Pakistan pursuing its bilateral goals vis-à-vis India has become an obstacle in the path of greater connectivity and interdependence, preventing Saarc from attaining its full potential.

An idea for such a grouping was first mooted by former Bangladeshi president Ziaur Rahman in 1980. Five years later, the first Saarc summit was held in 1985 with seven heads of states (of India, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka and Maldives) in attendance. Afghanistan was inducted as the eighth full member in 2007.

Despite the signing of a South Asian Free Trade Agreement in 2004 and the Saarc Agreement on Trade in Services in 2010, the incomplete implementation shows up in crude numbers. As Swaraj stated in her remarks in Pokhara last Thursday, “... our region accounts for merely 2% of world trade and 1.7% of world FDI (foreign direct investment). Our intra-regional trade is less than 6% of our global trade and intra-regional FDI accounts for only 3% of total FDI inflows."

In contrast, the share of intra-regional trade for the Association of Southeast Asian Nations (Asean)—to which Saarc is often compared—is close to 25%. Intra-regional FDI accounts for 18% of the net FDI inflows in the Asean region.

As Islamabad awaits the 19th Saarc summit to be held later this year, the 18th version saw another episode of Pakistan’s obstinacy. At the Kathmandu summit in November 2014, Pakistan’s delegation scuttled the Saarc Motor Vehicles Agreement and the Saarc Regional Railways Agreement. Following this, New Delhi took the lead by getting the motor vehicles agreement signed in June 2015 under a sub-regional framework, BBIN, involving the countries of Bangladesh, Bhutan and Nepal.

The red line for Pakistan—Rawalpindi in particular—has been the connectivity between India and Afghanistan. India has no direct connectivity to Afghanistan thanks to the illegal occupation of a portion of Kashmir by Pakistan. Given Pakistan’s refusal to provide an overland transit route despite repeated exhortations from both New Delhi and Kabul, Indian goods access the land-locked country though Iran.

Moreover, believing that its economic fortunes are now closely tied to those of China, especially after the latter’s decision to invest as much as $46 billion in the China-Pakistan Economic Corridor, Pakistan is unlikely to recognize the necessity of establishing connectivity with the rest of the Indian subcontinent. Not unless it realizes the futility of chasing non-existent Indian demons in Afghanistan. Saarc, Pakistan believes, will always be dominated by India; it has hence also pushed for China’s entry as a full member into the grouping.

It will be wise of other nations to go ahead with securing connectivity projects without waiting for Islamabad any further. India’s initiative on BBIN is a step in the right direction. A patchwork of bilateral free trade agreements, connectivity projects and sub-regional agreements such as the one secured by BBIN is the way to go forward.

If Saarc is bound to remain a perpetual victim of internal sabotage, then New Delhi would do well to avoid future sunk costs into the grouping.

Should India continue to invest in Saarc given Pakistan’s attempts to scupper it? Tell us at views@livemint.com

Close