In a significant break from the past, the 12th summit of the South Asian Association for Regional Cooperation concludes historic agreements on the issues of trade and terrorism.
THE 12th Summit of the South Asian Association for Regional Cooperation (SAARC) held in Islamabad in the first week of January has perhaps been the most successful one in the organisation's chequered 20-year history. Many of the leaders who participated in the summit described the Islamabad meet as "historic". The significant achievements of the summit included the signing of the South Asia Free Trade Agreement (SAFTA) and the inclusion of the additional protocol on terrorism
The summit also provided an opportunity for intensive behind-the-scenes bilateral talks between Indian and Pakistani officials. The joint press statement issued by Prime Minster Atal Bihari Vajpayee and Pakistan President Pervez Musharraf immediately after the summit wound up signalled the resumption of high-level official contacts between the two countries after a gap of more than two years.
The positive note was struck at the opening of the summit itself. In fact, both Vajpayee and Pakistan Prime Minister Mir Zafarullah Khan Jamali went out of their way to avoid mentioning contentious issues. For the first time in the history of SAARC, a Pakistani Premier did not mention the Kashmir dispute. The words "cross-border terrorism" also did not figure in Vajpayee's speech. The enduring theme in the speeches of all the heads of state and Prime Ministers was the need for collective action to achieve peace and to revitalise SAARC in order to mobilise the tremendous economic potential of South Asia. The leaders of the smaller SAARC countries welcomed the improvement in the relations between the two biggest member-states - India and Pakistan. They emphasised that mutual trust and political will were necessary prerequisites to ensure sustainable regional cooperation. Economic integration of the region, most observers feel, will remain a pipedream if India and Pakistan continue to remain at loggerheads.
Welcoming the signing of the SAFTA agreement, the Additional Protocol to the Regional Convention on the Suppression of Terrorism, and the Social Charter, the leaders described them as landmark developments. Another theme that dominated the speeches of the leaders of the SAARC countries was terrorism, which they said adversely affected the whole region.
In his speech, Jamali said that the energy needs of the subcontinent could be met through trans-regional oil and gas pipelines. Pakistan, he said, was in favour of commissioning a study for the creation of a South Asia "energy ring", which would include hydro and thermal capacities as well as trans-regional oil and gas pipelines. The only topic Jamali admitted to discussing with Vajpayee during their talks was the gas pipeline issue. Both Iran and Pakistan want the pipeline that will soon be linking the two countries to be extended to India in order to make the enterprise commercially viable. Jamali said that greater economic integration was "inextricably linked to the creation of a requisite political climate of peace and stability.
Addressing the SAARC delegates, Vajpayee said that South Asia "must make the bold transition from mistrust to trust, from discord to concord, and from tension to peace". The Prime Minster gave the example of the Association of South East Asian Nations (ASEAN) and said that SAARC too could go "forward now, with a collective approach in mind". He pointed out that successful examples of regional integration elsewhere in the world should remind South Asia "that rational economics should triumph over political prejudice in South Asia". Vajpayee said that the mutual suspicion that characterised relations between South Asian states had resulted in the "peace dividend" bypassing the subcontinent. "History can remind us, guide us, teach us or warn us; it should not shackle us. We have to look forward now, with a collective approach in mind."
On behalf of the Indian government, Vajpayee pledged an initial contribution of $100 million for specific poverty alleviation projects in SAARC countries. An agreement was reached on the modalities of creating a Poverty Alleviation Fund for the region. Vajpayee suggested that India, Pakistan and Bangladesh jointly celebrate the 150th anniversary of the 1857 uprising against colonial rule. However, Islamabad politely declined the suggestion, saying that the three countries have different interpretations of the history of colonialism in the subcontinent. Vajpayee emphasised the need to create more opportunities for commercial interaction in South Asia. Such a development, he said, would pave the way for "more ambitious - but entirely achievable - goals such as a free trade area, an economic union, open borders and a common currency for our region".
The President of the Maldives, Maumoon Abdul Gayoom, made a perceptive point in his speech at the inaugural session. "Our peoples need food, not fighter aircraft; books, not bombs; medicines, not missiles," said Gayoom, who has attended every SAARC summit beginning with the inaugural one in Dhaka in 1985. Gayoom had to leave Islamabad immediately after the inaugural ceremony owing to the outbreak of a political crisis at home.
Bhutanese Prime Minister Lyonpo Jigme Thinley in a message that was obviously directed at Islamabad, said that his country had successfully contributed to the goal of eradicating terrorism in the region by flushing out extremist groups engaged in subversive actions against India from its territory. Vajpayee had mentioned in his speech that the example set by Bhutan was worthy of emulation by other SAARC member-states. Until recently, New Delhi's stand was that Pakistan has allowed its territory to be used by terrorist groupings to destabilise India.
Sri Lankan President Chandrika Kumaratunga suggested that SAARC members jointly combat the threat of terrorism. "We must work together to eliminate this menace. SAARC should be made more effective," she said. Kumaratunga said that after the September 11 attacks and the start of the global fight against terrorism, it was all the more imperative for South Asia to crack down sternly on terrorism. Terrorism, Kumaratunga said, had become "the most terrifying factor in international politics".
The Sri Lankan President said that SAARC countries should concentrate on poverty alleviation by joining hands instead of getting bogged down in petty conflicts. While hailing the adoption of SAFTA, she said that SAARC members should ensure that the richer and bigger members should not dominate the poorer and the smaller ones.
Bangladesh Prime Minster Begum Khaleda Zia said that trade liberalisation in the region would lead to a "win-win" situation for all SAARC countries. Although Bangladesh had some objections to SAFTA before the summit began, it was resolved after the concerns of the least developed countries in the SAARC region - Bangladesh, Nepal, the Maldives and Bhutan - were adequately addressed by incorporating some special measures such as allowing them to put more goods on their sensitive list and granting an adequate time-frame for a full-fledged free-trade regime.
Nepalese Prime Minister Surya Bahadur Thapa said that SAARC should be more active in the war against terrorism. He reiterated his government's resolve to crush domestic terrorism. Thapa claimed that the terrorist network in the kingdom had been destroyed and said that he was very optimistic about the future of regional cooperation in South Asia. "Instead of long declarations and commitments, we should rather stress on implementing what has been agreed upon. Most important, we should stick to the deadlines we have set for ourselves," he added.
The "Islamabad Declaration", signed at the conclusion of the summit, said that SAARC would undertake a study on "creating a South Asian Energy Cooperation including the concept of an Energy Ring". Prospects for setting up a South Asian Development Bank would be examined, the Declaration announced. It was also stated that SAARC members "should continue to safeguard their collective interests in multilateral forums by discussing, coordinating and exchanging information with a view to adopting common positions, where appropriate, on various issues". The member-states recognised "poverty alleviation as the greatest challenge" facing the peoples of South Asia and called for the setting up of a Regional Food Bank.
"We condemn terrorist violence in all its forms and manifestations and note that the people of South Asia continue to face a serious threat from terrorism," the declaration stated. It said that terrorism violated the "fundamental values of the United Nations and the SAARC Charter". The signatories pledged to implement fully the relevant international conventions to which they are parties. Further, the declaration emphasised that the signing of the Additional Protocol to the SAARC Regional Convention on Combating Terrorism to deal effectively with the financing of terrorism was "a further manifestation of our determination to eliminate all forms of terrorism from South Asia". It said that it envisaged South Asia as "a peaceful and stable region where each nation is at peace with itself and its neighbours and where conflicts, differences and disputes are addressed through peaceful means and dialogue".
The additional protocol on terrorism designates "the provision, collection and acquisition of funds for the purpose of committing terrorist acts" as a criminal activity. SAARC countries are now obliged to extradite terrorists and refuse refugee status to any individual who is suspected to have links with terrorist outfits. Member-states will have to take concrete steps to prevent, suppress and eradicate "the financing of terrorism" in the territory under their jurisdiction. SAARC member-countries will have to develop mechanisms for "the identification, detection and freezing or seizure of any funds used or allocated" for the purpose of committing terrorist offences". However, the additional protocol makes it clear that the obligations of the member-countries under the additional protocol would be "based on the principle of sovereign equality and the territorial integrity of the member-states". According to Indian officials, this is a major step forward. "Pakistan has apparently changed its stance on terror," said Indian Foreign Secretary Shashank. Pakistan Foreign Minister Khurshid Mahmud Kasuri said that the additional protocol was necessary after the events of September 11 and was in consonance with the United Nations Security Council Resolution 1373 on combating international terrorism.
However, the most important SAARC-related development was the signing of the SAFTA agreement, which will drastically reduce trade barriers between South Asian countries within two years. The member-states have agreed to eliminate tariff almost completely by the year 2016. However, SAARC has a long way to go before it can even think of emulating ASEAN. Although South Asia is home to a quarter of the world's population, intra-regional trade accounts for less than 5 per cent, whereas trade within the ASEAN region is around 63 per cent.
The important thing, according to observers, is that India and Pakistan have been able to bridge their differences on the issue. Pakistan and other SAARC countries have evidently overcome their fear of being dominated by Indian business and have taken the strategic decision to use trade as a method to improve bilateral relations. Indian exporters control over 70 per cent of the intra-regional shipment. Duty-free goods from India have the potential of wiping out domestic industries in other South Asian countries. The six SAARC countries have a trade deficit of more than $2.2 billion with India.
Although SAFTA was first proposed in 1998 at the SAARC summit in Colombo, until recently Islamabad was the main hurdle to the trade bloc becoming a reality. Finally Pakistan seems to have assigned greater priority to economics rather than politics. Prime Minister Jamali told the media in Islamabad that "politics cannot be divorced from economics. However, the imperatives of geoeconomics can no longer be ignored". He described the signing of SAFTA as a "major milestone".
However, observers of the South Asian scene caution that for SAFTA to be meaningful there should be durable peace in the subcontinent that would attract outside investors. An early resolution to the long-running political conflict between India and Pakistan would make SAFTA a more viable proposition. Indian officials feel that greater trade will provide the basis for durable peace between the two countries. External Affairs Minister Yashwant Sinha, has been saying that intensified commercial ties between the two countries would "increase the political and economic space to deal with differences". Striking a similar note, while talking to the media in Islamabad at the conclusion of the SAARC summit, Musharraf said: "The signing of SAFTA will facilitate the implementation of bilateral agreements."
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