SAARC conjures up an image of jamborees and no results. The South Asian Association of Regional cooperation with its seven members ( India, Pakistan, Sri Lanka, Maldives, Nepal, Bhutan and Bangladesh) remains one of the most dysfunctional trade blocs and there is hardly any freedom of movement of goods, services and people. The next (13th) SAARC summit is going to be held in Dhaka in the beginning of January 2005.
Needless to say, the South Asian region is not only one of the poorest in the but also one of the most problematic as it is witnessing a rise of fundamentalism, the spread of AIDS (about 5 million HIV positive cases in India alone) and increase in terrorist activities. India is the biggest member and has 76 per cent of the total population and 77 per cent of the total GNP. It is the 'big brother' from whom all the smaller neighbours expect disproportionate generosity regarding tariff cuts. The two of the biggest --India and Pakistan are like France and Germany of the EU. But they have not buried their past and are still on acrimonious terms with each other and are perceived as dangerous enemies by the rest of the world because both have nuclear weapons.
At the Dhaka summit, South Asian Free Trade Area-SAFTA and the Social charter for the region will be discussed. There are many other issues that will not be discussed and these include the movement of people across borders in search for work. Though the issue of 'illegal immigrants' is highly politicized, it is never discussed officially.
If SAFTA becomes operational in a year's time, then there would be hardly any barriers to trade and tariffs would be brought down to 0-5 per cent level. Its previous incarnation SAPTA ( South Asian Preferential trade arrangement) did not succeed. This was mainly because the smaller neighbours were afraid of Indian products swamping their markets. The tariff concessions clearly benefited India which has the strongest economy in the region. But first, Pakistan has to agree to give the most favoured nation (MFN) status to India because India granted Pakistan MFN status many years ago. Due to the impasse with Pakistan, India has gone ahead and signed bilateral free trade treaties with Sri Lanka, Nepal and Bhutan.
At almost all the SAARC summits, Pakistan has raised the Kashmir issue and that it would not be possible to have any progress in SAARC negotiations unless the bilateral problem is solved first. This has been the recurrent factor acting against any progress in areas like transport, energy, investment and tourism cooperation.
More foreign investment can be attracted to the region specially with greater harmonization of investment policies between the members of SAARC along with compatible tax laws and exchange rates. Other requirements would be a common legal and regulatory framework and harmonizing of customs laws and national standards and certification processes.
There is much scope for enhancing the transport links that would promote development. It would reduce costs and increase competitiveness. For example Bangladesh imports cotton from Pakistan that comes via Colombo to its port, taking weeks. If a container could be put on a freight train leaving Lahore, it would reach Dhaka via India in about four days.
In the field of energy, cooperation between the members would lead to greater access to power that would lead to an increase in their production capabilities . Already there is hydro energy trading between India and Bhutan and India and Nepal but there are no power purchase agreements or any effort at determining proper tariff rates. This is mainly because of the small amount of power that is purchased. More commercial involvement would be helpful in increasing the supply of power. Cooperation in the oil and gas sectors would also help but could face problems regarding approval for transit through third countries.
Poverty reduction is very high on the agenda of SAARC. South Asia has the largest number of poor in the world in absolute numbers and 37 per cent of the population survive on less than a dollar a day. The poverty of the region can be assessed by the fact that while it has 22 per cent of the world's population, it is responsible for only 2 per cent of the world's total GNP. The average annual income is only $441 per capita which makes it one of the poorest regions of the world.
The health facilities in the region are very poor especially in the remote areas because hospitals are ill equipped with medicines and doctors. The hospitals in bigger towns are, as a result, over crowded . The region's record of maternal and infant mortality rates except in the case of Sri Lanka are dismal and half the children under five are malnourished. The Second Poverty Commission was appointed by SAARC in 2001 and its report adheres closely to the Millennium Development Goals set by the United Nations. It aims at halving the number of people without safe drinking water and sanitation by 2010 and also halving the number of poor. In poverty reduction programmes, the role of the civil society has been stressed instead of the top down approach followed by different governments of the SAARC members.
It has also suggested the creation of South Asian Poverty alleviation fund out of which model hospitals would be built through out the region with medical experts drawn from all the SAARC members.
India has offered $100 million for poverty alleviation programmes in the region. It has stressed the development of the informal sector as it would help in bringing about gender equality. It advocates the sharing of experiences and best practices across the region of institutions like the Grameen Bank , Sewa and Amul .
If the Dhaka summit fails to usher in a free trade area, then sub- regional cooperation could be tried. BIMST for example is a bloc ( forrmed in 1997) consisting of Bangladesh, India, Myanmar, Sri Lanka and Thailand-countries, that have traded with each other around the Bay of Bengal since ancient times. At the first summit meeting of this sub grouping, held in Bangkok in July 2004, it was renamed BIMSTEC which stands for Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation. Clearly one of the advantages of regional blocs is its bargaining power with other blocs . BIMSTEC could get linked with ASEAN and China easily. But hopefully, the Dhaka summit will offer some insights for the revival of SAARC itself , after twenty years of its inception.
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