Indo-Bangla meet: Talks on transit and water issues

THE Indian high commissioner's observation that transit rights through Bangladesh is essentially an economic issue, not political, is, prima facie, correct. In view of this, and to extend friendly cooperation in the area of transit transport, Bangladesh, after gaining independence in December 1971, restored the "Protocol on Inland Water Transit and Trade" in 1972, which was suspended by the Pakistan authorities after the Indo-Pak war of 1965.
This protocol allows India to make full use of the most important and cost effective transit operation on as many as eight inland waterway routes. India is making the most successful use of the facility, as the phenomenal increase in India's transit traffic through Bangladesh since 1972 will bear out.
Scope for further cooperation, no doubt, also exists in a mutually beneficial manner, not merely between India and Bangladesh, but also in the entire region, between South Asia and East Asia. In the immediate context, however, the concerned Saarc countries can tremendously benefit through cooperation in the area of transit transport to promote trade, transport and tourism.
Within Saarc, cooperation between India, Nepal, Bhutan and Bangladesh, can be more easily enhanced. In fact, India, Nepal and Bhutan can particularly benefit from the low cost Bangladesh inland water transport facilities, as the Indian experience will confirm.
There is urgent need for Indian consideration to allow Nepal-Bangladesh and Bhutan-Bangladesh road transit to operate up to the river heads in Bangladesh, whereby these two countries can benefit from low cost Bangladesh inland water transport and sea ports. So, a combination of road and waterways, through India and Bangladesh, would enormously benefit the two land-locked countries, thus lessening the burden on the Calcutta port.
Bangladesh has made enormous, disproportionate investment in highway construction to enhance inter-district connectivity by road, perhaps ignoring the full potential of inland water transport, which offered relatively low transportation cost on many of the comparable routes. Nonetheless, the standard of its highways remains poor and dangerous compared to the minimum standards adopted for any international highway, in Thailand for instance.
The recent World Bank study on Revival of Inland Water Transport would confirm that the prospect of inland water transport is enormous in Bangladesh. Therefore, demand for transit through Bangladesh by India, Nepal and Bhutan, can be met for a much higher level of traffic if the depth of Bangladesh rivers can be increased with cooperation from India.
The withdrawal of waters by erecting barrages across almost all rivers, including the Ganges, has been detrimental for everyone, including India's interest in terms of securing year-round transit facility from the low cost inland water transport system. There is a possibility that larger vessels can be used at lower unit cost throughout the year. For Bangladesh, it has been an economic disaster. Bangladesh must, therefore, raise this issue in the meeting on transit and water in Delhi.
Also, the Bangladesh highway system, as its very low standard of safety would confirm, is not fit for heavy road transit traffic. Besides, the high cost of fuel and steel, which are likely to go even higher, will make road transport operation increasingly more prohibitive for all the countries, apart from the environmental damage that heavy road traffic would inflict on the country.
Bangladesh has no aggregate, thus, road building based on imported aggregates and bitumen, among other imported items, will make road transit haulage less viable economically. However, there are many other technical issues, which would need in-depth examination by the concerned experts. Thus, for everybody's interest, the Bangladesh inland water transport system should be urgently revived.
India can make the most important contribution by releasing not only the agreed upon quantity of water but also by augmenting its discharge. In the coming Delhi meeting, Bangladesh should make a special plea for India's cooperation in this respect, on economic grounds alone.
India's recent request for gas pipeline transit from Myanmar to India through Bangladesh should have been subjected to detailed technical and financial study for mutual benefit. Bangladesh will itself need, before long, to import gas from Myanmar. The gas pipeline could easily attract foreign private investment, and on a BOT (build, operate and transfer) basis Bangladesh could become the potential owner of the pipeline at a future date.
Given a captive market and safe investment, everyone concerned could benefit. India could obtain gas without having to invest in the pipeline, and Bangladesh could easily attract foreign private investment on a BOT basis, and, given the long life of the facility, it could earn an enormous amount of rental and transit income for many years in the future. Bangladesh may still explore this possibility in the forthcoming meeting by way of offering cooperation in transit facility to India for the Myanmar gas.
It is just such an investment in the infrastructure field, where one country makes investment through BOT, thus acquiring ownership of the assets at a future date that brings benefits to itself as well as to its neighbours at a low marginal cost. Given an appropriate regulatory environment, non-recourse financing in the shape of foreign private investment can easily be attracted.
The operation is literally in a captive market, with virtually no risk and uncertainty, and assured rental and transit income will generate sufficiently strong cash flow for the investor to recoup the investment with profit within, say, twenty years and, beyond it, Bangladesh would become the sole owner of the transit asset (facility).
Everyone is the winner, including India, which will get transit without having to invest in the pipeline. In passing, it can be said that what applies to a gas pipeline project is equally valid for the Tata proposed steel and fertiliser factories. The BOT approach should be one of the options considered.
There are relevant UN conventions to which all the concerned countries are parties. Conceivably, a Saarc version of a convention allowing for the TIR (Transport International Routier) Carnet and TIR Carnet du Passage en Doune may be adopted in the inland waterway transit field, which could be undertaken under the auspices of Saarc and be applicable in the entire Saarc region, from Bangladesh up to Afghanistan.
It may be apt to remember that Switzerland is a landlocked country, but the Europe-wide transit transport regulatory framework is so efficient that the Swiss do not suffer from any geographical disadvantages. Similarly, the Mekong countries comprising Cambodia, China, Laos, Myanmar, Thailand and Vietnam have recently adopted a region-wide transit transport framework for the benefit of all. India can, in fact, give leadership whereby, to begin with, the eastern part of Saarc countries can move towards a more economically efficient transit transport regime. Then, when the Indo-Pakistan conflict over Kashmir is amicably resolved, all the Saarc countries including India will have easy access up to Afghanistan, in fact up to the whole of Central Asia.
A scenario can be envisaged whereby India could be a potential transit and transport bridge between East Asia and Central Asia. This is a possibility that needs to be addressed with vision, leadership and willingness to share and give. The fundamental basis of such an international transport regime is mutual economic benefit to all, at which the Indian High Commissioner has rightly hinted.
This is the message the Bangladesh delegation should take to Delhi, make its presentation at the technical level, buy time to undertake detailed technical economic studies of the various propositions and, thus, lay a basis for fuller and more fruitful discussion with the elected leaders of the concerned countries in the not so distant future. Let us hope.

Dr. Abu Reza is a transport economist and a former World Bank economic advisor to Kenya.