Madhukar Shumshere J.B. Rana
Professor, South Asian Institute of Management & Former Finance Minister
There are a total of five LDCs (Least Developed Countries) in South Asia:
(a) Three—Bhutan, Bangladesh and Nepal-- lie on the eastern seaboard of the sub continent to comprise what is now known as the South Asian Growth Quadrangle (SAGQ).
It includes the Indian North East to create a quadrangular economic growth hub in the Bay of Bengal sub region, and
(b) Two – Afghanistan and Maldives which could, potentially, be part of the western seaboard growth hub centered on Gowdar, Karachi and Mumbai sub region.
All LDCs aspire to graduate out of their LDC status before 2015 but, surprisingly, Sri Lanka has been, off and on, clamoring for LDC status. That being said, South Asia is the least developed sub continent caused mainly by the consequences of partitioning of British India in 1947, and the failure of its political leadership to raise it from mass deprivation, hunger and underemployment even after 63 years of Independence. LDCs are having that status because of their landlocked and sea locked geography; and a demography of overpopulation given the land availability.
Although launched by Foreign Ministers in April 1997, the SAGQ was throttled at its very birth by the implicit veto by Pakistan, which believed that it was against the letter and spirit of the SAARC Charter: and, thus, Pakistan successfully mobilized Maldives and Sri Lanka to revise their original positions over sub regionalism within SAARC Both nations had gladly accepted the concept at the Foreign Ministers’ meet in New Delhi in 1996. It was at this time that Nepal floated the SAGQ Concept Paper which was endorsed.
Basically, the SAGQ Concept Paper was conceived as a necessary sequential action by SAARC to befit India’s new neighborhood policy – popularly known as the ‘Gujral doctrine’ of non-reciprocity; and India’s new strategic interest to pursue a ‘Look East’ foreign policy enunciated by the BJP government.
Let us recall that the formal agreement by and between the SAGQ governments envisaged cooperation in targeted sectors, on project-by-project basis, such as multimodal transportation and communication; energy; trade and investment facilitation, promotion of tourism; optimal utilization of natural resource endowments (water), and environment.
In essence, SAQG is borne of the strategic intent that for LDCs cooperation in ‘trade complementarities’ through SAFTA would amount to naught; as what the LDCs—more specifically LLDCs-- required was ‘production complementarities’ to create growth and thereby generate surpluses for international trade though massive regional and international investments.
It underscored that the SAGQ sub region can be sustainable and prosperous if:
(a) It can revive the infrastructure linkages lost with the Partition after the departure of the British,
(b) Harness the eastern Himalayan waters for sub regional benefit and
(c) Create the necessary Upland-Lowland or Mountain-Plains linkages with equitable, ecology-driven growth for the upper, middle and lower riparian nations and communities. Fortunately, the Asian Development Bank has chosen to keep the spirit of SAGQ alive through means of what it christened as the South Asian Sub Regional Economic Cooperation (SASEC) initiative.
One cannot but help admire the farsightedness, and diplomatic finesse and determination, of the ADB leadership to move the sub regional process forward. Admiration flows from the fact that the next big jolt to the SAGQ process came, soon after its inauguration, from India itself.
India was suspicious of external actors assuming the driver’s seat. In fact, the smaller nations have always believed that the involvement of ADB was vital to overcome perceptions of Indian hegemony arising from its asymmetrical size compared to others. They also deeply feared that all benefits would be gobbled up by India, and its business houses and banks, with their superior financial, managerial and technological clout.
As a matter of fact, the formation of BIMSTEC arose from the Indian frustration over SAARC as a whole and SAGQ in particular. With BIMSTEC the SAGQ extends to Paradeep, Vizakapatnam and Chennai and so the entire Bay of Bengal takes a new strategic importance as a prosperity zone for both South and South East Asia; with Myanmar and Thailand as members.
Possibly Lao PDR will join, some day, to make BIMSTEC a unique organization comprising all of the land mass that is united by the eastern Himalayan water towers. (It’s interesting to speculate whether China (Tibet) will wish to join or be welcomed to do so?). Except India, one perceives that all countries in BIMSTEC think it would be good for China to join simply because these countries see China as an opportunity-- more than a threat-- to their national interests.
Promoting food security and agricultural productivity:
We need 2200-2500 k/day of food intake to be free from the insecurity of hunger and malnutrition—indeed to survive death and disease and to be able to grow mentally and physically to develop and to realize our God gifted potential, which be the life long mission of each individual.
A FAO Report has found that amidst the 1 billion living in chronic hunger more than 27% hungry and undernourished of the world are located in India. Among them, over 47% comprise undernourished children. This is a good indicator of the inadequacy of our regional stock of human capital on which social development, economic growth and agricultural productivity depends. The so called competitive advantage from the global demographic divide obviously will remain underdeveloped.
Annual average agri-growth from 1994-2006 was 3.5% (Bangladesh; GDP 5.2%); 2.7% (Bhutan; GDP 6.5%); 2.6% (India; GDP 6.6%); 3.5% (Nepal; GDP 4.3%); 3.3% (Pakistan; GDP 4.2%), and 1.3% (Sri Lanka; GDP 5.0%) (Maldives; GDP 8.2%).
A Food Security Risk Index (FSRI) has been compiled by FAO and the 2009 data released shows that all of South Asia face ‘high risk’ with Afghanistan and Pakistan facing ‘extreme risk’. (http://www.maplecroft.com/about/news/food_security_research_reveals_differing_fortunes_of_key_economies_04.html)
FSRI measures the availability of food, stability of supplies and access to basic food stocks, as well as the impacts on nutrition and health that result from food insecurity. China is better placed than India as it has managed to be engaged in contract farming through land leasing in Africa.
The crucial issue is: should India get engaged with the new scramble for Africa or look within the sub continent to harness, collectively as SAARC, Nature’s plentiful bounties here in our own planetary space.
The visionary former president of India, Dr APJ Abdul Kalam, has enlightened us on the need for, and prospects from, drought relief and flood prevention in the form of the $112 billion (2002 price) Interlink of Rivers Project.
To successfully implement it in the face of the massive civil society hostility will require unity of vision amongst the central executive, legislative and judicial authorities but, also, unity of purpose between states of the Indian federation, which will be a Herculean task for the central government and centrist parties given the vicious circle of regional and class inequality in income distribution and thus the benefits from globalization.
The matter will be even more complex as Bangladesh, Bhutan and Nepal have not been approached to cooperate sub regionally as they are both upper and lower riparian states with their own needs and rights over the eastern Himalayan water.
Herein lies the true potential of the LDCs for South Asian integration. If regional water politics and diplomacy are not handled with great tact, finesse and fairness, herein also lies the real potential for ‘water wars’ in South Asia-- and its possible destabilization and disintegration. (http://www.ecoworld.com/waters/indias-water-future.html)
Despite the far-sightedness of India’s river basin vision and strategy when, however, it concerns its Himalayan neighbours, the policy is pretty short sighted. Nevertheless, a breakthrough of sorts has been made by ICIMOD in its ability to conduct China-SAARC workshops and seminars on “Climate Change and its Impact on the Indus Basin”.
Hopefully, more such basin wide perspectives will arise to cover also the Gangese and Brahmaputra river basins as the building blocs for South Asian integration and eventual SAARC Union.
When river basin planning approaches take root food security will be something of the past and Sino-India scramble for Africa would be unnecessary for both. Thus avoid the likelihood of African neo-colonization and neo-imperialism by the emergent super powers of the 21st. century.
The trick to meeting the challenge over food security is to empower the small and marginal farmers to realize their yield potential with supply of water, energy, credit and vocational education (maximization of indigenous knowledge); extension services; cooperative storages to gain from trade; seeds; fertilizers; market access –rural roads and hat bazaars; mobile communication and mobile banking.
Promoting energy cooperation and renewable energy trade
For the long run, population growth needs to be curtailed if food security is to be provided. What is often ignored is the contribution of electricity in rural areas and its impact on fertility. Research by SARI (Economic and Social Benefits of Power Trading Arrangements in the South Asian Growth Qudrangle) (www.sari-enrgy.org) shows that in electrified rural areas the TFR is 26% lower than in non-electrified areas and people live longer with greater empowerment of women freed from the overburden of daily household chores.
The beauty of mountainous countries is that their surface may be small-- lying within fixed borders. But if one incorporates 3-D space one finds that they are actually large economies with height in their favour--- and the infinite forests potential as a tradable, sustainable natural resource, including carbon trading.
For example, the contribution to GDP by the forestry sector is insignificant. As matter of fact, Nepal tacitly subsidizes this sector as its economic benefits are being reaped by the unscrupulous forest encroachers and their mafia.
Nepal’s innovation in the community management of forests, through user groups, is world renowned as duly recognized by the Nobel Prize for Economics being awarded, in 2009, to Prof. Elin Ostrom. Experts estimate that the 500, 000 hectres of forests in Nepal can easily yield Rs 13 billion in annual revenue. This does not include benefits from soil conservation, sale of fuelwood, animal fodder, salwood from exports.
However, for any significant impact of this sector on GNP, poverty, employment and agro-forestry industrialization commercialization would be a sine qua non. For which purpose, the private sector must take the lead role to conserve, afforest, reforest etc in partnership with the public sector and local people – more an innovative 4Ps approach rather than simply the 3 Ps (PPP). The extra P is the people –be they tribals, dalits or forest dwellers.
Innovative tenancy reforms could be considered examining the feasibility of Land Banks for rural and urban sectors with the full participation of the regional private sector using remittances and accessing the stock and bond markets. To begin with, one may even permit cross border trade in stocks and bonds and also permit barter trade, if need be, for the regional agro-forestry products being promoted by Land Banks’ enterprises.
Establishing LDC-friendly projects:
(1) R and D in low cost nanotechnology for mountain development;
(2) Bee keeping and honey manufacturing for global markets;
(3) Expand and deepen SAARC Food Bank and allow barter trade as repayment with pricing by a SAARC Pricing Authority;
(4) Create SAARC Land Banks;
(5) Invest in world class SAARC Cold Storages and capital intensive SAARC Warehouses in major distribution points;
(6) Sponsor cross border haat bazaars and trade fairs to make trade pro-poor especially between contiguous communities who enjoy the same culture.
(7) Undertake SAARC waterways studies;
(8) Commence with the ESCAP-UNDP Trans Asian and Railway Highways;
(9) Set up a SAARC Regional Low Cost Airline duly subsidized by all nations;
(10) Pre-feasibility Studies of Trans Border High Speed Rail Transportation;
(11) SAARC Construction and Engineering Corporation to undertake regional and sub regional projects as a SA-TNC;
(10) To encourage people-to-people Corporation between SAARC peoples and China, the private sector take the initiative to develop a SAARC Kailash – Masoravar Project to build a world pilgrim city mobilizing funds from Hindus-Buddhists-Bons-Confucians-Spiritualists of the world.
(1) For LDCs ‘production complementarities’ are much more vital than ‘trade complementarities’.
(2) SAFTA without trade in service and in the absence of Trade Facilitation Agreements and a Regional Treaty on Transit and Tran-shipment Transportation will negate the LDCs potential;
(3) A Regional Agreement on Commercial dispute Settlement is an absolute must for harmony, equity and justice by and between the private sector and speedy settlement of commercial disputes without state intervention –unless asked for;
(4) The ADB has done admirably in economic diplomacy with SACEP and its ability to move SAGQ process forward-- that too from a ‘project-by-project approach’ to a ‘sector approach’, which hopefully will lead to regional policy coordination;
(5) FICCI’s sustained interest and engagement in sub regional cooperation through SAGQ is admired too and, finally,
(6) As can be learnt from the implementation of the ADB’s SACEP tourism project so far, one gathers that it is yet compromised by the inability of the national actors to “think global/sub-regional and act local” quite contrary to the fundamental attitudinal and perceptional requirement of true globalization.
They still think local and act regional hoping to maximize short term national benefits. The role of the SAARC Chamber. Islamabd, and SAARC Secretariat, Kathmandu is vital for this transformation.