SAARC: Propagating south Asian poverty

The ineffectiveness of SAARC has pushed poorer members, especially Nepal into further poverty and deprivation.

SAARC has not been able to tackle poverty in South Asia. Although in this South Asian regional bloc had been created in 1985 with the aim of progress and economic success in the region, no fortune has been created in the poorer countries, such as Nepal. Unlike other regional blocs in the neighborhood, SAARC suffers from poor integration, non-implementation of decisions, India-centric and reluctant to spread out its membership. As a result members with LDC status are more affected and reaping poverty rather than prosperity.

Although SAARC has made a number of landmark decisions such as transport links, growth corridor, Preferential Trade Agreement, Free Trade Area, they were barely implemented.

In a contrary, another regional cooperation in the locality--Association of South East Asian countries (ASEAN), created in 1999, has left no stone unturned thereby making greater amalgamation of trade, technology and capital among them. ASEAN has left SAARC far behind not only in cooperation among members, but also in prosperity.

Poor Regional Integration

This southern bloc of Asia is creeping at a snail’s pace towards integration. It has hardly climbed up to the second stage of the cooperation staircase. Regional cooperation has six stages. A rise in integration to the succeeding stage is accompanied by higher collaboration as well as free flow of capital, commodities and technology without any restrictions.

Stages of regional integration

So far, the SAARC has ended up in Preferential Trade Arrangement (PTA) and Free Trade Agreement (FTA) in the territory. PTA reduces tariffs for certain goods in the region, whereas FTA eliminates tariffs, quantitative restrictions and non-tariff barriers to conduct trade freely.

On the other hand, regional blocs in the neighboring continent—Pacific Alliance (central and southern America), the Andean Community (South America), Southern African Custom Union (Africa) and European Union Custom Union (Europe) —have extended their cooperation a step further to Customs Union. This alliance eliminates customs tariffs among members and applies common tariffs for other states. The nations of eastern and southern Africa established a common market under their alliance Common Market for Eastern and Southern Africa (COMESA). This system helps them to move factors of production—capital, labor, technology—across the member states. Furthermore, European Union (EU) has entered into the Economic Union with common economic and monetary policies among members. Amid rapidly growing regional blocs with deeper integration, SAARC is still hovering over swallow integration with no substantial benefit for its members.     

Characteristics of regional integration

Growth Corridor in limbo

Moreover, SAARC has not become capable to implement previously proposed growth corridor (growth zones) in the country. These zones are said to boost rapid growth in the implementation area by consolidating efforts and resources. The cooperation for growth corridors focus primarily on infrastructure development, joint natural resource development, promotion of trade and investment and the creation of free trade zones. As a sub-regional cooperation this is a potent tool for speedy growth.

Regional Growth triangles    photo: www.wtec.com

Growth triangle of ASEAN, comprising Singapore, Riau Province of Indonesia and Johor state of Malaysia is a successful model. In addition, other growth zones are Tumer River Economic Development Area (TREDA) containing Yanji, Nakhoda and Chongjin of Chinese, Russian and North Korean region; ASEAN northern growth triangle including some regions of Thailand, Malaysia and Indonesia; growth quadrangle of Brunei, Indonesia, Malaysia and the Philippines; and BIMSTEC growth quadrangle comprising Bangladesh, India, Myanmar, Srilanka and Thailand. 

Owing to the example of successful sub-regional co-operations in the Asia, SAARC made an initiative to form a growth quadrangle in 1997. Four countries—Nepal, India, Bangladesh and Bhutan made an endeavor to create a growth zone aiming to develop infrastructure, tap natural resources, and build institutional linkages facilitating cooperation within members. The identified areas of cooperation were natural resource endowment (Bangladesh), tourism (Nepal), trade and investment (India) and environment (Bhutan). The ambitious SAARC growth quadrangle was expected to be completed in 7-13 years by 2009. Nevertheless, it wasn’t materialized.

SAARC Connectivity

Another episode of beautiful dream of SAARC was the connectivity of member states. The twelfth SAARC Summit held in Islamabad in 2004, planned to link South Asian Countries via strengthened transport, transit and communications. An assessment--SAARC Regional Multimodal Transport Study (SRMTS)—conducted in June 2006 10 road corridors, 5 Rail, 2 Inland Water Transport corridors, 10 Maritime and 16 Aviation Gateways for greater transport connectivity in the region. The only progress to SRMTS was on 14th SAARC Summit held in April 2007 in New Delhi that urged SAARC Transport Ministers to oversee for implementation. As time passed, it withered away.

Proposed Asian Highway Map              Photo: Wikipedia 

Over Indo-centricity

In fact, India has been piloting the regional bloc since its establishment. Role of India has been decisive for implementing SRMTS, and inviting new members in the alliance. However, India is reluctant in giving full transit right; access to the sea to landlocked SAARC members—Bhutan and Nepal. In addition, India is hesitant in inviting new members, especially China. India has sustained perennial enmity with China. As a result, the Indian national interest of Chinese evasion is daunting other state’s will of membership expansion.

“It is pointless to include new member, China, that doesn’t share a common culture, economy and history of South Asia”, a senior official of the Indian Foreign Ministry in New Delhi said in an interview to The Telegraph on 19^th March 2014. 

Accumulation of Poverty

The Perennial inefficacy of SAARC has resulted in reaping more poverty in south Asia. Despite national effort of poverty reduction in the member countries there is no substantial decrease in number of poor. In addition to the poor supply side capacity of LDCs in this Asian region restriction on trade and frail linkage—transport, policy and communication—among members has worsened the trade regime. Whereas, ASEAN’s endeavor has rocketed economic progress in East Asia. As a result ASEAN poverty which was more eminent than that of South Asia in 1980s, fell sharply after 1990s.    

The time has come to redefine the objective of SAARC, restructure and reform to the greatest possible extent. In addition, there is a need of upgrading the present cooperation into the higher level of regional consolidation. This regional bloc needs Implementation of current SAARC Free Trade Area and gradual advancement towards the SAARC Custom Union and Common Market where factor of production—capital, labor and technology can freely flow across countries. Then only, SAARC will garner its member states a robust economic development.