Barun Roy: A new Silk Route through South Asia

ASIA FILE

How ADB plans to replicate the Mekong sub-region experience in regional cooperation for South Asia?

We may not see the birth of an Asian Union yet, but we may not have to wait too long to see a new "Silk Route" cutting through South Asia to connect Da Nang at one end and Peshawar at the other. It could, in fact, happen within the next 10 years, according to Rajat Nag, a senior Asian Development Bank (ADB) official who advises ADB president Haruhiko Kuroda on matters concerning regional economic cooperation and has just taken over as the Bank's new managing director general.

Kuroda is sworn to the idea of regional cooperation in Asia and Nag has helped put in place the Bank's programme in the Greater Mekong Sub-region (GMS), unquestionably one of Asia's most successful cooperation endeavours. They both believe it's possible for Asia to stop being a mishmash of discrete and mostly bilateral agreements among nations "" Kuroda calls it a "spaghetti bowl" "" and move towards becoming a more pervasive community. However, for the pieces to fall together, it's essential that South Asia fall in line too, because it is a big chunk of Asia and without it Asian unity will be functionally incomplete.

That's why South Asia is gaining ground in ADB's calculations. Talking on the phone from Manila soon after assuming his new position, Nag said: "South Asia is so strategically located, almost at the centre of Asia and the Pacific, that not integrating South Asia means not integrating Asia." How hopeful is he that ADB can replicate the GMS experiment in South Asia? "Very," he observed, quickly adding, "South Asia can't afford not to be integrated."

Nag, a Canadian citizen of Indian origin, was head of the Bank's Mekong Department between January 2002 and early this year and led its Southeast Asia Department before joining his new position. In 2001, he was a member of the management committee that formulated proposals for reorganising ADB's operations. As managing director general, a position created in 2003 by the then ADB president Tadao Chino and held before him by Young-Hoi Lee (a former chairman of the Export-Import Bank of Korea), Nag will have a high-level role in coordinating ADB's reforms and policy positions, especially with regard to poverty reduction and regional cooperation and integration.

Excerpts from my telephone interview with Nag:

What makes you so hopeful about South Asia?

We are very encouraged by fundamental changes in the Indian polity. Last week, Prime Minister Manmohan Singh, during his visit to Japan, talked about an "arc of advantage and prosperity" across Asia. Geo-political issues have been holding up regional economic integration, but the challenge for the leadership is not to make that a binding constraint. This is a very win-win situation for everybody. The countries, including India, realise the great benefits flowing from regional cooperation and integration.

Could politics be the real stumbling block?

Politicians are willing to take the leap but they have to carry the burden of their domestic politics, and that sometimes becomes an issue. But then, the countries of the Mekong sub-region were at war even when they were talking about regional cooperation. I think it's useful to remember that countries can have fundamental differences of opinion but they can put them aside and talk about greater trade and cooperation. I believe there's much more appetite now for regional cooperation but the opportunity has to be seized by the political leadership.

How do you look at your task in South Asia?

South Asia is by far the least integrated region in the world. Only about 5 per cent of its trade takes place within the region, compared with 55 per cent in East Asia. The South Asian region stands to gain more by being regionally integrated. We are bringing to South Asia the best practices from elsewhere, for instance, the Mekong sub-region. By taking small steps at a time, the Mekong sub-region has now become much more interconnected than before, both physically and trade-wise.

ADB is happy to play not only the role of an honest broker and facilitator, but also that of a financier. We have begun to provide more resources to the countries in South Asia with five broad objectives in mind: (a) improving connectivity among the countries of the sub-region; (b) facilitating trade and investment; (c) promoting sub-regional tourism; (d) enhancing energy cooperation; and (e) promoting greater cooperation with the private sector.

Have you made any progress?

We've made the greatest progress in the area of tourism and a sub-group is already at work looking at the "Buddhist circuit". But the areas that have the biggest potential are connectivity improvement and energy cooperation. We are working on various project designs. For instance, we are looking at an India-Bangladesh corridor or a Nepal-Bangladesh connection through India, as well as power interconnection between Nepal and India. We need to have a multi-track, multi-speed approach.