Eyes on South Asia

Rasul Bakhsh Rais

The entry of countries outside of South Asia as observers at the South Asian Association for Regional Cooperation (SAARC) might make some waves. These observer countries are important players, however, on the global economic and security scene, and have a varying interest in the South Asian landscape.

States seek observer status in regional or other international organisations when they don’t meet the criteria for membership. China, the United States, Russia, Japan, South Korea, Iran and the European Union have all been accepted into SAARC as observers, meaning they would attend summit meetings, watch proceedings and make statements with the permission of the chair.

For nearly a quarter century since the creation of SAARC, no country from adjacent regions or afar evinced any interest in the agenda, vision or functioning of this largely ineffective organisation, except sending the usual messages wishing it the best of luck.

Why have they suddenly become interested in SAARC? How will the presence of these observer countries affect the growth of cooperation among members?

First, all observer countries have extensive bilateral relations - especially economic and security - with all SAARC members. Observer countries have interacted with South Asian states, though in varying degrees, for over half a century. The interest in SAARC, however, is new, and has been influenced by a number of developments.

Chief among them is the economic growth in the region over the past two decades, mainly in India, the largest regional economy. Three other countries - Bangladesh, Pakistan and Sri Lanka - have not been too far behind either.

Economic growth in each country and in different parts of that country may have different economic and policy dynamic, but what explains positive economic change in South Asia is a set of identical economic frameworks and economic globalisation. All South Asian countries have an identical template for economic policy, but with different resources, politics and governance endowments.

The factors of economic frameworks and globalisation are, in fact, two sides of the same coin. They are rooted in the same neo-liberal ideological framework and driven by the global flow of capital and technology, and the relocation of industry and production. Of course, not all countries of the regional have benefited from this process. India had a far greater national capacity in every field and therefore has done far better than the others.

The interesting thing is that while India and its immediate neighbours have a historically greater density of economic linkages with non-regional industrial states - which have grown substantially during the past two decades - regional trade remains very low. The opposite is true of other regional organisations like ASEAN and the EU, where economic integration has made great progress.

All observer countries in SAARC have multiple webs of economic, political and strategic relationships with more than one regional country. What, then, shapes the interest of these countries to sit as observers in SAARC meetings?

We believe that their involvement in SAARC in this capacity is propelled by two factors. One is the expansion of bilateral economic exchanges with most regional countries, which is largely determined by economic liberalisation and openness to global market forces. The second, perhaps the more important, factor are the future growth prospects of the region for the global economy and the observers.

South Asia is a region that will see further economic development and expansion in the coming decades. Therefore, opportunities for investment, trade and relocation of industrial activity are likely to grow if all other issues affecting growth - energy, trade, recession - are settled. Going by global economic cycles, the present conditions of economic stress and fiscal decline may not last forever.

Globalisation now shapes economies, cultures and even political attitudes.

It is one of the autonomous effects of conscious economic and technological policies of the western world. The end of the Cold War added that extra ideological authenticity, swagger and aggressiveness to the neo-liberal prescription for economic growth.

With the exception of Iran, which has joined SAARC for very different reasons, other observers have played a great role in global interdependence and economic integration.

Therefore, helping South Asian countries expand cooperation among themselves would reduce the transaction costs of global integration. Greater liberalisation of trade, investment and capital flows across South Asia would benefit multinationals in almost every field and cut their costs of production. Economic cooperation within the regional or at a larger level has positive gains for everyone engaged in it, with differential payoffs depending on participant states’ various capacities.

Economic growth and stability in any region, especially South Asia, is significantly linked to political stability and security. The unstable and insecure zones experiencing conflict cannot be integrated into productive economic processes. And if they are not contained or resolved, their effects will spill over borders. South Asia has many past and present examples of how inter-state relations are affected by security challenges.

Regional security problems in South Asia - Afghanistan and Pakistan’s tribal belt; the Tamil insurgency in Sri Lanka; until recently the Maoist insurgency in Nepal and India’s north-eastern states; and the unrest in Kashmir - do not present a comfortable picture to foreign economic and security players.

India, with its massive size, can isolate its heartland from its conflicted periphery, but other states cannot. Multiple points of conflict within the region and the India-Pakistani rivalry add difficulties to economic cooperation and growth, in which all SAARC observers have developed a considerable stake.

The effects of conflict in the region, purely in terms of security, are no longer confined to South Asian states. Modern-day insurgencies have transnational linkages and support bases, flows of weapons and fighters, and political connections across borders.

Most SAARC observer states have been affected by transnational militancy directly, and therefore have an interest in defeating or diffusing it. A good number of them are involved in the reconstruction effort in Afghanistan.

It is no coincidence that these observers drew closer to SAARC after 9/11, which reshaped strategic relationships of major powers in the context of India, Pakistan and Afghanistan. The ongoing review and reassessment of the war on terror suggests that only through regional cooperation can the insurgencies be defeated.

The presence of major global economic and military powers, even as mere observers, will have a positive effect on how SAARC redefines itself as a meaningful regional organisation. Its lacklustre performance in vital areas of cooperation has not made anyone happy.

Dr Rasul Bakhsh Rais is author of Recovering the Frontier State: War, Ethnicity and State in Afghanistan (Lanham, Maryland: Lexington Books 2008) and a professor of Political Science at the Lahore University of Management Sciences. He can be reached at *[email protected]

Daily Times