Reconnecting with neighbours

Trade and transit can transform South Asia

The talk about connectivity is back in South Asia. In the east, India and Bangladesh are narrowing down their differences on transit rights, trade and connectivity. This agenda could be the focus of Bangladesh Prime Minister Sheikh Hasina’s visit to New Delhi next month. In the west, Prime Minister Manmohan Singh has brought issues relating to trade and connectivity across the line of control, between Jammu & Kashmir and Pakistan-occupied Kashmir, back onto his agenda for improved relations with Pakistan. Properly taken forward, these economic initiatives can help improve political relations in the sub-continent. As reported in the Business Standard, India has agreed to provide 100Mw of power from its central grid to help Bangladesh dredge the Ichhamati river, for the first time since 1971, and has also agreed to speed up talks on river water sharing. India has also agreed to be more transparent and sincere about trade liberalisation and facilitation. India has also assured transit rights for Bangladesh to connect with Bhutan and Nepal. In exchange for such gestures from India, Bangladesh will agree to transit rights for power equipment destined for Tripura. Hopefully, this is the first step towards more comprehensive transit rights for goods headed for the north-east region from peninsular India. Direct connectivity to Bangladeshi ports from the north-east would be a huge boost for the region’s economy.

All this augurs well for both Bangladesh and India. Both neighbours can benefit from improved connectivity and from increased trade between themselves. The same would be true on the western border as well, except that Pakistan is far too pre-occupied with itself and continues to drag its feet on offering transit rights to Afghanistan and India. Afghanistan has been unable to import vital commodities, including food, petroleum and construction material, from India because of Pakistan’s unwillingness to grant transit rights. Manmohan Singh’s renewed focus on trans-LoC trade and connectivity should bring focus back to the larger agenda of cross-border economic linkages between India and Pakistan. Pakistani economist and former finance minister Jawed Shahid Burki, has written extensively about the benefits to Pakistan from increased business links with India and, more importantly, from the restoration of traditional economic links between Afghanistan and India. Pakistani business hopes to gain from India’s growing investment in Afghanistan’s economic development. Hence, the more limited initiative taken by India in bolstering cross-LoC trade and transit should be extended to cross-border trade and transit between India and Pakistan. Allowing such business linkages to grow can help create a constituency for peace on both sides of the border. As Prime Minister Singh has said on numerous occasions, no single country in South Asia can race very much ahead of its neighbours on its own. The linkages, both economic and political, are such that the region must as a whole move forward. Historically, South Asia has had strong economic links to Asia to its west and east. Restoring these links, and tapping into the economic potential of west and south-east Asia, can benefit the sub-continent as a whole.