Behind the bonhomie

Print edition : December 26, 2014

Prime Minister Narendra Modi greets his Pakistani counterpart Nawaz Sharif at the SAARC summit in Kathmandu on November 27 in the presence of Sri Lankan President Mahinda Rajapaksa (left) and Nepalese Prime Minister Sushil Koirala (centre). Photo: PTI

Nawaz Sharif walks past Narendra Modi at the opening session of the SAARC summit in Kathmandu on November 26. Photo: REUTERS

India’s diplomatic chill with Pakistan and the failure of SAARC members to sign any significant agreement render the Kathmandu summit’s objective of “Deeper Regional Integration” a pipe dream. Moreover, China’s economic push in the region is making India nervous.

THE 18th summit of the South Asian Association for Regional Cooperation (SAARC), which was held in Kathmandu on November 26-27, has not been a good advertisement for regional unity or cohesion. It was held against a backdrop of renewed tensions between India and Pakistan, the two most powerful members of the regional grouping. The coming to power of the Bharatiya Janata Party (BJP) with a massive majority has put India’s role in the region under renewed scrutiny. Only one important agreement, which relates to energy connectivity, was signed at the eleventh hour. The other two important ones, on road and rail connectivity, will probably have to wait until the next summit, which will be held in Pakistan in 2016. It was decided that the summit would henceforth be held only once in two years and not every year.

There were no significant new agreements on combating terrorism, which was identified as a top priority by India, Afghanistan and Nepal. “Deeper Regional Integration”, which was the theme of the summit, seems to be a pipe dream as no agreements were reached on the flow of investments. This did not deter the eight SAARC leaders from announcing that a regional economic formation will be a reality in the next 15 years. The Kathmandu declaration, issued at the end of the summit, talked about developing a “blue economy” for the region based on maritime trading between member states. As in previous summits, the member-countries pledged to initiate joint action to monitor cybercrimes, ensure good governance and universal health security, and provide universal health coverage along with food security. All the leaders present in Kathmandu duly declared the summit a success, but the facts on the ground tell another story.

Before the summit ended, Indian Prime Minister Narendra Modi and his Pakistani counterpart Nawaz Sharif shook hands rather reluctantly before the waiting cameramen. They virtually failed to acknowledge each other on the first day of the summit. It was not a secret that Nawaz Sharif was upset with the precipitate Indian decision to call off Foreign Secretary-level talks in August. Firing by the Indian and Pakistani forces across the Line of Control (LoC) in October, which continued for weeks, further vitiated the atmosphere. Immediately after assuming office in May, Modi said that India placed the highest priority on improving its relations with its South Asian neighbours. He also spoke about setting up of a “SAARC Bank” on the lines of the “BRICS Development Bank” so that member-countries could work more closely together. But Modi’s foreign policy priorities seem to have changed since then.

The diplomatic chill with Pakistan had serious repercussions on the summit. On the sidelines of the summit, Modi held separate talks with all SAARC leaders except Nawaz Sharif. The Indian side blamed Pakistan for creating roadblocks on connectivity-related issues. After the grouping failed to agree on rail and road connectivity, Modi implicitly warned Islamabad that regional integration would happen “through SAARC or outside it”. Despite a free trade pact signed in 2006, trade among South Asian nations accounts for only around 5 per cent of their total trade.

Pakistan, according to Indian officials, feels threatened by the prospect of India using its territory as a corridor to transport goods and emerging as a competitor in Afghanistan. But there is an opinion that things could have turned out differently had the initial bonhomie exhibited by Modi towards his Pakistani counterpart lasted at least until the end of year. Expanding business and trade links with India was the centrepiece of Nawaz Sharif’s policy until the neighbours fell out.

In his speech at the summit, Nawaz Sharif offered Pakistani territory as an energy and transport corridor between South and Central Asia. He told the Pakistani media that his country’s dignity was paramount and that he would not succumb to military and diplomatic pressure from the Indian side. Before proceeding to Kathmandu, Nawaz Sharif said he was prepared to resume the dialogue process with India provided New Delhi made the first move. He also reiterated that Pakistan would consult the separatist Hurriyat leaders before the beginning of a new round of talks.

The China factor

Another visible point of disagreement at the summit was on the inclusion of China either as a full-fledged member of SAARC or as a dialogue partner. Nawaz Sharif suggested that South Korea be included as a full-fledged member. At present, the two countries, along with the United States, the European Union, Iran, Myanmar and Japan, only have an observer status in the regional grouping. India objected to admitting China as a member. China has promised India full membership of the Shanghai Cooperation Organisation (SCO) as a quid pro quo for member status in SAARC. The Indian political establishment is of the view that China, given its economic muscle, will diminish India’s de facto status as first among equals in the SAARC hierarchy. It has apparently calculated that in the SCO, India will be relegated to playing second fiddle to Russia and China.

From its recent foreign policy initiatives, it is apparent that the BJP government prefers closer strategic links with the West rather than with Beijing or Moscow. During his recent trip to Myanmar, Australia and Fiji, Modi conveyed a not-too-subtle anti-China message on issues relating to the South China Sea. He tried to position India as a counterweight to China in the East Asian and Pacific regions. Modi was in faraway Fiji in the last week of November to meet with leaders of the Pacific Island nations (story on page 54). Chinese President Xi Jinping was also in Fiji a few days later doing the same thing. Washington has not taken kindly to the growing Chinese presence in the Pacific Ocean. The Fijian government has in recent years adopted a “Look North” policy, which emphasised stronger ties with China.

China is not without friends in South Asia. Nepal, Pakistan and Sri Lanka argued strongly for China’s entry into SAARC. China, along with Japan, was first admitted into SAARC in 2005 as an observer nation. Since then, China has strengthened its economic and political ties with all the eight SAARC countries with the exception of Bhutan. The Kingdom of Bhutan tried to set up an embassy in Beijing and allow a Chinese Ambassador to take up residence in its capital, Thimphu, two years ago. New Delhi did not view the move kindly and the ruling party, which initiated the move, lost an election subsequently. The new Bhutanese government has been more careful in keeping India’s sensitivities in mind.

China has continued with its diplomatic and economic push in the region. Its Vice-Foreign Minister, Liu Zhenmin, who represented his country at the SAARC summit, promised a Chinese investment of $30 billion for infrastructure development in South Asia and 10,000 scholarships for young South Asian students. Nepal, Sri Lanka and the Maldives have benefited immensely from Chinese aid and investment. The building in Kathmandu where the summit was held was built by the Chinese government. China has surpassed India as the biggest investor in Nepal. The governments in the region know that China is a country with deep pockets unlike India. China has already invested more than $30 billion in South Asia and has given $25 billion in loans at concessional rates to SAARC countries.

India's interference

Besides, there is a feeling among most SAARC countries that India has a penchant for interfering in their internal affairs. Modi’s comment in Kathmandu on the slow pace of drafting a new Constitution for Nepal was not viewed favourably by many political leaders involved in the drafting process. China scrupulously avoids such interference and is willing to do business with governments of all hues, including the right-wing BJP government in India. After the summit ended, a multibillion dollar economic corridor connecting China and Pakistan was formally inaugurated. The corridor will be a 60–kilometre, four-lane fenced motorway.

China’s blueprint for economic integration of the region envisages the creation of a $40 billion “new Silk Road” economic belt connecting Central and South Asia and a Maritime Silk Road connecting South-east Asia with South Asia. China has already built railways and ports in the region to enhance connectivity. Railroads in Tibet have reached the borders of India, Nepal, Bhutan and Bangladesh. Whether some SAARC members like it or not, China has emerged as a key player in the South Asian region. India is among the many Asian countries that have signed up to be a member of the China-led Asia Infrastructure Investment Bank (AIIB), which many observers predict will emerge as a rival to the World Bank.

The Kathmandu summit ended with a declaration on collective efforts to combat terrorism in all its forms. The member-countries once again pledged to prevent human trafficking and the exploitation of children for forced labour. Given the wide support for China’s inclusion in the grouping, the member-states agreed to review and analyse a previous document regarding the engagement with observer countries in order to establish “a dialogue partnership”.

The current SAARC Chairman, Prime Minister Sushil Koirala of Nepal, in his concluding address, said that the summit succeeded in deepening cooperation in the core areas of investment, trade finance, energy, infrastructure and connectivity.