The three-day 5th South Asia Economic Summit, convened by the Sustainable Development Policy Institute (SDPI) which opened in Islamabad yesterday (September 11), could not have come at a more appropriate time. Note that the operative word is ‘appropriate’, not ‘propitious’, because the times are unpropitious and projections suggest that economic growth in the region will be on the “decline at least for the next two quarters”.
This is just one factor and linked to other developments that go beyond the region but which have already begun impacting South Asia and its economies negatively.
The SDPI-convened summit identifies at least three other broad trends:
First, the effects of the global financial crisis are likely to linger on longer than was originally projected. “This,” as the SDPI concept note for the conference argues, “has been validated by the eurozone crisis that has already started to impact South Asia.” The second factor relates to the 17th Conference of the Parties of the United Nations Framework Convention on Climate Change held at Durban. This is being viewed as an important step towards combating global climate change. Third, there is growing awareness that regional development is crucial to combating the negative global trends and the region’s future depends on economic cooperation. This realisation has already set in and the 17th Saarc Summit, which was held in the Maldives in November last year, witnessed the signing of some important agreements between member states.
An additional factor relates to the normalisation process between India and Pakistan, the two big players within Saarc. For long, adversarial relations between the two — manifested by hot wars, low-intensity conflicts and, at best of times, a cold peace — have held regional cooperation and development hostage. Two positive developments have the potential to change that: after the post-Mumbai freeze, India has come round to accepting the fact that disengagement does not make a sound policy and it needs to resume the composite dialogue with Pakistan; two, Pakistan has come round to the view that it needs to fast-track economic ties with India — trade and investment — without compromising its position on disputes such as Kashmir, Siachen and Sir Creek etcetera but not making them a precondition for economic cooperation.
This change is begotten of a shift in Pakistan’s foreign policy, which assigns top value to improving relations with all the neighbours within the region and beyond. Internally, this change is related to another significant development: the country’s foreign policy, which had taken a backseat to its security policy, is emerging as the arbiter of the security policy rather than the other way round. Externally, it is linked to deteriorating relations with the United States which have necessitated diversifying and gaining more state adherents for Pakistan’s position on the Afghan conflict and its resolution.
The recent visit to Pakistan of India’s External Affairs Minister SM Krishna and the signing of agreements on a new visa regime and cultural and other exchanges manifests this new trend. To be precise, nothing substantial has happened as far as the disputes are concerned; the progress made by the two sides on Kashmir, as also on Sir Creek, between 2004 and 2007 hasn’t reached fruition. On Siachen, India has hardened its position, calling for extending and delineating the line of control from NJ9842. The assumption is that Siachen is not a disputed area and once the line has been demarcated and delineated, both sides will be free to do what they please on their side of the line. The problem with this approach is that the conflict relates to which direction the line may be extended to — and that persists. That said, Pakistan, in keeping with its policy shift, is striving to normalise with India. Its focus on trade and investment is an indication of that engagement despite other problems, including India’s actions in Afghanistan.
The SDPI summit, which brings together the largest gathering of experts from the region, is therefore an excellent effort to give policy input in multiple areas: sustainable development; climate change; regional energy corridors; food security; trade; water crisis; agriculture; regional transport corridors, communications, etc.
The summit offers an extensive agenda with an eye on the fact that the eurozone crisis has already hit the economies of South Asia, multiplying problems and throwing up a myriad of challenges for governments in the region: “India and Bangladesh have officially reported the status on cancelled export orders. Pakistan fears that migrant workers in the EU may be laid off in big numbers, which in turn, may result in a decline in future remittance inflows. Afghanistan has indicated that aid flows from EU may be slashed on account of already high budget deficits being faced by leading member states, including France, Italy, and Spain.”
The situation offers challenges that cannot be tackled by individual states and governments. Equally, the situation offers the prospect of formulating cooperative policies and strategies, which can bring the South Asian states together and detoxify them by creating interdependencies. Some developments already indicate a positive trend. The 17th Saarc Summit saw the signing of several agreements like the Saarc agreement on Rapid Response to Natural Disasters, agreement on Multilateral Arrangement on Recognition of Conformity Assessment, the Saarc Seed Bank Agreement and the agreement on Implementation of Regional Standards.
Much work still needs to be done. It is a good time for think-tanks and policy communities in the various states to give their inputs to the governments to ensure that there is substantive movement in the areas of concern. The challenges also offer opportunities and this is what the 5th South Asia Economic Summit aims to highlight. However, policy input needs to become both relevant and tenable. And that, ultimately, is a function of political will. Pakistan’s commitment to this cooperation is indicated by the fact that the summit’s final plenary will be addressed by the foreign minister, Hina Rabbani Khar, on September 13.
Best suited she is to close the summit because she brings her understanding of economic affairs to bear on her remit as the foreign minister.
Published in The Express Tribune, September 12th, 2012.
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