SAARC: The Best Way Forward

by Muttukrishna Sarvanthan

(August 02, Colombo, Sri Lanka Guardian) In spite of proliferation of economic and political groupings at continental and sub-continental levels in all the continents of the world in the post-Second World War period (in addition to the global groupings such as the United Nations), only a handful could claim to have achieved considerable success in terms of economic and/or political cooperation and integration.

One such success story is the European Union (EU). This opinion piece draws lessons from the economic and political cooperation and integration in Europe in the past fifty-eight years of its existence (since its origin in 1950) to embolden the SAARC to make real and effective progress towards an economic and political union during the first quarter of this millennium, which is often termed the ‘Asian Millennium’.

Europeans have fought each other much more viciously and enduringly than South Asians have ever done in the entire history of the peoples of these two geographical regions.

Besides, Europe has also undergone most horrific intra-state conflicts throughout its history, even during the late twentieth century, than what South Asia has ever undergone.

Yet, how come 27 countries that speak 23 different languages could join together as one single economic and political union successfully, which has been eluding seven South Asian Countries?

Although cooperation among West European countries in the immediate aftermath of the Second World War was conceived as a conflict transformation and peace promotion endeavour, the principal strategy adopted to attain the objective of peace and coexistence among West European countries was through economic cooperation, and later integration. In 1949 West European countries established the Council of Europe.

The European Economic Community (EEC) that came into operation on January 1, 1958 formulated a ‘common agricultural policy’. On July 1, 1968 the same countries entered into a customs union thereby removing customs duties on goods imported from each other, and introducing uniform import duties for goods imported from non-member countries.

The EEC gradually took over social, environmental and regional policies in addition to its erstwhile economic policies, and therefore changed to European Community (EC).

The Maastricht Treaty signed on February 7, 1992 replaced the ‘European Community’ with ‘European Union’ (EU) and paved the way for the single market, i.e. free movement of goods, services, money and people, effective from 01st January 1993.

The chronology of the birth and growth of the EU noted above reveals that economic cooperation and integration has been its foundation. On the contrary, SAARC was originally and still remains primarily a political body.

One of the fundamental impediments to progress of SAARC has been the ‘mandatory consensus’ in decision-making enshrined in the SAARC Charter, which has stifled progress in economic cooperation and integration, inter alia.

That is, any proposal submitted by any particular member country or group of countries has to be agreed upon and ratified by the entire membership for implementation. Tortuous political culture of South Asia has prevented any meaningful progress due to this binding requirement of consensus in decision-making.

On the contrary, individual countries were allowed to opt out of treaties and agreements reached by the majority of the member countries of the EU.

This has paid rich dividends to the EU to forge ahead successfully, despite some countries opting out of some of the treaties, policies or agreements.

For example, Britain refused to embrace the common European currency, the Euro. Recently, Ireland rejected (through a referendum) the Lisbon Treaty to draw a common Constitution for Europe.

Secondly, the fact that annual SAARC Summits can take place if and only if all heads of states or governments agree to attend has made postponement of several annual summits. Although the Heads of States or Governments of SAARC member countries originally agreed to meet annually, during its 23 years of existence there have been only 14 annual summits until 2007 due to regular postponements.

On the economic front, preferential trade agreement among SAARC countries during the late-1990s had hardly increased intra-regional trade due to excessive exemptions through the so-called ‘Negative List’, and the proposed South Asian Free Trade Agreement (SAFTA) has been a non-starter to date.

SAARC member countries have never attempted to agree on uniform import duties for goods imported from the rest of the world, i.e. forming a Customs Union.

Due to the delay in the implementation of SAFTA, bilateral free trade agreements have been signed between some member countries of SAARC.

Even these bilateral free trade agreements have been undermined by the so-called ‘negative list’ whereby thousands of goods are excluded from duty free trade.

Another reason for the successful regional cooperation of the EU is that new legislation and policy proposals primarily emanates from the bureaucrats of the European Commission rather than from the politicians, which of course have to be approved by the European Parliament and the Council of Europe to take effect.

Therefore, parochial politics has little leeway to be a spoiler of regional cooperation and integration. On the contrary, SAARC Secretariat plays second fiddle to the political heads of South Asia. South Asia is permeated by India.

The population of India and its land mass are around three times greater than the combined population and landmass of all other South Asian countries.

India’s demographic and physical domination is compounded by its surging economy in the last decade. India’s national income is almost four times greater than the combined national income of all other South Asian countries. These are significant differences between the EU and South Asia.

However, pervading India provides challenges and opportunities for greater economic and political cooperation and integration among South Asian countries under the aegis of SAARC.

While India should be accommodative of and sensitive to the concerns of its neighbours due to its predominance, the rest of South Asia should shirk its minion mentality and take advantage of the opportunities sprung up by India’s booming economy.

Drawing lessons from the EU experience, SAARC should set up a technocratic cum bureaucratic body to develop and execute (subject to approval by the political body) policies and legislation for economic cooperation and integration, first and foremost, followed by in other fields as well.

However, such a technocratic bureaucracy has to be totally independent, proactive and be a watchdog instead of being a lapdog of politicians. Economic cooperation and integration has to be the foundation on which greater socio-political and cultural cooperation and integration should be built.

Of course direct comparison of the EU and SAARC on this matter is not desirable because of different levels of economic development of these two regional blocs at the time of their respective birth.

At the time of the birth of EU in 1950 original member countries were already industrialised, which was not the case with any of the member countries of SAARC at the time of its birth.

Moreover, despite laying emphasis on economic cooperation from its very inception, EU took forty-three years to establish a single common market.

Nevertheless, it is much easier for SAARC countries to find common grounds on economic cooperation and integration in the interdependent world of the twenty first century than on any other issues or fields.

It appears that SAARC has put politics before economics in difference to the successful experience of the EU. It is high time the political leaders of South Asia realise this and change course.

(The writer is a Development Economist who is the Principal Researcher of the Point Pedro Institute of Development (PPID), Point Pedro.)
- Sri Lanka Guardian