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India-Pak tensions hurting South Asia economy

September 27, 2016

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India-Pak tensions hurting South Asia economy

Zahid ImranbyZahid Imran
September 27, 2016
in World Digest
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Khaleej Times
Waqar Mustafa


It was spring time in the salubrious Bhutanese capital of Thimphu six years ago. Bhutan, the host country, had set up a village to house leaders of the seven other South Asian member nations – Afghanistan, Bangladesh, India, Maldives, Nepal, Pakistan and Sri Lanka – attending the South Asian Association for Regional Cooperation (SAARC) conference there. Indian Prime Minister Manmohan Singh and Pakistani Prime Minister Yousuf Raza Gilani were put up at villas just metres away from each other. An op-ed article in a Thimphu tabloid, Bhutan Today, commented whether ‘it is the primitive, rustic but effective Bhutanese trick’ to force Singh and Gilani to meet at least like neighbours. “How can they ignore each other when all the state heads in the village will greet each other like ‘good’ neighbours?” Yet they did. Staying in the earth-coloured double-storeyed Bhutanese structures in the enclave specially built for the 16th summit of the regional grouping, they preferred not to hail each other!
At the summit inaugural and outside the venue, the other six SAARC leaders expressed their unease at the India-Pakistan dispute putting in the shade the summit of an organisation that had little tangible to show as compared to similar blocs in South East Asia and East Asia. The trick of accommodating the leaders of India and Pakistan in villas where they could greet and meet each other easily showed how desperate other nations in the regional combine were to see that the two countries’ poor relations did not eclipse the summit. They did not oblige them. However, the other leaders kept trying and ultimately won. Singh and Gilani took a walk together at the insistence of their SAARC colleagues who thought a stroll in the picturesque surroundings might help matters. To quote a SAARC press statement then: “Insisted by the leaders of [South Asian] delegations, both the prime ministers walked together in the SAARC Village and exchanged views. They strolled for sometime before returning to their respective villas.”
The two countries’ strange ways is not a rarity. Indian Prime Minister Narendra Modi made a surprise stopover in Pakistan in December last year to meet his counterpart, Nawaz Sharif, the first time an Indian premier had visited the neighbouring nation in over a decade. The visit was requested by Modi just hours earlier before he flew back home from Afghanistan. Two years earlier, at the Kathmandu SAARC summit, Sharif and Modi were painstakingly avoiding a public handshake, but dishing out no meaningful agreement, all that the regional summit could cherish was the handshake that came at long last. Tensions between the two countries have been running high in the aftermath of violence in India-administered Kashmir for the last couple of months. Recently at SAARC interior ministers’ conference in Pakistan’s capital Islamabad, Indian and Pakistani ministers barely shook hands and made critical remarks apparently aimed at each other’s governments and Indian finance minister Arun Jaitley skipped another regional conference. The moot pushed for the fast-track formation of the South Asian Economic Union (SAEU) to ensure larger investment inflows, higher trade volumes and energy generation.
Home to 40% of the world’s poor, South Asia, which can make big gains in energy and trade, is being held back by lack of economic integration, courtesy interstate conflicts. South Asia’s 1.7 billion people include 26% of the world’s youth. Less than 2% of total trade investment made by South Asia is intra-regional. Less than 20% of the South Asia’s hydropower potential has been realized so far making the region highly dependent on coal and imported oil. “If energy-rich nations – Bhutan and Nepal – shared their power with their neighbours, South Asia could double its electricity transmission connectivity and trade by 2020. This would benefit nearly 400 million of the region’s people who lack reliable access to electricity, and give a boost to businesses that cite energy shortages as their biggest drag on growth,” says Annette Dixon, vice-president of the South Asia region of the World Bank.
“South Asia’s intra-regional trade is the lowest in the world, making up less than 5% of its total trade, compared with 25% within the Association of Southeast Asian Nations. If barriers to trading with neighbours were removed, intra-regional trade in South Asia could increase from the current $28 billion to $100 billion over the next five years,” she adds.
So, while India and Pakistan are at loggerheads, hostage is the region’s fate. Unless they talk their issues out, other members of the SAARC can’t move forward on anything that involves or impacts the region. The 19th SAARC summit is due to take place in Islamabad and Murree, Pakistan in November 2016. As with other summits, the event could offer the two countries a big opportunity to mend fences. To quote top American diplomat Henry Kissinger, “The advantage of a summit meeting is that the participants possess the authority to settle disputes. The disadvantage is that they cannot be disavowed. A summit conference can make binding decisions more rapidly than any other diplomatic forum. By the same token, the disagreements are liable to be more intractable and the decisions more irrevocable. The possibility of using summit conferences to mark a new departure in the relations of states should not be underestimated.”
Things suddenly stop being bad when leaders meet. And we have seen it happening after the Bhutan summit walk and the recent hug-and-tea in Lahore. Indian Minister of External Affairs Sushma Swaraj said in March that Prime Minister Modi had accepted Pakistan’s invitation to attend the SAARC summit. The summit takes place only when leaders of all member countries are present, and so, risks being put off if he doesn’t turn up. It would be unfortunate for poor people of the region if peaceniks’ hopes for another stroll down some trek at the hill station of Murree are dashed.

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