Regionalism in South Asia: Negotiating Cooperation, Institutional Structures (Routledge Contemporary South Asia)

Regionalism in South Asia

The dramatic surge in regional integration schemes over the past two decades has been one of the most important developments in world politics. Virtually all countries are now members of at least one regional grouping. South Asia is no exception to this trend. In December 1985, seven South Asian countries came together to establish South Asian Association for Regional Cooperation (SAARC) to address issues of peace and development in the region. This book examines regionalism in South Asia, exploring the linkages between institutional structures, government capabilities, and domestic actors’ preferences to explain the dynamics of regional cooperation. It considers the formation and evolution of SAARC, explaining why its growth in terms of institutional developments and program implementation has remained modest and slow over the past two decades. It also addresses the impact of important issues such as the acquisition of nuclear capabilities by India and Pakistan, the unending conflicts in Kashmir, the war against global terror in Afghanistan, and India’s growing economy. Drawing on a wealth of empirical research, including elite interviews and trade transaction data, this book sheds new light on the main cooperation issues in South Asia today and provides important information on the trends and prospects for regional cooperation in future years. Kishore C. Dash is Associate Professor of Global Studies at Thunderbird School of Global Management. His research interests are in the areas of international political economy, Asian studies, and political economy of contemporary South Asia. He has published in international journals, and he is the coeditor of International Political Economy: State–Market Relations in a Changing Global Order.

Routledge contemporary South Asia series

1 Pakistan Social and cultural transformations in a Muslim nation Mohammad A. Qadeer 2 Labor, Democratization and Development in India and Pakistan Workers and unions Christopher Candland 3 China–India Relations Contemporary dynamics Amardeep Athwal 4 Madrasas in South Asia Teaching terror? Jamal Malik 5 Labor, Globalization and the State Workers, women and migrants confront neoliberalism Edited by Debdas Banerjee and Michael Goldfield 6 Indian Literature and Popular Cinema Recasting classics Edited by Heidi R.M. Pauwels 7 Islamist Militancy in Bangladesh A complex web Ali Riaz 8 Regionalism in South Asia Negotiating cooperation, institutional structures Kishore C. Dash

Regionalism in South Asia Negotiating cooperation, institutional structures

Kishore C. Dash

First published 2008 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 This edition published in the Taylor & Francis e-Library, 2008. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Routledge is an imprint of the Taylor & Francis Group, an informa business © 2008 Kishore C. Dash All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Dash, Kishore C., 1956– Regionalism in South Asia: negotiating cooperation, institutional structures/Kishore C. Dash. p. cm. – (Routledge contemporary South Asia series; 8) Includes bibliographical references and index. 1. South Asian Association for Regional Cooperation. 2. Regionalism–South Asia. 3. South Asian cooperation. I. Title. DS335.D37 2008 341.247-dc22 2007036117 ISBN 0-203-93036-3 Master e-book ISBN ISBN10: 0-415-43117-4 (hbk) ISBN10: 0-203-93036-3 (ebk) ISBN13: 978-0-415-43117-0 (hbk) ISBN13: 978-0-203-93036-6 (ebk)

To My Parents

Contents

List of figures List of tables Acknowledgments Map

viii ix x xii

1

Introduction

2

Explaining regional cooperation in South Asia

20

3

Regional dynamics

45

4

Origin and evolution of SAARC

79

5

The challenge of regionalism in South Asia

110

6

Domestic politics and regional economic cooperation in South Asia

142

Domestic preferences for regional cooperation: cross-national comparisons

170

Conclusion

187

Notes Bibliography Index

217 226 241

7

8

1

Figures

2.1 4.1 6.1 6.2 7.1 7.2 7.3

Government strength, domestic support, and regional cooperation policy initiatives Organizational structure of SAARC Regional leadership, potential market gains, and regional integration outcomes Nature of political coalitions, potential market gains, and preferences for free trade arrangements Relative benefits and contributions of South Asian countries Positive issues of SAARC Issues with negative effects on SAARC’s growth

31 92 146 166 177 179 180

Tables

2.1 3.1 3.2 4.1 5.1 5.2 5.3 5.4 5.5 6.1 6.2 6.3 6.4 6.5 6.6 7.1 7.2 7.3 7.4 7.5

Characteristics of foreign, domestic, and community issues Key indicators of SAARC member countries Socioeconomic profile of SAARC member countries Contribution of SAARC countries to annual budget expenditures of the secretariat Dominant power in selected regional groupings Hegemony and regional cooperation dynamics in South Asia The balancing act – India and Pakistan Comparative government strength in South Asia, 1990–99 Ruling party’s strength in South Asia, 1990–2005 Regional complementarities South Asian market sizes Share of foreign trade in GDP (percentage) Intra-SAARC trade in relation to world trade South Asian trade dependence indices (in percentages), 1980–2006 Sensitive lists of SAFTA members Affective and utilitarian support questions Interviewees according to occupational categories Comparison of measures of affective support National image of SAARC countries Attitudes toward expansion of regional cooperation in South Asia

22 47 50 95 112 113 115 128 129 148 150 152 152 153 163 173 174 175 176 182

Acknowledgments

One of the most rewarding aspects of working on this project is that it has brought me into contact with many extraordinarily generous people. I have incurred many debts of gratitude in the preparation of this work. I cannot hope to include all to whom I owe such debts, but the following are among those who can not be ignored. My deepest debt of gratitude goes to Prof. Michael Haas, my mentor and my dissertation advisor at the University of Hawaii at Manoa, for his constant support, encouragement, and detailed critical comments on drafts of my chapters which not only sharpened my thinking but also enhanced my understanding of regional cooperation dynamics. I am also deeply grateful to my two other mentors Dr Charles Morrison, president of the East–West Center at Honolulu, and Prof. Majid Tehranian, director of Toda Institute for Peace, for their intellectual support. Other scholars that I owe great gratitude for their critical insights and comments are Carolyn Stephenson, Richard Chadwick, Seiji Naya, William James, Harry J. Friedman, Tsuneo Akaha, Muthiah Alagappa, Yaacov Vertzberger, Richard Baker, Mark Valencia, Ali Riaz, and Larry Smith. In South Asia, I owe deep gratitude to the numerous embassies, academic institutions, think tanks, government officials, political leaders, industry associations, Parliament staff members, and staff members of the SAARC Secretariat, who provided forums and very helpful intellectual exchange during my travel to the region. Although it is not possible to list them all, which will take several pages, I do, however, want to list some of them, which provided too many services to be detailed here. Without their tremendous personal and institutional support, the project could not have been carried through to completion. They are the SAARC Secretariat (Kathmandu), SAARC Documentation Center (New Delhi), Marga Institute (Colombo), Bandaranaike Center for International Studies (Colombo), Bangladesh Institute of International and Strategic Studies (BIISS), Center for Policy Research (New Delhi), Center for Studies of Developing Society (Delhi), Institute of International Strategic Studies (Islamabad), Indian Council of Social Science Research (New Delhi), Indian Council for Research on International Economic Relations (New Delhi), Institute for Defense Studies and Analysis (New Delhi), Teen Murty Library, Central Library

Acknowledgments

xi

of Delhi University, Sapru House, and Jawaharlal Nehru University Library at New Delhi. To the following individuals, I give my deep thanks for their tremendous personal and professional help: Ibrahim Hussain Zaki, SAARC Secretariat staff members, Bimal Prasad, Lok Raj Baral, B.B. Thapa, Mana Ranjan Josse, Puru Risal, Barun Gurung, S. Sultana, A.K.H. Morshed, Rehman Sobhan, Muhammad Shamsul Huq, Emajuddin Ahamed, Imtiaz Ahmed, Mohammad Humayun Kabir, Ataus Samad, Md Abdur Razzaque, Subrata S. Dhar, Kajal Dhar, Gitiara Nasreen, V. Kanesalingam, Godfrey Gunatilleke, Ray Forbes, Gamini Weerakoon, Manik De Silva, Victor Gunawardena, Ponna Wignaraja, Siri Ranasinghe, Jayadeva Uyangoda, Ven. Dodampahala Chandra Siri, Ven. T. Mithabani Thera of Gothama Thapowanaya, S.D. Muni, I.N. Mukherjee, Muchukund Dubey, Manoranjan Mohanty, Subrata Mukherjee, Neera Chandhoke, Rajni Kothari, Vijay Pillai, Uday Kumar, Ali Baquer, Charan Wadhva, Partha S. Ghosh, S.P. Gupta, Jasjit Singh, GVC Naidu, Rupa Narayan Das, Nasir Ahmed, K. K. Panda, and Lynette Wageman. I would like to thank Thunderbird Research Center for a generous research grant to complete this project. I would like to thank my colleagues at the International Studies Department of Thunderbird for engaging me in many intellectually stimulating discussions. At Thunderbird, I owe a special gratitude to Georgia Lessard for her outstanding research and editorial help. I am very grateful to Dorothea Schaefter and Tom Bates at Routledge (Asian Studies), who provided me with timely reviews and constantly encouraged me to complete this work. Without their help, this work could not have been completed. Above all, I am indebted to those 780 respondents who consented to be interviewed and shared their thoughts, perception, and vision with me. This book simply could not have been written without them, their insights, and their views of South Asian regionalism. In acknowledging my indebtedness to these many individuals and institutions, I would like to stress that the ultimate responsibility for any conclusions or errors in this work remains mine alone. Throughout this project, I have been blessed with the love and support of my family. To Arun and Tara: thanks for being there when I needed you most. Your zest for life is a constant source of inspiration for me. Most of all, I would like to thank my wife, Sagarika. She has been of tremendous help in virtually every way possible. Despite her extremely demanding teaching schedule, she was able to find time to offer me crucial advice in difficult times of my research. Her infinite reserve of good-natured patience and understanding and intellectually stimulating comments on some aspects of this research have been a repeated source of inspiration during the research and writing of this book. Kishore C. Dash

TURKM. UZB.

TAJIKI STAN

National capitals Other cities

AFGHANISTAN Chinese line of control

Line of Control Srinagar

Kabul

Indian claim

South Asia

JAMMU AND KASHMIR

Islamabad

CHINA

HIMACHAL PRADESH

Simla PUNJAB

Chandigarh

PAKISTAN

Dehra Dun UTTARANCHAL

HARYANA

Delhi DELHI

ARUNACHAL PRADESH

NEPAL

New Delhi UTTAR PRADESH RAJASTHAN

SIKKIM

Kathmandu

BHUTAN Thimphu

Gangtok Lucknow

Itanagar

Dispur

Jaipur

ASSAM

NAGALAND

Kohima

Shillong

Patna

MANIPUR

MEGHALAY

BIHAR JHARKHAND

Gandhinager

Ranchi

Bhopal MADHYA PRADESH

GUJARAT

CHHATTISGARAH

WEST BENGAL

BANGLADESH Agartala Dhaka Aizaw

Kolkata (Catcutta)

Raipur Daman

Diu

Shvassa

DAMAN AND DIU

TRIPURA

MIZORAM

Aizaw

BURMA

MAHARASHTRA

DADRD AND NAGAR HAVELI

Mumbai (Bombay)

Imphal

ORISSA

Bhubaneshwar

Rangoon Hyderabad PONDICHERRY ANDHAR PRADESH

Panaji

Arabian Sea

GOA

Bay of Bengal

KARNAT AKA Chennai (Madras) Bangalore

Port Blair

PONDICHERRY Cuddalore TAMIL NADL

Kavaratti

PONDICHERRY ANDAMAN AND NICOBAR ISLANDS

KERALA LAKSHADWEEP

Trivandrum SRI LANKA Colombo INDONESIA

Indian Ocean MALDIVES

Male

1

Introduction

Revival of regionalism The dramatic surge in regional cooperation schemes in the post-1980 period has been one of the most important developments in world politics. Significantly, countries like the United States, Canada, Japan, and China, which showed little interests in regionalism in the post-World War II period, have embraced regionalism with considerable enthusiasm in the post-Cold War era.1 What accounts for this recent spurt in regionalism? At least four developments seem to have come together in the late 1980s to create a momentum toward regionalism: expansion of European integration; the demise of Soviet Union; the shift in US strategy; and changing perspectives on regional trade and foreign investment in the developing world. Unlike the “locust years” of disillusionment in the 1970s, during which regional integrative activities declined in Western Europe (Euro-sclerosis) as a result of the revival of nationalism (Clark 1988: 1424–1425), the late 1980s witnessed several new integration initiatives in Europe. The continued expansion of the European Union in terms of scope, depth, and geographical area is a significant achievement.2 This success has had a demonstration effect, encouraging emulation of regional integration initiatives in other parts of the world. A related development during this time was the end of the Cold War and collapse of Soviet Union. This led Eastern European and Baltic countries to embrace democracy and capitalism. Western Europe entered into several regional economic arrangements with these countries to accelerate their transition. Such moves increased the appeal of regionalism as an instrument of economic development and political transformation. The decision of the United States to embrace regionalism in the post-Cold War era, as Bhagwati (1992: 535–555) argues, has been an important driving force for the growth and success of “second regionalism.” The changed attitude of the United States toward regional integration, from active hostility to broadly enthusiastic support, has both fostered regional integration schemes and reduced the diplomatic pressure for countries from engaging in the formation of regional schemes. The shift in the US policy was partly driven by its frustration with the slowness of the multilateral process and partly by its desire to gain increasing access to large regional markets.

2

Introduction

The formation of the European single market and North American Free Trade Agreement (NAFTA) led to apprehension among the developing countries that the major centers of economic powers – notably Western Europe and North America – may form trading blocs and pursue protectionist policies.3 Such policies would, many developing countries feared, prevent their effective participation in the global economy and hamper the prospects of their national development (Hveem 1989: 269). In such a situation, their aspirations for economic development would perhaps be best realized through some kind of regional cooperative arrangements among themselves (Gilpin 1987: 294). The regional arrangements, many policymakers of these countries reasoned, would provide them more secure access to regional markets. Growth of regional cooperation among the developing countries appears to have been guided by what Ernst Haas (1990: 65) called an “ideology of pragmatic antidependency” which seeks to promote regional interdependence among the developing countries without delinking them from the global system.4 Through increasing intraregional trade, the Third World countries aspire to achieve “structural empowerment” (Mortimer 1980) and, thus, hope to reduce their degree of dependence on the North and at the same time increase their collective bargaining in the global economy (Hettne 1992: 198). A logical prerequisite for the success of pragmatic antidependency was that countries in the developing regions had to implement trade liberalization policies. To do so, they had to abandon their inward-looking domestic-oriented import-substitution model, which had dominated thinking in the 1960s and 1970s, and, instead, embrace an outward-oriented market liberalization model. The examples set by the phenomenal success of the East Asian “tigers” and the collapse of the Soviet system validated the market liberalization model of development. The pro-market philosophical shift in the 1980s became the basis for a growing number of free trade agreements (FTAs) among developing countries and between developed and developing countries (Frankel 1997: 10). One of the important goals of economic liberalization and trade liberalization policies in many developing countries is to attract more foreign investment and technology. The success of these policies requires regional stability, which would make the region more attractive for foreign investors by reducing geopolitical risks. Policymakers in many developing countries believe that regional cooperative arrangements can help achieve such goals. Through regional cooperation, the developing countries also desire to help neighboring countries stabilize and prosper for altruistic reasons and to avoid spillovers of unrest and population (Schiff and Winters 2003: 9). Thus, in the post-Cold War era, forming regional cooperation schemes and FTAs have become a pragmatic goal for many developing countries. Finally, from a policy coordination point of view, regionalism appears more practical and feasible than global cooperation. Balancing divergent interests and a coordination of policies is easier among relatively few partners than among a large number of member states at a global level as represented by GATT/WTO. Developing countries are also convinced that regional cooperation can build

Introduction

3

upon existing cultural, economic, or even security ties between neighbors. A global option does not present this dynamic. Regionalism in South Asia South Asia is no exception to such worldwide trends. After more than eight years of negotiations, seven South Asian countries – Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka – came together in December 1985 to form the South Asian Association for Regional Cooperation (SAARC). The formation of this regional association represented a major diplomatic initiative by the South Asian leaders to address the issues of peace and development in the region. But since its origin, SAARC has experienced only limited growth in terms of institutional developments and program implementation. This has led some observers to argue that the organization is likely to experience what Ernst Haas describes as “turbulent nongrowth” in coming decades (1990: 109–125). According to Haas: Turbulence in an organization’s life refers to a phase where participating actors are utterly confused about the goal and purpose of the organization, pursue many objectives simultaneously as they are unsure of the trade-offs among them, and demonstrate ambiguity and lack of commitment in any negotiation. (1990: 111) “Nongrowth is characterized by stable or shrinking budgets, the failure to acquire new tasks, low morale, and failure to recruit needed personnel” (Haas 1990: 109). When non-growth occurs in a setting of turbulence, the organization experiences “turbulent nongrowth,” which over a period of time leads to either the demise or the reevaluation (replacement) of the organization. Some other observers, however, argue that SAARC may not be a panacea to the region’s problems, but its existence has certainly provided an opportunity for the policymakers and other techno-economic experts of South Asia to meet regularly and hold informal discussions on important bilateral and regional issues at the highest level. These informal discussions among the leaders have, at least, opened doors for improved relations among the South Asian countries. What lies ahead for SAARC? What are the prospects of deeper regional cooperation in South Asia? Given decades of mutual hostility and distrust, will South Asian leaders be able to pursue deeper regional cooperation that involves taking concrete initiatives to strengthen the existing regional arrangements and building new regional institutions to achieve mutual benefit?5 This book analyzes the prospects of deeper regional cooperation in South Asia by linking the process and outcome of regional cooperation with domestic politics. Understanding the prospects of growth of regional cooperation, I argue, requires an examination of the domestic system, different domestic sources of motivations of the policymakers, and various kinds of domestic institutional

4

Introduction

constraints and opportunities that policymakers usually face while pursuing regional cooperation policies. Such an examination will address two fundamental questions about regional cooperation. First, why do governments form or join regional arrangements? Second, once a regional cooperation scheme has been launched, what forces drive the process further and determine the chance of sustained growth? Focusing on the interrelationship between domestic politics and regional cooperation policies, this book argues that the interaction of the domestic actors’ (both political and societal actors) preferences within the context of their domestic institutional structures determines when expansion of regional cooperation is possible and what its terms will be. This book seeks to link the nature of the institutional structures, government capabilities, and domestic actors’ preferences to explain the dynamics of regional cooperation in South Asia. While there is no dearth of books and articles on country specific studies in South Asia, and studies related to India–Pakistan rivalry, very few systematic studies are available on South Asian regional cooperation. Besides, the existing studies on regional cooperation in South Asia have focused mostly on historical analyses and interpretation, structural economic, and security analyses. Studies related to different domestic sources of motivations of the policymakers – for example the nature of domestic institutions, various kinds of domestic institutional constraints and opportunities, domestic actors’ support or opposition to regional cooperation policies – have received inadequate attention. It is necessary to understand the dynamics of domestic politics and domestic actors’ preferences in order to explain why or why not South Asian countries seek to deepen regional cooperation. This introductory chapter is organized as follows. First, I provide a review of the major schools of integration theory and suggest why these theories offer only partial explanations of the regional cooperation process. Second, I identify several important implications of Euro-centric focus of the integration literature for understanding regional cooperation efforts in Third World regions. Third, I provide a brief preview of the analytical arguments of this study and introduce the organization of this book.

Theoretical approaches to regional integration: a review Transactionalism One of the early theories of regional integration, transactionalism (or communications theory), was developed by Karl Deutsch, the Czech-born German political scientist. Deriving his paradigm from cybernetics and information theory, Deutsch developed a communications approach to address the issue of community building in the international arena. His most substantive contribution to integration theory is found in his pioneering work Political Community and the North Atlantic Area (1957). In this book, he defined integration as “the attainment, within a territory, of a sense of community and of institutions and prac-

Introduction

5

tices strong enough and widespread enough to assure, for a long time, dependable expectations of peaceful change among its population” (Deutsch et al. 1957: 5). By “peaceful change,” Deutsch refers to “the resolution of social problems, normally by institutionalized procedures, without resort to large-scale physical force” (1957: 5). The central objective of Deutsch’s theory was to develop a political community to avert war and thus enhance the prospect of peace and prosperity among nation-states. In contrast with Durkheim’s pessimistic construction of world society,6 Deutsch believed that people can learn to give up their narrow parochial orientations and form organizations to promote peace (1978: 285). Deutsch’s effort, as Arend Lijphart (1981: 236) perceptively remarks, revived significantly the Grotian paradigm of world society, which challenged the traditional paradigm of international relations. Traditional international relations theory revolved around the notions of state sovereignty and its logical corollary, international anarchy. Such notions reflected the Hobbesian paradigm, which underlined the fact that nation-states live in an international state of nature with no guarantee of security. Thus, they are forced to survive in a condition of mutual competition and conflict. Challenging this axiomatic view of the relationship between anarchy and war, Hugo Grotius and his followers claimed that the world consists of a society of states with a common framework of moral and legal norms and that “the normative consensus of international society is sufficiently strong and pervasive to render the image of the state of nature, at least in the Hobbesian sense of international anarchy, inapplicable” (Bull 1966: 51). Deutsch’s analysis of political communities seems to be in line with this paradigm. According to Deutsch, political communities can be of two types: pluralistic security communities and amalgamated security communities. An amalgamated security community exists whenever there is “formal merger of two previously independent units into a single larger unit with some kind of common government after amalgamation . . . with one supreme decision-making center” (1957: 6). Deutsch cites the United States as an example. Alternatively, a pluralistic security community exists when nation-states retaining the legal independence of separate governments and maintaining their separate national identities pursue common goals and harmonize their policies to achieve joint economic rewards. Of these two communities, Deutsch observes, the pluralistic security community is easier to attain and maintain. He further suggests that for the creation of both kinds of communities, changes in the political attitudes and behavior of individuals, in other words, development of a “we feeling,” are absolutely necessary. According to him, through transactions such as trade, migration, tourism, cultural and educational exchanges, and the use of physical communication facilities, a social fabric is built not only among elites but also the masses, instilling in them a sense of community or a “we feeling” (1957: 29). To Deutsch, the success of integration is linked to the development of a “sense of community” among nation-states. To measure this “sense of community,” he and his associates quantified transaction flows – such as mail flows,

6

Introduction

electronic communication, student travel, tourism, and relative levels of intraregional trade – among nation-states. On the basis of aggregated data on social communications and public and elite opinion, Deutsch and his colleagues (1967) concluded that the process of European integration, at least in the sense of the growth of supranational state or sense of community, had come to a halt. They observed that integration in Europe was at its peak in 1954; integration reached a plateau from 1957 to 1958 and from then on integrative trends declined (218). Deutsch’s conclusion, however, was challenged by Inglehart and many other scholars. Using identical data, Inglehart (1968) found out that regional integration in Europe, rather than declining, was progressing toward a fuller integration during the same time period studied by Deutsch and his associates (122). Sharing Inglehart’s view, Lindberg (1970) commented that Western Europe, during the five-year period after the formation of European Economic Community (EEC) in 1958, experienced substantial progress toward integration (24). Carl J. Friedrich (1969), using other indicators, concluded that Western Europe had become more integrated since 1957, the year of the signing of the Rome Treaty, creating the Common Market. He criticized Deutsch and his associates both for their choice of indicators and for their use of statistical data in supporting their conclusion (196–215). Ernst Haas (1958) found Deutsch’s paradigm inappropriate to account for the emergence of the European Coal and Steel Community (ECSC). Haas argued that if one had to consider Deutsch’s transactionalist criteria to gauge the level of regional integration in Europe, then ECSC would not have come into existence, because the six countries were not enjoying a high level of transactions among themselves. Haas also did not find Deutsch’s three qualitative indicators – mutual predictability, mutual responsiveness, and value compatibility – useful in case of ECSC. Instead, Haas argued that political leaders and their expectation of mutual economic gains played crucial roles in the emergence of the ECSC. These criticisms led Deutsch to reevaluate his conclusions about European integration from 1954 to 1967. In a subsequent study with Richard Chadwick (1973), Deutsch reported statistical errors for measuring relative trade concentration [relative acceptance (RA) indices], which led to his earlier conclusion that European integration has reached a plateau in the mid-1950s. Instead, the study of Chadwick and Deutsch (1973: 84–109) suggested that steady growth in the EEC had occurred since 1954–67. Despite these revisions, many critics remained unconvinced about the applicability of Deutsch’s transactionalist framework in the 1970s and 1980s. The major weakness of this approach was that Deutsch’s emphasis on quantitative measures of transaction flows led him to ignore other critical international and domestic political and economic factors in the decision-making process. His analysis neglected the role of international organizations, structural dynamics of state power, and the self-interested national decision-makers. By focusing on quantitative transaction flow indicators to measure structural integration in Europe, his study paid inadequate attention to various international and domestic

Introduction

7

constraints and opportunities that policymakers face in pursuing integration policies. This was a major deficiency of Deutsch’s transactionalist approach, which was criticized by scholars of neo-functionalism and intergovernmentalism. Functionalism Functionalism, as developed by Hungarian political economist David Mitrany (1966), rests upon two central assumptions. First, political divisions are a source of conflict among nations. Nation-states can transcend these divisions gradually by seeking out areas of mutual interests and establishing a “working” web of international institutions, managed by technical elites. Second, in today’s interdependent world, no nation-state can individually solve all its economic and social problems. Hence, there is a need to identify common international economic and social problems and to create regional and global organizations to deal with them. However, Mitrany did not favor an organization like the League of Nations, which failed, according to him, because of its all-encompassing nature and overemphasis on military issues. Instead, he argued for monofunctional or functionally specific organizations because they can address a single international problem and strive for its ultimate solution. Technical experts, rather than political actors, Mitrany believed, will play a vital role in these functional organizations. Once people are able to perceive increased benefits and the greater ability and efficiency of these organizations, demands will be raised for the solution of other problems with other functionally specific organizations. This process, known later as “spillover”7 or what Mitrany calls “the doctrine of ramification,” will result in “ever-widening circles” of social and economic integration. As the role and number of these functionally specific organizations grow, the state system will collapse, resulting in the transfer of “slices of sovereignty” from nation-states to regional organizations. Thus, functionalism suggests that promotion of cooperation in the “low politics” (technical, social, and economic) will bring about greater political cooperation among the nationstates in the long run and may result in the emergence of supranational institutions. Mitrany hoped that the technical experts would create a new world culture dominated by “technical rationality” that would replace the narcissistic nation-state system. The major weakness of Functionalism is its deterministic solution that functional cooperation in “low politics” area would gradually lead to cooperation in “high politics.” Summing up these deficiencies of functionalism, Dougherty and Pfaltzgraff (1990) comment: It is difficult, if not impossible, to separate the economic and social tasks from the political; that governments have shown themselves unwilling to hand over to international authority tasks that encroach upon the political; that certain economic and social tasks do not ramify or spill-over into the political sector; and that the road to political integration lies through

8

Introduction political “acts of will,” rather than functional integration in economic and social sectors. (458)

In light of the Western European experience since World War II, there is little evidence to suggest that technology or economic growth per se had produced integration through functional cooperation. Political influences and pressures from various interest groups, political parties and regimes have mattered greatly in the integrative process of Western Europe. In short, there has been little or nothing that is “non-political” in the integration experience of Western Europe since World War II (Pentland 1973: 98). Thus, the relative neglect of political factors undermines the explanatory value of functionalism. Neo-functionalism The concepts and assumptions of functionalism were refined and then embedded into an analytical framework to study the logic of regional integration by neo-functionalism. Ernst Haas, the chief exponent of neo-functionalism, in his pioneering work The Uniting of Europe, provides the original framework of neo-functionalism. Later, this framework was expanded to include contributions from several other scholars, Leon Lindberg (1963) and Joseph Nye (1968), to name a few. The central objective of neo-functionalism was to explain how and why nation-states cease to be wholly sovereign, how and why they “voluntarily mingle, merge, and mix with their neighbors so as to lose the factual attributes of sovereignty while acquiring new techniques for resolving conflicts between themselves” (Haas 1970: 610). More specifically, neo-functionalism defines integration as “the process whereby political actors in several distinct national settings are persuaded to shift their loyalties, expectations, and political activities towards a new and larger center, whose institutions possess or demand jurisdiction over the pre-existing states” (Haas 1958: 12). Neo-functionalism postulates that the key actors in the integration process are national and regional elites, political parties, pressure groups, and supranational institutions. It is the expectation of gain or loss of these groups that becomes the driving force for the regional integration process. As actors realize that their interests are best served by a commitment to a larger organization, learning contributes to integration. Besides, actors who experience gains from supranational institutions in one sector will tend to favor integration in other sector. Thus, there is an “expansive logic” of sector integration that contributes to “spill over” from one sector to another (Haas 1964: 48). Sectoral integration, neo-functionalists argue, makes two types of spillovers possible: functional and political. Functional spillover, as Walter Mattli (1999: 25) argues, is based on the assumption that the different sectors of a modern industrial economy are highly interdependent and that any

Introduction

9

integrative action in one sector creates a situation in which the original goal can be assured only by taking further actions in related sectors, which in turn creates a further condition and a need for more action, and so forth. Stephen George (1985: 21) provides an illustration of this functional spillover in the context of European integration. He argues that the removal of tariff barriers will not in itself create a common market. The fixing of exchange rates is also required in order to achieve that end. But the surrender of control over national exchange rates demands the establishment of some sort of monetary union, which, in turn, will not be workable without the adoption of central macroeconomic policy coordination and which itself requires the development of a common regional policy, and so forth. Thus, sector integration, as Haas argues, “begets its own impetus toward extension to the entire economy even in the absence of specific group demands” (1958: 297). Political spillover describes the process of adaptive behavior of national interest groups and political parties at the supranational level in response to sectoral integration. According to neo-functional framework, sectoral integration leads to a gradual shifting of expectations and the changing of values of national elites and interest groups, resulting in more favorable response to integrative efforts. Like functionalism, neo-functionalism also posits that functional cooperation must begin on the relatively low politics areas, that is economic, technical, and social areas. But unlike functionalism, neo-functionalism argues that economic, social, and political problems are ultimately inseparable and accepts the linkage between economics and politics in the integration process. As Haas describes, “The supranational style stresses the indirect penetration of the political by way of the economic because the purely economic decisions always acquire political significance in the minds of the participants” (1968: 152). With the advent of the first major crisis of the European Community in 1965, when President de Gaulle refused to accept further expansion of European integration, neo-functionalism seemed to have lost much of its appeal as an analytical framework for explaining regional integration. Critics pointed to the failure of neo-functionalists to recognize the importance of nationalism, the autonomy of the political sector, and the interaction between the international environment and the regional environment (Hoffmann 1966: 862–915). In light of these criticisms, several neo-functional scholars suggested reformulation of this theory to include factors that neo-functionalism neglected until this point. Concepts such as spillback (Lindberg and Scheingold 1970: 137) and spillaround (Schmitter 1970: 840) were introduced to note the halt in the integration process as a result of participating actors’ wavering of commitment. Explaining spillback, Schmitter argued that in the regional integration process “spillback” may occur, “whereby in response to tensions actors consequently withdraw from their original objective, downgrading their commitment to mutual cooperation” (1970: 840). Spillaround refers to an increase in the scope of functions performed by an integrative organization but not a corresponding growth in authority (Schmitter 1970: 846). For Haas, the role of external actors

10

Introduction

and events in the integration process was considered peripheral. Exploring this variable in some detail, Joseph Nye came to the conclusion that both external actors and events should be included as a “process mechanism” in the evolution of any integrative scheme, with particular emphasis on the role of external actors (1971: 64). Roger Hansen criticized the neo-functionalists for their failure to relate the process of regional integration to factors in the surrounding international system. The neo-functionalists, according to Hansen (1969), tend to deny rather than investigate the discontinuity between “high” (national interest) politics and “low” (welfare) politics, a distinction developed by Hoffmann (1966). The neofunctionalists also failed to recognize, Hansen argued, that sizable economic gains would result from a common market coordinated by sovereign states rather than managed by ceaselessly expanding supranational authorities (1969: 270). These criticisms forced neo-functionalists to take a closer look at their analytical framework. Many accepted their analytical inadequacy and argued for a new framework to explain the process of integration. In the contemporary world, Haas (1975) found that more emphasis was laid on national self-interest than approaching issues on the basis of a joint incrementalist strategy. European integration in the 1970s can therefore be more fruitfully studied, Haas suggested, through a concept of global interdependence. He identified global interdependence as “fragmented issue linkage” (1975: 25). “Issue linkage” occurs, Haas pointed out, “when older objectives are questioned, when there is a clamor for satisfaction of new objectives, and when the rationality accepted as adequate in the past ceases to be a guide to future action” (1975: 26). Thus, regional integration, according to Haas, “has become a fragmented, disjointed process, heavily dependent upon motives of actors and their ability to link the solution of one problem with the solution of prior problems” (Duffy and Feld 1980: 499). Despite these reformulations, many critics remained unconvinced about the applicability of neo-functional framework in the 1970s and early 1980s. However, with the revival of European integration in the mid-1980s, neofunctionalism regained popularity in the international relations literature as a framework for explaining the process of integration. In particular, the focus of neo-functionalism on subnational actors and the role of supranational institutions as catalysts for integration have proven to be relevant for explaining regional integration in Europe. Nevertheless, neo-functionalism suffers from several shortcomings. First, the argument of neo-functionalism that technocratic problem solving is the main basis of motivation for national decision-makers in pursuing regional integration remains inadequate. This neo-functionalist view is based on a lack of understanding of the preferences of governments and how these preferences are shaped in a particular society and political system. Rewarding and protecting domestic constituency upon which decision-makers are dependent for political support and survival are also important considerations for national decisionmakers. In addition, policymakers’ decision to cooperate or not is shaped by the

Introduction

11

structure of the society and government. In sum, neo-functionalism fails to adequately explore the range of motives, constraints, and opportunities that policymakers face in pursuing regional integration policies. Second, the overemphasis of neo-functionalism that supranational institutions have the capability to initiate integrative activities neglects the role of nationstates as the dominant decision-making institutions (Keohane and Hoffmann 1991). In fact, as the evidence of European integration process and elsewhere suggest, nation-states continue to play significant roles in expanding (or lack of expanding) regional integration activities. More precisely, the nature of development of regional integration is affected by participating members’ system capacity, system support (domestic opinion), demand (for integration), and leadership preferences rather than the exclusive roles of regional actors and supranational institutions as emphasized by neo-functionalism.8 Intergovernmentalism Another popular school of integration theory is intergovernmentalism, which has based its analysis on the central assumptions of structural realism. According to the structural realist paradigm, the unitary states are the central actors in an anarchic international system, seeking to maximize their national interests (Waltz 1979; Grieco 1990). Following this, intergovernmentalism reinforces the states as primary actors in the regional cooperation process. These sovereign states seek to pursue regional integration only when their national interests are compatible with the regional integration goals. Thus, as intergovernmentalism argues, regional integration process involves a series of bargains between the heads of governments of the states in a region. Nation-states’ search for balance of their national interests with regional integration goals is not easy and often slows down the pace of regional integration. Further, in this interstate bargaining, the heads of governments are often reluctant to sacrifice their national sovereignty to attain common goals. Thus, intergovernmentalism is much more cautious about the growth prospects of regional integration than is neofunctionalism and seems to account for the uneven and slow pace of European integration in the 1960s and 1970s (Huelshoff 1994: 259). The emphasis of intergovernmentalism on the centrality of unitary states as sole actors in international relations was criticized by the interdependence school (Keohane and Nye 1977). Pointing to the need to disaggregate states, interdependence school focused on the interaction among the domestic actors and fragmented state. This theme was later picked up and expanded by neoliberal institutionalism, which has replaced interdependence school in recent years. Neo-liberal institutionalists were particularly critical of intergovernmentalism’s emphasis upon the centrality of the unified state, system-derived interests, and relative gains motivations, which lead to little regional integration (Milner 1992). By emphasizing the role of the unified state, intergovernmentalism is unable to systematically analyze the domestic sources of the motivations of states in regional integration and thus offers only a partial explanation of the

12

Introduction

integration process (Huelshoff 1994: 260). Neo-liberal institutionalists, instead, focus on the existence of fragmented states, multiple actors, and multiple definitions of national interests to overcome this limitation of intergovernmentalism. Faced with such criticisms, intergovernmentalists have sought to expand their theoretical approach. Building on the original postulates of intergovernmentalism, Andrew Moravcsik has developed a new version of this theory called “liberal intergovernmentalism” (1991: 19–56). The theory posits a two-stage approach to explain the integration process of the European Community in the late 1980s. Walter Mattli has summarized these two stages as follows: In the first stage, national preferences are primarily determined by the constraints and opportunities imposed by economic interdependence. In the second stage, the outcomes of interstate bargains are determined by the relative bargaining power of governments and the functional incentives for institutionalization created by high transaction costs and the desire to control domestic agendas. (1999: 30) This expanded approach is undoubtedly an improvement over the original version of intergovernmentalism. But the focus of liberal intergovernmentalism on the interaction between domestic preferences, government bargaining, and supranational institutions in the regional integration process shows a strong influence of neo-functionalism. Critics point out that this new theory offers nothing new but the central arguments of neo-functionalism and thus suffers from the same kind of criticisms that are leveled against neo-functionalism (Caporaso 1998: 336). In light of the above argument, it would be problematic to apply the liberal intergovernmental approach to fully explain regional integration in Europe and elsewhere. Like neo-functionalism, liberal intergovernmentalism points out the important roles of governmental actors, groups, and supranational institutions in the regional integration process. But, it fails to explore adequately domestic sources of motivations of policymakers. Dynamics of Third World regionalism: limitations of eurocentric explanations The Eurocentric approaches of neo-functionalism and intergovernmentalism – and its later reformulation in the form of liberal intergovernmentalism – are inadequate to explain regional cooperative efforts among developing countries. In fact, regional cooperative arrangements in Third World regions were downplayed by Eurocentric scholars. Haas and Schmitter (1964) predicted that integrative efforts in the Third World countries would be less likely to succeed because of the absence of four “background conditions” – relative equality in size and power; substantial rates of transaction among them; existence of a pluralistic sociopolitical structure; and high degree of complementarity of the values existing within the proposed union (268–269).

Introduction

13

Amitai Etzioni (1965) cited three reasons for the failure of regional unification efforts among developing countries. The first reason is a “restricted horizon” of the illiterate publics. Second, the developing countries “lack citizens with the organizational and political skills to handle regional unification.” Third, these countries are so preoccupied with their own domestic problems that they have very little time left to think of regional unification (319–321). Roger Hansen (1969: 258) came out with additional explanations for the lack of success in the integrative efforts of the Third World countries. The superpowers’ interference in the economic and political systems of these countries is a major impediment in their integrative efforts. Moreover, integrative efforts, Hansen argued, would be impossible so long as developing countries were still engaged in the nation-building process. Following Karl Deutsch and his associates’ observation that all integrative efforts have built-in expectations of gains and rewards, Lynn Mytelka argued that Third World integrative systems will fail unless there is a solution to the problem of unequal gains (1973: 236–250). Characterizing the Third World countries’ dependence on the industrialized nations for capital, markets, and technology as asymmetrical interdependence, John Ravenhill (1979) argued that the Third World countries’ vulnerability to external economic influence may impede their regional cooperation efforts (231). These arguments explain why many regional arrangements in Africa, Latin America, and Central America did not achieve the desired success during the 1970s and 1980s. A central argument in this literature is that regional cooperation efforts in the Third World are unlikely to succeed because members of regional arrangements in the Third World have very little to offer one another (Haas 1990: 247). According to this literature, remedies for Third World problems can be provided only by the wealthy North and not by “regional partners in poverty.” This argument seems to have ignored the fact that most Third World countries have pursued development strategies based on aid and trade with the developed world for more than four decades. Yet, very few of these countries have actually been significantly successful in alleviating poverty. The export performance of many Third World countries have been sluggish in the face of the protectionist policies of their main trading partners in the developed world. The stalemate in the North–South dialogue, the worsening terms of trade in the global markets, the growing dependence on external assistance, and mounting debt have turned the vision of the New International Economic Order (NIEO) into an illusion. With the end of the Cold War and end of the European schism, most Third World countries are faced with the ever-increasing prospect of being marginalized in the international economy. Today, regional cooperation is no longer just an option but a necessity for policymakers in most of the Third World countries. As a result of global changes, it is likely that more and more Third World countries will engage in regional arrangements for trade and technology transactions. However, given the resource crunch of the Third World countries, these regional arrangements are likely to be more outward looking and likely to have more external linkages than in the past.

14

Introduction

Regional cooperative efforts have increased in the Third World regions during the 1980s, and thereafter. The Association of South East Asian Nations (ASEAN) came into existence in 1967 and, after almost a decade of “nonaction,” has become a successful regional organization in Asia and thus a model of regional cooperation for developing countries. The members of ASEAN agreed to create an ASEAN Free Trade Area (AFTA) in 1992. ASEAN has also enlarged by admitting new members since 1980s – Brunei (1984), Vietnam (1995), and Laos, Cambodia, and Burma (1997). Inaugurated in 1971, the South Pacific Forum (SPF) has grown in strength since early 1980s as a regional organization in the Southwest Pacific-Oceania region (Haas 1989b; Palmer 1991). In Middle East, the Gulf Cooperation Council (GCC), which was formed in 1981, has been growing in stature since its inception (Nakhleh 1986). With the inclusion of Bolivia as a new member, the Latin American Free Trade Association (LAFTA) formed in 1960 was supplanted by the Latin American Integration Association (LAIA) in 1980. In Latin America, several other regional cooperation schemes have emerged in the early 1990s. The most notable of these regional arrangements was the Mercado Comun del Sur (MERCOSUR) in 1991 comprising Argentina, Brazil, Paraguay, and Uruguay. The Andean Pact and the Central American Common Market (CACM) were resurrected in 1991 and 1993, respectively. In 1995, the Group of Three (G-3) – Colombia, Mexico, and Venezuela – FTA was established. A recent organization to join the list of cooperative efforts in the Third World countries is the SAARC which came into existence in 1985. What is remarkable about these regional organizations is that they have emerged in regions which, unlike Europe, have little prior experience of regional integration. How can one explain the emergence of such regional cooperation schemes in the developing world when the integration theorists predicted failure? The integration theorists’ attempts to explain and predict regional integration efforts in Asia and elsewhere were clearly inadequate. One of the critical reasons for this is that Eurocentric theorists overemphasized integration, ignoring other more realistic regional cooperation approaches. As Norman Palmer comments, “By concentrating too heavily on integration, which was interpreted in many different ways, they gave inadequate attention to the conceptualization and encouragement of other forms of regional cooperation of less intensive but more realizable nature” (1991: 11). Michael Haas (1992b: 235) observes that the central weakness of the integration theorists is their emphasis on the creation of a supranational authority, which presupposes “a slicing of sovereignty” of the nation-states.9 The Third World countries, still extremely emotional and sensitive about sovereignty, seem to resent any idea of surrender of their sovereignty (Krasner 1985: 73–75). Thus, while regional cooperation for mutual gains is considered as a pragmatic policy and is appealing for Third World leaders, regional integration which involves setting up a supranational authority by surrendering their sovereignty (or going completely “beyond the nation-state”) seems undesirable for most of these leaders. Capturing this tension between regional integration and regional cooperation,

Introduction

15

Michael Haas (1992b) has advanced a Communitarian perspective to explain the process of regional cooperation in Third World regions. He has developed this perspective after comparing some 75 regional institutions in Asia and the Pacific since the 1950s. According to this perspective: modest technical cooperation pursued for joint economic gain, leads to the development of communitarian culture of interaction, which spills over into the building of a political community that is so firmly rooted in cultural affinity that economic collaboration proceeds and spillback becomes impossible. (Haas 1992b: 294) Central to the communitarian perspective is what Michael Haas (1989a) calls the Asian Way to cooperation. The Asian Way advances three main arguments: regional cooperation should proceed from less controversial issues (because consensus can be easily achieved on those issues) to more complex political and economic issues; political actors should take an incremental approach rather than embracing any blueprintish grand designs; and there should be a stress on cooperation rather than integration (Haas 1992a: 240). Although mainly derived from his observations on regional institutions in Asia, Michael Haas’ conceptualization contains various practical principles that can be adopted to explain regional cooperation activities in most Third World regions, including South Asia. In particular, his emphasis on regional cooperation rather than regional integration and consensus building, which is necessary because of the interplay of domestic and regional political and economic dynamics, has important implications for this study. The central empirical issue in this study is to explain the growth of regional cooperation in South Asia. Thus, the first task is to define what is regional cooperation? Defining regional cooperation is important for two reasons. First, it allows one to distinguish policy coordination among nation-states (an attribute of cooperation) from devolution of decision-making power to a supranational authority, which is an essential attribute of regional integration. Second, it allows to shift the focus of analysis from predominantly economic areas (as found in regional integration) to other areas of cooperation among regional partners such as security, social welfare, environment, and technology. The literature on international cooperation (Keohane 1984) and international regimes (Krasner 1983) provides useful insights on the meaning of cooperation and basis of cooperation among nation-states. Based on these insights, regional cooperation in this study is defined as a process of policy coordination through which a group of states in a region agree to establish a common set of rules and procedures to guide state actors’ policy choice in economic and/or non-economic areas. It is obvious from this definition that regional cooperation entails a set of reciprocal commitments and obligations on the part of participating members to abide by some common rules of conduct (Rodrik 1995: 176). In a sense, as Andrew Moravcsik suggests, regional cooperation can be considered as an

16

Introduction

intergovernmental regime to manage state actors’ expectations in the economic and/or non-economic areas (1993: 474). The management of expectations means that participants in the regional arrangement agree to play by the same rules. This study argues that participating actors’ willingness to play by common rules of conduct and enter into reciprocal commitments and obligations is determined, to a large extent, by domestic politics.

Domestic politics and regional cooperation The central argument of this study is that the growth of regional cooperation activities is affected by the domestic politics. Growth of regional cooperation is primarily measured by the extent to which regional groupings manage to match their stated cooperation goals with subsequent achievements. Intergovernmental negotiations to realize regional cooperation goals often fail because of domestic politics. Also, political leaders often fail to implement regional cooperative agreements because of domestic politics. Thus, domestic considerations play a critical role in shaping the possibility and nature of regional cooperative agreements. In explaining the growth of regional cooperation, an examination of domestic constraints and opportunities becomes essential at least for three reasons. First, domestic politics facilitates our understanding about various actor’s preferences, how national interests are constructed, and how states calculate their gains (absolute or relative gains) from any cooperative arrangements. For example, if the dominant domestic actors share a strong perception of inequity, that is, their country sacrifices more and benefits less, regarding an arms control treaty, or a preferential trade arrangement, decision-makers will find it difficult to pursue cooperative policies toward such agreements. Second, domestic factors explain the kinds of strategies decision-makers usually employ to realize their goals. Of course, a state’s structural position is important, but at the same time, the nature of its political system, the role of bureaucracy and military, the influence of special interests, and public opinion may ultimately determine which strategies the decision-makers can realistically pursue at the international and regional levels. Third, the policymakers can always negotiate international and regional agreements, but the implementation of these agreements require domestic support. Hostile or negative domestic reactions for any agreement may eventually lead the decision-makers to abandon or postpone regional cooperation policies. Thus, this study posits the need to focus on domestic politics in order to explain the growth of regional cooperation in South Asia. Many scholars have noted the need for studies that emphasize a linkage between domestic politics and foreign policy to explain regional cooperation process, but few have been offered in the literature. Again, these few studies are confined to explaining the European integration process only. No such study has been attempted in explaining regional cooperation process in other regions. In this study, I have sought to explain the importance of domestic politics for the growth of regional cooperation in South Asia by combining three interrelated perspectives. First, building

Introduction

17

on the concept of issue areas, I argue that regional cooperation policies do not fall strictly into the category of either domestic or foreign policy issue areas. Rather, these policies are in the realm of community policies, possessing some characteristics of both domestic and foreign policy issue areas. An important implication of this argument is that domestic groups’ involvement in regional cooperation issues can be high and support of various domestic groups is necessary for the decision-makers to pursue regional cooperation policies. Second, employing Robert Putnam’s framework, I argue that regional cooperation is a two-level process in which domestic support and regional bargains and negotiations must overlap if cooperation is to proceed. Third, drawing on the literature of institutional analysis, I argue that the interaction of the domestic actors’ (both political and societal actors) preferences within the context of their domestic institutional structures determines when expansion of regional cooperation is possible and what its terms will be.

The plan of this book This book is organized in the following way. Chapter 2 examines three interrelated perspectives in the areas of international relations and comparative politics – i.e. issue areas, two-level game, and institutional analysis – to frame the central argument of this study. Building on these three theoretical insights, this chapter argues that to explain the nature, process, and outcome of regional cooperation in South Asia, it is necessary to understand domestic institutional structures, government capacity, domestic support, and preferences of political and societal actors toward regional cooperation. Chapter 3 explores the nature of interstate relationships among five major original SAARC member countries: India, Pakistan, Bangladesh, Nepal, and Sri Lanka. It first identifies major characteristics of each state that affect their policies toward the neighboring countries and countries outside of the region. It, then, examines the influence of history, which plays a significant role in defining the South Asian countries’ regional diplomacies. In addition to history, it examines other features of the structure of the South Asian regional system – religious affiliations, ethnic relations, state capabilities, Indo-centric geography, and leaders’ contrasting conception of their state’s relative roles – that affect their relationships. The Indo-Pakistan rivalry and the implications of security dilemma for the entire region are examined. This chapter also examines how the smaller states are affected by their relations with their larger neighbors and how these relations create opportunities and challenges for their leaders. Finally, this chapter explores the relations between South Asian states and extraregional powers and the implications of these relations for the South Asian region. Regional cooperation is not a new development in South Asia. In the postindependence period, regional cooperation issues were discussed in at least three conferences: the Asian Relations Conference in New Delhi in 1947, the Baguio Conference in the Philippines in 1950, and the Colombo Powers Conferences in 1954. After examining these earlier initiatives for regional cooperation by South

18

Introduction

Asian leaders, Chapter 4 explores the important domestic and external factors that led Bangladesh to take some concrete initiatives for regional cooperation in South Asia in the late 1970s. Examining the dynamics of domestic politics and the interrelationship between domestic and regional politics, this chapter explains why smaller states in South Asia (Bangladesh, Nepal, and Sri Lanka) took the initiatives for regional cooperation and why India and Pakistan were initially reluctant to join the regional grouping. It examines the domestic and external factors that led to changes in India’s and Pakistan’s decision in favor of joining the regional association? This chapter then provides an overview and evaluation of SAARC’s record in terms of institutional developments and program implementation. Some of the major security-related and trade-related agreements, i.e. SAARC convention on suppression of terrorism, and SAARC Preferential Trading Arrangements (SAPTA) are examined in detail to explain if SAARC has been able to increase the capacity and extend the scope of its institutions. Chapter 5 assesses the prospects of deeper regional cooperation in South Asia by examining some of the major challenges of the region. This chapter identifies several “facilitating conditions” in the literature to explain the growth of regional cooperation activities. First, regional groupings operating with the presence of a benevolent hegemonic power are more likely to experience an enhanced sense of regionalism accompanied by the creation of regionalist institutions than are groups without a benevolent hegemonic power. Second, regional groups with strong governments are more likely to pursue cooperative efforts than regions with weak governments. Third, ruling coalitions committed to economic liberalization policies are likely to seek deeper regional cooperation. Given these conditions, this chapter explores several key questions. First, how has India’s hegemonic status affected the process of regional cooperation in South Asia? This chapter has drawn four major arguments from the literature – balance of power, regionalist entrapment, bandwagoning, and declining hegemony – that explain how hegemonic power can provide powerful stimulus for the growth of regional institutions. These are then examined in the context of South Asian regional dynamics, and their implications for deep regional cooperation in South Asia are discussed. Second, how has the strength of South Asian governments and their interactive dynamics with civil society affected the process of regional cooperation? This chapter then examines India’s and Pakistan’s nuclear policies and their special implications for regional cooperation in South Asia. Finally, this chapter considers how ethnic relations transcend frontiers and affect South Asian state’s interrelationships. The implications of ethnic dynamics for national cohesion and accommodative diplomacy among South Asian countries are examined here. This discussion lays the groundwork for assessing the future prospects of regional cooperation in South Asia. A key facilitating condition for the growth of regional cooperation is the existence of significant market potential for economic gains from market exchange within a region. Given this condition, Chapter 6 profiles the market size and structure of economy of South Asian countries. It then examines the levels of intraregional imports and exports among South Asian countries to

Introduction

19

determine the extent of their economic interdependence. It explains several reasons for South Asia’s limited intraregional trade with a focus on domestic policies toward regional trade. This chapter then examines the question: will the latest economic liberalization polices launched by South Asian countries and their new economic interests drive these countries toward deeper economic cooperation? By signing South Asian Free Trade Area (SAFTA) agreement in Islamabad in January 2004, South Asian leaders have taken an important step to intensify their intraregional trade cooperation. What are the prospects of SAFTA? This chapter examines the nature of political coalitions, preferences, and initiatives of two key actors – policymakers and business groups – to provide a realistic assessment of the prospects of SAFTA. Using primary data derived from extensive open-ended interviews with 780 elites from five South Asian countries (India, Pakistan, Bangladesh, Nepal, and Sri Lanka) over a period of three years, Chapter 7 provides an assessment of domestic preferences for deeper regional cooperation in South Asia. The respondents were drawn from the following occupational categories: political leaders, civil servants, retired military personnel, university professors and research fellows, journalists, business groups, trade union leaders, religious leaders, and other professional groups. This chapter presents our findings on the following issues/questions, which have important bearing on the future growth of SAARC. 1 2

3 4

5 6 7 8

To what extent do South Asians believe that their country’s national interest will be promoted through regional cooperation? Do South Asians perceive inequity in any SAARC arrangement, that is, do they feel that their country will contribute more and benefit least, or vice versa, from SAARC arrangements? What are the evaluations of South Asians about their country’s concrete gain or loss from SAARC membership? What kind of national images do South Asians have about their neighboring countries in terms of the following attributes: political stability, authoritarian, economically dependent, external orientation, aggressively militaristic? What do South Asians think about India and Pakistan becoming nuclear powers? Do South Asians ever think of themselves not only as a citizen of their country, but also as a citizen of South Asia? Are South Asians willing to undergo economic sacrifice for the sake of other SAARC members? In general, are South Asians for or against efforts being made to expand regional cooperation in South Asia?

The concluding chapter discusses the main findings of this book and considers the implications of these findings for regional cooperation in South Asia. This chapter also discusses some important lessons for the future growth of regionalism in South Asia.

2

Explaining regional cooperation in South Asia

In Chapter 1, I argued that Euro-centric approaches of the integration theorists are inadequate to explain regional cooperative efforts among developing countries. One reason for this is that Euro-centric theorists overemphasized integration and the creation of supranational institutions with authority to override the participating members’ decision-making institutions. By focusing too heavily on integration, they gave inadequate attention to other more realistic forms of regional cooperation efforts. For example, regional cooperative agreements among developing countries can exist on a specific issue area such as trade, monetary exchange, security, social welfare, science and technology, and meteorology without any “spillover effect” as integration theorists would argue. Policymakers in developing countries are more comfortable in coordinating their policies on specific issue areas with each other rather than pursuing any kind of integration, which presupposes surrender of sovereign policy-making power to a supranational institution. Sometimes, policymakers’ concerns on different issue areas are intertwined intermittently. In such a context, they may pursue cooperation on several issues simultaneously. However, the choice of issue areas for cooperation and the nature and terms of regional cooperation depend much on the participating member countries’ domestic politics and leadership preferences. Thus, I argue in this study that to explain the nature, process, and outcome of regional cooperation in South Asia, it is necessary to understand domestic institutional structures, government capacity, domestic support, and preferences of political and societal actors toward regional cooperation. This chapter examines three interrelated perspectives in the areas of international relations and comparative politics – i.e. issue areas, two-level game, and institutional analysis – to frame the central argument of this study.

Regional cooperation as a community policy issue area If we accept the traditional distinction between domestic and foreign policies, regional cooperation policies can be technically described as the representative of the latter. But such simple characterization seems to be inadequate because the member states’ regional cooperation policies, in many ways, resemble the

Explaining regional cooperation in South Asia

21

patterns of domestic policy-making process. In light of this, Charles Pentland has suggested a useful third category of policy – community policy – to describe the policies of cooperating states toward each other (1973: 220). Pentland’s discussion of the concept of community policy is based on Rosenau’s analysis of foreign and domestic policies as issue areas (1967: 15–43).1 According to Rosenau (1967), domestic and foreign policy issue areas exhibit three important differences, that is motivational differences, role differences, and interaction differences. An analysis of these three differences appears to provide some scope to establish the existence of a third issue area, namely that of community policy issue area. The extent and nature of differences between foreign, domestic, and community policy issue areas are summarized in Table 2.1. The first difference that Rosenau describes between the foreign and domestic policy issue areas is related to the type and degree of motivation found in each. For citizens, Rosenau argues, foreign policy matters, being largely beyond their immediate concern, interest, and control, are likely to generate motivation “that is less complex and ambivalent, and therefore more clear-cut and intense, than is the domestic area” (1967: 24). While the intensity of people’s motivation toward external environment is high, their motivational extensity toward external developments is generally narrow. This is because the citizens often fail to connect external developments with their daily needs and wants. However, the case is different for the political elites. Since the political elites are aware of the extensive nature of foreign policy issues as well as the interdependence of foreign and domestic politics, their motivational extensity is much greater and motivational intensity much less in foreign policy matters than ordinary citizens. Thus, unlike the domestic issue areas, the foreign policy issue areas are marked by a “motivational gap” between citizens and policymakers. One important implication of this motivational gap is the apparent freedom of officials in foreign policy matters, unlike the domestic areas where public involvement is generally high and is, thus, a constraint on official action. In the case of community policy, citizen motivation is the same as in the case of domestic issues. But unlike pure foreign policy issues, the public motivations in community policies are somewhat “less stark, simple and intense” (Pentland 1973: 221). Besides, a motivational gap exists not only between the citizens and the policymakers, but also among political elites. Some members of the political elites tend to treat community policy issues as domestic, others try to make diplomatic gains from the interdependence of participating states’ economic and political systems, while a third group tends to see such issues as opportunities to increase the level of cooperation among cooperating states. A second distinction between the foreign and domestic issue areas, according to Rosenau, is based on the number of actors involved and types of roles they play in each of these issue areas. Domestic issues, Rosenau argues, involve the distribution of resources and arrangement of relationship at home. Thus, the enactment of these issues usually involve a number of generalized social roles, as represented by “the healthy and the sick, the old and the young, the rich and the poor in the society,” and large categories of occupational roles as represented by

Foreign policy issues Domestic policy issues Community policy issues

Policymakers and agencies

Low Low Low

High Low High + low

Narrow Wide Narrow + wide Wide Wide Wide

Extensity

■ Few Many Many

Few Many Many

Number

Roles

National National and local National and locala

National leaders All strata All strataa

Identity

■

Vertical Horizontal Vertical + horizontal Vertical Horizontal Vertical + horizontal

Direction

Low High Low + high Low High Low + high

Degree

Interaction sequences

Note a Not always.

Sources: James N. Rosenau, Domestic Sources of Foreign Policy (New York: Free Press, 1967), p. 46; Charles Pentland, International Theory and European Integration (London: Faber, 1973), pp. 220–224.

Foreign policy issues Domestic policy issues Community policy issues

Citizens and groups

Intensity

Motives

Table 2.1 Characteristics of foreign, domestic, and community issues

Explaining regional cooperation in South Asia

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businessmen, workers, farmers, teachers, housewives, doctors, other professionals, and leaders of interest groups. On the other hand, issues of foreign policy, being concerned with resources and arrangements abroad, do not normally involve the roles of such large classes of people. Basically, the occupational roles of government leaders, foreign ministers, and senior officials are involved in the formulation of foreign policies (Rosenau 1967: 39–41). In community policy, although the official actors play a dominant role, actors playing traditionally domestic roles, such as interest group leaders and opinion leaders, are often involved. The main reason for this is that a state involved in the regional cooperation process may have to pursue accommodative policies and to take actions jointly for which the mobilization of support from different strata of the society becomes necessary. Moreover, since community policies encompass issues of both high politics (security) and low politics (economics, technology, and culture), they require the involvement of foreign policy officials and non-official actors. The third distinction that Rosenau draws between the foreign policy and domestic policy issue areas is related to the patterns of interaction among various actors and various agencies involved in the policy-making process. While the patterns of interaction in foreign policies, according to Rosenau, are largely hierarchical or “executive,” these patterns are mostly horizontal or “legislative” in the domestic policies. Often, it is necessary to take quick and decisive action to deal with an external environment. Because of this, in all political systems, foreign policies are made by few officials in the executive branch of the government. Invariably, the decision-making structure in the foreign policy areas is hierarchical with a vertical flow of information, initiatives, and guidance coming from the executive branch. The pattern of interaction in the domestic policy areas, by contrast, is not so hierarchical and is highly competitive between various actors of the society. As Rosenau has argued, since every segment of the society has some claim on the resources, decision-making in the domestic issue areas is dispersed rather than concentrated in a few hands. Accommodation of different views and demands is necessary for successful enactment of domestic policies. Thus, unlike foreign policy areas, a horizontal pattern of interaction among various societal actors is found in case of domestic policy areas. Community policy differs from the pure models of both the domestic and the foreign policy issue areas. Since community policy deals with distribution and rearrangement of the cooperating state’s internal as well as external resources, both the horizontal and the hierarchical patterns of interaction among various actors are necessary. Besides, as the states become more deeply engaged in the regional cooperation process, they need to deal with more and more bordercrossing issues. A time comes when it becomes impossible for the traditional foreign policy hierarchy “to coordinate all the policies advocated and pursued by different departments and agencies-all with their different foreign and domestic clientele, different priorities and perceptions, different methods, personnel and contacts” (Pentland 1973: 224). It is in this kind of environment that a unique

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pattern of interaction – neither absolutely hierarchical nor totally horizontal – takes place. According to Pentland (1973), such a pattern of interaction is possible in the context of a community policy. Based on this discussion, it seems reasonable to argue that a state’s regional cooperation policy does not exclusively fall in the realm of the traditional domestic or foreign policy areas. Rather, it falls in the category of community policy areas, possessing some characteristics of the domestic and foreign policy issue areas.2 It is in this context that the influence of various domestic groups on regional cooperation policies acquires added significance.

Regional cooperation as a two-level game Robert Putnam’s (1988) conceptualization of the two-level game provides a useful framework to analyze the role of domestic politics in the regional cooperation process (Mayer 1992: 793–818; Evans et al. 1993; Iida 1993: 403–426). In negotiating an international agreement, decision-makers, Putnam argues, are typically engaged in two simultaneous games, one at the domestic level and the other at the international level. Putnam describes two-level games as follows: At the national level, domestic groups pursue their interests by pressuring the government to adopt favorable policies, and politicians seek power by constructing coalitions among those groups. At the international level, national governments seek to maximize their own ability to satisfy domestic pressures, while minimizing the adverse consequences of foreign developments. Neither of the two games can be ignored by central decision makers. (1988: 434) In the ultimate analysis, the outcome of an international agreement depends on what other states will accept and whether or not the terms of the agreement are acceptable to the decision-makers’ domestic constituencies. Thus, in international negotiation, prospects of domestic ratification are an important concern for the decision-makers. At the domestic level, decision-makers’ strategic moves are largely determined by the nature and size of what Putnam calls a “win-set.” Defining the win-set as a set of international agreements that will gain majority support among domestic constituencies, Putnam develops two main hypotheses: 1

2

The larger the win-set, the greater the possibility of a successful agreement (regional cooperation in this case); the smaller the win-set, the more likely that the policymakers will be reluctant to conclude an agreement. Decision-makers with large win-sets are likely to have weaker bargaining positions in international negotiations than decision-makers with small win-sets.

The latter will have larger (stronger) bargaining positions internationally as they can make domestic pressure a credible alibi to disagree with unfavorable deals.

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The size of win-sets is, therefore, important to understanding the outcome of an international negotiation. What determines the size of the win-sets? Here, Putnam offers three factors. First is the nature of domestic coalitions and their preferences for a specific agreement. The pattern of domestic coalitions and their role in negotiations are shaped by a combination of the following: the degree of heterogeneity of the constituents, saliency of the issue for a particular group (to what extent the issue at hand affects the interests of a particular group), and the cost of “no agreement” for the domestic constituents. Second, the size of winsets is determined by the nature of domestic institutions. A country’s ratification procedure can change the size of the win-sets. Here, Putnam’s discussion introduces the weak–strong distinction of states based on the autonomy of the central government from domestic pressure. For example, in a democratic political system, strong party disciplines and the strong strength of the government as determined by the extent of legislative autonomy of the decision-makers can increase win-sets. In contrast, weak governments, which do not enjoy legislative autonomy and are subject to domestic pressures, will have only narrow win-sets. Decision-makers in an authoritarian political system may not have to go through a rigorous legislative ratification process and thus may have large win-sets for international agreements. Third, the size of domestic win-sets is also influenced by what Putnam calls synergy. A hallmark of Putnam’s concept of the two-level game, synergy means the promotion of mutual benefits through cooperation in the international bargaining game to create coalitions favoring cooperation in negotiating countries (Snyder 1993: 104). In the pursuit of synergy, a critical concept that assumes significance in the two-level game is that of positive or negative reverberation, in which concessions or threats from one state affect coalition politics inside another state (Putnam 1988: 454–456). Positive reverberation can expand the domestic win-set and facilitate international agreements. Negative reverberation, on the other hand, can create a domestic backlash and impede international cooperation. It is quite clear that hard-line policies and coalitions in one negotiating state can sometimes reinforce hard-line policies and coalitions in another negotiating state, thus impeding the progress of international agreements. Since international cooperative agreements have significant domestic distributional consequences (Milner 1997: 61–65), positive and negative reverberation play a critical role in terms of generating domestic support or domestic backlash for any particular international agreement. Putnam also suggests that decision-makers can employ several innovative strategies – such as transnational linkages, side payments, and targeting swing voters – to transform the domestic politics and thus expand their win-sets for any particular international agreement. The two-level approach strikes a middle-ground between the state-centric theories and “second-image-reversed perspectives.”3 Unlike the state-centric theories, the second-image-reversed approach does not consider the state as a unitary rational actor. Rather, a state is a fragmented unit consisting of different groups or units. According to this analysis, states are no longer the actors.

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Central decision-makers, legislatures, and domestic groups become the agents. A state’s policy preferences often are expressions of coalitions of interests of these units or agents. Focusing on this dynamic of a state’s decision-making process, Putnam argues, “Unlike state-centric theories, the two-level approach recognizes the inevitability of domestic conflict about what the national interest requires” (1988: 460). Thus, the definition of national interest and how it is constructed and pursued become a central focus of analysis in this approach. Applying Putnam’s framework to the process of regional cooperation, it can be argued that decision-makers will show more enthusiasm for those regional agreements which meet the demands of enough domestic groups to guarantee ratification and the leaders’ political survival. In other words, domestic and regional bargains must overlap if cooperation is to proceed. Domestic support, thus, is of crucial importance for policymakers to pursue regional cooperation policies. Employing Putnam’s framework, a number of scholars have focused on the links between the domestic politics and intergovernmental bargaining to explain the progress of the European integration process in the late 1980s.4 The central attraction of the two-level game framework for regional cooperation is that it offers a better conceptual framework in which negotiations are no longer viewed as binary game based on cooperation or defection, but as a continuum where many tactics and bargaining tools are employed (Jervis 1988). The framework allows to explain variations in policy outcomes across various issues even when the domestic and international factors remain constant. By avoiding the binary two-by-two game theoretic model, Putnam provides useful analytical tools to explain suboptimal cooperation. Unlike the game theoretic model, Putnam’s framework acknowledges that “cooperation below the Pareto frontier” to use Krasner’s term (1991) is possible and indeed very common because of the domestic game that decision-makers have to engage in simultaneously. Thus, more than the game theoretic models, the two-level game framework can better account for the various cooperative outcomes. Specifically, Putnam’s two-level game approach allows one to examine three interrelated domestic level variables that have significant impact on intergovernmental bargaining at the regional level – institutional structures and policymaking process, the strength of the government, and the policy preferences of domestic actors. In the following section, these three variables and their linkage with intergovernmental bargaining are analyzed to explain the process and outcome of regional cooperation.

Institutions, preferences, and regionalism Helen Milner’s conceptualization of the state as a polyarchy provides a useful framework to analyze the role of domestic actors in the regional cooperation process. The term polyarchy was first coined by Robert Dahl to refer to the degree of democracy present in a country (1984: 75). Milner has used this term to refer to power-sharing arrangements among domestic groups. Challenging the

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realist paradigm (Waltz 1979: 88), in which state is considered as a unitary actor and decision-making usually flows along a vertical hierarchy, Milner argues: States are not unitary actors; that is, they are not strictly hierarchical but are polyarchic, composed of actors with varying preferences who share power over decision making. The struggle for political power domestically is critical for them . . .. “International politics and foreign policy become part of the domestic struggle for power and the search for internal compromise.” (1997: 11) This analysis focuses on the important roles of domestic actors and their preferences in a country’s policy-making process. Based on Milner’s analysis, I argue that understanding the actors and their preferences within a given institutional context is essential to explain why a state behaves the way it does. Such a focus provides additional insights to help explain questions on three fundamental issues of regional cooperation: 1 2 3

why states differ in their commitment to increase information and transparency; why states evaluate gains associated with each outcome differently; whether relative gains matter more than absolute gains.

The relevance of domestic politics assumes significance in a country’s policy-making process once the realist assumption of the state as a unified actor is relaxed. The question, then, is: who are the actors involved in the policy-making process in a domestic political setting? Usually, there are three sets of actors in domestic politics, who play important roles. The first two sets of actors are political actors – executive and legislature, and the third set of actors are the societal actors. The executive refers to the executive branch of government that includes head of a government (president or prime minister or dictator), the bureaucracy, or the various departments and ministries of government. The legislature refers to the legislative branch of government where policy issues are discussed, debated, and voted by legislators to become laws. A country’s legislature is also important for the ratification of international and regional agreements and treaties negotiated by the policymakers. The third set of actors are societal actors who include interest groups and opinion leaders. The societal actors are assumed to exercise indirect influence on the policy-making process in terms of supporting or opposing a particular policy. Examining the dynamic interaction of preferences between the political and societal actors is the key to understanding the policy-making process in a country. The interaction of preferences between the political and societal actors takes place within an institutional context. The relative roles of each actors and the extent of their control over policy-making are determined by a country’s institutional structures. It is, thus, useful to examine a country’s institutional structures

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and how different policy preferences of actors are aggregated by domestic political institutions to explain the nature and outcome of national policies. Domestic political institutions There is a growing consensus among political analysts that institutions play a critical role in shaping politics. As March and Olson observe: “political institutions define the framework within which politics takes place” (1989: 18). Robert Putnam (1993: 7–8) provides further explanation to this observation: “The rules and standard operating procedures that make up institutions leave their imprint on political outcomes by structuring political behavior . . .. Institutions influence outcome because they shape actor’s identities, power, and strategies.” Douglass North offers a useful definition of institutions. According to him, “institutions are the rules of the game in a society or, more formally, the humanely devised constraints that shape human interaction” (1990: 3). Agreeing with this broad definition, Jack Knight provides an additional dimension to explain the scope of institutions: “First, an institution is set of rules that structure social interactions in particular ways. Second, for a set of rules to be an institution, knowledge of these rules must be shared by the members of the relevant community or society” (1992: 2). The common theme of these definitions is that institutions are considered as socially accepted constraints or rules that shape human interactions. Domestic political institutions determine how much control each of the three domestic actors – executives, legislatures, and societal – has over policy-making process. In a country’s policy-making process, the relative influence of domestic actors is based on their varying degrees of control over three crucial elements of power: the ability to initiate and set the agenda, to amend any proposed policy, and to ratify or veto policy (Milner 1997: 18). The extent of control over these three elements of power determines whose preferences are likely to be more reflected in the ultimate policy choice. Constitutions often assign certain power to each set of domestic actors. However, it is obvious that the constitutional provision of power in a democratic system differs from a non-democratic system. In a non-democratic system, legislatures are often subservient to the executives. However, although executives have exclusive control over the policymaking process, policies are rarely formulated by a single person. The support of the bureaucracy, professional military, big business, landed oligarchy, religious leaders, opinion leaders, and/or a political party is usually necessary for even autocratic leaders to implement their policies and remain in power. Thus, it is reasonable to argue that these groups can often exercise veto power over the executive’s policy proposals and may share power with the executives by participating in the agenda setting functions. Historical evidence suggests that even such autocratic leaders as Hitler, Stalin, and Franco depended on the support of internal groups to retain their positions and make policy.5 In many democratic countries, the executive is most often given the power to initiate and formulate policies. Although the legislatures act as a representative

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body, they have almost no power to initiate policy proposals. At the same time, the legislatures enjoy the power to ratify or reject the executive’s policy proposals. This power of ratification and rejection gives the legislature a veto power that executives must have to deal with in making a policy. Another issue for democracies is that both executive and legislative actors must be sensitive to the demands of their constituents and effective to address those demands. Inability to address the societal actors’ demands is a recipe for the loss of power for the political actors. It is in this context that domestic societal actors exercise influence over the policy-making process. In nutshell, the executives in a democracy require the support of legislative actors and societal actors for the formulation of policies. In non-democracies, the executives may not depend on the legislature for their policies. But, they do depend on professional elites and opinion leaders, military, landed elites, labor union leaders, and big business to formulate and implement policies. In light of this argument, the strength of government becomes a useful variable to explain the nature and outcome of policies, including regional cooperation policies. The strength of government The importance of domestic politics for the growth of regional cooperation acquires added significance when governments involved in the cooperation process are “weak.” In the statist literature, there has been too much emphasis on the weak–strong conceptualization of states.6 A state is said to be either weak or strong on the basis of the centralization of decision-making authority. Centralized institutions and single-party governments are usually the two main attributes of strong states. Weak states, on the other hand, are associated with division of powers between executive and legislative branch of governments (federalism), judicial independence, coalition governments, and para-public institutions. However, this institution-based categorization of states neglects the role of leadership and, thus, is clearly arbitrary and limited in scope. Not surprisingly, many scholars have criticized this institution-based categorization.7 Often, popular leaders are able to overcome the institutional weaknesses and pursue their own agendas of national interest. It is, therefore, analytically useful to distinguish between institutions (i.e. constitutional arrangements) and governments (i.e. political leaders who operate within these constitutional arrangements), to determine the ability of decision-makers to resist domestic demands and pursue their views of national interests.8 Thus, I have focused on the variable “government strength” in this study because it allows space to distinguish between institutions and the power of political leaders who constitute government. Centralization of decision-making authority, legislative independence, single-party system, and wide popular base of the political leaders is some of the essential attributes of a strong government. Weak governments, on the other hand, are associated with unpopular heads of government, divisions within legislature, and/or constitutional order that limit the power of heads of government.9 Because of their lack of broad public

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support and social base, the leaders in weak governments are less able to design and implement policies independently without the support of dominant domestic actors.10 Thus, policymakers in weak governments are likely to remain more responsive to domestic opinion in order to pursue specific policies, including regional cooperation policies. Two important reasons why policymakers in weak governments depend on the support of domestic actors are: 1 2

the latter’s ability to politicize issues, thereby making ratification and implementation of regional agreements more difficult; the leaders’ concern for political survival.

To insure their political survival, weak coalitions are under greater pressure to accommodate the varying demands and interests of their political opponents than strong coalitions. Thus, as Etel Solingen shows, weak coalitions often pursue more populist, nationalistic policies, and it often becomes difficult for leaders of weak coalitions to downplay regional security threat and to ignore scapegoating (blaming external enemy) as an instrument of their national policies (1997: 68–100). In any intraregional negotiation, it is quite possible that weak governments will take larger bargaining positions because they must be more responsive to domestic demands than are leaders in strong government. Strong governments tend to have smaller bargaining positions as leaders are not forced to seek out support from various domestic actors. In this case, the leaders’ own values and beliefs will help determine the bargaining positions. Thus, while leaders in strong governments can take bolder regional cooperation initiatives, weak governments remain tentative about taking more active regional cooperative initiatives unless these initiatives have strong domestic support and thus are strategically important for the leaders’ to retain their political power. Figure 2.1 captures the above arguments in a stylized way. The horizontal axis describes the strength of governments. The vertical axis describes the nature of domestic support. The cells represent four possible types of outcomes. If domestic support remains weak for regional cooperative activities, policymakers in weak governments lose enthusiasm and are unlikely to pursue further regional cooperation policy initiatives. In such a situation, as cell A shows, the policymakers’ regional cooperative initiatives are likely to be ambiguous, sporadic, and fragmented, leading to a stop-and-go pattern of regional cooperation, in which implementation of regional policies and development of regional institutions remain uncertain.11 Conversely, it is possible for policymakers in weak governments to pursue regional cooperation policy initiatives if regional arrangements receive strong or adequate domestic support and if such arrangements are considered strategically important for the government’s legitimacy, leadership, and popularity (see cell D). Weak democratic governments of the United States and Canada have often pursued regional integration successfully because of the strategic importance of such integration schemes in terms of enhancing job growth, overall economic growth, and competitiveness. As the example of NAFTA illustrates, once the strategic importance of a regional

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Government strength Weak A Weak

Domestic support

B Deeper regional cooperation initiatives possible

Stop-and-go (SAG)

D Strong

Strong

C If strategically important for the government, further regional cooperation policy initiatives possible

Deeper regional cooperation successful

Figure 2.1 Government strength, domestic support, and regional cooperation policy initiatives.

integration scheme is established, it becomes possible for the policymakers in weak governments to generate adequate domestic support for such schemes. In contrast, as cell B shows, the absence of strong domestic support may not deter policymakers in strong governments to engage in regional cooperative arrangements. Policymakers in strong governments usually remain reasonably confident that a positive outcome of a regional cooperative arrangement can create synergy and turn public opinion in favor of their policy. The ideal context for the success of regional cooperation is when the government is strong and strong domestic support is available for regional cooperation policy initiatives (see cell C). As suggested by the two-level game framework, the strong/weak categorization of government is useful in understanding the dynamics of domestic decision-making. By focusing on the relative responsiveness of policymakers to domestic demands, it also sheds light on policymakers’ bargaining positions at a regional level. For example, whether or not the decision-makers are able to take a large or small bargaining position while negotiating a particular regional issue relating to trade, or security, or social welfare can be explained by the relative strength of their governments and domestic political environment. The domestic variables, thus, determine what the decision-makers take to regional bargaining and the extent to which they might be able to accommodate regional interest over their own narrow national interest. The preferences of political actors The central argument of this book is that the preferences of both political and societal actors hold a key to understanding the dynamics of regional cooperation in South Asia. This argument is based on the assumption that a country’s policy

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choices are influenced by the preferences of both political and societal actors. The strategic interaction among the actors’ preferences within a given institutional context determines a specific policy choice. Thus, to understand the scope and nature of regional cooperation, it is important to understand the actors’ preferences and how they interact in a given institutional context. Preferences are defined in this study as the specific policy choice that actors believe will maximize their benefits – that is maximizing chances of retaining political office for political actors and maximizing chances of benefits in terms of income, security, or social welfare for societal actors (Milner 1997: 15). Preferences, as Milner reminds us, need to be differentiated from interests: Actors’ interests represent their fundamental goals, which change little . . .. Although all political actors may share the same interest, their policy preferences will vary according to their political situation, for example, their party affiliation, constituency, characteristics, and so on. The same is true for economic actors. Interests are the stable foundation on which actors’ preferences over policy shift as their situation and the policy area vary. (1997: 15) What is important to note here is that actors’ policy preferences are situationspecific and constituency-driven. Unlike interests, preferences are dynamic, and they change as a country’s domestic political and economic conditions change. Since domestic politics influence regional politics and vice versa, it is reasonable to argue that actors’ regional cooperation policy preferences will not remain static for ever. In this context, an important question to explore is: under what conditions will political actors show preferences for regional cooperation? The answer to this question requires an understanding of the fundamental goals and motivations of political actors. The primary goal of political actors is to retain their political office, maintain or increase their power and authority. Thus, political actors’ preferences for regional cooperation are determined by the extent to which regional cooperation policies serve their fundamental goals. If regional cooperation policies enhance political actors’ prospects of retaining power or remaining in office, then these policies are likely to be enthusiastically pursued. Otherwise, political actors are likely to show little preference for these kinds of policies. In democratic political systems, the political actors need to participate in the electoral process to achieve their “office-seeking” or “office-retaining” goals. Thus, electoral considerations motivate their policy choices. In order to maximize their chances of reelection, the political actors need to worry about two issues: the overall economy and the preferences of their domestic constituents. If the general performance of the economy is good and voters are relatively content, it is possible that political actors will not show interest in regional cooperation. This is because their expected marginal benefit from regional cooperation in terms of improved reelection chances or simply in terms of retaining

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political power is minimal and thus not worth the cost of regional cooperation. The political cost of regional cooperation is some degree of loss of political autonomy in policy choices which many political leaders are unwilling to do as long as their economies are relatively prosperous. However, if the general performance of the economy is not good, voters may choose to support the opposition parties in the hope that the latter can improve the situation. The voters’ power to reward or punish the incumbents on the basis of their performance forces political actors in democracies to be concerned not only with the policies that benefit domestic interest groups but also with those that serve the general economy. In non-democratic political systems, political actors do not face the pressure of a regular electoral cycle to stay in power. But, in order to secure their legitimacy and retain their power for a relatively longer period of time, they also need to be sensitive to the preferences of their domestic constituencies – for example military, bureaucracy, industrial, and landed elites, religious groups, and the general health of the economy. A continuously declining economy is a recipe for social unrest that no political actors like to face. Thus, they would be inclined to pursue policies that can improve the overall state of the economy, thereby enhancing their probability of remaining in office. This “power-retaining” motivation guides political actors in both democracies and non-democracies to embrace only those specific regional cooperation policies that improve their country’s economy and promise to bring economic benefits to their constituency, whose support is necessary for them to stay in power for a longer period of time. In addition to “office-retaining motivation,” political actors’ preferences for regional cooperation are also shaped by the following factors. Several studies support the argument that the presence of externalities shape political actors’ preferences for regional cooperation (Milner 1997: 42–44; Mattli 1999: 46–50). Externalities refer to unintended consequences of one country’s policies on other countries’ economies. Milner defines externalities as follows: “When through its choice of policies a foreign country generates costs or benefits for another country that are not included in the foreign country’s calculation of the optimality of the policy, we can speak of externalities” (1997: 43). Externalities can be positive or negative. While positive externalities are beneficial for a country’s economic growth, negative externalities are generally considered to be a burden. Several studies have shown that in issue areas like exchange rate policy, industrial and trade policy, and monetary policy, the presence of externalities are likely to generate demand for cooperation among political actors (Cooper 1986; Frankel 1988; Webb 1991). However, the effects of externalities vary from country to country and depend on the extent of openness of a country. The more open a country’s economy is – that is the more a country’s economy is integrated with global economy – the greater the effects of externalities. In a closed economy, the effects of externalities are difficult to determine because of several policy distortions by political actors. If a country is open to global economy in terms of its

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trade, investment, and monetary exchange rate, it is reasonable to assume that any policy change by foreign countries on these areas is likely to impact the home country’s economies. To deal with these externalities, political actors often seek cooperation. In a regional context, geographical contiguity makes the issue of externalities even more important. Countries in a region are affected more by externalities when they share resources – such as rivers, fishing grounds, hydroelectric power, or transport connection (rail connections). For example, the upstream industrial plant which discharges industrial wastes in the river thus reducing the scope for fishing downstream is said to impose an externality on the fishermen. Unilateral exchange rate policies, such as devaluation or appreciation, tariff reductions, and other trade-related polices by one country, can impose externality on another country in a region. The resolution of these issues requires cooperation between the affected countries. A coordinated approach to policy-making within a framework of regional cooperation becomes a desirable strategy when countries in a geographically contiguous area seek to alter the policies of their neighboring country to reduce the negative externalities or increase positive externalities these policies create for them. However, it is worth noting that countries sometimes are unwilling to cooperate because of national pride, lack of trust, political tension, the inequitable distribution of costs and benefits, and so on. Regional cooperation agreements can help to build trust among parties by facilitating collaboration and frequent contact between political leaders. Political leaders may also seek to join a regional cooperation scheme to enhance their country’s security. This motivation is based on the belief that increasing intraregional trade would reduce the risk of intraregional conflict. The association between trade and security has been supported by several studies on European integration (Milward 1984), the Association of Southeast Asian Nations (ASEAN) (Anwar 1994; DeRosa 1995; Acharya 1998), and the CACM (Page 1996). The fundamental argument of these studies is that negotiations between political leaders on trade issues gradually build trust that lead elites to form cross-national coalitions for subsequent collaboration. Collaborations on various economic activities eventually make war undesirable and enhance regional security (Mansfield 1993: 199–217; Gowa 1994). As perceptively argued by the founding fathers of the European Community, Robert Schuman and Jean Monnet, economic integration would make war “materially impossible,” because interlocking of steel, coal, and other strategic industries would leave countries unable to wage war against each other (Milward 1984). Many scholars, however, disagree with the above argument. According to them, regional trade policy can redistribute income and produce outcomes that worsen intraregional security. In the case of East African Common Market, Kenya enjoyed disproportional income transfers that were created by the common external tariff on manufacturers. Tanzania and Uganda consistently complained about this income transfers. They also feared that Nairobi would attract increasing concentration of manufacturing industries because of its relat-

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ively well-developed infrastructure. Arguments about compensation for the income transfers led to the collapse of the Common Market, the closing of borders, and the confiscation of Community assets in 1978 (Robson 1998). Similarly, in the CACM, the dissatisfaction of Honduras over the distribution of benefits is cited as one of the factors for the 1969 military conflict between Honduras and El Salvador and the subsequent withdrawal of Honduras from the CACM (Pomfret 1997). Thus, it seems that regional cooperation is a double-edged sword with respect to intraregional security – sometimes promoting intraregional security and sometimes worsening it. Which of the two consequences is likely to result depends upon the economic characteristics of the member countries. If the members have a similar size of economy and level of economic development, regional cooperation can enhance intraregional security. But, in the case of uneven economies, redistribution problems can arise and cause conflicts among the member countries. Thus, the preferences of political actors for regional cooperation are often determined by their countries’ economic conditions. Sometimes, intraregional security may not be the political impetus for regional cooperation. The need to unite to face a common external threat can also serve as a driving force for regional cooperation. Typically, the regional hegemon is perceived to be the potential threat by the small countries of the region. For example, the formation of the Southern African Development Coordination Conference (SADCC) in 1980 was the result of a collective desire among the small countries of the region to provide a united front against the apartheid regime in South Africa (Foroutan 1993). The GCC was established in 1981 partly in response to the potential threat of regional powers like Iran and Iraq (Kechichian 1985). The communist threat from Vietnam was one of the reasons for the creation of ASEAN in 1967. A major motivation of Central and Eastern European countries in seeking EU membership in the 1990s is protection against a perceived threat from the Russian Federation. Thus, security considerations – either intraregional or extraregional – often serve as powerful motivations for political actors’ regional cooperation policy preferences (Lake and Morgan 1997). Regional cooperation, of course, has economic consequences. Sometimes the economic effects will be favorable, offering political leaders positive political payoff – such as enhanced security, political legitimacy, and longer stay in power. Sometimes the economic effects will be unfavorable, forcing decision-makers to choose non-cooperative policies or to withdraw from cooperative agreements. Regional cooperation agreements may allow leaders to “lock in” or bind themselves to their preferred polices. If there is a conflict of preference between domestic groups and political leaders about a particular policy and the political leaders believe that domestic preference for a policy is not beneficial to their political interests, they may choose to “lock in” regional cooperative agreements to prevent themselves from being forced domestically to adopt such policies. There is a circular logic involved in this strategy. For example, political leaders often pursue economic reforms to attract more investment to their country. But,

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investors will not invest unless they are confident that economic reforms will persist. If a country has no track record of reform or a history of reversing reform, then investors’ confidence in the persistence of reform may be low. In that case, the country may not experience a steady inflow of foreign investment. In the absence of adequate investment, government is likely to face increasing domestic pressure to reverse the reforms. To escape from this situation, leaders often need institutions or commitment mechanisms that enable them credibly to lock in to their decisions. Regional cooperation agreements offer such commitment mechanisms. Regional cooperation agreements can serve as a well-designed piece of commitment mechanisms in a variety of policy areas – such as economic reforms, trade liberalization, market-based exchange rate as opposed to unilateral exchange rate policies, democratic reforms, and security-related policies. Through regional commitments, governments of developing countries can improve their problem of credibility gap for sustaining economic reforms. Regional cooperation schemes can also increase the credibility of commitments via signaling to the private sectors that “rules of the game are now changing for good” (Rodrik 1995: 111). Some of the examples where regional cooperation agreements have proved useful as commitment mechanism are Mexico gaining credibility through NAFTA; Eastern Europe through accession agreements with the EU; North Africa through association agreements with the EU; and MERCOSUR members’ commitment to democracy and free trade (Rodrik 1995: 110). Despite some obvious advantages of lock-in strategies, political leaders choose these strategies on the basis of a careful evaluation of political costs. The most important political cost is their loss of unilateral control over a policy instrument. Thus, in all likelihood, political leaders will choose regional cooperative agreements only when political costs are expected to be less than the benefits. The preferences of societal actors Political actors remain the formal initiators of regional cooperation negotiations. As Evans et al. (1993: 403) observe in their comprehensive survey of two-level games, “There is little doubt that agenda-setting usually reflects leaders’ preferences. International initiatives in direct response to constituency pressure were surprisingly rare.” Thus, the terms and nature of regional cooperation agreements are largely determined by the preferences of political actors. Nevertheless, societal actors have much indirect influence on regional cooperation agreements, because their preferences often have a significant bearing on political actors’ policy preferences. In one of his earlier works, The Nerves of Government (1963), Karl Deutsch provides a systematic analysis of the effect of societal actors’ feedback on the decision-makers. According to Deutsch, government policies become successful and are reinforced only when they receive a “positive feedback” from the societal actors, that is, when the domestic groups react favorably agreeing with the decision that has been made. “Negative feedback,”

Explaining regional cooperation in South Asia

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i.e. unfavorable domestic reactions to the government policies, has a dampening effect on decision-makers. For integration policies to be successful, Deutsch argues, policymakers need to have positive feedback from domestic actors. This argument is consistent with the insights from the “distributional politics” literature and a wide range of research in international political economy. According to this literature, the preferences and political pressures of societal groups are key determinants of both foreign economic policy and international cooperation (Gourevitch 1986; Milner 1988; Rogowski 1989; Frieden 1991). Two reasons explain why political actors’ policy preferences are influenced by societal actors’ preferences. First, following the logic of two-level game, a number of scholars agree that political actors can negotiate regional agreements on their own, but the subsequent ratification or implementation of these agreements require domestic groups’ support (Huelshoff 1994). Since political actors desire to retain their office or stay in power for long, they anticipate the reactions of societal groups on specific cooperation policies and generally avoid those policies that will bring them into confrontation with dominant domestic groups. In this sense, political actors tend to choose cooperation policies that are more or less consistent with the policy preferences of key societal groups. The second reason for the influence of the societal groups is related to political actors’ sensitivity to business interests (Lindblom 1977). Business groups play an important role in generating employment, income, and tax revenues and even in providing “bribe money” or “campaign contributions” to politicians. Given these economic benefits, political leaders are particularly careful not to pursue those policies which will undermine “business confidence” and adversely affect the overall economy. Instead, they anticipate business reactions to their economic cooperation policies and pursue those that are agreeable to the dominant business community. Sometimes, political actors pursue economic cooperation policies under the sustained pressure from business groups. The “relaunching” of European integration in the mid-1980s (Sandholtz and Zysman 1989: 95–128) and the creation of NAFTA in the mid-1990s (Haggard 1995: 90) are in great part attributable to the pressure of the business community. Thus, societal groups, including business groups, may not play a direct role in regional cooperation negotiations process. But, they play a major, often indirect, role in shaping policy-making and influencing regional cooperation. What shapes the preferences of societal actors? In other words, are societal actors interested in all kinds of regional cooperation policies? To address this question, it is necessary to understand who these societal actors are. The key societal actors include business and labor groups, landed elites, retired civil servants and military leaders, religious leaders, professional elites, and opinion leaders – such as communication media leaders and academics. Given this composition of societal groups, it should be clear that not all societal actors are concerned with all kinds of regional cooperation policies. Different issue areas will evoke the attention of different societal actors. For example, regional trade liberalization policies might evoke the attention of different societal groups than would regional security policy coordination or environmental policy

38

Explaining regional cooperation in South Asia

coordination. It follows that if a group is unaffected by the policy change in a particular issue area, that group is unlikely to become involved in the given issue area. Thus, the policy preferences of societal groups remain issue specific and are shaped by the relative saliency of a particular issue area for the specific groups’ self-interests. The issue-area approach suggests that societal actors’ preferences for regional cooperation policies are determined by their self-interests. Societal actors, like political actors, seek to maximize their utility. Thus, their support for a particular regional cooperation policy will be determined by their perceived utility (that is costs and benefits) from such a policy. David Easton’s analysis of public support for political institutions (1965, 1975) provides useful insights into this utilitarian dimension of societal actors’ preferences for regional cooperation. Easton’s analysis specifies how and under what conditions utilitarian evaluations of societal actors influence their preferences for regional cooperation. David Easton’s model posits that public support for political institutions is based on their affective allegiances to these institutions and their utilitarian evaluations of institutional outputs and performance (1975: 444–448). Deep public affective allegiances are an important source of legitimacy for the institutions. When affective allegiances are low or non-existent, the level of public support for the institutions can be determined by utilitarian evaluations (Gabel 1998: 11). According to Easton, utilitarian support refers to perceived benefits or satisfaction from governing institutions and policies. When these perceived benefits decline or cease, the citizens’ support to these institutions will do likewise (1975: 439). Thus, utilitarian support is not permanent or stable, and it changes with the change in the performance of institutions. Affective support represents an allegiance, attachment, or loyalty to governing institutions and policies that may develop as a result of “accumulated positive utilitarian appraisals of governance” (Easton 1975: 445). According to Easton, “it consists of a reservoir of favorable attitudes or good will that helps members to accept or tolerate outputs to which they are opposed or the effects of which they see as damaging to their wants” (1975: 444). In contrast to utilitarian support, affective support does not swing much in either positive or negative direction over time on the basis of short-term institutional performance. Thus, it provides a stable long-term environment for governance. Easton contends that these two dimensions of public support are interlinked. Affective support toward governing institutions derives from positive utilitarian evaluations of these institutions’ performance. If citizens are discontented with the performance of these institutions over a long enough period of time, it may gradually erode their affective support. Applied to the regional cooperation context, Easton’s model explains that both affective support and utilitarian support are necessary for the growth of regional institutions. Utilitarian support for regional cooperative arrangements can grow with the perception of mutual economic and political benefits (for example increased standard of living or a guarantee of peace). This perception of mutual rewards and gains will, in turn, enhance peoples’ affective support,

Explaining regional cooperation in South Asia

39

which is related to their shared values, attachment, sympathy, trust, confidence, and loyalty to a regional organization and its institutional arrangements. Thus, Easton’s focus on the interlinked aspect of utilitarian and affective support provides a useful explanatory tool to examine the societal actors’ preferences toward the growth of regional cooperation. Several previous studies have applied the Eastonian model to the EU context. Lindberg and Scheingold (1970) found that the strongest basis of support for the European Community was utilitarian. Using the reasoning of game theorists, Lindberg and Scheingold (1970) argued that utilitarian support for European integration was based on the perception that involved parties were likely to gain more by cooperation than by an independent or non-cooperative stance. Their study concluded that although weaker in comparison with utilitarian support, levels of affective support were sufficiently high to provide a “permissive consensus” in favor of European integration. Because of the existence of permissive consensus, “National and (European) Community decision-makers can expect to operate relatively freely without encountering significant opposition” (Lindberg and Scheingold 1970: 252–260). Later studies have confirmed a pervasive and stable level of affective support for European integration (Shepherd 1975; Slater 1983: 74; Smith 1993: 72–76). More recent empirical studies, however, have challenged these findings. Matthew Gabel (1998), for instance, has found low affective support for EU and argues that citizens’ utilitarian appraisal of the impact of the Union on their individual welfare will remain a crucial determinant of their preference toward European integration. While the debate on the aggregate-level domestic support for EU continues, there is a convergence of opinion among many scholars of European integration that a systematic examination of domestic support along the utilitarian and affective dimension remains a useful method to explain the scope and speed of integration in Europe. In this study, I adopt the Eastonian model of public support to examine the affective and utilitarian preferences of South Asian societal actors toward the growth of regional cooperation in South Asia. However, unlike European Union, where Easton’s model has been extensively employed by many scholars to study public opinion, I have restricted the scope of this study to the examination of elite preferences for the growth of regional cooperation in South Asia for primarily two reasons discussed in the next section of this chapter. Preference-based approaches have been employed by many scholars to predict domestic support for and opposition to European integration. I contend that with some modification, this preference-based approach can explain the scope and speed of regional cooperation in other regions, including South Asia. In the past, scholars of regional integration have focused their analysis either on societal actors’ preferences (public opinion literature) or on political actors’ preferences (intergovernmentalism; neo-functionalism) to explain the dynamics of regional integration. This study seeks to move beyond the earlier work by combining political actors’ preferences with those of societal actors. By so doing, this study acknowledges the interdependence among political and societal actors in policy-making toward regional cooperation.

40

Explaining regional cooperation in South Asia

Understanding regional cooperation in South Asia As reviewed above, scholars of regional integration, international relations, and comparative politics have offered various useful perspectives as to why, when, and how regional cooperation is possible. In what follows, I discuss how these theoretical arguments can be applied to the study of regional cooperation in South Asia. The central assumption of this study is that regional cooperation is a process of action, that is, initiatives by governmental actors, and reaction, that is, support or opposition to those policies by domestic societal actors. Focusing on either governmental actors or societal actors captures only one aspect of regional cooperation, leading to an unnecessarily restricted view of the process. On the basis of this assumption, this book advances the following arguments that will be elaborated and examined in the following chapters. First, consistent with Pentland’s (1973) discussion on issue areas, I argue in this study that South Asian countries’ regional cooperation policy does not exclusively fall in the realm of the traditional domestic or foreign policy areas. Rather, it falls in the category of community policy issue areas, possessing some characteristics of both the domestic and the foreign policy issue areas. It is in this context that the domestic political economy and the preferences of various domestic actors (both political and societal) for the formulation and implementation of regional cooperation policies acquire significance and thus must be understood in order to explain adequately the process of regional cooperation in South Asia. Second, based on Putnam’s (1988) framework, I argue that regional cooperation is a two-level process in which domestic support and regional bargains and negotiations must overlap if cooperation is to proceed (Putnam 1988). Attempts to achieve regional cooperative agreements involve bargaining and negotiations among governmental actors in various issue areas. But, domestic support is essential for implementation of these negotiated agreements. Policymakers know this, and hence, when negotiating regionally, they always anticipate domestic reactions. The larger the domestic win-sets, the greater the possibility of a successful agreement; the smaller the win-sets, the more likely that the policymakers will be reluctant to conclude an agreement. Thus, policymakers’ anticipation and calculation of the size and nature of domestic win-sets largely determine their scope of bargains and negotiation on various regional issues. In case of South Asia, the two-level game framework provides useful insights for understanding South Asian countries’ interstate relationships. What kind of domestic constraints or opportunities, along with international ones, do the South Asian governments face in pursuing policies of cooperation with their neighbors? How do South Asian governments use external threats at home? How do issues of macroeconomic compatibility or incompatibility weigh on the process of regional cooperation among South Asian countries? In case of the existence of narrow win-sets for a specific regional cooperation agreement, are there ways of expanding the win-set during the regional cooperation negotiation process? The answer to these questions requires an understanding of the South

Explaining regional cooperation in South Asia

41

Asian countries’ domestic political and economic dynamics and their link to international and regional factors. Understanding this linkage is essential to explain the prospects for regional cooperation in South Asia. Third, external factors, outside pressure for opening domestic markets, private capital flows, and country’s degree of economic openness critically affect leaders’ political calculations about deeper regional cooperation policy initiatives. But, external factors alone are not enough. Growth of regional cooperation is also critically dependent on the nature of domestic institutional structure and strength of the government. When the governmental actors enjoy legislative autonomy and are relatively well insulated domestically, they can afford to pursue bold and accommodative regional policies. Conversely, a weak government may force governmental actors to pursue more nationalistic and domestically oriented policies, with regional cooperation initiatives a prime casualty. It is, therefore, important to understand the nature of domestic institutions and the strength of the government, in order to explain why states do or do not deepen regional cooperation initiatives. In light of this argument, this book examines the institutional structures and the strength of the governments in South Asia. South Asian countries experience various kinds of political systems – democratic, authoritarian, and quasidemocratic political systems. As discussed in Chapter 5, almost all South Asian governments have suffered from considerable weakness in terms of their political leaders’ narrow political base and lack of legislative autonomy since 1990s. Given the weakness of their governments, political leaders are likely to pursue more domestic-oriented policies, making regional accommodation a difficult goal. Fourth, under what conditions will political actors show preferences for regional cooperation that involves coordinating policies with another country? The answer to this question requires an understanding of the fundamental goals and motivations of political actors. The primary goal of political actors, as discussed above, is to retain their political office, maintain or increase their power and authority. Thus, political actors’ preferences for regional cooperation are determined by the extent to which regional cooperation policies serve their fundamental goals. If regional cooperation policies enhance political actors’ prospects of retaining power or remaining in office, then these policies are likely to be enthusiastically pursued. Otherwise, political actors will show little preference for these kinds of policies. In addition, externalities, intraregional and extraregional security consideration, and lock-in are the main motivations that shape political actors’ preferences toward regional cooperation. To what extent do regional cooperation policies serve the power-retaining objectives of South Asian political actors? What is the overall impact of regional cooperation policies on the economy of South Asian countries? Given their geographical contiguity and the fact that they share water and land resources, South Asian countries have to deal with externalities on a continuous basis. In fact, many experts believe that regional cooperation in South Asia can be useful for a number of issues facing South Asian countries – such as natural disasters,

42

Explaining regional cooperation in South Asia

destruction of ecosystems, pollution, droughts, irrigation, fishing, transportation bottlenecks, equitable water sharing, hydroelectricity generation, and energy issues. According to many outside observers, regional cooperation is likely to help South Asian countries to effectively deal with these issues by increasing trust between policymakers and by embedding the issues in wider negotiations where trade-offs are more feasible and agreements easier to reach. Do South Asian policymakers share these beliefs or they find themselves unwilling to cooperate because of national pride, political tensions, lack of trust, and the asymmetric distribution of costs and benefits? Another issue of critical importance for regional cooperation in South Asia is intraregional and extraregional security considerations among South Asian leaders. One of the main contributions of the realist scholars has been the emphasis on the security dilemma and how it serves to aggravate intraregional security environment, thereby weakening regional cooperation efforts. This study explores to what extent security dilemma, particularly between India and Pakistan, has been a crucial barrier to effective regional cooperation in South Asia. Another underlying assumption in the realist literature that shapes preferences of political actors for regional cooperation is the need for extraregional security, that is, the need to unite to face a common external threat. The potential threat can come from a regional hegemon or other extraregional power. Given this line of reasoning, this book advances the argument that the potential for regional cooperation in South Asia will greatly improve when intraregional and extraregional sources of insecurity are eliminated in the region. Another source of motivation for political actors to pursue regional cooperation policies is the potential of regional cooperation agreements to help lock in or to create a commitment mechanism for trade liberalization and economic reforms policies. To what extent regional cooperative arrangements have facilitated trade liberalization policies in South Asian countries? Has regional cooperation proved useful for political actors as a lock-in mechanism for the continuation of economic reforms in South Asia? Has regional cooperation facilitated an increase in intraregional trade among South Asian countries? These questions are addressed in the following chapters with a focus on the domestic political and economic dynamics of South Asian countries. Based on the insights from the “distributional politics” literature, this book argues that while political actors negotiate regional agreements, their preferences for specific regional cooperation policies are influenced by the preferences of societal actors. The “power-retaining” motivation of political actors forces them to anticipate the reactions of societal groups on specific cooperation policies and avoid those policies that will bring them into confrontation with dominant domestic groups. In this sense, political actors tend to choose cooperation policies that are more or less consistent with the policy preferences of key societal groups. Following David Easton’s theory of public support, this study argues that preferences of key societal actors for specific regional cooperation policies are based on their utilitarian evaluation of and/or affective allegiances toward

Explaining regional cooperation in South Asia

43

regional cooperation agreements. While utilitarian preferences are determined by their perception of benefits – economic, security, social welfare, and so on – from a specific regional cooperative arrangement, affective allegiances are based on their shared values, attachment, sympathy, and trust toward a regional organization. Several empirical studies in the context of EU show that examining the level of utilitarian and affective support provides a useful explanation in understanding the scope and speed of integration. Based on this understanding, the present study seeks to examine the nature of domestic support along the utilitarian and affective dimensions for regional cooperation policies in South Asia. However, in exploring the nature of domestic support toward regional cooperation in South Asia, this study has focused on elites. My decision to focus on elites rather than mass publics is based on two specific assumptions. First, in a region where almost half of the population lacks formal education, knowledge of regional cooperation issues is extremely limited. South Asian mass publics are generally uninformed and unconcerned about regional cooperation. Thus, to explore preferences for a variety of complex regional cooperation policies, it is necessary to target educated and well-informed elites such as business groups, labor union leaders, religious leaders, retired civil servants, and opinion leaders – academics, mass media. Second, elites in South Asia have greater potential to influence indirectly the course of government policy. As opinion leaders, these elites have the capability to politicize issues, mobilize masses, and even increase saliency of a particular issue by means of debates, media writing, and discussion. Hence, the perspectives of these elite groupings are of particular significance for gauging trends in policy formulation.12 In the context of examining the nature of elite opinion, it is useful to understand the elite structure of South Asian countries. The elite structure of India and Sri Lanka can be described as pluralistic. In such a system, political decisionmaking is more often a case of bargaining among functional elites than one in which a single elite imposes its will on others. While governing elites are directly responsible for policy through initiation, legislation, and administration, other functional elites – opposition political leaders, business, or labor leaders or the communication media or religious leaders – may play a less direct role in policy-making. Sometimes, they act as interest groups lobbying to secure certain goals; at other times, they act as veto groups who must be placated before a given policy can be implemented. In order to understand why a particular policy is adopted in India and Sri Lanka, it is usually necessary to know what pressures were put on decision-makers by such interest groups. It is in this sense that understanding domestic elites’ preferences becomes useful. The elite structure of other SAARC member countries – Pakistan, Bangladesh, Nepal, Bhutan, and Maldives – remains tightly integrated to a varying degree, where few functional elites – notably, the military, bureaucrats, industrial, and landed elites and religious leaders – have access to power and wealth. In such a system, a leader may enjoy more autonomy in the policymaking process. Even then, it will be unreasonable to assume that a leader

44

Explaining regional cooperation in South Asia

initiates and implements single-handedly policy measure to keep an entire country functioning. A leader must rely upon associates comprising various functional elites who tell him what the major problems are, offer information and advice, suggest solutions, and assist in carrying out decisions. The number of these elite groupings surrounding the leader is few. But, typically, these few elite groupings, as Karl Deutsch et al. (1957) reminds us, have a support base on which the leader must depend in order to expand his own support base for legitimacy and retaining power. Hence, it is useful to examine the perspectives of these elite groupings to understand trends in policy formulation.

3

Regional dynamics

Geographically, South Asia is easily demarcated. It is bounded on the north, northwest, and the northeast by the Himalayas and its sub-ranges. The vast expanse of the Indian Ocean, with the Arabian Sea to its west and the Bay of Bengal to its east, marks off the region from the rest of the world. The region has one of the largest alluvial soil systems of the world formed by three great rivers, the Indus, the Ganges, and the Brahmaputra. The eight countries of this region – Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka – share common rivers, mountain systems, oceans, and ecological cycles. Except for narrow water corridors between the subcontinent and Sri Lanka and Maldives, the whole region is a contiguous land mass without any natural barriers between the countries. In addition to geographic contiguity, the eight countries in South Asia share a common colonial past, historical ties, religious and cultural traditions, linguistic affinities, and values and social norms. These commonalities should have provided a solid ground for regional cooperation among South Asian countries. But, the growth of regionalism – the efforts to build institutions to foster regional cooperation – has been notably absent in South Asia in the post-independence period, leading one observer to comment that South Asia has been “a region without regionalism” (Lyon 1992: 126). What explains the lack of growth of regionalism in South Asia? This chapter seeks to answer this question by exploring the nature of interstate relationships among five original SAARC member countries: India, Pakistan, Bangladesh, Nepal, and Sri Lanka. It first identifies major characteristics of each state that affect their policies toward the neighboring countries and countries outside of the region. It, then, examines the influence of history, which plays a significant role in defining the South Asian countries’ regional diplomacies. In addition to history, it examines other features of the structure of the South Asian regional system – religious affiliations, ethnic relations, state capabilities, Indo-centric geography, and leaders’ contrasting conception of their state’s relative roles – that affect their relationships. The Indo-Pakistan rivalry and the implications of security dilemma for the entire region are examined. This chapter also examines how the smaller states are affected by their relations with their larger neighbors and how these relations create opportunities and challenges for their leaders. Finally, this chapter explores the implications of

46

Regional dynamics

the relations between South Asian states and extraregional powers for the South Asian region.

South Asian states – differences and shared characteristics The South Asian region is Indo-centric. India is at the center of the South Asian system, sharing frontiers with every country in the region. While all the countries in South Asia share borders with India, none of them shares borders with one other except for Pakistan and Afghanistan. India is the world’s second most populous country with more than one billion people and is expected to surpass China’s population in 2025. It occupies over 3,288,000 square kilometers, which is four times larger than the next big state in South Asia – Pakistan. India is a thriving multiethnic democracy with 29 states and six union territories. It has more than 16 officially recognized languages and 200 other languages and dialects. Constitutionally secular, India is a home to all major religious faiths of the world – Hindus (80.5 percent), Muslims (13.4 percent), Christians (more than 2 percent), Sikhs (2 percent), Buddhists (1 percent), and Jains (less than 1 percent). In terms of population, size, natural resources, military power, and industrial capability, India is enormous compared to its neighbors (see Table 3.1). Pakistan is the second most important state of the region in terms of population, size, military power, and industrial capability. It occupies over 796,000 square kilometers with some 150 million people. Although created as a Muslim state as a result of the partition of the subcontinent in 1947, Pakistan is a multiethnic state with at least five regional languages. Unlike India, however, Pakistan has been ruled by the military in the vice-regal tradition for most of its existence. For a brief period in early 1970s and more than a decade in late 1980s (1988–99), Pakistan experienced a “quasi-democracy,” where political leaders, despite their victory in parliamentary elections, remained critically dependent on the support of the military and bureaucracy for foreign and domestic policies. Since 1999, there has been once again a military rule in Pakistan. Bangladesh, formerly East Pakistan, became an independent state in 1971 by breaking away from Pakistan after a prolonged civil war over issues of representation, economic policies, and language issues. Situated at the mouths of the great Brahmaputra and Ganges rivers, Bangladesh occupies about 144,000 square kilometers (seven times less than Pakistan’s total size) with a population of more than 144 million (nearly the same number of people as Pakistan). Unlike India and Pakistan, however, Bangladesh is culturally relatively homogeneous with nearly everyone speaking Bengali. About 88 percent of its population are Muslims, 11 percent are Hindus, and 1 percent are Christians and others. Following its independence in 1971, Bangladesh was governed for four years by the charismatic Sheikh Mujibur Rahman. After his assassination by a group of army officers in 1975, the army generals ruled the country for 15 years. Since 1991, there have been parliamentary elections at regular intervals with two political parties – Awami League and Bangladesh Nationalist Party (BNP) –

Notes a 2002 figure b indicates data for 2000. – indicates non-availability of data.

Sources: World Bank, World Development Indicators 2006.

1 Area (thousands of square km) 2 Population (millions), 2004 3 GNP per capita (US$), 2004 4 GDP per capita annual growth rate (%), (2003–04) 5 Total external debt (millions of US$), 2004 6 Total debt service as % of export of goods and services (2004) 7 Current account balance (millions of US$), 2004 8 Structure of output (% of GDP), 2004 (a) Agriculture (b) Industry (Of which Manufacturing) (c) Services 9 Foreign trade (a) Imports of goods and services (% of GDP), 2004 (b) Exports of goods and services (% of GDP), 2004 10 Gross domestic savings as % of GDP (2004) 11 Armed forces personnel (thousands)

Table 3.1 Key indicators of SAARC member countries India

Maldives

Nepal

Pakistan

38.2b 36.5b (11.6) 25.4b 60b 30b 37.9b –

21 16 31 251

23 19 23 2,617

21 27.0 (16) 52

76b 93b – –

16.4b 18.4b (6.5) 64.7b

31 18 27 131

40 23 (9.0) 37.0

15 16 23 921

22 25.0 (18.0) 53.0

47 3,288 0.30 141 796 0.896 1,080 0.321 27 152 760 620 2,410 250 600 2.3 5.4 8.1 1.4 3.9 245 122,723 316 3,332 32,566 4.6 14.9a 4.5 5.5 21.2 –20.3 6,853 –10.5 197 –808

Bhutan

21 27 (16.0) 52

144 139 440 4.3 20,344 5.2 –279

Bangladesh

46 36 19 239

18 27.0 (15.0) 55.0

66 19 1,010 4.5 10,061 8.5 –648

Sri Lanka

48

Regional dynamics

dominating the political landscape. These parliamentary elections have brought civilian governments to power in Bangladesh, with the military back in the barracks. Situated at an important Indian Ocean crossroad, Sri Lanka is an island state and is separated from India by a narrow 20-mile Palk Strait. It has a population of 20 million people and an area of 65,000 square kilometers. It has a more varied and cosmopolitan population than Nepal or Bangladesh, with Buddhist (mostly Sinhalese, 70 percent), Hindus (Tamils, 15 percent), Christian (8 percent), and Muslim (7 percent). Until independence in 1948, Sri Lanka was directly ruled from London as a Crown Colony. Sri Lanka is the only country in Asia which has had universal adult franchise since 1932. Historically known for its robust electoral democracy, the country’s government has been dominated by a two-party system until the 1970s and multiparty system since then. Since the mid-1970s, the country has plunged into one of the world’s most intractable civil conflicts between Sri Lanka’s Tamils minority in the northern and eastern parts of the island and Sinhalese majority in other parts of the country. Given the domestic compulsions driven by natural sympathy of its Tamil population mostly from Tamil Nadu, geographical proximity, and the concern for regional peace and security, India has been drawn into Sri Lanka’s civil conflicts as a major player. Nepal is a landlocked country, occupying 141,000 square kilometers. Nepal’s location along the 16,000 kilometers of frontier dividing India and China has made it strategically important for India. It has a population of about 25 million out of which 90 percent are Hindus, 5 percent are Buddhists, 3 percent are Muslims, and 2 percent are Christians and others. Nepali is recognized as official language, but its people speak many other languages and dialects. Until 1990, the country was run by an autocratic king under a system of governance known as the panchayat. Although touted as a representative system, the panchayat system in reality comprises a cluster of like-minded undemocratic politicians who were primarily chosen by the king and obeyed the will of the king. In 1990, following months of popular unrest and agitation, King Birendra, on the throne since 1972, finally gave in to popular demands to create a democratic state with elected representatives rather than king’s chosen upper caste and class elites. But, Nepal’s political leaders were unable to manage complexities of democratic governance. In particular, the leaders were unable to forge effective political alliances with other parties to form politically stable governments. Consequently, Nepal had 14 governments from 1991 to 2001. From 1996 until 2001, Nepal experienced a civil war between Maoist groups and the various governmental forces. In 2001, Nepal returned to a monarchical rule under King Gyanendra when King Birendra’s entire royal family was massacred by his son and Crown Prince Dipendra.1 However, the monarchical rule of King Gyanendra with a government of unqualified cronies and demoralized army unable to maintain Nepal’s peace and stability came to an end in 2006 as a result of months of popular protest. Since then, parliamentary democracy has been restored, and there has been a multiparty government in power in Nepal.

Regional dynamics

49

Shared characteristics Although different in the nature of their political systems and regimes, size, population, economy, and military power, South Asian states also share certain characteristics. More than half of the world’s poor live in this region. Per capita income, despite some improvements in recent years, still remains very low among South Asian countries. As shown in Table 3.2, even after five decades of independence, over 28 percent of the total population in India, 32 percent in Pakistan, 49 percent in Bangladesh, 30 percent in Nepal, and 25 percent in Sri Lanka live below the poverty line. More than 52 percent Indians, 74 percent Pakistanis, 82 percent Bangladeshis, 68 percent Nepalis, and 41 percent Sri Lankans survive on less than two dollars per day. In these countries, infant mortality rates are among the highest in the world and life expectancy at birth is just 63 years on average. Almost 50 percent of children under five suffer from malnutrition. In South Asia, the incomes and consumption levels are highly skewed, with the rich enjoying a disproportionate amount of resources. As summarized in Table 3.2, other social statistics such as literacy rates (except for Sri Lanka), availability of doctors and medicines, drinking water, and other sanitary levels also indicate the widespread existence of poverty in South Asia. All South Asian countries have experienced high rates of population growth during the past four decades. While the population density at the global level is about 49 persons per square kilometer, it is 1,069 in Bangladesh, 300 in Sri Lanka, 363 in India, 186 in Nepal, and 197 in Pakistan (World Bank World Development Report 2006). With an annual average growth rate of little less than 2 percent, the population in the region is likely to account for almost a quarter of the world’s population by 2010. The rapid increase in population during the past decades has led to an adverse dependency ratio in the South Asian countries. The ratio of population in the dependent age group (between 0–14 and 60 years and above) is 95.4 percent in Bangladesh, 90.1 percent in Pakistan, and 82.7 percent in Nepal, in comparison with 64.7 percent globally and only 11.7 percent in the United States. While the economies of the East Asian newly industrializing countries (NICs) (Hong Kong, Singapore, South Korea, and Taiwan) grew annually at an average of 9.0 percent and the ASEAN-4 (Indonesia, Malaysia, Philippines, and Thailand) at 7.0 percent, the South Asian countries achieved a modest annual growth rate of 4.6 percent during the past three decades (World Bank World Development Report 1991: 39). Both the industrial growth rates and the agricultural production of the South Asian countries remained low during the 1980s, in comparison with East Asia and ASEAN countries (World Bank World Development Report 1991: 38, 41). The slow growth rate in South Asian economy can be attributed to the import-substitution development strategy of these countries during the 1970s and 1980s. The increasing debt-burden of all the countries, which has further contributed to the slow growth of economy, certainly is a serious obstacle to human development in the region. Dualism and uneven economic development have been the dominant feature

1,069 2.1 63 56 0.3 49.8 82.8 48 31 50 27 55

231 2.2 54 113 0.37 – –

1980

India

363 1.7 63 62 0.6 28.6 52.4 – 48 73

2004

■

7 37

102 2.1 48 133 0.03 – –

1980

Nepal

186 1.8 62 59 0.2 30.9 68.5 48 35 63

2004

■

14 40

107 2.8 55 105 0.29 – –

1980

Pakistan

197 2.1 65 80 0.7 32.6 73.6 38 35 62

2004

■

79 91

226 1.3 68 35 0.14 – –

1980

2004 300 1.0 74 12 0.5 25 41.6 30 89 92

Sri Lanka

– 9.0 – 8.9 – 6.0 – 9.3 – 8.3 – 75 – 86 – 84 – 90 – 78 – 48 – 30 – 27 – 54 – 91 – 0.1 – –0.4 – 1.6 – 1.7 – 1.2 1,281 1,404 2,192 691 163 427 1,183 1,421 390 519 0.05 0.8 0.04 0.8 0.02 0.0 0.27 1.2 1.07 1.2 0.364 0.520 0.438 0.602 0.333 0.526 0.386 0.527 0.649 0.751

17 40

656 2.5 49 129 0.12 – –

2004

■

Notes a Negative numbers indicate increase in forest area. b Human Development Index Report, 2005 (2003 and 1980 trend data given).

Sources: World Bank, World Development Indicators 2006; UNDP Human Development Report, 2006.

Population density (people per square km) Average annual population growth rate (%) Life expectancy at birth (years), 2004 Infant mortality rate (per 1,000 live births) Physicians per 1,000 Population below the poverty line (national %) Population per capita income (less than $2 a day) (%) Malnutrition, in children under age 5 (%) Female adult literacy rate (% ages 15 and older) Male adult literacy rate (% ages 15 and older) Income Distribution (share of poorest quintile in national consumption or income %) Access to improved water source (% of population), 2002 Access to improved sanitation facility, 2002 Deforestation (average annual % of total land mass)a Official development assistance ($ millions) Foreign direct investment, net inflows (% of GDP) Human Development Index (HDI) – World Rankingb (2003)

1980

Bangladesh

Table 3.2 Socio-economic profile of SAARC member countries

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of South Asian economies. Vast disparities exist between different regions and different strata of population in the same region in South Asia. The metropolises of South Asian countries have more economic, cultural, and social linkages with the industrialized world than with their own hinterlands. “Enclaves” of modern industries and urban living are found in all countries of South Asia. Regional imbalances are also common features of South Asian countries. The western states of India are more developed than the eastern states of Bihar, Bengal, and Orissa. The per capita incomes in Punjab, Maharashtra, and Gujarat are much higher than in the three eastern states. The northeastern states of Assam, Manipur, Tripura, Nagaland, and Meghalaya have almost no industries, and their per capita incomes are far below the national average. In Pakistan, Punjab is far more prosperous than Sind, Baluchistan, and North West Frontier Province. While Karachi and Lahore have been extensively industrialized and commercialized, the rest of the country suffers from lack of industrialization. The capital cities, Dhaka in Bangladesh and Kathmandu in Nepal, are qualitatively different from the rest of the country. Such regional imbalances often contribute to social and political tensions in South Asian countries. South Asia has an integrated environment. Three major rivers and their tributaries – Ganges, Indus, and Brahmaputra – flow through India, Pakistan, Bangladesh, Nepal, and Bhutan. Majority of South Asian countries share the Himalayan ecosystem, and all of these countries share common ecological cycles. The rapid increase in population has put enormous pressure on this ecosystem. In recent years, there has been an increase in natural disasters in South Asia, bringing untold miseries to millions of people. The increase in the frequency of natural disasters in South Asian region are due to the break down of the Himalayan ecosystem caused by extensive deforestation. Unless all the countries in South Asia make collective efforts to protect the ecosystem, environmental disasters are likely to continue. In recent decades, there has been an increase in ethnic polarization and social conflicts in South Asia. The Tamil militancy and Sinhalese violence in Sri Lanka, terrorist activities in Kashmir and northeast regions in India, antimohajir violence in Karachi, tensions in Sind and Baluchistan, and, above all, communal violence in India, with some spill over effect in Pakistan, and Bangladesh have adversely affected the interstate relationships in South Asia. As discussed in detail in Chapter 5, in all the states of South Asia, there are ethnic groups who have close relatives in the neighboring states. This explains how ethnic conflicts in one country affect ethnic politics of its neighbor. At least three factors can be identified that have contributed significantly to the increasing ethnic violence in South Asia: large-scale unemployment resulting from the slow growth of economy and population explosion; uneven development in each country, which has led some ethnic and linguistic groups to believe that they have been marginalized from the process of development and denied the benefits of economic growth; and gradual erosion of credibility of the state and other political and legal institutions. A combination of populist and repressive policies of South Asian ruling elites have alienated some ethnic

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groups and contributed to growing social rifts and violence in South Asian societies. Given the shared characteristics of the South Asian societies and similar problems facing the governments of these countries, it is reasonable to argue that some sort of collective efforts would have been mutually beneficial to address the nation-building issues in South Asia. But, instead, political leaders of these countries drifted away from each other because of their insecurity and fear of India’s domination. Since independence, the political leaders of South Asian countries have actively sought external assistance to offset the power of India. The intense rivalry between the two principal states in South Asia – India and Pakistan – has a profound impact on the nature of interaction among South Asian countries. In fact, it is fair to say that the subcontinental rivalry between India and Pakistan has shaped the most consequential relationship in South Asia.

The influence of history History has deeply influenced the interrelationship of the South Asian countries. With a five millennia old heritage, South Asian history is complex and open to many interpretations. For the purpose of this chapter, however, some major historical developments with a direct bearing on the shaping of interstate relations in South Asia are briefly discussed here. From the beginning of the Second millennium BC, periodic migrations of tribal communities from Afghanistan and Central Asia to the fertile plains of the northern part of the Indian subcontinent contributed significantly to the region’s emerging socioeconomic structure. The South Asian societies grew constantly with the absorption of new kinds of social organizations and methods of economic production introduced by the migrants. Gradually, with the settling down of the agrarian communities across the plains of the Indus and the Ganges, different types of local polities emerged in the region. The local polities were governed by clans of warrior elites who controlled rights over land and appropriated the agricultural surplus. Subsequently, social conflicts and warfare between the local polities led to the formation of regional states by the middle of the First millennium BC. Either a chieftain or a dominant kinship group controlled the power structure of the local polities and the regional states. Both monarchical and republican systems of administration were prevalent during this period. With the passage of time, the monarchical system became dominant form of macro-political organization. At the microlevel, however, different communities and tribal groups continued to exercise a substantial measure of self-rule through popular assemblies known as sabha and more select gatherings known as samiti (Bose and Jalal 1998: 15). By the Third century BC (322 BC), a few years after Alexander the Great’s brief foray into northwestern India, a subcontinental polity was established for the first time in South Asia under the Hindu king Chandragupta Maurya. The Maurya empire achieved a far-flung reach under the reign of Chandragupta Maurya’s grandson, Ashoka (268–231 BC), who expanded the empire beyond Southeast Asia. Under Emperor Ashoka’s patronage, Buddhism spread to East

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and Southeast Asia, Central Asia, and Ceylon. During their rule, the Maurya kings developed a centralized bureaucracy and an intricate network of spies and informants to maintain domination over their far-flung empire. As Romila Thapar (1966: 91) observes, a high degree of central control over revenue was necessary to support a vast army or subsidize imperial enterprises. The nature of Indian statecraft, political and social organization under the Mauryan empire are discussed in Kautilya’s Arthashastra, which literally means “science of wealth” but reads like a manual for the kings in the same way as Machiavelli’s Prince. The Arthashastra, written about the same time as Thucydides’s The Peloponnesian Wars and Sun Tzu’s Art of War, is no longer regarded as a unitary text by historians of Ancient India. It is, however, an influential, entirely indigenous political text, comparable to the writings of Aristotle and Plato (Schwartzberg 1992: 254–261; Cohen 2001: 10). It offers many important insights on the doctrine and practice of Mauryan kings’ foreign policies. One of the important foreign policy doctrines of Mauryan empire as described in Kautilya’s Arthashastra is based on the mandala, which literally means a circle or ring. According to this doctrine, a state is surrounded by a circle or ring of 12 neighbors: some allies, some enemies, and some neutrals. In this mandala of existence, a state’s immediate neighbors are likely to be the enemy; beyond that ring are a number of potential allies (who are the enemy’s enemy) and so forth. Kautilya describes a range of six types of foreign policy options for a ruler based on this circular arrangements of states: agreement with pledges (peace), offensive operations (war), threats to the enemy, indifference (neutrality), subordination within an alliance, and “duplicity,” or the dual policy, that is, forming an alliance with one power while making war against another. An underlying assumption of the mandala doctrine is the justification of military strength of a state to achieve balance of power in a regional system. These principles of statecraft are comparable to the modern-day realists’ architecture of the international system based on the military capability of the sovereign states and balance of power.2 The Mauryan Empire disintegrated soon after the death of Ashoka. With the disintegration of this far-flung empire, the Indian subcontinent experienced establishment of many autonomous regional kingdoms – the Shaka and Kushana kingdoms in western and northern India are among the most notable ones – from c.200 BC to c. AD 300. During these five centuries, India enjoyed a good deal of economic prosperity and cultural glory with thriving coastal trade with Southeast Asian region and long-distance trade with the Roman empire. Historians have noted Indian cultural influence in countries like modern-day Thailand and Kampuchea during this period (Bose and Jalal 1998: 18–19). The process of empire building was renewed by the Gupta dynasty (represented by well-known emperors like Chandragupta I, Samudragupta, and Chandragupta II) from AD 320 to the early decades of the sixth century. The Gupta empire was not as centralized as their Maurya predecessors. Nonetheless, the

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Gupta reign witnessed comparable political security and economic prosperity. Described as the “golden era” of Hinduism, the Gupta period produced some of the best-known literary, scientific, and cultural works. This period was represented by one of the greatest literally figures Kalidasa – known for his famous play Shankutala and poem Meghaduta (The Cloud Messenger) – and a great mathematician and astronomer Aryabhatta – known for his remarkably accurate calculations of the length of the solar year. From the early sixth century onward, the Gupta empire started crumbling down under a number of Hun invasions. Although briefly reversed during the reign of Harshavardhana, the founder of another short-lived empire in northern India between AD 606 and 647, the trend toward imperial disintegration continued in India until the establishment of the Mughal empire in 1526. During this period, many powerful regional kingdoms emerged in India. The most famous of these kingdoms was the Chola kingdom in southern India from the tenth to the twelfth century AD. Near the end of the tenth century, Chola king Rajaraja I conquered Sri Lanka while his son Rajendra I made military forays into the north during 1022–23 and Southeast Asia couple of years later. In 1026, he defeated the forces of the great South East Asian empire Srivijay and established deep economic and cultural exchange between southern India and Southeast Asia. In the early eighth century, Muslims came to India’s Sind via the Arabian Sea and later to the Malabar coast in the South. Fresh migrations from West and Central Asia led to the development of new technologies of warfare, political organization, economic production, and, above all, a new faith, Islam, which had a far-reaching impact on the South Asian region. There are two schools of thought among historians of medieval India about the impact of Islam on the process of political, social, cultural, and economic transformation in the subcontinent. While the first school of thought provides a popular narrative of Indian history supported by most Hindu nationalists, the second school of thought provides a more dispassionate view of the subcontinent’s medieval history under Mughal rule. According to the first school, Islam is a religion of violence and Muslims are generally intolerant of other faiths. This view is supported by the series of military conquests, lootings, attack on the Brahmin-dominated Hindu social order, destruction of Hindu temples – most notably, the destruction Somnath temple in the Indian state of Gujrat by Mahmud of Ghazni during a series of raids between 997 and 1030 – and religious conversions undertaken by early Muslim invaders and rulers. Writing in the early eleventh century, the Central Asian scholar Alberuni provided one of the most vivid accounts of these conquests: Mahmud of Ghazni utterly ruined the prosperity of the country, and performed there wonderful exploits, by which the Hindus became like atoms of dust scattered in all directions, and like a tale of old in the mouth of the people. Their scattered remains cherish, of course, the most inveterate aversions towards all Muslims.3

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On the other hand, the second school of thought based on recent research on the spread of Islam in the subcontinent offers several important insights. First, the historical interpretation of a monolithic Islamic community in India is challenged. Instead, the research focuses on the great variety of Muslims – Turks, Mongols, Persians, Arabs, and Afghans – who came to India motivated less by religious zeal than by political and economic objectives. Second, the research questions any general model of Muslim conversions in the subcontinent and instead reveals cultural and economic regional specificities to explain conversions of Hindus into Muslims (Eaton 2002: 46–56). Finally, the research shifts the focus from an Islamic religious identity to an Indo-Islamic historical identity. It brings attention to the issues of Indo-Islamic accommodation at various levels of society and culture and the eventual emergence of the Indian subcontinent as the hub of an Indian ocean world with “a distinctive historical identity that stretched from the Mediterranean to the Indonesian archipelago” (Bose and Jalal 1998: 26). By 1290, nearly all of India came under the domination of Muslim rulers. After two and a half centuries of internecine war among Muslim, Hindu, and Sikh rulers, the Mughal empire was established in the early sixteenth century. Most historians agree that the Mughal emperor Aurangzeb’s brutal treatment of his subjects and his several attempts to extend his control to South India led to a crisis and weakening of Mughal empire. After his death in 1707, the Mughal empire started to decline. The empire lasted until 1858, when the British finally brought an end to it. British domination in India started in the 1750s beginning with the British conquest of Bengal led by the East India Company. The company, which was a private company chartered by the British Crown, developed a civil and military administration throughout most of the subcontinent well before 1858, when India formally became a colony. The dual pretext of Company rule and Mughal sovereignty came to an end and the British Raj (rule) in India officially commenced following the sepoy (sipahi in Urdu which means soldier) mutiny of 1857.4 Politically, the British raj established a unified administrative structure by setting up strong bureaucratic and military institutions for effective governance in India. Although the British raj sought no mass conversions or state-sponsored religion, its cultural penetration – through the English language and Western education – was as deep and lasting as the Mughals. Economically, from 1858 to 1914, Britain is said to have derived maximum strategic and economic benefits from its prize colonial possession – India is often described as the jewel in the crown of the empire. Summing up Britain’s strategic colonial advantage during this period, Bose and Jalal (1998: 97) aptly observes: India was being fashioned into a colony not only to play a critical role in the international system of payments of the capitalist world economy for the sustenance of its hegemonic core, but was also indispensable in the strategic defense of that hegemony. . . . India’s economy was twisted to fit a classical colonial pattern of importing manufactured goods from the metropolis and

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From 1914 onward, however, the British rule had to deal with a variety of Indian independence struggles led by moderate nationalists, militant nationalists, and radical revolutionaries. The most successfully organized freedom struggle was led by Mohandas Karamchand Gandhi (popularly referred to as Mahatma and Bapu or Father of the Nation) that eventually resulted in India’s independence and partition in August of 1947. There is a rich polemic literature on the partition of the Indian subcontinent. For Indian nationalist historians, Muslims’ demands for a separate Pakistan arose mainly in the post-1919 period when the British tried to divide the two communities to rule them. For another group of secular historians, in addition to the British machination, the failure of the Indian National Congress to accommodate the Muslim League demands for autonomous provinces also contributed to the demand for a separate homeland for Muslims. For many Pakistani historians, however, the idea of a separate Pakistan was rooted in the British victory in 1857 and their subsequent preferential policies toward Hindus. By favoring Hindus in education, administration, and economic spheres, the British alienated Muslims culturally, economically, and politically. The British introduction of democracy and parliamentary elections, according to many Muslim leaders, was meant to perpetuate Hindu domination and the minority status of Muslims in a Hindu-majority Indian state. The fear of Hindu domination in the political, economic, and sociocultural spheres was one of the root causes that drove early Muslim leadership to demand for a separate status for India’s Muslims. The idea of a separate Muslim nation can be traced back to the thinking of the leading jurist and educator Sir Saiyid Ahmad Khan (1817–98), who vigorously argued for the recognition of Indian Muslims as a separate nation and their equal treatment with the Hindu nation in the distribution of power and patronage. However, the actual territorial description of a separate Muslim state was first articulated in the 1930s by Choudhary Rahamat Ali, a student in Cambridge. Inspired by Saiyid Ahmad Khan’s thinking and later Muhammad Iqbal’s demand for a separate Muslim nation in the December 1930 session of All-India Muslim League, Rahmat Ali outlined a plan for a federation of several Muslim states, which he named “Pakistan” – means “land of the pure” – by drawing letters from the provinces with a Muslim majority. According to this scheme, “P” stood for Punjab, “A” for Afghan, “K” for Kashmir, “S” for Sind, and “tan” for Baluchstan. Although dismissed initially, Iqbal and Rahamat Ali’s idea gained momentum subsequently and came to be supplemented by a plethora of Muslim schemes most of which were predicated on Mulims being a nation and not a minority. By the late 1930s, All-India Muslim League formally demanded for an independent nation for Indian Muslims under the leadership of Mohammaed Ali Jinnah, referred to as the Quaid-i-Azam (or great leader) in Pakistan

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today. In a historic address at the annual session of the All-India Muslim League at Lahore in March 1940, Jinnah articulated the logic of an independent Pakistan based on a two-nation theory: The Hindus and Muslims belong to two different religious philosophies, social customs and literatures . . . they belong to two different civilizations which are based mainly on conflicting ideas and conceptions . . .. It is quite clear that Hindus and Musalmans derive their inspiration from different sources of history. They have different epics, their heroes are different, and they have different episodes. Very often the hero of one is a foe of the other, and their victories and defeats overlap.5 Jinnah’s two-nation theory essentially served as the basis of a political movement by All-India Muslim League for an independent Pakistan. The protracted debate following the Cabinet Mission Plan of 1946 for a three-tiered all-India federation between the liberal leaders of the Indian National Congress led by Jawaharlal Nehru and the Muslim League under Jinnah intensified bitterness and fear between the Muslims and Hindus. Competing political leaders of the two communities did little to address these fears and instead played on the fears and psychological anxieties of Muslim minority and Hindu majority to develop loyal political following. The brutalities and savageries of the pre-partition period, which were perpetrated by the frenzied members of both communities, were largely the result of the fears and anxieties of Muslim minority of Hindu domination and the anxieties of Hindu majority of Islamic intolerance and insensitivities to Hindu social order. Such fears and anxieties, which were partly aided by the construction of mutually hostile political and historical narratives by the leaders, continue to profoundly influence the post-independence relationships between India and Pakistan.6 Although historians continue to debate about the impact of partition on the psyche of the people, the subcontinent has never really recovered from the colossal human tragedy and the nightmarish experience of human resettlement of Hindus, Muslims, and Sikhs during the partition.7

Structure of the regional system: India and Pakistan – unequal rivals In addition to historical tension, the rivalry between India and Pakistan is also a reflection of their structural problems. Separated by a historically arbitrary border and with no natural frontiers and buffer state between them to check their rivalry, India and Pakistan have continued their rivalry unchecked in the postindependence period. The relative size of India and Pakistan also contributes to their rivalry. Since both the states are not nearly equal in size, leaders have not attached any strategic importance to reciprocity in their relationship. Yet, Pakistan before 1971 was not substantially smaller to accept India’s domination more readily. Instead, unlike other smaller states, Pakistan remains India’s principal rival for influence within South Asia and regularly stakes its claim to play

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a larger or even coequal leadership role in South Asian regional system much to the disliking of India. The intense rivalry between India and Pakistan can also be explained, albeit not entirely, by the useful framework of the security dilemma (Jervis 1988: 167–214; Buzan 1983: 106). The security dilemma, which is based on an action–reaction effect within a region, is a negative consequence of anarchy in the international system. The security dilemma paradigm suggests that steps taken by a state to reduce its own anxieties about its neighbor, in turn, contributes to an intensification of that neighbor’s sense of insecurity. As Howard Wriggins et al. (1992: 11) observe: “Because the margin of safety for one state is often seen as the margin of danger for its neighbor, these can provoke defensive efforts that only reinforce the sense of threat.” Thus, security dilemma is often considered a prime cause of arms race, in which neighboring states waste large sums of money on acquiring mutually threatening weapons that do not ultimately provide security. Since their independence, both India and Pakistan have engaged in a continuously unhealthy arms competition that has ultimately reinforced their insecurity against each other. The acute rivalry between India and Pakistan in South Asia has led to what Barry Buzan describes as security complex, in which the primary security concerns of India and Pakistan are so closely linked that their national security problems cannot be considered without one another (Buzan and Rizvi 1986: 8). Other smaller states’ securities in South Asia are bound to this security complex for geographical reason. Buzan has further added amity/enmity axis to explain the pattern of security relationships among South Asian countries (Buzan and Rizvi 1986: 9). According to this view, security relationships and patterns of alignments among South Asian countries are determined not only by considerations of relative strength of the states or the distribution of power, as balance of power theory suggests, but also by the legacy of colonial rule and such domestic issues as religious and ethnic conflicts and other ideological perceptions of individuals and leaders. The rivalry between India and Pakistan is built around this amity/enmity axis. Reasons for interstate hostility between India and Pakistan include historic rivalries between Hindus and Muslims, past conquests of one group over the other, the bitter memory of partition, territorial disputes in Kashmir, mutually antagonistic constitutional principles such as India’s secular as opposed to Pakistan’s Islamic foundation of the state, and the memory of three major wars that the two countries have fought since independence. In addition, structural asymmetry intensifies the security dilemma between the two states. Despite great disparity between India and Pakistan in terms of population, size, economy, and military capability, Pakistan has constantly refused to accept India’s domination in the region. Pakistan has sought to achieve a balance of power in the subcontinent basically through two means. First, it has successfully secured military and economic assistance of foreign powers including the United States, China, and Islamic countries in the Gulf and the Middle East. While the assistance from

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Islamic countries is mainly economic, the assistance from China and the United States is both economic and military. Pakistan’s strategic position as a frontline state in America’s struggle to contain communism in the 1960s and after Soviet Union invasion in Afghanistan in 1979, and the US fight against terrorism in Afghanistan after 2001, has mainly led to massive US military and economic assistance to the country. Given the Sino-Soviet and Sino-Indian rivalry from the late 1950s to the end of the Cold War period, China has also joined the United States in continuing its support for Pakistan. The cumulative effect has been the development and modernization of Pakistan’s military that is able to challenge India. Although Pakistan has benefited substantially from military and economic assistance from the United States and China, Pakistani policymakers recognize the vulnerabilities of relying exclusively on foreign powers. Past experience has shown that the US support to Pakistan is unreliable. The support is only a strategic alliance and can shift with the change of geostrategic situation. Although China can be counted as a trusted ally, it cannot match the sophistication of the US defense technology. Moreover, Pakistan also knows well that no matter how much the country spends on defense, it will not be able to match India in terms of conventional weapons and military personnel. Thus, acquisition of nuclear bomb remained a critical policy option for Pakistan to achieve a strategic military parity with India. After the 1971 military defeat, Pakistani policymakers sought to develop nuclear weapons with a sense of urgency to achieve the balance of power with India. By acquiring nuclear bomb in May 1998, following India’s nuclear test, Pakistan seems to have met its objective of improving balance of power with India. As discussed in Chapter 5, the development of nuclear weapons by both India and Pakistan, however, does not guarantee lasting peace or growth of cooperative activities between these two principal rivals in South Asia. Kashmir dispute The territorial disputes over Kashmir remain the most divisive issue in the subcontinent and a major source of bitterness between India and Pakistan. Both the countries have fought three wars – 1948, 1965, and 1999 – over the Kashmir issue. The roots of the problem in Kashmir can be traced to the partition of the subcontinent in 1947. The last viceroy Lord Mountbatten passed an edict that required the division of the states of British India on the basis of demographics, i.e. Muslim-majority states and areas would go to Pakistan and Hindu-majority states would go to India. The “princely states” which enjoyed nominal independence during the British rule were given the choice to join either India or Pakistan. Mountbatten made it clear that the decision of these princely states should be based on considerations of geographic location and demographic features. Based on this principle of partition, 500 odd states were integrated without any problem. However, in three cases – Junagadh, Jodhpur, and Hyderabad – where rulers decided either to remain independent or to accede to Pakistan in violation

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of the principle of partition, India used force to integrate them with the Indian union. The loss of both Junagadh and Hyderabad, where the rulers were Muslim but the population was Hindu, increased Pakistani leaders’ distrust toward Indian leaders’ motive. The situation in the princely state of Kashmir was exactly the opposite. The state had a Hindu ruler, Maharaja Hari Singh, and more than 75 percent of Muslim population. Threatened by a tribal invasion from Pakistan’s North West Frontier Province, allegedly supported by Pakistani army, Maharaja Hari Singh signed an Instrument of Accession to India in October 1947 on the advice of V.P. Menon, the Government of India’s secretary for the Princely States. After the signing of the Instrument of Accession, Nehru, the then Indian Prime Minister, agreed to airlift Indian troops to stop the onslaught. By the time the first Indo-Pakistan war ended with a cease-fire resolution by the United Nations in January 1949, some two-thirds of Kashmir was under Indian control and the remaining one-third under Pakistani control. Between 1948 and 1965, there had been several multilateral efforts mainly led by the United Nations to resolve the Kashmir issue. But, these efforts had failed because of the intransigence of both Indian and Pakistani leaders. For Pakistani leaders, the claim to Kashmir is irredentist, a moral issue because it is linked with Pakistan’s identity as the homeland of Muslims of South Asia. Pakistan’s former Prime Minister, Zulfiquar Ali Bhutto, in his The Myth of Independence (1969) captures this sentiment well: If a Muslim majority can remain a part of India, then the raison d’etre of Pakistan collapses. These are the reasons why India, to continue her domination of Jammu and Kashmir, defies international opinion and violates her pledges. For the same reason, Pakistan must unremittingly continue her struggle for the right of self-determination of this subject people. It would be fatal, if in sheer exhaustion or out of intimidation, Pakistan were to abandon the struggle, and a bad compromise would be tantamount to abandonment; which might, in turn, lead to the collapse of Pakistan.8 Thus, throughout 1950s and 1960s, Pakistani leaders remained unreconciled to the disputed status of Kashmir and pursued multilateral, diplomatic, and military strategies to wrest Kashmir from India. For Indian leaders, however, conceding to Pakistan’s demand over Kashmir would weaken India’s secular structure and lead to other secessionist demands. Not surprisingly, Indian leaders ignored Pakistan’s demands and tightened India’s grip by passing an ordinance in Indian Parliament in 1964 to extend Articles 356 and 357 to Jammu and Kashmir. This ordinance enabled the central government at New Delhi to promulgate President’s rule in the state during the crisis, essentially eroding Kashmir’s special autonomous status provided under Article 370. Needless to say, from Pakistan’ perspective, such actions were interpreted as India’s efforts to integrate Kashmir more formally with Indian union and thus a blow to Pakistan’s irredentist claim on the state.

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After her humiliating defeat in the Sino-Indian border war of 1962, India embarked upon a substantial military modernization program, by securing military aid from Britain, the Soviet Union, and the United States. As expected, Indian military planners deployed few infantry divisions along the Sino-Indian border. But, surprisingly for Pakistan, India deployed majority of its infantry divisions in Kashmir and along the western borders with Pakistan. Such arms buildup by India generated considerable anxiety among Pakistani decisionmaking elites. For them, any further military buildup by India in Kashmir and along the India–Pakistan border would close Pakistan’s “last window of opportunity” (Rizvi 1986: 108; Ganguly 2001: 31) to seize Kashmir through military offensive. In addition, the following factors explain Pakistan’s decision to launch a military attack in Kashmir and on India in 1965. First, a lack of Indian counterattack against a limited Pakistani military campaign in early 1965 along the Rann of Kutch (near the western Indian state of Gujrat) disputed area and India’s ready willingness to accept a third party intervention to resolve this issue convinced the Pakistani leadership about India’s military weakness and an apparent unwillingness to engage in any major military conflict with Pakistan. Second, after an eight-day visit to China in March 1965, President Ayub Khan and Foreign Minister Zulfiqar Ali Bhutto were convinced of China’s military assistance in the wake of a war with India. Third, following India’s military defeat in the Sino-Indian war in 1962 and the subsequent death of Indian Prime Minister Jawaharlal Nehru in 1964, India’s domestic politics were passing through considerable political turbulence. For outsiders, India’s domestic politics at this time seemed to be in disarray marked by an intra-party leadership squabble in the Congress party leading to a compromise selection of Lal Bahadur Shastri as the next prime minister, the political defeat of Congress party in a number of states, Tamil agitation for an autonomous Dravidian state, and communal riots in most part of the country. In such a situation, India’s military resolve to fight against a Pakistani attack was considered weak by Pakistani leaders. Finally, following the theft of a holy relic – claimed to be the sacred hair of the Prophet Muhammed – a widespread and violent agitation by Kashmir Muslims against India erupted in December 1963. This was construed by Pakistani leaders as a popular support of Kashmir Muslims for Pakistan. On the basis of this belief, Pakistani leaders planned Operation Gibralatar to recover Kashmir in May 1965. According to this plan, specially trained Pakistani troops would infiltrate in small numbers into Indiaoccupied Kashmir area and help spread the armed rebellion against Indian authorities. In the wake of Indian authority’s measure of suppressing the rebellion, Pakistani troops would launch a military attack on Indian forces. Pakistani leaders reasoned that this would be a localized war in Kashmir and that India would not cross the disputed cease-fire line (CFL) in order not to antagonize world opinion. At the same time, the limited localized war would bring international attention to the Kashmir dispute leading India to accept a Rann of Kutch type of agreement with international mediation. These Pakistani assumptions proved wrong. First, contrary to Pakistani

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leaders’ belief, the rebellion in Kashmir was not pro-Pakistan. This became clear when Kashmiri Muslims apprehended Pakistani commandos after they crossed the CFL in Kashmir in August 1965 and handed them over to Indian authorities. Second, again contrary to Pakistani belief, Indian troops actually crossed the Indo-Pakistan international boundary in their counterattack, forcing Pakistani troops to defend their own territory. A full-fledged war between India and Pakistan broke out on September 5, 1965, and 15 days later, this war came to a halt with Soviet Union initiated UN cease-fire resolution on September 20, 1965. The Soviet diplomacy for brokering peace between the two subcontinental rivals was based on a strategic calculation to expand Soviet influence in South Asia and limit China’s influence in Pakistan. On the invitation of Soviet Prime Minister Alexei Kosygin, Pakistani President Ayub Khan and Indian Prime Minister Lal Bahadur Shastri met at Tashkent to resolve their differences on January 4, 1966. The Tashkent meeting did not produce any substantial result so far as the resolution of the Kashmir issue was concerned. It merely restored the status quo ante over Kashmir. The Indo-Pakistan war in 1965 had at least two critical consequences for Pakistan. First, as the failure of Pakistan’s Operation Gibralator suggests, the antiIndia agitation of Kashmiri Muslims should not be interpreted as a movement for Kashmir’s merger with Pakistan. Second, and more critically for Pakistan, the 1965 war demonstrated Pakistan’s Kashmir fixation. Pakistan’s preoccupation with Kashmir led its leaders to neglect East Pakistan’s Bengali subnationalist movement, which gathered considerable momentum during and after the 1965 war. The 1971 Indo-Pakistan war While the Indo-Pakistani conflicts in 1948 and 1965 were initiated by Pakistan, the 1971 war was a result of India’s strategic initiative. However, the roots of the 1971 conflict can be found in the failure of Pakistani domestic politics since 1950s. There was widespread resentment among Bengalis of East Pakistan against the domination of Punjabis in Pakistan’s politics, military, and economy. The Bengalis of East Pakistan had always resented against the imposition of Urdu as the national language, inadequate representation of East Pakistanis in military and civil services, and a disproportionate allocation of foreign aid and domestic revenues to West Pakistan. In Pakistan’s first democratic election in October 1970, the Awami League under the leadership of Sheikh Mujibur Rahman won an absolute parliamentary majority. Emboldened by this victory, the Awami League demanded for the immediate implementation of its six-point program for autonomy. But, the military regime under General Yahya Khan refused to concede to these demands and instead launched a military invasion of East Pakistan to negate the popular mandate. A full-scale civil war erupted in March–April 1971 in East Pakistan in protest against this attack. Pakistani army resorted to large-scale atrocities against East Pakistani population (Bose and Jalal 1998: 219).

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The extreme brutality of the Pakistani army caused a massive influx of Bengali refugees into the eastern part of India (state of West Bengal). The number of East Pakistani refugees reached four million by the end of May in 1971 with about 60,000 refugees crossing the border per day (Sisson and Rose 1990: 152). Describing as humanitarian intervention, India provided massive logistics and sent its troops across its eastern border to join Mukti Bahini (liberation army) to fight against Pakistani army. Finally, in response to Pakistan’s preemptive air strikes against Indian air installations on December 3, India declared the war on December 5, 1971. On December 16, Dhaka fell and Bangladesh was born. India’s motivation to fight this war of 1971 was based on the following strategic objectives. The liberation of East Pakistan would undermine Pakistan’s two-nation theory; weaken Pakistan’s claims to Kashmir; and reduce Pakistan’s size so that she would not be able to challenge India’s predominance in the region. India’s decisive victory in the 1971 war essentially changed the political geography of the subcontinent. With the emergence of Bangladesh as an independent state, Pakistan experienced a substantial structural reduction in terms of losing half of its population and territory. Undoubtedly, India emerged as the dominant power in South Asia. Although analysts differ, it can be argued that the subsequent withdrawal of the United States from South Asia reflects a tacit recognition of this reality by the US policymakers. In 1972, India and Pakistan had signed the Simla Accord, according to which both the countries agreed to: 1 2

respect the Line of Control (LoC) as determined by the cease-fire agreement on December 17, 1971; resolve their disputes peacefully through bilateral negotiations or any other mutually acceptable means.

The agreement on the new LoC gave India control over the strategically significant areas of Tithwal and Kargil and thus made any future attempt by Pakistan to dislodge India from Kashmir extremely difficult (Mansingh 1984: 229). In nutshell, this agreement essentially froze the Kashmir dispute by making the Line of Actual Control (LAC) the de facto boundary between Indian and Pakistani parts of Kashmir (Hagerty 1998: 137). For India, Simla agreement supplanted the UN resolutions as a point of reference for the resolution of Kashmir dispute. For Pakistan, however, the Simla Agreement became just another means of resolving the dispute, but it did not replace the UN resolutions. The other agreement on the principle of “bilateralism” meant that both Pakistan and India would no longer seek the intervention of third parties to resolve a bilateral issue. Instead, they would seek to directly work with one another, making extraregional diplomacy irrelevant. Given India’s insistence on bilateral negotiations and opposition to external intervention on a South Asian regional issue, this provision of the Simla Agreement was a diplomatic triumph for India. Pakistan’s defeat and the emergence of Bangladesh as an independent state in 1971 challenged the basic assumptions of the two-nation theory. No longer,

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religion could be considered as the sole basis of state-building in South Asia. Other ethno-linguistic issues should also constitute as a foundation for statebuilding. In addition, Indian policymakers argued that the outcome of the 1971 war had considerably weakened Pakistan’s claim on Kashmir. Although Pakistan agreed for a pragmatic solution by soft-pedaling the Kashmir issue and accepting the LoC as existing on December 17, 1971 (Rizvi 1986: 118), it never really relinquished its moral claim on Kashmir. Further, to maintain Pakistan’s Islamic identity and to attract much-needed international support, President Bhutto turned to the oil-rich Islamic states of the Middle East by projecting the Pakistani state as not only a South Asian state but also a Southwest Asian state (Hagerty 1998: 77). The Bangladesh debacle intensified a national debate on the Pakistani security issues inside Pakistan. Given India’s overwhelming conventional military security, some Pakistani policymakers led by President Bhutto were convinced that the only way Pakistan could achieve strategic security parity with India was through a nuclear option. As discussed in Chapter 5, India’s 1974 nuclear test further increased Pakistan’s resolve to develop nuclear weapons. After a brief period of relative peace following the Simla Agreement, the Indo-Pakistan relations again ran into a rough patch in the 1980s. With the Soviet invasion of Afghanistan in December 1979, and the subsequent American involvement to fight against the Soviet occupation, South Asia’s security landscape changed dramatically. In 1981, the Reagan administration decided to provide a six-year, $3.2 billion economic and military aid to Pakistan, because of the country’s frontline status in the scheme of American defense strategy against soviet occupation in Afghanistan. This substantial economic and military aid enabled Pakistan’s new military ruler, President Zia-ul-Haq, who ousted President Bhutto in a military coup and later hanged him despite unfavorable international public opinion, to modernize Pakistani army. It also provided him with confidence to challenge India by exploiting her domestic weakness. Four important developments marked Indo-Pakistan relations in the 1980s. First, staking claims over the Siachen glacier, both India and Pakistan deployed troops in 1984 on the glacier.9 Throughout the 1980s and 1990s, the Siachen dispute remained one of the major bones of contention in Indian and Pakistani diplomacy (Khosa 1999: 195). Second, a major source of political conflict between India and Pakistan was each country’s alleged support for ethnic insurgencies on the other’s territory. In 1981, a Sikh insurgency led by the Akali Dal had begun in the Indian state of Punjab demanding more autonomy for the state and recognition of the city of Chandigarh as the capital of Punjab only as opposed to the current status of the city as the capital of both Punjab and the neighboring state of Haryana. The failure of negotiation between the Sikh leaders and Indira Gandhi government led the more extremist Sikh leaders to demand for Khalistan – an independent Sikh state. In June 1984, the Indian army launched Operation Bluestar, an assault on the sacred Golden Temple, where militant Sikh leaders had taken refuge. After three-day military siege and death of an estimated 1,000 people because of fighting between the army and the

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militants, the crisis came to an end. Subsequently, Prime Minister Indira Gandhi was assassinated by her two Sikh bodyguards in October 1984 leading to widespread riots between Hindus and Sikhs. An estimated 2,700 Sikhs were killed in Delhi’s worst violence since partition (Hagerty 1998: 95). Denying Indian government’s accusation of Pakistan’s support for the Sikh extremist movements in Punjab, Pakistani leaders launched a counter-allegation against Indian government’s role of inciting violence between Sindhis and other communities in Pakistan in the southern Pakistani province of Sindh. In the midst of this accusation and counteraccusation, a third significant development related to nuclear issues took place in 1985. By 1983, both the US intelligence report and the Indian intelligence suggested that Pakistan had developed nuclear weapon capabilities but not the nuclear bomb (Spector 1988: 127). There was a widespread speculation in South Asia and Washington that India had finalized a plan for an “Israeli-style” attack on Pakistan’s Kahuta nuclear facility to shut down the plant. However, laying the speculation to rest, both India and Pakistan announced an agreement in December 1985 not to attack each other’s nuclear facilities. Fourth, this relative goodwill in IndoPakistan relations in 1985 came to an end with a series of India’s largest ever military exercises, collectively known as Brasstacks, along its western border in Punjab during 1986–87. Although consistently denied by the Indian policymakers, Indian military movements during the Brasstacks crisis were largely an outgrowth of New Delhi’s anxiety about the instability in Punjab and its wider implications for the integrity of the country. In response to India’s military exercises, Pakistan moved its armed forces to the border leading to a “war-like” situation. Although the Brasstacks crisis subsequently subsided with an agreement between President Zia-ul-Haq and Prime Minister Rajiv Gandhi to pull back their troops to their normal positions by 1988, the crisis increased Islamabad’s determination to acquire nuclear weapons to achieve strategic military parity and nuclear deterrent vis-à-vis its larger neighbor. The Indo-Pakistani relations deteriorated further in the 1990s with the advent of three major crises – the 1990 Kashmir crisis; acquisition of nuclear weapon capability by both India and Pakistan in 1998; and the Kargil war between India and Pakistan in 1999. These three crises, which are discussed in Chapter 5, intensified the Indo-Pakistani rivalry. The rivalry between India and Pakistan is based on a deep-seated historical, structural, and ideological animosity and is thus unlikely to disappear soon. India’s secular ideology, the presence of the third largest Muslim population in the world, and the emergence of Bangladesh as an independent state with the help of India constantly challenge the “twonation theory” and the religious basis of the partition of the subcontinent, making the creation of the Pakistani state and its claim as the homeland for Muslims in South Asia questionable. In contrast, Pakistan’s determination to challenge India’s hegemony in South Asia and its continuing assertion as the homeland for South Asian Muslims are the primary sources of irritation for Indian leaders. The unresolved Kashmir dispute, over which India and Pakistan have fought three major wars, reflects this deep-seated animosity between India

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and Pakistan. Another indication of this animosity is the acquisition of nuclear bombs by Pakistan following India’s nuclear tests in 1998. While the acquisition of nuclear bombs by India is based on its strategic regional and global calculations, Pakistan’s acquisition of nuclear bomb was solely based on its objective of achieving a strategic balance of power and nuclear deterrence against India. The acquisition of nuclear bombs by both India and Pakistan, as discussed in Chapter 5, may have introduced a stability–instability paradox into the South Asian region. But, it has not led to and is unlikely to result in the elimination of rivalry between India and Pakistan in near future given their historically shaped animosity.

The other South Asian states and their relations with neighbors The relations among South Asian states are primarily shaped by the rivalry between India and Pakistan and divergent perceptions of each other. Indian policymakers consider South Asia as India’s legitimate sphere of influence and oppose any external intervention in South Asian affairs. Leaders of other smaller South Asian states, however, constantly worry about India’s predominance in the region and her influence and potential intervention in their domestic affairs. In nutshell, India is perceived by smaller states as a source of threat. Not surprisingly, the primary basis of foreign policy of the South Asian states, from the beginning, has been how to cope with India’s overwhelming power in ways that would not precipitate direct Indian intervention in their domestic affairs (Wriggins et al. 1992: 120). Several Indian actions in the past have contributed to this fear of South Asian leaders. India’s military intervention in the independence movement of Bangladesh in 1971, absorption of Sikkim into Indian Union in 1975, deployment of Indian troops to deal with Sri Lanka’s ethnic crisis in 1987, sending Indian troops to Maldives to foil a coup in 1988, and profound influence in Nepal’s domestic affairs are often interpreted by Indian neighbors as India’s willingness to exercise its military power to support its strategic objectives in South Asia. It is not surprising that India’s neighbors have pursued classic balancing policies by seeking the support of external powers and encouraging multilateral as opposed to bilateral engagements to deal with India. The following section explores this. Bangladesh After becoming independent in 1971, Bangladesh signed a Treaty of Friendship, Cooperation, and Peace with India for closer economic and political links. With her extreme poverty, limited natural resources, proneness to frequent floods and cyclones, absolute aid dependency, and limited industrial, scientific, and technological development, Bangladesh’s capacity to cope with the nation-building process was severely limited. Thus, Bangladesh had an enormous interest in developing strong bilateral economic and political cooperation with India. A

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generous flow of foreign aid and economic aid from India provided the necessary support for Bangladesh’s economic development. But soon, the flow of foreign aid dried up. There were resentment among Bangladeshi entrepreneurs and middle class against Indian economic domination. Demand for protectionism against Indian industrial goods grew in Bangladesh, contributing to economic and political tension between the two countries. The cancellation of three joint Indo-Bangladesh projects (i.e. urea fertilizer plant, sponge iron project, and cement plant) during 1973–75 provides evidence of such tension (Sobhan 1991: 44–45). More importantly, the Indo-Bangladesh relations deteriorated after the assassination of President Mujibur Rahman – whose government India had supported so actively – in a coup d’etat in 1975. One of the critical issues that adversely affected Bangladesh’s cordial relationship with India in the post-1975 period related to the conflict over the sharing of the Ganges water. In the early 1950s, India developed a plan to build the Farakka Barrage to divert the Ganges flow during the dry season into Bhagirathi–Hoogly river to flush out the silt from Kolkata port. With the completion of the construction of Farakka Dam, the plan became operational in April 1975. India’s diversion of Ganges water deprived Bangladesh of adequate supply of water needed for its downstream agriculture, fishery, and navigation. India’s unwillingness to negotiate an increase in the supply of water with the post–Mujibur Rahman military regime led by Ziaur Rahman intensified Bangladesh’s bitter feelings toward India. The main argument of Indian political leaders was that since 2,036 kilometers of the 2,177 kilometers of the Ganges flow through Indian territory, India as the upper riparian state is entitled to as much water as it requires (Mansingh 1984: 298). Such a legalistic argument by India was seen by Bangladesh as India’s insensitivity to the needs of Bangladesh. Capturing the emotional intensity of Bangladeshi feeling on this issue, some analysts observed that the Farakka by 1975 had become the “Kashmir of Bangladesh’s grievance against India” (Rizvi 1986: 135). Almost two decades later, and after several rounds of negotiations, India and Bangladesh signed a 30-year Treaty on Ganges water sharing in December 1996. While Indian leaders attempt to showcase the agreement as a model of bilateral cooperation to resolve bilateral issues, Bangladeshi political leaders do not consider this as the permanent solution. In addition, an Indian proposal to develop a mega project by linking all major rivers that flow through both India and Bangladesh (India and Bangladesh have some 54 rivers in common) has produced resentment in Bangladesh. There are several other irritants in Indo-Bangladesh relations. The Indian occupation of New Moor Island (known as South Talpatty to Bangladesh) near Sundarban in 1981 despite strong claim to it by Bangladesh convinced Bangladeshi leaders of India’s uncompromising attitudes on territorial issues. Another thorny issue that had generated increased tension in Indo-Bangladeshi relations was the flow of refugees across the border to India as a result of the tribal insurgency in the Chittagong Hill Tracts. Bangladesh blamed India for supporting the Chakma Shanti Bahini who were fighting the Bangladesh government for

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greater autonomy for the tribal people of the Chittagong Hill Tracts. India, in turn, blamed Bangladesh for supporting Mizo National Front rebels against Indian Union. India’s decision to erect a barbed wire along the Indo-Bangladesh border reflected the lack of goodwill between India and Bangladesh. India’s continuation of the deployment of its Border Security Force (BSF) along the IndoBangladeshi border to check the migration of Bangladeshi citizens to Indian eastern territory for economic reasons is seen in Bangladesh as India’s efforts to exercise undue influence in the domestic affairs of Bangladesh. The political realities of India and Bangladesh in the post-1990 period have made the leaders of these two countries less accommodative. Successive weak governments (defined in terms of narrow political base, coalitional nature of governments, and weak legislative control) in India since 1990s have contributed to a lack of willingness among the political leaders to take a bolder policy initiative on these politically sensitive issues. On the other hand, the existence of weak governments in Bangladesh in the post-1990 period offers only limited opportunities for the leaders to take any bold or innovative approach to resolve the bilateral problems with India. Instead, the Bangladeshi leaders seem to thrive by resorting to combative regional postures and scapegoating (blaming India for its intransigent attitudes). Except for India, Bangladesh has no outstanding disputes with any SAARC country. Bangladesh’s political and economic relations with Pakistan have improved after a brief disruption from 1971 to 1975. Throughout the 1980s, Pakistan accounted for almost 60 percent of Bangladesh’s exports to South Asia. There is still more scope to improve Bangladesh’s exports to Pakistan in such items as tea, newsprint, jute goods, and leather. In turn, Bangladesh can import, at a competitive price from Pakistan, such items as textiles, cement, light engineering goods, machinery, and railway rolling stock. The visit of Bangladesh Prime Minister Khaleda Zia to Pakistan in April 1995 and her cordial and highlevel political talks with Pakistani Prime Minister Benazir Bhutto revived trade cooperation between the two countries. In a bold move, President Pervez Musharraf offered a near-apology to Bangladeshis for the 1971 events during his visit to Bangladesh in 2002, the thirtieth anniversary of Bangaldesh’s separation from Pakistan (Cohen 2004: 77). During this visit, President Musharraf expressed his confidence that the bilateral relations between Pakistan and Bangladesh would improve further given their common religious and cultural heritage. Trade cooperation between the two countries can be restored soon because it is relatively easy for the entrepreneurs of both Pakistan and Bangladesh, who were either involved in interregional trade or had been located in the two countries prior to 1971, to renew and reestablish their contacts. The main motivation that drives both Pakistan and Bangladesh to come together is their shared concern about India. Bangladesh’s relations with India are shaped by the political and economic dilemma of a relatively smaller regional state and a strong proclivity to assert the separateness of its identity to counter India’s sociopolitical and sociocultural influence. Not surprisingly, Bangladesh has pursued a strategy of “demonstra-

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tive distancing” from India after 1975. Bangladesh’s assertion of its Islamic identity, closer links with Pakistan, Middle Eastern states, China, and the United States, and quest to play an active role in international forums are part of this strategy. Surrounded by India on three sides and having no common boundary with other South Asian states (India-locked as Bangladeshi observers like to put it), Bangladesh’s ability to counter Indian domination is extremely limited. Thus, the Bangladeshi leaders prefer and insist on multilateral ties with some hopes of using the collective strength of smaller states to counter Indian hegemony. Bangladesh’s initiatives to create a multilateral regional forum, SAARC, in the late 1970s, as discussed in the next chapter, are based on this logic. At the economic level, the Bangladeshi leaders know that India has the capability to meet Bangladesh’s need for manufactured goods, such as steel, chemicals, light engineering goods, capital goods, coal, and limestone. At the same time, India can increase its imports substantially in such areas as urea, sponge iron, semi-processed leather, and newsprint from Bangladesh to reduce the latter’s trade deficit with India. Besides, both India and Bangladesh can agree to set up joint ventures to improve the latter’s export base and the mutual capacity of the two countries. But a lack of political will between the leaders of these two countries has restricted the trade on mutually beneficial items and prevented the prospect of setting up industries with Indian capital and technology in Bangladesh. Given the current trend of a limited flow of official development assistance (ODA) from developed economies to the South Asian countries in the face of competition from countries in Eastern Europe and the Central Asian republics, Bangladesh’s limited structural abilities, and the hesitation of the World Bank and the International Monetary Fund to provide continuously concessional loans, Bangladesh’s need to improve economic cooperation with India and other countries in South Asia has increased in recent years. Of late, India has shown considerable interest in expanding economic cooperation with Bangladesh. But given the Bangladeshi leaders’ apprehensions and political sensitivity to continuing dependence on and potential domination by India, closer economic cooperation with India appears to be more feasible under the cover of multilateral arrangements, such as SAARC programs, rather than bilateral arrangements with India. Nepal The relations between Nepal and India have been determined by geography, history, and culture. Geographically, Nepal is landlocked between India and China. Both India and Nepal share the Gangetic plain, and there are no natural frontiers between the two countries. Nepal covers nearly 500 miles of India’s northern border, and three Indian states – Uttar Pradesh, Bihar, and West Bengal – are located on the west, south, and east side of Nepal. Nepal shares nearly a 1,000-mile border with Tibet to its north, which is critical to India’s security interest vis-à-vis China. Therefore, India has always sought to maintain a close strategic relationship with Nepal.

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Nepal has close ethnic and cultural links with India. About 90 percent of Nepal’s population are Hindus, and the Hindu caste system is widely prevalent there. There are over a million Indian settlers in the fertile Terai region of Nepal. Over five million Nepalese live and work in India and over a 100,000 seasonal workers come to India every year. Although Nepali is the official language of Nepal, Hindi is widely used in the country. There is no visa restrictions for travel between Nepal and India. India remains the preferred vacation destination for many rich and upper-class Nepalis who also send their children to school in India. Not surprisingly, majority of Nepal’s elites maintain close political, economic, and cultural links with India. Given Nepal’s geographical proximity, cultural affinity, and strategic importance for India’s security, India has sought to maintain a special relationship with Nepal since independence. However, India’s overwhelming influence in the political and economic life of Nepal has produced tensions in their bilateral relations. Five major issues can be identified in the bilateral relations between India and Nepal. First, given the critical significance of Nepal as a buffer state, British India signed a defense treaty with Nepal in 1923. Three years after independence from Britain, India signed a Treaty of Peace and Friendship with Nepal in 1950, essentially reiterating the security provisions of 1923 treaty (Muni 1998: 143). The 1950 Treaty of Peace and Friendship obligated the governments of Nepal and India to consult with each other in devising effective countermeasures to meet a security threat to either of the countries emerging out of foreign aggression. The treaty also stipulated that the two governments must inform each other of any serious friction or misunderstanding with any neighbouring country that may be likely to adversely affect the friendly ties between India and Nepal (Baral 1986: 104). The Nepalese ruling elites under the monarchical regime have long resented this provision of the treaty because it essentially restricted the autonomy of Nepal in conducting its foreign policy and provided scope for Indian domination. It is not surprising that Nepal occasionally attempted to use the China card to move away from the Indian sphere of influence. The most serious Indo-Nepalese dispute occurred when Nepal allowed China to build the Lhasa–Kathmandu road after the Sino-Indian conflict in 1962 (Rose 1971: 137). India considered this move as Nepal’s acquiescence to China’s overall military strategy in South Asia which was a serious threat to India’s security interest. Consequently, throughout the 1960s and the 1970s, Indo-Nepal relations remained at a low ebb. The second major issue in Indo-Nepalese relations is related to the declaration of Nepal as a zone of peace and India’s reluctance to endorse this proposal. India’s annexation of the autonomous state of Sikkim into India in 1975 led to a growing apprehension among Nepal’s ruling elites about a similar Indian design for Nepal. Consequently, Nepal sought to distance itself from India in defense and security matters by developing closer relationship with China and demanding a status of zone of peace for the country. Third, both India and Nepal accuse each other of exploiting the open IndoNepal border. Nepal argues that the open border has encouraged Indian migra-

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tion into Nepal and the smuggling of Indian goods to the detriment of Nepal’s economy. The Gurung Commission report of 1983 found that of the total immigrants in Nepal’s Terai region, more than 97 percent came from India. The report alleged that the total control of Terai’s commercial and industrial sectors by the Indian immigrants and their indulgence in capital flight and tax evasion adversely affected Nepal’s economy. Accordingly, the report suggested that Indian and other foreigners should not be allowed to work in Nepal without work permits (1983: 17). Nepal’s accusation of Indian demographic invasion drew strong condemnation from New Delhi. According to Indian officials, Nepal’s accusations seemed baseless as more than five million Nepalese live and work and over a 100,000 seasonal workers come to India every year (Rizvi 1986: 143). In addition, substantial number of Gurkha armed personnel are employed in the Indian army. Although there has been significant improvement in the Indo-Nepal relations in the post-1990 period (Prasad 1989: 38–41), the migration issue remains one of the major irritants and need immediate attention to further improve the two countries’ bilateral relations. The fourth major issue in Indo-Nepali relations is Nepal’s limited economic autonomy and a total economic dependence on India. With one of the world’s lowest per capita income and gross domestic product (GDP) growth over the past decades, Nepal desperately needs economic development. Nepal has no strong industrial sector, and its export base is quite narrow. The country is critically dependent on India for foreign assistance and its imports, including oil, petroleum, cement, and coal. Nepal’s India-centric economy has occasionally produced tension in the Indo-Nepal bilateral relationship. One of the major irritants in Indo-Nepali relations relates to the trade and transit treaties between both countries. These two treaties were concluded in 1978, providing Nepal with favorable trade terms and transit rights. But, in 1989, Rajiv Gandhi administration refused to renew these two treaties and, instead, imposed a trade embargo on Nepal and closed 13 of 15 transit routes into the landlocked kingdom (Taras 2006: 64). The main reason for India’s action was Nepal’s decision to purchase anti-aircraft and armored personnel carrier from China without prior consultation with India in violation of the 1950 Treaty. Some Indian sources claimed that Nepal’s arms agreement with China also included surface-to-air missiles and an alleged secret intelligence sharing agreement between Nepal and China (Rose 1990: 53), leading to a serious security threat to India. Although Nepal’s government retaliated by ending duty-free privileges for goods coming from India, the trade embargo exposed the limited nature of Nepal’s economic autonomy and caused enormous economic difficulties in Nepal, increasing Nepali government’s bitterness toward India’s “bullying” behavior. Some analysts observe that worsening economic conditions following India’s economic blockade led to political turbulence and ultimately to a change in Nepal’s political system (Ahmed 2004: 11). The Indo-Nepali relations, however, improved substantially following three significant developments in the 1990s: the establishment of democratic regime in Nepal; India’s economic liberalization; and India’s enunciation of “Gujral Doctrine” named after the former Prime Minister I.K. Gujral

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(1996–97), making what is often referred to in New Delhi’s policy circles as “non-arithmetical reciprocity” or non-expectation of reciprocity as a basis for improving India’s bilateral relations with her small neighbors. The fifth major issue that influences Indo-Nepali relations is related to the political system of Nepal. While a multiparty, representative government in Nepal has sought to maintain balance between its two giant neighbours, India and China, and has shown more preference to pursue accommodative diplomacy with New Delhi, a monarchical regime had been perceived as more pro-Beijing. From 1962 to 1990, Nepal was run under a system of governance known as panchayat democracy. The panchayat (national assembly), which consisted of high caste and high-class political elites chosen by the king and thus obeyed the will of the king, largely played an advisory role. Popular resentment against decades of this undemocratic political system under the absolute monarchical rule of King Birendra, on the throne since 1972, led to a democratic revolution in Nepal in 1990. This revolution produced a more pro-Indian coalition government led by Nepal’s Congress Party leader, Girija Prasad Koirala, who had long association with India. But soon, Prime Minister Koirala found himself unable to manage the complexities of democratic governance. His inability to manage intra-party infightings and to forge successful coalitions with other political parties led to the collapse of his government and a new election in 1994. Since 1994, Nepal had 12 governments, with each government lasting for only few months (Adams 2005: 125). Political instability and uncontrollable political corruption led to widespread disappointment and disillusionment among common people in Nepal, providing a conducive environment for the Maoist rebel groups to start a civil war in 1996. The violent Maoist insurgency has proven to be costly for Nepal in terms of the loss of human lives and political and economic instability. Nepali political leaders focus on the transnational links between the country’s Maoist rebel groups and India’s Naxalites in six states – West Bengal, Bihar, Uttar Pradesh, Andhra Pradesh, Orissa, and Chattisgarh. Given these links and the frequent visits of Maoist leaders to India for material help, it is widely believed that India has the leverage to shape the outcome of this conflict. India, on the other hand, seems to be concerned with the links between Nepali Maoist groups, violent Naxalites movements, and secessionist movements in India’s restless northeast region. It is this security threat posed by the transnational Maoist movement that has prompted both Nepal and India to start a pilot program that requires more rigorous documentation checking along a popular Nepal–India border crossing point (at Nepalguni) in 2005. It also has led to an Indian plan to increase its border troops to 40,000 along the Nepal and Bhutan frontiers by 2007 (Taras 2006: 66). While political leaders in both countries seem to understand the rationale for such Indian actions, these actions have led to an increasing uneasiness among Nepali population. Public denial notwithstanding, political leaders in both New Delhi and Kathmandu agree that a longterm solution to Nepal’s Maoist movement requires the representation and participation of Maoist groups in the country’s governance process.

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Indo-Nepali relations suffered a major setback following the palace massacre of June 2001. King Gyanendra, who was anointed as the next monarch because he was the nearest surviving male kin, ended Nepal’s decade-long experiment with democracy in October 2002 by sacking the prime minister, assuming executive authority himself and postponing elections indefinitely. King Gyanendra maintained the pretense of democracy until February 2005, when, working hand in hand with the army, he staged a military coup and seized all political powers. While China, Pakistan, and Russia viewed the king’s power grab as a purely domestic issue, India, along with Britain and the United States, reacted negatively and suspended military supplies. India’s suspension of military aid in response to the king’s coup was a significant move for two reasons: first, India is Nepal’s main military weapon supplier; second, although a thriving democracy, India has never made democracy an integral part of its diplomacy. By linking military aid with restoration of democracy in Nepal, India for the first time departed from its long-held diplomatic principle of non-interference in internal affairs of a country. The Indian government also refused to attend the annual SAARC meeting in 2005 in order not to meet the king and ligitimise his coup. Pakistan made a public offer to replace any economic and military aid suspended by India (Adams 2005: 129). But, Nepal refused to accept it for the fear of offending India. Under sustained pressure from India and other Western powers, and months of popular protest in Nepal, the king finally relented and gave in to popular demands by inviting political parties to form a democratic government in 2006. The Indo-Nepali relations reflect a typical South Asian structural dilemma. As the major regional player, India can intervene more substantially in Nepal’s domestic politics. However, any overt intervention in Nepal would be a strategic mistake for India. Because such a move would almost certainly bring China’s opposition and involvement, leading to regional instability. At the same time, lack of Indian initiatives and involvement in Nepal has its own risks. Nepal’s social and economic development could be undermined by continued political violence and instability, providing further fuel for insurgencies. Indian strategists worry that a weak, unstable, and “failing” Nepal might provide China with opportunity to directly interfere in South Asia. Thus, from New Delhi’s perspective, a balanced (and not too blatant) intervention remains a necessary course of action to maintain Nepal’s political and economic stability. From Nepal’s perspective, while friendship with India is her strategy for survival, good relationship with South Asian neighbors and other external powers is necessary to balance Indian influence. Sri Lanka While other countries in South Asia have contiguous neighbours besides India, Sri Lanka has only India as its neighbor to the north, and on all other sides, there is the Indian Ocean. Sri Lanka is separated from the southern Indian state of Tamil Nadu by a mere 20 miles of the Palk Strait. Such a geographic reality,

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coupled with India’s overwhelmingly superior size, population, natural resources, military, economic, and technological power, generates a great deal of anxiety in Sri Lanka. While Sri Lanka recognizes India’s dominant power, it does not want to be overshadowed by India’s domination. Not surprisingly, since its independence in 1948, Sri Lanka has always been keen to maintain its distance from India. Sri Lanka was the first South Asian state to sign a defense agreement with an external power, Britain, and in the 1950s, 1960s, and 1970s, it sought membership and active role in such international or regional organizations as the United Nations, the Colombo Plan, the Non-Aligned Movement (NAM), and ASEAN. Sri Lanka’s interest was shaped by the thinking that membership in a regional or international organization would provide some scope for developing a collectivity of small states anxious about larger neighbours. The Indo-Sri Lankan bilateral relationship is also shaped by a persistent conflict between the two main ethnic groups of Sri Lanka – the Sinhalese-speaking Buddhists who constitute over 70 percent of the population and the Tamil minority who constitute about 20 percent of the island’s population and are mainly Hindus. The Tamils were originally brought to Ceylon from southern India by the British in the mid-nineteenth century to work for the tea and rubber estates. After independence in 1948, Sri Lanka passed a series of citizenship laws which discriminated against the Tamils. According to the two Citizenship Acts in 1948 and 1949, various ethnic groups in Sri Lanka (Sinhalese, Sri Lankan Tamils, Moors, and Burghers) were considered natural citizens by descent. But Indian Tamils were required to prove a two-generation ancestry in Sri Lanka to be granted citizenship status. According to one estimate, only 12 percent of 825,000 Tamil applicants became eligible for citizenship on the basis of two-generation ancestry criteria (Kanesalingam 1991b: 182). To deal with the remaining people, Sri Lanka’s government created a “stateless” category of Indian Tamils and sought to have India “repatriate” them. After several negotiations, an agreement was reached between Sri Lankan President Sirimavo Bandaranaike and Indian Prime Minister Lal Bahadur Shastri in 1964, which stipulated that India would grant Indian citizenship to 600,000 stateless Tamils and repatriate them, while Sri Lanka would grant Sri Lankan citizenship to 375,000 such persons. Until the 1980s, stateless Indian Tamils did not receive full Sri Lankan citizenship (Kanesalingam 1991b: 183). Frustrated with this long-drawn process, some of the Indian Tamils started migrating to the northern and eastern province of Sri Lanka, where Tamil militancy was growing. A series of anti-government riots by Tamil militants in the Jaffna peninsula in the 1980s and the subsequent crackdown by Sinhala-dominated government forces intensified ethnic crisis. In 1983, anti-Tamil riots by Sinahalese zealots in Colombo with the help of some members of government killed hundreds of Tamils and burned hundreds of Tamil business and homes. Unable to get urgent protection from the government, thousands of Tamil families fled to Tamil Nadu in India (Kanesalingam 1991b: 180–183). These events not only provoked angry protests from Tamil Nadu politicians, but also radicalized many Sri Lankan Tamils who were neutral until this point, believing that a negotiated compromise

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solution was still possible. Under the pressure of Tamil politicians in Chennai (formerly Madras), New Delhi decided to provide humanitarian and military assistance and training to Tamil militants in Sri Lanka. With the memory of Indian interventions in East Pakistan and the consequent breakup of Pakistan in 1971 not so distant, Sri Lankan leaders acted quickly to engage India in becoming a part of the solution. Unable to defeat the Jaffna militants or to concede to the independence demands of the Tamil Tigers, organized under Liberation Tigers of Tamil Eelam (LTTE) with Velupillai Prabakharan as its leader, President Jayewardene signed a Peace Accord with Indian Prime Minister Rajiv Gandhi in late June 1987. According to this Accord, India agreed to deploy an Indian Peace Keeping Force (IPKF) at President Jayewardene’s invitation to maintain peace and stability in the Jaffna peninsula. By signing this bilateral Peace Accord, Sri Lanka acknowledged India’s geostrategic security concerns and accepted India’s role as the region’s dominant power. The approval of the treaty by both the United States and the Soviet Union was a tacit recognition of India as South Asia’s preeminent power. The Indian military engagement in Sri Lanka’s civil war proved to be largely unsuccessful. Instead of laying down their arms, the Tamil militants fought guerrilla warfare against the IPKF, causing loss of lives of about 1,000 Indian soldiers between 1987 and 1989 (Rao 1988: 19–37). In addition, the Tamil Tigers carried out a series of assassinations of Indian political and military figures. There were also some evidence of support provided by the Tamil Tigers to the separatist groups in Kashmir and northeastern region in India (Cohen 2001: 240). After three years of bitter and unsuccessful war with the Tamil militants in Sri Lanka, India finally pulled out its troops. India’s failure in Sri Lanka raised serious questions about New Delhi’s military ability to manage regional conflicts. But, given the close emotional ties between Tamils in both sides of the Palk Strait, a pure military solution leading to Sri Lanka’s disintegration is not in the interest of India. Not surprisingly, in order to deal with the ethnic crisis in Sri Lanka, India supports a policy of maximum devolution within a sovereign and territorially integral Sri Lanka. Several Indian concerns have shaped this policy. First, Sri Lanka’s division along the ethnic lines would have a spillover effect on the violent separatist movements in India’s northeastern states. Second, the emergence of a separate Tamil state in Sri Lanka might revive Tamil nationalism in India and the demand for a greater Tamil-speaking state, in a Tamil version of the “two-nation” theory. Third, Sri Lanka’s disintegration would be a challenge for India’s claim as a regional power capable of maintaining regional stability. Thus, India is engaged in a delicate balancing act: it provides training to Sri Lankan army but refuses to sign a defense treaty with Colombo to avoid any perception of supplying lethal weapons to Sri Lankan troops that can be used against Tamil fighters. Making a departure from its earlier stance, India has also quietly allowed other powers like the United States, United Kingdom, Canada, Australia, and most recently European Union in May 2006 to assist Sri Lanka. However, it is unlikely that India would tolerate any direct foreign intervention

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in Sri Lanka. At the same time, India cannot allow further deterioration of the situation. This dilemma has led to New Delhi’s decision to add LTTE to its list of banned terrorist groups so as to intensify diplomatic isolation and cut off external sources of funding to put pressure on LTTE for a negotiated settlement. To what extent these policies will succeed remains uncertain. But given the magnitude of this crisis, assisting Sri Lanka to find a political solution to the ethnic problem in a reasonable time period is in India’s own long-term interest.

External influence and regional balancing In South Asia’s regional system, the structural imbalance between India and Pakistan and other smaller states has created contrasting policy objectives. Given their relatively small size, population, economic underdevelopment, and geographical location, the smaller states in South Asia cannot hope to exert much influence in the South Asian regional system. At the same time, these states do not want to be overshadowed by India. In order to limit India’s predominance inherent in bilateral relationship between large and small states, the smaller South Asian states have shown preference for multilateral diplomacy and actively sought to engage external powers in their bilateral disputes with India. On the other hand, India’s policy objectives since independence reflect her grand strategy based on both regional and global ambition. Explaining India’s grand strategy, C. Raja Mohan (2006: 19) aptly observes: India’s grand strategy divides the world into three concentric circles. In the first, which encompasses the immediate neighborhood, India has sought primacy and a veto over the actions of outside powers. In the second, which encompasses the so-called extended neighborhood stretching across Asia and the Indian Ocean littoral, India has sought to balance the influence of other powers and prevent them from undercutting its interests. In the third, which includes the entire global stage, India has tried to take its place as one of the great powers, a key player in international peace and security. While India’s policy objectives in the second and third concentric circles – that is at the extended regional level and global level – are yet to be fulfilled, her policy objectives at the regional level have met with some success. Given her preeminent regional position, Indian policymakers have sought to advocate a policy of autonomy at the regional level. Regional autonomy, as articulated by New Delhi, requires the whole of South Asia be free of outside influence. Thus, India has always opposed outside intervention in South Asian affairs. This policy appears to be successful in the case of Nepal and Bhutan. India exerts significant control over Nepal and Bhutan because these two countries depend on India for all their import and export needs as well as their access to the outside world. The same, however, cannot be said in the case of Pakistan, Sri Lanka, and Bangladesh. Of all the South Asian countries, Pakistan’s economic, security, and ideo-

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logical challenge to India’s predominance in South Asia has remained the most substantial. The security dilemma, as discussed earlier, remains one of the major driving forces for an unhealthy arms race, including nuclear weapon development between India and Pakistan, making regional cooperation a prime casualty (Carranza 1998: 111). It is true that rivalries between India and Pakistan and their domestic politics are the fundamental reasons for the lack of growth of accommodative policies between India and Pakistan. At the same time, the role of external diplomatic, economic, and security assistance in enhancing a country’s comparative capability and, in turn, helping sustain its rivalry with the neighbor cannot be undermined. External helps to Pakistan from China, Gulf states, and the United States from mid-1950s to 1965, 1980s–90s, and again from 2001 onward have contributed to Pakistan’s resistance to India’s claim of natural domination and a hierarchical regional order in South Asia. Similarly, external support of Soviet Union made India less willing to accommodate Pakistan’s claims during the Cold War period. Whether the end of the Cold War, shifting US support to India in the 1990s, and improving Sino-Indian relations since the late 1990s would help India and Pakistan to be more accommodating or would only intensify their rivalry remains to be seen. India’s ability to exert too much control over Bangladesh and Sri Lanka is limited by three factors. First, although India has provided considerable aid and assistance to her smaller neighbors because of her relatively more developed economy, she is not fully capable of meeting with all their development needs. Hence, the smaller states have sought external aid and assistance, limiting India’s influence over them. Second, the Indo-Pakistan rivalry, Sino-Indian rivalry, and China’s ready willingness to support the independent status of the smaller South Asian states have provided these states with an opportunity to demand larger political and economic concessions from India, which, given their size and economic vulnerability, would not have been otherwise possible. Finally, most South Asian countries perceive their main security threat to be India. Accordingly, South Asian states have actively sought military, economic, and diplomatic assistance from external powers to offset India’s influence. In such an environment, regional accommodation policies have become increasingly difficult. Two other issues are worth noting to explain the dynamics of South Asian regionalism. First, South Asian countries do not share a common external threat perception, which makes it difficult for the leaders of these countries to work toward common regional security strategies. While the South Asian states perceive their main security threat from India, New Delhi perceives an external threat from cross-border terrorism and Pakistan’s military challenge with the support of external powers. The narrow political base of South Asian ruling elites provides few opportunities for them to ignore this perceived regional security threat. Consequently, blaming the neighbor (scapegoating) has become a preferred policy for South Asian ruling elites, making growth of regional cooperation an extremely slow process. Second, South Asian states also worry that any regional trade arrangements will favor India, and Indian goods will

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dominate the regional market. This concern explains why Pakistan remains opposed to any Indian initiative for trade liberalization in South Asia. In nutshell, India’s hegemony, the lack of trust among South Asian states, and Pakistan’s continuing challenge to India’s domination in South Asia have contributed to the slow growth of regional cooperative arrangements under the rubric of SAARC. Has the prospects of SAARC in terms of institutional development, new initiatives, and program implementation improved after the first decade of its existence? This is examined in Chapter 4.

4

Origin and evolution of SAARC

Although the idea of SARC was discussed by South Asian leaders from time to time in the post-independence period, the concrete initiatives for establishing a comprehensive regional organization in South Asia came only in the late 1970s. After examining the earlier attempts for regional cooperation by South Asian leaders, this chapter explores the important domestic, regional, and external factors that led President Ziaur Rahman of Bangladesh to take some concrete steps for regional cooperation in South Asia in 1977. Examining the dynamics of domestic politics and the interrelationship between domestic and regional politics, this chapter explains why smaller states in South Asia – Bangladesh, Nepal, and Sri Lanka – were more enthusiastic for regional cooperation and why India and Pakistan were initially reluctant to join the regional grouping. It examines the domestic and external factors that led to changes in India’s and Pakistan’s decision in favor of joining the regional association. This chapter then provides an overview and evaluation of SAARC’s record in terms of institutional developments and program implementation.

Early regional cooperation efforts in South Asia The idea of a South Asian regional forum can be traced to April 1947, when the non-official Indian Council of World Affairs convened the Asian Relations Conference in New Delhi. Attended by delegates from 25 Asian countries and presided by Indian Prime Minister Jawaharlal Nehru, the Asian Relations Conference, which was held from March 23 to April 2, 1947, devoted much time to the question of Asian unity, economic development of the newly independent post-colonial states in Asia, and the need for greater regional cooperation (Gupta 1964: 34). However, the two Asian giants, India and China, made their differences open on two issues at this conference. First, both India and China were in contention about their respective desires to assume the leadership role in Asia. Second, the Chinese objected to a map which showed Tibet as a separate state (Gupta 1964: 36; Ganguly 1993: 274). The conference ended without any concrete proposals for regional cooperation. The next meeting, scheduled for China in 1949, did not take place because of the civil war and the Chinese Revolution. After ten years of inconsequential

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existence, the Asian Relations Organization was quietly dissolved in 1957 (Haas 1989a: 276). An important official initiative for Asian cooperation was taken by India, when Prime Minister Nehru invited concerned Asian governments to participate in a conference on Indonesian situation following the Dutch invasion of Indonesia on December 18, 1948. This conference on Indonesia, held in New Delhi on January 20, 1949, was attended by 18 Asian countries. Among the three resolutions adopted at the Indonesia conference, the first two resolutions condemned the Dutch invasion on Indonesia and urged the UN to take effective action against the Dutch action. The final resolution called for establishing an institutional base for cooperation among Asian countries (Gupta 1964: 40). Based on this third resolution, the Indian Council of World Affairs at New Delhi, which organized the Asian Relations Conference in April 1947, published an article describing the informal structure of an Asian Union or the Organization of Asian States. The article further argued that the structure of the proposed Organization of the Asian States should be less formal than the Organization of American States (Gupta 1964: 32). However, the Indian urgency for regional integration in the Asian region eroded in 1949–50 with the establishment of Communist regime in China and the onset of two blocs Cold War politics in Asia. Prime Minister Nehru realized that the commitment for an Asian regional grouping had weakened among the Asian countries as the urgent task for all the countries in Asia was now to devise a policy toward the Cold War and to face the rise of communism in Asia. Consequently, Nehru became more interested in developing a Third World NAM rather than focusing on regional integration initiatives in Asia. With Indian lack of enthusiasm for a regional grouping, the Philippines took the initiative next in convening a conference of Asian countries to discuss the prospects of regional cooperation in Asia. At the invitation of the Philippines government, India, Pakistan, Australia, Indonesia, Thailand, and Ceylon attended the Baguio Conference of May 1950, held in the Philippines, to carry out discussion about the possibilities of regional cooperation. Although this conference exhorted its members to promote greater cultural cooperation, in substantive terms the conference achieved little (Gupta 1964: 47). The Cold War division was very much evident in this conference. While Australia and the Philippines were distinctly pro-West and anti-Communist, India, Pakistan, Indonesia, Thailand, and Ceylon were neutral to varying degrees. With the intensification of the Cold War tensions, the idea of regional cooperation in Asia underwent a shift at this point. Instead of exploring the possibilities of regional cooperation, the focus now turned to the possibilities of keeping Asia free from superpower competition. Jawaharlal Nehru played a major role in stressing this idea. His main concern was that involvement with the superpower conflicts would not only lead to the militarization of Asian societies, thereby jeopardizing the prospect of peace in Asia, but also would divert the leaders’ attention from the urgent task of economic development. Nehru’s ideas, though detested by the superpowers, found favor with some Asian leaders.

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Influenced by Nehru’s ideas, the Prime Minister of Ceylon, John Kotelawala, invited the leaders from Asia to Colombo in April 1954 to exchange views and discuss problems of common interest. This conference, known subsequently as the Colombo Powers Conference, was attended by Burma, Ceylon, India, Indonesia, and Pakistan. The leaders at this conference discussed such diverse issues as events in Indochina, atomic bomb tests, representation of China in the United Nations, problems of Tunisia and Morocco, difficulties of Arab refugees in Palestine, and considered proposals relating to economic cooperation and mutual aid (Haas 1989a: 276). The bilateral differences, particularly Pakistan’s efforts to bring up the unresolved question of Kashmir, and divergent views about the Cold War limited the scope of discussion regarding regional cooperation in this conference (Ganguly 1993: 276). The conference participants, however, agreed to convene a meeting of African–Asian nations to explore areas for cooperation among these countries. After the first Afro-Asian conference convened in Bandung in April 1955, the Colombo Powers never met again, believing perhaps that the task of building Third World solidarity was on its way (Haas 1989a: 276). Although the Bandung conference of 1955 discussed the idea of regional cooperation in the area of energy among South Asian countries, no machinery or institutional means for achieving such cooperation were specified (Salahuddin 1985: 16). The leaders’ divergent perception about the world politics and acute shortage of funds to implement any cooperative venture may have contributed to the lack of agreement on specific proposals. Despite the lack of progress of the Bandung conference in the area of regional cooperation, the conference provided the basis for a larger Third World movement, known as the NAM, and enumerated a long agenda of cooperative ventures between African and Asian countries. After 1955, the idea of a South Asian regional forum was discussed informally from time to time among the leaders of South Asian countries mostly at the international forums like the United Nations and NAM. In September 1961, a conference of Asian Economic Planners was held in New Delhi, which was sponsored by the UN Economic Commission for Asia and the Far East (ECAFE), to discuss the prospects of regional cooperation in Asia and among South Asian countries. The conference was successful in establishing an Asian Institute of Economic Development and a Regional Advisory group on Economic Development and Planning in Asia. But the discussion on regional cooperation in South Asia did not produce any positive result because of India’s lack of enthusiasm and, more importantly, lack of endorsement to the idea of South Asian economic integration by the representatives of Ceylon and Pakistan (Gupta 1964: 83). The opposition of Ceylon and Pakistan to the idea of a South Asian economic integration was based on their fear of India’s economic domination. It is reasonable to argue that despite some earlier initiatives, South Asia remained relatively unaffected by the “old regionalism” of 1950s and 1960s, when Western European countries made some exciting advances toward

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regional integration (Palmer 1991: 75). Nehru’s focus on internationalism, IndoPakistan conflicts, mutually antagonistic alliances of the two principal South Asian states – Pakistan with the United States and India with the Soviet Union – Sino-Indian conflict, India fear, and mutual distrust among South Asian countries seemed to have prevented South Asian leaders from taking any concrete initiatives toward regional cooperation. Although the Bangladesh war of 1971 brought further urgency to the idea, countries of the region waited until the early 1980s to embrace regionalism (Haas 1989a: 276).

The Bangladesh initiative In his letter to the Heads of State or Government of seven South Asian countries on May 2, 1980, President Ziaur Rahman of Bangladesh made the first concrete proposal for establishing a framework for regional cooperation in South Asia (Huq 1986: xxiii). However, the Bangladesh President seemed to have been working on the idea of an ASEAN-like organization in South Asia for at least three years before giving it a concrete shape and presenting it to the South Asian leaders in 1980.1 During his visit to India in December 1977, President Ziaur Rahman discussed the issue of regional cooperation with the new Indian Prime Minister Morarji Desai (Muni and Muni 1984: 30). During the same period, in his inaugural speech to the Colombo Plan Consultative Committee, which met in Kathmandu in December 1977, King Birendra of Nepal gave a call for close regional cooperation among the South Asian countries in sharing river waters. The King’s call was welcomed by President Ziaur Rahman during the former’s visit to Bangladesh in January 1978 (Muni and Muni 1984: 31). President Ziaur Rahman had also informally discussed the idea of regional cooperation with the leaders of South Asian countries during the Commonwealth Summit in Lusaka (1979) and the Non-Aligned Summit in Havana (1979) (Huq 1986: 67). Finally, the Bangladesh President seemed to have given a concrete shape to the proposal after his visit to Sri Lanka and discussion with the Sri Lankan President J.R. Jayawardene in November 1979 (Muni and Muni 1984: 31). Why did the President of Bangladesh seek regional cooperation in South Asia? What factors shaped his preference for regional cooperation that involved coordinating policies with the neighbors? The following section examines the domestic, regional, and international factors during 1975–79 that shaped President Ziaur Rahman’s choice for seeking to establish a regional organization in South Asia.2 Domestic factors As outlined in Chapter 2, the main motivations that shape political actor’s preferences toward regional cooperation are power-retaining objectives, externalities, intraregional and extraregional security considerations, and lock-in dynamics. To what extent these motivations influenced the Bangladesh President’s initiatives for establishing a regional organization in South Asia? General Ziaur Rahman came to power in a military coup in 1975 after overthrowing the

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popular civilian regime of Sheikh Mujibur Rahman, who was supported by India during both the freedom struggle and post-independence era of Bangladesh. General Ziaur Rahman’s top most priority was to retain his power that required legitimacy for his military regime through domestic and external support. Domestically, he understood that for a young Bangladeshi state, the most pressing needs were economic growth, employment, and political stability. Externally, his most immediate concern was to improve the bilateral relations with India so as to insure India’s economic and security support for his regime. India’s support was necessary not only for the legitimacy of his coup d’etat regime, but also for domestic political problems and economic growth. At the same time, given the Bangladeshi sensitivity to India’s economic and security domination, the President believed that Bangladesh’s bilateral problems with India could be better addressed in a regional forum than through bilateral approach. President Ziaur Rahman’s interest in regional cooperation was also fueled by the need to deal with externalities or spillover effect of India’s policies on the economy and security of Bangladesh. The President knew that his overthrow of the democratically elected and India supported Mujib regime was a major setback to Indian foreign policy. It was a matter of deep concern for him that Indira Gandhi-led Congress administration during this time had come to believe that the new military regime in Bangladesh might seek external assistance more to legitimize its rule.3 He was aware that such a move of the new regime in Bangladesh would not be congruent with India’s strategic security thinking in the region and would, therefore, intensify India’s opposition to his rule. He firmly believed that improved communication, regular consultations, and closer personal connections were necessary to allay Indian misgivings about the intentions of the new military regime and generate trust among the Indian leaders. The establishment of a regional organization, President Ziaur Rahman concluded, would help accomplish this objective. Given Bangladesh’s “India-locked” geography and the fact that both India and Bangladesh share water and land resources, Bangladesh has to deal with negative externalities of India’s policies on a regular basis. President Ziaur Rahman and his key advisors shared the belief that regional cooperation involving India and Nepal would be beneficial for Bangladesh on a number of issues facing the country – such as natural disasters, irrigation, fishing, hydroelectricity generation, water sharing, and energy issues. In his calculation, the domestic political and economic benefits from regional cooperation outweighed the costs – that is the outcome of non-cooperation was seen as worse than the outcome of cooperation. His new regime concluded that in the wake of non-regional cooperation, the domestic economy and security would be worse off, adversely affecting the new leader’s power-retaining objectives. Thus, initiatives for regional cooperation were seen as a “smart policy” for a military regime in search of political legitimacy and longevity in power.4 Finally, some analysts observed that one of the reasons why President Ziaur Rahman was so enthusiastic and took so many initiatives for regional

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cooperation in South Asia was that he wanted to transform his image from a military dictator of a least-developed country to that of a powerful Third World leader, claiming a place in history with Gandhi, Nehru, Jinnah, and Sukarno. By becoming a leader of a regional cooperation movement in South Asia, he hoped to bring prestige and an historical legacy of great regional leadership to his rule (Khan 1991: 34–35). Regional factors India’s annexation of Sikkim as a full-fledged state in 1975 became a source of fear for the small neighboring countries. This demonstration of muscular diplomacy by India created negative externalities for smaller neighbors in the issue area of security policy, generating greater need for urgent security cooperation with India. President Ziaur Rahman’s initiative for a regional cooperation scheme, as some analysts observe (Datta Ray, 1992), was based on this need of Bangladesh for security cooperation with an unstated objective of neutralizing India’s potential expansionism. The logic of regionalist entrapment – that is creating regional institutions to contain the hegemonic power of dominant India in the South Asian region – provided a strong basis for Bangladesh initiative for a South Asian regional organization. In 1977, most of the countries in South Asia witnessed changes in their political regimes. Morarji Desai of the Janata Party became the new prime minister of India after defeating Mrs Indira Gandhi and her Congress Party in the election of 1977. In Pakistan, General Ziaul Haq captured power from the civilian regime of President Bhutto through a military coup in 1977. In Sri Lanka, Mrs Bandarnaike’s government was replaced by the United National Party (UNP), led by J.R. Jayawardene, in the same year. After a series of coups and countercoups that followed the violent overthrow of the Mujib government in August 1975, Ziaur Rahman finally established himself as the president of Bangladesh in 1977. All these new leaders displayed a distinctive style of accommodative leadership and put first priority on improving relations with the neighboring countries. Moreover, the new regimes, which came to power in South Asian countries after a prolonged power struggle, had not yet consolidated their positions in relation to their powerful domestic opponents. They, therefore, as Muni and Muni (1984: 22) have observed, “needed each other’s help, support and understanding in securing their respective internal legitimacy and credibility.” During the second half of the 1970s, almost all the countries in South Asia were suffering from an acute balance of payment crisis, which was further aggravated by the second oil crisis in 1979. In 1974–75, South Asia’s economic situation deteriorated, with the growth rate reaching an all time low at 2.2 percent, while population increased at 2.4 percent (Muni and Muni 1984: 23). With North–South negotiations not yielding any result and the protectionism of the developed countries increasing, “South Asian countries had enough compulsions to look inward the region and toward each other to seek new options for preparing themselves to meet the then prevailing challenges” (Muni and Muni

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1984: 23). In fact, these developments seemed to have increased the openness of political leaders of the smaller South Asian countries toward “logrolling” strategy – that is “I’ll vote for your issue if you vote for mine” – at North–South and other international forums. Empirical studies on the Scandinavian groups, ASEAN, and CARICOM show the benefits of “logrolling” strategy for a regional grouping. By pooling their negotiation resources, and formulating common policy stances, the members of these groupings have been able to reduce their negotiation costs, increase their bargaining power, and exert greater influence outside the region at various regional, multilateral, and North–South meetings than would have been possible had they acted unilaterally or independently (Schiff and Winters 2003: 203–204). It is reasonable to argue that the potential benefits of “logrolling” were a major motivation during this economic crisis period that could explain the enthusiastic support of the political actors of smaller South Asian states for the idea of establishing a South Asian regional organization. After almost a decade of inaction, ASEAN was given a greater momentum in 1976, when the Southeast Asian leaders held their first summit meeting at Bali. The Bali summit declaration with concrete programs of cooperation in the political, economic, social, cultural, and informational and security fields (Galbraith 1980: 34) had a profound influence on President Ziaur Rahman’s thinking about the usefulness of a regional organization. He, in fact, approached the ASEAN for Bangladesh’s membership into the organization. After Bangladesh’s approach to ASEAN for membership was turned down, he launched serious initiatives for regional cooperation in South Asia (Bajpai 1990: 53). Finally, the political actors’ initiatives for regional cooperation received strong support from a group of scholars in the South Asian countries, who began to exchange ideas on potential social, cultural, and economic areas of regional cooperation. In September 1978, these group of scholars formed a Committee on Studies for Cooperation in Development (CSCD) in South Asia to carry out studies on specific regional projects. These projects provided detailed background analysis and information to the officials involved in working out the details of the new regional organization, under the direction of the foreign secretaries and foreign ministers of the South Asian states (Rostow 1986: 131; Haas 1989a: 277; Saksena 1989: 82). International factors The 1970s can be described as a critical decade during which a number of initiatives for South–South cooperation were taken. Such international developments as NIEO (1974), the call for South–South action programs for collective selfreliance adopted at the successive Non-Aligned Summits in Colombo (1976) and Havana (1979), the United Nations conference on technical cooperation in 1978, and the Arusha program of collective self-reliance adopted by the G-77 in February 1979 underlined the need for collective approach at regional levels among the southern countries to achieve economic growth. It is quite possible that President Ziaur Rahman’s preference for a regional cooperation scheme in

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South Asia has been shaped by such international debates that produced a strong wave of intellectual and political support for collective action among the developing countries (Khan 1991: 35; Mohanan 1992: 2). After regime changes in South Asia in the mid-1970s, US President Jimmy Carter and British Prime Minister James Callaghan visited India, Pakistan, and Bangladesh in January 1978. These leaders urged the new South Asian regimes to make special efforts to establish peace, amity, and cooperation in the region. They also assured the South Asian leaders of economic assistance for multilateral cooperative projects on sharing water resources of Ganga and Brahmaputra (Muni and Muni 1984: 26). Such assurance of financial assistance made cooperation on water-sharing projects and other regional projects all the more desirable. The Soviet military intervention in Afghanistan in December 1979 had a profound impact on regional security in South Asia. The Soviet invasion undoubtedly led to a further deterioration of regional security in South Asia, making regional security cooperation more compelling. But, the subsequent US decision of military aid to Pakistan and India’s opposition to this decision made regional security cooperation almost impossible. The Bangladesh President faced a dilemma. On the one hand, given the new regional security situation, it was difficult for him not to include security as an issue area for regional cooperation. At the same time, he was not sure how India would react to the idea of any security cooperation given the great divide between India and Pakistan on the issue of Soviet invasion of Afghanistan. Despite this uncertainty, he sent a formal proposal in the form of a letter in May 1980 to the heads of the other South Asian states, proposing a South Asian Summit meeting to discuss a framework of regional cooperation with a goal of achieving “peace, stability, and security” in the region (Muni and Muni 1984: 31; Palmer 1991: 81).

The reluctant partners: India and Pakistan By the early 1980s, the South Asian political, security, and economic environment had deteriorated significantly. With substantial US military aid to Pakistan, Indo-Pakistan tensions increased. After only two years of power, intra-party squabbles led to the defeat of the Janata party and the Congress party under Indira Gandhi came back to power in India. With the return of Indira Gandhi as the prime minister, India’s commitment to regional accommodative policy became questionable. Bangladesh President Ziaur Rahman was assassinated in May 1981 and was immediately succeeded by Vice President Abdus Sattar, who led the BNP (established by General Ziaur Rahman) to victory in elections held in 1981. But, only few months later, army chief General Ershad staged a coup and took over power from the elected government. In early 1980s, the Colombo government faced the Tamil militancy, which later became a violent separatist movement under the leadership of the Tamil Tigers. In addition to these turbulent political and security environment, the South Asian countries faced a grave economic crisis caused by the twin shocks of oil price increase and severe

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drought. Given this regional context, initiatives for regional cooperation were difficult, yet enormously desirable. Understandably cautious but convinced about the benefits of regional cooperation, the smaller states in South Asia – Nepal, Sri Lanka, Maldives, and Bhutan – were first to endorse the Bangladesh proposal for establishing a framework for regional cooperation. But both India and Pakistan were skeptical initially. India’s policymakers, particularly Prime Minister Indira Gandhi, feared that the Bangladesh proposal for regional cooperation might provide an opportunity for the small neighbors to regionalize all bilateral issues and to join with Pakistan to “gang up” against India. India was also concerned that a regional organization might impinge on her freedom in foreign affairs. Indian policymakers realized that if regional cooperation was institutionalized and decisions were taken by majority, India would stand to lose. Thus, in order to protect itself against being maneuvered by the other states in South Asia, India insisted on the following issues: unanimity on decisions at all levels, exclusion of bilateral and contentious issues, and unanimous approval for external assistance or intervention. At one stage of negotiation, India even asked its neighbors to go ahead and set up a regional organization without India’s participation if that suited the rest. But this was merely a tactical move to persuade the neighbors to keep the bilateral and contentious issues out of the purview of the regional forum. India very well knew that no regional organization would succeed in South Asia without its participation (Muni 1988b: 8). Like India, Pakistani leaders also believed that a regional organization would impinge their freedom in foreign affairs. Thus, while Bangladesh was eager for an early summit meeting, Pakistani leaders were hesitant, preferring step-by-step approach to avoid raising expectations of the potential security and economic benefits of the proposed regional organization. In addition, Pakistani leaders assumed that it might be an Indian ploy to gather the subcontinent against Pakistan and insure a regional market for Indian products, thereby consolidating and further strengthening India’s economic dominance in the region (Thornton 1991: 136; Wriggins 1992: 132–133). The Pakistani business community, an important support base of the government, was opposed to any regional trade liberalization policy because of the fear of Indian domination. Analyzing Pakistani opposition to regional economic cooperation, Gowher Rizvi (1993: 147–149) perceptively observes that historically, one reason why the Muslim bourgeoisie so strongly supported the movement for an independent Pakistan was that they wanted to monopolize their share of trade and commerce within a protected national boundary and without any competition from the Hindu business elites. Since independence, Pakistan’s dominant political and economic ideology has been to move away from India. Growth of regional cooperation would entail at least a partial aligning of Pakistan’s economy with that of India. Such prospects seemed to be unacceptable to the political and business elites of Pakistan at this time. This explains Pakistan’s hesitation and preference for a step-by-step approach for regional cooperation in South Asia. However, after initial reservations regarding the Bangladesh proposal’s reference to security consideration and lack of clarity about the theme of economic

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and social development, India and Pakistan expressed their willingness to participate in the discussion. What followed was a series of quiet diplomatic consultations between the South Asian foreign ministers at the UN headquarter in New York from August to September 1980 (Muni and Muni 1984: 34). Finally, it was agreed that given the detailed works of the initial proposal, Bangladesh should be entrusted with preparing the draft of a working paper for discussion among the foreign secretaries. Bangladesh prepared and circulated the draft, which was basically a reformulation of President Ziaur Rahman’s proposal, to all South Asian countries in November 1980 (Muni and Muni 1984: 35). While endorsing the idea of a regional organization, the draft paper dropped all references to security matters and suggested that the areas of cooperation should be confined to “non-political” and “non-controversial” items. Explaining the rationale for a regional organization and advocating regional conferences at various levels, the draft identified 11 potential areas for cooperation in the economic, cultural, and scientific spheres.5 The Bangladesh draft paper became the basis for discussion among the foreign secretaries of seven South Asian countries, who first met at Colombo during April 21–23, 1981. The Colombo meeting identified five areas for cooperation: agriculture, rural development, telecommunications, meteorology, and health and population. The Colombo meeting also decided to establish a Committee of the Whole, with Sri Lanka as its chairman, to prepare an Integrated Program of Action (IPA) in the agreed areas of cooperation. At second meeting of the foreign secretaries, held at Kathmandu on November 2–4, 1981, three more areas were identified for cooperation: transport, postal services, and science and technology. At this meeting, the foreign secretaries of smaller South Asian countries recommended a meeting at the level of foreign ministers to bring political urgency to the discussion. But, both India and Pakistan resisted, calling for more progress before involving the foreign ministers and taking the discussion to the next political level. At the third meeting of the foreign secretaries, held at Islamabad during August 7–8, 1982, one new area, that is, sports, arts, and culture, was added. The Committee of the Whole then met at Colombo during January 10–13, 1983, to draw up an IPA, which ranged from organizing workshops to the establishments of regional institutions and eventually to major capital investment in infrastructure. At their fourth meeting, held at Dhaka during March 28–30, 1983, the foreign secretaries approved the IPA prepared by the Committee of the Whole. However, it was decided to launch the IPA at a meeting of foreign ministers to be held at New Delhi. In these four meetings, the foreign secretaries were able to prepare considerable groundwork on two major aspects of regional cooperation: organizational aspects and identification of the areas for cooperation, including an IPA (Muni and Muni 1984: 37). The first foreign ministers’ conference was held at New Delhi during August 1–3, 1983, signaling the political momentum of regional cooperation in South Asia. At the completion of the meeting, the foreign ministers launched the IPA and adopted a Declaration on Regional Cooperation, formally beginning an

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organization known as the SARC. The Delhi Declaration marked the completion of the preparatory phase and the beginning of a new phase of active implementation of joint programs in a number of specific areas, which required political will and cooperation of the South Asian leaders. Following the New Delhi meeting, three more meetings of the foreign ministers were held at Male (July 10–11, 1984), Thimpu (May 13–14, 1985), and Dhaka (December 5, 1985) to discuss institutionalization issues and determine a date and place for the first meeting of South Asian heads of state. Given the role of Bangladesh in initiating the proposal for regional cooperation, the Male foreign ministers meeting decided to hold the first summit meeting of SARC at Dhaka in the last quarter of 1985. Sri Lanka initially refused to attend the foreign ministers meeting scheduled to be held at Thimpu (Bhutan) because of alleged Indian support for Tamil militants, who were demanding a separate Tamil state in Sri Lanka. However, India’s new Prime Minister Rajiv Gandhi and Pakistani President Zia-ul-Haq successfully persuaded Sri Lankan President Jayawardene to reverse his decision, thus preventing a potential breakdown of SARC movement. At the Dhaka foreign ministers’ meeting in 1985, a decision was taken to change the name of the organization from SARC to SAARC. The change in the acronym was based on the thinking that while SARC refers to the process of SARC, SAARC marks the establishment of an association (organization) to promote and develop such cooperation (Kanesalingam 1991a: 1).

The Dhaka Summit and formation of SAARC Five years after the formal process began, sufficient political momentum was generated for the leaders of the seven South Asian nations to hold a summit meeting to advance regional cooperation. The first Summit meeting of the Heads of State or Government of the South Asian countries was held at Dhaka during December 7–8, 1985. The Summit meeting formally launched the SAARC by adopting its Charter. The Charter lists eight objectives of SAARC: to promote the welfare of the peoples of South Asia and to improve their quality of life; to accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potentials; to promote and strengthen collective self-reliance among the countries of South Asia; to contribute to mutual trust, understanding and appreciation of one another’s problems; to promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields; to strengthen cooperation with other developing countries; to strengthen cooperation among themselves in international forums on matters of common interests; and to cooperate with international and regional organizations with similar aims and purposes. (Article I) The Dhaka Summit Declaration stated that cooperation should be “based on respect for the principles of sovereign equality, territorial integrity, political

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independence, non-interference in the internal affairs of other states and mutual benefit.” These principles are in line with India’s famous Panchsheel or “Five Principles of Peaceful Coexistence” foreign policy enunciated by Prime Minister Jawaharlal Nehru. The Declaration also mentioned that regional cooperation should “not be a substitute for bilateral and multilateral cooperation but shall complement them” and that cooperation should not be “inconsistent with bilateral and multilateral obligations” (Article II of the Charter). The Declaration further stipulated that decisions at all levels in SAARC “shall be taken on the basis of unanimity” and that “bilateral and contentious issues shall be excluded from the deliberations” (Article X of the Charter). The last two principles were meant to insure that every member is equal, has a “veto power,” and that discussions in the forum would not be contentious. The South Asian leaders at Dhaka Summit decided to exclude security, bilateral, and contentious issues from SAARC meeting discussion because of India’s stated opposition. The Summit also reached an agreement to establish SAARC headquarter and secretariat in Kathmandu, the capital of Nepal. The Dhaka Summit brought out the central issues on which regional cooperation in South Asia is considered absolutely desirable. As the Heads of State or Government at the Summit (1985) acknowledged: the countries of South Asia, constituting one-fifth of humanity, were faced with the formidable challenges posed by poverty, underdevelopment, low levels of production, unemployment and pressure of population compounded by exploitation of the past and other adverse legacies. They felt that, bound as their countries were by many common values rooted in their social, ethnic, cultural and historical traditions, regional cooperation provided a logical response to these problems.6 Recognizing the differences between the member countries, the Summit settled for a slow and steady growth of SAARC, which, the leaders felt, would facilitate mutual confidence building more than impatient plunges and impracticable undertakings. Accordingly, rather than adding anything new, the leaders reaffirmed their commitment to the implementation of the IPA in nine mutually agreed areas, as suggested at the New Delhi foreign ministers meeting in 1983 – agriculture, rural development, telecommunications, meteorology, health and population control, transport, sports, arts and culture, postal services, and scientific and technical cooperation. As expected, all the leaders of South Asia at the first summit preferred to highlight the commonalities among the South Asian countries and their countries’ readiness to make this endeavor fruitful, an accomplishment thus far largely unrecognized.7 Probably, the greatest success of the first Summit was the opportunity for the leaders to meet on the sideline of the SAARC forum to discuss their bilateral problems and reach some kind of unofficial agreement. For example, General Ziaul Haq of Pakistan and President Jayawardene of Sri Lanka met informally and agreed to intensify trade and other transactions

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between the two countries. India’s Prime Minister Rajiv Gandhi and General Ziaul Haq of Pakistan also met informally and discussed bilateral issues. After the meeting, General Ziaul Haq accepted Prime Minister Rajiv Gandhi’s invitation to visit India on December 17, 1985, which generated great optimism about future Indo-Pakistan relations. A sentimental irritant between India and Pakistan was also removed when General Ziaul Haq agreed to allow Khan Abdul Ghafar Khan, a towering figure of India’s liberation struggle, to visit the Congress centenary celebrations at Bombay in late December 1985 (Mohanan 1992: 67). The Dhaka Summit also got some moral-boosting recognition from international leaders. Mr Zhao Ziyang, the Chinese premier, hailed the Summit as “an event of great significance in the South Asian Region.”8 The US President Ronald Reagan, congratulating the South Asian leaders, described SAARC as a “significant new venture in international cooperation” (Tribune October 20, 1986). The UN Secretary General, Mr Javier Perez de Cuellar, expressed the hope that the Summit would open “a new era of progress and help reduce the tension in the region” (The Hindustan Times December 8, 1985). Mr Jacques Delors, president of the Commission of the European Community, and the Commonwealth Heads of State Summit at Vancouver congratulated the leaders of South Asia for launching SAARC and hoped that the Association would contribute to the region’s peace, stability, and progress (The Statesman October 19, 1987).

Growth and achievement of SAARC: an overview The first decade (1985–95) In spite of a slow and cautious start, SAARC’s institutional structure developed quite early. The Dhaka Declaration of 1985 provided for a modest institutional structure. Since then, a complex organizational structure has emerged (see Figure 4.1). The highest organ of SAARC, the Heads of State or Government Meeting (also known as the Summit Meeting), meets once a year. This Summit Meeting provides overall direction and officially approves new initiatives for SAARC. The Council of Ministers, comprising the foreign ministers of member states, meets twice a year and may meet in extraordinary session as and when necessary to formulate policies, review progress, decide upon new areas of cooperation, and establish additional mechanisms to carry out SAARC’s activities. The Standing Committee, which consists of the foreign secretaries of the member states, meets as often as deemed necessary, but at least once a year, and submits periodic reports to the Council of Ministers. It is entrusted with the responsibility to monitor and coordinate programs of cooperation, approve projects and modalities of their financing, mobilize regional and external resources, and identify new areas of cooperation based on appropriate studies. By the end of the thirteenth summit at Dhaka in 2004, the Standing Committee has held 31 regular sessions and four special sessions.

Other Committees

General Services Staff

Directors

• • • • • • • •

Agriculture and Development Human Resources Development Environment and Forestry Meteorology Social Development Science and Technology Communication and Transport Energy

Technical Committee

Organizational hierarchy Informal channel

Note * SAARC NGOs so far; SAARC Friendship Orgs; SAARC Professional Groups; SAARC Women’s Orgs; South Asian Federation of Accounts.

SAARC NGOs*

Regional Committee

Secretary General SAARC Secretariat KATHMANDU

Action Committee

SAARC Chambers of Commerce and Industry

Programming Committee

Standing Committee

Council of Ministers Foreign Ministers

Figure 4.1 Organizational structure of SAARC (source: SAARC Secretariat and Declarations).

Committee on Economic Cooperation (COEC)

Ministerial Meeting

Heads of State or Government Meeting

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The Standing Committee is assisted by a Programming Committee, which comprises senior officials. The Programming Committee usually meets prior to the Standing Committee sessions to scrutinize the Secretariat budget, finalize the calendar of activities, and take up any other issues assigned to it by the Standing Committee. The Programming Committee now has been assigned to consider the reports of the SAARC regional centers, recommendations of the Technical Committees and submit its comments to the Standing Committee. The Standing Committee, when necessary, can also set up Action Committees, with representatives from member states. Action Committees are responsible to implement projects involving more than two, but not all, member states. Next in the hierarchy are the Technical Committees, which have representatives from all member states. The Technical Committees report to the Standing Committee and are responsible for the formulation, implementation, coordination, and monitoring of programs in their respective areas. Chairmanship of the Technical Committees rotates among member states in alphabetical order every two years. Under the new SAARC Integrated Program of Action (SIPA), the number of Technical Committees has been reduced from thirteen to seven mainly through the amalgamation of the different sectors covered by the various Technical Committees. The main rationale of the reduction in number of Technical Committees has been to increase clarity in terms of the goals and targets of the activities undertaken, as well as to improve the quality and effectiveness of the Committees by eliminating overlapping, duplication, and waste. The seven Technical Committees under SIPA now cover: agriculture and development; communications and transport; social development; environment, meteorology, and forestry; science and technology; human resources development; and energy (ICSW 2003: 5). Apart from these structures, SAARC has also provided for Ministerial Meetings on vital areas of cooperation. Since 1985, a number of SAARC Ministerial Meetings have been held on important areas such as trade, manufactures, and services; basic needs; human resources development; database on socioeconomic indicators; energy modeling techniques; and poverty alleviation strategies. Under this rubric, the Planning Ministers and Commerce Ministers of South Asian countries have met several times to provide policy directives for strengthening regional economic cooperation. The SAARC Commerce Ministers also meet from time to time to develop common positions on issues before WTO Ministerial Meetings. In the thirteenth Dhaka Summit (2005), the Heads of State or Government of SAARC countries agreed for regular finance ministers meeting immediately after every summit to explore and strengthen avenues of financial cooperation in South Asia (Dhaka Declaration November 13, 2005). In order to assist these Ministerial Meetings, there are several committees available. In the Male Summit (1991), SAARC leaders established a Committee on Economic Cooperation (CEC) comprising commerce/trade secretaries of member states. The CEC is mandated to formulate and oversee implementation of specific measures in intraregional trade issues. In addition to SIPA under several Technical Committees, SAARC leaders

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have agreed to establish several regional centers over the years to harmonize the member countries’ efforts to carry out activities in important areas of common interests. Each regional center is managed by a director and a governing body, which consists of representatives from member countries. The governing board reports to the Standing Committee (ICSW 2003: 6). So far, the following regional centers have been established: SAARC Agriculture Information Center (SAIC) and SAARC Meteorological Research Center (SMRC) in Dhaka (Bangladesh); SAARC Tuberculosis Center (STC) in Kathmandu (Nepal); SAARC Documentation Center (SDC) in New Delhi (India); SAARC Human Resource Development Center (SHRDC) in Islamabad (Pakistan); and SAARC Coastal Zone Management Center (SCZMC) in Male. In addition, SAARC leaders have approved to set up four more such SAARC regional centers in member countries: SAARC Cultural Center (SCC) in Colombo (Sri Lanka); SAARC Information Center (SIC) in Kathmandu (Nepal); SAARC Forestry Center (SFC) in Thimpu (Bhutan); and SAARC Energy Center (SEC) in Islamabad (Pakistan). Unlike ASEAN, which got its own secretariat almost a decade after its founding, the leaders of South Asian countries decided to establish a SAARC secretariat at Kathmandu (Nepal’s capital) just one year after the first summit. Although the first Dhaka Summit hinted about establishing a Secretariat, the details were not spelled out. During the second Summit at Bangalore (1986), the foreign ministers signed a Memorandum of Understanding (MOU) on the establishment of the SAARC Secretariat, delineating in some detail the modalities of staffing, funding, and functioning of the Secretariat.9 The Secretariat was inaugurated in Nepal’s capital Kathmandu, on January 16, 1987. The role of the Secretariat is to coordinate and monitor the implementation of SAARC activities, provide professional service to various SAARC meetings, and serve as the channel of communication between SAARC and other international organizations. As the headquarter, the secretariat provides a neutral venue for various SAARC meetings. The Secretariat comprises the secretary general, one director from each member country, and general services staff. The Council of Ministers appoints the secretary general upon nomination by a member country. The appointment is based on the principle of rotation in alphabetical order and is made for a nonrenewable tenure of three years. Until the ninth SAARC Summit at Male (1997), the tenure of the secretary general was for two years. Since, a two-year tenure is too short a time to achieve anything, the SAARC leaders have raised the tenure of the secretary general to three years since 1997. According to the decision of the eleventh Summit held at Kathmandu in 2002, the secretary general holds the rank and status of a minister. Fittingly, the first Secretary General, Abul Ahsan, was from Bangladesh. Since then, seven other diplomats have assumed the office of the secretary general.10 The seven directors are appointed by the secretary general upon nomination by the member countries for a period of three years. In special circumstances, the secretary general can extend a director’s appointment for a period not exceeding three more years in consultation with the concerned member country. A director is in charge of a functional unit called a

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division. Frequent interdivisional meetings, presided over by the secretary general, are held to insure close interaction and coordination among the divisional units. Initially, four directors were appointed by India, Nepal, Pakistan, and Sri Lanka. The Council of Ministers meeting in Islamabad in November 1989 decided to expand the numbers to seven directors. Thus, directors from Bhutan, Bangladesh, and Maldives joined the Secretariat in 1990 (SAARC Record November 1990: 20). The General Services Staff are appointed by the secretary general from the nationals of the member countries through an open recruitment process. Outside of this formal structure, several other institutions – such as SAARC Chamber of Commerce and NGOs – exist which provide important information on specific issues to the secretary general. Broadly speaking, there are three levels of financial arrangements for SAARC activities. At the first level, member countries make annual pledges for financing SAARC activities at the national level. The allocated funds remain at the disposal of member countries and generally cover the cost of hosting of meetings and organization of SAARC-related events within the country and of sending delegations to meetings, seminars, and workshops held in other countries. The second level of financial arrangements concerns with the budget of the SAARC Secretariat. At the Bangalore Summit (1986), the member countries agreed on a formula according to which each member country is required to contribute a minimum of 3 percent toward the annual budget expenditure of the Secretariat (Table 4.1). The minimum 3 percent payment indicates equality among the seven member states. Besides, 3 percent payment, each country makes an additional contribution assessed on the basis of its per capita income and the economic capability. The third level of financial arrangements relates to the expenses of regional institutions. The host country is required to bear 40 percent of the cost of regional institutions. The remaining 60 percent is distributed among all seven countries on the basis of the same formula applied to the budget expenditures of the SAARC Secretariat.

Table 4.1 Contribution of SAARC countries to annual budget expenditures of the secretariat Member state Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Total

Equal contribution (%)

Assessed contribution (%)

Total share (%)

3 3 3 3 3 3 3

8.35 2.00 29.10 2.00 8.35 20.85 8.35

11.35 5.00 32.10 5.00 11.35 23.85 11.35

21

79.00

100.00

Source: Abul Ahsan (1992), SAARC: A Perspective, p. 14.

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Institutional evaluations During the first decade, SAARC has evolved slowly in terms of institutions and programs.11 However, it is true that most of the programs and achievements of SAARC exist on paper. The much talked about SAARC Food Security Reserve could not be utilized to meet the needs of Bangladesh during its worst natural disaster in 1991. The Convention on Suppression of Terrorism appears to be a failure, as both India and Pakistan have failed to curtail the movement of terrorists across their borders. It is also true that most SAARC activities are confined to “soft” areas of cooperation and to the holding of seminars, workshops, and short training programs. These activities may be useful, but they do not address priority core areas of trade and security and therefore lack visibility and regional focus, so essential for evolving a South Asian identity. Most importantly, SAARC suffered from an acute resource crunch, leading to non-implementation of most of its projects. SAARC’s existence, however, has enabled the South Asian political leaders to meet regularly and carry on informal discussion to address their mutual problems. This is not an insignificant achievement given South Asia’s past history and low level of interaction among South Asian countries since their independence. Informal talks among the leaders at regularly held SAARC meetings have led to inter-elite reconciliation on many sensitive issues, producing some noteworthy results in South Asia. The informal talks between the Indian and Pakistani prime ministers at the second SAARC Summit meeting at Bangalore in November 1986 led to the diffusion of tension between the two countries on the issue of India’s troop exercise (Operation Brasstacks) on the Indo-Pakistan border. An informal discussion between Indian Prime Minister Rajiv Gandhi and Sri Lankan President Jayawardene at the 1986 Bangalore Summit eventually led to a peace accord on the Tamil problem in 1987. As a result of an informal meeting and discussion between the prime ministers of India (Narasimha Rao) and Pakistan (Nawaz Sharif) at Davos (Switzerland) in 1992, the Pakistani government took action to prevent the move of the Jammu and Kashmir Liberation Front (JKLF) to cross the CFL in Kashmir later that year. The Davos meeting was possible because of an earlier informal agreement between the two leaders at the sixth SAARC Summit meeting at Colombo in December 1991. Despite this utility of SAARC annual summit meetings, at least three summits were cancelled or postponed during 1985–95 period because of political tensions between India and her neighbors. After the Bangalore summit, the Indian decision to use her Air Force jets to drop off relief materials in the Jaffna Peninsula against the wishes of Colombo led to a serious crisis between India and Sri Lanka in 1987. The Indian action was a violation of Sri Lankan airspace and was widely condemned by all the South Asian countries as an attack on the sovereignty of Sri Lanka. As a protest to such action, Sri Lanka refused to attend the SAARC foreign ministers’ conference scheduled for New Delhi during June 18–19, 1987, to finalize the draft for the Kathmandu Summit. It is significant that while all the neighboring South Asian countries condemned India’s action

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in the strongest possible terms, none of them tried to cash in on India’s possible discomfiture at the Sri Lankan boycott of the SAARC meeting. On the contrary, they seemed anxious to stave off any such embarrassment (The Hindu June 13, 1987). Determined to keep SAARC alive, the foreign ministers of Pakistan, Bangladesh, Maldives, and Nepal wrote personal letters to Sri Lanka’s president and foreign minister, urging them to participate fully in the SAARC session at New Delhi (The Hindu June 17, 1987). Pakistan took an important initiative to diffuse the crisis. In his letter to the foreign minister of Sri Lanka, Mr A.C. Shahul Hameed, the Pakistani foreign minister, Mr Yakub Khan, wrote: “Unfortunate differences have arisen on the eve of a highly important meeting of SAARC which has made noteworthy progress. It is of the utmost importance that nothing should happen that should constitute a setback to the consolidation of SAARC” (Mohanan 1992: 70). Finally, the Sri Lankan government agreed to participate in the forthcoming SAARC foreign ministers meeting in New Delhi. Two implications of this crisis can be noted here: no South Asian country wanted the premature demise of SAARC, and it is fair to say that in the absence of SAARC, each country would have dismissed the crisis as bilateral concerns and a collective regional initiative to defuse the crisis would not have occurred. The third Summit meeting of South Asian Heads of States or Government was held at Kathmandu during November 2–4, 1987. There were clearly two agendas discussed in this Summit: 1

2

the private agenda, which dealt with such hard issues as security of South Asian countries, border issues, membership of Afghanistan in SAARC, South Asia as a nuclear-free zone, and bilateral problems between the South Asian countries; the official agenda, which discussed the soft, apparently non-controversial, issues that resulted in a common declaration.

Hard issues of the private agenda were discussed in behind-the-scene meetings between the Heads of States or Government and foreign ministers. For instance, the Indian Prime Minister, Rajiv Gandhi met with Sri Lankan President Jayawardene for two hours after dinner on the first night of the Summit and again for the same duration on the second night. They discussed a wide range of issues, including a defense pact between the two countries. Similarly, India’s External Affairs Minister, Natwar Singh met with his counterpart in Sri Lanka, Hameed to discuss the Tamil issues in Jaffna. The meeting between the Indian prime minister and the Sri Lankan president led to what could be considered the most notable achievement of the Summit, the signing of Indo-Sri Lankan Peace Accord (The Hindustan Times November 4, 1987). In addition to his meeting with the Sri Lankan president, Prime Minister Rajiv Gandhi had also informal breakfast meetings with King Birendra of Nepal and the King of Bhutan, Jigme Singye Wangchuk, to review bilateral issues (Dawn November 5, 1987). Indian prime minister and President Ershad of Bangladesh met on the second day of the Summit. The two leaders agreed to

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start discussions at the tripartite level with Nepal to augment water flows of the Ganges river. President Ershad was reportedly happy to know from the Indian Prime Minister that the process of administrative and legal formalities for handing over the Tin Bigha corridors to Bangladesh was in the final stage (The Hindu November 3, 1987). After informal discussions over a period of three days, Prime Minister Junejo of Pakistan and the Indian Prime Minister agreed to convene an early meeting of their respective secretaries for economic affairs to explore various areas of economic and trade cooperation. Both prime ministers also agreed to convene an early meeting of secretaries for interior and home affairs to take appropriate measure to prevent illegal crossing of borders. The Siachen glacier issue, the second most important irritant after Kashmir in IndoPakistan relations, was discussed by the two leaders, and it was decided that a third meeting at the defense secretary level would be held to address this issue as soon as possible. Both leaders also agreed to appoint surveyor generals for the purpose of demarcating international boundaries at Sir Creek, close to the Rann of Kutch. They decided to settle the maritime boundaries in accordance with the international law covering the sea lines (Bangladesh Observer November 4, 1987). As a result of so many unexpected agreements between the two countries, Pakistan reportedly withdrew its proposed contentious amendment – that is to declare South Asia as a nuclear-free zone region, which India opposed – to the draft declaration (Mohanan 1992: 78). The Kathmandu Summit can be described as a triumph of accommodative diplomacy. It demonstrated that high-level agreements can be reached on difficult bilateral problems through informal, behind-the-scene negotiations. Not all outstanding issues were addressed, much less agreed upon, in the Summit meeting. But, given the tension-ridden atmosphere in which the conference began, the three-day Summit meeting can be considered an important step in the growth of SAARC. Reflecting the general sentiment of the South Asian leaders assembled at Kathmandu, the outgoing chairman of SAARC, Rajiv Gandhi, commented: “We have succeeded in nurturing South Asian Regional Cooperation because it is firmly grounded in the realities of the region. Ours is a concord for cooperation and not a concourse for controversy” (Patriot November 3, 1987). The fourth Summit at Islamabad was held as scheduled in 1988 in a changed regional environment. In 1988, President Ziaul Haq died in a plane crash. After 11 years of militarist rule under Zia, Pakistan had a democratic election in 1988, and Benazir Bhutto, winning the election with a comfortable margin, became the new prime minister. Indian Prime Minister Rajiv Gandhi’s visit to Islamabad to attend the SAARC Summit meeting was considered significant, as he was the first Indian prime minister to pay an official visit to Pakistan in 28 years. The meeting between Benazir Bhutto and Rajiv Gandhi brought back historical and personal memories of the “Simla spirit” in Indo-Pakistan relations. The slain parents of these two leaders, Indira Gandhi and Zulfiqar Ali Bhutto, had signed the historic Simla Agreement in 1972 to resolve Kashmir issue. As widely expected, the informal meetings between Benazir Bhutto and Rajiv Gandhi – described as the “representatives of a new generation” in the media of South

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Asian countries – led to important bilateral agreements at the Islamabad Summit. Both Pakistan and India agreed not to attack each other’s nuclear installations and facilities. They also agreed to begin “constructive dialogue” on the Kashmir issue (Dawn December 31, 1988). Benazir Bhutto categorically stated that her country would not use the Sikh card against India any more (Mohanan 1992: 80), a daring statement, given Pakistan’s constant denial of any such involvement in Punjab. In short, the three most important political irritants in Indo-Pakistan relations, that is, Kashmir, cross-border terrorism, and nuclear issues, were deliberated privately at the Islamabad Summit. Such discussions underlined the utility of SAARC as a confidence-building mechanism (Muni 1988a: 13–26). As Ross Masood Hussain, director general of the Institute of Strategic Studies at Islamabad, has perceptively remarked: But for the association [SAARC], a meeting between the Indian and Pakistani Prime Minister might not have been possible so soon after the revival of representative government in Pakistan. The significance of these confidence building exchanges between SAARC leaders can hardly be exaggerated. (1990: 4) After the Islamabad Summit, the SAARC movement suffered a setback, as Colombo refused to host the fifth Summit in 1989 because of New Delhi’s failure to completely withdraw the IPKF from the northeastern part of Sri Lanka. When the last batch of IPKF left on March 25, 1990, Sri Lanka offered to host the fifth SAARC Summit. It was, however, agreed at the Islamabad meeting that Colombo would host the fifth Summit in 1989, and Maldives would be given the special honor of hosting the sixth Summit in 1990, to coincide with the latter’s twenty-fifth anniversary of independence from Britain (Male Declaration 1990: 14). A diplomatic confrontation ensued between Maldives and Sri Lanka. With the intervention of other SAARC members, Sri Lanka finally relented in favor of Maldives, where the fifth Summit was held during November 21–23, 1990. The successful completion of Male Summit did not mark the end of SAARC Summit crisis. The sixth SAARC Summit, which was scheduled to be held at Colombo during November 7–9, 1991, was postponed following the King of Bhutan’s (Jigme Singye Wangchuk) inability to attend the Summit because of the officially stated reason of widespread domestic violence and unrest in the capital city of Thimpu. While the idea of holding the Summit with a representative of the King of Bhutan was agreeable to Pakistan, Sri Lanka, Bangladesh, Maldives, and Nepal, India opposed it on technical grounds. According to Indian arguments, holding the summit in the absence of one of the heads of state would violate the SAARC Charter. The Charter stipulates that the Heads of state or Government of all the member nations must be present for the summit to take place. Moreover, India argued that holding a summit meeting without heads of the state or government would set an unwelcome precedent and undermine the

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significance of summit meetings. While India might not have played a role in instigating Bhutan to sabotage the conference, as was widely reported in the media in Colombo and Pakistan,12 the Indian government certainly did not empathize with the beleaguered Sri Lankan President to save the sixth Summit (Dhanjal 1991: 25–27). Several developments can be mentioned to explain India’s unhelpful action. Relations between New Delhi and Colombo began to deteriorate after Ranasinghe Premadasa succeeded Jayawardene as the new president of Sri Lanka in January 1989. The new president’s stubborn stance about the immediate withdrawal of IPKF from the island, without taking into consideration the logistical problems, was not appreciated by New Delhi. India’s proposal of a phased withdrawal of the IPKF was rejected by the new Sri Lankan president. Even President Premadasa refused to host the SAARC Summit in Colombo in 1989 on this ground. Moreover, in an effort to undermine the role of India, he invited the LTTE leaders for direct negotiation and sought the Tamil militants’ support to fight against the “common enemy” – IPKF. Such actions exposed the hollowness of New Delhi’s foreign policy, caused quite a bit of embarrassment in New Delhi’s policy-making circles and, more importantly, led to an increase in tension between Tamil Nadu and New Delhi. During 1989–91, President Premadasa’s failure to deal with the domestic crisis in Sri Lanka was criticized by the opposition parties. In October 1991, there was a move to impeach President Premadasa, who was convinced that the impeachment move by the opposition party was inspired by New Delhi in order to discredit him. To save himself from further political humiliation, he blamed India and expelled the local correspondent of All India Radio on the charge of false and malicious reporting. Such symbolically provocative actions further aggravated relations between Colombo and New Delhi. The initial cancellation of the Colombo summit was widely perceived as the collapse of the SAARC movement. Commenting on the failure of the sixth SAARC Summit, The Economist observed, “it [SAARC] looks more than ever like an idea whose time has yet to come” (November 16, 1991). However, as a result of intensive diplomatic consultation, mainly undertaken by the President of Maldives, Maumoon Abdul Gayoom, it was agreed to hold a one-day Summit at Colombo on December 21, 1991. The King of Bhutan’s apology for his failure to attend the November SAARC Summit helped remove some of the misunderstandings and bitterness among policymakers in Colombo. The holding of the sixth SAARC Summit proved the skeptics wrong and confirmed the fact that South Asian ruling elites were still committed to keep SAARC alive. SAARC since 1995 Expectation for a greater momentum for SAARC in the second decade was high following two summit meetings at Male (1997) and Colombo (1998), where Indian and Pakistani prime ministers showed considerable warmth toward each other and resolved to take concrete initiatives to address their bilat-

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eral problems. Holding informal discussions on the sidelines of the SAARC Summit meeting at Male in 1997, Indian Prime Minister I.K. Gujral and Pakistani Prime Minister Nawaz Sharif agreed to follow up the Simla Agreement principles to resolve their outstanding issues. This initiative was significant because the two countries came together for the first time to work toward mutually acceptable solutions in the spirit of Simla Agreement principles nearly two decades after signing the Agreement. The Colombo summit in 1998 was significant because it was the first contact between the newly elected Indian Prime Minister from the BJP party, Atal Behari Vajpayee, and Pakistani Prime Minister Nawaz Sharif after the nuclear tests by the two leaders in the same year. The informal personal meeting at Colombo seemed to have broken the ice between the two leaders and started a process that culminated in the Lahore bus journey in 1999 to renew the peace efforts between India and Pakistan. However, this optimism of a greater momentum for SAARC plummeted after the Kargil war in 1999 and the military coup in Pakistan in the same year. From 1999 to 2002, no SAARC annual summits were held because of India’s refusal to attend the summit meetings. India’s decision not to participate in the SAARC summits during this period was driven primarily by three issues. First, there was a strong official opposition in New Delhi to the Indian prime minister’s sharing of a platform with General Musharraf, who came to power through a military coup. Although New Delhi’s official position was that the Indian prime minister’s visit to Islamabad would unnecessarily confer legitimacy on General Musharraf’s military coup, which India had condemned strongly, the real reason was a strong mistrust and suspicion among Indian policymakers toward General Musharraf, who was the principal architect of the Kargil war. Second, Prime Minister Vajpayee was deeply disappointed with the failure of his peace initiative at the Agra summit in July 2001, where, despite India’s opposition, President Musharraf sought to focus on the resolution of Kashmir issue. Third, Prime Minister Vajpayee, responding to domestic pressure, took a strong stand against Pakistan’s alleged involvement in a terrorist attack on Indian Parliament in December 2001. Although India later agreed to attend the summit meeting in Kathmandu in 2002 – where the “famous handshake” between President Musharraf and Prime Minister Vajpayee was widely perceived as a peace overture between the two countries – it refused to attend the summit in 2003 scheduled to be held at Islamabad. Indian leaders’ distrust toward Pakistani military regime, Pakistan’s insistence on Kashmir as a core issue, and Pakistan’s refusal to reciprocate the most-favored nation (MFN) status with India were some of the main reasons for India’s refusal to attend the Islamabad summit meeting. Confronted with the arguments that New Delhi’s stance was causing damage to the regional grouping, Indian Prime Minister Vajpayee decided to attend the delayed Islamabad summit in 2004. However, the Dhaka summit scheduled for January 2005 got postponed twice – first time because of the Tsunami in the Indian Ocean; second time because of the refusal of the new Indian Prime Minister Manmohan Singh to attend the meeting. India’s stated reason for not attending the summit was a rapidly deteriorating

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security environment in Bangladesh following the assassination of the country’s foreign minister. But, this was not the real reason for India’s decision. The unexpected political developments in Nepal, where King Gyanendra, disregarding New Delhi’s advice, assumed dictatorial power by dissolving Parliament and all other democratic institutions was the main reason for India’s decision. It was felt in New Delhi that Indian Prime Minister’s sharing of a platform with King Gyanendra would confer legitimacy on the King and his dictatorial regime, which India was in no mood to oblige. Several months of intense diplomatic negotiations between India, Bangladesh, and Sri Lanka, including King Gyanendra’s willingness to negotiate with Nepal’s political parties to restore democracy, led India to change its mind. Eventually, after ten months of delay, the thirteenth Dhaka summit was held on November 13, 2005, saving another possible collapse of the organization. Indian leaders’ decisions to cancel or delay several SAARC summit meetings are seen as part of India’s coercive regional diplomacy by her neighbors and have evoked resentment among the leaders of other South Asian countries. Although the momentum of progress of SAARC in the second decade has not picked up as expected, SAARC summit meetings, nonetheless, have produced some important agreements. At the twelfth summit in Islamabad (2004), two important agreements were signed. One was a SAFTA, providing a broad framework for economic cooperation among South Asian states. The adoption of the SAFTA framework, as discussed in Chapter 6, is a major initiative to deepen regional integration efforts in South Asia. The SAFTA framework is an improvement over the existing SAPTA, which was signed on April 11, 1993, and came into force in December 1995. Although SAPTA has run into troubles because of Indo-Pakistani disagreements over the lists of tradable items with reduced tariffs, it is fair to say that there has been some advances in the process of trade negotiation under SAPTA to further trade liberalization in the region.13 The other important agreement signed at this summit was an Additional Protocol to SAARC Convention on Suppression of Terrorism, outlining various measures to combat terrorism in South Asia. The success of this protocol, however, depends primarily on the level of cooperation between Indian and Pakistani leaders. At the thirteenth Summit in Dhaka (2005), the Islamic Republic of Afghanistan was admitted as the eighth member of SAARC. At this summit, India also agreed with other leaders to grant observer status to China along with Japan. While Pakistan and Bangladesh supported China’s candidature to join SAARC in the past, India was more reluctant about the prospect of Chinese membership. Indian willingness to accept China’s observer status at SAARC reflects the growing positive relationship between the two giants in Asia. By 2005, SAARC has secured the United Nations Observer Status in addition to signing number of MOU with various UN agencies for collaboration. In August 2006, the SAARC Council of Ministers agreed to grant observer status to the United States, South Korea, and the European Union. Such moves not only

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enhance SAARC’s external visibility, but also may put additional pressure on SAARC members to seek implementation of agreed upon cooperative projects. As in the case of ASEAN, these transregional linkages can provide increasing credibility to SAARC’s status as an important regional organization. It can also give SAARC members a somewhat bigger voice in global institutions, including the United Nations. Given the magnitude of poverty in the region, the Heads of State or Government of South Asian countries at the thirteenth Dhaka Summit decided to establish a much-needed SAARC Poverty Alleviation Fund (SPAF) with contributions “both voluntary and/or, assessed, as may be agreed by member states” (Dhaka Declaration November 13, 2005). This initiative was taken by Bangladesh with full support from other members of SAARC. It was also decided to deepen SAARC linkages with Asian Development Bank (ADB) and World Bank to explore funding opportunities to implement various SAARC projects. The summit leaders agreed to integrate SAARC development goals with Millennium Development Goals (MDGs) in order to tap on external resources to implement various development projects. Despite the promise of developing into the most important regional organization in South Asia, SAARC’s growth has remained slow in terms of institutional developments and program implementation. Not surprisingly, there is considerable basis for less positive evaluations, and the organization has received a wide range of open criticism in the SAARC countries. In fact, two of the principal members of SAARC – India and Pakistan – have led the chorus of public criticisms against the organization. Expressing deep disappointment at the lack of any substantial achievement of SAARC, Indian Prime Minister, A.B. Vajpayee, noted at the inaugural function of the SAARC Information Ministers’ conference in December 2003: Since its inception in 1985, SAARC has been struggling to emerge from the concept to the practical reality of close regional cooperation . . .. It is time we recognize what it means for all of us in South Asia. If SAARC cannot organize itself, it will simply miss the boat. Other alignments will develop to seize the economic opportunities offered by close integration. (The Hindu December 9, 2003) Pakistan’s Information Minister, Sheikh Rashid, echoed this sentiment at the same meeting by describing that “SAARC’s role had remained marginal in South Asia” (The Hindu December 9, 2003). In order for SAARC to grow and become a relevant organization in South Asia, Pakistani leaders have argued at several forums to include political and security issues in the SAARC agenda in the pattern of ASEAN and European Union. During the past two decades, SAARC has been able to establish a number of regional institutions to initiate and carry out important regional programs. For example, creation of a regional food security reserve, cooperation in the area of meteorology, health, agriculture, poverty reduction, environment, forestry,

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transport, communications, biotechnology are some of the important SAARC initiatives. But, it is fair to say that these institutions and their initiatives have offered more promise than performance. Ironically, none of these regional centers are truly regional as yet but can be described as national centers prone to varying degrees of domestic political imperatives. The activities of these regional institutions are normally confined to holding of seminars, training programs, and exchanging of information on rather low priority of issues. These activities have so far lacked a regional focus. Since the activities of the regional centers are mostly financed by national governments, the scope and frequency of these activities are largely determined by domestic politics and the financial health of a particular country. In more than a decade of existence, these regional institutions have not undertaken a single collaborative project. There is a deep resistance to undertaking anything that could be collaborative in nature. The reasons for this, as explained in subsequent chapters, rest with two variables: weak governments and lack of endorsement by key domestic groups. The Secretariat of SAARC seems to be patterned after the ASEAN Secretariat. But while ASEAN took almost nine years to set up its Secretariat, SAARC accomplished this task in less than two years (since the first Summit in 1985). Establishment of the Secretariat within such a short time indicates willingness among the policymakers in South Asia to give a sense of permanence to SAARC. However, the role of the Secretariat and the Secretary General remain unclear. Unlike the ASEAN and European Union, where the secretariat has the authority to initiate programs and coordinate projects to strengthen regional cooperation, SAARC Secretariat performs none of these roles. In case of SAARC, the Standing Committee and the Technical Committee, which consists of representatives of member countries, are responsible to monitor and coordinate SAARC activities (Ahsan 2004: 5). Since these committees are intergovernmental institutions, it is not surprising that members of these committees take positions of their respective governments rather than sharing any regional perspectives. All activities of SAARC – program initiation and implementation – are undertaken by the member states. The Secretary General has no responsibility and power in matters of program initiation and implementation. As the experiences of ASEAN and EU demonstrate, the role of a strong secretariat and secretary general is central to the cooperative process. In case of SAARC, South Asian leaders have not shown any preference for a stronger secretariat and secretary general. The reasons for this rest with two issues: lack of confidence and trust among SAARC leaders and the unwillingness of SAARC leaders to part with their sovereignty (Ahsan 2004: 8). In the absence of a strong secretariat and secretary general, it is difficult to move SAARC forward.14 The SAARC Charter also partly explains the organization’s limitation in carrying forward concrete cooperative agendas. The Charter provides that “decisions at all levels in SAARC are taken on the basis of unanimity.” This unanimity clause makes decision-making process extremely slow and difficult. Even after a decision has been taken, SAARC has no ability to enforce implementation of agreed upon measures. Further, the Charter provides that “bilateral

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and contentious issues are excluded from the deliberations of the Association.” The inclusion of this principle in the Charter in 1980s was considered as pragmatic, given the existence of a host of bilateral problems primarily between India and Pakistan, but also between India and its smaller neighbors, including Nepal, Bangladesh, and Sri Lanka. But, it has serious implications for SAARC’s growth. While bilateral issues can be understood and well defined, the “contentious issues” are clearly subjective determination of member states because there is no specific criteria in the Charter that defines a contentious issue. In the absence of specific criteria, a member state can consider any issue as contentious and thus prevent its discussion or resolution at the SAARC forum. It can be argued that by excluding contentious issues from discussion at SAARC forum, the regional leaders lost a vital opportunity to allow a critical role for SAARC as a mediator in regional conflicts. Consequently, SAARC has been mostly a place for dialogue with an aversion to addressing the core issue of security and limited involvement in concrete cooperation. SAARC and security issues Even though the framers of SAARC insisted that they were not setting up a security-oriented organization, security matters have tended to dominate recent summit meetings of top SAARC leaders. As discussed earlier in this chapter, security concerns formed an important part of considerations for the establishment of SAARC. In fact, in his initial proposal, the late President of Bangladesh, Ziaur Rahman, underlined the need for security cooperation among South Asian countries because of his conviction that peace and security were prerequisites for economic progress in South Asia. However, it was necessary to leave out such a role for SAARC because of the serious opposition from Indian and Pakistani leaders (Mohsin 2005: 36). The SAARC formula, which developed after a prolonged discussion among South Asian political leaders, was to eschew security problems, leaving these problems to national action and bilateral or multilateral cooperation through other channels. The objectives of SAARC were set to enhance economic and other forms of non-military cooperation among South Asian countries. It was thought that increasing cooperation in the economic area (low politics) and other soft areas would eventually lead to stability, development, and peace in the region. Two different visions seem to have emerged among South Asian leaders about the role of SAARC in the region. While Indian leaders emphasize that SAARC’s energy should be directed to achieve regional economic progress and prosperity, other SAARC leaders see SAARC as an instrument for peace, stability, security, and development. This divide in the vision between Indian leaders and other South Asian leaders has prevented SAARC from addressing the core issue of security in a transparent manner. It is true that military topics are kept off the formal agenda of SAARC meetings of the heads of the government and foreign ministers of South Asian countries. But, the top officials at

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these meetings have often taken advantage of the opportunities to discuss security-related issues outside of formal sessions. However, after two decades and since the Islamabad Summit in 2004, South Asian leaders have started to openly talk about the need for security cooperation in South Asia. Commenting on the need to strengthen regional cooperation efforts in South Asia at the twelfth SAARC summit in Islamabad (2004), Indian Prime Minister Vajpayee made indirect references to the imperatives of security cooperation in South Asia. He called for an end to “mutual suspicions and rivalries” and emphasized that “history can remind us, guide us and warn us. It should not shackle us . . .. We have to look forward now with a collective approach in mind to achieve peace, stability, and prosperity in the region” (Mohsin 2005: 38; emphasis added). Other South Asian leaders were less indirect in their comments on the need for security cooperation at this summit. Describing the twelfth Summit as a “key watershed event,” Prime Minister Begum Khaleda Zia of Bangladesh expressed hope that it would lead to peace and security in South Asia. Prime Minister Zafarullah Jamali of Pakistan told the participating delegates at this summit that greater economic integration is inexplicably linked to the creation of requisite political climate of peace and stability. Without security cooperation, he contended, deeper economic cooperation in South Asia would remain a distant dream. Hailing the peace overtures between India and Pakistan at the summit, Sri Lankan President Chandrika Kumaratunga observed that peace between India and Pakistan would “boost chances of saving South Asia from global marginalization.” While President Maumoon Abdul Gayoom of Maldives made a strong plea for security cooperation among the South Asian countries, Nepalese Prime Minister Surya Bahadur Thapa underscored the critical importance of collective efforts to combat terrorism in South Asia.15 The open references to security cooperation by South Asian leaders reflect the growing importance of security consideration in SARC process. They also demonstrate that for effective implementation of regional cooperation programs in a region like South Asia, it is necessary to address political and security issues, no matter how controversial they are. At least, four developments can be discussed here to explain the imperatives for regional security cooperation in South Asia. First, the asymmetry between India and her neighbors in respect to size, demography, military, technology, and economic capabilities has generated apprehension among smaller South Asian countries about India’s regional strategic goals. Unlike other regions, where states demonstrate their preoccupation with security from external interferences, smaller countries in South Asia are preoccupied with security from Indian interference. As discussed in the previous chapter, these countries have sought external intervention to counter the prospect of any Indian intervention into their domestic affairs. Indian policymakers in recent years recognize that their failure to inspire trust and confidence and to remove threat perceptions among South Asian neighbors will only strengthen the prospects of more external intervention in the region. In addition, India’s neighbors have been experiencing domestic turmoil, political instability, and worsening security situation. India’s concern is that continuation of such

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turbulence and volatile environment in her neighborhood would be less attractive for foreign investors who are looking at India as a new investment destination. This would have an adverse impact on India’s economic growth and aspiration for global leadership. Thus, with widespread instability and uncertainty in the neighborhood, India has no choice but to actively engage in security arrangements with her neighbors to bring peace and stability to the region. The enormous economic, military, and humanitarian cost of managing conflicts in South Asia provides the second imperative for regional and even multilateral security cooperation. In their efforts to bring stability and peace to the region, Indian policymakers have slowly realized that it is no longer possible and even desirable to prevent the involvement of major powers in the region’s security affairs. The cost of peace, the need for India’s defense modernization, and India’s strategic goal of a major global power require India to pursue, what C. Raja Mohan (2004) calls as a policy of “security multilateralism.” This policy tolerates inclusion rather than exclusion of major powers in managing South Asia’s security-related issues. In the post-Cold War era, security multilateralism is in India’s interest and remains a realistic option for India to secure her global objective. The acquisition of nuclear bombs by India and Pakistan and the resulting “stability–instability paradox” that South Asian region has fallen into (Ganguly 2001: 126–129) provides the third imperative for regional security cooperation in South Asia. After their nuclear tests in May 1998, both Indian and Pakistani leaders sought to initiate active diplomatic engagements, including high-profile summitry meetings, to develop preventive measures. The failure of these initial efforts, coupled with the outbreak of Kargil war in 1999 and continuing lowintensity conflicts in Kashmir, has increased the urgency of security cooperation between the two nuclear weapon capable states. The possibilities of nuclear accidents, nuclear terrorism and blackmail, misperception, unauthorized nuclear use, and technological error have reinforced the importance of regional security cooperation to manage conflicts between India and Pakistan. In this context, the concept of “cooperative security” can be advanced to capture the logic of regional security cooperation in South Asia (Dewitt 1994; Nolan 1994; Banerjee 1998; Raja Mohan 2004). Although the term “cooperative security” has been extensively used by security scholars in the post-Berlin Wall (1989) discourse to explain the changing international relations in Eastern Europe and former Soviet Republics, there is no consensus on the meaning of the term. C. Raja Mohan (2004: 7) provides a description of the term, which is specifically relevant to South Asian security environment: Cooperative security could be understood as policies of governments, which see themselves as former adversaries or potential adversaries to shift from or avoid confrontationist policies. Cooperative security essentially reflects a policy of dealing peacefully with conflicts, not merely by abstention from violence or threats, but by active engagement in negotiation and a search for practical solution and with a commitment to preventive measures. Cooperative security assumes the existence of a condition in which the two sides

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Origin and evolution of SAARC possess the military capabilities to harm each other . . .. Establishing cooperative security runs into a complex process of building confidence and trust and there could be repeated failures.

Given the reality of security and economic interdependence in South Asia and the prevailing security complex in which both India and Pakistan develop their security strategies, the idea of cooperative security offers a realistic framework for Indian and Pakistani leaders to address the issues of conventional military and nuclear conflict management in the region. Finally, the most important imperative for regional security cooperation comes from the threat of cross-border terrorism in South Asia. There is a convergence of dominant public and official opinion in South Asia on the linkage between terrorism and decline in investment and economic growth. Given the surge in terrorist activities in South Asia after September 11, 2001, South Asian governments have shown greater interests in regional efforts to fight against terrorism. The signing of an additional protocol on terrorism at the thirteenth Dhaka Summit by the leaders of South Asian countries is an indication of this intention. However, South Asia’s record of implementing regional programs in fighting against terrorism is far from impressive. The heads of government of seven SAARC countries signed a Regional Convention on Suppression of Terrorism in November 1987. After ratified by all member states, this accord came into force in August 22, 1988. Although touted as the most significant achievement of SAARC, this accord remained a non-starter from the beginning with only lip-service endorsements from Pakistan and other SAARC countries. The accord exists today but perhaps as a statement of an ultimate goal than anything else. The success of any regional accord to address issues of terrorism in South Asia effectively requires coordination and application of complex policies. To what extent South Asian leaders can realistically implement these policies given their domestic political compulsions remains an open question.

Conclusion To be fair, SAARC has produced some positive results. One of the most significant achievements of SAARC relates to its annual summit meetings, which is provided by the SAARC Charter. The primary objective of the annual summit meetings is to facilitate face-to-face interaction and communications between heads of South Asian states or governments which would not have been otherwise possible. It is true that through improved communications and closer personal interaction on an annual basis, South Asian top political leaders have achieved some success in finding mutually acceptable solutions to their many domestic and regional problems. But, during the past two decades (1985–2005), eight annual summits – three summits between 1985 and 1995 and five summits between 1995 and 2005 – had been missed because of political tensions between India and her neighbors.16 The failure to hold these annual summits has, undoubtedly, deprived the South Asian leaders of an important opportunity for

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constructing relationships based on shared interests and has generally become counterproductive for moving SAARC agenda forward. In nutshell, rhetoric has generally outdistanced performance in South Asia’s efforts at regional cooperation. Over the past two decades, there has been a proliferation of SAARC-related meetings and declarations, while real progress has been elusive. Deeper regional cooperation in South Asia has not been possible because of the disparate nature of the region and Indo-Pakistani antagonism. It is ironic that the two major powers in South Asia are simultaneously quarreling with one another and urging greater South Asian institutionalized cooperation. Unless Indo-Pakistani tensions diminish, real progress of SAARC will not be possible. From the point of view of SAARC’s growth, it remains problematic that the political leaders of both India and Pakistan find it more useful to build relationship with China, countries in Central Asia, Middle East, and Western powers than to invest their political energy and capital to help build a greater commonality of interest and perspectives among themselves and their South Asian neighbors. Despite all the big talk of growing need for regional cooperation by the smaller states of South Asia, their governments remain focused on their own internal problems and bilateral relations with their immediate giant neighbor, India. It is not surprising, therefore, that more than 20 years after its creation, SAARC has achieved little tangible results, and there is no real sense of a SAARC community except among a small group of officials and scholars. This is recognized by the political leaders of South Asian countries. Addressing the Foreign Ministers’ meeting in November 2005, which was held just before the thirteenth SAARC Summit meeting at Dhaka in December 2005, Bangladesh Foreign Minister, Morshed Khan, stated: “this summit will not be a summit of declaration, it would be a summit of implementation” (Financial Express November 13, 2005). Lack of implementation of agreed upon programs has, undoubtedly, diminished the relevance of SAARC. Why has SAARC not been able to implement its programs effectively can be explained by examining several serious challenges that political leaders face in South Asia. These challenges are discussed in the next chapter.

5

The challenge of regionalism in South Asia

This chapter examines four major challenges that have significant bearing on the growth of regional cooperation in South Asia: India’s hegemonic status and Pakistan’s continuing challenge to India’s position, existence of weak ruling coalitions, ethnic crisis, and nuclear issues. Specifically, I explore the following questions. How has India’s hegemonic status affected the regional cooperation activities in South Asia? Is India’s structural domination a “facilitating condition” for the growth of regional cooperation in South Asia? How has the strength of South Asian governments affected the process of regional cooperation? What are the implications of ethnic dynamics for national cohesion and regional accommodative diplomacy in South Asia? And finally, what are the implications of overt nuclear capability of India and Pakistan for regional stability and cooperation in South Asia?

Hegemony and regionalism The growing literature on hegemony and regionalism suggests that regional groupings operating with the presence of a benevolent hegemonic power are more likely to experience an enhanced level of regionalism accompanied by the creation of regionalist institutions than are groups without a benevolent hegemonic power (Walt 1987; Hurrell 1992: 121–139; Crone 1993; Waltz 1993: 44–79). The basic line of argument in this literature is that the benevolent leading country within a region can serve as an institutional focal point in the coordination of rules and policies and through side-payments can help to ease tensions that arise from the inequitable distribution of gains from regional cooperation. Absence of hegemonic leadership leads to coordination dilemma (CD) and can make coordination problem very difficult to resolve. The relative success of the European Union with Germany as the regional leader and NAFTA with the United States as the dominant power provides evidence to this assertion. In contrast, absence of regional leadership and the consequent CD have led to the lack of success of many regional cooperation schemes. Some of the examples of less successful regional cooperation schemes are the LAFTA, the ANDEAN Pact, Caribbean Community, Arab Common Market, and Economic Community of West African States.1

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India occupies a preeminent position in the South Asian regional system in terms of its size, GDP, population, and military capability. Table 5.1 provides a comparative summary of economic, demographic, and military attributes of regionally dominant powers in selected regional systems and their implications for the growth of regional cooperation. India’s territory accounts for 73 percent of the total region, and its population is more than three times of the combined population of all other South Asian countries. India also accounts for 75 percent of the region’s GDP, 79 percent of value added in manufacturing, 78 percent of the total exports, and 60 percent of all imports into South Asia. Additionally, India has 100 percent of the total resources in the region with respect to iron ore, bauxite, copper, gold, lead, silver, and zinc and more than 80 percent of the region’s coal and crude oil reserves. India’s military superiority remains unmatched in South Asia (The Military Balance 1999–2000, 2004–2005; World Bank World Development Data: Country Data 1999, 2000, 2005). The literature on hegemonic stability theory offers four major arguments to explain how a hegemonic power can provide a powerful stimulus for regionalism and the creation of regionalist institutions (Hurrell 1992: 129). Table 5.2 summarizes these four arguments as: 1 2 3 4

balance of power – states seek subregional groupings to improve their balance of power vis-à-vis a regionally dominant or threatening state; regionalist entrapment – states support the creation of regionalist institutions to limit the free exercise of hegemonic power; bandwagoning – weaker states seek accommodation with the regional hegemony in order to receive military and economic rewards; declining hegemony – declining hegemony may force the hegemon to initiate common institutions to pursue its interests, to solve common problems, and to generate international support and legitimacy for its policies.

However, as Table 5.2 illustrates, South Asia presents a far more complex regional system in which India’s hegemony has produced a dynamic that is not always conducive to the growth of regional cooperation. Balance of power In many parts of the world, subregional groupings have developed as a means of changing the balance of power vis-à-vis a regionally dominant or threatening state. Although formed in 1967, the ASEAN was galvanized into action only in 1976 when the security threat from Vietnam increased with the victory of North Vietnamese forces over the United States and its Southern proxy. The prospect of improving balance of power against the overpowering presence of South Africa in the region motivated political leaders to establish SADCC in 1980. Similarly, the establishment of Mercosur in 1991 (presumably against the dominance of the United States) and the GCC in 1981 (against the dominance of Iran)

1992

1975

1991

1993

1985

North American Free Trade Agreement (NAFTA)

Economic Community of West African States (ECOWAS)

Commonwealth of Independent States (CIS)

Common Market for Eastern and Southern Africa (COMESA)

South Asian Association for Regional Cooperation (SAARC)

India • India accounts for more than 75% of the region’s GDP. • India’s population is more than three times of the • combined population of the region. • India’s conventional military strength is unmatched in • the region.

Egypt • Egypt accounts for roughly 50% of the groupings’ GDP. • Egypt has the largest population – more than 20% of the • combined population of the bloc members. • Egypt’s military is the strongest in the bloc.

Russia • Russia accounts for more than 68% of the region’s GDP. • Russia has more than 50% of the region’s total • population. • Russia’s conventional military strength is the strongest • in the region.

Nigeria • When ECOWAS was formed, Nigeria accounted for • more than 65% of the region’s GDP. Currently, • Nigeria accounts for more than 42% of the region’s GDP. • Nigeria has about 54% of region’s total population. • Nigeria’s military is the strongest in the region.

United States • US accounts for more than 85% of NAFTA’s GDP. • US population is more than double the combined • population of Canada and Mexico. • US military strength is unmatched in the region.

Dominant power

Limited growth. Lack of mutual trust. India’s leadership is contested by Pakistan; Coordination dilemma persists.

Limited growth. Lack of confidence on Egyptian leadership. Egypt’s leadership is contested; Coordination dilemma persists.

Limited growth. Lack of mutual trust among members. Lack of confidence on Russia’s leadership.

Relatively stagnant. Nigeria’s domination is challenged by other members. Coordination dilemma persists.

Relatively successful. Role of US – serves as an institutional focal point and regional paymaster.

Outcome

Source: World Bank, World Development Report (New York: Oxford University Press, 1999); The Military Balance 1999–2005 (London: IISS, October 1999).

Year signed

Name of regional cooperation schemes

Table 5.1 Dominant power in selected regional groupings

Regional dynamics

States seek subregional groupings to improve their balance of power vis-à-vis a regionally dominant state (ASEAN against Vietnam in 1976); SADCC against South Africa until 1992; ECOWAS against Nigeria; Mercosur against USA; GCC against Iran)

States support the creation of regionalist institutions in order to constrain the free exercise of hegemonic power (European Community versus Germany in 1957)

Weaker states have a tendency to seek accommodation with the regional hegemon in order to receive security and economic rewards (Mexico in NAFTA)

Declining hegemony may force the hegemon to take initiatives for the creation of common institutions to pursue its interests, to solve common problems, and to generate international support and legitimacy for its policies (role of the US in NAFTA and APEC)

Arguments

Balance of power

Regionalist entrapment

Bandwagoning

Declining hegemony

Table 5.2 Hegemony and regional cooperation dynamics in South Asia

South Asian neighbors’ fear of India’s potential expansionism and widespread mistrust toward India

Trojan Horse fears, i.e. South Asian countries’ fear of cross-border ethnic links with India and its potential sabotaging effect in their nation-building process

India’s fear of South Asian neighbors’ ganging up against India. Hence, India has consistently opposed any agenda of regional settlement of disputes and favored bilateral settlement of disputes

Security dilemma between India and Pakistan, contributing to unhealthy arms race and the development of Nuclear Weapons

South Asian dynamics

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suggest how states in a particular region seek to form or strengthen regional organizations to balance against a regionally dominant power. In South Asia’s regional system, the structural imbalance between India and Pakistan and other smaller countries is quite clear. This structural imbalance has led policymakers to pursue contrasting policy objectives. While India desires to maintain a hierarchical regional order, Pakistan and other South Asian countries are opposed to this design. Of all the South Asian countries, however, Pakistan’s opposition to India’s predominance in South Asia has remained the most substantial and has contributed to a classic security dilemma in the region (Buzan and Rizvi 1986: 8). This security dilemma has led to an unhealthy arms race, including nuclear weapons development, between India and Pakistan, making regional cooperation a prime casualty. Since independence, Pakistan’s regional policy has revolved around two objectives: to achieve balance of power vis-à-vis India and to liberate Kashmir to prove the validity of the two-nation theory.2 In order to achieve these two objectives, Pakistan has always sought external support. During the Cold War era, Pakistan joined the two United States-sponsored organizations, the South-East Asian Treaty Organization (SEATO) and the Central Treaty Organization (CENTO), to insure American support in case of any military confrontation with India. From 1947 to 1970, despite India’s relative victory in two Indo-Pakistani wars on Kashmir in 1948 and 1965, Pakistan was largely successful in challenging India’s predominance in the region with economic and military support from the United States, China, and Turkey. The liberation of Bangladesh in 1971, with India’s military intervention, changed the structural dynamics of power in South Asia. The emergence of Bangladesh as an independent state had two important implications: first, Pakistan suffered a substantial reduction in its structural strength; and second, the two-nation theory became irrelevant to South Asian politics. Pakistan’s breakup induced a deep sense of insecurity in the minds of its policy-making and political elites. Cognizant of their military’s structural weakness to deal with Indian conventional military superiority, the Pakistani elites chose to pursue three strategies to offset India’s dominance in the region: 1 2 3

seek increasing military and economic support of China, the United States, and the Gulf countries; develop a clandestine nuclear program; seek to internationalize the Kashmir issue, despite the Simla agreement of 1972 in which both India and Pakistan agreed to resolve their dispute through bilateral negotiations.

With the acquisition of nuclear bombs in May 1998 by both India and Pakistan, the latter’s objective of improving balance of power with India may have been partially fulfilled. However, as illustrated in Table 5.3, India remains far ahead of Pakistan in terms of conventional military capability. The development of nuclear weapons by India and Pakistan does not guaran-

1,200,000 (1985) 1,180,000 (1998) 1,325,000 (2003) Designation Sagarika SA-3b, SA-8b, SA-16 BrahMos Prithivi I (150 km) Prithivi II (250 km) Agni I (700 km) Agni III (3,000 km) MiG-21 MiG-23 MiG-27 Su-30K Su-30MKI Jaguar Mirage 2000 Arjun T-90

Number of Active Armed Forces

Categories of Weapons

Submarine-launched-ballistic missiles

Surface-to-air missile

Cruise missile

Surface-to-surface missile

Fighter Planes (ground attack)

Main battle tank

124 310

220 50 70 18 10 64 40

– – – –

–

–

–

Units

2004 2005

2003 2003 2003 2003 2003 2004 2004

2004 2004 2004 Development

2003

Development

Date

Al-Khalid T-80UD

Mirage III F-7P&F-7PG Mirage – – – –

Hatf III (280 km) Shaheen I (750 km) Shaheen II (2000 km) Ghauri I (1300 km) Ghauri III (3000 km)

–

–

–

Designation

575,000 (1985) 600,000 (1998) 619,000 (2003)

6.7 (1985) 6.5 (1998) 4.5 (2003)

Pakistan

Source: The Military Balance 1999–2000; 2004–2005, International Institute for Strategic Studies (London: IISS, October 1999, 2005).

2.7 (1985) 2.7 (1998) 2.6 (2003)

Defense spending (% of GDP)

India

Table 5.3 The balancing act – India and Pakistan

45 320

43 132 68 – – – –

– – – – –

–

–

–

Units

2004 2004

2004 2005 2004 – – – –

2003 2003 2004 2004 Development

–

–

–

Date

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Challenge of regionalism in South Asia

tee a lasting peace or growth of cooperative activities in the region. As discussed later in this chapter, the overt nuclearization of India and Pakistan has introduced a regional “stability/instability paradox” in South Asia. In the presence of such a paradox, bilateral talks between India and Pakistan have acquired more significance than multilateral cooperation. In addition, the Kashmir issue still remains the major bone of contention between India and Pakistan and continues to limit the growth of regionalism in South Asia. Regionalist entrapment States often take initiatives to create regional institutions in order to contain the hegemonic power of a dominant state in a region. The position of Germany in the European Community is a classic illustration of this regionalist entrapment strategy (Hurrell 1995: 50–51). In South Asia, smaller states are always concerned about border disputes with India and the latter’s unsolicited intrusion into their domestic affairs. Thus, Bangladesh’s initiative to create SAARC in the late 1970s and the enthusiastic endorsement of this initiative by Bhutan, Maldives, Nepal, and Sri Lanka is partly guided by this regionalist entrapment sentiment vis-à-vis India. The regionalist entrapment logic explains why the initial Bangladesh draft paper for regional cooperation in 1979 included security as one of the areas of cooperation among the South Asian countries. However, India’s opposition to the security matters led Bangladesh to introduce a new draft paper in 1980, which dropped all references to security matters and suggested only non-controversial areas for cooperation.3 Except for Bhutan and Maldives, all SAARC member countries had sought external assistance to limit India’s exercise of hegemonic power in the region. After the 1975 assassination of its democratically elected President, Mujibur Rahman, military and civilian rulers in Bangladesh have often sought external involvement from the United States, the United Nations, and member countries of the Organization of Islamic Conferences (OIC) to resolve the Ganges water dispute with India. During the early 1980s, Sri Lanka has made consistent efforts to involve external powers in the sponsorship of a UN resolution to make the Indian Ocean a nuclear-free zone. Despite the existence of an Indo-Nepal Friendship Treaty since 1950, and India’s serious objection to the proposal of declaring Nepal a “zone of peace,” Nepal’s monarchy during the late 1980s sought continuous support from the United States and China to make this proposal a reality. The South Asian ruling elites’ policies of externalization and external mediation of bilateral disputes are presumably designed to limit India’s sphere of influence in South Asia and have directly contradicted Indian ruling elites’ objective of Indian autonomy in the region (Buzan and Rizvi 1986). Autonomy for India, as envisioned by its political leaders, requires that the whole of South Asia be free of outside influences. Thus, India has always opposed outside intervention in South Asian affairs. The Indo-centric geographic structure of South Asia has led India’s policymakers to articulate a regional doctrine of Delhineation (that is Delhi’s world

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view), which essentially argues that in order to achieve regional peace, security, and stability in South Asia, India has to remain strong and maintain military superiority in the region (Lyon 1992: 25039). Indian policymakers believe that once India’s military superiority is recognized by its neighbors, regional peace will prevail in South Asia. In order to maintain its military superiority in the region, India has engaged in various military-related activities during the late 1980s and 1990s: “Operation Brasstacks” (military exercise on the IndoPakistan border) in 1987; peace-keeping operation in Sri Lanka from 1987 to 1990; sending troops to Maldives to foil a coup in 1988; and holding joint military exercises with the United States in the Indian Ocean at regular intervals since 1992. These moves, however, are viewed by its neighbors as India’s aggressive hegemonistic designs and have generated a fear of New Delhi’s potential expansionism and unsolicited intrusion into their domestic affairs. Not surprisingly, all of India’s neighbors since the 1980s have actively sought to promote regionalism to restrict India’s hegemonic power. The logic of regionalist entrapment is apparent in South Asian neighbors’ insistence to place all bilateral disputes with India on the SAARC agenda for discussion. But India remains strongly opposed to such an idea because of its fear that discussions on bilateral conflicts will eventually lead to its isolation and will provide an opportunity for South Asian neighbors to “gang up” against India. India’s insistence on a bilateral approach, as opposed to its neighbors’ emphasis on using a multilateral approach to resolve bilateral conflict issues, has further strengthened their mutual acrimony and distrust and has prevented any bold initiatives for a permanent settlement of the Kashmir dispute and for the growth of regionalism in South Asia. Bandwagoning Neo-realist literature suggests that weaker states in a regional system tend to pursue a bandwagoning strategy – seeking accommodation with the local hegemon in order to receive economic and military benefits (Waltz 1993: 54–61). Bandwagoning is most likely to emerge as a preferred strategy for the small states when they are located in close geographical proximity to the hegemon and when there is a great power disparity. In South Asia, all the states share a common border with India. Given the geographical proximity, great power disparity, and the potential for economic and security benefits from an alliance with India, it would seem that bandwagoning would be a preferred strategy for smaller South Asian countries. Yet, except for Bhutan and Maldives, other small states such as Nepal, Sri Lanka, and Bangladesh have not employed this strategy because of domestic opposition and ethnic tensions. Much of domestic opposition from dominant domestic actors like bureaucracy, military, business, and religious leaders is rooted in the existence of a widespread fear of India’s overwhelming military and economic domination in the region. The dynamics of regional ethnic relations (which is discussed later in this chapter) and ethnic tensions in which India’s hand is generally suspected by its neighbors

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have also largely undermined cooperative endeavors of smaller South Asian states. Declining hegemony A central argument of Hegemonic Stability Theory is that, by virtue of its dominant position, a benevolent hegemon can insure the stability and smooth functioning of regional institutions and thus can promote growth of regional cooperation. But, if a hegemon’s dominance is extreme, it will make the process of institutionalized regionalism irrelevant (Hurrell 1992: 52–53). On the other hand, declining hegemony may force the hegemon to take initiatives for the creation of regionalist arrangements and institutions to promote its interest and to generate international support and legitimacy for its policies and leadership position (Crone 1993: 167–183). India’s active role toward promoting regionalism in South Asia in the post-1990 period supports the declining hegemony argument. Until the early 1990s, India’s policymakers chose to take only a cautious approach to any regional cooperation initiative in South Asia because of their belief that India is unlikely to accrue substantial economic benefits from any SAARC arrangement. But, the end of the Cold War provides many new challenges for India to reexamine its regional policy options. India’s aspiration for a global leadership role has received a serious setback as a result of: 1 2 3 4

the Soviet Union’s demise, and consequently, India’s loss of a strong ally in international forums; growing acceptance of China’s strategic capability and leadership by the world community; declining relevance of the NAM; the rise of Malaysia, Indonesia, and South Africa as new leaders on Third World-related matters, eclipsing India’s role in such multilateral forums as Commonwealth meetings and G-15 meetings, etc.

Indian leaders have realized that New Delhi needs to demonstrate its leadership first in South Asia to generate legitimacy for its leadership in the international arena. As stated by India’s former Prime Minister, I.K. Gujral, “India’s future depends on what its neighbors think of it. If India’s energies are wasted in fights with neighbors, India will never become a world power” (Basu 1998: 4). Successive Indian leaders have echoed this sentiment and have shown their willingness to improve relations with their neighbors in order to accomplish India’s larger goal of regional leadership. Several important policy initiatives by India since becoming a nuclear weapon capable state in 1998 illustrate India’s willingness to improve its relations with neighbors, particularly with Pakistan. First, in February 1999, Prime Minister A.B. Vajpayee inaugurated a bus service between the border cities of Amritsar in India and Lahore in Pakistan. At the end of this bus trip, Prime

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Minister Vajpayee and the Pakistani Prime Minister Muhammed Nawaz Sharif signed the Lahore Declaration, reiterating their determination to resolve bilateral issues in a peaceful manner. The declaration, which included the principles of Simla Agreement of 1972, led to much euphoria in New Delhi’s policy-making circle about its potential positive spillover in the regional and international context. However, this euphoria was short-lived. In May 1999, Pakistani troops attempted to intrude into the Indian controlled territory in Kashmir by crossing the LoC at Kargil sector (Ganguly 2001: 83–88). Despite a massive mobilization of its troops, India resisted from engaging in a full-fledged war with Pakistan. The role of international diplomacy led by the United States, the United Kingdom, and European Union, the fear of a nuclear war, and India’s desire to gain world’s recognition as a responsible great power can be considered as some of the important factors for India’s decision not to engage in a full-scale war with Pakistan over the Kargil issue. India’s second policy initiative was Prime Minister Vajpayee’s invitation to Pakistan’s military ruler, General Pervez Musharraf, to a high-powered Agra Summit in 2001 to resume bilateral talks for improving relationship between India and Pakistan despite the general’s known active role in the Kargil war. The Summit failed to produce any positive result due to India’s objection to President Musharraf’s efforts to use this summit platform to raise the Kashmir issue. Third, despite intense domestic pressures, Prime Minister Vajpayee refused to go for any military retaliation over the sensitive issues of Pakistani-trained terrorists groups’ – Lashkar-e-Taiba (LeT) and Jaish-e-Muhammad (JeM) – attacks on Indian Parliament in New Delhi in December 2001. In addition, continuous killings of hundreds of innocent civilians in Kashmir during 2002–03 added pressure on Vajpayee administration for decisive military actions. Instead, Prime Minister Vajpayee insisted on diplomatic negotiations and took another important initiative in October 2003 by offering to resume dialogue with Pakistan to improve bilateral relations. Pakistan reciprocated to India’s peaceful overtures by announcing cease-fire along the 150-kilometer stretch of LoC, restoring diplomatic relations and resuming bilateral talks on all issues, including Kashmir and intraregional trade. Finally, India’s rapid response of economic and military support to help the earth quake victims in Pakistan-occupied Kashmir in the fall of 2005 seems to provide an opportunity for the two countries to engage in peaceful diplomacy. After 2001, almost all of India’s neighbors have experienced deteriorating economic and security conditions. Growing political instability in Pakistan, Bangladesh, and Nepal, continuing turmoil in Sri Lanka, and the worsening security situation in Afghanistan have led observers to describe these states as “failing states.”4 India’s concern is that a volatile neighborhood and continuing turbulence in the region may discourage foreign investors who are looking at India as a new economic destination. This may retard India’s growth and its aspiration of becoming a global player. Consequently, achieving peace, prosperity, and stability in South Asia has become one of the top priorities of India’s external policies. As Prime Minister Manmohan Singh observes:

120

Challenge of regionalism in South Asia We face a turbulent neighborhood. It is our foremost challenge to create a stable and cooperative atmosphere in our region that will allow us to concentrate our energies on tackling the problems at home and in our region. Peace, prosperity, and stability in South Asia are the top priorities of our external policies . . .. Our emphasis is on extending our support and cooperation to our neighbors so that causes of instability are minimised.5

Moreover, Indian policymakers also know that as long as South Asia remains one of the world’s least economically and politically integrated regions, China’s growing influence in the region will be difficult to contain. There is a growing consensus among Indian policymakers about SAARC’s potential to insure regional stability, status quo in South Asia, and to provide opportunity for improving bilateral relations through regular informal meetings. Not surprisingly, Indian policymakers have shown renewed enthusiasm for improving India’s relations with its neighbors and for the growth of SAARC in recent years. From an economic perspective, Indian policymakers have realized that an intraregional trading arrangement is beneficial for India’s economic interest. This shift in attitude has strengthened New Delhi’s commitment to SAARC’s growth in recent years. Despite India’s renewed enthusiasm for regional cooperation, SAARC’s growth has remained slow due to South Asian states’ fear about India’s hegemony and its potential intrusion into their domestic affairs. South Asian states also worry that SAARC’s growth will enable Indian goods to dominate the regional market. This concern explains why Pakistan remains opposed to any Indian initiative for trade liberalization in South Asia. In nutshell, India’s hegemony, the lack of trust among South Asian states, and Pakistan’s continuing challenge to India’s domination in South Asia have contributed to the slow growth of SAARC in terms of institutional development and program implementation.

Ethnic politics South Asia is one of the world’s most ethnically and linguistically complex regions. All the states of South Asia are home to multiethnic and linguistic groups. Ethnic political mobilization has been a marked feature of their histories and nation-building experience. The partition of the subcontinent in 1947, reorganization of Indian states’ territorial boundaries in 1956, the secession of East Pakistan in 1971, and the continuing civil war in Sri Lanka have been influenced, to a large extent, by ethnopolitical and ethnolinguistic considerations. Ethnic minorities in all the states of South Asia feel disadvantaged and resent the inability of the central governments to deal with their concerns effectively. Understandably, South Asian governments are concerned about the destabilizing effect of ethnic disorder. Ethnic issues influence both domestic and regional politics in South Asia. At the domestic level, South Asian governments remain worried about the possibility of transformation of an ethnic crisis into an

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autonomist–separatist movement. At the regional level, South Asian governments worry about the spillover effects of the ethnic crisis from one country to the other and potential involvement of neighboring countries in their domestic affairs. Some of the major ethnic crises and their implications for regional relations are discussed below. Given the complexity of Indian society with its multitude of languages, ethnic groups, castes (jatis), and “little societies” within which individual identities are determined by inherited affiliations, Indian state remains vulnerable to ethnic unrest and its potential disintegrative effects (Hardgrave 1970: 8). India’s achievement in maintaining its pluralistic political system in the face of such diversity cannot be undermined. But, at the same time, efforts of central government at New Delhi to maintain control over states’ politics and administration have fostered resentment against the center among various regional and ethnic groups and leaders. There is fear among Indian policymakers that ethnic and regional agitation could lead to the emergence of separatist and autonomist movements resulting in the country’s partition. Thus, New Delhi is worried about Dravidian movement in Tamil Nadu, unrest in the northeastern hill areas along the Chinese, Burmese, and Bangladesh borders – Assam, Nagaland and Manipur; in Kashmir; and the Sikh Khalistan movement in Punjab in the 1980s. The assassination of Prime Minister Indira Gandhi by Sikhs in 1984 at New Delhi and her son Rajiv Gandhi by Tamil militants in 1991 in Tamil Nadu indicates the extent of political violence ethnic bitterness can cause. Despite India’s emphasis on secularism, political mobilization of Hindus and Muslims by their local leaders often leads to sectarian violence, resulting in the killings of many innocent people from two religious faiths. The spread of caste-based deadly riots represents another dimension of ethnic violence in India. Coping with India’s diversity has always been a challenge and the political leaders in New Delhi often worry about the role of outsiders – in particular, Pakistan and Pakistanbased terrorist organizations – in exploiting this diversity to weaken their country. Like India, Pakistani society has diverse ethnic and linguistic groups. Each of Pakistan’s four provinces comprises a single ethnolinguistic group: Punjab with Punjabis, Sindh with Sindhis, Baluchistan with Baluchis, and the Northwest Frontier Province (NWFP) with Pashtuns. Punjabis are the largest single ethnic groups and control much of Pakistan’s military and civilian government power. Other ethnic groups – the Sindhis, Pathans, Baluchis, and Muhajirs (people who came from India at partition) – resent Punjabi domination in Pakistan’s economy, politics, and military. Unlike India, which has embraced federalism to cope with its diversity, Pakistan under Jinnah and the subsequent civil and military rulers has opted for a unitary centralized political structure to deal with its provincial ethnolinguistic issues (Ahmed 1997: 236). The idea of greater provincial autonomy has been rejected by Pakistani rulers since independence. For many observers, this has become problematic in Pakistani politics (Cohen 2004: 227–229). Stephen Cohen provides an insightful analysis of this issue. Until the 1970s, the deepest “fault line” was between East Pakistan and West Pakistan

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Challenge of regionalism in South Asia

with Bengalis of East resenting the domination of Punjabi-led ruling establishment of West Pakistan. After the creation of Bangladesh in 1971, this “fault line” has become more “diffused” with the spread of autonomist movements in various provinces of Pakistan mainly as a reaction against the domination of Punjabi-led civil–military leadership at the central government (Cohen 2004: 206). Despite the existence of separatist movements in all the provinces of Pakistan, it is unlikely that the country will experience another Bangladesh or ethnolinguistic breakup. Nonetheless, in the absence of genuine decentralization and any democratic representation in the central government, Pakistani ruling establishment will continue to face separatist–autonomist movements in coming years. Three factors – two internal and one regional – explain the likely continuation of these kinds of ethnolinguistic separatist movements in Pakistan. First, until 1970s, the dominant narrative used by the Pakistani ruling establishment for the country’s national identity was to describe Pakistan as a “homeland” for oppressed Indian Muslims. This narrative was defined entirely in terms of Pakistan’s relations with India’s Hindu-dominated ruling elites. While it served the interest of the military–bureaucratic elites well, it ignored the structural contradiction of Pakistani society, that is, domination-deprivation of one groups of Muslims vis-à-vis other groups of Muslims. In the post-independence Pakistan, while Punjabi Muslims dominated the country’s military and politics, other ethnic groups’ experienced marginalization in terms of equal political representation and sharing of political power. A fundamental structural issue that intensified East Pakistan’s separatist–autonomist movement under the leadership of Sheikh Mujibur Rahman of Awami League during 1960s was the resentment of Bengalis against the Punjabi domination and the latter’s refusal to address their demand for shared political power. Despite the country’s breakup, Pakistan’s leaders are not showing any urgency to modify the post-independence narrative and to address the issues of political representation and sharing of political power as raised by other ethnic groups. The second internal factor is the lack of willingness of Pakistani ruling elites to grant more political autonomy to the provincial authorities to deal with the ethnic issues. As the experience of India suggests, multiethnic states are difficult to govern through centralized politics. Instead, regional autonomy may be necessary to manage regional ethnolinguistic aspirations. But, Pakistan’s leaders, including the current military regime under general Musharraf, do not seem to have fully grasped the effectiveness of this regional management principle. Instead, they have always sought to weaken provincial power and centralize politics. As Stephen Cohen has perceptively observed: It is noteworthy that almost all of Pakistan’s ethnolinguistic agitations were triggered by the central government’s dismissal of a provincial government, for example, in East Bengal and Sindh in the 1950s, Baluchistan in 1973 and 1988, and the NWFP in 1947 and 1973. (2004: 229)

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What Pakistan needs today to deal with these ethnolinguistic movements is more provincial autonomy and representative government rather than more centralized rule from Islamabad. The third factor for Pakistan’s continuing ethnolinguistic separatist movements has a regional dimension. Pakistan’s every ethnolinguistic group has had cross-border ties with India and Afghanistan. From Islamabad’s perspectives, both these states, and particularly India, have the potential to encourage ethnic separatist movement in its soil. Thus, instead of addressing the demands of its ethnic groups, Pakistan blames India for supporting the separatist movement. Using ethnic unrest as an instrument of foreign policy, Pakistan resorts to a retaliatory policy of supporting and encouraging separatist movements in India. Thus, Pakistan has supported Kashmiri separatists for decades and housed terrorists on its soil. It provided active support to Sikh separatists in the mid-1980s possibly as a response to India’s support for Bengali separatists in the late 1960s. While blaming India serves Pakistan’s short-term objective, the longterm solution requires the Pakistani rulers to address these ethnolinguistic separatist movements within a pragmatic framework of political decentralization and political representation at the center. Sri Lanka’s ethnic crisis offers a significant lesson of how important it is for a post-colonial state to address the issues of ethnic aspirations with urgency and in a timely manner to achieve political stability. In Sri Lanka, there are several ethnic groups – Sinhalese, Tamils, Moors, and Burghers. But the major ethnic divide exists between the majority Sinhalese and the minority Tamils, who constitute about one-fifth of the island’s populations. Several factors explain the ethnic divide. First, a highly biased historical chronicle, the Mahavamsa, which has been maintained by Buddhist monks since the third century, has kept alive ancient anxieties among the majority of Sinhalese. The narrative of this Great Chronicle blames successive Tamil invasions from South India between the eighth and twelfth centuries for many of the Sinhalese problems in Sri Lanka (de Silva 1981: 9–16; Wriggins 1992: 122). Second, after independence in 1948, many politicians used the “threat from India” argument to mobilize the Sinhalese support. This political mobilization of the majority around Sinhalese cultural nationalism mainly to improve the leaders’ support base among the Sinhalese seemed to have marginalized Tamil participation in the political process. In 1956, government measures for the linguistic Sinhalese-only legislation and quotas for the Sinhalese majority at University alienated young Tamils, making them more prone to violent methods. Third, as discussed in Chapter 3, the issue of the future citizenship rights of Indian Tamil estate workers who were brought to Ceylon by the British in the mid-nineteenth century to work for the tea and rubber estates contributed to the ethnic divide between Tamils and Sinhalese. When Sri Lanka’s citizenship laws were enacted in 1948–49, various ethnic groups in Sri Lanka (Sinhalese, Sri Lankan Tamils, Moors, and Burghers) were considered natural citizens by descent. But Indian Tamils were required to prove a two-generation ancestry in Sri Lanka to be granted citizenship status. According to one estimate, only 12

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Challenge of regionalism in South Asia

percent of 825,000 Tamil applicants became eligible for citizenship on the basis of two-generation ancestry criteria (Kanesalingam 1991b: 182). To deal with the remaining people, Sri Lanka’s government created a “stateless” category of Indian Tamils and sought to have India “repatriate” them. After several negotiations, an agreement was reached between Sri Lankan President Sirimavo Bandaranaike and Indian Prime Minister Lal Bahadur Shastri in 1964, which stipulated that India would grant Indian citizenship to 600,000 stateless Tamils and repatriate them, while Sri Lanka would grant Sri Lankan citizenship to 375,000 such persons. Until the 1980s, stateless Indian Tamils did not receive full Sri Lankan citizenship (Kanesalingam 1991b: 183). Frustrated with this long-drawn process, some of the Indian Tamils started migrating to the northern and eastern province of Sri Lanka, where Tamil militancy was growing. Finally, a series of anti-government riots by Tamil militants in the Jaffna peninsula in the 1980s and the subsequent crackdown by government forces intensified ethnic crisis. In 1983, anti-Tamil riots by Sinahalese zealots in Colombo with the help of some members of government killed hundreds of Tamils and burned hundreds of Tamil business and homes. Unable to get urgent protection from the government, thousands of Tamil families fled to Chennai in India (Kanesalingam 1991b: 180–183). These events not only provoked angry protests from Chennai politicians, but also radicalized many Sri Lankan Tamils who were neutral until this point, believing that a negotiated compromise solution was still possible. Under the pressure of Tamil politicians in Chennai, New Delhi decided to provide humanitarian and military assistance and training to Tamil militants in Sri Lanka. With the memory of Indian interventions in East Bengal and the consequent breakup of Pakistan in 1971 not so distant, Sri Lankan leaders acted quickly to engage India in becoming a part of the solution. Unable to defeat the Jaffna militants or to concede to the independence demands of the most extreme faction of Tamils – Tamil Tigers organized under LTTE with Velupillai Prabakharan as its leader – President Jayewardene saw no alternative but to sign a Peace Accord with Indian Prime Minister Rajiv Gandhi in late June 1987. According to this Accord, India agreed to deploy an IPKF at President Jayewardene’s invitation to maintain peace and stability in the Jaffna peninsula by negotiating a peace agreement with Tamil militants. This engagement of India had several serious consequences. First, instead of laying down their arms, the Tamil militants fought guerrilla warfare against the IPKF. To deal with this situation, India was forced to increase its military troops from the original number of 3,000 in 1987 to about 60,000 in 1989. In the process of fighting the Tamil guerillas, India lost about 1,000 soldiers between 1987 and 1989, leading to New Delhi officials’ allegation of lack of cooperation by Sri Lankan authority. The second consequence of India’s engagement in Sri Lanka’s ethnic crisis is the ultimate political price – in terms of the assassination of Prime Minister Rajiv Gandhi – that New Delhi had to pay for its failure to contain Tamil militancy. The presence of Indian troops in Sri Lanka evoked anger among Sinhalese nationalists. The radical Janatha Vimukthi Peramuna (JVP – People’s

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Liberation Front) used this as an attack on Sri Lanka’s sovereignty to build a terrorist movement against the government. Unable to cope with the growing Sinhalese opposition, coupled with the failure of IPKF to defeat Tamil Tigers, President Premadasa, Jayewardene’s successor, insisted for the withdrawal of Indian troops in 1990. Finally, New Delhi’s perceived betrayal of the Tamils not only angered Sri Lankan Tamils but also fuelled a discontent in Tamil Nadu. This led to easy infiltration of Tamil militants into Chennai. One year after the IPKF withdrawal from Sri Lanka, India’s former Prime Minister, Rajiv Gandhi, was assassinated in Chennai by a female LTTE suicide bomber in 1991. Since the 1990s, in addition to India, other external powers, notably, the United States, EU, Norway, Sweden, and Denmark, have also been engaged in the peace process without much success. Tamil militants’ repeated violation of several cease-fire agreements, negotiated between the LTTE and Sri Lankan government as well as outside powers over the past decade, leaves little hope for an early solution of this crisis. This ethnic crisis, which has turned into a costly “civil war,” has significant implications for Sri Lanka’s domestic stability as well as India’s domestic politics. Politicians in New Delhi and Chennai remain worried about the steady exodus of Sri Lankan Tamils to India. In 2005, 1,300 Sri Lankan Tamils crossed the Palk Strait to join the 55,000 Tamil refugees living in 102 camps across the state of Tamil Nadu.6 At present, this may not pose a serious challenge to India. But Indian politicians worry that if this trend is continued, it will add to the discontent of Indian Tamils, leading to political instability in Tamil Nadu. India’s official policy on this ethnic crisis is to support the formula of maximum devolution within a sovereign and territorially integral Sri Lanka. This policy is based on several Indian concerns. First, if Sri Lanka is divided on ethnic lines, it would have a spillover effect on the violent separatist movements in India’s northeastern states. Second, the emergence of a separate Tamil state in Sri Lanka might revive Tamil nationalism in India. Third, as mentioned earlier, India’s neighbors are Asia’s most troubled countries. Another failing state on its border would challenge India’s claim as a regional power capable of maintaining regional stability. Thus, India is engaged in a delicate balancing act: it provides training to Sri Lankan army but refuses to sign a defense treaty with Colombo to avoid any perception of supplying lethal weapons to Sri Lankan troops that can be used against Tamil fighters. Along with the United States, United Kingdom, Canada, Australia, and most recently European Union in May 2006, India has decided to add LTTE to its list of banned terrorist groups. India’s basic objectives are to intensify diplomatic isolation and cut off external sources of funding to put pressure on LTTE for a negotiated settlement. To what extent these policies will succeed remains uncertain. But Sri Lanka’s costly ethnic crisis has an adverse impact on the prospect of regional stability in South Asia.

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Regional dimension Since ethnic minorities in all states of South Asia have close affiliation with their kinfolks in neighboring states, cross-border ethnic identities widely prevail in South Asia. This aspect of ethnic relations has several negative implications for interstate relations in South Asia and consequently for SAARC’s growth. First, ethnic conflicts in one state draw natural support from the co-ethnic groups in neighboring states, contributing to the growing strength of ethnic subnationalism in South Asia. This has resulted in the proliferation of separatist and terrorist movements and the destabilization of governments in South Asia. Not surprisingly, each country blames the other for assisting separatist movements on its soil. India accuses Pakistan for encouraging separatist movements in Kashmir and Punjab, while Pakistan blames India for the separatist movements in Pakistan’s Sindh province. Until the signing of the Chakma Peace Accord in November 1997, Bangladesh blamed India for assisting separatist movement in the Chittagong Hill tract, while India counteraccused Bangladesh of supporting terrorist groups in India’s eastern state of Tripura. Sri Lanka blames India for its support of the Tamil rebels’ demand for an independent state. Consequently, an atmosphere of mutual distrust and suspicion prevails in South Asia, making the goal of regionalism difficult to achieve. A second negative implication for SAARC’s growth is that since India’s ethnic groups overlap into all neighboring states, India’s hand in all ethnic conflicts is strongly suspected by the other South Asian states. Moreover, India’s structural position of regional preeminence leads its policymakers to believe that India has a legitimate role to play in resolving the ethnic crisis in neighboring countries. Such Indian belief, however, is not mutually reciprocated by its neighbors and often leads to tension in South Asia (Mansingh 1984: 238–240). Third, the ethnic composition of South Asia is such that the majority group of small South Asian states suffers from a minority complex (Sen Gupta 1988: 4–17; Phadnis 1989; Ghosh 1991). The Indian Nepalese of the Tarai region together with their co-ethnics in the Indian states of Bihar and Uttar Pradesh outnumber the Nepalese of Nepal. Sri Lankan Tamils together with the Tamils of India’s southern state of Tamil Nadu outnumber the Sinhalese in Sri Lanka. Bhutan’s Nepalese groups together with Indian Nepalese outnumber Bhutan’s majority Drukpas. Although Pakistan and Bangladesh do not suffer from such a complex, the activities of Sindhis in northern India and of Bengali Hindu refugees in West Bengal do sometimes cause worries for these two neighboring states. Such an ethnopolitical configuration has led to Trojan-horse fears among India’s neighbors. The Trojan-horse fears refer to the South Asian countries’ concerns that a subordinate ethnic group might use its cross-border links with India to turn against a state in which their clan or group is disadvantaged. The fear of India’s potential intrusion and its sabotaging effect in their nationbuilding process has made South Asian countries distrustful toward India.

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Institutional structures and government strength An important factor for the slow growth of regional cooperation in South Asia during the past decade was the weak strength of South Asian governments. Lack of wide public support and social base makes it difficult for the leaders in weak governments to pursue bold domestic and foreign policies independently without the support of dominant domestic actors. The support of domestic actors, as discussed in Chapter 2, is important for the leaders of weak governments in order to pursue bold policies, including regional cooperation policies because of: 1 2

the domestic actors’ ability to politicize issues, thereby making implementation of regional agreements more difficult; the leaders’ concern for political survival.

Weak coalitions are under greater pressure to accommodate the varying demands and interests of their political opponents to insure their political survival. It often becomes difficult for leaders of weak coalitions to downplay regional security threat and to ignore scapegoating (blaming external enemy) as an instrument of their national policies (Solingen 1997: 78). Thus, weak coalitions remain tentative about taking more active regional cooperative initiatives. Political leaders of all South Asian countries are encumbered with weak coalitions. They face various levels of domestic dissent, either in terms of cultural and ethnic demands for political decentralization or in terms of broad-based secessionist movements (Jalal 1995: 65–72). South Asian leaders have not been able to pursue bold policies to resolve these domestic crises because of their narrow political base (limited popularity) and lack of legislative autonomy. Tables 5.4 and 5.5 provide a snapshot of South Asian countries’ government strength in terms of their nature of regime, legislative independence, and popular support. In Bhutan and Maldives, despite having authoritarian regimes and a centralized decision-making system, these governments can only be described as relatively strong because of the leaders’ narrow social base of support. Since 1990s, Nepal has experienced a deficit democracy, which refers to the reduced public participation in the policy-making process that resulted from moving political authority from elected representatives to Monarchy. In Nepal, the transition from Monarchy to a parliamentary democracy in 1990, followed by King-led authoritarian rule during 2001–06, and again transfer of power from Monarchy to political representatives as a result of prolonged popular unrest organized by various political parties in 2006 has not helped its government’s strength. On the contrary, the Nepalese government demonstrates all the attributes of a weak government: continuous conflict between the King and other political leaders, resulting in a divided government; intra-party strife; divisions within Parliament; and unpopular political leaders. The Sri Lankan government suffers from considerable weakness of a divided government because of its “semi-presidential political system.” In such a

Weak

Multiparty

Weak

Narrow

No

Multiparty

Relatively strong

Narrow

Yes

Weak

Narrow

No

Authoritarian Coalitional

N/A

Centralized

Parliamentary quasidemocracy

Nepal

Weak

Narrow

No

Simple majority rule until October 1999, followed by military rule

Multiparty until October 1999

Centralized

Parliamentary quasidemocracy until military takeover in October 1999

Pakistan

Weak

Narrow

No

Coalitional

Multiparty

Centralized

Presidential quasidemocracy

Sri Lanka

Note Legislative independence is determined by the ruling party’s percent of seats in the lower house. If the ruling party’s strength is less than simple majority (50% plus one), it is obvious that the ruling party forms a coalition government and requires other parties’ support to pass legislation. Popular base is determined by the percentage of vote the ruling party has received in the last election.

Relatively strong

Narrow

Narrow

Presidential quasidemocracy

Maldives

Semi-centralized Centralized

Parliamentary democracy

India

Authoritarian Coalitional

Government strength

Simple-majority rule

Political regimes

N/A

Popular base

Multiparty

Party system

Centralized

Yes

Centralized

Decision-making structure

Monarchy

Bhutan

Legislative independence No

Parliamentary quasidemocracy

Political system

Bangladesh

Table 5.4 Comparative government strength in South Asia, 1990–99

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Table 5.5 Ruling party’s strength in South Asia, 1990–2005 Countries

Ruling party

% of total seats in the lower house of central legislature

% of votes polled

Bangladesh 1991 1996 2001–06

Bangladesh Nationalist Party Bangladesh Awami League Bangladesh Nationalist Party

42.4 48.0 63.6

30.3 34.2 48.0

Bhutan

N/A

–

–

India 1991 1996 1999 2004–

Congress I United Front Bharatiya Janata Part Congress I

42.5 32.4 33.3 26.6

36.5 32.0 32.8 26.7

N/A

–

–

Communist Party of Nepal Nepali Congress King-led rule off and on; Parliament dissolved in 2005

42.9 55.1

30.8 46.3

–

–

39.6 63.13

37.9 46.8

–

–

46.6 48.4

48.0 53.6

46.7

45.6

Maldives Nepal 1994 1999 2001–05 Pakistan 1993 1997 1999–2005 Sri Lanka 1994 2001 2004–

Pakistan People Party Pakistan Muslim League-Nawaz Military coup and National Assembly dissolved People’s Alliance Party United National Party United People’s Freedom Alliance

Source: Banks et al. 1992, 1997, 2000–02, 2005.

system, a blend of presidential and parliamentary system is employed. As long as the president comes from the same party that has legislative majority, this system works like a unified presidential system and can be quite effective. But, if the president and prime minister represent different political parties with different agendas, the government remains divided in which the conflict between president and prime minister can be intense, making the government quite ineffective (Lijphart 1981). In Sri Lanka, the constitutional division of power between the president and the prime minister, continuous struggle between the two executives to demonstrate their control over the two crucial institutions of the bureaucracy and the military, ineffective and unpopular heads of state, division in the ruling party, and a narrow majority of the ruling party in the legislature have all contributed to the weakness of government.7

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Moreover, the Colombo government confronts an ongoing vicious civil war against the Tamil minority’s fight to secede. In the election of November 2005, Mahinda Rajapakse of the People’s Alliance Party was elected as the new President of Sri Lanka with the support of the Sinhalese nationalist hard-liners. It is widely assumed that Tamil rebels engineered Mr Rajapakse’s election by preventing Tamils in the north and east from voting. Mahinda Rajapakse got 50.3 percent vote while his opponent Ranil Wickramasinghe, who campaigned for appeasement with LTTE, polled 48.4 percent votes. This slenderest margin of victory, coupled with a lack of majority of People’s Alliance Party in the legislature, makes the formulation of any bold domestic or foreign policies difficult for the Rajapakse administration. Since independence, Pakistan has been mostly ruled by military leaders. In between several military regimes, Pakistan has also experienced what can be described as “quasi-democracies.”8 Quasi-democracies are fragile political systems where the political leaders, despite their election through popular vote, are critically dependent on the support of the military for foreign and domestic policies. Unlike mature democracies in Western Europe and North America, where political leaders can take bold initiatives on foreign policy issues with wide public support, leaders in quasi-democracies are severely constrained to formulate or implement only those kinds of policies that are supported by the military and the bureaucracy. In Pakistan, democratically elected leaders have often lost their power when their policies are inconsistent with the military leaders’ goals and objectives (Lamb 1991). The intervention of the army in securing the resignation of two elected prime ministers, Benazir Bhutto and Nawaz Sharif, and President Ghulam Ishaq Khan in the 1990s testifies to the continuing domination of army in Pakistan’s politics. The military and bureaucratic elites in Pakistan have mostly shown more preferences for domestic-oriented and external-oriented policies than policies with a regional thrust. This attitude of the military and bureaucracy has led to a dampening of enthusiasm among the civilian leaders of Pakistan to pursue any bold regional accommodation policies with their neighbors. In Pakistan, the democratically elected governments of Benazir Bhutto and Nawaz Sharif in the 1990s enjoyed only a narrow popular base and faced serious opposition from the fundamentalist religious groups and the military, contributing to the government’s weakness. Not surprisingly, both Bhutto and Sharif administrations pursued the ideology of Islamic Nationalism in order to appease the military and the fundamentalist religious groups. The central thrust of Pakistan’s Islamic Nationalism is to promote the collective solidarity of the Muslim Pakistanis by constantly nourishing hostility toward the Indian Hindus. For the Pakistani ruling elites, this ideology of Islamic Nationalism has served two principal strategic functions: 1 2

It has provided a strong rationale to maintain a well-financed and powerful military as a defense against India. It has enabled the successive administrations to use force to silence opposition.

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On the other hand, the ideology of Islamic Nationalism has intensified India’s mistrust toward Pakistan and has become counterproductive for the growth of regional cooperation in South Asia. The military coup in Pakistan led by General Musharraf on October 12, 1999, which ousted Nawaz Sharif’s government and brought Pakistan under direct military rule for the fourth time since independence, has brought additional tension to the Indo-Pakistani relations. Military regimes, when in conflict with a neighboring democracy, tend to engage in military confrontation, scapegoating, (i.e. blaming the neighbor for domestic problems in order to insure their political survival), externalization of bilateral problems, and support for external mediation in resolving bilateral disputes (Solingen 1996: 81–86). Since independence, Pakistan’s four wars with India (two over Kashmir in 1948 and 1965, one over Bangladesh liberation issues in 1971, and one over Kargil in 1999) have either been initiated by military regimes or decided by intense military pressure on civilian regimes. Like Pakistan’s former military rulers, General Musharraf has often resorted to scapegoating, as manifested in a series of militant anti-India postures, to remain in power and to acquire legitimacy. Pakistan’s military rulers, who have intermittently ruled Pakistan for 32 of its 59 years, have always sought external engagement in resolving their bilateral disputes with India. To insure Pakistan’s strategic significance for extraregional powers and to maintain domestic political clout, Pakistan’s military regimes often have preferred domestic-oriented and external-oriented policies vis-à-vis a regional thrust. General Musharraf has already shown his preference for all these kinds of methods in dealing with India (Bearak 1999). Such policies of externalization and external mediation of bilateral problems, which India opposes strongly, have prevented close and continuous regional interactions between India and Pakistan, making regional cooperation goals difficult to achieve. In Bangladesh, the successive formation of coalition governments due to the ruling party’s lack of a comfortable majority in the Parliament, coupled with ineffective political leaders who do not enjoy a broad political base of support, has produced consistently weak governments since 1990s.9 In the 1991 Bangladesh election, the ruling party (BNP) under Khaleda Zia secured 42 percent of the total seats in the Central Legislature and 30 percent of the total votes polled. In the election of June 1996, the Bangladesh Awami League under Sheikh Hasina emerged as the ruling party with a 48 percent control of the total seats in the Central Legislature. But the party polled slightly more than 34 percent of the total votes. Besides, Prime Minister Sheikh Hasina faced serious opposition from the dominant religious groups and opposition parties, weakening her government’s strength. In the 2001 election, BNP-led coalition under Khaleda Zia came back to power. Although the coalition won a majority of seats in the central legislature, it polled only 48 percent of the total votes. Since 2001, Prime Minister Khaleda Zia has struggled to deal with intra-party squabbles among the coalition partners, political differences between the president and prime minister that led to a serious constitutional crisis, opposition from the popular Awami League party on the government’s economic and foreign

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policies, continuing political violence, unrest, and strikes, and the demand from the influential Islamic fundamentalists groups to declare Bangladesh as an Islamic state with the institution of Islamic Shari’ah law. Such pressing domestic issues have increased substantially the domestic insecurity of the Bangladeshi government. To deal with these issues and to expand their domestic political base, the governing elites of Bangladesh have increasingly pursued nationalist and populist policies. Consequently, although regional cooperation remains an important goal for Bangladesh, policies toward regional cooperation have received low priority from the government in recent years. In the case of India, the decline of the Congress Party, the formation of coalition governments at the center since the 1990s, lack of unity among the party members, unpopular and corrupt political leaders and their lack of public support, burgeoning political parties at the regional and national levels with diverse socioeconomic agendas, interparty strife, constitutional constraints limiting the power of the Head of State, and the existence of a quasi-federal decisionmaking system have contributed to the government’s weakness.10 India has experienced four weak liberalizing coalitions since the 1990s: 1 2 3 4

the minority government of Narasimha Rao of the Congress Party (1991–96); United Front Party’s coalition government with outside support of Congress party led by Deve Gowda and later I.K. Gujral (1996–97); a 23 party coalition government under the leadership of A.B. Vajpayee of the Bharatiya Janata Party (BJP) (1998–99, 1999–2004); a 12-party United Progressive Alliance coalition government led by Manmohan Singh of the Congress Party (2004–).

Given their limited popularity and domestic political insecurity, the leaders of these coalition governments have basically relied on three strategies – scapegoating (i.e. blaming the neighbors, particularly, Pakistan); combative regional postures; and nationalist policies – to advance their domestic agenda, that is, legitimize their rule and strengthen political base. Consequently, although regional stability remains an important goal, Indian leaders’ regional cooperative initiatives have remained tentative and fragmented. It is obvious from the above discussion that in almost all South Asian countries, weak coalitions are under greater pressure to accommodate the varying demands and interests of domestic groups to insure their political survival. Leaders in such weak coalitions require strong domestic support to pursue any kind of bold domestic or regional accommodations policies. As discussed in detail in Chapter 7, domestic support (in terms of affective and utilitarian support) remains low for regional cooperation in South Asia. As a result of this low support, weak coalitions remain tentative about taking more active regional cooperative initiatives. Slow growth of regional cooperation in South Asia in the past decade was also caused by the lack of transparency in communication among South Asian

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countries. Both print and electronic media (India is an exception) are highly government-regulated in South Asia, thereby distorting and delaying information flows. In addition, the intelligence agencies in India and Pakistan carry out systematic disinformation campaigns against each other on a regular basis. As a result, accurate and timely information about policy preferences and domestic conditions of their neighbors are not readily available. Such lack of domestic transparency and contained pattern of communication have several negative implications for regional cooperation. First, inadequate information on countries’ domestic conditions has contributed to mutual distrust and has prevented transnational logrolling of people’s support for regional cooperation. Transnational logrolling refers to spread of one population’s support for regional cooperation to neighboring countries through smooth exchange of information. Second, a lack of domestic transparency has made it difficult for the partners of SAARC to predict the intention and behavior of other partners. This is particularly evident in the dealings of two large partners of SAARC – India and Pakistan. This problem of uncertainty has become even more acute with the advent of military rule in Pakistan and weak coalition governments in India. Such uncertainty, in addition to lowering incentives for regional cooperation among SAARC partners and raising the cost of building SAARC institutions, has also contributed to non-implementation of such important SAARC programs as anti-terrorism act, which was signed by SAARC member in 1987. Third, lack of transparency has deprived SAARC partners of positive externalities – i.e. they have been unable to develop frequent formal and informal communication networks among policymakers and non-governmental actors essential for strengthening regional cooperation.

Nuclear issue On May 11 and 13, 1998, India tested a series of five nuclear devices at the Pokhran test cite in the northern state of Rajasthan after more than two decades of maintaining a policy of nuclear ambiguity.11 Two weeks later, Pakistan followed suit by testing six nuclear devices on May 28 and 30, 1998, abandoning its policy of nuclear ambiguity and equaling India’s total number of explosions since 1974. By conducting these tests, India and Pakistan became the only two neighboring countries in Third World region to have demonstrated a real nuclear weapon capability. What are the implications of nuclear weapon capabilities of India and Pakistan for South Asia? Has their decision to go overtly nuclear enhanced the prospects of regional peace and stability or has increased the chance of war? The following section examines these questions. The evolution of nuclear program in India India’s nuclear program was started by the Cambridge-educated scientist Dr Homi J. Bhabha in 1944 at the newly established Tata Institute of Fundamental Research (TIFR). After India’s independence in 1947, Prime Minister Nehru

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provided full support and political patronage to this program and showed strong preference for a nuclear dual track policy – that is India’s development of nuclear energy should be for peaceful purposes,but could be used for defensive purposes if necessary. By early 1960s, India had developed the capability to produce nuclear weapon. Although Nehru rejected Bhabha’s request to make a nuclear bomb using plutonium, he kept the option open.12 Nehru’s preference for nuclear option was further strengthened by India’s defeat in the Sino-Indian war of 1962 and China’s nuclear explosion in 1964. After Nehru’s death in 1964, Prime Minister Lal Bahadur Shastri continued India’s nuclear dual-track policy. With Shastri’s death in 1965, the political push for nuclear explosion slowed down. However, the changing political landscape of South Asia during early 1970s provided a new political momentum to Prime Minister Indira Gandhi’s administration for carrying India’s first nuclear explosion. The US efforts to establish rapprochement with China in July 1971 and to strengthen its relationship with Pakistan incited New Delhi’s fear that the balance of power on the subcontinent might become unfavorable. In December 1971, India sent its troops to East Pakistan to fight against West Pakistan. In showing support for Pakistan, the United States sent the Task Force 74 of the Seventh Fleet which consisted of Enterprise, the world’s largest attack carrier, with 75 nuclear-armed fighter bombers on board into the Bay of Bengal. Although India defeated the Pakistani forces and secured Bangladesh’s independence, it was resentful of the US gunboat diplomacy and the nuclear threat.13 In the political calculation of Mrs Gandhi and her close advisors after India’s victory in the Indo-Pak war of 1971, a single peaceful nuclear explosion (PNE) would offer India the best possible policy option by achieving the following objectives: 1 2 3 4

5

India would be able to reject the non-proliferation regime, the main architects of which were the United States and the former Soviet Union. It would demonstrate the limits of Soviet influence on New Delhi. It would provide deterrence against China. By demonstrating its capability to build nuclear weapons and then choosing not to do so, India would be able to claim moral superiority over other nuclear weapon states; It would enable India to reassert its autonomy in world affairs and legitimize its non-alignment policy.

While the preparation for India’s first nuclear explosion started in May 1972 when the Purnima reactor went critical, the timing of the PNE reflected the interplay of domestic and external considerations. By 1974, Mrs Gandhi’s domestic popularity had declined because of growing factionalism within the Congress Party, rapidly deteriorating economy due to sudden rise in oil prices as a result of Arab-Israeli war in 1973, labor unrest as represented by the ongoing longest (three-week long) railway strike, and the wave of Jayaprakash Narayan’s movement for “total revolution.” To divert people’s attention from domestic problems

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and boost her and the Congress party’s popularity, Mrs Gandhi, after consulting with a few of her closest advisors – P.N. Haksar, the former principal secretary to the Prime Minister; P.N. Dhar, the incumbent principal secretary; Dr Nag Chaudhary, scientific advisor to the Defence Minister; H.N. Sethna; and Raja Ramanna – decided to go for a nuclear explosion. On May 18, 1974, India detonated its first PNE at the site of Pokharan in Rajasthan.14 By conducting the PNE, India achieved its nuclear policy objective, that is, its nuclear complex became more self-reliant. But the adverse international reactions had a sobering effect on India’s nuclear programs. For next two decades, Indian policymakers maintained a policy of nuclear ambiguity until the advent of the comprehensive test ban treaty (CTBT) debate in 1995. In pushing for a CTBT, the United States gave highest priority to the issue of non-proliferation. For India’s nuclear establishment, this was a strategy for permanently foreclosing India’s nuclear option. This belief was reinforced by the repeated statements of several senior American officials that Washington’s goal was to “cap, reduce, and then eliminate” India’s and Pakistan’s nuclear weapon capabilities and the capabilities of other states (Cohen 2001: 173–174). This was a sensitive issue for India’s pro-nuclear lobby and nationalist politicians who have long opposed a two-class international system with “nuclear haves” versus “nuclear havenots” that would perpetuate the dependence of less-developed countries on technologically advanced countries. The CTBT debate during 1995–97 created an environment in which the decision to go nuclear was domestically permissible in India. By 1998, there was widespread support for any decision that would preserve India’s nuclear option and maintain the country’s pride and independence. Indeed, it was widely agreed that India’s nuclear weapons would greatly enhance India’s quest for great power status. The other strategic calculations of India’s political elites were that India’s acquisition of nuclear bomb would put India on a level-playing field with China, pressuring Beijing to negotiate seriously over the longcontested border disputes with India. It would also insure India’s dominant position in South Asia, dissuading Pakistan from playing any disruptive role in Kashmir. The 1998 Indian election brought the most pro-nuclear party, the BJP, to power. Even during his brief stint as the Prime Minister for 13 days only in May 1996, the BJP leader, Atal Behari Vajpayee, had vowed to break with past policy of nuclear ambiguity and to begin an openly declared nuclear buildup. Two years later, when BJP came to power, the strategic and political reasons for a nuclear test were there. In addition, the BJP leaders’ desire to increase the party’s popularity so that it would retain power in the event of a fresh election became a driving force for its decision to go for a nuclear test in May 1998. The evolution of nuclear program in Pakistan Although Pakistan’s nuclear research program started in March 1956 with the establishment of the Pakistan Atomic Energy Commission (PAEC) under the chairmanship of Cambridge-educated Dr Nazir Ahmad, the Pakistani nuclear

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program did not really take off because of lack of bureaucratic and military support. With the defeat of Pakistan in the 1971 Indo-Pakistani war and the emergence of Bangladesh as an independent state, President Zulfiqar Ali Bhutto decided to acquire nuclear weapon technology (Ahmad 1999: 178–204). Pakistan’s basic objective of developing a nuclear bomb was to achieve strategic military parity with India, thereby enhancing its security and national esteem (Bhutto 1969). President Bhutto was convinced that nuclear weapons are the contemporary currency of international power and only with them in hand could Pakistan neutralize growing influence of India in the region and recapture some of its lost prestige in the 1971 war. India’s test of its nuclear device in 1974 provided further impetus to President Bhutto’s plan to develop nuclear weapons for military purposes. In October 1974, Pakistan signed an agreement with France for building a plutonium reprocessing plant, which was designed to produce fuel for a series of nuclear plants. In 1975, Dr Abdul Qadir Khan, a prominent scientist, returned to Pakistan after his training at a Dutch consortium, URENCO, where he seemed to have acquired substantial knowledge on centrifuge enrichment process. President Bhutto hired him as the head of a team of research scientists engaged in a secret program to manufacture nuclear weapons. As the head of the team, Dr Khan was promised sufficient autonomy from bureaucratic and military interference to carry out his activities. With this power, Dr Khan soon got engaged in several clandestine activities to acquire technologies and equipment from abroad, often through third parties and subterfuge. By 1977, under the leadership of Dr Khan, Pakistan was able to develop an enrichment plant at Kahuta, near Islamabad. Although not enthusiastic initially, the military support for the development of nuclear weapons program changed dramatically after General Mohammed Zia-ul-Haq came to power in a military coup in July 1977, overthrowing the Bhutto administration. Like India, General Zia-ul-Haq embraced a nuclear ambiguity policy, publicly denying any effort to manufacture nuclear weapons while vigorously pursuing nuclear weapon development program secretly. The Soviet invasion of Afghanistan in December 1979 led to a weakening of the US pressure on Pakistan from acquiring nuclear weapons. As a part of its strategic military plan, the United States needed to use Pakistan’s territory to funnel military and economic assistance to Afghanistan’s resistance forces. To accomplish this objective, the United States sought Pakistan’s cooperation by providing military and economic aid and relaxing its pressure on Pakistan’s nuclear program. Taking advantage of this shift in US policy which brought massive military and economic assistance to Pakistan, General Zia was able to channel the necessary funds for Pakistan’s nuclear weapon development program under Dr A.Q. Khan. By 1987, Pakistan seemed to have developed some capability for nuclear weapons.15 However, Pakistan’s first official admission that it maintains unassembled nuclear weapons came in February 1992, when Foreign Secretary Shahryar Khan told the Washington Post that Pakistan possesses “elements, which, if put together, would become a device.” He also said that Islamabad had in 1991 frozen its production of highly enriched uranium and bomb cores but

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would not destroy its existing cores unless India reciprocated (Hagerty 1998: 173). By claiming to freeze its production of fissile material and at the same time linking its nuclear program with India, Pakistani policymakers sought to accomplish an important policy objective: retain a measure of nuclear deterrence against India without suffering the negative diplomatic consequences associated with nuclear weaponization. Several reports suggest that with China’s supply of technology for the short-range M-11 missile and sale of magnets used to refine bomb-grade uranium in 1995, Pakistan’s nuclear weapon program moved forward, albeit secretly.16 Finally, the Indian nuclear test of May 1998 provided an opportunity to the Pakistani Prime Minister, Muhammad Nawaz Sharif, who on the advice of the senior military leaders, decided to conduct six nuclear tests two weeks later to match India’s nuclear strength. Nuclear deterrence and regional stability Following the South Asian nuclear tests, an intense global debate reemerged between the nuclear non-proliferation community and supporters of nuclear deterrence. Fundamentally, two nuclear worldviews guide this debate. First, the nuclear non-proliferation community led by many American analysts and observers argue that the Indian and Pakistani nuclear tests make the South Asian region more unstable and war-prone.17 On the other hand, guided by neo-realist worldview, supporters of nuclear deterrence school argue that overt nuclearization of India and Pakistan will enhance regional stability. The latter group is largely represented by South Asian decision-makers and a majority of South Asian military and non-military observes and analysts for whom it is now an article of faith that nuclear weapon capabilities deter war between India and Pakistan (Subrahmanyam 1993: 184; Singh 1998; Mattoo 1999). Which one of these views provides a more accurate assessment of South Asian nuclear situation? According to the nuclear proliferation analysis, given the geographical proximity, historical and political tension, and systematic disinformation campaigns (as carried out regularly by India’s Research and Analysis Wing and Pakistan’s Inter-Services Intelligence) between India and Pakistan for decades, inadvertent nuclear use is possible in the wake of a crisis. Any false warning of an impending missile attack from one country would produce extraordinary pressure for the other country to launch a counter-missile attack for the fear of “immediate decapitation” (Ganguly 2001: 109). The short flight distances between Indian and Pakistani targets leave so little time for the decision-makers that it would be difficult to correctly assess the situation and respond accordingly. This makes the situation extremely dangerous. While compelling on the surface, this argument does not hold up to sustained scrutiny. Although they were not declared nuclear powers until 1998, both India and Pakistan have been nuclear-armed rivals for over a decade. In addition to numerous low-intensity crises, India and Pakistan had experienced at least two major military crises – 1990 Kashmir crisis and 1999 Kargil crisis. There is no

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reliable evidence to suggest that either side had resorted to nuclear weapons during these crises. Several geopolitical factors influence the Indo-Pakistani nuclear relations. First, the logic of existential deterrence dissuades India and Pakistan from fighting a full-scale war (Hagerty 1998: 181). Existential deterrence, as defined by Marc Trachtenberg, refers to: a strategic interaction in which the mere existence of nuclear forces means that, whatever we say or do, there is certain irreducible risk that an armed conflict might escalate into a nuclear war. The fear of escalation is thus factored into political calculations: faced with this risk, states are more cautious and more prudent than they otherwise would be. (1985: 139) Several prominent nuclear strategists in India and Pakistan firmly argue that nuclear weapons have cast an existential deterrent shadow over Indo-Pakistani relations. As Subrahmanyam observes: In 1965 when Pakistan carried out its “Operation Gibraltar” and sent in infiltrators, India sent its army across the cease-fire line to destroy the assembly points of the infiltrators. That escalated into a full-scale war. In 1990, when Pakistan once again carried out a massive infiltration of terrorists trained in Pakistan, India tried to deal with the problem on Indian territory and did not send its army into Pakistan-Occupied Kashmir. (1993: 184) Concurring with Subrahmanyam’s observation, India’s former Army Chief, K. Sundarji, argues: The reason why Indian leaders have hesitated to take recourse to their stated avowed strategy of reacting in the plains conventionally is because of the nuclear equations. . . . What the nuclear capability does is to make sure that old scenarios of Indian armour crossing the Sukkur barrage over the Indus and slicing Pakistan in two are a thing of the past. (quoted in Hagerty 1998: 168) Similar views have been expressed by Pakistan’s two most prominent nuclear strategic analysts. Abdul Sattar notes, “Pakistan’s nuclear capability has made indispensable contribution to deterrence of aggression and maintenance of peace” (1995: 20). Echoing this view, Pakistan’s former COAS Mirza Aslam Beg observes, “Far from talk of nuclear war, there is no danger of even a conventional war between India and Pakistan. As compared to previous years, there is no possibility of an India-Pakistan war now” (quoted in Hagerty 1998: 168). These observations illustrate the perspectives of many South Asians for whom nuclear weapon capabilities serve as a deterrence to war between India and Pakistan.

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A second reason why nuclear first strike is not considered as a realistic policy option by either India or Pakistan is because of the short distances separating Indian and Pakistani targets. Policymakers in both the countries share the concern that radioactive fallout resulting from a nuclear strike could affect their own territory. The possibility of widespread radiation poisoning and the consequent human cost is a serious concern. Also, preemptive nuclear strikes are extremely unlikely, because of the deterrent power of “first-strike uncertainty.” Leaders in New Delhi and Islamabad are not certain if they could destroy all of the opponent’s nuclear weapons preemptively. The devastating consequences of such failure are too critical for leaders to ignore. In fact, such considerations may have formed the basis of the India–Pakistan Nuclear Non-Attack Agreement in December 1988 according to which both India and Pakistan have agreed not to attack each other’s nuclear facilities. The third reason why New Delhi and Islamabad are dissuaded from nuclear aggression is the fear that any outbreak of nuclear hostilities would lead to international isolation, economic sanctions, and disruption of foreign investment, adversely impacting their economic goals. The 1999 Kargil war between India and Pakistan offers a useful test case about the implications of overt nuclearization on regional stability. The outbreak of the war challenged the assumption that overt nuclearization would deter India and Pakistan from launching a conventional war. On the other hand, the decision not to use nuclear weapons and escalate the war horizontally by two nuclear rival neighbors supports what Sumit Ganguly describes as “stability/instability paradox” situation in South Asia.18 According to this argument, the knowledge of sheer destructive power of nuclear weapons makes the execution of a fullscale war between India and Pakistan most unlikely. At the same time, limited and calculated incursions across the LoC are possible despite the mutual acquisition of nuclear capabilities. In fact, lower-level engagements as witnessed in Kargil crisis in 1999 and Kashmir crisis in 1990 are likely to occur given the policymakers’ belief that either side would not attempt a full-scale war for fear of use of nuclear weapons by the opponent. While the debate on the two competing positions about nuclear stability and instability will continue, some other critical issues in South Asia are the possibilities of nuclear accidents, nuclear terrorism and blackmail, misperception, unauthorized nuclear use, and technological error. Such challenges will continue to persist unless addressed by India and Pakistan by embedding their nuclear weapons in robust command, control, communications, and intelligence infrastructure (Tellis 2001). Until such arrangements are made, nuclear issues will provide an additional element of tension to the Indo-Pakistani bilateral relations.

Conclusion This chapter examines four critical issues in South Asia that have an important bearing on the growth of regional cooperation: India’ hegemonic power, existence of weak ruling coalitions, ethnic crisis, and nuclear issues. What are the

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implications of these issues on the growth of regional cooperation in South Asia? First, as discussed in this chapter, despite India’s hegemonic position, there is no consensus among South Asian countries to recognize India as the region’s undisputed leader. Additionally, South Asian countries do not share a common external threat perception, which makes it difficult for the leaders of these countries to work toward common regional security strategies. Most South Asian countries perceive their main threat to be India. On the other hand, India perceives an external threat from Pakistan’s military challenge with the support of external powers. The narrow political base of South Asian ruling elites provides few opportunities for them to ignore regional security threats or to transcend their dominant domestic constituencies. Thus, blaming the neighbor (scapegoating) has become a preferred policy choice for South Asian ruling elites, making regional accommodation a difficult goal. It is not surprising, therefore, that SAARC-related policies and programs have received low priorities by South Asian ruling elites over the past decade. Second, weak strength of ruling coalitions throughout South Asia has made the leaders of these countries critically dependent on the support of important domestic groups. The leaders’ need for domestic support for political survival have led them to pursue populist, nationalist, and self-reliant policies. In India and Pakistan, the leaders have pursued not only such policies but also have emphasized military-intensive policies. While these policies may have brought short-term political payoffs to the ruling elite in India and Pakistan, they have become enormously counterproductive for the growth of regional cooperation. Third, the states in South Asia are all multiethnic and highly permeable. They remain vulnerable to ethnic regionalism that can generate separatist movements. This vulnerability has increased domestic insecurities in all the states in South Asia. Each state blames the neighboring state for supporting its ethnolinguistic separatist movements. In particular, India is blamed by its neighbors for its role in ethnic crises. Since India’s ethnic groups overlap into all neighboring states, India’s hand in all ethnic conflicts is strongly suspected by the other South Asian states. Moreover, India’s structural position of regional preeminence leads its policymakers to believe that India has a legitimate role to play in resolving the ethnic crisis in neighboring countries. Such Indian belief is not mutually reciprocated by its neighbors and often leads to tension in South Asia. Consequently, an atmosphere of mutual suspicion and distrust prevails in South Asia, which is not conducive for the growth of regional cooperation. Finally, the overt nuclearization of India and Pakistan in 1998 may have introduced a regional stability/instability paradox in South Asia. On the one hand, policymakers’ realization of the devastating consequences of nuclear weapons makes the execution of a full-scale war most unlikely. On the other hand, the deterrent insurance provided by possession of nuclear weapons may tempt both sides to engage in limited war by initiating military adventurism along the LoC. Episodes like Pakistani incursion across LoC in 1990 and Kargil war are likely to occur until a political resolution is found in the Kashmir issue.

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If political and military tensions between India and Pakistan remain unresolved, regional cooperation among South Asian leaders will continue to be weak and inconsistent, making only a “stop-and-go” pattern of growth of SAARC possible. In such a pattern of growth, some regional cooperation policy initiatives are possible. But then, these initiatives will be followed by protracted stalemates during which regional institutional developments and implementation of SAARC-related programs will remain uncertain. The recent move of the South Asian countries toward economic liberalization has generated some optimism for increasing regional cooperation in South Asia. Will economic interests drive the South Asian countries toward greater cooperation? This issue is explored in the next chapter.

6

Domestic politics and regional economic cooperation in South Asia

By signing the Framework Agreement on SAFTA at the Islamabad SAARC Summit in January 2004, South Asian leaders took an important step to intensify their intraregional economic cooperation. Will SAFTA agreement drive South Asian countries toward deeper regional economic cooperation? This chapter presents a political economy framework to address this question by evaluating domestic factors in the design and evolution of regional economic cooperation arrangements in South Asia. In Chapter 2, employing the two-level game framework, I argued that regional cooperation is a two-level process in which domestic support and regional bargains and negotiations must overlap if cooperation is to proceed (Putnam 1988). While attempts to achieve regional cooperative agreements involve bargaining and negotiation among governmental actors in various issue areas, domestic support is essential for successful implementation of these negotiated agreements. In the issue area of trade, state actors’ preferences for regional arrangements are shaped to a large extent by pressure from business groups. Given this argument, the present chapter argues that willingness of political actors and support of domestic business groups are necessary for the success of deeper regional economic cooperation. As the experiences of EU and NAFTA illustrate, the demand for regional rules, regulations, and policies by market players is a critical driving force for deeper regional economic cooperation. Thus, the purpose of this chapter is to answer two questions. First, under what conditions will domestic business groups support regional trade agreements? Second, under what conditions will governmental actors show preferences for regional trade arrangements? Regional trade preferences by domestic actors are shaped by their expectations about the dynamic effects of regional integration. Studies on regional integration identify three kinds of dynamic effects (Balassa 1961; Chase 2005: 23). First, regional integration enhances consumer interests by increasing competition and breaking the monopolies that leads to reduction of prices. Second, by uniting regional economies, regional integration creates larger market, which promotes intraindustry specialization through economies of scale. Third, reallocation of factors of production is possible because of factor price differences between countries. While political actors show more preference to the first dynamic effect of regional integration related to price reduction and

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consumer benefits, market actors like the second and third dynamic effects – that is increased market size with scale economies and factor movements. Thus, the existence of significant market potential for economic gains from market exchange within a region is a critical facilitating condition for the support of business groups toward deeper regional economic cooperation. Several empirical studies have shown that if there is little potential for market gain because of either lack of complementarity of regional economies or absence of relatively large size of regional markets with insignificant economies of scale, the process and outcome of regional economic cooperation will not be successful (Milner 1997: 85–88; Mattli 1999: 42–43; Chase 2005: 16–27). This is because market players will not have sufficient incentives to demand for regional trade. These studies show that market gains are a function of three conditions – increasing returns to scale (IRS); size of domestic market available to firms; and complementarities of regional economies. First, using the new international trade theory, recent work on regional integration argues that firms with IRS support regional trade liberalization more than firms which do not have IRS (Milner 1997; Chase 2005). IRS – that is firms achieve declining average production costs as they increase their output – is important because the firms can expect to achieve greater profit in imperfect markets as production becomes more efficient with scale. Contrary to neoclassical economic assumption of constant returns, industries with increasing returns achieve efficiency with level of production. As the number of units produced increases, their cost decreases, insuring maximization of profits for firms. Costreduction effects of increasing returns, as the analyses of Corden (1972) and Pearson and Ingram (1980) show, are important motivations for firms to support regional trade strategy. Cost-reduction is best realized when two conditions exist – geographic proximity and economies of scale. Geographic proximity is important because it brings down transportation costs substantially. Free trade areas in geographically non-contiguous regions may lose the benefits of scale because of the high costs of transport. It is recognized by both classical and contemporary literature on international trade that scale economies are important methods of production that can provide IRS to firms in the era of imperfect market competition. The central logic of scale economies – that is large-scale production can achieve lower costs – has been demonstrated in the writings of Adam Smith (for example his famous pin factory analysis in The Wealth of Nations), John Stuart Mill, and strategic trade theory literature. As John Stuart Mill, in his classic Principles of Political Economy, observes, “The larger the scale on which manufacturing operations are carried on, the more cheaply they can in general be performed.”1 In more recent strategic trade literature, Paul Krugman (1992) has advanced the export promotion model, where import protection policies by governments encourage domestic firms to increase their outputs with scale economies, reducing their average costs until they can profitably export. Extending the strategic trade logic, several scholars have adopted a political economy approach to argue that once firms achieve scale economies, they will seek regional trade liberalization

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to export their products to regional markets in order to reap maximum profit (Froot and Yoffie 1993; Busch and Milner 1994; Milner 1997; Chase 2003, 2005). Building from these insights, I argue in this chapter that if IRS are large, producers will support regional trade liberalization to increase output, reduce unit costs, and earn more profits. If IRS are small, producers will have little incentives in regional trading arrangements because of minimal economic gains. Second, domestic market size influences support for FTAs. Firms with IRS have limited opportunity to reap profits from small domestic markets. Thus, if the home market is small, firms with IRS will support regional trading arrangements to reap greater profits and reduce unit costs. In contrast, if the home market is large, firms with IRS may be less interested in regional trading arrangements since they may be already the beneficiaries of large domestic markets in terms of profits and unit costs (Casella 1996; Milner 1997). By the same logic, if the regional market is too small, then producers will not be able to achieve cost reduction and hence will show little interest in regional trading arrangements. Third, complementarity of regional economies is an important condition for FTAs. If firms produce and export similar products in a region, they will have little incentives to support regional trading agreements because of limited or no demand for their products. When firms compete with similar products, there is a tendency to support for the protection of domestic markets. Trade complementarity is said to exist when the structures of a country’s important exports match with its partners’ import basket. In case of the existence of substantial trade complementarity, firms are likely to be more supportive of FTAs. The absence of trade complementarity will diminish firms’ support for FTAs. Of course, only the support of domestic business groups is not sufficient to insure the success of regional economic arrangements. Since governments make economic policies and negotiate regional and multilateral economic agreements, it is clear that no change will occur unless governmental actors take initiatives and positively respond to the demand or support of the business groups. It is, therefore, necessary to understand preferences of governmental actors. Thus, this chapter seeks to answer the second question: under what conditions the political actors will be motivated to show preferences for regional economic cooperation arrangements. As discussed in Chapter 2, if regional economic cooperation policies enhance political actors’ prospects of retaining power by significantly improving domestic economic conditions, then these policies are likely to be enthusiastically pursued. Otherwise, political actors will show little preference for pursuing regional economic cooperation policies. Thus, power-retaining objective is the primary motivation of political actors for pursuing regional economic cooperation policies (Milner 1997: 85–88; Mattli 1999: 42–43). However, a cursory look at outcomes of various regional integration schemes suggests that even willing political leaders may be unable to sustain regional economic cooperation because of collective action problems (Mattli 1999). Two types of collective action problems – prisoners’ dilemma (PD) and CD games –

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have been identified in the international cooperation literature to explain why nation-states choose or not choose cooperation among themselves (Stein 1983: 115–140; Keohane 1984; Snidal 1985: 923–942; Martin 1992: 765–792; Garrett and Weingast 1993: 173–206). These two collective action problems provide important insights which can be relevant to the study of regional economic cooperation in South Asia. The PD game, where the pursuit of narrow self-interest and private gain prevents two actors from reaching a desirable outcome of cooperation, is often considered as a useful framework in evaluating the difficulties of cooperation between two states. This framework also explains defection of states even after agreeing to cooperative arrangements because both states continue to have incentives to defect. The extension of PD game from two-actor to the multipleactor (or n-actor) situation further increases the difficulties of cooperation. Given the increasing problems of information and communications in multipleactor cooperative arrangements, it becomes easier for nation-states to cheat and thus prospects of sustained cooperation diminish. However, as Robert Axelrod (1984) has shown, by playing the PD game repeatedly and for number of times, political actors can develop confidence in each other’s behavior and can reduce the problems of information and communications, improving the long-term prospects of cooperation among themselves. Similarly, as Duncan Snidal (1985) has shown, by establishing issue-linkages across several issue areas, political actors can improve the long-term prospects of cooperation. This is because issue-linkages produce a fear of non-cooperation spillover, that is, noncooperation in one issue area may lead to the same outcome in another issue area and thus provide less incentives for governmental actors to defect for shortterm issue-specific gains (Snidal 1985: 939). While PD game has been studied extensively in the literature of international cooperation and undoubtedly has offered important insights to study regional economic cooperation schemes, the second collective action problem – CD game – has received inadequate attention. But, as Walter Mattli (1999) has shown, CD game is equally, sometimes more, salient for regional economic cooperation schemes. After all, successful regional economic arrangements require coordination of regional rules, regulations, and policies. If coordination problems persist, it is difficult to sustain regional economic cooperation. How can coordination problems be resolved? Summarizing the outcomes of various regional economic cooperation schemes, Mattli (1999: 42) argues that the presence of a benevolent leading country is necessary to resolve coordination problems. He reasons: Such a [leading] country serves as a focal point in the coordination of rules, regulations, and policies; it may also help to ease tensions that arise from the inequitable distribution of gains from integration, for example, through side-payments. Contested institutional leadership or the absence of leadership makes coordination games very difficult to resolve. (1999: 42)

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This observation supports the argument that when a region lacks an undisputed leader, it is difficult to sustain regional economic arrangements (Figure 6.1). This does not necessarily mean that the absence of leadership renders regional economic cooperative arrangements impossible, but it makes their success more elusive. In sum, this chapter argues that for regional economic cooperation to succeed, three conditions must be present. First, strong support from business groups (market actors) is necessary. Business groups will show preferences for regional economic arrangements when there is strong potential for gain in terms of regional economic complementarity or large size of regional markets with significant economies of scale. Second, political actors must be willing to initiate the process of regional economic cooperation. As discussed above, political actors will be more motivated to pursue regional economic cooperation policies if such economic arrangements serve their power-retaining goals by improving their country’s overall economic conditions. Third, when a regional grouping is led by an undisputed leader, its prospects of sustained success improves considerably (Figure 6.1). As illustrated by EU and NAFTA, the role of an undisputed regional leader for the success of a regional economic grouping is critical because such a leader can “serve as a focal point in the coordination of rules, regulations, and policies, and is able to ease distributional tensions by acting as a regional paymaster” (Mattli 1999: 190). In light of the above arguments, this chapter profiles the market size and structure of economy of South Asian countries to evaluate regional economic complementarities and economies of scale. It, then, examines the levels of intraregional imports and exports among South Asian countries to determine the Regional leadership Uncontested 3

2 European Union NAFTA EFTA (until 1973)

Significant

Potential market gains

2

Insignificant

Contested

EFTA (after 1973) APEC MERCOSUR

1

CACM (until 1969)

CACM (after 1969) AFTA ECOWAS LAFTA Andean Pact Caribbean Community Arab Common Market GCC SAFTA?

Success rate: 3  highest; 1  lowest

Figure 6.1 Regional leadership, potential market gains, and regional integration outcomes (source: adapted from Mattli (1999).

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extent of their economic interdependence. It explains several reasons for South Asia’s limited intraregional trade with a focus on domestic policies toward regional trade. This chapter, then, examines the nature of political coalitions and their preferences to provide a realistic assessment of the prospects of deeper regional economic cooperative arrangements in South Asia. In conclusion, the dynamics of India’s bilateral and transregional economic relationship is discussed.

Overview of South Asian economy The scale of South Asian industry One way to explain preferences of domestic business groups for regional trading arrangements is to examine the dynamics of scale economies in a region. Industries with large-scale economies in small domestic markets are more likely to support regional trade liberalization for realizing cost reduction and greater profits. However, these type of industries will show less interest for regional trade if their domestic market is large and regional markets are too small. Regional trade liberalization is also not a preferred goal for industries with small-scale production as they are likely to face pressure of increasing competition, price decline, possible takeover, or exit from production. Not surprisingly, these type of industries will show more preference to national protection policies than to regional trade liberalization. Put in a regional context, except for few selective industries in India – information technology, pharmaceuticals, automotives (for example motor cycles and two-wheeler scooters), and industrial goods – there is no scale economies for other countries in South Asia. These few Indian industries, as represented by Tata groups, Bharat Forge, Ranbaxy, Infosys, and Wipro, support regional trade liberalization in principle. At the same time, however, they have not made any vigorous efforts to put pressure on Indian government for expansion of regional trade because of the small market sizes of South Asian countries. Instead, they have sought global markets – United States and EU in particular – for their investment and industry expansion. According to a report published by ASSOCHAM in March 2007, these firms invested US$15 billion in EU and United States in the first quarter of 2007. While this trend of global quest for some Indian firms and industries is likely to continue, the prospect of their regional expansion, investment, and manufacturing appears unlikely given the insufficient market size, protected and fragmented national markets, and limited skilled labor force of South Asian countries. On the other hand, small-scale producers of South Asian countries have resisted opening of their domestic markets to Indian firms because of their fear of losing business. For example, manufacturing firms in Pakistan, Bangladesh, and Sri Lanka are too small to effectively compete with firms from India. As a result, South Asian countries have adopted import protection policies with high import tariffs on import of manufactured products from India. Not surprisingly,

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more than 53 percent of export of manufacturing goods from India goes to NAFTA and EU, while exports of India’s manufacturing goods inside the SAARC region is very small (Bandara and Yu 2003: 1306). In addition, there is a lack of complementarity of regional economies, and South Asian countries enjoy comparative advantage on a relatively narrow range of products (Table 6.1). This has led to competition among the endowment-based industries in South Asia for the same market and same products. Given this dynamics, many analysts believe that in the context of the establishment of a FTA, companies from Pakistan, Bangladesh, and Sri Lanka will make fewer gains than their Indian rivals. The textile industry is South Asia’s traditional area of strength. Although textile products do not constitute significant portion of India’s total exports, Indian firms are still major players in textile industry. Pakistani, Bangladeshi, and Sri Lankan producers also maintain strong positions in volume-intensive textile products. A quantitative assessment by Bandara and Yu (2003: 1305) based on GTAP model and database shows that while the wearing apparel sector has been the most dominating export production in Sri Lanka and Bangladesh (36 percent and 42 percent of their total exports, respectively), textile products remain the major export item of Pakistan (about 41 percent of the country’s total exports). In textiles and apparel, a few firms in these SAARC-4 countries (India, Pakistan, Bangladesh, and Sri Lanka) have reached world-class levels of outputs. But the export of these firms to South Asian region is minimal because of state protection policies in terms of value-added Table 6.1 Regional complementarities Country

Revealed comparative advantage (products)

Bangladesh

Fish, vegetables, jute, tea, leather, textile yarn, clothing, woven cotton fabrics.

India

Food, beverages, tobacco, meat, fish, crustaceans, rice, fruits, nuts, tea, coffee, spices, oilseeds, cotton, iron ore, concentrates of basic metals, petroleum, petrochemical products, chemicals, synthetic materials, medicinal and pharmaceutical products, cosmetic and soaps, insecticides and herbicides, leather, textile and clothing, machine tools, transport equipment, household equipment, steel, motor vehicles, motor cycles, scooters, and bicycles.

Nepal

Textile clothing accessories, floor coverings.

Pakistan

Fish, crustaceans, rice, fresh and dried fruits, sugar, spices, vegetables, cotton, oil seeds, textile and clothing, leather, medical instruments, toys and cutlery.

Sri Lanka

Fish, crustaceans, fruits, nuts, spices, tea, synthetic rubber, oilseeds, fuel wood, paper, textile fibers, rubber tires, wood manufactures, pottery, pearls and precious stones, textile yarn, woven fabrics, electric power machinery.

Source: Kemal (2004).

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taxes, import tariffs, and labeling requirements. Instead, these firms compete with each other for world market share. For example, a study by Bandara and Yu (2003: 1306) shows that in case of wearing apparels, more than 80 percent of India’s exports and 97 percent of exports from Pakistan, Sri Lanka, and Bangladesh goes to NAFTA and EU region, while export of this good inside South Asia is very small. The preceding discussion suggests that given South Asia’s industrial and manufacturing dynamics – that is domination of Indian firms, existence of narrow range of products according to comparative advantage among South Asian countries, and their export orientations to similar destinations – a SAFTA offers few opportunities to South Asian firms. Instead, small-scale South Asian firms fear that the establishment of SAFTA and the phasing out of import restrictions would lead to disruption in sheltered national markets, negatively impacting their profits and business. Consequently, these firms show little preference for a FTA in South Asia. Market size As summarized in Table 6.2, the national economies of SAARC countries differ significantly from each other in terms of population and national income. In terms of per capita income, all South Asian countries fall in low-income developing countries and have wide income differentials. India alone accounts for more than 79 percent of gross national income (GNI) in the region. In contrast, the shares of Nepal and Sri Lanka are significantly low. Nepal, Sri Lanka, along with two other SAARC original member countries – Bhutan and Maldives – can be described as small economies with very small market size. Although the shares of Pakistan and Bangladesh are relatively larger than Nepal and Sri Lanka, they are no match to India’s enormity in South Asia. The market size of both Pakistan and Bangladesh remains significantly smaller compared to India’s market size. This chapter argues that if the domestic market is small, firms with IRS will support regional trading arrangements to reap greater profits and reduce unit costs. However, firms in all South Asian countries, with the exception of India, do not have scale economies, and IRS is non-existent. Thus, domestic producers in these countries do not have incentives to seek regional trading arrangements. On the other hand, although some Indian firms have achieved scale economies and generally support regional trading arrangements, they have shown hesitation to expand to regional markets for two reasons. First, India’s domestic market size is quite large in comparison with other South Asian markets. Even the combination of all South Asian markets will be smaller than Indian market size, providing no extra incentives for Indian firms to seek regional trade liberalization. Second, political tension among South Asian countries prevents expansion of intraregional trade.

139 1,080 27 152 19

Millions

Population in 2004

Source: World Development Indicators, 2006

Bangladesh India Nepal Pakistan Sri Lanka

Country

Table 6.2 South Asian market sizes

9.8 76.2 1.9 10.7 1.34

%share in region’s population

■

61.3 673.2 6.6 90.7 19.5

Million US$

GNI in 2004

7.2 79.0 0.7 10.6 2.2

% share in region’s GNI

440 620 250 600 1,010

Per capita income US$

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Complementarities of regional economies A close look at the trade and production structure of South Asian countries suggests that there is a considerable degree of overlapping in agricultural products such as jute, cotton, and tea. In the industrial sector, except for India and to some extent Sri Lanka, other South Asian countries do not have diversified product base. As shown in Table 6.1, with the exception of India and Sri Lanka, South Asian countries enjoy comparative advantage in a relatively narrow range of products. Several studies have established that there is a lack of strong complementarity in the bilateral trade structures among South Asian countries (Hassan 2001; Bandara and Yu 2003; Kemal 2004). Lack of complementarity of regional economies has two significant implications for intraregional trade in South Asia. First, South Asian countries do not find it useful to intensify trade among themselves. Consequently, intraregional trade remains low in South Asia. A World Bank study reveals that South Asia’s intraregional trade is only 0.8 percent of GDP, one-eighth of Latin America’s level and only a fraction of East Asia’s nearly 27 percent of GDP.2 Second, these countries export similar goods and compete for similar destinations. As discussed earlier, the major destinations for South Asia’s exporting goods are not South Asian countries. Rather, NAFTA and EU remain the main destinations.

Current levels of economic interdependence The relative share of the foreign trade in GDP of a country is a significant indicator of the preference and potential influence of business groups on the formulation of trade policies. It is widely recognized that the attitudes of businesspeople engaged in foreign trade is likely to be less narrowly nationalistic than are the attitudes of businesspeople chiefly oriented toward domestic markets. Also, as argued in this chapter, firms with economies of scale in smaller markets show greater preference toward regional trading arrangements than firms from larger markets. Table 6.3 shows that among all South Asian countries, India’s share of trade in GDP is the lowest. India’s low reliance on trade can be explained by the fact that it has a relatively large domestic market, providing substantial profits to its firms with economies of scale. In contrast, Sri Lanka’s highest trade ratios indicate the country’s greater reliance on trade. Given its narrow resource base and small domestic market, Sri Lanka’s firms have shown more preference toward outward-orientation than other South Asian countries. Despite their relatively smaller size of markets in comparison with India, both Pakistan and Bangladesh have substantially less share of trade in GDP than Sri Lanka or Nepal. This shows an inward-orientation of Bangladeshi and Pakistani firms. Another important trade-related issue is that higher trade ratios of smaller South Asian countries are a function of their trade with the world, NAFTA and EU in particular, rather than with their region. As summarized in Table 6.4, South Asian countries seem to practice only reluctant regionalism as they have substantially lower share of intra-SAARC trade as

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Table 6.3 Share of foreign trade in GDP (percentage) Country

1980

1990

1995

2000

2002

Bangladesh Share of Import In GDP(%) Share of Export In GDP (%) Total Trade In GDP (%)

7.36 20.22 27.58

8.82 16.20 25.02

11.02 18.69 29.78

15.38 21.50 36.88

14.21 20.04 34.25

India Share of Import In GDP(%) Share of Export In GDP(%) Total Trade In GDP (%)

6.64 10.00 16.63

7.59 9.09 16.68

11 12.20 23.21

13.31 14.24 27.55

14.78 16.06 30.84

Nepal Share of Import In GDP (%) Share of Export In GDP(%) Total Trade In GDP (%)

11.54 18.73 30.27

10.53 21.10 31.63

24.22 34.61 58.83

23.28 32.43 55.71

14.89 29.34 44.23

Pakistan Share of Import In GDP (%) Share of Export In GDP(%) Total Trade In GDP (%)

7.99 12.74 20.72

16.93 18.49 35.42

16.90 21.43 38.33

18.01 19.35 37.37

16.91 16.32 33.22

Sri Lanka Share of Import In GDP (%) Share of Export In GDP(%) Total Trade In GDP (%)

31.36 53.35 84.71

30.55 38.53 69.08

35.89 45.52 81.41

39.27 49.74 89.01

36.08 42.38 78.46

Sources: Estimated from United Nations, Statistical Yearbook (1993, 1996, 2001, 2004, 2006).

Table 6.4 Intra-SAARC trade in relation to world trade Year

Intra-SAARC trade (exports + imports) (US$ million)

World trade of SAARC countries (exports + imports) (US$ million)

Percentage share of intra SAARC trade in world trade

1980 1985 1990 1995 2000 2005

1,210.0 1,088.7 1,584.7 2,919.0 5,315.0 14,165.4

37,885.3 43,759.5 65,490.0 83,110.0 14,1494 317,796.6

3.2 2.4 2.4 3.5 3.7 4.5

Sources: Estimated from The IMF Direction of Trade Statistics Yearbook (1985, 1992, 1995, 2006), Washington, DC: International Monetary Fund.

compared to their world trade over a period of more than two decades from 1980 to 2005. As Table 6.5 shows, exports and imports among SAARC countries are quite modest. The low level of intraregional imports and exports of India and Pakistan indicate how little these two relatively developed economies in South Asia depend on the region’s markets. By contrast, the industrialized countries remain

1980 1990 2001 2003 1980 1990 2001 2003 1980 1990 2001 2003 1980 1990 2001 2003 1980 1990 2001 2003 1980 1990 2001 2003

48.1 42.2 25.4 21.3 46.2 60.6 40.5 34.6 67.4 23.1 18.8 20.7 39.9 39.1 15.7 15.8 50.1 55.2 32.5 34.3 45.5 40.1 31.2 30.8

35.4 42.1 59.6 67.8 43.5 36.1 36.1 45.4 32.8 76.9 81.2 79.2 61.1 60.9 81.2 80.5 47.6 43.8 67.4 65.7 52.5 59.7 68.5 66.8

Developing countries 16.4 34.0 51.8 57.4 8.9 17.2 17.2 23.3 29.7 76.4 65.5 68.0 59.9 60.3 60.9 55.4 14.1 19.5 24.7 28.2 20.4 40.5 55.7 56.1

Asia 3.68 6.8 17.4 16.6 0.9 0.4 1.4 0.9 23.3 11.4 9.2 24.3 47.9 11.7 31.8 23.9 2.3 1.6 3.1 2.4 5.1 7.0 12.3 17.6

SAARC countries

Sources: Estimated from IMF Direction of Trade Statistics Yearbook (1985, 1999, 2003, 2007).

Sri Lanka

Pakistan

Nepal

Maldives

India

Bangladesh

Industrial countries

Imports from

Table 6.5 South Asian trade dependence indices (in percentages), 1980–2006 ■

36.0 71.3 74.5 75.3 48.7 60.3 52.4 50.4 60.0 50.2 72.9 58.4 48.4 72.7 55.0 43.4 36.4 60.8 57.0 55.6 39.6 61.5 74.0 68.9

Industrial countries

Exports to

56.7 24.0 9.5 9.0 31.0 25.8 43.8 45.8 40.0 49.8 27.1 41.6 51.6 27.7 43.2 54.4 60.9 36.8 42.9 44.3 42.9 32.3 23.0 26.8

Developing countries 26.1 10.1 5.4 5.2 11.5 13.0 23.1 25.4 31.8 49.7 24.5 40.7 44.9 26.5 42.6 53.5 25.3 20.9 42.6 18.7 15.2 9.6 8.5 11.7

Asia

8.68 3.6 2.7 1.7 3.6 2.7 5.7 4.6 26.5 14.0 3.7 14.0 37.8 7.1 36.6 51.6 6.3 3.9 5.1 2.9 7.0 3.6 2.7 6.8

SAARC countries

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the major trading partners for SAARC countries. As evident in Table 6.5, intraregional exports of SAARC members, with the exception of Nepal, have significantly declined during 1980–2003. The relatively large exports of Nepal to SAARC region can be explained by the existence of a preferential trade regime between Nepal and India. Sri Lanka’s exports to SAARC region declined during 1980–2001 but picked up during 2001–03 due to a FTA with India in the late 1990s. Intraregional imports of SAARC members, with the exception of Sri Lanka, also show a significant declining trend during 1980–2003. In sum, the SAARC countries’ trade with industrial countries, developing countries, and other Asian countries far outweigh trade among themselves. Why is intraregional trade so low in South Asia? Several factors account for this. First, with the exception of India and Pakistan, SAARC countries do not have a diversified product base. Being primary producers, they tend to export similar items and thus compete with each other. Thus, lack of complementarity in regional economies has contributed to low level of intraregional trade. In addition, despite their small market size, lack of scale economies, except for some firms in India, makes exports less profitable and thus prevents domestic producers of SAARC countries from exporting their products to each other’s markets. Second, the existence of a high rate of tariff and non-tariff barriers in South Asian countries is an important factor for constraining the expansion of intraregional trade.3 In the 1980s, tariffs in South Asia were nearly 70 percent on an unweighted average basis, compared to East Asia’s 27 percent and Latin America’s 32 percent (Newfarmer 2004: 4). Although tariffs have declined in South Asia from 70 percent to 35 percent in the 1996–98 period and about 18 percent in 2002 (Pursell and Sattar 2004) because of trade liberalization by South Asian countries over the last two decades, tariff rates are still higher in South Asia than other regions. One reason that explains this disparity is the continuous tariff cuts at a more rapid pace by other regions in comparison with South Asian countries. The other reason is that tariff revenues are an important source of government revenue for most South Asian countries. Political leaders in these countries are concerned about any loss of tariff revenues because that will reduce their ability to redistribute government funds to special interests or spend on public welfare schemes. Given the growing budget deficits and absence of substantial export earnings, the loss of tariff revenues poses problems for South Asian leaders. These revenues are necessary for political leaders to enhance their prospects of retaining power. Consequently, unlike developed countries, tariff revenues have remained a significant part of the government budget in South Asian countries and tariff cuts have moved at a much slower pace than other regions of the world. In the 1970s and 1980s, most South Asian countries pursued import substitution industrialization (ISI) policies. Sri Lanka is the only South Asian country to have pursued trade and investment liberalization policies since 1977 after the failure of its ISI policies from 1970 to 1977. The adoption of protectionist

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import substitution policies by South Asian countries turned their economies into one of the most inward-oriented and regulated economies with stringent trade and exchange controls and pervasive state intervention in all areas of economic activity. Promotion of public sector dominance in the economy was preferred policy options for South Asian governments during this period. Two implications of these policies are particularly important for intraregional trade in South Asia. First, these policies were highly unfavorable to private sector activities in general and export production in particular. There was a significant antiexport bias in the economy, which was not conducive to promote intraregional trade. Under the pressure of economic crises and the multilateral agencies like the International Monetary Fund, and the World Bank, South Asian countries have pursued economic liberalization policies since early 1990s. While trade and investment liberalization marked a clear departure from two decades of import substitution policy preferences by political actors, these policies were clearly partial and not accompanied by comprehensive reforms. South Asian countries continue to impose restrictions on foreign direct investment (FDI) entry on several sectors, including service sector. Consequently, South Asian countries have not received FDI at nearly the level of other regions. According to one estimate by the World Bank, available FDI at a global scale rose from $15 billion in 1980–82 to $140 billion in 2001–03 (Newfarmer 2004: 6). But the preferred destinations for most FDI inflows are East Asia and Latin America. While China has attracted about $50 billion and Latin America has attracted $58 billion during 2001–02, South Asia has received less than $5 billion during the same period (Newfarmer 2004: 6). The legal barriers to and limits on FDI in South Asian countries are the primary reason for this trend. Drawing on the evidence of NAFTA, EU, and Japanese FDI into ASEAN, several studies have shown that FDI coming from multinational corporations serves as an important driving force for integration through trade (Blomstrom and Kokko 1997; Robson 1998; Newfarmer 2004; Chase 2005). The dynamics of setting up integrated production facilities and supply chains in different countries by multinational corporations to take advantage of local factors of production (such as local labor) is the principal reason why FDI typically facilitates cross-border trade between neighboring countries. Geographic proximity offers several benefits for multinational firms: lower transport cost; easier coordination with suppliers; better prospects of just-in-time delivery of products; and shorter lead times for quick adaptation to changes in demand or consumer tastes (Chase 2005: 32). These benefits drive multinational firms to get involved in regional production sharing, region-specific sourcing, manufacturing, and marketing, thereby facilitating cross-border trade. In addition, inward flows of FDI can play a role in stimulating local production in related industries, in transferring technology, and in raising productivity in firms. These benefits of FDI generally enhance economic capacity of a country and are helpful for improving prospects of intraregional and extraregional trade. The limited inflow of FDI into the region has deprived South Asian countries of potential economic gains with serious implications for limited intraregional trade.

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The lack of adequate transport and information links among the South Asian countries poses serious problems for major imports and exports. Lack of communication and information links between the South Asian countries has made it difficult for business groups to know each country’s production, consumption and trade patterns, and business opportunities in general. Not surprisingly, there has been only negligible interaction among business groups in the region for the past several decades. In addition, a highly unfavorable freight structure for shipping services, coupled with a lack of well-developed land and water routes between India, Pakistan, and Bangladesh, has increased transportation costs considerably, making trade unattractive. For example, freight for Kolkata–Khulna (Bangladesh) is higher than that for Kolkata–Singapore; and freight for Karachi–Mumbai is higher than that for Karachi–Hong Kong. Shipments of cargo through foreign vessels from India to Karachi and Chittagong are subject to lengthy and cumbersome bureaucratic procedures. Unless shipping facilities, licensing, and bureaucratic procedures improve, the current limited volume of trade among South Asian countries is unlikely to change. Finally, political differences and a lack of willingness to create trade complementarities among the leaders of the South Asian countries contribute to the current low level of intraregional trade. In this context, the persistent hostility between India and Pakistan is particularly important. Despite great potential for trade between India and Pakistan, the volume of trade is insignificant between two countries because of political tension. The share of total trade between Pakistan and India measured by their bilateral exports amounts only to 0.4 percent of total exports from India and Pakistan. This is only one-fifth of the bilateral trade between Malaysia and China, two countries of comparable GDP and proximity, and only one-sixteenth of the trade that occurs between Argentina and Brazil, other two countries of comparable size.4

Economic liberalization policies In the post-1990 period, India, Pakistan, Bangladesh, and Nepal have adopted policies of economic liberalization in response to their severe economic crises. As the experiences of regional cooperation efforts in Latin America (MERCOSUR) and Southeast Asia (ASEAN) suggest, economic liberalization can provide a good foundation for the growth of regional cooperation. Two lines of argument – virtuous circle and market gains – link economic liberalization policies with growth of regional cooperation. According to the virtuous circle argument, economic liberalization policies encourage foreign investors, who typically prefer to invest in politically stable areas. Regional cooperation efforts reduce the propensity for conflict among the partners and promote regional political stability. This reduces the risks for international investors and financial institutions, resulting in the much-needed inflow of foreign investment, technology, aid, and concessional financial loans to the developing countries, benefiting their leaders’ domestic economic agenda. In order to be successful, economic liberalization policies need maximum possible saving of resources for

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investment in development-oriented projects. Reducing expenditure in unproductive military sectors enables the governments to save substantial resource capital. Such a result is possible when peace prevails in the region, an outcome facilitated by regional cooperation efforts. According to the market gains logic, countries pursuing economic liberalization policies require access to regional markets, which is made possible by cooperation commitments among participating member countries. Besides becoming a driving force for accelerating intraregional trade and investment and maintaining the region’s economic dynamism, regional cooperation can also help substantially in enhancing technology transfer, improving infrastructure, developing natural and human resources, and protecting the environment. Such outcomes are, indeed, some of the most important objectives of economic liberalization policies. The success of South Asian countries’ current economic reforms depends upon, among other things, an increase in their exports and their ability to find new markets both in the developed and in the developing countries. But given the slow growth of the world economy in the 1990s, the formation and expansion of such regional economic blocs as NAFTA, EU, AFTA, and MERCOSUR, and growing desire of these blocs to increase intraregional trade among the participating members, the South Asian countries may not find it easy to gain access to these markets. Since the 1980s, most of the world’s FDI has flown to Latin America, East Asia, and Southeast Asia as a result of these countries’ economic liberalization policies, leaving the South Asian countries with minimal investment. For example, during the past decade, while in East Asia private investment was 54 percent of total GDP, it was only 2 percent in South Asia. The expectation of the South Asian countries for increase in FDI may not materialize until they are able to create a stable political climate in the region, thereby increasing their attractiveness as a large integrated regional market for the Western investors. Indian policymakers’ earlier thinking that India is unlikely to get any substantial benefits from any SAARC economic arrangements appears to have changed after the mid-1990s. India’s economic liberalization policies since the early 1990s have produced significant economic growth and export opportunities for its firms. With this change, Indian leaders realize that it is in India’s interest to promote intraregional trade for the expansion of regional market. Not surprisingly, India has agreed to implement SAPTA agreement and to expedite the process of SAFTA agreement.5 India’s keen interest to boost trade ties with South Asian countries is evident in what is now known as the “Gujral Doctrine,” named after Mr I.K. Gujral, India’s prime minister during 1996–97. The doctrine, which is the basis of India’s recent push for a policy of positive unilateralism, stipulates that India, as the region’s dominant power, should be willing to grant its neighbors concessions without expecting reciprocity. Such a paradigmatic shift in India’s regional policy can be explained by the post-Cold War global political–economic developments. Indian leaders know well that the success of their country’s economic liberalization largely depends

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upon its ability to increase exports to new markets in the developed and developing countries. Until recently, India has achieved only restricted access to the markets of Japan, North America, and Western Europe due to these countries’ protectionist policies and various kinds of non-tariff barriers against Indian products.6 With the collapse of the Soviet Union and the gradual incorporation of Eastern Europe into the West European economy, India has lost two of its privileged market links. In an effort to expand its market links, India has recently taken many initiatives, some of which include its active diplomatic role in the formation of the Indian Ocean Rim Association for Regional Cooperation (IORARC)7 in March 1997; its association with the ASEAN as a dialogue partner; its active interest in joining the Asia-Pacific Economic Cooperation (APEC); and its renewed focus on the “Look East” policy in order to strengthen its trade ties with the East Asian and Southeast Asian countries. However, although India will continue to explore markets in other regions, it can no longer ignore its own base in South Asia, where it enjoys a comparative advantage in almost every economic sector. Like India, the success of Pakistan’s economic liberalization policy depends, among other things, on increasing its exports to the markets of developed and developing countries. But so far, Pakistan has gained only a limited access to the markets of Japan, North America, and Western Europe because of these countries’ protectionist policies. As a result, Pakistan has taken initiatives to form the Economic Cooperation Organization (ECO)8 to boost its exports and improve intraregional trade with Central Asia. But Pakistan’s success in Central Asian markets are likely to be limited, given the competition of the developed countries to capture these markets. In meeting the needs of Central Asian republics, Pakistan’s capital and technology are no match to what the Western Europe, the United States, Japan, and even Russia have to offer. Although the Gulf countries remain a major destination of Pakistan’s exports, competition from other OIC countries9 like Malaysia, Indonesia, Bangladesh, Iran, and Egypt has put a further limitation on Pakistan’s exports to these markets. Consequently, Pakistan can no longer ignore the South Asian markets, where, next to India, it enjoys some comparative advantage. Reviving normal trade relations with India within the SAPTA and SAFTA framework makes economic sense as it would give Pakistan access to India’s large market and cheap raw materials. Additionally, given the shortage of development funds worldwide and the industrialized countries’ aid fatigue, Pakistan will have to compete with India and other South Asian countries as well as Eastern Europe and the former Soviet Union to attract ODA and private investment. The Pakistani leaders know well that in order to survive in Pakistan’s turbulent politics, new economic initiatives are necessary so that the country does not remain hostage to a collapsing economy for long. One of the critical factors for the loss of power of Pakistan’s two former prime ministers, Benazir Bhutto and Nawaz Sharif, during the 1990s is their inability to turn around Pakistan’s rapidly deteriorating economy. The Pakistani policymakers are also well aware of the fact that an environment of regional confrontation will only deter foreign investors which will be detrimen-

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tal to Pakistan’s interest. Regional cooperation thus remains a pragmatic policy initiative for Pakistan’s own interest. Other South Asian countries are facing the same kind of difficulties like Pakistan. Given the current trend of limited flow of ODA to South Asia in the face of competition from countries in Eastern Europe and Central Asia, World Bank and the International Monetary Fund’s reluctance to increase concessional loans, and their own limited structural abilities, i.e. few manufacturing sectors, small gross domestic savings, and small scale of economies, both Bangladesh and Nepal have an urgent need to attract more investment into their countries and to expand economic cooperation with India, Pakistan, and other countries in South Asia. Consequently, since 1994, both of these countries have been pursuing economic liberalization policies to attract foreign investment and promote intraregional trade. During the 1980s, Sri Lanka reaped substantial benefits in terms of exports and investment largely due to its economic liberalization policies. But in recent years, Sri Lanka’s exports to the developed countries have declined significantly because of adverse terms of trade and growing protectionism. With the smaller size of its home market relative to the optimal scale of production, Sri Lanka needs Indian and other South Asian markets for its exports. The country has also been losing FDI because of its protracted civil war. Not surprisingly, Sri Lanka has shown the most interest in regionalism and has strongly advocated for the expansion of intraregional trade through the framework of SAPTA since 1992.

From SAPTA to SAFTA Although one of the important reasons for the formation of SAARC was to increase regional trade cooperation among South Asian countries, no serious steps were taken until 1990s to achieve this objective. The first attempt to achieve this goal was made by the SAARC Secretariat in 1990 when it commissioned a study on trade, manufactures, and services. The SAARC Council of Ministers endorsed the report of this study in July 1991 and decided to set up a high level CEC to explore trade-related opportunities in South Asia. After a year-long deliberations, the CEC recommended a draft agreement on SAPTA. Following the CEC recommendation, the Heads of State at the Colombo Summit in December 1991 approved the establishment of the Inter-Governmental Group (IGG) to examine the institutional framework for SAPTA. On the basis of IGG recommendations, the Council of Ministers signed an agreement to form SAPTA in April 1993, which became operational in December 1995. Since the launching of SAPTA in 1995, three rounds of preferential tariff reductions have been negotiated – SAPTA-1 in 1995, SAPTA-2 in 1997, and SAPTA-3 in 1998. Although a fourth round of SAPTA negotiation (SAPTA-4) was initiated in 1999, it could not be ratified by member states because of the postponement of SAARC summit. Given the highly tedious nature of commodity-by-commodity negotiation under SAPTA rounds, the SAPTA-4 was eventually replaced by SAFTA agreement.

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Under SAPTA negotiations, a two-tier structure of tariff reductions for two categories of members – LDCs and non-LDC members – have emerged in South Asia. The tariff concessions for LDCs – Bangladesh, Bhutan, Maldives, and Nepal – are higher than that of non-LDC members (India, Pakistan, and Sri Lanka). The SAPTA-1 round produced modest results as only 226 products at six-digit HS level (about 6 percent of traded goods) were granted tariff concessions. After four rounds of negotiations (that is completed SAPTA-1, SAPTA-2, SAPTA-3, and the non-ratified SAPTA-4), SAARC members have agreed to provide tariff concessions on 4,700 six-digit HS items (Weerakoon and Wijayasiri 2003). As expected, India has offered the largest number of concessions, followed by Bangladesh and Pakistan. Out of a total list of 4,667 consolidated items, India has provided concessions on 2,554 items, Bangladesh on 521 items, Pakistan on 491 items, Nepal on 491 items, Bhutan on 233 items, Sri Lanka on 199 items, and Maldives on 178 items (Weerakon and Wijayasiri 2003). Despite the concessions to a seemingly large number of products, the progress of preferential trade under SAPTA remains modest. One of the most important limiting factors of SAPTA has been the actual preferential imports by member countries as compared to their total values of imports. Mukherji (2004) has estimated that products imported under SAPTA concessions reached to only 15 percent of total imports among SAARC member countries. A World Bank report on South Asian trade estimates that on average only 8.4 percent of tariff lines in the case of imports from non-LDCs and 6.2 percent in the case of imports from the LDCs are covered under SAPTA (World Bank 2005). These estimates support the argument that SAPTA has little or no impact in changing the existing low trade patterns in South Asia. At least, three reasons account for the insignificant product coverage under SAPTA. First, negotiations under SAPTA have been conducted mainly on a product-by-product basis, which are extremely time-consuming. Second, proposed tariff cuts offered under SAPTA are not deep enough to have any significant impact on trade volume. Finally, most of products, which received concessions, are not widely traded in the region and thus have limited trade value for SAARC member countries. Given the slow progress of SAPTA, the signing of the SAFTA at the 12th SAARC Summit at Islamabad in January 2004 represented a major development in South Asia’s search for deeper economic cooperation in the region. With the signing of SAFTA in 2004, regional trade cooperation gained momentum and the once difficult-to-achieve objectives of a free trade area appeared increasingly achievable in South Asia. However, the limited progress and slow movement of SAFTA since its signing has raised some questions about its relevance as a tool of liberalizing regional trade. There are two major viewpoints found in the literature on the prospects of SAFTA. The supporters of SAFTA hold that South Asian economies, small economies in particular, would substantially gain if SAFTA comes into existence (Pigato et al. 1997). Several empirical studies show that despite the potential for trade diversion, SAFTA would bring significant benefits to small countries in the region and would facilitate unilateral trade

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liberalization in South Asia (Srinivasan and Canonero 1995; Srinivasan 1998). Using the framework of gravity model, a recent empirical study by New Delhibased Research and Information Systems institute suggests that complete elimination of tariff under SAFTA is likely to increase intraregional trade by 1.6 times (Kemal 2004: 16). In contrast to these findings, the second view represented by SAFTA critics argue that SAFTA is hardly beneficiary for its members and will mostly lead to trade diversion and slow down unilateral trade liberalization in South Asia (Panagariya 1999). Using the example of MERCOSUR, Panagariya (1999: 376) provides empirical evidence to support this view. He argues that after joining the Southern American Common Market, both Brazil and Mexico have abandoned unilateral trade liberalization and raised their tariff. He contends that such outcomes are possible in case of South Asian countries, and from this perspective, SAFTA is considered undesirable in South Asia. While the debate on SAFTA continues, a general notion that a free trade area in South Asia would facilitate deeper regional integration and thus would strengthen ties between member countries seems to have persisted in the minds of South Asian policymakers. To what extent this belief is consistent with the political and economic realities of South Asian countries? The following discussion addresses this issue. SAFTA was first mooted at the 8th SAARC Summit in Delhi (1995). It was then suggested that SAFTA would come into effect by 2005. But frustrated by the slow pace of progress of SAARC including SAPTA rounds of negotiations, and driven by the potential economic and political benefits of a free trade area agreement, the policymakers of South Asian countries took a decision at the 9th SAARC Summit at Male (1997) to advance the effective date of SAFTA from 2005 to 2001.10 The Male Summit also decided to set up a forum called Group of Eminent Persons (GEP) to look into various aspects of intraregional trade in South Asia and prepare a feasibility report on SAFTA. The GEP report entitled “SAARC Vision Beyond the Year 2000” was presented at the 10th SAARC Summit in Colombo (1998). According to this report, the year 2008 was considered a realistic timetable for the launching of SAFTA (GEP Report 1998). On the basis of the recommendations of this GEP report, the policymakers at the Colombo Summit agreed to first complete a “Framework Treaty” for SAFTA by 2001. However, preparation of the Treaty by 2001 was not possible because of rapidly deteriorating political and security environment in South Asia triggered mainly by the following events – nuclear tests by both India and Pakistan in 1998, Kargil conflict between India and Pakistan in 1999, military coup in Pakistan in 1999, and India’s refusal to recognize the new military regime of General Musharraf, political turmoil in Nepal, worsening security environment in Afghanistan and the beginning of US military engagement in Afghanistan in 2001. The preparation of the Framework Treaty for SAFTA was finally completed in January 2004, leading to a formal launching of the SAFTA at the 12th SAARC Summit at Islamabad in January 2004. The Islamabad Summit Declaration provided two different timetables for implementation of SAFTA agreements. SAFTA will become fully effective for

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non-LDC members (India, Pakistan, and Sri Lanka) by 2013 and for LDC members (Bangladesh, Bhutan, the Maldives, and Nepal) by 2016.11 There are two issues in the Framework Agreement of SAFTA – tariff liberalization program (TLP) and sensitive list of goods – that are important to our discussion here. According to SAFTA’s TLP, non-LDC members are required to reduce tariffs to 20 percent within two years of implementation of the agreement and to a range of 0–5 percent in the next five years. Given the small size of economy, Sri Lanka was given an additional one-year time to achieve this objective. LDC member countries are required to reduce tariffs to 30 percent in three years and to a range of 0–5 percent in the next eight years. While the adoption of the above progressive non-linear reduction formula takes into account differential levels of economic development of South Asian countries and may contribute to the reduction of average tariffs, it is not without shortcomings. It is important to note that this formula of tariff reduction is not consistent with the recommendations of the GEP report but somewhat closer to the suggestions made by the SAARC Chamber of Commerce and Industry (SCCI) (Mukherji 2004). The experience of AFTA suggests that it is always more efficient if convergence is achieved initially by all countries lowering their tariff to a maximum rate and then proceeding further (Kelegama 2004). A similar pattern of convergence tariff reduction followed by SAFTA-type nonlinear tariff reduction would have been more beneficial to all SAARC members. Another shortcoming is that the TLP under SAFTA does not include trade in services. While this may not be a major concern for LDCs for now, the nonLDC members are certainly disadvantaged. In contrast to SAFTA, bilateral FTAs – for example the India–Sri Lanka FTA (ISFTA) and Pakistan–Sri Lanka FTA (PSFTA) – have included liberalization of services. The BIMSTEC grouping, which brings together the littoral states of the Bay of Bengal – Bangladesh, India, Myanmar, Sri Lanka, and Thailand – has agreed to implement an FTA in 2007 that includes liberalization of services.12 Consequently, these FTAs have become more attractive for non-LDC SAARC members. One of the most critical issues in SAFTA is that the TLP is not applicable to goods on the sensitive list of items by each member country. It is understandable that SAFTA member countries, given their various levels of industrial development, are concerned about protecting some of their sensitive industries from increased competition. But, what is of considerable concern is the large number of sensitive lists that member countries are allowed to keep and absence of any binding provision in the Framework Agreement that requires member countries to reduce the number of sensitive lists over time. According to SAFTA agreement, member countries can retain a sensitive list of 20 percent of tariff lines for non-LDC member states and slightly less for LDC member countries (Weerakoon and Thennakoon 2006: 3920). Table 6.6 provides the number of sensitive lists for SAFTA members. The large number of sensitive lists is clearly not favorable for the growth of intraregional trade in South Asia. Since the signing of SAFTA, several economic analyses have pointed to the negative impact of sensitive lists on South

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Table 6.6 Sensitive lists of SAFTA members

Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka

Sensitive items for non-LDCs

Sensitive items for LDCs

Value of imports from SAARC subject to NLs (%)

Value of exports to SAARC subject to NLs (%)

1,254 157 884 671 1,310 1,183 1,065

1,249 – 763 – 1,301 – –

65.0 – 38.4 74.5 64.0 17.2 51.7

22.0 – 56.5 57.6 46.4 34.0 47.0

Source: Weerakoon and Thennakoon (2006); SAFTA; WITS data. Note NL – negative list.

Asian trade volume. Analyzing trade data for the SAFTA members from the World Integrated Trade Solution (WITS) database, Dushni Weerakoon and Jayanthi Thennakoon (2006) argue that nearly 53 percent of the total import trade between SAFTA members has been subject to the negative lists of the respective countries. This study, as summarized in Table 6.6, reveals that except for Pakistan and India, all other South Asian countries protect more than 50 percent of their total imports from SAFTA countries under their negative lists. Despite their negative implications for intraregional trade, why do South Asian countries maintain such large number of items under their negative lists? Two factors explain this. First, trade liberalization can adversely impact smalland medium-scale industries. With trade liberalization and tariff reduction, industries in which a country does not have comparative advantage are likely to close down. In such a case, countries face unwelcome challenges of unemployment, political and social unrest. Second, there is a fear among smaller South Asian countries that tariff liberalization would bring more benefits to larger countries like India and Pakistan. These two factors have largely contributed to lack of enthusiasm among political actors to push for rapid trade liberalization in South Asia. The above analysis suggests that growth of intraregional trade in South Asia is far from satisfactory despite four rounds of SAPTA negotiations and the signing of SAFTA agreement. It is clear that unless South Asian countries make serious commitments to reduce the size of sensitive lists over a reasonable period of time, SAFTA’s progress will remain limited. It is necessary to introduce a formal binding provision in the Framework Agreement that will require SAFTA members to reduce their sensitive lists. In this context, the experience of AFTA agreement offers a useful lesson. According to the AFTA agreement, member countries are required to phase out their temporary exclusion lists (similar to SAFTA’s sensitive lists) in five equal installments. Although there is a provision in SAFTA agreement for the review of sensitive lists by member

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countries at least every four years in order to reduce the number of sensitive list items, the provision is not binding on member countries. Such open-ended approach to address sensitive list issues makes implementation of SAFTA provisions time-consuming and difficult. It took SAARC members ten years to operationalize SAPTA in 1995. It took another nine years to move from SAPTA to SAFTA. In the absence of any specified timetable, it remains unclear as to how long it will take to implement SAFTA provisions. Given the uncertainty of a regional trading arrangement, SAFTA members have focused on various bilateral, subregional, and transregional FTAs, which are expected to move faster than SAFTA. For example, following a policy of “positive economic unilateralism” after the mid-1990s,13 India has signed bilateral FTAs with Sri Lanka, Nepal, Bhutan, and Bangladesh. Similarly, Pakistan has signed bilateral FTAs with Sri Lanka and Bangladesh. Since these small countries have received far more favorable preferential treatment from India in terms of market access and tariff reductions, their interest on SAFTA remains limited. India has also actively participated in the creation of a subregional grouping known as South Asian Growth Quadrangle (SAGQ). In addition to India, Bangladesh, Bhutan, and Nepal are the members of this grouping. The ADB, under its South Asia Sub-regional Economic Cooperation (SASEC) initiative, supports various initiatives of the SAGQ. Modeled after the successful Greater Mekong Sub-Region cooperation, the SAGQ has taken initiatives to develop transportation, energy, waste management, trade, agribusiness, telecommunications, and tourism projects in member countries with the technical and financial support of ADB. Under its SASEC initiative, the ADB has also established a South Asia Business Forum (SABF) to facilitate private sector and government cooperation for the promotion of trade and investment in the region. To what extent all these bilateral and subregional initiatives will be successful remains unclear. But their existence poses challenge to SAFTA. In addition to bilateral and subregional trade initiatives, India is also involved with various transregional trading arrangements – for example India–ASEAN FTA, India–Singapore FTA, India–China trade negotiation, and BIMSTEC FTA. All these transregional trading arrangements hold much promise for India as they provide a larger market to Indian goods than the SAFTA market. In addition, the BIMSTEC FTA, India–ASEAN FTA, and India–Singapore FTA have less number of negative lists and are expected to move much faster than SAFTA. From the perspectives of Indian policymakers and industrial groups, the success of these initiatives will be vital for India’s trade interest. Although business groups in South Asian countries are generally supportive of the idea of SAFTA, their support for the implementation of SAFTA agreement remains weak. Under the initiatives of the SCCI, the apex business organization of SAARC, various seminars and conferences have been conducted in both South Asia and abroad to discuss about the promises and challenges of SAFTA. The SCCI sponsors a SAARC Business Leaders Conclaves every year when business leaders from South Asian countries meet in one of the member countries to discuss various business initiatives. Two premier business associ-

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ations in India – Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industry (CII) – have also taken some initiatives in organizing conferences and seminars over SAARC and SAFTA issues. These two organizations have published several monographs and research papers on SAFTA and South Asian economy. Various Chambers of Commerce in Pakistan, Bangladesh, Sri Lanka, Bhutan, Maldives, and Nepal also organize conferences and publish conference proceedings on SAFTA-related issues. While these discussions remain useful in terms of establishing some “talking points,” the efforts of South Asian business groups toward SAFTA can be characterized as half-hearted and inconsistent.14 When it comes to solid action plan in terms of lobbying their governments strongly for the implementation of SAFTA agreement, business groups have generally shied away. Business groups in Bangladesh, Pakistan, and Sri Lanka have shown little interests in removing sensitive lists within a reasonable span of time and instead have shown more preferences for trade protection because of their vulnerability vis-à-vis Indian business.15 The general argument for the business groups’ preference for trade protection is that sensitive lists are an important tool for saving their industry and domestic market from the glut of imports, mostly from India. The lack of strong support from business groups provides little incentives to political actors to move forward in achieving free trade objectives in South Asia.

Political coalitions and FTAs Despite their economic liberalization policies and the conducive international climate for strengthening regional cooperation, SAARC’s progress has remained limited during the past decades due to the emergence of two mutually competing ruling coalitions – i.e. weak liberalizing coalitions in India and nationalist–fundamentalist coalitions in Pakistan.16 As summarized in Figure 6.2, liberalizing coalitions show more favorable preference to regional trade arrangements than nationalist coalitions. Ruling liberalizing coalitions (pursuing economic liberalization policies) generally embrace regional cooperation policies for at least two positive payoffs: 1

2

regional cooperative order enables these coalitions to avoid the enormous opportunity cost of military expenditure and diversion of societal resources toward developmental projects; regional cooperative arrangements can offer positive global and regional externalities by providing some access to foreign and regional markets, capital investment, technology transfers, and foreign aid which can help the ruling coalitions to maintain or even broaden their domestic support base.

While strong ruling liberalizing coalitions can pursue regional cooperation for the above reasons, weak liberalizing coalitions face different domestic political dynamics. Contrary to strong liberalizing coalitions, the political base of weak liberalizing coalitions is narrow and unstable. Consequently, weak liberalizing

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Domestic politics and regional economic cooperation Nature of coalitions Liberalizing

Nationalist

Significant

Strong support for free trade arrangements

Weak support for free trade arrangements

Insignificant

Weak support for free trade arrangements

Weak support for free trade arrangements

Potential market gains

Figure 6.2 Nature of political coalitions, potential market gains, and preferences for free trade arrangements.

coalitions are under greater pressure to dilute their reform agenda and may be more inclined to accommodate the varying demands and interests of their political opponents to insure their political survival. It often becomes difficult for weak liberalizing coalitions to downplay regional security threat and to ignore scapegoating17 (blaming external enemy) as an instrument of their national policies. Not surprisingly, India’s four weak liberalizing coalitions since the 1990s – Congress administration of Narasimha Rao (1991–96), United Front Administration of Deve Gowda and I.K. Gujral (1996–97), BJP administration under A.B. Vajpayee (1998–2005), and UPA (Congress and Left Party alliance) administration of Manmohan Singh (2005–) – have generally remained tentative about regional cooperative postures, although they have not demonstrated the same degree of antipathy toward regional cooperation policies as the nationalist–fundamentalist coalitions. The nationalist–fundamentalist ruling coalitions follow a combative regional policy as they thrive on myths of self-reliance, military prowess, sovereignty, and national pride. Their goals of military strength and economic independence are naturally incompatible with the objectives of regional cooperation, which involve downsizing military endowments and promoting economic interdependence through lowering trade barriers. The two main pillars of domestic support for the nationalist–fundamentalist coalitions are the military and both private and state monopoly enterprises. Private and state monopoly enterprises, which generally perceive a threat from the competition of regional counterparts, resist lowering trade barriers. The interest of the military is better served in an atmosphere of regional conflict and instability. Consequently, parochialism or a combative regional policy becomes preferred policy choices for a nationalist–fundamentalist coalition. In Pakistan, economic liberalization policies by weak liberalizing coalitions under Benazir Bhutto and Nawaz Sharif since the 1990s have not contributed substantially to any regional cooperative initiative. Rather, Pakistan has become more tentative about the cooperative process than India and other South Asian

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countries. The primary reasons for Pakistan’s lack of enthusiasm for any tradecreating scheme in South Asia are 1 2

its leaders’ apprehension of being dominated economically and militarily by a stronger India and the consequent backlash from the dominant domestic groups, further weakening the liberalizing coalition’s position at home.

The logic of political survival forced Pakistan’s two Prime Ministers, Benazir Bhutto and Nawaz Sharif, to pursue a reactive and combative regional policy vis-à-vis India during 1990–99. The military coup in Pakistan on October 12, 1999, which brought Pakistan under direct military rule for the fourth time since independence, has produced additional tension in the Indo-Pakistani relations. As discussed in Chapter 5, military regimes, when in conflict with a neighboring democracy, tend to follow one or combination of all of the following policies: engage in military confrontation; scapegoating (i.e. blaming the neighbor for domestic problems in order to insure their political survival); externalization of bilateral problems and support for external mediation in resolving bilateral disputes.18 Since independence, military-dominated regimes in Pakistan have fought three major wars with India – twice over Kashmir in 1948 and 1965 and once over Bangladesh liberation issue in 1971. Although the Kargil war of 1999 between India and Pakistan was fought by the civilian regime of Prime Minister Nawaz Sharif, available evidence suggests that this war was primarily masterminded and conducted by Pakistan’s military under the leadership of General Musharraf.19 Pakistan’s ruling elites, particularly military rulers, have often resorted to scapegoating, as manifested in a militant anti-India posture, to remain in power and to acquire legitimacy. To insure Pakistan’s strategic significance for extraregional powers and to maintain their political clout in domestic politics, the military regimes have often shown greater preference for external mediation in their bilateral disputes with India and focused more on domestic-oriented and external-oriented policies than policies with a regional thrust. Such policies of externalization and external mediation of bilateral problems have prevented close and continuous regional interactions between India and Pakistan, making regional cooperation goals difficult to achieve. Despite some initiatives, no substantial change in this type of bilateral relationship is evident in policies of Pakistan’s present military ruler, General Pervez Musharaf.20 On its part, India also continues to reject international mediation on the Kashmir issue despite the wide recognition of international mediation as an effective instrument in resolving border disputes, as evident in northern Ireland, the Middle East, and the Peru–Ecuador border dispute in 1996. Such inflexible posture by India has been counterproductive for the growth of regional cooperation in South Asia. It is a widely shared belief in South Asia that the political tension between India and Pakistan has contributed to a lack of substantial progress in regional

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cooperation and regional trading arrangements in the region. Because of this political tension, ruling coalitions of both India and Pakistan have shown greater interests in the growth of subregional and “spoke–spoke” integration initiatives rather than focusing exclusively on the growth of SAARC. These “spoke–spoke” cooperation initiatives have taken a variety of forms. Some initiatives can be described as “hub-and-spoke” type of cooperation, in which the largest country in a region signs bilateral agreements with many small countries. India’s initiatives for the growth of bilateral FTAs between India and Sri Lanka, India and Nepal, India and Bangladesh, and India and Bhutan are examples of “hub-and-spoke” type of cooperation. Similarly, Pakistan has also taken initiatives in signing bilateral FTAs with Sri Lanka and Bangladesh. A second variant of “spoke–spoke” pattern of cooperation is the growth of subregional grouping within a regional grouping.21 India’s initiatives for the formation of SAGQ with Bangladesh, Bhutan, and Nepal is an example of this type of cooperation initiatives. While this pattern of cooperation may lead to an improvement of market access of smaller countries, it can also diminish the relevance of regional FTA.

Conclusion This chapter has argued that three conditions must be present for sustained success of regional economic cooperation in a region – potential for significant market gain; political actors’ willingness to pursue regional economic cooperation policies; and the presence of an undisputed regional leader. Regional economic arrangements typically entail a lengthy process of establishing rules, regulations, and policies, which are neither easy nor automatic. Only regional groups that satisfy the above three conditions are likely to achieve sustained success in establishing regional institutions, while groups that satisfy none of these conditions are least likely to succeed. As discussed in this chapter, with the exception of India, the economies of SAARC members are not complementary. Since SAARC countries export the bulk of their primary commodities and manufactured goods to the same world markets, they tend to compete in the same industrial sectors with each other. Indeed, most of SAARC members’ trade is with the United States and Europe than with their neighbors. Given the small size of markets and insignificant economies of scale, there is limited scope for mutually beneficial market exchange among South Asian countries. Consequently, demand for deeper economic cooperation by market actors is weak. Although SAARC members have pursued economic liberalization policies after the early 1990s, these policies have not led to deeper regional economic cooperation. The emergence of two types of competing domestic coalitions in India and Pakistan – that is liberalizing coalitions and nationalist–fundamentalist coalitions – is the important reason to account for this failure. While India’s ruling–liberalizing coalitions have more or less supported economic liberalization and regional economic cooperation policies, their weakness made it almost

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impossible for national leaders to pursue deeper regional economic cooperation policies in the 1990s. This trend continues. The nationalist–fundamentalist coalitions in Pakistan, as represented by Pakistan’s radical Islamic Jamaat-i-Islam Party and its current military regime, generally have shown less enthusiasm for deeper regional economic cooperative arrangements. Within SAARC, India is the largest member state in terms of size, population, and market. But, there is no consensus among South Asian countries to recognize India as the region’s undisputed leader. In particular, Pakistan continues to challenge India’s leadership. The continuing squabble between India and Pakistan does not augur well for the future of SAARC. Absence of leadership within SAARC implies that there is no “paymaster” or no regional leader to ease distributional problems. Absence of leadership has also made coordination of rules, regulations, and policies difficult and time-consuming. It is not surprising that under SAPTA and SAFTA agreements, individual countries continue to undermine free trade principles by excluding numerous products from tariff cuts by keeping them under the sensitive lists. The rivalry between India and Pakistan signifies trouble for SAARC’s future and any prospects of deeper regional economic cooperation. Already the policy differences of India and Pakistan have driven these two countries to engage in several “spoke–spoke” and “hub-and-spoke” type of cooperative arrangements. In addition, both India and Pakistan are involved in other transregional economic arrangements, such as IORARC and BIMSTEC in case of India and ECO and OIC countries in case of Pakistan. India’s involvement in a “noodle bowl” of bilateral trade agreements with Singapore, Thailand, Vietnam, Japan, China, South Korea, Sri Lanka, Nepal, Bhutan, and Bangladesh and her initiatives for the “spoke–spoke” pattern of economic cooperation among subgroups of South Asian countries – for example SAGQ – are motivated in part by Pakistan’s unwillingness to increase the speed of free trade negotiation with India. While such transregional and “spoke–spoke” pattern of trade cooperation may provide some short-term solutions to India’s need for trade expansion and market access, given their lack of commonality and quite different rules of origin, it is not clear as to what extent these type of trade agreements will facilitate deeper economic cooperation. SAFTA would make a good deal more practical sense and would be an essential underpinning of an emerging regionalism in South Asia. But, the level of regional economic interdependence achieved so far and the pace at which South Asian countries are progressing in their negotiation for FTAs will leave South Asian countries at an appreciable distance from the goal of SAFTA even after a decade. Any substantially faster rate of progress on FTAs would be a desirable goal. But, that would require a substantially greater political effort from South Asian political leaders – Indian and Pakistani leaders, in particular.

7

Domestic preferences for regional cooperation Cross-national comparisons

Regional cooperation in South Asia is an intergovernmental process, where political leaders engage in bargaining and negotiation to promote their respective state’s multiples national interests. Growth of regional cooperation, thus, depends on the willingness of the political leaders to pursue regional cooperation policies. The political leaders’ willingness depends greatly on the payoff of regional cooperation to political leaders. The most valuable payoff for the political leaders is to retain political power. In order to retain political power, political leaders need adequate domestic support for their policies. It is, therefore, reasonable to assume that the power-retaining motivation of political actors will force them to anticipate the reactions of key societal groups on specific regional cooperation policies and avoid those policies that will bring them into confrontation with dominant domestic groups. Thus, lack of adequate domestic support or negative reactions for regional cooperation policies can contribute to a dampening of enthusiasm among the ruling coalitions to seek deep levels of regional cooperation. In contrast, adequate domestic support or positive reactions from domestic groups toward a specific regional cooperation policy can create a more favorable environment for policymakers to pursue cooperation policies. Given this dynamic, the present chapter examines the nature of domestic support for regional cooperation in South Asia. In examining the nature of domestic support for regional cooperation, this chapter focuses on elite-level support. In South Asia, regional cooperation policy essentially remains a foreign policy issue and is thus an issue in elite politics. Issues of regional cooperation policy are largely beyond the immediate concern of mass citizens and do not involve large number of people. South Asian mass publics are, thus, generally uninformed and unconcerned about regional cooperation. The South Asian elites, on the contrary, are aware of the extensive nature of regional cooperation policies as well as the interdependence of regional and domestic politics. Thus, they remain more interested and involved in the formulation of regional cooperation policies. In addition, elites in South Asia have greater potential to influence indirectly the course of government policy. As opinion leaders, these elites have the capability to politicize issues, mobilize masses, and even increase saliency of a particular issue by means of debates, media writing, and discussion.

Cross-national comparisons

171

In a pluralistic elite structure like India and Sri Lanka, functional elites sometimes act as interest groups lobbying to secure certain goals. At other times, they act as veto groups who must be placated before a given policy can be implemented. In order to understand why a particular policy is preferred by governing elites in India and Sri Lanka, it is usually necessary to know the nature of support to those policies by key domestic groups. In other SAARC countries – Pakistan, Bangladesh, Nepal, Bhutan, and Maldives – where the elite structure remain tightly integrated to a varying degree, few functional elites, such as the military, bureaucrats, industrial and landed elites, and religious leaders, have access to power and wealth. In such a system, a leader may have more autonomy in the policy-making process. Yet, it will be unreasonable to assume that a leader single-handedly initiates and implements policy measures to keep the entire country functioning. The leader depends on advices, information, and support of associates comprising various functional elites. The number of these elite groupings surrounding the leader is few. But, typically, these few elite groupings have a support base on which the leader must depend in order to expand his own support base for legitimacy and retaining power. Hence, the perspectives and preferences of these elite groupings are of particular significance for gauging trends in regional cooperation policy formulation. Given this understanding, the present chapter seeks to examine the nature of elite preferences for regional cooperation policies in South Asia. As discussed in Chapter 2, preferences of domestic elites for specific regional cooperation policies are based on their utilitarian evaluation of and/or affective allegiances toward regional cooperation agreements and institutions. While utilitarian preferences of elites are determined by their perception of benefits – economic, security, social welfare, and so on – from a specific regional cooperative arrangement, affective allegiances of elites are based on their shared values, attachment, sympathy, and trust toward a regional organization. Several empirical studies in the context of EU show that examining the level of utilitarian and affective support provides a useful explanation in understanding the scope and speed of regional integration.1 In the literature of regional integration, there is no agreement among scholars about which kind of support, affective or utilitarian, precedes the other. According to functionalists and neo-functionalists, utilitarian support generally precedes affective support because rewards and gains are said to be prerequisites for trust and confidence. In contrast, communitarian scholars argue that existence of affective support facilitates utilitarian support. Trust and confidence, communitarian scholars argues, are the prerequisites for the growth of economic transactions between member countries of a regional grouping. Despite the plausibility of the arguments by both schools of thought, it is problematic to determine which kind of support emerges first. However, the necessity for both utilitarian and affective support for the growth of a regional organization is widely accepted in the literature (Lindberg and Scheingold 1970; Hewstone 1986; Gabel 1998). Following this literature, this chapter seeks to examine the nature of utilitarian and affective support by South Asian elites for SAARC.

172

Cross-national comparisons

To evaluate the nature of South Asian domestic elite-level support along the affective and utilitarian dimensions toward SAARC, this chapter has sought answers to the questions listed in Table 7.1. Using primary data derived from extensive open-ended interviews with 780 elites from five South Asian countries – India, Pakistan, Bangladesh, Sri Lanka, and Nepal – over a period of two years (May 2002 to November 2004), this chapter provides an assessment of domestic elite preferences for deeper regional cooperation in South Asia. Table 7.2 describes the profile of the elite respondents.2 Affective support is abstract and broad in nature, representing elites’ emotional attachment and loyalty to such ideals as regional identity and regional community. To tap the affective dimension of support, the respondents were asked questions on South Asian identity, solidarity, and national image (Table 7.1). The question on South Asian identity asks specifically about respondents’ South Asian identification. The question on solidarity assesses respondents’ solidarity with South Asian citizens outside their own country and their willingness to undergo economic sacrifice for the sake of other SAARC members. The question on national image evaluates respondents’ positive or negative perception of neighboring countries in terms of such issues as military aggression, authoritarianism, political stability, economic dependency, and external orientation. Thus, these questions capture respondents’ political identification with SAARC and mutual obligations toward each other, which are fundamental indicators of growth and legitimacy of regional institutions. Since utilitarian support reflects an evaluation of the perceived benefits of cooperation, this research has made an attempt to elicit manifest attitudes of the respondents toward deeper cooperation by asking questions on evaluation of membership and perception of inequity (Table 7.1). The questions on evaluation of membership ask specifically about respondents’ level of satisfaction with SAARC achievements so far and their positions (favorable or not favorable) on the issue of expansion of regional cooperation in South Asia. The questions on perception of inequity evaluate respondents’ perception of their country’s relative contribution to and benefit from SAARC arrangements. Overall, responses to these questions should represent respondents’ perception of economic gains and losses from the current stage of regional cooperation arrangements and their perception of likely benefits from future economic arrangements between SAARC members.

South Asian identity and solidarity Table 7.3 provides a comparison of the national percentage of positive responses to the questions related to South Asian identity and solidarity. When asked about their sense of South Asian identity, less than one-fifth of the respondents in India and about one-eighth of the respondents in Pakistan indicated that they often think of themselves as citizens of South Asia. With regard to this question, less than one-fourth of the respondents in Bangladesh and more than one-third of the respondents in Nepal and Sri Lanka answered more positively. This shows that regional identity is much less developed in case of elites of both India and Pak-

Perception of inequity

Evaluation of Membership

Utilitarian support questions

National Image

South Asian Identity Solidarity

Affective support questions

6 7 8 9 10 11

Are you satisfied with SAARC’s achievments so far? In general, are you for or against efforts being made to expand regional cooperation in South Asia? In your opinion, which member country is likely to benefit most from SAARC? In your opinion, which member country is likely to benefit least from SAARC? In your opinion, which member country is likely to contribute most to SAARC? In your opinion, which member country is likely to contribute least to SAARC?

1 Do you ever think of yourself not only as a citizen of your country, but also a citizen of South Asia? 2 Are you, personally, prepared to make some personal sacrifice, for example paying more taxes or supporting your country’s leaders to channel your country’s resources to help out another country in South Asia in economic difficulties? 3 Do you think that your neighboring countries’s political behavior is conducive for regional political stability? 4 Do you think that your neighboring countries’s economic policies are conducive for regional economic growth? 5 How do you describe your neighboring countries in terms of the following attributes? a Political stability b Authoritarian c Economically dependent d External orientation e Aggressively militaristic

Table 7.1 Affective and utilitarian support questions

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Cross-national comparisons

Table 7.2 Interviewees according to occupational categoriesa Bangladesh Civil servants (Active and Retired) Journalists Scholars Business executives Othersb Total (780)

India

Nepal

Pakistan

Sri Lanka

12 33 35 17 12

51 70 77 59 47

7 23 29 14 5

25 45 49 36 25

12 32 34 21 10

109

304

78

180

109

Notes a Interviewees include two previous Secretary-Generals of SAARC. b Others include religious leaders, trade union leaders, NGO leaders, retired military personnel, judges, and lawyers.

istan than their counterparts in smaller South Asian countries. For the question on solidarity, only about one-fourth of the respondents in India, Nepal, and Bangladesh and less than one-fifth of the respondents in Pakistan were prepared to make a personal sacrifice to help another SAARC member state experiencing economic difficulties. In contrast, a slightly fewer than one-half of the respondents in Sri Lanka expressed a willingness to make a personal sacrifice to help their neighboring country in times of economic difficulties. These results indicate the existence of a low level of affective support among South Asian elites for the growth of regional cooperation. Only a small portion of South Asian elites think of themselves as South Asian citizens and are willing to make personal sacrifices to help another SAARC member state experiencing economic difficulties. While such attitudes among elites from economically weaker countries in South Asia are understandable, demonstration of such attitudes among Indian and Pakistani elites remains problematic for the growth of SAARC. These results have important implications for evaluating the progress of SARC. First, it is evident that public legitimacy for SAARC institutions, grounded in widespread affective attachment, does not exist in South Asia. The existence of low level of affective sentiment is hardly encouraging for South Asian policymakers to push for deeper regional cooperation policies. Second, the low level of affective attachment among South Asian elites indicates their strong national political loyalties and lack of development of any supranational identity and allegiances. Such an environment is hardly conducive for the growth of regional institutions. National image Several studies on regional integration have established that policies supporting regional cooperation are more likely to receive domestic support when people in a country perceive neighboring countries positively or favorably (Deutsch 1957; Lindberg and Scheingold 1970; Shepherd 1975; Smith 1993). Lindberg and Scheingold (1970: 45) argue that when people of one country have positive

Cross-national comparisons

175

Table 7.3 Comparison of measures of affective support

Bangladesh India Nepal Pakistan Sri Lanka

South Asian identity: % who often think of themselves as citizens of South Asia

Solidarity: % prepared to make a personal sacrifice

22 19 34 12 38

27 26 24 18 48

Source: Author. Note Percentages given on the basis of total number of responses in a category.

images or good feelings about another country, they tend to develop an “identitive support” to regional cooperation policies. In such an environment, the decision-makers feel more encouraged to pursue regional cooperation policies than when people have negative images of their neighboring countries. Negative images of their neighboring countries make people reluctant to support regional cooperation policy initiatives. Several studies suggest that people have negative images of a country when it is perceived as aggressively militaristic, authoritarian, economically dependent, and more externally oriented. On the other hand, when a country is perceived as politically stable, economically and industrially developed, and friendly toward neighbors, people are likely to have positive images of that country (Hewstone 1986: 81). Table 7.4 provides a comparison of the national percentage of positive responses to the questions on national image. When asked about their perception of national images of their neighboring countries in terms of the five attributes (i.e. political stability, economically dependent, external orientation, aggressively militaristic, and authoritarian), about three-fourths of the respondents described India and about one-half of the respondents described Pakistan as aggressively militaristic. These results indicate an absence of positive perception of national images of India and to a lesser extent of Pakistan among the South Asian respondents. India and Sri Lanka were viewed as least authoritarian. Except for Pakistan, other South Asian countries were also viewed as less authoritarian. More than three-fourths of the respondents described Pakistan as authoritarian. In terms of economic strength and weakness, not surprisingly, India was considered as economically and industrially most developed. Next to India, Sri Lanka was considered as less economically dependent. More than three-fourths of the respondents described Nepal as economically weak and dependent. A substantial majority (70 percent) of the respondents described Bangladesh the same way. More than one-half of the respondents viewed Pakistan as economically weak and dependent. Surprisingly, on the issue of political stability, except for Sri Lanka, all other South Asian countries were considered by more than a majority of the respondents as politically unstable. Finally, for

176

Cross-national comparisons

Table 7.4 National image of SAARC countries

Aggressively militaristic Authoritarian Economically dependent Political instability External orientation

India (%)

Bangladesh (%)

Nepal (%)

Sri Lanka (%)

Pakistan (%)

74 8 14 58 43

5 18 70 60 65

0 14 80 75 55

3 10 40 44 60

48 77 54 68 70

Source: Author. Note Percentages given on the basis of total number of responses in a category.

the question on external orientation, slightly fewer than three-fourths of the respondents described Pakistan as most externally oriented. More than one-half of the respondents viewed Bangladesh, Sri Lanka, and Nepal as externally oriented. India also scored high on this issue. A slightly less than one-half of the respondents viewed India as externally oriented. External orientation is a detrimental factor for the growth of regionalism. It is evident from the high scores of external orientation that respondents do not consider South Asian countries as very supportive of the idea of regional cooperation. The evidence presented in this section indicates the existence of a low level of affective support among the South Asian elites for the growth of regional cooperation. The existence of widespread negative perceptions of national images of the neighboring countries has an adverse effect on the development of any supranational identity and allegiances, making deeper cooperation in terms of institutional development extremely problematic. Due to the low level of affective support, the results indicate that utilitarian evaluations remain an important determinant of support for deeper cooperation in South Asia. Do South Asians elites demonstrate adequate utilitarian support for SAARC? The next section explores this issue. Perception of inequity In this study, utilitarian support for SAARC was assessed by asking questions about perception of inequity and evaluation of SAARC membership. In the context of perception of inequity, four specific questions were asked: 1 2 3 4

which member country benefits most; which member country benefits least; which member country contributes most; which member country contributes least.

As several studies suggest, people’s perceived inequity, that is, people’s perception that their country is likely to contribute more than it receives from a

Cross-national comparisons

177

regional organization, appears to be related to their attitudinal support for a regional organization.3 Individuals who believe that their own country will both contribute most and benefit least will have more negative or indifferent attitudes toward a regional organization than those who believe that their own country will either contribute least or benefit most. The attitudes of the latter group will be considerably more negative or indifferent than those of individuals who believe that their country will neither contribute most nor benefit least. Figure 7.1 provides a comparison of respondents’ perception of inequity. When asked about their perception of which country contributes most to SAARC-related activities, slightly fewer than three-fourths of the respondents indicated that India’s contribution is highest. At the same time, more than onehalf of the respondents also indicated that India is likely to benefit most from any SAARC arrangements. This assessment seems to be based on India’s relatively larger economic size. Most Indian respondents, however, disagreed with this assessment. A substantial majority of Indians (77 percent) viewed their country as the least likely beneficiary from SAARC and 82 percent of the Indian respondents felt that India is likely to contribute most.4 Indian perception of inequity may not lead to the formation of negative attitudes toward SAARC over the long run. But, it certainly contributes to an attitude of indifference toward SAARC. As one respondent from India remarked: “If SAARC succeeds, it is well and good. If it doesn’t, well, doesn’t matter.” Such an attitude is not encouraging for the growth of SAARC. Interestingly, few South Asians thought that their own country would be likely to benefit most from SAARC and contribute least to SAARC. However, after Bhutan and Maldives, Pakistan was viewed by large numbers of respondents from India (56 percent), Bangladesh (54 percent), Nepal (64 percent), and 80 72%

Benefits least Contributes most

70

Percentage

60 50 40

36%

30 18%

20

14%

10 0

17%

14%

11% 4%

India

Pakistan

Bangaldesh

8% 2%

Nepal

Sri Lanka

Figure 7.1 Relative benefits and contributions of South Asian countries (source: Author’s calculation). Note Percentages given on the basis of total number of responses in a category.

178

Cross-national comparisons

Sri Lanka (49 percent) as likely to contribute least. Most Pakistani respondents (71 percent) disagreed with this assessment. On the other hand, like most Indians, most Pakistani respondents (68 percent) felt that Pakistan would contribute more and 62 percent of the respondents felt that Pakistan would benefit less from SAARC.5 Pakistani elites’ perception of inequity, which is almost similar to their Indian counterparts, has led to an attitude of indifference toward SAARC. This attitude of indifference by both Pakistani and Indian elites bodes ill for the growth of SAARC, which needs active support from both India and Pakistan to succeed. Evaluation of SAARC membership Several studies on regional integration have established that evaluations of achievements and failures of a regional organization provide useful understanding about what societal actors expect from a regional organization and what are the goals and principles that they value most (Deutsch 1963; Shepherd 1975; Hewstone 1986). Such understandings are crucial because they provide policymakers with relevant information to focus on issues and areas, where policy of regional cooperation can receive more support from societal actors and know about issues and areas, which may need improvement or change of government policy to strengthen cooperative activities. Given this logic, this study sought to explore respondents’ views on positive and negative issues of SAARC. For the question on evaluation of membership, the summary of responses is given in Figures 7.2 and 7.3. The most widely viewed (78 percent) positive aspect of SAARC was the practice of holding regular meetings among the heads of states or governments, foreign and other ministers and bureaucrats. Given South Asia’s widespread mutual distrust and limited intraregional interaction, it is significant that most South Asian respondents viewed the meetings as critical for confidence-building purposes. Most respondents pointed to the fact that informal talks among the leaders at regularly held SAARC meetings have led to inter-elite reconciliation on many sensitive issues, producing some noteworthy results in South Asia. The following are some of the major events mentioned by the respondents. The informal talks between the Indian and Pakistani prime ministers at the second SAARC summit meeting at Bangalore in November 1986 led to the diffusion of tension between the two countries on the issue of India’s troop exercise (Operation Brasstacks) on the Indo-Pakistan border. The India–Sri Lanka talks at the 1987 SAARC foreign ministers’ meeting led to their accord on the Tamil problem. As a result of an informal meeting and discussion between the Prime Ministers of India (Narasimha Rao) and Pakistan (Nawaz Sharif) at Davos in 1992, the Pakistani government took action to prevent the move of the JKLF to cross the CFL in Kashmir later that year. The famous “handshake” between Pakistani President General Pervez Musharraf and Indian Prime Minister A.B. Vajpayee at the 11th SAARC summit meeting at Kathmandu on January 6, 2002, appeared to have broken ice between the two leaders and eventually led to resumption of dialogue on

Cross-national comparisons Regular meetings between heads of state, foreign and other ministers, secretaries at all levels

179

78%

Cultural, technical, and scientific cooperation

53%

48%

SAARC Free Trade Area initiatives

44%

People to people contact Visa relaxation for MPs, Supreme Court Judges, and heads of academic institutions

31%

SAARC Regional Food Security Reserve

22%

Poverty alleviation

22%

13%

Terrorism and drug trafficking 0

10

20

30

40

50

60

70

80

90

Percentage

Figure 7.2 Positive issues of SAARC (source: Author). Note Percentages given on the basis of total number of responses in a category.

bilateral issues between the two countries, which were suspended after the failure of Agra Summit in 2001. The second most positively viewed achievement of SAARC was cultural, technical, and scientific cooperation among the members. Many respondents talked about the necessity of confidence-building measures in South Asia by undertaking cooperation at cultural, technical, and scientific levels. More than half of the respondents (53 percent) acknowledged SAARC’s positive contribution in this regard. This finding reflects a growing awareness among South Asian elites about the importance of soft areas of cooperation in building confidence among South Asian countries. What is significant is that a majority of South Asian respondents view that cooperation in such areas as culture, science, and technology is possible and desirable that can eventually lead to cooperation in other more salient areas like trade and security. SAFTA initiatives were mentioned as the next most positive aspect of SAARC by nearly half of the respondents (48 percent). Given South Asian countries’ low level of intraregional trade and their trade dependence on industrialized countries (as discussed in Chapter 6), this finding is encouraging and marks a shifting attitude toward deeper trade cooperation in South Asia. However, while more than half of the respondents from India (56 percent) and

180 Cross-national comparisons

Indo-Pakistan conflict

72%

Fear of India domination

48%

Few concrete achievements

38%

Unresolved bilateral disputes

34%

Competition between members

29%

Too much import–export restrictions

29%

Too much border/ passport control

14% 0

10

20

30

40

50

60

70

80

Percentage

Figure 7.3 Issues with negative effects on SAARC’s growth (source: Author). Note Percentages given on the basis of total number of responses in a category.

Sri Lanka (66 percent) supported expansion of intraregional trade cooperation, there was low support for SAFTA from Nepal (33 percent), Bangladesh (44 percent), and Pakistan (38 percent).6 Nepal’s special trade agreement with India and the realization that it has nothing more to gain through intraregional trade due to its relatively smaller economic size might have contributed to a lack of enthusiasm on this issue among Nepalese respondents. Bangladesh’s fear of Indian goods dominating the country’s market and India’s high rate of tariff and non-tariff barriers as well as lack of any unilateral openness to Bangladeshi products explain the existence of a low level of support for trade liberalization under SAFTA. In fact, many respondents in Bangladesh observed that since India is the largest economy in South Asia and makes up 80 percent of the region’s GDP, it should unilaterally open its markets and grant its neighbors concessions without expecting reciprocity. Similarly, low support among Pakistani respondents for SAFTA reflects the country’s fear of India’s economic domination in the region. Next to SAFTA initiative, people-to-people contact received much support from South Asian elites. A little less than half of the South Asian respondents mentioned about SAARC’s positive role in enhancing people-to-people contact in South Asia. It is significant to note that currently there is only limited travel, media, and academic interaction among South Asians. For South Asian elites, this is detrimental for the development of a South Asian community sentiment.

Cross-national comparisons

181

There seems to be a growing recognition among South Asian elites that SAARC can play an important role in facilitating contacts between South Asian people. It is more of SAARC’s potential than its actual achievement in terms of facilitating people’s interaction that received support from South Asian elites. Not surprisingly, a little less than one-third of South Asian elite respondents supported SAARC’s efforts for visa relaxation to facilitate more interaction among South Asian people. SAARC’s Regional Food Security Reserve and plans for poverty alleviation were mentioned as positive aspects of SAARC by a little less than one-quarter of respondents. Ironically, however, respondents from small and relatively less developed countries in SAARC (Bangladesh, Nepal, and Sri Lanka), for whom Regional Food Security Reserve is important, were less enthusiastic about the Reserve than respondents from India and Pakistan. Such low appraisal of the SAARC Regional Food Security Reserve by small countries may be due to their frustration in not getting adequate support from the Reserve during their time of need caused by natural disaster. SAARC’s efforts to combat terrorism and drug trafficking received support from slightly more than one-tenth of respondents. While most respondents from India (77 percent) and Pakistan (74 percent) dismissed this as a positive achievement of SAARC, majority of respondents in Nepal (66 percent), Bangladesh (62 percent), and Sri Lanka (58 percent) supported SAARC’s positive role on this issue.7 The Indo-Pakistan conflict, fear of Indian domination, and few concrete achievements of SAARC were considered as the three most negative factors in South Asia (Figure 7.3). While 72 percent of South Asian respondents mentioned Indo-Pakistan conflict, about half of the respondents cited India’s domination as a major negative factor for the lack of growth of SAARC. More than one-third of the respondents mentioned lack of any tangible achievements8 and unresolved bilateral disputes with India as other negative factors for the growth of SAARC. As the biggest partner of SAARC, many respondents mentioned that India should make more unilateral sacrifices by making concessions on bilateral issues, such as opening its markets for other small South Asian countries. The general consensus among smaller South Asian countries, to quote a respondent from Bangladesh, is: “India can make or break SAARC.” Other issues cited by the respondents that had negative effects on the growth of SAARC are competition between members (29 percent) for same products, too much import–export restrictions (29 percent), and too much border/passport control (14 percent). Responses in Table 7.5 represent respondents’ perception of likely benefits from future economic arrangements between SAARC members. More than a majority of respondents in Sri Lanka and a little less than one-half of respondents in Nepal and Bangladesh are convinced about future economic benefits of SAARC to their countries and thus support expansion of regional cooperation. In contrast, about one-third of respondents in India and less than one-third of respondents in Pakistan favored expansion of SAARC activities. However, only one-fifth of Indian respondents oppose SAARC’s future expansion and a little less than one-half of Indian respondents remain uncertain about SAARC’s

182

Cross-national comparisons

Table 7.5 Attitudes toward expansion of regional cooperation in South Asia

Favor Oppose Don’t know

Bangladesh (%)

India (%)

Nepal (%)

Pakistan (%)

Sri Lanka (%)

42 13 45

34 20 46

46 15 39

30 32 38

55 16 29

Source: Author. Note Percentages given on the basis of total number of responses in a category.

future. This result indicates that a majority of Indians remain indifferent toward SAARC and a shift in their attitude toward SAARC’s future will depend on the relative utilitarian achievements of the organization. The opposition to expansion of SAARC activities in economic sphere by about one-third of Pakistani respondents reflects their fear of Indian economic domination in the region. At the same time, more than one-third of Pakistani respondents expressed uncertainty about SAARC’s future. This kind of evaluation of SAARC by Pakistani respondents is clearly influenced by lack of mutual trust between India and Pakistan and the Indo-Pakistani political tension over their bilateral problems, including the Kashmir issue. It is significant to note that contrary to popular perception, the nuclear issue is not considered as a major impeding factor for strengthening regional cooperation in South Asia. Although most Pakistanis (85 percent) and Indians (72 percent) were apprehensive and critical of each others’ nuclear plan, no single respondent from these two countries considered the nuclear issue to be an obstacle to regional cooperation. The same view was expressed by most respondents from Bangladesh (72 percent), Nepal (65 percent), and Sri Lanka (60 percent).9 Many respondents even pointed to the growth of EU despite the presence of two nuclear powers – France and United Kingdom. From this result, one can speculate that nuclear nationalism is not a serious issue for the growth of regional cooperation. Instead, nuclear issues, like many other bilateral problems, can be addressed by informal meeting of South Asian leaders at various SAARC forums.

Discussion – the myth of a South Asian community The findings of elite responses reported above suggest that across nations, variation in positive responses to the affective and utilitarian questions follows a similar pattern. Within India, Pakistan, Bangladesh, Sri Lanka, and Nepal, the various respondents were generally closer in their views to each other than they were to the opinion of their counterparts in the other country. This indicates a strong nationalist bias and lack of regional outlook among South Asians. On the question of South Asian identity, Indians, Pakistanis, and Bangladeshis demonstrated less positive attitude than Sri Lankans and Nepalis. It is ironic that while most Bangladeshi elites were aware of Bangladesh’s contribution to the

Cross-national comparisons

183

creation of SAARC, they were far away from a construct of South Asian community. The considerably less positive attitude of Indians and Pakistanis toward a South Asian community is a reflection of their deep divide caused by history and continuing political tension. Memories of the partition in 1947, Kashmir issue, and Indian role in the partition of Pakistan in 1971 are still prominently recalled in Pakistan. Most Indian elites fault Pakistani ruling elites for their failure to deal with its past and for perpetuating the path of confrontation with India. At the same time, they recognize the need for Indo-Pakistani cooperation for South Asia’s peace and prosperity. As one Indian scholar put it: “Because of size, geography, history, and strategic perspectives, there will always be common and competitive interests in our bilateral relations with Pakistan regardless of how wisely or unwisely we jointly manage the relationship.” The evidence on South Asian solidarity reveals that South Asians are less inclined to support their neighboring countries in times of economic difficulties. While this may be a reflection of weak socioeconomic development of most South Asian countries, such a lack of “we-feeling” among South Asian elites is hardly encouraging for the growth of regional cooperation. A combination of factors can be mentioned here to explain why South Asians show low sense of solidarity with each other. Of course, limited economic opportunity is an important reason. In addition, vast differences in the nature of individual states, preoccupation with domestic issues, lack of cross-border travel, less or negative press coverage of South Asian affairs, distorted history text books, and limited interaction among South Asian governments have influenced, to varying degrees, South Asians’ attitude toward each other. One of the principal goals of SAARC was to promote people-to-contact in the region so that South Asians would be more supportive of a regional entity. The evidence presented here indicates that very few South Asian elites express a strong South Asian community sentiment. Apparently, despite its existence for more than two decades, SAARC is yet to promote a South Asian community sentiment among its people. The picture that emerged from the analysis of national images by South Asian countries is hardly encouraging for the development of a trans-national entity. Most South Asian elites viewed their neighbors negatively. India was described by most respondents as economically and militarily strong and less authoritarian. Such positive perception of India, however, was neutralized when most South Asians described India as “aggressively militaristic.” This indicates a widespread distrust toward India’s role in the region. Similarly, Pakistan was also viewed on a negative light by most South Asians on the measures of “authoritarian,” “political stability,” and “external orientation.” While smaller SAARC members (Bangladesh, Nepal, and Sri Lanka) were seen as less authoritarian, Bangladesh and Nepal were characterized by most South Asians as neither economically developed nor politically stable. Sri Lanka was viewed relatively more favorably on the dimensions of economic development and political stability. However, all the three smaller countries scored high on their external orientation. Taking all the five measures of national image – militaristic, authoritarian, economic development, political stability, and external

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orientation – together, one can say that there is a significant presence of negative perception of national images of their neighboring countries, which interferes with their support for a regional entity. South Asians, in a nutshell, are less positively inclined toward a development of South Asian community. The finding of high degrees of perceived inequities – that is their country would contribute most but benefits least – among Indians is not surprising. But the fact that respondents from all four other members of SAARC think the same way offers a crass example of self-interest. In all fairness, this might have been expected from politicians but not informed elites. The existence of perceived inequity to varying degrees among South Asian elites along with lack of concrete achievements of SAARC appears to be associated with their relative indifference toward SAARC. This remains worrisome and obviously requires much effort from South Asian policymakers to convince their people that membership in SAARC is worthwhile. On the issue of relative cost and benefit of SAARC membership, most South Asian respondents did see some benefits in SAARC’s role in facilitating confidence-building process in the region. At the same time, most of them also expressed their disappointment about SAARC’s lack of concrete achievements in more salient issues like trade and security. Not surprisingly, continuing IndoPakistan conflict was mentioned by most respondents as the primary reason for SAARC’s lack of achievements. In addition to Indo-Pakistan antagonism, low level of intraregional trade over the past decades has also contributed to low level of utilitarian support for SAARC. Most respondents feel that unless there is a substantial improvement in the current low level of intraregional trade, SAARC’s utility will remain limited. Existence of low levels of utilitarian and affective support for SAARC does not augur well for the growth of the organization. It appears that the activities of SAARC have not yet captured the imagination or interests of even the region’s most enlightened people. This is the reason why a relatively high number of respondents in Bangladesh, India, Nepal, and Pakistan showed lack of interest in the expansion of regional cooperation activities. SAARC’s lack of visibility can be attributed to its failure to address salient issues such as trade and security in South Asia. The existence of a high degree of indifference toward SAARC reveals the gulf between rhetoric and reality in South Asia. In brief, SAARC suffers from a credibility gap. Some of the major reason that have contributed to SAARC’s credibility gap are South Asian countries’ repeated failure to implement important regional conventions on terrorism and narcotic drugs, lack of resources to implement SAARC-related projects in a timely manner, lack of satisfactory progress in the creation of trade complementarities under the provisions of SAPTA during the past decade, lack of urgency to implement SAFTA provisions, and continuing political differences and hostility between India and Pakistan. There is no denying the fact that if SAARC is to achieve sustained success, then more positive utilitarian evaluations of this organization by key societal actors in South Asia is necessary. Some major progress in the core areas of economics and security will help achieve this.

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Conclusions and implications The findings of this chapter reveal that domestic elite support for SAARC along affective and utilitarian dimensions remains limited. The findings have two important implications for understanding the growth of regional cooperation in South Asia. The first implication is that absence of strong positive domestic elite support for SAARC-related activities has contributed to the dampening of enthusiasm and weakening of commitments among the South Asian policymakers for bolder regional cooperative initiatives and implementation of various regional agreements. Consequently, SAARC’s growth has remained slow and modest over the past two decades. Of course, limited domestic support is not the only factor for the slow growth of SAARC. But when seen in the context of some South Asian regional dynamics, that is, the existence of weak governments in South Asia and the ruling coalitions’ need for domestic support for political survival, lack of strong domestic support, doubtless, has contributed to the policymakers’ inertia toward SAARC. The second important implication is that South Asian elites expect that SAARC has important consequences for South Asia’s political and economic welfare related to trade, security, and regional peace and stability. The results of the analysis indicate that South Asian elites incorporate these utilitarian considerations in their appraisal of SAARC. In fact, SAARC’s few concrete achievements in the areas of trade, security, and regional peace are linked to its credibility gap. Many South Asian elites pointed out that SAARC-related rhetoric has generally outdistanced SAARC’s performance over the past few decades. As long as SAARC’s credibility gap continues, societal actors’ indifference toward this organization will persist. This indifference does not indicate the formation of negative attitude. Rather, it suggests that societal actors may not be strong catalyst and advocate for regional cooperation. At the same time, their indifference does not put any urgent pressure on policymakers to pursue regional cooperation policies, but it certainly provides governing elites with an acquiescent domestic environment in which to pursue regional cooperation policies. The elite indifference also suggests that majority of South Asian elites could be persuaded about SAARC’s utilitarian value by changing circumstances and new information about SAARC achievements. As shown in Table 7.5, except for Pakistan, fewer respondents actually oppose expansion of regional cooperation activities. Taking “favorable” and “don’t know” responses together, one can argue that majority of South Asian respondents do expect SAARC to perform better. In nutshell, the prevailing indifference of societal actors can be transformed into greater utilitarian support for SAARC with a show of more positive results of SAARC in the areas of trade and security. In this context, the political actors in South Asia have to play more decisive roles in realizing the goals of regional cooperation. As this analysis indicates, two major factors – IndoPakistani political tension and a general fear of India’s overwhelming military

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and economic domination – remain major obstacles for the growth of SAARC. Given this dynamic, it is reasonable to argue that resolution of Indo-Pakistani conflict and some active positive unilateral economic initiatives by India toward its neighbors to overcome their fear can serve as driving forces that could galvanize South Asian governments to move ahead with regional cooperation efforts. The adverse impact of Indo-Pakistani conflict on the growth of SAARC is discussed earlier. Suffice it to say here that the continuing conflict between these two countries contributes greatly to the negative evaluation of SAARC by South Asian domestic elites. Unless Indo-Pakistani antagonism abates, the prospects of SAARC’s growth will not gain much lift. There is a growing recognition among governing elites in South Asia that while regional political tension will take time to resolve, economic issues create some urgency for cooperation. Thus, deepening regional cooperation is seen by many South Asian countries as a potentially important political tool to help address conflict in the region and address political tension with India. After 1990s, smaller South Asian countries have been showing more preferences to enter into free trade area agreements with India. The underlying reasoning for this move is that smaller South Asian neighbors would like to tie India into a web of reciprocal obligations and benefits that they believe will enhance India’s self-interest in using its growing power prudently and taking fuller account of its neighbor’s interests. On the other hand, Indian governing elites seem to have found new confidence that given its growing strength, some positive unilateral economic initiatives such as opening its markets to South Asian neighbors through preferential trade agreements; granting MFN status to South Asian neighbors without demanding reciprocity; and some restraints on its freedom of action may be an acceptable price for reassuring the neighborhood that its growing strength is not a threat to its neighbors. Indian governing elites also believe that the success of SAARC will demonstrate Indian leadership in the region and, more importantly, reduce external influence. While the above scenario is promising for SAARC’s growth, another not-sopromising scenario deserves to be mentioned here. As the results of this chapter and our discussion in Chapter 6 indicate, low level of utilitarian support of South Asian elites for SAARC can be partly attributed to low intraregional trade dependence among South Asian countries. To the extent that SAARC members redirect their trade toward global market away from the SAARC market, utilitarian support for SAARC should decline. Indian trade interests are particularly important in this regard. As India looks more and more to markets beyond South Asia, its economic interests in SAARC market will decline. Given its large market and the potential to become the main engine of South Asian economic growth, a substantial diversion of Indian trade away from regional market could reduce economic interdependence in South Asia and thereby reduce utilitarian support for SAARC across its member states. In the absence of adequate affective support among South Asian elites, such a scenario will be, doubtless, detrimental for the future growth of SAARC.

8

Conclusion

I have argued in this book that regional cooperation is a two-level process in which domestic support of key societal actors and regional bargains and negotiations among governmental actors must overlap if cooperation is to proceed (Putnam 1988). Attempts to achieve regional cooperative agreements involve bargaining and negotiations among governmental actors in various issue areas. But, domestic support is essential for the implementation of these negotiated agreements. Policymakers know this, and hence, when negotiating regionally they always anticipate domestic reactions. Thus, policymakers’ anticipation and calculation of the size and nature of domestic support largely determine their scope of bargains and negotiation on various regional issues. External factors, outside pressure for opening domestic markets, private capital flows, and country’s degree of economic openness, affect leaders’ political calculations about deeper regional cooperation policy initiatives. But, external factors alone are not enough. Growth of regional cooperation also depends on the nature of domestic institutional structure and strength of the government. When the governmental actors enjoy legislative autonomy and are relatively well insulated domestically, they can afford to pursue bold and accommodative regional policies. Conversely, a weak government may force governmental actors to pursue more nationalistic and domestically oriented policies, with regional cooperation initiatives a prime casualty. It is, therefore, important to understand the nature of domestic institutions, and the strength of the government, in order to explain why states do or do not deepen regional cooperation initiatives. Before examining the nature of domestic institutions, I discussed in Chapter 3 some important South Asian regional dynamics – the role of history, geography, Indo-centric structure, small versus large states – that affect interstate relationships among South Asian countries. A major contribution of the realist scholars has been the emphasis on the security dilemma and how it serves to aggravate intraregional security environment thereby weakening regional cooperation efforts. In this chapter, I discussed the extent to which security dilemma, particularly between India and Pakistan, has been a crucial barrier to effective regional cooperation in South Asia. Another underlying assumption in the realist literature that shapes preferences of political actors for regional

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cooperation is the need for extraregional security, that is, the need to unite to face a common external threat. The potential threat can come from a regional hegemon or other extraregional power. As discussed in Chapter 3, South Asian countries do not share a common external threat perception, which makes it difficult for the leaders of these countries to work toward common regional security strategies. Most South Asian countries perceive their main threat to be India. To offset India’s influence in the region, South Asian countries have actively sought military, economic, and diplomatic assistance from external powers. On the other hand, India perceives an external threat from Pakistan’s military challenge with the support of external powers. In such an environment, regional accommodation policies have become increasingly difficult. The narrow political base of South Asian ruling elites provides few opportunities for them to ignore regional security threats or to transcend their dominant domestic constituencies. Thus, blaming the neighbor (scapegoating) has become a preferred policy choice for South Asian ruling elites, making regional accommodation a difficult goal. Consequently, SAARC-related policies and programs have received low priorities by South Asian ruling elites over the past decades. This was demonstrated in the evaluation of SAARC and SAARC-related programs and institutions in Chapter 4. Although SAARC has produced some positive results – one of the most significant achievements of SAARC relates to its annual summit meetings of South Asian heads of states or governments – rhetoric has generally outdistanced performance in South Asia’s efforts at regional cooperation. Over the past two decades, there has been a proliferation of SAARC-related meetings and declarations, while real progress has been elusive. A central argument in this book focuses on understanding the nature of domestic institutions and the strength of the government to explain why states do or do not deepen regional cooperation initiatives. In light of this argument, this book examines the institutional structures and the strength of the governments in South Asia. South Asian countries experience various kinds of political systems – democratic, authoritarian, and quasi-democratic political systems. As discussed in Chapter 5, regardless of their type of political systems, almost all South Asian governments have suffered from considerable weakness in terms of their political leaders’ narrow political base and lack of legislative autonomy since 1990s. Weak strength of ruling coalitions throughout South Asia has made the leaders of these countries critically dependent on the support of important domestic groups. The leaders’ need for domestic support for political survival have led them to pursue populist, nationalist, and self-reliant policies. In India and Pakistan, the leaders have pursued not only such policies but also have emphasized military-intensive policies. While these policies may have brought short-term political payoffs to the ruling elite in India and Pakistan, they have become enormously counterproductive for the growth of regional cooperation. In Chapter 5, I examined the challenge of ethnic regionalism that political leaders face in South Asia. The states in South Asia are all multiethnic and highly permeable. They remain vulnerable to ethnic regionalism that can

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generate separatist movements. This vulnerability has increased domestic insecurities in all the states in South Asia. Each state blames the neighboring state for supporting its ethnolinguistic separatist movements. In particular, India is blamed by its neighbors for its role in ethnic crises. Since India’s ethnic groups overlap into all neighboring states, India’s hand in all ethnic conflicts is strongly suspected by the other South Asian states. Moreover, India’s structural position of regional preeminence leads its policymakers to believe that India has a legitimate role to play in resolving the ethnic crisis in neighboring countries. Such Indian belief is not mutually reciprocated by its neighbors and often leads to tension in South Asia. Consequently, an atmosphere of mutual suspicion and distrust prevails in South Asia, which is not conducive for the growth of regional cooperation. The implications of the overt nuclearization of India and Pakistan for regionalism are also discussed in Chapter 5. The overt nuclearization of India and Pakistan in 1998 may have introduced a regional stability/instability paradox in South Asia. On the one hand, policymakers’ realization of the devastating consequences of nuclear weapons makes the execution of a full-scale war most unlikely. On the other hand, the deterrent insurance provided by the possession of nuclear weapons may tempt both sides to engage in limited war by initiating military adventurism along the LoC. Episodes like Pakistani incursion across LoC in 1990 and Kargil conflict in 1999 are likely to occur until a political resolution is found in the Kashmir issue. The continuation of political and military tensions between India and Pakistan has contributed to the lack of any real progress of SAARC over the past two decades. In Chapter 6, I focused on the dynamics of economic interdependence and prospects of regional economic cooperation in South Asia. This chapter identified three conditions for sustained success of regional economic cooperation in a region – potential for significant market gain; political actors’ willingness to pursue regional economic cooperation policies; and the presence of an undisputed regional leader. With the exception of India, the economies of SAARC members are not complementary. Since SAARC countries export the bulk of their primary commodities and manufactured goods to the same world markets, they tend to compete in the same industrial sectors with each other. Indeed, most of SAARC members’ trade is with the United States and Europe than with their neighbors. Given the small size of markets and insignificant economies of scale, there is limited scope for mutually beneficial market exchange among South Asian countries. Consequently, demand for deeper economic cooperation by market actors is weak. Although SAARC members have pursued economic liberalization policies after the early 1990s, these policies have not led to deeper regional economic cooperation. The emergence of two types of competing domestic coalitions in India and Pakistan – that is liberalizing coalitions and nationalist–fundamentalist coalitions – is the important reason to account for this failure. While India’s ruling liberalizing coalitions have more or less supported economic liberalization and regional economic cooperation policies, their weakness made it almost

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impossible for national leaders to pursue deeper regional economic cooperation policies in the 1990s. The nationalist–fundamentalist coalitions in Pakistan, as represented by Pakistan’s radical Islamic Jamaat-i-Islam Party and its current military regime, generally have shown less enthusiasm for deeper regional economic cooperative arrangements. Within SAARC, India is the largest member state in terms of size, population, natural resources, and market. But, there is no consensus among South Asian countries to recognize India as the region’s undisputed leader. In particular, Pakistan continues to challenge India’s leadership. Contested leadership within SAARC has, at least, two negative implications for regional cooperation: first, there is no “paymaster” or no regional leader to ease distributional problems; second, the absence of a regional leader makes coordination of rules, regulations, and policies extremely difficult and time-consuming. It is not surprising that under SAPTA and SAFTA agreements, individual countries continue to undermine free trade principles by excluding numerous products from tariff cuts by keeping them under the sensitive lists. The rivalries between India and Pakistan in terms of leadership and traderelated policies have driven these two countries to engage in several “spoke–spoke” and hub-and-spoke type of cooperative arrangements. India’s involvement in a “noodle bowl” of bilateral trade agreements with Singapore, Thailand, Vietnam, Japan, China, South Korea, Sri Lanka, Nepal, Bhutan, and Bangladesh and her initiatives for the “spoke–spoke” pattern of economic cooperation among subgroups of South Asian countries – for example SAGQ – are motivated in part by Pakistan’s unwillingness to increase the speed of free trade negotiation with India. While such transregional and “spoke–spoke” pattern of trade cooperation may have provided some short-term solutions to India’s need for trade expansion and market access, it has proven counterproductive for the growth of regional economic cooperation in South Asia. The level of regional economic interdependence achieved so far and the pace at which South Asian countries are progressing in their negotiation for FTAs will leave South Asian countries at an appreciable distance from the goal of SAFTA even after a decade. Any substantially faster rate of progress on FTAs would be a desirable goal. But, that would require substantially greater political efforts from the Indian and Pakistani leaders. One of the basic arguments of this book is that while political actors negotiate regional agreements, their preferences for specific regional cooperation policies are influenced by the preferences of societal actors. The “power-retaining” motivation of political actors forces them to anticipate the reactions of societal groups on specific cooperation policies and avoid those policies that will bring them into confrontation with dominant domestic groups. In this sense, political actors tend to choose cooperation policies that are more or less consistent with the policy preferences of key societal groups. In Chapter 7, I examined preferences of key societal actors along the affective and utilitarian dimension. The findings reveal that domestic elite support for SAARC along affective and utilitarian dimensions remains limited. This result has two important implications

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for understanding the growth of regional cooperation in South Asia. First, absence of strong positive domestic elite support for SAARC-related activities has contributed to the dampening of enthusiasm and weakening of commitments among the South Asian policymakers for bolder regional cooperative initiatives and implementation of various regional agreements. Second, there is a gap between what South Asian elites expect from SAARC and what SAARC has actually achieved over the past two decades. In fact, SAARC’s few concrete achievements in the areas of trade, security, and regional peace are linked to its credibility gap. As long as SAARC’s credibility gap continues, societal actors’ indifference toward this organization will persist. In this concluding chapter, I will discuss the implications of this study for regional cooperation in South Asia. Next, examining the development of regional cooperation so far, I will draw some useful lessons on how regionalism in South Asia can be fully realized.

Implications for regional cooperation in South Asia SAARC’s credibility gap Examining the record of achievements and failure of SAARC in the past two decades, one can argue that SAARC’s rhetoric has generally outdistanced its performance. SAARC has achieved few concrete results in the core areas of trade, security, and economic welfare. Not surprisingly, as the results of elite interviews in this study revealed, SAARC activities have not yet captured the imagination or interest of South Asia’s enlightened citizens. Rajni Kothari’s remark sums up a generally shared view in South Asia: “SAARC may have prospered as an inter-governmental and inter-bureaucratic organization, but as a political process it has not accomplished any objective.”1 Since its inception, the primary operating principle of SAARC has been “non-interference” in one another’s internal affairs. Instead of focusing on economic development, building state capacity among its members, addressing regional environmental issues, and assisting member countries in their fights against poverty, illiteracy, and disease, SAARC has mostly spent its time on formulating declarations and such slogans as “decade of girl child,” “decade of implementation,” “decade of youth,” and “decade of poverty alleviation.” There has been proliferation of meetings and initiatives without resource and political commitments to follow up on those initiatives. Thus, it is hard to fault the critics when they describe SAARC as a mere “talking shop” without any serious involvement in concrete cooperation. More than 20 years after its creation, there is still no real sense of a SAARC community except among a small group of officials and scholars. As an institution, SAARC makes its decision on the basis of consensus and has no ability to enforce implementation of agreed upon measures. Non-implementation of already-signed regional conventions by South Asian countries on terrorism and narcotic drugs, failure of the timely release of food supplies from the SAARC

192 Conclusion Food Security Reserve to member countries at the time of the country’s worst natural disasters, a lack of serious commitment among South Asian countries regarding the implementation of SAPTA and SAFTA provisions, failure of timely implementation of some already approved development-related projects, and extreme resource crunch have contributed to SAARC’s credibility gap in South Asia. The results of the elite analyses in this study indicate that South Asian elites expect that SAARC has important consequences for South Asia’s political and economic welfare related to trade, security, and regional peace and stability. Low level of utilitarian support of the elites for SAARC indicates that SAARC’s performance over the past two decades has not met with the expectation of South Asian elites. The presence of a general elite indifference toward SAARC does not indicate the formation of negative attitude. Rather, it suggests that societal actors may not be strong catalyst and advocate for regional cooperation. At the same time, their indifference does not put any urgent pressure on policymakers to pursue regional cooperation policies, but it certainly provides governing elites with an acquiescent domestic environment in which to pursue regional cooperation policies. The overall impression from the results of the elite interviews is that while the idea of regional cooperation is considered favorably in South Asia, there is no strong domestic support for SAARC. Overall, the elites of South Asia may be indifferent, but they do not seem to be hostile or unduly negative toward SAARC. Over a period of time, this indifference toward SAARC may swing in either favorable or unfavorable directions, depending on the achievements of the organization and the domestic politics of South Asian countries. As long as South Asians do not turn hostile or negative, the prospect of SAARC’s survival and even slow progress is not going to be adversely affected. However, there is a general feeling that unless SAARC speeds up its activities and addresses such areas as trade and security issues it is likely to become a moribund and largely meaningless institution. National identities prevail over regional identity For the functionalist and neo-functionalist schools of integration, the progress of regional integration is closely linked to the gradual shift from national to supranational loyalty (Haas 1968). An important indicator of this shift is when citizens think of themselves as not citizens of a particular country but citizens of a region. The shift from national identity to regional identity enables citizens to think more in terms of supranational issues, interests, and institutions and thus provides a conducive environment for regional integration to move forward (Deutsch et al. 1967). Such a shift, as our analysis suggests, has not occurred in South Asia. Results of elite responses, as discussed in Chapter 7, reveal no strong tendency to eschew nationalism and that very few South Asians think of themselves as “citizens of South Asia.” Instead, a strong sense of nationalism prevails in South

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Asia and there is little likelihood that this sense of nationalism will be superseded by a new sense of supranational loyalties anytime soon. Currently, there is no general consensus among South Asian countries, between India and Pakistan in particular, for any kind of major common policies. Given the current dynamics of domestic politics in South Asia, it is likely to take more than a decade for South Asian leaders for the development of such a consensus to sustain a major common regional policy. In light of above argument, it is reasonable to conclude that South Asia remains a region of nation-states.2 In the minds of South Asian people, consciousness of the nation remains infinitely stronger than a sense of South Asian community. In fact, it can be argued that in the absence of a complete regional integration, this national consciousness is likely to persist. This, however, may not be a major problem for the continuation of regional cooperation efforts. While death of nationalism is a strong indicator of complete regional integration or regional unification, it is not required for the progress of regional cooperation. What is useful for the progress of regional cooperation in South Asia is the development of multiple loyalties and identities – both national and regional – among South Asian citizens. Development of regional identity and loyalty is possible through concrete achievements of SAARC that can create solidarity among South Asian people. By solidarity, we mean in this study, the development of a “sense of community” (Deutsch 1967) or a “we-feeling among a group of people” that work together on the basis of mutual trust and a shared sense of common history, culture, geography, and political experience (Easton 1965: 332). So far, however, this sense of solidarity remains elusive in South Asia. There are several reasons for this. First, history has not been favorable for the growth regionalism in South Asia. History has influenced enormously people’s thinking and behavior in South Asia over the past decades. The history of the subcontinent’s partition has cast a long shadow of distrust and suspicion over the relationship between India and Pakistan. The ruling elites in Pakistan play the “history card” in every opportune moment to sell the idea to the general public that “India had never accepted the partition at heart and would not let any opportunity to undo it [partition] slip by” (Prasad 1989: 14). India’s role in the emergence of Bangladesh as an independent state in 1971 has strengthened this impression. On the other hand, the Indian elites often show a profound sense of “historical distrust” in their obsession with the idea that Pakistan might go to any extent to destabilize India. Not surprisingly, Pakistan’s hand is strongly suspected in most communal riots and secessionist movements in India. Also any move by Pakistan to modernize its defense with the help of outside powers is perceived to be a serious danger to India’s stability. After the partition, India and Pakistan became committed to mutually incompatible models of nation-building. India opted for secularism, democracy, and federalism. Pakistan, on the other hand, settled for authoritarianism, a centrally controlled administration and an Islamic state. The practice of diametrically opposite principles of political organization in two contiguous countries with no

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natural frontiers led to enormous tension and anxiety between India and Pakistan. In addition, the territorial disputes over Kashmir intensified bitterness between the two countries. Despite the Simla agreement in 1972 to resolve the Kashmir issue peacefully, conflict between the two countries has continued. The degree of violence in Kashmir and the two countries’ intransigence on reaching a peaceful solution have left deep scars on the national psyche of both India and Pakistan. History has also played a critical role in the evolution of Indo-Bangladesh relations. Despite India’s crucial role in the liberation movement of Bangladesh, Indo-Bangladesh relations began to deteriorate soon after Bangladesh’s independence principally for two reasons. First, a large section of Bangladeshi elites shared Pakistan’s distrust for India because of their involvement in the pre-partition freedom struggle on the subcontinent. Indeed, the people in the eastern wing of Pakistan, which later became Bangladesh, were even more deeply involved in the Muslim League sponsored struggle to partition India than the people in the western wing (Prasad 1989: 14). Second, Bangladeshi elites also shared Pakistan’s suspicion of India’s hegemonistic ambitions. The Tamil–Sinhalese conflict in Sri Lanka is often sustained by historical references to Tamil invasion and Sinhalese injustice by their respective protagonists. There is a perception among the smaller states in South Asia that independent India’s foreign policy is more or less based on the same hegemonic, cultural, geopolitical compulsions and calculations of the British Indian Empire (Prasad 1989: 14). The way the princely state of Sikkim, formerly a protectorate, was annexed by India in 1975 as the twenty-second Indian state appears to have strengthened smaller states’ perception of India’s hegemonistic ambition. Such actions of India have made the smaller states hyperconscious and hypersensitive of their separateness and individuality (Ahsan 1992: 2). The smaller states not only criticize India for practicing Kautilyan principles in its foreign policy behavior, but they have also sought assistance on many occasions from outside powers to limit India’s dominance in the region. India, on the other hand, views such actions and the smaller states’ criticism of India as a hegemonistic power as hostile and unfriendly to the cause of SAARC spirit. Despite some progress through the 1990s in terms of increasing diplomatic intercourse and economic cooperation between India and her neighbors, levels of trust remain low in South Asian countries. Proliferation of SAARC meetings and ritualized friendship toasts has not suppressed small states’ anxieties about regional ties. Second, given their widespread poverty and development gap, South Asian countries have given more priorities to domestic issues. Their concern and preoccupation with domestic problems has stood in the way of regionalism. Political and societal elites of each South Asian country are anxious to achieve a normal national identity after feeling humiliated and frustrated by the domination of foreign powers resulting from the colonial rule and decades of dependency on economically and militarily powerful country. This dynamics of domination and dependency has created a psychology of victimization among South Asian elites who are essentially distrustful of development strategies that favor regionalism with one economically and militarily dominant power.

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Third, the assumptions of realists that security dilemma between the two major South Asian countries – India and Pakistan – has been decisively important in limiting the growth of a regional identity in South Asia are correct. In addition, concerns for national security, perception of threats to territorial integrity, autonomy, and balance of power have been the principal barriers to trust among South Asian countries and seem to have trumped economic interests in building a basis for regionalism. Fourth, problems in bilateral relations between South Asian countries accentuated partly by their focus on building national identities played an important role in preventing the growth of regionalism. Despite frequent calls by South Asian leaders for building trust and mutual confidence in their relations, the ground reality remains unchanged. While the current strategy of South Asian leaders to set aside contentious issues in order to build trust gradually through concrete acts of economic cooperation is a sound one, it will take a long time and test the will power of the leaders. Yet, it can be argued that any serious effort to escape from the current level of distrust and tie South Asian countries together will require a breakthrough in the development and implementation of major economic projects in the region. Fifth, the role of the national press in providing inadequate coverage of SAARC, but excessively emotional coverage toward one or more of the other regional countries during the past decades, is also an important reason for the slow growth of regionalism in South Asia. The Indian and Pakistani press is particularly responsible for fueling nationalism. Old stereotypes, lack of empathy, and negative images of neighboring countries and their leaders have dominated the press coverage in India and Pakistan. Such a pattern of coverage has only accentuated leaders’ worries about the atmosphere for various bilateral talks, leaving little room for any substantial discussion on real issues of regionalism. Cross-national differences – the Indian factor One Bangladeshi respondent noted: “India can make or break SAARC.” The implication of this statement is that given South Asia’s geopolitical realities, it is clear that SAARC will face a troubled future without Indian support. However, our analysis and evidence in this book suggest that there is low level of support for SAARC in India. The low level of Indian support remains the most worrisome factor for the future growth of SAARC. India’s initial hesitation about joining SAARC and the continuing opposition to include bilateral issues in the formal SAARC agenda are based on the Indian policymakers’ apprehension that small South Asian countries might “gang up” against India. But this apprehension alone does not explain the relatively low level of Indian support for SAARC. The following four snapshots explain the dynamics in which India’s support toward SAARC can be examined. First, in the structure of South Asian regional system, India remains at the center and is the most powerful country. It is strongly believed by a section of Indian elites, apparently close to the ruling circles, that regional security will

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lead to India’s security and vice versa (Ghosh 1989: 221). India’s regional preeminence leads its leaders and some powerful elites to believe that in order to achieve peace, security, and stability in South Asia, India must remain strong and maintain superiority in the region. Although a few scholars have contributed to such belief, K. Subrahmanyam, a leading security scholar, stands out as the most influential protagonist of this kind of thinking.3 Strongly arguing India’s case for regional preeminence, Subrahmanyam observes that there is a necessity for India to establish and project its military power in the region. Once India’s military superiority is accepted by its neighbors, there is no danger of violation of peace in the subcontinent. Subrahmanyam’s views not only reflects the Indian government’s thinking on strategic issues in South Asia over a number of years but also is shared by a large section of the elites in India. It is not surprising that Indian government’s effort to maintain a high military profile in the subcontinent’s security affairs has always received domestic support. The only open challenge to such a regional system comes from the region’s second-ranking state, Pakistan. Although the smaller regional states appear to be more reconciled to the preeminent position of India, they nevertheless resent India’s hegemonistic aspiration and share Pakistan’s sense of frustration in dealing with India. Indian ruling elites and opinion makers are very much aware of such feelings on the part of neighboring countries. Consequently, Indian public has come to share the Indian policymakers’ apprehension that SAARC will provide an official forum for India’s neighbors to “gang up” against India. It is no wonder that India has opposed in the past, and still continues to oppose, any move by the member countries to include bilateral conflicts in the SAARC agenda for discussion. Some Indians fear that India will not only be isolated but also will lose much respect in the eyes of the international community if issues of bilateral conflicts are discussed because of India’s involvement in almost all the bilateral conflicts in South Asia.4 Second, a high degree of perceived inequity – that is perception that their countries will contribute more and benefit less from SAARC – among Indians seems to be a major impediment for the growth of SAARC. It is common knowledge in South Asia that SAARC suffers from an acute resource crunch. Unless the resource situation is improved, most SAARC projects will not achieve any success. Given, India’s economic strength vis-à-vis other South Asian countries, it is expected that only India can contribute substantially to improve the resource position of SAARC. This fact has contributed to the widespread Indian perception that their membership in SAARC is disadvantageous and inequitable. Such perceptions have a negative spillover and certainly contribute to the development of negative attitudes and low levels of support toward regional organization. While most Indians feel that their country is likely to contribute more and benefit less from SAARC, the majority of citizens in Bangladesh, Nepal, Pakistan, and Sri Lanka believe that India is likely to benefit most from any SAARC arrangement. The success of SAARC as a durable political entity cannot be guaranteed if the arrangement is perceived as benefiting some states at the expense, or to the exclusion, of others.

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Third, Indian leader’s believed during the past decades that their country was unlikely to get substantial economic benefits from any SAARC arrangements. Thus, in New Delhi’s economic equation, SAARC’s importance was secondary to India’s bilateral relations with Japan, South Korea, ASEAN, Australia, China, Europe, and the United States. This belief, however, has changed in the postCold War period. India’s attitude toward South Asian regionalism has become much more positive. But, instead of building a vision of regionalism capable of winning trust from others, India has failed to communicate its own trust in regionalism to its neighbors. A primary reason for India’s failure is its leaders’ obsession with Pakistan’s external orientation. Although most South Asian countries have developed external linkages because of their fragile political and economic structure and the dynamics of neocolonialism, Indians seem to be more obsessed with Pakistan’s external linkages and orientation. Since its birth as an independent state in 1947, Pakistan has always looked westward, either through the now-defunct Regional Cooperation for Development (RCD), which is an intergovernmental organization with Turkey and Iran as members, or through bilateral ties with the United States and the Arab world (Sobhan 1989: 21). In pursuing such policies, Pakistan’s ruling elites may have been guided by their desire to make their country strong and independent vis-à-vis India. But the policy of moving away from India has strengthened the misperception among Indians about Pakistan’s hostile intentions and untrustworthiness. While the rest of South Asian countries believe that SAARC’s slow progress is primarily due to India’s lack of solid support, Indian policymakers and the press have put the blame on Pakistan. India has always considered Pakistan’s efforts to raise the issue of Kashmir in such international forums as the Non-alignment Summits, the Commonwealth Summits, the United Nations, and the OIC as serious setbacks to regional peace and stability. Indian policymakers have, on several occasions, cited Pakistan’s initiatives and involvement in the OIC and the ECO with Iran, Turkey, and the newly independent Central Asian Muslim republics as evidence of Pakistan’s extraregional orientation and lack of sincerity regarding SAARC.5 Misperceptions about each other’s strength and intentions have played a crucial role in Indo-Pakistan relations. The ruling elites of both the countries, due to insecurity at home, have time and again tried to strengthen this misperception. Pakistan has always justified its policy of external linkages to neutralize India’s domination, while India has sought to interpret Pakistan’s policy as the primary cause of regional tension. The policymakers in both the countries realize very well that they can gain from regional cooperation. But they seem to suffer from a prisoner’s dilemma dynamics and thus seek unilateral advantage by pursuing non-cooperation strategies.6 Over the years, the policymakers of these two countries have been quite successful in conveying this message to their citizens through the help of their press, which has strengthened the citizens’ misperceptions and mutual suspicions. Fourth, Indian leaders’ perceptions, personalities, and styles have influenced the course of regional politics in South Asia.7 Thus, when Morarji Desai became

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India’s prime minister in 1977, his restraining style assuaged neighbor’s anxieties. The Janata government under Desai’s stewardship defined India’s national interest differently and followed a friendly neighborly policy. Bilateral relations among South Asian countries, including Indo-Pakistan relations, improved remarkably during Desai’s premiership. Indira Gandhi, on the other hand, during the pre- and post-Janata regime, was more concerned to assert India’s preeminence and was perhaps less responsive to India’s smaller neighbors. Accordingly, she was less trusted by other leaders of South Asia, and the region was filled with tension and anxieties during her stewardship. Rajiv Gandhi’s eclectic personality and sometimes his indecisiveness were a source of confusion for the region. Both Rajiv Gandhi and Benazir Bhutto were responsible for creating an improved environment, even though it lasted for a short time (1988–89), in Indo-Pakistan relations. But Rajiv Gandhi’s unresponsive attitude toward Nepal on trade matters during 1988–90 and toward Bangladesh on water sharing and Chakma refugee issues during 1988–90 brought enormous tension to their bilateral relationship. Rajiv Gandhi’s policy toward Sri Lanka during 1987–90 was a mixed bag, sometimes appreciated for bold initiatives and sometimes condemned for insensitivity toward a small neighbor. From 1991 to 1995, Prime Minister Narasimha Rao focused on economic liberalization policies and basically pursued a friendly regional policy. Since 1996, India has pursued a dual regional policy – positive unilateralism toward small neighbors and pragmatic bilateralism toward Pakistan. The policy of positive unilateralism, initiated by India’s former Prime Minister, I.K. Gujral in 1996 and pursued since then by successive Prime Ministers A.B. Vajpayee and Manmohan Singh, provides preferential access to the products from small neighboring countries on a substantially reduced tariff basis without any reciprocity. The primary goal of the policy of positive unilateralism is to win the trust of its regional neighbors that can facilitate the growth of South Asian regionalism. While India may have achieved some success in this policy toward small neighbors, its policy of pragmatic bilateralism with Pakistan has remained problematic. India’s policy of pragmatic bilateralism, which combines accommodative diplomacy with combative regional posture, has remained worrisome for Pakistani policymakers and has become counterproductive for the growth of regional cooperation in South Asia.

Future of regionalism in South Asia: some lessons After more than 20 years of existence, SAARC has not produced any significant results. Although some progress has been made, one cannot say with confidence that regionalism is firmly rooted in South Asia. On the basis of our analysis in this book, one can identify the following lessons that can serve as facilitating conditions for the future growth of regionalism in South Asia.

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Lesson 1: recognizing India’s leadership South Asian regionalism is unlikely to grow without India’s serious support. In comparison with other South Asian countries, India enjoys an absolute comparative advantage in almost every sphere. While one can empathize with neighbors’ resentment over India’s overwhelming economic and political influence in the region, India’s dominant power and capability can hardly be questioned. Despite Pakistan’s challenge to India’s regional leadership, it is clear that India is the natural leader in South Asia and has a disproportionate say in the region. While Pakistan’s challenge to Indian leadership in South Asia is driven by historical rivalry, Kashmir dispute, and its objective to achieve balance of power vis-à-vis India, lack of consensus among small South Asian countries on Indian leadership is based on their fear of India’s hegemonic arrogance, potential expansionism, and unsolicited intrusion into their domestic affairs. Generally speaking, there is a lack of trust for India’s benevolent hegemony in South Asia. Indian failure to build trust in South Asia has considerably slowed the progress of SAARC in the past decades. India, on its part, remained less enthusiastic about SAARC primarily because of two reasons: 1 2

potential use of SAARC platform by neighbors to discuss their bilateral conflicts with India; Indian leaders’ belief that India is unlikely to accrue substantial economic benefits from any SAARC arrangements.

However, New Delhi’s reevaluation of its economic and political options in the post-Cold War era drives India to overcome its earlier reticence toward regionalism in South Asia. Since independence, Indian leaders’ have always desired to play a greater role in the global arena. This desire had driven them to play a leadership role in such multilateral forums like the NAM, the G-15, and Commonwealth meetings. These groupings, however, have lost much of their relevance with the end of the Cold War. Indian leaders have realized that for any country to play a global leadership role, the demand of the new global order requires that country to fulfill at least three conditions: 1 2 3

be an important member of WTO; be able to negotiate successful FTAs; be able to demonstrate capability to maintain a stable regional order.

India’s active initiatives in GATT/WTO negotiations, its decision to become a “dialogue partner” with ASEAN, its willingness to become a member of APEC, its eagerness to contribute to G-8 agenda and dialogue on global issues, its active lobbying to become a permanent member of the United Nations Security Council, and its active initiatives to implement SAPTA and achieve SAFTA are indicative of its growing desire to play a more active regional and global leadership role. On

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the issue of SAFTA, Indian Prime Minister Manmohan Singh’s comment at the 13th SAARC Summit in Dhaka in 2006 is instructive. The region risks missing out on Asia’s dynamic economic growth if it does not act speedily on SAFTA . . .. Is SAARC prepared to be an integral part of the emerging Asian resurgence or is it content to remain marginalized at its periphery? This statement implies India’s frustration with the slow progress of SAFTA as well as its keen desire to achieve a FTA through regionalism. To the extent that Indian political leaders perceive that membership in SAARC can lead to political stability in the region and future improvements of India’s bilateral relations with its neighbors, one would expect a validation and strengthening of New Delhi’s commitment toward regionalism in South Asia. In fact, India’s changing attitude toward SAARC is evident in India’s post-1995 policy of positive unilateralism toward its neighbors. This policy seeks to provide preferential access to the products from neighboring countries on a substantially reduced tariff basis without any reciprocity. India’s agreements of bilateral FTAs with Sri Lanka, Bangladesh, Nepal, and Bhutan, which are more or less favorable to these countries, are an indication of India’s willingness to continue its policy of positive unilateralism. India seems to have realized that positive unilateralism serves one of its critical policy objectives – that is to win the trust of its regional neighbors that can facilitate the growth of South Asian regionalism. Indian leaders know well that the success of India’s economic liberalization largely depends upon its ability to increase exports to new markets both in the developed and in the developing countries. Until recently, India has achieved only restricted access to the markets of Japan, North America, and Western Europe due to these countries’ protectionist policies and various kinds of nontariff barriers against Indian products.8 Additionally, with the collapse of the Soviet Union and the gradual incorporation of Eastern Europe into the Western European economies, India has lost two of its privileged market links. In an effort to expand its market links, India has recently taken many initiatives. Some of India’s important initiatives include its active diplomatic role in the formation of the IORARC in March 1997, its desire to join APEC and its renewed focus on the “Look East” policy in order to strengthen its trade ties with the East Asian and Southeast Asian countries. However, although India will continue to explore markets in other regions, it can no longer ignore its own base in South Asia, where it enjoys a comparative advantage in almost every economic sector. Indian leaders have also realized that they cannot expect to win the confidence of the global community without proving their leadership capability to maintain regional order and stability in South Asia. After 2001, almost all of India’s neighbors have experienced deteriorating economic and security conditions. Growing political instability in Pakistan, Bangladesh, and Nepal, continuing turmoil in Sri Lanka, and the worsening security situation in

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Afghanistan following the 9/11 development have led observers to describe these states as “failing states.” India’s concern is that a volatile neighborhood and continuing turbulence in the region will not only lead to a loss of global confidence on India’s capability to maintain a stable regional order, it may also discourage foreign investors who are looking at India as a new economic destination. This may retard India’s growth and its aspiration of becoming a global player. Consequently, achieving peace, prosperity, and stability in South Asia has become one of the top priorities of India’s external policies. Moreover, Indian policymakers also know that as long as South Asia remains one of the world’s least economically and politically integrated regions, China’s growing influence in the region will be difficult to contain. There is a growing consensus among Indian policymakers about SAARC’s potential to insure regional stability, status quo in South Asia, and to provide opportunity for improving bilateral relations through regular informal meetings. Not surprisingly, Indian policymakers have shown renewed enthusiasm for improving India’s relations with its neighbors and for the growth of SAARC in recent years. It is important for Indian leaders to realize that it is much easier to win the trust of regional neighbors and remove their anxiety about a rising India through projection of “soft power” rather than “hard power.” The idea of soft power, as argued by Joseph Nye (2005), is that countries can often best achieve their objectives by persuasion rather than force. While the instruments of hard power are military and economic, the instruments of soft power are cultural and ideological. Soft power arises from the attractiveness of a country’s culture, political ideals, and policies. A country’s soft power is enhanced when its images are seen as positive, and its policies are considered as legitimate in the eyes of others. India’s negative image among its neighbors, as found in this study, requires to be addressed urgently by Indian leaders if they are serious to maintain their leadership in the region. India’s potential for soft power in the region remains significant. Indian films, music, and television shows are quite popular across the region. Despite official censorship on Indian films in Pakistan, DVDs of Indian films are widely available in Pakistan. In higher education, India has some of the finest world-class universities, medical, technological, and management institutes. Although only few South Asian students attend these universities currently because of bilateral problems, these universities can attract more students in future once bilateral issues are resolved. It is encouraging that India’s support for more cultural exchanges in the region has been growing in the past decade. With the final agreement in 2007 to establish a South Asian university in New Delhi with substantial Indian resources, cultural exchanges among South Asians are likely to expand as visits to India from other South Asian countries become even more numerous. Contested leadership will be problematic for regionalism in South Asia. The slow growth of South Asian regionalism in the past decades can be attributed to the lack of consensus on Indian leadership. In the absence of a regional leader,

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coordination problems have become difficult to manage in South Asia, resulting in the slow progress of SAARC. With its rising political and economic power in the global and regional arena, and its leaders’ increasing interest to project their soft power, India holds the key as the main pillar of South Asian regionalism. Lesson 2: finding a political solution to Kashmir dispute The tension between India and Pakistan is a key factor for the slow growth of regionalism in South Asia. At the center of this tension lies the Kashmir dispute. Experts on South Asia agree that territorial disputes over Kashmir remain the most divisive issue in the subcontinent and a major source of bitterness between India and Pakistan. Unless there is a political solution to the Kashmir dispute, prospects of South Asian regionalism will remain uncertain. Although India and other SAARC members are quite willing to give priority to economic cooperation with the logic that deep commitment to economic cooperation between India and Pakistan will eventually address Kashmir dispute, this approach is not acceptable to Pakistan. Given Pakistan’s unwillingness to put economics over politics and its continuation of support to Kashmir militants, political efforts to resolve Kashmir dispute cannot be postponed to a later date if regionalism has to make any meaningful progress. There are compelling economic reasons for the political solution of the Kashmir dispute. First, the trade between India and Pakistan is far below their potential because of the prevailing political tension. Economists argue that the Indo-Pakistan trade can easily see a ten-fold increase over the current trade volume once SAFTA provisions are implemented.9 Second, an end to Kashmir dispute will make it unnecessary for both Pakistan and India to go for high defense spending that holds back their growth by diverting away resources from more productive uses, such as investment in infrastructure. For this reason, the business communities in both the countries support a détente between India and Pakistan. Third, the resolution of Kashmir dispute will benefit other SAARC members too. The conflicts between India and Pakistan have stymied the economic integration in South Asia. The progress of SAPTA and SAFTA has remained modest because of the frictions between New Delhi and Islamabad. There is hardly any issue in the Indo-Pakistan relations which is capable of arousing so much public passion on both sides of the border as the Kashmir dispute. Therefore, Kashmir dispute cannot be set aside as if it will magically be resolved after economic cooperation has been realized. Yet, given the nature of Kashmir conflict, associated with deep-rooted historical and emotional scars, religious and ideological differences, questions of political legitimacy of both India and Pakistan, it is not easy to find a solution within a short span of time. Kashmir conflict can only be addressed in a spirit of compromise. It will require patience, diplomatic skill, and long-term commitment by the Indian and Pakistani political leaders. South Asian political leaders and public must look ahead to goals that bind nations together. To what extent South Asian political leaders will demonstrate urgency and spirit of compromise to resolve this issue remain

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uncertain. But one thing is beyond doubt that an end to the Kashmir dispute would bring enormous economic and political rewards to SAARC region. Lesson 3: establishing a South Asian regional forum While South Asian countries have been focusing on regional economic cooperation with signing of FTAs, there has been little talk of a region-wide South Asian security cooperation. Although security concerns are and have been a major element of South Asian countries’ foreign policy behavior, there is no reference to security in the original SAARC Charter. Many South Asians believe that Bangladesh’s initiative for SAARC and the small South Asian countries’ immediate and enthusiastic response to the idea of regional cooperation may have been based on security considerations – that is to contain an Indian military threat. It is also argued in some quarters that India, after initial hesitation, accepted the SAARC proposal to contain extraregional security links of small South Asian countries, which might pose a threat to India’s security (Bajpai 1990). Despite SAARC agreements on cross-border terrorism and drugtrafficking, cooperation on these issues among South Asian countries, India and Pakistan in particular, has been generally tentative and non-serious. In the past decades, security dilemma has defined the bilateral relations between India and Pakistan, where neither side is willing to give the other a onesided advantage. This has resulted in unhealthy arms race between the two countries, contributing to the deterioration of security environment in South Asia. If regionalism has to sustain in South Asia, a balance must be struck between the security aspirations of India and Pakistan. The primary reason why India and Pakistan have been unable to engage in any meaningful security cooperation is their structural imbalance and pursuit of contrasting policy objectives to address this imbalance. While India, as the preeminent power of the region, seeks to play the role of a regional security manager with a focus on resolving intraregional security issues bilaterally, Pakistan opposes this design and seeks to involve extraregional powers to resolve security issues. With the emerging globalization of regional security in the post-Cold War period and more significantly in the post-9/11 era, India’s approach to manage the security affairs of the subcontinent by itself looks neither credible nor effective. Simply put, India does not have the necessary military, technological, and economic resources to deal with such issues as cross-border terrorism, nuclear security, and drug-trafficking on its own. This realization makes Indian policymakers more receptive to the idea of security multilateralism, which refers to the willingness of major powers to engage in security cooperation with a number of countries to enhance their mutual interest. India’s defense cooperation with the United States, its willingness to cooperate with the United States in Afghanistan, its decision to cooperate with the United States, Canada, and European countries to resolve ethnic war in Sri Lanka, and its willingness to support Commonwealth countries and United Nations to deal with Maoist insurgency in Nepal are indications of New Delhi’s growing commitment toward security multilateralism.

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In the context of this shifting attitude of New Delhi toward security multilateralism, South Asian countries should be encouraged to create a SAARC Regional Forum (SRF) like their ASEAN counterpart, where the ASEAN Regional Forum (ARF) has been operating since 1994. The SRF can bring all members of SAARC and SAARC’s new dialogue partners including the United States, Japan, Australia, China, and South Korea to an annual meeting of foreign ministers to discuss regional security matters. While the immediate success of this institution cannot be guaranteed, its long-term potential remains important for South Asian security and regionalism. The creation of such an institution acquires added urgency because, unlike the ASEAN, two members of SAARC are nuclear powers and their conflicts have global implications. Immediately after their respective nuclear tests of May 1998, both India and Pakistan initiated several measures to engage in constructive dialogues with each other. But, these measures were largely unsuccessful as exemplified by the advent of Kargil war in 1999 and failure of a high-profile Agra Summit between India and Pakistan in 2001. The failure of these steps has reinforced the importance of SRF to provide a regular consultation mechanism to manage conflicts in South Asia. If nothing else, the establishment of such an institution will put pressure on SAARC members, including India and Pakistan, to attend the annual meeting and engage in a confidence-building process. This will also provide opportunity for SAARC members and other major powers to consult with each other and hopefully develop a mechanism to reduce chances of conflict in South Asia. Lesson 4: embracing globalization Regionalism in South Asia is likely to be guided by what Ernst Haas (1990: 65) has described an “ideology of pragmatic antidependency” that seeks to promote regional interdependence among South Asian countries to achieve economic growth without delinking them from the global system.10 Embracing globalization is essential for South Asian region whose economic growth depends on exports to global markets. Sri Lanka’s export-driven economic growth model since 1970s makes global linkage inevitable for its economy. In the post-1990 period, most South Asian countries – India, Bangladesh, Nepal, and Pakistan – have adopted economic liberalization polices and regional trade liberalization policies. However, given their low levels of economic development and small size of domestic (with exception of India) as well as regional markets, these policies are unlikely to produce any significant positive results without global integration. In light of this, it can be argued that the full realization of SAFTA requires global economic integration. Indian leaders know well that the success of their country’s economic liberalization largely depends upon its ability to increase exports to global markets. After decades of slow progress, India’s economy has grown at more than 7 percent a year since the mid-1990s, making it one of the world’s best performance economies for a quarter century. Global market links is necessary for India to sustain its current level of economic growth. Like India, the success of

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Pakistan’s economic liberalization policy depends, among other things, on increasing its exports to the markets of developed and developing countries. In addition, Pakistan also needs substantial FDI from global corporations to boost its economic growth. This economic logic requires Pakistan to maintain strong ties with the United States, China, EU, and countries in Central Asian and Gulf region. The regional security dynamics in South Asia after 1998 made global linkage inevitable for India and Pakistan. Immediately after becoming nuclear weapon capable states in 1998, both India and Pakistan got involved in a border war (Kargil war) in 1999. The anxiety of a possible nuclear attack, however remote it might have been, made intensive engagement of global powers in the region possible. Finally, the global war against terror in South Asia following the 9/11 al-Qaeda attacks on the United States in 2001 brought forces of globalization led by the United States back to the region. Given South Asia’s ever-growing crossborder terrorism, the need for resources to manage nuclear security between India and Pakistan, and to fight against domestic poverty and militancy, South Asian countries are likely to remain open to the support of global powers. The logic of uncertainty of the war on terror and economic growth that requires global market and global investment dictates South Asia’s firm linkage with globalization in the coming decades. Lesson 5: building the support of the quartet – the United States, Europe, Japan, and Russia – for South Asian regionalism Developing countries generally view regionalism as a path to escape from dependency. Yet, South Asian countries have increasingly recognized that growth of regionalism in South Asia will require the support of the quartet, comprising the United States, Japan, Russia, and Europe, for security and economic reasons. Majority of South Asian experts agree that for regionalism to be realized in South Asia, the US involvement needs to be greater than it was during the Cold War period. There is little doubt that SAARC members need substantial economic assistance for their growth. Although the United States has been providing economic support to these countries, more American support in terms of economic aid, investment, and market access is necessary. For India and Pakistan, in addition to economic cooperation, security cooperation with the United States has become increasingly necessary. For the United States, South Asia’s geostrategic importance has increased following its military involvement in the war of terror in Afghanistan and development of nuclear weapons by both Pakistan and India. Pakistani support is critically necessary for the United States to succeed in fighting against al-Qaeda led terrorists forces. At the same time, the United States seeks active engagement with New Delhi for two reasons: strategic and ideological. Strategically, the US–Indian cooperation will provide Washington with some ways to manage China’s growing influence. Ideologically, the United States is pleased to present India’s rise as an economic power as a successful example of the linkage between liberal democracy, principles of

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Washington consensus, and sustained economic growth. Given this mutuality of interest between the United States and two major South Asian countries, building of the US support for South Asian regionalism will not be difficult. Europe remains the best example of regionalism. In their pursuit of deeper regionalism that requires development of regional institutions, South Asian countries can learn from the EU about what works and what does not work. South Asian countries have growing economic and political ties with some European powers. Given the enormous economic need of the South Asian countries, there is a need to strengthen economic cooperation between Europe and South Asia. Although many smaller European countries have been critical of the nuclear developments of India and Pakistan, and the nuclear deals between the United States and India, two nuclear powers of Europe, France and the United Kingdom, have been supportive of India’s new status. Although critical of South Asia’s record of human rights, the EU countries seek engagement with South Asian countries for peace-keeping purpose. NATO is involved in the war of terror in Afghanistan. Norway and the EU are actively involved in resolving Sri Lanka’s civil war between Tamils and Sinhalese. In the last several years, many EU countries including France, the United Kingdom, Germany, and Italy have started to seize economic opportunities in India. France and the United Kingdom have also been supportive of New Delhi’s regional and global leadership aspirations in such multilateral forums as the United Nations and G-8 group. Overall, strengthening economic and security cooperation between the EU and South Asian region will be mutually beneficial. Japan has emerged as an important partner for South Asian economic development. It has been one of the largest donors of ODA to South Asian countries in the past couple of decades. Although not comparable to Southeast Asia, Japanese investment in South Asian countries – India, Pakistan, Bangladesh, and Sri Lanka – has been growing. In fact, along with the ADB, Japan has shown interest in joint regional projects in the area of infrastructure development. Needless to say, such infrastructure projects if come to fruition with the help of Japanese assistance will be extremely beneficial for the growth of regionalism in South Asia. Japan’s relations with India and Pakistan deteriorated after 1998. Responding harshly to the nuclear tests by India and Pakistan, Japan resorted to economic sanctions and diplomatic actions to censure India and Pakistan in the United Nations and other multilateral forums. However, Japan’s fear of a growing China, strong military cooperation between India and the United States in the post-2001 period, India’s increasing attraction as a large market, economic power, and as an IT service provider led Japan to significantly improve its relations with India after 2001. During his visit to New Delhi just two weeks after Chinese Premier Wen’s visit in April 2005, Prime Minister Koizumi announced a close “strategic partnership” with India, recognizing India as a key player in Japan’s long-term plan for Asian security and economic prosperity. Despite China’s opposition, Japan took initiatives to invite India to participate in the inaugural East Asian Summit in December 2005. On its part, India has

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recognized that it is extremely beneficial to strengthen its cooperation with Japan for three reasons – economic benefit due to growing Japanese FDI in India, big IT opportunities in Japan for Indian companies, and Japan’s critical role in maintaining a balance of power in Asia. Further strengthening of bilateral relationship between two Asian democracies is expected and will be guided by their concern for potential threat from China and calculation of mutual economic benefits. At the same time, Japanese investment interest in other South Asian countries are also likely to grow as a part of its need to diversify its Asian economic portfolio. If SAARC is perceived to be instrumental in mitigating political risks for Japanese investment in South Asia, Japan’s interest in the growth of South Asian regionalism is likely to grow. Although Russia’s influence has significantly declined after the end of the Cold War, Russia’s contribution to the growth of South Asian regionalism cannot be underestimated. Pakistan will always suspect Russia’s motive because of its close relations with India and support to India’s global leadership aspiration and stance on Kashmir. However, President Putin’s policy to support the war on terror in Afghanistan, open condemnation for Islamic militancy schemes to kill General Musharraf, and improved relations with China has contributed to Islamabad’s reduced fear about Moscow in South Asia. With its surplus of oil and gas resources, Russia can play an important role in South Asia, where energy security is a growing concern. In fact, by actively participating in regional energy projects and management, Russia can effectively address India’s and Pakistan’s growing energy needs. Given its key role and position in the politics and economic management of Central Asian countries, with which South Asian countries’ economic and political cooperation is likely to grow in future, Russia’s participation in South Asian regionalism should be welcomed. Lesson 6: encouraging China’s active involvement Given its geographical proximity to five SAARC member countries (India, Pakistan, Nepal, Bangladesh, and Bhutan), China is an important player in South Asian political and economic landscape. While China’s relations with South Asian countries have remained more or less constructive, its relations with India have fluctuated over the past years. The Sino-Indian dispute in 1962 and India’s defeat in the hands of Chinese military in that war had made Indian leaders extremely distrustful toward China. From India’s perspective, China’s motives have often been suspect, given its close friendship with Pakistan and sympathetic support to Nepal’s economic and political causes. During the 1960s, 1970s, and 1980s, Indian leaders feared that China was too close to Pakistan and an integral part of Pakistan–US–China nexus. Preventing China from gaining excessive influence in India’s neighborhood and Indian leaders’ deep-seated reluctance to play a second fiddle to China in Asia also shaped India’s cautious and not-so-friendly foreign policy toward China during the past decades. However, the Sino-Indian relations have improved significantly since 1992 because of growing economic cooperation between the two countries.

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Pakistan has always found China’s friendship reliable. Since 1960s, China has been a steady economic and military partner with Pakistan, providing huge economic and military assistance, including nuclear technology. Bangladesh and Nepal often like to play the “China card” to neutralize Indian influence. After 1990s, China’s economic influence in Bangladesh has grown. Overall, given China’s growing economic and political influence, South Asian countries are likely to offer China a larger role in their economic plans. Not surprisingly, all SAARC members, except for India, supported China’s membership in SAARC as an observer since 2003. In 2005, SAARC admitted China with an observer status when India dropped its opposition to China’s membership. India’s shift toward China from hostility to friendly overtures can be explained by the political and economic developments since 1992. With the disintegration of Soviet Union, China’s lessened worry about India as a client of Soviet Union enhanced prospects for improved Sino-Indian relations. The signing of a “landmark agreement” between China and India in September 1993 to reduce troop levels in the mountainous borders of two countries and to honor the existing border in the disputed territory of Arunachal Pradesh in northeastern India after three decades of hostility is an indication of this improved relations. In addition, China’s promise of not talking about Kashmir publicly after 2002 and to categorize Kashmir dispute as a bilateral dispute that should be resolved on the basis of bilateral negotiation between India and Pakistan has earned appreciation from India. The Chinese leaders, on the other hand, interpret American tilting to India in the post-Cold War period as a strategic move to counter China’s growing military and economic influence in Northeast Asia, Asian region, and beyond. Chinese leaders have realized that improving relations with India will be strategically much more productive than isolating India. Recently, growing trade and business transactions between China and India (in 2007, China was the second largest trading partner of India) has brought these two giants of Asia together. In addition, the need for energy security by both India and China has enhanced the prospects of their strategic cooperation. In 2003, in a spirit of compromise, India communicated to China about its decision to seek settlements of its border dispute with China on a political basis rather than on the basis of legal and historical claims. Reciprocating India’s gesture, Chinese Premier Wen Jiabao agreed on a set of political principles to guide the final settlement of Sino-Indian border dispute during his visit to New Delhi in April 2005. With improving Sino-Indian relations, and China’s enormous potential to contribute to South Asia’s economic development and political stability, China should be encouraged to play more active role in the growth of South Asian regionalism. Lesson 7: promoting regional identity Despite their shared historical, political, and cultural experiences, South Asians have reservations about their regional identity. Narrow national identities, reinforced by mutual distrust and problems in bilateral relations, prevail in South Asia and have shaped each country’s interactions with neighbors in the past

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decades. Such an environment is hardly conducive for the growth of regionalism. What is required in South Asia is a determined and consistent effort by South Asian leaders to overcome narrow national identities. To achieve this, South Asian leaders must redefine and take a more consistent long-term view of their national interests consistent with the goals of regionalism. While the redefinition of national interest – in terms of political, economic, and security interests – will take time, immediate actions in the following areas can be initiated to strengthen regional identities in South Asia. The transnational connections forged through sports, music, tourism, personal travel, contacts, and interaction among citizens will deepen regional interdependence and promote peace in South Asia. It is widely acknowledged that people who travel to another country often develop both a deeper understanding and a deeper appreciation for it. People who maintain person-to-person contacts and friendships across borders seem to be less favorably disposed to regional conflicts. Despite the enormous potential of tourism in South Asia and SAARC’s recognition of its benefits, tourism programs have not really caught on the popular imagination because of an utterly inadequate information campaign regarding the facilities each country provides to the SAARC tourists. Given the substantive benefits of cross-border travel and tourism to create a regional awareness, the South Asian governments, with the help of SAARC Secretariat, should improve their propaganda efforts in media to reach out to more people. There is also a necessity to increase and make the SAARC scholarship programs more widely known to raise the number of exchange students in the region so that more and more students can learn about the neighboring countries and share their experiences with each other. Such kinds of networking will improve regional sensitivity among the younger generation of the South Asian countries. In this area, India can play a crucial role. With its world-class educational institutions in the field of technology, science, medicine, and business, India can offer more incentives to students from all over South Asia to benefit from its educational facilities. In this context, the decision taken by SAARC countries in 2007 to open a South Asian university in New Delhi with substantial Indian resources is encouraging. The full operation of this university is likely to increase cultural exchanges among the younger generation of South Asia and thus establish a foundation of deeper understanding and appreciation of neighboring countries. It is a positive development that the South Asian countries have agreed to relax visa regulation for members of Parliament, Supreme and High Court judges, senior journalists, and academic chairs of the universities for intraregional travel. However, further visa relaxation is necessary to facilitate wide interaction among the general public in South Asia. Sometimes, when heads of state do not see their common interests because of political imperatives, ordinary citizens try to raise awareness of such mutual interests on both sides. Travel and discussion by private individuals and groups toward this end have been called citizen diplomacy, and it occurs fairly regularly (though not very visibly) when

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conflicting states are stuck in a cycle of hostility. Citizen diplomacy has been particularly successful in the context of Sino-American rapprochement in 1970s and US–Russia relations in 1980s.11 It is encouraging to note that citizen diplomacy, as evident in the growing number of meetings of journalists from South Asian countries, private visit of prominent citizens both as a group and individually to various South Asian countries, visit of SAARC citizen group, which comprises prominent citizens from the SAARC countries, to supervise elections in the neighboring country and discuss important matters of mutual interests, appear to be gaining popularity in South Asia. Further visa relaxation in South Asia is necessary to facilitate travel of more ordinary citizens and promote citizen diplomacy. Sports competitions among South Asian countries held annually since 1984 under the auspices of South Asian Federation Games (SAF) appears to have captured the imagination of sports enthusiasts in South Asia. This is good news for SAARC. Sports are often seen as a force for peace. Although sports competition may sometimes stir up nationalism and animosities between neighbors, sports also bridge differences, promote friendship, create a sense of participation in a supranational community, and bring people from different countries together in shared activities (Allison 1993). In the context of sports some thoughts can be given to utilize cricket, the most popular game in South Asia, to generate active interest in SAARC activities. Next to war, cricket seems to have the most emotional appeal in South Asia. In fact, there are some evidence to suggest that South Asian leaders have employed “cricket diplomacy” successfully to address Indo-Pakistan tension. For example, the late President of Pakistan, Ziaul Huq, employed “cricket diplomacy” very effectively to diffuse Indo-Pakistan border tension created by “Operation Brasstacks” in the winter of 1987. Similarly, President General Musharraf used “cricket diplomacy” to restart peace dialogue with India in 2004. President Jayawardene of Sri Lanka watched a cricket match with Prime Minister Rajiv Gandhi of India in 1987 when the talk of an IPKF seemed to have been initiated. Given the enormous popularity of cricket in South Asia, a cricket camp for South Asian youth can be organized with star players from South Asian countries participating as coaches. Informal coaching by Pakistani cricketers to Indian players and vice versa regularly occurs during their visits to each other’s country and even at the international cricket competition venues. Such programs will go a long way to bridge the gap among the younger generations of South Asia.12 Socially constructed knowledge, as Ernst Haas (1990: 73–75) has argued, is extremely crucial for the policy-making process because it shapes the world view of the decision-makers and thus influences their reaction to particular issue areas and determines their modes of interaction at national, regional, and international level.13 Similarly, people’s reaction to a particular decision or institution is based on their level of knowledge. As discussed in this book, even most of the educated citizens of South Asia appear to be ignorant about SAARC and each other. Lack of knowledge about each other has led to misunderstanding and mutual prejudices among South Asian neighbors. One of the important goals of

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SAARC and the South Asian ruling elites, therefore, should be to create an effective public information campaign. Without an informed public, most of SAARC’s goals cannot be accomplished. As found out in this book, a high perception of inequity in India and Pakistan is a major impeding factor for the growth of SAARC. It is urgently necessary, therefore, for the governments of both India and Pakistan to address this issue. Commonsense perceptions among Indians and Pakistanis may not be in proportion to the “economic reality.” In order to rectify this misperception, the governments of India and Pakistan should carefully provide information to their citizens as to how these two countries’ net budget contribution to SAARC is proportional to the “peace dividend” in South Asia. It will not be a very hard sale to convince the citizens of India and Pakistan that peace and stability in the region can save these two countries substantial amount of revenues which are currently spent on the acquisition of unproductive defense arsenals. The envisaged public information campaign cannot be assumed to have immediate or dramatic effects on the perceptions of South Asian public regarding SAARC. But it surely can be argued that a carefully conceived campaign by the media, governments, and the Secretariat can raise the salience of SAARC, thereby generating public interest on the regional cooperation issues in South Asia. A clear and honest feedback – not in the form of dull, abstract statistics, but in a form consistent with commonsense views – should be provided to South Asian peoples on what has so far been achieved and what can be realistically achieved. In this effort, the media in SAARC member countries should play a supportive role. So far, a vision of regionalism is lacking in the media coverage. A vision of regionalism can temper the degree of nationalism and emotional intensity with which the media covers bilateral conflicts between South Asian countries. In the past decades, the media coverage, based mainly on narrow national interests, contributed to misperceptions and the level of distrust among South Asian countries. A reversal in this type of coverage will improve the basis for mutual understanding in South Asia. Lesson 8: learning from other regional groupings SAARC is a case of “late regionalism,” which refers to the development of regionalism through learning. Regional organizations in one area can learn lessons from, or what Etzioni describes “fashion” its growth after the experiences of other regional organizations in other areas (1991: 317). Being a case of late regionalism, SAARC has the distinctive advantage of avoiding the pitfalls of other regional organizations that led to their decline. At the same time, SAARC can incorporate their successful principles. From LAFTA’s case, it is obvious that embarking on an overambitious project of free trade may not be practical or even desirable for developing countries and South Asia in particular. A slow, cautious, and gradual approach to regionalism, as demonstrated by ASEAN, appears to be the best strategy for South Asian countries. Cooperation at micro-level and then advancement to the macro-level, as the Nordic Council’s

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experience reveals, may be more appropriate for the growth of regionalism in South Asia. Some principles of “late regionalism” have been articulated by various scholars in various ways. Michael Haas (1992: 240), for instance, has suggested the following six principles: (1) respect for the equality of cultures (rather than hierarchical, coercive methods of conducting diplomacy), (2) consensus building (rather than value maximization), (3) incrementalism (rather than blueprintish grand designs), (4) attention to principles (rather than technical details), (5) unique solutions (rather than universalistic remedies) and (6) a stress on cooperation (rather than integration) Michael Antolik (1990) has proposed two principles, i.e. (7) self-restraint, as demonstrated by non-interference in other’s domestic affairs, and (8) mutual accommodation. To these eight principles, two more might be added: (9) accepting a gradual timetable and (10) open regional communications to create an awareness among the public about the potential benefits of a regional organization. The last principle is important because a regional organization can be maintained only as long as both the political leaders and the public of the member countries perceive its continued existence as advantageous to them. While six of the above ten principles of late regionalism are already found in South Asia, the remaining four – i.e. (4) attention to principles (rather than technical details), (7) self-restraint as demonstrated by non-interference in other’s domestic affairs, (8) mutual accommodation, and (10) open regional communication – appear to be absent. The sooner SAARC leaders are able to adopt these principles, the better the prospects of SAARC’s growth will be. Lesson 9: building “engines” of regional cooperation Some “engines” of regional cooperation need to be developed within South Asia for South Asian regionalism to move forward. The most important engines are joint projects, transportation corridors, energy grid, monetary cooperation, and South Asian Development Fund (SADF).14 Development of joint projects, big or modest scale, by SAARC countries will bring visibility to South Asian regionalism. SAARC countries should negotiate with the United Nations Development Program (UNDP) and ADB for the development of joint projects. Some innovative approaches such as the ADB’s vision of growth triangles merit serious attention. Development of joint projects with the assistance of ADB in smaller units can create new opportunities and help establish linkages with other regions. For instance, promising economic opportunities exist, and with respective governments’ support, extensive economic cooperation is possible in parts of Bangladesh, Northeast India, Myanmar, and Thailand, or South India, Sri Lanka, the Andaman and Nicobar Islands, and Northwest Indonesia. There are other joint projects possible in

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South Asia – that is oil and gas pipelines between India and Pakistan, hydroelectric projects between India, Nepal, Bhutan, and Bangladesh, joint road and railway projects between India, Pakistan, and Bangladesh, joint energy grid between Sri Lanka and South India. Developments of such joint projects have at least two important implications for regionalism. First, it will generate trust, calm fears, and enhance confidence-building process among South Asian countries. Second, joint project planning and implementation has the potential for turning the rivalry between India and Pakistan into a workable partnership. That, itself, will be a significant achievement. Improved transportation facilities in each member country and their integration across the region are an important engine for the growth of regionalism in South Asia. Most of the South Asian countries have inherited common transportation infrastructure – such as railways, roads, inland water transport, and ports – from the British. However, after independence, regional transport linkages were broken due to what Rehman Sobhan calls “pathologies of inter-state and domestic politics” (2005: 10). Much of the transportation infrastructure in South Asia is in bad condition. There are several studies which indicate that lack of transportation connectivity and the costs associated with it is a serious impediment to the growth of regional trade and cross-border interaction among people in South Asia (Dubey 2005: 32–33; Sobhan 2005: 10–11). Many of the transportation infrastructure projects can be rebuilt or repaired with reasonable cost. The existing road and railways facilities when repaired can enable Indians, Pakistanis, and Bangladeshis to travel via bus or train to various urban centers in Delhi, Mumbai, Kolkata, Lahore, Karachi, Islamabad, Dhaka, and Chittagong more frequently. In addition to the obvious advantages of increasing crossborder travel of South Asians, such transportation linkages will also significantly reduce the cost of intraregional trade. For example, imports of a consignment of cotton from Pakistan by Bangladeshi textile industry currently take 40 days to move from West Punjab to Chittagong via Karachi with trans-shipment in Colombo or Singapore. A freight train from Lahore moving across India can bring the same consignment of cotton to Dhaka within four days (Sobhan 2005: 10). Similarly, transportation of a container from Delhi to Dhaka takes 45 days now. It will take only two to three days through railway traffic. According to one estimate, transportation of goods from northeastern part of India to Kolkata via Chittagong airport in Bangladesh will cut the total journey time by 60 percent (Dubey 2005: 32). Since no transit facilities through the Pakistan territory are allowed for Indian goods being transported to Afghanistan and beyond to Central Asian countries, India is currently incurring huge costs by using circuitous routes through Iran to reach these destinations. By denying transit facilities to Indian goods, Bangladesh and Pakistan are foregoing freight and license charges in foreign exchange amounting to billions of dollars. The obvious benefits of building and integrating transportation facilities across the region are compelling to pursue these projects seriously. South Asian leaders promised to take urgent action on this issue at the Islamabad

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Summit in 2004. So far, however, there has been very little concrete action on this issue except for few official talks. Building adequate transportation infrastructure and establishing their connectivity across the region is a challenge given their cost and political tension among South Asian countries. While the “cost challenge” can be overcome by seeking financial assistance from multilateral institutions and private sectors, the “political challenge” remains critical. But this challenge needs to be seriously addressed for the growth of regionalism in South Asia. In South Asia, India and Pakistan are energy deficit countries and share serious energy security concerns. In contrast, Nepal and Bhutan have vast hydropower potential through their river waters and Bangladesh has natural gas potential. Coordinated development of these various energy resources and their trading in the region will be substantially beneficial for SAARC members. There is a need for common distribution system in the region based on single regional grid which interconnects the national grids. Such a coordinated effort will go a long way in enhancing the prospects of regional cooperation. Another coordinated effort which can prove useful for the growth of regional cooperation is the laying of pipelines across the region for the transportation of gas from Bangladesh and Myanmar in the East, and from Iran, Qatar, and Turkmenistan in the West, to India and Pakistan (Dubey 2005: 34). Monetary cooperation is often considered as critical for deeper regionalism. Apparently impressed by the implications of a single currency (Euro) on European integration process, India’s Prime Minister A.B. Vajpayee suggested for the adoption of a common currency for South Asian region in January 2004. The realization of a single currency requires harmonization of economic policies in the area of exchange rates, interest rates, fiscal deficits, price support mechanisms, etc. Establishment of a free trade area and a Custom Union are generally considered as preconditions for achieving the harmonization of economic policies. South Asian countries are far away from these goals. While adoption of a single currency will take a longer time period, two other measures of monetary cooperation hold greater promise for South Asian countries. First, SAARC members can create a South Asian Monetary Fund (SAMF) to provide hard currency to a member country facing monetary and other balance-of-payment crisis. Given its economic growth and considerable accumulation of reserves of foreign exchange, India will have to play a key role in this scheme. Second, the South Asia Development Cooperation Report in 2004 floated the idea of creating a parallel regional currency which can be used parallel with the national currencies of the individual member countries. Explaining the dynamics of this parallel currency, Muchkund Dubey, a member of SAARC Eminent Person Group (EPG), observes: This currency would amount to Supplementary Drawing Rights (SDR) at the regional level and can be used as a unit of account for settling transactions under regional arrangements, like payments under a clearing system. . . . It can also be used for funding the creation of regional public goods in

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the area of transport and communication, energy, information technology, bio-technology, food security, tourism and science and technology. (2005: 31) This is an important idea, which will facilitate the growth of regional institutions. South Asian countries must give serious consideration to this idea to move their goal of regionalism forward. Finally, it is necessary to put the already established SADF into action. The SADF came into existence more than a decade ago but has remained inactive because of lack of adequate resources. The SADF can undertake large regional infrastructure projects to improve infrastructure facilities in South Asia. In addition, the SADF can finance poverty-alleviation programs, provide lending to a comprehensive human resource development program, support intraregional and extraregional trade by arranging finance for export credit and commodity stabilization, and support the operational expenditure of the existing SAARC institutions. Resources for the SADF can come from contributions of South Asian countries, external sources, regional and international financial institutions. Revenues for the Fund can also be generated through regional and international capital markets. Japan has already shown interest in contributing 20 percent of Japanese ODA to a common SAARC fund. Other donor countries like the United States, the EU countries, Canada, and OECD members can also be persuaded to contribute some percentage of their ODA to the SADF. If adequate resources are available to SADF, it will be able to provide the much-needed financial support to regional projects, the completion of which will strengthen regional interdependence among the South Asian countries. What South Asia needs today is peace, stability, prosperity, and international recognition, objectives that can best be accomplished through enhanced regional cooperation. Given the nature of the nation-building process in South Asia, SAARC may not be able to provide immediately any molecular attraction that will induce the member states to act in unison. Bilateral differences will persist, and they are likely to be addressed through bilateral negotiations. SAARC may be able to facilitate dialogues among the South Asian ruling elites and to serve as a supplementary method for advancing national development. While the leaders of Bhutan, Maldives, and Nepal will continue to support SAARC for the purpose of security, international prestige, recognition, and some economic benefits, the leaders of India, Pakistan, Bangladesh, and Sri Lanka are likely to support SAARC for the purpose of peace and stability at home and in the region and economic benefits. It is reasonable to believe that the ruling elites of South Asian countries have realized that there is no alternative to SAARC. The alternatives to SAARC are economic nationalism, destabilization, social conflicts, and ultimately political tensions that may escalate into war. Thus, SAARC appears to provide a possible path toward a stable South Asian regional order. At this critical moment of history, it seems unlikely that the ruling elites in South Asia will ignore SAARC and thus miss a splendid opportunity for peace and development.

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South Asian regionalism is likely to be based on leadership initiatives from India, a path-breaking accord between India and Pakistan over Kashmir dispute, openness to globalization, and some special arrangements for China and the quartet forces – the United States, EU, Russia, and Japan – so that these countries remain involved in South Asia’s regional cooperation activities and share South Asia’s inclusive rather than exclusionary vision of regionalism. There is a need for incremental growth of deeper regional cooperation and fostering of regional identity that can deepen as select number of engines of regionalism tie South Asian countries together, strengthening their mutual trust and confidence. The burden of high expectations for progress combined with South Asian countries’ low preparedness to win mutual trust has shaped the contours of development of South Asian regionalism over the past two decades. These contours of development, to say the least, are disappointing. The credibility gap between expectation and performance of SAARC has led many observers to ask the question, Will regionalism in South Asia ever take off? What is needed for the growth of regionalism in South Asia is a shared will, bold thinking for deepening cooperation, and high preparedness of South Asian leaders to win mutual trust. What are not needed are excessive optimism, grandiose goals, and bunch of political rhetoric that is not based on ground realities.

Notes

1 Introduction 1 In North America, a FTA between the United States and Canada was signed in 1989. This agreement grew into the NAFTA when Mexico joined in 1994. Since 2001, China and Japan have been actively engaged in signing number of FTAs with ASEAN countries. In the post-2001 period, ASEAN+3 (that is ten members of ASEAN plus Japan, China, and South Korea) has emerged as a significant regional cooperative arrangement in Asia. For various regional cooperative arrangements and initiatives in Northeast Asia, see Rozman (2004). 2 Expansion of European integration activities include the creation of a Single Market in 1992; the signing of Maastricht Treaty in 1992 seeking monetary union (EMU) and closer political union; the signing of European Economic Area (EEA) in 1992; the expansion of the EU in 1995 by admitting new members – Austria, Finland, and Sweden; and the enlargement of EU in May 2004 by admitting ten new members – Cyprus, The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. 3 Jagdish Bhagwati (1993: 26), for instance, has predicted a fragmented world of four blocs: an augmented EC; NAFTA extended into the Americas; a Japan-centered Asian bloc; and a fourth bloc of marginalized nations such as those of South Asia and Africa. 4 Ernst Haas (1990) has constructed five world-order ideologies – classical liberalism, managed liberalism, structural antidependency, pragmatic antidependency, and ecoholism – to explain various purposes and forms of collaboration among the nationstates. For an explanation of these five types of ideologies and examples of regional organizations based on these ideologies, see Haas (1990: Chapter 4, 225–226). 5 The term “deep cooperation” is used in this study to describe relentless efforts by governments to cooperate in developing and implementing common norms or rules in a particular area, such as trade, security, and economic welfare. Efforts to set common norms may be limited to intergovernmental cooperation or may involve a decision to develop supranational institutions for rule-setting. Deep cooperation is different from “deep integration,” the term favored by Lawrence (1996: 7), in terms of scope of coordination of economic policies. Deep integration refers to agreements such as the EU that aim at achieving some measure of economic union and that create supranational institutions for pursuing this goal. In this study, deep cooperation is used for less far reaching coordination on domestic policies and regulations. 6 For an insightful discussion comparing Deutsch and Durkheim, see Merritt and Russett (1981: Chapter 7). 7 Although the concept of “spillover” is central to the neo-functionalist thought, the term is used in the functional theory through such euphemistic phrases as “ever-widening circles.” 8 For a full discussion of the implications of these variables – system capacity, support,

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demand, and leadership – on the development of regional integration, see Lindberg and Scheingold (1970: 115). 9 Max Weber’s theory of social change seems to have influenced the central perspectives of integration theorists. Weber had shown how capitalism’s demand for rational calculations was responsible for certainty and stability in the society. Stability was created, according to Weber, by the emergence of rational-bureaucratic nation-states and society’s recognition and dependence on legitimate central authority. The integration theorists presumed that transformation of anarchic international order was possible by the creation of legitimate supranational authorities over states. For an overview of this literature, see Genco (1980: 55–80); Crawford (1991: 438–468). 2 Explaining regional cooperation in South Asia 1 Rosenau’s (1967) discussion of differences between domestic policy and foreign policy issue areas offers useful insights to my analysis of regional cooperation as a community policy issue area. For some excellent reviews of literature and critical examination of Rosenau’s conceptualization of issue areas, see Potter (1980: 405–427); Evangelista (1989: 147–171). 2 Shepherd (1975) provides an earlier support for this view. 3 For a representative literature on the second-image-reversed perspective, see Gourevitch (1986); Rogowski (1989); Katzenstein (1985); Milner (1988); Frieden (1991). 4 For representative literature, see Huelshoff (1994: 255–279); Sandholtz and Zysman (1989: 95–128); Keohane and Hoffmann (1991); Moravcsik (1991); Bulmer (1983: 349–363); Eichenberg and Dalton (1993: 507–534); Parker and Peel (2003). 5 For a discussion of this view, see Hiden and Farquharson (1989); Ra’anan (1983); Gunther (1980). 6 For insightful discussion on statist literature, see Nordlinger (1981); Katzenstein (1978); Krasner (1984: 223–246); Rockman (1989: 173–203). 7 For an excellent review of this literature, see Mitchell (1991: 77–96). For various categorization of the term state in the non-Western context – such as hard state, administrative state, soft state, bureaucratic polity, and repressive-developmentalist state – see the review of statist literature by Crone (1988: 252–268). For an excellent discussion of states as quasi-states, see Jackson (1990). 8 For an extension of this argument, see Huelshoff (1994: 264–265); David (1991: 16–17). 9 This discussion is based on Huelshoff’s argument. For an excellent discussion on weak and strong governments and their respective preferences for regional cooperation policies, see Huelshoff (1994: 262–264). 10 This argument relies on the burgeoning literature concerned with such issues as the development and form of state structures, their capacity and autonomy in particular contexts, and the interaction of the state with various societal groups and organizations. Among the many studies in this area, see the following major works: Evans et al. (1985); Nordlinger (1981); Miliband (1969); Krasner (1978); Midgal et al. (1994). 11 For an explanation of “stop-and-go” pattern of regional cooperation, see Schneider and Cederman (1994: 636–638). 12 For systematic elite studies on regional integration, see Deutsch et al. (1967); and for systematic elite studies on South Asian foreign policy issues, see Free (1950); Singer (1964); Cortright and Mattoo (1996). 3 Regional dynamics 1 On June 1, 2001, Crown Prince Dipendra, using automatics weapons, massacred almost the entire royal family, including his father King Birendra, his mother, his

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sister, his brother, and then shot himself. Gyanendra, King Birendra’s brother and the nearest surviving male kin, was anointed as the next monarch of Nepal following this unfortunate incident. For an excellent survey of the realist principles embedded in the mandala, see Modelski (1964: 549–560). For a modern translation of The Arthashastra, see Rangarajan (1987). See Alberuni’s India edited by Sachau (1991: 22). Alberuni, whose full name was Abu-Raihan Muhammed Ibn Ahmad al Beruni, was taken prisoner my Mahmud of Ghazni in Khiva and accompanied him to India as a court historian. The sepoy mutiny of 1857 has been described as an uprising by Pakistani historians, a mutiny by the British, and the First War of Independence by Indian nationalists. Quoted in Sherwani (1990: 10); also see Cohen (2004: 28). The leaders of the Pakistan movement referred to India’s Islamic period as a golden era during which much of high cultural, material, and spiritual progress was achieved. Hindu nationalists, on the other hand, portrayed the Muslim rule as a dark age, marked by the mass destruction of places of worship, forced conversions, and a frontal attack on Hindu social order. While historians debate over the exact casualty figures, it is commonly estimated that approximately 500,000 Hindus, Muslims, and Sikhs were killed during the tragic process of partition (Baxter 1991: 59). Quoted in Ganguly (2001: 32). Siachen Glacier, which is 75 kilometers long, is located in the Karakoram Range in the disputed state of Jammu and Kashmir. Referred to as “Third Pole” because of its extremely inhospitable cold climate (the surface temperature on the glacier drops to minus 40 degree Celsius in the winter and blizzards in the area can generate winds up to 150 knots), the glacier was not adequately demarcated in the 1965 and 1971 CeaseFire Line (CFL) agreement between India and Pakistan. It was, therefore, possible for both India and Pakistan to stake their claim over the glacier. Because the Siachen Glacier Complex was situated along the disputed territory of Aksai Chin (the area, India claims, was illegally ceded by Pakistan to China), India considers it strategically important. Although analysts differ as to which of the two countries (India or Pakistan) staked its claim over the glacier first, overwhelming evidence suggests that India did deploy troops on the glacier first to establish its claim. For a detailed discussion on this dispute, see Ganguly (2001: 83–85).

4 Origin and evolution of SAARC 1 Bajpai (1990) has argued that Bangladesh launched serious initiatives for regional cooperation in South Asia after its approach to ASEAN for membership was turned down. Bajpai’s assertion, however, is not based on firm evidence. See for a discussion, the dissertation of Kanti Prasad Bajpai (1990: 50–53). 2 For an extensive discussion on various external and domestic moves and initiatives concerning the growth of regionalism in South Asia, see Muni and Muni (1984: Chapters 2–3); Bajpai (1990: Chapters 1 and 4). 3 Interview with former secretary of External Affairs Ministry in New Delhi, December 17, 2002. 4 The linkage between the leaders’ concern for legitimacy and political survival and their policy preferences for cooperation with powerful neighbors has been well explored by Steven David in what he called an “omnibalancing theory.” For an explanation of this theory and how it is different from the balance-of-power theory, see David (1991: 233–256). 5 For the Bangladesh draft paper and the areas or items suggested for cooperation, see Muni and Muni (1984: 35). 6 See Dhaka and Bangalore Summits’ declarations and joint press releases, Kathmandu, 1986, p. 2.

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7 The Bangladesh Observer, on December 6, 1985, published an interview with the Pakistan President, Ziaul Haq, who eloquently spoke about the common heritage, culture, and necessities of regional cooperation in South Asia. He also mentioned the utility of a regional identity in South Asia and Pakistan’s sincere desire to make SAARC a success. Similarly, all the leading newspapers in South Asia carried headline news and editorials quoting statements from their respective leaders about the positive aspects of regional cooperation in South Asia and the readiness of their countries to make this endeavor fruitful. 8 See, SAARC (1988) published by Lok Sabha Secretariat, New Delhi, p. 53. 9 The MOU on the Establishment of the Secretariat was singed on November 17, 1986, at Bangalore, India, by the foreign ministers of the seven member countries of SAARC. The Memorandum contains 16 articles, which spell out various aspects of the Secretariat. My discussion about the features of the Secretariat is based on these articles. 10 The eight secretary generals of SAARC are Abul Ahsan from Bangladesh (January 16, 1987–October 15, 1989); Kant Kishore Bhargava from India (October 17, 1989–December 31, 1991); Ibrahim Hussain Zaki from the Maldives (January 1, 1992–December 31, 1993); Yadav Kant Silwal from Nepal (January 1, 1994–December 31, 1995); Naeem Ul Hasan from Pakistan (January 1, 1996–December 31, 1998); Nihar Rodrigo from Sri Lanka (January 1, 1999–2002); Q.A.M.A. Rahim from Bangladesh (January 11, 2002–February 28, 2005); Chenkyab Dorji from Bhutan (March 1, 2005–2008). 11 Some of the important achievements of SAARC during the first decade are as follows. In 1987, a permanent SAARC Secretariat was established in Kathmandu. The SAARC Audio-Visual Exchange Program (SAVE) became operational in November 1987. The same year, a SAARC Food Security Reserve of 2,415,680 tons of wheat and rice was established for use by member states in times of natural calamities. The decision to operationalize SAPTA is by far the most important achievement of the Delhi summit in 1995. 12 Colombo accused India for wrecking the Summit. See particularly the editorials of Daily Observer and Daily News, November 8–9, 1991. Front page articles in Pakistan Times, November 14, 1991, also supported Colombo accusation about India’s role in wrecking the Summit. However, editorials in prominent newspapers in India – The Times of India (November 12, 1991), The Statesman (November 12, 1991), and The Hindu (November 13, 1991) – supported India’s decision. For the defense of India’s position, see the article “SAARC: A ‘Summit Fiasco,’ ” in Mainstream December, 1991. 13 For a detailed evaluation of SAPTA, see Chapter 6. 14 For a detailed evaluation of SAARC Secretariat and Secretary General, see Ahsan (1992, 2004). 15 For detailed evaluation of the 12th SAARC Summit and its contribution to peace and security in South Asia, see Mohsin (2005: 36–46). 16 By 2006, 13 summit meetings of the Heads of State or Government have been held respectively in Dhaka (December 7–8, 1985), Bangalore (November 16–17, 1986), Kathmandu (November 2–4, 1987), Islamabad (December 29–31, 1988), Male (November 21–23, 1990), Colombo (December 21, 1991), Dhaka (April 10–11, 1993), New Delhi (May 2–4, 1995), Male (May 12–14, 1997), Colombo (July 29–31, 1998), Kathmandu (January 4–6, 2002), Islamabad (January 2–4, 2004), and Dhaka (November 12–13, 2005). Going by the SAARC Charter mandate, South Asian leaders should have held 21 summits by 2006 instead of 13 summits. 5 The challenge of regionalism in South Asia 1 See Mattli (1999: 59–67). 2 The two-nation theory was formally enunciated by Mohammad Ali Jinnah, the leader

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of the All-India Muslim League Party at the Party’s annual session in Lahore in March 1940. According to this theory, Indian Muslims were a separate nation in terms of their distinctive religious and sociocultural beliefs and practices. Hence, the Muslim-majority provinces in the northwest and the northeast of India should be grouped to constitute an independent state for the Muslims. The two-nation theory became the basis of partition of the subcontinent into two independent countries – India and Pakistan – in August 1947. For an excellent discussion of South Asia’s history, the partition of India and the creation of Pakistan, see Bose and Jalal (1998: Chapters 16–17). Muni and Muni (1984: 29–31). According to Foreign Policy Magazine’s 2006 rankings of failed states, Pakistan is ranked number 9 among 148 countries surveyed. It is followed by Afghanistan (10), Myanmar (18), Bangladesh (19), Nepal (20), and Sri Lanka (25). Foreign Policy, May–June 2006. See Prime Minister Manmohan Singh’s speech at the Ministry of External Affairs (MEA) in Delhi on May 5, 2006, as published in India Today, June 5, 2006. Italicized emphasis is mine. Johnson and Merchant (2006). Sri Lanka’s ruling party (People’s Alliance Party) controlled only 46 percent of the total seats in the Lower House of the Central Legislature and has secured 48 percent of the total votes polled in the election of 1994. Although Mrs Chandrika Kumaratunga of People’s Alliance Party was reelected as the President of Sri Lanka for the second six-year term in the election on December 21, 1999, her victory margin was sharply lower than in 1994. She received 51.12 percent of total vote, a decline of 11 percentage points from the November 1994 Presidential Election. This decline further contributed to her weakness to pursue any bold domestic or regional policy initiatives. See Mydans (1999). Some features of “quasi-democracy” as discussed in this article are identified by Myron Weiner.” See Weiner (1986). For Bangladesh election in 1991, see A Report on the Elections to the Fifth National Parliament, February 27, 1991 (Dhaka: BAMNA, 1991), pp. 62–63; for 1996 election, see The Bangladesh Times, June 23, 1996. Since the late 1980s, no single political party in India has received absolute majority in the Lok Sabha (lower house of the Parliament). As a result, only coalition governments have been possible at the center. See David Gardner, “Indian Parliament in Disarray over Hindu Nationalists,” Financial Times, February 25, 2000. According to the Election Commission of India, there are over 550 registered political parties in India representing different shades of ideologies, regions, caste, color, and socioeconomic factors. Different preferences of these political parties have contributed significantly to the weakness of central government in India since the late 1980s. See V.J. Thomas, “India Has Largest Number of Parties,” Times of India, July 26, 1999. For an insightful discussion on several aspects of government weakness in India, see Kohli (1990). Policy of Nuclear ambiguity refers to a country’s official assertion that it is not producing nuclear weapons despite its capability of acquiring a nuclear explosive device. The central objective of this policy is to send a signal to another nuclear capable state that the country has a deterrent that is less threatening than an explicit weapons capability would be but that is serious enough to induce caution in any planning of unilateral attack. See Subrahmanyam (1984b: 132–133). On India’s capability to produce nuclear weapons, see U.S. Department of State, Director of Intelligence and Research, “Research Memorandum, INR-16,” U.S. Department of State, Washington, DC, May 14, 1964. For a discussion on Bhabha’s request to make a nuclear bomb, see Kapur (1976: 221). For a detailed official account of the US decision to send the Enterprise into Bay of Bengal and its consequences, see Schwartz and Derber (1990: 103–106).

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14 See Ramanna (1991: 88–89). According to one estimate, the cost of India’s Bomb was US$370,000. See Nature, 250, No. 5461 (July 5, 1974), p. 8. 15 In an interview with widely respected Indian journalist, Kuldip Nayar, on January 28, 1987, Dr A.Q. Khan reportedly asserted that Pakistan had acquired the capability to build nuclear bombs. See Ottoway (1987). 16 On China’s sale of M-11 and atom parts to Pakistan, see Weiner (1996). 17 See Proceedings of the 2000 Carnegie International Non-Proliferation Conference, March 16–17, 2000, Washington, DC: Carnegie Endowment for International Peace. 18 For detailed explanation of “stability/instability paradox” in South Asia, see Ganguly (2001: 126–129). For an earlier discussion of this paradox in the US–Soviet nuclear relationship, see Snyder (1965: 184–201). 6 Domestic politics and regional economic cooperation in South Asia 1 Quoted in Chase (2005: 23). 2 For detailed discussion and policy recommendations on SAFTA, see Newfarmer (2004). 3 For insightful discussion, see Panagariya (1999: 353–377); Pama, M. “Free Trade Regime in South Asia,” The Economic Times, July 30, 1998. 4 For various estimates of Indo-Pakistan trade, see Newfarmer (2004). 5 SAPTA was launched at the Dhaka Summit in April 1993. After two years of negotiation, SAPTA came into effect on December 7, 1995, with the ratification of the last SAARC member Pakistan in October 1995. At the eighth SAARC summit in New Delhi (1996), the South Asian Heads of Governments took a decision to create SAFTA by 2005. 6 For a discussion, see Rizvi (1993: 159–162). 7 Initiated by Mauritius in 1995, IORARC was formally launched in March 1997 with its first Ministerial Meeting in Mauritius from March 5 through 7, 1997. The 14 initial members of this new regional grouping are India, Australia, Mauritius, Singapore, Indonesia, Malaysia, South Africa, Oman, Madagascar, Mozambique, Sri Lanka, Tanzania, Yemen, and Kenya. The organization’s secretariat is located in Mauritius. 8 ECO was formed in February 1992. Its members are Pakistan, Iran, Turkey, and the newly independent Central Asian republics – Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, and Kirghizstan. The primary objective of this organization is to facilitate trade and other economic cooperation among member countries. 9 OIC has 57 members, most of which are Islamic countries from Africa, Middle East, Central Asia, South Asia, and Southeast Asia. Although India has shown interest to become a member of OIC on the basis of its substantial Muslim population, it only enjoys an observer status in the organization because of Pakistan’s opposition to its membership. India’s request for OIC membership is supported by Egypt and Saudi Arabia. 10 The then Indian Prime Minister I.K. Gujral took active initiatives to persuade SAARC leaders to agree to advance the date of SAFTA from 2005 to 2001. See Bagchi, I. ‘SAARC Wants Economic Union, a la EU’, The Economic Times, July 25, 1998; Najeeb, M. “Towards SAFTA: Import Tariff on 1200 Items to Go,” The Economic Times, May 16, 1998. 11 To insure effective implementation of SAFTA agreement, the Islamabad Summit decided to establish the SAFTA Ministerial Council as the highest decision-making authority and a Committee of Experts (COE) responsible for monitoring implementation of SAFTA programs. The Committee of Experts is required to update the Ministerial Council every six months on the progress of the agreement. 12 Set up in 1997, BIMSTEC, named after its founding members, was known as Bangladesh, India, Myanmar, Sri Lanka, and Thailand Economic Cooperation. With the entry of Nepal and Bhutan, its name was changed to Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation. BIMSTEC focuses on enhanc-

Notes

13

14

15

16 17 18 19 20 21

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ing cooperation among its member countries in crucial areas like transportation links, trade, investment, tourism, fisheries, and agriculture. BIMSTEC includes five of the seven member countries of SAFTA with the key exclusion of Pakistan. India’s policy of positive economic unilateralism has its origin in what is called as Gujral Doctrine, named after India’s former Prime Minister, I.K. Gujral. This strategy essentially requires India to pursue favorable economic policies toward her small neighbors in terms of market access and tariff reductions without expecting reciprocity from them. India’s FTAs with her small neighbors are based on this principle. In July 2006, the SCCI conducted a survey on SAFTA to gather inputs from business stakeholders – business organizations, industrialists, traders, and service providers. About 2,000 questionnaires were sent out to chosen business stakeholders to obtain their feedback on SAFTA. Only 20 percent response was received. This shows a lack of interest and enthusiasm in SAFTA activities. See Survey Report on SAFTA (2006). One anomaly related to the negative list is that even items not produced in a SAARC country is put in the negative lists. For example, automobiles have been put in the negative lists by SAARC members other than India. Auto manufacturers from India strongly argue that items not being produced and imported significantly in a member country should not be placed in the negative list. So far, no decision on this has been made. For an insightful discussion of why different coalitions pursue different regional and foreign policies, see Solingen (1998: Chapters 3 and 6). For a discussion on why weak liberalizing coalitions prefer scapegoating strategy, see Solingen (1997: 68–100). For a discussion on the authoritarian regimes’ preference for extreme and violent solutions of their bilateral problems with democracies, see Solingen (1996: 81–86); Snyder (1993: 104–140); Mesquita and Lalman (1992). See “Who Really Runs Pakistan?” The Economist, June 26, 1999; Perlez (1999: A.1); Dugger (1999: A9); Weisman (1999: Section IV, 8); Kumar, D. “Secret Tapes Bare the Strategy of a State within a State,” Times of India, June 12, 1999. For detailed discussion, see Bearak (1999). For a discussion on spoke–spoke cooperation initiatives at regional level, see Haggard (1997: 41–42).

7 Domestic preferences for regional cooperation: cross-national comparisons 1 For a detailed discussion of the utilitarian and affective dimensions of support for European Union, see Lindberg and Scheingold (1970); Hewstone (1986: 129–135); Gabel (1998: 16–35). 2 The study method consists of face-to-face interviews of approximately 45 minutes’ duration with individual respondents in five South Asian countries. The target sample was 820 with 780 responses. All the respondents have college and more than college degrees and their socioeconomic status is much higher than general population. About 20 percent respondents were women. About 75 percent of respondents were in the age bracket of 35–55, while about 25 percent were in the age bracket of 56–70. Two types of response percentages are given in this study: percentages are given on the basis of total number of responses in a category and percentages are also calculated on the basis of total number of responses from a particular occupational group in a given category. Only those statistically significant findings are reported in the discussion. 3 Equity theory, as developed in social psychology and economics, is broadly concerned with how people judge what is just, fair, deserved, or equitable and how these perceptions influence behavior. Although equity theory has been applied to various issues, the first systematic application of the theory to analyze perceptions of the

224

4 5 6 7 8

9

Notes

European Community was made by Hewstone (1986). In this study, by asking separate questions about which member states are likely to contribute and benefit most or least, the level of perceived inequity of the member states of SAARC has been analyzed. For further discussion and literature review on equity theory, see Hewstone (1986: 129–135). This percentage of response is based on the responses of Indian respondents only. These responses are estimated from the data set developed by the author for each individual SAARC country. These responses are from author’s data set. Estimated from author’s data set. Some respondents expressed disappointment over few concrete achievements of SAARC, including the much touted two regional conventions on terrorism (1987) and narcotic drugs (1990). The low appraisal of the SAARC Food Security Reserve by the respondents from smaller South Asian countries is due to their frustration in not getting adequate and timely support from the reserve during times of natural disasters such as drought, cyclone, and flood. A few respondents also mentioned the lack of resources to carry out SAARC-related projects and expressed their disappointment with the frequent cancellation of SAARC annual summits. Estimated from author’s data set.

8 Conclusion 1 Interview with Rajni Kothari at New Delhi, June 13, 1992; 2002. 2 Our analysis supports a conclusion similar to what Karl Deutsch et al. (1967) concluded about European Union four decades ago – that is “Europe remains a Europe of nation states.” 3 For some characteristic samples of K. Subrahmanyam’s earlier writings on India’s security dynamics, see Subrahmanyam (1981, 1984a). 4 Air Commodore Jasjit Singh, noted for his study of airpower, expressed this view during my interview with him in New Delhi. 5 A number of journalists and civil servants from India and Sri Lanka have particularly mentioned the OIC and the ECO examples to describe Pakistan’s shift of interests from SAARC. These elites argue that Islamabad is more likely to align its foreign policy and make trading arrangements with the Central Asian republics and Islamic belt than with SAARC countries. Most Pakistani respondents, however, disagree with such views. 6 Those familiar with game theory literature will agree that many episodes in IndoPakistan relations can be explained in terms of the Prisoner’s Dilemma. See also Jervis (1976, 1988). 7 For a detailed discussion on how the leader’s perception and misperception influence the decision-making process, see Jervis (1976); Axelrod and Keohane (1985: 226–254). 8 For a discussion, see Rizvi (1993: 159–162). 9 For the linkage between the resolution of Kashmir dispute and growth of trade in South Asia, see Johnson (2005). 10 For a detailed discussion on pragmatic antidependency and other strategies, see Haas (1990: 225–226). 11 For a useful discussion on this theme of citizen diplomacy, see Warner and Schuman (1987). 12 In Israel, one of the most successful programs for bridging the gap between Jewish and Arab children is a soccer camp in which Jewish and Arab star players (each admired in both communities) participate together as coaches (Goldstein 1994: 420). The historic process of Sino-American rapprochement of 1971 is said to have begun after the US ping-pong team’s first official visit to China.

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13 For a useful discussion on how knowledge can transform the decision-makers’ interest and improve the prospects for regional and international cooperation, see Stein (1983: 49–53). 14 For a discussion on engines of regionalism in Northeast Asia, see Rozman (2004: 376–377).

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Index

Figures are indicated by bold page numbers, tables by italics. academia, support for regional cooperation 85 affective and utilitarian support 38–9, 171–2 Afghanistan, Soviet invasion of 86 Afro-Asian conference 81 Ahmad Khan, Saiyid 56 Ahmad, Nazir 135 Alberuni 54 Ali, Rahmat 56 amalgamated security communities 5 Andean Pact 14 Antolik, Michael 212 Arthashastra (Kautilya) 53 ASEAN Free Trade Area (AFTA) 14, 163 ASEAN Regional Forum (ARF) 204 Asian Economic Planners conference 81 Asia-Pacific Economic Cooperation (APEC) 158 Asian Relations Conference (1947) 79–80 Asian Union (proposed) 80 Asian Way to cooperation 15 ASSOCHAM 147 Association of South East Asian Nations (ASEAN) 14, 35, 85 Axelrod, Robert 145 Baguio Conference (1950) 80 balance of power and hegemony 111, 113, 114, 115, 116 Bandara, J.S. 148–9 Bandung conference 81 bandwagoning 117–18 Bangladesh 46, 47, 48; birth of 63; economic liberalization policy 159; government strength 128, 129, 131–2; implications of emergence of 114;

initiative towards regional cooperation 82–6; president’s motivation for cooperation 82–4; relations with India 66–9, 194; relations with Pakistan 68 Beg, Mirza Aslam 138 Bhabha, Homi J. 133 Bhagwati, J. 1 Bhutan 47, 127, 128 Bhutto, Benazir 98–9 Bhutto, Zulfiquar Ali 60 bilateral and subregional initiatives 164 BIMSTEC 164, 223 Birendra of Nepal, King 82, 218 Bose, S. 55–6 Britain in India 55–6 business: efforts regarding SAFTA 164–5; influence on political actors 37 Buzan, Barry 58 CD game 145 Central American Common Market (CACM) 14, 35 Chadwick, Richard 6 Chakma Peace Accord 126 China: impact of support from 77; involvement of 207–8; and relations between India and Nepal 70, 71, 73 Chola kingdom 54 Confederation of Indian Industry (CII) 165 citizen diplomacy 209–10 coalitions, political and free trade agreements 165–8 Cohen, Stephen 121–2 Cold War 80 collective action problems 144–5 Colombo Powers Conference 81 commitment mechanisms 35–6

242

Index

Committee on Studies for Cooperation in Development (CSCD) 85 communication, lack of transparency in 132–3 communication links between countries 156 communications theory 4–7 communitarian perspective on regional cooperation 15 community, sense of between nations 5–6 community policy 20–4, 22 cooperation, regional 15–16; affective and utilitarian support for 38–9; attitudes towards expansion of 181–2, 182; Bangladesh initiative 82–6; building engines of 212–15; as community policy issue area 20–4, 22; and domestic politics 16–17; early efforts 79–82; the India factor 195–8; low level of affective support for 174, 176; monetary 214–15; nuclear power not obstacle to 182; and perceptions of inequity 176–8, 177, 184; and preferences of political actors 31–6; and security 34–5; in South Asia 40–4; and strength of government 29–31, 31; as a two-level game 24–6; see also regionalism cooperative security 107–8 credibility gap of SAARC 184, 185, 191–2 cricket diplomacy 210 currency 214–15 Dahl, Robert 26 democracy: deficit democracy 127; quasi democracy 130, 221 Deutsch, Karl 4–7, 36–7 developing countries: communitarian perspective on regional cooperation in 15; eurocentric explanations of integration 12–16, 20; and liberalization 2 development fund 215 distributional politics 42 domestic issues, priority given to 194 domestic market size 144 domestic politics: actors in 27–8; and foreign policy 20–4, 22; institutions of 28–9; and regional cooperation 16–17 domestic preferences for regional cooperation: affective/utilitarian based 171–2; elites 170–2; national identity 172, 173, 174; and national image 174–6, 176, 183–4; solidarity with other countries 174, 183, 193

Dougherty, J.E. 7–8 Dubey, Muchkund 214–15 Durkheim, Emile 5 East African Common Market 34–5 Easton, David 38–9 Economic Cooperation Organization (ECO) 158, 197, 222 economic growth rates in South Asia 49 economic liberalization policies 156–9 economics as motivation for regional cooperation 186 ecosystem of South Asia 51 elites 43–4, 170–2; elite structure and elite opinion in South Asia 130 energy, coordination of resources 214 entrapment, regionalist 116–17 equity theory 223–4; perception of inequity 176–8, 196 ethnic politics/violence 51–2, 120–6 ethnolinguistic movement, agitation 122–3 Etzioni, Amitai 13 Europe: regional integration in 6; support from 206 European Coal and Steel Community (ECSC) 6 European Union: East and Central European countries 35; and the revival of regionalism 1, 2; support for 39 evaluation of SAARC 178–82 Evans, P. 36 externalities (positive and negative) 33–4 failing states 119, 221 feedback: positive and negative 36–7 FICCI 165 foreign direct investment, restrictions on 155 foreign policy and domestic politics 20–4, 22 forum, South Asian regional 203–4 free trade agreements: bilateral and subregional initiatives 164; and political coalitions 165–8, 166; see also South Asian Free Trade Agreement (SAFTA) Friedrich, Carl J. 6 functionalism 7–8, 9 Gabel, M. 39 Gandhi, Indira 84, 87, 89, 134, 198 Gandhi, Mohandas Karamchand (Mahatma and Bapu) 56 Gandhi, Rajiv 91, 96–7, 98–9, 125, 198, 210

Index 243 Ganges water sharing 67 George, Stephen 9 Ghulam Ishaq Khan 130 global interdependence 10 globalization 204–5 government, strength of 29–31, 31, 127–33, 128 Gowda, Deve 166 Grotius, Hugh 5 Group of Three (G-3) FTA 14 Gujral, I.K.: Gujral doctrine 132, 157 Gulf Cooperation Council (GCC) 14, 35 Gupta empire 53–4 Gyanendra, King 102 Haas, Ernst 2, 3, 6, 8, 9–10, 12 Haas, Michael 14–15, 212 Hansen, Roger 10, 13 hard power 201 Hasina, Sheikh 131 Haq, Ziaul 84, 89, 91, 136 hegemony: and balance of power 112, 113, 114, 115, 116; bandwagoning 117–18; declining 118–20; and India 111; and regional coordination 110, 111; regionalist entrapment 116–17 history of South Asia, influence of 52–7, 193–4 hub-and-spoke initiatives 168 Hussain, Ross Masood 99 identity, regional 172, 172, 174, 175, 192–5 image, national 174–6, 176, 183–4 import substitution industrialization (ISI) policies 154–5 increasing returns to scale (IRS) 143–4 India 46, 47; and Bangladesh 66–9, 194; British domination of 55–6; and China 207–8; and Delhineation 116–17; discussions with Pakistan at SAARC summits 100–1; dominance in the region 66; dominance of and Pakistan 114, 115, 116; and ethnic crisis in Sri Lanka 124–5; ethnic politics in 121; and external influences 76; as factor in success of SAARC 195–8; and globalization 204–5; government strength 128, 129, 132; as hegemonic power 111; Indo-Pakistan war, 1971 62–4; and Japan 206–7; Kashmir dispute 59–62, 202–3; leadership role of 199–202; limited control over Bangladesh and Sri Lanka 77; and

Nepal 69–73; non-attendance at SAARC meetings 101–2; nuclear power 114, 116, 133–5, 137–9; and Pakistan 52, 57–9, 64–6, 167–8, 183, 193–4; Pakistan and evolution of SAARC 86–8; regional imbalances 52; scale of industry 147; and security 203–4; shift in economic liberalization policy 157–8; and Sri Lanka 73–6; transregional trading arrangements 164 Indian National Congress, 56–7 Indian peace keeping force (IPKF) 124–5, 210 industry in South Asia 147–9 inequity, perceptions of 176–8, 177, 196 Inglehart, R. 6 institutions: institutional structures 26–7, 127; of domestic politics 28–9; public support for 38 integration: dynamic effects of 142–3; eurocentric explanations of in developing countries 12–16, 20 integration theory: functionalism 7–8, 9; intergovernmentalism 11–12; neofunctionalism 8–11; transactionalism 4–7 intergovernmentalism 11–12 international relations theory 5 intraregional trade 151–6, 152, 153, 186 IORARC 158, 200, 222 Islam 54–5 issue area 20–24, 38; foreign policy issue area and domestic policy issue area 21–22; community policy issue-linkage 10; fragmented issue linkage 10 Jalal, A. 55–6 Janatha Vimukthi Peramuna (JVP) 124 Japan, relations with 206–7 Jayawardene, J.R. 84, 96–7 Jinnah, Mohammed Ali 56–7 joint projects 212–13 Kargil War 131, 137, 139 Kashmir dispute 59–62, 202–3 Kautilya 53 Khan, Abdul Qadir 136 Knight, Jack 28 Kothari, Rajni 191 Krugman, Paul 143 Kumaratunga, Chandrika 106 late regionalism 211–12

244

Index

Latin American Free Trade Association (LAFTA) 14 Latin American Integration Association (LAIA) 14 leadership: regional 146; role of India 199–202 liberal intergovernmentalism 12 Lijphart, Arend 5 Lindberg, L.N. 6, 8, 39, 174–5 logrolling strategies 85 LTTE 124–5 Mahavamsa 123 Maldives 47, 127, 128, 129 mandala doctrine 53 March, J. 28 market gains logic 157 market size of South Asian countries 149, 150 Mattli, Walter 8–9, 12, 145–6 Maurya empire 52–3 media coverage 195 Mercado Comun del Sur (MERCOSUR) 14, 161 Mill, John Stuart 143 Milner, Helen 26–7, 32, 33 monetary cooperation 214–15 Morarji Desai 197 Moravcsik, Andrew 12, 15–16 motivation of political actors 31–3 Mughal empire 55 Mukherji, I.N. 160 Musharraf, Pervez 131, 167, 178 Muslim League 56–7 Mytelka, Lynn 13 national and regional identities 192–5 National Food Security Reserve 181 national image 174–6, 176, 183–4 Nehru, Jawaharlal 80, 82 neo-functionalism 8–11 neo-liberal institutionalism 11–12 Nepal 47, 48; economic liberalization policy 159; government strength 127, 128; and India 69–73 Nerves of Government, The (Deutsch) 36–7 NICs 49 North, Douglass 28 North American Free Trade Agreement (NAFTA) 2 nuclear power: as deterrent for India and Pakistan 137–9; India 133–5; not obstacle to regional cooperation 182; Pakistan 59, 114, 116, 135–7

Nuclear ambiguity 221; nuclear dual track policy 134; nuclear deterrence 137–9; PNE 134–5; comprehensive test ban treaty (CTBT) 135 Nye, Joseph 8, 10, 201 office-retaining motivation 32–3; powerretaining motivation 42 OIC 197, 222 Olson, J. 28 Organization of Asian States (proposed) 80 organizational structure of SAARC 91–5, 92, 95 Pakistan 46, 47; discussions with India at SAARC summits 100–1; economic liberalization policy 158–9; ethnic politics in 121–3; external assistance for 77; foreign assistance 58–9; formation of 56–7; and globalization 205; government strength 128, 129, 130–1; India and evolution of SAARC 86–8; and India’s dominance 114, 115, 116; Indo-Pakistan war, 1971 62–4; Kashmir dispute 59–62, 202–3; nuclear power 59, 114, 116, 135–7, 137–9; political coalitions and FTAs 166–8; regional imbalences 52; relations with Bangladesh 68; relations with China 207–8; relations with India 52, 57–9, 64–6, 183, 193–4; and security 203–4 Palmer, Norman 14 Panagariya, A. 161 Pareto frontier 26 partition of Indian subcontinent 56–7 Pentland, Charles 21, 23–4 perceptions of inequity 176–8, 177, 184, 196 permissive consensus for European integration 3 Pfaltzgraff, R.L. 7–8 pluralistic security communities 5 political actors: influence on of societal actors 36–7; preferences of 31–6 political coalitions and free trade agreements 166 Political Community and the North Atlantic Area (Deutsch) 4–5 polyarchies, states as 26–7 population growth in South Asia 49 positive economic unilateralism, Indian policy 164, 223 poverty: SAARC Poverty Alleviation Fund 103; in South Asia 49

Index 245 Prabhakharan, V. 124 pragmatic antidependency 204 preferences: of political actors 31–6; of societal actors 36–9 Premadasa 125 press coverage 195 prisoners’ dilemma (PD) game 144–5 promotion of regional identity 208–11 public information campaign 210–11 public opinion 39 public support 39 Putnam, Robert 24–6, 28 quasi-democracies 130 Rahamat Ali. Choudhary 56 Rahman, Ziaur 82–4 Raja Mohan, C. 76, 107–8 Rajapakse, M 130 Rao, Narasimha, 132 Ravenhill, John 13 regional cooperation, defined 15; facilitating conditions for regional cooperation 18, 19; deeper regional cooperation 3; deep cooperation 217; difference between deep cooperation and deep integration 217 regional identity: and national identity 192–5; promotion of 208–11 regionalism: eurocentric explanations of in developing countries 12–16, 20; formation and impact of SAARC 3; revival of 1–3; see also cooperation, regional regionalist entrapment 116–17 reverberation, positive and negative 25 Rosenau, J.N. 21, 23 ruling coalitions 165–7 Russia 207 SAARC Regional Forum 204; see also South Asian Association for Regional Cooperation (SAARC) scale of industry in South Asia 147–9 scapegoating 166–7 Scheingold, S.A. 39, 174–5 Schmitter, P.C. 9, 12 scholarship programs 209 second-image-reversed perspective 25 sectoral integration 8–9 security: complex: 58; dilemma 57–8, 114, 195, 203; impact on of Soviet invasion of Afghanistan 86; and India and Pakistan 203; issues as barriers to trust

195; multilateralism 107, 204; and regional cooperation 34–5, 84; relationships between countries 58–9; and SAARC 105–8 sensitive lists 162–4, 163 sepoy (or sipahi) mutiny 55, 219 services, liberalization of 162 Sharif, Nawaz 131, 137, 167 Shastri, Lal Bahadur 124, 134 Simla agreement 63 Singh, Manmohan 119–20, 200 single currency 214 Smith, Adam 143 Snidal, Duncan 145 societal actors, preferences of 36–9 soft power 201 solidarity with other South Asian countries 172, 174, 175, 183, 193 Solingen, Etel 30 South Asia: commonalities between countries 45; complementarity of economies 151; dominance of India 66; economic growth rates 49; ecosystem of 51; ethnic politics in 120–6; external influences and regional balancing 76–8; and globalization 205; identity in 172, 182–3, 192–93, 208–9; increasing ethnic violence in 51–2; Indo-centrism 46; intraregional trade 151; lack of common external threat 77; lack of growth of regionalism 45, 77–8; lack of transparency in communication 132–3; population growth in 49; poverty in 49; regional complementarities 148; regional cooperation in 40–4 (see also cooperation, regional); regional imbalences 51–2; scale of industry 147–9; security relationships between countries 58; shared characteristics of countries 49, 50, 51–2; see also Afghanistan; Bangladesh; Bhutan; India; Maldives; Nepal; Pakistan; Sri Lanka South Asian Association for Regional Cooperation (SAARC) 14; benefits at cultural, technical and scientific levels 178–9; benefits from informal meetings 96–9, 178–9; Colombo Summit 99–100; credibility gap of 184, 191–2; criticisms of 103–5; and cross-border ethnic identities 126; Dhaka Summit 89–91; early meetings 88–9; evaluation of 108–9, 178–82; financial arrangements 95; formal beginning 88–9; formation

246

Index

South Asian Association for Regional Cooperation (SAARC) continued and impact of 3; implications of elite indifference 185; India and Pakistan discussions 99–101; India as factor in success of 195–8; Islamabad Summit 98–9; Kathmandu Summit 97–8; key indicators of member countries 47; as late regionalism 211–12; low level of affective support for 174; National Food Security Reserve 181; negative issues of 180, 181; objectives of 89; organizational structure 91–5, 92, 95; and people-to-people contact 180–1; and perceptions of inequity 176–8, 177; positive issues of 179, 181; Poverty Alleviation Fund 103; reasons for slow growth of 120; regional centers 93–94, 104; SAFTA 102; secretariat 94–5, 104; secretary general and directors 94–5; and security 105–8; socio-economic profiles of member countries 50; transregional and international links 102–3; unanimity and contentious issues 104–5 South Asian Development Fund (SADF) 215 South Asian Free Trade Agreement (SAFTA) 102, 160–5, 179–80 South Asian Growth Quadrangle (SAGQ) 164 South Asian Monetary Fund (SAMF) 214 South Asian Preferential Trading Arrangement (SAPTA) 159–61 South Pacific Forum (SPF) 14 South-South cooperation, initiatives for 85 Southern African Development Coordination Conference (SADCC) 35 spillback and spillaround 9 spillovers 8–9, 217 spoke-spoke initiatives 168 sports competitions 210 Sri Lanka 47, 48; economic liberalization policy 159; ethnic politics in 123–5; government strength 127, 128, 129, 129–30; relations with India 73–6; Tamil-Sinhalese conflict 74–6, 194 states: categorisation of as weak or strong 29; as polyarchies 26–7 stop-and-go pattern of growth of regional cooperation 30, 141, 218

strength of government 29–31, 31, 127–33, 128 Subrahmanyam, K. 138, 196 subregional initiatives 164 Sundarji, K. 138 support, affective and utilitarian 38–9 synergy 25 Tamils situation in Sri Lanka 74–6 tariff barriers and revenues 154 tariff liberalization program (TLP) 162 textile industry 148–9 Thapar, Romila 53 Third World countries: communitarian perspective on regional cooperation in 15; eurocentric explanations of integration 12–16, 20; and liberalization 2 Third World regionalism 12–13 tourism programs 209 Trachtenberg, Marc 138 trade liberalisation: and domestic market size 144; increasing returns to scale (IRS) 143–4; and trade complementarity 144 transactionalism 4–7 transparency in communication, lack of 132–3 transport infrastructure 156, 213–14 turbulent non growth 3 two-level game, regional cooperation as 24–6 two-nation theory 57, 220 United States: and regional integration 1; support from 205–6 utilitarian and affective support 38–9, 171–2 Vajpayee, A.B. 101, 103, 119, 132, 135, 166, 214 virtuous circle argument 156–7 visa relaxation 209 Weber, Max: theory of social change 218 win-sets 24–5 Wriggins, Howard 58 Yu, W. 148–9 Zia, Khaleda 131