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Tag Archives | SAARC

SAARC: A Sunk Cost

Following the Uri Attacks, the 19th SAARC Summit that was due to take place on the 15th and 16th of November has been postponed. India refused to attend the summit, placing the blame on cross border terrorism perpetrated by a single country. Soon, Bangladesh, Nepal, Sri Lanka and Afghanistan also chose to opt out of the summit meeting which was due to take place next month. Pakistan placed the blame on India for derailing processes of regional cooperation and reiterated its commitment to the SAARC charter. For now however, the seven heads of South Asia will not be meeting until India and Pakistan have simmered down tensions.

The Indian media has been quick to attribute the postponement of the SAARC meeting to the success of Modi’s diplomacy. However, SAARC meetings have always been susceptible to bilateral tensions. While the group is supposed to meet annually, it concedes that the regional organisation meets only once in a year and a half or so. No wonder SAARC’s initiatives have been characterised by failure: the countries cannot fulfill commitments to meet but intermittently.

The first time the SAARC Summit was derailed was in 1989 when Sri Lanka protested against the delay of the IPKF’s withdrawal from the country. The 7th Summit in 1992 was pushed by a year because of the Babri Masjid riots. A year later, India-Pakistan contentions impacted SAARC processes and the 8th Summit was pushed to 1995. The period between 1998 and 2003 saw repeated postponement of the 11th Summit because of a number of low intensity conflicts between India and Pakistan (from the Kargil War in 1999 to the Parliament Attacks of 2001). The 12th Summit was derailed because of the coup in Nepal and the Dhaka bombings.  After the 26/11 Attacks, the summit was again pushed by a year because of contentions between India and Pakistan. 2012 Summit

The postponement of the SAARC Summit is not a victory of Indian diplomacy but a feature of the SAARC mechanism. Unlike organisations like the ASEAN which have managed to keep channels of communication open even during times of conflict, SAARC’s history remains intertwined with the Indo-Pak power politics. It is unable to accomodate power dynamics of the region and allows for bilateral contentions to easily derail any processes. Even if the SAARC summit had taken place, what would have the result been? SAFTA is dead while the South Asian Economic Union is a pipe dream; regional trade remains at a meagre percentage.

At the 2014 Kathmandu Summit, hullabaloo was created about the launch of a SAARC satellite and cooperation of forces to deal with disasters. The Kathmandu Summit had taken place in the first year of the Modi rajya and there was much talk of the neighbourhood gaining importance- a move indicated by Modi’s unprecedented invitation to the heads of South Asian States to attend his swearing in ceremony. Two years later, bilateral ties between India and the remainder of the South Asian states (the case of Pakistan is debateable) are definitely on the upswing, however, the SAARC remains as ineffective as it has always been.

India needs to acknowledge that this multilateral initiative is not a success and direct its attentions towards the external neighbourhood. It needs to de-hyphenate itself from being merely a South Asian power and look at a larger region such as the Indo-Pacific. India is gradually improving ties with countries in South-East Asia and West Asia, which is the way to go. Maybe it is time to recognise that SAARC is a sunk cost and invest those resources in a more fruitful venture under the larger Asian security architecture.

Hamsini Hariharan is a Research Scholar with the Takshashila Institution and tweets at @HamsiniH

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India-Pakistan Rendezvous: Will terrorist attack destabilize the relation

 

Prime Minister Modi has called for a prompt and decisive action against those involved in the terror attack at Pathankot air base. Speaking to Prime Minster Nawaz Sheriff, Modi expressed his grave concern on the terror activities on the Pakistan soil and has called for an actionable response. Disrupting bilateral talks between India and Pakistan could be attributed as the key reason to this attack and a similar pattern has been sighted in the past.

A noticeable interface at the recent Paris Climate summit, on the sideline was the India-Pakistan Prime Minister talks that paved the way for a crucial Ministerial level dialogue. The rare meeting of the NSA (National Security Advisor) between India and Pakistan was described as cordial, open and positive. This was followed by the visit of India’s Foreign Minister Sushama Swaraj to the Heart of Asia Conference at Islamabad. Prime Minster Modi’s visit thereafter to Pakistan and meeting his counterpart Nawaz Sheriff, was seen as a significant bilateral development and an unprecedented progress in India-Pakistan relations. Interestingly this was followed several engagement like the cricket diplomacy and  the assurance by Modi to attend the SAARC summit to be held in Pakistan next year.

Despite the recent terror attack at the Pathankot Air Base and the Indian Consulate at Mazar-i-Sharif, Afghanistan with several reports confirming the involvement of Pakistan militant outfit Jaish-e-Mohammed (JeM), the rendezvous between India and Pakistan continues. However, Prime Minster Modi has reiterated the fact that such a dastardly terrorist attack was carried out from the Pakistan soil and has insisted firm action. Normalization could succeed only if action on perpetrators are taken as promised by Pakistan. There is no ambiguity in the terrorist attack and India has provided specific information to Pakistan to investigate the strike. Prime Minster Modi has demanded stern action to be taken against the perpetrators.

On the face of hope, there is a movement for comprehensive bilateral dialogue as against a composite dialogue. The Foreign Secretary talks as of now does not stand cancelled. Instead of confrontation and antagonism there is an unruffled silence. There is a regional implication to this reticence, both India and Pakistan are competing for influence and stabilization in Afghanistan. Several common interest like trade, security, energy and terrorism underpins this relationship. Modi’s address at the Afghan Parliament dawned a ray of hope, positive spirt and an earnest effort to dispel the Pakistani notion of distress on India’s involvement in Afghanistan.

There are several drivers to this stabilization process and some of the key factors would be energy assets and viable Central Asian markets for both India and Pakistan. Afghanistan is a key promoter of regional stability and is looking forward to an era of economic and security cooperation. With an emerging India-Afghanistan-Pakistan triangular relation, each of them are exhibiting high level of maturity and commitment. The recent inauguration of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is yet another important strategic calculi.

Regional rapprochement has not been very successful and largely the South Asian politics have been dominated or clouded by India-Pakistan relations. Prime Minister Modi on assuming office has committed to sustain normalcy in the region. Earnest effort to adhere his commitment was seen in several of his initiatives towards the region. The recent   Modi’s visit enroute from Kabul to Pakistan is an important milestone in the process of regional stabilization.

Terror attacks and threats have been the key destabilizing factor in the area. Several terror outfits coexist and cohabit in the region and they have been supported largely by fundamental and fanatic groups. Countering terrorism has been a daunting task and several peace process to find a solution to this enduring problem has dominated the past years. Thus countering terrorism as a regional phenomenon would succeed only if there is a single peace process outcome in which both India and Pakistan are involved. Pakistan counter terrorism operation in the tribal region along Afghan border is underway. A step to regional balance and progress is on cards and India’s involvement is seen as positive step in this initiative. South Asian diplomacy has been advancing well in the past few months with several rounds of talks at the Government level and the impromptu visit by the Indian Prime Minister.

Balancing the regional stability is a daunting task, there are several glitches to this progress. It is not the very first time that peace process or normalization talks have been stalled. The question that remains is, will the recent terror attack at Pathankot air base set the clock behind in India-Pakistan Relations.

 

Priya Suresh is a Research Scholar at the Takshashila Institute.  She tweets@priyamanassa

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Looking beyond the debate of bilateralism versus multilateralism

by Varsha Ramachandran

It is important to not to look at bilateral and multilateral engagements as being mutually exclusive of one another. In fact, bilateralism is the first step towards broader economic integration.

For a country to enhance its national power in the era of globalisation, it is important that it has strategic, yet unbiased economic agreements with countries across the globe. Taking this idea of economic integration further is the concept of one global economy which involves unification of economic policies, monetary policies, abolishing tariffs and taxes between various countries, and providing promising prospects of peaceful livelihood.

To engage internationally, a country can enter into several kinds of agreements. Such agreements can be classified into two categories based on the number of countries involved. Bilateral agreements are the ones that exist between only two countries, while multilateral agreements exist between several countries. Both these agreements can further be classified as Free Trade Agreements (FTAs), which does not involve any kind of tariff or non-tariff barriers to trade, or Preferential Trade Agreements (PTAs) which involves partial elimination of tariff or non-tariff barriers.

The debate on advantages and disadvantages of bilateral and multilateral trade agreements has existed for many decades in the field of international trade. Numerous studies have been conducted, using empirical data, to determine the success or failure of bilateralism and multilateralism. While the general consensus among economists is that multilateralism is more effective in the long run, this is sharply contrasted by the failure of the WTO multilateral agreements in the past few years and the success of multiple bilateral agreements instead. Economists who believe in multilateralism however point out that although bilateralism and regionalism increases trade, it harms the welfare of the world trade system.

The first half of nineteenth century saw a more closed global economy where nations engaged in bilateral agreements. Studies have noted that bilateralism contributed majorly towards harming the world trade during the inter war period. Economists argued that the highly discriminatory agreements made war inevitable. Similar opposition towards bilateral trade occurred post the Great Depression where it was argued that discriminatory agreements created vicious cycles of rising prices which further deepened economic depression.

The “Bandwagon Effect”, a situation where the non-trading partners will try to enter an existing bilateral agreement, thus rendering the original agreement less meaningful, is considered to be the biggest shortcoming in bilateralism. Creation of bilateral agreements can immensely complicate the trading environment due to creation of multiple rules. Most of these agreements have their own specific rules of origin which only complicate the production process and thus business and trade. At the same time, this also complicates the functioning of customs union as they have to assess same product differently for different countries. In the words of Professor Bhagawati, this is known as the “Spaghetti Bowl” phenomenon.

There is enough evidence to prove the failure of bilateral arrangements made way for openness among economies around the globe thereby leading to the formation of International Monetary Fund, World Bank, GATT, etc. Multilateralism soon gained popularity among policymakers as they started to explore the benefits of multilateral trade by removing stringent discriminations.

Though bilateralism allows countries to venture into different territories of similar interests, facilitate trade diversification and provides for simplified processes, multilateralism is often preferred because the risks and responsibilities associated with it get distributed among the members. Multilateralism acts as a central point to systematically deal with global concerns such as environment. Multiple countries can achieve better results than single countries working independently. Transaction costs reduce when nations pool in their resources. Multilateralism leads towards the realization of “one world, one law” with minimal complications and complete cooperation among all nations. It ensures that all nations participate in the management of global affairs.

Is multilateralism then the best option? Unfortunately, no!

The economic and geopolitical multilateral cooperation of eight countries of South Asia, SAARC, is a perfect example of the failure of a multilateral setup. Two of the largest economies of the SAARC, India and Pakistan have had inherent and long standing political tensions. The Indo-Pakistan dispute over Kashmir has proved to be one of the biggest impediments in the progress of SAARC. This shows that failure of a strong bilateral relationship between two countries will only cause a multilateral agreement including the same two countries to fail.

Economists have also pointed out some rather interesting shortcomings of multilateral arrangements. For instance, the United States was accused of having become increasingly dominant and inclined towards acting unilaterally, thus, making a number of developing nations question the very relevance of multilateralism. It is much more complicated and challenging as it involves many nations coming to a consensus which may become a tedious task. It may even happen that certain issues remain unresolved due to lack of cooperation among few countries.

Despite bilateralism and multilateralism, both, having strong drawbacks, bilateralism is believed to be here to stay. The fact is that bilateralism has always been around makes it very unreasonable to believe that it will cease to exist. The need of the hour is to identify how best bilateral trade can be used in the ultimate goal of reaching complete free trade. Practical ways of how integrate the two can be identified. For instance, a stronger multilateral system that has a bigger control over bilateral trade agreements, which are used to supplement the multilateral trading system by addressing issues that are more specific to countries and regions.

Multilateralism is necessary to reach a world of free trade. The first step towards multilateralism is, of course, bilateralism. Better regulation and a robust policy framework will educate nations engaged in bilateral agreements to expand their horizons and become part of multilateral trading blocs.

Varsha is an intern at the Takshashila Institution.

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