Inside
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Can We All Get Along? Sadiq Ahmed ponders peace, regional cooperation, and poverty reduction in South Asia Events in Afghanistan, Bangladesh, Nepal, Sri Lanka, and most recently in Pakistan, show that the constraints to development mainly relate to internal governance; the enemy is within, and not an external force. Yet, it still remains fashionable and convenient for politicians to blame external agents or forces for the those countries' social and economic problems. Continuing this old-fashioned approach has led to hostile and very complex intra-regional country relationships in South Asia, where trade, investment, connectivity and mobility of people are lowest among global regions. Scarce resources are often deployed to enforce border restrictions and finance cross-border conflicts. The result is a lose-lose situation for South Asian citizens, especially when one compares the outcomes in the European Union or the Asean countries.
This is not to deny or wish away a number of genuine cross-border issues and challenges. The most important of which is the long-standing dispute between India and Pakistan over Kashmir, which has continued to strain relations between these two large South Asian neighbours. Afghan-Pakistan relations are also constrained by allegations of support for Talibans from sources in Pakistan. Similarly, tackling the immigration and security issues in the India-Bangladesh border areas requires concerted efforts. Yet, focusing foreign and economic cooperation policies almost single-mindedly on these aspects, thus depriving them of the benefits of regional cooperation, has imposed a high cost both in terms of missed benefits and also in terms of diverting scarce resources away from internal uses with high development impact. This point can be illustrated with a specific example. Imagine a scenario where Pakistan is at peace with both Afghanistan and India, and there are no cross-border security worries beyond the norm. In this world, Pakistan will have a few additional instruments to promote development. First, the expenditure on defense can be reduced to levels that are prudent in a peace environment. These released resources can be redeployed for spending on human development, an area where Pakistan remains a negative outlier when compared with countries with similar per capita income. Second, this will free up senior management attention away from managing external conflicts to managing development in the lagging regions of Balochistan, the tribal belt of NWFP, and rural Sindh. Third, regional cooperation will become a reality. The estimated gains from higher trade and investment are believed to be enormous. Some of the largest beneficiaries will be the residents in the regions along Pakistan's borders; many of which are highly underdeveloped and lagging behind the rest of the country. There will be similar gains for Afghanistan and India. Indeed, in an environment of regional peace and better economic cooperation, the biggest gainers will likely be the poor. A careful look at South Asia's geography shows that the border areas tend to be generally underdeveloped due to poor connectivity, lack of investment and political neglect. Much of the focus typically is on military activities to secure the borders. In most cases, economic activities in border areas are constrained by poor connectivity with the regional growth centres, and by lack of access to international trade outlets like a sea-port. In many cases, these barriers are artificial in the sense that these facilities are available in nearby bordering towns of other countries, but access is prevented by border restrictions.
Despite some progress on cross-border cooperation, notably the Indus Water Treaty between India and Pakistan in 1960 and the Ganges Treaty between Bangladesh and India in 1996, regional cooperation on water management is generally inadequate. There are major water management issues in South Asia, concerning flood control, better sharing of water for irrigation and hydro-power, and the management of the Himalayan glacier melt to prevent water loss for the rivers, that will greatly benefit from better regional cooperation. Some specific examples of possible areas of regional cooperation, and the possible gains, will help illustrate the point better. Let's consider the north-east corridor of the South Asia region encompassing India, Bhutan, Nepal, and Bangladesh. Both Bhutan and Nepal are land-locked. Presently, their main access to a sea-port is through Kolkata. India's north-eastern states, surrounded by Bangladesh, Bhutan, China, Nepal and Myanmar, have borders along 98 per cent of their boundary. These states are linked to mainland India only by a narrow 27 km corridor through Siliguri. Kolkata is the nearest port for them. Three other eastern Indian states that belong to this corridor are West Bengal, Bihar, and the Uttar Pradesh. This entire region can be classified as a low-income area, although parts of Bangladesh (notably Dhaka) and West Bengal (Kolkata) are richer than the other neighbourhoods of this corridor. There are a number of constraints to development in this corridor, some of which concern internal policies and governance of the respective countries, and/or states of India. These constraints must be addressed, but alongside these national reforms better regional cooperation can make a substantial positive contribution. The priority areas for cooperation include transport, energy, and water management.
In transport, one could imagine the conversion of Chittagong into a modern international sea-port serving as a regional hub for Bhutan, Nepal, north-east India, as well as Bangladesh. The port traffic could be better connected through appropriate road-rail-inland water networks from these other countries. Additionally, given the peculiarity of geography, the north-eastern states of India can benefit tremendously through road-rail-inland waterway connections running through Bangladesh, linking these states to the rest of India. All parties will win as Bangladesh can benefit enormously from port charges and transit fees, and better connectivity for its own trade to these neighbouring countries. Regarding energy, both Bhutan and Nepal are already actively engaged in exporting hydro-power energy to their energy-hungry neighbour India. The potential in Nepal far exceeds the present level of activity, and some believe that Nepal could almost double its per capita income in a few years with appropriate investments in hydro-power along with trading arrangements with its neighbours, especially India. Bangladesh can also profitably engage in energy trade with India and Nepal. Perhaps the biggest gains are in water management, particularly for the poor. This is also the area where the vulnerability is most serious, especially for Bangladesh that lies furthest downstream before the mighty Ganges and Brahmaputra rivers meet the sea. The range of issues includes cooperative arrangements to address long-term vulnerability due to climate change (e.g. availability of water, coastal belt flooding from rising sea level), to immediate solutions to reduce flooding, making more water available for irrigation, and producing hydro-power for regional use. In the past, water agreements have been difficult to come by because of the tendency of each country to think of this resource as a zero-sum-game; more for my neighbour means less for me. This need not always be the case. A package deal that looks at hydro-energy, irrigation, and flood-control, based on an equitable sharing of financial costs and output benefits, will likely show that a cooperative solution is indeed a win-win. The poor in Nepal, Bangladesh, and India can all benefit tremendously from sound and equitable water management agreements, which ought to be the highest priority for the north-east corridor development. Similar cooperation is possible in the north-west region of the South Asian. Afghanistan is a land-locked country, and it is poorer and more vulnerable than Nepal. Internal and external security constraints have further complicated the development efforts of this fragile nation. In a peaceful external environment, Afghanistan could be better placed to address its internal security challenge as well as come to grips with the massive development needs. Being land-locked, Afghanistan must depend on the goodwill of its neighbours, Pakistan and Iran, to get access to sea-ports. Concerning land routes, historically, Afghanistan has been a leading trading nation, with linkages with Turkey, Central Asia, Middle East, Pakistan, India and China. These links were destroyed over the years by war and establishment of border restrictions. With peace in the region, Afghanistan might considerably regain its lost glory with a modernisation of its trading routes.
Indeed, efficient trade and transit arrangements with neighbours are key factors in developing exports and promoting economic growth in Afghanistan. There is also substantial scope for energy trade. Already, an important beginning is being made on the basis of the proposed Central Asia-South Asia energy project. There is considerably more long-term potential, including investment in gas pipelines that might link gas surplus, low-income Central Asian countries with the fast-growing, high energy demanding South Asian countries of India and Pakistan through Afghanistan. Pakistan and India themselves share a long, common border. With peace and better cooperation, the volume of trade and investment would likely grow manifold. The options are many, including trade and investment between the two Punjabs with a possible transit sea-link for the Indian Punjab through the ports of Karachi or Gawadar rather than the longer haul to Mumbai; and trade and investment in the Sindh corridor linked with Gujarat and Rajasthan. Additionally, this will open up doors for greater water cooperation based on the concept of Indus Treaty II, building on the successful experience of the first treaty of 1960. Both Pakistan and India are facing increasing water scarcity. Cooperation might provide an answer to resolving this common problem. All the region's countries can benefit tremendously from production integration, as in East Asia, as well as from trade in services, especially education and health. An integrated production system will ensure equitable distribution of gains from cooperation. Of course, such agreements will emerge from market forces and not from political interventions. Regarding services, with minimal restrictions on cross-border movement, centers of excellence in areas such as health, education and research can be located anywhere in the region, and need not be constrained by lack of demand. This will be particularly beneficial for consumers in smaller countries, who lack these facilities due to inadequate scale economies. Examples of successful cooperation suggest that political constraints and historical conflicts need not be permanent barriers to cooperation, nor is the presence of a dominant member country a threat to cooperation and shared gains. For example, the members of the European Union have fought numerous wars, many of them far more intense, long drawn and expensive in terms of loss of lives and material resources than South Asia. Similarly, member countries differ considerably in economic strength. Yet, they have found it mutually advantageous to come together and formulate a formidable economic union. In East Asia, the economic dominance of China has not prevented very effective regional cooperation with the much smaller Asean countries.
It is not realistic or necessary to expect that all political and social conflicts will have to be resolved before meaningful cooperation can be achieved. Indeed, economic cooperation is also a powerful means for resolving political and social conflicts. Trust and goodwill at the citizens' level can be a credible way for resolving conflicts. Economic cooperation by raising citizens' welfare can be instrumental in building this trust. There is already evidence of citizen interest in having better regional cooperation in South Asia. Political forces can provide impetus to this by reducing policy barriers to regional integration. Indeed, armed with recent economic successes, the political space for better regional cooperation is now growing in South Asia. This is a welcome development, and one hopes that South Asian leaders capitalise on it by making a stronger effort to develop concrete regional partnership agreements that could yield tangible results in terms of economic benefits for their citizens. Sadiq Ahmed is with the World Bank in Washington DC. The views expressed here are his own. |
Importantly, South Asian countries often share a scarce common resource, which encompasses several countries. The most well-known example is the water flow from the Himalayan mountain range that feeds the three mighty rivers -- Indus, Ganges, and Brahmaputra. These rivers are the lifeline for an estimated 500 million people, mostly poor, in Bangladesh, Nepal, India and Pakistan. 
