Opinion (Spotlight Weekly)

Economic Dimensions Of South-Asian Security

By PREM SHANKAR JHA

Joint infrastructure development: By far the most promising area of economic cooperation is one that has been almost completely neglected so far. This is the joint development of the economic infrastructure of the region in order to make it more attractive destination for foreign direct investment. If the South Asian countries can find a way to develop their infrastructure jointly, they will at one stroke remove both the hurdles that discourage foreign investment today. They will demonstrate that they are capable of keeping their political disagreements insulated from their economic policies, and they will modernize the infrastructure of the region and make it an economically attractive destination for investment.

The political vivisection of what was one economic region, and the subsequent development of prickly nationalism and strained political relations between all the countries so created, and India, is one of the main reasons why South Asia has some of the least developed infrastructure in the world. Even a short checklist of the projects that have been proposed and vetoed for one reason or another quickly develops into a litany of missed opportunities.

In the west, not only is Pakistan not prepared to sell India any gas from its Sui Gas fields, but it has so far turned a clod shoulder to proposals to allow an oil and gas pipeline from Central Asia via Afghanistan and Pakistan to serve India in addition to Pakistan. This despite the fact that not allowing it to do so would greatly reduce, perhaps destroy, the economic viability of the project.

In the east, Bangladesh's President Begum Zia is under tremendous domestic pressure no to sell any gas from its newly discovered Gas fields to India, but to keep it ëbottled up' inside the earth till Bangladesh can make use of it in its own downstream industries. This despite the fact that the consortium of American companies that proposed to develop the gas fields has told the government that they will become unlivable if some of the gas is not sold to India. So great is the pressure on Begum Zia that on April 23rd at the international conference center at Dhaka she told newspersons that the question of selling Bangladesh's gas to any other country would only arise after there was a good estimate of the reserves and after every other way of utilizing the gas within Bangladesh, including the option of keeping it in the ground for later use had been thoroughly examined.

In the central region Nepal sits on the greatest Hydroelectric potential in the world but fifty years of discussions with India on how to utilize it has yielded very belatedly one sole and highly controversial project agreement.

The other river system with awesome hydroelectric potential is the Brahmaputra. The complete inability of India and Bangladesh to agree on a single project that could meet their joint needs, because of dog-in-the-manger nationalism ensures not only that this project is not even discussed but that the Brahmaputra continues to flood one third of the arable land in Bangladesh in every other year.

An alternative proposed by India, that would greatly ameliorate the flooding caused by the Brahmaputra and at the same time recharge the Ganges as it flows into Bangladesh, is the oft proposed Ganga-Brahmaputra link canal. This canal can perform the functions of both irrigation and flood control because the Brahmaputra floods in May and June, at a time when the discharge of the Ganges is at its lowest point. Such a canal would enable Bangladesh to augment the supply of irrigation to its north-western districts while reducing the flooding of the northeastern districts. This project has been vetoed time and again by Bangladesh on the grounds that allowing India to control a canal that passes across Bangladesh and is vital to its agriculture would be detrimental to its national security.

Bangladesh has similarly vetoed repeated suggestions to allow India to develop a waterway to the North east up the Padma and the Brahmaputra and thus link the region, now land-locked and rife with terrorism and armed extortion, to Calcutta and the rest of the world.

Lastly, India is actively pursuing a rail link through Myanmar with Thailand, Malaysia and Singapore, i.e. with ASEAN, but Bangladesh is not part of the plan because it will not allow a rail link across its territory for India. There are scores of other projects that are technically feasible but have not even been thought of, because of the prickly nationalism that pervades South Asia.

This kind of negative nationalism makes economic security a victim of the search for political or military security. It thus replaces the threat of war or military coercion by a large neighbor with the threat of internal disruption, the breakdown of law and order, the rise of extremism, economic exclusion from the global production and marketing system and eventually the failure of the state itself. Every step that the countries of South Asia can take away from this dire eventuality is one that none should spurn.

Pakistan would benefit economically from a pipeline to India because it would be able to garner transit charges for the oil and Gas. Nepal would benefit immensely from the supply of hydropower and irrigation to India because it would get the royalties and a share of the electricity in perpetuity. Bangladesh would benefit in numerous ways from the many projects described above — foreign exchange from the sale of gas and the provision of transit rights on the Padma and Brahmaputra being the least of the gains. But the most important gain, as described at the beginning of this section, would be the change in the image of the region abroad and the increased inflow of foreign investment that would follow.

Bypassing Politics : It is this writer's belief that the fears that have been expressed in Bangladesh and Nepal that India would misuse the power it acquires over the territory or economy of its smaller neighbors through such joint projects is greatly exaggerated. The standing refutation of this fear is the Indus waters treaty of 1960. Although India is the upper riparian state in this treaty, and although India and Pakistan have fought three wars since it was signed, the release of water under the treaty has not been disrupted on even a single day. However it would be too much to expect encrusted attitudes and fears to melt away overnight. That is why the collective effort of the countries of SAARC should be focused on creating instruments that would be able to attract foreign capital into such infrastructure projects while at the same time taking shielding them from the arbitrary influence or control of any one country.

One way to do this would be to create a Joint Infrastructure Development Authority under SAARC to which all the SAARC countries would provide seed capital in proportion to their size and GNP. This authority could be entrusted with the task of preparing feasibility reports for existing and proposed regional infrastructure projects, finding international investors, determining the share of each of the concerned countries in Its share capital, the tariffs to be charged for the services or products supplied to the beneficiaries, and do whatever else is required to implement the project. It, or a parallel organization also created by SAARC, could administer the infrastructure facilities so created, much as the original Common Market Secretariat in Brussels did in the sixties and seventies.

(Excerpts of the paper presented by Mr. Jha, an Indian journalist, at a seminar on comprehensive security in South Asia.)