Comment: SAARC promises regional economic integration

With the ‘Addu Declaration’ issued at the conclusion of the 17th SAARC Summit in Maldives, resolving to take the maritime and rail linkages among member-nations forward and with tangible goals set for the present, there is promise of SAARC moving forward to integrate South Asian economies.

The decision for India, Maldives and Sri Lanka to cooperate in building maritime connectivity and for India, Bangladesh and Nepal to develop railway links will go a long way in bringing SAARC goals nearer to achievement full 25 years after the concept of South Asian cooperation was given some practical shape. Each of these components need to be expanded to cover other nations in the region. Bringing Afghanistan and Pakistan, into this process of building maritime and rail-road linkages in South Asia acquires importance, if the current initiative were not to be lost.

The success of SAARC depends on a variety of factors, both internal and external. First, there is the question of political resolve in member-nations to implement all the various declarations and decisions of SAARC summits. Differences between India and Pakistan have hampered the speedy completion of the SAARC agenda from the beginning. The inclusion of Afghanistan as a full-fledged SAARC member has brought in both opportunities as well as challenges.

Earlier the focus was on India-Pakistan differences as obstacles to progress. Now it is for Pakistan to address issues pertaining to fundamentalism and terrorism which affect the region and sort out the problems in its relations with Afghanistan. Pakistan will also have to shed its perceived security concerns related to Afghanistan and also facilitate over-land connectivity and two-way movement of goods between India and Afghanistan.

The India-Pakistan differences are really not as insurmountable as they might appear. Mutual trust will help to resolve them in course of time. Unfortunately, terrorism sponsored from Pakistan territory has continued to make neighbouring India look at Islamabad with suspicion.

There seems to be some realisation in Pakistan’s political circles about the need for working closely with Afghanistan and India even to eradicate terrorism from its soil. Pakistan-based terror groups, often assisted by the ISI, have also been using the territory of other SAARC nations, particularly Nepal and Bangladesh, to target India, which has give cause for concern to these countries also. Apprehensions now exist even in Maldives and Sri Lanka.

India’s role and responsibility

SAARC has taken 25 long years to reach where it is today. The growth of Indian economy during this period, and the opportunities that it offers to India’s South Asian neighbours, jointly and severally, were not there when SAARC was founded. India’s place in the global economy has given New Delhi a certain leverage and confidence to look at SAARC, and indeed at the world beyond, in full awareness of its responsibilities and role in contributing to their economic advancement.

South Asia’s economic integration will help India’s growth as much as the economic growth in its SAARC neighbours. Given the fact that the global economic turmoil has left very few nations, regions and groupings unaffected, for India to sustain its own economic growth it should help to develop the markets in South Asian countries and, at the same time, open up its own vast market to them. India’s economic success has contributed to a new awareness in these countries of their larger neighbour being more of a source of support and cooperation than of irritation. There are indications of fairly common desire to sort out the differences and irritants that their countries may have with India.

In the new environment of a fast globalising world, cooperation for a better future takes precedence over political confrontation and contention left over by history. In an environment of cooperation, willing neighbours will find India open-mined and generous in dealing with them. Even as efforts must continue to peacefully resolve lingering bilateral problems, SAARC countries must work together for the larger goal of peace, progress and prosperity of their people.

Common currency for SAARC?

Though SAARC’s founders had contemplated the EU model for it, the Association has been reluctant even to consider measures such as a SAARC passport for greater freedom of movement and unhindered trade, not to speak of open borders and single currency for the region’s integration. The Addu Summit was characterised by the usual timidity in this regard. The Summit Declaration chose not even to mention a forward-looking suggestion by the Sri Lankan President, Mahinda Rajapaksa, for a ‘South Asian currency’.

However, Maldives has taken the initiative to begin discussions with India and Sri Lanka about direct exchange of its rufiya against the currencies of the other two nations. For Maldives, in particular, the measure would yield immediate benefit. India and Sri Lanka are its major trading partners and earning US dollars to pay for imports has been a major problem for the country. The solution should lie in balancing the books between SAARC members in terms of dollars and expanding the experiment to cover bilateral arrangements among all SAARC members. Common SAARC currency is an idea the adoption of which may become unavoidable, after a time, when there is greater integration of SAARC economies, including on the labour front.

Migrations in search of employment in the region are a problem and varying restrictive visa regimes are a part of it. India’s neighbours are complaining about the non-availability of the facility of visa-on-arrival regime in India. Maldives offers this facility to all nations owing to its needs as a global tourist destination. Sri Lanka, which used to be open, has begun to review the position: it has decided that the facility has to be bilateral. India has genuine concerns in regard to security and unauthorised movement of individuals.

Experience, however, has shown that ban on travel movement has not made the security situation any less worrisome. For Sri Lanka, the source of apprehension is different: Colombo is reluctant to enter into a Comprehensive Economic Partnership Agreement (CEPA) because of its fears about Indian professionals and skilled labour flooding its market. India could have similar apprehensions, and a via media needs to be found at the SAARC-level. Issues remain between India and Bangladesh, on the labour front.

SAARC needs to evolve a common economic and fiscal policy for an effective free trade area. The Indian decision announced at Addu, to prune the ‘Sensitive List’ from 425 tariff-lines to 25, is a big positive step in the direction of economic integration of the SAARC countries. Moving in slow and halting steps, SAARC has, nevertheless, gathered some strength. The setting up of the SAARC University in New Delhi will create greater awareness among the young of the region of their common heritage, shared interests and help promote common standards in higher education.

The harmony and the spirit of mutual understanding and cooperation witnessed at the Addu Summit should, one hopes, lead to SAARC countries speaking with one voice on important issues in international arenas regardless of bilateral difference such as those between India and Pakistan. Complex bilateral problems are best left to be resolved through bilateral negotiations. The SAARC mandate rightly prohibits raising of such issues in the group’s meetings at different levels.

Perhaps, the most important feature of the 17th SAARC Summit was the one pertaining to the promotion of maritime and rail connectivity among three of the region’s eight countries. Much improved connectivity – maritime and on-land, duly extended to cover all member countries, will lead to reintegration of the region, which was, not-so long also, one single whole.

<strong>The writer is a Senior Fellow at the <a href=”” target=”_blank”>Observer Research Foundation</a></strong>
<em>All comment pieces are the sole view of the author and do not reflect the editorial policy of Minivan News. If you would like to write an opinion piece, please send proposals to [email protected]</em>

Comment: India-Maldives ties moving forward

Nothing explains the width and depth of bilateral relations between India and Maldives than the speed with which the People’s Majlis passed a special legislation unanimously for the visiting Heads of State and Government to address members in a special session, only days before Prime Minister Manmohan Singh was to arrive in Male for bilateral talks with President Mohammed Nasheed.

Despite the deep divisions within the Maldivian polity, which often gets reflected in Parliament, as in other democracies, Maldives offered a near-full House when Singh became the first visiting Head of Government to address the House.

“The People’s Majlis is a testimony to the strong faith the people of Maldives have shown in democracy. As a fellow democracy, we take delight in your achievements,” the Prime Minister said.

“India will be at your side in your transition to a fully functioning democracy. We will assist the Majlis by way of training, formulation of rules and regulations, and any other assistance that you may desire,” he said, touching upon the democratic milestones achieved by this “pearl of the Indian Ocean” in a short span since 2008, when the nation adopted a new Constitution providing for multi-party democracy and elected a new President.

Singh also touched upon the formation of the India-Maldives Parliamentary Friendship Groups. The Indian Prime Minister also met with the Leader of the Opposition in the Majlis, Thaseen Ali of the Dhivehi Rayyathunge Party (DRP), setting a healthy precedent.

In a way, the Prime Minister’s references to the ushering in of democracy in Maldives and the strengthening of democratic institutions in the country were an acknowledgement of the initiatives taken by President Nasheed and his Government since his Maldivian Democratic Party (MDP) began a movement for the purpose while in the opposition.

As Singh pointed out in his Majlis speech, Maldives has “undertaken the reforms necessary for the independent functioning of the judiciary and other vital organs of the State. The People’s Majlis has upheld the freedom of speech and expression of the people and the media which are the pillars of democracy,” he said.

The Prime Minister’s references to capacity-building thus included Indian assistance to all sections and sectors of Maldivian Government and democratic institutions. When put into action, it would go a long way in furthering democratic linkages, whose institutional mechanisms would go a long way in deepening and widening the ties and trust between the two Indian Ocean neighbours.


After structured talks between President Nasheed and Prime Minister Singh, the two sides signed six agreements. Topping the list was the Framework Agreement on Cooperation in Development. The agreement committed India to aiding and assisting Maldives in a series of development projects over the coming years. India is already committed to setting up the Maldivian National University in Male, for which buildings are already coming up.

Another agreement provides for New Delhi renovating the Indira Gandhi Memorial Hospital in the capital, a gift from India. Prime Minister Singh said that India would also undertake a feasibility study on constructing a port in northern Kulhudhuffushi. India also contributed substantially to the development of Addu City and Atoll into the ‘convention capital’ of Maldives to help integrate the southern part into the nation at a faster pace.

Given the economic realities in which Maldives is placed, combined with some of the politically-driven decisions of the Government in the past, Indian assistance for the atoll-nation has always been substantial and readily forthcoming. Immediately after President Nasheed came to office in November 2008, India extended a US$100 million line of credit, as sought by the Maldivian Government. In 2009, India fully subscribed the $ 100-m treasury bonds floated by Maldives.

Among the agreements signed during the prime ministerial visit this time, one provided for a US$100 million standby credit facility for the country.

Sensitivity to security concerns

The second item on the list of six agreements was a ‘Memorandum of Understanding on Combating International Terrorism, Trans-national Crime, Illicit Drug Trafficking and Enhancing Bilateral Cooperation in Capacity-Building, Disaster Management and Coastal Security’.

As the long title indicates, the agreement reads all-inclusive, to cover all aspects of security, starting with human security. At the news conference held after the conclusion of the agreements and bilateral talks, both the leaders touched upon the decision to introduce ferry services between the two countries.

Considering the logistics and other issues involved, the two sides would be holding further talks in the matter, to dovetail Indian concerns, if any, and Maldivian interests, given the continuing family and cultural linkages between the peoples of the two countries in some islands.

“In furtherance of the shared recognition that the security interests of both the countries are inter-lined in the region, they (the two leaders) reiterated their assurance that each side would be sensitive to the concerns of the other on the issue and that their respective territories would not be allowed for any activity inimical to the other and by any quarter,” the Joint Statement issued at the conclusion of the visit said.

Though tugged in between commitments on fighting international terrorism, piracy and drug-trafficking, the message was clear. In this context, the joint statement said, “The two leaders agreed to strengthen cooperation enhance maritime security in the Indian Ocean Region through coordinated patrolling and aerial surveillance, exchange information, capacity-building and the development of an effective legal framework against piracy.”

India’s concerns in the shared Indian Ocean neighbourhood do not stop with terrorism, piracy and drug-trafficking, though, among them, there is always a greater concern about the first in the list. Strategic analysts in India and elsewhere have often been writing about the perceived increase in fundamentalism in Maldives. At the conclusion of the SAARC Summit, fundamentalist elements in southern Addu set fire to, and later decamped with, the monument erected by Pakistan as part of a SAARC custom. To them, the motifs at the foot of the monument depicting the artefacts of the Indus Valley Civilisation had idols of worship, which was not allowed in Islam. The reference was to motifs resembling Buddha, worshipped in some of the SAARC nations.

While the fundamentalist Adhaalath Party has gone to court, charging the Government with going against the letter and spirit of the Constitution, some leaders of the newly-formed Progressive Party of Maldives (PPM), founded by former President Maumoon Gayoom, said those who destroyed the monument were ‘national heroes’. PPM and Adhaalath Party youth also held demonstrations, something that not all the senior leaders in the former reportedly relished. The strategic community reads all this in the context of the 26/11 experience, when sea-borne terrorists had attacked Mumbai, the nation’s business capital. For the Maldivian authorities, it is a concern about the increasing permissiveness and acceptance of fundamentalist elements, if not ideology. However, the dividing line, as they understand, is also thin.

India’s concerns are also directed at China, whose increasing interest in Maldives came to the fore with the opening of an embassy in Male on the eve of the SAARC Summit. India is alive to diplomatic and political realities, where the opening of an embassy by any country in any other by itself should not be a cause for concern. But New Delhi’s concerns now are because of China’s increasing military might and strategic ambitions, particularly in the immediate Indian Ocean neighbourhood. However, India draws clear distinction between China’s economic interests and investment potential in all nations in the neighbourhood and beyond, though New Delhi is not unaware of the political clout and dominance that it could facilitate over time.

While the neighbourhood countries are hungry for huge investments, Indian private sector, unlike their Chinese counterparts, if the latter could truly be called so, has not been so forthcoming. The result is that the countries are left with little choice. In this regard, the Indian Government may have to do as much at home as overseas to encourage the Indian industry to put big money in the neighbourhood, combining economic interests with a sense of national duty, and not crib that China and Chinese are everywhere and that they had no space to play out when they enter overseas markets belatedly.

The writer is a Senior Fellow at the Observer Research Foundation

All comment pieces are the sole view of the author and do not reflect the editorial policy of Minivan News. If you would like to write an opinion piece, please send proposals to [email protected]