SAARC cooperation Is it economically viable?

The average growth rate of SAARC countries is not disappointing. In the midst of insecurity, and severe human and institutional constraints, the GDP growth in Afghanistan reached 13.9 per cent in 2007. In Bhutan the GDP growth is estimated to have doubled to 17 per cent. Overall economic performance in India is still good though it declined marginally from 9.6 per cent in 2006 to 8.7 per cent in 2007. Maldives suffered major economic losses because of the drop in fish catch after the tsunami. However, with the growth of tourism by 10 per cent during post-tsunami period, the economy took momentum and growth remained at 6.6 per cent.

Peace accord with the Maoists in 2006 could not give much hope to Nepalis because of the unrest in Terai and uncertainty created by postponement of Constituent Assembly elections twice. However, because of good harvest of agricultural products, Nepal is expected to achieve about 4 per cent growth by the end of 2008 after serious economic setback in 2006/07. Pakistan achieved 7 per cent growth in 2007 for the fourth consecutive year. Sri Lanka is facing serious socioeconomic consequences due to the escalating conflict. It is good news that the country is still expected to achieve 6.7 per cent growth.

What it indicates is the average economic growth in SAARC countries remains approximately at 8 per cent, but despite strident voices for economic integration, why has intra-SAARC trade stagnated below 5 per cent? Although SAARC estimates 10 per cent growth, which amounts to $40 billion during 2011-13, it hardly reaches $20 billion (4.8 per cent). How have the myopic forces of status quo been so influential at fuelling suspicions over the organisation’s future?

The review of the priority sectors identified during SAARC summit is in no way below the global standards. It is however, a matter of serious concern why the commitments are incomplete and if executed at all, why they are awfully delayed and handled with neglect? After four years of negotiation, the full execution of SAFTA remains questionable. South Asians are proud of opening up service sector and advocating the concept of global economy at a time when there is no direct air links and reasonable rates of communication links between SAARC nations. Ordinary citizens are denied visas by Indian and Pakistani consulates for travel between the two countries. In case someone is lucky, it is not possible for h/her to travel beyond the designated city. The political mess created in the member countries have failed to strengthen the sense of belongingness by developing an environment of partnership in the mind of common people. Ironically the theme of 15th summit in Sri Lanka is “Partnership for our People.” If we want to make the region truly vibrant and globally competitive economy, we should redesign and restructure the working structure of the two and half decade old organisation.

For a long time, even special funds donated by non SAARC members could not be utilised. Nobody knew who had the authority to execute such funds. We do not find notable progress in accomplishing past commitments either. There is not much progress in establishing Food Bank. Extremely poor development is noticed in terms of the functioning of South Asian University. The work on “SAARC Development Goals” (2007-2012) prepared by the Independent South Asian Commission on Poverty Alleviation to complement the MDGs have been lying in the dark room of the Secretariat.

The possibility of implementation of four major agreements signed in the 15th summit is bleak. The agreements include: SAARC Development Fund (with a corpus of $307 million), treaty on Mutual Legal Assistance, an Agreement on the establishment of the South Asia Regional Standards Organisation and a pact for formal entry of Afghanistan into the South Asian Free Trade Agreement. The additional areas for consideration include: Poverty Alleviation Fund, Infrastructure Fund, South Asian Development Bank, Media Development Fund and Voluntary Fund for the Differently Abled Persons.

Seven countries including China, the EU, Iran, Japan, Republic of Korea, Mauritius and the US are participating as observers in the 15th round. It is likely that the summit will consider Myanmar and Australia as well. Many observers are resource-rich countries. I do not see any problem in generating funds; the problem is its utilisation. There is no rational to inviting more well-wishers without massive changes in its institutional structure of SAARC.

Considering its less than satisfactory economic achievements, it seems the cost of bureaucratisation in SAARC is much higher than the benefit accruing from concrete economic achievements. Yes, my hypothesis stands in sharp contrast to the wider belief that the cost of non-cooperation is much higher than benefits from cooperation.

Dr Pyakuryal is professor of Economics, TU