If SAARC region is better connected and integrated economically, it is bound to multiply benefits from initiatives underway in member countries to attract investment. This will make South Asia an attractive regional market
Is it the right time to talk about a South Asia Association for Regional Cooperation (SAARC) 2.0?
Isn’t Donald Trump’s election as United States president and Brexit referendum exemplary of an inward-looking process underway at the global level? In South Asia, as well, recent developments have only highlighted fissures within SAARC?
And with divergent trajectories of Indo-Pakistan and Pak-Afghan relations, isn’t the path connecting South Asia with other regions — Central Asia and West — already quite difficult to tread?
In short, from a realist perspective, it would seem that it’s time to look beyond South Asian cooperation.
The critics of SAARC would bring up trade statistics or the association’s failure in resolving major issues, slow pace of institutionalisation, and inability to hold regular summits, as reasons to look beyond regional cooperation.
Perhaps, these criticisms may be correct. But precisely because of these reasons, it has become all the more important for South Asia to rethink its regional priorities and pursue a second generation push.
Firstly, South Asia countries are looking at increasing their economic growth rate. For example, both India and Pakistan would not only like to sustain their new rate of growth, but would also want to increase it further. Expanding population, especially the youth bulge in South Asia demands that the region expands its economy.
Though agriculture forms the basis of economic growth in South Asia, the region is fast expanding its manufacturing sector. Both sectors play a crucial role in growth. To sustain it, the region needs adequate energy from every possible resource. Given the inherent inadequacies in South Asia to tap the existing resources, gas pipeline projects will play an important role in importing energy from Central and West Asia.
Two major projects — Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-Pakistan-India (IPI) — have enormous potential, but could not yet move forward because of issues among India, Pakistan and Afghanistan. Though, none would question the salience of these gas routes for energy supply and their implications in augmenting growth, objections have been raised vis-à-vis the political side.
Second, South Asia should be able to attract external investment, if it is integrated within. Countries in the region have been pursuing different strategies in the recent years, with varying successes. The ‘Make in India’ campaign is aimed at augmenting external investment. The China-Pakistan Economic Corridor (CPEC), according to the agreements signed so far, is expected to bring more than 60 billion USD. Bangladesh, India and Myanmar are expecting substantial investments from Japan as a part of the Bay of Bengal initiative. The Heart of Asia process would invite projects that would help Afghanistan. These are projects at different stages of their conception and investments.
If the region is better connected and integrated economically, it is bound to multiply the above investment processes and make South Asia attractive and alluring as a regional market. Given the population level and lack of opportunities, it is imperative for the region to attract global investment.
The lack of infrastructural network is the biggest huddle in this regard. The region has failed to play on its strengths and make use of existing opportunities. For example, consider the electricity sector. Nepal has a large potential to produce clean energy from its hydel sources — that could support substantial parts of South Asia. However, Nepal is unable to exploit the resource for lack of funds. Foreign investment and technology would flow into Nepal, if it can project a bigger market to the investors. Nepal alone as a market may not be an attractive proposition. If the energy produced in Nepal could be linked to a larger South Asian electricity grid, then imagine the global interest in investing in Nepal!
Development of three north-south corridors is underway in the region. There are CPEC, a corridor linking Chabahar with Central Asia and parallel networks to be built in Myanmar with Chinese and Indian investment. If these are linked together — imagine the potential of the resultant network!
On the electricity grid, there is already an existing project — CASA-1000 — linking Central Asia with South Asia. But the CASA-1000 project is limited to only Pakistan and Afghanistan as recipient countries in South Asia, and Tajikistan and Kyrgyzstan as source countries in Central Asia. Imagine an electricity corridor innovatively linking CASA-1000 with Nepal, Bhutan (which also has an enormous hydel potential), India and Bangladesh, and extending into Myanmar. This would become an irresistible project in South Asia, bringing huge investments from Canada to Japan. With such a corridor, South Asia could then function as a supplier, recipient and a transit.
Third, there have been multiple discussions on Asian Railway and Asian Highway; both projects have potential to create an amazing network transforming intra-SAARC trade, and also SAARC as a transit route linking Central Asia, West Asia, Southeast Asia and China. In the recent years, there have also been individual initiatives to create three north-south corridors. One, the Chinese and Indian infrastructural investments in Myanmar on creating parallel networks; Two, the CPEC would lead to another north-south corridor; and three, India and Iran are working towards a north-south corridor linking Chabahar with Central Asia. If these three perpendicular corridors are linked across — imagine the potential of a resultant network!
SAARC 2.0 becomes important in this context. Every project undergoes a generational transformation. SAARC needs a second generation push looking at a revival, rather than a cynical condemnation leading to its demise. It is easy to despair and give up; but one needs courage and patience to build and sustain. Let SAARC 2.0 start with energy and infrastructural networks; a strong regional infrastructural network will help countries to increase their individual growth rate.