The Hindu Business Line : 14th SAARC SUMMIT — Will it rise above `just another meet'?

As yet another SAARC summit began in Delhi on Tuesday, it once again raised expectations that India and Pakistan would resolve their political differences and the South Asian Association for Regional Co-operation will finally emerge a body with some political and financial muscle. Notwithstanding that several times in the past such hopes have been belied by the stand-off between India and Pakistan, particularly over such contentious issues as Kashmir.

Travel to Pakistan and soon enough you will find everybody — the man on the street, the politician, the businessman or the professional — holding forth with great passion on how "India wants everything to be normalised... business, trade, travel wagairah sabhi karengey lekin Kashmir ka mudda hal nahi karengey (we'll normalise everything, but do nothing about resolving the Kashmir dispute.) How is this possible?"

But there are indications that this mood is now changing. You may choose to give it any reason you please — the Americans breathing heavily down President Pervez Musharraf's neck, asking him to deliver on his promise of curbing terrorism; the average Pakistani getting fed up with decades of misrule and enviously watching India make much greater progress; or the brickbats Islamabad is receiving for supporting Kashmir militancy, at international platforms where terrorism is certainly not the flavour of the day.

Changed mood?

The change in Pakistan's mood vis-à-vis improving trade and business ties with India was evident from a news report published on March 9 in the Pakistani newspaper Daily Times. It was a routine report on how the Energy Ministers of SAARC countries had approved India's proposal to set up a "common energy grid" to allow flow of electricity across the region.

It was decided to request the Asian Development Bank to prepare a feasibility study of a common grid and energy cooperation between the two countries. Talking to the newspaper, Pakistan's Petroleum and Natural Resources Minister, Mr Amanullah Khan Jadoon, lauded the Indian proposal as an "original idea" and said: "This is a positive proposal and it found across-the-board support amongst member countries."

Very rarely do Pakistan politicians praise Indian ideas and proposals. But what the Minister said next was even more surprising. Mr Jadoon also sought India's help to extract the huge coal deposits in his country.

"We have 184 billion tonnes of proven coal deposits in which 175 billion tonnes are placed in Tharparker in Sindh. India has lot of experience and technology in mining. We have asked Indian experts to visit Pakistan and help us in refining and excavation of coal."

Improve trade ties

Responding to a question from Business Line on the change in tone while talking about business ties with India, Mr Majyd Aziz, President of the Karachi Chamber of Industry and Commerce, welcomed the "new confidence building measures" and said that Pakistani businessmen had always wanted to enhance bilateral trade between India and Pakistan.

"At our Chamber we have been openly talking about increasing the Positive List. We believe that we should talk more about regional trade, as we understand each other and our costs are addressed. But we are not happy with the non-tariff trade barriers and imposition of para-tariffs." Mr Aziz added that he and his colleagues in business and industry are "strongly supportive of the Iran-Pakistan-India pipeline. We believe that this pipeline would be very beneficial to Pakistan and we should strive to ensure that this project becomes a reality. We also support any and all efforts to ensure continuous supply of power if we have to prosper and attain some position in the global marketplace."

So energy is clearly an area where there is tremendous scope for collaboration among the SAARC countries. Taking note of yet another opportunity that presents itself at the Delhi SAARC meet, at a media briefing in Washington held on Monday, Mr Praful Patel, World Bank Vice-President for the South Asia region, said that the region's unprecedented growth, averaging close to 6 per cent a year since the 1990s, had created "a new momentum for closer regional integration".

Such close cooperation, he added, "can be a very effective tool in increasing trade, relieving energy shortages, improving connectivity, increasing investment, and promoting peace and stability."

But as a World Bank study on South Asia says, this is the "least integrated region in the world" with intra-regional trade at less than 2 per cent of GDP. Compare this to East Asia where the intra-regional trade is more than 20 per cent of GDP.

Says the report: "Annual trade between India and Pakistan, the bulk of which is routed through Dubai, is currently estimated at $1 billion, but could be as great as $9 billion. In addition, cross-border investments, and the flow of ideas, crudely measured by the cross-border movement of people or the number of telephone calls, are all low for South Asia."

Huge benefits

Mr Patel added that starting from such a low base, greater integration among South Asian countries could bring huge benefits to its people. "Intra-regional trade in South Asia can increase to $20 billion by 2010 if trade barriers are lifted. Benefits from energy trade can also be huge. Nepal has the potential to produce more than 40,000 Mega Watts of hydro power, most of which can be exported to India, generating $6-10 billion per year of revenues for Nepal."

Dizzy figures, all these. But is anyone, particularly the SAARC leaders, listening? India's proposal to put in place a regional mutual legal assistance treaty has not found favour with Pakistan, which has opposed the extradition clause proposed by India.

Business synergies

But what we need to remember is that while we keep scoring self-goals, the rest of the world is surging ahead. For instance, though South Asia has significantly reduced import tariffs, the cost of trading across the borders of these countries is one of the highest in the world.

"Crossings between India and Bangladesh are so heavily congested that queues often exceed 1,000 trucks on the Indian side with the result that crossing time can take 99 hours instead of 21 hours without delay. Trade can more than double if appropriate regional agreements on roads, rail, air, and shipping are put in place enabling seamless movement," says the World Bank report.

Take, for instance, the power sector. In Pakistan, it is estimated that businesses lose 5.6 per cent in annual sales revenue owing to power outages against a reported loss of 2 per cent by their Chinese counterparts. Bangladesh too continues to be dogged by a poor electricity network.

At present only India, Bhutan, and Nepal trade electricity. "Bangladesh is endowed with natural gas reserves, but gas trade is constrained by the region's inadequate infrastructure and political misconceptions. Pakistan and Afghanistan can play an important role as transit states for the rest of South Asia, as they provide the best route for access to Central Asia's energy," says Mr Shantayanan Devarajan, World Bank Chief Economist for South Asia. At the Delhi summit, Afghanistan becomes the eighth SAARC member.

Also, consider this nugget: It takes on average more than 33 days to export from South Asia compared to 12 days from OECD (Organisation for Economic Cooperation and Development) which has 30 members as far flung as Japan, Korea, Mexico, the US, Australia, Canada and most European countries. It takes more than 46 days to import into South Asia compared to 14 days for the OECD countries.

It is not as though the leaders are not aware of the shortcomings. The Pakistan Prime Minister, Mr Shaukat Aziz, told the Summit that "mutual distrust" and grappling with "conflict management" had led to the regional grouping's failure to accomplish its 20-year old aspirations. "The consequent drain on our energies has held us back from achieving the goals that we have set for ourselves in the SAARC Charter."

The Prime Minister, Dr Manmohan Singh, too put his finger on the pulse when he said in his inaugural address: "The political transitions, painful as they may be, are something that each one of us has to work out for ourselves, within our countries and between our governments," to enable SAARC to reach its full potential.

But if nothing is done to sort of these problems, the 14th SAARC meet too will fail to make any meaningful progress and all that journalists will be left to report at the end of the two-day Summit will be trivia such as how the Afghanistan President, Mr Hamid Karzai, and Mr Aziz held each other in a bear hug or what was the fare on offer at the lunches and dinners.

Trade and terrorism will have to be tackled firmly at this forum as most of the member-countries — India, Sri Lanka, Afghanistan and Nepal — are grappling with insurgency and militancy in some form or the other. And, this continues to be among the poorest regions in the world.

That, again for the first time, international observers from countries such as China, the US and Japan were present at the Delhi meet, proves that the rest of the world is keeping a watchful eye on this region with abundant potential.

But will the SAARC countries opt to unleash this potential to improve the lives of their citizens or not remains a moot point.

Response may be sent to rasheeda@thehindu.co.in

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