When the South Asian heads of state and government assembled for the third Saarc Summit in Kathmandu on November 2-4, 1987, they looked at a different world.
The Berlin Wall had not yet fallen, the rise of the Asian Tigers as economic powerhouses had just begun, and China and India were still peripheral players in world politics. Though there were signs that the US-Soviet rapprochement had begun, the Cold War and the spectre of nuclear Armageddon very much haunted the world stage.
Unsurprisingly, the Kathmandu Summit, the first one held after the opening of the current Secretariat at Tridevi Marg, in 1987, “expressed concern at the deteriorating international political environment which was due to great power policies…”
British Prime Minister Margaret Thatcher had just completed a historic peace mission to the Soviet Union and international news coverage was dominated by such Cold War stories as “strategic arms limitations talks” and the “special chemistry” between Reagan, Thatcher, and Soviet leader Gorbachev.
Two and a half decades later, we live in a different world. The Soviet Union has imploded, and we have come a long way since President Bush and President Yeltsin announced the formal end of the Cold War on February 2, 1992. The world’s ‘pivot’ has now shifted to Asia.
From relative obscurity, China has risen to become the world’s second largest economy and is all set to surpass the US economic might. The Indian resurgence, which started in 1991 with liberalisation, has seen the southern neighbour make giant strides. It is taken far more seriously in the international arena now than 20 years ago. It has made a pitch for inclusion in the UN Security Council, where China has long been a member.
What does the rise of India and China mean to South Asia and Saarc?
To some analysts, both the countries are all set to reclaim their pre-eminence and that the Western dominance of the last 200 years is more an aberration than the rule. The Chinese like to use the term ‘rejuvenation’ (not ‘growth’) to describe this momentous period in human history. Middle class income has grown seven-fold in parts of Asia since the turn of the millennium. The scale and sweep of this new prosperity is unprecedented.
Still, South Asia as a region remains poor. It is one of the least integrated regions in the world. The history of wealth creation shows that better linkages assist trade and investment and bring new prosperity in its wake.
Yet, the spirit of Saarc has taken a long time to take hold. In 2002, Pakistan President Pervez Musharraf’s aircraft bound for the Kathmandu Saarc Summit was not given access to Indian airspace because of the Kargil border war; he flew in via China instead. Twelve years later, Pakistan has refused to use armoured cars supplied by India for the Kathmandu Summit. The ties between the largest Saarc members have hit a low. The first summit in three years comes amid the worst cross-border violence in Kashmir in nearly a decade and growing tensions because of the imminent pullout of NATO-led forces from Afghanistan.
Modi means business
Yet, there are silver linings. Indian Prime Minister Narendra Modi surprised everybody when he invited the Saarc heads of government/state to New Delhi for his swearing-in. His visit to Kathmandu in August—his first bilateral visit was to another Saarc member-state, Bhutan—underscored his “neighbours first” approach. He has rekindled new hope for Saarc cooperation.
Energy is one area where Saarc nations could cooperate for tangible results, since all of them, except Bhutan, are reeling under energy crises despite their huge potential. In a policy paper produced before the Kathmandu Summit, Brookings India suggests that Nepal (hydro) and Bangladesh (gas) have sizeable capacity for exports. It offers five potentially “win-win value adding projects” to be taken up in Kathmandu.
One, the establishment of a thermal power plant in the Thar desert (India) and fuelled by coal mines across the border in Pakistan; two, a power plant in Punjab (India) fuelled by gas piped through the Iran-Pakistan-India pipeline; three, the supply of petroleum products from the Bhatindra refinery to consumers in Pakistan via a 150-km pipeline from Jalandhar (India); the development of a hydro project on the Kosi river in Nepal.
“Dams are controversial but the hydro potential is so huge that the project warrants consideration,” says the Brookings paper. With the second-largest inland water resources in the world and a steep, mountainous topography, Nepal could generate up to 40,000MW of hydro electricity, it adds.
In August, the first visit to Kathmandu by an Indian prime minister in 17 years was hailed a success for a number of reasons. In his 45-minute address to Parliament in Hindi (after starting in Nepali), Modi brilliantly used symbolism—the legends of the Buddha, the Ramayana were recalled—to connect with the Nepalis and never once did he give the impression that he was talking down to a smaller neighbour that looked to India for investments in its cash-strapped infrastructure development.
Two things stood out about the new Indian prime minister. One, he mentioned India’s security challenges posed by a porous border with Nepal only in passing, unlike any other visiting senior officials. Two, after he returned to New Delhi, he followed up on all major commitments made during the visit, like a stick-wielding school teacher ever mindful of every single deadline.
So during his second coming this week, he has in place two landmark agreements, which had been in limbo for years. The Nepal-India Power Trade Agreement, or PTA, the framework agreement that allows Nepal to sell electricity to India like any other commodity, was signed within 45 days of his departure. The two sides also signed the project development agreement (PDA) on Upper Karnali (900MW). With a project template in place, the first detailed agreement in the power sector sets in motion many more power agreements to follow. The first one is always the hardest.
There is now light at the end of the tunnel for another major power project, Arun III, which has been in the wilderness for the last two decades. Indian company Satluj signed a project agreement with Investment Board Nepal, with Modi standing tall at the singing. There could be no greater symbolism to tell the story of a no-nonsense Indian prime minister. Both Karnali and Arun will add 900MW each to the national grid, which now stands at a meagre 650MW.
Long reeling under long hours of power cuts, Nepal finally looks set for energy self-sufficiency and exports to India, and possibly even beyond.
Modi no doubt means business, but he, we hope, also means to treat Nepal and the smaller South Asian neighbours with generosity and level of engagement that’s been lacking in the way India has approached its neigbourhood.
India and China
But the China factor should be carefully weighed as we talk of South Asian connectivity and Saarc. It’s a fact that China has grown by leaps and bounds since Saarc started three decades ago; it is also a fact that China believes that it has much strategic stakes in the region. It shares borders with five South Asian countries, and considers these relations vital for its two volatile regions, Tibet and Xinjiang.
Analyst C Raja Mohan suggests, as the subcontinent’s geopolitical weight grows, India must devote some attention to the emerging role of South Asia as a bridge between different regions—East Asia, Central Asia, and the Middle East.
Towards that end, India must ask itself if there is a way to benefit from the growing number of Saarc observers, not least China. Beijing has invested considerable diplomatic, political, and economic energies in promoting a South Asian regionalism of its own imagination, adds Raja Mohan from the New Delhi-based Centre for Policy Research.
India and China, no doubt, will have to engage in a cooperative framework in South Asia even as they jostle with their complex relations and larger geopolitical rivalry. Though opinions are divided in India about a greater Chinese engagement in Saarc, we would like to argue for a stronger Chinese role for a number of reasons. One, smaller South Asian countries see that they can benefit from Chinese investments, a view that has takers even in India. Two, these South Asian countries will engage with China and vice-versa, Saarc or no Saarc. Bringing in China—an economic giant next door—not only offers smaller nations new opportunities, it also offers India room for strategic independence.
Upadhyay is Editor-in-Chief of The Kathmandu Post