Conflicts and economic cooperation in South Asia
The world has changed considerably since the end of the Cold War, but it seems South Asia is stuck in a time warp- stubbornly refusing to make new beginnings, or to harness the countless opportunities unleashed by globalization.
Economically speaking, South Asia is the least integrated region in the world. Intra-regional trade is barely 5 percent compared to over 25 percent in the ASEAN and EU regions. The South Asia Free Trade Agreement that came into effect in 2006 is now almost dead, like its parent organization SAARC, which was established in 1985.
The 19th SAARC summit which was to take place in Islamabad in November 2016 could not be held as India refused to attend, following the September 18 Uri attack, where 19 Indian soldiers were killed. India holds the dubious honor of being the only member country to occasionally boycott the yearly summit for bilateral, extraneous reasons.
Needless to say, India-Pakistan hostility is the major reason behind SAARC’s impoverishment. The two biggest countries in the region have not been able to keep their mutual animosity at bay to let the organization function and promote regional cooperation in important areas ranging from trade to climate change and counter-terrorism.
As Pakistan and India are now seemingly caught in another long impasse, prospects for SAARC look even bleaker.
Regional cooperation cannot be built on rickety and unpredictable interstate relations. Following the August 5th decision by India to strip Jammu and Kashmir of its special legal status, Pakistan not only downgraded diplomatic relations, but also suspended bilateral trade with India. Earlier, in the wake of the Pulwama attack in February that killed 40 Indian security personnel, India imposed tariffs at 200 percent, rendering imports from Pakistan almost impossible.
Interestingly, whereas India had given Most Favoured Nation (MFN) status to Pakistan in 1996, the trade imbalance continued to increase in India’s favor. While awarding MFN status, at the same time, India ensured it was imposing stringent non-tariff barriers on imports from Pakistan, thus negating the very purpose of the MFN facility.
As Pakistan and India are now seemingly caught in another long impasse, prospects for SAARC look even bleaker.
Abdul Basit
Pakistan had agreed to return the favor in early 2014, before the Indian general election in the spring of that year. However, the Bahartiya Janata Party (BJP) requested Islamabad to postpone the decision, as the party was expected to win elections and said it would prefer that the positive development take place under its watch, so as to start the bilateral relationship on a good note. Subsequent developments in Kashmir never allowed this to happen.
On the other hand, Afghanistan’s long-held demand that Pakistan allow its territory for direct Afghanistan-India trade has also been pending for a long time. Pakistan contends that given its peculiar security concerns vis-à-vis India, it cannot allow the facility unless sufficient mutual trust is built between the two countries. Nevertheless, Afghanistan is allowed to export to India through the Wagah border.
Realizing that its relations with Pakistan are unlikely to improve in the foreseeable future, India is now focusing more on sub-regional arrangements which exclude Pakistan and Afghanistan. It is also committed to the Chabahar port project to bypass Pakistan.
Undoubtedly, Pakistan provides the natural bridge between Afghanistan/Central Asia and India. Hence, cost-effective regional integration and connectivity cannot be attained without Pakistan.
Moreover, India is also opposing the China-Pakistan Economic Corridor (CPEC), contending that the corridor runs through the disputed territory of Gilgit-Baltistan. In a nutshell, the mutual hostility between the two neighbors is so deep that nothing seems to be working. So much so that India is doing all it can to have Pakistan be put on the blacklist of the Financial Action Task Force, which will be meeting in Paris this month.
When it comes to regional economic cooperation, Pakistan is in a cleft stick, for the situation both on its eastern and western borders remains far from stable. It is left with no other option but to ensure timely and full completion of CPEC while continuing to work toward bringing about reconciliation and peace in Afghanistan.
Meanwhile, Pakistan would be well-advised to keep exploring possibilities for bilateral economic cooperation with other SAARC countries, especially Sri Lanka, Bangladesh and Nepal.
Pakistan has recently given an indication that it is considering re-inviting SAARC leaders, including Prime Minister Modi, to attend the 19th SAARC summit meeting in Islamabad next year. India is unlikely to oblige, especially if the situation in Jammu and Kashmir remains volatile.
In the upshot, regional cooperation in South Asia will remain hostage to Pakistan-India hostility. It is almost unthinkable that the two countries would ever be able to take irreversible steps forward by avoiding the long-standing Jammu and Kashmir dispute. We need courageous statesmen on both sides of the border to make a new beginning for the betterment of the 1.6 billion inhabitants of South Asia.
– Abdul Basit is the president of Pakistan Institute for Conflict and Security Studies. He was previously Pakistan's ambassador to Germany and Pakistan's High Commissioner to India.
