At the time, we were confidently assured by the government that the treaty could be signed at any time before the end of 2005, and that Bangladesh would sign as soon as we had successfully negotiated our proposed route from Myanmar through Teknaf as part of the Asian Highway network.

I wrote then that this was highly unlikely to happen, because at no time had Myanmar agreed to this southern route being included in the network, and that in fact the road that was being contemplated for the route remained largely unbuilt.

Well, it is a year and a half later. The southern route still has not been agreed to, and we are now once again reduced to going to Escap (under whose auspices the project has been undertaken), cap in hand, to beg for a special extension to sign up to the agreement.

What good such a special exception will accomplish remains unclear, since the chances of the southern route being included in the Asian Highway network remain as remote as they ever were.

Chalk this one up as another embarrassing diplomatic failure on the part of the government due to its poor grasp of international affairs and its even poorer grasp of basic economics.

The fiasco is reminiscent of the Bimstec free trade negotiations, where we were again initially left out of the original signing of the agreement, because we were holding out for compensation for the loss of import duty that would accompany the arrangement. Eventually, and embarrassingly, we had to back down and sign anyway.

In any event, the point raised by Bangladesh with respect to Bimstec free trade was an absurd one. It is not persuasive to, on the one hand, complain about the flooding of the local market by imported goods, and then, on the other hand, try to argue that the economy would implode if we had to sacrifice the revenue generated from import duties.

The whole point of a freer regional trading regimen is that it will boost our exports, which should more than make up for the revenue loss from the reduction in import duty. If this is not the case, then we should really stop complaining about our balance of payments deficit, and think about financing the government entirely from import revenues.

On a domestic level, there was the decision in the last budget to slap a Tk 900 tax on sim-cards for mobile phones. This tax has had the effect of retarding the growth of the mobile phone market, one of the bright spots in the economy over the past few years, making it much harder for small businessmen and independent contractors to afford mobile phones (at a time when the mobile phone companies had been slashing their rates to increase their customer base).

The up-tick in economic activity that would result from more people being able to afford mobile phones was sacrificed. In addition, since the government collects tax on each phone call made, the smarter revenue model (that has been employed in every other country around the world) would have been to encourage the sale of as many sim-cards as possible, and to collect revenue on the back end.

Policy making in Bangladesh is littered with examples of similar imbecility. Sadly, the political debate in the country almost never focuses on such issues, but rather on issues such as who declared independence, and now who is to blame for the terrorist threat.

This is not to say that these are not important issues that have their place and need to be debated. The rise of religious extremism, especially, is an issue that urgently needs to be discussed in the political arena right now.

But the inevitable casualty of focusing on such issues to the exclusion of all others is coherent and cogent economic policy that is well thought-out and enacted in the public interest. One could argue that it is this neglect of hard policy debate that has in large part contributed to Bangladesh's relatively anemic development and the stubborn resilience of the various social and economic problems that we face as a nation.

We are simply not having the kinds of policy debates that the country needs, and as a result the policies that are ultimately enacted are largely ad hoc, not well thought-out, and often bad for the country, with little or no fall-out for those who enact them.

It is imperative to shift the focus of debate in this country from abstruse issues such as who declared independence to debating a policy agenda that would govern how we address the challenges faced by the nation.

The Asian Highway fiasco shines a useful spotlight on the backward thinking of the current administration and their limited grasp of policy matters.

The main reason that the government objects to the existing route is that it remains hostile to the notion of India having transit rights through Bangladesh. The reasons for not granting such rights remain utterly specious -- it would be in Bangladesh's national interest to do so -- and in any event, signing up to the highway network would not grant India automatic transit rights.

What the government fails to see is that the issue now is no longer just India. It is a question of Bangladesh being a conduit between India and south-east Asia and southern China, and beyond. The advantages that would accrue to Bangladesh from being at the centre of this regional transportation network are obvious and immense (most recently extolled by the ADB).

On a visit to the Thai foreign ministry I made earlier this year I learned that Thailand, Myanmar, and India were building a tripartite road that would transport goods between India and Thailand, but that the road bypasses Bangladesh because of our opposition to Indian transit.

India, for its part, is busy building another network of roads in the north-east that will ultimately bypass Bangladesh, even though this adds over 500 km to the route from the north-east of India and beyond to eastern India, and is costing an astronomical sum of money to build.

The southern route for the road network that the government has been pursuing will not come into being for the simple reason that Myanmar opposes it. The route runs through the country's sensitive Arakhan region, which the Myanmar authorities do not wish to open up to transnational trade.

When the road is complete, it will be useful for trade between Myanmar and Bangladesh. But neither Thailand nor any other country will be permitted to go though to Bangladesh through the southern route. Nor is Thailand much interested. It is mainly interested in India trade, and is busy building the tripartite road in furtherance of this objective.

China, too, has nothing to gain from the southern route into Bangladesh, and is perfectly happy with the northern route. China and the countries of south-east Asia are mainly interested in the Indian market and would like nothing more than access to India through Bangladesh, as this is the quickest and cheapest route.

But Bangladesh's continuing recalcitrance on permitting India transit rights through Bangladesh is now having the effect of damaging our relations, not only with India, but with China and south-east Asia as well, and will in the long-run cost us untold sums of money due to the economic opportunities lost.

Basically, Bangladesh's objection to Indian transit calls into question our involvement in the entire Asian Highway project, which is premised on the benefits of opening up transportation networks transnationally, and if we do not resolve our issues with granting India transit rights, the network will eventually simply bypass us, and we will be left on the outside permanently.

The bottom line is that the current administration's short-sightedness and amateurish grasp of economics and international affairs has completely derailed our involvement in a project with unlimited potential for the national good, and has the added detriment of making us look ridiculous in the eyes of the world due to our backward thinking.

Nice work, guys.

Zafar Sobhan is Assistant Editor, The Daily Star.