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Address: 177-A, Shadman-II, Lahore, Pakistan. Tel: 0092-42-7555621-8, Fax: 0092-42-7555629 Email: sajournal@gmail.com Website: www.southasianmedia.net
S O U T H
A S I A N
Contents Editor Imtiaz Alam
Roadblocks to getting connected in South Asia Khaled Ahmed
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In This Issue
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“Connectivity”: Why the Resistance to Roads? Khaled Ahmed
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Towards a Seamless South Asia: Vision and Tasks Ahead Dr Prabir De
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Geopolinomics of Central Asia's Traditional Indus Basin Corridor Dr Aftab Kazi
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Dynamics of Sub-Regional Cooperation in South Asia Shahab Enam Khan
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Madlives Aminath Najeeb
Potential for Cross-LoC Collaboration in Jammu Kashmir Moeed Yusuf
Nepal Yubaraj Ghimire
India-China Border Trade Connectivity Prof. Mahendra P. Lama
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IP Pipeline—Instrument of Socio-Economic Stability Aasir Kazmi and Shahbaz Khan
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Publisher Free Media Foundation
Towards Détente in South Asia Ali Ahmed
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Facilitator South Asian Free Media Association (SAFMA)
Global Financial Turmoil and India Dr Abhijit Sen Gupta
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Genesis of Military Intervention in Bangladesh Dr Sayeed Iftekhar Ahmed
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“Post-War” Dilemmas of Diversity in Sri Lanka Asanga Welikala
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What about Economic “Connectivity”? Ijaz Nabi
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Book Review: Punjabi Taliban Khaled Ahmed
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Senior Consulting Editor Khaled Ahmed Executive Editor Zebunnisa Burki Assistant Editor Bushra Sultana Editorial Board Afghanistan Farida Nekzad Bangladesh Reazuddin Ahmed Bhutan Gopilal Acharya India K K Katyal
Pakistan I A Rehman Sri Lanka Sharmini Boyle
Designed by DESIGN 8 Editor’s Post E-mail: sajournal@gmail.com
Address: 177-A, Shadman-II, Lahore, Pakistan. Tel: 0092-42-37555621-8, Fax: 0092-42-37555629 Email: sajournal@gmail.com Website: www.southasianmedia.net
S O U T H
A S I A N
Contents 2009—Year in Review Afghanistan: Major Developments Danish Karokhel Bangladesh: Many Promises, Few Deliveries Nader Rahman Bhutan's 365 Days Gopilal Acharya and Passang Dorji India: Defining Moments Soutik Biswas Maldives: Breaking with the Past Aishath Shaheen Nepal: Eventful Year of an Eventful Country Prateek Pradhan 2009: Pakistan's Year of Living under Terrorism Khaled Ahmed Sri Lanka: Brutal War, Triumphant Peace Mirak Raheem Documents The New Silk Roads Transport and Trade in Greater Central Asia (Excerpts) Edited by S. Frederick Starr Declaration of the Fourteenth SAARC Summit
Editorial
Roadblocks to getting connected in South Asia Khaled Ahmed The 14th SAARC Summit, 3–4 April 2007, New Delhi, agreed to build “a partnership for prosperity”—against the background of high growth rates in the regional states—recommending “intra-regional connectivity, particularly physical, economic and people-to-people connectivity” facilitating “smooth flow of goods, services, peoples, technologies, knowledge, capital, culture and ideas in the region”. The Summit asked the “National Coordination Committees to formulate concrete programmes and projects to complement national implementation efforts” in this regard. The region was “extended” into what is vaguely known as Central Asia with the inclusion of Afghanistan in SAARC. South Asia looked like “taking off” economically and the world responded to the idea of “connectivity”, an initiative of the Indian prime minister, Manmohan Singh, in the shape of observer states: China, Japan, European Union, Republic of Korea and the United States of America. Prime ministers of both India and Pakistan—Manmohan Singh and Shaukat Aziz—were economists first and politicians later and believed in “connectivity” as the prime requisite for economic change in a region stuck in the outmoded paradigms of what Mahnaz Ispahani in her book, Roads and Rivals: The Politics of Access in the Borderlands of Asia (1989), had called “antiroutes”. Before the Summit, SAARC ministerial consultations had seen the vision Prime Minister Singh had conceived for South Asian connectivity. The Indian study had suggested the building of a network of 6,540-km railroad and 11,844-km road corridors. It also included construction of 10 ports, two inland waterways running into 2,757-kms, and 16 airports. It recommended the construction of 10 regional roads and five rail corridors. Its main emphasis was on a transport network in the region, considered crucial for all states but especially for Nepal, Bhutan and north-east India. Mr Singh's proposals were bold and emanated from an imagination that vaulted beyond the current conflictual environment. He recommended “the immediate construction of over 2,000 kms of highways from Lahore to Agartala” as the first leg of the project, passing through Delhi, Kolkata and Dhaka. He wanted a bilateral agreement between India and Bangladesh for the movement of vehicles and goods across the IndoBangladesh border.
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This was the first “corridor”. His second corridor was to run from Kathmandu to Kolkata/Haldia (1,323 kms), passing through Birgunj. This would involve up-gradation of the 180-km road passing through Bihar and the construction of a fast-track road between Kathmandu and Birgunj, where a freight station would be established. He wanted to ensure better connectivity between north-east India and Bangladesh too. Other corridors included the 1,362-km Kathmandu–Mongla/Chittagong road, the 906km Samdrup–Jongkhar–Kolkata road and the 227-km Agartala–Akhaura–Chittagong road. Pakistan was advised to agree to connecting Nepal with Pakistan, after enhancement of the 2,643 km Kathmandu–Nepalganj–New Delhi–Lahore–Karachi road, while other networks on offer were the 966-km Thimphu–Chittagong road and 663 km Kathmandu–Lucknow road. He also wanted India linked to Myanmar with a road through Bangladesh. States with demarcated boundaries are supposed to obstruct connectivity as a means of asserting their sovereignty. The barriers are not only physical but also invisible like high tariffs against the passage of goods and visa restrictions against the passage of human beings. Assertion of sovereignty is necessitated by the need to defend against perceived aggression or the need to attack. Before the concept of the state gained ground, “connectivity” was in the shape of roads that punctured isolated societies and brought them new ways of thinking and living. South Asia was a part of a complex of such “silk roads”. Had there been no connectivity, the South Asian civilisation as we know it would not have come into being. Inter-state conflict has marred South Asia's capacity to grow as a region. SAARC has often been called a failed idea. Looking forward, conflict looms larger on the horizon than peace. Having tired of “normalisation” and “avoidance of conflict”, many in South Asia are adopting lateral thinking based on what may be called “thesis reversal”. If the thesis is: peace leads to trade, then let us not try to build peace, which is hampered by nationalism, but start trade to produce the reverse thesis: trade leads to peace. If the states find it politically impossible to resolve their bilateral disputes, let them agree to trade without changing their mutually hostile nationalisms. Connectivity means roads, railways, water courses, gas pipelines, and electricity lines that cross frontiers otherwise lined with armies to prevent their violation at great national cost. Now that Afghanistan is a part of South Asia a new imagination of possibilities is gaining currency among economists. The strategist may still think that “blocking” may be a source of leverage, as opposed to “letting pass” which the economist insists gives advantage even in an environment of conflict. “Median states” like Afghanistan and Pakistan giving access to Central Asia can enhance their power by allowing access. The strategist backing “anti-routes” against connectivity is being
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gradually proved wrong because of the failure of the median state to achieve its objectives through “obstruction”. In Central Asia too the opening up of the old “silk roads”, after the end of the Cold War “blocking” function of the Soviet Union, is taking time. China has embarked on a new strategy of avoiding “infiltrated conflict”, not by setting up anti-routes or firming up the borders, but by enhancing connectivity through trade, roads and gas pipelines. Pakistan's strategist has given ground to the economist by not attaching conditionalities to the Iran–Pakistan–India (IPI) gas pipeline when it suddenly became feasible in the 1990s. But in the case of Indian trade to Afghanistan and Central Asia through Pakistan, the strategist continues to be a hindrance. Yet in the case of the Turkmenistan–Afghanistan–Pakistan–India (TAPI) gas pipeline the strategist may beat a retreat as TAPI becomes feasible according to recent reports. The roads and electricity lines linking Tajikistan to Afghanistan and Pakistan may become a reality, bringing resource-rich Central Asia closer to energy-hungry, fast-growing South Asia. Conflict is still the dominant paradigm between the two major South Asian states, India and Pakistan, but separately both are successfully shifting to the paradigm of connectivity. India and Bangladesh agreed late last year to allow mutual access and routes; Pakistan is determined to create more energy-related routes to China and Tajikistan. Sooner or later the looming ecological threat to agriculture in the region and growing poverty among the masses will concentrate the South Asian mind more decisively in favour of “routes” and against the “anti-routes” of the Cold War.
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In This Issue (The views expressed in this journal are solely those of the authors)
“Connectivity”: Why the Resistance to Roads?
Khaled Ahmed, senior journalist and political analyst, uses Mahnaz Ispahani's book Roads and Rivals: The Politics of Access in the Borderlands of Asia as the basic reference for his paper on roads and connectivity in South Asia. For the author, Ms Ispahani's book has become important in today's Pakistan since the book insists on retaining the state's focus to safeguard “national security” and thus urges against building inter-state roads. However, Mr Ahmed writes, the countries are now being advised to concentrate more on creating trade corridors. The author believes that it is more useful for Pakistan to form a trade corridor with a country it considers a threat than the one it considers a friend since the resultant interdependence will facilitate normalisatiom of ties between those two states. Towards a Seamless South Asia: Vision and Tasks Ahead
Dr Prabir De, Fellow with Research and Information System for Developing Countries (RIS) New Delhi, while lauding South Asia's economic performance in the last two decades, points out that the lack of regional connectivity is one of the major constraints hindering the full potential of regional growth and economic integration in South Asia. Strong regional cooperation among South Asian countries is essential for establishing SouthAsia-wide physical connectivity and economic integration. Prof. De argues that in order to move towards a seamless South Asia, a comprehensive approach is needed to address the physical infrastructure issues, including roads, railways, inland waterways, maritime transport, dry ports, airports, seaports, and information and communication technology, as well as the non-physical soft infrastructure issues, including cross-border transit facilitation measures, customs clearance, and other facilitating polices and regulations. South Asian countries need to make coordinated efforts to integrate the border areas and landlocked economies with the export-led growth process in order to effectively tackle the downside risks of globalisation. Dynamics of Sub-Regional Cooperation in South Asia
Shahab Khan, assistant professor at Jahangirnagar University, Dhaka, looks at the South Asian sub-regional growth quadrangle, presenting an overview of the current state of subregional infrastructure and Bangladesh's perspectives on trade
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routes. The author says that Bangladeshi discourse recognises that investment in transportation systems alone is not enough; it needs to be supplemented by a transparent policy, improved procedural and operational efficiency and regional political consensus. According to Dr Khan, issues of sovereignty, migration and security are critical in allowing or preventing free movement of goods and natural persons across borders and, therefore, it is crucial to develop adequate multilateral arrangements in addition to physical facilities to accrue the benefits from regional connectivity. Geopolinomics of Central Asia's Traditional Indus Basin Corridor
Dr Aftab Kazi, senior fellow with the Central Asia-Caucasus Institute & Silk Road Studies Program, discusses the importance of Central Asia's traditional transit corridor through South Asia, particularly through the port cities of Pakistan, which have historically served Central Asia, including China, Mongolia and central Siberia, to connect this broader region with the world economy. The author analyses the prospects of regional economic development at various levels including nation building, transit-route politics, economic and political development, and regional and international politics. Potential for Cross-LoC Collaboration in Jammu Kashmir
Moeed Yusuf, South Asia Advisor at the United States Institute of Peace (USIP) Washington DC, presents various avenues for economic development in Pakistan-administered Kashmir and potential initiatives where Pakistan and Indian-administered Kashmir could cooperate with each other. Providing a brief overview of the Kashmir dispute and the socioeconomic profile of Pakistan-administered Kashmir, the author conducts a detailed analysis of the potential for economic development and collaboration across the LoC as a potent approach. According to Mr Yusuf, the true potential for economic integration in Jammu and Kashmir lies not in trade in goods, but in the numerous possibilities for collaborative investments and joint ventures within each part of Jammu and Kashmir as well as across the LoC. The ultimate objective of taking the economic route is to ensure sufficient integration among economies as well as peoples on both sides of the LoC, in the hope that such integration, while bringing normalcy to life in Jammu and Kashmir, will also end up creating a high peace dividend.
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India-China Border Trade Connectivity
Professor Mahendra Lama, vice chancellor, Central University of Sikkim prepared a report, commissioned by the Skikkim government in 2005, on Indo-China trade via the Nathu La pass. The report led to the reopening of this trade route after 44 years and serves as the guiding factor in Indo-China border trade policies and agreements. Using extracts from his report, Prof. Lama says other routes for border trade between India and China were in an inhospitable terrain, which makes trade through Nathu La doubly attractive. The author believes that this route has the potential of transforming the economy of the region and estimates trade through the pass at Rs 2,266 crores (USD 527 million) by 2010. While the trade is initially restricted to 29 items from Sikkim and Tibet Autonomous Region (TAR), Prof. Lama believes it will eventually benefit states like West Bengal and Assam, as well as neighbouring Bhutan. IP Pipeline—Instrument of Socio-Economic Stability
Aasir Kazmi, assistant production engineer, and Shahbaz Khan, manager production at MOL Pakistan Oil and Gas Company, present the basics of the much talked about India–Pakistan–Iran (IPI) gas pipeline project, analysing the challenges to its realisation. The authors conclude that Pakistan alone might not be able to appropriately utilise the imported Iranian gas. However, the pipeline can play an effective role in the economy of the country and as an instrument of stability. The authors also put forward recommendations that can prove helpful for the successful execution of the IPI project, such as taking the Baloch leadership into confidence by including them in the processes of the project and harnessing Chinese coffers for financing the project. Towards Détente in South Asia
Ali Ahmed, research scholar in international politics at the School of International Studies, Jawaharlal Nehru University, New Delhi attempts to conceptualise South Asian entente through traversing territory uncharted so far in strategic literature. The author states that while Pakistan has an offensive strategic doctrine at the sub-conventional level and India at the conventional level, both states hold offensive doctrines at the nuclear level that deepen the security dilemma in both states. In case the two states were to retract the offensive bias in their respective strategic doctrines, their security dilemma would be greatly alleviated. The paper suggests starting a strategic
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dialogue outside the presently paused composite dialogue to bring about a changed model that achieves security through peace. According to the author, détente brought about thus will set the stage for eventual balancing of forces. Entente in South Asia would then become a feasible proposition. Global Financial Turmoil and India
Dr Abhijit Sen Gupta, associate professor at Jawaharlal Nehru University, discusses the adverse ramifications of the economic slowdown that has dented India's growth prospects significantly more than what was initially anticipated. Dr Gupta is of the view, however, that it would be incorrect to ascribe the entire downturn to external factors as India was already in the midst of a domestic cyclical slowdown when the crisis occurred. The author asserts that, while policy measures were quickly implemented to offset the decline in growth rate, the quantum of these measures significantly reduced the space for incremental policies in case the downturn persists. Dr Gupta suggests that a number of short and medium term strategies will have to be evolved to ensure the sustainability of the growth momentum India enjoyed in the past few years. These strategies will have to focus on alleviating the impact of the crisis on some hard hit sectors and ensure additional generation of domestic aggregate demand as well as create additional fiscal space so as to be able to sustain a high growth regime once global conditions become more benign. Genesis of Military Intervention in Bangladesh
Dr Sayeed Iftekhar Ahmed, visiting faculty at Northern Arizona University, USA, discusses Fakhruddin's caretaker government and its “anticorruption” drive to depoliticise the state and civil society and terms it a “unique case of military intervention” because instead of direct involvement, the military junta took power while hiding behind the mask of a civilian “caretaker government”. Dr Ahmed believes that the root cause of the repeated juntas can be traced to the fragmentation of the elites on the issue of identity; they failed to develop an inclusive national imagery—a major cause for the development of dual nationalism in both the elite and subaltern domains—a unique phenomenon in South Asian history. The paper concludes that the constant making and remaking of identity in the political discourse of the nation has created an opening for the military to interfere repeatedly in politics.
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“Post-War” Dilemmas of Diversity in Sri Lanka
Asanga Welikala, from the Centre for Policy Alternatives, Sri Lanka, in his paper on “post-war” Sri Lanka claims that the current situation of the country is actually a repetition of a cycle of what has transpired before. The author feels that the end of the war has only served to enable the triumphalist advancement of the “thesis” of a dominant and dominating majoritarian nationalism. Analysing the comprehensiveness of LTTE's defeat in 2009, Mr Welikala says that this will not serve to prevent the reproduction of the “antithesis” in the future. The author says, that unless President Rajapakse demonstrates a radically different approach to power-sharing and accommodation in his second term, a return to conflict remains a probability in Sri Lanka. What about Economic “Connectivity”?
A compilation of articles originally published in the Daily Times, this paper sees Ijaz Nabi, Dean at Lahore University of Managements and Sciences, analyse the economic potentials of Pakistani and Indian Punjabs. Book Review
Khaled Ahmed, senior journalist and political analyst, reviews Mujahid Hussain's book titled “Punjabi Taliban” published in Lahore in 2009. The book gives an account of terrorist activities in Punjab and discusses the transformation of the province into an extremist society where the outlawed jihadis increasingly find acceptance.
2009—Year in Review Afghanistan: Major Developments
Reviewing the year 2009 in Afghanistan, Danish Karokhel, director and editor-in-cheif of Pajhwok News Agency, Afghanistan, says that some of the major developments that took place in the country during 2009 were the 20 August 2009 presidential elections; US President Barack Obama's decision to send more troops to Afghanistan along with his withdrawal plan; the spread of insurgency from the south to the north and western zones; and the record number of casualties among foreign troops since 2001. Civilian deaths in military operations, particularly air bombing; flourishing poppy trade; growing frustration
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among the citizens about the security situation, political instability and the economy; and unbridled corruption in government as well as private organisations, also remained in the news in 2009. Bangladesh: Many Promises, Few Deliveries
Nader Rahman, assistant editor, Forum magazine, looks back at 2009 and says that the enthusiasm that led Bangladesh Awami League to victory fizzled out by the end of the year as they resorted to the politics of old. The opposition too went back to their old habits and the public lost out most in this situation. The beginning of the year also marked one of the most ghastly attacks in Bangladesh—the rebellion of the Bangladesh Rifles (BDR) cadres against their apparent mistreatment. The rebellion resulted in the deaths of 74 people. The local government elections turned into a farce and prices of essentials were kept unnaturally high by syndicates. However, the author does see a few positives in 2009, the most important being the revival of the war crimes trials and the verdict of the case of the murder of Sheikh Mujibur Rahman. Mr Rahman concludes with the hope that 2010 turns out to be a better year for Bangladesh. Bhutan's 365 days
For the authors, 2009 was another extraordinary year for Bhutan. Amid social and political progress, the country witnessed unprecedented natural disasters. A major flood and earthquake hit the country, and hundreds lost their homes and properties, especially in the east. On the other hand, colourful political debates brought home numerous lessons for a people who are into the second year of their democratic experience. India: Defining Moments
Soutik Biswas, online correspondent for BBC News in India, in his review for BBC online, takes a look at the defining events of 2009. Starting with the differences within Bharatiya Janata Party (BJP), the author goes on to Rahul Gandhi's comeback and India's performance during the recession, and events such as the launch of Tata Motor's Nano car. Moving toward entertainment, Mr Biswas hails music director AR Rahman and sound recordist Resul Pookutty's Oscar wins. The author also includes the Satyam case—India's biggest-ever corporate fraud case as a major event in 2009.
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Maldives: Breaking with the Past
Ms Shaheen, freelance journalist, says that the year 2009 started on a special note since after 30 years under the same ruler, 2009 saw a new president of the Maldives. However the year witnessed a downward spiral in the Maldivian economy that closely echoed the global economic recession, and people faced a drastic rise in unemployment, inflation and lower standards of living. Freedom of expression continued to remain in the news, with a new threat to freedom of expression introduced in the form of a new set of regulations that would be incorporated under “Religious Unity Act”, said to include policies which would empower the authorities to check printing presses, bookshops and other media for material “in conflict with Islam”. 2009 was also a year when religious revivalism came to the forefront. On a positive note, the Maldives made global headlines in 2009 for conducting the first ever underwater cabinet meeting, in a bid to raise awareness of global warming as part of the grassroots level 350 campaign against climate change. Nepal: Eventful Year of an Eventful Country
Prateek Pradhan, editor in chief of daily Karobar, Nepal, summarises the major events that unfolded in Nepal in 2009. Calling it the year of the Maoists in Nepal, Mr Pradhan starts with the Maoists taking on India by ending the centuries old tradition of appointing Indian priests in the country's biggest temple Pashupatinath. Another major event in 2009 was the direct confrontation between the president and the prime minister over the issue of chief of army staff. Prachanda's infamous video also created a huge stir in Nepali politics and society during the year. Apart from these issues, the year will also be remembered for the issue of the language of the oath of the vice president, as well as the controversy over the Maoists' federation system in Nepal. 2009: Pakistan's Year of Living under Terrorism
Veteran journalist and media analyst, Khaled Ahmed, reviews the events of the year 2009 in Pakistan. Reviewing the economic situation of the country, the author says that there was a massive contraction of the economy, mainly because of acute energy shortage, bad security environment and political disruption. Downsizing in banks, declining exports, food inflation, extreme load-shedding and the Kerry-Lugar Bill were the major highlights of Pakistan's economy in 2009. Moving on to the
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Pakistan's political scene, Mr Ahmed discusses the lawyer's movement and the NRO case in Pakistan, both of which dominated politics in the country. According to the author, during 2009, terrorism affected Pakistan's everyday life and state policy in ways few Pakistanis realise. Starting with the army's operation in Malakand, national politics and Pakistan's foreign policy was moulded by attitudes taken towards the Taliban and Al Qaeda. Sri Lanka: Brutal War, Triumphant Peace
Mirak Raheem calls 2009 one of the most decisive years in Sri Lanka's post independence history. A 30 year old ethnic war, one of Asia's longest running and most intractable conflicts, came to an end with the defeat of the Liberation Tigers of Tamil Eelam (LTTE) by the state, albeit at a huge human cost. The author looks at the situation of closed camps and IDPs in the country and concludes that, while the war has come to an end, the underlying violent political conflict which pre-dates the war remains at large. Hence, as to whether 2009 will mark a real turning point for Sri Lanka to step out of the shadow of conflict will depend on the steps taken in 2010.
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“Connectivity”: Why the Resistance to Roads? Khaled Ahmed
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n a somewhat reductionist statement, one can say that the Pakistan Peoples Party (PPP) government that came to power after the 2008 elections in Pakistan got into trouble because it tried to reach out to the neighbouring countries with promises of “connectivity” either through improved trade relations, sharing of energy sources or allowing trade routes to pass through the country's territory. There were other very powerful causes of the government's decline in the eyes of the ruling institutions of the state, but the one often connected in popular perception to “national security” can be called the most important cause. In October 2008, an official of the World Bank in Islamabad said the Bank was ready to lend Pakistan USD 2.25 billion for a trade and energy corridor focusing mostly on Gwadar Port and its land link with China: “the trade and energy corridor that would serve as a gateway for commerce and transport between South Asia, Central Asia, China and the Gulf countries”. Pakistan will set up a big oil terminal at Gwadar together with refineries, with Chinese help, because most of the oil will be transported to China from there. But the World Bank official made other observations too: “Any land-based trade between the Gulf region and the South Asian states can best take place through Pakistan. The country would work as a link between the Gulf region, Iran, Afghanistan, China and Central Asia and that would make regional states natural trading partners. Pakistan is the ideal approach for the shipment of Indian goods to Afghanistan and the Central Asian markets”1. He could have added the Iranian–Pakistan–India (IPI) pipeline to the above “projects of peace” but for the complex tripartite negotiations going on about the IPI pipeline. A much more important thing, however, happened during President Asif Ali Zardari's meeting with the Indian prime minister, Manmohan Singh, in New York that year. The report said: The two met on the sidelines of the 63rd United Nations' General Assembly session and announced mutual agreement on a number of vital business-related issues. On top of everything else came Pakistan's agreement to allow Indians an overland access to Afghanistan. The trade corridor was first spoken of by former president, General (Retd.) Musharraf in one of his enlightened moments. He was thinking in paradigmatic terms, about converting Pakistan into a trading hub for the regions around it. Since he had begun to build the Gwadar Port—not first conceived by him though—the network of roads and railway tracks branching from the port seemed to leave India out. But later General
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Musharraf began to speak in more general terms and was once privately in favour of conceding the Indian request that a corridor be given to it for trading with Central Asia. Although the idea of the Indian corridor got stuck because the former president deferred to the “defence” angle and abstained from de-linking it from Kashmir after having established the precedent of de-linking the IPI pipeline from Kashmir. As a general he probably knew that he was standing on the edge of an identity-change of the state of Pakistan. Perhaps he realised the limits of how far he could go as a military leader in changing the country from a warrior state to a trading nation. There are two ways of looking at “geopolitical importance”, or two ways of deriving benefit from it. One is the “civilian” approach which says that the geographically important state has to develop its roadways and railways and other infrastructure, such as hotels, to facilitate those who wish to pass through. Once the geographically “connective” state has become an effective corridor of passage, its “strategic” importance will no doubt increase. And the dividend of this importance will come in economic terms and through an absence of war. The other way is the “military” approach which relies on geography as “hindrance” rather than “connection”. The military mind says: we are in the middle and we will not let you pass unless you agree to our terms. (To India, we say let us talk Kashmir before we talk free trade.) This is a warrior's approach and signalises his opposition to economic activity. In the case of Pakistan, it is the military view of geopolitical importance that has held sway. To be fair, one has to survey the past and note that “obstruction” was the received doctrine among the states till the end of the Cold War. In 1979, the Foreign Office in Islamabad, faced with the Soviet invasion of Afghanistan, was poring over the historic will of Tsar Peter the Great and the old Russian pursuit of “warm waters” to explain what the Soviets would do next. By 1991, the same Foreign Office was poring over old history books looking for “Muslim contacts” with the newly freed states of Central Asia, even as Foreign Minister Sardar Aseff Ahmad Ali toured the new “republics”, offering them assistance as a prelude to building trade routes from Pakistan to them. The Taliban were actually “discovered” during this search for routes to Central Asia through Afghanistan. The Soviet need for routes was considered hostile in 1979; routes were seen as an economic advantage in 1995. But South Asia has been a laggard in venturing out of the region and linking up with Central Asia, a race now clearly won by China.2 Pakistan as a nuclear power is eminently suited to become a trade corridor with the capacity to lay down the terms compatible with its economic interest. The Central Asian market may be small at this moment and it may be tough for India to compete with China there, but in the coming years the region of SAARC will take what is its due in Central Asia on the basis of shared history and civilisation. Afghanistan has already decided where it wants to stand by joining SAARC. The free trade project of the SAARC “common market” will finally integrate it to South Asia. The Central Asians will most probably follow provided the two regions are “connected” physically and economically. At present, South Asia does not even trade within itself and is least ready to reach out to the
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neighbouring regions.3 There is “informal connectivity” between the two regions. The smuggling that takes place between Pakistan and Afghanistan now supplies markets in Central Asia. The next stage might see Pakistan organising the Central Asian food supply on the strength of its trade corridor and making middleman's money out of it. Trouble began right after the 2008 elections. The Indo-Pak Trade Policy 2008–09 announced by Pakistan's freshly installed PPP government was immediately dubbed “India-specific” in some quarters inside Pakistan, giving rise to well-reasoned but onesided articles in the national press. Conservative opinion wished to retain the status quo which no one believes is good for Pakistan. Urdu column-writers, appearing on TV, said it would be dangerous to make Pakistan dependent on Indian imports of crucial raw material while New Delhi is conspiring against Pakistan in Afghanistan and secretly interfering in Balochistan. This argument was not borne out by facts. Reference was once again made to the trade gap between the two countries. In 2008, Indian exports to Pakistan were worth USD 1.8 billion while Pakistani exports to India were worth only USD 350 million. The reason for this was India's restrictive tariff regime which applies to the entire world and is not Pakistan-specific. By the 2008 “concession” made to India in the trade policy, the PPP government was supposed to exacerbate the already skewed trade balance and bring Pakistan in a relationship of further inequality with India. With the addition of more importable items, raising the total to almost 2,000, India's exports to Pakistan were supposed to rise to USD 4 billion. But the real reason for getting the critical opinion published was contained in the following observation: “But who will ensure the sustainability of supply of these items from India, keeping in view the ongoing war against the militants on the western borders along which India has established more than 13 consulates in the various provinces of Afghanistan”. That the objection to a liberalised import regime with India was political rather than economic became more manifest when reference was made to Interior Adviser Rehman Malik's recent statement that India was out to destabilise Pakistan by providing “financial and weaponry support” to some militants in Pakistan. After decades of subordinating economics to politics, Pakistan has placed itself at a crossroads. The crisis in Pakistan was economic despite the fact that it kept distracting itself with other less relevant issues. The politics that overrode economics did not succeed but it persisted in the Pakistani mental attitude. Arguments given above have long been refuted by circumstance; only those whose ideological creed was thus hurt did not care to take account of it. When the embargo was placed on imports from India by General Zia-ul-Haq in the 1980s, the reason was political; and the economic wisdom of Dr Mahbub ul Haq, the World Bank finance minister who wanted more liberalised trade with India, was defeated by a federal secretary who had put forward the theorem that helping India profit from trade with Pakistan was a betrayal of the Kashmir cause. Increased reliance on Indian imports has proved beneficial, rather than harmful, to the disappointment of the intelligence agencies on both sides. From General Zia's 40 items,
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Pakistan is now importing 2,000, most of them strategic raw materials; and Pakistan has not been let down. On the basis of this experience, in fact, Pakistan would be well advised to create an Indian “interest group” comprising exporters to Pakistan (there is already a beginning of it in the Punjab, Haryana and Delhi Chamber of Commerce and Industry). The intermeshing of economic interests is always more reliable compared to political compacts made when there is little mutual trust. On the other hand, the “profit motive” is blind to politics and endures beyond the alarums of war and finally compels the states to allow peace to prevail “for profit”. Pakistan has signed free trade area (FTA) agreements with Iran, China, Sri Lanka and Malaysia, but there has been no increase in Pakistani exports to these countries because of the unstable situation in Pakistan. It is hardly valid, on the basis of this, to block trade with India. Import of Indian raw material and some other items is attractive because they are cheaper when received from across the border. If the increase in Indian imports is expected to be 30 percent, it will displace the import of the same volume of more expensive imports from elsewhere. This will help Pakistan cut its manufacturing costs. The irreducible objection is therefore political. Pakistan is not the only state which succumbs to fear. The fear is bilateral, and it came to the fore when India was first compelled to consider the import of Iranian gas across Pakistani territory. The bureaucracy in New Delhi was so entrenched over this fear that it got India to prepare a fleet of ships to import gas in the form of LNG, but the “profit motive” won out in the end despite Pakistan's more scary posture of a revisionist state vis-à-vis India.4 Today India has overcome its fear of Pakistan with regard to the Iranian gas pipeline. By taking in more Indian imports Pakistan will disarm the Indian fear further and might actually persuade it to relent in its actions in Afghanistan. After coming to power, the PPP tried to lessen tensions with India and explore ways of normalising relations with it, as demonstrated in the above account. The year it announced a liberal trade policy with India, the Mumbai attacks took place at the hands of non-state actors that went from Pakistan, halting everything in its tracks. In the critical year 2009 when finally the Supreme Court cornered the government and sought to punish President Zardari under the National Reconciliation Ordinance (NRO), President Zardari was in the process of reaching out to Central Asia. On 23 October 2009, he said Pakistan would like to build trade and energy corridors with Central Asia for the development of the entire region. The country was Tajikistan with whom the plan was to build a power line importing Tajik electricity. He visited Tajikistan in July 2009 with the intent of establishing a trade and energy corridor.5 What President Zardari said was significant: Pakistan was so strategically located that it could become the hub of trade and commerce in the region. The president said that the rail and road links between the two countries through Afghanistan will give Tajikistan access to the sea through the Pakistani sea ports. He added that opening up of road links was critical to bringing the countries of the region closer and for increasing trade and people-to-people contacts for economic and social benefits of all countries. He got the experts to finalise a pre-feasibility study of the 1,300 kilometre-long road and 1,000
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kilometre-long power transmission line connecting Pakistan with Tajikistan and Central Asia through the Durrah Pass. If this was a continuation of Musharraf's policies—as a general of the Pakistan Army he too used to talk about a trade corridor from Gwadar to Central Asia—it will only benefit Pakistan by transforming it from an access-denying warrior state to a pluralist trading nation tolerant of its neighbours. In their first round of talks in May 2009, Pakistan and Afghanistan signed a memorandum of understanding (MOU) in Washington “to begin talks on a transit trade agreement which will ultimately allow India to use the WahgaKhyber route for trade with Kabul”. The memorandum committed the two countries “to achieving a trade transit agreement by the end of the year”. US Secretary of State Hillary Clinton, hosting the round, said: “This is a historic event. This agreement has been under discussion for 43 years without resolution”. Needless to say, the MOU soon came to nothing as the Foreign Office in Islamabad showed a realistic lack of enthusiasm for it and the US was seen as a mischief-maker in the region by the media, promoting the Indian cause against Pakistan.6 In December 2009, Bangladesh under the Awami League government, a year after coming to power somewhat like the PPP in Pakistan, tried to break out of a similar “security bind” vis-à-vis India. The Economist (10 December 2009) wrote: “Next month Sheikh Hasina is to make a state visit to India. Officials on both sides are confident that it will yield agreements on security co-operation, on Bangladesh's purchase of electricity from India and on the creation - virtually from scratch - of transport links across a common 4,100km (2,500-mile) border, the world's fifth-longest. Economic statistics belie the two countries' shared history and geography. Bangladesh's biggest trading partner is China. India is not even in the top ten of foreign investors in Bangladesh”. In the past, Bangladesh has been refusing clearly economically advantageous projects with India on “political bases”.7 The new initiative by the Awami League is bold, more or less like the initiative taken by the PPP in Pakistan, and it could run aground in the coming days if the rightwing opposition and the army try to destabilise it in the interest of “national security”. The cooperation between Bangladesh and India following the completion of transport links could transform Bangladesh. The Economist concludes: “The benefits of co-operation could be huge. Full economic integration with India could raise Bangladesh's average rate of economic growth from 6% [sic] to 8% [sic], estimates Farooq Sobhan, the president of the Bangladesh Enterprise Institute, a Dhaka thinktank. Now, says Mr Sobhan, for the first time, there is agreement that unresolved problems should not stand in the way of things that can be done”. The last sentence contrasts with Pakistan's revival of the Kashmir issue at a time when the PPP government was inclined to allow a trade corridor to India. Mahnaz Ispahani's Diagnoses of State Behaviour on Routes States are created by establishing borders that cut them off from their neighbours. Nations are often created by creating national identities in conflict with the national identities of the neighbouring nations. Borders are barriers to the movement of people and goods and provide “national security” by reason of their being “impervious”.
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External trade with the neighbouring states is in breach of “national security” because it tends to link national advantage to the “connection” it creates with the threatening neighbour. Self-containment is basic to national defence; interdependence between the regional states is hostile to it, endangering territorial integrity as well as national identity. If trade routes integrate regions, borders are the “antiroutes” that stand in the way. Pakistani-American scholar Mahnaz Ispahani wrote her seminal book on the issue of routes and antiroutes, Roads and Rivals: The Politics of Access in the Borderlands of Asia (IB Tauris, 1989) and remains the best source on South Asia's attitudes towards “regional connectivity”. She concluded that roads were essential to a country's internal cohesion; cross-border roads tended to be seen as breaching security and imposing cohesion where it was not required by states before they could reconcile to each other as friendly interdependent states. There were states that sought access and there were others that denied access and established antiroutes. Borders were the first natural antiroutes. Ispahani explains: A route is both a geographical and a political idea, both an end and a means. Routes create access, and access, as Jean Gottmann observes, has been a “central problem” in human history.8 It lies at the heart of person's relationship to his/her environment, and it is a matter as much political as geographical. Access in space, as Gottmann says, has been “organised at all times in history to serve political ends, and one of the major aims of politics is to regulate the conditions of access. Routes may be seen most abstractly as a form of regulation. A route may define a country or an area and make it available to the purposes of man” (p.2). Antiroutes are obstructions that may be physical or abstract, such as “tariff barriers” and “visa restrictions” between states. Ispahani explains: Opposing the route is what I call the antiroute—any natural or artificial constraint on access. Antiroutes may serve the same human purposes as routes. But antiroutes create pressure against movement—they limit, restrain, or “channel” it—where routes facilitate broader movement (p.3). By extension, the theory of antiroutes can be applied to creation of communication barriers in today's increasingly globalised world. While the state may find itself in two minds about the creation of access for external entities, it needs to consolidate the state internally by creating rail and road access on its own territory. Explains Ispahani: Militarily, routes provide the state with means for internal control and for the expansion of its external security interests. In developing countries, the concept of security incorporates both the need for internal consolidation and the need for defence against external threats. To constrain centrifugal forces, routes must permit not only peaceful means of integration but coercive ones as well. The centre must have access to the political (which often coincides with the geographical) periphery, not only to transmit a dominant ideology and culture but also to facilitate the effective deployment of troops and the extension of governmental writ. Routes built by the central government can thereby threaten the security of the traditional power structure in peripheries. They may also function as useful socioeconomic bribes to placate restless
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peoples and lure them away from local masters. Finally, a state's control of routes to its peripheries must be stronger than the control exercised by a neighbouring state if the former is to exercise real political and administrative control (p.11). Ispahani's insight applies tellingly in the case of Pakistan's national security perceptions: For successful defence against external threat, national forces must be mobile within a state. The antiroutes must be held strong, and the routes secured to provide speedy, efficient deployment of forces to meet threats from many directions—important attributes for most developing countries, located in unstable regional environments and often enmeshed in territorial disputes with neighbours (p.12). Ispahani examines the case of Balochistan as one region in Pakistan where the state has struggled to establish routes and prophetically throws light on the politics of controlling people spilling across the national antiroute. She writes: Estimates of Baloch population vary, but a 1984 study placed 3.7 million Baloch—about 70 percent of the entire Baloch population–in Pakistan (p.32). Balochistan may be entered from the north through a host of mountain routes, including the Bolan, Khojak, Gomal and Tochi. The Khvber Pass is similarly a gateway to the North West Frontier (p.36). The British Raj emphasised the antiroute—denying access, sketching buffer zones, drawing boundaries that raised the costs of free movement. Inside Balochistan a circumscribed policy of route-building—to support the demands of imperial frontier defence—was adopted (p.27). Two developments have taken place. Pakistan's capacity to create and maintain antiroutes against hostile incursion has eroded while its policy of creating defensive routes inside Balochistan has become challenged by what Caroe called “the empty porch”: According to the book, Sir Olaf Caroe, one of the last British guardians of India's frontier, argued for these old links in his influential book Wells of Power (1951).9 The Persian Gulf and the Gulf of Oman were a single sea channel, he argued; the “political assessor must reckon them as one right down to Karachi”. The new state of Pakistan, he said, “with its seaport and airport at Karachi and its long coastline of Balochistan, stands at the mouth of the larger Gulf, and is vital to the reckoning”. Balochistan was “an empty porch to the Pakistan mansion, but porches, though empty, must be held by the owner of the house”. The Soviet invasion of Afghanistan in the late twentieth century would reassert these regional linkages on the mental maps of local and foreign policy makers (p. 42). Pakistan as a revisionist state saw itself threatened more from its eastern border than from the western border. This distraction was complex rather than simple. The Indian threat was not based on the untenable Pakistani claim that India would undo the boundary to make Pakistan relapse into India; it was more intricately based on Pakistan's revisionist sallies into India, which would attract a retaliatory invasion from India. As a status quo power intent on retaining boundaries rather than violating them, India has fenced the Indo-Pakistan border. On the other hand, as a status quo power against revisionist Afghanistan, Pakistan has not been able to fence the Durand Line. In
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fact, it has allowed it to be de-legitimised informally by violating it with its non-state actors. Ispahani deals with this issue: The threat of India from the east was new and took the attention away from Balochistan. One key to altering the historical condition was not used. Existing road projects lingered, and apart from some resource-related construction and the RCD Highway between Iran and Pakistan—delayed for 15 years—few major road-building ventures were undertaken, especially in the coastal areas (p.51). The few major routes that were built primarily addressed and highlighted the importance of internal security, regional association, and resource extraction (p.51). As intermittent road building continued, the Baloch tribes pursued their longstanding opposition to construction. In the 1960s, for example, the Marris resisted—without success—the army's attempts to carve routes through their territory. Similar situations prevailed also in the North West Frontier Province (NWFP). Although there are salient differences in the tribal structures of Pakhtun and Baloch societies, the Pakhtun being more democratic and individualist, the inhabitants of both peripheries resisted routes through their territories (p. 52). Outside powers became interested in building roads inside Pakistan as a part of their policy of seeking access. In the case of the Soviet Union, proposals were driven by the need to find easy access to the sea, but it was interpreted in military terms during the Cold War, and Pakistan reached back to the strategising of the British Raj to recall the intent of Tsar Peter the Great, as expressed in his famous “will”, to gain access to the warm waters of the Indian Ocean. After the Cold War it has become more important that movement of goods be facilitated through cross-border roads. But conflictual inter-state relations force military interpretations on the state. In 2009, the Baloch insurrection considers the Pakistan army its main enemy and the rebel Baloch leaders think that Pakistan army is the real sovereign entity in Pakistan. According to Ispahani's book: In 1969 the Soviets asked permission to build a highway from Chaman on the Afghan-Pakistan border toward one of the five still undeveloped port cities (Gwadar, Pasni, Ormara, Jewani, and Somniani) on the Mekran Coast. Of these five towns, Gwadar is the largest and has the finest natural harbour (with a seadepth of thirty-two feet). The Soviets further suggested they would be happy to assist Pakistan in a five-year project for the expansion and improvement of Gwadar (p. 59). The offer was turned down by Pakistan. There is more: Writing in 1980, Admiral Thomas Moorer called for the establishment of a naval base at Gwadar. Referring to Gwadar as an “excellent, if undeveloped”, potential naval facility, Moorer and Alvin Cottrell argued that the harbour was much better suited topographically and financially to be a naval base than other possibilities in the vicinity of the Gulf of Oman.10 According to these writers, Zulfikar Ali Bhutto had offered the use of Gwadar to the United States in 1973–74, in exchange for a lifting of the US arms embargo then in effect (p.69). Lacking financial strength to build strategic roads that might enhance national security, Pakistan failed to lay down its own road network in Balochistan.
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When Bhutto evicted the National Awami Party (NAP) and Jamiat Ulema-e-Islam (JUI) politicians, he accused them of having interfered with his attempts to modernise Balochistan through road-building projects (p.60). In the 15 months following the dismissal of the NAP-JUI government in February 1973, army engineers constructed 550 miles of road where there was oil. Bhutto told the story of having offered one imprisoned sardar (tribal leader)—Khair Buksh Marri—his freedom in return for a promise to end his opposition to the government. The sardar responded that he would do so, on the condition that “the building of roads in the Marri area was stopped” (p. 67). Land routes were enmeshed, then, in a classic centre-periphery dispute, born of the attempt to hold diverse peoples under a single umbrella of statehood (p.67). Routes, of course, have historically been pertinent to insurrection. Knowledge of uncharted terrain and of the location of the rough, lateral routes that traverse it, has always been a weapon of the guerrilla (p.61). Similarly, the construction of roads and mobility permits the counterinsurgent to deny the guerrilla the advantages of inaccessibility (p.61). In Balochistan, before the British came, the lack of routes was a prime factor conditioning the ability of indigenous Baloch tribal federations to exercise control and to wield authority over all Balochistan. In the Pakhtun frontier regions of Pakistan, a road through tribal territory is much more than an avenue of mobility, because here the laws and the “iconography” of the modern state intersect with the laws and the iconography of the tribe (p.222). The Tirah road would reduce the isolation and underdevelopment of the area (the Zakhakhels have lived without schools, hospitals, tube-wells and other important amenities). It would also have military utility for Pakistani and mujahideen units by easing vital frontier logistics and permitting the rapid transport of troops and equipment through the Khyber Agency to the Afghan border (p.143). Perhaps the most strategic route is the one called the Karakoram Highway (KKH) in the Northern Areas (now Gilgit-Baltistan). It was an access provided to China which aroused opposition in India because of the conflictual Indo-Pak relations. What Pakistan had denied to the Soviet Union and the United States, it now allowed to China: access to the sea through Pakistani territory (it became more obvious to India after China won the contract to construct the Gwadar Port in Balochistan). It will be interesting to note how the route evolved from a military-strategic access to a factor of “trade” interdependence between China, Pakistan and India when the three states began to view favourably the prospect of getting gas from Iran through a pipeline entering Pakistan through Balochistan before branching from Pakistan to India and China. Ispahani took stock of the Northern Areas as a military-strategic territory of access. She saw isolated linguistic minorities in the Northern Areas of Pakistan and noted that China too looked at the Muslim minority in its western province of Xinjiang as an isolated community. Xinjiang shares a north-eastern border with Mongolia, a 4,010-mile northwestern border with the Soviet Union, a south-western border with Afghanistan and Pakistan and Indian Kashmir, a south-eastern border with Tibet, and an eastern border with the Chinese provinces of Qinghai and Gansu (p.163). There was potential for conflict between China and Pakistan because of the Chinese claim on territory included in the Northern Areas. She notes: Sporadic Chinese border violations around Hunza had
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been reported since 1953. On 23 October 1959, General Ayub was thinking specifically of Hunza, where China had traditionally been active—when he declared that such incursions “would be repelled by Pakistan with all the force at her command” (p.182). The 1963 Pakistan-China border treaty finally removed this potential for conflict. China relinquished control over 750 square miles of land beyond the main watershed of the Karakoram range and, most important, gave up its historical claims to Hunza, which if exercised, could have brought Chinese forces through the Karakorams towards Gilgit (p.183). Then in 1973 the momentous decision was taken to convert existing routes into the highest international highway in the world, the 500-mile Karakoram Highway (p.189). Even before the completion of the new Karakoram Highway (KKH), China had built a 118-mile-long highway from the Khunjerab Pass to Qila Nabi, which lies on its main strategic supply route between Xinjiang and Tibet (p.190). The KKH was completed in 1978. Development, however, cannot be the sole justification for routes. If the intent was to bring development to the isolated Northern Areas, it was foiled by how India saw the KKH. It took note of both Pakistan's desire to achieve better control over the Northern Areas through an easy route and its possible strategic intent of bringing China into the epochal conflict going on with India. India objected to the KKH, and then made its forward movement in neighbouring Siachen to create another bilateral dispute with Pakistan. Ispahani realised this in the case of Afghanistan's quest for roads for development: Contrary to the argument made by scholars, on the basis of quantitative analyses, that advances in development will lead to advances in security, a study of the politics of routes reveals that the political, social and strategic dimensions of development should be considered before such a simple conclusion is reached (p.221). Politics of Routes and Decline of the National State The resistance to routes or the decline of the sovereign state putting up antiroutes was predicted as early as the 1940s, but the ensuing Cold War prolonged the existence of the conventional territorial state till the Soviet Union fell in 1991. Quickly the idea of “connected” states based on economic interdependence took hold at the international level. States thinking of alignment rather than conflict began to look favourably at the globalisation of the world economy.11 States worried about losing their territorial supremacy and particularised nationalism soon noticed that, even as inter-state conflict continued to simmer, widespread internal conflict began to challenge national armies formed to battle hostile neighbours. Pakistan in the 21st century represents the halfway house between territorial sovereignty backed by nationalism and palpable threats emerging from inside its own frontiers. After a decade of rapid globalisation of its economy and open competition in the world market, it finds itself without the comfortable buffering of the Cold War concessions and feels challenged to modify its old threat perception. Its current difficulties arise in the shape of international isolation on the way it deals with this threat perception. Instead of
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balancing India with the Taliban as the two parallel threats—one from the inside and the other from the outside—it is trying to “reinterpret” the Taliban as a proxy of India before fighting them. This imbalance of perception maintains India as the only enemy of Pakistan and ignores the palpable internal threat posed by the Taliban and their allies, such as the madrassa network and Al Qaeda. There is a process of “thesis-reversal” behind the thinking of those in Pakistan and abroad recommending the removal of the label of enemy from India and replacing it with trading partner. Roughly, it goes like this: if there is war, trade peters off; if you want to remove war, initiate bilateral trade and make the two hostile states interdependent. In Pakistan, the same kind of “thesis reversal” is in evidence with regard to the revival of culture: when there is religious extremism, cultural activities cease; revive culture to push back extremism. (Having rolled back culture in deference to rising jihadi clericalism, Pakistan now tacitly relies on India's entertainment industry to oppose Talibanisation with furtive Indianisation.) The debate about trade with India has gone on for at least two decades in Pakistan, but conflict has won out every time Pakistan was on the brink of making its paradigmatic shift towards India. However, despite the intent of both mainstream political parties—the PPP and the PML(N)—Pakistan has not been able to pull down its regime of antiroutes. Both, however, remain committed to the Charter of Democracy they signed in 2006 promising normalisation of relations with India. The army chief, General (Retd.) Musharraf, who attacked in Kargil in 1999 when the Indian prime minister, Atal Bihari Vajpayee, was visiting Pakistan, himself violated the “antiroutes” geopolitics of the army by exempting the Iran–Pakistan–India gas pipeline from the conditionality of “meaningful dialogue on Kashmir”; in other words, “no route without Kashmir”. Precocious but ineffective as usual, the 14th SAARC Summit, held on 3–4 April 2007 at New Delhi, posited the question of routes, calling it “connectivity”. The summit's declaration contained the following paragraph: “The Heads of State or Government [sic] recognised the importance of connectivity in fulfilling these objectives. It was vital to first have better connectivity within South Asia and then with the rest of the world. They agreed to improve intra-regional connectivity, particularly physical, economic and people-to-people connectivity. They agreed to the vision of a South Asian community, where there was smooth flow of goods, services, peoples, technologies, knowledge, capital, culture and ideas in the region.” Starting in 1985 with wrangles over whether Kashmir could be mentioned during the summit sessions, SAARC is now familiar—if not ready for their actual implementation—with the implications of the policy of routes. Former vice-president of the World Bank and ex-finance minister of Pakistan, Shahid Javed Burki, recommends “working with India” by first assessing the economic plight of the country as it battles Talibanisation:
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“Pakistan is not likely to solve its resource problem any time soon. It will not be able to increase either its domestic savings rate to invest more in the economy or its tax-to-GDP ratio for the government to turn its attention to provide services to the poor. With the current domestic rates persisting into the future, the economy cannot expand by more than 3 to 3.5 per cent [sic] a year. At that rate the incidence of poverty would continue to increase and the country will become even more socially and politically unstable.” His next insight strikes at the current paradigm of Indo-Pak relations: “For decades, Pakistan's economic policies have been oriented towards achieving relative independence from India. The country was set on that course by New Delhi way back in the late 'forties [sic] and the 'fifties [sic]. Then it tried to cripple Pakistan economically in the hope that the act of partitioning British India could be annulled and the newly created Muslim state would once again become part of greater India. That, of course, did not happen but the memory of those efforts has stayed with Pakistan. It is important that policymakers climb out of that mind-set and learns to work with India.” In 2009, Mahnaz Ispahani's seminal book on routes and antiroutes has become relevant. When she wrote it in 1989, the new paradigm of the decline of the Westphalian state and the rise of intra-state threats had not firmly taken hold in the world. Her book reflects the negative side of the urge to build roads, insisting on retaining the focus on the state's compulsion to safeguard “national security”. She referred to the turbulence in Afghanistan as an example of how the construction of roads can endanger a state by opening it to external ingress. Today however the states of South Asia in general are being advised to allow trade corridors through their territory; and Pakistan is being asked to extricate itself from its conflictual relationship with India. Threatened from the inside by its erstwhile non-state actors, it needs to build a network of roads into the “ungoverned spaces” where these non-state actors are located; threatened from the outside by states attacked by these non-state actors, it needs to normalise relations with states it traditionally considered sources of its threat perception. Pakistan is partially open to the international advice being offered to it. It is clearly in favour of allowing a trade corridor to China across its territory; and it does not feel any fear to its national security from China. It resists any trade corridor for India—there is apparently a difference of opinion on this between the government and the civil-military establishment—because of Pakistan's deep-seated revisionist nationalism. But the usefulness of a trade-corridor is linked to creating interdependence with the state which threatens rather the one which does not. The IPI pipeline projection fulfils the condition of this kind of interdependence more appropriately but its fruition will depend on how whole-heartedly Pakistan concentrates its attention on the source of threat that is palpably located inside its territory.
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Khaled Ahmed is a seniour journalist and political analyst. Endnotes 1. Daily Times, Editorial, Lahore, October 7, 2008. 2. M. K. Bhadrakumar, "China resets terms of engagement in Central Asia", Asia Times Online, 24 Dec 2009, “In December 2009, President Hu Jintao arrived on a Central Asian tour for the formal commissioning of the 1,833-kilometer pipeline connecting gas fields in Turkmenistan, Uzbekistan and Kazakhstan (and possibly Russia) to China's Xinjiang Autonomous Region” 3. Jamil Nasir, "Trade barriers in South Asia," Dawn, July 30, 2009: “In spite of a noticeable cut in tariff rates, South Asia is highly protected as compared with other regional trade blocs. The non-tariff barriers are a common mode to restrict imports. These include anti-dumping and countervailing duties, quota restrictions, packaging and labelling requirements, testing, quarantine and other certifications. India is known to have a larger number of such barriers as compared to other South Asian countries. There are 109 specific commodities (food preservatives, additives, milk powder, infant milk foods, certain type of cement, household and similar electrical appliances, gas cylinders and multi-purpose dry cell batteries) that the Bureau of Indian Standards (BIS) must certify before goods are imported. The licensing fee for this certification ranges between 0.2—1 per cent [sic] of the value of certified goods”. 4. David Temple, The India-Iran-Pakistan Pipeline: The Intersection of Energy and Politics (April, 2007), Institute of Peace and Conflict (IPCS), New Delhi, p.23: Discusses the LNG option for India and predicts its future non-viability. “LNG imports do not provide a good option for meeting India's power needs until either the electricity market is liberalized or technology improvements in LNG infrastructure decrease the cost of LNG on the international market. As it stands right now, LNG investment is being stymied by an inability to even predict future rates of gas consumption. Although Petronet has been supplying gas to meet the public sector's power needs, it is unlikely that private sources—which can get two and a half times as much from private sales—will be willing to supply the power sector with enough gas to meet its demands”. 5. Dawn, October 24, 2009. 6. Daily Times, Editorial, Lahore, May 8, 2009: “Although India is not mentioned in the memorandum, its ghost was very much present on the occasion. Ms Clinton spelled out all the implications – a set of Western beliefs in trade as antidote to war which is not greatly appreciated in Pakistan – of what the opening up of Indo-Afghan trade through Pakistan will imply: “Nothing opens up an area to economic development better than a good road with good transit rules and an ability to transport goods and people effectively”. The DG ISI of Pakistan was among the delegation led by President Asif Ali Zardari which saw the memorandum being signed by the foreign ministers of Pakistan and Afghanistan”. 7. India Business Times, June 30, 2007: “India's biggest business conglomerate, the Tata group has indefinitely suspended work on its $ 3 billion investment plan in Bangladesh because of frustrating delays by the Bangladeshi government in approving the proposal. Tata's plan includes a steel plant with an annual production capacity of 2.4 million tonnes, a urea factory with a 1 million tonne capacity, a 500 mw coal-fired power station and a 1,000 mw gas-fired power plant”. 8. Jean Gottmann, "The Political Partitioning of our World: An Attempt at Analysis," World Politics, IV, (4): 512-9, July 1952 . 9. Olaf Caroe, Wells of Power: The Oilfields of South-Western Asia (London: Macmillan, 1951), xvi, xvii, 32. 10. Thomas H. Moorer and Alvin J. Cottrell, "The Search for US Bases in The Indian Ocean: A Last Chance," Strategic Review 8 (Spring 1980), p.36. 11. Miles Kahler, "The State of the State in World Politics," in Political Science: State of the Discipline, eds. Ira Katznelson and Helen V. Milner (New York: W. W. Norton, 2002), p 57: “The comfortable bipolarity of the cold war ended in the collapse of one superpower state. Old preoccupations with interstate war (military and economic) dissolved into an awareness of widespread violent internal conflicts and the encroachments of globalization. Predictably, although many of these developments were hardly novel, they quickly produced one last twentieth-century wave of proclamations that the state was endangered, in decline, or eclipsed.”
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Towards a Seamless South Asia: Vision and Tasks Ahead Dr Prabir De
R
egional (cross-border) infrastructure has typically been seen as one of the major determinants of the economic integration process (Vickerman 2002). It enhances international and regional connectivity through the free flow of goods and services across borders, allowing countries to benefit from a better relocation of resources. For example, transportation networks linking neighbouring countries enlarge market size and help national economies grow further through higher trade and production. Availability of cross-border infrastructure thus not only increases intraregional trade and investment but also plays a pivotal role in integrating economies across the region. Recent studies on South Asia show that countries with geographical contiguity could potentially benefit substantially from higher trade, provided infrastructure and trade costs are improved.1 Another set of studies indicates that, while the globalisation process results in an increase in the number of international exchanges of products and services in both extensive and intensive margins, the identification and establishment of South Asia's transportation networks (cross-border or otherwise) have become increasingly important.2 Nevertheless, all unequivocally call for efficient and integrated transport and logistics networks for enhancing movement of goods and services, particularly when a region has high potential in fragmented production and economic networks across borders. The need for integrated transport and logistics networks is also quite pressing at a time when the ongoing global financial turmoil is making it necessary for South Asian countries to strengthen their regional infrastructure networks in order to enhance the regional demand. The South Asian merchandise trade due to the agreement on South Asian Free Trade Area (SAFTA) is expected to greatly increase in coming years. One study estimated that intra-South-Asia trade has the potential of USD 40 billion, whereas the present volume of trade is about USD 11 billion (RIS 2008). Accompanying this trade growth will be an increase in demand of both national and international infrastructure services, for both production and consumption, and international trade purposes. A failure to respond to this demand will slow down South Asia's trade and hamper the growth process. Development of regional infrastructure, especially transportation linkages and energy pipelines, across the region will contribute to the regional integration by reducing transportation costs and facilitating intra-regional trade and services. Therefore, both the hardware and software infrastructure challenges before the South Asian countries, particularly islands and those that are land-locked, require better understanding and adequate support.
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Regional (Cross-Border) Infrastructure in South Asia The development of regional infrastructure in South Asia has so far been limited to road and rail transportation and hydropower (see Table 1). While there is a relative upsurge in cross-border overland infrastructure services in South Asia in recent years, the crossborder infrastructure investment is rather limited to only a few hydropower projects that exist between India and Bhutan. The power trading arrangement between India and Bhutan is one of the oldest cross-border infrastructure investments in South Asia and is an outcome of a successful partnership between the two countries. In Latin America, cross-border infrastructure projects have been a very popular and well accepted mode to facilitate economic integration. In recent years, Latin America and the Caribbean countries were successful in attracting as much as USD 21.19 billion, out of the proposed USD 68.27 billion, in cross-border infrastructure. The cross-border infrastructure projects are driven by energy and transportation projects, and most of them are undertaken through public–private partnership (PPP).3 In contrast, South Asia is yet to make a major breakthrough in regional infrastructure investments that enhance regional connectivity. Table 1: Cross-Border Infrastructure (Overland) in Operation in South Asia Sector Countries Particular Delhi – Lahore Amritsar – Nankana Sahib Amritsar – Lahore India and Pakistan Poonch – Rawalakot Srinagar – Muzaffarabad Road transportation Kolkata – Dhaka (passenger bus India and Bangladesh Agartala – Dhaka services)# Kolkata – Phuentsholing India and Bhutan Siliguri – Phuentsholing Delhi – Lahore India and Pakistan Rail transportation Jodhpur – Karachi (passenger train services)# India and Bangladesh Kolkata – Dhaka Chukha hydropower Kurichhu hydropower Energy (power India and Bhutan trading)* Tala hydro power Notes: #Cross-border services. *Cross-border projects where investment made by India and the generated power has been exported by Bhutan to India. Source: Compiled by author
With growth in regional trade in goods and services, South Asia has to adopt a strategy that will not only eliminate the barriers to cross-border infrastructure development but will also encourage investment flows in the region. Given that most cross-border projects are associated with several risks, governments in South Asia have to play a larger role in providing an enabling environment for the private sector to invest in crossborder infrastructure projects. Challenges and Potentials for Cooperation The importance of tariffs as barriers to trade has gradually come down; however, hightariffs still exist for certain sensitive products, and there is a strong presence of non-tariff barriers (NTBs) including high border transaction costs in the region. High transportation costs (e.g. 20 percent on value of imports), poor institutions (e.g. lack of e-filing of trade documents), inadequate cross-border infrastructure (e.g. lack of
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modern warehouse or container handling facility at border), and absence of a regional transit trade (virtually in the entire region) are some major factors penalising South Asia's trade and integration. Therefore, the major challenge facing South Asia in its quest for regional integration and increasing competitiveness is poor quality and inefficient infrastructure services, both hardware and software, which raise costs of transportation and production and constrain the capacity of South Asian economies to gain from a liberal trading environment. The South Asian region, with its geographical contiguity, has great potential for cooperation in infrastructure sector within the region. To realise the benefits of full regional connectivity and trade liberalisation, South Asian countries have to follow policies that will help them reduce the costs of border trade, on the one hand, and absorb new transportation technologies, improve productivity, and increase their labour force's knowledge and skills, on the other. Since countries in South Asia do not start with the same endowments, there will be both winners and losers. Countries that do not have adequate capacity to entangle with the integration process may lose, while countries that are better endowed with higher infrastructure stocks will be successful. The shared objective of regional cooperation should then be to eliminate this asymmetry between countries in South Asia and help the laggards to move ahead through deeper cooperation. High transportation costs penalising trade in South Asia Trade transportation cost across South Asia is very expensive and varies across goods and countries in the region. The costs of trade transportation in South Asia increase if the country is landlocked. In South Asia, the estimated trade-weighted ad-valorem transport cost for all goods is lowest in Sri Lanka (3 percent in 2005) and highest in Nepal (41.53 percent in 2005). Nepal, being a land-locked country, pays a high price for transportation of goods. The land border in South Asia is overcrowded and needs special attention in order to reduce time delay and costs of transaction. As a result, transport costs incidence in South Asia is higher than tariff incidence.
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Table 2: Estimated Bilateral Ad-valorem Transport Costs in 2005 Importer Exporter Ad-valorem Transport Applied Tariff Costs (%)* (%)** India 30.50 39.54 6.20 4.46 Bangladesh Nepal Pakistan 17.40 15.64 Sri Lanka 20.70 18.56 Bangladesh 29.40 15.87 Nepal 48.20 22.66 India Pakistan 45.00 24.35 Sri Lanka 11.90 23.29 Bangladesh 81.90 9.05 India 63.10 14.70 Nepal Pakistan 24.10 10.40 Sri Lanka 18.80 15.43 Bangladesh 21.10 6.58 India 53.60 7.91 Pakistan Nepal 16.60 6.83 Sri Lanka 15.60 6.58 Bangladesh 13.20 6.81 India 5.00 9.20 Sri Lanka Nepal 12.00 11.72 Pakistan 5.90 3.76 Notes: *Represented by total transport costs as percentage of imports. **Weighted average. Source: De (2009a)
Inefficient border corridors making trade costly in South Asia The efficiency of border corridors and land customs stations (LCSs) is an important factor for South Asia's competitiveness and its trade prospects. The present trade flow in South Asia is very uneven across the border corridors. The full regional connectivity in South Asia would likely redistribute the regional trade and traffic among the existing corridors. An efficient corridor is thus very important in order to maximise the benefits of full regional connectivity. Thus, the objectives of the trade facilitation measures would be to (i) constantly improve the performance of border corridors and LCSs, and (ii) eliminate the asymmetry between the LCSs pair. Procedural complexities very often work as deterrents to India-Bangladesh trade. The customs offices in South Asia still require excessive documentation, especially for imports, which must be submitted in hard copy form. While most of these documents are standard for international trade, the two governments tend to add requirements that are purely local in nature. The bureaucratic response to problems and anomalies has been to introduce new procedures and documents to avoid their recurrence. This introduces a significant increase in the cost of doing business, but in many cases has little effect on the cause of the problems. Because of this complex, lethargic and primitive procedure, pilferage continues to rise. This often changes the composition and direction of trade in South Asia. The transport system of the South Asian countries has been developed only in a national
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context, with little consideration given to cross border issues of compatibility, uniformity of standards in infrastructure and equipment design, user friendly customs and e-governance at border. An improved services quality of customs at borders will strengthen competitiveness of goods and services being traded across South Asia. Nonetheless, the performance of LCSs and border corridors would be contingent upon full regional transit in South Asia. Regional transit: key challenge to South Asian countries Transit is an intrinsic element of any cross-border movement of goods and vehicles, and exercises significant influence on national economies. Among the major causes of high trade transaction costs in South Asia are the cumbersome and complex cross-border trading practices, which also increase the possibility of corruption. The goods carried by road in South Asia are largely subject to transhipment at the borders, which is a serious impediment to regional and multilateral trade. This position is further compounded by lack of harmonisation of technical standards. The foremost critical factor prohibiting South Asia in achieving its full regional connectivity is the absence of regional transit trade. Unlike the European Union, South Asia does not have regional transit arrangements although partial transit exists for landlocked countries like Afghanistan, Bhutan and Nepal. Given the region's emergence as a free trade area since 2006, following the South Asia Free Trade Area (SAFTA) agreement, regional transit facilities will help South Asian countries to achieve the potential benefits of moving into an effective free trade regime. Therefore, transit is one of the central challenges facing South Asian countries. Table 3: Trade and Transit Arrangement in South Asia Type MFN MFN GATT Signatories Trade Transit India – Bangladesh Bilateral Yes No Yes India – Nepal Bilateral Yes Yes Yes India – Bhutan Bilateral Yes Yes India – Member Bhutan – Observer Bangladesh – Nepal Bilateral Yes Yes Yes Bangladesh – Bhutan Bilateral Yes Yes Bangladesh – Member Bhutan – Observer Bhutan – Nepal Bilateral Yes No Nepal – Member, Bhutan – Observer India – Pakistan Bilateral No No Yes Pakistan – Afghanistan Bilateral Yes Yes Pakistan – Member Afghanistan – Observer Agreement
Source: Compiled by author
Except Bhutan, all the other countries are members of the World Trade Organization (WTO). As shown in Table 3, except for the trade between India and Bangladesh, or Bhutan and Nepal, bilateral trade agreements of remaining countries in South Asia offer mutual understanding on transit. The movement of goods and vehicles is controlled through national legislation and a series of bilateral transit and trade agreements—and, in certain cases, also “ad-hoc” arrangements deriving from intent between certain country pairs for mutual cooperation. An example of this mutual cooperation is the movement of Bhutanese goods through Indian territory, which is governed by the stipulations contained in the “Agreement on Trade and Commerce” between the two
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countries as well as an attached protocol. Therefore, the present semi-transit arrangement in South Asia is disappointing. A full regional transit will not only bring a steady revenue stream of transit fees but will also help develop industry and service enterprises in the border areas. Once the transit is allowed, Bangladesh can earn hefty revenue as transit fees from Indian vehicles plying to and from India's north-eastern region (NER) to the rest of India using Bangladeshi soil. The amount may increase if other corridors between India and Bangladesh are also counted. Similarly, transit arrangements between India, Pakistan and Afghanistan will fetch a hefty royalty to Pakistan for movement of vehicles between India and Afghanistan using Pakistani soil. There are also huge gains associated with energy conservation due to transit and efficient use of resources. Therefore, agreeing to a full regional transit will mean a “win-win” gain for all the countries of the region. Borders contain higher concentration of poor in South Asia In South Asia, transportation costs and transit are not, however, the only problem faced by border areas and landlocked countries. Their lack of direct access to seaports and markets entails additional expense because the costs of transporting goods through a transit country result in less than competitive international trade as well as delays or even interruptions in their development and economic growth. Growth in South Asia has, so far, been centred around the core (inner) periphery of the region. The states (or provinces) at the outer periphery in a country (or economic bloc) tend to be poorer than those at the centre. Contrary to popular belief, despite unprecedented economic growth in South Asia, the total number of people living in poverty—particularly rural poverty—has not declined, and there has been an explicit rise in income inequality particularly within countries.4 On average, the ratio of income of the richest 20 percent to the poorest 20 percent increased from 4.3 percent during 1990–1996 to 5.5 percent in 2000–2005 (Human Development Centre 2008). This rise in income inequality is a serious concern for South Asia. Although there is no empirical evidence to show that the border areas are adversely affected by trade in South Asia, it can be said that costlier trade at the borders is negatively affecting the local economy in the border and landlocked areas, converting it into a rent-seeking informal economy. This becomes disadvantageous for the development of the border economy. Table 4 provides average per capita incomes and poverty rates (rural) of the border provinces/states of selected South Asian economies. It is clear that a vast majority of the South Asian population living in border and landlocked areas are comparatively poor and mostly depend on agriculture. The poverty incidence is very acute in eastern South Asia, particularly in landlocked Nepal, Bangladesh and India's north-eastern region.
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Table 4: Income per capita and Poverty Rate in Bordering States in South Asia Country
Bordering states
Bordering with
India
North-eastern states (7), West Bengal Western and North-western states (4) All states** (4) Eastern provinces (2) Southern states (5)
Bangladesh
Bangladesh Pakistan Nepal
Pakistan India India India
Income per capita (US$), 2006 (avg.) 690 (860) 910 [800*] (860) 450 890 (800) 300 (320)
Rural poverty rate (%), 200405 (avg.) 34 (22) 32 (22) 53 36 (32) 48 (46)
Country HDI 2005 0.619
0.547 0.551 0.534
Note: * Excluding Punjab State of India. Numbers in first parentheses are national averages. **Officially termed at divisions. Source: De (2009b)
Therefore, it would not be a digression to say that people living in border areas and landlocked countries are largely left untouched in relative terms by the globalisation process in South Asia. The exact causes of the slow growth remain unknown and are a matter for detailed analysis. However, rising transportation costs and border delays are certainly widening the income gap between the benefiting regions and the deprived border areas. Facilitating intra-regional trade and economic integration would provide an opportunity for many of these people and provinces (states) to benefit since they will be closer to the centre of the economy (rather than remaining at the periphery of their own national economy). In the short term, greater development efforts have to be focused on the border areas in order to deepen national integration and also attune their production structure to international demands. Vision of a Seamless South Asia: The Enabling Environment Unlocking South Asia's trade potential is a daunting task. The need for a better enabling environment for trade that offers lower trade costs has gained momentum in all of Asia. However, a favourable regional climate to create a seamless infrastructure to operate in its full potential is missing in South Asia. Because of this, the agenda of South Asian regional cooperation has to go beyond “policy” barriers and include “non-policy” barriers like regional connectivity both in its hardware (transport corridors) and software (facilitation of movements of goods and vehicles across borders). A scrutiny of sub-regional programmes across the world clearly shows that most of them have now undertaken exclusive projects to improve sub-regional connectivity (ADBI 2009). To realise the potentials of these sub-regional networks, we may have to integrate them with the pan-Asian arteries such as the Asian Highway (AH) and (Trans Asian Highway) TAR, or those initiated by United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and Asian Development Bank (ADB). Therefore, in order to promote seamless connectivity in South Asia, the primary challenging task is twofold: first, to integrate the different transport corridors and modes (railways, roads, air, and maritime shipping) which will facilitate the movement of goods and services in South Asia and beyond and second, to overcome institutional constraints and bottlenecks that are deteriorating regional competitiveness by making trade expensive. South Asia has entered the second era of regional integration. The next stage is to achieve customs and economic union in the coming years. To unleash the trade potentials of South Asian countries and realise the benefits of full regional connectivity in South Asia,
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the prime objective of the South Asian regional cooperation should be to improve national and international infrastructure. Perhaps we need to focus more on regional infrastructure that enhances regional connectivity. The objective of the regional cooperation in the present context would be to achieve an integrated South Asia. There is high potential for cooperation in the infrastructure sector in South Asia. These potentials are highlighted below. (i) Facilitating investment in regional infrastructure The success of cross-border infrastructure projects relies on friendly sector-specific policies and political stability of the region. Setting up a regional facilitation centre for cross-border infrastructure projects in South Asia—South Asia Regional Infrastructure Development Facility (SARDIF)—would pave the way for promoting cross-border infrastructure projects in PPP. (ii) Opening of South Asian regional transit By signing SAFTA, the South Asian countries are now looking towards closer economic integration in the region. Recognising its importance, the Islamabad, Dhaka and New Delhi SAARC Summits in 2004, 2005 and 2007 respectively, decided to strengthen transport, transit and communication links across the region. An integrated overland connectivity would provide substantial benefits to small landlocked countries like Bhutan and Nepal by giving access to the South Asian market at lower costs. An integrated transportation network will yield much larger economic benefits whilst minimising risks. Integration of the transport networks of South Asia is especially crucial to landlocked countries such as Afghanistan, Nepal and Bhutan, and land-locked areas within countries such as India's north-eastern region (NER) or Pakistan's northwestern region as this could serve to end their landlocked or semi-isolated status and provide shorter transport and transit links. However, there is an urgent need to prioritise SAARC corridors projects in South Asia and enhance regional integration through regional transit in a time bound manner. In general, the task ahead is to revive, renovate, and re-establish South Asia's transportation linkages that played a pivotal role in integrating the region even till about six decades ago and establish new cross-border infrastructure in order to reduce the trade transportation costs across borders. India is the only country in the region that shares land borders with its four neighbouring countries, namely, Afghanistan, Bangladesh, Pakistan, Nepal and Bhutan and sea routes with Sri Lanka, Maldives, Pakistan and Bangladesh. Road and rail links between the regional countries have to pass through the Indian territory. Thus regional transit would be useful to landlocked countries like Afghanistan, Nepal and Bhutan or smaller island countries like Maldives to access third country market using South Asian soil. Ideally, geographically connected countries in South Asia can become transportation “hubs” for each other. To allow seamless movement of vehicles, goods and passengers across the region on a door-to-door basis, South Asian countries should adopt SAARC Regional Transport and Transit Agreement (SRTTA). The agreement will be the stepping stone to reduce delays and costs at the borders and also to create transportation “hub” for each other.
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For larger countries like India and Pakistan, the economic benefits from SAFTA would be modest since their trade with South Asian neighbours is small in relation to their overall trade. If services and investments are included, the gains of bigger countries like India would stem from expanded exports appearing from an integrated transport network. However, the gains from expanded trade in the region for larger economies in South Asia will be limited if they do not involve in a greater way to rebuild South Asia's transportation infrastructure and associated software at the border. The bigger countries of South Asia stand to benefit more from the continuation of its policies of unilateral liberalisation, setting in place improved infrastructure at border, extending supports towards capacity building in smaller South Asian countries, among others. (iii) APIBM economic corridor: Asia's new silk route The vision of a borderless South Asia can be achieved only by setting in place an integrated overland connectivity and associated soft infrastructure at borders. All the pending proposals for transit across the subcontinent have to be approached with an open and positive mind. Integration of the transport network of South Asia is especially crucial to landlocked countries such as Nepal and Bhutan and regions such as the North East Region (NER) of India as this could serve to end their landlocked or semi-isolated status and provide shorter transport and transit links. A regional overland road link from Kabul to Yangon via Dhaka can be revived for regional trade with some effort. Table 5 indicates that if we reopen the cross-border linkages, a distance of about 5,272 kilometres (kms) from Kabul to Yangon via Lahore, Delhi, Kolkata, Dhaka and India's NER can be covered in about 12 days. A major part of Kabul–Dhaka corridor is domestically operational, dual carriageway, and an integral part of the old Sher Shah Road, or Grand Trunk (GT) Road. The opening of the route will mark a revival of the old linkages existing in South Asia dating back to the British period. Therefore, the Afghanistan–Pakistan–India–Bangladesh–Myanmar (APIBM) Economic Corridor, which is meant for making each and every country in South Asia a transport hub for trade in broader region, deserves a high priority for operationalisation. Table 5: The Proposed APIBM Economic Corridor Starting Country Ending Country Point Point Kabul Afghanistan Torkham Afghanistan Afghanistan – Pakistan Border (Torkham Border) Torkham Pakistan Wahgah Pakistan Pakistan – India Border (Wahgah – Attari Border) Attari India Petrapole India India – Bangladesh Border (Petrapole – Benapole Border) Benapole Bangladesh Dhaka Bangladesh Bangladesh – India (NER) Border (Tamabil – Dawki Border) Tamabil Bangladesh Dawki India India – Myanmar Border (Moreh – Tamu Border) Moreh India Tamu Myanmar Tamu Myanmar Yangon Myanmar
Distance (km) 224
Road condition Good
Max. Axle Load (ton) 31
607
Good
31
2042
Good
24
168
Good
19
325
Good
19
606 1300
Good Partly good
24 21
Note: Total distance (Kabul to Yangon): 5272 km; No of border crossings (Kabul to Yangon): 5; Transportation time (Kabul to Yangon): 12 days. Source: Author, based on information available from UNESCAP, Bangkok
The importance of the APIBM economic corridor is not only for trade it would facilitate and investments in the infrastructure sector in South Asia. It will also bring many rich
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rewards for bordering regions. It can transform Pakistan and Afghanistan into hubs for India's trade with Iran, Middle East and Central Asia although that would need upgrading of infrastructure and land custom stations (LCSs) at Afghanistan's border with the Central Asian countries (Turkmenistan, Uzbekistan and Tajikistan). Similarly, Bangladesh will become a hub for India's trade with Myanmar and other Southeast Asian countries, besides serving as a transit for India's NER. Myanmar itself will become a transit hub for India's trade with other ASEAN countries (see Figure 1). Sri Lanka is already well placed to be a maritime hub in South Asia with a lot of India's trade transhipped through the port of Colombo. Apart from transit revenues, there are huge gains associated with energy conservation due to transit and efficient use of resources. Figure 1: Potential Transport Hubs in South Asia Towards Central Asia
Afghanistan
Towards Middle East
Nepal
Pakistan
Overland
Bhutan
Myanmar
India
Maldives
China
Bangladesh
Maritime
Towards West Asia / Europe
Sri Lanka Maritime Hub
Towards Southeast / East Asia & Pacific
The network of linkages exists in some form or other. New projects are also being planned to fill-up the missing links and strengthen the network. These include crossborder development projects such as the upgrading of the Tamu (Manipur)–Kalewa–Kalemyo road, and the Rhi–Tiddim and Rhi–Falam roads along the border in Mizoram; the upgrading of the Jiribam (Manipur)–Imphal–Moreh road, and integration with the BIMSTEC Trilateral Highway; the Kaladan Multi-Modal Transport Project, which links Mizoram with Arakan province of Myanmar and provides, in the form of the historic port of Sittwe (Akyab), among others. This APIBM corridor would be Asia's new silk route, linking between Central Asia and East Asia, where South Asia is the land bridge and will be the most vital corridor for expanded trade and transportation. (iv) Building a trans-South Asian railway network Railways are the only mode that can play a positive role in integrating the South Asian region by allowing cross-border movement of bulk goods. However, compared to highways, the connectivity of South Asian railway network might require a greater effort in view of gauge mismatch and multiple missing links between the countries. For example, India and Pakistan have broad gauge all-weather railway networks whereas
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Bangladesh railways system is based mostly on metre gauge. However, with a definitive objective, there should be continuous effort in establishing an uninterrupted and harmonised railway network in South Asia. India's vast experiences in managing modern railway systems can be very useful in re-establishing South Asia's railway link from Kabul to Dhaka. For example, India has been playing an active role in linking Bhutan with India's railway network, and also helping Nepal in extending the railway line from Birganj to inside the country. The restoration of the India–Bangladesh railway link is most important, operations of which existed prior to 6 September 1965, when armed conflict between India and Pakistan broke out. Three trains were plying between the two countries carrying goods and passengers: 1. 2. 3.
East Bengal Express between Sealdah (West Bengal, India) and Goalandu Ghat (Bangladesh) via Gede (West Bengal, India); East Bengal Mail between Sealdah (West Bengal, India) and Partbatipur (Bangladesh) via Gede; and Barisal Express between Sealdah (West Bengal, India) and Khulna (Bangladesh) via Petrapole (West Bengal, India).
The customs check for the East Bengal Express and East Bengal Mail was done at Gede whereas the Barisal Express had its customs checking at Petrapole. Once cancelled, these trains were not restored even after the change in the regional political scenario with the creation of Bangladesh in 1971. India and Bangladesh have restarted the old Bongaon (India) and Jessore (Bangladesh) broad gauge railway line which had not been in use for transportation of goods since 1965 . India and Bangladesh also resumed all the passenger train services between Kolkata (India) and Dhaka (Bangladesh) on 14 April 2008. This is a welcome step towards fostering closer communication linkages between the two countries which would facilitate movement of goods and people. Other major barriers that affect intra-regional movement through railways include the lack of standardisation of technologies, operation and maintenance practices including different types of gauges, braking systems, incompatibility of rolling stock. South Asian countries have to eliminate some of the other major physical barriers such as inadequate loop lengths, some missing links of shorter lengths in the borders areas, lack of physical infrastructure at interchange points, load restrictions on bridges, lack of coordination for gauge conversion programmes on different railway systems and capacity constraints in certain sections of the identified corridors. A multilateral rail transport agreement in South Asia would pave the way to faster movement of bulk transporting goods and services. (v) Strengthening inland waterways, ports, shipping and aviation In case of inland waterways, there is only a formal understanding between India and Bangladesh which is renewed on a monthly basis. This serves only the interests of Bangladesh and India, where levels of traffic both intra-country and transit had been reducing over years, although during certain periods bilateral traffic has been substantial. It was, however, recognised that inland waterways transport has great
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potential to provide a cost effective transport service between India and Bangladesh. Therefore, India and Bangladesh should sign the Inland Waterways (IWT) Agreement for a longer term, and a similar understanding should also be encouraged between India and Nepal, or India and Pakistan. Major barriers to maritime transport include likely capacity constraints at many of the maritime gateways, together with heavy siltation at navigation channels where depths fluctuate with tide, inadequate and poor maintenance of channel markings, old technology in cargo and ship handling equipment, as well as floating crafts. Some other barriers on the ports include impacting port performances include lack of professional management and computerisation, as well as EDI/IT to link up stakeholders. Customs procedures are found to be too complicated; cumbersome port documentation was still in use and labour unrest were also noted in some maritime gateways. The absence of a bilateral agreement for ferry service between Sri Lanka (Colombo) and India (Tuticorin/Cochin) is a major non-physical barrier. Transhipment between India and Pakistan a long standing unresolved bilateral issue. Due to absence of direct call between Indian and Pakistan vessels, maritime trade between India and Pakistan is routed through a third country. India-Pakistan Shipping Protocol, signed in 1975 as per Simla Agreement of 1972 restricts transhipment cargo destined for a third country carried by the vessels of either country. As a result, capacity utilisation for a service run either by an Indian or a Pakistani flag vessel is badly impacted as an Indian vessel can not pick up cargo for a third country from Pakistan and similarly a Pakistani vessel can not carry cargo from Indian ports to a third country. Interestingly, a country other than India and Pakistan stands to benefit, as it falls outside the purview of the protocol. In order to boost bilateral trade, governments in India and Pakistan should amend this protocol. Supply side constraints are posing a serious threat to maritime transportation infrastructure in South Asia. Except India, the rest of the South Asian countries do not have adequate fleet of vessels and manpower. In view of rising merchandise trade in South Asia, South Asian countries have to strengthen their maritime profile for self reliance on national carriers. India can play a major role in strengthening ports and shipping sector in South Asian countries, particularly Bangladesh, Maldives and also Myanmar in terms of training human resources in marine engineering and nautical science, costal management, among others. India is setting up National Maritime University in Chennai, which can be made operationalise for South Asian countries. South Asia has long coastline which offers good potential for short sea or costal shipping. Maritime costs are significant determinant of trade flow across the region. On the one hand, goods and passenger traffic in South Asia have been growing, and on the other, ocean freight is rising day by day. Instead of relying on foreign vessels, short sea/costal shipping in this region will help the LDCs and small island countries in South Asia to effectively gain from rising trade and transportation. Added to this, complimentary policy reform, accompanied by improved procedural and operational efficiency in the shipping sector, is essential to support regional maritime connectivity. To start with, a regional agreement to allow short sea shipping in South Asia will not only enhance ferry
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services across the region but also strengthen maritime profile of South Asian countries. With regard to aviation, South Asian airports suffer from tremendous capacity constraints, on-shore and off-shore, for both passengers and cargo, in terms of runways, parking areas for aircrafts, passenger handling areas, cargo processing facilities (green channel, cold storage, etc.), as well as security and baggage handling facilities. There is urgent need of pilots and ground handling staffs in South Asian countries. It would be useful if South Asian countries are jointly set up a regional aviation training institute in the region. In addition, an open sky policy in South Asia for airlines originating from within the region may help in strengthening the connectivity between important cities. (vi) Accession to international conventions of transit trade Most of the South Asian countries are yet to ratify international conventions for crossborder movements of goods and vehicles. There are seven UN Conventions that set out a basic framework for the cross-border movements of goods and vehicles. In South Asia, Bangladesh and Sri Lanka have signed the “Convention on Road Traffic”, while India and Pakistan have signed both “Convention on Road Traffic” and “Convention on Road Signs and Signals”. Bhutan, Maldives and Nepal have not signed any one of these seven UN Conventions. Except Afghanistan, no South Asian country has signed the “Customs Convention on the Temporary Importation of Commercial Road Vehicles” or the “Convention on the International Transport of Goods under TIR Carnets”. Accession to different versions of conventions is likely to undermine facilitation objectives. For instance, many countries are contracting parties to the Convention on Road Traffic (1949), but have not ratified the new version of the convention (1968). The Convention on Road Traffic (1949) is still valid in relations between the contracting parties to it. What follows is that in order to facilitate the cross-border movements of goods and vehicles, South Asian countries should pursue a closer regional cooperation to accede to all of these conventions. (vii) Strengthening and harmonising rules, regulations and standards In order for the infrastructure hardware of a South-Asia-wide transport network to function effectively, necessary soft infrastructure—such as relevant rules, regulations, and standards—needs to be in place. Rules, regulations, and standards must meet at least a common regional structure, but preferably an international design. Participating countries need to formulate and agree on a harmonised set of rules, regulations, and standards, similar to the Cross-Border Transport Agreement (CBTA) adopted by the Greater Mekong Subregion (GMS) countries. CBTA is a very important step towards harmonising the software relating to cross-border infrastructure use and could provide a template for South Asia. Furthermore, to make such an agreement effective, South Asian countries need to incorporate the agreement provisions into their respective national laws, regulations, and standards. There is a need for higher level coordination among many concerned stakeholders and agencies, such as transport, customs, immigration, and quarantine authorities. At the same time, capacity of concerned national institutions, particularly for less developed countries, needs to be enhanced for effective implementation of these agreements. There is also a need for a uniform or compatible standard (preferably an international standard) for development of crossborder transport networks to make the networks effective and beneficial for all
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stakeholders. Establishment of an efficient management system and associated capacity building to look after the harmonisation of standards relating to cross-border transportation would pave the way to achieving regional connectivity. This would ultimately help achieve single-stop and single-window customs across the region. (viii) Simplification of processes and procedures in trade transactions Trade facilitation has an immense role to play in diversification of exports of South Asian countries. A recent study conducted at UNESCAP (Duval and Utoktham 2009) showed that a country could increase its intra-regional and South-South trade significantly by achieving a more homogeneous performance across all trade and business facilitation areas. It suggests that focusing on coherence would be a way for countries—especially those that have already made some good progress in trade facilitation—to gain a competitive edge in an increasingly challenging global environment. A more integrated approach to trade facilitation and business (investment) facilitation may also contribute to lowering the cost of entry into new markets and sectors of activity, leading to much needed export diversification in times of crisis. The policy suggestion is that each country has to determine its specific trade facilitation needs and priorities but computerisation and automation of trade procedures is an important and ultimately necessary step for effective participation in global trade (UNESCAP 2009). (ix) Financing cross-border transport projects Connecting South Asia requires a large investment. It will be a difficult challenge to mobilise such a large investment particularly due to ongoing financial and economic crisis. This calls for an appropriate financing mechanism to mobilise South Asia's huge savings for infrastructure development. This financing scheme should aim to raise resources from public sectors, multilateral development banks, and private sectors on a public-private partnership model. Bigger economies like Japan, Korea, China, and India have leading roles in filling the financing gap. They should unilaterally come forward to fill resources gaps in the South Asian corridors, particularly financing and managing missing links and bridges. (x) Strengthening coordination among countries and stakeholders Weak coordination, like high tariffs, prohibits trade among countries. The poor coordination between planning, implementing, and financing agencies causes highlevel inefficiency in infrastructure development. Coordination is also required among various concerned agencies or institutions within a country because each may have different objectives. In order to have timely implementation of vast South Asian corridors, effective coordination between countries and other stakeholders is vital. Without such coordination, it is unlikely that an optimal cross-border infrastructure will come into existence. Thus, an effective coordinating institution will be necessary to generate willingness of countries to participate in the projects. It can also resolve conflicting interests, if any arise, between the governments and stakeholders. (xi) Issue of security Secure trade is now as important as free trade. While formulating inter-modal transport corridors in South Asia, security concerns should not go unnoticed. Security issues must be addressed adequately before the South Asian countries adopt regional transit
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arrangement. Using modern technology, governments in South Asia could address security measures that could, if not managed properly, drive up trade costs, hamper trade of the region and close down the corridors. Therefore, our focused attention should be on the search for greater efficiency in international transportation, the need for cooperation in adopting collective measures to promote transport security, and the imperative of improving customs regimes, port facilities, and logistics management. The good example is scanning of every loaded container at the entry point and use of modern satellite communication to track the inter-country movement of goods and vehicles. South Asian countries need to invest in port and airport security, strengthen customs authorities, and bolster border security. In this regard, South Asian countries have to learn from experiences of other regional cooperation blocs and development organisations like International Civil Aviation Organization (ICAO), International Maritime Organization (IMO), and World Customs Organisation (WCO). South Asian countries have to commit themselves to increasing security for all transport modes and to promoting policy coherence and coordination among international organisations. New programmes to combat terrorism clearly will involve investment in new technology and infrastructure—possibly raising the costs of trade in the short to medium term. At the same time, the prospect of reducing future threats through technology-intensive security and customs inspections should be viewed as an investment in greater trade efficiency. Automated technology—such as bar codes, wireless communications, radio frequency ID tags, tamper-proof seals for containers with global positioning technology, and other electronic measures—could accelerate global trade while improving security. Sharing information among security agencies, LCSs, shippers, and customs brokers can help expedite the movement of freight through terminals without any new physical investment. Security-driven improvements can benefit trade. For example, despite limited finances and capacity to facilitate trade, some developing countries such as Sri Lanka have adopted cargo security measures that are on par with ports in many developed countries. The same applies to Bangladeshi facilities that boast advanced detection devices. These measures, however, are focused on imports into the country, emphasising the need to enhance inspection of exports. (xii) Strengthening regional cooperation The experiences of Europe, Latin America, and other parts of Asia (such as the Greater Mekong Sub-region—GMS) where the presence of cross-border infrastructure is comparatively high, and to a lesser extent Africa, where the development of cross-border infrastructure has taken a new shape, suggest that regional cooperation promotes greater prosperity and stability for participating countries. A major success factor is their ability to build regional initiatives that are based on shared strategic vision, as captured in the Initiative for the Integration of Regional Infrastructure in South America. South Asian cooperation programmes have to be much stronger to address the regional infrastructure needs and enabling institutions and policies. Therefore, what is important for Asian countries is to enhance the facilitation of trade and transport across borders. Integrated regional connectivity would provide substantial benefits to landlocked and small island countries as well as poor, small
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countries by giving them access to world market at lower costs. Conclusion South Asia's economic performance over the last two decades has been commendable. Undoubtedly, the region is a major economic force in the world. Accompanying this rise is the need for efficient regional infrastructures to meet the increasing demand of production and consumption, as well as that of international trade. Any slowdown or failure in responding to this demand will necessarily impact the growth and hamper trade and poverty reduction efforts in the region. South Asia's growth potential will only be realised if it can ensure that its infrastructure does not become a severe handicap. Nevertheless, the quality and capacity of South Asia's infrastructure, both on the national and cross-border levels, is certainly a matter of concern. The lack of regional connectivity is one of the major constraints hindering the full potential of regional growth and economic integration in South Asia. Strong regional cooperation among South Asian countries is essential for establishing South-Asia-wide physical connectivity and economic integration. In order to move towards a seamless South Asia, a comprehensive approach is needed to address the physical infrastructure issues, including roads, rail, inland waterways, maritime transport, dry ports, airports, seaports, and information and communication technology, as well as the non-physical soft infrastructure issues, including cross-border transit facilitation measures, customs clearance and other facilitating polices and regulations. Addressing these issues requires collaborative efforts among Asian countries, multilateral development banks, UN agencies, intergovernmental organisations, bilateral donor agencies, private sectors and professional associations. In particular, high-level policy direction and commitments are important for providing mutually beneficial regional transport infrastructure and services in the region and beyond. In this regard, a commonly agreed strategic regional transport policy and an associated plan are needed to facilitate closer cooperation and achieving an integrated South Asia. The trade and income gains of large economies in South Asia, like India, through rebuilding South Asia's transportation infrastructure and associated software, will be substantial in absolute value. However, the gain of smaller economies will be proportionality large compared to their economic sizes. Now it is the time for South Asia to further enhance its economic integration process, setting in place improved South Asia infrastructure and extending supports towards capacity building in smaller and vulnerable economies in the region. Reducing trade costs and facilitating transit are key approaches to achieving a more inclusive growth through trade, i.e., one that will reduce the gap between the economic core and the outer periphery of each of the South Asian economies. Doing so will encourage economic activity at and across borders, eventually generating employment through industrialisation as well as benefiting the poor of the border areas and landlocked countries; however, governments will also need to provide adequate education and capacity-building opportunities for the people living in such areas so that
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they can effectively engage in trade. The rise of trade as a share of national output is inexorable in the era of globalisation. Attempting to resist this process by keeping the cross-border trade costly and congested will merely escalate poverty and strengthen inefficient rent-seeking informal economies to dominate in the border areas and the landlocked countries. The ongoing global economic slowdown and its adverse effect on trade may escalate poverty and lead to the further rise of informal economies in the border areas and landlocked countries. Therefore, South Asian countries need to make coordinated efforts to integrate the border areas and landlocked economies with the export-led growth process in order to effectively tackle the downside risks of globalisation. Dr Prabir De is fellow with Research and Information System for Developing Countries (RIS), New Delhi. The views expressed in this article are the views of the author and do not necessarily reflect the views or policies of Research and Information System for Developing Countries (RIS), or the governments author represents. Usual disclaimers apply. Endnotes 1. Refer, for example, De (2010), for a list of studies. 2. Ibid. 3. During 1991-2006, natural gas (plant and transmission) has attracted about 78 percent (USD 10.88 billion) of the world's cumulative investments in cross-border infrastructure projects (calculations based on PPI Database, World Bank). 4. See, for example, Human Development Centre (2008). Bibliography ADB. SAARC Regional Multimodal Transport Study (SRMTS). Asian Development Bank (ADB), Manila, 2005. ADB-ADBI. Infrastructure for a Seamless Asia. Asian Development Bank (ADB) and Asian Development Bank Institute (ADBI), Manila and Tokyo, 2009. ADB-UNESCAP. Designing and Implementing Trade Facilitation in Asia and the Pacific. Asian Development Bank (ADB) and United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), Manila and Bangkok, 2009. Bhattacharyay, Biswa N., and Prabir De. "Restoring Asian Silk Route: Towards an Integrated Asia." ADBI Working Paper 140, Asian Development Bank Institute (ADBI), Tokyo, 2009. De, Prabir. “Trade Transportation Costs in South Asia: An Empirical Investigation”. In Infrastructure's Role in Lowering Asia's Trade Costs: Building for Trade, edited by Doug Brooks and David Hummels. Cheltenham: Edward Elgar, 2009a. De, Prabir. “Inclusive Growth and Trade Facilitation: Insights from South Asia.” ARTNeT Policy Brief No. 16, UNESCAP, Bangkok, 2009b. De, Prabir. "Regional Cooperation for Regional Infrastructure Development: Challenges and Policy Options for South Asia." Discussion Paper# 160, Research and Information System for Developing Countries (RIS), New Delhi, 2010. Duval, Yann and Chorthip Utoktham. Behind the Border Trade Facilitation in Asia-Pacific: Cost of Trade, Credit Information, Contract Enforcement and Regulatory Coherence. UNESCAP TID Staff Working Paper No. 02/09, UNESCAP, Bangkok, 2009. Human Development Centre (HDC). Human Development in South Asia 2007: A Ten-year Review. Mahbub ul Haq Human Development Centre, Islamabad. Karachi: Oxford University Press (OUP), 2008. RIS. South Asia Development and Cooperation Report 2008. Research and Information System for Developing Countries (RIS), New Delhi, 2008.
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Geopolinomics of Central Asia's Traditional Indus Basin Corridor Dr Aftab Kazi Background Political orders shape the processes of socioeconomic and cultural developments often through conquests and migrations or after an economic or military disaster and civil wars or simply by the fall of an existing order caused by specific historical reasons with a major power vacuum. The construction of new political orders can take decades. The power vacuum caused by the collapse of the Union of Soviet Socialist Republics (USSR) has initiated the processes of an emerging political order which, among other things, has to determine that the landlocked Central Asian countries, including Afghanistan and Caucasus, are reconnected with the world economy through region's traditional cost effective transportation routes in Southwest Asia. Commercial dependence of the newly independent landlocked states on the old Soviet routes and constant civil unrest in Afghanistan, caused by the zero-sum game played by regional and international actors, continue to hamper efforts toward the creation of a new commercial regime necessary to help revive Central Asia's long stalled traditional economic and political socialisation with its southern neighbors. There are geopolinomic reasons to believe that the presence of alternative routes of transportation through Central Asia's historic land and sea outlets originating in Southwest Asia through the warm waters of the Arabian Sea can stimulate the regional and cross-continental trade with positive impact over the ongoing economic and political transitions as well as broader regional stability. Approximately 17 years of efforts by the international community to invigorate the narrowly fluctuating GDPs of most Central Asian states (with an exception of Kazakhstan) have yet to materialise. Attempts toward the creation of some regional economic unions, such as the Economic Cooperation Organization and/or Central Asian Common Market and others have not succeeded enough to integrate Central Asian republics into the world economy. Dependency-oriented former unidirectional Soviet transportation infrastructure and the lack of an unambiguous international understanding about the resource rich Central Asia's traditional communication routes through Southwest Asian ports in Pakistan and Iran have stalled Central Asia's path of progress. The Greater Central Asia Partnership (GCAP) idea conceptualised by Professor S. Frederick Starr1 is in fact the first major attempt in the United States towards the regional development strategy intended to reintegrate Central Asian trade cross-continentally through its traditional historic routes of communication. It promises to replace this region's old camel and horse oriented caravan routes with modernised rail, road and maritime trade infrastructure. This north–south corridor strategy is bound to reintegrate Central Asia and Caucasus with the broad based world economy with desired speediness, hence the processes of regional economic, social and political development.
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Conceptual Justification The Greater Central Asia Partnership (GCAP) is a gradually evolved geopolinomic concept with its own attributes related to the transit-route politics. It is derived from the earlier conceptual developments in geopolitics and economics. Halford Mackinder's Heartland theory about power supremacy in the world during the early 20th century (revised in 1943) focused upon modern Central Asia and its surrounding regions as the core of world power competition. His Heartland theory aroused a new interest in this field and was readily applied as a major strategic doctrine in the defence policies of all major powers of the time. By the middle of the 20th century, Nicholas Spykman's Rimland theory appeared on the scene as an alternative development which, recognising the importance of the Heartland theory, explained the processes on how to restrict the Heartland expansionism. The Cold War era witnessed both Heartland and Rimland theory play as applied mechanisms of conflict and cooperation in the defence and foreign policies of the competing superpowers through conflicting roles between Heartland and Rimland spheres themselves, and by cooperative alliances within each power's respective areas of influence. GCAP as a geopolinomic concept is another major development in the evolution of geopolitics, which proposes a simultaneous cooperation between Heartlands and Rimlands by intersecting geopolitics with economics aiming at spurring a new geopolinomic regime in Central and South Asia and surrounding regions as a mechanism for regional economic integration and cross-continental trade. Relinking Central Asia with the world economy through its traditional Southwest Asian commercial transit routes via Afghanistan and through the Karakoram mountain range is the focus of this concept. Moreover, GCAP's new geopolinomic realism derives its strength from historical evidence related to the regional and cross-continental commerce between East, Central and South Asia, and Europe under various political orders across centuries when the southern Indus river port Barbarikon,2 through a network of land and sea silk-routes, served Central Asia as an import and export outlet as well as an emporium of economic and political socialisation. The Indus River Basin (IRB) has served as a natural historical boundary between historic India or Indostan (modern Pakistan) and Bharat (now called India under the British tradition). The IRB has played a significant role in intercultural and international relationships between Central and South Asia including modern Afghanistan and Iran. Focusing upon the transit routes as an essential geopolinomic requisite for trade, GCAP as a strategic doctrine signifies cooperation between the Heartland and Rimland space. By this configuration, the Indus Basin state, i.e. modern Pakistan plays a pivotal role through its closest ever rail, road and maritime communication infrastructure for trade as well as possible oil and gas pipeline outlets for Central, South, Southeast and East Asia and Europe as an alternative to the existing transit routes, hence associated forms of socioeconomic development and political socialisation. Pakistani road and rail networks and port facilities provide an answer to the dilemmas of the hitherto handicapped economic and political development processes in Central Asia. Justification for GCAP can be traced to various ancient, medieval and modern historical epochs and rationalised by the present day geopolinomics as a cooperation mechanism, a modicum that is likely to help bridge gaps between the conflicting interests of power
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politics with new forms of emerging interdependence through pipelines and trade routes, hence newer trends in the path of political order both regionally and internationally. Critics of GCAP3 are unable to offer alternative answers to Central Asia's chronic problem of land-lockedness and represent forces opposed to the idea of alternative traditional Southern routes of transportation. Analytical data provided in this paper demonstrates that the alternative routes of transportation through Pakistan, once fully functional, are likely to multiply the existing commercial transactions that are necessary to balance the concurrent economic and political development linkages in Central and South Asia, the surrounding regions of China, Mongolia, Central Russia, Near and Middle East as well as the East Asian, European, American and African markets. GCAP is thus a major geopolinomic development with focus on transit-root corridors centered around the hitherto hampered processes of political reordering in Central and South Eurasia. The next section offers the importance of GCAP from an historical context. GCAP's Historical Significance4 Although history does not repeat itself per se, geopolitical orders often resemble various epochs when analysed at various historical time-periods and cross-generational levels. With respect to land and sea communication, the history of the Indus Basin can be traced back to 3000 B.C. for its trade with Egypt and Mesopotamia and the European continent. Internal migrations within the Indus basin in earlier times occurred largely through the northern Khgerab Pass in the Karakorams than Khyber, Golan or Bolan passes in Central Pakistan, which were largely used by conquerors. From Darius of Persia and Alexander of Macedonia to Muhammad Bin Qasim of the Arabs and Mahmud of Ghazni, not a single conqueror ever attempted to cross the eastern banks of river Indus inside the Bharatan hinterlands until the 11th century A.D., the only exception being Emperor Kanishka of Kushan dynasty around 238 A.D. From his capital in modern Peshawar, he also penetrated inside Eastern Punjab up to Mathura region in Bharat. At least until the mid-11th century, Lodhis, Khiljis and their successors from Central Asia penetrated into Eastern Punjab. These dynasties established the foundations of the Muslim Empire in Delhi on the Bharatan land. Modern histories in the West often describe the entire South Asian subcontinent as India; however, until the rise of British power in the 18th century the name Indostan or Hindustan was applied to territories of the Indus Basin and its tributary regions in Punjab, Sindh and surrounding regions in Central Asian and European records. After the Mughal rule in Delhi (prior Muslim governments are named as Delhi Sultanates), Bharatan territory beyond the Indus Basin was also called Hindustan. Map A illustrates this fact.
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Map A.
A Greco-Latin map of Central Asia, University of Leiden 1731 A.D.
Annexation of the Indus Basin into Bharat by the Maurya dynasty (327 B.C.) was not led by a conquest, but through negotiations between the Greek General Seleucus and Bharatan ruler Chandragupta Maurya. Having succeeded Alexander after his death to rule over the largest part of Alexander's vast empire, stretching from the Mediterranean to the Indus, Seleucus found himself under pressure of local rivalries. He thus negotiated with Chandragupta an exchange of the eastern Indus regions for peace on the eastern borders of his domain, i.e. modern Pakistan. The fall of the Maurya dynasty returned the Indus Basin territories to its previous forms of political socialisation with Central Asia and Persia and later under the Arab Muslim political orders. The Gupta dynasty, which succeeded Mauryas, ruled eastern Punjab and parts of Sindh now in modern India, not the entire Sindhu or the Indus Basin. Although during the 11th century Lodhis of Central Asia conquered the central parts of the Indus Basin, i.e. parts of the Pakistani Punjab enroute Delhi, it was not until the 18th century that the Mughal Emperor Akbar formally annexed the entire Indus Basin state (indigenously called Sindh or Al-Hind as called by Arabs) into his empire. During the conquest by Arab General Muhammad Bin Qasim in 610 A.D., the Indus Basin Sindh state stretched from modern Kashmir to Karachi on the Arabian Sea coast, which more or less comprises the present day Pakistan. Map B illustrates the boundaries of the Kingdom of Sindh under the Brahman ruler Chach, who was the father of Raja Dahir, the ruler conquered by the Arabs.
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Map B
Not so long before the Arab conquest, in around 500 A.D. the Great Kushans ruled over the Indus state. The interim period was influenced by the remnants of the Kushans, while the Sassanid Empire of Persia maintained a close relationship with the southern Sindh regions. Having dealt with the necessary historical details, the paper traces the GCAP scheme patterns into various historic epochs explaining it by the model of the Kushan Empire.
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Map C
The Kushan Empire encompassed more or less the regions of modern day Central Asia, including Afghanistan and Pakistan, that are considered essential as a regional trade hub in the GCAP scheme. Political orders since the establishment of Kushan Empire, although different in terms of ideologies such as Zoroastrianism, Buddhism, etc. (patriotism prevailed instead of nationalism) indicate similar territorial rule patterns under empires following Kushans. This included the Sassanids of Persia, who cultivated considerable influence in the Indus Basin regions of Turan, Makran and Sindh until the beginnings of Arab-Muslim order throughout Central Asia and Southwest Asia by early 7th century. The Kushan Empire stretched from regions that comprise modern day Uzbekistan, Tajikistan, parts of Kyrgyzstan, Afghanistan and north central Pakistan with a satrap (governor in Persian) in the southern Indus Basin (now Sindh and Balochistan in Pakistan) allowing Kushans commercial access through its ports on the Arabian Sea coast.
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Map D
Map E
The ruins of the then Indus coastal harbor Barbarikon still exist some 60 kilometres (kms) near Karachi and are called Bhambhor by the natives. This communication through Barbarikon on the Arabian Sea and via lands of modern day Pakistan was one of the then silk routes. The cross-continental trade of the Kushan and Chinese empires in gold, silver, silk and spices with the Roman Empire was carried out through this route by the time Sassanid ruled over Persia. Ships sailed from the Arabian Sea to Red Sea and entered Mediterranean via the Red Sea Niles canal in Egypt, from where the goods were exported to Greece and Rome. The Kushan incursions in Bharatan hinterland were limited to Eastern Punjab—close to Mathura in Yamuna River Basin—for peripheral reasons, as is suggested by the fall of Kushan Empire in 500 A.D. Eastern Punjab was ruled by the Gupta Dynasty, while areas surrounding the Indus Basin regions remained with the remnants of Kushan rulers without much change in the territorial political order. Rulers changed but the territorial order remained more or less the same. Maps A, B and C demonstrate more or less the resemblance between the territories of Kushan Empire and GCAP trade regions with transportation corridors largely running through modern Pakistan and Iran coastal regions. Although much has been attributed to Bharat by its present day name India, the actual India in the days of Kushans was the Indus Basin—present day Pakistan.
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Contrary to the conclusions of the 1968 Dushanbe Conference on the "Kushan Period" that reflected upon India-Central Asia commercial and cultural interactions5, applied India in fact referred to the regions of modern Pakistan, from where the Kushan commercial and cultural influences in the form of Hellenistic Gandharan arts were extended to Bharat. Nevertheless, suffice to say that both the Indus Basin and Bharat have mutually influenced each other in cultural development under specific historical time-periods but not always. Present day sociopolitical influences on the modern day Indian subcontinent can be traced back to the beginning of the Muslim Empire and the succeeding British Empire. The fall of these empires re-established the Indus Basin state as Pakistan, which has often served as a natural boundary between historic Indostan and Bharat.
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Map G
Within this historical background, the GCAP proposals of region-wide partnerships resemble the extension of trade patterns under Kushans with their own gold and silver currencies. The phenomena that are now called silk routes are very old. Kushan Rule in fact, revitalised them and their empire served as the hub of larger regional trade between China and Central and South Asia, all the way to Rome through the Arabian Sea and Red Sea canal to Egypt between 100–500 A.D. (Maps F and G portray the traditional silk routes between the Kushan and Roman Empires. Map F maintains modern day identities of states in Central and South Asia).
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Map H
The maps of A.D. 230 and A.D. 362 have been cited from McEvedy Colin, The Penguin Atlas of Ancient History, Penguin Books, 1988
Although this map does not show internal trade route connections, the transport facilities of Kushans somewhat resemble the present day trade routes being planned by the Pakistan government. Applied modern technology has facilitated connections between Pakistan national highways, railways and the port facilities of Karachi, Port Qasim and Gwadar. Newly planned roads also include connecting points with Afghanistan at various junctions including Jalalabad, Wakhan border, and Western China through the northern Karakoram Highway, hence with Kyrgyzstan and Kazakhstan via Chinese roads as the north-south alternative transit route (See Map I). Under a contract of USD 200 million, China will be revamping the Karakoram Highway with five to six bridges on route turning it into a year round fair-weather road.6 Pakistani transit routes connecting India already exist; however, their effectiveness largely depends upon a long-term transit related negotiations with Pakistan. The Geopolinomics of Transit Routes Should the alternative routes of transportation for Central Asia and surrounding regions be considered as essentials in GCAP concept for regional and international trade, the geostrategic location of Pakistan provides the most convenient modern rail and road facilities with relatively short distances. A comparative overview of distances between
51
Islamabad and Karachi and the capital cities of Central Asia as well as existing Soviet era Russian port facilities illustrates this point. Table I: Distances Between Pakistan, Russian and Central Asian Destinations
(Table prepared from the article by Shameem Akhtar, “Strategic Significance of Central Asia�, Pakistan Horizon, Vol. 45, No. 3, July 1992, pp. 49-56. Routes remain the same since this publication).
Map I
Ministry of Communications, Government of Pakistan, Islamabad, 2006
Pakistan expressed great enthusiasm as one of the major transit-route corridors for Central Asian states at the time of independence. Estimating new port facilities in terms of distance, Pakistan government considered the construction of additional ports in 1995 besides Karachi and Port Qasim. The construction of the new Gwadar deep sea maritime port on the Balochistan coast and related connecting routes with Afghanistan reduce these distances by approximately 500 kms for Pakistan–Central Asia traffic. On one of his US visits in summer 2005, during a presentation at the Central Asia-Caucasus Institute, President Hamid Karzai emphasised the importance of the 32 hour long travel distance by road from Karachi to Tashkent via Afghanistan. The distance from Karachi
52
to Chaman is relatively longer than from Chaman to Dushanbe—via Afghanistan—and the port facility at Gwadar lessens it by approximately 500 kms reducing travel time from five to ten hours, depending upon where the journey may have started. Should the increasing volume of trade between Pakistan and Afghanistan be juxtaposed vis-à-vis the Pakistani transit-routes, Afghanistan-Pakistan trade in 2004 enhanced up to USD 1 billion7. According to officials at the Ministry of Foreign Affairs, Islamabad, “By early 2006, the Afghan-Pak trade has already reached US$ [sic] 1.2 billion against the US$ [sic] 3 million trade between India and Pakistan and that approximately 60,000 Pakistani workers are engaged in the Afghanistan reconstruction projects”.8 Pakistan shares approximately 2500 kms of border with Afghanistan and offers the country the most important trade facilities. Despite some disagreements on tariffs, largely over some electrical supplies from Dubai, which often are smuggled back to Pakistan, the trade volume between Afghanistan and Pakistan is continuously rising. Some Afghan government officials have complained about the lengthy time-period in cargo clearance at Karachi and Port Qasim. However, recent modernisation of ports and reformed customs rules and technological facilities has reduced the time from 12 to 4 days. Similarly, recent reports indicate significant increases in trade volume between India and Pakistan rising in the direction of USD 1 billion9, Pakistan-Central-Asia trade figures still fluctuate in between the trade volume figures of mid 1990s. The India-Afghanistan trade, particularly reconstruction assistance, is transported through Pakistan on Afghan/Pakistani vehicles from Karachi to Kabul. Direct transit for India through Pakistan is a component of the compound package of confidence building measures (CBMs) depending upon the progress of detente between these two countries, which so far has been encouragingly rocky and slow. Minimal trade between Pakistan and Central Asian states is likely to improve in the wake of improving transit security in Afghanistan, as well as through the bilateral agreements over commercial mechanisms between Pakistan and Central Asian states. Tajikistan, Afghanistan and Pakistan have agreed to construct a 20 km long road together with electricity supply line to help facilitate trilateral trade and Pakistani import of electricity from Tajikistan with possibilities of exports to India as well.10 However, Pakistan has also welcomed President Karzai's suggestion that the electricity transit to Pakistan may be facilitated via Kabul than the Wakhan border route. Secular and commercial initiatives by Pakistan over the last seven years are rapidly helping its image in the Central Asian republics (CARs). While Pakistan and Uzbekistan signed an extradition treaty in January 2002, the Pakistani government has waived a USD 10 million loan to Kyrgyzstan. The Almaty–Karachi road via Karakorams (Almaty–Bishkek–Kashgar–Karakoram–Islamabad–Karachi network) is functioning, albeit with a low trade volume at this time. The trade volume is likely to grow once the construction of Gwadar port is complete. The development of Gwadar is likely to open new opportunities of foreign direct investment in both regions. Although the government of Pakistan has reservations about Tajikistan leasing a military airbase to India for unexplained reasons, the Tajik government seems attentive to Pakistani
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concerns on the subject.11 Revived plans of Turkmenistan–Afghanistan–Pakistan gas pipeline with Turkmenistan certification about reserves in Daulatabad gas fields, and a successful visit by President Islam Karimov of Uzbekistan to Pakistan last May indicate promising developments.12 Besides the historic ethnocultural relationship (the majority of Pakistani population and material culture and art have roots in Ferghana and Zarafshan valleys), most Central Asian governments realise the geopolinomic importance of Pakistan as a southern transit route, hence an alternate to their landlocked isolation. Pakistan thus has an edge over the other transit routes for the simple fact that it offers at least three major maritime seaports on its Arabian Sea coast. The construction of Gwadar vis-à -vis the planned Iranian port of Chahbahar with India's assistance in the mouth of Persian Gulf (200 km away from Gwadar) should not be interpreted merely in terms of competition. Despite the limited scope of Chabahar near the Strait of Hormuz and relatively shallow waters of the Persian Gulf, commercial needs of Central Asia and surrounding regions can be so enormous that the existing port facilities may not be sufficient enough in time. Once the GCAP trade proposals through southern routes are materialised, proposals for the construction of additional ports might be necessary. The next section describes Pakistan government's plans about the construction of rail and road networks aimed to connect Central Asian traffic through Pakistan National Highways, internal routes connecting Afghanistan, Tajikistan, and Kyrgyzstan and Eastern Kazakhstan via Karakorams through the Western China road network and also the proposed gas pipeline from Turkmenistan to Pakistan via Afghanistan. Rail and Road Network: While the north-south corridor facilities already exist in the form of Karakorams and Pakistan's national highway system, many new internal bypasses, motorways and expressways are under construction (some are already completed) to help facilitate the Central Asian trade. Map I illustrates these routes. Pakistani officials believe that an effective way to address the issues of underdevelopment, poverty, stability and trade growth within Pakistan and nearby regions cannot be accomplished without a formal network of commercial communication. Official Pakistani investments in the communication sector reflect this concern. Table II demonstrates the extent of interest in the planning of rail and road infrastructure to help facilitate Central Asian trade.
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Table II: Road Communication Infrastructure in Pakistan
(Prepared from the Ministry of Communication, Islamabad Map, 2006. Possible mistakes in map reading are solicited for forgiveness. The map is attached for personal reading) Roads in Pakistan carry 89 percent of passenger traffic and 96 percent of all inward and outward freight traffic and have been a major development priority. The main national highway (N-5) connects Karachi in the south and Torkham in the north at the Afghan border and an additional Torkham-Jalalabad link with Afghanistan is nearing completion. The second north-south corridor in Pakistan, Indus Highway has been updated to international standards and entire highway was likely to be revitalised and revamped by 2008. These highways, together with various new bypasses, motorways and
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expressways along with Karachi–Gawadar road, and other widely connecting routes in north-central Pakistan have reduced the distance by 500 kms for Afghanistan and Central Asian trade.13 Additional roads: While direct rail and roads from Gwadar to Chaman are being planned with the assistance of Asian Development Bank (ADB), Gwadar has already been linked with Chaman through a combination of coastal highway (N-10) and ECO Highway (N-25). Additional roads with an investment of Rs 35 billion (USD 59 million) are being planned together with the upgradation of the existing road from Gwadar–Hoshab–Panjgur–Nag to Basima and Sorab. Construction of a new road to Pangur and beyond is being treated as a priority to facilitate the Afghanistan and Central Asian trade.14 The Liari–Gwadar road has been completed, while the Gwadar–Jiwani–Gabad road was expected to be completed by 2009 for trade with Iran. Reportedly 57 percent work on the Gwadar–Hoshab project has been completed; the rest of the road was expected to be completed by 2007. Also, the Basima–Khuzdar road was to be completed by 2009, while 60 percent work on the Khori–Wangu hill project has been completed. The remaining portion from Qubo Saeed Khan to Wangu hills is expected to be over within the next three years. The Qalat–Quetta–Chamman road has been awarded to contractors under ADB's financial package and is expected to be complete within three years.15 The existing Pakistan north-western railway network that serves the country from Karachi to Peshawar and other inland routes is being modernised through an agreement with China. The ADB has already offered to assist in the construction of the Gwadar–Chaman railway line that will be extended to Kandhar, Herat and Kabul with additional north and west extensions to Daulatabad/Ashkgabat (via Herat) in Turkmenistan, Termez in Uzbekistan and Tajik Badakhshan with in-country railway connections. While the Pakistan road network is scheduled to be completed in the next three years, additionally planned rail and road infrastructure is expected to complete within the next ten years or so. Domestically, Pakistan is busy reconstructing and revitalising its national highways with two-way double traffic lines and approximately 87 percent road revitalisation appears to be complete. The traffic volume on Pakistani national highways has almost doubled since the independence of the Central Asian states and reconstruction efforts in Afghanistan, subjecting the Pakistani domestic rail and road network to constant pressure, hence constant improvements and repairs. Moreover, an understanding between China and Pakistan for a railway line and an oil pipeline from Gwadar to Karakorams is also being explored. The Gwadar Deep Sea Maritime Port: The continued instability in the Persian Gulf regions led ADB's master plan studies to consider the strategically located Gwadar as an alternate to Gulf ports.16 Existing Pakistani ports of Karachi and Port Qasim, despite modernisation and revamping to accommodate large cargos, were found relatively unattractive for their distance from main roads and shipping routes and limitations in dealing with large mother ships and oil tankers. The construction of
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Gwadar deep-sea maritime port has been an important geoeconomic imperative by the government of Pakistan to help facilitate trade opportunities with landlocked Central Asian Republics (CARs) through Afghanistan. Gwadar is located approximately 489 kms from Karachi near the entrance of the Persian Gulf. Plans for the development of Gwadar port were initiated in the early 1990s, while construction of the first phase started in 2002 with Chinese assistance. In early 1980s amid the Afghanistan jihad, the United States also expressed an interest in developing the Gwadar port facilities, but the interest waned soon after the signing of the Geneva agreement on Afghanistan in 1985 (leading to the Geneva Accords of 1988). After the collapse of Soviet Union, the growing importance of the CARs and rising energy needs from the Gulf, China agreed to assist Pakistan with this initiative. Cost for the development of the first phase was facilitated by Chinese investments of USD 198 million and USD 50 million by Pakistan. The first phase was completed ahead of time by November 2005. Inauguration of the first phase development, first in March 2005 and afterwards scheduled for July was postponed in the wake of terrorist attacks in Balochistan, allegedly assisted by forces opposed to alternative routes of transportation for CARs and durable stability in Afghanistan. While the China-Pakistan construction of the second phase is underway, the opening ceremony of the first phase was to take place by the end of 2006. Coastal highways connecting Port Qasim and Karachi to Gwadar have been completed. The ADB is providing assistance to construct road and rail networks from Gwadar to Chaman with links to Afghanistan cities of Kandhar, Herat and Kabul, which will be connected with the border posts located within Iran, Tajikistan, Turkmenistan and Uzbekistan and eventually to Europe via Turkey and Turkmenistan. While the existing Karachi and Port Qasim cater to approximately 97 percent imports and exports of Pakistan, additional Gwadar deep-sea port will serve the needs of CARs, besides being a transit and trans-shipment hub in the region.17 Phase I of Gwadar port with “three multipurpose berths of 200 meters [sic], each with 350 meters [sic] backup area and related ancillary facilities, 5 km Approach Channel dredged to accommodate vessels up to 30,000 dwt drawing 11.5 meter draft, cargo handling equation and operational craft” has been completed at the total cost of USD 248 million.18 Phase II of Gwadar Port, with 7 additional berths of 300 metre and two oil piers will accommodate oil tankers up to 200,000 tones dwt, bulk carriers up to 1000,000 tons, general cargo vessels up to 100,000 tones dwt, and fourth generation container ships drawing 15.6 to 20 meters draft is estimated to cost approximately USD 524 million. The phase one scheme was revised on 25 February 2005 with additional allocation of Rs 1500 million (approximately USD 39.8 million) to dredge port channel to 14.5 metres to attract mother ships for use of trans-shipment, which was to be completed between June–December 2006.19 Recently, the port has been leased to Dubai World Ports Authority (now renamed DP World) for operations. Pakistan's customs administration has undergone a massive reformation process to ensure facilitation, transparency and user-friendly automated
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clearance system to expedite the dwell time for clearance of goods, with tariffs as low as five percent on raw materials and machinery not manufactured locally. Reforms have been initiated under bilateral agreements with Iran, Turkey and China. Supporting road network is being developed according to the Intergovernmental Agreement on the Asian Highway Network, the Programme of Action for ECO Decade Transport and Communication and Transit Transport Framework Agreement (TTFA) among ECO countries about the development of new silk route (NSR) to link up with China and Europe.20 Under the new rules, most cargo will be cleared in 4, instead of 12 days. Also, the International Ship and Port Facility Security Code (ISPS) of the International Maritime Organization (IMO) has been implemented by ports and shipping wing of the ministry, and the UN initiative called Customs-Trade Partnership against Terrorism (CTPAT) is operational on a voluntary basis, and the National Logistics Cell will install container scanners at all border crossings under the Container Security Initiative (CSI) of the US Homeland Security Department. Civilian structures planned to develop Gwadar as a modern port city are attracting many international countries. While Oman is already planning to invest approximately USD 100 million in city's new infrastructure, some Polish companies have also expressed interest in engineering work involved in this development.21 Regional trade forecast: Pakistan's sea-borne trade forecast for the year 2000 was estimated at 42 million tons. The trade forecast was estimated at 51 million tons per annum by 2005 and 78 million tons by the year 2015. Future trade envisages substantial cargo from China, CARs and Afghanistan. Gwadar will be the shortest in distance and a viable port for Western China, Kyrgyzstan, Eastern Kazakhstan and possibly Central Russia and Mongolia through Karakorams Highway, Indus Highway and proposed linkages through Ratodero and Khuzdar, and Khairpur to Dadu, as well as links to Uzbekistan, Tajikistan and Eastern Turkmenistan via Afghanistan. The estimated cargo figures for Gwadar Port envisage: TABLE III: Estimated Cargo Trade Volume
Ministry of Ports and Shipping, Government of Pakistan, 2006 Moreover, Pakistan's monetary expansion has improved considerably. Exports have increased from USD 8 billion to over USD 14 billion during the last five years. Export trade has been among the major factors. Pakistan-Afghanistan trade has risen 500 percent and similar trends in trade between India and Pakistan persist.22 Most Pakistani exports emphasise the cotton and textile industries.23 Pakistan's trade with Central Asia remains minimal, limited to leather products, banking, training, hotels and some
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minerals, etc. However, the projected energy/gas transit and land to sea trade through Pakistani infrastructure is likely to increase in transit fees and tariffs during the coming years. Estimates run around USD 1,000,000 plus million per year with gradual trade development. Afghanistan could similarly benefit from transit fees. Pakistani officials hope that besides the existing levels of cooperation, new projects of trade expansion between Afghanistan, Pakistan and Central Asia, if materialised could make a significant difference. Possible Pakistan-Central Asia cotton and textile cartel: Considering the large cotton production in Pakistan and Central Asia, officials suggested that both regions would benefit by initiating joint projects, particularly in cotton and textile industries. Increasing transportation facilities inside Pakistan and Afghanistan may eventually encourage Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, bilaterally or under ECO or other framework to join hands to establish a world cotton cartel24 based in the port city of Karachi with offices in all regional capitals. The cartel, if materialised, is likely to increase trade volume regionally and crosscontinentally, India could also join this cartel at a later stage, once the India-Pakistan dĂŠtente leads to agreements on transit facilities. A cotton/textile cartel could multiply regional trade by billions, leading toward economic cooperation in several other mutually beneficial areas of areas of interest, including natural gas and oil; minerals, jewelry, hydroelectric power, communications institutional cooperation (educational and operational), software technology, complimenting regional agrarian market and joint tourism. Such geopolinomic cotton cartel and relevant developments is the cornerstone of the GCAP scheme. Impediments Mistrust in security relations between India-Pakistan and Afghanistan-Pakistan appears to be among the major impediments. Emergence of CARs led to speculations that the new geopolitics in the region will compel both India and Pakistan to resolve their differences. The gradually developing India-Pakistan dĂŠtente is likely to need enough time to mature before the fundamental differences over Kashmir, Sir Creek and other issues are settled. Despite the beginnings of trade and tourism, mistrust in security relations persists as a fundamental issue in both India-Pakistan and PakistanAfghanistan relations. In light of previous insurgencies in Balochistan, according to Pakistani officials, some factions in Afghanistan appear to support the present day insurgency in Balochistan and India continues to play a zero-sum game against Pakistan in the region. Several military training camps in Balochistan, allegedly supported by the Indian consulates in Kandhar, Jalalabad and Zahidan, are found and are being destroyed by Pakistani Frontier Corps (FC). Moreover, Indian financial support of Sindhi and other anti-Pakistan groups based overseas has been a major concern for Pakistan. In the garb of human rights and/or social organisations, these groups are engaged in anti-Pakistan propaganda in the US, Canada and United Kingdom spreading stereotypes against the actually operating sociopolitical and cultural realities in contemporary Pakistan. Thus, the mistrust
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between India-Pakistan and Afghanistan-Pakistan appears on the increase despite the official rhetoric in joint public statements by these countries. The following points are necessary to be considered in terms of infrastructural development processes: 1.
Road and rail communication infrastructure in Afghanistan, if not addressed in a timely fashion, could delay the effective communication processes in the region, compelling the donor agencies and countries to emphasise upon, at least temporarily, for some other immediately available alternative transit routes, most likely through the Karakorams than via Afghanistan.
2.
Officials in the United States expressed an interest in Pakistan extending the direct transit for Indian products enroute Afghanistan and Central Asia.25 According to Pakistani officials, however, the lack of security trust and Pakistan's own developing state of trade and communication do not allow direct transit at this moment. Perhaps, in time with emerging relationship confidence, India may be granted this access. Central Asian states at this moment have no such problems with trade through Karakorams via the under-construction rail and road communication infrastructure through western China. In the meantime, India must rely upon the indirect transit facilities provided by Pakistan. Afghanistan, as a major trade partner of India, has to understand the Pakistani concern.26
3.
Many in India and the West often attribute Pakistani interest in Afghanistan merely in terms strategic depth search. This may be true in geostrategic terms, but the fact remains that strategic depth is not a one-way street and applies to all neighbours of Pakistan. However, the strategic depth of landlocked Afghanistan and Central Asian Republics is equally dependent on Pakistan for access to warm waters, and hence for world trade. The transit routes points actually necessitate a mutual reciprocity of bilateral interests—geopolitical, economic, security and strategic—between Pakistan, Afghanistan and CARs, just as this can be implied to China and India.
4.
Most states in South Asia fear India, because of its national-self worldview that is based upon the Lord Curzon's imperial worldview.27 It was advocated by K.M. Pannikar in 1950s and holds the entire Indian Ocean and surrounding regions as India's zone of influence. Besides the regional powers, the US itself may eventually find a conflict of interests with India over its presence in the Indian Ocean. This worldview represents the ideology of RSS, hence the Bharatiya Janata Party, which also includes Southeast Asia, and not Central Asia, as its traditional sphere of influence. Southeast Asia may have been a zone of influence for India in the ancient and medieval times, but in the present times, when the geopolinomics of Southeast Asia has changed considerably with the rise of new regional tigers, India may have problems finding suitable markets. India's longterm competition with China or Russia in Central Asia and Caucasus might become somewhat problematic, as both of these countries are located within the Eurasian Continental Realm, while India does not share borders with this heartland region and must rely upon China and Pakistan for transit facilities.
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Conclusion What can the US do to help in removing these impediments? The US government is already engaged in advising India and Pakistan to normalise relations without taking sides.28 However, a lot depends upon the leadership in India and Pakistan to resolve their disputes under the changing geopolitical situation in the region. Pakistan has already made a start. However, the US government can propose specific confidence building measure on a reciprocal basis to both governments. Lack of trust between Afghanistan and Pakistan, especially on security matters, needs similar attention. In this writer's view, the complex ethnopolitics in the region is complicating the matters. The nation and state-building processes in the region must include mechanisms of inter-ethnic socialisation besides an emphasis on law and order and civil society constitutionalism. This is also true in case of Pakistan to some extent. New transit routes via Pakistan and consequent economic developments are likely to stabilise the political ordering processes throughout the Central and South Asian regions. At present, the required tactical balance between economic and political development processes is missing. Processes of political socialisation as a value mechanism can be based on federal democracy, with theory and practice of democracy as a tyranny of neither majority nor minority. Structural processes of democracy are already in place and democratisation as a cross-general phenomenon is bound to take time. Messianic zeal at democratisation processes may cause more problems than prospects. Contrary to general speculations about instability, Central Asia is a relatively stable region. Credit goes to Central Asian countries for having resolved almost 95 percent of their boundary problems by themselves. The new Bureau of South and Central Asian Affairs at the US Department of State can play a major role in materialising the GCAP concept of regional and cross-continental trade. Its geopolinomic foundation is based on geopolitical realism and historic evidence. Increased transportation infrastructures and transit access to Central Asia's traditional southern routes of communication are likely to encourage foreign direct investment contributing toward peace and stability in Afghanistan and Pakistan and broader region. Alternative routes of communication are likely to create a new regional form of interdependence, allowing major powers to balance their own interests in these regions. New interdependence is likely to help stabilise US-China relations in the longterm. Trade can play an important role, just as it did in the past under various historic political orders in the region and is likely to speed up the economic and political transition in a relatively stable form throughout the region. Perhaps, the United States could offer new incentives to encourage confidence building both at the bilateral and multilateral levels among various regional countries. Existing region wide corruption may cause some problems in the short-term but a balanced economic and political development strategy is likely to gradually overcome or manage it at considerable levels, just as it can be useful in curbing terrorism. It is time that the long overdue solutions to the problems of relative deprivation in Central and South Asia are addressed. Alternative routes for trade and transportation through Pakistan may hopefully pave the way toward a broader region-wide stratification. Furthermore, the newer US-India relationship and new geopolinomics in Central and Southwest Asia
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demand a change in India's foreign policy worldview. The idea of emerging markets in Central and Southwest Asia is appealing; however, the nature of trade competition among regional powers can be somewhat unpredictable. Dr Aftab Kazi is a senior fellow with the Central Asia-Caucasus Institute & Silk Road Studies Program. The paper, originally presented at a conference in kabul in 2006, is a study in continuity. It will be part of Dr Kazi's next book on Geopolitical History of Central and Southwest Asia. Endnotes 1 “Greater Central Asia Partnership: Afghanistan and its Neighbors”, Foreign Affairs, Summer, 2005. 2. Barbarikon may be the port that Alexander of Macedonia established in 332 B.C. on the Indus when shipping all of his war booty to Babylon by sea, while personally taking the harsher route through Gedrosia in modern-day Balochistan). All historians of Alexander agree on this. The origins of Barbarikon/Bhambhor remain a mystery. The linguistic pronunciation of the word Barbarikon to localised term Bhambhor suggests a resemblance, just as the Greek word Indus is locally pronounced as Sindh; Hind by Persians and Al-Hind by Arabs those days. Barbarikon port on the Indus is shown on the territorial map D of the Kushan Empire. 3. Омаров М. Н, Новая Большая Игра В Центральной Азии. Мифы И Реальность. (Бишкек: «Салам», 2005). [Omarov, M.N (ed.) New Great Game in Central Asia: Myths and Reality. (Bishkek: Salam, 2005]. 4. Information provided in historical significance is scattered in several books including Encyclopedia Britannica. Besides several publications on historic India, Sindh and Hindustan and Muslim rule in the subcontinent in the Persian language, one can cite some literature in the English and Sindhi languages, which includes: M. H. Panhwar, Chronological Dictionary of Sindh, (Jamshoro Pakistan: Institute of Sindhology, 1983); Abraham Eraly, The Mughal Throne: The Saga of India's Great Emperors, (London Phoenix: Orion Books Ltd., 2004); A.T. Olmstead, History of the Persian Empire, (Chicago: Phoenix Books, University of Chicago Press, 1948); Mohammed Yunus and Ardhana Parmar, South Asia: A Historical Narrative, (Karachi: Oxford University Press, 2003); Ahmad Hassan Dani, New Light on Central Asia, (Lahore: Sang-e-Meel Publications, 1993); Dr. N.A. Baloch, Sindh: Studies in History, Vol. I, (Karachi: Kalhora Seminar Committee, 1996); and Shamsudin Rukandin Quraishi, Aina-e-Qadeem Sindh (A Mirror of Ancient Sindh –in Sindhi Language), (Hyderabad, Sindh: R.H. & Ahmed Brothers Publishers, 1956). This writer can cite approximately 20 more publications on the ancient and medieval history of Central and South Asia translated from Persian to Sindhi and Urdu languages. 5. Cited by Moonis Ahmar, “India and its Role in the New Central Asia”, Pakistan Horizon, Vol. 45, No.3, July 1992, p. 59 from Niranjan M. Khilnani, Realities of Indian Foreign Policy, (New Delhi: ABC Publishing House, 1984), pp. 167-168. 6. Conversations at the Ministry of Communications, Government of Pakistan, Islamabad, February 27, 2006. 7. “Trade with Kabul to rise to $1 bn”, Dawn, Karachi, January 19, 2004. 8. Personal meetings with top officials at the Ministry of Foreign Affairs, Government of Pakistan, Islamabad, February 28, 2006. 9. "India Pakistan trade on the rise”, Dawn, Karachi, March 20, 2006. 10. Meetings in the Ministry of Foreign Affairs, Islamabad, February 28, 2006. 11. Meetings, Ministry of Foreign Affairs, Islamabad, February 27, 2006. 12. Ibid. 13. “Trade and Transport Facilitation in Pakistan –Prospects for increasing trade volume”. A brief by the Ministry of Shipping and Ports, Government of Pakistan, Islamabad, February 27,
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2006. 14. “Gawadar link roads to cost Rs. 35bn: PM”, The News, Islamabad, March 21, 2006. 15. Ibid. 16. “Gawadar”, Board of Investment (BIO), Government of Pakistan. http://www.pakboi.gov.pkNews_event/Gawadar.html. 11/15/2004 17. “Trade & Transport Facilitation in Pakistan …” 18. “A Brief on Gawadar Port Project”, Ministry of Shipping and Ports, Government of Pakistan, Islamabad, February 27, 2006. 19. Ibid. 20. “Trade and Transport Facilitation in Pakistan…” 21. “Polish Companies Interested in Gawadar Development”, Pak Tribune, http://www.paktribune.co./news/print.php?id=61615&PHPSESSID=56818006188776b, 11/15/2004. 22. Conversations at the Ministry of Commerce, Government of Pakistan, Islamabad, February 27, 2006. 23. “Monetary Policy Implications for Trade”, Document, Ministry of Commerce, Government of Pakistan, Islamabad, 2006. Also, conversations with high officials at the ministry. 24. Conversations at the Ministry of Foreign Affairs in 1996 and in February 2006. 25. Conversation with officials at the US Department of Commerce, Washington, DC, January 2006. 26. Conversations at the Ministry of Foreign Affairs, Islamabad, February 28, 2006. 27. This worldview has been highlighted by Raja Mohan, Crossing the Rubicon: The shaping of India's New Foreign Policy, (New Delhi: Penguin Books India, 2003). 28. Conversation at the US Department of Commerce, Washington, DC, January 2006.
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Dynamics of Sub-Regional Cooperation in South Asia Shahab Enam Khan Introduction South Asia has embarked on a new role in the era of globalisation. During the 19th century the imperial power Great Britain saw the region as the prize of its “Great Game”; during the 20th century it was the backyard of the Cold War politics, neglected by the rest of the world; today it is the hub of economic growth of Asia, home to the most rapidly growing economies of the world. South Asian economies have become part of growing international economic networks through exchange of goods, services, and capital. These countries initiated reforms in their trade regimes during the early 1980s. The twin impact of free-market reforms and globalisation during the 1990s ushered in unprecedented economic growth (close to six percent on average)1 in the South Asian region. This can be measured by the rise of India as a global economic powerhouse or Bangladesh's inclusion in the “Next 11” country-list by Goldman Sachs or Maldives's credible performance in the Human Development Index rankings.2 However, the phenomenal economic growth witnessed in the region over the past two decades has obscured a startling and disturbing piece of key information: South Asia is the least integrated region in the world. Cross-border trade and investment or flow of ideas—crudely measured by the cross-border movement of people—are all low for South Asia. Leamer (2006) points that, “trade in products is a neighbourhood experience”, as trade flows decline dramatically with the distance despite the relative fall in transportation and communication costs.3 However, this is not the case in South Asia. More than 20 percent of the world's trade by value occurs between countries that share a land border. This level has remained nearly constant over recent decades although it varies significantly between continents. For Africa, the Middle East and Asia between one and five percent of trade by value is with neighbouring countries. But the figure is between 10 and 20 percent for Latin American trade and between 25 and 35 percent for European and North American trade.4 Intra-regional trade is less than 2 percent of GDP, compared to more than 20 percent for East Asia.5 At present, the official intra-regional trade in South Asia is about USD 6.25 billion; India alone contributes more than 45 percent of total intra-regional trade. The rest is equally distributed among Bangladesh, Nepal, Pakistan, and Sri Lanka.6
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Intra-Regional Trade and Investment Flow Data
Country Bangladesh Bhutan Nepal
Country Bangladesh Bhutan Nepal
Table 1 : FDI Inflows7 FDI Inflows 1985 1990 2000 -6.7 3.2 578.7 .. 1.6 0 0.7 5.9 -0.5
2004 460.4 3.5 -0.4
Table 2 : FDI Outflows8 FDI Outflows 1985 1990 2000 .. 5 2 .. .. .. .. .. ..
2004 5.7 .. ..
Table 3 : FDI Inflows9 Country Bangladesh Bhutan India Nepal
2001–2 355 0 5472 21
2002–3 328 2 5627 -6
2003–4 350 3 4233 15
2004–5 460 3 5771 0
2003–4 6 0 1879 0
2004–5 6 0 2179 0
Table 4: FDI Outflows10 Country Bangladesh Bhutan India Nepal
2001–2 21 0 1397 0
2002–3 4 0 1679 0
Policy discourse in the region has begun to realise that South Asian countries can not grow in isolation. The cost of the region's continuing geographic, political and economic fragmentation is increasingly becoming untenable. The unique geography of South Asia—distance and density—has the potential to raise growth through increased flow of labour, capital, ideas, technology, goods and services within the region and with the rest of the world. Despite their diverse resources, South Asian countries have not been able to harness this vast potential. The major reasons behind this are, in particular, infrastructure bottlenecks in intra-regional level, lack of regional connectivity—such as transport and energy networks—and political motivation. This paper looks at the South Asian sub-regional growth quadrangle. The sub-regional countries are defined to include Bangladesh, India (with particular focus on its northeastern region and West Bengal), Nepal and Bhutan. These countries are collectively referred to as the sub-region or quadrilateral growth zone of South Asia. This paper focuses on issues relating to cross-border infrastructure in the sub-region from Bangladesh's perspective. The cross-border infrastructure is defined as any cooperation initiative between two or more countries to strengthen physical connectivity. The paper takes into account that cooperation in the transport network in the region is crucial to Nepal, Bhutan and regions such as north-east India because it will end their
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landlocked or semi-isolated status. Sub-regional cooperation in transport in South Asia would lead to a greater degree of business cycle synchronisation between the large economies and the smaller ones. Successful cooperation in sub-regional level has the potential to provide constructive platform for increased integration into the regional economy. However, sub-regional cooperation might dampen the sensitivity of domestic economies to global developments.11 Nepal, Bhutan, and the north-eastern region of India will have the benefit of improved access to the ports and important economic centres of the region, and a choice of route and mode. The north-eastern region of India is connected to the rest of India by a narrow congested land corridor between Bangladesh and Nepal. This landlocked region, a natural hinterland to Chittagong port in Bangladesh, trades with the rest of India and the world through this congested strip of land. The costs of transporting goods to and from the north-eastern region are consequently high. The transportation costs include a trucking distance of more than 1,400 kilometres (km) through the land corridor around Bangladesh to Kolkata port. For example, the traditional tea route for Assamese tea via Chittagong port would cut the distance by almost 60 percent. Third-country trade for both Nepal and Bhutan is also routed through this corridor to Kolkata port with associated delays and costs.12 This paper argues that improved transport integration based on comprehensive and transparent policy regime leads to an increase in the total volume of trade as well as intra-regional trade allowing for effective exploitation of comparative advantages and competitiveness among the countries. Investment in transportation systems alone is not enough; it should be supplemented by policy reform, improved procedural and operational efficiency and regional political consensus. Issues of sovereignty and security are critical in allowing or preventing free movement of goods and persons across borders. Therefore, to increase the benefits of regional connectivity it is crucial to develop adequate institutions in addition to physical facilities. The first part of the paper presents the political economy of sub-regional connectivity in South Asia, linking obstacles to the region's phenomenal growth in intra-regional trade and investment. The second part discusses the needs and barriers in facilitating transport integration which hinders international and regional production networks and supply chains. This indicates different sets of agenda linking Bangladesh with Nepal, Bhutan, Indian and the Asian Highway. The concluding part of the paper reviews the possibilities of cooperation involving different stakeholders. It argues that, so far, the sub-region's connectivity has mostly been made through national infrastructure projects and national policy actions. This approach has so far worked but proved to be inadequate given the future prospects of rapid growth in over all Asian trade. Moreover, the need for reducing transport and logistics costs, developing economic agglomeration and connecting production clusters and markets is the key driver of demand for crossborder infrastructure in South Asia. Therefore, addressing the region's logistics challenges will require attention to cross-border infrastructure. Theoretically, the debates on deep versus shallow integration, comprehensive versus limited integration, and bilateral versus multilateral solutions to regional cooperation
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dominate the sub-regional discourse in South Asia. Therefore, the focus of most of the analytical work on sub-regional cooperation has been on trade and investment. As such, verifiable data on Nepal and Bhutan trade and informal trade in the region is notoriously difficult to find. The primary reason behind this is that they are all estimates derived from different studies using different methodologies, sample areas and time periods. There is a broad consensus regarding the formidable role played by political and bureaucratic entities within the sub-regional zone, but opinions vary sharply regarding their scale and magnitude. Furthermore, to exacerbate the problem, estimates of India's trade with the other member states exist but it is difficult if not impossible to desegregate and isolate north-east India's contribution in this entire process. This paper attempts to come up with a balanced analysis, giving greater credence to estimates published by credible institutions and renowned experts whose works are grounded on solid methodological and empirical evidences. Political Economy of Regional Connectivity in Bangladesh The South Asian sub-region, comprising Bangladesh, India, Nepal and Bhutan, is one of the largest concentrations of the poor in the world, reflecting a high incidence of poverty in Bangladesh, Nepal, and India's eastern and north-eastern states.13 The sub-region has a population of about 1.16 billion people (18.4 percent of the world population and 92.8 percent of the South Asian population) and a gross domestic product (GDP) totalling USD 543 billion (1.7 percent of the world's GDP and 86.5 percent of the South Asia's GDP). The sub-region has great potential for economic development, as it is endowed with rich natural and human resources as well as a rich historical heritage and vibrant and varied culture. The sub-region shares borders with Myanmar and the People's Republic of China, which provide gateways to Southeast Asia and the wider East Asian region. While the sub-region has achieved strong growth, averaging 5.7 percent between 2000 and 2008—one of the highest growth rates in the world—the region has yet to reach its full potential. Sub-regional economic cooperation, by eliminating barriers and ensuring optimum use of resources, is one important way to help the sub-region realise its potential.14 The sub-regional countries in South Asia have made several attempts to liberalise trade regimes using various unilateral, bilateral, regional and multilateral arrangements. Nevertheless, it has been long argued that the limited success in liberalising regional trade was due to political mistrust and miscalculation, limited tariff reductions, barriers in trade arrangements, and less complementarities in production and consumption among the countries. The smaller trade gains in the growth quadrangle is mainly due to the fact that sufficient attention has not been paid to trade facilitation measures such as efficiency of custom and other border procedures, quality of transport, cost of international and domestic transport.15 India, by any measure, is the largest South Asian economy, while Bangladesh is the third largest economy; Nepal and Bhutan are the land locked countries neighbouring India on its eastern flank. Afghanistan, after being inducted into South Asian Association for Regional Cooperation (SAARC) recently, is now the third such country. Besides, these four countries are geographically contiguous and share very porous borders with each
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other. India and Bangladesh would be the leading players in any formal regional integration agreement. Therefore, strengthening sub-regional collaboration and integration in South Asia will be a major stepping-stone towards the region's meaningful integration in the global economy and a critical building block for stronger growth and poverty alleviation. A study conducted by the Bangladesh Enterprise Institute (BEI) identified that subregional integration and cooperation would ensure qualitative improvement in the overall quality of life of the peoples of the South Asian sub-region; optimal and sustainable management of shared natural resources, i.e. water and sensitive ecosystems; equitable distribution of energy; and over-all economic security in particular. Such a process would also result in inducing and ushering in greater political unity, which could then collectively and effectively address regional problems such as terrorism, migratory diseases and climate change.16 Due to the sheer size of its economy, India enjoys extensive gains from its integration in the international market, while of the other three countries, Bangladesh and Nepal are currently facing massive power-shortages and rolling blackouts. Bhutan's problems are somewhat different owing to the small size of its population, relative to the size of the country, its remoteness and sense of isolation. These three countries also suffer from lack of economies of scale in production and their inability to compete in the international market due to the poor and unreliable infrastructure particularly in the transport, telecom and energy sectors, combined with often prohibitive intra-regional barriers on the flow of goods, capital and people.17 In addition, political and bureaucratic hurdles play a significant role in the process of sub-regional integration, where not only India suffers but so do Bangladesh, Bhutan and Nepal. The politics of identity leading to political mistrusts triumphs over collective economic and social welfare in the region. Amartya Sen in his book Identity and Violence, indicates that in South Asia the art of creating and nurturing hate invokes a dominant identity and suffocates other associations; and inequality simply intensifies polarisation.18 It therefore challenges the idea of collective distribution of resources for the greater benefit of most of the population living below the poverty line in the region. India's bilateral relations with Bangladesh, Nepal and Bhutan have always been subject to political and security considerations rather than economic realities. The relationship, particularly between Bangladesh and India, has not developed for mutual benefit due to mutual mistrust—the stakes notwithstanding. Depending upon which side one takes, blame could be apportioned on the other for the not-so-friendly relations. However, it could be observed that political will has begun to change according to the dynamics associated with globalisation—to maintain a stable, working relationship with the neighbours. For Bangladesh it includes India and Myanmar, and for India it is Bangladesh, Bhutan, Nepal and Myanmar. Due to historical complicacies, successful resolution of outstanding issues is bedevilling relations between Bangladesh and India despite growing changes in the political and economic spheres. In this context they point inter alia towards the consequences of
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iniquitous water management, non-completion of border and maritime demarcation, undocumented migration, killing of unarmed civilian Bangladeshis at the border by the Indian Border Security Force, physical and visible barriers in the borders, the continued imbalance in bilateral trade resulting out of Indian non-tariff barriers, informal trade and the recently proposed Tipaimukh Barrage in north-east India. In recent years, Bangladesh has made some specific commitments, e.g. Bangladesh will allow India, Nepal and Bhutan the use of the Chittagong and Mongla ports. On the contrary, New Delhi has reiterated open-ended promises for resolution of certain disputes that India has with Bangladesh including exchange of enclaves, sharing of the water of 54 trans-boundary rivers, demarcation of land and maritime boundaries and trade imbalance. After years of political contravention, people's opinion in Bangladesh may be sceptical of such assurances. Indeed, New Delhi has offered Dhaka a USD 1 billion credit line. The offer, however, is seemingly laced with conditionalities that, generally perceived, will protect and promote India's interests. There are, therefore, reasons for many to feel disappointed if not dejected.19 On the other hand, India feels that Bangladesh has not always conducted its foreign relations keeping India's interests in focus. Such sentiments have increased in the Indian political mindset because it played an important role in Bangladesh's Liberation War of 1971 by hosting 10 million Bangladeshi refugees who had fled to India to escape the Pakistani genocide. India also has serious security concerns arising from concerns that Bangladesh allows its territory to be used as a sanctuary for Indian militants. India has so far not been able to gain favourable access to land transit and to the use of Chittagong port. Bangladesh had also earlier turned down India's request for purchase of gas—an issue no longer relevant. The bottom line of this complicated history is that Bangladesh feels that India is conscious of its role as a regional power but insensitive about its responsibilities to the neighbours. Although the year 2009 has seen expectations grow both in India and Bangladesh about improvement of the multifaceted nature of the countries' relations and possible solution of outstanding issues. This anticipation has emerged partly because of the traditional ties of friendship that have existed between the ruling Bangladesh Awami League party in Bangladesh and the Indian National Congress party of India. The year has also witnessed great interest in both the print as well as the electronic media about the scope of future relations between India and Bangladesh. However, connectivity and “transit facility to India” remains a subject to torrential political significance. The opposition led by the Bangladesh Nationalist Party—or for that matter any parties in the opposition—as has been their custom with regard to anything Indian and consistent with their mind-set, overlooked the bigger picture and threatened mass political agitation on the streets if “the country's interests” were compromised. Therefore, politicisation of connectivity has largely been supplemented by “commitment phobia” and experiences of “unlovely attitudes” between India and its neighbours like Nepal, Sri Lanka and Bhutan. Both Bangladesh and India have to recognise these facts in order to reap the benefits from effective transport cooperation
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within the region which, in turn, will provide opportunities for reaching Bangladesh's goals of being a lower middle income country by 2021. Both Bangladesh and India also have to develop a comprehensive mechanism to undertake constructive foreign policy mindset towards the region and Myanmar and underline not only the importance of regional growth through connectivity but also to take all possible steps to contain militancy and terrorism.20 Sustained political will and interactive engagement could reduce the unfortunate trend of unhelpful politicisation. The concern for transport connectivity has been explicitly discussed in the SAARC forums. The first meeting of the SAARC Inter-Governmental Group on Transport, held in December 2006, identified the importance of a missing rail link between Agartala (India) and Akhaura (Bangladesh), which would enable the landlocked region to access Chittagong port through the eastern border of Bangladesh. The Fourteenth SAARC Summit, held in April 2007, approved the SAARC Regional Multimodal Transport Study that included the Agartala–Akhaura rail link as a key transport corridor. Currently, Indian Railways is constructing a new broad-gauge line connecting Kumarghat in Tripura (north-eastern India) to Agartala. The connection of Agartala and Akhaura by rail and the transportation of imports and exports between the landlocked region and Chittagong port will accelerate economic integration of the South Asia Subregional Economic Cooperation (SASEC) sub-region and promote mutual prosperity. The SASEC Subregional Corridor Operational Efficiency Study in the South Asia Subregion indicated that seamless transit transport through the Kakarvitta–Panitanki–Fulbari–Banglabandha corridor will allow Nepali traders to have easier access to Mongla port or Chittagong port in Bangladesh, which in turn will promote competition among trans-shipment ports such as Kolkata/Haldia, and help lower logistics costs for Nepali traders.21 Outlook of the Connectivity Issue in Bangladesh Bangladesh seeks to facilitate an international transportation system that promotes economic growth and development. The primary rationale in facilitating an efficient structure of connectivity will require the following issues: 1. 2.
3. 4. 5.
Reduced barriers to trade in transportation goods and services. Safer, more efficient, and cost-effective movement of passengers and cargo throughout international and domestic transportation systems, including regional ports of entry, modal, and inter-modal supply chains. Sustained regional institutional mechanism and monitoring system in regulating transportation policies and the issues of security and migration. Harmonised and standardised regulatory and facilitation requirements in the international and regional arena. Expanded opportunities for all businesses in the transportation sector, especially small and medium enterprises, and disadvantaged businesses.
Bangladesh has the potential to become a transport and trans-shipment centre for the sub-region. It borders India and Myanmar and is close to the landlocked countries of Bhutan and Nepal. With the opening of the Bangabandhu Bridge and the proposed
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development of the Padma Bridge, the Dhaka–Chittagong and Dhaka–Mongla transport corridor and other strategic transport corridors can facilitate trade between Bangladesh and the north-eastern states of India, West Bengal, Bhutan, and Nepal and thereby attract more foreign and domestic investment to the country. The government has also set up several land ports to facilitate cross-border trade. The land port at Benapole is operated by the Bangladesh Land Ports Authority (BLPA) while those at Sonamosjid, Hili, Bibirbazar, Birol, and Banglabandh are operated by the private sector under a build-operate-transfer arrangement with the BLPA as the licensee. In addition, the BLPA plans to set up land ports at Akhaura, Bhomra, Burimari, Haluaghat, Tamabil, and Teknaf. Four of the six corridors identified as important for greater sub-regional trade by the Transport Working Group of the SASEC pass substantially through Bangladesh. The government has also identified several other important trade corridors by road, rail and inland waterway that can boost Bangladesh's trade with Bhutan, India and Nepal.22 The government has set up export-processing zones (EPZs) to attract foreign investors, and offers generous tax concessions to firms that locate to Bangladesh's two largest industrial cities, Dhaka and Chittagong. Among other EPZs, one zone located in Chalna near Mongla port in Khulna could become an important trading hub in Bangladesh if transit facilities for Nepal and Bhutan are granted. The EPZs had accumulated total investment of USD 514.2 million and total export income of USD 1.07 billion. Mongla is the second seaport of Bangladesh. However, the Mongla port is an under-utilised port, therefore detention and other charges are much lower as compared to Kolkata and other busy ports. The cost of holding goods passing through the port is lower due to the fast turnaround time. Furthermore, the government of Bangladesh had announced a 50 percent discount on port charges for Nepalese trade handled through the port up to a few years back. However, trade for Nepal through the port has not commenced due to various reasons and the benefit has not been utilised. Mongla port would be able to assist the economic growth of two land-locked countries—Nepal and Bhutan. The transit traffic via Indian ports, particularly by road and sea, is not hassle free for Nepal and Bhutan. There are problems associated with the movement of goods largely due to carteling by transporters, lack of liability to the carrier, and pilferage of goods en route. The pilferages in many cases are due to security and customs staff's interventions. These interventions are also expensive in terms of the unofficial inducements payable to customs staff, and cause unnecessary delays. There is little effective choice of carrier, and there seem to be powerful forces acting to prevent modernisation of the road transport fleet and method of carriage. As a result a high proportion of imports and exports are uninsured for land routes unless the owners themselves buy a separate insurance to cover it. Insurance is expensive and often granted in restricted conditions.23 The costs of holding, demurrage and detention charges comprise a major element of the overall transport cost and such costs are increasing day by day for imports from Kolkata port. As a result, maintaining trade competitiveness has become very difficult for the business community. Kolkata port is over congested with the existing infrastructure unable to bear the trade growth through the port. Delays in meeting commitment for
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export cause huge foreign currency losses to the country through unnecessary air freight charges and additional discount to the buyers.24 Cost of handling has increased significantly during the last few years and it is expected to increase further in the days to come; inadequate exercise in creating alternate routes may lead to disaster for the trade composition of the country. However, overall transport connectivity issue can be discussed through three sets of issues: Connectivity Issue I: Bangladesh-India-Nepal Between Bangladesh, India, Nepal and Bhutan, road transport is the dominant mode and its importance is growing in these countries. The dominance of road transport is evident when comparing the modal shares (excluding air transport and coastal shipping which is negligible) for transport, as shown in Table 5:
Road Rail IWT
F 43 8 49
Table 5: Existing Modal Shares for Transport Bangladesh Bhutan India P F P F P 75 100 100 60 80 12 40 20 13 -Neg Neg -
F 100 Neg -
Nepal P 100 Neg
Notes: F: freight transport, P: passenger transport, Neg.: negligible Source: Compiled by the author
Both Bhutan and Nepal are landlocked countries that depend on transport routes through India for export and import traffic. Until recent years when Mongla port has also been utilised for some traffic, this traffic mainly used Kolkata and Haldia ports in India. Because of its location, Bangladesh could play a significant role in the subregional transport system by offering attractive alternatives in terms of more direct, shorter route choices covering different modes of transport (road, rail and inland water transport) including multimodal options, such as container operations. By utilising different modes and routes, Bangladesh could offer shorter transport routes not only for Indian traffic to and from its eastern states but also for Indian export traffic utilising the Banghabandu Bridge. Thus, Bangladesh could offer transit by road, rail, or inland water transport (IWT) or combinations thereof, which could be used for Indian traffic as well as for Nepalese and Bhutanese export and import traffic by utilising Mongla and Chittagong ports in Bangladesh. The present road connection to Nepal from Bangladesh is through Kakorvitta (Nepal), Phulbari (India) and Banglabandh in Panchagarh district of Bangladesh. There is a narrow strip of Indian territory in that area that separates Bangladesh and Nepal. The East-West Highway in Nepal and the connection via Phulbari and Banglabandh to Dhaka is part of the Asian Highway 2 (AH2). In 1997, India allowed a direct route for trade and transit between Nepal and Bangladesh via Kakorvitta, Phulbari and Banglabandh. This route could provide Nepal an easier access to Chittagong and Mongla ports in Bangladesh as an alternative to Kolkata port which is already congested. However, at this point, India allows this route to be used for bilateral traffic only. Nepal would need India's transit agreement to use this corridor for third country trade. This route, however, was not found to be very attractive to the traders and transporters both in Nepal and Bangladesh because it is too long and there is transhipment involved at the
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border. If India agrees, a direct broad gauge rail route from Rauxal (border point between India and Nepal) to Rohanpur (Bangladesh) and Khulna or to Chittagong would be much more attractive. Apart from road connectivity, four rail corridors (two broad gauge and two meter gauge Map 1: SAARC Highway Corridor 4
This border crossing corridor falls in SAARC Highway Corridor 4: Kathmandu–Kakarvitta–Phulbari–Banglabandha–i) Mongla (1,314 kms) or ii) Chittagong (1,394 kms). This corridor starts at Kathmandu and uses the EastWest Highway to the border at Kakarvitta (Nepal)/Panitanki (India). It then follows the NH 31C, H 31 and SH 12A for short stretches and partly a state road of West Bengal to reach Phulbari (India)/Banglabandha (Bangladesh). From Banglabandha, the corridor follows the N 5 up to Hatikumrul and then it follows the N 507, N 6, N 704 and N 7 to reach Mongla port.25
Map 2: Proposed Route on the Nepal-Indian Site Extended to Bangladesh
Source: Nepal Chamber of Commerce and Industry. http://www.nepalchamber.org/index.php Accessed on 16 January 2010
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corridors) are presently active for export and import traffic between India and Bangladesh. In addition, the Benapole–Jessore rail corridor in Bangladesh has been rehabilitated. The broad gauge connections are Gede (India)–Darsana (Bangladesh) and Singhabad (India)–Rohanpur (Bangladesh), while the metre gauge connections are Radhikapur (India)–Birol (Bangladesh) and Mahishashan (India)–Shahbazpur (Bangladesh). While broad gauge is the dominant gauge in India, Bangladesh Railways is currently converting some of the most important parts of the core rail network to dual gauge. This has not only enabled movement of broad gauge traffic to the eastern part of Bangladesh including greater Dhaka but ultimately also across Bangladesh to India's north-eastern states via Agartala and to Chittagong port. Railway links on the Indian side from Raxaul onwards to Singhabad already exist. However, with the upgrading of Railway link on the Katihar–Jogbani section to broad gauge, the proposed route will have connectivity from both Birgunj as well as Biratnagar transit points which are major trading points on the Nepalese side and handle nearly 70 percent of the total trade of the country. Birgunj shall be linked with Bangladesh through the Birgunj–Raxaul–Sagauli–Muzaffarpur–Samistipur–Hasanpur/Barauni– Mansi–Katihar–Old Malda–Singhabad–Rohanpur (Bangaldesh) route. Biratnagar shall be linked through Jogbani–Forbesgunj–Purnea–Katihar–Old Malda–Singhabad– Rohanpur (Bangladesh) route. The distance between Birgunj to Rohanpur is 540 kms and Jogbani to Rohanpur is only 230 kms.
Map 3: Proposed Route on the Bangladesh Site Extended to India and Nepal
Source: Nepal Chamber of Commerce and Industry. http://www.nepalchamber.org/index.php Accessed on 16 January 2010
The railway link on the Bangladesh side at Rohanpur is connected to Singhabad on the Indian side; the distance between Singhabad and Rohanpur is only 12 kms. The proposed route will provide railway link to various towns of Bangladesh including Khulna which is not far off from Mongla port. The major stations on the way are Rohanpur, Amnura, Rajshahi, Abdulpur, Isurdi, Poradaha, Darsana, Jessore, Nawapara, and Khulna. The distance between Rohanpur to Khulna is only 326 kms.
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Connectivity Issue II: Bangladesh-India-Bhutan Bhutan's trade suffers from the typical problems that affect all landlocked countries requiring transit facilities through neighbouring countries. These include excessive delays at ports, inefficiencies at land border crossings, limits on the routes allowed for transit cargo, and limits on the use of the landlocked country's own transport companies. The competitiveness of Bhutan's exports is further reduced by the high transportation costs within the country and unbalanced trade flows, reflected by a shortage of back loads. Bhutan's international trade is solely reliant on the Kolkata port in India, using the transit corridor on the Indo-Bhutan border at Phuentsholing.26 Bhutan and Bangladesh have signed a bilateral trade agreement which includes a new trade route that should benefit eastern Bhutan. The new route to Tamabil, north-eastern Bangladesh, passes through the Indian states of Assam and Meghalaya and is the fifth route the two countries have identified to enhance trade. It will be a shorter distance for eastern Bhutanese exporters to use this route than go to Burimari near Siliguri, India, from the south-eastern town of Samdrup Jongkhar which is about 400 kms away. Burimari, which is about 117 kms from Phuentsholing, is the most active trade route currently being used by Bhutan to export horticulture and mineral products and import garments and melamine products from Bangladesh. The other three routes are Banglabandh via the Indian state of West Bengal—used by Nepal—and Haluaghat and Nakugaon on the Meghalaya border that could be used by central Bhutan. These routes have not been used so far.27 Connectivity Issue III: The Asian Highway and Bangladesh-India Concerns The Asian Highway (AH), a cooperative project among Asian countries providing a link to Europe, was conceived in 1959 by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) to promote regional cooperation. The AH1 route passes through Benapole–Jessore–Kanchpur–Dhaka–Sylhet–Tamabil. The AH2 passes through Banglabandha–Hatikamrul–Dhaka–Kanchpur–Sylhet–Tamabil and the international sea ports. Chittagong and Mongla are connected to AH1 and AH2 by AH41 so that the ports can also serve regional needs if required. Depending on Myanmar's interest and agreement, AH41 could also be extended through Myanmar to Thailand.
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Map 4: Asian Highway Route in Bangladesh
Source: Rahmatullah, M. 2009. Connectivity between Bangladesh & NE -India : Relative merits of transit and transshipment. Conference Presentation. Stakeholders Consultation on 'Indo-Bangla Trade : Focus on NE-India'. August 09, 2009, Agartala, Tripura
Initially, Bangladesh offered two entry/exit points on the north-east corner of Bangladesh as part of its proposal. In 1993, UN-ESCAP asked all AH member countries to indicate as to which roads of their national network could form part of the Asian Highway network (AHN). Apart from the routes mentioned earlier, Bangladesh also proposed in addition to Tamabil, the Austagram (Sylhet)窶適arimganj (Assam) route which could have provided a much shorter link to Tamu via Imphal. Tamu is the border point with India, which Myanmar offered for AH connection with India, and then through India to Bangladesh. Myanmar proposed road connections to China and Thailand as well, but none to link Bangladesh directly. The Tamabil route, which is about 600 kms to Imphal from Sylhet, passes through a mountainous region across four Indian states through which vehicles can move only slowly, since the gradients are steep. Trucks with heavy loads will face difficulty in moving, and fuel consumption will be huge, making travel costly. It was an erroneous choice since the alternative route through Austagram would have been shorter by around 200 kms.28
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Map 5: Asian Highway in North-East India
Source: Wangdi , Phuntsho. 2010. Bhutan Bangladesh to renew bilateral trade agreement. Druk Phuensum Tshogpa. http://www.dpt.bt/2009/11/bhutan-bangladesh-to-renew-bilateral-tradeagreement/ Accessed on 16 January 2010
The blue line in Map 5 is the proposed Asian Highway in 2008. The red line was what was proposed initially by India and the UNESCAP. The Bangladeshi experts indicated that Bangladesh actually chose the blue line as AH route among the alternatives. Such geographical preference has the potential to defeat the purpose. The red line mostly goes through plains and the blue one through hills. The road length, as obvious from the map, is 400km longer through the blue line.29 There is now a growing concern in Bangladesh that the current AH1 route between Sylhet and Imphal is not suitable for any of the member countries. The Sylhet–Austagram–Karimganj–Imphal route will reduce the distance by about 400 kms, thereby reducing time and travel costs. Map 6: Chittagong-Ghumdum Border Point
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On the Dhaka–Chittagong–Ghumdum–Myanmar route, experts opine that in the future Bangladesh may initiate diplomatic efforts to include this route as an AH route. It is unlikely that it would be treated as AH1, since Myanmar does not have any interest in it.30 This would be the best possible route for Bangladesh to have access to South East Asia. But it may need quite a bit of effort to achieve. Myanmar finalised its route through Tamu region because there are reasonably good quality roads of AH standard in that part of the country. On the other hand, Myanmar does not have such a high quality road in its Arakan region through which the Gundum road will pass. This route can be possible only if Bangladesh can convince Myanmar to build an AH standard road along Gundum–Myanmar, with financial and technical support from China and Thailand. Map 7: Mizoram to Sittwe Proposed Route
For India, the AH1 is a mixed basket. In the north-east region, the circuitous AH proposal should help India improve the quality of roads as most of the important regional Indian cities (Imphal, Kohima, Dimapur, Guwahati and Shilong) are connected to it. The former proposal could only have touched Silchar and Imphal. However, in its own interest, India should prepare the latter route as well. At the same time, no route is suggested for connecting Mizoram to Sittwe—a proposed trade port to be used by India in the near future. Sittwe has been developed as a port to be used by north-east India at a cost of USD 100 million. By the year 2013, it should be ready for use. India also did not persuade Myanmar to agree to the Indian proposal to upgrade Stillwell road (also known as the Ledo Road) that connects India and China directly. Both India and China are quite eager for it and have completed the respective section of work. Now the connector between India and China would be the Asian Highway 3, which goes through Myanmar to Kunming, China. The other important miss would be the development of Siliguri corridor, which India could have got if Bangladesh stayed out of the Asian Highway. However, from international transport point of view it would not be a feasible option.31
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A BEI report identified that joining the AH Network does not mean allowing transit to India. While it is legally correct, it is also understandable that India will not allow foreign traffic to Bangladesh till it reciprocates with a transit deal. Hence, sans transit deal the Asian Highway would be a mere domestic route for Bangladesh.32 It is worth mentioning that the AH Network agreement and transit are two completely different issues. Article 15 (clause 3) of the AH Network agreement says: “Nothing in this agreement should be construed an acceptance of an obligation by any party to permit the movement of goods and passenger traffic across its territory”.33 For movement of goods and passengers in the form of “transit”, there must be a separate agreement. However, the connectivity discourse in Bangladesh identifies several inter-related factors for the sustainable future of sub-regional cooperation in transport connectivity. First, Dhaka–Tamabil–Shillong–Guwahati–Shillong–Tamabil Bus Service needs to be initiated to popularise passenger movement among Bangladesh, north-east India and Bhutan. This will require a Bangladesh trade and visa office in Guwahati. To facilitate cargo movement, there is a lack of structured platform to remove the existing non tariff barriers in doing business between Bangladesh and India. Simplification of customs procedure and modernisation of the Land Customs Stations (LCSs) is required to improve trade between Bangladesh, India and Bhutan. Second, Agartala–Akhaura rail connection could be re-established to provide third country export transit for the goods originated from north-east India via Chittagong Port. Agartala is 1,650 kms from Kolkata and 2,637 kms from New Delhi via Guwahati, whereas the distance between the Tripura capital and Kolkata via Bangladesh is about 350 kms. Furthermore, Ashuganj could be considered as a “port of call” because it will save almost two days to transport goods to Tripura and Mizoram. It could be noted that India already enjoys maritime transit through Bangladesh.34 Land Customs Stations (LCSs) serve as an important conduit for trade between the subregional countries. However, in the case of India–Bangladesh and India–Nepal, the LCSs is not adequate both in terms of quality and quantity. Table 6 is provided to illustrate the above mentioned point.
Table 6: LCS between Bangladesh and North-East India State Assam Meghalaya Mizoram Tripura Total
Functional 3 9 0 4 16
No of LCS Non Functional 5 1 1 3 10
Total 8 10 1 7 26
Source: Jalil, Altaf. 2005. “LCS Infrastructure as a NTB: Identification of Gaps and Suggested Strategies”. Seminar Paper. Seminar on “Promotion and Facilitation of Trade between Bangladesh and Northeast India”. September 2005. Dhaka, Bangladesh. Bangladesh
The quality of service provided in the LCSs is also not satisfactory on either side of the
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border or even in the case of India–Nepal, where the Indian government has been pushing Nepal to upgrade the infrastructure and handling capacity of its LCSs. Some of the infrastructural deficiencies and procedural hazards at these LCSs are inadequate and congested roads, absence of government bonded warehouses, irregular power supplies, inadequate sanitary facilities and drinking water, prevalence of theft and other crimes, frequent strikes, prevalence of speed money, a single border gate which handles all truck and other traffic as well as individual travellers and which is wide enough for only one truck at a time to pass through. Then there are allegations from Bangladeshi and Nepali traders that they are often dealt shabbily by the Indian customs authority. A report identified the following frequently cited complaints:34 ·
At the border Bangladeshi trucks have to give way to Indian trucks going in the opposite direction with a wait of 4–5 hours to cross.
·
Once the trucks enter India, immediate trans-shipment to Indian trucks is required, since there is no bonded warehouse in which the goods can be stored. As no facilities are provided for the trans-shipment, this results in damage to the goods.
·
Bangladeshi exporters complain that they are badly treated when entering India at Petrapole, despite paying substantial bribes. Consequently they prefer to fly to Kolkata in order to explore business opportunities, even though the cost is much higher than the cost of land travel.
Conclusion: The Future of Cross-Border Infrastructure in Asia The future of South Asia—in terms of economic growth and poverty reduction—is closely tied to its ability to reap benefits from regional economic cooperation. In this regard, cross-border cooperation in infrastructure and connectivity would be the first step to achieve a tangible form of cooperation. This article has indicated that substantial initiatives will be required to enhance both the quality and quantity of infrastructure to improve overall efficiency. Potentials for cross-border economic activities in the subregional levels have important implications for the demand for infrastructure development in the region. The poorer bordering areas within the countries of Bangladesh, India, Nepal and Bhutan, where infrastructure is a major constraint on economic opportunities and improved access to larger regional markets, will be key to economic success. The efficiency of cross-border infrastructure connectivity will be an important determinant of a country's prospects for economic growth, employment creation, poverty reduction, and social improvements. Through greater investment in logistics and infrastructure, the sub-regional countries can further strengthen overall productivity and competitiveness. As existing physical linkages are inadequate in the sub-region there is a need for improving overall efficiency: institutional mechanism to oversee the policy and regulatory enforcement relating transit and trans-shipment; new construction; rehabilitation; upgrading and modernisation of infrastructure services, equipment, and facilities; capacity building for asset maintenance; coordination of cross-border services, harmonisation of regulations, procedures and standards; and trade and
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customs facilitation. Various stakeholders need to work together to ensure success in this difficult area. One of the first tasks is to undertake coordination and planning for cross-border infrastructure. The sub-regional governments can take several actions. First, they can identify and implement projects and programmes for cross-border infrastructure to enhance the region's trade and integration agenda. A number of multilateral organisations, i.e. the World Bank, Asian Development Bank and SAARC Secretariat have already conducted various studies. There is a need for political leadership to support such cross-border infrastructure arising from a vision of regional cooperation based on improvements in transport and logistics efficiency and market expansion for the entire region. Second, the governments could integrate some cross-border projects and programmes into their countries' own development plans to demonstrate their willingness and credibility to support such initiatives. Finally, governments in the subregion should establish a framework for sharing risks that are inevitable in such projects and programmes. It is important for governments to develop a reliable and dependable partnership for such programmes. Along with the governments, the private sector also has responsibilities. Though the role of the private sector in cross-border infrastructure has been somewhat opportunistic, the sector has brought real “additionality�. Given the public sector's resource constraints, the private sector will have to play an increasingly important role in crossborder infrastructure. There are substantial financial rewards to be derived from regional and/or sub-regional cooperation in the energy and transport sectors. The private sector is expected to play a critical role in this process. The civil society in the region may play an important role in facilitating regional cooperation. Most cross-border infrastructure projects and programmes are highprofile investments, and often civil society organisations are opposed to them. There are several reasons for this. First, they often share serious concerns regarding environmental and social costs associated with such projects or programmes. Second, the concerns relating to asymmetric distribution of costs and benefits could be addressed by the civil society. The civil society organisations can provide a rigorous system of screening and monitoring on cross-border infrastructure to ensure that transparent processes are put in place for project planning, designing and implementation, and for a fair distribution of costs and benefits between different groups of stakeholders.36 Involvement of the multilateral institutions could be seen positively. Multilateral institutions can facilitate the process of dialogue and discussion where countries can reach political convergence to promote tangible regional cooperation. Besides, multilaterals can provide technical assistance, knowledge transfer and risk mitigation instruments.37 It has been observed that the issue of regional connectivity and trade facilitation has policy implications. The rationale for trade facilitation between Bangladesh and India should focus on creating a conducive environment for business in both the countries. Therefore, trade cooperation between Bangladesh, India, Nepal and Bhutan will build capacity and equip these four countries in dealing with specific issues, such as border
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controls, and transit and movement of labour. Increase in trade in the sub-region will dramatically increase the level of confidence among the political leaders and decisionmakers in all the countries. This paper has shown that security concerns and perceptions on both sides hinder the way of economic cooperation. More economic cooperation based on multilateral approach will provide amicable solutions for the long standing bilateral problems. Shahab Enam Khan is assistant professor in International Relations at Jahangirnagar University, Dhaka, Bangladesh. Endnotes 1. World Bank, 2007, South Asia: Growth and Regional Integration. http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/0,,cont entMDK:21224117~pagePK:146736~piPK:146830~theSitePK:223547,00.html. Accessed on 05 January 2010. 2. Parvez K. Abbasi, "Position Paper on Inventory of Barriers to Integration," in ed. Shahab E. Khan et. al., Position Papers to Facilitate Sub-regional Trade and Investment Integration in South Asia, BEI-IFC Project on 'Regional Integration Program in South Asia,' (BEI: Dhaka, 2009). 3. E. E. Leamer, "A Flat World, a Level Playing Field, A Small World After all or None of the Above?," Journal of Economic Literature, 2006, Vol. 45. No. 1. Pp. 83-126. 4. D. Hummels, "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, 2007, Vol. 21. No. 3. Pp. 131-154. 5. World Bank. 2007. South Asia: Growth and Regional Integration http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/0,,cont entMDK:21224117~pagePK:146736~piPK:146830~theSitePK:223547,00.html. Accessed on 05 January 2010. 6. Asian Development Bank, 2009. Prospects of India–Bangladesh Economic Cooperation: Implications for South Asian Regional Cooperation. http://www.adbi.org/discussion-paper/2007/09/13/2360. india.bangladesh. economic.cooperation. Accessed on 06 January 2010. 7. UNCTAD, 2009. The Least Developed Countries Report 2008: Growth, Poverty and the Terms of Development Partnership. UNCTAD Secretariat: Geneva. Read figures in $million, .. Indicates the figure is not available or separately reported, 0 means the amount is nil or negligible. 8. Ibid. 9. Research and Information Systems for Developing Countries, South Asia Development Report 2008, (Oxford: Delhi, 2009). Read figures in $ million. 10. Ibid. 11. Stephane Dees, Filippo di Mauro and J. Warwick McKibbin, "International Linkages in the Context of Global and Regional Integration," in eds. Stephane Dees et. al. Globalization, Regionalism and Economic Interdependence, (Cambridge: Cambridge University Press, 2008) p. 12. 12. Asian Development Bank, 2007, Preparing the South Asia Sub-regional Economic Cooperation Transport Logistics and Trade Facilitation Project. http://www.adb.org/Documents/ TARs/REG/39454-REG-TAR.pdf. Accessed on 12 January 2010. 13. Sushil Khanna, Trade and Investment in the South Asia Sub-region for Economic Cooperation: Barriers and Opportunities, Indian Institute of Management, Calcutta, 2001. 14. Asian Development Bank, 2005,Technical Assistance South Asia Sub-regional Economic Cooperation III. http://www.adb.org/Documents/TARs/REG/37648-REG-TAR.pdf Accessed on 14 January 2010.
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15. J. Weerahewa and B. Wijeratne, Improving Intra-Regional Trade in South Asia through Trade Facilitation. Second Annual Research Forum of SAEA, 2008: Agricultural Production and Trade, 2008. 16. Shahab Enam Khan et.al., Position Papers to Facilitate Sub-regional Trade and Investment Integration in South Asia. BEI-IFC Project on 'Regional Integration Program in South Asia'. BEI: Dhaka, 2009. 17. Ibid. 18. Amartya Sen, Identity and Violence: The Illusion of Destiny (Issues of Our Time). (Massachusetts: W. W. Norton, 2006). 19. New Age, "New Dhaka-Delhi deals need at least be placed before JS," Editorial. January 19, 2010. http://www.newagebd.com/2010/jan/19/edit.html Accessed on 27 January 2010. 20. Muhammad Zamir, "India, expectations and connectivity," The Daily Star, January 16, 2010. http://www.thedailystar.net/newDesign/news-details.php?nid=122020 Accessed on 27 January 2010. 21. Asian Development Bank, 2005. Technical Assistance South Asia Sub-regional Economic Cooperation III. http://www.adb.org/Documents/TARs/REG/37648-REG-TAR.pdf 22. Asian Development Bank, 2006. People's Republic of Bangladesh: Preparing the Development of Transport Corridors for Trade Facilitation Project. http://www.adb.org/Documents/ TARs/BAN/37338-BAN-TAR.PDF. Accessed on 12 January 2010. 23. P. Ojha, Nepalese Experience in Liberalization of Trade Logistics Services, Joint Secretary, Office of Prime Minister and Council of Ministers, Nepal, 2006. http://www.unescap.org/tid/artnet/mtg/tfri_s3ojha.pdf Accessed on 14 January 2010 24. Ibid. 25. Prabir De, Abdur Rob Khan, and Sachin Chaturvedi, 2008. Transit and Trade Barriers in Eastern South Asia: A Review of the Transit Regime and Performance of Strategic BorderCrossings. Asia-Pacific Research and Training Network on Trade. Working Paper Series, No. 56, June 2008. http://www.unescap.org/tid/artnet/pub/wp5608.pdf 26. World Bank, 2010. Bhutan Transport Sector. http://go.worldbank.org/WYC3V28GA0 Accessed on 20 January 2010. 27. Phuntsho Wangdi, Bhutan Bangladesh to renew bilateral trade agreement. Druk Phuensum Tshogpa, 2010. http://www.dpt.bt/2009/11/bhutan-bangladesh-to-renew-bilateral-tradeagreement/ Accessed on 16 January 2010. 28. The Daily Star, "Asian Highway: Dream or a reality?," Point Counterpoint section, 2009. http://www.thedailystar.net/newDesign/news-details.php?nid=93162 Accessed on 16 January 2010. 29. M. Rahmatullah, "Connectivity between Bangladesh & NE -India: Relative merits of transit and transshipment," presented at Stakeholders Consultation on 'Indo-Bangla Trade : Focus on NE-India,' August 09, 2009, Agartala, Tripura. 30. The Daily Star, "Asian Highway: Dream or a reality?"... 31. M. Rahmatullah, "Connectivity between Bangladesh & NE -India...." 32. Shahab Enam Khan et.al., 2009. Position Papers to Facilitate Sub-regional Trade.... 33. Intergovernmental Agreement on the Asian Highway Network. . http://untreaty.un.org/English/Asian_Highway/English_text.pdf 34. M. Rahmatullah, "Connectivity between Bangladesh & NE -India..." 35. Chittagong Chamber of Commerce and Industry (CCCI) and Tripura Chamber of Commerce and Industry (TCCI), Enhancing the Trade and Investment between Bangladesh and Northeast India, CCCI: Chittagong, 2006. 36. Haruhiko Kuroda, "Infrastructure and Regional Cooperation," conference paper, Annual Bank Conference on Development Economics, Asian Development Bank, Tokyo, 2006. 37. Ibid. Bibliography
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Acharya, Amitav. Whose ideas matter?: agency and power in Asian regionalism. Cornell University Press: Ithaca, 2009. Asian Development Bank. 2009. Prospects of India–Bangladesh Economic Cooperation: Implications for South Asian Regional Cooperation. http://www.adbi.org/discussionpaper/2007/09/13/2360.india.bangladesh. economic.cooperation. Accessed on 06 January 2010. Asian Development Bank. 2007. Preparing the South Asia Sub-regional Economic Cooperation Transport Logistics and Trade Facilitation Project. http://www.adb.org/Documents /TARs/REG/39454-REG-TAR.pdf Asian Development Bank. 2006. People's Republic of Bangladesh: Preparing the Development of Transport Corridors for Trade Facilitation Project. http://www.adb.org/Documents/ TARs/BAN/37338-BAN-TAR.PDF Asian Development Bank. 2005. Technical Assistance South Asia Sub-regional Economic Cooperation III. http://www.adb.org/Documents/TARs/REG/37648-REG-TAR.pdf Bhagwati, Jagdish N. Termites in the Trading System: How Preferential Agreements Undermine Free Trade. Oxford: OUP, 2008. De Lombaerde, Philippe. et al. Governing Regional Integration for Development: Monitoring Experiences, Methods and Prospects. Burlington: Ashgate, 2008. De, Prabir, Abdur Rob Khan and Sachin Chaturvedi. Transit and Trade Barriers in Eastern South Asia: A Review of the Transit Regime and Performance of Strategic BorderCrossings. Asia-Pacific Research and Training Network on Trade. Working Paper Series, No. 56, June 2008. http://www.unescap.org /tid/artnet/pub/wp5608.pdf Dieter, Heribert. ed. 2007. The Evolution of Regionalism in Asia: Economic and Security Issues. Routledge: London Dees, Stephane. et. al., eds. Globalization, Regionalism and Economic Interdependence. Cambridge: Cambridge University Press. Ekins, Paul, and Voituriez, Tancrède. eds. 2009. Trade, Globalization and Sustainability Impact Assessment: a Critical Look at Methods and Outcomes. Earthscan:London Estevadeordal, Antoni. et. al. 2009. Regional Rules in the Global Trading System. Cambridge University Press. Exim News Service. Global recession makes little impact on Major Ports' April-Dec. 2009 performance. Kolkata. 25 August 2009. http://www.eximin.net/past_news /news_template_Sql.asp?newsid=58970 Frost, Ellen L. Asia's New Regionalism. Boulder: Lynne Rienner Publishers, 2008. Government of Nepal. 2006. National Planning Commission: An Assessment of the Implementation of the Tenth Plan/ PRSP. June 2006. Hummels, D. 2007. "Transportation Costs and International Trade in the Second Era of Globalization." Journal of Economic Perspectives. Vol. 21. No. 3. Pp. 131-154. Jalil, Altaf. "LCS Infrastructure as a NTB: Identification of Gaps and Suggested Strategies." Seminar Paper. Seminar on 'Promotion and Facilitation of Trade between Bangladesh and Northeast India'. September 2005. Dhaka, Bangladesh. Bangladesh Enterprise Institute. Kerremans, Bart and Bob Switky, eds. The Political Importance of Regional Trading Blocs. Burlington: Ashgate, 2000. Khan, Shahab Enam. et.al. Position Papers to Facilitate Sub-regional Trade and Investment Integration in South Asia. BEI-IFC Project on 'Regional Integration Program in South Asia'. Dhaka: BEI, 2009. Khanna, Sushil. Trade and Investment in the South Asia Sub-region for Economic Cooperation: Barriers and Opportunities. Indian Institute of Management, Calcutta, 2001. Kohli. Harinder, S. Growth and Development in Emerging Market Economies: International Private Capital Flows, Financial Markets and Globalization. New Delhi: Thousand Oaks, 2008. Kuroda, Haruhiko. Infrastructure and Regional Cooperation. Conference Paper. Annual Bank Conference on Development Economics. Asian Development Bank.Tokyo. 2006 Lester, Simon, and Mercurio, Bryan. 2009. Bilateral and Regional Trade Agreements:
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Commentary and Analysis. Cambridge: Cambridge University Press, 2006. Leamer, E.E. 2006. "A Flat World, a Level Playing Field, A Small World After all or None of the Above?". Journal of Economic Literature. Vol. 45. No. 1. Pp. 83-126. New Age. "New Dhaka-Delhi deals need at least be placed before JS." Editorial. 19 January 2010. http://www.newagebd.com/2010/jan/19/edit.html Accessed on 27 January 2010. Ministry of Development of North Eastern Region. North Eastern Region Vision 2020. Volumes I & II. Government of India, 2008. Ojha P. 2006. Nepalese Experience in Liberalization of Trade Logistics Services. Joint Secretary. Office of Prime Minister and Council of Ministers, Nepal. http://www.unescap.org /tid/artnet/mtg/tfri_s3ojha.pdf Rahmatullah, M. Connectivity between Bangladesh & NE -India: Relative merits of transit and transshipment. Conference Presentation. Stakeholders Consultation on 'Indo-Bangla Trade: Focus on NE-India'. August 09, 2009, Agartala, Tripura Research and Information Systems for Developing Countries. South Asia Development Report 2008. Delhi: Oxford, 2009. Sen, Amartya. Identity and Violence: The Illusion of Destiny (Issues of Our Time). (Massachusetts: WW Norton, 2006. The Daily Star. 2009. "Asian Highway: Dream or a reality?" Point-Counterpoint. http://www.thedailystar.net/newDesign/news-details.php?nid=93162 UNCTAD. The Least Developed Countries Report 2008: Growth, Poverty and the Terms of Development Partnership. UNCTAD Secretariat: Geneva, 2009. Wangdi, Phuntsho. 2010. Bhutan Bangladesh to renew bilateral trade agreement. Druk Phuensum Tshogpa. http://www.dpt.bt/2009/11/bhutan-bangladesh-to-renew-bilateraltrade-agreement/ Accessed on 16 January 2010. Weerahewa, J. and B. Wijeratne. Improving Intra-Regional Trade in South Asia through Trade Facilitation. Second Annual Research Forum of SAEA, 2008: Agricultural Production and Trade, 2008. World Bank. 2010. Bhutan Transport Sector. http://go.worldbank.org/WYC3V28GA0 Accessed on 20 January 2010 World Bank. 2007. South Asia: Growth and Regional Integration http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/0,,cont entMDK:21224117~pagePK:146736~piPK:146830~theSitePK:223547,00.html World Bank. Trade blocs. World Bank policy Research Report. Oxford: OUP, 2000. Zamir, Muhammad. "India, expectations and connectivity." The Daily Star. 16 January 2010. http://www.thedailystar.net/newDesign/news-details.php?nid=122020
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Potential for Cross-LoC Collaboration in Jammu Kashmir Moeed Yusuf Introduction The territorial dispute over the state of Jammu Kashmir is the single most contentious issue between Pakistan and India. The issue has been directly or indirectly linked to several Indo-Pak wars and crises. While persistent efforts have been made to find a resolution to the dispute, traditionally, the entire debate has centred on concerns about territoriality, sovereignty, principle of equality, and moral legitimacy. All of these are aspects that allow for little flexibility without invoking political repercussions for authorities on both sides. Notwithstanding, the failure of the two sides to resolve their differences within the traditional paradigm has finally pushed them to broaden their vision and allow more "innovative" ideas to be debated. The post 9/11 geopolitical situation in South Asia has acted as a major push factor for Islamabad and New Delhi to approach the issue with a new resolve. The positive spinoff of this welcome change is the window of opportunity for relevant stakeholders to contemplate "out of the box" thinking on Jammu Kashmir. The debate is now increasingly moving away from trying to impose a permanent solution to adopting a more gradual approach to the issue. Stakeholders finally seem to have realised the importance of viewing the ultimate solution as a product of a long drawn out process that aims to create an indigenous constituency for peace as well as an incentive structure for Pakistan and India such that they allow for complete normalisation of the dispute. Perhaps the most promising "out of the box" idea floated is the possibility of accelerating economic development and strengthening human interaction in both parts of divided Kashmir, both independently of each other as well as in a cooperative framework. The hope is that over time such an approach would integrate peoples and economies on both sides substantially, thus forming a potent constituency for permanent normalisation. The impetus to explore the economic route to enhance the likelihood of political reconciliation is grounded in the liberal theory of economic interdependence. Proponents of the theory perceive trade to be inherently beneficial for countries as it brings efficiency gains for producers, consumers, and governments. Interdependence, in turn, ought to bring amelioration of tensions or conflict as a welcome political externality.1 On the domestic front, trade theorists contend that increased trade spurs domestic economic activity, thus generating employment, reducing unrest and increasing cooperation within local populations.2 The economic theory of interdependence provides the conceptual framework for our analysis. While the debate on the potential for economic integration in Jammu Kashmir has been
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initiated, it is being conducted in a broadly defined framework. Thus far, there has been little effort to focus on the particular avenues for collaboration and the implementation mechanisms that could be employed. Moreover, the need for a proactive civil society role to lend permanence to such an approach is virtually absent from literature. This paper seeks to fill the void by discussing various potential aspects for economic cooperation and the role a vibrant civil society could play within such a framework. We focus primarily on the possibility for development in Pakistani Kashmir3 and on identifying the avenues for joint initiatives with Indian Kashmir from Muzaffarabad's4 perspective. The paper begins by providing a brief overview of the Kashmir dispute. The socioeconomic profile of Pakistani Kashmir is then presented. Next, a detailed discussion about various avenues for economic development in Pakistani Kashmir and the potential initiatives where Pakistani and Indian Kashmir could cooperate with each other are highlighted. This discussion is followed by a mention of the potential for civil society involvement in the proposed framework. The penultimate section identifies various sources to finance the suggested plan. Finally, we briefly discuss some governance concerns relevant to the economic cooperation design. Overview of the Kashmir Dispute Jammu Kashmir are considered a single entity but in two parts, located in the northwest part of the South Asian subcontinent. It is landlocked and borders the Indian states of Himachel Pradesh and Punjab to the south, Pakistan to the west, Chinese territory of Sinkiang and Tibet to the East and Afghanistan to the northwest (see annex 1).5 Almost 80 percent of the state's population is Muslim. Pakistani Kashmir has a population of 4.1 million, almost all of which is Muslim.6 Indian Kashmir comprises 10 million people, of whom 75 percent are Muslims.7 Within Indian Kashmir, the Kashmir Valley, which is the heart of the dispute, has a population of over 3 million, 93 percent of which is Muslim.8 The region of Jammu also comprises nearly 3 million people, with 57 percent Hindus and 40 percent Muslims.9 The district of Ladakh is inhabited by 1.5 million people, 55 percent of whom are Buddhists and approximately 40 percent are Muslims.10 The latter are predominantly Shia. The origins of the Kashmir dispute lie in the partition of British India. Kashmir was a princely state of British India whose ruler was given the option of joining one of the two new states, Pakistan and India, based on the guiding principles of religious majority and geographical contiguity.11 As postpartition events unfolded in Jammu Kashmir, the Maharaja, a Hindu, was faced by a Muslim rebellion, which threatened his rule. Under serious threat of a takeover by the rebels, the Maharaja requested military help from the Indian government, and as a precondition acceded the state to India.12 Yet by the time military assistance from India arrived, the Muslim rebellion had already managed to capture Muzaffarabad (now capital of the Pakistani Kashmir).13 The present day territorial distribution of Jammu Kashmir broadly reflects the area each side managed to bring under its control at the time. The government of Pakistan refused to accept Kashmir's accession to India, which it claimed violated the fundamental principle that formed the basis for partition.14 It further alleged that Kashmir's accession came about as
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a result of "fraud and violence" that allowed India to exert pressure on the Maharaja.15 The issue acquired international status when India took the matter to the United Nations (UN) Security Council in 1948.16 Despite efforts by the UN and periodic discussions on Kashmir between Pakistan and India in various forums, no tangible progress has been made on the issue. To the contrary, Kashmir has been the cause of Pakistan-India armed conflict in 1948, 1965, and 1999.17 Near-war crises relevant to the tense situation were experienced in 1987, 1990, and 2001–2002. Apart from the impact on bilateral relations, the dispute has had tremendous impact on the state of Jammu Kashmir itself. Indian Kashmir has had a turbulent existence ever since independence. The state has witnessed a perpetual presence of secessionist elements which have resulted in periodic violence. Resentment in Indian-administered Kashmir climaxed in 1989 when an active insurgency erupted in the state. Ever since, the insurgency has proceeded with an intensity that is matched by few other conflicts in the world. The fall out has resulted in the killing of over 60,000 people and a much higher number of injuries sustained by civilians, security personnel and militants.18 While Pakistani Kashmir has not experienced active violence, the region has lagged behind in terms of macroeconomic development. Having viewed the region entirely in a strategic paradigm, Islamabad has often maintained a tight fisted control over its part of the state, overlooking the pressing socioeconomic development concerns in the process. The ongoing violence and the overall mistrust between Pakistan and India have meant that the two parts of Kashmir have remained completely cutoff from each other over the years. Trade between the two sides is also nonexistent. Catering to their insecurities with regard to Jammu Kashmir, Islamabad and New Delhi have treated the divided Kashmir as two isolated entities. This has taken away the potential to explore natural complements between the peoples and economies of the divided state. As already mentioned, of late, the traditional disconnect has been undergoing revision. Both sides have finally begun to step down from their maximalist positions. In the past four years, Pakistan and India have concluded a formal ceasefire on the LoC, initiated a bus-service between Muzaffarabad and Srinagar, agreed to do the same for the Rawalakot–Poonch route, opened five LoC crossing points in the aftermath of the earthquake, and reached an agreement to allow trade in raw materials across the LoC.19 These are commendable initial steps that ought to be continued in a quest to accelerate the process towards normalisation. In this regard, the need to develop an institutionalised framework for economic cooperation is key. Before deliberating upon this issue however, it is important to highlight the existing socioeconomic situation in Kashmir. Socio-Economic Profile of Jammu Kashmir and Northern Areas The urgent need for addressing economic concerns in Jammu Kashmir is obvious from an overview of the state's dismal socioeconomic profile. Pakistani Kashmir's per capita income stands between USD 185–200.20 The economy is predominantly rural in its orientation. As much as 88 percent of the population is dependant on agriculture and
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forestry as the principal source of livelihood. In the rural areas, income from households' earnings constitutes as much as 40 percent of the total income, with the rest coming from employment, business or remittances.21 The latter forms a major part of resources flowing into the state for private use. The state's economy has been adversely affected in recent years due to a significant decline in agricultural productivity.22 Industrial development in the state has been sluggish. Despite an increase in the number of industrial estates over the years, only marginal progress has been achieved in terms of industrial production. The unemployment rate is an estimated 35–50 percent.23 The northern areas register a per capita income of approximately USD 120.24 The economy is agrarian, but productivity is low due to the harsh climatic conditions. Industrial activity is minimal. There is hardly any developed urban town to speak of in the entire northern belt. Social indicators in Pakistani Kashmir are equally dismal, although the state has fared better than Pakistan's national average in terms of literacy. Literacy rate estimates put the figure at 55–60 percent. Incredibly, about 27 percent of the state's recurring budget and about 10 percent of the development budget is allocated to education. Gross enrollment rates stand at a remarkable 95 percent for boys and 88 percent for girls. Unfortunately, the story is quite the opposite on the health front. There are only 0.5 beds and 0.191 doctors per 1000 people. The infant mortality rate however has been reduced significantly to 56 deaths per 1000 live births. Almost 38 percent of the rural population and 23 percent of the urban population do not have access to piped water.25 In the northern areas, literacy rates stand at an abysmal 33 percent. Female literacy is even lower at 25 percent. No more than 40 percent of the villages have access to water.26 For Indian Kashmir, it would suffice to say that the situation is not much different. The state has experienced much lower economic growth rates than India's national average. The per capita net state domestic product grew at 12.45 percent annually from 1980–2000, a rate much lower than most other Indian states.27 Like Pakistani Kashmir, industrial development has been slow and unemployment rates have remained substantially high. The insurgency has played a major role in disrupting the state's economic growth. Moreover, social indicators reflect the poor quality of life for citizens. Literacy stands at 54.5 percent, well below India's national average.28 Indian Kashmir's human development index is below the national average as well. Moreover, the state's ranking in terms of human development has declined over the years.29 Potential for Trade in Goods between Pakistan and Indian Kashmir In this section, we look at the potential for inter-Kashmir trade in goods. Although literature on economic interdependence often meshes the aspects of trade in goods with avenues for joint ventures and investment opportunities, the policy prescriptions for the two aspects are in fact quite distinct. There is thus added value in treating trade in goods independently from investment/joint ventures. Trade in Goods: A Static Estimation Currently, there are hardly any quantitative estimates of trade potential between Indian and Pakistani administered Kashmir. This is largely a result of unavailability of detailed
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trade data. Nevertheless, a rudimentary estimation is possible. Ten years ago, imports into Indian Kashmir were higher than exports by approximately a factor of four. While industrial production has increased, the ratio has remained largely unchanged. Although no official trade figures for Pakistani Kashmir could be obtained, it is known that the export potential for Azad Kashmir is lower than Indian Kashmir.
Table 1: Trade statistics for Indian Kashmir Year 1994–95 1995–96 1996–97
in USD million Import Export 563.67 124.60 687.07 149.30 659.14 155.20
Source: Official statistics released by the Jammu and Kashmir Government, India. A notional estimate for export potential from Indian to Pakistani Kashmir could be derived from Table 1. The maximum exportable value is USD 155.20 million. At the risk of being unrealistic, even if we presume that Indian Kashmir's entire exportable surplus is traded with Pakistani Kashmir, the amount comes to USD 155.20 million. Given the fact that Pakistani Kashmir's potential is lower, the exportable surplus would be below USD 155.20 million. Therefore, the total trade potential would fall below USD 310 million. Even this highly exaggerated figure is hardly attractive. Admittedly, trade potential between geographically contiguous conflict-economies is often understated if the analysis ignores informal trade volumes, which usually thrive under conditions similar to those in Jammu Kashmir. Indeed, a number of studies on India-Pakistan trade contend that official statistics understate trade volumes substantially since the bulk of the trade is conducted through informal means. The reality, however, as highlighted in an analysis conducted by the Sustainable Development Policy Institute (SDPI), an Islamabad based think-tank, is that informal trade amounts to a mere USD 544 million.30 More importantly, the study dispenses the previously held perception that the LoC near the Neelam River was one of the major exchange points for informal consignments between Pakistan and India (this would constitute inter-Kashmir informal trade). The SDPI study found informal exchanges across the LoC to be so insignificant that the route was left out of the final analysis. In essence, inter-Kashmir informal goods flows are minimal. Further pessimism is shed on the potential for trade in goods if one looks at the breakdown of the exportable commodities. For Indian Kashmir, the key export items include textile products, carpets, cricket bats, walnut and walnut kernels, apricot nuts, almond, coriander, saffron, lentils, fluxes and chemicals, basic drugs, and sewing machines. Pakistani Kashmir's major exports include marble, apricot, rice, onion, garlic, and fertilisers. The craft industry is a major production component in the economy on both sides as well. In order to determine trade potential, one must eliminate products that are either being
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produced indigenously across the LoC or can be obtained at cheaper rates from either Pakistan or India (or any third country). The bulk of the value-added products fall in this category. A number of existing analyses confirm this by pointing out that in the final outcome cross-LoC trade is likely to end up focusing on primary products, with horticulture exports going from Indian Kashmir and vegetable and fertiliser exports flowing from Pakistani Kashmir.31 Trade volumes in other commodities are likely to be relatively small. Enhancing the Potential for Trade in Goods As ought to be clear from the above, a static analysis paints a fairly dismal picture with regard to trade in goods. The low trade potential validates the abysmal economic situation on both sides of the LoC. Clearly, conflict in the region has stifled economic opportunities, deterred private sector activity from taking off, and consequently left the economies largely dependant on primary goods production, with little exportable surpluses. There is thus an urgent need to explore avenues both to optimise trade under the current economic structures as well as to seek areas to enhance economic productivity on both sides of the LoC, which would eventually lead to higher exportable surpluses. A number of avenues could be explored in this regard. To optimise the current trade potential, the foremost requirement is to remove all tariff and para-tariff barriers to inter-Kashmir trade. There are existing proposals that call for integration of Jammu Kashmir, India, and Pakistan through a sub-regional free trade agreement within the South Asian Free Trade Agreement (SAFTA) framework.32 While this is realistic only in the long run, a less ambitious variant of this could be a preferential trade arrangement which allows for cross-LoC duty free access of raw materials and value added goods of Kashmiri origin. This would also necessitate having an agreement on the rules of origin. No sensitive lists ought to be prepared, thus allowing all Kashmiri products to be traded free of duties. To maximise gains, an appropriate regulatory framework for tax breaks and simplified trade modalities would also have to be devised. A positive beginning on this front would be to ensure that the recent agreement to trade raw materials across the LoC allows exchange free of tariff and para-tariff barriers. Even before the preferential arrangement is concluded, both sides must explore the option of establishing border markets at designated points. Three obvious locations could be the Poonch–Rawala Kot route, Uri, and Chakothi. All of these are current bus/truck routes.33 The fourth suggested point is near Kargil from where a road link between Kargil and Skardu would potentially pass in the future. The Kargil–Skardu route has been identified, as it would end up bringing economic interaction to an area that is essentially deprived of any commerce activity at present.34 Ideally, border markets should serve as the centre of commerce activity, where people from across the LoC are allowed to visit, using officially stipulated travel documents to cross the LoC.35 Not only could such border markets act as retail hubs, but they could also provide opportunities for traders on both sides, be they farmers, craftsmen or producers of other value added products, to meet and conclude future business deals. This would be a luxury that even Pakistani and Indian businesspersons cannot afford given the
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stringent visa controls exercised by Islamabad and New Delhi. Arguably, enhanced interaction could lead producers on both sides to gauge consumer preferences and specialise products, especially crafts and value added goods. Moreover, trade through border markets would cater not only to the demand for the residents of Jammu Kashmir but also to tourists that visit either part of the state. Apart from increased economic activity, potential positive spinoffs of establishing border markets include regular people-to-people contacts. Moreover, if such markets are made a daily affair, the food industry on both sides could also gain by virtue of their presence in the border markets. Domestic transport requirements for shipment of goods to the markets will also increase. Moreover, were a quota for a certain proportion of rural producers (especially for agricultural producers) to set up retail stations in the markets be established, which is highly desirable, the mechanism will ensure easier market access for the rural poor. The trade facilitation framework suggested above must be complemented by aggressive marketing strategies, which seek to project tradable goods to Kashmiris as well as foreign tourists. Currently, marketing of Kashmiri products and services is virtually non-existent.36 Neither India nor Pakistan have fully included Jammu Kashmir in their global trade projection strategy. Consequently, hardly any professional marketing entities or strategies exist on either side of the LoC. Much of the exports are facilitated through individual contacts. Authorities on both sides of the LoC must therefore push their respective countries to promote Kashmiri exports, at the same time developing an internal marketing dynamic Intrinsically linked to the need for robust marketing is the availability of adequate communication networks. Telecommunication and internet facilities are a major aspect of any modern economy. The Pakistan military's hold on Pakistani Kashmir's landline telecommunication must be loosened to allow Pakistan Telecommunication Limited (PTCL) or any private sector company to extend landline services.37 The mobile telecommunication companies are already operational in the region, whose network should be further expanded. As for world wide web services, while both countries, especially India, have managed significant progress in access to basic internet facilities, Kashmir has lagged behind to a large extent. Pakistani Kashmir and the Northern Areas must receive immediate attention in terms of expanding areas with access to the internet, at least to cover all urban towns. Given the necessity for swift communication modes in a modern economy, lack of adequate telephone and internet facilities could prove to be a major hindrance. A preferential trade arrangement, border markets, and marketing strategies would all produce limited success if the productive capacity on both sides of the LoC remains stagnant. Over the long run, the growth in inter-Kashmir trade volumes will primarily be a function of the extent to which both sides are able to enhance production at efficient levels. In the case of Pakistani Kashmir, there is tremendous scope to do so. Currently Pakistani Kashmir and the northern areas use traditional agricultural production methods, thus reducing output ratios significantly. Agricultural productivity has also
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declined due to unsustainable practices.38 Given the agrarian nature of the economy, introducing sustainable modern agricultural practices could boost economic growth substantially. While statistics on efficiency of industrial production do not exist, much of the crafts (which is a major part of industrial activity) industry by definition is not automated and thus works on low efficiency. The same is true for Indian Kashmir. Enhancing productive capacity in Jammu Kashmir could be done relatively easily by installing new production units. There is tremendous scope for expansion in the handicrafts, wood articrafts, and handlooms industries.39 Inviting private sector involvement and foreign investment would however be a necessary prerequisite to ensure sufficient inflow of resources to achieve expansion of productive capacity (see section on "financing the economic development plan"). One other long-term efficiency-enhancing development could be to move towards an increasingly urbanised economy. Boosted by increased industrial activity, urban towns could serve as major wholesale and retail centres to supply exportable surpluses to the rest of Pakistan (and India for Indian Kashmir) as well as to international destinations.40 The recent earthquake in Pakistani Kashmir has provided a natural opening for this sort of urbanisation drive to take place. The government has approved plans to rebuild the city of Muzaffarabad as part of the earthquake reconstruction effort.41 Economic Development in Pakistani Kashmir and Prospects for Cross-LoC Cooperation Having discussed the prospects for trade in goods, we now turn our attention to the potential for investments and joint cooperation in initiatives relevant to economic development. In terms of integrating the two sides of Kashmir, such endeavours carry much greater value. Unlike commercial trade, where exchange of goods could take place with minimal human interaction and without any intense collaboration in terms of economic activities, cooperative frameworks necessitate integration of institutions, functional processes, and in an ideal scenario, the overall economies as a whole. In the discussion below we identify the key sectors with a potential for tangible gains under a cooperative economic framework. Transport Infrastructure For any programme of economic uplift and increased trade activity in Kashmir, an adequate transport infrastructure is essential. Without this, much of the efficiency gains possible from enhanced trade will be lost. Theoretically, transport has both direct and indirect economic impacts. Direct impacts are related to accessibility change where transport enables larger markets and time and cost savings. Indirect costs on the other hand are linked with the economic multiplier effect where increased product lines are available at lower prices.42 The road communication network in Pakistani Kashmir has progressed tremendously since 1947. Starting from a mere 265 kilometres of road, the majority of which was unmetalled, today the region's roads span 9,816 kilometres.43 Approximately 4,162 kilometres of these are metalled.44 Substantial progress in road development has also been made in the northern areas, where metalled roads now reach some of the remote
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tourist attractions. Quality of roads in Pakistani Kashmir and the northern areas however remain a concern. Road networks in the northern areas need to be refurbished, especially if these areas have to be positioned to attract global tourism (see section on tourism). A large part of the road network is also in dire need of upgrades. According to one estimate, 50 percent of the National Highway Authority's current network requires major rehabilitation.45 The majority of the roads in the northern areas and Pakistani Kashmir fall in this category. The air network in Jammu Kashmir remains meagre. There are only two small airports in Muzaffarabad and Rawalakot.46 None have facilities that could allow it to cater to international trade. The Srinagar airport on the Indian side is also not used for international traffic and thus has limited utility in terms of international commerce.47 Both sides are also missing dedicated dry ports.48 In essence, Jammu Kashmir has no direct link with the outside world except through Pakistan and India. Relevant to our discussion on inter-Kashmir cooperation is the lack of adequate transport links across the LoC. At independence, the only transport links that existed were a road from Rawalpindi (Pakistan) to Muzaffarabad (Pakistani Kashmir) and on to Baramula and Srinagar (Indian Kashmir), and a rail and road link between the cities of Sialkot (Pakistan) and Jammu (Indian Kashmir).49 The Kashmir conflict has kept even the existing routes unoperational. Lack of maintenance has meant that these have eroded over the years. Recently however, there has been progress in reopening some of the traditional routes as part of the peace process. In April 2005, the Srinagar–Muzaffarabad road link was opened and a bus service initiated. The recent agreement allowing trade in raw materials between the two Kashmirs has also facilitated commercial trucks' movement on the route. The proposal to initiate a bus service from Rawalakot to Poonch has also been on the cards for some time. While such initiatives are welcome, there is a need to further enhance transport links, especially for commercial vehicles, in order to facilitate commerce activities. Revitalisation of existing routes and road network extension would also facilitate trade in goods. One potential route to be developed is the Kargil–Skardu road, which relevant authorities on both sides could do jointly (each one could develop the road on territory under its control). Kashmir's existing transport network links it to major cities in Pakistan, and not India. Geographical contours present Pakistan as a much more cost-effective route for inward and outward flow. Pakistan therefore has a natural advantage in utilising its transport network to provide feeder services for Kashmir's trade. Were the road infrastructure revitalised and the rail link refurbished, the new airport at Lahore could serve as the hub of movement of goods not only to and from Muzaffarabad but also to Srinagar.50 Both parts of the state could also benefit from Pakistan's expanded road infrastructure to utilise port services at Karachi. Pakistan's link with China through the Karakoram Highway (KKH) is also a convoluted, yet economically feasible, route for Kashmir to receive direct inflow of Chinese goods.51 Moreover, plans to extend KKH have a tremendous bearing on Kashmir's access to Central Asia and on to Europe.52
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Tourism One direct casualty of the lack of infrastructural development in Kashmir has been the loss of tourism, which was once the mainstay of the state's economy. Kashmir's greatest potential in the service sector has always been its attraction to South Asian and extraregional tourists. The Neelam Valley in Pakistani Kashmir and the entire stretch of the northern areas in the country are prime tourist attractions. Northern areas are home to the Karakoram range which includes K2, the world's second highest peak as well as some of the longest glaciers outside the polar regions.53 Despite some efforts from the Pakistani government, no structured tourism industry exists in these areas. Consequently, the number of foreign tourists remains miniscule as compared to the potential. With the right kind of investment in infrastructure development, Pakistani Kashmir and the northern areas could become one of the most promising attractions for high-income tourists. There is tremendous scope for mountaineering expeditions. A few take place even today. Ski resorts could also be built in the region, as could facilities for water sports. In addition, if Kashmir's history could be captured through museums, it is sure to interest Chinese and other East Asian nations that trace back their roots to this part of the world.54 With direct road links with China and reports indicating that as many as 100 million Chinese tourists may be interested in joining the global tourist industry as clients, Kashmir could benefit immensely. Of course, physical infrastructure in terms of five star hotels, an expanded road network, communication systems, banking facilities, and health facilities would all have to meet international standards. Moreover, the authorities would also have to ensure good law and order throughout the entire region, which given the periodic sectarian tensions in part of the northern belt and the physical deployment of the military is likely to prove challenging. Admittedly, infrastructure development is only one aspect of a thriving tourism industry. Equally important is the need to have trained human resources who could manage such a specialised industry. This would be especially needed for an industry as large as the one being envisioned here. Moreover, the entire tourism sector would need to benefit from an aggressive marketing setup that lures tourists from around the world through attractive packages. India could do the same for its side of Kashmir. Possible avenues for inter-Kashmir tourism could include joint travel packages, which provision for visits to sites across the LoC utilising the Muzzaffarabad–Srinagar road link. This could be facilitated by establishing a Joint Travel Management Board.55 Moreover, India could gain from its existing human capacity building track record to set up hotel management institutes in Srinagar, where Kashmiris from both sides could be trained. Other more specific vocational training institutes for personnel to be involved in various capacities in the industry could be set-up in urban towns on both sides of the LoC. Environmental Clean Up Forest Resources A rather unique avenue for collaboration between Pakistani and Indian Kashmir is
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provided by the rich natural resources found in the state. Kashmir contains some of the most valuable forests in South Asia. Forests on both sides contribute tremendously to the construction and furniture industries, predominantly those operating in Pakistan and India. Natural forests were once a major source of revenue for the state. Unfortunately, massive degradation over the past few decades has led to considerable decrease in the sectors' economic potential. Notwithstanding, some areas near Muzaffarabad and Udhampur still maintain dense forest cover.56 Moreover, the forest related institutions are extremely important, especially in Pakistani Kashmir where the forest department officially controls more than 42 percent of the total land area.57 Moreover, on both sides, the forest industry is dominated by a small number of elite—the timber mafia—which is often politically connected and manages to siphon away large quantities of timber illegally. The wood based industries that draw upon these forests are also dominated by elite, who resist efforts to remove market entry barriers in this highly lucrative business.58 The end result is continued illegal extraction, and the lack of incentives to induce efficiency in the production practices of the wood industry. Literature on forest preservation details a number of varying instruments through which conservation could be ensured. In the South Asian context, experiences in Nepal, India, and Pakistan have proven the worth of community participation through joint forest management (JFM).59 In this light, the Muzaffarabad–Udhampur forest belt could potentially be jointly managed. Even if security concerns do not allow communities to cross over the LoC as frequently as is needed for JFM in the near future, communities from both sides could interact intermittently to share best practices and jointly plan future initiatives regarding protection, harvesting and regeneration. Civil society organisations with forest sector expertise, even if they are not Kashmir based, could be involved to guide communities on formulating JFM plans. Another option could be to involve the private sector through public-private partnerships (PPPs) in the forest sector, an avenue that state monopolies on forests on both sides have quashed over the years. PPPs are considered valuable as they can assist in conservation efforts at the same time helping provide sustainable livelihoods to resource dependent communities.60 There is already some movement in various provinces in Pakistan to allow private sector involvement in the traditionally monopolised sector.61 Investors from the same or opposite side of the LoC could either be allowed to lease out land with a stipulation to meet demand for forest products within the state before exporting harvests elsewhere. In addition to state forests, PPPs could be extended to wastelands for plantations, agro-forestry, social forestry, wildlife breeding and conservation of biodiversity. An immediate opportunity to jump start collaboration in forest management is provided by the ongoing reconstruction in earthquake-affected areas. The forest resources, which were already depleted, are now under further threat due to the enormous task of physical reconstruction in the region. Both sides could share best practices to ensure sustainability during the reconstruction phase. For the next three to four years, a one-off activity could be to promote privately owned nurseries on both sides of the LoC. These
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would produce saplings for regeneration purposes, which could be sold under contract to the government of Pakistani Kashmir.62 Since Indian Kashmir's earthquake related rebuilding needs are miniscule compared to Pakistani Kashmir's, the former would be involved in the process mainly to reflect good will. The ultimate objective of collaboration in forest preservation would be to revitalise resources for use in indigenous wood based industries. Granted, this would only be possible over the long run. However, once achieved, wood based industries on both sides could benefit the state's economy tremendously through furniture exports. Much of the exports would be destined for extra-Kashmir sources since the forest species on both sides of the LoC, and therefore their uses, are virtually identical. Waterways Kashmir's waterways intrinsically link Pakistan and India. All three major rivers of Pakistan, the Indus, Jhelum and Chenab flow through Jammu Kashmir. The fact that watersheds lie across the LoC implies that Pakistan is directly affected by the state of rivers in Indian Kashmir. Therefore, it has a stake in ensuring sustainability of water resources. Currently, all three-river tracks in Indian Kashmir are highly polluted. They are regularly used as dumps for human, animal agricultural and industrial waste.63 Moreover, river catchments are heavily encroached.64 Water pollution has had severe implications on aquatic flora and fauna, as well as on human health. To exacerbate the situation, downstream pollution levels in Pakistani Kashmir and Pakistan are also high. An economic fallout caused by the water pollution is the decreased attraction of water fronts as tourist spots. Traditionally, a combination of the splendor of the mountain ranges and the waterways flowing through mountain valleys formed tourist hubs in the state. Moreover, the potential for the eastern tributaries, especially Jhelum, as a trade channel is tremendous. In British India, Jhelum was a major channel for downstream trade flow to Punjab and Sindh. Human interference and solid waste dumping have taken away the riverine transport potential. Restoring this potential would mean taking some pressure off the road network, at the same time raising efficiency levels in transporting goods naturally suited to riverine transport (e.g. timber). Finally, contaminated water's health impacts, and in turn the affect on the households' poverty, are negative spin-offs, which while not quantifiable, result in dampened economic growth. Pakistani Kashmir and Pakistan have much to gain from environmental cleanup. Reports have indicated that there is already interest in collaborating on environmental cleanup on both sides of the LoC.65 Inter-Kashmir collaboration on this front could include a joint environmental cleanup exercise and regular exchange of data on water flows and quality.66 Since a joint cleanup initiative may require buffering water flows or temporarily rechanneling outflows, a political consensus on such collaboration must be reached in advance. In addition to being mutually acceptable, the programme would have to be situated within the confines of the Indus Water Treaty, which is the guiding framework for water sharing between Pakistan and India. Failing a political consensus, either Pakistan or India could raise concerns about the Indus Water Treaty being violated in the guise of environmental sustainability.
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Power Generation Perhaps the most potent economic use of Kashmir's water resources is its electricity generation potential. The total hydroelectric potential of Jammu Kashmir's water resources is estimated at 15,000 megawatts, which far surpasses the demand of Kashmir, northern India, and Pakistan.67 Notwithstanding, it is ironic to note that despite containing watersheds for all major rivers in Punjab, Jammu Kashmir remains severely energy deficient. Indian Kashmir is the most energy-starved state in the country. Pakistani Kashmir has made tremendous progress in terms of expanding its power network. Six hydel stations are operational in the state, an avenue that must be explored further. A total of 17,000 kilometres of transmission lines are providing electricity to over 360,000 households.68 By 2009, 100 percent of the population would have access to electricity.69 Despite the quantitative gains, quality of transmission remains poor. Power outages, either through planned load shedding or faults in the transmission system are common. Therefore, authorities in Pakistani Kashmir must invest heavily in maintaining existing infrastructure to cut transmission losses. The potential to collaborate with Indian Kashmir on hydroelectricity is also tremendous. Thus far, the sensitivities surrounding the interpretation of the Indus Water Treaty and the mutual insecurities between Pakistan and India have not allowed any cooperation in power generation. Both Pakistan and India are developing hydroelectric projects in close proximity to each other across the LoC, but without any collaboration. Shahid Javed Burki, a renowned Pakistani economist, has suggested a realistic plan whereby a careful study of the power generation potential of the Indus system could be followed by a joint proposal to tap the potential.70 Burki argues for the need to have an integrated power grid, which could be based on an extension of the current distribution systems on both sides of the LoC. In Burki's estimate, such a joint initiative could produce as much as 7,500 megawatts of additional power.71 This arrangement however, would require a sub-regional agreement within the framework of the Indus Water Treaty. The World Bank or any other international body could provide the overall auspices. The terms of the agreement would also have to stipulate the revenue sharing arrangement from export of surplus energy. Apart from Pakistan and India, export surpluses could find markets in the surrounding Central Asian republics.72 A less ambitious option could be to have a joint power generating project situated on the LoC.73 Regardless, any joint arrangement for power generation would have to go through intense negotiations to ensure that both sides are comfortable that the Indus Water Treaty would not be undermined, and that resources and revenues would be shared equitably. A formal regulatory framework would also have to be put into place. Information Technology The role of the IT industry on both sides is multifaceted and could underpin the very success of the entire economic cooperation programme. For one, the IT industry could become the mainstay of Jammu Kashmir's marketing and information projection strategy. The entire economy ought to move towards automation in order to ensure
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efficiency in trade deals as well as to promote investor friendliness. India has already transformed into the global hub of the IT service industry. While Indian Kashmir has not been a major actor in the country's IT revolution, the positive spill-over has nonetheless impacted Indian Kashmir favourably. According to the FICCI, as many as 10,000 skilled IT professionals are present in Indian Kashmir.74 A software technology park and an Electronic Industrial State have already been established.75 FICCI's recommendation to set up a technical university is also being contemplated. To the contrary, the situation in Pakistani Kashmir and the northern areas is dismal. While an IT board has been set up in Pakistani Kashmir, awareness about the basic concepts of IT is low, the skilled professional pool is inadequate, software parks are absent, and there are hardly any information or learning centres to enhance youths' interest in the field.76 Arguably, the demand for IT services on both sides of the LoC could be expected to increase tremendously once Kashmir transforms into a modern economy and banking, ecommerce, and e-governance practices are instituted. Therefore, there is a need for Pakistani Kashmir to accelerate IT development in the state. To begin with, Pakistani Kashmir could utilise the software development capacity across the LoC by outsourcing assignments. In order to develop human resource capacity for long term sustainability, Indian IT professionals could be requested to teach at small IT training centres that could be set up in Pakistani Kashmir. Moreover, IT students from Pakistani Kashmir could study in the proposed Indian technology institute in Indian Kashmir. The Indian side could also help their Pakistani counterparts in setting up software technology parks and other such IT ventures. Moreover, the establishment of clusters of basic IT service providers—call center, transcription, etc.—even if only at a small scale, could crowd in education and investment that provides a future to indigenous labour that would otherwise migrate to the south for employment. Programmes that civil society could engage in would entail addressing the supply chain of IT labour from education to entrepreneurialism and find partners to provide seed funding to establish businesses in Kashmir. The Education Sector As already mentioned, Pakistani Kashmir has fared well as far as education is concerned. The northern areas however, are a different story. Apart from enhancing access to education in the northern areas, which is already a stated goal of the government of Pakistan, there are two relatively unexplored avenues for improvement. First, both parts of Kashmir could initiate an exchange programme for a small quota of students between postgraduate institutions on both sides. The University of Jammu has already established its mark, and could be an attractive site for students from Pakistani Kashmir. Any one of the seven postgraduate colleges in Pakistani Kashmir could host Indian Kashmiris..77 Given the sensitivity about such exchanges under the current mindset, one could envision starting with an extremely small quota, perhaps half a dozen students each year, and gradually build up such interaction. Student interaction at the academic level carries special importance to ensure a holistic cooperative framework, as centres of learning often end up being the hub for creative ideas and innovative prescriptions to
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approach seemingly intractable solutions. Such interaction would also be instrumental in bringing the young population to appreciate the cultural similarities on both sides. Another avenue for cooperation is for Pakistani and Indian Kashmir to share their experiences on improving the quality of education. Low quality of education, especially at the elementary level in the rural areas, is a problem that both sides continue to struggle with. In this regard, educational administrators (including non-government) could build on their existing programmes for teacher training, either limiting interaction to sharing best practices or exchanging master trainers that could serve short term tenures at teacher training institutes across the LoC. Admittedly, the Pakistani Kashmir model for teacher training is exemplary in its design, and if implemented properly, could foster positive change among the teaching cadre. Teachers are trained in public sector training institutes. In addition, the government offers curriculum integrating training courses to primary and middle school teachers, develops and distributes training packages, provides textbook training and evaluation for curriculum development, and improves the assessment and exams for teachers.78 Teacher trainer capacity building, continuous assessment (via district assessment cells) and training with guides and materials are also part of current government activities.79 Indian Kashmir could implement a similar programme, and also interact with the Pakistani side to determine how best to tackle implementation bottlenecks currently faced by Pakistani Kashmir. The civil society NGOs could also play a major role in capacity building parallel to government efforts, especially at the higher-level institutions. Such initiatives are already being witnessed. NGOs could come in with expertise in assessment techniques, identify strengths, weaknesses, opportunities for improvement and threats and serve as a management tool for the effective planning for each school. Distance education through teacher certification, pre-service and in-service training as well as graduate and post graduate qualifications in education could also be instituted by NGOs. They could also help in training the trainers in techniques that ensure creative learning and child centred approaches. Adopting schools is another possibility for NGOs, given the lack of state capacity in order to refurbish them, increase the level of teachers and increase enrolment levels.80 Anti-Poverty Programmes One of the remarkable achievements specific to the northern areas in Pakistan has been the high level of community mobilisation, a welcome scenario not often witnessed in South Asia. Much of this has been made possible by the Rural Support Programmes (RSPs), which have a nation wide presence in Pakistan, but maintain most penetrability in the northern areas. RSPs are basically micro-lending programmes which seek to target the poor. They are also involved in rural infrastructure development in a number of villages.81 The most important aspect of the RSPs is that village communities themselves are tasked to determine the deserving "poor" who ought to receive microcredit, as well as identify the infrastructure development projects that would prove most beneficial for the village residents.82 Such a structure ensures the presence of highly mobilised communities whose energies could easily be utilised in any inter-Kashmir
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cooperative framework. Relevant to our discussion is the need for the RSP structure to be replicated extensively in Pakistani Kashmir. Not only will this serve the goal of poverty alleviation at the household level, it will also inculcate the spirit of community mobilisation in the state. Indian Kashmir, where the insurgency has stifled any opportunity for developing a robust civil society, could learn from the RSP experience. One could even envision the RSP top-brass conducting orientation and training courses for their Indian counterparts and/or setting up the programme in a few model villages in Indian Kashmir. Given that poverty reduction is a common goal across the LoC, should Islamabad and New Delhi become serious about taking the economic route in Kashmir, both would likely welcome such interaction. Indian Kashmir would also welcome an opportunity to replicate one of the most successful poverty reduction programmes in Pakistan. Disaster Management Jammu and Kashmir is predicted to be a site for regular seismic activity in the coming years. Moreover, the state is already vulnerable to other natural disasters like land slides. Therefore the potential for economic and human losses due to such disasters is high. The devastating earthquake in Kashmir in 2005 highlighted the potential magnitude of disaster-related losses. The estimated cost of bringing Pakistani Kashmir's economy to the pre-earthquake level in six years is USD 10–12 billion.83 The 2005 earthquake also underscored the utility of allowing cross-LoC movement. Thousands of people in close proximity to the LoC on the Pakistani side remained trapped under the rubble for days without anyone from the Indian side being allowed to assist. Subsequently, Pakistan and India did agree to open five crossing points across the LoC but only to assist in the recovery effort in Pakistani Kashmir.84 Even this measure has been only selectively implemented on the ground. Financing the economic development plan The estimated cost for any major uplift plan depends on the envisioned constituent elements. Shahid Javed Burki's proposal for economic uplift (mentioned above), which includes six major sectors—power, tourism, physical infrastructure, water resources, forest and value added agriculture, and human resource development—is estimated to cost USD 25 billion.85 With some additional elements and inclusion of the Northern areas (Burki's plan only focused on Pakistani and Indian sides of Kashmir) in our suggested framework, the proposed transformation may cost USD 35–40 billion. It is clear that such an exorbitant amount cannot be mobilised from public resources. Both parts of the state will have to tap private sector resources and foreign assistance. A sector-by-sector financial plan should first be developed with the help of technical experts dealing with various facets of the programme. Subsequently, the plan could be floated to seek investor interest. At an advanced stage, feasibilities for various identified projects could be carried out. Various multilateral donor agencies could then be lured to provide low interest loans, which are common for post-conflict economies. In the case of bilateral assistance, maximum amount of grants should
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be sought. Each agency could opt for projects that fall within its priority areas. For example, ADB's focus on infrastructure and water and sanitation would lure it to such initiatives. The US assistance on the other hand could go into health and education. The multilateral IFIs and bilateral donors would also have to play a role as underwriters of certain developments that require joint collaboration between the two parts of the state. Arguably, concluding the terms and conditions of such arrangements would be extremely tricky and would have to involve not only the Kashmir governments but also authorities from Islamabad and New Delhi. Given that IFIs have historically shied away from controversial projects on either side of the LoC, or ones where international stakes have been high, the only way one could realistically envision a strong commitment from these entities is if Pakistan and India, and Western powers endorse such developments. Private sector investment will be an equally important pillar of the financing plan. The level of private investment in large part will depend on the extent to which the public sector agrees to give up its monopolies, and the kind of incentives that are offered. As a first step, the World Bank's Foreign Investment Advisory Service could also be requested to conduct a detailed investment climate survey of the region.86 As for financing, the Kashmiri diaspora could prove to be a major resource bank. Expatriate investors could be targeted to involve themselves in sectors of their interest. Admittedly, the terms of the investment would have to be fairly liberal given that Kashmir's economy on both sides has been in disarray for a considerable number of years making most investment avenues "high risk". One other option would be to float international bonds, say the “Kashmir bonds� to raise resources.87 One possible buffer against future losses could be a joint disaster management plan. Moreover, the current lack of capacity to respond to major disasters could be overcome by pooling capacities of the two parts of the state. A joint disaster management cell, with nominated officials from both sides should also be constituted and should meet periodically to exchange information and discuss potential plans and requirements on both sides of the LoC. Such a group would also benefit from presence of members of the civil society. Pakistan's disaster management plan which is being prepared under the auspices of the NDMA would have taken into account all lessons from the recent earthquake. It could thus be used as a benchmark for devising the inter-Kashmir joint disaster management programme. Best practices from any existing Indian disaster management plans could also be incorporated. The plan ought to allow for movement of people across the LoC in addition to the exchange of all machinery that is not deemed to be "sensitive" (helicopters, etc). The civil society could take the lead role in instituting community based training programmes seeking to integrate traditional coping mechanisms with modern techniques for disaster mitigations. It could even liaison with relevant government functionaries to ensure the necessary disaster prevention infrastructure is available to each community in the region.
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Civil Society Cooperation Some potential avenues for civil society involvement in an inter-Kashmir cooperative framework have been discussed as part of the various initiatives suggested above. However, the real potential of the civil society in any peace bid lies not in its assistance in particular projects, but in its role as the underlying driver of the entire framework. In South Asia, where the state often acts as a closed, impermeable entity, it is the civil society organisations that create the space for dialogue and cooperation through a bottom-up approach.88 After years of dormancy, both Pakistan and India have recently experienced a substantial growth in civil society movements. Unfortunately, the lack of any genuine democracy in either part of Kashmir and the insurgency in Indian Kashmir has not allowed these currents to travel to Jammu Kashmir. Currently, while informal citizens boards and community organisations exist sporadically in the state, there are hardly any development NGOs to speak of on either side of the LoC. The absence of civil society in Kashmir has led to a lack of any social institutions, which could help forge a common voice for peaceful coexistence. What is required is to spread the civil society movements in Pakistan and India to Jammu Kashmir. Then, as civil societies in the state engage with their counterparts from Pakistan and India, and thus grow in stature, energies could be channeled such that a cross-LoC vibrant peace constituency develops. Perhaps the most important role for the civil society in this regard is one of advocacy and social mobilisation. Two set of actors would be pivotal in attaining this objective: the media and the academia. As far as the media is concerned, both sides of Kashmir could build on the South Asia Free Media Association (SAFMA) model, which arranges regular interaction between the media communities from across South Asia in a quest to identify common themes and positions that could enhance cooperation among regional countries. A SAFMA delegation in 2004 was the first group of Pakistani journalists to be allowed to Jammu Kashmir after years of absence of any such interaction.89 Media in Jammu Kashmir could cooperate under the SAFMA umbrella.90 Frequent interaction between media personnel from both parts of Kashmir should focus on developing a joint stance on the avenues for collaboration across the LoC. As for specific initiatives, the two sides could have joint TV talk shows, even if they are situated in respective studios in Muzaffarabad and Srinagar. Joint press articles highlighting the potential for cooperation and the key constraints could also be written jointly by journalists from both sides of the state. Kashmiri academia has an equally important role to play. To begin with, academics have an obvious task of undertaking in-depth research on various possibilities for Kashmir's future, including our proposed economic development model. Currently, academic research on Kashmir has been dominated by non-Kashmiris and thus often tends to miss the many intricacies and subtleties in the highly complex situation that must be addressed to present objective analysis. In all fairness, much of the fault lies with the indigenous academics for not having made any serious effort to cooperate, save through a few donor funded one-off research assignments. Academic research from Kashmir has not been able to provide any innovative ideas on the Kashmir problem. Kashmiri academics placed in institutions and think tanks within or outside Jammu Kashmir
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must come together to identify key areas for research and conduct joint projects. Given the transient nature of most academic affiliations today, it is relatively simple to engage Kashmiri academics through neutral affiliations thus bypassing any potential objections from Islamabad and New Delhi. Given the global attention on Kashmir, funding for such initiatives is available in abundance. Enhanced interaction between peoples from both sides of the LoC should also extend to community based organisations, institutional actors, de-politicised community leaders, social workers and business community members. Civil society organisations could also encourage religious, social, civic and youth leaders to conduct advocacy campaigns to promote harmony among various adversarial viewpoints in Jammu Kashmir. With regard to business interaction, the Azad Kashmir Chamber of Commerce and its counterpart in Indian Kashmir should arrange delegations of various sub-committees relevant to inter-Kashmir trade. The business communities, who have an incentive to push specific proposals to enhance business transactions, are sure to take advantage of any scenario under which such interaction is permitted. As for community involvement in civil society movements, grass roots interaction through programmes such as the RSP must be extended. An indigenous civil society lobby against human rights violations is also much needed and could be trained by Amnesty International or local Pakistani and Indian human rights activists. This process is already underway in Indian Kashmir.91 While the above point to only a few of the endless opportunities for civil society in Jammu Kashmir, much of the future of the non-government involvement hinges on the ability of both sides to develop vibrant civil society institutions. Without the right kind of infrastructure and resources, civil society movements are likely to have minimal impact on the ground. Given that civil society in Kashmir would in effect be challenging the traditional official stance, they are likely to be pitted against authorities as they seek to generate momentum. Traditionally, governments in India and Pakistan (and Jammu Kashmir) have welcomed civil society presence where the latter's agenda complements, or at the very least refrains from challenging, the official stance. The outlook is entirely reversed, however, as soon as civil society organisations step outside the traditional paradigm, which is exactly what a vibrant Kashmiri civil society would have to attempt to do. The point is not to suggest that the civil society's stance should be amenable to the government's. Instead, what is being accentuated is the need for a robust institutional framework underpinning the entire effort. Once this is achieved, generation of innovative ideas and social mobilisation resulting from civil society efforts would end up enhancing inter-Kashmir people-to-people contact and perhaps even provide new avenues for resolution of the Kashmir dispute. Governance of Cooperation The success of the entire economic coordination plan outlined in this paper is contingent upon a political consensus in Islamabad and New Delhi to allow both sides of Kashmir to transform into an open market economy. This strikes at the heart of a number of governance issues that would necessarily have to be tackled if our propositions are to be successfully implemented on the ground. For example, any initiative that requires Kashmiris to cross the LoC (border markets, IT students etc) will invoke sensitivities
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about the travel documents requirement. Moreover, either side could decide not to compromise on the need to conduct thorough security checks, not only to inspect day passes but also to conduct physical security checks. Vehicles carrying commercial goods could also be harassed by security forces. By the same token, intelligence agencies on both sides could easily dampen the spirit of cooperation by tapping people who are proactively involved in cross-LoC activities. Such is the current practice employed by Pakistani and Indian intelligence agencies for respective citizens frequently traveling to the "other" country. Another concern, especially on the Pakistani side, could be with regard to the Rules of Origin even if the SAFTA guidelines are used. The proposed free trade zone would also have multiple governance concerns. The precise nature of regulatory frameworks could be an especially thorny issue. Both sides could also limit gains from the economic transformation by maintaining the present stringent regulations for foreign tourists. Currently foreign tourists in Pakistani Kashmir require an NOC from the Kashmir Home Department.92 The requirements are as dissuasive in Indian Kashmir. Moreover, various suggestions amounting to residents from one side placing themselves across the LoC for an extended period of time (student exchanges, master teacher trainers, RSP teams, etc.) are sure to be received cautiously in the initial stages and could only be expected to materialise over the medium term. Overlyaggressive civil society involvement is also sure to raise a few concerns in Islamabad and New Delhi. The above are only a few examples of the possible governance bottlenecks that either Pakistan or India could create. The point is that extreme political will is necessary to allow the process to continue beyond the initial euphoria. For the suggestions to work, the political consensus among Pakistani and Indian elite would have to be broad based, ensuring civil society involvement while sidelining hardline views seeking to gain political mileage by attempting to undermine the process. Moreover, a conscious decision would have to be made to let loose the traditional tight fisted control maintained by both sides in their respective parts of Kashmir. The Pakistani military would have to accept taking the back seat, notwithstanding strategic concerns that would remain despite positive movements on the economic front. In essence, the mindsets on both sides would have to change. In tandem with a change in mindsets, Islamabad and New Delhi's formal hold on functioning of Kashmir's governments must be relaxed. Only then can one expect a truly autonomous structure required to ensure economic transformation. While Pakistani Kashmir has its own head of state, constitution and legislature, the entire government structure remains highly influenced by decision makers in Islamabad.93 The Ministry of Kashmir Affairs and Northern Areas is the central government's principal representative body dealing with the said areas. There is also the Azad Jammu and Kashmir Council, which follows Islamabad's lead for the most part.94 The northern areas are managed under an equally intrusive regime. These areas have no declared constitution.95 The level of intrusiveness is not much different in Indian Kashmir despite constitutional guarantees to the contrary.96 In essence, the governance regime in both these regions remains highly intrusive, with little real autonomy being provided to the local authorities. Such a governance structure is a matter of grave concern for the
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economic uplift of the state. For any possibility of the cooperation plan to go through, both sides of Kashmir have to be highly autonomous and be allowed to develop an open market economy without any stringent checks and balances from Islamabad and New Delhi. If such guarantees are provided by the public sector, the transformed economy will inevitably end up being dominated by the private sector. Industrial production and services industries like tourism and IT must be driven by private sector involvement to ensure efficiency. Private sector involvement would also be key in Kashmir's image projection and industrial marketing around the world. There is a substantial role for the private sector in the forest sector. Civil society involvement in the services and social sectors would also be essential. Consequently, the public sector monopolies would have to give way, with the sector's role being limited to one of a loose regulator. Proactive public sector involvement would only be required in sectors where the private sector is not forthcoming. These could include major physical infrastructure development, crossLoC cooperation in environmental management, and power generation initiatives. The most important function for the public sector however is to guarantee an investor friendly climate with clearly defined regulatory and legal frameworks, facilitate business processes by reducing bureaucratic red-tape, enhance transparency and accountability in official mechanisms, and most importantly provide clear boundaries for permissible interaction within which governments would refrain from invoking security concerns. All this is only possible if Pakistan and India's current mindset towards Kashmir is overhauled. Conclusion After years of failure to reconcile differences on the issue of Jammu Kashmir, Pakistan and India finally seem to have realised the need to allow "out of the box" thinking on Kashmir. Increasingly, the debate on Kashmir is beginning to focus on bringing normalcy in the lives of citizens and economic development within the state before hunting for a permanent solution. In this paper, we conducted a detailed analysis of the potential for economic development and collaboration across the LoC as a potent approach. Looking beyond the current euphoria surrounding the question of economic integration, our analysis suggests little potential for trade in goods across the LoC under the current structures of production. A highly exaggerated figure of less than USD 310 million has been arrived at, which is hardly attractive. Moreover, many of the products in which both parts of Kashmir have tradable surpluses are produced indigenously by the other side. In the final outcome, goods trade is likely to be confined to primary products, which tend to create little economic interdependence and fetch much lower prices. However, currently, even the existing potential in goods trade is not being realised. There is a need to explore the possibility of an inter-Kashmir preferential trade arrangement to allow duty free exchange of primary and value added goods. Moreover, border markets could be set up at designated points to act as retail and wholesale hubs. Communication links would also have to be enhanced. While these measures will ensure optimisation of the existing potential, increase in trade in goods over the long run is only
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possible if production capacity is expanded and efficiency of production, especially in the agriculture and crafts industries is raised. The true potential for economic integration in Jammu Kashmir lies not in trade in goods, but in the numerous possibilities for collaborative investments and joint ventures within each part of Jammu Kashmir as well as across the LoC. The most promising avenues for such collaboration include the transport, tourism, forestry, water, power, IT, education, poverty and disaster management sectors. The recommended approaches vary from sector to sector, with some programmes like power generation and forest preservation necessitating an elaborate cross-LoC cooperative framework, while others could be implementable independently in both parts of the state. While we do not recap the specifics of each proposed project here, it is important to note that all plans entail substantial private sector and civil society involvement. The role of the civil society organisations is key in the education and poverty uplift programmes. Private sector involvement would be essential in industrial production and services industries like tourism and IT as well as in Kashmir's image projection and industrial marketing around the world. Public-private partnerships have been envisioned in the forest sector. The ultimate objective of taking the economic route is to ensure sufficient integration among economies as well as peoples on both sides of the LoC. Grounding the analysis in the liberal theory of economic interdependence, the argument is that such integration while bringing normalcy to life in Jammu Kashmir would also end up creating a high peace dividend, thus increasing the likelihood of a permanent political resolution of the dispute. Realistically however, the entire set of suggestions forwarded here could end up being mere 'wish lists' unless extreme political will to allow Jammu Kashmir to transform economically is developed in Islamabad and New Delhi. Failing such a change in mindsets, both sides could stall the impetus for economic collaboration by creating countless governance bottlenecks, as they have done to date. The role of the civil society to conduct an advocacy and social mobilisation campaign involving all relevant stakeholders is essential in order to buffer against any insecurities that may lead either Pakistan or India to thwart the initiative. Moeed Yusuf is South Asia Advisor at the United States Institute of Peace (USIP). Washington DC. This paper was first published in Pugwash Issue Brief in 2007 and is being reprinted with the publisher's permission. Endnotes 1 Shaheen Rafi Khan, et al., “Regional Trade Agreements in South Asia: Trade and Conflict Linkages�, Sustainable Development Policy Institute (for the International Development Research Center), forthcoming. 2. Ibid. 3. We have used the term "Pakistan Kashmir" to refer to the part of Jammu Kashmir under Pakistani control (not including the Pakistani Northern areas, which are mentioned separately wherever appropriate), 'Indian Kashmir' to reflect the part of the state under Indian control, and Jammu Kashmir to represent the entire area on both sides of the LoC, but not including the Pakistani Northern areas. 4. Muzaffarabad is the capital of Pakistani Kashmir.
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5.
6. 7. 8. 9. 10. 11. 12.
13. 14.
15. 16. 17.
18.
19.
20. 21.
22. 23. 24.
25. 26. 27.
28. 29.
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For an overview of the geography of Jammu and Kashmir, see Mushtaqur Rahman, Divided Kashmir: Old Problems, New Opportunities for India, Pakistan, and the Kashmiri People (Boulder: Lynne Rienner Publishers, 1996). Ibid.; Faisal Yousaf, “Kashmir: An Array of Options”, Kashmir Institute of International Relations, April 30, 2004. Ibid. Ibid.; Government of India, Census of India, 1991. Ibid. Ibid. This option was provided to rulers of all princely states. The Maharaja's decision to accede was made reluctantly, since ideally he was vying for independence for Jammu Kashmir. The Muslim rebellion originated in Poonch. For a detailed discussion of the rebellion and its role in the Maharaja's decision to accede, see Victoria Schofield, Kashmir in Conflict: India, Pakistan and the Unending War (London: I.B. Tauris, 2003). Ijaz Hussain, Kashmir Dispute: An International Law Perspective (Islamabad: Quaid-iAzam University, 1998). According to the partition guidelines, Muslim majority areas were to go to Pakistan and Hindu majority areas were to join India, provided they were geographically contiguous with the respective countries. In 1947, the year of partition of British India, 78 percent of Jammu and Kashmir's population was Muslim. Furthermore, the state was geographically contiguous with present day Pakistan. Its imports and exports flowed through present day Pakistan. Its only road and rail links were also through Rawalpindi and Sialkot respectively. Furthermore, its postal and telegraphic services were also catered through Pakistan. Therefore, Pakistan felt a moral right over Jammu Kashmir. Hussain, 1998. Schofield, 2003. For details of the Indian complaint and subsequent U.N. proceedings, see Hussain, 1998. Pakistan initially denied active involvement in the 1999 conflict, which took place in the Kargil region of Kashmir. It maintained that the attack on Indian posts in Kargil was conducted by insurgents. Randeep Ramesh, “India Announces Troop Reduction in Kashmir,” Guardian Unlimited, November 12, 2004, <http://www.guardian.co.uk/ kashmir/Story/ 0,2763,1349631,00.html>. Celeste Le Roux, “Strengthening Cooperation Across the Line of Control: Assessment of Areas for Further Inspection”, Pugwash Conferences on Science and World Affairs, concept note, July 21, 2006; V. Mohan Narayan, “Bus to Muzaffarabad from April 7”, Rediff News, February 16, 2005, <http://in.rediff.com/nws/2005/feb/16bus1.htm>; Mubarak Zeb Khan, “Pakistan and India to Allow Trading of Raw Products Only”, Dawn, May 31, 2006. Shankar Aiyar, “The Nation: Kashmir Economy”, India Today, October 14, 2002. Government of Azad Jammu & Kashmir, “State Profile: Introduction”, official website, <http://www.ajk.gov.pk/site/index.php?option=com_content&task=vie w&id=2257&Itemid=144>. Ibid. Ibid. Government of Pakistan, “Northern Areas of Pakistan: Profile”, Planning & Development Department, Northern Areas, Gilgit, < http://mail.comsats.net.pk/~ sfpd/area and_population.htm>. Government of Azad Jammu & Kashmir, “State Profile: Introduction”. Government of Pakistan, “Northern Areas of Pakistan”. Government of India, “Jammu & Kashmir Development Report”; Executive Summary, Planning Commission, undated, <http://planningcommission.nic.in/plans/ stateplan/sdr_jandk/sdr_jkexecutive.pdf>. Shahid Javed Burki, “Tapping Kashmir's Economic Potential”, Dawn, July 29, 2005. Ibid.
30. Shaheen Rafi Khan, et al., “Quantifying Informal Trade between Pakistan and India”, Sustainable Development Policy Institute, research paper, 2006. 31. Various studies have forecasted these items as constituting the bulk of inter-Kashmir trade. 32. See for example, Teresita C. Shaffer, “Kashmir: The Economics of Peace Building”, Center for Strategic and International Studies, South Asia Program (with the Kashmir Study Group), December 2005. 33. Le Roux, 2006. 34. Ibid. 35. Ibid. 36. Ibid. 37. Currently, the entire fixed telecommunication network in Pakistani Kashmir is managed by a single public entity, the Special Communications Organization influenced by the Pakistan military. 38. Government of Azad Jammu & Kashmir, “State Profile: Introduction”. 39. Federation of Indian Chamber of Commerce and Industry, “Horticulture, Handicrafts & Handlooms, Tourism, IT and Biotech: FICCI Makes Focused Sector-wise Suggestions to Boost Investments in J&K”, press release, May 19, 2006, <http://www.ficci.com/press/ 86/jk.DOC>. 40. The idea of urbanisation has been floated by renowned Pakistani economist, Shahid Javed Burki in the context of post-earthquake rehabilitation of Pakistani Kashmir. See Shahid Javed Burki, “Rebuilding Azad Kashmir”, Pakistan Link, December 25, 2006, <http://www.pakistanlink.com/Commentary/2005/Dec0 5/30/02.HTM >. 41. For an overview of the reconstruction plans, visit the website for the Earthquake Reconstruction and Rehabilitation Authority (ERRA), <http://www.erra.gov.pk>. 42. Rodrigue Jean-Paul, “Transport and Economic Development” in Transport Geography on the Web (Hofstra University, 1998). 43. Government of Azad Jammu & Kashmir, “State Profile: Introduction”. 44. Ibid. 45. World Bank, Project Appraisal Document for the Highways Rehabilitation Project,
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India-China Border Trade Connectivity Prof. Mahendra P. Lama
C
hina has been consciously trying to make economic dents at a very local level. It has extensively used border trade as its main instrument to realise this goal of local economic integration. It is broadly estimated that border trade through its 120 inland towns and ports constitute nearly half of China's total foreign trade of USD 1.3 trillion. This has been largely supported and regulated by a comprehensive policy document known as “Provisions of Administration on Border Trade of Small Amount and Foreign Economic and Technical Cooperation of Border Regions” promulgated by Ministry of Foreign Trade and Economic Cooperation and China's General Administration of Customs in 1996.1 This document has in fact been the basic guiding factor in China's border trade related policies and agreements with the trading partners. The memorandums that relate to the resumption of border trade are the policy instruments of this local penetration. On the India-China border the examples are the Lipulekh pass trade route in central Himalayas that connects Dharchula–Pithoragarh, Uttaranchal in India with Taklakot in the Purang county of Tibet Autonomous Region (TAR) in China and the Shipkila pass that connects Namgya-Kinnaur, Himachal Pradesh and Jiuba in Zada County in TAR. Both these trade routes are in difficult and rugged terrains and are highly seasonal. Though a significant section of policy echelons in India considers the reopening of Nathu la Pass route in Sikkim as a mere symbolic border trade venture, China in the long run at least, looks at it as a vital physical economic entry into the 1.3 billion people market of South Asia. In terms of feasibility this is arguably the shortest route (roughly 590 kms between Lhasa, Tibet and Gangtok, Sikkim) to reach the ever bourgeoning middle class in Indian mainland, Bangladesh, Bhutan and Nepal. The completion of the 1142 km railway from Golmud city in Qinghai province to Lhasa in 2006 and the refurbishing of overland access through Sichuan–Tibet Highway could transform the entire physical accessibility to and from mainland China for Tibet and neighbouring provinces as well as for neighboring countries. It could drastically reduce the tortuous sea route entries to these compulsive markets. The domestic impulse in China is that the resulting prosperity could trigger a major development action in the otherwise backward and frigid western China. This may ultimately provide succour in dealing positively with traditional and emerging pockets of discontentment in the region including Tibet. For India, besides Lhasa, these new transport infrastructures could open access to other business centres in the western, eastern and south-eastern sea coasts of China. China has a history of using other countries as a base for exporting its goods. As in the case of Southeast Asia, China has used Singapore as a base to tap the markets of
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Thailand, Malaysia, Indonesia and even further off in Australia. Hong Kong too is used as a base to export Chinese goods to European and American markets. The Chinese patterns of executing these strategies are much in contrast to those of India. For instance, there have been several visits by trade, development and investment officials and representation of the private sector from Yunnan Province mostly to the eastern states of India including West Bengal and some of the eight north-eastern states. With their single point agenda of establishing trade and investment linkages with the vast untapped market and naturally contrasting but well endowed regions of eastern India, these delegates give an impression that they have been given a "free hand" by their federal government to negotiate the larger process of the “Kunming Initiative”. Its advocates are actively promoting the reopening of Stilwell road (named after General Joseph Warren Stilwell 1883–1946, Chief of Staff to Allied Forces in China-BurmaIndia). Built by the US forces during the World War II, this double-track all-weather road connects Assam (61 kms) in India, with Kunming (632 kms) in China via Myanmar (1,033 kms). It remained unused for last six decades. This “initiative” even involves Bangladesh, Myanmar and other neighbouring countries.2 This is certainly a successful sequel of the decentralising strategy that China has followed since 1979. At that time the Party Central Committee had allowed the Guangdong and Fujian provinces to adopt “special policies and flexible measures” particularly with regard to investment and trade in the special economic zones (SEZs). The singlemindedness with which they are pursuing this initiative is reflective of Yunnan's involvement in other economic zones at the provincial level such as Greater Mekong Subregion (GMS). The provinces are no longer confined to their administrative role and have increasingly adopted economic functions, while the centre has voluntarily reduced its own role. Preferential policies have provided the provinces in the coastal regions their own economic policies. Even the inland provinces are moving in the same direction. “The inability of the centre to dictate regional economic policies and the strong economic role of provinces is reflected in a new type of regional planning which focuses on smaller trans-provincial economic regions growing out of economic interchange between subprovincial regions with specific economic advantages”.3 In 1995, the state transferred one of its key powers, grain (food security) policy, to the provinces.4 This new role of the provinces will change China politically and economically. There are several arguments extended to explain the liberal centre policy vis-à-vis the provinces in China. The very nature and structure of decision making and political system at the centre's level ensures a high degree of political compliance and vertical accountability thereby reassuring the centre that these provinces will not go astray in their decisions and actions. Perhaps the most plausible argument for extending such autonomy emanates from the "the province at the provincial level" paradigm that exists in today's China. This paradigm has been primarily an outcome of the reforms led growth and development needs. “The equation of 'one China' and 'a centralized (Communist) partystate' makes clear and unequivocal sense at the political center. At the
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provincial level things look rather different. Here, the equation is certainly not the salient feature in decision-making. At this level, lofty ideas of a socialist utopia or of a singular Chineseness need to be translated into enforceable policies. Constraints imposed by natural and cultural endowment need to be taken into account, lest social and economic change escape the control of the party-state with the unwarranted effect that the center [sic] can no longer steer their development. Provincial leaders need to weigh carefully the trade-offs between compliance with the center [sic] and need to respond flexibly to actual requirements in the province, the more so as the demand side makes itself heard.”5 On the other hand, India traditionally maintains foreign trade and investment as an exclusive domain of the Union Government wherein the relevant constituent states are “consulted” and taken into confidence for any newer trade and investment ventures with the foreign countries. Though an initiative like the Kunming Initiative fits well into India's “Look East” policy and its participation in the Bay of Bengal Initiative for MultiSectoral Technical and Economic Cooperation (BIMSTEC) consisting of Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand Economic Cooperation, this primary notion of “local engagements” and using trans-local actors which are inherent in the geo-economics of the Kunming initiative is something new that the Indian government is trying to cope with. More interestingly such initiatives gradually build the relevant states and the people of this eastern fringe in India as the core stakeholders. In a federal structure like that of India, these stakeholders' ability to act as potent pressureinterest groups and influence the political permutations and combinations can never be ignored and discounted. This is more so in today's context when the regional political parties have gained more influence in the structure and composition of national polity. China has achieved much success in similar trade and investment related initiatives in its other neighbourhoods including those in the South China Growth Triangle (SCGT) comprising Hong Kong, the Guandong and Fujian provinces of China and Taiwan; the Greater Mekong Basin Growth Triangle (GMBGT) consisting of Myanmar, Cambodia, Lao PDR, Southern China, Vietnam and Indonesia and the Golden Quadrangle covering Thailand, Myanmar, Lao PDR and southern China. The northern Chinese provinces of Heilongjiang, Xinjiang and Inner Mongolia have been at the forefront of border trading with Russia and other central Asian republics. The Kunming and Nathu la initiatives therefore, could be categorically called an extension of these lab-to-field models wherein China has pocketed handsome and largely sustainable gains. Border Trade with China Traditionally in some of the border areas there have been major trade exchanges between India and China.6 There are interesting accounts and empirical studies in some cases.7 The team members of the Nathu la Trade Study Group visited a number of such trading points. The team conducted a detailed survey in areas of trade facilitations measures in these border points and also examined the direction, volume and composition of trade.
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Nathu La Pass Trade Route The reopening of the traditional trade route between Tibet Autonomous Region (TAR) of China and Sikkim in India through Nathu la pass after 42 years in 20068 is likely to bring about a significant change in India's economic exchanges through the land border areas. This agreement is likely to have a much larger scope both in terms of the coverage of geographical regions and nature of goods and services. This is because of relatively easier accessibility to the pass leading to markets and more developed physical and institutional infrastructures in and around the trading points. Further, this trade route was a very active means of economic exchanges for Tibet vis-à-vis India and to other countries mainly through Calcutta (now Kolkata) port before it was closed in the early 1960s. Institutions like banking, post offices and custom points were set up and remained functional for many years. As mentioned above, while a significant section of policy echelons in India consider the reopening of Nathu la Pass route in Sikkim as merely symbolic, China looks at it as a vital physical economic entry into the 1.3 billion people market of South Asia. As per the projections made by the Nathu la Trade Study Team Report 2005 the Scenario I of higher projection showed that trade flow through Nathu la will be USD 48 million (Rs 206 crore) by 2007, USD 527 million (Rs 2266 crore) by 2010 and USD 2.84 billion (Rs 12203 crore) by 2015. The Scenario II lower side projection shows that the trade volume passing through Nathu la route will be Rs 353 crore in 2010, Rs 450 crore in 2015 and Rs 574 crore in 2020.9 This could drastically reduce the tortuous sea route entries. The distance between the Siliguri and Phulbari corridor is hardly 10-30 kms. Bangladesh, Bhutan and Nepal can, in the long run, plan to use this route. The Nathu la Trade Study Group in its report recommended the following: 2005–2010: Initiation of trading on both sides backed by existing, and some additional, infrastructures. In the meanwhile, setting up wider and deeper infrastructural facilities. 2010: Trading on a larger scale start to take place based on upgraded and more developed infrastructures. 2012: Integration of trade with tourism for which a fresh bilateral legal basis needs to be concluded to facilitate the movement of tourists across the border. Package Tours: During 2012–2015, only Indian and Chinese tourists permitted to cross the border through Nathu la on a package tour basis. Open tourism: From 2015 onwards, movement among Indian and Chinese tourists both on package and individual basis. 2015: Inclusion of movement of freights to and from neighbouring countries including Bangladesh, Bhutan and Nepal through this route. 2018 onwards: SAARC tourism. Integration with tourism activities of third countries of the region, including Bangladesh, Bhutan and Nepal. Open for all tourists to cross the
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border.10 As usual there are status quo-ists with insurmountable mindsets. Their arguments against reviving this traditional trade route vary from security to influx of Tibetan refugees and flooding of local markets by cheap Chinese goods to environmental concerns. It was the same mindset that literally marginalised India in Myanmar where the former once had unparallel historical strongholds, political and social constituency and substantive economic influence. India should have long harnessed these huge cross border opportunities. Prime Minister Manmohan Singh's well acclaimed plea for cross border infrastructure projects in the last SAARC Summit in Dhaka in 2005 belatedly yet definitely recognises this clamour for lost opportunities.11 However, no significant trading has taken place at Nathu la. Hardly a few lakh worth of goods are exported and imported. These are mostly attributed to poor road conditions, very nascent infrastructural facilities, limited tradable items and lukewarm attitudes of the policy makers. Table I presents the status of the Siliguri- Nathu la road. Though these roads were in existence since 1920, most of them were rebuilt and reconstructed in 1960s.12 The Final Feasibility Report for all three Segments by Archtech Consultants Pvt. Ltd of India and Halcrow Group Ltd of UK on behalf of Sikkim Industrial Development & Investment Corp. Ltd. (SIDICO) prepared in February 2004 brings out revealing deficiencies in the National Highway 31 A. This survey was conducted while also keeping in view the traffic movement triggered by the reopening of the Nathu la trade route. Table I : Siliguri-Nathu La Road* Road Sevoke (Coronation Bridge - Teesta Teesta - Malli Malli to Rongpu Rongpu to Ranipul Ranipul to Gangtok Gangtok to Changu
Changu to Sherathang Sherathang-Nathu la
Formation Width (m) 8.00
Carriageway width (m) 5.50
8.00 8.00 8.00 8.00 6.10
5.50 5.50 5.50 5.50 3.66
6.10 5.00
3.66 3.00
Gradient Gentle Gentle Gentle Gentle Steep Gentle gradient with intermittent steep gradient -doSteep
Note : * The entire stretch of the road is black topped. Source: 2004, 87 RCC Coy
Containerisation Presently no one uses containers for transport of goods and services. The reason for this is that multi-axle truckers are not allowed to ply on the existing highway. The other reason is plain business since there are no out bound loads either from Siliguri or Gangtok that justify the need to be carried on containers. Containerisation as a concept just does not exist at the present moment. Since there are no major heavy industries in the region, there has been no need for the local trucking industry to invest in multi-axle trucks or in containerisation. Most of the
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load traffic comes into the region and very little load is exported out of the region. The goods that are exported out of the region are seasonal agricultural products like broom grass, ginger, cardamom and tea. No containers are needed to transport these goods. The only time multi-axle trucks come into Siliguri is when Maruti, Tata Motor or Hyundai transport their cars to their respective dealers in Siliguri. Air cargo facilities The demand for a full-fledged cargo and freight handling centre in the region is going to be more conspicuous in the first few years after reopening of the Nathu la trade route reopening. These facilities could either be developed at Bagdogra airport or somewhere in the vicinity so that users can easily access the same. There is some thought being given to this. The West Bengal Government has already initiated the process by asking the Siliguri Jalpaiguri Development Authority (SJDA) to prepare a feasibility report on setting up a cargo and airfreight handling centre at Bagdogra airport. The SJDA is looking into the needs of various sectors including food processing, horticulture and floriculture.13 The expectation is to make Siliguri and surrounding areas a major transshipment hub. In fact, if adequate cargo facilities are developed in the strategically located Bagdogra airport, it could serve as a major air cargo ferrying centre of the eastern and northeastern regions wherein all the major produce particularly in the agriculture and horticulture sectors could be transported to anywhere in the world. It is the absence of such quicker transport options and easier access to potential markets (including South East and East Asia, Europe and America) that both farmers and economies of this region have suffered in the past. The state has a fairly good distribution network of power. However, electricity has not reached Nathu la and its surrounding areas including the proposed trade mart at Sherathang. Telecommunication facilities are very inadequate. In fact no mobile phones work in the entire trading zone. The Chinese Side: Preparations There is visible euphoria on the Chinese side on the reopening of the Nathu la trade route. For instance, the officials in Lhasa clearly told the visiting Nathula Trade Study team that the Chinese central Government has set a high priority on the resumption of trade through this corridor. The heads of various trade-related departments were asked to form teams/committees on each of the crucial segments of trading operation. These teams had already visited Yatung (Chumbi Valley) 12 times in this regard (by September 2004).14 i)
The Chinese central government has set a high priority on the resumption of trade through this corridor.
ii)
The Tibet Autonomous Region (TAR) government sees tremendous opportunity to enter into the Indian market in the near future and to enter other countries of South Asia in the long run.
iii) They also see that there is a huge scope for Indian goods and services to access the markets of Tibet and western China, which has a huge population and for
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which the accessibility through India (Sikkim route) is much easier and economical than through the other routes of mainland China. iv) The TAR government is not thinking of the trade in the typical border trading sense. Their preparations mode gives the impression that they are considering it to be a full fledged trade with a range of exports and imports passing through this route. They plan to extend the railway line up to the Nathu la border. They opine that India could also use this train service to reach mainland China. v)
The tourism officials stated that they are very interested in integrating trade with tourism. Lhasa to Nathu la:15 Lhasa – Shigatse Shigatse –Yatung Yatung – Nathu La
= = =
261 kms. (using the 318 National Road) 291 kms. 37 kms 589 kms
In China, the roads have been given standards from I to IV.16 The road condition from Yatung to Nathu la is not a pitched road so is not a standard road. The technical standard of this road is not good at present; reconstruction work is underway now. The proposed road from Yatung to Nathu la will be a 2-way lane road. It is being built as Class III standard road because of the geographical complexities. Passage of 500–2000 vehicles in 24 hours is likely to be the carrying capacity of this new road. It would be able to ferry trucks approximately 15 meters in length. Post-reconstruction, the road from Yatung to Nathu La will measure a total distance of 37 kms. The road, on completion, will measure 7.5 mtrs in width. Design speed for vehicle/s plying on this road is 30 km/hr (actual speed higher than that.) The gradient of the road is equal to 7 percent for every 100 mtrs. The road is being built on the old road itself because of the complicated natural conditions. Upgradation of the road to make it a two lane and high speed road is being undertaken. The idea is to move only the containerised vehicles with sufficient carrying capacity. The present road conditions are: Lhasa –Shigatse: Shigats –Gyantse: Gyantse–Khydung: Gyantse –Kangmar: Kangmar-Yatung: Khydung–Yatung:
High Standard Road. (II & III Class) . Black Pitched Road (III Class) Black Pitched Road ( III Class-will be completed this year) 40 kms. 162 kms. Black Pitched Road (III Class)
The Chinese have worked out the details about the trade mart and trade infrastructure at Renqinggang (a village in the Yatung county 31 kms away from Nathu la). The proposed trade mart covers an area of approximately 20,000 square mtrs. The main mart building is an integrated building with all the concerned governmental department's offices. There are provisions for 200-500 shops, and adequate storage and warehousing space. This also includes an area specifically demarcated for parking and packaging.
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This covers a total area of over 5000 sq.mtrs. The trade port will be able to accommodate approximately 100 trucks at a time. The trade mart will basically be a point for inspection by the custom officers of the goods being imported and exported. The rest of the area is meant for future expansion. Also, the mart area will be “clean and green”. They also have plans to set up the most modern customs systems. A power station has been built on the Yatung side recently. Investment Opportunities The opportunities for investment in the western region of China are huge. Sikkim can even export electricity and other energy sources to the energy hungry western region of China. The key elements while preparing for trade through Nathu la are infrastructures, institutional capacities and regulatory framework that adequately safeguard and promote both national and local interests. The state of infrastructure at the moment is utterly inadequate and fragile. The Expert Group Report has recommended an Infrastructure Development Package of Rs 1650–1700 crore for roads, airport, banking, communications, trade mart, customs, warehousing and rest and recreations to be used in a phased manner by 2012. Since this is going to be a very vital project for the entire eastern and north-eastern regions and the country as a whole, some of these infrastructure projects could be very attractive for both the private sector and for agencies like World Bank and Asian Development Bank. Tourism Potentials Tourism is Sikkim's major strength. It has the potential of acquiring the status of the back bone of Sikkimese economy and society. Therefore, a conscious attempt should be made to gradually integrate trade through Nathu la with the movement of tourists across the border. Most of the scenic sites and Tibet are now open to tourists. Tourism has emerged as a major industry in Tibet. Historically also trade was done alongside tourism mainly pilgrimage. “Often trade and pilgrimage were combined. For example, pilgrims from Mongolia visiting the shrines of Lhasa would bring goods to sell in the capital to finance their trip. At the same time Mongolian traders going to Lhasa with Chinese silver, silk and ponies would, as a matter of course, visit the holy places once they arrived.”17 The exchange of tourists between Nepal and Tibet through the land route of Kathmandu-Kodari highway can be cited as an important example. A large number of tourists (30,000) from China, Nepal and other parts of the world already use this route for tourism purposes. This route is likely to be used more extensively for tourism now that the Kathmandu–Lhasa bus service has started. The ribbon development on this highway in terms of way side hotels and other tourist amenities could itself generate a huge source of income for the Nepalese and the Chinese as it has done in the Solokhumbu region of Nepal. This region has been developed because of adventure tourism triggered by Mount Everest. Tourists are making a beeline to watch how trade actually takes place between India and China at Sherathang and Renqinggang, respectively. In the last couple of years, the Nathu la pass itself has become a major tourist spot with hundreds of people visiting the border and enjoying the “pleasure” of shaking hands with the Chinese soldiers.
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Globally known as the “roof of the world”, Tibet has focused on “eco-tourism” lately. In 2003, tourist inflow into Tibet was recorded as 9.28 lakhs (0.928 million). The total income from tourism in Tibet amounts to approximately 1 billion Yuan. (USD 125 million–Indian Rs 563 crore). Since 2003 an annual increase of 20 percent in tourist arrivals has been recorded. There are over a hundred high quality tourist attractions within the Tibet Autonomous Region. Most of the tourists are Europeans, Americans, South East Asians, Japanese and Koreans. There has been a huge surge in domestic tourism as well. The eco-tourism activities of Sikkim can be well integrated with the pilgrimage to places like the Mansarovar Lake in China. The journey could be much easier and time shorter from Sikkim. Tourists flow may also be affected as tourists visiting destinations like Kailash -Mansarovar in Tibet would opt for the pass instead of using Nepal as transit.18 The Buddhist circuit has now been identified as one of the priority areas in the tourism development policy of the government of India. Sikkim could be the hub connecting all the major Buddhist destinations in India and its neighbouring countries—Bodh Gaya in Bihar, Rumtek in Sikkim, Tawang in Arunachal Pradesh, Lumbini in Nepal and Taktsang in Bhutan to Jokhang and Potala in Lhasa. Though belated, this is a very appropriate strategy. Most of the Himalayan states will be direct beneficiaries of this new thinking and intervention. This is going to be further strengthened by the proposed air link between Bagdogra and Kathmandu. The Nathu la trade route, if opened to tourist traffic, could integrate the tourism industry of Himalayan states in the north-east and regions with similar features in the neighbouring countries like China, Bangladesh, Bhutan, Myanmar and Nepal. This type of integration will transform the entire tourism potential into a galore of development opportunities. The other attractive areas of interests for the people of Tibet Autonomous Region and nearby areas will be the health and educational facilities that are available in and around Sikkim. The entire Sikkim-Darjeeling belt is famous for educational institutions and the quality of education they impart. The huge surge in demand for English speaking students and professionals in China could trigger a beeline for educational institutions in Sikkim and surrounding districts. The people of TAR have long been sending their children to various educational institutions in places like Darjeeling. A formal reopening of the trade route and the permission for the movement of people through this route would give a solid boost not only to traditional tourism that relates to sightseeing and pilgrimage but also for education and health purposes. This can transform the basic nature of Sino-India cooperation. Prof. Mahendra P. Lama is vice chancellor of the Central University of Sikkim. While being the Chairman of the Centre for South, Central South East Asian and South West Pacific Studies, School of International Studies, Jawaharlal Nehru University, he was given the responsibility of preparing this path breaking report popularly known as “Nathu la Trade Report in 2005”, which paved the way for the reopening of this trade route after 44 years. Endnotes 1. This was actually promulgated in 1984 as the “Provisional Regulations for the Management
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of 'Small Volume' Border Trade”. The 1996 version of this promulgation took shape after a series of amendments. 2. Mahendra P. Lama, “India and China in Border Trade” , Hindustan Times, New Delhi, April 27, 2005. 3. Hans Hendrischke, “Provinces in Competitions : Region, identity and cultural construction”, in Hans Hendrischke and Feng Chongyi eds., The Political Economy of China's Provinces, (London: Routledge, 1999), pp 6-7. 4. CW Kenneth Keng, “China's Economic Prospects in the New Century,” in Andrew J Nathan, Zhaohui Hong and Steven R Smith eds., Dilemmas of Reform in Jiang Zemin's China, (London: Lynne Rienner, 1999), p. 189. 5. Barbara Krug, “Why Provinces ?,” in John Fitzgerald ed., Rethinking China's Provinces, (London: Routledge, 2002), p. 260. 6. China is a mountainous country with two-thirds of its total land area covered by mountains, hills and plateaus. It has land border of 22143.34 kms and is bordered by 14 countries : Korea in the east; Russia in the north east and north west, Mongolia in the North; India, Pakistan, Bhutan and Nepal in part of the west and South west; Myanmar, Laos and Vietnam in the South. This also has borders with Kazakhstan, Kyrgyzstan, Tajikistan and Afghanistan. 7. Also see Janet Rizvi, Trans-Himalayan Caravans: Merchant Princes and Peasant Trades of Ladakh (New Delhi: Oxford, 1999). 8. Memorandum between the Government of the Republic of India and the Government of the People's Republic of China on Expanding Border Trade, signed at Beijing on 23 June 2003 signed during Prime Minister Atal Behari Vajpayee's visit to China in 2003. 9. Mahendra P. Lama, "Sikkim-Tibet Trade via Nathu la : A Policy Study on Prospects, Opportunities and Requisite Preparedness," prepared by Nathu la Trade Study Group for the Government of Sikkim, August 2005. 10. Ibid. 11. Mahendra P. Lama, “Trade is only the beginning of the Story”, Indian Express, June 18, 2006. 12. The road from Sevoke to Gangtok was originally built in the 1960s. Improvement of the road to National Highway intermediate lane specifications was done during the 1990s. The road from Gangtok to Nathu la was also built in the late 1960s. This road was developed to District road specifications in the 1970s. The road from Sherathang to Nathu la was developed from Jeepable to other district Road specifications in the 1970s. 13. Anupam Dasgupta , The Telegraph, Siliguri, June 9, 2004. 14. Members of the Nathu la Trade Study Group visited Lhasa and its surrounding areas in September 2004. This section is largely based on the discussions held during this visit. Tibet Autonomous Region is divided into 6 prefectures viz., Nyitri, Lhoka, Shigatse, Chamdo, Nakchu, Ngari with Lhasa as a district. These prefectures have several counties. Yatung is a county of them under Shigatse prefecture. Lhasa district also has 7 counties. The other neighbouring provinces are Sichuan (state capital Chengdu) with 2,155 kms distance from Lhasa, Yunnan (state capital Kunming) 2,320 kms and Qinghai (state capital Xining) with 1,937 kms from Lhasa and Xinjiang. See Tibet Tourism Bureau, Guide to Holy Tibet, Lhasa, (www.tibettour.org) 15. All the roads are good especially those to Qinghai (II Class). 16. Some of the roads especially on the Chengdu and Kunming routes are under reconstruction. 17. There are 3 routes from Lhasa to Shigatse and there are 2 routes from Lhasa to Yatung viz., Shigatse → Gyantse → Yatung and straight from Lhasa to Yatung bypassing Shigatse. The Lhasa –Shigatse road renovation will be completed soon. 18. I Class : width 15 mtrs. for speed over 100 kms./hr.; II Class: width 12 mtrs. for speed upto 80 km/hr. Under this 2,000-5,000 vehicles can move within 24 hrs in the mountain region; III Class: width 7.5 mtrs. for speed between 30 –80 kms/hr and IV Class: width 5 mtrs, speed less than 35 km/hr. 19. John Clarke, Tibet : Caught in Time, (Reading: Garnet Publications, 1997), p. 39. 20. Narayan Wagle, “Opening Nathu-La would affect Nepal's trade”, http:// www. cybernepal.com/news/news_more.php?nid=2380
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IP Pipelineâ&#x20AC;&#x201D;Instrument of Socio-Economic Stability Aasir Kazmi and Shahbaz Khan Objective Although oil and gas have played a pivotal role in Pakistan's economy since the start and their significance in this respect has only grown over time and taken a centre-stage during the past few years, the awareness of the general public with respect to issues related to oil and gas remains negligible. This article is an attempt to understand the basics of the much talked about IPI gas pipeline project, analyse its dynamics, foresee the mammoth challenges to its realisation and make certain recommendations that can prove helpful for its successful execution and consequentially for the economic progress and social integrity of Pakistan. Background Since the discovery of the world's second largest natural gas reserves in Iran's South Pars field in 1988, which has 360 TCF of recoverable gas reserves, the Iranian government began increasing efforts to promote higher gas exports abroad, especially to its neighbouring energy starved countries like India and Pakistan where the prospects of profits are high. This is elaborated in the following paragraphs: a)
India's energy outlook India is projected to become the third-largest energy consumer in the world by 2030, surpassing Japan and Russia, from its current position of fifth largest consumer. According to the US Energy Information Agency's (UEIA) reference case scenario, primary energy demand in India is expected to grow by 3.6 percent per year, doubling from 537 MTOE in 2005 to 1,299 MTOE by 2030. As of January 2007, India had 38 trillion cubic feet of proven natural gas reserves, with natural gas consumption at over 1,000 billion cubic feet (BCF) and production approximately 996 BCF in 2004, further outpacing production versus consumption during 2006 at 1,350 BCF and 1,065 BCF respectively. Projections by experts indicate that India would require 5.2 TCF of gas per annum by 2025 to meet its energy demands. In addition to current stocks, several recent discoveries in the Bay of Bengal have added to India's known domestic reserves. But despite these finds, India's gas reserves are still insufficient to meet its growing demand and it would have to rely on gas imports in the future.
b)
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Pakistan's energy outlook Though Pakistan's overall gas energy demand is only a fraction of that of India, it is expected to increase by about 250 percent over the next 20 years. Natural
gas consumption accounts for more than 50 percent of Pakistan's energy use. However, as per several studies, Pakistan's domestic gas reserves, having reached their peak in 2009, will rapidly start depleting after 2012–2013 and by the year 2015 the country is expected to face a gas shortfall in the range of 2200–2900 MMCFD at GDP growth rates between 6.5–7.5 percent. Therefore, in addition to accelerating exploration activities for augmenting its indigenous gas reserves and supplies, Pakistan would also have to seriously consider its imports while keeping in view the risks and sensitivities involved in natural gas imports through its neighbouring energy hubs in order to meet its growing demand. Iran is also desperate to increase its oil and gas exports primarily to offset the economic stagnation brought about by the US and European Union (EU) sanctions against its uranium-enrichment programmes. According to the National Academy of Sciences (NAS), Iran's oil and gas exports are declining by 10–12 percent per year and if the trend persists, Iran would cease to be an oil/gas exporter by around 2015. Iran-Pakistan-India (IPI) Gas Pipeline In the wake of rising energy costs and demands Iran, Pakistan and India have long mulled over building a natural gas pipeline, commonly termed as the IPI pipeline, connecting Iran and India through Pakistan. The pioneers of the concept were Iran's Ali Shams Ardekani, foreign minister; and Rajendra Pachauri, director general of Tata Energy Research Institute (TERI) of India, during late 1989. After four years of negotiations India signed an MOU in 1993 with Iran with respect to its construction, connecting the two states. However, the project was shelved in view of the security concerns with respect to the proposed route passing through Pakistan. The concept only re-emerged when a discussion between Iran and Pakistan started during 1994 with India joining in later. Due to its historically tense relations with Pakistan, India initially explored the feasibility of offshore, deep sea and shallow sea pipelines as alternatives to crossing through Pakistani territory. However, the overland route was eventually chosen for further negotiations, being four times cheaper than the deep-sea route. Originally, as per the technical details of the land route, the gas pipeline, with a 56 inches diameter, was to run 2,775 kilometre (kms) from Iran's South Pars gas field in the Persian Gulf through Khuzdar, Pakistan, with one branch going on to Multan and another to Karachi. From Khuzdar, it was envisaged to extend into India. Islamabad was to import around 3.15 BCFD of natural gas from Iran (1.05 BCF per day under phase-I, and 2.1 BCF under phase-II), with India importing around 1.05 BCF per day in phase-I and 3.20 BCF in phase-II. The aggregate cost of this project was estimated to be around USD 7.5 billion; its construction was to start in 2009 and was expected to be completed by September 2013. The negotiations, however, met a major setback on 16 July 2006, when Iran demanded a price of USD 7.20 per million British thermal unit of gas against India's offer of USD 4.20
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per million British thermal unit. According to India, the price demanded by Iran was more than 50 percent above the prevailing market price in India. As the said price was higher vis-Ă -vis the average price of indigenous gas in Pakistan as well, India and Pakistan joined hands in February 2007 to offer Iran a maximum price of USD 4.93 per million British thermal units. While negotiations on the pipeline were progressing at a snail's pace, India signed the US-India nuclear treaty in 2008 and then disengaged itself from the trilateral talks, leaving Iran and Pakistan alone. However, the stakes of energy security and geopolitics are too high for India to be able to afford losing the pipeline for ever. India's withdrawal from the negotiations implies that, in a region supercharged with geopolitical intensity and international security concerns, there are other considerations for India that are more pressing as compared to energy security. It is also noticeable that soon after India's withdrawal from the project, China, ever seeking greater energy supplies, declared that it would gladly buy India's share. India's recalcitrance to join IPI and China's eager interest bodes well for the visionaries who wish to transform Pakistan's energy corridor into a reality especially in view of the capital intensive nature of the project and Pakistan's limitations in this respect. Energy Geopolitics and South Asia In order to evade international isolation mostly caused by the machinations of the US and its allies, Iran is seeking economic investment and political support from members of the UN's Security Council like Russia and China, who have emerged as its key diplomatic backers and military suppliers. The following section explores the geopolitical and security risks and benefits of building a trans-national gas pipeline in South Asia. a)
US- India front The strategic interests of India and the US seem to be converging more and more in the Persian Gulf and Central Asia since the end of the Cold War. Also, with ambitions of becoming a global power and a history of acrimonious relationship with China and Pakistan in the backdrop, it suits India to remain allied with the US in this region; building the IPI would definitely be contrary to these interests. Thus India appears to be in a quandary i.e. whether to displease the US and go for the badly needed Iranian gas or keep the US on its side and look for alternates. No sooner had large international private and state-owned energy companies started working together to build a consensus on the tri-nation IPI pipeline, Iran was slapped with economic sanctions in the shape of the US Congress passing the Iran-Libya Sanctions Act of 1996, using Iran's uranium-enrichment programmes as justification This act enforces credit penalties on all foreign and domestic energy companies investing more than USD 40 million in the Iranian energy market. The US has been quite successful in enhancing these sanctions gradually.
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Contrary to the IPI pipeline, the US administration has always supported purchase of energy for South Asia from the Central Asian republics contiguous to Afghanistan and not Iran. One such venture was the Turkmenistan– Afghanistan–Pakistan–India (TAPI) gas pipeline. However, geopolitical considerations and continuing security issues in Afghanistan, particularly after 9/11, have so far proven to be the major obstacles for the realisation of this option. b)
Russia–Iran front The economic, commercial and political interests of Iran and Russia seem to be converging with respect to favouring a strategy of multipolarity, both in the Middle East and worldwide. It is worth noting that Iran and Russia are also moving away from using the dollar as the preferred currency for energy transactions. At present Europe depends on Russian gas imports for 41 percent of its annual consumption and is becoming more dependent on Russian gas day by day. Accordingly, Russia is seeking to expand its gas transmission/sales network through its proposed north–south energy corridor. This corridor is part of Kremlin's plan to make Russia the primary hub in a vast pipeline network that would embrace Europe to the west and Iran, Central Asia, and India to the south. It goes without saying that while on the one hand Russia is an ally of Iran against the US, on the other, Russia, wanting an undisputed hegemony of the European energy markets, would prefer divergence of Iranian oil and gas exports away from European and Caspian region. The Kremlin also hopes that the IPI will prevent construction of the TAPI pipeline, which can prove to be detrimental in the long run to Russian dominance of the European market. Resultantly, Moscow's interest in the IPI pipeline dates back to 1995, when Moscow showed interest in the project both as a contractor and as an investor. By helping to manage IPI, Gazprom would gain access to a massive consumer market and thus augment its political leverage in addition to swallowing up smaller energy companies along the way.
c)
China's role There appears to be a commonality of interests vis-à-vis US among Russia, Iran and China. Hoping to reduce its dependence on US dominated sea-lanes, China views Iran as a far safer strategic source of energy supply for its ever-expanding economy and an important link through Pakistan. China and Pakistan are already working on a proposal for laying a transHimalayan pipeline to carry Middle Eastern crude oil to western China. Pakistan provides China the shortest possible route to import oil from the Gulf countries. The pipeline, which would run from the southern Pakistan port of Gwadar and follow the Karakoram highway, would be mostly financed by Beijing. Imports using the pipeline will allow Beijing to reduce the portion of its
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oil shipped through the narrow and unsafe Strait of Malacca, a narrow, 805 kms (500 miles) stretch of water between Peninsular Malaysia (West Malaysia) and the Indonesian island of Sumatra, which at present carries up to 80 percent of its oil imports. While constructing the pipeline across the Himalayas would itself be an expensive and challenging engineering feat, plans to extend a railway track to China to connect it to Gwadar are also on the anvil. Balochistan's Role As an immense desert comprising almost 48 percent of Pakistan's area, Balochistan is quite rich in uranium and copper, potentially very affluent in oil, and produces more than one-third of Pakistan's natural gas. It needs to be highlighted that the province has hardly been properly explored for oil and gas because of a force majeure situation in the province and the consequential reluctance of exploration and production (E&P) companies, both local and foreign. There are areas where even surface indications of crude oil are evident. The province has a great potential to radically improve not only its own economy but that of the whole country. Geographically the major portion of any trans-national pipeline originating from Iran and passing through Pakistan would have to pass through Balochistan. Since the inception of the Gwadar project and discussions about the pipeline, Balochistan has become a hotbed of tension, strife and insurgency. The relationship of the unrest with the progress of Gwadar and the pipeline is quite evident. Powers antagonistic to China and Iran would never like these projects to succeed and will try to sabotage them. Without going into the social roots of the problem, general dissatisfaction and disenchantment from the state prevails across all strata of the society in Balochistan which is not only attributable to the general poverty in the province but also because hardly any attempt has been made to integrate them into the state structure. In view of these observations and facts, it is not surprising at all if certain sections of the society, end up being exploited by the above mentioned powers. China has already invested around USD 420 million in developing a deep sea harbour at Gwadar in Balochistan. A second investment phase of USD 600 million is also planned to start during the next year. China's presence in Gwadar means that it would have direct and easy access to the Indian Ocean, which is unacceptable both to India and the US. While the former wants to be the undisputed power in the Indian Ocean, and to signify that it is building up the so called Blue Water Navy, the latter is upset with its growing proximity to the Straits of Hormuzâ&#x20AC;&#x201D;a narrow but strategically important waterway between the Gulf of Oman in the south-east and the Persian Gulf in the south-west. Though even currently around 25 percent of aggregate international supplies of crude oil pass through this passage, this figure is expected to increase in the future. If the ongoing unrest in Balochistan is analysed against the backdrop of the above international factors then it starts making sense. Time and again one hears that Taliban or Al Qaeda members are moving from the tribal border region to Balochistan. Is it not a well known fact that Al Qaeda has already perfected the â&#x20AC;&#x153;artâ&#x20AC;? of sabotage, especially of oil and gas installations, in Iraq?
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Most of the ire of the Balochistan Liberation Army (BLA) has also remained directed towards sabotage of water pipelines, power transmission lines and gas installations. It is evident that without the restoration of tranquillity and peace in Balochistan and alignment of the masses and their leadership behind the objectives of the government, the IP pipeline and other related projects cannot become realties. Iran-Pakistan (IP) Gas Pipeline Project After 14 years of on-off negotiations and despite immense international pressures as well as the US having succeeded in wooing India off from the deal, Iran and Pakistan ultimately signed a Gas Sales and Purchase Agreement (GSPA) on 6 June 2009 for the construction of a trans-national gas pipeline, connecting Iran with Pakistan. The salient outlines of the said agreement are as follows: -
The seller i.e. Iran would provide 750 MMSCFD to Pakistan for a period of 25 years, extendable up to 1 BCFD of gas and for another five years, as per requirement.
-
The project was expected to kick-off during September 2009, and targeted to be completed by June 2014.
-
The IPI route of Iran–Khuzdar–Multan–New Delhi, has been revised as the Iran–Gwadar–Bhong route.
-
The overall length of pipeline stands revised at 2,100 kms, after excluding the Indian section. It is imperative to highlight that as a part of augmenting its southern pipeline infrastructure, Iran has already completed laying around 900 kms of the pipeline out of the total 1,100 kms in its territory. This leaves only 1,200 kms to be laid including the 1,000 kms section belonging to Pakistan.
-
The delivery point for the gas would be at the Iran-Pakistan border, near Gwadar, at an agreed pressure of not less than 798 psig. From Gwadar, around 1,000 kms pipeline would carry gas till Nawabshah (Sindh) to the town of Bhong and finally into the national gas grid.
-
The diameter of the pipeline stands reduced to 42 inches due to revised volumetric parameters.
-
The capital expenditures (CAPEX) of the Pakistani section of pipeline would be around USD 3.2 billion.
Project Economics Gas pricing basis The current world natural gas market can be divided into three parts, i.e., Asia-Pacific, Europe, and the US. All these regions/markets have been observed to follow their own pricing systems, which may approximate one another but are unlikely to be standardised globally. Currently natural gas prices are being linked more and more to imported crude oil in Asia with a basket of crudes referred to as the Japanese Crude Cocktail (JCC), as a
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Reference Crude Price (RCP). The pricing formula typically includes a base price indexed to JCC, a constant and a mechanism for the review/adjustment of the formula at predetermined periodic intervals as depicted by the following equation: Ø
Pn = ax + b
where “x” is the average price of JCC, “a” is the average price of the LNG imported into Japan during the reference period divided by average JCC price over the same period and “b” is the said average LNG price. The same principle has been adopted for determining the gas price in the subject GSPA. According to this pricing formula, approved by the Economic Coordination Committee (ECC) of Pakistan on 19 March 2009 and by the federal cabinet on 8 April 2009, the base IP gas price was agreed at 80 percent of the JCC as against Pakistan's demand of 70 percent, since Iran took the plea that its Parliament has decided that the price of gas exported to Pakistan should match the price being paid by its other buyers, namely Turkey and Armenia. While keeping in view the average crude oil data of 60 months imported into Japan from 2002 to 2007, the RCP is indexed at USD 60/bbl. Thus, in line with the above formula being applied in all recent long term gas import contracts in Asian gas trade, the price of imported Iranian gas (Pn) is stipulated to be USD 8.2 /MMBTU, as follows: Ø
Pn
= [(0.12 * JCC) +1]
where, while referring to the below reference graph, 0.12 Bbl/MMBTU and 1 USD/MMBTU are “a” and “b” respectively.
While inserting the value of a, b and JCC crude, i.e. 60 USD/Bbl in the above equation Pn comes out to be:
= 0.12*60 + 1 = 7.2 +1 = 8.2 USD/MMBTU
The above IP contract price is about 1.75 times costlier than the price of any post December 2008 gas discovery in Pakistan as per the new Pakistan Petroleum Policy 2009, Annexure-7, and around 370 percent costlier than the prevailing well head prices in Pakistan. Thus, the contracted quantity of 750 MMSCFD would require around 7.8 MMUSD/day and around USD 2.8 billion per year to disburse the said quantity. The
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above gas price is also subject to revision every three years after 2013,to reflect the fiscal variations in the relevant RCP. A lot of unnecessary uproar is being raised in the media about the price of the Iranian gas making it seem that Pakistan has made a bad deal. However, in all fairness to both the relevant parties, the negotiated price is directly reflective of recent developments in the global gas market with respect to the foundation of Gas Exporting Countries Forum (GEFC), of which Iran is a member along with Russia, Qatar and others. All recent international gas price contracts/negotiations have been concluded at much higher prices as compared to the previous in the major gas trading hubs. This is mainly to establish the minimum floor for the gas prices as close as possible to the oil prices, thus giving an interpretation in real terms to the phrase: “The era of cheap gas is over” as depicted in the following paragraphs: -
During January 2009, Ukraine agreed to pay Russia on an average USD 7.36–8.5/MMBTU as against USD 5.1/MMBTU in 2008. The revised price averages to 70–81 percent of the relevant RCP as against 50 percent parity to the said RCP in 2008.
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During February 2009, Iran finalised a deal to import gas from Turkmenistan at the price of USD 8.5–10/MMBTU. The given price corresponds to 81–94 percent of the crude oil pric, i.e. USD 60/bbl.
Consumer market of Iranian gas in Pakistan According to the government of Pakistan, natural gas is being imported to generate around 5,000 MW of electricity per day. It is also being asserted by authorities that power generation through this imported Iranian gas would result in annual savings of up to USD 1 billion in furnace oil imports, assuming the crude oil prices are at USD 50 per barrel. In order to unveil the said fiscal estimates, the following discussion is useful. Pakistan currently has 19,389 MW/day of installed aggregate power generation capacity. As per the 2008 annual report of Oil Companies Advisory Committee (OCAC), 32 percent of the above given power i.e. 6080 MW/day comes through furnace oil. Besides furnace oil, 34 percent, 30 percent, 3 percent, 2 percent and 0.7 percent power is generated through gas, water, coal, nuclear energy and diesel respectively. Only three years back, the furnace oil consumption was only 16 percent which reflects a major shift from natural gas to furnace oil for power generation during the last three years, i.e. by around 4 percent annually. This shift is attributed to a reduction in gas production, increased domestic requirement, unavailability of opportunities to tap new discoveries to replenish the supply decrement and the phenomenal increase in consumption of CNG by around 43 percent in 2008–2009 vis-a-vis 2007–2008. Resultantly, furnace oil has emerged as a priority product for power generation during the past few years. As per OCAC, around 80 percent of the furnace oil annually consumed in Pakistan is being imported, whereas the local refineries fulfil the rest of the requirement. The
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demand for the same is likely to grow at an average annualised rate of 7 percent during the next 5 years, i.e. FY09–FY13. Only during FY 2008–09 was around 7.4 million tonnes of furnace oil imported in Pakistan amounting to USD 3.2 billion @ Rs. 35,000/ton as compared to 6.9 million tonnes amounting to USD 2.7 billion @ Rs. 32,000/ ton in the last fiscal year, reflecting a surge of USD 0.5 billion in only one year when the prices of crude had in fact drastically reduced during that particular span. Otherwise this difference could have been in the range of at least USD 1 billion. In addition, it is interesting to note that, as per OGRA journal 2007–2008, 1 MW of electricity is generated by 3M tonnes of furnace oil vis-à-vis 0.1499 MMSCF of natural gas required for generating the same amount of power. The respective fiscal values of furnace oil and natural gas amount to USD 1,462/MW and USD 682/MW for the given period, clearly reflecting that generating electricity through furnace oil is around 2.14 times costlier than natural gas at its current prices, i.e. excluding any gas discoveries to be made post 2009 petroleum policy. In view of the agreed pricing formula vide which 1bbl of the JCC is indexed at USD 60, the power generation cost with the Iranian gas would be around USD 1,552/MW, while considering only the price to be paid to Iran and excluding the operating cost of the pipeline, amortisation of capital cost and profit. Thus it would be comparatively more attractive for generating electricity vis-à-vis furnace oil if the crude oil price remains in the range of USD 77/bbl and above with reference to the existing gas price. Project Financing As per information revealed by ISGS, the IP project is planned to be funded at a debt: equity ratio of 65:35, requiring debt financing of USD 2 billion and equity investment of nearly USD 1 billion. Public sector entities, therefore, may end up holding through ISGS, majority shareholding in the above venture. In this regard, Sui Northern Gas Pipelines Limited (SNGPL) has already shown interest in the construction of the same. In addition to the above, Beijing is also interested in financing the subject gas pipeline, particularly with a view to pave the way to transform Pakistan's energy corridor for its oil/gas imports. It may be of interest to note that China has also played a key role in the field development of Iran's South Pars field. If China sustains its interest in the project then the financing issue might prove to be a non-issue, because of China having the largest investment banks in the world and huge trade surpluses. In addition, to the chagrin of the US and its sponsored UN sanctions, Gazprom (Russia), BHP (Australia), Petronas (Malaysia) and Total (France) are taking keen interest and already negotiating with Iran to construct the IP pipeline on build and operate basis. Discussion and Open Questions Since at present the world's eyes are mostly focused on the internal political scenarios of Iran and Pakistan, the milestone achieved by both the countries on 6 June 2009, when they inked the GSPA, went almost unnoticed. However, what apparently may seem like a standard energy project is going to have profound implications for the geopolitics of energy in the 21st century, the future of South Asia and US' ability to check Iran's dominion in the Persian Gulf. It is worth noting that the US has been opposing this
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project since the beginning and ultimately succeeded in influencing India to pull out, even if only temporarily. Also both Iran and Pakistan will have to remain watchful till the commissioning of the pipeline because the US can go to any possible extreme to sabotage this project. For both Iran and Pakistan, the benefits of this pipeline are innumerable. Iran sees in the pipeline a much required boost to its economy at a time when the US and its allies are trying to weaken it economically. It also looks at it as an opportunity, should the pipeline be extended to China/India, to create a long-term economic and political, dependence of the above countries on its gas. Pakistan, for its part, views the pipeline as the solution to its energy security challenge. Since Pakistan's domestic gas production is falling and its import dependence is growing by leaps and bounds, by connecting itself with the world's second-largest gas reserve, Pakistan could guarantee a reliable supply for decades to come. However, the following remain major concerns are materialising before the trans-national gas pipeline project: -
Balochistan, in view of its prevalent volatile security situation, remains a major bottleneck, which can cause delays in the project and even result in the shelving of the project again if no major steps are taken immediately. The fate of this project would be no different from Kalabagh dam if the situation in Balochistan is not addressed properly and justifiably on priority basis.
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Keeping in view the projected increase in energy demand and expected shortfall of around 2500 MMSCFD by 2015, the above pipeline alone would not be enough to meet the energy demands of the future.
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The imported gas would only partially shoulder the power crisis because keeping in view the expected gradual increment in the requirement of electricity, major limitations of existing power generation infrastructure and immense transmission losses, massive augmentation of the infrastructure is also imperative.
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It has been observed that the prevailing power crisis in the country is mostly attributable to the shortage of furnace oil because of the paucity of funds for import thus most of the power stations are operating at capacities much below their design values. Keeping in view the amount of monetary allocations required being charged-off dailyâ&#x20AC;&#x201D;7.8 MMUSD for importing Iranian gasâ&#x20AC;&#x201D;it is critical to ensure sufficient protection against the above situations in the GSPA to avoid the highly embarrassing and discomforting situation of curtailment or stoppage of gas supply by Iran in case of default in payments by Pakistan. This highlights the significance of payment terms, guarantees and guarantors of this agreement.
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There are bright chances that if Balochistan becomes accessible to exploration activities then Pakistan might make huge gas and oil discoveries and may not need the Iranian gas. In view of this situation the termination clause of the contract may be furnished with adequate protections for Pakistan to be able to pull itself out of the arrangement without incurring much fiscal exposure in terms
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of termination charges. This can easily be achieved if China is involved as a party to the agreement since the start. -
The mode of amortisation of the capital investment, its period, operating cost and profit will need to be dealt with very carefully while pricing the gas for the local market. Otherwise, Pakistan can easily end up in a dispensation which can prove to be uneconomical for the country.
In view of the above discussion, it is quite evident that Pakistan alone might not be able to appropriately utilise the imported Iranian gas. However the trans-national pipeline can play an effective role in the economy of the country and as an instrument of stability and basic infrastructure development in Balochistan as well, provided the pipeline is extended up till China, thereby generating royalties and transit fees as opposed to bearing the high capital and operational costs alone by Pakistan. Recommendations In order to augment its energy security, Pakistan needs to move ahead with the project. The following pertinent recommendations may be given some consideration in this regard: 1.
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The Baloch leadership may be taken into confidence and assurance and support may be sought from them with respect to their cooperation for this project. The following steps in this regard might help: -
A big state-of-the-art pipe mill, furnished with coating facilities, may be established at a central location in Balochistan, near Gwadar. This mill may be co-owned by the state through ISGS, Balochistan government, the Baloch sardars (tribal leaders) of the area and a private local or foreign investor. As to Baloch sardars, they may not be asked to share in the equity. Rather, their shares may equate with certain written guarantees with respect to security, conducive working conditions etc. The entire pipe to be used in the line may come from the above mill. The state may provide written guarantees to the sardars that locals would be preferred in employment; while they providing counter guarantees that there would not be any disturbance in the work flow of the mill.
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The management/operations of the mill may be handled by the private investor.
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Each Baloch tribe through whose lands the line would pass may enter into an official agreement with the state and the pipeline contractor for the provision of security to the work and the employees. As per the said agreement, the tribe may be paid monthly security charges. In case of any proven default on the part of the tribe clearly stipulated contractual penalties may apply.
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Once the pipeline project is completed and the pipeline stands commissioned then the said contracts may be shifted, though of course at a different set of rates, to the operator of the pipeline.
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The pipe mill established for the pipeline may continue to operate once the project is over. If the foreign or local investor may wish to disinvest at this stage then he may be contractually bound to shift his percentage of shares only to Balochistan government or the Baloch sardars i.e. whichever of the two bids higher.
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At least 50 Baloch fresh engineers and 100 fresh associate engineers may be inducted into the project since the start through a clearly established merit based procedure. In this induction, an attempt may be made to have a fair representation of each tribe, lying along the right of way (ROW), in the inductees.
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Along the ROW of the pipeline at least one technical training institute may be established which should churn out at least 50 Baloch associate engineers every year. In this induction, an attempt may be made to have a fair representation of each tribe lying along the ROW, amongst the students.
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The entire ROW may be arranged on lease/rental arrangement from the respective tribes at negotiated rates. Though the agreements may be valid for 30 years but the rates may be subject to revision after every five years i.e. they may be, somehow, proportional to the gas price.
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An attempt may be made to give proportional representation to Baloch in the management of the operator/owner of the pipeline.
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Balochistan government may charge a reasonable tariff (eg. USD 0.2) on each MMBTU of the gas to be transmitted through Balochistan. They should be officially bound to spend the said tariff, which amounts to around 60 MMUSD/year for the social development and uplift in the tribal areas lying along the ROW. In order to ensure transparency in this regard an authority or board or a consultative body having equal representation of all the relevant tribes may be constituted for the effective and judicious management of the generated revenue.
2.
If the project has to succeed then all measures must be undertaken to harness the Chinese coffers for financing the project. In this regard, Pakistan must persuade China to jump into the contract as soon as possible and start negotiating with it regarding the transit fees, royalties and sharing of capital investment etc.
3.
It appears that the delivery pressure stipulated in the said GSPA is 798 psig. As purchase at higher delivery pressures can result in tangible savings in terms of the capital and operating cost of compression, it is strongly recommended that the same, if possible, may be renegotiated at around 1150 psig.
The above suggested measures would not only facilitate the timely completion of the project and successful management of the operations of the pipeline in addition to bringing prosperity to the relevant districts of Balochistan but would also open up new
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vistas for other E&P companies to enter into the province and discover oil and gas; the province is currently a no-go area for almost all of them including the national state owned companies like PPL and OGDCL. Thus the said pipeline may in the long run prove to be a stepping stone for the whole country into an era of prosperity and economic stability. Aasir Kazmi is assistant production engineer and Shahbaz Khan is manager production, MOL Pakistan Oil and Gas Company. Bibliography 1. Inter Gas State System, website: www.isgs.pk 2. ISAS Working Paper, No. 37, 11 February 2008. 3. First Capital Research Papers, FCEL. 4. OGRA Journal, 2007â&#x20AC;&#x201C;08. 5. Ministry of Petroleum and Natural Resources, Pakistan, website: www.mpnr.gov.pk 6. National Academy of Sciences (NAS) website: www.nasonline.org 7. United States Energy Information Agency, website: www.eia.doe.gov 8. Dawn News, The News, Asia Times online etc. 9. www.google.com.pk, www.yahoo.com, www.wikipedia.com 10. Oil Companies Advisory Committee, website: www.ocac.org.pk
Abbreviations IPI TCF BCF MMSCFD MTOE MMBTU UEIA NAS TERI MOU ECC TAPI RCP JCC BLA FO MW ISGS OGRA GSPA OCAC
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Iran-Pakistan-India Trillion Cubic Feet (SI Measurement unit of gas) _ 1012 Billion Cubic Feet _ 109 Million Standard Cubic Feet per Day _ 106 Metric Tonnes of oil equivalent Million British thermal unit United States Energy Information Agency National Academy of Sciences Tata Energy Research Institute Memorandum of Understanding Economic Co-ordination Committee Turkmenistan-Afghanistan-Pakistan India Reference Crude Price Japanese Crude Cocktail Balochistan Liberation Army Furnace Oil Mega Watt Inter State Gas System Oil and Gas Regulatory Authority Gas Sales Purchase Agreement Oil Companies Advisory Committee
Towards Détente in South Asia Ali Ahmed The Hope in Alternatives Realism dominates strategic thinking in India and Pakistan. Masquerading as a solution, instead it is one of the principle reasons for the security problematic of the subcontinent. Détente in South Asia is predicated on visualising it as a single strategic space. Towards this end, state centric realist thinking would require to be challenged. Simply put, this owes to realism privileging states as actors and marking out their security relationships as the primary consideration in inter-state relations. In its logic security is about power maximisation.1 The argument is that power trajectories are taken serious note of in security establishments using the realist lens to view the world. Accordingly their reaction dictated by realist logic is of power balancing.2 A long standing critique of such thinking is that its inherent determinism precludes construction of alternative futures. This article attempts to circumnavigate realism by arriving at a conception of South Asian entente through traversing territory uncharted so far in strategic literature. It advocates détente through a balancing of strategic doctrines taken as lying at the heart of vexed India-Pakistan relations.3 It first takes a critical look at the operation of realism in the subcontinent. It then views the impact of this on India-Pakistan relations as manifested in their respective strategic doctrines. It outlines a manner of untangling the doctrinal interface by recourse to the rationalist paradigm. In doing so it propagates a conceptual model in which security is predicated on peace as against the prevalent “peace through security” model. The early 1980s are crucial to understanding later events in the subcontinent. The Cold War's rude entry into South Asia in late 1979 set off a chain of events leading up to today's security circumstances in South Asia. Pakistan resorted to external balancing, while Indira and Rajiv Gandhi's India acquired an outlook of a regional power.4 By late 1980s, the trends had crystallised. Pakistan's resort to proxy war and nuclearisation was well underway. India had, through the 1980s, upped the ante on the conventional plane through going in for a mechanised capability of dissecting Pakistan. Nuclearisation and straitened financial circumstances along with the unipolar moment at the global level in the 1990s kept the security situation delicate. The turn of the century witnessed overt nuclearisation, a border war and a prolonged crisis occasioning movement in the strategic doctrines of the two states. India moved to a more offensive posture, while Pakistan drew back on its proxy war, though not on account of Indian pressure as much as from, once again, becoming a “frontline state”. 9/11 and the emergence of South Asia as a major theatre of Operation Enduring Freedom has managed to keep a check on the security competition between the two neighbours.5 However, the potentiality for conflict
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continues to exist between the two neighbours, necessitating a relook at the strategic doctrines that lie at the centre of their antagonism. This paper recommends movement towards defensive strategic doctrines at the sub-conventional, conventional and nuclear levels for outbreak of détente on the subcontinent. Challenging Realism It is taken for granted that for the state to survive and protect its sovereignty, it has to resort to power maximisation. Through this the geo-political environment is to be controlled and the ability to do so is the measure of success. Realism's focus is narrowly on state self-interest defined in terms of power. It thereby ends up breeding adversarial relationships sans mutual trust. Simply put, the realist theory has it that national security stems from the optimisation of power in the defence and,furtherance of national interest. Such simplistic elevation of the geographic state, and of the international system being but an inter-state system, leads to an external orientation. In positing that the state is a unitary and rational actor, realism is unable to theorise the relationship between intra- and trans-state actors. The narrow focus on the state and the external system precludes serious systematisation of the conceptual difference between state, society, nation and government.6 Realism ignores the input of the domestic environment in foreign policy formulation, whereas internal politics in South Asia impede directly and indirectly to the extent of—in some instances—defining external relations. The realist postulation of the state as unit, rationally defining its national interest, and optimising power for its achievement is inadequate in an environment in which these “truisms” do not obtain. The underside of realism includes the notion that “safeguard of one's national interests may result in compulsions which necessitate the departure from absolute principles of morality”. This gives rise to an amoral order in inter-state relations.7 Attendant problems of realism include the problem of stereotyping, in which the adversary acquires a negative form and predictability. Its actions are thereby easy to assimilate in the realist world-view. Allied to this is the irrational mythology of the state's own past and prowess.8 The second problem is that a perspective in the Mandala tradition of Kautilya would make strained relations with Pakistan and China a selffulfilling and self-perpetuating prophecy. A graver problem is the covert quasi-alliance that “hawks” on both sides establish by thriving on each other's prejudices. This has an impact on domestic politics, in that the objective, value-neutral, apolitical commentary by secular hard-liners reinforces—if only unwittingly—reactionary forces in polity.9 This can be witnessed on both sides of the border. The internalisation of the realist philosophy by the state owes much to the dominance of the realist paradigm in world affairs after the decline in credibility of the idealist plank with the onset of World War II. Practice of the same by both contestants in the bipolar structure of the Cold War had an impact on philosophy of decision-making by the power elite in developing countries. Even where their freedom movements rejected western thought, subsequent to independence and on incorporation into the world system, South Asian states were socialised into the dominant discourse. As part of nationbuilding, they hark back to the respective golden ages of peace and prosperity when
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peace was dependent on strength. Suitable reference points have been identified in their cultural pantheon for conviction in the imported philosophy leading to its indigenisation.10 Given that most states are only over 50 years old as modern day states, it is understandable that they expect to concretise their existence prior to embarking on delivering on the reason for their existence.11 In this interregnum, the Hegelian philosophy of the reification of the state is ascendant.12 The Darwinist notion of the “survival of the fittest” in a Hobbesian world underpins the realist doctrine subscribed to by these states. Once their juridical sovereignty has been protected through selfassertion—a matter facilitated also by the mutual interest of their numerous compatriots in the Westphalian system—these states have taken the hesitant first steps towards broader, long term and accommodative policies. Today this process is observable as a fledgling trend in transition from the realist to the rationalist discourse for determining inter-state relations.13 This article is an attempt to progress further down in this direction. The attempt is to balance the realist-conservative discourse.14 It would help undercut its narcissism and the dominance of incestuous thinking in the “strategic community”. The rationalist plank advocated is one that prioritises prosperity over strength; prefers eradication of weaknesses as means of pursuit of recognition; is inclusive, non-threatening, and mindful of the “weak”; looks at non-military measures of security against nontraditional threats; and, though introspective, is engaged with the world community from a morally sustainable position. It is said that Indian strategic culture is marked by its absence. A valid deconstruction of this can be that the nation is not inclined to the definitions of security offered in the realist paradigm—whence springs criticism on the somnolence of Indian strategic culture. Political control implies ensuring the security establishment internalises this, lest an alignment of institutional and political interests drag the nation towards the elusive and contested goal of being a “regional power” or “global player” at the cost of its character, cohesion and ultimate best national interest. Conceptualising Detente The necessity to depart from realism owes to its limitations, particularly taking adversarial relations as immutable. Even though realists maintain that “there are no permanent friends or enemies, only permanent interests” (Lord Palmerston), their prescription makes for permanent friends and enemies at the cost of interests. This owes to the operation of the “security dilemma”.15 The more states exert towards power maximisation, the more threatened neighbours feel. Their consequent actions then become the rationale for further power exertions. This then becomes a self-referring cycle, rationalising the realist paradigm. The exit point therefore would be to mitigate the security dilemma. India has three options in addressing its Pakistan dilemma. One is status quo. It is quite obvious that status quo has its limitations. Noted French strategist Andre Beaufre states, “The further nuclear strategy develops and nearer it gets to establishing the balance, however precarious, of overall deterrence, the more indirect strategy will be used. Peace will be less and less peaceful and will get nearer and nearer to 'war in peacetime […]'”.16
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This is virtually the situation in the subcontinent since overt nuclearisation. S. Paul Kapur, associate professor in Strategic Studies at the US Naval War College, has made an insightful modification to the stability/instability paradox by restating it to read “instability/instability” paradox in the South Asian setting.17 The stability/instability paradox in nuclear literature states that stability, i.e. stable deterrence at the strategic level, can lead to instability at the conventional level. This has been used to explain the South Asian situation with the variation that the instability is not at conventional but sub-conventional levels. Kapur's position is that instability at the strategic level encourages conflict even at the conventional level. This indicates that conventional war is a possibility with its attendant escalatory connotations, belying the promise of a peace dividend of the nuclear era. Saira Khan's thesis that nuclearisation leads to protraction of conflict is a timely warning.18 The second option has many votaries in the strategic community peopled by realists. They are visible and vocal and are generally rotated by the state through the national security advisory board. It is no wonder then that the debate is monocular revolving around how India can exhaust Pakistan by upping the ante. The analogy is the demise of the Soviet Union through competing with Reagan's US. This they consider feasible in light of India's economic trajectory and Pakistan's currently straitened economic and political circumstance. This is a persuasive position but would involve militarisation. Pakistan for its part would attempt to play the asymmetric card more virulently leading up to uncertain internal political fallout in India in terms of avoidable imposition on its largest minority. The comparison with Reagan's US is apt in that the era set the stage for the neo-conservatives to takeover a couple of decades later. Unwittingly this realist prescription endangers the state by making it vulnerable to rightist forces. A stronger state in the wrong hands can only be a threat to its neighbours and, worse, to itself. The last option is of doctrinal balancing through a strategic dialogue recommended here. In security studies, “threat” is constituted by “capability” and “intention”. Tackling “capability” is the ultimate step, with the stage at which this is done being reached through first manipulating perception of “intention”. The proposition here is that perception of the intention can best be managed by addressing strategic doctrines of the two states at their interface. This would entail first defining strategic doctrine. In the words of arch realist theoretician and practitioner, Henry Kissinger, the task of strategic doctrine is “to translate power into policy. Whether the goals of a state are offensive or defensive, whether it seeks to achieve (compel) or to prevent (deter) a transformation, its strategic doctrine must define what objectives are worth contending for and determine the degree of force appropriate for achieving them.”19 Drawing on Kissinger, the strategic doctrines of India and Pakistan directed at each other can be taken at the sub-conventional, conventional and nuclear planes. On the sub-conventional level, that Pakistan has resorted to proxy war has been evident from the past quarter of a century. On the conventional level, India may be seen to be on the offensive over the same period beginning in the mid-1980s. It tried out its strike corps in a counter-offensive role in Exercise Brasstacks20 and has since acquired a third strike corps. The growing offensive content at the conventional level owes also to the Indian
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need to deter Pakistan's proxy war through the promise of a suitable response in case of Pakistan breaching India's tolerance threshold. Of late, with India's adoption of the “Cold Start” war doctrine positing a proactive and offensive posture in 2004,21 India's strategic doctrine at the conventional level can be deemed to be moving from deterrence with an offensive bias to compellence.22 At the nuclear level, Pakistan has avoided a nofirst-use (NFU) commitment. In not having ruled out first use, it can be said it is relying on ambiguity for deterrence. While this does not imply a “first use” policy, it does not rule out nuclear first use. Though India subscribes to the NFU policy, the two states can be deemed to be equally offensive at this level since Indian nuclear doctrine posits “massive punitive retaliation”.23 Summing up, Pakistan has an offensive strategic doctrine at the sub-conventional level, while on the conventional level India has an offensive strategic doctrine. At the nuclear level both states are quits with both having seemingly offensive doctrines. It follows therefore that in case the two states were to retract the offensive bias in their strategic doctrines at the various levels, their mutual perception of “intentions”, which contributes towards threat perception, would be greatly assuaged. Absence of a perception of threat implies peace. Peace would beget security. This reverses the current model for getting to peace through security by undercutting the security dilemma. In the resulting détente, “capabilities” are to be balanced so as to bring about an entente eventually. The model therefore is security through peace, with peace preceding security. In this, peace is brought about through manipulating perceptions of “intentions” to reduce “threat perceptions”. Détente brought about sets the stage for eventual forces balancing addressing “capabilities”. Entente then becomes possible. Constructing such an alternative requires a road map identifying the path and entry points into the “power maximisation-security dilemma” cycle dealt with next. Towards Detente The doctrinal dialectic has this trajectory: “in order to keep the LIC [low intensity conflict] within sub-tolerance threshold, India requires a viable conventional capability; in order to redress the conventional imbalance, Pakistan deems it requires a nuclear deterrent; in order to prevent operational employment of the Pakistani nuclear capability, India posits “unacceptable damage”.24 Since the two states are operating in the realist paradigm, power balancing can be taken as the key feature. Undercutting the need for this balance of power game could lead to its discontinuance or détente. Tackling Pakistan on this score would require addressing three issues. One is that it is a praetorian state. Therefore military vested interests have to be taken into account. The second factor is the stark power imbalance with India. The third is the problem of identity. India has attempted to assuage all three.25 With respect to army rule, it is in favour of deepening of democracy in Pakistan. With respect to the power imbalance, it has tried confidence building measures. To put Pakistan at ease in terms of its identity, even India's right wing leaders such as Atal Bihari Vajpayee and L.K. Advani—incidentally at great personal cost respectively—have reaffirmed that India has no expansionist designs. But the problem remains, indicating that more needs to be done or that some aspect has not been tried out.
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The contention here is that Pakistan Army is central to the country's power structure.26 It takes power imbalance seriously since the army traditionally and universally favours the realist paradigm. In so far as the identity aspect is concerned, the Islamic factor and Kashmir are only for generating power through internal balancing in terms of national cohesion and coherence. Therefore the two issues of consequence that emerge are the army's salience in Pakistani polity and the power imbalance. India can do little with respect to the former. However, it can address the latter to a considerable extent through manipulating Pakistani perceptions of Indian “intentions” that contribute to its heightened “threat perception”. This would require India to retract the offensive bias in its strategic doctrine at the conventional level. Consequent to a reduced threat perception, Pakistan could draw down its proxy war since, in the logic subscribed to here, the same owes not to ascriptive reasons but is the manifestation of Pakistan's attempt at strategic balancing. That Pakistan has done so in some measure already, evident by better security indicators in Kashmir for over half a decade now, implies that the time is ripe for India to speed Pakistan along by incentivising it by in turn drawing back on the conventional plane. This would imply détente. The potentiality for the future that détente opens up, particularly entente, are many and therefore need to be worked towards. The First Steps The road map requires cessation of Pakistan support for proxy war in return for Indian draw-down of the offensive bias in its strategic doctrine at the conventional level. This simultaneity requires both the militaries to be on board and persuaded by the logic as a first step. Additionally, implementation would require a sense of ownership of the process. Therefore the first step is not towards engaging Pakistan as much as it is to bring the security establishment on board. The security establishment in question is constituted by security agencies, the wider strategic community and increasingly an expanding domestic defence technology and industrial base comprising a nascent and powerful military-industrial complex. Two problems would require to be overcome. One is that of the mindset of these institutions qua institutions and second is of institutional interest. Arriving at a theoretical understanding of the nature of the challenge is in order. Universally, the mind-set of security establishments is informed by the realist logic.27 Realism lends itself as an operational philosophy to institutions dealing with the provisioning of security to state and society. The perspective adopted influences perception of the security problem. These institutions then legitimately pursue “more of everything” in order to cope with a “threat” defined expansively. Thus the compatibility of realism with the institutional interests of security imparting agencies can be seen. In effect, “rationality” is rendered elusive, for its definition is liable to bias ab-initio. Paradigm dominance forecloses other equally legitimate and compelling approaches to security. On its Indian avatar, there is a view that the ascendance of realist thought since the days of the Indira Gandhi's doctrine of Indian regional pre-eminence,28 owes to the notion of achieving militarily what economy and diplomacy have failed to secure.29 Collectively, institutions charged with the security function are to cohere to beget security. Individually, they are statutorily mandated to deliver in specified areas.
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Deepening legitimacy, societal regard, role commitment and internal regulation lead to institutionalisation. Institutions, naturally, have societal obligations in terms of delivering on their segment of responsibility of the state's social contract. They develop “needs” in order to fulfil their mandate. They acquire related expertise and prefer autonomy in defining the manner of discharge of their function. They stake a claim on the resources deemed necessary. Each develops a tradition, work culture and ethos that enable positive identification by its members and approbation of society. In effect institutions have institutional interests that require subsuming within and superseding by the national interest. This is a major task requiring to be approached politically since institutions are subordinate to the political in democracy. In light of decline in political institutions and leadership the difficulty is accentuated. Militarily it makes much more sense to undertake détente with Pakistan. India's military is stretched by deployments in Siachen, the “Siachenisation” of Kargil and the human resource intensive counter terror grid across Jammu and Kashmir. It also requires keeping its conventional edge honed through acquisitions and exercise of its retributive capacity so as to deter Pakistan. The challenge posed by China, possible degradation in left wing extremism in central India and continuing insurgency in the north-east are additional concerns. While each of these is being engaged with characteristic competence by the military, collectively the burden could do with some mitigation. There is rethinking in military circles too on this score. Nuclearisation has been a major impetus in generating a limited war doctrine. This implies that necessity of three strike corps, collectively constituting an existential threat to Pakistan, can be realigned. The surplus human resources released can be absorbed in the raisings of offensive formations for the China front. The military would also like to be at the frontier of the revolution in military affairs. Presently its operational commitments compel its continuing as a mass army configured for wars of the previous century. Détente could enable the process of change. At a minimum, the idea mooted here could flesh out alternatives. Since the future is unpredictable, thinking through the manner it can be managed to deliver peace as attempted here is worth undertaking so as to have a blueprint on hand in case overtaken by events. In any case the discussion can add grist to the peace process that is wanting in both energy and ideas, thereby making it vulnerable to hard line lobbyists in both states. Maximally the exercise could result in a return to viewing the subcontinent as a single strategic space. Presently, privileging nation-states and national security obscures the linkages of geography, history and culture that make for an underlying unity in South Asia. Even the doyen of realist strategists, K. Subrahmanyam, observes that South Asia constitutes a single civilisation. The portents of a regional system are already in place through the mechanism of SAARC. These could be better worked if the antagonism that holds up progress in this direction were to be removed. To placate realists, it can be said that a united South Asia would be a better foil for an expansionist China. It would deny China the liberty of playing the states in South Asia against one another. Finally, it would enable a focus on the developmental agenda that is otherwise constantly imposed upon by the demands of “high politics”.
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And Beyond There is reason, therefore, for India to think imaginatively while engaging Pakistan. The definition of “normalcy” in which absence of crisis is seen as “normal” requires change. The manner of doing so is to get a strategic dialogue in place with Pakistan in which prospects of balancing doctrines can be mooted, matched and progressed. The mechanism can also be used to mitigate crisis as and when they occur. Presently India has a dialogue process only with partners such as the US. It is even more necessary to have the same with potential adversaries. The extent to which India engages with China and Pakistan is limited. The aim appears to be to ward off pressures brought about by India's ascent to nuclear power status. The novel idea here could constitute the substance that it is presently lacking. The ideal is to have a security system that is transparent, consultative, with distinct lines of authority and accountability, and answerable to the Parliament. Since reality can only approximate the ideal, structural design and normative culture should be such as to minimise this gap. Effectiveness, efficiency, optimisation, coherence and consistency must be in conformity with principles of democratic debate, its system of checks and balances, and societal values. More importantly, the debate about the strategic posture of the state must be reflected in mainstream debate and not be confined narrowly to strategic cognoscenti. The attempt here has been to challenge verities of the debate and bring it to the attention of a wider circle. To bring about change in light of the current impasse that portends nuclear dangers there is a need to move towards challenging the realist-inspired security mindset. Offensive strategic doctrines are practiced by both states with Pakistan being culpable at the sub-conventional level and India at the conventional level. A retraction by both simultaneously would be equitable and on that account acceptable. To bring this about a strategic dialogue aiming at détente needs to be instituted between India and Pakistan. The possibilities that would then open up, including entente, have the potential to transform the strategic and economic complexion of South Asia. Ali Ahmed is a research scholar in International Politics at the School of International Studies, Jawaharlal Nehru University, New Delhi. Endnotes 1. The realist tradition has been built by thinkers such as Chanakya, Thucydides, Tsun Tsu, and Machiavelli. Modern realism is attributed to EH Carr. Hans Morgenthau elaborated the theory in his book, Politics Among Nations. Kenneth Waltz has developed a structural theory, Neo-realism, in his landmark text Theory of International Politics. See Mr. Subrahmanyam's Indian exegesis of this philosophy in his Cariappa Lecture, Strategic Analysis, Dec 2000. For a critique of realism in the Indian setting, see Vanaik, A., "India in a Changing World, Tracts for the Times," his paper for the Delhi Policy Group Seminar edited by Lt Gen. Raghavan National Security Management; and Vanaik, "India's Place in the World," in P. Chatterjee ed. Wages of Freedom, pp. 62–85. 2. See section on "Imbalance of Power" in R. Rajagopalan, "Neorealist Theory and Indo-Pak Conflict," in K. Bajpai and S. Malavarupu, International Relations in India: Theorising the region and nation (New Delhi: Orient Blackswan, 2005I.
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2 July 2008). 24. A. Ahmed, "Doctrinal Challenge", USI Journal, Jan 2000. 25. For a survey of Indian policy, see â&#x20AC;&#x153;The Challenges Ahead for India's Foreign Policyâ&#x20AC;? -Speech by Foreign Secretary, Shri Shivshankar Menon at the Observer Research Foundation, New Delhi (http://www.carnegieendowment.org/ newsletters/ SAP/pdf/april07/challenges_india.pdf). Accessed 30 April 2009. 26. See S. Cohen, The Pakistan Army (Berkeley: University of California Press, 1998); A. Siddiqua, Military Inc: Inside Pakistan's Military Economy, 2007; and S. Pasha, Crossed Swords: Pakistan, its Army and the Wars Within (Oxford: OUP, 2008) on centrality of Pakistani Army in Pakistani polity and economy. 27. Samuel P. Huntington, The Soldier and the State: The Theory and Politics of Civil-Military Relations (Harvard: Harvard University Press, 1957). 28. C. Raja Mohan, "Beyond India's Monroe Doctrine," The Hindu, January 2, 2003. 29. G. Navlakha, "Insecure Foundations of Security," EPW, Oct 3,1998, p. 2571.
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Global Financial Turmoil and India Dr Abhijit Sen Gupta Introduction The ongoing global financial crisis, that originated in the advanced world has severely dented growth prospects in South Asia, despite the limited exposure of South Asian financial institutions to the toxic debt instruments tied to the subprime mortgages in the United States. According to the latest World Economic Outlook, published by the International Monetary Fund (IMF), gross domestic product (GDP) growth rate in South Asian economies in 2009 is estimated to be significantly lower compared to average growth during 2003–2007. As indicated in Figure 1, while the Maldivian economy is estimated to shrink by 1.3 percent in 2009, the larger economies of India (5.4 percent), Pakistan (2.5 percent), Sri Lanka (2.2 percent) and Bangladesh (5.0 percent) are estimated to slow down considerably from the high growth rates of 2003–2007. This is in complete contrast to the “decoupling theory” that was initially postulated when the crisis was unfolding in the United States in 2007. It was argued that the Asian economies, especially the emerging ones like India and China, with their high investment rates and robust domestic demand no longer depended on United States for their growth, and would remain insulated from a severe slowdown in the US. Figure 1: GDP Growth Rates in South Asia
Source: World Economic Outlook, International Monetary Fund
The global financial crisis was transmitted to the South Asian economies at a time when these economies were already struggling with the adverse effects of a severe terms of trade shock imparted by the sharp rise in global food and oil prices. This was reflected in worsening of macroeconomic balances and strong inflationary pressures. Ahmed (2008) shows that on a net basis, South Asia suffered the most loss of income as a percent of GDP among all developing regions. Although South Asia's reliance on food articles is relatively low, an overwhelming part of petroleum need is met by imports. The
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terms of trade losses among the South Asian countries during 2003–2008 ranged from 34 percent of Maldives' GDP in 2002 to around 8 percent of GDP in the case of Bangladesh. The commodity price shock also led to worsening of both current account and fiscal balance, and surging inflation in these countries. With the transmission of the financial crisis, the South Asian countries were simultaneously faced with a collapse in commodity prices, slump in global demand, severe liquidity crunch and a sharp increase in risk aversion. Countries like Bangladesh, Bhutan and Nepal were relatively insulated from the direct impact of the financial crisis as the financial sector in these countries were not strongly linked with the developed world. However, these countries were affected by the indirect effects as developed countries experienced a downturn in growth. In these countries export earnings, remittance flows and foreign financing for infrastructure constitute an important part of the economy, and these are likely to take a hit in the event of a prolonged downturn in the advanced economies. In contrast, Pakistan, Sri Lanka and Maldives were particularly vulnerable since the existing socio-political environment prevented these countries from adjusting fully to the terms of trade shock. Moreover, some of these countries were heavily reliant on foreign funding, which sharply contracted with the onset of the crisis in the developed world. India on the Eve of the Crisis As the global financial crisis was unfolding in the developed countries in 2007, India was in the midst of a strong growth period. It had already enjoyed 4 years of high growth rate, with the annual growth averaging 8.8 percent between 2003–2004 and 2006–2007, compared to 4.7 percent during 2000–2001 to 2002–2003. The high growth continued in 2007–2008 largely pushed by impressive performance by agriculture and the services sector, even as manufacturing witnessed some decline in growth rate. This sharp increase in GDP growth during 2003–2004 to 2007–2008 was associated with a surge in investment. Compared to 4.5 percent during 2000–2001 to 2003–2003, investment growth rate jumped to over 16.4 percent during the high growth period. Consequently, as highlighted in Figure 2, investment's contribution to overall GDP growth more than quadrupled from 1.0 percent to 4.4 percent, which helped average annual GDP growth rate to rise by 4 percentage points in the latter period. Investment's share in GDP also increased from 22.8 percent in 2001–2002 to 39.1 percent in 2007–2008. Rakshit (2009) points that the surge in investment was largely driven by private investment which recorded average growth rates of over 20 percent. There was also an uptrend in private consumption during this period, with the growth rate nearly doubling from 3.8 percent to 7.4 percent. The other push to GDP growth came from exports, which grew at 18.5 percent during 2003–2004 to 2006–2007 compared to 15.2 percent 2000–2001 to 2002–2003, thereby raising its contribution to overall GDP growth to 2.6 percent from 1.9 percent. A strong Rupee and weakening global economy led to a dip in the export growth rate in 2007–2008.
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Figure 2: Decomposition of GDP Growth
Source: Central Statistical Organization, Ministry of Statistics and Programme Implementation
However, as a consequence of this sustained strong growth rate, the Indian economy was starting to show some unmistakable signs of overheating. In a survey conducted by NCAER, 99 percent of respondents pointed to operating at or close to full capacity in November 2006, compared to only 75 percent in January 2002. Overall inflation had risen to over 6.5 percent in April 2007, well over Reserve Bank of India (RBI)'s comfort level of 5 percent, and significantly higher than 3.8 percent in April 2006. Domestic credit growth had surged to over 23 percent in March 2007 from 15 percent in March 2006. There was also a sharp rise in asset prices. According to National Housing Bank's Residex, housing prices in most Indian metros were growing at an explosive rate. While housing prices in Delhi doubled between 2004 and 2007, they increased by more than 65 percent in Mumbai and Kolkata. Equity markets were in the middle of a strong rally and the Bombay Stock Exchage (BSE) Sensex had doubled between June 2005 and February 2007. The overheating also manifested itself in the form of increasing infrastructural bottlenecks which constrained growth across various sectors. The aviation sector was plagued by skilled crew scarcity and inadequate airport facilities while the maritime sector suffered from high average ship turnaround time and lack of rail and road connectivity of the ports. Industrial infrastructure was also getting overstretched with rush for special economic zones (SEZs) leading to escalating land prices. Dearth of coal, natural gas and power generating equipment resulted in power shortages, while lack of trained and skilled labour led to wage escalation and adversely affected the information technology sector. The growth was further strangulated as export performance deteriorated considerably in 2007. While the beginning of the economic downturn in the US did adversely impact exports, the bulk of the decline in export growth rate was due to a sharp appreciation of the Rupee. The real effective exchange rate (REER) appreciated by 11 percent between July 2006 and July 2007, while the Rupee appreciated by 15 percent against the US dollar over this period, leading to slowdown of exports. This led to the erosion of the net profit margins of low-import intensity sectors like textiles and leather, whose exporters were at a disadvantageous position in price sensitive global markets. On the other hand,
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high-import intensity sectors like automobiles, petroleum products, gems and jewellery, fared better as appreciation reduced the cost of their imported inputs. A large part of the appreciation pressure was built up due to strong inflow of foreign capital coming onto India to take advantage of a strong currency and declining interest rates in the advanced economies. Such strong capitals flows led to an increase in money supply growth rate as the RBI was unable to completely sterilise these flows due to rising fiscal costs of sterilisation. Thus India was in the midst of a domestic slowdown when the global financial crisis hit the country in the middle of September 2008. What made India more vulnerable at the eve of the crisis was the sharp increase in commodity prices from the second half of 2007. While India is not a big importer of food articles, more than 70 percent of the domestic consumption of crude oil is imported. Consequently, India was hit hard by the global hardening of prices. With transmission of globally high prices to domestic markets, inflation—based on the wholesale price index (WPI)—surged to nearly 13 percent in August 2008. The current account deficit was set to widen to around 4 percent of GDP as a result of high import bills. Moreover, as the government intervened to prevent the transmission of the increase in global prices of commodities like crude oil and fertilizer to the domestic retail markets through off- and on-budget subsidies, the fiscal deficit of the country sharply worsened. In addition, as the sub-prime crisis deepened in the US and spread to other developed countries, there was a “flight to safety” of capital and there was a net outflow of capital from the emerging markets. In India there was a net outflow of FII investment of USD 6.8 billion during January–August 2008 and significant slowdown in External Commercial Borrowings (ECBs). The policymakers responded pro-actively to these series of shocks and undertook a string of actions to moderate their impact and achieve a soft landing with some degree of moderation in both GDP growth and inflation. RBI tightened the monetary policy by raising the key policy rates in an attempt to control inflationary pressures. Retail prices of petroleum products were raised by 15–20 percent to ease the burden on the exchequer. Foreign capital outflow was accommodated by a drawdown of reserves and managed depreciation of the Indian Rupee. Finally, a number of trade measures including reduction in import duties, export taxes and export bans were introduced to counter the impact of imported inflation. As a result of these policy offsets, on the eve of the crisis, most estimates still expected the Indian economy to grow between 7.5 to 8 percent in 2008–2009.1 Transmission of the Crisis to India The current global financial crisis has significantly affected India compared to the Asian financial crisis in 1997. This has happened despite the fact that the current crisis originated in the financial markets of the geographically distant advanced countries whereas the Asian financial crisis had engulfed countries in the near vicinity. The primary reason for the heightened impact is the increased level of India's integration with rest of the world. While share of trade in GDP increased from 23 percent in 1996–1997 to close to 50 percent in 2007–2008 over the same period the ratio of gross capital flows to GDP has more than tripled from 17 percent to 56 percent. Hence the global financial crisis transmitted to India through both current and capital accounts.
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Figure 3: Merchandise Trade Growth and Effective Exchange Rates
Source: Department of Commerce and Reserve Bank of India
On the trade side, the impact came because of the reliance on advanced countries as the primary destination of Indian exports. While in recent years there has been an increase in the share of Asian emerging markets as the destination of Indian exports, the advanced countries continue to corner a major share in merchandise and especially in services exports. Even in 2007–2008, the Organisation for Economic Co-operation and Development (OECD) countries accounted for 37 percent of Indian exports. As a result the sharp economic slowdown in these countries has adversely impacted Indian exports. Overall merchandise exports from October to March 2008–2009 shrunk by 19 percent compared to 2007–2008. Some of the major sectors whose exports contracted in the second half of 2008–2009 included cotton yarn and fabric (22 percent), iron ore (40 percent), non-ferrous metals (52 percent) and primary and semi-finished steel (17 percent). While decline in commodity prices in the second half of 2008–2009 was partly responsible for the shrinkage in exports, the bulk of the decline was due to a slump in demand in developed countries. The services sector was also adversely affected with a number of export intensive sectors being hit hard. While software services exports experienced a gain of less than 1 percent in the second half of 2008–2009 compared to the previous year, business and communication services witnessed declines of 13.8 percent and 28.2 percent. The global downturn was also associated with a strong decline in flow of foreign capital and increased risk averseness. Overall, net capital inflows declined from USD 108 billion in 2007–2008 to less than USD 9.2 billion in 2008–2009. Barring foreign direct investment (FDI) inflows which increased from USD 33.2 billion to USD 35 billion, almost all other types of capital flows witnessed a decline. During the high growth period the Indian corporate sector had become increasingly geared towards ECBs and net inflow of ECBs jumped from USD 2.5 billion in 2005–2006 to USD 22.3 billion in 2007–2008. However, as a result of the global liquidity crunch, these flows reduced to a third at USD 8.2 billion in 2008–2009. In addition, investment by foreign institutional investors (FIIs) sharply declined. While net outflow of FII investment was taking place
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even prior to the crisis, the pace accelerated in the second half of 2008–2009, with a net FII investment outflow of USD 5.9 billion. Short-term trade credit was also adversely impacted and, as opposed to a net inflow of USD 16.9 billion in 2007–2008, there was a net outflow of USD 5.8 billion in 2008–2009. As a result, overall resource flows to the commercial sector from foreign sources have declined by 49 percent in terms of rupees in 2008–2009, despite the Rupee weakening by 13 percent in 2008–2009 compared to the previous year. However, it must be understood that India was not an exception and there was a global decline in the capital flowing to developing countries. According to the Institute for International Finance, private capital flows to emerging Asia declined from USD 296 billion in 2007 to USD 59 billion in 2008 rising to USD 88 billion in 2009. Figure 4: Net Capital Flows (US$ Billion)
Source: Reserve Bank of India Database
Apart from a foreign credit crunch, there was also a domestic liquidity crisis with the inter-bank market freezing up in the aftermath of the collapse of the Lehman Brothers Holdings Incorporation. The inter-bank call money rates spiked up to nearly 20 percent, as there was tremendous uncertainty about the exposure of the various Indian banks to the toxic assets in the US. As banks became increasingly risk-averse, lending to some of the crisis-affected sectors including real estate and small and medium enterprises sharply deteriorated. Overall non-food credit growth rate declined from a peak of around 30 percent in October 2008 to less than 15.8 percent in June 2009 despite the central bank lowering policy rates, relaxing provisioning norms, and reducing risk weights on exposures. Although a part of the decline in the credit growth is attributable to the slowdown in demand due to weak economic conditions, the bulk of the slowdown is a result of heightened risk averseness. With the transmission of the crisis, the real economy was deeply affected. The overall GDP growth rate dropped from 7.8 percent in the first half of 2008–2009 to 5.8 percent in the second half. As is evident from Table 1, there was a sharp deceleration in growth rate of manufacturing, which shrunk by 0.3 percent in the second half of 2008–2009. The index of industrial production (IIP) shows that some of the worst affected sectors include cotton textiles, jute fibre, wood products, leather products, metal and metal products. In terms of use-based classification, intermediate goods were the worst
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affected, experiencing a contraction of 5.5 percent in the second half of 2008–2009. The reduction in investment growth rate led to contracting purchases of capital goods. Both production and import of capital goods have shrunk considerably in the second half of 2008–2009. Construction activity also experienced a dramatic slowdown as the real estate sector was affected by the liquidity crunch. Among the services sector trade, hotels, transport and communication's growth rate more than halved in the second half of 2008–2009. The doubling of community, personal and social services' growth rate is largely due to measures taken by the government to stimulate aggregate demand including pay revision of government employees, increased plan expenditure and other fiscal stimuli measures. Given that some of the manufacturing and services sector that witnessed a slowdown in growth were highly labour intensive, there has been an adverse impact on employment. While accurate data on employment comes after a considerable delay/lag, there have been several surveys that have indicated that the ongoing crisis has significantly affected employment. A Ministry of Labour and Employment survey indicated that over 0.5 million jobs were lost between October and December 2008 as a result of economic slowdown. Most of these job losses were in export oriented sectors such as gems and jewellery, automobiles and textiles. Subsequent surveys by the labour ministry in January–March and April–June 2009 indicate a continuing declining trend in employment with the bulk of the job losses being confined to export oriented sectors. According to these surveys, around 167,000 workers are estimated to have lost their jobs in the export sectors during April–June 2009. A number of industry associations have also indicated job losses in their industries. In December 2008, the Federation of Indian Micro, Small and Medium Enterprises (FIMSME) indicated that nearly 4000 ancillary units were on the brink of a shutdown, which would affect the livelihoods of 200,000 people. The Auto Components Manufacturers Association (ACMA) has also reported job losses of around 70,000 between September and December 2008, with most of the burden falling on casual workers. With the economic slowdown hitting the engineering industry, about 50,000 workers are estimated to have been laid off in Coimbatore (Tamil Nadu) alone. Similarly, about 200,000 workers are estimated to have lost their jobs in the diamond sector in Surat (Gujarat). Another area which was adversely impacted is infrastructure financing. The 11th Five Year Plan had set out an ambitious target of increasing infrastructure investment to USD 500 billion during 2007–2012, thereby raising its share to 8 percent of GDP. A large share of this (about 30 percent) was to come from the private sector. However, the current economic slowdown, along with lack of funds and rising cost of debt, has made it difficult to achieve this target. A number of infrastructure projects in the areas of electricity distribution, ports and shipping, telecommunication services etc. have slowed down or shelved due to inadequate funds.
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Table 1: Sectoral Decomposition of India’s GDP Growth Rate
Agriculture, Forestry & Fishing Mining & Quarrying Manufacturing Electricity, Gas and Water Supply Construction Trade Hotels, Transport & Comm. Financing, Insurance, Real Estate etc. Community and Social Services GDP
Growth Rate Apr–Sep Oct–Mar 2008–09 2008–09 2.9% 0.7% 4.2% 3.2% 5.3% -0.3% 3.3% 3.5% 9.0% 5.5% 12.5% 6.1% 6.6% 8.9% 8.6% 17.1% 7.8% 5.8%
Share in GDP Apr–Sep Oct–Mar 2008–09 2008–09 15.2% 18.5% 1.9% 2.0% 15.5% 13.9% 2.1% 1.9% 7.6% 7.0% 29.0% 28.2% 15.1% 14.5% 13.6% 14.2% 100.0% 100.0%
Contribution to GDP Growth Apr–Sep Oct–Mar 2008–09 2008–09 0.4% 0.1% 0.1% 0.1% 0.8% 0.0% 0.1% 0.1% 0.7% 0.4% 3.5% 1.7% 1.0% 1.2% 1.2% 2.4% 7.8% 5.8%
Source: Central Statistical Organization, Ministry of Statistics and Programme Implementation
The Indian Policy Response Indian policymakers responded proactively as the global financial crisis transmitted from developed countries to Indian shores. The direct impact of the financial meltdown on the overall Indian financial sector was limited due to its low exposure to the toxic assets. While there were some concerns about the exposures of the some of the Indian banks, these concerns were allayed citing the strong capital-to-risk weighted assets ratio (CRAR), which enabled these banks to absorb the losses, and policymakers commiting to stand by these banks. This helped to prevent a run on these banks. In the insurance sector, the American Insurance Group (AIG) has two joint ventures in India with a minority holding of 26 percent. After the bankruptcy of AIG, Insurance Regulatory and Development Authority (IRDA) came out to confirm that solvency margins of these corporations were adequate. As the call money rates spiked due to the reversal of capital flows and the freezing of the inter-bank rates, the RBI injected liquidity in a number of ways. The cash reserve ratio was lowered from nine percent to five percent by January 2009. The RBI also unwound the market stabilisation scheme (MSS) bonds, which were earlier used to suck out excess liquidity arising from foreign capital flows. Other measures initiated by the RBI include reduction in statutory liquidity ratio (SLR), opening of new refinance windows, refinance to SIDBI and EXIM Banks, and lowering of prudential norms in relating to provisioning and risk weights. Mohan (2009) estimates the actual/potential injection of liquidity as a result of these measures to be Rs 4,900 billion or 9.2 percent of GDP. To alleviate the deceleration in credit growth rate the RBI sharply cut back the various policy rates. However, despite the reduction in the repo rate from 9 percent to 4.75 percent and reverse repo rate from 6 percent to 3.25 percent, there has not been a proportionate reduction in retail lending rates owing to an increased risk aversion on the part of the various banks. The prime lending rate of the public sector banks continues to be in the range of 12.75 percent to 13.25 percent and has declined by only around 150 basis points. Apart from the above policy measures, a series of steps were taken to offset the downward pressure on the Indian Rupee stemming from a sudden stop in capital flows. The Rupee was allowed to depreciate in a controlled manner thereby ensuring that there was not a speculative run on the currency, which would have led to disastrous
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consequences for external debt and balance of payments. In addition, to stem the outflow of capital, interest rates on non-resident Indian (NRI) deposits were raised in a series of steps by 100 to 175 basis points. The cap on foreign investment in corporate bonds was raised from USD 3 billion to USD 15 billion while norms for FII and ECB were relaxed to enhance their flows. Table 2: Quantum of Monetary Stimulus Key Measures/Facilities Monetary Policy Operations
Amount (Rs. Crores)
Share in GDP (%)
1. Cash Reserve Ratio (CRR) Reduction
160000
3.01%
2. Open Market Operations
68835
3. MSS Unwinding/De-sequestering
97781
1.29% 1.84%
Extension of Liquidity Facilities 1. Term Repo Facility
60000
2. Increase in Export Credit Refinance
25512
3. Special Refinance Facility for SCBs (Non-RRB)
38500
4. Refinance Facility for SIDBI/NHB/EXIM Bank
16000
5. Liquidity Facility for NBFCs through SPV
25000
Total
491628
Statutory Liquidity Ratio (SLR) Reduction
40000
1.13% 0.48% 0.72% 0.30% 0.47% 9.24% 0.75%
Source: Mohan (2008)
Globally, fiscal stimulus has been the preferred way to compensate for decline in exports, investment and consumption demand. Fortuitously, prior to the transmission of the current financial crisis, a number of discretionary measures were initiated in India to bolster the aggregate demand. These included a large waiver of farm loans, implementation of the Sixth Pay Commission recommendations raising the salary of government employees and widening the coverage of the National Rural Employment Guarantee Act (NREGA), which guarantees adult members of any rural household 100 days of employment at the statutory minimum wage rate. In addition, the government provided large food and fertilizer subsidies to prevent the complete pass through of high international commodity prices. With the transmission of the crisis into India and a slowdown in the Indian economy, the government initiated a series of fiscal stimulus to bolster aggregate demand. These stimuli packages aimed to encourage additional spending, through cuts in various indirect tax rates (central value added tax [cenvat], service tax and excise duty), additional plan spending and creation of separate instruments to facilitate lending to some of the most affected sectors (exports, infrastructure and NBFCs). These fiscal incentives, if fully utilised, are likely to amount to over Rs. 1,850 billion or around 3.6 percent of GDP.
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Table 3: Quantum of Fiscal Stimulus Key Measures/Facilities
Amount (Rs. Crores)
Share in GDP (%)
Pre Crisis Stimulus 1. Fertilizer Subsidy 2. Sixth Pay Commission 3. NREGA 4. Farm Debt Waiver 5. Food Subsidy
44900 25430 10500 15000 10600
0.83% 0.47% 0.19% 0.27% 0.19%
Fiscal Stimulus I (December 2008) 1. Additional Plan Spending 2. 4% reduction in CENVAT 3. Export incentives etc.
20000 10000 1450
0.37% 0.18% 0.03%
Fiscal Stimulus II (January 2009) 1. Additional market borrowing for states
30000
0.57%
Fiscal Stimulus III (February 2009) 1. Service tax reduction 2. Excise duty reduction 3. Customs duty reduction Total
14000 8500 6600 186380
0.25% 0.15% 0.11% 3.60%
Source: Ministry of Finance
As the fiscal and monetary stimuli started working through the economy, there are some indications of growth revival. The industrial sector has grown at an average of 3.9 percent in the first quarter of 2008–2009 after experiencing a growth of 0.5 percent in the second half of 2008–2009. The growth in the core infrastructure sectors, comprising coal, steel, cement, electricity, crude oil and petroleum refinery, during April–June 2009 increased to 4.8 percent compared to 3.5 percent the previous year. The RBI's Industrial Outlook Survey also suggests a turnaround in business sentiment. While the business assessment indices for April–May 2009 improved by 20.3 percent over the previous quarter, business expectation indices for July–September 2009 improved by 14 percent. On the credit side, incremental non-food credit absorbed by industry increased to 47.4 percent compared with 43.2 percent a year ago. On the external front, there has been a revival of FII flows with net FII inflow of USD 9.7 billion during April–August 2009. This revival of FII flows, along with favourable corporate results, contributed to the rally of the BSE Sensex, which gained nearly 8000 points between March and August 2009. However, a deficient monsoon is likely to pull back GDP growth rate. Although the share of agriculture in GDP is less than 20 percent, a low agricultural growth is likely to adversely affect the overall GDP growth through demand linkages with services and industry. Policy Challenges While the above mentioned policy measures did offset the decline in growth rate to a certain extent, they have raised several policy challenges for the medium term. With global economy likely to be in a downturn for the next few years, domestic demand will have to drive the overall growth in India. The ongoing response to the global financial turmoil has considerably limited the policy space to stimulate further growth in the face of a prolonged domestic slowdown. First, the pre- and post-crisis fiscal measures have significantly worsened the fiscal deficit in 2008–2009 with the consolidated deficit being close to 11 percent (including
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the off-budget liabilities), more than double its level in 2007–2008. What is more worrisome is that the fiscal deficit is likely to be high in 2009–2010 despite global commodity prices being subdued. Higher budgeted revenue expenditure in 2009–2010 compared to 2008–2009 and possibility of additional plan expenditure to boost aggregate demand is set to increase the fiscal deficit from 6.2 percent of GDP to 6.8 percent. With a limited fiscal space constraining additional spending to boost growth, policymakers will have to resort to improved quality of spending and prevention of leakages. Moreover, policymakers face the dilemma about the type of spending they will focus on. Whereas short-term, consumption-focused measures boost aggregate demand, investment spending removes some of the supply side bottlenecks that constrained growth before which is likely to enhance growth rates going forward. Second, the large fiscal deficit has resulted in a sharp spike in borrowings with the total borrowings for 2009–2010 marked at Rs. 4500 billion. The government's revised issuance calendar for the first half of 2009–2010 pegs the gross market borrowing at Rs. 2,900 billion. Part of the additional borrowing is to be met by open market operations (OMOs), which are slated to be around Rs. 800 billion. Thus the RBI has to strike a balance between government borrowing and ensuring that this heavy public borrowing does not crowd out private investment. Moreover, the sudden expansion of the government borrowing is likely to impede the monetary transmission. The monetary easing undertaken by the RBI was aimed at encouraging banks to lower the retail rates. However, the sharp spike in government borrowing has led to firming up of interest rates, militating against the low interest rate regime and stifling the credit to the private sector. Third, the OMOs are just another way of monetising the fiscal deficit. While unlike in the past, the OMOs do not involve recourse to ad-hoc treasury bills, this is just a technical difference. In the past the government used to directly borrow from the RBI via the primary market, while now the RBI will be buying government securities in the secondary market. Thus both cases involve printing money and a rise in the net RBI credit to the government which is likely to increase inflation expectations. Fourth, once capital flows return to India—and there are already signs of revival of capital flows—India will have to find a way of managing these flows. India, like many other emerging markets have been grappling the various alternatives of the “impossible trinity”.2 Capital flows create a pressure on the currency to appreciate, something the central bank is keen to avoid given the loss of competitiveness of the exporters. Consequently it intervenes in the foreign exchange market to accumulate reserves. However, unsterilised intervention runs the risk of increasing the money supply and fuelling inflationary pressure. On the other hand sterilised intervention has an associated fiscal cost as the government bonds issued to keep the money supply in check tend to have a higher yield than the return earned on the foreign assets. Fifth, a deficient monsoon will have a sharp negative impact on agricultural growth rate. While the share of agriculture in GDP has come down over the years to 17 percent, a 6 percentage point decline in agricultural growth rate will still dent India's overall GDP growth rate by 1 percentage point. Moreover, nearly 65 percent of the population still
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depends on agriculture for a livelihood so there will be strong demand side impacts which will affect industry and services with a lag. As the government comes out with a host of measures to mitigate the impact including the increase in calamity funding, interest waiver, rescheduling of loans, the fiscal space will get further constrained. In addition a poor harvest will generate greater demand for work under NREGA which will also exacerbate the fiscal pressure. Finally, the government might have to subsidise import or reduce import duties if there is a shortfall of agricultural produce. Fortunately the large stock of food grains and buoyant foreign exchange reserves in case there is a need to import should mute the impact of a truant monsoon. Conclusion Looking back at the events of the last year one is tempted to conclude that the global financial crisis impacted India much more than originally anticipated and the quantum of the drop in growth rate in 2008–2009 was largely unanticipated. However, it would be incorrect to ascertain that the entire decline in growth rate from an average of over 8.8 percent during 2003–2004 to 2007–2008 to 6.7 percent in 2008–2009 was due to the financial crisis. Several other factors that predated the crisis contributed to the slowdown. These included a domestic downturn in growth rate as the economy started showing signs of overheating and significantly large negative terms of trade shock, immediately before the transmission of the global financial crisis. India was impacted by the current crisis much more severely than some of the past crises due to increased trade and financial integration. Weakening of export markets, reversal of capital flows and increased risk averseness significantly dented India's growth prospects, While offsetting policy measures were quickly implemented which mitigated the impact of the global financial turmoil, the incremental policy space has significantly shrunk. Fiscal room has been considerably reduced due to a burgeoning fiscal deficit. With limited scope of expenditure increase, greater emphasis will have to be placed on improving the quality of expenditure and preventing leakages. Increased government borrowing is also leading to hardening of yields thereby reducing the effectiveness of monetary policy. The recent halt in the reduction in interest rates by the RBI is an indication of the central bank being amenable to reversing the expansionary policy stance it had undertaken since the transmission of crisis. Indeed, with the massive quantum of liquidity injection and inflation risks stemming from low base effect, there are expectations about a reversal of monetary policy in the last quarter of the current financial year. As India rides out this crisis with a significant dent in its growth rate, a number of short and medium term strategies will have to be evolved to ensure the sustainability of the growth momentum it had enjoyed during 2003–2004 to 2007–2008. The short term strategies will have to focus on alleviating the impact of the crisis on some of hard hit sectors and ensure additional generation of domestic aggregate demand to replace the dwindling foreign demand. In contrast, the medium term strategies need to emphasise on the creation of additional fiscal space, improving the transmission of the monetary policy as well as creating adequate physical infrastructure so as to be able to sustain a high growth regime once global conditions become more benign.
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Dr Abhijit Sen Gupta is associate professor at Centre for International Trade and Development School of International Studies, Jawaharlal Nehru University, New Delhi. Endnotes
1.
2.
While the Prime Minister's Economic Advisory Council estimated a growth rate of 7.7 percent in mid-2008, RBI in its August 2008 Bulletin estimated the economy to grow at 8 percent. The impossible trinity implies that a country can simultaneously achieve any two of the following three objectives: maintaining stable exchange rates, maintaining an independent monetary policy and allowing capital movements.
Bibliography Ahmed Sadiq (2008), “Global Food Price Inflation: Implications for South Asia, Policy, Reactions and Future Challenges”, World Bank Policy Research Working Paper No. 4796 Mohan, Rakesh (2009), “Global Financial Crisis: Causes, Impact, Policy Responses and Lessons”, Speech Delivered at London Business School on 23 April 2009. Rakshit, Mihir (2009), “India Amidst the Global Crisis”, Economic and Political Weekly, Vol. 44 No. 13 pp 94–106.
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Genesis of Military Intervention in Bangladesh Dr Sayeed Iftekhar Ahmed
B
angladesh experienced repeated military juntas before its final, bloodless military coup in 1981, orchestrated by General H. M. Ershad. After nine long years of military rule, he was overthrown by a mass uprising in December 1990, and the state returned to a parliamentary form of government. Although the democratic path was not always smooth, the country was ruled by elected representatives from 1990 until 2006. However, unlike any other democratic system, all elections in Bangladesh have been conducted by a caretaker government. Distrust among the political parties regarding free and fair elections prompted them in 1991 to introduce the concept of the caretaker government into the constitution. This government's sole responsibility, led by a chief advisor, is to conduct free and fair elections within three months after its inauguration. When Fakhruddin Ahmed was sworn in as the chief adviser of the caretaker government on 12 January 2007, the nation was expecting that like his predecessors, and according to his constitutional obligatons, he would organise parliamentary elections within the prescribed 90-day period. But the nation was surprised when, instead of conducting a general election, the Fakhruddin government1 banned all types of political activities and also tightened its grip on both the electronic and print media, although officially they were still free and independent. The caretaker government thus started its so-called anti-corruption drive to free the country from the “curse” of corruption, putting more than a hundred politicians and businesspersons in prison on charges of corruption.2 Moreover, the Fakhruddin government tried to banish the current prime minister, Sheikh Hasina, and the former prime minister, Khaleda Zia, from all political activities; these politicians were the heads of the current ruling and opposition political parties, Bangladesh Awami League (AL) and Bangladesh Nationalist Party (BNP) respectively. This attempt to banish both leaders from politics was known in the media as the “minus2” strategy. To implement this plan, the Fakhruddin government tried to send them outside the country, similar to what Pakistan's military ruler General (Retd.) Pervez Musharraf did with two former prime ministers of his country, Benazir Bhutto and Nawaz Sharif. However, unlike their counterparts in Pakistan, both these leaders refused to leave. Although Sheikh Hasina went abroad right after the caretaker government took office, she immediately returned home and defied the government by organising rallies. This motivated the Fakhruddin administration to put these two leaders in prison and bring corruption charges against them.3 Except for a brief episode of one-party rule in the mid 1970s, the nation had not experienced authoritarian rule under any civilian government4 and was thus taken by
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surprise when the caretaker government (which had no political base) began repressing the political parties. Like the previous military rulers of the country, the military chief General Moeen U. Ahmed openly supported this government and stated that the armed forces would implement all the decisions taken by the government.5 To justify its actions, the government proclaimed that it was preparing a “level playing field” for all parties to encourage free and fair elections. As a result of the military chief's open support for the Fakhruddin government, his frequent statements regarding various issues, and the direct involvement of the military in the country's day-to-day affairs—such as the anticorruption drive and the need to restore law and order—the national and international press termed this a military-backed caretaker government. This constitutes a unique case of military intervention, however, because instead of direct involvement, the military junta took power while hiding behind the mask of a civilian “caretaker government.” To preserve their interests, the military-backed caretaker government used the anticorruption drive to depoliticise both state and civil society. Hence, the question arises: why did Bangladesh again retreat from its parliamentary form of government and fall back into the hands of the military elites, although this time indirectly? A case can be made that it was the failure of the elites to develop a unified discourse of nationalism that created an opening for the military bureaucrats to interfere in the post “internal” colonial state of Bangladesh. After the country's independence in 1971, the elites6 failed to remake the nation by incorporating all its fragments7 into a “nation-building”8 project that developed a parallel, dual contested nationalism in both the elite and subaltern domains—a unique phenomenon in South Asian history. The elites were unable to develop a unified discourse of nationalism based on shared identity and national imagery. Instead, following the colonial module, the elites of the country reconstructed two parallel nations into the political discourse on the basis of two camps of nationalism: one is the Western form of secular nationalism known as Bengali nationalism, and the other is a hybrid form known as Bangladeshi nationalism.9 The major difference is that the former is based on secularism and language, and the latter on territory and Islam.10 Using the relative autonomy of the state theory, a historical view shows how the inability of the elites to speak for the nation has created parallel, contested identities that have fractured the entire nation on the issue of identity, nation and nationalism, opening up a space for the military, a relatively homogenous group, to repeatedly intervene in the state structures of Bangladesh. Relative Autonomy of the State The relative autonomy of the state raises the question, “relative to what?”11 The state is autonomous from various classes and groups and hence, not solely controlled by a single class or group; although it might favour one (usually the capitalist class) over others, depending on the group's political power in the state.12 After World War II, neo-Marxists raised the debate on the nature of the state, especially in advanced capitalism—whether the “modern” state merely acts as an “executive committee” of the capitalist class, or whether there is any space for other classes and groups to pursue their own interests.
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Most theorists agreed that it was not possible for a modern state to act solely as an agent of the capitalist class and to only protect their economic and political interests.13 The relative autonomy perspective of the state explains that the state's interactions with multiple classes and groups make it impossible for a single class or group to establish absolute control over state structures. However, in postcolonial states, we have observed a different scenario. Hamza Alavi claims that the state in a postcolonial society is usually “overdeveloped”, while the other classes are not equally developed. Hence, both the military and civil bureaucracies are in more advantageous positions than the other classes when it comes to using state structures because they have more opportunity to exercise political power. Alavi further mentions that postcolonial states have inherited strong institutional structures, which have autonomy from capitalist and other social classes and can act on behalf of themselves. The state structures have become “overdeveloped” since colonial times due to the relative development of civil and military bureaucracy in relation to other classes and groups under the direct auspices of the colonial rulers.14 The danger associated with overdevelopment of the state lies in its instrumental use by bureaucrats, both civil and military, depending on the context. In advanced capitalism, the capitalist and other classes/groups are relatively developed in comparison to their counterparts in postcolonial states, providing a check on state power.15 The growth of trade unions and service sectors as well as collective bargaining rights ensures more space for workers and service holders in industrially developed countries. In contrast, in postcolonial states, as a result of long colonial rule, the capitalist and working classes have not developed to the same extent as their counterparts in industrially developed countries. This provides a space for the civil and military bureaucracies to play a more active role, which places the state at risk of becoming too autonomous and yielding too much power. The relative autonomy theory perceives class as a homogenous entity, and thus ignores the fragments within the class such as women, religious, ethnic, and linguistic minorities, or “lower” castes. The role of a particular class is described solely from its class position, which is seen as the sole driving motivation for any class; according to this school, all members of a particular class are motivated by the same class interest. The relative autonomy theory analyses interactions among classes and is thus not successful in identifying the multiplicity of class interests within the same class; the various fragments within a particular class can certainly have different interests. The problem with this theory is that it focuses mainly on “collective consciousness” when discussing “class consciousness”. Marxists and the dependency schools are unable to recognise the role of “subjectiveconsciousness,” also a motivating factor for members of a particular class. Subjectiveconsciousness could motivate members of a particular class to act differently from the members of a particular class as a whole. As a result, they could act against the interests of any particular class despite belonging to the same class. Various fragments from the same class background could also act differently despite sharing some common class
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interests and could be motivated by different micro collective consciousnesses, which are different from the collective consciousness of the class (as a whole) to which they belong. For example, religious or ethnic minorities or women in a particular class could have different agendas despite sharing some common interests of the class to which they belong. The relative autonomy theory reduces “state power to (solely) class power.”16 Looking through the lens of classic relative-autonomy theory, therefore, it is not possible to comprehend the role of the fragments and their relations to the state. Hence, this study focuses on fragments (in both elite and subaltern domains), instead of classes, and their interactions with the state of Bangladesh, to comprehend how their contested positions on the issues of nation, nationalism, and national identity have created an opening for the military bureaucrats to repeatedly intervene in the postcolonial, overdeveloped state of Bangladesh. This article examines how the progression of making and remaking identity into the political discourse of the nation gave birth to the contested dual nationalism that divided the nation (both the elites and the subalterns) on the issue of national identity and put the military bureaucrats in a position of advantage in relation to other fragments of the nation. Background of the Present Cleavage The subcontinent was divided in 1947, creating Pakistan, on the basis of the religionbased “two nation” theory, which resulted in all the Muslims and all the Hindus who lived in colonial India being imagined as two nations. Modern Bangladesh became the part of Pakistan that was known as East Pakistan. This was the genesis of the contested nationalism that lies at the heart of the two-nation theory. The two-nation theory gained popularity among the majority of the Muslims who lived in (former) East Pakistan, which was known as East Bengal at that time. Muslim elites began to imagine themselves as a nation where Hindus and other small religious minorities were considered as “the others”, the outsiders. The failure to recognise different identities led the majority of the Muslim subalterns to accept this religion-based identity as their own identity, although it originated outside their domain.17 Thus the reconstruction process of secular Bengali nationalism started through deconstructing the cultural domain of the elite. A major flaw in the two-nation theory was that it could not accommodate the society's non-Muslim fragments into its nationalist project in the new state of Pakistan.18 The chief propagator of the two-nation theory in East Bengal was Muslim League (ML). Hindus, other religious minorities, and a small segment of the Muslim community regardless of their class backgrounds refused to accept Islam as a main component of their national identity. Instead, they supported the secular Indian national identity proposed by Indian National Congress and Communist Party of India. They also opposed the break-up of India on the basis of religion. In the final days of colonial India, as a result of this clash of identity, there were severe riots between the followers of the Muslim and non-Muslim identities,19 resulting in a million deaths and the largest “internal” migration in human history. East Bengal was one of the worst affected zones. Finally in 1947, when India was divided on the basis of religion, the majority of the Muslims in East Bengal opted for Pakistan in a referendum conducted by the British colonisers.
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The religion-based nationalist project was contested and challenged in East Pakistan immediately after the creation of the state. Pakistan was a multi-ethnic state; after its creation, the majority of the Bengali Muslim elites found themselves cornered in the state, when compared to West Pakistan-based ethnic groups. As a result, they developed a counter-hegemonic ideology to resist the dominant ideology of the state, which served the interests of the leading ethnic groups. This led to the failure of the Muslim nationalist elites to establish their own hegemony in civil society in East Pakistan, which resulted in what Ranajit Guha has described as “dominance without hegemony.”20 To address the Muslim nationalist identity, which had already transformed into Pakistani identity (without discarding the religious identity) after the creation of Pakistan, the Bengali Muslim and non-Muslim (at that time East Pakistani) elites began to re-imagine only the inhabitants of East Pakistan as a nation in their “cultural domain”, instead of all the inhabitants of the state. In their re-imagining process, they discarded the religion-based Pakistani identity and replaced it with a secular national identity within the rubric of the colonial module of nationalism that was known as Bengali nationalism. Further, they self-identified as the Bengali nation, instead of the Pakistani nation. In this process of reconstruction, the Bengali elites relied on secularism and wanted to unite all the fragments of the nation on the basis of language and secularism. Despite resistance from the Adivasis (native people), they were able to establish their relative hegemony over other fragments and various domains of the subalterns. This re-imagining process was clearly visible in the cultural domain in the practices of the country's syncretistic tradition. A monument was constructed in Dhaka, known as Shaheed Minar (Martyr's Monument), in memory of the people who were killed by the ruling ML provincial government, on 21 February 1952, for protesting the government's decision to impose Urdu as the state language. This monument provided a place where the Bengali population paid homage to the martyrs, regardless of class, ethnicity or religious background.21 People had defied a government ban on constructing the monument, and not only did they construct one, but they also gathered before it to show their respect for the martyrs. This was a clear sign of counter-hegemonic culture, because the propagators of Muslim nationalism perceived this type of practice as contradictory to the teaching of Islam. Further, the provincial ML rulers banned Rabindra Sangeet (a form of music composed by Rabindranath Tagore) as anti-Islamic, but throughout the history of united Pakistan, secular Bengalis defied this ban by organising Rabindra Sangeet programmes on various occasions.22 Therefore, the nation-building process in East Pakistan based on Islamic identity faced severe resistance and a parallel contested secular national identity developed. On the political front, a group of Bengali Muslim elites left the Muslim League in 1948 and formed their own secular political party, the East Pakistan Awami League (AL)—a nationalist party—to carry out their agendas. In East Pakistan, despite the relatively marginalised position of the religion-based identity in civil society in the 1950s and the 1960s, it did not completely fade away in politics and society. Moreover, it enjoyed state patronage; all the national and provincial governments promoted the religion-based
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identity of Pakistani nationalism.23 Throughout the history of united Pakistan, Islambased political parties mainly promoted the religion-based nationalist idea, whereas AL and various leftist parties promoted the idea of secularism. However, the major leftist party, National Awami Party (NAP, Bhasani faction), despite promoting the ideal of socialism, believed that there was no contradiction between the ideals of Islam and socialism. Although they were equally vocal with linguistic-based secular nationalism against the economic exploitation by West Pakistani elites, they did not give up the idea of combining Islam with national identity. After 1971, the followers of this party played a vital role in resurrecting the religion-based identity in independent Bangladesh. It was clear that the elites in Bengal were unable to speak for the whole nation. The elites were divided into two opposite camps: the secularist and the Islamist. Here the term Islamist refers to those who wanted to include the Islamic identity in the normalising process of constructing a nation in postcolonial Pakistan and Bangladesh.24 Both groups were unable to incorporate all of society's fragments into their nation-building process. The aspiration of getting rid of the economic exploitation of the West Pakistani elites as well as reconstructing the nation on the basis of secularism and linguistic nationalism motivated the Bengali elites and the subalterns to organise the war of liberation in 1971 under the leadership of the AL. “Pro-Moscow” leftist political parties joined the war effort to implement the same vision; however their economic plan was different from that of the secular elites. In this liberation war, all the totalitarian Islamic parties supported the Pakistani government and some of them actively collaborated with the Pakistan Army in committing the genocide that claimed the lives of three million people. They firmly believed that in the state of Bangladesh—what the secularists were fighting to gain—it would not be possible to keep the religion-based nationalist identity. The secularists and the totalitarian Islamists were clear about their goal, but the Islamist camps were not. On the one hand, they wanted to get rid of economic exploitation by the West Pakistani elites; on the other, they were worried about whether in independent Bangladesh they would be able to retain their religion-based national identity. As a result, some of them directly participated in the liberation war whereas a good number of them remained passive. Therefore, although Bangladesh gained independence on the basis of secular nationalism, the nation remained divided on the issue of identity and nationalism. The fragmentation of the elites and the subalterns placed the military—which had developed under the auspices of the Pakistani state structure and was deeply influenced by the ideology of incorporating Islam into the nationalist project—in an advantageous position relative to the other fragments of the nation. Their relatively advantageous position motivated them to repeatedly intervene in the post “internal colonial” state structure of Bangladesh. A Fractured Nation and its Military The independence of Bangladesh from the “internal colonial” structure of Pakistan provided an opportunity for the secularists to reconstruct the nation according to their vision of secular nationalism. Awami League became the ruling party in independent Bangladesh under the leadership of Sheikh Mujib, the nation's founder. However, like the Muslim nationalists in East Pakistan, the secularist elites were also not successful in
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establishing their hegemony over civil society. It was ironic that although they struggled throughout the era of united Pakistan against the coercive measures of the religious elites, they also adopted the same measures to implement their ideals of creating a secular Bengali nation. They faced resistance from the fragments of the ethnic minorities and Adivasis; from the beginning of the independent Bangladesh, they refused to accept the other nation's (Bengali nation) identity as their own. Meanwhile the Islamists wanted to incorporate Islam into the nation-building project. They were confused at first—just after independence—regarding how they could accomplish that goal. But then under the leadership of Maulana Bhasani's National Awami Party (NAP), they started to demand that Bangladesh be renamed as Muslim Bengal. Moreover, the poor law and order situation of the newly independent country, rampant corruption and the 1974 famine—which claimed a million lives—made it difficult to implement the Bengali elite's nationalist project. They also faced severe challenges from various underground Maoist guerrilla groups who wanted to establish the Chinese model of socialism. It had been unimaginable to the Bengali elites that they would face such severe challenges from various fragments of the nation in independent Bangladesh. As a result of their failure to establish hegemony and to maintain power, the Bengali elites ended up following the same path of coercion and domination as the religious elites did in united Pakistan. In January 1975, the ruling AL passed a resolution in the Parliament to establish oneparty rule. They banned all political parties and newspapers, except four governmentrun newspapers.25 This was a clear sign that as a result of their failure to establish hegemony, the secularist elites planned to rely on the state apparatus to reconstruct the nation according to their vision of secularism. Further, this move sharpened the division among the elites vis-à-vis the nation, and elevated them from the contesting to the confronting position. The various subaltern groups in the nation simply inscribed the debate in their own domain because of their ideological dependency on the elite domains. However, in the process of implementing the ideal of secular nationalism, the secularists had to rely more on the civil-military bureaucracy. The new state inherited the civil-military bureaucracy of united Pakistan, comprising bureaucrats who had been trained in various academies in Pakistan. Alhough Islam played an important role in their training process, they had a positive attitude towards western democracy. However, a good number of them believed that their own country should bear the identity of Islam despite following western lifestyles. The overall attitude of the Pakistani bureaucrats was positive regarding the role of Islam in national identity and politics, but they had an overall negative attitude towards secularism and socialism. Although a good number of Bengali bureaucrats were directly involved in the independence movement of Bangladesh, a significant number also supported the idea of a unified Pakistan and the role of Islam in the state and society and they worked for the Pakistani government during the liberation war of 1971. In independent Bangladesh, the Mujibur Rahman government incorporated all the civil and military bureaucrats (those who participated and those who did not participate in the liberation movement) into the state structure of Bangladesh. Therefore, like the
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national elites and the subalterns, the civil and military bureaucrats were also divided on the question of nation, national identity, nationalism, and the role of religion in the state and in society. Unlike other typical postcolonial states, the civil and military bureaucracies were internally fractured like the nation to which they belonged. Even the cohesive, hierarchical organisation could not subdue the contested position of the military and civil bureaucrats. This contestation became bloody and spread to the entire nation when a group of junior Islamist military officers organised the country's first coup. Clash of Identities, Military Coups and the “Official” Disintegration of the Nation The Islamist elites were effectively cornered in the state and in society by one-party rule. This also shut down all legitimate democratic means to express their opinions. In comparison to the other fragments of the nation, the military elites were in a relatively advantageous position because of the nature of their organisation; the ruling AL leaders' increasing dependency on them also placed them in a favourable position. Under such circumstances, a group of Islamist military officers believed that their only chance to forward their nation-building agenda was to capture the state power by force. This motivated them to organise a bloody military coup under the leadership of a junior military officer, Lieutenant Colonel Syed Faruk Rahman. Breaking the chain of command—on 15 August 1975—Col. Faruk and his followers killed Mujibur Rahman, his family and a group of other AL leaders and their families. Coup leaders declared that Bangladesh would be an Islamic republic and, after the coup, they received support from the right-wing political leaders of the AL. They formed a new government under the Islamist AL leader Khondokar Mustaq, who became the president of the new government, and a good number of AL leaders joined his cabinet. This coup provided the Islamists an unexpected chance to rebuild the nation on the basis of the Islamic identity. The Mustaq government withdrew the ban on totalitarian Islamic party leaders becoming members of the Parliament; this ban had been imposed on them due to their activities against the liberation of Bangladesh in 1971. It was the first attempt of the Islamists in independent Bangladesh to subvert the entrenched secular meaning of identity, nation, and nationalism and impose the discourse of Islamic identity through reshaping the state. However, on 3 November 1975 the Islamists were temporarily evicted from power by another military coup led by Brigadier General Khaled Mosharraf. He deposed the Islamists from power and although he did not openly declare his vision for the nation, it was widely believed that he belonged to the secular camp and wanted to restore the idea of secular nationalism. He was not successful in capturing state power, however, and was killed during another military coup a few days later. To counter the “secularist” Mosharraf, the Islamist military officers organised another coup on 7 November 1975 led by General Ziaur Rahman. He initially obtained support from a leftist political party, National Socialist Party (JSD). But after capturing the state structure, Zia refused to cooperate with them and put thousands of JSD supporters in prison. He imprisoned and later executed the commander of the military branch of the party, Colonel Abu Taher, who had lost a leg in the liberation war.
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After consolidating state power, Zia restarted the process of Islamisation in the state and civil society. Although Zia had participated in the liberation war, he had probably joined the war with a vision different from that of the secular nationalists. The capture of power provided an opportunity to remake the nation according to his vision of incorporating Islam into the national identity. He obtained support from both the Islamists and totalitarian Islamist groups who regarded the seizure of power by the Islamist section of the military as an opportunity to rebuild the nation on the basis of Islam. Moreover, Islam-based political discourse helped Zia to â&#x20AC;&#x153;legitimiseâ&#x20AC;? his rule and obtain support from citizens who believed that Islam should play an important role in the state and society. The Islamists' vision of a religion-based national identity was fulfilled by Zia's declaration that all people living in Bangladesh, regardless of race or religious identities, comprised the Bangladeshi nation and not a Bengali nation. Islam was an important component in this re-creation of the nation's identity. It was interesting that like the secularists, the Islamists also began their nationalist project ignoring the fragments of the nationâ&#x20AC;&#x201D;in this case, mainly the religious minorities and the Adivasis. Since then the secularists and the Islamists, regardless of their location in society, have identified themselves as Bengalis and Bangladeshis respectively. Zia's declaration of Bangladeshi nationalism officially disintegrated both the elites and the subalterns of the nation on the issue of national identity. Zia then established Bangladesh Nationalist Party (BNP) to carry out the project of remaking the nation with the support of the Islamists. During Zia's regime, the division among the national elites further sharpened on the issue of identity. Despite resistance from some fragments to both of these identities various subaltern groups and fragments remained sharply divided by supporting either one of these identities. The military was also not immune from this fragmentation process. It was alleged that to secure his political power, Zia had killed thousands of military officers and soldiers who were affiliated with the secularist camp and had actively participated in the liberation war to implement the vision of establishing a secular state on the basis of Bengali nationalism. Further, he imprisoned thousands of political activists from different political parties who belonged to the secular camp. However, all the measures of brutal repression could not secure Zia's life. On 30 March 1981, he was assassinated by another military coup organised by Major General Abul Manjur and his followers. Most of the coup officers, including Manjur, had participated in the liberation war and were believed to have belonged to the secularist camp. It was further believed that Zia's process of de-secularising the army by either executing or expelling secular officers and soldiers had prompted them to organise the coup. Nevertheless, Manjur was not successful in capturing power mainly because he assassinated Zia in Chittagong which is a few hundred miles away from Dhaka, the capital of the state. Moreover, he was not a military chief so the BNP government ordered the military chief, Lt. General Hussain Muhammad Ershad, to crush the rebellion. General Ershad sent troops to Chittagong and all the rebel military officers eventually surrendered and were later executed. Zia's assasination created a rift among the military and civilian sections of the Islamists.
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While the Islamist military elites wanted to retain power, the BNP—which had been created by Islamists in the military-civil oligarchy under the leadership of Zia to protect their interests in the state through re-creating the nation—took the initiative to maintain their rule by relying solely on the civil bureaucrats and the Islamist political activists. They also obtained support from the emerging capitalist class—a new leading class in Bangladesh and the product of Zia's policy of denationalisation. However, as a class, they were weak in comparison to the military and civil bureaucrats and their fragmentation regarding the question of nation and nationalism further weakened their class coherence. The weakness of the capitalists as a class and the “subordinate” position of civil bureaucrats in relation to the military elites had encouraged the military chief General Ershad to take power. After the assassination of Zia, the vice president of the state and BNP member Justice Abdus Sattar was elected as the president of the country. However, there was intense distrust and sharp differences among the secular and Islamist elites and as a result the civil-Islamist BNP government was overthrown by another military coup headed by the Islamist General Ershad in 1982. After capturing power, General Ershad followed in the footsteps of his predecessor General Zia. He further consolidated the process of Islamisation in both the state and civil society, thus further advancing the Islamists' agenda of remaking the nation. Moreover, General Ershad declared Islam as the state religion which encouraged both the Islamist and totalitarian Islamist camps despite the fact that they were unhappy about his seizure of power. During the Ershad regime, secular, Islamist and totalitarian Islamist parties had reached a consensus regarding establishing civilian rule and democracy in the state. They had also agreed to organise a joint movement against Ershad and that after his overthrow, there would be an election under a neutral caretaker government and whoever came to power through that election—regardless of their position on national identity—would be accepted as the legitimate ruler of the state. Their open declaration about the caretaker government and their strong opposition of the military rule encouraged all the fragments and subaltern groups of the nation to actively participate in the movement against the military ruler Ershad. As a result, General Ershad was overthrown by a mass upsurge in December 1990. This movement clearly revealed that if the national elites could speak up for the nation, it was not possible for the military elites to stay in power. After General Ershad's overthrow, the civilian section of the Islamists again came to power, under the leadership of Zia's widow, Begum Khaleda Zia, through an election conducted by the caretaker government. Khaleda Zia became the first woman prime minister of the country and her party (BNP) became the ruling party. Fakhruddin's Interregnum: Military Government in a Civilian Mask The first elections conducted under the caretaker government were in 1991, right after the overthrow of the military regime. This caretaker government was later legitimised by the Parliament elected under this government.26 Since then, it has become a tradition and a constitutional obligation that parliamentary elections must be conducted under a non-partisan, neutral caretaker government. However, a crisis emerged when at the end of the term in 2006, the ruling coalition, the BNP-led Four Party Alliance, wanted to
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nominate retired Chief Justice K. M. Hasan as the chief adviser of the caretaker government. The BNP-appointed president of the country, Iajuddin Ahmed, proposed his own name as chief adviser and the Four Party Alliance supported his move. But the AL-led Fourteen Party Alliance which was the main opposition alliance in the country, along with other political parties, refused to accept him as chief adviser of the caretaker government accusing him of affiliating with the BNP-led four-party alliance. They proposed that a chief adviser be selected from a pool of persons who were not involved in “partisan” politics. But instead of selecting a chief adviser from that non-partisan pool the president had himself sworn in as chief adviser on 29 October 2006. The AL-led Fourteen Party alliance agreed to participate in the national elections at the beginning but later called for a boycott. They organised massive demonstrations throughout the country demanding the president's immediate resignation as chief adviser. However, the BNP-led Four Party Alliance supported this caretaker government and demanded that the parliamentary elections be held at any cost on 22 January 2007 as scheduled. The nation was once again divided into two camps on the issue of the caretaker government and the national elections: on the one side, the AL-led secularist camp while on the other side, the BNP-led Islamist camp. Both sides refused to compromise and as a result, supporters of both camps clashed all over the country leaving at least 50 people dead. Then on 11 January 2007 the partisan caretaker chief Iajuddin, who was also president, suddenly declared a state of emergency and resigned as the chief of the caretaker government. The president deployed the military all over the country to implement the state of emergency and on 12 January he nominated Fakhruddin Ahmed as the chief adviser of the caretaker government. Fakhruddin received open support from the military and they implemented all his policies to depoliticise the state and civil society by imprisoning hundreds of political leaders, activists, and businesspersons. It was widely believed, and is now confirmed by the memoir of the then military chief, General Moeen, that the military had been behind Fakhruddin's nomination; he further mentioned that it was the military who forced President Iajuddin to declare an emergency. The military wanted to preserve their interest in the state through the pseudo caretaker government of Fakhruddin. The military elites were unable to seize power directly because they realised that the international and national political environment was not in favour of direct martial law and would not legitimise their rule. This realisation prompted the military elites to avoid direct confrontation and instead they ruled the country indirectly through Fakhruddin's government.27 Moreover, to preserve their interest as a “cohesive” body, this time neither the military nor the Fakhruddin government openly revealed their allegiance. The Fakhruddin interregnum once again made it clear that the division of the national elites regarding the issue of identity and nationalism created a space for the military elites to intervene in the politics and state of Bangladesh. Conclusion It is clear that the genesis of the repeated military interventions in the post “internal” colonial state of Bangladesh is historically rooted in the fragmentation of the elites on
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the issue of identity, nationalism and their failure to speak for the nation through sharing and incorporating the various fragments into the national imagination. Their failure to remake the nation on the basis of a shared “collective consciousness” is the core cause of military interference in politics. It is unfortunate that on the issue of national imagination, the “subaltern conscience is subject to the cathexis of the elites”,28 which made their domain dependent on the elites' domain. This dependence also resulted in fragmentation in their domains like their elite counterparts on the issue of identity and nationalism. Moreover, as a result of overdevelopment of the military and civil elites in Bangladesh, like other typical postcolonial states, the subalterns could play a very small role when it came to the issue of interacting with the state. Likewise, other fragments of the nation, such as women, religious or ethnic minorities or Adivasis, also had a very small role because of their marginal locations in the state and society. This context, in a relatively overdeveloped organisation, positioned the military advantageously in dealing with the state or capturing the state power itself. Therefore, until the elites are able to speak for the entire nation there might always be a possibility that the military could retake power directly or indirectly despite the return of the state to the democratic system. Dr Sayeed Iftekhar Ahmed, Ph.D., is visitng faculty at the Department of Politics and International Affairs, Northern Arizona University, USA. Endnotes 1. In Bangladesh, in contrast to the Western custom, the first, last, or even the middle name is used according to the significance of the name itself. 2. According to Transparency International Bangladesh (TIB), Bangladesh was the most corrupt country in the world from the years 2001 to 2006. 3. The government also put former Prime Minister Khaleda Zia's two sons in prison and brought corruption charges against them. 4. In the mid 1970s, following the Soviet model of one-party rule, the ruling party of Bangladesh (AL) adopted a resolution in the parliament on 25 January 1975 that banned all political parties except the AL, introducing one-party rule. AL renamed their party as the Bangladesh Krisok Sramik Awami League (BAKSAL, Peasants and Workers Party of Bangladesh Awami League). 5. General Moin U. Ahmed himself described his and the armed forces role in installing Fakhruddin Ahmed's “caretaker” government in his recent book, Shantir Sopno: Somoyer Sriticharon (Dream of Peace: A Memoir of the Time). This event has come to be known as the “one-eleven” of Bangladesh; the general himself at first started referring to the event as the 1/11 of Bangladesh following the 9/11 incident in the United States. The excerpt of his book regarding the role of the military in installing the Fakhruddin government is available at Staff Reporter (“General Moin-er Boi Theke: One-Eleven-er Seyi Din” [Excerpt from General Moin's Book: The Day of One-Eleven], The Daily Manavzamin, 30 Jan 2009, pp. 1–2, column 2). Mokhlesur Rahman Chowdhury, former adviser of President and Chief Adviser Iajuddin Ahmed, discussed how the military chief General Moin and other military elites compelled Iajuddin to resign from the chief adviser position and forced him to declare emergency law in the country. He further mentioned that initially they wanted to declare martial law but they changed their strategy later because the local UN and US diplomats did not support martial law. See Mokhlesur Rahman Chowdhury, “11 January Bangabhabane Ja Ghotechilo” (What Happened to the Presidential Palace on the 11th of January), Amar Desh [the daily My Country] February 1, 2009, pp. 1–2, column 6. In his recent book (mentioned above), General
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Moin also mentioned his role in selecting Fakhruddin Ahmed as the chief adviser for the caretaker government. It is widely believed that Fakhruddin Ahmed acted as a “puppet” for General Moin's government. 6. “Elite” usually signifies dominant classes and groups; in Bangladesh, various sections of the capitalist class (regardless of lumpen, national or comprador), commercial class, highranking government officials, leaders of political parties, lawyers, etc. are known as elites. Most of the political leaders from the major political parties come from either capitalist or commercial class backgrounds. Despite their same class affiliation, they are fragmented on the issues of nation, nationality, identity, and the role of secularism and Islam in the state and civil society. This division shows that instead of “collective consciousness” as a class, the elites like the subalterns are guided by the subjective consciousness. As a result of their split positions and the inability of the subalterns to put forward their own nationalist agenda free from the domain of the elite nationalist discourse, the nation of Bangladesh remains fragmented. 7. For the concept of fragments see Partha Chatterjee, The Nation and Its Fragments: Colonial and Postcolonial Histories (Princeton, New Jersey: Princeton University Press, 1993). 8. The modernist school uses the term “nation-building” to describe the development of nationalism in postcolonial states. They describe this task within the rubric of a colonial module of nationalist project. For a modernist interpretation of nation, see Rupert Emerson, From Empire to Nation: The Rise of Self-Assertion of Asian and African People (Cambridge: Harvard University Press, 1960). 9. In the hybrid form of Bangladeshi nationalism, the Bangladeshi elites incorporated religion (Islam) in the same colonial nationalist module that the Bengali elites used to construct their secularist nationalist project. 10. The propagators of Bangladeshi nationalism proclaimed that although it is a territory-based nationalism, Islam should play an important role in the formation of national identity and nationalism. However, in their nation-building process, they wanted to impose this identity on the religious minorities, while ignoring their religious differences. At the same time, the elites who are the followers of the secular-based linguistic nationalism also wanted to impose this identity on the different fragments of the nation, i.e., the ethnic minorities of the country, thus denying their different ethnic origins. 11. Leland L. Glenna, “The Relative-Autonomy State Theory and Emancipatory Strategies,” Rural Sociology, 64, 1 (March 1999): 165. 12. Relative autonomy scholars do not pay attention to groups. However, this paper argues that a group is a significant phenomenon to understanding relative autonomy in Bangladesh, which has experienced military rule. The military elites captured and exploited the state structures as a group rather than as a class. Civil bureaucrats in Bangladesh are also identified as a group in this paper. 13. Murry Knutilla and Wendee Kubik, State Theories: Classical, Global and Feminist Perspectives (UK: Zed Books, 2000), 111. 14. Hamza Alavi, “Class and State,” in Hassan Gardezi & Jamil Rashid eds., Pakistan: The Roots of Dictatorship: The Political Economy of a Praetorian State (London: Zed Press, 1983), 49. Poulantzas also claims that the structure of the state determines its autonomy. For details, see Nicos Poulantzas, State, Power, Socialism (NY: Schocken Books, 1978), 148. 15. In advanced capitalist countries, service sectors are also usually more developed in comparison to the sectors in postcolonial states. As a result of the strong presence of the capitalist and working classes as well as developed service sectors, the states in advanced capitalism cannot exercise as much autonomy as states in postcolonial societies. The presence of multiple relatively strong social classes and groups in advanced capitalist countries reduces the probability of a single class or group using the state structure to their own advantage. For the nature of the state in advanced capitalism, see Ralph Miliband, The State in Capitalist Society (London: Merlin Press, 2009). 16. Fred Block, “Beyond Relative Autonomy: State Managers As Historical Subjects,” The
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Socialist Register (1980), 229. 17. In another article, I have described the subaltern in the following way: “In the context of Bangladesh, the term 'subaltern' refers to various marginalized groups and underclasses, workers, day laborers, middle and small peasants, the rural proletariat, women, various native and 'tribal' peoples, and 'minority' religious groups and communities. The position of subalternity is relational and relative; therefore in some local or regional situations or under certain circumstances any of them could act as or for the 'elite.' Like the elites, there are fragments within the various subaltern groups. The relationships between and within the various subaltern groups and fragments are both contentious and harmonious, depending upon the context, locality, and situation. In the questions of nation, nationality, identity, secularism, and religion, the subalterns are also divided, like their elite counterparts. Subaltern cultural practices in the Bengal region are generally syncretic; that is, in their everyday lives, Hindu and Muslim and other minority and local religions and practices are all intermingled. Subalterns are also divided on the role of religion in the state and civil society and there is no apparent homogenous or monolithic subaltern culture in Bangladesh.” Sayeed Iftekhar Ahmed, “Resurgence of Islam in Bangladesh Politics,” South Asian Journal, Issue 11, January–March 2006, pp. 159–160. In my present study, I include ethnic minorities in this group. 18. It is ironic that after the creation of Pakistan, to solve this problem, the founder of the state, Muhammad Ali Jinnah, ignored the two-nation theory, and declared that from now, all the people regardless of their religious affiliations living in Pakistan would be considered Pakistanis. 19. Non-Muslim identities could be religious, such as Hindu, as well as non-religious secular identities. 20. Ranajit Guha and Gayatri Chakravotry Spivak, eds., Selected Subaltern Studies (Oxford NY: Oxford University Press, 1988), xii. 21. This day is observed as a national day of mourning in Bangladesh. The United Nations recently declared 21 February as the International Language Day. 22. Rabindranath Tagore was a poet, novelist, and dramatist who won the Nobel Prize in 1913. He wrote the national anthems of both Bangladesh and India. The East Pakistani rulers considered his writings to be against their nationalist project, partly because Tagore came from a Hindu background. In their nationalist discourse, he was simply identified as the “other” and anything he wrote was considered as against the principle of the Muslim nationalist project and the state of Pakistan. 23. In 1954, representatives of Bengali elites' political parties came to power in East Pakistan provincial assembly through a mammoth electoral victory. The provincial ML was defeated in this election by the AL and a coalition of like-minded parties. This was a clear sign that religion-based nationalism had lost its appeal among the majority of the population in East Pakistan. However, they were able to stay in power for only a few months because the central non-Bengali government felt that this provincial government was against their political and economic interests. As a result, they deposed this government through a presidential decree. 24. There is an important distinction between the Islamists and the Islamic fundamentalists. Although both wanted to include Islam in the national identity, the Islamists usually do not want to rule the state and society on the basis of Sharia; the Islamists might like to incorporate some Islamic ideals in the constitution of the state. On the contrary, Islamic fundamentalists, whom I like to identify as Totalitarian Islamists, want to rule the state on the basis of Sharia, and they want to impose Sharia law on the society. Therefore, we can say that all totalitarian Islamists are Islamists; however, all Islamists are not totalitarian Islamists. 25. The government nationalised the most popular independent newspaper, Daily Ittefaq. 26. For details about the caretaker government, see Chapter II A, “Non-Party Care Taker Government, Articles 58 (B), (C), (D), and (E),” The Constitution of the People's Republic of Bangladesh (as modified up to 17 May 2004).
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27. For details about the background of installing the Fakhruddin government, see Staff Reporter, and Mokhlesur Rahman Chowdhury (see note 5). 28. Gayatri Chakravorty Spivak, â&#x20AC;&#x153;Subaltern Studies: Deconstructing Historiography,â&#x20AC;? in Ranajit Guha and Gayatri Chakravorty Spivak, eds., Selected Subaltern Studies (New York, Oxford: Oxford University Press, 1988), 11.
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“Post-War” Dilemmas of Diversity in Sri Lanka Asanga Welikala Introduction On 18 May 2009 the Sri Lanka Army Special Forces Regiment killed Velupillai Prabhakaran and virtually the entire top leadership of the Liberation Tigers of Tamil Eelam (LTTE) on the banks of the Nandikadal lagoon in Northern Sri Lanka. With these killings, the three decades-long armed conflict in Sri Lanka came to an end, at least in the conventional form it had taken during the past 15 years or so. During the last half of the war, the state had been engaged in military conflict or—at sporadic intervals—peace negotiations with the LTTE, which had the military capacity to engage the state on equal terms and which also controlled substantial territory (along with aspects of an alternative administration) that formed the basis of its claim to selfdetermination and secession from Sri Lanka. The LTTE combined a single-minded political vision of a separate state with not only a fearsome reputation for waging terror, but also—for an armed opposition group—a formidable conventional military power which enabled it to control substantial territory and its population in the north and east of the island. In May 2009, however, the LTTE faced an unprecedented, comprehensive and final defeat at the hands of the current Sri Lankan government. The government had pursued a self-described “war on terrorism” that proved costly in economic terms and human suffering, and resulted in a substantial erosion in the respect for human rights and the rule of law, and the institutionalisation of a political culture of government best described as a form of nationalist authoritarianism. According to those who control the state at the present moment, the military victory over the LTTE represents the end of the conflict. The political root causes of mismanaged diversity that led to militant Tamil nationalism are recognised as legitimate to a limited extent. However, according to this view, they can be dealt with through a form of limited devolution that is already part of the constitution, or with a measure of further devolution that is consistent with the unitary state (discounting the extreme Sinhala nationalists in the governing coalition who countenance neither equality nor devolution for the minorities). In this attitude, however, there is an inherent oversimplification of the fundamental political anomalies of the existing constitutional order. These include, at first instance, the constitutionally entrenched, highly centralised, majoritarian unitary state that led to the political and socio-economic exclusion, and acts of discrimination that constitute the grievances at the heart of Tamil nationalism in Sri Lanka. If the defeat of the LTTE is to represent a fresh opportunity to address these anomalies and ensure that diversity and
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pluralism do not become a source of conflict again in the future, then the state needs to recognise and constitutionally accommodate the political claims to power-sharing and territorial autonomy that flow from the condition of societal diversity. Taken together, these constitute the political challenges and choices involved in taking Sri Lanka from a situation of “post-war” to one of “post-conflict” in the future.1 The prospects for such radical reformation of the Sri Lankan state, however, are not especially sanguine with the re-election of President Mahinda Rajapakse on 26 January 2010. Indeed, the first post-war national level elections in Sri Lanka were politically interesting for many reasons but not for the debate they generated on constitutional reforms and power-sharing. Both President Rajapakse and his main challenger, General (Retd.) Sarath Fonseka were seen as part of the administrative leadership that won the war against the LTTE. Their contest was thus expected to divide the Sinhala electorate creating the space for the minorities to hold the decisive vote as to who won the presidency. This however was not the case as the president decisively won the southern vote, and the Tamil and Muslim vote in the north and east went to General Fonseka. President Rajapakse did nothing to commit anything beyond the ambivalence that has always characterised his “policy” on devolution. General Fonseka was hamstrung between the need to attract the minorities through promises of greater power-sharing2 without alienating the Sinhala nationalists of the south by appearing “soft” on the issue. A further complication for Fonseka was his fundamentally anomalous position on the ethnic conflict and means of resolution between the opposition parties that supported his candidacy.3 These issues of electoral politics ensured that the crucial policy debate on the constitutional options, and means and modalities of state organisation in Sri Lanka's pluralist polity were inadequately addressed in the presidential elections. This is unfortunate because the defeat of the LTTE in no way alters the essential condition of ethnic and religious pluralism that characterises Sri Lankan society or the anomalies of the unitary constitutional form of the state in relation to that diversity. Nonetheless the principal political consequence of the defeat of the LTTE, registered at the presidential election, has been twofold. First, the consolidation of a form of triumphalist nationalism among the Sinhala-Buddhist majority further strengthening its control of the state and second, in contrast, an absence of coherence and policy direction in Tamil politics and Tamil nationalist politics in particular, in the post-LTTE world. Consequently, it has been a case of “back to the future” as far as a new constitutional and political settlement is concerned. In terms of the dynamics of the relationship between the majority and minorities and between competing groups' political interests, the political context in early 2010, is not dissimilar to that which prevailed in the immediate and pre- and post-independence era. In this political context the majority (or more precisely, the nationalist discourse of the majority) is politically dominant on the cusp of a military victory. It is also reinterpreting basic norms of constitutional government and democratic values in such as way as to exalt and reify the majoritarian principle to the exclusion of all others—especially in the respect for the rights and aspirations of the minorities. Thus the political power re-established on the battlefield is projected as
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illimitable by any institutional or procedural constraints imposed by constitutional and legal parameters of a democracy under the Rule of Law. This raises not merely the prospect of the resumption of violent ethno-political conflict in the future (if only far into the future), but also grave concerns for democracy and constitutional government (via the spectre of the tyranny of the majority). A more magnanimous and accommodating disposition at the victory over the LTTE would have treated that moment as a militarily created political opportunity for the entrenchment of a new constitutional settlement for peace between all communities in Sri Lanka.4 A brief recapitulation of the history of ethnic relations as framed by several constitutional instruments in Sri Lanka is necessary in order to sustain the arguments of both “back to the future” and “post-war but not post-conflict” set out here. The “State-Nation” of Sri Lanka and its Identity Crisis The modern Sri Lankan state came into juridical existence in 1948 when the administration of the British Crown Colony of Ceylon transferred power under a granted constitution (known as the Soulbury Constitution) to a democratically mandated Dominion of Ceylon government.5 It was in practical effect a transfer of power to a seemingly constitutionalist and cosmopolitanist local elite.6 The constitutional form of the new dominion was a unitary Westminster-style parliamentary executive arrangement underpinned, it was hoped, by permissive British constitutional conventions and liberal democratic values. However, in a departure from Westminster orthodoxy, a specific minority protection clause was inserted in Section 29 of the Soulbury Constitution wherein the Ceylon Parliament was precluded from discriminatory legislation on the basis of race, religion, caste etc.7 Although the smooth transition of power in Ceylon was considered to be a model exercise in de-colonisation at the time, the entire enterprise was based on some tragically erroneous assumptions, both with regard to the substance of the new constitutional arrangements as well as the mode of transfer.8 Although universal franchise and democratic institutions had been in existence in Sri Lanka since as far back as 1931 under the Donoughmore Constitution, an interest-based party political system—a fundamental feature of successful parliamentary government—did not develop until the promulgation of the Soulbury Constitution just prior to independence in 1947. The Donoughmore Constitution was a creative innovation even amongst the multiplicity of constitutional forms to be seen across the British Empire.9 In the context of the times, its liberal architects were radical in introducing universal adult franchise to a non-white society in the Empire. Its institutional framework (based on the procedures and form of the then London Borough Council) was underpinned by a transformational vision which sought to educate a voting public in the values, norms and institutional behaviour, including the encouragement of an interest-based system of party politics, of a parliamentary democracy and responsible self-government that was envisaged for the future.10 However, the expectation that universal franchise would induce the growth of a liberal values based party system was not altogether successful.11 This particular framework for
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democracy only reinforced pre-colonial social conceptions of the conduct of government where politics is a bundle of patron-client relationships between elites and subordinate classes. It provided a context in which the early development of the relationship between rulers (new political elite) and the ruled (the electorate) in novel democratic conditions was heavily influenced by primordial and ultimately divisive notions of proximity such as race, religion, caste and region.12 There was also an absence of popular mobilisation around a freedom struggle against imperial oppression. Independence was mediated through negotiated constitutional devices between the departing colonial power and local elites who were expected to, and ostensibly did, subscribe to a set of rules of the political game that were neutral in terms of sub-national identities. This not only deprived an opportunity for pre-independence nation-building with inclusive popular participation, but also ignored the intra-elite tensions that were divided along, and fuelled by, much the same ethno-religious faultlines as the broader polity. What was thought to be a consociational grand coalition of ethnic elites united on common grounds of liberal values and class affiliations was in fact a fiction. These contributory factors created a new centralised constitutional state wholly bereft of the type of national identity that could give it political legitimacy from within, given the manifest multiplicity of identities by which various groups in the Sri Lankan polity distinguished themselves from each other.13 Against this constitutional backdrop of centralised unitarism, post-colonial nationbuilding efforts were also not informed by enlightened values that would construct a modern democratic polity reflecting the pluralistic ethno-political foundations of the wider Sri Lankan society. On the contrary, the structures entrenched Sinhala nationalism's majoritarian political ideology,14 idiomatic reification of the centralised state, and its equation of sovereignty with unitarism. Moreover, the majority community's very language of societal and inter-ethnic negotiation was shaped by the institutional form of the state it dominated and led to the exclusion of any other identity from the ethnic relations and social foundations of the state. This brings to focus the central limitation of a unitary model in relation to multicultural polities–even one replete with all the distinctive features of a modern democratic political order such as universal franchise based representative democracy, the rule of law and the independence of the judiciary, and constitutional minority safeguards. Unitary state structures are fundamentally anomalous to the ethnically, religiously and class segmented nature of the Sri Lankan polity.15 This anomaly reflects the embryonic contradiction in the notion that Sri Lanka constituted a “nation-state” at independence, if the “nation” element of the nation-state concept is meant to convey viable political legitimacy. From the perspective of nationality in the classical liberal sense, it is also an empirical affirmation of the fundamental limitations of conventional institutional mechanisms and superficial preconstitutional commitments to liberal democratic “universal” values (a justiciable bill of rights was deliberately excluded from the Soulbury constitutional design) when
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confronted with the fissiparous dynamics of multiculturalism and subjectively constructed ethno-nationalisms.16 The immediate and inevitable consequence of the Sinhala claim to ownership of the state was a post-colonial re-formulation of the Tamil identity in oppositional terms to the numerically larger Sinhalese identity, and a corresponding demand for federal autonomy on the basis of Tamil nationhood.17 When the federalist project failed in the face of total rejection by the politically dominant Sinhala nationalism, registered most tellingly by the first attempt at autochthonous constitution-making and the establishment of the First Republic of Sri Lanka in 1972, the process of de-legitimation of the state in the eyes of non-Sinhala groups was complete.18 This and other acts of majoritarian arrogance such as the Sinhalisation of administration19 resulted in the English-speaking minorities of European mixed descent emigrating en masse. In the case of the Tamils, the “Sinhala Only” language policy, state-sponsored Sinhala settlements in predominantly Tamil areas, and discrimination in the sphere of education that excluded Tamil youth from higher education, led to the crystallisation of a militant separatist agenda by the mid-1970s. Militant separatism spawned a welter of youth guerrilla groups whose notions of nationhood and the means of achieving it were unhampered by the niceties of the international rights discourse, parliamentary methods of dissent and the widely subscribed non-violence principles of their federalist predecessors. They relocated Tamil aspirations in the discourse of the political left and reformulated the polemic as the “Tamil national question” in line with the Stalinist settlement of the right to national self-determination.20 However, with the significant exception of some groups such as the Eelam People's Revolutionary Liberation Front (EPRLF) and Eelam Revolutionary Organisation of Students (EROS), ideology was not an undue preoccupation of militant groups especially in the later stages of existence. One of these organisations, the Liberation Tigers of Tamil Eelam (LTTE), hegemonised the Tamil armed struggle against the state more with unparalleled violence, ruthlessness and determined intolerance of dissent than by ideological triumph. What remained was an untested representation of the Tamil identity as a type of volksgeist (cultural spirit), which at a conceptual level posed some considerable threat to individual civil and political rights of members of the Tamil nation. On the other hand, the state's response to separatism was one of brutal suppression that included state-sponsored anti-Tamil pogroms. The Sri Lankan state was wholly unable to envision its own reformulation so as to accommodate diversity and to absorb centrifugal political forces because the contemporary constitutional discourse was too narrow to contemplate a re-conceptualisation of sovereign unitarism. The centralised unitary state was a British legacy and the administrative structures built by them did not obviously reflect the exigencies of political freedom and nationbuilding, but rather the objects of a colonialist agenda. These inherited structures were buttressed in the immediate post-colonial era by not only a legal community and political intelligentsia whose jurisprudential and constitutional assumptions were
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drawn from not only Austinian, command theory positivism and Diceyan conceptions of parliamentary sovereignty and the unitary state, but also by the less sophisticated predispositions of popular Sinhala nationalism.21 As observed earlier, Sinhala-Buddhist nationalism employed a powerful idiom of centralisation of state power. That is to say, it interpolated the glorious historical paradigm of the ancient Sinhalese monarchy—patron of the people and protector of the faith—onto the new institutions of political independence. The greatest characteristic of a truly heroic occupier of the Sinhala monarchical paradigm was the overthrow of foreign domination (usually Dravidian invasions but subsequently western powers as well) and subsequent “unification of the country” under a single, central authority. This is the imperative pre-condition of the good life: peace, stability, economic progress and cultural renaissance, and is the subject matter of popular historical myth. On the other hand, dilution of central authority, often derisively attributed to vapid leadership in Sinhala historiography, was seen to produce anarchy, pestilence, moral decadence and cultural degradation. Therefore centralised unity related to territorial integrity is axiomatic in the traditional Sinhala ontology of the state and exercise of sovereignty, and explains its resonance in the modern nationalist hostility to any sort of political decentralisation. In the Sinhala nationalist view, decentralisation,22 devolution, federalism, power-sharing and autonomy are mere precursors of an unthinkable certainty: the territorial division of the island. A church and state symbiosis between the state and the monkhood was another pillar of this evocative popular ideology; a new class of radical monks had come into existence which claimed for itself an activist role in political life.23 The genesis of this phenomenon is perhaps to be found in the religio-cultural revivalist movements, significantly divided along ethnic and religious lines, of the late nineteenth century in direct reaction to the evangelical proselytisation techniques of Christian missionaries.24 The result of this stridently advanced thesis was a concept of exclusive motherland belonging to “us”—the Sinhala race and cosmic legatees of the purest Buddha dharma. It follows that this worldview did not permit an existential equality to anyone identified as “them”. The reluctance to extend a hand of partnership to Tamils in the task of nationbuilding was even more pronounced due to historical Sinhalese fears of Dravidian invasions and of being overwhelmed by hordes of sub-continental Tamils from India.25 All these are strands of the Sinhala collective consciousness and a fairly coherent if simplistically subjective internal value system that was, and continues to be, sustained by the Mahavamsa (Great Chronicle of the Sinhala people) tradition of historiography. Accordingly, the post-colonial nation-building enterprise proceeded on the presumption that the Sinhalese were the only legitimate holders of grievances against colonialism, which correlated to the perception that minorities were actual beneficiaries of the colonial regime. Thus the Sinhalese had a justified entitlement to preferential treatment by the post-independence state to the exclusion, if need be, of the minorities. This gives at least a partial explanation of the causes of well-documented acts of blatant minority discrimination that followed: the disenfranchisement of plantation Tamils,26
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the language and education policies of successive governments and developmental and agricultural strategies involving internal colonisation that altered territorial demographic patterns as well as the intermittent outbreaks of savage racial riots. But more importantly, this frames the context of the mainstream Sinhala nationalist attitude towards a dilution of the unitary state which has been one of near absolute antipathy.27 Conclusion The foregoing demonstrates that what is happening in Sri Lanka is actually a repetition of a cycle of what has transpired before. There is a Hegelian dialectic that has not been broken by the end of the war because all that it has enabled is the triumphalist advancement of the “thesis” of a dominant and dominating majoritarian nationalism, seemingly incapable of seeing self-interest in accommodating minority interests and aspirations in a fresh constitutional settlement (the “synthesis”). The sheer comprehensiveness of the LTTE's defeat in 2009 therefore will merely retard, but not prevent, the reproduction of the “antithesis” in the future. Unless President Rajapakse demonstrates a radically different approach to power-sharing and accommodation in his second term, the return to conflict—if only later rather than sooner—remains a plausible probability. Asanga Welikala LL.B, LL.M, on sabbatical leave from the Centre for Policy Alternatives (CPA), Colombo, is a PhD candidate at the Law School, University of Edinburgh. Endnotes 1. See Asanga Welikala, 2009, "From Post-War to Post-Conflict: The Continuing Relevance of Power-sharing and Territorial Autonomy in Sri Lanka," in Thomas Benedikter ed., Solving Ethnic Conflict through Self-Government (Bolzano/Bozen: Institute for Minority Rights, 2009): Ch.25. 2. The Tamil National Alliance (TNA), a conglomeration of Tamil political parties that were formerly seen as parliamentary proxies for the LTTE, endorsed General Fonseka's candidacy on the basis of an understanding concerning the resolution of immediate issues such as the release of Tamil internally displaced persons from camps, the removal of High Security Zones and restrictions on agricultural activities and fishing, the acceleration of combatant rehabilitation and so on. Both the TNA and General Fonseka's campaigns vehemently denied that there was any formal agreement between them apropos a new constitutional settlement and devolution, which was largely in response to the ruling party's claim that such a secret agreement was in fact in existence, and which was projected as a "betrayal" of the war victory. 3. That is, between the liberal, pro-devolution position of the United National Front (UNF) comprising the main Opposition United National Party (UNP) led by the Leader of the Opposition Ranil Wickremasinghe, M.P., the Sri Lanka Muslim Congress (SLMC) led by Rauff Hakeem, M.P., and the Democratic People's Front (DPF) led by Mano Ganeshan, M.P., on the one hand. And the hard-line anti-devolution stance of the Janatha Vimukthi Peramuna (JVP), led by Somawansa Amerasinghe, on the other. This schism was further apparent in other areas such as economic policy. 4. From a very different analytical standpoint to that of this paper, see the advice, unlikely to be taken, given by Dr. Dayan Jayatilleka (2010) Electoral Nadikadal: National-Popular vs. Neo-Comprador, available at http://www.groundviews.org/2010/01/31/electoralnandikadal-national-popular-vs-neo-comprador/ (Dr. Jayatilleka is a former Permanent Representative of Sri Lanka to the United Nations in Geneva and was an integral member of
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President Rajapakse's team during the prosecution of the war). 5. See J.A.L. Cooray, Constitutional and Administrative Law of Sri Lanka (Colombo: Sumathi, 1995): p.33 et seq. 6. See for an historical overview of this period of transition and constitutional reform, K.M. de Silva, A History of Sri Lanka (Colombo: Vijitha Yapa, 2005): Ch.33 [hereinafter de Silva (2005)]. 7. See for a commentary on the Soulbury Constitution: Ivor Jennings, The Constitution of Ceylon (3rd Ed) (Oxford: OUP, 1953). 8. See Rohan Edrisinha, Mario Gomez, V.T. Thamilmaran and Asanga Welikala eds., PowerSharing in Sri Lanka: Constitutional and Political Documents, 1926-2008 (Colombo: Centre for Policy Alternatives, 2008): Chs.6,7. [hereinafter Edrisinha et al (2008)]. 9. Martin Wight, The Development of the Legislative Council 1906-1945 (London, 1946): p.94. 10. Edrisinha et al (2008): Ch.2. 11. For a fuller discussion of these issues, see A.J. Wilson, Sri Lankan Tamil Nationalism (New Delhi: Penguin India, 2000): esp. Chs.4,5; and more generally de Silva (2005): Ch.31. 12. See Michael Roberts, Exploring Confrontation (Geneva: Harwood Academic Publishers, 1994): Ch.5. 13. See A. J. Wilson, The Break-up of Sri Lanka: The Sinhalese-Tamil Conflict (New York: Hurst, 1988); S. J. Tambiah, Sri Lanka, Ethnic Fratricide and the Dismantling of Democracy (Chicago: Chicago UP, 1986). 14. Neelan Tiruchelvam, Federalism and Diversity in Sri Lanka in Yash Ghai ed., Autonomy and Ethnicity (Cambridge: CUP, 2000): pp.198 – 200. 15. Jayadeva Uyangoda, The State and the Process of Devolution in Sri Lanka in S. Bastian ed., Devolution and Development in Sri Lanka (Colombo: International Centre for Ethnic Studies, 1994): p.59. 16. See for a comprehensive exploration of the relevant theoretical terrain, Stephen Tierney Constitutional Law and National Pluralism (Oxford: OUP, 2004). 17. Edrisinha et al (2008): Ch.8 18. Ibid, Ch.11; for a rigorous theoretical exploration of the relationship between constituent power and constitutional form, see Martin Loughlin and Neil Walker eds., The Paradox of Constitutionalism (Oxford: OUP, 2007). 19. See for example, James Manor, The Expedient Utopian: Bandaranaike and Ceylon (Cambridge: CUP, 1989) 20. See Helena J. Whall, The Right to Self-Determination: The Sri Lankan Tamil National Question (London: Tamil Information Centre, 1995) 21. The Interim Report of the Sinhala Commission (1997) and the references therein rehearse many of these of politico-legal arguments: discussed in Edrisinha et al (2008): Ch.26 22. Uyangoda, op. cit., pp. 69–70. 23. See esp. H. L. Seneviratne, Work of Kings: The New Buddhism in Sri Lanka (Chicago: Chicago UP, 1999) 24. Roberts, op. cit. 25. Uyangoda, op. cit., pp.57– 1, 69–70. 26. C. Manogaran, Ethnic Conflict and Reconciliation in Sri Lankan (Honolulu: Univ. of Hawaii Press, 1987). 27. In the historical canvass of Sinhala nationalist politics described here, the decade between 1994 and 2004 was an "aberration" in that, even though the period did not see the securing of a settlement to the conflict in the form of a new constitutional compact, at least the two major parties (the Sri Lanka Freedom Party and the United National Party) departed from the nationalist politics of outbidding within the Sinhala polity towards a broad consensus on devolution: see Asanga Welikala, "Sri Lanka: Politics of Dual Mandate," South Asian Journal, 5th Issue, July-September 2004. The current UPFA government which came to power in the general elections of April 2004 and the presidential elections of November 2005 represents a return to the "old politics".
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What about Economic “Connectivity”? Ijaz Nabi The Indus Basin Market Some of us remember well the tedium of school time spent on “unity” days listening to unconvincing speakers who tired to drill into us that Bengal was an integral part of Pakistan's identity. Or the hectoring of the mullah that religion is our cement. Or the prodding of the language professor that Urdu is our salvation. Time has taken care of many of those myths. Fortunately, we do have a bond that has helped us survive decades of abuse. This bond is firmly rooted in the Indus basin market. The Indus market, of course, is not new. The Indus and its tributaries spawned Harappa and Mohenjodaro, testimony to one of the world's oldest civilisations. Even though communications and transportation were slow, dependent as they were on the river system, enough exchange of goods and information took place four thousand years ago to shape the cultural traits of a distinct civilisation. Four millennia later, in the nineteenth century AD, public works commissioned by the British dramatically escalated the frequency of human contact and exchange of goods in the Indus basin. The canal network opened up the doabs (land between two rivers) for cultivation and human settlements. The north-western railway and the extension southward of the Grand Trunk (GT) road catapulted Karachi into the role of a clearinghouse of goods, people, information and money within the country and with the rest of the world. Soviet Union's xenophobic economic model to then North, the sheer distance to the Iranian centres of commerce in the west, and India's short-sighted decision soon after Partition to curb trade with Pakistan because of differences in exchange rate management, set the stage for a larger, and a far more dynamic Indus basin market than ever before. The threads that bind this market are not vacuous exhortations from the pulpit, but activities of commercial enterprises that fulfil the needs of buyers up and down the country. Companies distributing tea, petroleum products, seeds and fertiliser, procuring rice, cotton, fresh fruits and vegetables and supplying kitchenware, soaps and detergents are the foot-soldiers in this manifestation of the national character. Advertising companies, digging deep into the cultural heritage, shape and define the personality of the market as seen on the billboard and the television screen. While sipping tea that an advertisement declares to be Shahid Afridi's favourite, we momentarily feel the rush of blood as he destroys the opponent's bowling, and we come
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closer together. A great feature of this market-based integration is that it rests on millions of voluntary contracts between individuals. The successful conclusion of these contracts, whereby all parties entering them gain, signals others to strike similar deals. Unimpeded entry into the market unleashes the power of competition. Costs are lowered, new and better ways of doing things are adopted and long-term economic growth ensues. Even though the Indus market is well-integrated, Pakistan is a somewhat larger entity than this market since it encompasses lands and people to the west of the Indus Basin, i.e., Federally Administered Tribal Areas (FATA) and Balochistan. Migration of workers from these areas to the oil-rich Middle East has retarded their integration into the Indus basin labour market. Remittances have helped finance rampant smuggling of goods, weakening their links with the mainstream markets of the country. Free supply of electric power rid them of any remaining contractual obligations to the rest of the country. Little wonder that they fell prey to alien ideology and embarked on a disastrous collision course with the aspirations of the rest of the country. FATA's full integration with the rest of Pakistan must now be a top priority. Markets need to be continuously rejuvenated with new products, technologies and management practices; else, they become inward looking. The vitality that creates wellpaying jobs is gradually sapped and they stagnate as happened in the Soviet Union, China and India until a couple of decades ago. With the rapid population growth in Pakistan, a stagnant market would be a disaster, a foretaste of which is the recent resort to extremist Islam by young unemployed males in search of quick solutions. The Indus market should be rejuvenated via intensive contact with the larger world market. Trade and investment barriers that prevent this from happening should be cast aside. Markets are governed by rules, and the most important rule is that people have full access to information generated in the market and the freedom to act upon it. In poorly governed markets, this rule is violated, usually at the behest of the rich and the powerful. This leads to undesirable consequences in terms of concentration of wealth and slow pace of technical change. The Indus market has long suffered government interventions in the shape of restrictive licensing, many categories of statutory regulatory orders (the infamous SROs) issued by the Ministry of Commerce, and hidden subsidies in the budget. The justification for the intervention is always an altruistic one i.e. nation building, employment generation etc. But make no mistake. The real motivation is plain old greed that profoundly damages the national interest because market-based integration is thwarted. The full potential of the Indus market will be realised only when all those participating in it have assets that strengthen their bargaining position. Education and health are valuable assets while entering into market-based transactions but we as a society have been remiss in building up these assets of the poor. Recent research suggests that clear ownership rights to the plots of land on which the poor live are a powerful way of
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facilitating their gainful participation in market-based transactions. Finally, market based transactions must be voluntary to be beneficial to all. In the context of the Indus basin that integrates the cultural traditions of Sindh, Punjab and the NWFP, this means that no single cultural tradition must be allowed to tread heavily on the others. Otherwise, the contracts would no longer be perceived to be voluntary. Punjab thus has to go out of its way to accommodate the smaller provinces especially when it comes to sharing pooled resources such as water and tax revenues. Only such accommodation will ensure that the Indus basin market remains firmly integrated. Beyond Islamabad and Delhi Fortunately, there is more to the Indus-Gangetic cousins than exploding nuclear bombs, fighting ancient battles and mistreating their respective minorities. India and, more recently, Pakistan are engaged in serious reform to address economic problems at the sub-national level, the level that really matters for the quality of life of the ordinary citizen. If you were to catch a plane and, dodging the silly restrictions on direct flights between the two neighbours, touch down in, say, Peshawar, Karachi, Hyderabad (Deccan) and Lucknow, you would be struck by the similarity of problems confronting the citizens of the four provincial/state metropolises. Fifty years of living apart seems to have affected little the essential nature of problems: chaotic street life, deteriorating law and order, broken pavements, run down citycentres, limited employment opportunities and clusters of depressing urban poverty. And yet each metropolis, in its own way, has started to tackle the problems. Andhra Pradesh was the first to take the initiative, unshackling itself from the Delhi baboos, to address the development needs of Hyderabad and the rest of the state. Chandrababu Naidu was elected to office on the strength of the changes he promised to the voters. After assuming office, he sought the best technical advice available (domestic and international) to identify the core problems confronted by the state. What Hyderabad learnt from this exercise was identical to what the state government of Uttar Pradesh (UP) and later the provincial governments of Sindh and the NWFP have learnt. The five core problems faced by the sub-national governments are: 1) The demand for most of the services that citizens needs such as basic health, education, roads, law and order etc.â&#x20AC;&#x201D;all provided at the state/provincial levelâ&#x20AC;&#x201D;has increased manifold mainly due to population pressure but also because citizens expect better quality. Meanwhile, the technical and financial capacity of the state/provincial governments to deliver the services is severely limited. 2) The quality of civil service at the sub-national level, that would design and deliver public services and provide economic governance, has declined over time. In part, this is because civil service salaries have not kept pace with the private sector and thus the government no longer attracts good talent. Equally important is the fact that rules of
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business have not evolved in keeping with the times. The old ethos of power and patronage continues while the need is for a civil service that provides cost-effective facilitation to the citizens as users of public services and as investors in local industry. 3) All sub-national governments suffer from chronic and acute budget deficits. Expenditure far exceeds revenue, which results in expensive borrowing from the central government. This further diminishes the fiscal space for sub-national governments in subsequent years. Re-orienting expenditures to cut out waste is one part of the solution. The other, more important, one is to increase revenue by streamlining existing taxes, especially the real estate tax, but also exploring some new ones such as the agricultural income tax. 4) Cost recovery at the sub-national level is a huge problem. In the Indian states, the power sector is the principal culprit. Line theft and technical losses, failure to metre farmers and low electricity tariffs inflict losses on power utilities that have been devolved to the states. These losses thus appear as large holes in state budgets and reduce state capacity to deliver other much needed services. Pakistan's provincial governments have been spared the power sector albatrossâ&#x20AC;&#x201D;WAPDA and Karachi Electricity Supply Company are black holes in the federal budgetâ&#x20AC;&#x201D;but provincial cost recovery in irrigation, road use, higher education etc. is weak and a drain on the budget. 5) Islamabad and Delhi have started to clean up the plethora of redundant regulation that inhibits industrial expansion. The thick layer of red tape at the sub-national level, however, is alive and well and needs to be cast aside. Useless inspections of factory premises by sub-national officials and the requirement to obtain archaic provincial licenses and permits should be done away with. Labour and safety standards should be enforced without levying a huge corruption tax on firms. Provincial/state governments should compete for industrial investment just as the national government i.e. for generating employment and incomes and strengthening the revenue base. This change in the mind-set will go a long way towards improving governance at the local level. Having identified the core problems, all four sub-national governments have started to implement reforms with financial and technical support from international financial institutions. The support is in the form of quick disbursing loans on remarkably soft terms (especially for the NWFP and Sindh) in the amount of USD 300 million each for Andhra Pradesh and Uttar Pradesh and $100 million each for Sindh and NWFP. These loans have created substantial fiscal space to pursue reform. Here is a brief progress report. Andhra Pradesh, the first on the reform path, has made considerable progress on four of the five core issues. The power sector remains a problem and continues to weigh down the budget. Getting farmers to pay for the power they consume has a huge political cost that elected governments are unwilling to pay. But Chandrababu Naidu continues to be
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engaged in reform and gives it top priority in his political agenda. The government of Uttar Pradesh has a more difficult problem to contend with. Compared to Andhra, the elected government of Mayawati is a weak political coalition of Dalits (low caste Hindus) and Muslims. This, combined with a weak civil service, curtails UP's ability to pursue vigorous reform in all five core issues. Sindh (under the able leadership of Governor Mohammed Mian Soomro and Finance Minister Hafeez Sheikh) and NWFP (led by the reforming Governor Syed Iftikhar Hussain Shah) initiated far-reaching and credible reforms in the summer of this year affecting all five core issues. But the reforming governments were unencumbered by the noise of democracy. They have been replaced by the untested Muttahida Majlis-e-Amal (MMA) in Peshawar and a young and raw team in Sindh that will lead a khitchry (mix) of a cabinet. Hafeez Sheikh, now at the centre, must use all his charm and power of persuasion to ensure that the new government in Sindh continues on the reform path. Shaukat Aziz and President Pervez Musharraf have to get Prime Minister Zafarullah Jamali to weigh in with the federal clout. The MMA in Peshawar may well surprise us. It already sees the long-term political benefit of the reform programme, and the promise of cheap, quick, loans from international financial institutions for the much-needed fiscal space. And if the MMA delivers on economic governance it will get elected again and again. Beware Punjab and Sindh! A tale of two Punjabs Since the partition of 1947, agriculture in the Indian and Pakistani Punjabs has evolved in different institutional and policy settings. The Indian Punjab has less unequal land distribution, higher education levels and a weaker feudal tradition than the Pakistani Punjab. These factors and the stronger tradition of parliamentary democracy has given the Indian Punjabi farmer greater clout in designing pro-farmer policies compared to his â&#x20AC;&#x153;cousinsâ&#x20AC;? across the border. How have these differences affected agricultural performance in the two Punjabs? The answer, according to serious research1, is not so obvious. The two Punjabs adopted the green revolution technology for wheat, rice and cotton crops at around the same time (mid-1960s) and experienced similar phases of its intensification over the next 30 years. The results are fascinating and tell us much about the way different policies affect farmers' performance. The most common way to measure performance is in terms of growth in output per acre. On this measure, the Indian Punjab led Pakistani Punjab in wheat (3.6 percent annual growth versus 2.2 percent) and rice (4.1 percent vs 0) but was outperformed by the latter in cotton (1.6 percent vs the latter's 3.6 percent).
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As a result of this growth, at the end of the green revolution period (mid-1990s), the Indian Punjabi farmer produced 3643 kg per hectare of wheat which was nearly twice his Pakistani counterpart's output of 1902 kg per hectare. In rice, the Indian Punjabi farmer's output of 3426 kg per hectare was nearly three times the Pakistani Punjabi farmer's output of 1215 kg per hectare. To be fair, Pakistani Punjabi farmer's poor performance in rice is because he was switching to low yield but high value basmati rice. It turns out that the difference in growth in the two Punjabs is largely because the Indian farmers use more inputs than their Pakistani counterparts. On average, the Indian Punjabi farmer applied 156 kg of fertiliser per hectare, twice Pakistani Punjabi farmer's 86 kg's per hectare. Also, the Indian farmer used more machinery (41 hours per hectare vs. 15). But there was little difference in access to irrigation (91 percent of total land under irrigation vs. 86 percent). Indian Punjabi farmers appear to use more tube wells (104 per 1000 hectares vs. 26) but this may be illusory because the Pakistani tube wells are generally larger. This tale of agricultural productivity differences in the two Punjabs does not end there. All we have learnt so far is that you get more output if you apply more inputs. This, as we have seen earlier (The story of economic growth, Daily Times, 15 November 2002), is only a partial story. A far more interesting and meaningful comparison of the two Punjabs is in terms of total factor productivity i.e. how well do the two Punjabi farmers perform controlling input use. A cricket analogy would help. A batsman may score well compared to another if he uses a better quality bat but that may tell you more about the bat than the batsman. The real test is controlling the performance for the same quality of the bat. This is what total factor productivity does. Total factor productivity growth on the two Punjab farms is calculated by subtracting input growth from total output growth. In the Indian Punjab, output and input growth in the 30 year green revolution period was five percent and three percent respectively giving total factor productivity growth of 1.9 percent. In the case of Pakistan's Punjab, with output and input growth rates of 3.2 and 1.9 percent, respectively, total factor productivity growth was 1.5 percent. The difference of a mere 0.4 percent is not much to write home about! We can get further insight into farm performance by breaking down the 30 year green revolution period into three clearly identified sub-periods i.e. the years of introduction of the new technology (1966–1974), the years of input intensification (1975–1984) and the years of maturity (1985–1994). Total factor productivity growth in the three subperiods in the Indian Punjab was 1.3, 1.8 and 1.5 percent per annum respectively. In the Pakistani Punjab the corresponding growth rates are 0, 1.4 and 2.9 percent. Thus in the mature stage of the green revolution technology, Pakistani Punjabi farmers were rapidly catching up with their eastern “cousins”. One explanation for this pattern of total factor productivity growth is that the green revolution technology was knowledge intensive so it was adopted more quickly by the
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better educated Indian Punjabi farmers that had access to better research and extension services. The Pakistani Punjabis were slow to respond because of poorer education and research and extension services, but when information became available and they learnt to manage the risks associated with technological change, they responded with enthusiasm. The other explanation is that Indian Punjabi farmers have enjoyed much higher intensity of input use throughout the green revolution period because they are politically better organised and are able to extract large water and fertiliser subsidies from the government. In contrast, the Pakistani Punjabi farmers have had to make do with their own resources and therefore were slower to catch up. But then, unlike their Indian counterparts, they are less of a burden on the government budget. The third explanation is the outstanding performance of cotton, mung daal (mung split beans) and livestock in Pakistan's Punjab in the final period. Pakistan has been proactive in promoting long staple cotton for export that has responded well to pesticides while India has focused on low yielding short staple varieties for home consumption. Surely, there are costs to the environment that need to be taken into account while calculating the benefits of intensive cultivation that uses a lot of water and chemicals in the form of pesticides and fertilizer. Indeed there are. In Pakistan's Punjab, for example, half the productivity gain in agriculture associated with the green revolution technology is cancelled out due to the detrimental effects of water pollution. And because Indian Punjabi farmers use water and chemicals more intensively than Pakistani Punjabi farmers, netting out the detrimental effects may well eradicate any remaining differences in the performance of the two Punjabi farmers. Political economy of the three Punjabs Sikh and Hindu Punjabis in India are economically better off than our Punjabis in Pakistan thanks to the huge subsidies from the all-India government. The subsidy route to income growth and poverty reduction is unsustainable and politically not feasible in Pakistani Punjab. Instead, we have to aim at improving literacy and genuine productivity gains throughout the country and not Punjab alone. The failure of political accommodation between Muslims and Hindus in pre-partition India and later between Sikhs and Hindus in post-partition Indian Punjab has given South Asia three Punjabs: a Sikh Punjab (population 24 million), a Hindu Punjab (Haryana, population 21 million) and a Muslim Punjab (population 73 million). Some lament while others applaud this division of the greater Punjab along religious lines. That is not our concern. We take as given the hand history has dealt us and focus instead on how the three Punjabs have managed their economic affairs unhindered by religious competition. The premier criteria for gauging success in economic management has to be progress in eradicating poverty. The poor being those who just meet or fall below a minimum standard of consumption. Economic progress that creates wealth for a few but does not
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lift the poor out of their misery is hollow and unlikely to be sustained. On this criteria of economic management, Sikh Punjab is the most successful. In 10 years since the late 1980s, the proportion of poor in rural areas fell from 13 percent to 6 percent, and from 14 to 5 percent in urban areas. Hindu Punjab is close behind Sikh Punjab with rural poverty falling from 15 to 7 percent in the last ten years and urban poverty declining from 18 to 10 percent. Our beloved Muslim Punjab is a distant third. In 1990, 39 percent of the rural population was poor. This fell only slightly to 35 percent by 1999. In urban areas, the proportion of the poor fell from 29 percent to 27. To put it starkly, out of every 100 Sikh and Hindu Punjabis, only 6 are poor. On the other hand, 30 out of every 100 Muslim Punjabis are poor. The incidence of poverty is thus five times more in Muslim Punjab than in Sikh and Hindu Punjab. How did the Indian Punjabis eradicate poverty so effectively while ours are struggling? It was not via a radical restructuring of the economies to generate high wage jobs in manufacturing and services. Agriculture remains the principal source of employment in all three Punjabs, accounting for 39 percent of all jobs in Sikh Punjab, 52 percent in Hindu Punjab and 46 percent in Muslim Punjab. The answer lies in agriculture itself and the political economy of subsidies. We saw that agricultural productivity in Sikh Punjab is considerably higher than in Muslim Punjab. However, that productivity is driven by huge subsidies on inputs (fertiliser, water, power and fuel) that inflate farm income. Furthermore, resource intensive productivity growth contaminates sub-soil water with harmful toxicants. This cost is also not factored in. Finally, excessive use of subsidised inputs leads to over production and the government has to step in to subsidise crop output as well, thus accumulating food stocks that nobody wants. Input and output subsidies to Indian farmers are estimated at nearly USD 7 billion annually (or 1.5 percent of India's Gross National Product of USD 500 billion). Major beneficiaries of the subsidies are Punjab and Haryana farmers. Thus the high incomes of Indian Punjabi farmers are due, in large part, to transfer payments by the rest of Indiaâ&#x20AC;&#x201D;a sort of bribe for keeping the peace. The result is much lower incidence of poverty among Indian Punjabis than the rest of India that has a poverty rate of 28 percent (similar to our Punjab's). It has to be granted that the â&#x20AC;&#x153;bribeâ&#x20AC;? is spread around well among the Indian Punjabis and is not usurped by rich farmers alone. Credit for this goes to India's effective land reform. Pakistan's Punjabi farmers, on the other hand, enjoy no such subsidies or transfer payments. In fact, for several decades, Pakistani farmers were heavily taxed via an overvalued exchange rate that pushed the farm gate price of export crops, such as cotton and rice, below the international price. Could our Punjabi farmers have emulated their neighbours across the border and manipulated the rest of the country to subsidise them? The answer is no because 45 million Indian Punjabis constitute less than five percent of India's total population. They can get away with the argument that they defend the Western flank of the country and
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therefore deserve special attention. Pakistani Punjabis, on the other hand, are the majority group accounting for 60 percent of the population. Transfer payments of the sort enjoyed by Indian Punjabi farmers are politically not feasible here. Besides, given the high land concentration in Pakistan's Punjab, rich farmers would pocket most transfer payments. This would worsen income distribution leading to political dissatisfaction. The other critical indicator of well-being is education since it affects the chances of escaping poverty in the future and joining the middle class via genuine improvements in agriculture and/or by securing high paid manufacturing or service sector jobs. Again Sikh and Hindu Punjabis, with about 70 percent adult literacy rates, have performed better than Muslim Punjabis with a rate of only 43 percent. The literacy rate of Sikh and Hindu Punjabi men (76 percent and 79 percent) is higher than that of Muslim Punjabi men (57 percent) but especially telling is the much higher literacy rate of Sikh and Hindu Punjabi women (63 percent and 56 percent) compared to Muslim Punjabi women (30 percent). To conclude, Pakistani Punjabi farmers cannot take the subsidy route to catch up with the Punjabis on the other side of the border. Income growth, employment and poverty reduction must come from genuine gains in productivity. This involves more efficient use of water, a more diversified cropping pattern, better domestic and international marketing of produce and increasing non-agricultural sources of income. These efficiencies require increasing the literacy rate in rural areas and also discouraging inefficient holdings of absentee landlords. For reasons of political economy, our policy approach has to be the opposite of the Indian Punjabis'. Improvements must come at the country-wide level and not Punjab alone. Ijaz Nabi is professor of Economics and Dean School of Humanities, Social Sciences and Law at Lahore University of Management Sciences. This paper appeared as a series of articles during 2002â&#x20AC;&#x201C;2003 in Daily Times, Lahore. Endnote 1. By Ringku Murgai, Derek Byerlee (both work the World Bank) and Mubarik Ali (at the Asian Vegetable Research and Development Center).
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Book Review
Terrorist Havens in South Punjab Khaled Ahmed Punjabi Taliban (Urdu); By Mujahid Hussain; Nigarishaat Lahore 2009; Pp272; Price Pak Rs 350
I
n a TV discussion in October 2009 the Punjab Law Minister Rana Sanaullah insisted that south Punjab was as much a home of terrorist organisations as any other part of Pakistan, meaning that south Punjab was not a safe haven for terrorists. He rightly pointed out that the terror masterminds captured after the recent attack on Pakistan Army's general headquarters (GHQ) were from Faisalabad. He did not agree with the normal delineation of South Punjab as a distinct region inside the province; he did not accept Jhang as a part of South Punjab. Ex-commissioner of Peshawar and now an expert attached to the Federally Administered Tribal Areas (FATA) Secretariat, Khalid Aziz, stated in a paper: “Southern Punjab comprises 13 districts having a total population of approximately 27 million. These districts include Bahawalnagar, Bahawalpur, Bhakker [sic], DG Khan, Jhang, Khanewal, Layyah, Lodhran, Multan, Muzaffargarh, Rahimyar Khan [sic], Rajanpur, and Vehari”. Editor Shireen Mazari who hails from Dera Ghazi Khan (DG Khan) wrote in The Nation (29 April 2009) about the dominance of the more jihad-oriented madrassas in DG Khan, significantly pointing out the “foreign funding” they were receiving: “In DG Khan, there are 185 registered madrassas of which 90 are Deobandi (with a total of 324 teachers), 84 are Barelvi (with a total of 212 teachers), six [sic] are Ahl-e-Hadith (107 teachers) and five [sic] are Fiqh-e-Jafaria (10 teachers)”. Mazari continues: “Of the Deobandi madrassas, only the Jamia Ataul-Ulum in DG Khan, with 200 boarders and 20 day-students ranging from 5 to 25 years and eight [sic] teachers, receives donations from Kuwait as well as from private local and religious trusts and is affiliated with the JUI. Another madrassa, Jamia Darul Rehmania, with the same credentials, offers education up to middle and has 350 boarders plus 230 daystudents and 28 teachers [...] The total number of Deobandi madrassa students in the DG Khan district is 11,535. Interestingly, in this category, it is the large madrassas […] linked to the JUI that receive foreign funding […] almost solely from Kuwait”. On 10 December 2009, Pakistan Peoples Party's member of national assembly, Jamshed Dasti from DG Khan, flatly denied the claim made by the Punjab law minister that there were no terrorist havens in south Punjab and that the Barelvi madrassas actually outnumbered those belonging to the more violent Deobandis. He said south Punjab was the main source of the Taliban-linked terrorists and that particularly DG Khan was in the grip of violence encouraged by the state itself. He said the hills of DG Khan were still the
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training grounds for jihadis patronised by the state. He asked why the Frontier Constabulary was stationed on these hills if the region was not on the border. An account of terrorist activity in Punjab in Urdu contained in Mujahid Hussain's book is going to open the eyes closed by state propaganda and jihadi intimidation that there is no terrorism in Punjab in general and in south Punjab in particular. The book discusses the transformation of Punjab into an extremist society where the outlawed jihadis increasingly find acceptance窶馬ot a little helped by the state agencies. The chapters on south Punjab are significant in so far as it forms a peripheral territory of the province with low writ of the state. Bahawalpur Division contains the following important districts, Bahawalpur, Bahawalnagar and Rahim Yar Khan, dominated by the presence of the banned terrorist jihadi organisations, Jaish-e-Muhammad and Sipah-e-Sahaba. The other two forces in the territory, the feudals and the state, have developed a modus vivendi with them; the latter frequently acts as a bodyguard threatening anyone trying to investigate their activities. The districts have supplied nearly 5,000 warriors to the Taliban's war in Afghanistan, Waziristan and Swat. Tehsil Khanpur in Rahim Yar Khan has the madrassa Makhzan al-Ulum founded in 1944 and belonging to Jamiat Ulema-e-Islam of Maulana Fazlur Rahman (JUI[F]) known for its sectarian character. Famous Deobandi cleric Abdullah Darkhwasti was its founder. After his death in 1994 his son Ataur Rehman is running it at present. Another Khanpur madrassa Abdullah bin Masud has Abdus Sattar Taunsavi at its head; he was the head of the region's Sipah-e-Sahaba. Taunsavi's son has trained at Darul Ulum Eidgah at Kabirwala, the madrassas from where the founder of Sipah-e-Sahaba, Haq Nawaz Jhangvi, had graduated. Khanpur is also a centre of the Deobandi Tablighi Jamaat. Leader of Jaish-e-Muhammad Masud Azhar is said to be located in Cholistan where he runs a training camp for his warriors for which he receives financial aid from Al Qaeda. He is also being protected by Pakistan's Inter-Services Intelligence (ISI). In Bahawalpur city he has been given five acres of land for a centre with up-to-date facilities. Thousands of Jaish militants are living in Bahawalpur where Masud Azhar too secretly resides. He frequently visits the Taliban and Al Qaeda leaders on the Afghan border. Malik Ishaq is in jail in Lahore for killing dozens of people belongs to Rahim Yar Khan and is leader of Lashkar-e-Jhangvi and rules the territory from jail, even talking to the political leaders of Punjab from prison. The case against him has weakened after witnesses against him got killed and the living ones have resiled. Bahawalpur produced Osama Nazir, arrested in 2004 from Faisalabad, but wanted by the US for killing an American lady in a church in Islamabad in 2002. He followed it up with another attack on a Christian school in Murree and a Christian hospital in Taxila on behalf of Al Qaeda, taking revenge against America's invasion of Afghanistan. Osama Nazir began as the ISI's man trained for warfare in Kandahar when the Taliban were ruling Afghanistan. He ended up marrying the daughter of an important Taliban commander (p. 62). Riaz Hussain Pirzada of Bahawalpur had his father killed by the sectarian killers of
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Sipah-e-Sahaba. Chief of Sipah, late Azam Tariq himself was the accused but after Pirzada was systematically subjected to intimidation, things changed and Pirzada published a notice in Jang Newspaper (13 January 2009) saying anyone who spoke against the chief of Jaish, Masud Azhar, would be considered as attacking the Seraiki people. Even the BBC took note of this volte face. The mastermind of the Mumbai attacks Hamid Amin also belongs to Rahim Yar Khan; he matriculated locally but went to Karachi where he also got married. Around this time he contacted Lashkar-e-Taiba and took training in its camps. Zakiur Rehman Lakhwi who allegedly prepared the attackers for Mumbai, helped his family with money after his death. In Bahawalpur thousands of warriors have gone to join the war in the Tribal Areas from Madrassa Usman-o-Ali established Masud Azhar. Azhar's father, Allah Baksh Sabir serves as imam of Madrassa Usman-o-Ali. The nearby mosque serves as the hostel for a large number of Pashtun Taliban. Multan Division forms another “feeder” of the Taliban from south Punjab. This is the territory of Sipah-e-Sahaba, Lashkar-e-Jhangvi and Shia-based Sipah–e-Muhammad wielding power in Multan, Muzaffargarh and Khanewal. Malik Ishaq and Akram Lahori, the former jailed in Lahore and the latter in Multan, have admitted killing people in these three districts and are about to be released because most witnesses against them have either been killed or the prosecution is too scared to put them through “due process”. Allama Masud Alvi, the founder of Jamiat-ul-Mujahideen was from Multan in the famous madrassa Khairul Madaris. He was the son of an even more famous Maulana Muhammad Sharif who was the Sheikhul Hadith of Khairul Madaris. Alvi believed in warlike training along with education in Sharia. In 1973, he formed his warrior organisation in this madrassa aimed at conquering the world and taking Islam out of its chasm of dishonour. He attacked the Ahmadis first but had to disperse under government pressure. He found home for his “active” Sharia in Kundian next. When the JUI chief Mufti Mahmood came to south Punjab he was given a military salute at the Kundian madrassa from trained militants. He was chased by the government in Azad Kashmir where he crossed over into the Indian administered Kashmir and killed 12 Indian troops. Finally in 1988 Allama Masud Alvi died in Paktia after stepping on a mine. Commander Nasrullah Mansur Langrial belongs to Harkat-ul-Jihad-al-Islami and since 1992 is in prison in India. He had the honour of taking jazia (Islamic tax for nonMuslims) from the Hindus of Indian-administered Kashmir. He belonged to Chichawatni in Multan Division and when he was studying at the Khairul Madaris madrassa he was influenced by the jihadi aspects of the madrassa. He went to Afghanistan for training under Al Qaeda and from 1984 repeatedly went there for jihad. Despite efforts, he has not been sprung from his jail in India. Khanewal in Multan Division has Darul Ulum Eidgah that is known to prepare graduates with most extreme sectarian beliefs. Fifteen kilometres from Khanewal is the village Kabirwala where the violent youths usually found safe haven in the local madrassa. The Kabirwala madrassa is famous because the founder of the most dreaded Sipah-e-Sahaba Maulana Haq Nawaz Jhangvi studied here for seven years before returning to native
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Jhang to hound the Shia (p.94). This Deobandi madrassa was founded by Maulana Abdul Khaliq in 1953; it has four storeys housing 1500 pupils with 80 teachers at the cost of Rs 15 million annually. In 2009 a Karachi businessman who did not wish to be named gave the Kabirwala Madrassa Rs 10 million. When the Taliban of south Punjab returned from Malakand-Swat to their homes in Muzaffargarh district of Multan in July 2009 they carried with them the warning note from Muslim Khan a commander of the Tehreek-e-Taliban Swat. These notes were sent to 200 shops and 35 educational institutions asking the Shias to become Muslims or their women would be taken as wives and subjected to zina (rape) after mutaa (temporary marriage) (p 96). In July 2009 again a Sipah-e-Sahaba member teacher and a veteran of Afghan jihad Riaz Ali in Mian Channu had his house blown up from the explosives he was keeping for the Taliban. All the surrounding houses were destroyed too. He was never questioned by the police or the people who knew who he was and what he was doing. Because he posed as a teacher they sent their children to him under intimidation. The children attending class in his house were killed. Lashkar-e-Taiba and Jaish-e-Muhammad have thousands of trained youths working for them in south Punjab. Jaish has 20 madrassas in Multan from where they can pick up their jihadi warriors at any time. They also help out Lashkar-e-Jhangvi if and when required. Lashkar gets the bulk of its finding from Faisalabad but after Faisalabad the biggest source is Multan. Lashkar's camps at Muridke and Chehla Bandi in Azad Kashmir draw most of their warriors from Multan Division. Dera Ghazi Khan Division abuts the other three provinces and has mountains on its border, looking towards the troubled FATA territory. The division is unstable in terms of law and order and is a haven for the extremist Islamists. Yet it also has the most sensitive natural resource owned by the countryâ&#x20AC;&#x201D;uranium. It houses an atomic energy plant, an airport and an industrial area. The jihadis have attacked railway lines and attacked oil supply lines and other state-owned properties. The division in general and DGi Khan in particular is a hothouse of sectarianism which denotes a dominance of the Deobandi school of thought, the creed of the Taliban. In February 2009 a Shia gathering was attacked by a suicide-bomber killing 35 while the responsibility for it was accepted by late Baitullah Mehsud. According to tapped telephone calls Taliban leaders frequently visit DG Khan and its tehsils (administrative division) especially the madrassas where youths are trained to become Taliban warriors. Around 2,000 of them have joined the Taliban from this territory. Taunsa Sharif is under great pressure from the Taliban and is virtually a no-go area for the police. One terrorist caught by the police with explosives admitted that he was from Taunsa and was a sworn follower of the late Sipah-e-Sahaba leader, Azam Tariq. (The spokesperson of Tehreek-e-Taliban Pakistan has been named Azam Tariq under the new leader Hakimullah Mehsud.) He admitted being in a South Waziristan training camp. Qari Hussain of the Taliban has trained many suicide bombers from here. In Rajanpur there is a katcha territory which is a haven for the Taliban. Islamabad's Lal Masjid (Red Mosque) clerics the Ghazi brothers came from Rojhan, another tehsil of DG Khan (p 105). The attack on Lal Masjid by state troops in 2007 aroused the most intense Al Qaeda rage against Pakistan.
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Afghanistan in 2009 Chronology of Major Events February 11
February 17 August 3 August 6 August 13 August 15 August 18 August 15 September 2 May 3 August 20
September 21
October 20
November 1 November 2 November 29
Taliban gunmen and suicide bombers staged synchronised raids on 3 government buildings in Kabul, killing at least 20 people and injuring scores of others. The US President Barack Obama approves adding some 17,000 US troops in Afghanistan. A bomb blast in Herat city killed 12 people. Five American and three UK soldiers, five civilians and five policemen killed by roadside bombs mainly in Helmand Twin bomb blasts in Helmand and Kandahar killed 14 people including several children Bomb blast outside NATO headquarters in Kabul killed 7 people and injures 90 others. 9 Afghans and 1 NATO soldier died and more than 50 were injured in Kabul A massive car bomb explosion in the southern Afghan city of Kandahar killed at least 40 people. Bomb blast in Laghman province killed Afghan deputy chief of intelligence and 21 others. US air strike killed 140 civilians in Afghanistan's Farah province. Presidential and provincial elections were held, but were marred by widespread Taliban attacks, patchy turnout and claims of serious fraud. Gen. Stanley McChrystal, the top US and NATO commander in Afghanistan, said in a confidential report that without additional forces, the war against insurgents will end in failure. Hamid Karzai agreed to a runoff elections, acknowledging he fell short of a majority after the UN-backed auditors stripped him of nearly a third of his votes. Abdullah Abdullah withdrew from November 7 runoffs against his opponent Hamid Karzai Hamid Karzai was declared the elected president of the country. President Obama issued orders to send about 30,000 additional American troops to Afghanistan
Source: Compiled in-house
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Afghanistan: Major Developments Danish Karokhel
A
s the eighth year of the war in Afghanistan is concluding and two key allies of the present government in the country—the US and the UK—are redrawing their political and military strategies to win the war, the country is still reeling from increasing attacks on the Afghan government, civilians and foreign troops. The surge in Taliban activity from the volatile south to the comparatively peaceful northern zone along with widespread corruption in governmental organisations and departments are worrying conditions for international supporters of the Afghan government. The Taliban—overthrown as a result of the US-led invasion of Afghanistan in late 2001—retreated and went into hiding in the remote areas of Afghanistan or the tribal belt of neighbouring Pakistan till end 2005. But by the end of 2009 they gained confidence enough to challenge the Afghan and international security forces by carrying out attacks even in the fortified capital of Kabul. The year 2009 also witnessed the second term of presidential elections, a major success for the Afghan government and the international community. However, the process was fraught with charges of fraud on the part of the incumbent president, Hamid Karzai. Some of the major developments that took place in the country during the year 2009 were the 20 August 2009 presidential elections; the recent announcement of US President Barack Obama to send more troops to Afghanistan along with his withdrawal plan; the spread of insurgency from the south to the north and western zone; the record number of casualties among the foreign troops since 2001; civilian deaths in military operations, particularly air bombing; flourishing poppy trade; growing frustration among the citizens about the security situation, political instability and the economy; and the unbridled corruption in the government as well as private organisations. While the holding of presidential elections in August, notwithstanding charges of largescale corruption, is a success, the undue delay in announcement of the results and the growing tension between President Hamid Karzai, his rival Dr Abdullah and some international players showed that the Afghan administration is not totally independent in carrying out its decisions. The elections were no doubt a success, but the international community is yet to ensure a totally independent Afghan administration without any interference or pressure. When the political system is influenced by foreign allies, there is no doubt that they will not rely on the Afghan security organs at any point in the near future. The second biggest development in December 2009 was the announcement by US President Barack Obama to send 30,000 more troops to Afghanistan and American troops withdrawal plan from the country from July 2011 onwards. The announcement
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drew appreciation as well as disdain from Afghans, most of whom want the foreign troops to leave the country if they are not doing any reconstruction work and are instead carrying out air raids and ground operations in civilian areas. The frustration among common Afghans about the foreign troops can be gauged from the fact that hardly one percent of people in the southern and southeastern zones, the most volatile parts of the country, are happy with the reconstruction work done in their areas. Less than that percentage of people are of the view that the foreign troops respect their culture and traditions. The rest have widespread complaints against the peacekeepers for showing disrespect to their culture and tradition by entering their houses and searching their women, bombing their farms and orchards and destroying their houses. It the situation stays the same, extra troops will render no help to the Afghans except increasing their frustration about their own government and the international community and thus providing a stronger support-base to the Taliban, who are picking their recruits among those whose houses were searched and bombed, family members either killed in the security operations or tortured and dishonored by searching their women during night raids on their houses. A short meeting with the residents of the southern and south-eastern zones—apart from those living in the provincial capitals and some district centres—will easily reveal that the people are in dire need of the reconstruction process. This includes the construction and opening of schools, hospitals, roads, provision of clean drinking water, support for farmers to start agriculture and, particularly, the provision of jobs to the youth in those areas. The jobless youth in southern and south-eastern Afghanistan are recruited by the Taliban in large numbers in the name of Islam, jihad, promises for a better future for the country and their families, expulsion of the foreign troops who, they propagate, were here to convert Afghanistan into a “Zionist state”. According to a report published in a section of the US media, 800 American soldiers have been killed and more than 200 billion US dollars spent by the US government in Afghanistan over the past eight years. Of that amount, 60 billion has been spent only in the outgoing year while the surge in troops will add another 30 billion US dollars to its cost of war in the country. According to estimates, the cost of keeping a soldier in Afghanistan is nearly one million US dollars. Looking at the security and reconstruction expenditures, a wide gap is visible. Even a small fraction of the amount spent on security can boost support for the foreign forces if spent judiciously on construction of schools, roads, health clinics, clean drinking water and agriculture. It would not only benefit the Afghan citizens but also provide jobs to the youth, thus drawing them away from the Taliban propaganda and injecting a sense in them that the international community is here to reconstruct the country and improve the social, political and economic situation of Afghans. As far as the security front is concerned, the Afghan government and the foreign troops are losing even their safe areas. A fresh example is attacks by the Taliban on Afghan and
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foreign troops and supply convoys in the northern zone. Once considered peaceful areas, the provinces of Kunduz, Baghlam, Samangan, Faryab and the western provinces of Herat, Farah and Nimroz no more enjoy the same status because of the sporadic attacks that have been witnessed there much to the dismay of the local population. It is said that the militants are now shifting their focus to the northern and western zones. They are planning to fight the most part of their battle in these two areas during the next summer to embarrass those countries whose troops are serving in the western and northern parts and who are reluctant to send them to the southern or south-eastern provinces. When there is talk of security in Afghanistan, one can not set aside the tribal belt of neighbouring Pakistan where Taliban supporters have their sanctuaries. The Afghan government has accused these Taliban of providing constant support to those fighting inside Afghanistan. Though the Pakistani government launched a massive operation in Waziristan in midOctober 2009, no major success is visible except that the militants have been pushed back from their hideouts. This worsened the situation as the Taliban in Waziristan shifted to Orakzai Agency, closer to the city of Peshawar, or moved to Afghanistan, thus attacking targets in the cities. The year 2009 also witnessed an increasing number of civilian casualties which further increased the anger among the Afghans against their own government as well as the foreign troops. Even the international organisations criticised the increasing number of civilian casualties in military operations as well as during attacks by the Taliban and asked both the warring sides to observe restraint. It is because of the increasing number of civilian casualties that the demand among Afghans regarding the withdrawal of foreign troops from the country continued to grow. On the reconstruction front, works are underway both in the central capital of Kabul and in the provincial capitals. But the people in rural areas and the remote districts of the country are still in dire need of basic facilities of life, like clean drinking water, health clinics, roads, schools and shelter. The administration's corruption also remained a hot topic during the outgoing year and many candidates during the presidential elections fought the contest with the slogan that they would root out corruption from the governmental departments if elected to the top slot. The international community also increased pressure on the Afghan government to take serious measures to overcome the menace of corruption in the country. At the same time, frustration among Afghan citizens increased during the year because of consistent unemployment which still exists. The Afghans are also complaining about the lack of easy and speedy justice. Danish Karokhel is director and editor-in-chief of Pajhwok News Agency, Kabul, Afghanistan.
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Bangladesh in 2009 Chronology of Major Events
Date
Incidents
January 3â&#x20AC;&#x201C;4
Members-elect of the Parliament belonging to Awami League (AL)-led grand alliance took oath.
January 6
Bangladesh Awami League (AL) President Sheikh Hasina was sworn in as the country's new prime minister. Bangladesh Nationalist Party (BNP) lawmakers-elect decided to take oath and join the first session of the Parliament.
January 22
The upazila parishads elections are held after around 19 years.
January 25
The BNP-led opposition lawmakers walked out of the inaugural session of the ninth Parliament and boycotted President Iajuddin Ahmed's address.
January 28
Prime Minister Sheikh Hasina Wazed said her government would not hesitate to take stringent measures to curb militancy in the country during her first question-answer session in the ninth Parliament.
February 1
Speaker of the Parliament Abdul Hamid turned down all 21 notices from BNP-led opposition lawmakers for holding discussions on various issues adjourning other scheduled businesses of the House.
February 19
The Bangladesh government said that it has mutually agreed with India to hand over the United Liberation Front of Asom (ULFA) founder Anup Chetia, who has been lodged in a Bangladeshi jail since 1996, reports The Hindu.
February 24
Prime Minister Sheikh Hasina while addressing a function at Bangladesh Rifles (BDR) headquarters in Dhaka said that Bangladesh would not allow anyone to use its territory as a springboard for terrorist activities.
February 25
A bloody mutiny by a section of Bangladesh Rifles (BDR) soldiers sent Dhaka into a war footing as the paramilitaries fired several thousand shots from machineguns, killing at least two army officers, one noncommissioned BDR officer, and three civilians in BDR Pilkhana Headquarters. Prime Minister Sheikh Hasina offered a general amnesty to the mutineers who held more than 100 top officers hostage.
February 26
The 33-hour mutiny of BDR personnel ended in their surrender at the BDR headquarters after Prime Minister Sheikh Hasina warned of tough action to take them off a "suicidal route".
March 1
The government decided to deploy members of the armed forces across the country indefinitely to help law enforcement agencies arrest the absconding rebels of BDR and recover the missing firearms and ammunition.
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March 12
The Commerce Minister Lt Col (retired) Faruk Khan, who has been coordinating the investigations into the February 25 and 26 killing of 74 people including 52 Army officers at the Bangladesh Rifles (BDR) Pilkhana headquarters, linked the killings to the militant outfit, the Jamaâ&#x20AC;&#x2122;atul Mujahideen Bangladesh (JMB).
March 22
The first court of Rajshahi Divisional Special Judge sentenced seven militants of the banned JMB for life in connection with the August 17, 2005 serial bomb blast case filed with the Motihar Police Station
March 25
Two people, including a Awami League (AL) leader Ruhul Amin Khan, were wounded in a bomb blast at his house in the Laxmipur village of Muladi sub-district in Barisal District.
April 17
Police arrested 31 Hizb-ut Towhid (HuT) militants, including its Kushtia regional chief, and seized books and leaflets on Jihad from the Pather Disha office at Bara Bazaar in Kushtia town, while they were holding a secret meeting.
April 18
A court in Kushtia sent 31 Hizb-ut Towhid cadres, including its regional chief, to jail.
April 23
Security Forces arrested 22 suspected militants, most of them women, in a raid in the south-western Barisal District soon after enforcing stepped up vigil around foreign missions following threats from Islamist extremists.
May 12
The government announced zero tolerance against militancy, terrorism and any attempt to disrupt the law and order situation as a 17-member National Committee on Militancy Resistance and Prevention held a meeting at the Home Ministry.
May 21
The national probe committee on Bangladesh Riffles (BDR) mutiny did not find any militant, political or foreign links to the carnage at Pilkhana headquarters.
July 16
A military investigation found 3000 jawansâ&#x20AC;&#x2122; (personnel) involvement in the BDR mutiny case. Military Intelligence recently completed screening around 8000 BDR jawans who were inside Pilkhana during the mutiny, sources said. In the aftermath of the mutiny, 40 cases were filed in 28 Districts outside the capital and a total of 1,721 BDR jawans were arrested on charges of mutiny outside the headquarters.
July 30,
Two persons were killed when suspected left-wing extremists carried out a bomb attack at Purbabonogram village in the Pabna District. The Dhaka Police arrested 1582 more persons on various charges in separate drives across the country in 24 hours till 6:00am.
August 5
The arrested JMB militant, Zahidul Islam Sumon alias Boma, revealed before the Rapid Action Battalion (RAB) that the outfit had planned to assassinate either Prime Minister Sheikh Hasina or former Prime Minister Khaleda Zia in its failed bid to foil the ninth parliamentary elections in December 2008.
August 27
SFs arrested six left-wing extremists from three south-western Districts as a crackdown on the extremists continued amid an increasing number of killings in the region.
October 12
A court in Netrakona sentenced three JMB militants to 39 years rigorous imprisonment each for a bombing in the town on August 17, 2005. The convicts were identified as Kawser Ahmed alias Yunus, Kawser Alam Sumon and Amanullah.
November 2
Police arrested Moulana Sheikh Abdus Salam, founder of the HuJI-B, for suspected links with the August 21, 2004 grenade attack on an AL rally.
November 9
The chief of the Janajuddha faction of the PBCP-Janajuddha in Pabna District, identified as Mohammed Kamruzzaman Oli, was shot dead by Police during an encounter in the Faridpur District. He was reportedly wanted for three murders and had been in hiding since the caretaker Government came to power in 2007.
November 20
A five-member special bench of the Appellate Division delivered the nine-minute "short order" of the judgment chief justice upholding the death sentence to a dozen killers and dismissing appeal petitions of five convicts among them.
November 26
Police arrested 1519 persons on various charges in separate drives across the country in 24 hours as of 6:00am (BST). 14 firearms, 12 bombs and 120 bullets were also seized during the countrywide drive, said a Police headquarters release.
November 30
The Canadian government has decided to deport Lt Col (Retd.) SHMB Nur Chowdhury, a convicted fugitive killer of Bangabandhu Sheikh Mujibur Rahman, to Bangladesh, Law Minister Shafique Ahmed announces.
December 6
Arrested Jammu and Kashmir based Islamist militant Abu Yusuf Butt, who is a leader of Jamaat-e-Islami and Hizb-ul-Mujahideen (HM) outfit, confessed before a Dhaka court that he was linked to the August 21, 2004 grenade attack on an Awami League rally on Bangabandhu Avenue in the city. Yusuf also said that he also worked with militant outfits HuJI and Pakistan-based LeT.
December 29
RAB said that during 2009, 60 persons have been killed in 57 incidents in which RAB used firearms but the use was not proved unlawful in the investigation.
Source: http://www.satp.org/satporgtp/countries/bangladesh/timeline/2009.htm
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Bangladesh: Many Promises, Few Deliveries Nader Rahman
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he year 2009 was to be the year of change in Bangladesh, at least that is what the politicians of the country promised. It turned out to be just about as topsy-turvy as any other year while the so-called “charter for change” was forgotten merely a few months into the calendar. But aside from what is now considered normal political wrangling, 2009 was also the year the two major political parties in Bangladesh tried to reinvent themselves. Whether they succeeded or not is open to debate, but the fact that they even started the process was progress indeed. The year was dominated by a number of key issues but none more important than the Bangladesh Awami League (AL) led government coming back into power in what was essentially the second coming of democracy in Bangladesh. Khaleda Zia and the BNP may have done it before in 1991 after toppling H.M. Ershad's near decade long autocratic rule, but Awami League's victory in the end of year elections in December 2008 promised a return to democracy like no other government. It was not the promise of a system merely called democracy, it was the promise of a working and inclusive democracy that would take Bangladesh out of the doldrums while also fostering electoral competition. Essentially Sheikh Hasina promised the country what no one before her had ever even dreamed of, but it was a promise too rich to fulfill and by the end of the year the country was back to the confrontational politics of old. After possibly the most corrupt government in the country's history (the four party BNPled alliance from 2001 to 2006) Bangladesh went through a transitional change in the name of a caretaker government which at first promised to clean out the house but then failed to do so with any form of distinction. While the caretaker government was questionably unconstitutional (that is still a topic of debate in the country) it started with enormous public support. The government promised to purge corrupt politicians and reform political parties. However, a few months into its nearly two-year tenure it lost public support by making a mess of the judicial process behind putting politicians away for corruption. By the time the caretaker government left it was jeered away by a public that was sick of Bangladesh Nationalist Party (BNP) and their cohorts who reviled in faith-based politics, which had managed to fail in implementing any of their so-called reforms. It was the perfect time for AL to step in and take over the reigns, but nobody expected them to win the December 2008 elections so comprehensively. With over a two-thirds majority in the Parliament they all but erased BNP from the electoral map. The people had spoken and it was Sheikh Hasina they wanted to lead them into 2009. She famously put forward a “Charter for Change” as her election manifesto and promised a “digital
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Bangladesh” along with a vision for how the country would be in 2021, the 50th year of its independence. As usual things started off quite well, a new cabinet was sworn in and immediately they seemed up to the task. The ninth Parliament began on 25 January 2009 and the then President Iajuddin Ahmed called it a “parliament for change”, somehow not being able to overcome President Barack Obama's powerful message for change thousands of miles away. The Parliament is normally where all the problems stem from and it was no different in 2009. BNP sat through the first session of the Parliament and it seemed as if it would finally play its deserved role in Bangladeshi politics, a place for elected leaders to debate and discuss issues of national importance while making laws to protect and provide for their constituencies and the people at large. For a while that utopian dream seemed a reality and then disaster struck; the smallest opposition ever in the house decided to start a petty squabble over the placing of seats. Initially all they wanted was an extra seat in the front row, but after being denied this small favour they decided to up their demands and that is when the water came to a boil. Within a few weeks they started boycotting the Parliament and continued to do so till the end of the year and the foreseeable future. There seems to be no end in sight for this ridiculous situation, but what can be said is that the opposition is not the only party to blame for a non-functioning Parliament. If the Awami League had ceded to the minute demands of an extra seat on the front row, the country may not have been in this situation. But as is the case with the party in power, they feel an insatiable need to flex their muscles even on the most trivial of matters. With an empty Parliament, the government went about their charter for change unopposed. One of the biggest issues the government dealt with in the first half of the year was the return of local government. After 19 long years and several false starts, 2009 was supposed to mark the rebirth of the system of local government. With the local government elections on 22 January 2010 going off without a hitch, everything seemed set for the local government or Upazilla Parishad chairpersons to start work in their respective communities, but this was not to be. The government decided that the members of Parliament (MPs) would be “advisors” to local government chairpersons and that the chairpersons would have to heed to local MPs, thus giving the MPs almost absolute power over the chairpersons. It was unconstitutional to say the least and caused an uproar around the country since it was seen as a blatant attempt to keep the local governments under the influence of the MPs. By doing so the very foundations of a free and open democracy were being toyed with—and all so that the MPs could have a little more power over their localities. This also proved to be one of the few times that both the government and the opposition agreed on an issue of national importance as they both saw the matter to be beneficial to them and their lawmakers. The government then went back and forth on the issue a number of times, one week saying the MPs would not have power over the chairpersons and the other week saying they would. Till the end of the year no clear statement had been made by the government
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as to how to deal with the local government chairpersons and as such no work was undertaken by them. While the elections in January may have been a false dawn for the local government system, one still hopes the government will come to its senses sooner rather than later. Politics aside, the beginning of the year also marked one of the most ghastly attacks in Bangladesh since the Liberation War. For three days downtown Dhaka was turned into a war zone as the Bangladesh Rifles (BDR) cadres rebelled and mutinied against their apparent mistreatment and in the process killed 74 people including 57 members of the armed forces. While a clear picture of what went down is available now, the far murkier issue is the reason behind the mutiny. As soon as word of the mutiny broke all hell broke loose in Dhanmondi, where the BDR Week celebrations were being held. As the rebelling guards held down their positions many outside their complex were shot at indiscriminately. The media were quick to the spot and for the first day at least swayed public opinion in favour of the guards. The guards claimed that they had been mistreated by their army superiors who had also plundered millions of Takas away from various national level campaigns. They claimed that they only took up arms because there was no other way for them to be heard and initially there was large scale public support for them. The average person felt military corruption and mistreatment were reasons enough to rebel, but the public had no idea about the macabre killings that went on inside the BDR camp. It was only after bodies started showing up in the river surrounding the headquarters that the people realised that most of the senior military personnel had been killed inside. That was when public opinion started shifting against the mutineers and the topic of discussion then turned on how to end the situation with the least loss of life. There were unconfirmed reports that up to 20,000 BDR men were in with the rebellion and, with the army taking up strategic positions outside the headquarters, it seemed at one point that they were going to storm the area and forcefully take them down. That, however, did not materialise and halfway into the third day they surrendered. Only after investigators entered the premises did they realise the scale of destruction. Officers were lined up and killed en masse and then dumped into shallow mass graves while some women were apparently raped; it was mayhem inside and yet the reasons for the rebellion seemed flimsy at best. The government ordered all absconding BDR guards back to their stations and there was a wave of mass arrests trying to pin down exactly who was to blame for the massacre. With the mass arrests and detentions another issue started to surface after the BDR jawans started dying under “mysterious” circumstances. Many died of suspicious “heart attacks” while many also committed “suicide”; essentially it is believed that it was all a front as the government had been torturing them into confessions and after the umpteenth person died only then did the civil society step in and protect their treatment while under detention. But for many, the damage had been done, lives had been lost and the system of rough justice was seemingly back in fashion. But the prime minister was keen to keep her image clean and claimed that she would crack down on the extra judicial killings which, to be fair, were probably at their lowest levels for a few years.
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National politics also swirled around international relations in 2009 as the building of the Tipaimukh Dam in India aproved to be one of the major talking points this last year. India proposed to build a dam which would adversely affect the water flow in parts of northern Bangladesh, an issue that cause a major uproar in the public. They arranged protest after protest and accused the government of pandering to India by not taking up the issue more seriously with the Indian government. Finally when a delegation was sent to India to investigate the issue, the weather was so bad that they could not even visit the site; they simply made the rounds in Delhi and came back home. While India officially says they are not building anything yet and that there is a long way to go till the plans are passed, the fact that they would even go ahead with such plans was insulting to the Bangladesh government. Domestically things were on an even keel, but the government which had come in with such promise started to return to the politics of old. They started renaming everything after their late leader Bangabandhu Shaikh Mujibur Rahman. Everything named after the founder of BNP, Ziaur Rahman, was renamed with immediate effect and that was merely the star of their mini war on the opposition. While almost all the cases filed against Awami League members during the caretaker government's rule were dismissed, interestingly those against BNP were not and a few new cases even found their way into the courts. It was all shockingly shameful from a government that had the largest peoples mandate ever. By the end of the year the honeymoon was over and the public realised that the charter for change, much like any election promise, was all talk and no action. But that is not to say it was all doom and gloom in Bangladesh. There were many positives to take out of the year such as the new push for green energy with the prime minister taking the lead on the issue. She promised to bring down taxes and levies on renewable energy while also encouraging the sector to flourish. Her words were met with solid deeds as a local company got a 9.9 million contract to turn the prime minister's office into one that runs entirely on solar power. A similar contract was struck with the offices of Bangladesh Bank. But going green was not just a phase for the government and Prime Minister Hasina; throughout the year she talked and lobbied for a climate change deal to be struck in December since Bangladesh stands as one of the first countries to be affected by global climate change. The prime minister even took the road show to Copenhagen where she remained vocal about developed countries paying for the adaptation costs of developing and least developed countries. While there may have been no binding deal at the summit, her role was duly noted by those who attended. Economically the year had both its ups and downs, the downs mostly related to the prices of basic commodities but the ups linked with a marked increase in Bangladesh's foreign reserves. 2009 was also the year of change within the political sphere of Bangladesh as both Bangladesh Awami League and BNP held their national councils. Awami League did away with their old guard as they dumped them for younger, fresher faces, while at BNP's council Tarique Zia, son of Khaleda Zia was elected to a senior role, thus paving the way for his entry into politics.
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Looking back at 2009 a few things become apparent. The zeal and enthusiasm that led Bangladesh Awami League to victory had fizzled out by the end of the year as they resorted to the politics of old. The opposition fell back into old habits as they kept away from the Parliament and it was the public at large that lost out most in this situation. The local government elections were turned into a farce and prices of essentials were kept unnaturally high by syndicates that did their best to cheat farmers and retailers alike. But there were a few silver linings and none more important than the revival of the war crimes trials and verdict of the killing of the father of the nation, Bangabandhu. It is said that justice delayed is justice denied, but in this case the justice was worth the wait. The current year (2010) does not look much better than 2009, but at the end of the year there is always hope that one might be able to wipe the slate clean and start anew. It does not seem likely, but there is hope and even minute progress is progress indeed. 2009 promised a lot and delivered little. There is hope that the same upside-down relationship between promises and deliveries works next year. 2010 does not promise much, but it is hoped it delivers plenty. Nader Rahman is assistant editor, Forum magazine, a publication of The Daily Star.
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Bhutan in 2009 Chronology of Major Events July 18
According to Sentinel, about 40 militants dressed in the fatigues of Sashastra Seema Bal (SSB) of India ransacked a house in the Sarpang District of Bhutan. This was the second such incident in the area during three weeks.
June 19
After signing a Memorandum of Understanding with the visiting Indian External Affairs Minister S. M. Krishna, the Bhutanese Foreign Minister Ugyen Tshering denied the presence of United Liberation Front of Asom (ULFA) in that country, according to Assam Tribune. "We don’t have any presence of any ULFA cadre here…," Tshering said. There were intelligence reports that some ULFA cadres were still witnessed along the India-Bhutan border resulting in some violent attacks by the insurgent group in those areas, according to the report.
August 5
Bhutan dismissed reports of the presence of permanent camps of Indian militant outfits on its territory but said it cannot rule out occasional incursions by the militants in the country. "There are unconfirmed reports of ULFA training camps along the India-Bhutan border but not within Bhutan," said Joint Secretary of Law and Order Bureau Karma T Namgyal, who was part of the Bhutanese delegation that held parleys with an Indian team at the Seventh Border Coordination Development Meeting in capital Thimphu. Indian officials said the ULFA and NDFB militants, based in Assam, are regrouping and may try to enter Bhutan to set up camps. "We were told that these groups are regrouping and planning to come back. We need to be more vigilant," an unnamed official said. According to Indian officials, these groups are in close collaboration with anti-national groups like Communist Party of Bhutan (MLM), Bhutan Tiger Force (BTF) and Revolutionary Youth of Bhutan (RYOB). "We've also received information that Maoist groups like MLM, BTF and RYOB are receiving trainings from ULFA and NDFB militants in batches," Namgyal was quoted as saying by the state-run newspaper Kuensel.
August 24
Bhutan has reportedly said that no militant outfit from Assam had camps on its soil, according to Telegraph . A 11 -member delegation from Bhutan which is visiting Assam said in Kokrajhar that their country would never allow any anti-India activity from its soil. "We are clear that after Operation All Clear in 2003, there is no militant camp in our country," Dasho Kunzang Wangai, the Deputy Commissioner of Bhutan’s Serfang District, bordering Kokrajhar in Assam, said. He also said his Government had asked him to convey to India that Bhutan would never allow any insurgent group from India to use Bhutan for its activities. Earlier, Wangai, the Superintendent of Police of Gelephu, Major Karma Tshering and Gelephu Sub-Divisional Officer Yecherangrig Dorji met the Kokrajhar Deputy Commissioner of Police Carol Narzary and top officials of the para-military Sashastra Seema Bal to discuss security of the two countries.
September 21
A 6.3 magnitude earthquake struck Bhutan killing at least 13 people and injuring dozens.
December 22–26
King Jigme Khesar Namgyel Wangchuck visited India on his first international trip since his coronation. India and Bhutan signed 12 memorandum of understanding (MoU) in areas including hydropower, civil aviation, health, IT and drug trafficking.
Source: http://www.satp.org/satporgtp/countries/bhutan/timeline/index.html
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Bhutan's 365 days Gopilal Acharya and Passang Dorji
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or Bhutan, 2009 was another extraordinary year. Amid social and political progress, the country witnessed unprecedented natural disasters. A major flood and earthquake hit the country, and hundreds lost their homes and properties, especially in the east. His Majesty, King Jigme Khesar Namgyel Wangchuck was personally involved in the relief efforts, helping the affected to rebuild their lives. On the other hand, colourful political debates brought home numerous lessons for a people who are into the second year of their democratic experience. Governance, Politics and Media Debate of the year The political debate of the year revolved around a touchy concept introduced by the ruling Druk Phuensum Tshogpa (DPT) government—Constituency Development Grant (CDG). CDG was finalised with an executive order from the finance minister in April 2009. Under the scheme, each elected member of the National Assembly (Lower House) is entitled to an annual budget of Nu 2.0 million (for five years) that s/he can spend in funding “pork barrel” projects. CDG started a countrywide fire Some quarters said the prime minister (PM) was under pressure from his members of Parliament (MPs) to introduce CDG. Others pointed out it was a “pork barrel” concept. Yet others said the idea was totally unconstitutional. Although the media failed to take a stand on the issue, the PM himself passionately defended CDG in a live televised session. Despite national debates and disagreements, the government swiftly implemented CDG. The MPs went about fulfilling their campaign promises. Some paid for their constituents' scholarship for higher education, and others paid boatmen to ferry voters across the river over which the MP had promised a bridge during campaigns. Constituency Development Grant (CDG) robs the legitimacy of a well-intended government brought to power by people. Pork barrel concepts have never been looked at in good faith. For example, in the Philippines, Filipino legislators are allocated large sums of the annual national budget (200 million pesos for each senator and 70 million for each representative) in a programme called the Priority Development Assistance Fund. However, politicians are often accused of misusing their allocations for selfish purposes, particularly through kickbacks and commissions from their projects. The National Council (Upper House) analysed how such grants have been unsuccessful in countries like India, Kenya and the Philippines, and pointed out how—besides having stringent guidelines for utilising the funds—they are vulnerable to misappropriation and mismanagement by the MPs.
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Constituency Development Grant (CDG) will certainly benefit the politician, either in terms of active party support during campaign or real votes. CDG can also divide societies and communities. In an adverse scenario, a politician can actually lose voters because s/he could favour one village more than the others in his constituency while spending the DPT “election pork”. The government should learn a lesson here. If a party in power tries to institutionalise ideas that in the long term could result in corruption, the democratic exercise in which the people so passionately participated (Bhutan had 80 percent voter turnout in the first general election in March 2008) is already diluted. The unrelenting Houses of Parliament Bhutan's is a bicameral Parliament: the National Council (Upper House), and the National Assembly (Lower House). Representatives to the National Council (NC) comprise 20 elected members—one from each 20 districts—and five nominees of the king. The Upper House is apolitical—primarily a House of Review. The National Assembly (NA) consists of 47 members elected from the 47 constituencies. At the moment, the NA has 45 members from the ruling DPT government and two members from the opposition. Right from the start of the first session of the Parliament in May 2008, the two Houses have been at loggerheads over various national issues. Their positions have often been contrasting, and they continue to take opposing stance on issues of national importance. This is good, because in a democracy one agrees to disagree. No democracy will stand the test of character without discourses and debates. The public opinion on the two Houses differs as well. While many see the NC as more rational, they view the NA less favourably. Even the Bhutanese media finds the NC more reasonable than the NA. This is because the NC members opened themselves up to the media's scrutiny and are more tolerant of public criticism. However, the battle of the two Houses continues to amuse the Bhutanese. It started with the NC members detecting a major hoodwink by the government in the second session of the Parliament. The government had secretly decided on state funding for the two existing political parties. The NC was furious and so were the people. The media fought an admirable battle to stop this unconstitutional move. The NA then reacted by declaring that the Budget Bill need not go to the NC for review and even if it goes, the NC's recommendations must be ignored. The NC strongly disagreed citing their constitutional duty as House of Review. Continuing their differences, the NA said the ban on the sale of tobacco must be adhered to when the NC suggested that the ban, proven as irrational, be revoked. People are wondering if the elected leaders are setting the right precedents and acting in the interest of the nation. Bhutan's elected leaders should learn about consensus building. The key here is zeroing disparate opinions to a shared vision which eventually becomes a piece of legislation that affects all Bhutanese.
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No new political parties yet There are only two registered political parties in Bhutan at the momentâ&#x20AC;&#x201D;the ruling Druk Phuensum Tshogpa (DPT) and the opposition, People's Democratic Party (PDP). In the run-up to the first general election in March 2008, the Election Commission of Bhutan disqualified the third party, Bhutan People's United Party (BPUP), and denied it registration citing its incompleteness; BPUP reportedly did not fulfil the criteria of a political party. The Election Commission, however, opened up registration of new political parties right after the election. Unfortunately no new political parties have come forward so far, even as the existing elected government is poised to turn two years old soon. There are rumours doing the rounds, though, that people have started working on forming a third party. Although the media tried to stir a general discourse on the importance of more political parties for a healthy election, people have thus far remained uninterested in forming one. The major discouragement for any new parties is funding. With the two existing parties already steeped in huge public debt, people say sustaining more political parties in a population of little more than half-a-million people will be unrealistic. The two existing political parties are yet to pay several institutions, including media organisations, and have publicly declared absence of funds in their coffers. They have pointed the difficulty in raising funds through membership fees and voluntary individual contribution by the registered party members. Instead, they say their membership is rapidly dwindling as members pull out because of the ongoing financial crunch. Therefore, in a bid to bolster the financial sustainability of political parties in Bhutan, the Election Commission raised the ceiling of voluntary individual contribution to Nu 500,000 (about USD 10,950) from Nu 100,000 (about USD 2,190). Moreover, people are seriously questioning the long-term sustainability and existence of the opposition (PDP), given that most of its candidates have disbanded after the humiliating defeat in the last election. While many of them are now comfortably employed in the corporate and private sector, some have altogether quit the party. Will People's Democratic Party resurrect as a robust political institution by the time the next election is around the corner? Will Bhutan have new political parties any time soon? It is in this dismal political context that the concept of CDG is being questioned. Media stumbles, fumbles, and carries on The Bhutanese media continued its growth with one more weekly paper hitting the newsstands in the fall. Another weekly, owned and run by a group of journalists, started circulation this month. The Bhutanese are yet to fully trust the country's young media industry where the average age of a journalist is 25. Therefore, the media in Bhutan needs to consistently build public confidence through accurate and more in-depth reportage. For the first time in the country, a group of journalists in a private newspaper, Bhutan
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Times, resigned en masse in a professional protest to editorial interference from the management. The group stood to protect independent journalism in Bhutan and live up to journalistic principles and values. In a democracy where the opposition is severely under-represented in the Lower House, where 45 of the 47 elected seats are held by the ruling government, where a strong civil society is yet to take root, the media has an immense responsibility in providing the much-needed check-and-balance in the system. What the media in Bhutan critically lacks at the moment is the understanding of its role and responsibility in a state where democracy is yet to take firm roots, where democratic institutions are yet to assert their character, and where the rule of law is just about beginning to be appreciated by its citizenry. Therefore, media organisations and professionals bear the important task of positioning themselves vis-Ă -vis the new realities the recent democratic exercise in the country has ushered in. Without an institutional guidance of sorts, the media will continue to face both government and public outrage at the way individual media houses look at themselves. On the other hand, with the government's liberal licensing policy, the media continues to grow rapidly. Where there was just one newspaper and just one state-subsidised TV/radio station three years ago, today a country of barely 600,000 people has six newspapers, four radio stations, and a television house. The Heating Bhutanese Economy First, the paradox Bhutan saw a commendable economic growth rate of more than seven percent. But some crucial elements of true growth and development were barely noticeable. The recorded growth was primarily spurred by the sale of hydroelectricity which does not, in the short-term, translate into improving poverty and unemployment which are the two pressing issues in the country today. Though there were no nation-wide studies conducted on poverty in 2009, it can however be deduced from information available that the poverty situation did not improve. Unemployment soared to 4 percent from 3.7 percent in the previous year. Given the small population of the country, the number of people languishing without jobs is alarmingly high. The Wall Street crash and the consequent global economic meltdown affected the Bhutanese as well. Because of their linkages with international markets, the steel and tourism industries slackened and business slid during much of the year. Steel industrialists said their factories were on the brink of closure as their products could not compete in markets abroad where steel prices hit rock bottom. Tour operators also had to bear the pain of cancellation of several visits by tourists from the west, especially Americaâ&#x20AC;&#x201D;Bhutan's major source of tourists. However, the impact of the global financial and economic crisis on Bhutan was minimal compared to the degree of recession the rest of the world underwent in 2009. Because of
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no or limited integration into the global financial system, the Bhutanese financial industry enjoyed an escape from the economic disaster. The Bhutanese stock market remained dormant and safe since the stock exchange rules restrict its exposure to external financial markets. The capital in-flows were negligible as usual. Consequently, the capital market stood immune to the ripples of the global economic meltdown. The Hydropower promises Following the signing of power protocol with India, the construction of 10 mega hydropower plants with generating capacity of more than 11,000 MW by the year 2020 was finalised. The projects will be undertaken in collaboration with India in two different modalitiesâ&#x20AC;&#x201D;inter-governmental and joint venture. This is a significant economic milestone given that the hydropower sector is the major source of revenue for the government. The successful completion of the projects will be a fulfilment of the first elected government's pledge to harness 10,000 MW of electricity by 2020. A new policy direction The country's first Economic Development Policy (mother of all economic policies, rules and regulations) was introduced. The policy sets out the direction for a fledgling economy to reap the opportunities that globalisation provides. This, the policy states, can be done by developing competent industries that have comparative advantages in the international markets. Encompassing the urgent call of time, the policy emphasises on five important elements: sustainable economic growth, private sector development, diversifying the economic base, economic self-reliance, and employment generation. Another equally important policyâ&#x20AC;&#x201D;Foreign Direct Investment Policyâ&#x20AC;&#x201D;saw a major revision. More liberal in approach, the revised policy will help the economy take advantage of global technological expertise and resources through technology transfer and foreign investments. Indeed, the policy opens up the economy which otherwise has been quite inclusive. An expanding financial system The inception of a new insurance company (Bhutan Insurance Ltd.) broke the monopoly of the only insurance company (Royal Bhutan Insurance Corporation of Bhutan) in the country so far. The new insurance company provides wider choices of insurance policies to the people. Furthermore, the company will contribute to the growth of the insurance industry as there is more than Nu 50 million worth of property that can be insured. In another incident marking the growth of the financial industry, the central bank (Royal Monetary Authority) sanctioned approval for operation of two commercial banks by private players. The new banks, scheduled for operation shortly, will take the count of commercial banks in the country up to four. Also, during the last South Asian Association for Regional Cooperation (SAARC)
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Summit in Colombo, Sri Lanka, Bhutan's proposal to host the SAARC Development Fund (SDF) was approved. With the SDF headquarters in the capital Thimphu, Bhutan is set to become a regional financial hub. The fund which aims at bringing about socio-economic progress in the region is expected in particular to boost employment opportunities and help alleviate poverty in Bhutan. SDF is expected to be operational in 2010. Meanwhile, immense support has been pouring in from various development partners after a major earthquake in September destroyed hundreds of homes in eastern Bhutan. His Majesty the king personally toured the affected areas granting relief funds and offering psychological support to rebuild people's homes and lives. Gopilal Acharya is the editor and Passang Dorji is the chief reporter of The Journalist newspaper.
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India in 2009 Chronology of Major Events January 5 February 11 February 17
February 19
February 25
March 9
March 23
April 6 April 16
April 30
May 7
May 13
May 14
May 20
May 16 May 22
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Indian Government handed over evidence of Pakistani involvement in the Mumbai multiple terrorist attacks to Pakistan. India and Russia signed deals worth $700m, according to which Moscow will supply uranium to Delhi. A "brief statement'''' on "activities and achievements'''' of the Ministry of Defence released, mentioned that the Army killed 330 terrorists and arrested 172 others in Jammu and Kashmir in 2008, while it neutralised 717 United Liberation Front of Asom (ULFA) militants in Assam. The Mumbai Police obtained crucial evidence from the FBI, the internal investigation agency of US, which indicates that the plot to execute the 26/11 terrorist attack was hatched in Pakistan. The Mumbai Police filed a charge-sheet against 47 accused persons in the case of 26 November 2008 Mumbai terrorist attack. The 47 include 35 wanted LeT terrorists from Pakistan, the lone arrested terrorist Mohammed Ajmal Amir Iman alias Kasab and arrested Indian nationals Fahim Ansari and Mohammad Sabahuddin. The first hearing of the November 26, 2008 Mumbai terror attack case would start from March 23 in the Arthur Road jail premises of Mumbai. The Special Sessions Court set up at the jail would convene for the first hearing of the case, according to an order by the Metropolitan Magistrate N. Shrimangale. In the first hearing of Mumbai terrorist attack case, Mohammad Ajmal Amir Iman alias Kasab, the lone arrested LeT militant, acknowledged before the trial judge that he was a Pakistani national and also accepted the proposal of a government-provided lawyer to defend him. The trial of Ajmal Amir Kasab, the lone surviving terrorist of the Mumbai attacks, began in Mumbai. In Uttar Pradesh, an estimated 48 percent of polling was recorded in 16 Parliamentary constituencies, which included the CPI-Maoist affected areas of the State. Around 50 percent of 144 million voters exercised their franchise in 107 constituencies in nine States and two Union Territories in the third phase of the Parliamentary elections. About 57 percent of the 94.6 million voters exercised their franchise when Phase IV poll in 85 Lok Sabha (Lower House of Parliament) constituencies in seven States and the National Capital Territory (NCT) of Delhi. In the last phase of Parliament elections, approximately 62 per cent of the voters exercised their franchise in seven States and two Union Territories, covering 86 constituencies. The Mumbai Crime Branch extradited an aide of underworld gangster Chhota Shakeel, identified as Gurpreet Singh Bhullar, from Bangkok. The government handed over additional information to Pakistan on the involvement of its (Pakistani) nationals in the Mumbai terrorist attacks. The ruling Congress party and its coalition won an overwhelming election victory. Dr. Manmohan Singh took oath as the prime minister for the second time.
July 2
A court in the Indian capital, Delhi, ruled that homosexual intercourse between consenting adults is not a criminal act. The ruling overturned a 148-year-old colonial law which describes a same-sex relationship as an "unnatural offence". July 16 India and Pakistan agreed to renew the bilateral relationship, frozen since the Mumbai terrorist attacks in November 2008, in a joint statement issued after the meeting of Prime Minister Manmohan Singh with his Pakistani counterpart Yousaf Raza Gilani. July 17 A 36-page dossier handed over by Pakistan for the first time admitted that the LeT carried out the November 26, 2008 Mumbai attacks. July 28 Prime Minister Manmohan Singh clarified the governmentâ&#x20AC;&#x2122;s position on the India-Pakistan joint statement in the Lok Sabha (Lower House of Parliament) asserting that the government had not diluted its position on terrorism by issuing a joint statement with Pakistan. September 4 The Indian Army Chief General Deepak Kapoor said that India would be forced to retaliate in case Pakistani army continues to violate the cease-fire and try to push in militants through the border under the cover of gunfire October 8 Targeting the Indian embassy in Kabul for the second time, a Taliban suicide bomber blew up an explosives-laden car outside the mission, killing 17 persons and injuring over 80, including three Indo-Tibetan Border Police (ITBP) soldiers. December 7 India and Russia signed a path-breaking broad-based agreement in civil nuclear field that will ensure transfer of technology and uninterrupted uranium fuel supplies to Indian nuclear reactors and inked three pacts in the defence sector. December 9 The federal government in India agreed to create a new state in the north and north-western regions of Andhra Pradesh. Source: http://www.satp.org/satporgtp/countries/india/timeline/2009.htm
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India: Defining Moments Soutik Biswas
T
he year 2009 was strange year. On the one hand, some stability returned to politics with the Congress party managing a fairly comfortable majority in the general elections. After the horrors of the 2008 Mumbai attacks, India actually went through 2009 without a terror strike. The economy appeared to have weathered the worldwide recession. Indian science and cricket scaled new heights. On the other hand, the year held out ominous portents—Maoist rebels are threatening to go to war with the Indian state; food inflation is threatening to negate the gains of improved growth; and, egged on by the movement for Telangana, homegrown separatism is rearing its head again. There is growing suspicion that the country's natural resources are being bartered away cheaply. All this—and more—could turn 2010 into an extremely restive year. Here are some of the defining events of 2009: The End of Hardline Hindu Nationalism? The Hindu nationalist Bharatiya Janata Party (BJP) proudly calls itself the "party with a difference". By the end of the year, India's main opposition was a party with many differences - within. When it was trounced by Congress at the general election, its fortunes hit rock bottom. Since then nothing has gone right: its leaders have bickered bitterly and openly; and one of them was banished, ostensibly for writing a book on Mohammed Ali Jinnah. Party president and paterfamilias LK Advani looked jaded, and as the year wound down he handed over the baton as leader of the parliamentary party to a younger colleague. He also handed over the party presidency. Whatever the changes, the BJP appeared lost. Critics say that ideologically, the party is past its sell-by date—still making noises about building temples, refusing to come to terms with the fact that India has grown up and strident Hindu nationalism has lost its vote-catching lustre. Others say the BJP's only hope appears to lie in reinventing itself as a modern day, rightof-centre, Indian conservative party. But observers find the leadership uninspiring. They say the party's best chance of revival is a dramatic slide in Congress fortunes. Rahul Gandhi's Second Coming He began as a gawky politician with a disarming smile that won him more female admirers than serious followers. But Rahul Gandhi, the latest scion of the Nehru-Gandhi dynasty, showed some serious political mettle this year.
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Travelling through the northern Indian heartland—especially in Uttar Pradesh—Mr Gandhi quietly worked on rejuvenating his party's grassroots network and attracting younger talent, his supporters say. His party staged a comeback of sorts in Uttar Pradesh—a return from virtual politician oblivion after two decades. Rahul Gandhi has his work cut out for him—revitalising Congress and making it less of a family enterprise. Apparently he believes the party should go it alone, bucking the current narrative of coalition politics. Most analysts feel he may be wrong on this, and that coalition politics is here to stay in a complex country like India. 2010 will prove whether Mr Gandhi can help maintain his party's momentum—and even perhaps take up the cabinet position which he has repeatedly been offered. Beating the Recession India, by and large, escaped the ravages of the global recession. Its conservative banking system and lower exposure to the world economy possibly saved the day. But to be fair, thousands lost jobs and companies stopped hiring and slashed costs. Spending plummeted and the property bubble burst. Now Prime Minister Manmohan Singh is holding out the hope of slightly higher growth—seven percent plus—in this fiscal year. Companies have begun hiring again and spending is up. However, many economists believe that India's growth is not pulling enough people out of abject poverty, while deepening the divide between the haves and the have-nots. Even if India hits double-digit growth like China, there will be no reason to party when a third of its people live in dire poverty and milions of children go underfed. Small is Beautiful? When Tata Motors unveiled the world's cheapest car, everyone sat up and took notice. The buzz around the rear-engined, four-passenger, 624cc Nano, whose basic model costs USD 2155, had been immense—one magazine wrote that it embodied a "contrarian philosophy of smaller, lighter, cheaper" transport. The Nano is a nifty little car all right. User reviews have been mixed: most say it is great value for money, but caution that it may not be the safest car on the road. Others believe it's safer than the wobbly three-wheeled auto-rickshaw. 2009 will tell whether Nano is a path-breaker or a risky gimmick. Customers seem to know what they want. The Nano's order books—more than 200,000 orders and counting—are full. Newsweek magazine, meanwhile, worries about potential "global gridlock" caused by Nanos and their ilk. India's Oscar Moment In the days before the Big Hype, Bhanu Athaiya, a Bollywood costume designer, picked up India's first Oscar for costume design for her work in Gandhi. That was in 1982. Nine years later, the celebrated auteur Satyajit Ray was honoured with a Lifetime Achievement Oscar, joining such greats as Charlie Chaplin, Jean Renoir and Akira Kurosawa. But India went truly Oscar-crazy only in 2009 when music director AR Rahman and sound recordist Resul Pookutty picked up a golden statuette each for their work in
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Slumdog Millionaire. The redoubtable Rahman—dubbed the Mozart of Madras, where he lives and works—is India's finest music composer and a brilliant crossover musician. Pookutty's triumph showed how Indian movie technicians are today on a par with the best of the world—even the worst Bollywood tripe these days has a sheen and technical verve which is impressive. An Accolade for Indian Cricket India defeated Sri Lanka at home to become test cricket's reigning champions. The team's batting line-up is difficult to match. The bowling has improved vastly. The fielding can be infuriatingly inconsistent though. In a country where cricketers are worshipped like gods and are the highest paid in the world, India cannot afford to slip up. There seems to be talent aplenty: hungry, young players coming up from smaller towns and villages are flocking to the game. The only threat to India's cricketing fortunes, say critics, comes from the country's notoriously fractious and inept cricket officialdom and the riches of the shorter Twenty20 game. Will mammon crush nationalism in what a sociologist called an "Indian game accidentally discovered by the British"? Over the Moon When India pulled the plug on its inaugural Moon mission in August, 10 months after it was launched, some questioned whether it had "delivered the good science" it had promised. Two months later, Chandrayaan, as the mission was called, was hailed as a "grand success" after helping find evidence of water on the Moon. The mission cost less than USD 100 million and fetched an enormous amount of goodwill for the country's bright space scientists. One newspaper crowed, One Big Step for India, A Giant Leap for Mankind. This time, few minded the hyperbole. An Indian Enron It had all the makings of an Indian Enron—one of the world's largest software companies, Satyam, found itself embroiled in India's biggest-ever corporate fraud. Its founder admitted exaggerating its cash reserves by nearly USD 1 billion. That was in January. Thousands of jobs, millions of dollars worth of shareholders wealth and India's corporate reputation was at stake. The government waded in and appointed directors to run the beleaguered company. Four months later, the fraud-hit firm found a suitor—a local company called Tech Mahindra—which picked up a stake of more than 30 percent in the company. And in June, the company, amazingly, announced a profit of more than USD 10 million. Rebuilding Satyam is a work in progress. But the fact that the company managed to stay afloat and fight back despite its founder and eight others facing charges of criminal conspiracy, cheating and forgery for stealing millions of dollars from the company is a testament to the spirit of its workers and a steely resolve by the government-appointed directors who refused to let the company crash.
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What next? I hope 2009 has not been the lull before a storm. For the moment, enjoy the festivities. See you in the new year! Soutik Biswas is online correspondent for BBC News in India. This review was first published on BBC News' website at www.bbc.co.uk.
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Maldives in 2009 Chronology of Major Events
March 15
July 22
October 16 November 3
President Nasheed saidthe country will become carbon neutral within a decade by switching completely to renewable energy sources like wind and solar power. The Independent newspaper of the UK reported that almost 150 women living in the Maldives face a public flogging for indulging in extra-marital sex after being convicted by the Muslim country's conservative courts. Around 50 men also face the punishment. The government held a cabinet meeting about five metres (16ft) underwater to highlight the threat of global warming. Maldivian president Mohamed Nasheed announced a ÂŁ160 million offshore wind project that will supply close to half of the island nationâ&#x20AC;&#x2122;s electricity requirements.
Source: Compiled in-house
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Maldives: Breaking with the Past Aishath Shaheen
T
he Maldives made global headlines in 2009 for conducting the first ever underwater cabinet meeting, in a bid to raise awareness of global warming as part of the grassroots level 350 campaign1 against climate change.
In total, 11 cabinet ministers, including President Mohamed Nasheed and Vice President Dr Mohamed Waheed took part in the underwater cabinet meeting, which sought to remind the world once again of how vulnerable the low lying country is to global warming and rising sea levels. The president, who is a certified diver, met his cabinet on the sea bed off Girifushi Island and signed a declaration titled “SOS from the Frontline” that called for cuts in global carbon emissions that threaten the survival of small, island countries like the Maldives. They used white boards and hand signals to communicate during the half hour avantgarde meeting. The declaration message read, “Climate change is happening and it threatens the rights and security of everyone on Earth.” The message called for people to “unite in global effort to halt further temperature rises, by slashing carbon dioxide emissions to a safe level of 350 parts per million”. Although climate change is a very real catastrophe that might occur in the perhaps not so distant future, there are other factors that threaten to sink this nation in different ways. Economic recession leading to a drastic increase in unemployment and low standard of living, religious extremism opening paths to sordid activities such as statutory rape, Islamist militancy, child abuse and female genital mutilation are just some issues that could sink this nation economically and socially. The Infant Government After 30 years under the same ruler, the year 2009 began with a new president of the Maldives. For some it seemed too much to swallow, for others it represented a change, a step forward and the promise of a brighter future. The new government ushered in the new year with promises such as a unified and affordable transport system, affordable costs of living and housing, quality healthcare and decentralisation. Although steps such as abolishing the atolls ministry and electing ministers of states for each of the seven provinces instead, and finalising plans to introduce corporate tax by the year 2011 have been taken towards the achievement of these goals, the current government has faced public criticism, even from its supporters, for the slow pace of
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implementing the policies. Economic Development The year 2009 has seen a downward spiral in the Maldivian economy that closely echoed the global economic recession. A drastic rise in unemployment, inflation and lower standards of living are just some of the issues faced by the people. There was also a US dollar liquidity crisis in 2009, resulting in severe shortage of American dollars and severely affecting lending and forex trade in the country. The black market was trading US dollars at up to 15.00 Maldivian Rufiyaa, as against the official exchange rate of 12.85 for a dollar. To ease the crisis, the government introduced treasury bonds later in the year. According to President Nasheed, the new measures would allow the government to control inflation by linking the supply of money to the sale of government bonds. The ultimate aim was to boost the economy by increasing people's disposable income. This was a departure from the previous administration's method of borrowing money from the Maldives Monetary Authority, a short-term measure that depreciated the exchange rate. According to Maldives Monetary Authority's Annual Economic Review 2008, Outlook for 2009, tourism (which accounts for 27 percent of GDP) is expected to decline by 11 percent, mainly as a result of the recessions in major tourism markets of Europe. The report also predicted that domestic construction would slump by 24 percent, due to the delaying of major resort development projects and the downsizing of government infrastructure development projects as a result of external credit crunch.2 The government has embarked on new revenue measures such as the planned privatisation of state owned enterprises and the extension of resort lease periods, thus the gross international reserves for 2009 is projected to increase. Fisheries, the Maldives' second largest industry, were also noted to face setbacks this year. According to MMA's Monthly Economic Review, fish catch continued to remain low and totalled 8.3 thousand metric tonnes during August 2009. However, the article points out that despite the decline in fish landings, the volume of fish exports registered a strong growth during August 2009, registering an almost 4-fold increase to 4.1 thousand metric tonnes by the end of the review month. As of August 2009 consumer price inflation, measured by the annual percentage change in the 12 month moving average of Consumer Price Index (CPI) for Male', further declined to 6.3 percent at the end of August 2009, from 7.4 percent in the preceding month and 11.7 percent in August 2008. By August 2009, inflation was mainly influenced by the increase in price of education (22 percent), housing (9 percent), transportation (8 percent) and health care services (7 percent).3 The relative affluence created by years of economic growth before the recession resulted in educated Maldivians being reluctant to work at jobs of certain categories. These factors, together with the high cost of living and consequent demand for higher wages by
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Maldivians, have resulted in what some believe to be an unmanageable migrant workforce, stretching the public services. During 2008 a newly formulated Employment Act was enacted which, for the first time, granted the right to work, organise trade unions, the right to strike and also prohibited forced labour and discrimination.4 The year 2009 also saw the Employment Tribunal, which was set up in 2008, officially start functioning. According to official records, the Employment Tribunal has handled 184 cases since 15 April 2009, with 45 cases closed and 10 of them reportedly enforced properly according to the sentence. Despite these measures, the Employment Act has come under criticism for being lax on enforcement. According to a report by Maldives Human Rights Commission, despite the provisions of the act, few employers have, in practice, concluded employment agreements in accordance with it. Even government corporations are only in the process of bringing their employment agreements in line with the act. Many private companies and small businesses have also not implemented the provisions of this act and, as a result, a large percentage of employees do not receive adequate protection or privileges guaranteed to them by the law. On the bright side, Ministry of Human Resources, Youth and Sports recently announced that the government would establish a job centre in every province for the purpose of employment promotion and providing assistance to job seekers in the islands. Freedom of Expression In the past five years, the Maldives has seen vast improvements in the freedom of citizens to express their opinions and beliefs in a free manner. Whereas just over five years ago, one could be imprisoned for treason for criticising the government, today there is a vibrant discussion and open criticism of politics in mainstream media such as newspapers, magazines and also online forums and blogs. Soon after getting elected, President Nasheedâ&#x20AC;&#x201D;a former incarcerated journalistâ&#x20AC;&#x201D;proclaimed that the Maldives would grant sanctuary for foreign dissident writers. However, while there is much more freedom than before, local writers still feel stifled due to several factors. For instance, until lately, defamation was considered a criminal offence according to the law. Concern mounted when the prosecutor general launched a criminal defamation suit against a former editor of a local magazine during the middle of the year. The suit led to an outcry from both the local and international community working for freedom of expression. Bowing to pressure from several organisations (such as Article19 and SAFMA5) and the local community, the Maldivian Parliament finally passed a bill in December to decriminalise defamation and make it a civil offence instead. However, despite such improvements, there are still subjects which are considered taboo by the media. There is a marked lack of freedom in discussing matters regarding religion; all discussions of freedom of religion, criticism of religious dogma, and contradicting the
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state-sanctioned version of Islam are considered off limits. In early 2009, the Ministry of Islamic Affairs banned nine websites, claiming that the sites contained pornography, anti-Islamic material and critical comments on Islam. Given these conditions, several citizens expressed concerns whether freedom of expression can really be achieved in the country. Anyone who publicly criticises religion is subject to being labelled anti-Islamic and treated as a social outcast. Some media officials have tried tentatively to test the boundaries of this sensitive subject only to be publicly accused of trying to encourage the spread of other religions in the country and undermining the Islamic faith. A recent case was when the state-owned Television Maldives aired an opinion poll asking the public about whether differences of opinion within Islam should be allowed in society. The channel was immediately accused by an opposition party and religious conservatives of using the poll to “philosophically” weaken Maldivians' faith and “encourage the people trying to bring other religions to the Maldives”. The issue further escalated when Maldives National Broadcasting Company (MNBC) asked Television Maldives to investigate the issue and take measures against those responsible for the poll even though the managing director of MNBC admitted that the opposition party had taken the poll out of context. Criticism on religion was further taken out of the public sphere when the Ministry of Islamic Affairs cautioned the public to refrain from such discussions and stated that only learned scholars should be allowed to make comments on such issues. One of the latest actions that further threaten freedom of expression is perhaps a new set of regulations that would be incorporated under “Religious Unity Act”. Some of the draft regulations are said to include policies which would empower the authorities to check printing presses and bookshops for material “in conflict with Islam”, and make it an offence to publish such opinions or views in the media. Religious Extremism The year 2009 was also a year when religious revivalism came to the forefront. The secular reformist parties had teamed up with the religiously conservative Adhaalath Party during the presidential run-off elections. The Maldivian constitution imposes a single state-sanctioned version of Sunni Islam, and recognises only this version as the official religion. A newly formed Ministry of Islamic Affairs (which superseded the Supreme Council of Islamic Affairs of the previous administration) was granted wide discretionary powers, and is entirely dominated by religious conservatives of the Adhaalath Party. The Ministry of Islamic Affairs has initiated some measures that have come in for wide criticism, such as banning new year's eve parties, blocking critical websites, and stifling opposing views. Wide media buzz was generated when President Nasheed, in an interview to an Indian newspaper, acknowledged for the first time that "hundreds" of Maldivian youth were undergoing training in radical Islamist camps in Pakistan. This news was followed by the
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release of a video of a Maldivian “martyred” in jihad in Pakistan. In September 2009, former Attorney General Azima Shukoor spoke about the existence of concubines in the Maldives during a public rally. The issue had first been reported by a local freelance journalist on his blog in July. But an official investigation into the matter was launched only two months later. The subject of abuse of under-age girls for religious reasons was brought up again when Jamiyyathul Salaf, a registered NGO that promotes Salafist interpretation of Islam in the Maldives, invited conservative religious scholar Bilal Philips to speak at a widely publicised religious advice programme held in Male'. During the programme Mr Philips suggested that Muslim girls should be married off as soon as they reach puberty. He further advised against women assuming leadership roles by stating that “it's [sic] a fact” it always ended in failure. Critics saw this as the government's endorsement of a misogynistic, pro-child sexual abuse ideology that is completely at odds with the liberal, folk Islam traditionally practiced in the Maldives. Evidence of neo-Salafist ideology taking root in remote islands also came to the fore by incidents of extremist islanders breaking up a musical event held in celebration of Eid in November, claiming it to be un-Islamic. In October, the Human Rights Commission of Maldives accused the government of not taking a tougher approach in tackling extremism in the country. The commission noted that illegal independent prayer groups continued to congregate in various parts of Male', and that radical ideologies were being disseminated in sermons there. They recommended that preachers' licenses should be revoked for sermons that aggravated social divisions in the community. Speaking at a human rights function in the Maldives, Attorney General Husnu Suood, publicly warned that the practice of female genital mutilation is also being revived in the South of Maldives. It appeared that religious scholars were issuing edicts to midwives in Addu, preaching that it was compulsory in Islam for girls to be circumcised. Conclusion During the 15th United Nations Climate Change Conference (COP15) in Copenhagen (7–18 December 2009), the Maldivian president made an impassioned plea to the world leaders assembled there. “You cannot cut deal[s] with Mother Nature”, said President Nasheed before reiterating his plans to make Maldives the world's first Carbon neutral country in 10 years by adopting renewal energy sources. Nevertheless, the final Copenhagen deal has been criticised by environmentalists for not having clear emission cut targets or legal enforcement and fell below expectations. The Maldives remains uncertain of its existence in the near future. Aishath Shaheen is a freelance journalist in Maldives.
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Endnotes 1. 350.org is an international campaign dedicated to building a movement to unite the world around solutions to the climate crisis--the solutions that science and justice demand. 2. Outlook for 2009; Annual Economic Review 2008, Maldives Monetary Authority 3. Monthly Economic Review; Volume III, Number: 9, Maldives Monetary Authority 4. Rapid Assessment of the Employment Situation in Maldives 2009, Human Rights Commission Maldives 5. SAFMA issued a statement condemning the act, and stated that criminal defamation curbs freedom of expression and causes journalists to self-censor, which in turn undermines the principles of democracy. 6. Article19 also issued a similar statement calling on the Maldivian authorities to abolish the crime of defamation, replacing it with appropriate civil defamation rules.
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Nepal in 2009 Chronology of Major Events January 1
The Terai Madhesh Loktantrik Party (TMLP) decided to withdraw its support to the government. The Communist Party of Nepal-Maoist (CPN-Maoist ) and Nepali Congress agreed to set a three-month deadline for the return of lands and properties seized by Maoists to the rightful owners.
January 2
The Supreme Court issued a stay order asking the government not to implement its decision to withdraw 349 cases. The apex court gave the order saying that cases not related to politics and those criminal cases related with law and order of society, too, were in the list of withdrawal.
January 11
Uma Singh, a Janakpur-based journalist, was killed by a group of unidentified assailants. Three years ago, the victimâ&#x20AC;&#x2122;s father and elder brother were abducted from their homes at Mirchaiya in the Siraha District.
January 15
More than 150 cadres of the United CPN-Maoist and MJF deserted the parent parties and announced the formation of a new outfit named the Krantikari Rastriya Madheshi Mukti Morcha Nepal.
January 18
Police arrested a Unified CPN-Maoist cadre, Shrawan Yadav, from his house in the Rampurbirta area of Siraha District on the charge of murdering the Janakpur-based journalist Uma Singh.
February 2
The Unified CPN-Maoist passed its new statute with an objective to reach communism all the way through socialism.
February 13
A bomb exploded at the office of the UNHCR in Nepalgunj.
February 21
The government reached a five-point agreement with an underground armed outfit, Liberation Tigers of Terai Ilam, at a dialogue held in Birgunj.
March 18
Fearing for their life, over 90 percent of the locals of Kanchanpur in the Bara District fled their homes after a group of around 300 persons claiming to be cadres of the Unified CPN-Maoist looted and vandalised over two dozen houses in the area.
March 20
The government and the Madhesi Mukti Tigers (MMT), an armed outfit operating in the Terai, si gned a four-point agreement during the first round of talks held between them at Kathmandu.
March 21
A group of senior MJF leaders dissociated themselves from the parent party and formed a new group, the MadheshTerai Party.
April 22
Prime Minister Prachanda conferred with President Ram Baran Yadav early in the morning regarding terminating Chief of Army Staff (CoAS) Rookmangud Katawal from the post.
April 30
The Unified CPN-Maoist decided to go ahead with the plan to take action against the Chief of Army Staff (CoAS), Rookmangud Katawal, after a meeting of the party's central secretariat.
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May 3
The Maoist-led coalition government removed the Chief of the Army Staff (CoAS), General Rookmangud Katawal. The major coalition partner, the CPN-UML, consequently withdrew support to the government.
May 4
Nine months after he was elected the first prime minister (PM) of the Federal Democratic Republic of Nepal, Pushpa Kamal Dahal announced his resignation which was subsequently accepted by President Ram Baran Yadav.
May 5
President Ram Baran Yadav called on parties in the Constituent Assembly (CA) to form a Government by May 9 after Prime Minister Pushpa Kamal Dahal resigned on May 4. In a video telecast by Kathmandu-based Image Channel in the afternoon of May 3, the Maoist chairman Prachanda was seen telling Peoples' Liberation Army (PLA) combatants in a meeting at Shaktikhor cantonment in Chitwan how the party swindled all into believing that the number of PLA was 35,000 when it was actually not more than 8,000, ultimately leading to the increase in PLA’s strength rather than its reduction as has been assumed.
May 6
Organising a press conference over the videotape of his lecture to PLA commanders some 16 months ago, the outgoing prime minister and Mao ist chairman Pushpa Kamal Dahal alias Prachanda said his party had three tiers of armed forces - central and regional as regular armed forces and militia that numbered well over 100,000. Prachanda said what he mentioned in the tape that real strength of the PLA was 7,000 to 8,000 was only the number of the ''central regular armed force'' Prachanda also reiterated his commitment to the peace process and constitution-drafting which will transform the country into a federal republic.
May 11
The Unified CPN-Maoist decided to escalate the street agitation against the president ’s ‘unconstitutional’ step overturning the government decision to dismiss the CoAS Rookmangud Katawal at a meeting of the Maoist politburo. The Maoists attacked NC’s Basanta Raj Bhatt, former VDC chairman and UML member Gopal Silwal, NC District member Krishna Paudel and an NC-affiliated teacher Keshav Paudel in Banke District.
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May 17
The CPN-UML –led coalition submitted 350 signatures of lawmakers to Speaker Subas Nemwang for formation of a majority Government under the leadership of senior UML leader Madhav Kumar Nepal.
May 23
The Parliament elected CPN-UML leader Madhav Kumar Nepal as the new prime minister. He was elected unopposed as no other candidates filed nomination for the post.
May 25
Prime Minister-elect Madhav Kumar Nepal was sworn in as prime minister. President Ram Baran Yadav administered him the oath of office and secrecy during a special ceremony at the President’s office, Shital Niwas.
June 18
The Cabinet in its meeting held at Singha Durbar, the prime minister’s office, took a decision to reverse the previous government’s decision to dismiss the CoAS Rookmangud Katawal, and appoint Lt. General Kul Bahadur Khadka as acting CoAS.
July 23
Former judge Parmanand Jha took oath of vice president’s office in Hindi triggering widespread protests.
August 9
The government decided to appoint Lt. General Chhatraman Singh Gurung, second-in command of the Nepal Army, as the acting Army Chief.
August 23
A special bench of five Supreme Court judges ordered Vice President Parmanand Jha to take the oath of office and secrecy in Nepali within a week or be removed from his post.
August 26
The government decided to recommend to President Dr Ram Baran Yadav the appointment of the acting Army chief Chhatra Man Singh Gurung to the Post of Chief of the Army Staff. The Cabinet decided to promote Lt. Gen. Gurung to the post of Army Chief effective from September 9, said Minister for Information and Communications Shankar Pokharel.
August 31
The Unified CPN-Maoist agreed to join the defunct Special Committee for Supervision, Integration and Rehabilitation of Maoist combatants led by Prime Minister Madhav Kumar Nepal.
October 4
Matrika Yadav, who broke away from the Unified CPN Maoist to form another party, which goes by the name CPNMaoist, said his party is going to float its own army.
December 13
Despite the national and international concerns over its move, the Unified CPN Maoist declared Seti-Mahakali and Tharuwan autonomous States as part of the party's third round of protests. The Maoists declared five Districts in western Terai as Tharuwan autonomous State amidst a huge gathering of party cadres and supporters in Nepalgunj of Banke District.
December 14
The Unified CPN-Maoist declared two more 'autonomous States' in the eastern Nepal. Maoist Chairman Pushpa Kamal Dahal announced Sherpa State in Solukhumbu, and politburo member Gopal Kirati declared Kirat State in Khotang.
December 16
The Unified CPN-Maoist announced two more autonomous States — Newa and Tamsaling — defying calls from several quarters to withdraw the autonomous state declaration programme.
December 17
Disregarding calls from various quarters including the political parties to refrain from declaring autonomous States, the Unified CPN-Maoist declared two more Autonomous States—Magarat and Tamuwan.
December 18
The Unified CPN-Maoist wrapped up its autonomous state declaration programme by declaring Madhesh autonomous state, reports Nepal News.
December 29
The government introduced a bill in the Nepal Parliament to enable the President and Vice President to take oath of office and secrecy in their mother tongues, a move likely to resolve the row over the "unconstitutional" oath by Parmananda Jha.
Source: http://www.satp.org/satporgtp/countries/nepal/timeline/index.html
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Nepal: Eventful Year of an Eventful Country Prateek Pradhan
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epal is a most eventful country; it has been suffering from incessant fluid politics and social disturbance since 1990, when the people's power diminished authoritarian monarchy into a constitutional monarchy. The year 2009 was just the continuation of the fallout of yet another revolution of 2006, when the monarch—attempting to become an authoritarian—was transformed into a common citizen in 2007. But even after a successful revolution and peaceful change of power, the political turmoil in Nepal did not finish in 2009. One of the oldest nation states of Asia, Nepal has been struggling to decide on its political, economic and social systems. Though never colonised in its 400-year history, this Himalayan state has never gone through so much confusion, chaos and debate about its stability, social structure, and political and economic systems. Nepal still has to decide whether it wants a presidential system, Westminster system or any other type of governing system. If it cannot decide on its future amicably, the process of struggle and conflict might give rise to a communist state, an army-ruled regime or any other type of authoritarian system. The highlight of 2009 was the attempt of the country to write a new constitution. But instead of making headway in their basic goal, Nepali political parties have been busy bickering among themselves. One of the major issues of the year was the head-on collision between Nepal's army chief and former (Maoist) Prime Minister Pushpa Kamal Dahal “Prachanda” in May. The issue became worse after the intervention of President Ram Baran Yadav, and the subsequent resignation by the Prime Minister Pushpa Kamal Prachanda. After coming out on the streets, the Maoists rocked the country with strikes, banda (ban on mobility), protests, and torch-rallies. They stalled the Parliament for months and did not allow the House to pass the budget announced in July for over three months. In the last months of 2009, the Maoists announced their model of federations within the country. They announced 14 federations, most of them based on caste and ethnicity, which again created a lot of controversy. The Maoists' open declaration of their struggle against India's expansionism and bullying made the headlines in December. This open declaration of war with India by the Maoists is going to lead the politics of 2010. Two Steps Forward One Step Back This is a basic theory of the Chinese Communist leader Mao Tse Tung. The Nepali Maoists have also been practicing it quite liberally. They have been taking quite strong steps in many things, and after receiving opposition they would not mind reverting.
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The year 2009 has been the year of Maoists in Nepal. They gripped the social and political sphere of this country, if not the support of the people. The year began with the Maoists ending the centuries old tradition of appointing Indian priests in the country's biggest temple Pashupatinath. In the name of preserving nationaliy, the then government of the Maoists broke the tradition and appointed two Nepali priests as the heads of the temple. But the appointments of the priests were opposed by the locals for their closeness with the Maoist party. The theists of the country were hurt mostly because the Maoist is an atheist party. India opposed the discontinuation of about three-century old tradition citing examples that Nepali priests were also serving in many Indian temples. In this row India not only took a diplomatic course, but its opposition leader and president of pro-Hindu Bharatiya Janata Party, Lal Krishna Advani also warned the then Prime Minister Prachanda of severe consequences. As a result, Prime Minister Prachanda retracted his move. However, the tussle with India did not end with just the temple issue. Later in July, after the Maoists had resigned from the government, the Maoist cadres physically manhandled the new Indian priests when they were in the process of their sacred and secret rituals. President and Army Chief versus Prime Minister The other major event of 2009 in Nepal was the direct confrontation between the president and the prime minister over the issue of chief of army staff. The Maoists wanted to implement mandatory retirement of the army officers who had completed 30 years in the service. They implemented the rule in Nepal Police Organization and Armed Police Force, resulting in the ouster of dozens of senior officers in both the forces. But Nepal Army resisted. The vocal and strong army chief Rook Mangud Katwal openly stood up to the government and the prime minister. The army chief and the Minister for Defence Ram Bahadur Thapa “Badal” were reportedly not on speaking terms. Thus the Maoists had no option but to sack the army chief. The cabinet sacked the chief of army staff on 3 May 2009. This was the most fluid time in the history of Nepal Army since the Maoists had named another general Kul Bahadur Khadka as the successor of Katwal. The incumbent chief and the successor were waiting for the midnight of 3 May, when the cabinet decision would have been effective. There was confusion and a situation of conflict at the army headquarters. About an hour before midnight came the letter from the president to the army chief to continue in his position and not obey the decision of the cabinet. On 4 May Maoist Prime Minister Prachanda resigned from his position saying that there were two parallel forces in the country. He termed President Ram Varan Yadav's move as unconstitutional. The Maoists then announced a nationwide move against the president's “unconstitutional” move, and to uphold the people's sovereignty. By the end of 2009, three phases of the movement were completed while the fourth phase is to confront India.
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Army Chief Katawl completed his tenure until September and then retired as per the rules. But by then the pro-Maoist general Khadka had already retired. Therefore, the less controversial new Army Chief Chhatra Man Singh Gurung was decorated with the position by the president on 9 September 2009. Prachanda's Videogate A heated debate over the president's overruling the cabinet decision took over Nepali politics immediately after 3 May. The people were clearly divided on whether the president had taken an extra-constitutional move or not. Though many people were of the view that the cabinet had taken a biased decision, they were strongly against the president's move to demean the power of the cabinet. However, President Ram Varan Yadav claimed that he had to take a political decision to avert serious conflict and that the situation was very dangerous and fluid. The issue would not have easily settled had the infamous video of Prachanda not been made public. After resigning from the government on 4 May, the Maoists were preparing to confront the president and the army with the support of all who favoured supremacy of the prime minister in the parliamentary system. But the move was dampened when a local television channel, Image TV, broadcast a video of Prachanda where he had claimed that the party was not for democracy and democratic system in Nepal. The video was soon carried by all the major television channels of the country. The video was shot by the Maoists themselves for the purpose of internal training of their cadres all over the country, where Prachanda outlined his party's plan to capture power by force and implement an authoritarian communist system in the country. Prachanda was addressing his cadres at Shaktikhor camp, one of the seven camps where the former Maoist combatants have been barracked. The northern European countries, mainly Denmark and Norway, which had provided millions of dollars to the Maoists, expecting them to honour the core principles of democracy and human rights, were taken aback. After the release of the video they refrained from criticising the president. In the video Prachanda explained in detail how they use the support coming in the name of their combatants' management in the party's interest. He also admitted that the real number of combatants was merely 6â&#x20AC;&#x201C;7 thousand and how it was falsely increased to 19 thousand after the signing of peace agreement with the government. Vice President and Oath in Hindi The year 2009 will also be remembered for the issue of the oath of the vice president. As per the Interim Constitution 2007 of Nepal, all the parliamentarians (members of the Constituent Assembly) could take oath to office in their mother tongue, as per a list of languages. This list also includes Hindi. However, in the case of the president and the vice president, the consitution has categorically mentioned that they would take oath only in Nepali. On 25 July 2009, the Supreme Court ruled that Vice President Parmananda Jha's oath in Hindi was unconstitutional. This decision of the apex court of the country stirred the
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the fourth phase of the movement would be to uphold the soverignty of Nepal against India. Prachanda has called for the support of all 30 million Nepali nationalists in this movement. In the meantime, Prachanda has also blamed his party's ideologue and second leader Dr Baburam Bhattarai for being pro-Indian. In a party's training programme in Kathmandu, Prachanda claimed that India had been pressurising him to nominate Dr Bhattarai as the next prime ministerial candidate. Interesting Dawn of 2010 While it might inflict some problems on the poor people of Nepal, the political dawn of 2010 looks promising. There is going to be an open display of influence and power of India and the US in Nepal against the Maoists and the support from China. All Nepalis hope the worst comes sooner than late so that the country can take a definite direction towards peace and stability. Prateel Pradhan is a journalist and has been the editor of English and Nepali dailies. At present he is editor-in-chief of Nepal's only Economic daily Karobar. Endnotes 1. Madhesis are people who live in the plains bordering India
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Pakistan in 2009 Chronology of Major Events January 01
At least 13 people – 10 militants and three Security Force (SF) personnel – were killed in a clash between the SFs and militants in Balochistan. The Government has decided to set up a high-level body – the proposed National Commission for Counter-Terrorism – to coordinate efforts in countering the threat posed by the Taliban.
January 02
Seven persons, including an Awami National Party leader and two Frontier Constabulary personnel, were killed in different parts of the Swat District. Taliban announced the enforcement of Sharia (Islamic law) in the Shakai, Sheikhan and Mulakhel areas of Hangu District in the NWFP. The decision was made in a jirga (assembly of tribal elders) and announced in mosques during the Friday sermons, and comes days after a similar decree in the bordering Orakzai Agency.
January 04
Three armed groups in Balochistan announced the formal end of a four-month-old unilateral cease-fire in response to the Security Forces’ continued military operation in the province.
January 7
The Government confirmed that Mohammad Ajmal Amir alias Ajmal Kasab – the lone Lashkar-e-To iba (LeT) militant arrested during the Mumbai terrorist attacks on November 26, 2008 – is a Pakistani.
January 20
After proscribing female education in the Swat District, the militants reportedly issued another decree, asking the local people to wear caps and stop shaving beards after January 25. The militants set January 25 as deadline for keeping beards in the Matta sub-division and also asked people to wear caps in order to implement Sharia (Islamic law) in the area. They had already stopped barbers from shaving and trimming beards in the valley while following their fresh decree all barbers reportedly displayed "shave is banned" posters at their shops.
February 2
The military claimed it had killed 70 Taliban militants and injured several others during its assault on a village in the Chaharbagh sub-division of Swat District. A top United Nations (UN) official John Solecki was kidnapped and his driver was killed after his vehicle was ambushed in Quetta, capital of Balochistan.
February 5
32 persons were killed and 48 others wounded when a suspected suicide bomber blew himself amidst a crowd of Shia worshippers outside a mosque in Dera Ghazi Khan in the Punjab province.
February 6
The Islamabad High Court (IHC) declared the detained nuclear scientist Dr Abdul Qadeer Khan "a free citizen", and disposed of his writ petition following a 'mutual agreement' between him and the federal Government which - according to the court - cannot be made public in line with a request by the petitioner and the respondent.
February 11
Alamzeb Khan, a Member of Provincial Assembly from the ruling Awami National Party (ANP), was killed in a remotecontrolled bomb blast in Momin Town in Peshawar, the NWFP capital.
February 12
Pakistan acknowledged for the first time that the Mumbai terrorist attacks were partly planned in Pakistan and that it has arrested six suspects, including the "main operator".
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February 15
The Taliban of Swat announced a 10 -day cease-fire after the Government and the Tehreek -e-Nafaz-e-Shariat-e-Mohammadi (TNSM) reached an understanding about promulgating Sharia (Islamic law), termed "Nizam-i-Adl Regulation", in Malakand region.
February 16
The NWFP Government formally announced the implementation of Sharia (Islamic law) known as the Nizam-eAdl Regulations 2009 in Malakand Division and Kohistan District.
February 18
A TV and print media journalist was found dead hours after he was abducted in Swat. Musa Khankhel, correspondent for The News and a private TV channel, Geo News, was covering a "peace march" led by Maulana Sufi Mohammed, chief of the Tehreek -e-Nafaz-e-Shariat-e-Mohammadi (TNSM) in Matta when he was kidnapped and later found dead, said Mingorabased journalists. The TNSM chief Sufi Mohammed led hundreds of supporters and activists in a march to plead peace with the leadership of the Swat-based Taliban.
February 22
The Swat Private School Management Association Chairman Ahmed Shah said all the private educational institutions would be opened on February 23, but girls would go to schools in veil.
February 23
The Taliban in Bajaur Agency announced a unilateral cease -fire and secretly signed a peace accord with the Government, pledging to remain peaceful. Maulana Sufi Muhammad, chief of the banned TNSM, announced a 10-point peace plan for Swat in a press conference in Mingora. Sufi asked the Taliban to remove all their check-posts and not to display arms in the Swat valley. He asked the Government to withdraw troops from schools and other buildings and stop all military operations immediately. He also called on the Taliban and Government to release each others prisoners.
February 24
The Taliban in Swat declared an indefinite cease -fire in the valley. The decision was made in a meeting of the Taliban shura (executive council), Taliban spokesman Muslim Khan said.
February 25
Taliban disbanded checkpoints and stopped carrying weapons in public a day after announcing an indefinite cease-fire in the Swat valley. The Taliban in Swat valley received PKR 480 mil lion ($6 million) in compensation from the Government after agreeing to a cease-fire with the Security Forces. The amount was paid from a special fund of President Asif Ali Zardari, a senior security official said. "It is compensation for those who were killed during military operations and compensation for the properties destroyed by the security forces", he added. "The amount has been paid through a backchannel," he added.
March 3
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Sri Lankan cricketers narrowly escaped a terrorist attack when terrorists ambushed the bus carrying them to the Gaddafi Stadium for the third dayâ&#x20AC;&#x2122;s play of the second Test. At least seven persons-six policemen escorting the Sri Lankans and the driver of another van in the convoy-were killed and 20 others wounded in the attack near the Liberty roundabout, 500 metres from the stadium. Seven Sri Lankan players were among the wounded.
March 4
The NWFP Government struck a 17-point deal with the banned TNSM in the Swat valley. The army began vacating former headquarters of Swat Taliban leader Mullah Fazlullah in Imamdheri, military sources told.
March 5
Suspected Taliban militants blew an ancient shrine of a 17th century Sufi poet - Rehman Baba - in the Akhund Baba graveyard of Peshawar, capital of the NWFP.
March 11
The NWFP Governor Owais Ahmed Ghani signed the draft of Nizam-e-Adl (Sharia) Regulation 2009, for forwarding it to the president for a final approval, said official sources.
March 15
Prime Minister Yousuf Raza Gilani a nnounced the reinstatement of all sacked judges, including Iftikhar Muhammad Chaudhry, after the retirement of Chief Justice Abdul Hameed Dogar on March 21. In response, Nawaz Sharif has called off the "long march" to Islamabad.
March 27
83 persons, including 16 Security Force personnel, were killed and over 100 injured in a suicide attack on a mosque at Peshawar-Torkham Highway in the Jamrud sub -division of Khyber Agency in FATA during the Friday congregation. President Asif Ali Zardari announced a PKR 46.6 billion development package for Balochistan.
April 09
Maulana Sufi Muhammad, the TNSM chief, concluded his "peace camp" in Swat, in protest against the delay in the implementation of Nizam-e-Adl Regulation.
April 12
President Asif Ali Zardari referred the Nizam -e-Adl Regulation, 2009 to the Prime Minister with the advice that he may consider placing it before parliament for debate.
April 14
President Asif Ali Zardari signed the Nizam -e-Adl Regulation for Swat, after the National Assembly passed a resolution in favour of the draft regulation. Sharia (Islamic law) courts formally started functioning in Swat after the enforcement of the Sharia justice system.
April 16
The Government released Maulana Abdul Aziz, former chief cleric of the Lal Masjid, from a sub-jail in Rawalpindi after the Supreme Court granted him bail in the last case related to the Childrenâ&#x20AC;&#x2122;s Library.
April 20
The TTP spokesman Muslim Khan said Sharia (Islamic law) would not be restricted to the Malakand Division in Swat District, and that the Taliban will not lay down weapons unconditionally.
April 21
The Taliban in Swat said they are not bound to ho nour the peace accord between the Government and TNSM Maulana Sufi Muhammad. They said the NWFP Government had signed the deal with the TNSM, and not with the Taliban. Taliban militants from Swat took control of Buner and started patrolling bazaars, villages and towns in the District.
April 24
The Taliban announced its withdrawal from the Buner District in NWFP after a meeting between the TNSM chief Maulana Sufi Muhammad and key Government officials.
April 25
12 children were killed and four others injured when girls of a local primary school in the in the Luquman Banda area of Lower Dir District in NWFP had found the toy bomb and were playing with it when it exploded. The dead girls were aged between four and 12 years..
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April 30
The Taliban in Orakzai Agency of FATA banished 50 Sikh families from the agency for not paying Jizia, a tax levied on non-Muslims living under Islamic law.
May 4
The Swat peace agreement crumbled as Taliban militants took over Mingora, the district headquarters of Swat in the NWFP, taking positions atop Government and private buildings and patrolling the deserted streets.
May 07
Prime Minister Syed Yousuf Raza Gilani ordered the armed forces to launch an operation against the militants and terrorists so as to flush them out completely from Swat and Malakand in order to ensure security, restore honour and dignity of the homeland and for the protection of the people.
May 27
Suicide bombers detonated a vehicle loaded with 100 kilograms of explosives near offices of the capital city police officer (CCPO) and the Inter-Services Intelligence (ISI) in Lahore- killing at least 27 persons and injuring 326 others, in addition to destroying a two-storey building of the Rescue 15 police service, according to Police.
May 29
The number of Internally Displaced Persons (IDP) has crossed the three million mark, according to the NWFP Government.
June 9
A massive truck bomb explosion at the five-star Pearl Continental hotel in Peshawar, the NWFP capital, killed 17 people and injured 60 others.
June 14
The Government ordered a “full-fledged” military operation against the TTP chief Baitullah Mehsud and Mehsud tribes for harbouring terrorists, abetting terrorist activities and killing innocent people.
June 16
The US Senate Foreign Relations Committee unanimously passed the Enhanced Partnership with Pakistan Act, (KerryLugar Bill) authorizing USD1.5 billion annually to Pakistan for the next five years.
August 5
Four persons, including the second wife of TTP chief Baitullah Mehsud, were killed and a few others sustained injuries in a drone attack on the house of Baitullah’s father-in-law in Zangara village of Laddha sub-division in South Waziristan Agency. Taliban sources close to Baitullah Mehsud confirmed the killing of his wife in the drone attack, but denied reports that the TTP chief too was killed in the missile strikes.
August 6
There is a strong likelihood that TTP chief Baitullah Mehsud was killed, along with his wife and bodyguards, in a missile attack, Interior Minister Rehman Malik said in Islamabad.
August 7
Quoting intelligence reports, Foreign Minister Shah Mehmood Qureshi confirmed that the TTP chief Baitullah Mehsud was killed in a US drone attack in South Waziristan.
August 23
The "commander" Faqir Mohammad, who had proclaimed himself as successor to the slain TTP chief Baitullah Mehsud, on August 20, announced on August 22 that Hakeemullah Mehsud was the new leader of the TTP.
October 5
A suicide bomber targeted the United Nations World Food Programme (WFP) office in Islamabad, killing five persons, including a UN diplomat and two women employees. Six other staff members were injured.
October 9
49 persons, including a woman and seven children, were killed and 90 others were injured when a suicide attacker detonated his explosives-laden car at the crowded Soekarno Chowk in Khyber Bazaar in Peshawar, capital of NWFP.
October 10
Six Army personnel, including a Brigadier and a Lieutenant Colonel, were killed and five others injured when militants clad in Army uniform attacked the General Headquarters (GHQ) of the Army in Rawalpindi at around 11:30am (PST).
October 11
In a successful 18-hour operation, the armed forces - in collaboration with Special Services Group commandos - killed four terrorists, arrested one and rescued 39 hostages at a security office outside the General Headquarters (GHQ) in Rawalpindi, ending a siege that began on October 10.
October 17
The Pakistan Army launched Operation Rah-e-Nijat (Path of Salvation), combating the Hakeemullah Mehsud-led TTP killing 30 Taliban militants in air strikes targeting the Kotkai, Makeen and Ladah regions in South Waziristan of FATA on three different fronts.
October 20
Two suicide bombers targeted the new campus of the International Islamic University Islamabad in the H-10 sector of Islamabad, killing at least six students and staff members, including two female students, and injuring more than 29 others.
October 25
Unidentified gunmen killed the Balochistan Education Minister Shafiq Ahmed Khan, a member of the Pakistan Peopleâ&#x20AC;&#x2122;s Party, outside his residence in the provincial capital Quetta.
October 28
A remote-controlled car bomb killed 117 people â&#x20AC;&#x201C; including women and children â&#x20AC;&#x201C; and injured around 200 others at the Meena Bazaar in Peshawar, capital of the NWFP.
November 2
The United Nations announced an immediate withdrawal of its staff from the NWFP and FATA due to the deteriorating security situation there.
November 10
Prime Minister Yousuf Raza Gilani announced a "revolutionary" development package for Gilgit-Baltistan. The Prime Minister said PKR 2 billion had already been allocated for education and PKR 1 billion for healthcare.
November 24
The Federal Government unfolded a five-tier multi-dimensional special package for the Balochistan province - combining political, administrative and economic initiatives - in a joint sitting of parliament.
December 4
40 persons, including 17 children besides serving and retired Army officers and personnel, were killed and over 86 others injured, when a Friday congregation at the Parade Lanes mosque in Rawalpindi was attacked by a group of terrorists. The high number of casualties was caused by hurling of grenades and indiscriminate targeted firing by the terrorists, reportedly numbering between six to eight.
December 28
A suicide bomber targeted Pakistan's largest procession of Shiite Muslims on their holiest day of Ashura, killing at least 30 people and injuring more than 63 persons. The blast sparked riots in Karachi, the financial capital, where angry mourners went on the rampage, throwing stones at ambulances, torching cars and shops and firing bullets into the air.
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2009: Pakistan's Year of Living under Terrorism Khaled Ahmed Economy Pakistan began ominously in 2009 with the Economic Survey 2008–09 announcing that the economic growth of 2.0 percent seemed reasonable although it implied a big slippage against the 4.1 percent growth of 2008 and the target of 4.5 percent. The reason was global recession and the state of law and order in the country. Agriculture registered growth of 4.7 percent, as compared to 1.1 percent witnessed earlier, and the target of 3.5 percent for the year. However, June onwards, even agriculture was set on a downward course because of political interference by the judiciary and climatic waywardness. Revenue collection has been traditionally abysmal in Pakistan comparing badly with India's 18 percent of the GDP. In 2009 it sunk below 10 percent of the GDP, forcing the government to rely on high rates of indirect taxation. The tax-net was not increased and the sector that already paid taxes was further squeezed. The Federal Board of Revenue reported that it had collected Rs 577.337 billion during July–December 2009–10 as against Rs 553.833 billion collected during the same period last year, showing an increase of 4.2 percent. Economic slowdown—seven percent decline in manufacturing—actually points to declining collection in 2010 which will force the government to open new sectors for taxation so far exempted. There was a massive contraction of the economy, mainly because of acute energy shortage, bad security environment and political disruption. This shortage hit the valueadded sector the hardest which declined by 50 percent. The banks began to downsize as fast as they had been incentivised during the Musharraf years and the job market was likewise affected at the middle class levels. Investment declined as well by two percent because of terrorism and extreme political instability. As the economy contracted and prices rose, the US dollar saw its steepest climb against the rupee at Rs 85. Exports languished with a decline of 10 percent threatening to decline further. The collapsing rupee encouraged remittances that reached an all-time high of USD 8 billion. Food inflation touched over 26 percent as against 14 percent of the previous year and contributed most to the dissatisfaction at the popular level. Advice from the economists to resort to targeted subsidy was translated into action through Benazir Income Support Programme and Punjab Food Support Programme, which unfortunately received a negative political interpretation in the media. In September 2009 Asian Development Bank (ADB) actually said that Pakistan's economy was on the mend. This was based on the fact that the current account deficit was USD 462 million, a vast improvement from the USD 4.3 billion deficit a year earlier. In September 2008, Pakistan had received pledges of USD 5.7 billion from the Friends of
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Pakistan (FoP), a group that included Pakistan's Western and Islamic donors. About USD 2 billion of this, equal to 1.1 percent of Pakistan's GDP, was expected to be disbursed in 2009, but it never came, given the political uncertainty and xenophobia at the popular level in the country that looked like a pro-terrorism trend to the outside world. As one American think-tank observed in November 2009: â&#x20AC;&#x153;The major U.S. contribution to Pakistan's economic lifeline took the form of the Kerry-Lugar bill, new legislation that would roughly triple economic assistance to $1.5 [sic] billion in each of the next five years. The idea behind the bill was that Pakistan's development is in the United States' national security interest, and that increasing aid to civil society would show the United States' long-term commitment to Pakistan. If fully implemented, this bill would make Pakistan the third-largest U.S. economic aid recipient in the worldâ&#x20AC;?. Domestic politics took a dangerous turn by the end of 2009 and by January 2010 the ruling Pakistan Peoples Party (PPP) was desperately trying to use foreign policy to save itself from being toppled from power: this time the device was to challenge the US the same way the media and the opposition was doing. The device was populist and was already creating problems with disbursements from Washington: the widening gap of bilateral trust was manifest in the shape of USD 349 million left over from the 2008 dues owed to Pakistan, and in the delay in disbursement of USD 1.4 billion from the US assistance for 2009. Pakistan began borrowing its latest amount from the International Monetry Fund (IMF) in November 2008, with a pledge of USD 7.6 billion. The IMF promised another USD 3.236 billion to offset the failure of FoP to give what they promised in 2008. The IMF finally came up with USD 10.836 billion, but the official estimates in 2009 placed the total likely IMF borrowing at USD 11.327 billion. In 2009, Pakistan's external debt stood at USD 50.796 billion, up from USD 44.467 billion in June 2008. This will have climbed to USD 55.303 billion as the year 2010 unfolds. In January 2009, the PPP government announced plans to build 16 projects to produce 25,270 MW to offset the power squeeze of 2008. In July, the Minister for Water and Power Raja Pervaiz Ashraf announced that the government would bring in rental power plants (RPPs) to produce nearly 2,000 MW of electricity to meet the 3,000 MW power gap by December 2009. In August the cabinet approved RPP projects for 2,250 MW. But before the year drew to a close the minister admitted that the projects under RPPs could not be realised because of public criticism and that load shedding would go on beyond 2009. Asian Development Bank assessed that RPPs would increase the tariff for electricity by 45 percent, thereby opposing the projects. By the beginning of 2010, an average load shedding of 12 hours a day was going on in Pakistan, hurting the reputation of the government and crippling the economy for the second year running. Politics The big event in 2009 was the politics surrounding the activism of the Supreme Court that started in 2005 and reached its climax during the most critical phase of the PPP-led coalition government. President Asif Ali Zardari, also the leader of the PPP, had already fallen foul of the army for his pro-India and pro-US leaning; he loaded the dice against
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himself by first promising to reinstate the 60 judges of the higher judiciary fired by former President Musharraf acting as army chief, then kept postponing it. The year saw the build-up of a civil society movement led by the lawyers against the PPP government who was also busy creating a fait accompli against the dismissed judges by inducting their replacements. The extra-parliamentary opposition formed a front and moved in with the lawyers' movement, while the major opposition in the Parliament, Pakistan Muslim LeagueNawaz (PML[N]), joined the fray to give it the political clout it needed. Its locus standi was based on the fact that President Zardari had reneged on a written assurance given to it that he would reinstate the judges, headed by chief justice of the Supreme Court, Iftikhar Muhammad Chaudhry. The year 2009 began with a growing agitation against the government that occasionally became violent. Finally a long march, planned to be “decisive” through a showdown in Islamabad, was on the Lahore-Islamabad road. But before the clash could take place, the long march was called off after a phone-call from the army chief, General Kayani; Prime Minister Gilani reinstated the judges through an order on 16 March 2009. The PPP-PML(N) partnership had not worked in 2008 because of lack of trust and partisan passions at the grassroots level. The PML(N) government in Punjab reacted negatively to Governor Salmaan Taseer in Lahore, accusing the PPP of mala fides by retaining an appointee of General (Retd.) Musharraf. As the result of a petition, Chief Minister Shahbaz Sharif was deposed by the alternative judiciary under Chief Justice Abdul Hameed Dogar in February, imposing Governor's Rule in Punjab. On 1 April 2009, the reinstated Supreme Court restored the Shahbaz Sharif government. The media, which had supported the judiciary because of its independence under Justice Chaudhry, backed the decision, bringing the PPP under pressure. The relationship between the judiciary and the executive became intensely politicised because of the partisans of both sides. All this took place while terrorist attacks peaked in the Tribal Areas, the NWFP and Punjab. Combined with power shortfall resulting in long hours of electricity outage and the rising rates of gas and petrol—because of the removal of subsidies under the tutelage of the IMF—the PPP government became almost paralysed. Allegations of corruption did not help either. The Supreme Court made its mind known while listening to petitions against the validity of the National Reconciliation Ordinance (NRO) issued by General (Retd.) Musharraf in 2007. As if knowing the result of this move, it asked the government to get the ordinance made into law through the Parliament because it was untenable as an ordinance. When the PPP turned to the Parliament for legislation it found the numbers lacking—the coalition partner, Muttahida Quami Movement (MQM), opted out of the defence of the NRO and Awami National Party (ANP) looked uncertain as well. It then approached the Supreme Court to undo the ordinance in a simple order. The court, however, in its 16 December verdict struck down the NRO and asked the government to restart proceedings against President Zardari that had been stopped under the NRO. In detail, the Supreme Court made it clear that President Zardari could be disqualified for any violation of the “qualification articles” in the constitution retrospectively. As the year
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2010 dawned, President Zardari was facing ouster through the Supreme Court on the basis of “qualification defects” after being elected president in an unprecedented vote of approval under the constitution in 2008. The army had taken umbrage at the PPP's policy towards India and was not happy over the financial aid it was able to get from the United States through the Kerry-Lugar Bill. On 16 October 2009, the army issued a declaration which contained the following observation: “Kerry Lugar bill also came under discussion during the conference. The forum expressed serious concern regarding clauses impacting on National Security [sic]. A formal input is being provided to the Government [sic]. However, in the considered view of the forum, it is the Parliament, that represents the will of the people of Pakistan, which would deliberate on the issue, enabling the Government [sic] to develop a National [sic] response”. The media sided against the PPP's India policy and became a factor in the rising anti-Americanism in the country. Terrorism In May 2009, backed by the Parliament and the governments in Islamabad and NWFP, the army began its successful operation in Malakand against warlord Fazlullah. The month was a date in the retreat of the Taliban in front of the Pakistan army, but that did not have the same effect on acts of terrorism which escalated as a kind of signalling to the army which was now going after the headquarters of the Tehreek Taliban Pakistan (TTP) in South Waziristan. Serious differences developed between Pakistan and the US over the strategy of confronting Al Qaeda and Taliban in Afghanistan and over the operation of US drones in Pakistan's tribal areas. Terrorism affected Pakistan's everyday life and state policy in ways few Pakistanis realised. National politics was moulded by attitudes taken towards the Taliban and Al Qaeda, with politicians squaring off for and against. Secularist parties—PPP, MQM and ANP—favoured the hard approach based on confrontation; the right-wingers—led by the PML(N)—favoured “talks”, dubbing the war against terrorism America's war. The army was more concerned about the growing presence of the Indians in Afghanistan and leaned in favour of not fighting the American war on American terms and doubted the American approach as a strategic ally of India. Allegations of Indian interference in Balochistan were made but no proof was provided by Prime Minister Gilani to his Indian counterpart Manmohan Singh at the Sharm Al Sheikh meeting in July 2009. The economy was hostage to the TTP terrorism but not much regard was paid to this cause by politicians who kept blaming one another. Pakistan's foreign policy was influenced by the attitude of the army towards terrorism. The PPP government finally had to “adjust” itself to the “strategic interpretation” given to terrorism. Regionally it became isolated and at the global level, states committed to come to the assistance of Pakistan were affected by its lack of consensus. It is therefore important to take a close look at what happened in the country under conditions of terrorist assault. It is only by going through a diary of incidents during 2009 that one can comprehend the gravity of the situation.
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Sri Lanka in 2009 Chronology of Major Events
January 1
Troops advancing towards Kilinochchi captured the key Liberation Tigers of Tamil Eelam (LTTE) garrison of Paranthan following hours of fighting that killed over 50 militants. The Security Forces (SFs) captured Iranamadu junction, about six kilometres south of Kilinochchi town centre opening route to the Iranamadu town.
January 2
The Sri Lanka Army captured Kilinochchi, the LTTEâ&#x20AC;&#x2122;s political and administrative headquarters An LTTE suicide bomber killed three and injured 37 others at the entrance to the Air Force camp in Slave Island in Colombo.
January 4
SFs attached to Task Force IV operating in the East of the A-9 road captured the key junction town Oddusudan on the A-34 road taking full control of the Oddusudan-Nedunkerni-Puliyankulam road.
January 6
The Parliament voted to extend the Emergency Law for another month with a majority of 106 votes.
January 8
SFs advancing from the Kilali and Muhamalai forward FDLs captured the towns of Murasumoddai, Pallai and Sorampattu. Editor of the Sunday Leader, Lasantha Wickramatunga, was shot dead by unidentified assailants.
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January 9
SFs captured the A-9 highway connecting the south with the Jaffna peninsula after 23 years.
January 13
Troops captured the entire Jaffna peninsula by capturing the last remaining LTTE stronghold of Chundikulam.
January 25
SFs troops captured Mullaitivu Town, the LTTEâ&#x20AC;&#x2122;s most prestigious military stronghold in the Eastern coast.
January 26
More than 300 people were killed and several hundred were injured when the SLA fired artillery shells inside the Safety Zone declared by the Colombo Government within the last 24 hours, Tamil Net claimed.
January 31
The 48-hour truce period the president had offered to the LTTE to allow stranded civilians to move into safe areas expired in the night of January 31 but the LTTE continued to hold the people ignoring the ultimatum.
February 8
The SLA continued an indiscriminate barrage of artillery shelling on the safety zone, killing more than 80 civilians and injuring 200.
February 24
SFs entered Puthukkudiyiruppu in Mullaitivu District, the last town under LTTE's control.
March 26
131 civilians, including 32 children, were killed and more than 252 others, including 49 children, sustained injuries in military operations inside the â&#x20AC;&#x2DC;Safety Zoneâ&#x20AC;&#x2122; in the Mullaitivu District.
March 30
SLA shelling claimed the lives of more than 70 civilians
April 5
At least 420 LTTE militants, including several top leaders, were killed as the troops captured the outfit's final stronghold in Puthukkudiyiruppu in Mullaitivu District.
April 8
129 civilians were killed and 282 others sustained injuries in SLA artillery shelling inside the NFZ in Mullaitivu District, reported Tamil Net. The total number of civilians fleeing from the LTTE-held areas to the Government-controlled areas increased to 64,147.
April 20
The SFs rescued 39081 civilians held hostage by the LTTE inside the NFZ in Mullaitivu District.
April 27-28
More than 200 civilians were killed as the SLA fired heavy artillery into Mullivaaykkaal, Thaazhampan, Ottaippanaiyadi and Iraddaivaaykkaal areas, LTTE leaders said.
April 29
At least 350 soldiers were killed and over 700 injured as heavy fighting erupted between the troops and the LTTE in the area north of Mullivaaykkaal in the NFZ in Mullaitivu District according to Tamil Net.
May 7-8
45 civilians were killed and more than 197 injured as the SLA continued heavy shelling with cluster-munitions on civilian targets in the Mullivaaykkaal area of the NFZ in the Mullaitivu District, claims Tamil Net.
May 10-11
Lawrence Christy, chief of the TRO field office, on May 11 put the death toll of civilians in SLA shelling at more than 3,200 killed since the evening of May 10 up to the morning of May 11.
May 14
At least 1,700 civilians were killed and over 3,000 wounded within the last 48 hours as SLA continued its indiscriminate shelling inside the new NFZ, according a statement released by the LTTE Peace Secretariat. Sri Lanka rejected international calls to halt its final offensive against LTTE, hours after the UNSC called for civilian lives to be spared.
May 15
The Sri Lankan army claimed to have completely neutralized LTTE air capabilities.
May 18
The LTTE chief Velupillai Prabhakaran was killed, according to the Sri Lankan military.
May 20
The Sri Lankan military ceremonially ended the war with the LTTE at the Mullaitivu beach.
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May 23
The UN Secretary-General Ban Ki-moon urged the Sri Lankan government to grant the UN and other international humanitarian agencies immediate and unimpeded access to the camps to help the Government meet urgent humanitarian needs.
May 24
The LTTE admitted for the first time that their chief, Velupillai Prabhakaran, was dead.
May 26
The government said in Parliament that the State of Emergency would not be immediately relaxed despite the end of the LTTE.
June 16
The government released a complete report on the IDPs, including the total number of the displaced who are living in welfare canters. According to the report, the total number of IDPs is 262,632, including 134,464 women. The most number of displaced persons are reported from Mullaitivu District with 235,386 IDPs.
July 14
A presidential probe into the massacre of 17 local aid workers of the French aid agency Action against Hunger or Action Contre la Faim (ACF) exonerated the Sri Lanka military.
July 30
The newly appointed LTTE chief Kumaran Pathmanathan alias KP claimed that the outfitâ&#x20AC;&#x2122;s decision to give up armed struggle and take recourse to "political and diplomatic moves" was taken by its former chief Velupillai Prabhakaran.
August 7
Defence Secretary Gotabhaya Rajapakse said the victory against the LTTE was complete with the arrest of their new chief, Kumaran Pathmanathan.
August 8
The ruling UPFA party secured a comfortable victory in the elections for the Uva Provincial Council (PC) held on August 8, 2009 winning both the Badulla and Moneragala Districts.
August 23
The arrested LTTE chief Kumaran Pathmanathan alias KP told investigators that the outfit had tried to acquire nuclear weapons and know-how to be used against the Sri Lankan army.
August 27
The Sri Lankan Supreme Court said that war-displaced persons in Government-run camps should be allowed to go if they are non-combatants.
September 10 The Parliament extended the State of Emergency for another month with a majority of 87 votes. September 18 The New York-based LTTE leader Vishuanadan Rudrakumaran announced that the LTTE proposed Provisional Transnational Government of Tamil Eelam (PTGTE) will function as an organization of the Tamil Diaspora. September 28 At least 20,000 of the nearly 300,000 IDPs in the Vavuniya camps had escaped, said Senior SSP, Ranjith Kasturiratna. October 16-17 A US-based hedge-fund billionaire charged as part of an insider-trading case
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October 29
The Resettlement and Disaster Relief Minister, Rishad Bathiudeen, said of the total number of IDPs (285,000) nearly 100,000 people have been sent back home.
November 5
Rajeeva Wijesingha, secretary in the ministry of disaster management and human rights, said that the LTTE may have had links with the CPI-Maoist in India.
November 6
The Prime Minister Ratnasiri Wickramanayaka told the Parliament that the SFs had been able to remove land-mines in an area extending to four million square metres in the Northern Province.
November 12 Sri Lankaâ&#x20AC;&#x2122;s Chief of Defence Staff (CDS), Sarath Fonseka, who as Army Chief led the war against the LTTE, resigned, possibly to join politics. November 23 President Mahinda Rajapakse ordered a fresh Presidential election, possibly in the second half of January 2010, two years ahead of his tenure. December 2
The government announced it would take over all LTTE property and assets in the possession of individuals and groups in Sri Lanka and abroad.
December 8
Sri Lanka Parliament extended the State of Emergency for another month with a majority of 74 votes.
December 13 31,148 eligible Eezham Tamil Diaspora voters over 18 in France participated this weekend in the referendum to say yes or no to independent and sovereign Tamil Eelam and 30,936 of them said yes, reports LTTE Website Tamil Net. December 19 99.82 percent of 48,583 voters mandated independent and sovereign Tamil Eelam in the poll conducted in 31 centres across Canada. December 29 The government said it had resettled over 173,000 Internally Displaced Persons (IDPs) within five months. The government, despite having given a pledge to resettle all the displaced people by the end of January 2010 said that there was no deadline for the resettlement. Source: http://www.satp.org/satporgtp/countries/shrilanka/timeline/index.html
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Sri Lanka: Brutal War, Triumphant Peace Mirak Raheem
I
t would not be an exaggeration to say that 2009 could be considered one of the most decisive years in Sri Lanka's post independent history. A 30 year old ethnic war, one of Asia's longest running and most intractable conflicts, came to an end with the defeat of the militant separatist group, the Liberation Tigers of Tamil Eelam (LTTE) by the state, albeit at a huge human cost. While the war has come to an end, the underlying violent political conflict which pre-dates the war remains at large. Hence, as to whether 2009 will mark a real turning point for Sri Lanka to step out of the shadow of conflict will depend on the steps taken in 2010. The End of War In international context of the US-led “war on terror”, waged for nine years with seemingly no end in sight, the Wall Street Journal's declaration that “there is a military solution to terror” with Sri Lanka as its main success story did prove resonant. The “Sri Lankan solution” is being touted as a model for bringing peace to intractable conflicts. It is ironic that at one point, during the peace talks of 2002–2003, Sri Lanka was being promoted as a model for peace building. However, efforts at coming to a negotiated settlement which aimed at power sharing and granting significant powers to a separate administration in the North and East within a united Sri Lanka, including during the current President Mahinda Rajapaksa's term, proved unsuccessful. The LTTE's obduracy, including its record of having broken most of the ceasefires during talks, is a central factor in the failure of negotiations. However, the resistance of the state—regardless of which party was in power—to devolve powers cannot be denied in intensifying the suspicions. Even within Sri Lanka the war was seen among many as un-winnable for both the government and Tamil militant groups. By the year 2000, roughly half of the North and the East of the island were under de facto control of the LTTE--a group seen as one of the most sophisticated and brutal insurgent groups in the world with its own naval and air forces, parallel administrative system, innovation and the most prolific usage of the suicide bombings. With the failure of peace talks in 2006 the government set itself the task of defeating the LTTE in three years. The government launched full scale military operations in July 2006 over the closure of a water channel by the LTTE, eventually capturing LTTE strongholds in the East by July 2007, before advancing north into the LTTE heartland in the Wanni, capturing the LTTE's de facto capital, Killinochchi in January 2009 and routing the LTTE's last stronghold in Vellamullaivaikkal in May. The killing of LTTE supremo Velupillai Prabhakaran marked the end of the LTTE.
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This war was fought and won on multiple fronts: military, diplomatic and political. While President Rajapaksa occupied the position of commander in chief, the military leadership was provided by the Defence Secretary Gotabhaya Rajapaksa working in tandem with the commanders of the various forces including Army General Sarath Fonseka. Using a heavy barrage of aerial and artillery bombardment to “soften” the identified LTTE targets, the ground troops, assisted by special forces, moved in to force the LTTE to retreat. Despite possessing elite suicide units and a nascent air force, and its use of “chemical warfare,” the LTTE found itself trapped and unable to launch a successful counter-offensive. It was outgunned and outmanned by a military that stood at least at 200,000, was receiving a steady supply of arms from a variety of sources including China, Pakistan, Russia and India, and had succeeded in blocking arms shipments to the LTTE. For a small country, the Sri Lankan government showed remarkable resilience against increased international pressure and even engaged in high profile verbal attacks on leading international actors. To offset efforts by western countries to highlight the humanitarian and human rights crises and bring about a ceasefire, the Sri Lankan government successfully created an alliance of “like-minded states” that included the Asian block and countries like Cuba and Iran. While the Tamil diaspora in the West, especially London and Toronto, succeeded in holding protests over successive weeks and drawing the world's attention to the human cost of the war—which they claim is genocide—their use of the LTTE banner ended up isolating them from western governments most of whom are committed to the international “War on Terror”. It became apparent that there was little concrete action that the West or India would take to ensure civilian protection, apart from voicing their concerns through statements. This effectively resulted in a paralysis on the Sri Lankan issue in the UN, both in New York and Geneva. Parallel to the war, the government drove an aggressive propaganda campaign to generate public support which demanded patriotism and acquiescence as to how the war was being fought. In effect, this amounted to a “War on Dissent”. The media, opposition politicians, NGOs and activists found themselves targets of “unknown groups” which carried out extrajudicial killings, disappearances, grenade attacks and other acts of violence. Sri Lanka gained the reputation of being one of the most dangerous places in the world for journalists. In January 2009 the editor of the Sunday Leader Lasantha Wickrematunge was killed; he was the 12th journalist to be killed in Sri Lanka since the beginning of the war. More than 60 local personnel working for international humanitarian agencies were killed in Sri Lanka during that same period. Coupled with the LTTE's own intolerance for dissent and its policy of eliminating key dissenters, the situation resulted in a culture of fear and silence, with very few voices willing to contradict the official version of the war. In Sri Lanka it was a “war without witnesses” with no local or international agency having reporters in the fighting zone or able to cross into enemy lines. The only sources of information were locals trapped in the zone. Hence “independent verification” of the situation and incidents of large scale civilian killings became impossible. To date it is not
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known how many civilians died in the last stages of the war. The United Nations issued a statement in March 2009 that over 2800 civilians had been killed since January 2009; this was before the most intense periods of the war in April and May. The civilians trapped and used as human shields by the LTTE (they even shot at those trying to flee the zone) endured severe shortages of food, medicine and other basic supplies, and faced unending bombardment by the government even within areas the latter had declared “safe zones”. While unable to prevent the violations at the time, the UN and the US are both now involved in the process of examining the charges of war crimes which will continue to play out in 2010 regardless of the outcome of the presidential elections in Sri Lanka. Post-War, Not Quite Post-Conflict During the last few weeks of the war, tens of thousands of civilians fled the war zone into government-controlled territory swelling to some 230,000 displaced persons. A key post-war concern was the treatment of these internally displaced persons (IDPs) as the vast majority were kept in “closed camps” by the government, amounting to the mass detention of an entire population. While the government actors faced significant challenges in dealing with this mass influx, there were serious questions as to the preparedness in dealing with the issue and the policy of severe restrictions on humanitarian access. A month after the war ended the government had made a promise to the Indian government that it would release 60 percent of all IDPs within 180 days. There was significant international attention on the conditions within the camps especially in the first few weeks, including issues of over-crowding and poor sanitary conditions. Despite separating some 11,000 suspected LTTE cadres, the government cited security concerns for the “closed camps”; it was not until November that the government sped up releases and returns. By December more than 100,000 persons had been released from the camps. As to whether these releases were part of an overall plan, the result of international pressure, including the decision by donors to stop funding the closed camps, a response to fears of unrest within the camps especially with the onset of the monsoons or driven by domestic exigencies of electoral politics remains unclear. The situation within the “closed camps” has significantly improved due to the “release” of IDPs and a large number of people have had the opportunity to return home and attempt to re-build their lives. Yet there are concerns as to whether the assistance to the IDPs is adequate to ensure a durable solution; whether the IDPs have in fact returned home or whether they continue to live in “transferred displacement” as they opted to leave the “closed camps” by providing the addresses of relatives. The government has put forward a comprehensive Reintegration Program to deal with suspected LTTE combatants. This could result in significant opportunities for these individuals, but is yet to clarify its legal position with regards to these individuals. In addition to the “new IDPs” there is a population of some 200,000 “old IDPs”—including Muslims forcibly expelled from the North by the LTTE in 1990—who have not been included into the current resettlement programmes and have to negotiate their return at an individual level. While the government seems keen to use a model of rehabilitation and development,
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other issues continue to simmer. As the internationally recognised University Teachers for Human Rights (Jaffna) puts it: “The legacy of war and the devastated lives of hundreds of thousands of people will remain with us long. Its effects will be felt in every corner of the country, by the blind, blighted, marred and crippled; and beyond this is the mutilation of democracy, freedom and the ability of different communities to live together.” On issues such as justice, reconciliation and political solution there was little discussion from the government's side raising questions as to how sustainable peace was being created. While the end of the war removed a critical source of insecurity, there was a clear divergence in the levels of security among the various ethnic communities in Sri Lanka. For instance in the east, the Sinhalese tend to feel more secure than Tamils who continue to fear violence from state actors and armed groups such as Tamil Makkal Viduthalai Pulikal (TMVP) allied with the state. The end of the war has had a dramatic impact on the sheer volume and particular types of human rights violations (such as bombs resulting in multiple victims from a single incident). But the first six months after the war saw a continuation of human rights violations, including some high profile incidents of “encouter killings” and “custodial deaths” in and around the capital Colombo. There are reports of human rights violations in the north, but there continues to be a culture of silence in raising these violations and even in seeking redress. The president's reference to there being “no minorities” in Sri Lanka after the war, while meant as an effort at reaching out, only intensified fears of the president's plans for minorities. The minorities find themselves in a weak position. The divisiveness within minority politics with each community having multiple and competing representatives provides significant scope for the government to determine political outcomes in non-election years. The Tamil community, in particular, finds itself in a leadership vacuum, which is not just a result of the LTTE's defeat but also the decimation of Tamil political and civil leadership particularly by the LTTE. In the months after the war, the military victory felt as much a defeat of Tamil nationalism as of the LTTE. While the minorities suffered tremendously both directly and indirectly due to the LTTE, the one consolation was that the LTTE put pressure on the state to concede a political solution. The silence of the “old Left” and other progressives to push for a political solution has heightened the fears of the minorities. During 2009 it was increasingly unclear if the government saw the need for a farreaching political solution. Instead it seemed that the government was looking at maintaining the existing political structures while providing the opportunity for greater democracy and development to meet the needs of the people of the North and East. Within a few months of his election as President, Rajapkse established the All Party Representative Committee (APRC) to devise a southern consensus which could be used as the basis for negotiations with the LTTE. The convenor of the APRC, Minister Tissa Vitharana has repeatedly claimed that there was 90 percent consensus but there was little indication that the president would accept and endorse the report. The lack of interest on the part of the president to even mention the APRC in the post-war period only confirmed suspicions that it was meant as mere window dressing to placate the international community during the war.
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Instead, the president seemed to be favouring a variation on the 13th amendment to the constitution which establishes the provinces as the units of devolution and which has never been fully implemented. Instead of calling for a full implementation of this section of the constitution the government seems focussed on implementing “relevant sections.” This proposal, dubbed as “13th Amendment minus”, is problematic at multiple levels including the constitutionality of a government speaking of implementing only sections of the constitution. Even though the government appointed its ally, S. Chandrakanthan (alias Pillayan), the head of TMVP, as chief minister of the Eastern Province in June 2008, a year and a half later he started complaining about the lack of resources and powers to the Eastern Provincial Council (EPC). Instead of restoration and strengthening of the rule of the law, the post-war period was a continuation of the culture of impunity seen during the war with some high profile cases of custodial deaths. The rule of law came under tremendous strain during the war years with successive governments resorting to emergency rule which has extended for over 25 years. The president continued to violate the constitution by refusing to appoint the Constitutional Council which nominates commissioners to the independent commissions established by the 17th amendment to the constitution. A Turning Point? The year 2010 is the year of elections with the presidential elections on 26 January and the general elections due to be held a few months later. This article is written on the eve of the presidential elections, which appears to be a close fight, but is the incumbent's to lose. Rajapaksa is coming from a strategically advantageous position. For a start he decided to call for elections two years ahead of the end of his term. He can claim primary responsibility for winning the war and removing the “scourge of terrorism”. His government is made up of a “rainbow alliance” with almost all major political parties represented in the Parliament—either as constituent members or with break away factions within the alliance. Over 2009 the government held a series of provincial council elections which created a momentum in favour of the government, where even supporters of the opposing United National Party (UNP) were willing to cast their votes for the governing alliance on account of the war. The president has the state's machinery to back his campaign and there have been repeated allegations of the use of state personnel, equipment and finances for this campaign. Using the language of patriots and traitors, the government has almost inevitably accused the opposition of having signed a secret pact with the Tamil National Alliance (TNA), the main political party representing the Tamils of the north and east in the Parliament and which is seen to be pro-LTTE; this could have some impact among Sinhala voters. In May 2009 it seemed that any immediate election would be a landslide for the government, but six months on, commentators have taken to comparing President Rajapaksa to Prime Minister Winston Churchill who led the British to victory in World War II but lost in the elections that followed. The first real indicator of the decline in President Rajapaksa's popularity was that the Governing Alliance secured only 67 percent votes in the election for the Southern Provincial Council held in October. Any incumbent democratic government would be jubilant with such a huge endorsement.
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Competing in the president's “home turf” however the government was expecting over 80 percent votes. The real break, however, was the increasing friction between the president and General Sarath Fonseka who led the military campaign, which ended up with the latter coming forward as the common candidate for a united opposition in November. While a series of unexpected events led to General Fonseka's candidacy, it is striking that he is not a member of any political party and is supported by a disparate opposition made up of Sinhala Marxists (Janatha Vimukthi Peramuna), a pro-liberal market economy (UNP) and Tamil nationalists (TNA). General Fonseka remains somewhat of an enigma; despite his statements committing himself to the rule of law and substantive measures to address minority concerns in his manifesto, he was perceived to be pro-militarisation, Sinhala nationalist and a violator of human rights. The opposition has claimed that it would remove the executive presidency if they win which means that General Fonseka would not end up with much power. By choosing a war hero, the opposition has sought to neutralise the president's advantage via the war while exploiting the growing disenchantment with the lack of peace dividends, corruption within the government, domination by the Rajapaksa's family and a desire for change. As in the US, where Barack Obama was able to tap into discontent with the status quo, General Fonseka has campaigned on a platform of change, calling into question the governance record of the current leadership. Each side is attempting to mobilise its base and attract the large number of swing voters. It is expected that the president will do well among Sinhala voters in the rural areas while General Fonseka's appeal lies with the petite bourgeois and among the minorities. Despite the government's successful propaganda blitz which resulted in Rajapaksa's victory in terms of the “poster war” it seems clear that the momentum is favouring General Fonseka. The Southern Province which voted overwhelmingly for the president might now deliver a slimmer margin since General Fonseka will play on his southern roots and the caste vote as he is, unlike Rajapaksa, not from the dominant Govigama caste. Although most of the minority groups have representatives in the government (apart from the TNA), it appears that General Fonseka is building up his constituency among key groups including the Upcountry Tamils, who are concentrated in the Central Province, and the Muslims. The LTTE enforced boycott in the presidential elections of November 2005 effectively gave the election to President Rajapaksa. Once again the Tamils of the north and east could find themselves in a position to decide the final outcome. While the TNA has thrown its lot in with General Fonseka, it remains unclear if the Tamils will turn up in large numbers, especially given that the displaced and recent returnees may not have registered from their current locations. Political stability could prove elusive for Sri Lanka during the current year. Whichever candidate secures the presidency will provide a boost for their alliance, but the parliamentary elections will also be closely fought. The run up to the presidential election has seen a number of politicians crossing over from one side to another; this will probably intensify after January. This phenomenon of “cross overs” whereby elected members of alliance have switched their party loyalty usually from the opposition to the
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ruling alliance for a cabinet position has thoroughly weakened political parties and public faith in politicians. Sri Lanka has the world's largest number of ministers—currently 107. The general has promised to keep a smaller cabinet but it is unclear whether the united opposition can stay united given their divergent views on key issues including the economy and the political solution. The elections have ushered in a new political space. This is most noticeable in the media, which has thrown off some of its self-censorship. There are concerns that this will last only for the duration of the elections and that a government could find it difficult to resist returning to some of the tactics of intimidation and pressure in order to keep the press muzzled. It is unclear if the elections signal a break from the dark years of the war, when dissent was stifled and the rule of law was violated, especially if Rajapaksa secures victory. It is also not clear whether the elections will mark the turning point of the transition to the restoration of rule of law and post-war normalisation. It is a moot point as to whether the dramatic developments in terms of key humanitarian issues would have taken place if the elections were not so close. In the lead up, the president took a series of measures including releasing some of the IDPs from the “closed camps” and relieving some of the restrictions in the “closed camps”, promising to remove the High Security Zones in Jaffna which prevent the return of some 80,000 IDPs to their homes and the release of Tamils held in custody under the suspicion of being LTTE members. The election bonanza has also offered benefits to ex-servicemen and government servants while attempting to reduce the cost of living, at least for the election period. The election has not been free of violence and there have been five killings as of 24 January 2010. As to whether this space will remain once the elections are over is not clear. It is apparent that Sri Lanka stands at a historic moment. The question is whether an elected president, government and Parliament have the courage to seize this moment to address the fundamental structural causes that have undermined the possibility of peace in this country. Mirak Raheem is senior researcher, Peace & Conflict Analysis Unit of the Centre for Policy Alternatives, Sir Lanka. Endnotes 1. Bret Stephens, “There is a Military Solution to terror”, Wall Street Journal, June 08, 2008. 2. Ministry of Defence, The End Battle, June 21 2009 3. Tissa Ravindra Perera, “END OF AN ERA OF TERROR, ” Nation , Military Matters, May 24 2009. 4. Brahma Chellaney, “BEHIND THE SRI LANKAN BLOODBATH - CHINA, PAKISTAN AND INDIA,” Indian Express, Tamil Sydney, June 2009; “Pak played key role in Lanka's victory over Tamil Tigers,” May 28 2009, UK, Telegraph, by Richard Dixon, The Real Culprits behind Sri Lankan War, May 20 2009 5. The Centre for Protecting Journalists ranked Sri Lanka as the fourth most dangerous place in the world (CPF, “Getting Away with Murder,” March 2009). 6. According to the figures of CPJ, 13 Journalists have been killed since 2006. (CPJ, 18 Journalists Killed in Sri Lanka since 1992/Motive Confirmed, http://cpj.org/killed/asia/srilanka/) 7. CPA, A Profile of Human Rights and Humanitarian Issues in the Vanni and Vavuniya, March 2009.
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8.
9. 10. 11. 12.
13. 14.
15.
16.
17. 18. 19.
OHCHR, Press Release, Serious violations of international law committed in Sri Lanka conflict: UN human rights chief, March 13 2009, http://www2.ohchr.org/english /press/newsFrameset-2.htm University Teachers for Human Rights, “Let them Speak,” December 13 2009 Ministry of External Affairs India, “Press Statement on the visit of NSA and FS to Sri Lanka”, May 21, 2009. University Teachers for Human Rights, Special Report Number 34, “Let Them Speak,” December 13th 2009. Address by HE President Mahinda Rajapaksa at the ceremonial opening of Parliament, Sri Jayawardhanapura - Kotte, May 19, 2009, GroundViews, Qadri Ismail, Critiquing the President's victory speech: Evidence of a majoritarian mindset?, August 20 2009 Asian Tribune, “Consensus on Devolution”, December 18 2008, http://www.asiantribune.com/?q=node/14737 The report released on January 23 2008 was titled, “Action to be taken by the president to fully implement relevant provisions of the present constitution as a prelude to the APRC proposals”. Daily News, “Join hands to resolve national issue on common agenda”, January 24, 2008. Groundviews, “THE APRC PROCESS: FROM HOPE TO DESPAIR”, text from the groundviews video interview of Rohan Edirisinha, February 03 2008, Groundviews, by MCM Iqbal, “Devolution of powers under the 13th Amendment in Sri Lanka: Fact or Fiction?”July 19 2009. “Since I took office in May this year not a single person has been recruited to the Council. I don't have any powers to implement the 13th Amendment. We have asked the central government to give us the powers vested in the 13th Amendment.” (Sunday Times, “EPC has no powers, says Pillayan”, November 23 2008) Transparency International, “Fourth report on abuses of state resources released” 24 January 2010. Sunday Observer, “Ministers predict historic victory”, October 04 2009 CMEV, Presidential Elections 2010: Graphs and charts of election campaign violence, 21 January 2010.
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The New Silk Roads Transport and Trade in Greater Central Asia* Edited by S. Frederick Starr (Excerpts from the introduction to the book) Introduction S. Frederick Starr If Continental Trade is So Good an Idea, Why Does it Not Exist? With so many powerful institutions championing continental trade, and with so many of the key states committed to its development, why does Eurasia-wide continental trade not already exist? Or, on a more modest level, when such evident economic benefits are to be reaped even from intraregional trade, why has it been so slow to develop in Central Asia and the broader zone of which it is a part? What forces are holding back the development of land-based trade in Eurasia? Since successful modern trade involves so many separate elements, any one of which can, by its absence, retard the broader process, one must be wary of simple explanations. Legal, economic, tax, organizational, banking, managerial, technological, human resource, security, communications, and personal issues all play a part. Given this welter of separate elements, each of which must be coordinated with the others, it may be more pertinent to ask how Eurasian trade has managed to develop as quickly as it has, rather than why it is not evolving at a yet faster clip. Assuming that the pace could nonetheless be swifter, why have so many powerful nations and international institutions been unable to move the process forward faster? One important reason traces back to the question of complexity. A smoothly-running regimen for international trade requires the coordination of many discrete elements, and no one institution is in control of more than a couple of the many variables. An international financial institution can draft new tariff policies or design a computerized information system for tax collection, but it cannot command their acceptance by the governments of sovereign states. A national president may command the resources to rebuild a road or set up an efficient border post but this does not mean that the president of the neighboring country will do so as well. Given this situation, it is understandable that while the promotion of regional and continental trade is a high priority for everyone, it is the top priority for none. With the sole exception of the Asia Development Bank, which has consistently championed the expansion of trade and even been willing to stake its reputation on progress in this area, no country or international institution has â&#x20AC;&#x153;gone to the matâ&#x20AC;? over Eurasian trade. But perhaps the measured pace at which transport and trade are developing is a result of
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the great costs involved? It is true, of course, that the Tajik government is unlikely to have covered the cost of building the bridge across the Panzh River at the Tajik-Afghan border that was eventually funded by the United States, or the Chinese-built tunnel further north on that same road. Nor could the government of Azerbaijan have paid for the Baku-Ceyhan pipeline which, like many railroad projects since the 1840s, required international financing. Yet one must question whether cost considerations are the main brake on transport development. Thus, the cost of rebuilding the â&#x20AC;&#x153;Ring Roadâ&#x20AC;? linking the Afghan cities of Kabul, Kandahar, and Herat, as well as the main arteries connecting this road with major international routes, is estimated at $5.6 billion. Yet this sum is less than 5% of the combined projected national investments in Afghanistan of the main participating countries. Similarly, different track sizes between China and Kazakhstan require that all cargoes be off-loaded at the border, causing delays of three days on most shipments. China has introduced a faster process but Kazakhstan has yet to do so, even though the costs are no insurmountable. And compared with security budgets, for example, the total cost of all major transport infrastructure projects in Greater Central Asia is modest indeed, and easily within the power of regional governments to assemble, were they to work together and with international donors. Unfortunately, this discussion may overestimate the degree to which key national and international political figures really understand the potential gains to be reaped from the expansion of transport and trade. In the former Soviet states, three-quarters of a century of national autarky have left older leaders unable fully to grasp the benefits their countries might deride from freer trade. It is one thing for them to affirm free trade as an abstraction and quite another to risk alienating powerful domestic interests to advance it. The fact that Soviet citizens were long accustomed to view Afghanistan and Pakistan as primitive and unstable backwaters makes it all the harder for them to embrace the possibility that their own future prosperity might depend on them. The hold of old habits is equally strong in most other countries. Afghan leaders have had little contact until recently with countries to their north, while Pakistan's government embraced transport and trade in the early 1990s and then backed away from them. Nor are Europeans and Indians much better at conceiving something that flies in the face of commonly accepted belief that the age of land-bound Marco Polos is past and that water transport is always cheaper. To sum up, a major force stifling policies that might foster continent-wide transport and trade is a poverty of strategic imagination in many quarters. Lacking the capacity to frame and embrace the bigger picture, many leaders and policymakers are glad to content themselves with a plethora of ad hoc measures that are not without value but which lack any clear relationship to abroader strategy. Those governments with anything approaching a strategy in this regard, notably China but also, to a lesser extent, Russia, tend to have highly centralized and governmentalized systems of rule that do not need to respond to the immediate concerns of their
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electorates. In the case of Russia, which has taken a strategic approach to transport and trade, it persists in seeing the issue in terms of nineteenth-century mercantilism and the “zero sum” thinking to which it naturally gives rise. By contrast, India, the EU, Japan, and the US, all suffer from the common problem of democratic states, namely, a preoccupation with tactical and short-term concerns at the expense of the strategic and long-term. By no means all the factors inhibiting the expansion of transport and trade across the Eurasian continent are so conceptual and abstract in nature. A far greater number arise from the realities of daily life and the interplay of real-life interests within the many countries involved. A review of several of the more obvious practical impediments to the development of trade and commerce confirms this point, and gives relevance and poignancy to the adage, coined by U.S. Congressman “Tip” O'Neill, that “All politics are local.” A simple example of this is the unwillingness of most regional states to reckon with the vast networks of illegal and untaxed shuttle traders whose activities undermine legitimate cross-border commerce and rob the state of revenue. Thus, the Kazakh Customs Committee estimates that shuttle trade between China and Kazakhstan at US$2-3.5 billion per annum, making it comparable to the official bilateral trade. Unfortunately, such traders supply a regular flow of bribes and favors to local officials and customs officers, i.e., to the very officials on whom the state relies to thwart shuttle trading. The most egregious example of how illegal cross-border trading can protect itself from reform is the drug trade from Afghanistan. Demand driven and feeding supply chains that stretch to the main European capitals, this commerce accounts for more than 95% of all Afghan exports. Through generous bribes to officials in every transit countries, the main trafficking organizations (which are based in Russia, Turkey, and the Balkans) are able to protect themselves against would-be reformers and also to maintain in office officials at all levels who are ready to protect them. The mountains of paperwork required at all regional border crossings do much to promote illegal trade. Surveys of truck drivers indicate that the slow processing of vehicles at border crossings are a far more significant brake on legal transit than poor security or bad roads. Tajik government surveys indicate that a trucker passing between Uzbekistan and Tajikistan must produce seventy documents, while 31 signatures are required on the Kyrgyz border. Evidence presented in the Afghanistan chapter indicates hat the situation is no better elsewhere, with 57 signatures required for imports to Afghanistan, 45 for Iran, and 27 for Kyrgyzstan. In some instances these procedures are defended as a means of protecting the transited country from corruption. Thus, several regional states require that truckers shipping alcoholic beverages through their territory deposit in the state bank the full value of the shipment, to be repaid only when the cargo passes into a third country. The effect of such laws is to drive liquor transit into the illegal shuttle sector, which denies duties to the state and decreases trade overall.
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Further slowing the transit of goods and adding to the cost is the near-universal practice of local police setting up unofficial checkpoints at which they extort payments from international truckers. A secret Tajik survey found that a truck passing between Jambul and Karaganda in Kazakhstan had to make payments at nine such stops, increasing the cost of trade by 2-3%. An additional illegal fee was charged for the unofficial police “escorts” who accompanied the foreign truck across their territory. Kazakhstan, it must be said, is by no means the worst offender in this regard. Again, since this system of peculation is deeply entrenched among underpaid and underprofessionalized civil servants, any effort to rout it out faces formidable obstacles. A more fundamental retardant of cross-border trade of all sorts across Central Asia is the urge to protectionism. No country is immune from this seductive policy. Kyrgyzstan's decision to join the World Trade Organization (WTO) in 1998 was supposed to have proclaimed the benefits of free trade to all its regional neighbors. Instead, the resulting flood of Chinese goods on the Bishkek market convinced Uzbekistan and others that, without protection, domestic manufactures would quickly die under the pressure of cheaper foreign products. Trade imbalances are a problem that can impede regional and continental trade. Pakistan's sales to Afghanistan far surpass Afghanistan's to Pakistan, while Tajik sales to Kazakhstan are a pittance compared with the value of the reverse traffic. And across Central Asia the trade imbalance with China is extremely lopsided, reaching 3:1 in Kyrgyzstan and 9:1 ratio in Tajikistan. If unofficial trade is added, the figures would be yet more lopsided. It is difficult to make the case that in the long run this problem is most effectively addressed through more international trade in all directions, rather than less. Politicians sensitive to the short-term impact of their actions on local publics cannot afford the luxury of a long-term view. Closely related to the problem of trade imbalances are the unpredictable and often destabilizing fluctuations to which international trade is subject. Tajikistan and the Kyrgyz Republic, for example, both opened their doors to cross-border trade in the expectation that it would be a steadily rising tide. Instead, it has ebbed and flowed in ways that local planners find extremely upsetting. For example, the Russian economic crisis of 1997 wreaked havoc on Central Asian economies, and led to many damaging secondary effects, including a 50% drop in imports of building materials and other critical products from Turkey. These and other unwelcome consequences of cross-border trade have encouraged protectionist sentiment across the region. When the Soviet-era Dushanbe Cement plant finally went back into operation, Tajiks welcomed it as a chance to cut off cement imports from Uzbekistan and curtail the “mafias” associated with them. Felt even in the Kyrgyz Republic, a WTO member, protectionism has found its most sympathetic home in Turkmenistan and especially in Uzbekistan. Beginning in the mid-1990s Uzbekistan has pursued a policy of grain self-sufficiency, and in recent years has extended this protection to many consumer products. This has curtailed bilateral trade with China and, if continued, will equally discourage interchange with Europe, India, and Russia.
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More serious, Uzbekistan's protectionist impulse has combined with the government's concerns over security threats arising from the territories of its neighbors to justify a strict border regimen that effectively thwarts trade throughout the region. The inevitable response to such actions is for self-identified “global thinkers” to call for more reform in the countries of Greater Central Asia. While this may indeed be the most productive path, doubters in the region can point to much that feeds their skepticism. Bluntly, many “reforms” have brought unwelcome consequences. The negative consequences of Kyrgyzstan's WTO entry have been noted. In the same spirit, many reformers call for Central Asian countries to join the Transports International Routiers (TIR) convention that governs continental road transport. China is currently working to do so and its neighbors to the West are under pressure to follow suit. Similar pressures come from Europe, and in due course will come from India, Turkey, and Iran---all with good reason. Cargos transported under TIR are exempt from customs inspection, which is essential if goods are ever to be transported smoothly between the great economies of western and eastern Eurasia. In fact, it is probably only the pressure of TIR that will cut back the present border delays that can ground a truck for up to a month. Yet TIR costs money. Its strict emissions requirements will force the retirement of the entire Soviet and Russian-built truck fleet that is the backbone of Central Asian and even Afghan road transport. Vehicles meeting TIR standards are far more expensive---up to $100,000 each, a figure that is far beyond the capacities of most Central Asian shippers. Until they gain access to credit for new trucks, this means that the very trucking firms which should benefit from their central position on the Eurasian continent may be sidelined as Chinese, European, and eventually Indian and Turkish truckers dominate the field. Thanks to the bitter experience of the past, even proposals to establish customs unions and free trade zones are viewed in Central Asia with suspicion. The Economic Cooperation Organization (ECO) and Commonwealth of Independent States (CIS) both long championed free trade zones, but failed to overcome the skepticism of some of their members. More recently, Russia has promoted the Eurasian Economic Community (EAEC or EURASEC) as a customs union that would combine Russia, Belarus, Kazakhstan, the Kyrgyz Republic, Tajikistan, and Uzbekistan in a free trade zone. Kyrgyz experts, however, calculate that EURASEC will likely have a sharply adverse impact on their country and Tajikistan. The Asian Development Bank reached similar conclusions even for Kazakhstan which, it argues, would suffer a $10 billion loss and slow-down in GDP growth if this project were to be implemented as planned. Beyond these many practical issues inhibiting continental and regional trade in Central Asia are various political disputes that find expression at the region's border stations. For example, political tensions between Tajikistan and Uzbekistan have led to extremely slow border crossings between those countries. Many Kazakh, Russian and Uzbek shippers therefore choose to avoid these by proceeding instead through the Kyrgyz city of Osh and thence to Irkeshtam. Crossings along the Uzbek-Turkmen border are
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similarly slow. Chinese concerns over Islamic and secessionist activists have caused the processing of trucks at the border between Xinjiang and Pakistan atop the Karakuram Highway to slow nearly to a halt for long periods. In spite of these persisting problems, political problems today are far less serious an impediment to continental and regional trade than a decade ago. Not only has China opened up its western border in way that encourages neighboring countries to do likewise, but Afghanistan, which had been an impassible barrier to both east-west and north-south transit headed towards Pakistan and the Indian sub-continent, has emerged with a normal government committed to expanding trade in every direction. This development has done more than anything since 1991 to raise hopes about the renewal of continental transport. The great exception to this positive trend is the on-going conflict between India and Pakistan over Kashmir. It is above all for this reason that total two-way trade between India and Central Asia is a mere $200 million, a pittance compared with Turkey's figure of $2 billion, which itself reflects under-trading, or that Turkish imports from India are a mere $1.2 billion. To appreciate the importance of this impediment, it is necessary to recall the region's history. For 2,500 years trade between West and East meant trade between the Mediterranean world (including Europe) and both China and India. In many ways the Indian courts were more open to such interchange than their counterparts in China. The so-called “Silk Roads” headed equally to India and China. Even Marco Polo began his trip as if he was intending to go to India and only at some point three quarters of the way across Afghanistan did he take the left turn up the Vakhan Corridor towards China rather than continuing straight to the Indus valley. Indians, unlike Chinese, participated actively in continental trade. Whereas Chinese left transport along the “Silk Roads” mainly to Central Asians and Persians, Indians themselves established mercantile centers in all the major cities of Greater Central Asia. Called “Hindus” but in actuality including both Hindus and Muslims, the Indian trading houses were among the bestorganized commercial presences throughout Central Asia, Iran, and even in the Caucasus. In light of this, it is all the more astonishing that the reopening of Afghanistan did not unleash a flood of overland transit and trade extending clear across the Indian subcontinent to Southeast Asia and, in the West, to the Middle East, Europe, and Russia. But it did not, and the main reason has not been the many impediments discussed above, but the conflict over Kashmir. Because of this, what should be one of the main trade corridors on earth does not function at all. The economic cost of this stand-off to both India and Pakistan is far greater than either country has acknowledged, for their calculations fail to include estimates of lost opportunities. Gulshan Sachdeva, in his insightful paper on India, enumerates a number of positive developments that have occurred recently. Looking hopefully to the future, India has
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even set up bilateral trade commissions with all the countries of Central Asia. But when a series of terrorist bombs exploded in Bombay in 2006 were traced to activists from Kashmir, it understandably hardened India's resolve to address this issue before opening its western door to trade through Pakistan. One thing is certain: when these trade portals are finally opened, both countries will begin a new era of land-based trade with the West and with China. While the scale of this activity may pale in comparison with the Indian economy as a whole, it will have a transforming effect on Pakistan, returning the Indus valley to the status of continental entrepot it enjoyed from the Mohanjo-Daro age four millennia ago. And the impact on all other countries on Eurasia will be equally great. “Undertrading” and Opportunity Cost Economics being a practical field, it does not tend to dwell on what does not exist. Nonetheless, it acknowledges that in the modern world, certain levels of trade between neighboring countries can be considered “normal,” the actual level being based on a series of economic performance indicators on the two countries in question. Those paired countries that fall under this norm can be said to be “undertrading.” By any such measure, undertrading is the universal pathology of the economies of Greater Central Asia. Due to such undertrading, the ranking of trading partners among most countries of the region is the same today as fifteen years ago, just after the Soviet collapse. The papers in this volume are a record of this undertrading, and a kind of Linnean inventory of the forms that undertrading can take. Economics also recognizes that every opportunity foregone is a cost incurred. This foregone benefit is called the “opportunity cost,” and for many situations this cost can be estimated. We do not know the total volume of undertrading across the many countries of Greater Central Asia. Hence we cannot calculate the opportunity cost that is foregone each year that the Eurasian states and their partners further afield fail to develop continental trade. However, it is clear that the opportunity cost is huge, an enormous figure for any country but a staggering sum for the emerging economies of Central Asia. More to the point, the sums involved are grossly incommensurate with the modest scale of the many practical problems that to date have impeded the development of this trade. One might reasonably argue that, with the exception of the Kashmir issue, all the various impediments would long since have been swept away if the bureaucrats responsible for them had ever paused to reckon the opportunity cost of inaction. What is Being Done? What, if anything, is being done to narrow the yawning gap between reality and potential in continental trade across Eurasia? Had this issue been raised a mere decade ago the answer would have been “close to nothing.” The Central Asian states had by 1996 launched and abandoned two different attempts to bring about a customs union. The Economic Cooperation Organization had set forth ringing goals but done nothing to achieve them, and the European Union had launched its TRACECA program with far more fanfare than action. Today the situation has changed dramatically for the better, as is evident from a quick review of the major emerging corridors of trade.
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East-West Transit East-West transit is on the eve of a boom. The opening of the Baku-Ceyhan pipeline and pressures by Russia's Gazprom on western consumers have revived prospects of gas and oil being shipped across the Caspian by pipeline. EU countries are finally acknowledging their strategic interest in the Caspian region and two EU presidencies, Finland and Slovenia, have proposed to translate that recognition into action. Kazakhstan has already committed to the trans-Caspian project, and Turkey is pushing its related Nakubo project to transfer energy onward to Austria and the heart of Europe. Parallel with this, China and Kazakhstan are working on a major pipeline to transmit Kazakh gas to the heart of China, and both Uzbekistan and Turkmenistan are also planning to send gas eastward to Xinjiang. The Kyrgyz Republic has found in neighboring China a new customer for electricity from its Toktogul hydroelectric plant. This activity has in turn revived plans for completing an East-West railroad from China to Europe via Central Asia and the Caucasus. This 7077 km. undertaking calls for an as yet unbuilt railroad across the breadth of Kazakhstan (or, as Tashkent would prefer, Uzbekistan), as well as a reconstructed rail line from Baku to Batumi or Poti on the Black Sea. A related project would link the above railroad at Tbilisi with the Turkish railhead at Kars, opening the possibility of direct rail shipment from China to Istanbul and beyond. Ill-founded Armenian resistence to this phase of the project is holding up the link to Kars but is unlikely to prevail for long against an undertaking grounded in such powerful commercial logic. Meanwhile, old hopes for the construction of a Europe-Asian highway through Central Asia are being pushed from both ends of the Eurasian continent. While progress has been slow, the unacknowledged but real competition between Uzbekistan and Kazakhstan to serve as the Central Asian link of this project attests to the growing expectation that it will be realized. Absent so far is any comprehensive plan for more southerly east-west railroads and highways from the Middle East to India. Political problems plague such a project at both ends (the Iran-Iraq border and Kashmir) and in the middle (blockades against Iran). The only concrete proposal utilizing this southern route was for a gas pipeline from Iran to India via Pakistan. Announced with much publicity in 2006, this project has been judged unfundable and appears to be stillborn. North-South Transit For many years, both of the two main projects for north-south transport across the belt of the Eurasian continent deliberately avoided Afghanistan. Historically, the first of these was China's plan to build a highway connecting its western province of Xinjiang and the Arabian Sea via Pakistan's Indus valley and Islamabad. The Karakuram Highway was built over twenty years beginning after the Soviet-Chinese conflict of the 1960s. After years of neglect, the deeply rutted roadway of the Pakistani section of the highway is being reconstructed and extended southward. Its terminus is the new Pakistani port at Gwadar, which is being built with Chinese support. The second of these is Russia's scheme to build a road and railroad connection between
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Russia and the Persian Gulf, crosses Kazakhstan, Turkmenistan, and Iran, culminating at the port of Chahbahar. India has joined as a sponsor, and many other countries have associated themselves with the project, officially called the International North-South Transport Corridor. Related north-south routes are the railroad being built by Azerbaijan, Iran, and Russia across Azerbaijan and Russia's large investment in its Volga/Caspian port of Astrakhan. These two projects are both complementary and competitive with one another. The opening of Afghanistan has increased the competitive element, for both Chahbahar and Gwadar aspire to become the main southern port for Central Asia as a whole and for routes crossing Afghanistan. There is surely a place for both, however, since geography favors Chahbahar for shipments to the Gulf states and Africa, and Gwadar as the main port leading to India and southeast Asia. The fact that India has invested in Chahbahar even though the shortest route to Central Asia and the West would be through Gwadar or Karachi testifies further to the opportunity cost of the conflict over Kashmir. Since these projects were inaugurated, Afghanistan has opened up to transit trade, leading to a rush of interest in more traditional routes through Uzbekistan, Tajikistan, and Turkmenistan. Usually grouped under the heading â&#x20AC;&#x153;north-south routes,â&#x20AC;? these are also continuations of transport corridors beginning in both Europe and China. The principal routes today, as in the past, cross the Panzh River either through Termez in Uzbekistan, where the Soviet era bridge remains, or at the Tajik-Afghan border, where the United States has costructed a new bridge. New tunnels speed transport northward on the route acrosss Tajikistan, while an alternative highway is now open to the northeast to China via Khorog and the Kulma Pass. Since the processing of shipments on the Uzbek-Tajik border is slowed by political blockage, much of the traffic north to Kazakhstan and Russia has shifted eastward through Khorog and Osh to Bishkek, or westward through Uzbekistan. Further routes from Afghanistan run directly west from Herat to Mashad in Iran via a highway newly reconstructed by Iran, or northwest to Turkmenistan. India has financed the construction of a southwestern road connecting the Afghan Ring Road with the new port at Chahbahar, but the analogous southeastern link between the Ring Road and the new port at Gwadar in Pakistan is being held up by political disputes between Pakistan and Afghanistan. The continuing failure of Pakistan to reach accord on this project will effectively cancel out the large investment which that country and China have made in the facilities at the new port. The same political stand-off between Pakistan and Afghanistan that is holding back this project is thwarting the rapid expansion of transport over existing roads through Afghanistan. A Pakistani trucking company with links to the military long prevented Afghan drivers from delivering goods to the Karachi port. Afghanistan, citing drug smuggling and tax evasion, prevents Pakistani drivers from passing through Afghanistan. The result is a bizarre system of off-loading and on-loading at the Afghan borders that costs both countries an estimated 5% of the value of products shipped. Interestingly, truckers themselves are cooperating effectively even when their
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governments are not! Whatever the timing of the above north-south corridors through Afghanistan, it is probable that in time all of them will be built. Support from the Asia Development Bank, Islamic Development Bank, World Bank, India, Iran, Japan, Kuwait, and Pakistan, as well as Tajikistan, Turkmenistan, and Uzbekistan, makes this outcome more than likely. These highway corridors are not yet being supplemented by any planned rail line across Afghanistan. The absence of such a project leaves a significant gap in an otherwise rapidly developing transport system. Such a project has not yet been taken up by the Central-South Asian Transport and Trade Forum (CSATTF), an ADB-assisted entity for exchanging information on new transport corridors across Central and South Asia. However, the construction of a much-discussed gas pipeline from Turkmenistan across Afghanistan to Pakistan and eventually India could provide the necessary stimulus for constructing a rail corridor as well. The 1,700 km. trans-Afghan gas pipeline project was stuck in limbo while a new government was being formed in Kabul but is now under active consideration once more, this time with strong support from the ADB. The Turkmen government claims that studies it has commissioned from an American firm lay to rest accusations by Russia's Gazprom that southeastern Turkmenistan lacked the gas to justify such a project. Moreover, India, having earlier been committed to the IranPakistan-India route mentioned above, has not only joined the project but proposed that it be expanded to include an oil pipeline as well. Yet another emerging north-south transport corridor are the long electric lines that will bring hydroelectric power from Tajikistan to Afghanistan and on to Pakistan. Built with American assistance, these lines will provide a much-needed income stream to the Tajik government. It remains to be seen whether and how the Kyrgyz Republic and Uzbekistan will join in this emerging industry. Turkmenistan, though, is already sending electric power across the border to Afghanistan. The fact that India bid (albeit unsuccessfully, losing out to China) for Kazakhstan's Petrokazakhstan firm indicates that one way or another India is determined to import gas and oil from the Central Asian region in the coming years. However, this, too, remains subject to the unresolved Kashmir problem. Until this “Rubic's cube” is either solved or Pakistan and India are willing to segregate the transport of goods and energy across their common border from their outstanding unresolved issues, the obstacle will remain. As noted earlier, the negative effects of this blockage are to be felt clear to Europe and China. Does the Necessary National and International Resolve Exist? The establishment of Eurasia-wide corridors for transport and trade involves a bewildering array of separate projects, many of them linked to one another in sequences that are by no means obvious. In the words of Robert S. Deutsch, the American official responsible for fostering transport across Greater Central Asia, “There are many eggs and many chickens.” During the 1990s, the opening of Central Asian trade routes was seen principally as a regional affair and therefore left mainly to the countries themselves to achieve. Not only did they fail to do so, but they allowed many old Soviet-era routes
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and corridors to fall into decay. Today this is generally understood to be a global project, requiring close cooperation among regional states and between those states and the world's major economic powers and financial institutions. However, all of these countries and institutions face other concerns besides reopening the “Silk Roads” of Greater Central Asia. It is therefore pertinent to ask, “Does there exist the political will that will be required to reopen continental trade across Eurasia?” Any answer to this question must begin with the regional states themselves. Surveying governments across Central Asia, Afghanistan and the Caucasus, it is clear that their understanding of the issues has increased enormously, as has their level of interest in addressing them. Basic geopolitical concepts have begun to shift as Soviet borders fade into history and new relationships based on economic and geographical reality begin to emerge. It would be too optimistic to claim that regional leaders adequately understand the opportunity cost of inaction, but they are increasingly aware that progress in this area will produce measurable gains for their countries. At the same time, all of the local interests that have thwarted continental trade in the past are still present and must be faced. The country that has come furthest in championing continental trade across Greater Central Asia is Kazakhstan, which is now the clear regional leader in this regard. By promoting the International Transport Consortium and a Common Transport Policy it hopes to bring about a united regional voice on the modernization of transportation infrastructure and to coordinate that voice with all Eurasian powers. Overall, regional leaders are ready to act on transport and trade if other leaders do so, and if they are backed up by major powers and international organizations. Even Uzbekistan, with its history of protectionism, may be ready for change, since its policy of autarky has failed to sustain the GDP gains that were achieved throughout the 1990s. But this will happen only when the international environment makes change unavoidable. What, then, of the main Eurasian economic powers whose economies will drive the growth of transport and trade along the emerging corridors? Do they grasp the potential and are they translating that understanding into constructive programs? China, for one, clearly perceives the importance of continental trade and has moved in a purposeful manner to promote it. Its main failure to date is to drive its Gwadar project to completion and to engage Pakistan in the development of access roads from central Pakistan and Afghanistan. Russia, too, perceives the trend towards continental trade and has moved decisively on two fronts: first, to oppose all east-west transport routes (roads, railroads, and energy) not running through its own territory, and, second, to promote its own North-South corridor to Iran while at the same time discouraging former Soviet states of Central Asia and Afghanistan from opening direct links with Pakistan and India. On the first front Moscow has largely failed, while its North-South link is fast becoming a reality, with some twenty nations now committed to participate. Meanwhile, Russia has been unable to slow the formation of transport ties between India, Pakistan, Afghanistan and Central
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Asia. For a decade the European Union's commitment to continental trade was more rhetorical than operation. Now that it recognizes that its interests are clearly at stake in the Caspian energy sector, it is working to find a new role for itself. Cooperation with the United States in this area looks more likely than ever, and holds much promise. India, a late-comer to these issues, is running hard to catch up, having signed bi-lateral agreements with all regional countries in support of regional and continental trade. For the time being, India is supporting Russia's north-south corridor but in the long run its interests in road, rail, and energy transport clearly lie with the more direct routes across Pakistan and Afghanistan. These corridors, however, remain hostage to the on-going disagreements with Pakistan over Kashmir. Japan has demonstrated a subtle understanding of the economic and geopolitical issues relating to continental transport and trade and has moved deftly to advance its interests in this area. Japan has sponsored major road construction projects in Afghanistan and developed its â&#x20AC;&#x153;Japan Plus Central Asiaâ&#x20AC;? initiative as a forum for addressing future joint activities in trade and transport, as well as other areas. During the 1990s the United States concentrated mainly on intra-regional trade in Central Asia. With its decisive intervention in Afghanistan, however, it opened the door to continental trade. After first insisting that its interests in the region were confined to its anti-terrorism project and were therefore temporary, it then acknowledged its longterm interests there. This is affirmed by Congress in a new Silk Road II Act and has been given institutional reality by the reorganization of the State Department to bring Central and South Asia together under a new combined bureau and by the appointment of a special ambassador for transport and trade issues in Central Asia and Afghanistan. U.S. assistance has been crucial in major infrastructure projects in Afghanistan and Tajikistan. No less than the major countries, international agencies and financial institutions play a central role in advancing a continental trade regimen across Greater Central Asia. Funded by national governments, these bodies are able to stand above national interest in a way that is difficult, if not impossible, for their sponsors. Among international agencies, none has come close to the Asia Development Bank in its clear and sustained grasp of the issues affecting continental trade and in the range and effectiveness of its programs to address them. Sponsored mainly by Japan, the ADB has founded the six-nation Central Asia Regional Economic Cooperation (CAREC) and within CAREC a Trade Facilitation Program that is working to develop a common systems of customs across Greater Central Asia. Agreements signed by the participating countries will, if implemented, bring about the standardization and simplification of customs practices. The World Bank has carried out important research on the status and prospects for regional trade within Central Asia. Its many programs emphasize more the revitalization of important infrastructure and trade links with the Russia that lapsed
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after 1991 than the creation de novo of new continental corridors, yet its field of vision has steadily broadened to embrace longer routes as well. The World Trade Organization is arguably the single most important framework organization for the countries of Central Asia and their prospective continental trading partners. China's accession and Russia's likely future accession leaves Central Asian countries (other than Kyrgyzstan, which joined in 1998) isolated as non–members between four major poles of members, China, Europe, India, and Russia. As Sanat Kushkumbaev states in his chapter on Kazakhstan, “WTO membership will provide a base to these countries to establish a realistic mechanism to overcome their trade related problems.” Until recently, the South Asian Association for Regional Cooperation (SAARC) has been oriented towards trade from India to Southeast Asia rather than towards Afghanistan and the North. When SAARC approved Afghanistan for membership in 2005 the organization became a significant presence in the promotion of continental trade, not least through its 2004 Agreement on South Asia Free Trade Area (SAFTA). As Gulshan Sachdeva observes in his paper, “Afghanistan's membership to SAARC has the potential to fundamentally change and rejuvenate regional economic linkages between the South Asian and greater Central Asian regions.” The Economic Cooperation Organization is an old organization (founded 1985) that has expanded to include all countries of Central Asia, along with Afghanistan, Iran, Pakistan, and Turkey. As such, it has important longterm prospects for playing a role in the opening of a southern east-west route from Turkey to India across Iran, Afghanistan and Pakistan, as well as in the improvement of Central Asian links across Afghanistan and Turkmenistan to Iran. To now, though, ECO has been a passive force, impeded by internal organizational issues and regional politics from fulfilling this larger mission. The Eurasian Economic Community initiated by Russia and involving four states of Central Asia (Kazakhstan, the Kyrgyz Republic, Tajikistan and Uzbekistan) along with Belarus, is the economic successor to the Commonwealth of Independent States, and also to the locally-based Central Asian Economic Community, which it absorbed. Besides the likelihood that the implementation of its programs might harm the Central Asian economies, it is not clear that this project can survive the entry of member states into the WTO. Under any circumstances, its rise leaves open the possibility of Central Asian governments establishing a purely Central Asian economic organization, for which the presidents of both Kazakhstan and Uzbekistan have called. The Shanghai Cooperation Organization began in 2001 with a focus on security issues but has since broadened its purview to include transport and trade. At the same time it has expanded its original membership to include Uzbekistan, with Afghanistan, Iran, and Pakistan as possible future additions. While SCO can certainly play a constructive role in improving the basis for continental transport, it remains unclear what its specific mission in this sphere might be, given the existing high level of activity of its chief sponsors, China and Russia, and the plethora of other entities already active.
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The Organization of Security and Cooperation in Europe may seem an unlikely player in transportation and trade issues in Greater Central Asia. Nonetheless, it has hosted successful conferences in Dushanbe and Istanbul on continental trade and intends to use its convening power further to promote investment and transport. Finally, the United Nations figures at least marginally in the skein of institutions fostering continental interchange across Eurasia. In 2003 it organized a major conference of landlocked developing countries in Almaty, Kazakhstan, at which ministers and experts from seventy five countries adopted an â&#x20AC;&#x153;Almaty Action Plan.â&#x20AC;? The aims of this document are expansive, embracing infrastructure, the simplification of trade, and technical assistance. More important in the long run is the UN's active role (through the United Nations Drug Control Program) in the struggle against illegal trafficking in narcotics. Since drug trafficking remains the one Central Asian industry besides oil and gas that is thoroughly integrated on a continental basis, and since it is also the region's most lucrative export (even though the profits mainly go elsewhere), the UN's paramount role in fighting it is all the more critical. Conclusion These many states and diverse international institutions are but a sampling of the many entities actively involved in the development of continental trade across Eurasia. Numerous other bodies are involved in the most direct way. Many are private. Among these are the professional shippers in eastern Turkey, the Russian Urals, or Pakastani Punjab who see an opportunity in forwarding cargoes across the vast continent; the cotton farmer in Turkmenistan who borrows a truck from his cooperative to try to deliver a load to a Karachi spinning mill; the cement maker in Dushanbe who discovers a market in southern Tajikistan; the European manufacturer of fuel additives who wants to market his product in Kazakhstan; or the Indian or Chinese appliance manufacturer with an eye on markets in eastern Europe. Taking into account all these diverse agents of change, it is hard to conclude that the process as a whole is not extremely chaotic. It abounds in grandiose ambitions, crashing failures, overlapping initiatives, false starts, and on major issues a near-total lack of coordination. Above all, it abounds with competition among diverse nations, businesses, and even public agencies that claim to serve the common good. Yet the fact that the process is chaotic and shot through with competing interests in no way signifies that there is insufficient will to see the task through to a successful conclusion. On the contrary, it is precisely in this chaos and competition that one can discern the will that will be essential in achieving ultimate success. More than one of our authors regrets the absence of a single grand regional coordinating body to oversee the process. However, one might instead argue that the chaotic pluralism that now exists is far better. On the one hand it prevents any single state or grouping of states from controlling the development of continental trade in a way that would inevitably serve their particular interest. On the other, it moderates the pretensions of politicians and increases their exposure to the austere discipline of market forces. This in turn strengthens the sovereignty and independence of the countries in Greater
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Central Asia that form the hub of the emerging trade networks. Working with diverse partner countries and international agencies, they can play them off against each other in ways that ultimately benefit the transport system as a whole, and the region. By such a process, Central Asian countries can pursue the multi-directional foreign policies that will be essential to their long-term viability as states and to their prosperity as peoples. To say that the best strategic and operational decisions are those that are tested by competition and market realities in no way minimizes the importance of the several political problems that are impeding the opening of the â&#x20AC;&#x153;New Silk Roads.â&#x20AC;? The India-Pakistan conflict over Kashmir is like a cork that is bottling up continental trade to the Southeast. Unresolved issues between Pakistan and Afghanistan have a similar effect. In the South Caucasus, the unresolved Karabakh conflict exerts a negative influence on both highway and rail projects through that critical corridor. Similarly, Uzbek protectionism and Afghan hostilities to foreign truckers damage prospects for trade across those countries. Acknowledging this, the best way forward is to pursue whatever options make the best market sense under the circumstances. If one channel is blocked, let trade flow through others. This process will encourage, even force, those countries responsible for the main political blockages to calculate the opportunity cost to themselves of their own policies. They will see that the opening of continental trade is an elemental process that can be thwarted in one dimension but will quickly find a productive outlet in another. They will see how opportunities can quickly slip from their grasp and into the hands of others who are more receptive to the process as a whole and more committed to its success. For the first time in centuries, new Silk Roads across the Eurasian continent are on the cutting edge of change, rather than its victim. * Source: http://www.silkroadstudies.org/new/inside/publications/GCA.html
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Declaration of the Fourteenth SAARC Summit 3â&#x20AC;&#x201C;4 April 2007, New Dehli The President of the Islamic Republic of Afghanistan, His Excellency Mr. Hamid Karzai; the Chief Adviser of the Government of the People's Republic of Bangladesh, His Excellency Dr. Fakhruddin Ahmed; the Prime Minister of the Kingdom of Bhutan, His Excellency Lyonpo Khandu Wangchuk; the Prime Minister of the Republic of India, His Excellency Dr. Manmohan Singh; the President of the Republic of Maldives, His Excellency Mr. Maumoon Abdul Gayoom; the Prime Minister of Nepal, Rt. Hon'ble Mr. Girija Prasad Koirala; the Prime Minister of the Islamic Republic of Pakistan, His Excellency Mr. Shaukat Aziz; and the President of the Democratic Socialist Republic of Sri Lanka, His Excellency Mr. Mahinda Rajapaksa, met at the Fourteenth Summit meeting of the South Asian Association for Regional Cooperation (SAARC) held in New Delhi, India on April 3-4, 2007. 2.
The Heads of State or Government welcomed the entry of the Islamic Republic of Afghanistan into SAARC. This was a historic moment as Afghanistan assumed its rightful place as a valued member of the SAARC fraternity.
3.
The Heads of State or Government reiterated their commitment to the principles and objectives enshrined in the SAARC Charter. With the welfare of the peoples of South Asia uppermost in their mind, they agreed to build a Partnership for Prosperity and work towards shared economic cooperation, regional prosperity, a better life for the people of South Asia, and equitable distribution of benefits and opportunities of integration among the peoples and the nations.
4.
The Heads of State or Government recognised the importance of connectivity in fulfilling these objectives. It was vital to first have better connectivity within South Asia and then with the rest of the world. They agreed to improve intra-regional connectivity, particularly physical, economic and people-to-people connectivity. They agreed to the vision of a South Asian community, where there was smooth flow of goods, services, peoples, technologies, knowledge, capital, culture and ideas in the region. The SAARC Car Rally, in the run-up to the Fourteenth SAARC Summit, had vividly symbolized this connectivity.
5.
The Heads of State or Government recognised that the remarkable growth of the economies of SAARC countries has opened new opportunities to pursue the fight against poverty with firm resolve. They called for deepening of pro-poor orientation of growth process, including through enhancing investment in human capital and infrastructure, increasing budgetary allocations for relevant sectors and improved delivery of services. They reiterated their commitment towards project-based
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cooperation to strengthen collective efforts in the region. 6.
The Heads of State or Government acknowledged that there is a wide range of homegrown best practices and innovative solutions for transforming the lives of peoples in South Asia. They decided to earmark one rural community as SAARC Village in each Member State to showcase these innovative models of development in order to further replicate these across the region.
7.
The Heads of State or Government recognised that the implementation of the Social Charter needs focused attention and directed the National Coordination Committees (NCCs) to formulate concrete programmes and projects to complement national implementation efforts. They underscored that civil society organizations have a vital role to play in driving forward the implementation of the Social Charter and directed the NCCs to mobilize civil society organizations to achieve this end.
8.
The Heads of State or Government appreciated the Independent South Asian Commission on Poverty Alleviation (ISACPA) for its elaboration of the SAARC Development Goals (SDGs), which reflect the regional determination to make faster progress towards attaining the Millennium Development Goals (MDGs). They agreed that the national plans for poverty alleviation should appropriately mirror the regional consensus reached in the form of the SDGs and the Plan of Action on Poverty Alleviation. Deciding that resource mobilization for achieving the SDGs would remain a high priority in the Decade of Poverty Alleviation, the Leaders directed translation of the highest regional level political commitment into action for creating opportunities for productive employment and greater access to resources for the poor that are essential for them to enhance their livelihood and realize their potentials. They entrusted the Two-tier Mechanism on Poverty Alleviation to monitor the progress and fine-tune the approaches towards pro-poor growth process.
9.
The Heads of State or Government recognized the full benefits of an integrated multimodal transport system in the region. They emphasized that this would not be realized unless physical infrastructure and matters relating to customs clearance and other facilitation measures, including multimodal transport operations, were addressed comprehensively. They called for an extension of the SAARC Regional Multimodal Transport Study (SRMTS) to include Afghanistan as well. They also called for early implementation of the recommendations contained in the Study in a phased manner. In this context, the Heads of State or Government directed the Inter-Governmental Group on Transport to identify and develop sub-regional and regional projects based on the prioritised recommendations of the SAARC Regional Multimodal Transport Study (SRMTS) and to develop appropriate regional agreements. They noted the offer of India to hold the Meeting of SAARC Ministers of Transport in New Delhi in 2007. They also directed that pilot projects for improving connectivity be identified and implemented through mutual consultations among the Member States.
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10. The Heads of State or Government emphasized that in its third decade of existence, there was an urgent need to move SAARC from declaratory to implementation phase. They directed that the focus of SAARC should be on implementing collaborative projects that are concrete and effective. The SAARC Development Fund (SDF) is an important pillar that would bring concrete benefits to the people of the region. They directed that the SDF be made operational at the earliest. They agreed that the resources for SDF would be mobilised both from within and outside the region. They stressed the importance of decision making and working of the SDF being consistent with the SAARC Charter. They called for early identification and implementation of regional and sub-regional projects under the SDF. 11. The Heads of States or Governments recognized the region's rapidly increasing energy demands for meeting the developmental needs of SAARC countries. They also acknowledged the need of expediting development of conventional sources of energy in a sustainable manner and for strengthening renewable energy development such as in hydropower, bio-fuel, solar and wind. They welcomed the organizing of the first ever South Asia Energy Dialogue in March 2007 in Delhi. They called for early implementation of the recommendations of the Second SAARC Energy Ministers' Meeting to enhance regional cooperation. 12. The Heads of State or Government reiterated their deep concern at the continued degradation of environment and reaffirmed the need to further strengthen cooperation towards protection and conservation of the environment as a priority area. In this regard, while noting the progress in the implementation of the SAARC Plan of Action on Environment, they called for concerted efforts to implement various initiatives under the Plan in a timely manner. 13. The Heads of State or Government expressed satisfaction at the launching of 2007 as the 'Year of Green South Asia'. They reiterated that collaboration in addressing the problem of arsenic contamination of groundwater, desertification and melting of glaciers and assistance to affected peoples should be deepened. They expressed deep concern over global climate change and the consequent rise in sea level and its impact on the lives and livelihoods in the region. They emphasised the need for assessing and managing its risks and impacts. They called for adaptation of initiatives and programmes; cooperation in early forecasting, warning and monitoring; and sharing of knowledge on consequences of climate change for pursuing a climate resilient development in South Asia. They agreed to commission a team of regional experts to identify collective actions in this regard. 14. The Heads of State or Government stressed the need for closer regional cooperation in the field of information and communication technology. They noted with appreciation the establishment of a collaborative health care project involving a regional telemedicine-network. They directed that steps be taken to extend it to other ICT enabled fields such as education. They agreed to take steps to facilitate rationalization of telecom tariff on a reciprocal basis. They also agreed that national and regional telecom infrastructure should be upgraded to boost people-to-people connectivity in the region.
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15. The Heads of State or Government noted with satisfaction timely ratification of SAFTA Agreement by all member countries. They stressed the need for ensuring effective market access through smooth implementation of trade liberalization programme and directed the SAFTA bodies to review the progress on a regular basis. They emphasized that SAFTA should be implemented in letter and spirit. Successful implementation of SAFTA will catalyse other areas of regional economic cooperation. They stressed that to realize its full potential, SAFTA should integrate trade in services. They called for a finalisation of an Agreement in the services sector at the earliest. They also directed that the Agreement on Investment Promotion and Protection be finalized. 16. The Heads of State or Government underlined the importance of implementing trade facilitation measures, especially standardization of basic customs nomenclature, documentation and clearing procedures. They directed that a comprehensive agreement on harmonizing customs procedures be finalised. They also noted that harmonization of technical and phyto-sanitary standards and their implementation in a trade-friendly manner is important in boosting intra-regional trade. They appreciated the establishment of the SAARC Standards Coordination Board that would function as a precursor to the SAARC Regional Standards Body. 17. The Heads of State or Government complimented the SAARC Finance Ministers for finalising the framework of cooperation on financial issues in the region. They expressed satisfaction at the work of the Inter-Governmental Expert Group on Financial Issues. 18. The Heads of State or Government emphasized the need to develop, at an early date, a roadmap for a South Asian Customs Union and a South Asian Economic Union in a planned and phased manner. 19. The Heads of State or Government noted the cultural and social ties among the SAARC countries, based on common history and geography, and reiterated that the future of peoples of South Asia is interlinked. They stressed the importance of people-to-people contact as a key constituent in regional connectivity. They acknowledged the importance of intra-regional tourism and increased exchanges, particularly among the youth, civil society, and parliamentarians. They launched the SAARC Agenda for Culture and directed that annual SAARC Festivals for cultural exchange be institutionalized. They agreed to take measures to charge nationals of SAARC Member States fees for entry into archeological and heritage sites as applicable to their own nationals. They also directed that an enlarged SAARC Scholarship Scheme in ICT and related areas be instituted. They welcomed the offer of Bangladesh to host the First SAARC Youth Camp in 2007. 20. The Heads of State or Government decided to establish the South Asian University in India. They welcomed the signing of the Intergovernmental Agreement establishing the University. They further directed that the Intergovernmental Steering Committee be set up at the earliest to complete its tasks relating to the Charter, bye laws, rules and regulations, curriculum development, business plans
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and other issues. They also decided to strengthen cooperation and dialogue on educational matters through development of exchanges between academics, experts, policymakers, students and teachers. They called for inter-institutional cooperation, partnerships, and other regional initiatives in the field of education. 21. The Heads of State or Government acknowledged that women's full participation in all spheres of society, including participation in the decision-making process are fundamental for the achievement of equality and development. They noted that many sections of women and children continue to be in disadvantaged positions and lack equal opportunities for economic and social development. They emphasized that women's empowerment should be a major objective of regional cooperation. Regional projects should focus on addressing issues relating to women and children. 22. The Heads of State or Government stressed the need to collectively overcome the challenges of poverty, disease, natural disasters and terrorism. They confirmed that countries of South Asia must work together to deal with these challenges in order to secure the region's collective prosperity. 23. The Heads of State or Government acknowledged that countries of South Asia face challenges of food insecurity and malnutrition. In order to manage emergencies caused by natural and manmade calamities and food shortages, they welcomed the signing of the Intergovernmental Agreement establishing the SAARC Food Bank with the participation of all the SAARC countries. The Food Bank will supplement national efforts to provide food security to the people of the region. 24. The Heads of State or Government noted the challenges confronted by the countries of South Asia in ensuring food and nutritional security as well as in maintaining vibrant rural economy for agricultural development. They underscored the need for enhancing productivity and real wage in rural sectors, and for creating adequate non-farm employment to sustain the progress made in reducing poverty. Noting the constant decline in land availability and biodiversity, depleting soil and natural resources, lowering ground water levels, shrinking farm holdings as well as low and stagnating productivity, they recognized the imperative of reducing the wide gap between yields at the research and the farm level. They stressed, in particular, that South Asian agriculture must benefit from collaborative efforts within and among SAARC countries in developing an effective agriculture research, extension and farmers' linkages, and exchange of farm technology. 25. The Heads of State or Government underlined that terrorism is a threat to peace and security in the region. They condemned the targeted killing of civilians and terrorist violence, in all its forms and manifestations, wherever and against whomsoever committed. The Heads of States or Government affirmed that terrorism violates the principles of the Charters of the United Nations and SAARC and is a clear and present threat to international peace and security. They reaffirmed their commitment to implement all international conventions relating to combating terrorism, to which SAARC Member States were respectively parties, as well as the
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SAARC Regional Convention on Suppression of Terrorism and the Additional Protocol to the SAARC Regional Convention dealing with the prevention and suppression of financing of terrorism. While urging continued efforts to combat terrorism, the Heads of State or Government also called for urgent conclusion of a Comprehensive Convention on International Terrorism. 26. The Heads of State or Government agreed to work on the modalities to implement the provisions of the existing SAARC Conventions to combat terrorism, narcotics and psychotropic substances, trafficking in women and children and other transnational crimes. They expressed their commitment to take every possible measure to prevent and suppress, in particular, financing of terrorist acts by criminalizing the provision, acquisition and collection of funds for such acts, including through front organizations and also to counter illicit trafficking of narcotic drugs, trafficking in persons and illicit arms. They reiterated the need for law enforcement authorities of Member States to enhance cooperation in the prevention, suppression and prosecution of offences under these Instruments. They noted the initiative of India to prepare a draft of SAARC Convention on Mutual Assistance in Criminal Matters and welcomed the offer of Sri Lanka to hold a meeting of Legal Advisers to examine the idea of a draft convention, before the Second Meeting of SAARC Interior/Home Ministers scheduled to be held in October 2007 in India. They also directed them to ensure regular follow-up and implementation of the decisions taken. 27. The Heads of State or Government recognised that corruption was an issue of serious concern and agreed to exchange information on national experience in combating corruption to effectively address this problem. 28. The Heads of State or Government reaffirmed their commitment to a rule-based multilateral trading system. They recalled that the Doha Round was premised on the centrality of development. They directed the Commerce Ministers to work closely to co-ordinate their positions to ensure that the centrality of the development dimension in all areas of negotiations for creating new opportunities and economic growth for developing countries was fully realized. They called upon all members of WTO to show commitment for a successful conclusion of the Doha Round. 29. The Heads of State or Government welcomed the People's Republic of China, Japan, European Union, Republic of Korea and the United States of America, to be associated as Observers to SAARC. The region would benefit from these external linkages and help its economic integration with the international community. The Heads of State or Government also welcomed the Islamic Republic of Iran to be associated as Observer to SAARC. 30. The Heads of State or Government welcomed with appreciation the offer of the Maldives to host the 15th Summit Meeting of the Heads of States or Governments of the South Asian Association for the Regional Cooperation (SAARC). * Source: http://www.saarc-sec.org/data/summit14/ss14declaration.htm
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