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Kathmandu Friday January 04, 2002 Paush 20, 2058.
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India’s role in SAARC : Leader or
bully?
By Dr alok k bohara
Recent geopolitical drama between the two
rival SAARC members – India and Pakistan — has given many critics more than
ample reason to write off SAARC as a viable union. It had also become increasingly clear
that the sixteen year old organization’s charter was long on agenda and rhetoric and
short on accomplishments.
This essay argues that, in order to make it a
successful union, a well-defined role for India must be accommodated within SAARC with an
acknowledgment that India is indeed a de facto leader of the pack and not an arrogant
bully. Most importantly, SAARC should structure issues surrounding Kashmir in a fair
manner, and provide a forum for the US to broker a peaceful deal.
Why form alliance? There are two reasons for
forming an alliance. First is to seek mutual benefit for the parties involved through
internal transactions, and SAARC, in theory, should bolster its image to gain preferential
trade treatment from the EU and ASEAN, for example, arrangements that are highly
beneficial to the vast Indian economy as well as to the smaller members. Increased trade
among the participating countries and investment opportunities can only be beneficial to
its member nations.
Yet, experts argue that after sixteen years
since its inception none of the above has happened in reality. One reason is that, unlike
other economic unions (eg NAFTA, MERCOSUR, ASEAN and EU), the SAARC agenda has been too
complex and included a litany of issues such as extreme poverty, environmental
degradation, women trafficking, illiteracy, AIDS, energy, women’s right and internal
insurgencies.
Furthermore, SAARC, at the very outset, also
made a grave mistake by not embracing the idea of a free trade zone as its primary
objective; similarly a number of regional conflicts did not help the cause either. A lack
of clear agenda and focus have thus produced very little for the group.
There are two undeniable facts. First, India
is a rising giant with a dream to stand next to China as an economic force in Asia.
Second, the thorny issue of Kashmir has always been a stumbling block for SAARC, and
without its resolution, India cannot be fully onboard to provide necessary leadership to
move the organization forward for the benefit of everyone involved.
Can SAARC then find a way to incorporate
these two elements in its objective functioning or should India find a way to do it on her
own?
India as an emerging economic force: Let’s
start with the first issue. Of the seven nations in SAARC, India is gradually pulling
ahead of the pack in numerous sectors, especially in technology. Its rising growth rate
has begun to catch the attention of many developed countries (a healthy 6-7 percent GDP
growth over the last several years which is expected to reach double digit figures in the
near future).
Consequently, direct foreign investment (DFI)
in India has been growing steadily, spurring a remarkable growth in numerous sectors.
India’s DFI is almost three times that of the combined amount for the remaining six
members. With liberal economic policies and its strong technology sector, India has all
the characteristics for becoming an economic power, and all of these may happen without
any help from the other SAARC nations.
Given the fact that there is asymmetry
between India and its neighbours —76 percent of the total population and 77 percent
of the regional GNP— the smaller nations have much to lose from the failure of an
organization like SAARC. Thus, smaller neighbouring nations should find a way to take
advantage of India’s potential and make SAARC a meaningful union. For Nepal, it must
be the energy sector and tourism. India’s energy demand is gradually increasing with
an energy consumption growth of around 6 percent as against the world average of 1.5
percent (1993).
Consequently, India has begun to look for an
outside source for its energy need (e g Bhutan). Nepal should not miss out on this
opportunity, and should go into joint ventures with private Indian enterprises to produce
hydro power Indian energy intensive industries such as, steel, glass, metal casting,
petroleum, chemicals and wood products.
The rising non-commercial energy consumption
in India may also provide a viable market for Nepal. The rationale is as follows. India
has always feared that sole reliance on unreliable Nepali governments for its energy needs
(in UP and somewhat energy independent Bihar) may prove to be a strategic mistake. Nepal,
on the other hand, has always feared not getting a fair rate, a debatable issue, for its
energy from its giant neighbour.
Hegemony or not, simple economic theory
teaches us that a market with a single buyer (monopsony) will not make life fair for the
seller. But there are ways to get around the problem by entering into mutually agreeable
contracts of some ingenuity. By involving private Indian enterprises in joint ventures,
along with other investments from within the SAARC countries and other foreign
enterprises, one could effectively protect the joint Indo-Nepali economic interest. For
example, because of the heavy involvement of US private investments in the Maquiladora
programme along the border, the US will have to think twice before making any move to hurt
its southern neighbour, Mexico.
Motivated by profit maximisation, the same
Indian businesses will work on Nepal’s behalf against the Indian authorities and may
constitute a lobbying force to get preferential treatment for Nepal’s prime
export-hydro energy. Without the Indian market, a small landlocked country like Nepal
cannot profitably harness its vast energy potential (second only to Brazil), and India
will not open its market to just, for example, an Australian owned power enterprise
working out of its tiny neighbour.
India’s shift towards Bhutan should
serve as a learning experience. Further, in addition to removing import/export tariffs on
some select items to begin with, member countries should also remove regulations and
barriers to foster private investment to spur trade among the member countries. This may
eventually form a basis for a free trade zone among SAARC countries. Obviously, some form
of multilateral institutional arrangements must be in place to address, for example, the
issue of financial liability and other related issues.
The point is that only a strong and unified
SAARC can be an attractive market force for the mighty EU and ASEAN. But first, there must
be a congenial political climate in the region. Otherwise, with growing conflict between
India and Pakistan, an alternate grouping between Bhutan, Bangladesh, India and Nepal may
need to occur to mutually work on issues of common economic interests such as water
management and hydro energy production. Such an exclusionary move outside SAARC should be
the last resort.
Thorny issue of Kashmir and US role: Although
there are many internal conflicts in the region (e g Maoist insurgency in Nepal, Tamil
Tigers in Sri Lanka, Bhutanese refugee crisis, and the issue of Gorkhaland in West
Bengal), peace in South Asia and its economic future hinge on the resolution of conflicts
in Kashmir, and, for all practical purpose, it is beyond the purview of SAARC. A
collective voice of the member states may have some appeal to warring factions –
India and Pakistan –, but the only nation that has the capacity to broker a deal is
the US. The current geopolitical drama between India and Pakistan is designed to attract
US attention, and game-theoretically speaking, India had no choice but to up the ante (by
escalating the rhetoric backed up by troop movements and recalling of its ambassador from
Islamabad), especially in light of the recent incidence of terrorism in the heart of
India.
Given the fact that the Kashmir area has
indeed been a playground for Pakistani-backed terrorists, India will not let this
opportunity to weaken its opponent’s position slip by, and the US, on its part, will
have to step in to as peacemaker; the US now cannot take the risk of letting Kashmir turn
into another Tora Bora.
Can SAARC play a constructive role here? Yes
indeed, but the member countries have to first abandon their let’s-gang-up-on-India
approach. After all, because of mistrust among the member countries, India did not want
any bilateral conflicts to be brought within the multilateral forum of SAARC, and India
actually made it a precondition for joining the group.
Bully or Leader? The news of bilateral
tension between the two regional nuclear powers—India and Pakistan–, on the eve
of the 11th SAARC Summit in Kathmandu, is very discouraging, to say the least. It may have
all the characteristics of a school-yard fight between two bullies complete with a set of
smaller kids as onlookers, but the ramifications from their conflicts are far-reaching and
quite deadly. The current drama being played out by these two arch rivals should not come
as a surprise, however. The strategic game being played is not for regional consumption.
With Pakistan in disarray with a weak economy, internal strife and under the close
scrutiny of a super power, India took the opportunity to soften its opponent and gain an
advantage in this bargaining game.
Eventually, the US has to be involved, and
that is where SAARC can help structure issues and provide a forum by integrating the
critical voices of member countries and those of international bodies, primarily the US.
Without a civil and calm political climate, it is ludicrous to expect other pressing
socio-economic issues to take shape. Granted that no single country should have a monopoly
in truth, but at the same time, denying India a significant role within the organisation
will not make SAARC a viable force to be taken seriously by other international bodies.
Ironically, whether we like it or not, India
is destined to become an economic giant and a potent regional super power like China, and
this with or without SAARC. Of course, India would love to be a leader of an organization
like SAARC and increase its world stature, representing the South Asian subcontinent which
is home to more than 20 percent of humanity, and which is also a bastion of some the most
ancient civilizations and cultures. The only question is, are the SAARC member countries
willing to swallow their pride, stroke Indian ego a bit once in a while, and occasionally
let her act like a block leader, and refrain from calling her a bully?
As for India, it would not perhaps hurt to
let the smaller neighbours feel important sometimes by recognizing them as equal partners.
Sarcasm aside, a need for a strong and unified economic union of the South Asian nations
is long over due, and all the member countries of SAARC must work collectively to make
this organization a viable force to increase the living standard of the people and help
solve numerous social ills.
(The author is a professor at the University
of New Mexico)
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