24 Dec 2014

An Analysis : SAARC (South Asian Association for Regional Cooperation) and its Relevance !!

SAARC (South Asian Association for Regional Cooperation)None of the nation has sufficient power to choose its geographical neighbors. Its boundaries, priorities, ideologies, governments etc. may change over the time but it cannot simply ignore its neighbors. In this modern world, the phenomena of regional cooperation have grappled the whole world. In the era of globalization, the formation of regional groupings is being recognised as a step towards global integration. Regional groupings are, most commonly, based upon the principles of shared histories, geographical contiguity, core competencies, advantages associated with economy of scale etc. We can see few non-overlapping regional groupings.

Different regional groupings in the world

Now the trend of many overlapping cooperation are opening up space for cooperation on multiple fora. Thus the nations are trying to utilise even the slightest of opening opportunities. South Asia could not remain isolated with this phenomenon.

The concept of political and economical cooperation in South Asia was first envisaged by Bangladeshi President Late Zia-Ur-Rahman in 1980. SAARC (South Asian Association for Regional Cooperation) came into being in 1985 with Bangladesh, BhutanIndiaMaldivesNepalPakistan, and Sri Lanka as founding members. Afghanistan joined SAARC in 2007.

Presence of observer members has increased group's legitimacy. They are Australia, China, European Union (EU), Iran, Japan, Mauritius, Myanmar, South Korea, and United States (USA).

SAARC (South Asian Association for Regional Cooperation)

South Asia constitutes the world’s second least developed region after Sub-Saharan Africa. It has more poor people than the rest of the world. It is generally said that even after 30 years of its establishment, SAARC has remained merely a talk shop. We will discuss this issue in detail but let us first understand Strength, Weaknesses, Opportunities and Threats associated with this grouping.   

Strength
Weakness
Economic:
  • Rising economies (So provides large consumption market too.)
  • Huge natural resources: Common rivers, a mountain system, an ocean (these open opportunities for regional trade, hydro-power generations etc.)
Economic:
  • Very less regional connectivity(Among member countries)
  • Huge deficit of skilled manpower
  • Lacking in infrastructure development(Within national boundaries)
  • Trade barriers and less integration have made trade costly.
  • Scarcity of capital to invest in productive infrastructure
Overall:
  • Demographic Dividend(Youthful population)
  • So many agreed areas of cooperation, institutional mechanism and a Permanent Secretariat for SAARC
  • Challenges faced by member countries are of very similar nature. (Solutions lie in convergence of efforts to contain them.)
Overall :
  • Political history still dominates the national consciousness. It has become one of the biggest hurdles in regional integration. 
  • Low level of HDI(Human Development Index) ranking
  • Very low status of women
Opportunity
Threat
Economic:
  • Possibility of benefits accruing to nations through economy of scale because of rising consumption
  • Economic cooperation will raise the threshold below which bilateral relations will not fall
Economic:
  • Countries will either miss the opportunity or will be late in improving quality of lives of people due to non-cooperation  
Overall:
  • Social benefits by promoting growth (improving public health, education etc.)
  • Regional cooperation can also attenuate inter-state and intra-state conflicts and helps to stabilize the region.
Overall:
  • Due to changing climate, the vulnerability to disasters has increased. Not having cooperation among regional neighbors will make its management difficult.

Thus we can see that the opportunity cost of not having good relation is huge. Over the years, areas of cooperation have diversified to engage political, economic, social, cultural and other aspects. The SAARC Summits have created a platform for closed-door bilateral talks among members. These meetings have pushed for progress in regional cooperation. SAARC has moved ahead but the level of cooperation is much below its potential. We will first look into the steps taken by SAARC then question of its relevance and then the way forward.

Steps taken
  1. South Asian Free Trade Area (SAFTA): It was signed by founding members in 2004 and came into force in 2006. It created a free trade area of member nations. It is aimed to reduce custom duties of all traded goods to zero by the year 2016. Afghanistan as the 8th member state of the SAARC ratified the SAFTA protocol in 2011.As of 20 September 2013, the total free on board value of exports by Member States under SAFTA has reached about US$ 3 billion. This amount is far below the potential.                                            
Most important hurdles=>                                                      
I) Huge size of Sensitive lists (These contain goods that are exempted from low SAFTA tariffs. The use of sensitive lists allows countries to protect growing domestic industries or important sources of custom revenue.  However, its overuse can make goods more expensive for consumers and reduce trade.) Realising its negative consequence, members are now making effort to reduce this.                                   
II)  Reasons mentioned in Weakness section in the table above.       
III) Liberalization in service and investment is due, only goods portion have been taken care yet. Sooner it is done, quicker and bigger will be its impact in economic cooperation.

  1. Expansion of grouping: It is hoped that Afghanistan will become a land bridge between Central Asia, South Asia, and the Middle East. It will also become a trade, transportation, energy and minerals hub in the region. This seems mere aspiration at present but time will test its importance.
  2. Culture: Bamiyan (Buddhist site in Afghanistan) was declared as the SAARC CULTURAL CAPITAL for 2015. This is the unique step taken by the SAARC Cultural Centre. A series of year-long cultural events with a national but with an overall South Asian dimension will be organized at Bamiyan to celebrate its status as the First SAARC CULTURAL CAPITAL (DHAKA will be the second.) for the whole of South Asian region. It is an important step in the direction of cherishing shared culture which has got mired in the narrow identities and national boundaries.
  3. Education: Establishment of South Asian University in New Delhi and "Delhi Declaration" on education has charted out new course of cooperation.
  4. Recent summit (18th Summit in NOV, 2014)-There were three proposed regional agreements for connectivity and integration: motor vehicles, rail and energy cooperationTensions between India and Pakistan, once again, grappled the SAARC summit. Islamabad expressed concerns over all three but later agreed to SAARC Market of Electricity (SAME) Agreement. Finally all agreed to SAARC transport Ministers hammering out an agreement on motor vehicles and railway services within three months. SAME aims to setup a “SAARC energy grid” which will open up new era of cooperation.
    SAARC (South Asian Association for Regional Cooperation) Summit
    Pic courtesy : saarc-sdmc.nic.in
Question of SAARC's relevance

It is seen that SAARC countries are connected more to the outside world than to each other. They are also giving more importance to other cooperation fora like ASEAN, BIMSTEC etc. But beyond shared history the challenges faced by SAARC nation are of almost similar nature. These challenges include poverty, unemployment, environment, globalization and issues related to national securities like terrorism, drug trafficking etc. Challenges should bring members closer to cooperate not far apart.

It is generally said that SAARC has merely remained a talk shop. But looking at the steps taken we can understand that this view is not entirely true. We should see the process and stages of development of European Union. 

India's role

Initially India was against forming of such grouping. But after liberalization of economy and successes of NAFTA, ASEAN etc opened its eyes. In this association, India is perceived to behave like a hegemon and Pakistan as obstructionist in India’s ambitions to play a legitimate role commensurate with its achievements and capabilities. India's neighbors have tried to play China card against India either to get more concessions or pressurize it. In the recent summit (Nov 2014), Pakistan pushed for enhanced role of China in SAARC.

SAARC (South Asian Association for Regional Cooperation) Summit
Pic courtesy : thehindu.com
India being heavy weight can't dream of becoming regional power or global power without having made SAARC functional in its objective. But India will have to leave big brother attitude and try to get neighbors on board. At the same time neighbors too will have to look into the long term prospects and benefits accruing out of the successes of SAARC. China's economic power should be utilized in constructive way rather than holding India's effort.

Following will be the key in SAARC's success:

(a) Building Trust (b) Putting economics before politics (c) Boosting up cultural cooperation and regional tourism (d) Joint effort to deter cross-border illegal migration, terrorism, narcotics and drug trafficking.
SAARC (South Asian Association for Regional Cooperation)
Pic courtesy : nepal24hours.com
Besides these bilateral and sub-regional initiatives (Nepal-India-Bangladesh etc.) could significantly spur regional cooperation. After the experience of two terrible world wars, European nations sank their differences and came together. They are now enjoying the fruits of shared prosperity. 2010-20 is the SAARC Decade of Intra-regional Connectivity. With the great focus of Prime Minister Modi's govt. in the neighborhood, let us hope this becomes a ground reality.

What is your opinion about relevance of SAARC? How it can be utilized as a useful forum for the Indian subcontinent growth and prosperity?

How is SAARC’s performance with its counterpart groupings around the world? How it can become stronger and relevant in world scenario?

(Written by Sujit Bharti, an alumnus of IIT Bhubaneshwar)







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