Geography, is truly history

India cannot expect much from the SAARC now, it’s time to look elsewhere for alliances
South Asian Association for Regional Cooperation (SAARC) proves its existence only by holding summits; otherwise its impact in the region is almost zero. SAARC was born in 1985 with lofty goals, and its stated intent was to “promote the well-being of the populations of South Asia and improve their standard of living; to speed up economic growth, social progress and cultural development; to reinforce links between the countries of this area; and, lastly, to promote mutual collaboration and assistance in economic, social, cultural, technical and scientific fields.’’ But in the absence of provisions to solve bilateral contentious issues, the performance of the bloc has been below par.

Links are perhaps the toughest of the aims to meet. First of all, the three biggest nations in SAARC (India, Pakistan & Bangladesh) don’t get along well at all. Cross border terrorism is the single largest factor which makes the matters worse and India faces the brunt of it. This burning issue, along with the issue of Kashmir, has often created several deadlocks in SAARC meetings.

This goes a long way in explaining why the bloc has failed in speeding up ‘economic growth’ as well. India accounts for around 75% of the total GDP in South Asian region and is a dominant trading country. In absence of its desire to do trade in the region, economic performance slows down drastically. As per a World Bank report, promotion of economic integration is the lowest in South Asian region. Trade between the SAARC nations is less than 2% of their GDP. This is the reason why South Asian Free Trade Agreement (SAFTA) has been a miserable flop. There is a vast potential which remains untapped. The member nations have a comparative advantage in certain products, yet most of such products are sourced from outside. Bangladesh, for example, imports most of its textile requirements from outside South Asia, while India and Pakistan are net exporters of textiles.

India naturally shares interests with its regional neighbours and the increasing irrelevance of SAARC has downplayed the benefits that India could have received if the bloc was doing well. India’s trade with SAARC nations is much less than the potential. India currently has trade worth $1 billion with Pakistan and World Bank estimates show that this could increase by around 900%!

The recently concluded 15th SAARC summit, too, didn’t bring much hope. At a time when rising food and oil prices are threatening the economic progress of the region, terrorism has overshadowed the two day long talks yet again. Although, the members decided to work together in stopping terrorism, one knows that these issues will not move into oblivion in a hurry, considering the intent shown by Pakistan in the past.

In such a case, it would be foolhardy for the nations, especially India, to expect any major development in the region on any issue. It is disappointing since survival issues like climate change are being constantly overlooked. The agrarian nature of the region makes it vulnerable to bigger human and income losses in the future. Actually, India can’t change its neighbours, but of course it can choose a different set of friends.

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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