The South Asian grouping, called Saarc, which includes India, Pakistan, Sri Lanka, Afghanistan, Nepal, Bangladesh, Maldives and Bhutan, has struggled to give a boost to the free- trade pact they adopted in 2004. Trade between Saarc members is 5 percent of the countries’ total, compared with 55 percent among European Union nations, according to the Federation of Indian Chambers of Commerce and Industry.
“There is democracy everywhere in South Asia now and so the confluence increases at overall policy levels,” Sharma said in an interview at the Saarc headquarters in Kathmandu, Nepal, on June 24. “All the countries are wedded to the principle of growing together.”
Since last year, Nepal ended its 240-year-old monarchy, the Maldives overthrew Maumoon Abdul Gayoom’s 30-year regime, Pakistan got a new government after almost a decade’s reign by coup leader Pervez Musharraf and Bangladesh held national polls in December for the first time since 2001. Indian Prime Minister Manmohan Singh won re-election in May.
Even though trade in the region has been frustrated by hostility between nuclear weapons-armed India and Pakistan, the two governments have pledged to restart peace talks by next month. Saarc members are also working on a plan to cut non- tariff barriers, improve transport connectivity and reduce their “sensitive list” -- items that are banned from trading -- by at least 25 percent by the end of the year, Sharma said.
“There is an attempt to get the economic agenda going in Saarc,” said N. Bhaskara Rao, chairman of the Center for Media Studies in New Delhi. “But bilateral problems between India and Pakistan and unrest within some member states will be a stumbling block.”
Saarc was established in 1985 to improve livelihoods in a region that is home to half the world’s poor. After 24 years, the nations in Saarc, where a quarter of the world’s population lives, contribute less than 2 percent to global commerce.
Economic progress in South Asia has suffered because of the rivalry between India and Pakistan, which account for four- fifths of the region’s $1.3 billion economy. India accuses Pakistan of supporting armed extremists in Jammu and Kashmir, its only Muslim-dominated state. Pakistan denies it and says it offers only moral support to separatists.
India’s Prime Minister Singh said June 17 that peace talks with Pakistan may start by July. Pakistan’s foreign office said June 25 that talks between the two sides were “unavoidable” for “durable” peace in the region. Talks between the two sides were stalled following the Nov. 26-29 attacks in India’s financial capital of Mumbai that killed 166 people. India blamed the Pakistan-based Lashkar-e-Taiba for carrying out the assault.
Saarc members also face internal problems. Pakistan and Afghanistan are grappling with the growing influence of Taliban and al-Qaeda fighters. In Nepal, political chaos has flared again as Maoist supporters staged nationwide demonstrations after their leader Puspa Kamal Dahal resigned as prime minister last month.
“As part of the political process, there have been differences in Nepal, but they are trying to sort them out within the political system,” said Sharma. “In Pakistan, the radicals were beaten in the elections and what came forward was a democratic government.”
Similarly in Bangladesh, elections heralded a new government, “which is very reassuring,” Sharma said. In the Maldives, the long incumbency of the previous administration “led to popular discontent” and that has changed, while Sri Lanka has been able to deal with its problems after defeating the Tamil Tiger rebels, the secretary general added.
“I would view the electoral developments in the region as positive and an agent for change,” Sharma said.
He said member countries are working to harmonize customs- clearing procedures and have backed plans to put consignments originating in Saarc countries and destined for other Saarc nations on a fast track in terms of time taken for clearance.
Saarc has also identified developing ten regional road corridors, five railway corridors, two inland waterway corridors, ten maritime corridors and three aviation gateways to improve transport links in the region, Sharma said.
The New Delhi-based Federation of Indian Chambers of Commerce and Industry said bolstering democracy across South Asia would give a fillip to Saarc, and that if tariffs were slashed, intra-regional trade could rise by as much as four times to $100 billion in five years.Source: bloomberg.com