Heeding the lines on the map
At the heart of South Asia's poor integration is India-Pakistan rivalry, further complicated by China-Pakistan proximity and India-China hostility. A new dimension has been added with souring of Pakistan-Bangladesh relations and the India-China tug of war over Bangladesh. The time has come to make a paradigm shift in South Asia's regional integration strategy. Politics and religion aside, across India, Pakistan and Bangladesh (IPB) there are common socio-cultural bonds, and people-to-people connectivity remains positive.
Caught in a tangle
Today the big three of South Asia are caught up in a complex quagmire, both within and beyond the region. The remaining five—i.e. Bhutan, Nepal, Maldives, Sri Lanka, and Afghanistan—are paying the price of regional disintegration caused by unresolved puzzles having roots in the China-IPB (CIPB) axis. If the big three can have a strategic partnership that also factors in China, the remaining five can effortlessly fit into positive regionalism with a win-win situation for all.
IPB account for approximately 95 percent of South Asia's GDP and population. Along with China, they account for 18.5 percent of global GDP and 41 percent of global population. South Asia's intra-regional trade, currently 5 percent of total trade, can grow to USD 80 billion from the current USD 28 billion, the lion's share being within IPB. Pakistan and India have potential trade capacity of USD 20 billion compared to the current USD 3 billion. Underdeveloped transport and logistics services and bureaucratic procedures are deterring India-Bangladesh cross border trade, which can grow by 300 percent. The Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC) has a pivotal position in developing joint investment agreements but sluggish progress in infrastructural development has rendered the corridor nearly comatose. Due to its common borders with China and India, Myanmar's significance also needs to be factored in.
India continues to be the natural choice for external investors including Chinese multinational enterprises like Alibaba and Xiaomi. In 2016, foreign direct investment to Pakistan rose by 56 percent, largely due to Chinese investment in Belt and Road Initiative (BRI) infrastructure. Although the China-Pakistan Economic Corridor (CPEC) is being developed as a bilateral initiative, if Indian sensitivities can be addressed, it can be a multilateral project, integrating India as well as other South Asian and Central Asian regions. China has already pledged USD 38 billion to Bangladesh under the BRI. Synergetic integration of the economic corridors with other BRI projects can accelerate inward investment into IPB.
Due to cross-border barriers and lack of transport facilitation among IPB, freight movement is taking place along expensive routes, escalating investment cost. Movement of trucks across the international frontier is confined by absence of cross-border agreements between India and Bangladesh and India and Pakistan. China is injecting huge funds into physical infrastructure such as Pakistan's Gwadar port project and USD 20 billion in various Indian industrial and infrastructural projects. China has committed USD 1.4 billion for building Colombo Port City and is set to invest USD 1 billion more.
Rail connectivity is restricted due to technical problems of different gauges, track structures, signalling and so forth. Absence of a multilateral agreement has restricted the realisation of the railway potential. The deep-pocketed Chinese can invest in land and rail infrastructure to develop both inter-regional connectivity and intra-regional connectivity. Although India and Bangladesh have started exploring opportunities using Ashuganj inland port, regional inland waterways remain unexplored. Air cargo flights are encumbered by limited access to Indian airspace by Pakistan and vice-versa. China can lead in transport and transit agreements to facilitate smooth movement of freight and passenger vehicles across IPB resulting in integration with China and also South Asia.
The supply-demand gap of power in IPB is estimated to be 18,707 MW. To unravel the full potential, energy treaties based on renewable sources have become imperative. China and India are shifting from fossil fuels to renewables. With greater electricity generation and utilisation of domestic energy endowments, combined efforts of BCIM, CPEC and the proposed China-Nepal-India (CNI) Economic Corridor under BRI, can capitalise on regional energy potential.
By 2050, China, India, Pakistan and Bangladesh will experience water shortages. The three largest trans-boundary river basins, Indus, Ganga and Brahmaputra, are all within CIPB. This represents a huge potential for water-sharing and hydro power projects across the basins, but political mistrust is an impediment. The Zangmu hydroelectricity dam, situated in the middle reaches of the Brahmaputra, has raised concerns in India over downstream water supply. This damming, along with that of the Ganga, could exacerbate Bangladesh's downstream water scarcity.
While there exist bilateral river-water sharing treaties between India and Pakistan as well as India and Bangladesh, China is absent except for a hydrological data-sharing collaboration. China has expressed interest to pursue water-sharing treaties and the other three affected can come together in a collaborative framework. This can boost the livelihoods of millions across the region.
India and China are leading globally in terms of Internet and smartphone users, but Internet penetration for these four countries is below 55 percent, representing immense potential. Bangladesh, Cambodia and China have signed a framework to strengthen digital regional trade. China's BRI initiative is projected to increase connectivity by developing digital infrastructure.
Between 2016 and 2020, international bandwidth is expected to grow at an average of 43.5 percent across CPEC and 46.3 percent across BCIM. Higher broadband connectivity and Internet access can boost regional e-commerce. Digital connectivity can act as the gateway to a holistic transformation of the region via the CIPB conduit.
IPB fail to attract sufficient tourists due to poor civil aviation connectivity, complex regulations and lack of visa liberalisation procedures. Of China's total outbound tourists, only one percent are to IPB. Inadequate, expensive and mediocre travelling facilities against the backdrop of pickpockets, burglary, and sexual assaults have resulted in tourists lacking interest in the region. Rooms that cost USD 400 a night in Delhi or Mumbai would cost hardly USD 100 in most parts of China. China is unable to attract students from South Asia against the improved facilities provided by the US and UK. Only five percent of outbound students of IPB go to China, compared to 22 percent to the US. If these opportunities are tapped, it would enhance mobility of both tourists and students.
Solving the jigsaw puzzle
The CIPB axis is an open-ended chess game played out against cross-border conflicts. A strategic collaboration that rises to the occasion, looking beyond historical animosity and misgivings, can unlock a new era of regionalism whose benefits far outweigh negatives. Solving the jigsaw puzzle will need political statesmanship which will see friends and foes, living next to each other, knowing where to connect and when to disconnect.
Syed Munir Khasru, Chairman of the think tank, The Institute for Policy, Advocacy, and Governance, is based in Dhaka.
This article was originally published in The Hindu on April 5, 2018.