The Next Step

Rehman Sobhan looks beyond the Delhi Summit

PID

The recently concluded visit of Prime Minister Sheikh Hasina to India for the first formal summit meeting of her new regime, with her counterpart Dr. Manmohan Singh, promises much. It would, however, be unreasonable to assume that in such a visit outstanding problems, left festering due to the neglect of previous regimes, would be subject to instantaneous resolution. Nor may we expect that anything would happen to warrant the leader of the opposition laying out a carpet of thorns for the returning delegation or indeed to now launch a political movement to protect our national sovereignty.

Since our prime minister is now committed to a process of Din Bodol, she possibly hoped to extend this agenda into the realm of Indo-Bangladesh relations. Such changes in relations, which tend to become petrified due to the failure of previous regimes to act decisively, will take time. Most regimes in the past have lacked both the will and the courage to resolve outstanding issues lest they have to back down from their maximalist demands.

The end result of such a strategy of inertia in Indo-Bangladesh relations has largely worked to the disadvantage of the smaller neighbour, which happens to be Bangladesh. Time and tide waits for no country, it moves on and usually in favour of the larger party. Sheikh Hasina, thus, needs to take cognisance of the fast changing realities which continue to influence the balance of power in interstate relations.

Embarking on a new phase in Indo-Bangladesh relations at the beginning of the second decade of the 21st century, Bangladesh's leaders need to recognise that India has moved a long way from the years of the 1970s when our initial relations were forged. Then, India was part of the fault line in the Cold War where, countries in a state of contention with India, could expect to invoke some sympathy if not support from the United States and even China. India, large as it was in size and numbers compared to Bangladesh, was still a developing economy, plagued by economic problems, and much more vulnerable to external economic pressures.

Today, India is on the way to becoming a global power. Its economy is now highly diversified, much more modernised and hence competitive in global markets. In such frontier areas as information technology it is emerging as a global leader. In the next two decades, India is projected to graduate into becoming the third largest economy in the world (in purchasing power parity terms), after China and United States.

As a result, India is being wooed by all the major economic players, including China, which is now India's second largest trading partner, and may, in the next few years, emerge as India's largest economic partner. South East Asia also seeks partnership with India and is seeking to build closer economic and transport links.

The significance of this transformation in India's fortunes and its place in the global arena, is that it no longer needs to be over-concerned with the negative responses to its overtures to its immediate neighbours, which include Bangladesh. It is obviously advantageous for India if it can earn the friendship and cooperation of its neighbours. It would be both sensible and statesmanlike for it to extend its global reach, situated within a harmonious neighbourhood. However, the establishment of such a zone of harmony is hardly indispensable for establishing India's presence in its global and regional relations, where much bigger opportunities beckon than are on offer in its immediate neighbourhood.

In the circumstances indicated above, if Bangladesh prefers to remain disconnected from its larger neighbour this is certainly inconvenient for India and will add to the costs of its economic transactions with its North-East region as well as its Eastern neighbours. But India has already initiated plans, at a recent India-Thailand-Myanmar summit, to bypass Bangladesh, with the three countries agreeing to invest in upgrading the Asian Highway which runs through these countries so that it becomes a superhighway for trade and transit. India has also initiated moves for establishing connectivity between North-East India and Sittwe port in Mynmar, through investing in upgrading Myanmar's roads and navigability in the shared Kaladan river route to the port.

AFP

This brief attempt to spell out India's redefined position in the world is designed to restore a sense of perspective within Bangladesh in our perception of Indo-Bangladesh relations. Today, India can obtain largely what it needs from Bangladesh through the free play of market forces. The move by Bangladesh at the beginning of the 1990s, during the first tenure of the BNP regime, to liberalise our external relations, opened up opportunities for India to enhance its exports and widen its trade surplus with Bangladesh. This policy was continued by subsequent governments. India's exports to Bangladesh have, as a result, continued to expand, and, by the beginning of 2010, when the AL-led alliance assumed office, had exceeded $3 billion. India's trade surplus with Bangladesh has correspondingly expanded even though Bangladesh's exports have increased five-fold from $60 million to around $300 million over the last 20 years due to India's trade concessions to us. Today, however, India is superceded by China as our largest source of imports. As a result, China's bilateral trade surplus with Bangladesh, is even larger than India's. Interestingly, we hear very little from the media or political parties about the lack of access for Bangladesh's exports to Chinese markets.

Indo-Bangladesh trade today is not driven by their respective governments but by the private sector, whether as individual consumers or as commercial traders. With or without Safta, India as well as China are competitively positioned to avail of every available economic opportunity offered by Bangladesh to the rest of the world. Bangladesh's private sector will go on trading with India because, in many areas, it is the most proximate and competitive source of supply.

Apart from the export of its goods, India can competitively provide Bangladeshis with health care, education, and tourism services. Indigent Bangladeshis will continue to illicitly cross into India to avail of work opportunities available in their large and growing economy. Market forces, sustained by private demand in Bangladesh, will ensure the growth of India's exports to Bangladesh and the enhancement of its bilateral surplus with us. However, we should keep in mind that whilst India will remain a major exporter to Bangladesh's market, we still attract only 1 percent of India's global exports.

Bangladesh needs to avail of India's large and growing market and needs to avail of trade concessions such as dismantling trade barriers for us as they have done in recent years. India's import market is currently worth around $300 billion and is accessed by many countries, without duty free privileges. Bangladesh has accessed only 0.1 percent of this market and its exports to India are even lower than Pakistan's, which has no duty free privileges compared to Bangladesh. Unfortunately, we have little to export to India due to our undiversified export structure. Within our prevailing productive capacities, we may, with difficulty, be able to enhance our exports to India to a billion dollars over the next decade, if India lifts its remaining trade barriers to us as a special concession.

However, our trade deficit with India will continue to grow in the face of rising Indian exports to Bangladesh. To this end we will need to mobilise capital inflows and draw on India's improved technology in order to enhance and diversify our export capacity and eventually to leverage our access to economic opportunities on offer not just in India but in East and South East Asia.

If India were to immediately offer complete market access, involving zero duty, abolition of its sensitive list and non-trade barriers, business houses in Bangladesh would be incentivised to attract such investment from India and elsewhere to access their large and growing market. Such a service by India, within the next 6-9 months, would have a transformational impact on Bangladeshi perceptions about India. A statesman like Dr. Manmohan Singh should be advised to act accordingly and our prime minister should demand no less from him.

In other contested areas such as water, as the upper riparian, India hold most of the cards in determining how much water they will extract at our expense from our 54 shared rivers. Invocation of global laws or moral precepts or threats to launch global campaigns will get us little water from India. We will, in the final analysis, have to negotiate our way to both better market access and more water from India. Rhetorical protestations sitting in seminar rooms, or even indulging in short marches to nowhere, may earn some media coverage at home but largely passes unnoticed across the border or anywhere else in the world.

Mohammad Islam/Driknews

In such circumstances, our continuing mutual differences will need to be resolved rather than left to languish in a state of limbo. It beggars belief that such issues as maritime boundaries or undemarcated land borders, which were close to resolution in the last year of Bangabandhu's regime, have remained unaddressed and hence unresolved for 35 years. We are paying a heavy price for this today when our gas-starved nation is constrained from exploring for gas in the Bay of Bengal due to the unsettled nature of our maritime boundaries.

More contemporary concerns such as the sharing of the Teesta waters similarly remain in suspense. It is to the credit of Sheikh Hasina that during her first tenure in office in 1996-2001, she moved to conclude agreements on the Ganges water and to bring to an end an insurgency in the CHT which had lingered on for two decades. Neither of these agreements have been optimal deals for Bangladesh but they represent appreciable gains for Bangladesh compared to the perpetuation of the status quo in both areas.

Above all, these agreements created a climate for moving on to settle other unresolved issues rather than leaving relations mired in a state of acrimony and uncertainty. Significantly enough, for all their criticism of these agreements, the subsequent Khaleda Zia government, in office between 2001-06, or the interim caretaker government, neither suspended nor moved to re-negotiate the Ganges Water treaty or to resile from the agreements on the CHT.

As and when we sit down to negotiate these and other outstanding issues, Bangladesh will need to do substantial homework and demonstrate strong negotiating skills in order to extract from a larger neighbour, the best available deals we can secure. The quest for the perfect deal where the smaller power gets everything it wants from a larger neighbour, lies in the romantic imagination. The search for compromise solutions, however, tends to be politicised by opponents, seeking to project their rivals as subservient to India. This is particularly apparent in the distortions which permeate public debate on the issue of transport connectivity. The consequential impasse in improving connectivity has, eventually, served as another self-inflicted wound on Bangladesh's economy.

In most parts of the world, a strategically located landmass, as in the case of Singapore, Netherlands or Iran, has been transformed into an economic asset. The sea ports of Singapore, Rotterdam and Bander Abbas in Iran, now serve as regional export hubs for South East Asia, much of Europe and Central Asia, and serve as an important source of revenue to the concerned countries. Myanmar, our more insular neighbour is hoping to exploit its own advantageous location, by projecting itself as a land bridge between China and India. Myanmar aspires to reactivate the Stillwell Road built by Americans engineers towards the end of the Second World War, which originated in North-East India and traversed northern Myanmar to link up with Yunnan Province in South-West China. This route was to be used as a supply channel to carry arms and supplies to fight the Japanese. This road has fallen into disrepair but Myanmar is now interested to renovate it to provide a transit route for India and China trade.

In the final analysis, it should be recognised that if Bangladesh aspires to invite Nepal and Bhutan to have access to our ports, a position endorsed by every government and every major party in Bangladesh over the last 25 years, on what principle would we deny India, whose lands would have to be traversed by Nepal or Bhutan to reach Mongla port, a similar right of access to this same port? Nor is it clear why the opportunity to open up these ports to regional traffic, or the opportunity to use Bangladeshi trucks and railways, all on payment in foreign currency, should be deemed as giving away our ports as well as our sovereignty. Currently we have surplus capacity in Chittagong port (about 40%) and particularly Mongla (around 60%) whose profitability will be enhanced by further utilisation of its capacity. We should be able to invite substantial aid and investment to enhance the capacity as well as efficiency of both ports as well as our surface transport capacity, to keep pace with the growth of regional traffic.

The growth of this market for transport services within South Asia, supplemented by transport outlets for land-locked Yunnan Province in South-West China, would enable Bangladesh to eventually mobilise sufficient resources for investment in a new deep sea port. All such opportunities would only become available if Bangladesh would be able to partner its regional neighbours in establishing a seamless connectivity across the region with uninhibited movement for goods and persons from all associated countries of the region.

Wahid Adnan/Driknews

The recently concluded summit in Delhi has established a more congenial atmosphere for further constructive rather than adversarial negotiations. Both the government and the political opposition should realise that summit declarations are statements of intent not agreements. Bangladesh has not opened up Chittagong and Mongla ports to India nor has India actually eliminated a number of commodities from their sensitive list of imports from Bangladesh. Both these and other declarations of intent still have to be negotiated in detail before they are translated into formal agreements. And as we all know, the devil lies in the details. I therefore attempt to spell out some of the steps which may need to be taken to translate the climate of goodwill established at the summit into workable and mutually beneficial agreements. Bangladesh's immediate agenda in these forthcoming negotiations should be to reach agreement with India on the following issues:

*The operationalisation of the zero-tariff concession made by India to Bangladesh at the last Saarc Summit as part of the Safta process. This requires that India:
-Eliminates all non-trade barriers (NTBs) restricting Bangladesh's exports to India.

-Reduces its sensitive list, which excludes specific Bangladesh exports from zero-tariff benefits, to single digit levels, covering only security related or health related items.

-These agreements should be urgently negotiated by a high powered Indo-Bangladesh Task Force and operationalised within calendar year 2010.

*We should immediately initiate discussions, through the JRC, on sharing of waters in our shared rivers. This should cover:
-An immediate conclusion of an interim agreement on the Teesta river and the setting of a time bound date for concluding a final agreement for sharing its waters.

-Immediate discussions on the design and operation of the Tipaimukh Dam to ensure that it will be mutually beneficial to both countries rather than detrimental to the interests of the lower riparian.

*The maritime boundary negotiations should be immediately resumed at a bilateral level, without prejudice to our initiatives for seeking arbitration at the international level.

*Negotiations on the utilisation of the Mongla and Chittagong ports by India should address, inter alia, the following issues of special interest to Bangladesh:
-India's agreement to permit both Nepal and Bhutan to utilize Mongla port for purposes of their international trade.

-Carriage of all traffic from and to North East India from Chittagong port and from West Bengal to Mongla port, on Bangladeshi rail and road carriers.

-Investment by India in enhancing the capacity and modernization of both Chittagong and Mongla ports as well as in the carrying capacity of our rail and road systems.

-An agreement that our ports as well as land routes will be used exclusively for carrying commercial traffic and no security related traffic will be permitted.

Other outstanding problems such as land boundaries and border incidents may also be discussed and resolved. In order for these discussions to move forward expeditiously and for agreements to be concluded and implemented, each country should identify a full time emissary, of ministerial rank, reporting directly to their respective prime ministers. These two emissaries will need to be invested with plenipotentiary authority to ensure that discussions move ahead and that agreements are enforced so that political will prevails over departmental bureaucratic inertia.

Whilst my observations have largely been directed to Bangladesh and its political establishment where such opinions are likely to have more impact, it may be worth pointing out that for such agreements to be realised, India's leaders will need to focus more attention on addressing the specific concerns of Bangladesh and internalise these in their political priorities. This is no small matter for a country which now sees itself as a global player.

Furthermore, if India is aspiring to be a great power in the 21st century it needs to demonstrate a sense of statesmanship which demands greater generosity in its bilateral dealings with neighbours than has been the case in recent years.

In every area identified above, India will have to recognise that accommodating the special concerns of Bangladesh will carry longer term economic as well as political benefits for both sides. India's leadership must have the political sagacity to appreciate that any leader in Bangladesh who attempts to establish a harmonious relationship with it will need to take home some tangible gains from this closer relationship.

Such acts of statesmanship can only come from an enlightened political leadership, it cannot be delegated to narrowly focused bureaucrats. Such a vision was demonstrated by Indira Gandhi in 1971 and its aftermath, in her dealings with Bangladesh. In 2010, Dr. Manmohan Singh and Srimati Sonia Gandhi need to be no less visionary.

Rehman Sobhan is Chairman, Centre for Policy Dialogue, and the Chairman of Forum's Editorial Board.