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3.1] SAARC and BIMSTEC

1. SAARC – South Asian Association for Regional Cooperation

SAARC Countries PSIR

Often cited as one of the negative examples of regional cooperation, SAARC was founded in Dhaka on 8 December 1985 with the signing of the SAARC Charter. The association originally had 7 member and the Afghanistan was included as eight members in 2007. Kathmandu, Nepal serves as the Headquarters for SAARC.

Apart from 8 members, other eight countries and the EU has observer status in SAARC. Currently, Myanmar and China have shown interest in joining the grouping.

1.1 Objectives of SAARC

The eight objectives of the Association as outlined in the SAARC Charter are:

  1. To promote the welfare of the peoples of South Asia and to improve their quality of life;
  2. To accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potentials;
  3. To promote and strengthen collective self-reliance among the countries of South Asia;
  4. To contribute to mutual trust, understanding and appreciation of one another’s problems;
  5. To promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields;
  6. To strengthen cooperation with other developing countries;
  7. To strengthen cooperation among themselves in international forums on matters of common interests; and
  8. To cooperate with international and regional organizations with similar aims and purposes.

According to SAARC Charter, Decisions at all levels are to be taken on the basis of unanimity; and bilateral and contentious issues are excluded from the deliberations of the Association.

1.2 SAARC Summits

The biennial summits are the highest decision-making forum of SAARC. The 18th SAARC summit was held in Kathmandu, Nepal in 2014. In 2016, Pakistan was to host the 19th summit. However, it was cancelled after India refused to participate following the terror attack in Pulwama. Since then, no summits have been held.

1.3 South Asian Free Trade Area (SAFTA)

The SAFTA was envisaged primarily as the first step towards creation of a free trade area in South Asia, and leading subsequently towards a Customs Union, Common Market and the Economic Union.

The SAFTA Agreement was signed on 6 January 2004 during Twelfth SAARC Summit held in Pakistan. The Agreement entered into force on 1 January 2006, and the Trade Liberalization Programme commenced from July same year. Under SAFTA agreement, SAARC members will bring their duties down to 20 percent by 2009.

According to scholars, despite making an agreement for reduced tariffs, tariffs appear in several other form. Due to:

  1. Circuitous routes to markets
  2. Congested border crossings,
  3. Inadequate trade agreements and,
  4. Lack of transportation infrastructure,

it is 20% cheaper for India to trade with Brazil than with its neighbour Pakistan. Thus, the India Pakistan trade, which current stands below US$ 3 billion, has potential to go up to US$ 20 billion.

Thus, despite 20 years after the agreement, According to World Bank, Intraregional trade accounts for barely 5 percent of South Asia’s total trade, compared to the ASEAN, where intraregional trade makes up 25 percent, and European Union, where the percentage is 60%.

To achieve the full potential of regional trade, the countries will need to:

  1. Eliminate tariff and non-tariff barriers
  2. Leverage private and intraregional investment
  3. Invest in efficient connectivity and border crossings
  4. Liberalize visa, travel and trade policies.

Sensitive List in SAFTA

A sensitive list is a list with every country which does not include tariff concession. Various countries have included various items in this sensitive list to protect the domestic businesses. However, this has often been used as a tool to restrict the trade.

1.4 Reasons of the failure of SAARC

Various structural problems, coupled with ever antagonistic India Pakistan relation have ensured that the SAARC never realized its true potential. The various causes can be analysed as follows:

  1. The idea of SAARC itself was formed with a negative purpose i.e. to challenge the Indian hegemony. It was not formed for the purpose of cooperation. The Indian neighbours envisioned SAARC as a coalition to balance India.
  2. Absence of external push factor like USA in EU and ASEAN is also quoted as a reason why SAARC failed. Since there was no external factor, South Asia became prey to superpower rivalry.
  3. A huge asymmetry exists in South Asia. The other associations particularly EU and ASEAN are associations of equals, however that is not the case with SAARC. India is economic and demographic giant compared to all other countries, and the neighbours often feel threatened by the Indian weight.
  4. Historically, South Asian economies have been inward looking.
  5. South Asian nations, particularly India, Pakistan and Bangladesh have been a single unit before partition by Britishers. Since these nations are new, their own national identity remains in crisis and it is difficult for them to accept the transfer of their sovereignty.
  6. Political instability in domestic affairs of member countries, particularly Pakistan, Afghanistan, Sri Lanka, Nepal, Bangladesh etc.
  7. The Chinese policy of influencing Indian neighbours.
  8. The Indo Pak rivalry, domestic instability in Pakistan, its active and open support to terrorism.
  9. The SAARC decision making based on consensus is also problematic and there is need that SAARC countries should adopt some sort of qualified voting.
  10. Connectivity is the key to regional integration and increased trade cooperation. So long the trust deficit exists between India and Pakistan, SAARC will not be able to achieve the transit agreement, which is crucial.

1.5 Future of SAARC

Scholars across the gamut have declared that SAARC is dead. According to Santosh Poudel, a Nepali scholar, “India-Pakistan rivalry and India’s isolation of Pakistan contributed to the death of the South Asian regional organization.” He points out to the fact that how the BJP election manifesto of 2019 did not even mention SAARC but instead had a mention of BIMSTEC.

Dr. Sanjay Baru, in his book India and the World, suggests that historically, three factors have shaped the formation of regional organizations i.e. market driven economy, movement of people across borders and, political factors. In case of SAARC, all are missing. Instead of trade deficit, there is a trust deficit.

According to Happymon Jacob, India’s attitude with neighbourhood has not been so good. Delhi considers them irritants and challenges rather than opportunity. He draws out following lessons from the history of India’s relationship with neighbourhood:

  1. India must deal with tricky situations in more diplomatic manner. Way India dealt with Nepal during constitution making in 2015 was very sad.
  2. There is no to meddle with domestic politics.
  3. New Delhi must not fail to follow up on its promises to its neighbours. It has terrible track record in this regard.
  4. There is no point in competing with China, especially in domains where China has advantage. e.g. Infrastructure projects. India should better invest in institution building and use of soft power. e.g. SAU – South Asia University.
  5. Overall, India must have long term vision of neighbourhood devoid of rhetoric. A goal must be established and all attempts should reflect march towards such a goal.

S Jaishankar, speaking on the matter of SAARC, suggested that “I think there is today an appetite to grow under BIMSTEC… It is not like there are no problems there. The situation in Myanmar is very challenging. But I would say, we do not have the kind of issues in BIMSTEC which we do have in SAARC. There is a will to cooperate, there is a desire to take it forward.” This highlights India’s increased priority for BISMTEC over SAARC.

2. BIMSTEC – Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation

BIMSTEC Countries PSIR Notes

BIMSTEC was originally founded as BIST-EC (Bangladesh, India, Sri Lanka, and Thailand Economic Cooperation) in 1997. Following the inclusion of Myanmar the same year, the group was renamed ‘BIMST-EC’ (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation). In 1998, Further, following the inclusion of Nepal and Bhutan in 2004, the grouping was renamed as BIMSTEC or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation.

BIMSTEC have identified 14 main sectors for technological and economic cooperation, and member nations are denoted as Lead Countries for each sector.

1Trade & Investment8Public Health
2Transport & Communication9Poverty Alleviation
3Energy10Counter-Terrorism & Transnational Crime
4Tourism11Environment & Disaster Management
5Technology12People-to-People Contact
6Fisheries13Cultural Cooperation
7Agriculture14Climate Change

India is lead country for 1) Transport and Communication 2) Tourism 3) Counter-Terrorism and Transnational Crime, and 4) Environment and Disaster Management.

BIMSTEC is a five-tiered organization:

  1. The Summit comprising the Heads of State or Government of the Member States
  2. The Ministerial Meeting comprising the Ministers dealing with foreign relations of the Member States
  3. The Sectoral Ministerial Meetings comprising the Ministers of line ministries responsible for carrying out the activities of the respective sectors
  4. The Senior Officials’ Meeting consisting of the Foreign Secretaries/ Secretaries/ appropriate Senior officials nominated by the BIMSTEC Member States
  5. The BIMSTEC Permanent Working Committee (BPWC) comprising senior officials of the respective National Focal Points.

2.1 Analysis of BIMSTEC

BIMSTEC can be regarded as India’s strategic initiative. Since SAARC is not moving because of Pakistan, India is trying to consolidate relations with other South Asian countries and isolate Pakistan. BIMSTEC is a bridge between South Asia and Southeast Asia. According to C Rajamohan, the huge geostrategic significance of BIMSTEC is that it brings India closer to the three strategic regions of 1) Bay of Bengal, 2) Mekong, and 3) Sub-Himalayan region.

2.2 Unique Features of BIMSTEC

  1. All member countries possess a relatively low per capita income level, unemployment, low level technology, and thus low-level productivity.
  2. The region is also endowed with huge natural resources.
  3. The per capita income of BIMSTEC as a whole, is still far behind the middle-income world.
  4. All the members (except Sri Lanka) are connected by land, providing a stronger potential for greater connectivity among them.
  5. All the member countries of BIMSTEC are developing countries.
  6. In terms of social development indicators, BIMSTEC’s performance happens to be poor and static (HDI 2009 ranking: India: 134, Sri Lanka: 86, Thailand: 66, Myanmar: 144, Bangladesh: 129, Nepal: 146, Bhutan: 125

One of the major concerns regarding BIMSTEC has been the frequency of the Summits. It almost three decades of its existence, only five BIMSTEC summits have been held so far, with the latest meeting held in 2022 on backdrop of COVID 19 crisis. This questions the seriousness of the member countries.

Further, the delay in the adoption of the Free Trade Agreement (FTA), agreed upon in 2004, also creates doubts about the efficacy of BIMSTEC.

Joyeeta Bhattacharjee suggests following measures to strengthen BIMSTEC as sustainable platform.

  1. Consistency in the frequency of the summits to ensure regularity in decision-making;
  2. Improving the capacity of the secretariat, both in terms of manpower and funding;
  3. Ensuring tangible results/benefits, which will add to the motivation of the countries to concentrate on BIMSTEC (projects in the areas of tourism, digital connectivity, energy connectivity and humanitarian assistance in disaster relief should be considered); and
  4. Empowering BIMSTEC to be a platform for dispute resolution among member countries. This will require debates and discussions among the BIMSTEC countries to reach consensus.

3. BIMSTEC and SAARC

BIMSTEC and SAARC Comparison

SAARC and BIMSTEC, though focusing on similar geographic areas, serve distinct purposes. SAARC operates solely within the South Asian region, while BIMSTEC extends its reach to connect South Asia with ASEAN. Despite their overlapping interests, they complement each other in aims and functions. BIMSTEC offers SAARC nations a valuable avenue to engage with ASEAN countries. With the SAARC summit merely postponed, there’s potential for its revival. BIMSTEC’s success doesn’t diminish SAARC’s relevance; rather, it enriches regional cooperation in South Asia with a new dimension.

  1. SAARC is a regional organization, whereas BIMSTEC is inter-regional.
  2. SAARC, established in 1885 is a product of cold war, whereas BIMSTEC was established in 1997, in a different environment.
  3. While SAARC member countries suffer from mistrust and suspicion, the relations are relatively friendlier in BIMSTEC.
  4. SAARC has asymmetric power balance whereas presence of two powers i.e. India and Thailand in BIMSTEC creates a balance.
  5. Intra-regional trade has stagnated in SAARC, whereas it is on a growing trajectory in BIMSTEC.

While scholars have suggested the India is trying to move from SAARC to BIMSTEC, officially, the government have maintained the stance that SAARC is not meant to replace BIMSTEC, rather complement it.

Posted in PSIR NOTES

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