Jumpstarting South Asian integration

By Pradumna B. Rana
India and four other countries have pulled out of the 19th South Asia Association for Regional Cooperation (SAARC) summit to be held in Islamabad in November. India’s decision was taken in the wake of the Uri attack on September 18, 2016. Similar decisions by Afghanistan, Bangladesh, Bhutan and Sri Lanka have led to the cancellation of the summit and several commentators have opined that ‘SAARC 
is dead’.

The SAARC’s inability to hold summits is not new. Roughly half of the scheduled SAARC summits have either been cancelled or postponed since the grouping was established in 1985. The main reason for this is the ongoing conflict between nuclear powers India and Pakistan. But the SAARC is resilient and eventually diplomacy will prevail and the summits will resume as in the past, if intermittently.
Boycotting the summit will only further weaken the institution. Instead, the members should work together to strengthen the SAARC mechanisms to address regional concerns. This includes the decision-making process. As in the ASEAN, decisions in the SAARC are made by consensus. To reduce this inflexibility, the ASEAN has the ‘ASEAN minus x’ scheme under which members not ready to commit to an initiative can opt out so that progress is not held up. The SAARC should adopt a similar ‘SAARC minus x’ scheme.

South Asian countries should also go for schemes outside the SAARC framework such as bilateralism and sub-regionalism. Indian Prime Minister Modi supported this approach at the 18th summit held in Kathmandu in 2014, where he remarked that regional integration in South Asia should go ahead ‘through SAARC or outside it, among all of us or some of us’.

Bilateralism was a key pillar of Prime Minister Modi’s ‘neighbourhood first’ policy. His first day in office in May 2014 was dedicated exclusively to bilateral meetings with leaders of SAARC countries. His first state visit was to Bhutan and then to Nepal. The outcomes of this grand vision have unfortunately been disappointing and limited to a number of connectivity projects with Afghanistan, Bangladesh and Sri Lanka.

South Asian countries should also enhance sub-regionalism efforts, as these are less sensitive. These include the Asian Development Bank’s (ADB) South Asia Sub-Regional Economic Cooperation (SASEC), made up of India, Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka. The ADB has approved 40 infrastructure and IT projects totalling US $ 7.7 billion through the SASEC.

Bangladesh–India–Bhutan–Nepal (BIBN) is another sub-regional grouping that shows promise. The BIBN Motor Vehicle Agreement was signed in June 2015. This enables vehicles to enter any of the four countries without the need for trans-shipment, reducing transport costs. Plans for energy cooperation are also being considered.
 

Enhancing links with ASEAN
South Asian countries should also enhance their inter-regional linkages with the ASEAN, their largest market. In the past, commercial and religious links between the two regions were strong and led to a prosperous and integrated Asia. More recently, economic relations with the ASEAN have surged again. But their full potential is yet to be realised. South Asian countries need to implement policies to link themselves to production networks in the ASEAN and to develop domestic production networks. Such policies will lead to a win-win situation for all countries and help jumpstart economic integration in South Asia.

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is another institutional framework that promotes inter-regional cooperation, connecting South Asian countries (except Pakistan and Afghanistan which are not members) with some East Asian countries (Myanmar and Thailand). In a survey of Asian leaders that we conducted, four out of five leaders expressed the view that the BIMSTEC should play a more active role in promoting regional connectivity and integration in Asia.

India is slated to host the BIMSTEC summit in mid-October on the sidelines of the BRICS summit with discussion slated for issues related to transport, electricity and broadband connectivity.
Before the partition of India and Pakistan in 1947, South Asia was one of the most integrated regions of the world. At that time, over half of Pakistan’s imports and nearly two-thirds of its exports were from India. It is estimated that the volume of intra-regional trade in South Asia then stood at about 20 percent of its total trade. This has fallen to a dismal 5 percent. Political conflicts and mistrust have succeeded in transforming one of the most integrated regions in the world to the least integrated one.

Boycotting the SAARC is not the answer. South Asian countries should adopt a multi-pronged approach to jumpstart economic integration in their region, comprising a SAARC minus x scheme together with bilateralism, sub-regionalism and inter-regionalism outside the SAARC framework.

(Pradumna B. Rana is Associate Professor and Coordinator of the International Political Economy Programme in the Centre for Multilateralism Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore)