The Hindu Business Line : Asian Economic Integration: Pathway to security and prosperity

The obsession with Pakistan has distorted the conduct of India's foreign policy. This has not allowed the country to emerge as a constructive partner with Asean and SAARC, and other regional powers such as China, Japan and South Korea. The Prime Minister's historic Bali visit may be the first step to change this, and one that will also stop countries looking at India through the Pakistan-tainted prism, says G. Parthasarathy.

THE Indian media and official spin-masters wrongly describe virtually every summit meeting with Pakistan, China or the US as "historic". But Mr Atal Bihari Vajpayee's recent journey to Bali and Bangkok that can truly be termed historic and perhaps his most significant foreign policy achievement as Prime Minister.

For too long have Mr Vajpayee and his Government remained obsessed and sometimes starry-eyed about Pakistan. They have avoidably raised public expectations about imminent "breakthroughs" in relations with a neighbour that is led by a general who believes that bluff, bluster and bravado are hallmarks of good diplomacy, and is governed by a rogue army whose existence is premised on continuing and compulsive hostility towards India.

This obsession with Pakistan has distorted the conduct of our foreign policy. It has diverted attention from our emerging as a constructive partner with our neighbours in Asean and SAARC and other regional powers such as China, Japan and South Korea. It has also led to far too many countries, including the US, looking at relations with India largely through Pakistan tainted prisms.

The importance of economic integration with the economies of East and South-East Asia cannot be overemphasised. India had a larger share of international trade and comparable levels of prosperity with the members of Asean when we attained independence. But during the last few decades the Asean countries have rapidly overtaken us in levels of prosperity, human development indicators and in their share of world trade.

One has only to see the highways, ports and international airports in Thailand, Malaysia and Singapore to realise how poorly we have performed in economic terms compared to the "East Asian Tigers" which chose to make their countries globally competitive, instead of seeking to protect inefficient industries behind high tariff walls.

In his Discovery of India, Jawaharlal Nehru perceptively noted that India lost its influence in South-East Asia around the 12th century primarily because we became insular and lost the creativity that flows from learning from and enriching others. This is precisely what we did for over 40 years when we went into an era of non-competitive "import substitution" and became marginal in global markets that were opening out in the last decades of the 20th century.

Mr Vajpayee signed a historic Framework Agreement on Comprehensive Economic Cooperation with Asean at Bali, Indonesia. This envisages elimination of tariffs with the advanced members of Asean by 2011 and with the less developed countries such as Vietnam, Myanmar, Cambodia and Laos by 2016.

Indian industrialists can no longer hawk second-rate products to our consumers. They will have to get their act together speedily, to face up to competition from the "Asian Tigers". Both sides are looking at the establishment of an Asean-India Regional Trade and Investment Area.

Our negotiators outdid China in the sheer speed with which these agreements were finalised within ten months. What was equally heartening was the unilateral "open skies offer" to allow daily flights by airlines in Asean countries to the four metropolitan cities in India and an unlimited number of flights to other tourist destinations. India is also now moving ahead in establishing road and rail links with Asean through Myanmar, which will become our gateway to Asean. India also formally acceded to the Asean Treaty of Amity and Cooperation and concluded a comprehensive agreement to combat terrorism.

These agreements have come at a time when the two largest economies in Asia — China and Japan — have made moves to raise their economic profile and stakes in the Asean countries. Moves in the past to open out our economy and skies were invariably stalled by vested interests in our apex trade and industry associations and by the inefficient Air India. It is obvious that these moves have now succeeded only because of the exercise of Prime Ministerial authority by Mr Vajpayee.

Mr Vajpayee is scheduled to travel to Islamabad for the SAARC summit in January. Pakistan has thus far stalled moves to establish a Free Trade Area within SAARC, because of its obsession with Kashmir and its ostensible belief that can use trade and economic relations as a bargaining chip to wrest concessions from us on Kashmir.

The real reason for this posture is, however, that Pakistan fears that its propaganda that India has made no economic progress since independence will stand exposed when Indian goods ranging from cars, trucks, three-wheelers and scooters to consumer electronics start entering its markets.

The argument that opening out trade, investment and business ties with India hurt Pakistan's industries is untenable. Pakistan has open trade with China. Pakistan thus has the option of either joining India and the rest of South Asia in a journey towards progress and prosperity, or being excluded from it and remaining mired in its obsession with Jihad and its Utopian quest for "parity" with India.

New Delhi should go to Islamabad with a positive and imaginative economic agenda to the SAARC summit. We should unilaterally offer "open skies" to airlines of our South Asian neighbours, with the provision that this would be extended to Pakistan once that country extends us MFN status, establishes normal business and investment ties, and agrees to unconditionally reopen air links.

New Delhi should also expand trade concessions to Nepal, Bhutan and Bangladesh and further liberalise the terms for Indian industry to invest in these countries. South Asia should become a common investment area. And a clear message should be sent to South Asian capitals that India will not countenance any attempt to bring in bilateral or contentious issues at Islamabad.

With growing international pressure to normalise trade and economic relations with India, Pakistan will in all likelihood sign a framework agreement on SAFTA and then stall its implementation. It is here that Mr Vajpayee's visit to Thailand and the Free Trade Agreement concluded there assume importance.

The first Summit of the BIMSTEC grouping that will include not only the littoral states of the Bay of Bengal — Bangladesh, India, Myanmar, Sri Lanka and Thailand — but also the landlocked Nepal and Bhutan is scheduled to be held in Bangkok early next year.

India should endeavour to make this grouping a free trade and common investment area by 2011 — the year in which the India-ASEAN Free Trade Pact will become fully effective. Pakistan will then be faced with the choice either shifting its attention from jehad to economic integration, or facing isolation from regional endeavours for prosperity.

It can then no longer use SAARC as a forum to moan about its "grievances" against India. And if it joins SAFTA constructively, it will understand that while relations with an economically dynamic India can and should be based on "sovereign equality," its quest for "parity" with India is both stupid and futile.

Referring to the developments in Bali, the Indonesian Foreign Minister, Mr Hassan Wirajuda, proclaimed: "Just imagine 500 million people in Asean plus 1.2 billion in China and 1.3 billion in India so that in total three billion people in the East Asian region are tied up in a common security umbrella".

Spelling out his vision of the future, Mr Vajpayee asserted: "An Asian Economic Community of 14 countries, including the countries of Asean, plus 3 (China, Japan and South Korea), plus 1 (India), would most efficiently exploit our synergies". Our vision is clear. We, however, need the will and the determination to effect meaningful economic reforms to fulfill it.

(The author is a former High Commissioner to Pakistan.)

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