South Asia’s failure to develop an identity
By Shahid Javed Burki
Monday, 14 Sep, 2009
IN the lead up to any discussion of the various regional integration initiatives taken by the governments of South Asia over the last several decades, three points are worth highlighting. South Asian governments have found it difficult to turn to regional integration as a way of promoting economic development in the area.
This has happened even though there is recognition in the world that, notwithstanding trade theory, size matters in international trade. For the smaller countries in the developing world, size can be enlarged through regional integration.
At this time the world has hundreds of regional trading arrangements not only involving developing countries but also industrial nations. The most successful of these is the European Union which was initially set up to administer trade in two commodities – coal and steel – among the European countries. It is now a full-fledged customs union of 27 countries some of whom have abandoned their own currencies in favour of the Euro, a common currency managed by the European Central Bank.
While the developing world does not have any example of regional cooperation that matches the success of the European Union, some regional integration initiatives have succeeded more than others. The Association of South East Nations, the ASEAN, has evolved into a viable regional arrangement that is moving, albeit slowly, towards a custom union. In the southern part of Latin America, the Mercosur arrangement has scored both economic and political successes.
If regional arrangements can make contribution to economic development and if there are cases of success in other parts of the world, why have the countries of South Asia not been able to move in that direction? This should have happened given South Asia’s “historical and civilizational links” in the words of Professor Baru who has written a paper on the subject for the Asian Development Bank.
However, this notion would be rejected by many in each of the countries of the region since each one of them is seeking to establish not just their individual national identity, but also a distinct cultural identity. “What geography proposes, history disposes” writes Baru. In other words, the countries of South Asia carry a heavy burden of history in which hostility towards one another has developed over time.This was the result of the actions taken early on as each country attempted to develop an identity of its own.The most obvious example of this is to be found in the troubled history of relations between India and Pakistan, South Asia’s largest countries.
The second reason why South Asia has been so slow to move forward in terms of regional integration is the relative size of India. Especially after the acceleration in the Indian rate of economic growth in recent years, the country towers over its neighbours. The evolving theory concerning regional integration would suggest that it is advantageous for the smaller countries to work with the large ones to draw benefits from their larger markets. This has not happened in the case of South Asia mostly for political reasons..
The third reason for South Asia’s failure at achieving regional integration is the weakness of the institutions that could have supported it. It has to be accepted that for regional integration to work, the countries involved must be prepared to surrender some aspects of their sovereignty to regional institutions.The South Asians have been very reluctant to do this.
While the South Asian Association of Regional Cooperation, the SAARC, created a secretariat, this institution was given few powers. The countries that were members of the SAARC jealously guarded their sovereignty and did not allow the Kathmandu based secretariat to develop. All decisions were taken by the capitals with practically no initiatives coming out of the secretariat.
The member countries have gone to considerable length to prevent the SAARC Secretary General to gain stature. He is even denied a seat at the table when the heads of state and government meet for their annual summits.
To these three reasons I would add a fourth – the proliferation of regional institutions in South Asia. Some of this was done as an extension of the persistent hostility between India and Pakistan. The BIMSTEC, for instance is an institution for regional cooperation that was created in parallel to the SAARC. Although the initiative for its establishment came from Thailand, India took an active interest in its development. It was seen as “SAARC minus Pakistan” with Myanmar and Thailand added to the original formulation. Some of the regional institutions that have been created were set up to pursue very limited objectives. Almost all of them exclude Pakistan.
It is not often realised that there are enormous economic benefits of regional integration. South Asia could add at least one percentage point to its rate of economic growth by going in for regional integration much more seriously and aggressively than it has done in the past. It is clear that that has not happened with the creation of the SAARC and the decision taken in January 2004 at the summit in Islamabad to move towards a free trade area.
Although, the South Asia Free Trade Area, the SAFTA, was launched formally two years later and became effective on July 1 of that year, it has made little difference to trade among the countries of the region. Why has that not happened? Could this have occurred had the SAARC and SAFTA been supported by the right set of institutions?
Have the South Asian peoples and governments decided to which part of geography they belong? India is looking east while Pakistan continues to flirt with the Middle East. In the case of the latter religion sometimes dictates international economic relations more than pure economic interests.
In my view regional integration will only become possible when the South Asian countries grant transit rights to each other. This has become a highly contentious issue. The three countries that matter in this context – Bangladesh, India and Pakistan – have played politics by not allowing trans-country land trade through their territories.
There is also the need to determine what is the appropriate institutional set up required to promote regional integration in South Asia. How should the institutions that already exist be improved to make them more effective in terms of regional cooperation. In this context there are lessons to be learnt from other successful efforts at regional cooperation. As South Asia continues to make an effort to develop a customs union it would be useful to examine how this was helped by institutional development in Europe.