Sunday, January 17, 2010

India: Making economic concessions for security gains

FOR India and Bangladesh jointly to celebrate the 150th anniversary of the birth of Rabindranath Tagore, the Nobel laureate whose poems are national anthems of both countries, beautifully underscored the New Delhi visit last week of Prime Minister Sheikh Hasina Wajed.

India's woman president hugged Hasina and there was holding of hands with Sonia Gandhi. If India called her visit a "landmark", Hasina called it "a hundred per cent success" heralding peace and development in South Asia.

Going beyond symbolism, the visit marked the beginning of the integration of South Asia -- something long delayed as India's partition in 1947 was not just physical but also generated mutual mistrust.

In the months to come, India will provide Bangladesh rail access to Nepal and a roadway to Bhutan. Besides goods, the two landlocked Himalayan nations will have new sea outlets at Chittagong and Mangla.

India is finally behaving like a big neighbour, not a big brother. This again was long overdue. It comes now with growing economic confidence, a willingness to accommodate, and a realisation that to be seen as a major power, it must carry smaller neighbours along.

Bangladesh gets duty-free access to the Indian market, being a less- developed country (LDC). It now has tariffs ended for 47 more products. This is sorely needed because Bangladesh's imports are five times more than its exports to India.
The bonhomie was not just at the official level. Captains of trade and industry whom Hasina met also warmed up to her. Only last week, Indian telecom major Bharti Airtel not only purchased a stake in the Bangladeshi operations of Abu Dhabi-based Warid, but also committed US$300 million (RM1 billion) to help Bangladesh acquire a submarine cable link from Southeast Asia.

It remains to be seen if Dhaka will revive Tata Group's US$3 billion investment offer, turned down earlier as "politically sensitive".

"Sensitivity" is at the core of Delhi-Dhaka relations, which takes account of the rivalry between Hasina and two-term premier Khaleda Zia. Even before Hasina returned home, her Delhi talks and the agreements signed were pilloried by Zia, who has threatened a mass agitation.

So stark is the political divide in Bangladesh, where India inevitably becomes a factor, that Delhi cannot be faulted for viewing things through a black-and-white prism. If agitation and opposition delay plans and projects envisaged during the Hasina visit, the loss will not just be bilateral.

Zia opposes Bangladesh's joining the Asian Superhighway and the rail link that envisages linking Bulgaria to Bangkok, for no other reason than it might allow India access to its northeastern region.

Reversing past policy, Hasina is readying to join both, something that would improve South Asian connectivity in the near future.

Hasina signed a pact that will refurbish Bangladesh's rail network, which hasn't grown since the British era, readying it for the superhighway. The money for it, and a myriad other development and infrastructure projects in Bangladesh, will come from a US$1 billion line of credit, the highest India has given any country.

India has long hankered for transit through Bangladesh to reach its isolated and neglected northeastern region. Although this is Zia's bugbear, Hasina has gone halfway in promoting a rail link with the northeastern region.

This has the potential of a future freight corridor that would serve mutual interests, as it also opens up the Indian market for Bangladesh.

All this has been made possible by the presence of a Congress-led government in India that views Hasina and her Awami League as friendly, given the history of Bangladesh's emergence in 1971.

In the current, more complex times, the two have signed up as allies in the fight against militancy, both Islamist and ethnic, afflicting the region, of which both are victims.

Preparing the ground and making its intent clear, Bangladesh recently facilitated the arrest by Indian authorities of militants carrying multiple passports, roaming across South and Southeast Asia and staging violent operations from Bangla-deshi soil.

Dhaka, for once, put the ball in Delhi's court with its stand on trade and connectivity, cross-border power trading and cracking down on militants. Delhi could not but take the cue and walked the extra mile. Still, more needs to be done by the bigger economy.

India imports duty-free eight million pieces of readymade garments annually. Although they are competitors in the international market, India needs to absorb more to help Bangladesh's biggest foreign exchange earner.

The two can move towards integrating their economies, which would automatically change the matrix to address security concerns.

The 1947 division created many enclaves along the border where people live in territories in "adverse" possession. An exchange of these enclaves to streamline the border and remove hardship to the locals has been decided.

Bangladesh is sandwiched between India and Myamnar in the Bay of Bengal. There is high potential for hydrocarbons, the exploration of which has been stunted by the absence of maritime boundaries.

In less than a week, Hasina got both neighbours to agree to settle these disputes amicably. This is no mean achievement. It has wider economic and geopolitical implications.

The crux of economic well-being for Bangladesh and the Indian northeast, besides the end of militancy, is management of more than 50 rivers that either dry up or are flooded. Hasina had signed a pact for the Ganga waters during her earlier tenure (1996-2001). She now wants similar pacts on Teesta and other rivers. Given the current understanding, these should be possible.

A key part of the water management is silted rivers that have not been dredged since World War 2. Part of the billion-dollar credit would be utilised here.

The talks provided an opportunity to overhaul the grossly underestimated and underutilised relationship. It can now be based on grounds of equality and mutual respect.

As the Times of India recommended: "India needs to do what other great powers have done in the past, which is to make short-term economic concessions in return for long-term security gains. This is the essence of strategy and Bangladesh is among the most important tests of India's understanding of this concept." By MAHENDRA VED

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