A South Asian Union

96JohnKeay John Keay | Getty Images
  • Nawaz Sharif might claim that he was the first to espouse economic liberalisation, but it was India that opened its sails to deregulation.

The trouble with expanding economies is that they attract so much hyperbole. The weight of expectation becomes crippling, frustration creeps in and only by shifting the goalposts can the burden of delivery be dumped. South Asia provides a case in point. In the 1950s, state planners strove to make independent India ‘the Soviet Union of the 1960s’; in the 1970s less ideologically-inclined Indians talked up the country as ‘the Japan of the 1980s’; and in the 1990s free marketeers were betting on it becoming ‘the China of the 21st century’.

None of these forecasts proved especially prescient. The global models were inappropriate—why did India have to duplicate the achievements of others—and the timeframes were too short. A narrower geographical focus and a longer chronological perspective might have yielded more interesting results. As the countries of South Asia approach the 70th anniversary of independence, the question to ask is not where the subcontinent will be in the 2020s but where it will be when the centenary of independence comes along in 30 years’ time.

A lot can happen in 30 years. Recall, for instance, the 1980s. In those days South Asia’s big success story was Pakistan, not India. A special report in The Economist in June 1987 had Pakistan’s growth rate running at nearly double India’s. Pakistan also had ‘better road, transport and telephone services’, and car ownership per head of population was more than twice that in India. Pakistanis ‘looked bigger and healthier’, colour TVs were abundant even in ‘areas called slums’, and ‘the hopeless poverty… still so common in India’s backward areas’ was scarcely to be found.

While Delhi wrestled with the aftermath of Operation Bluestar, then waded into the Sri Lankan conflict and stirred up more trouble in Assam and Kashmir, Islamabad under General Zia was having an easy ride. Taliban were just Muslim students; the term as yet had no jihadist connotations. And Afghanistan, then under Soviet occupation, seemed to exist simply to ensure Pakistan received a steady flow of US aid and armaments. With Zia’s dictatorship disguised under a veneer of civilian rule, The Economist thought Pakistan was better run than it had been by any elected government and ‘freer than it ever was under [Zulfikar Ali] Bhutto’.

All of which now reads like a historical aberration. But just as the last three decades have proved long enough for a tectonic transformation, so will the next three. Today, India is unquestionably the trailblazer. Nawaz Sharif might claim that, as prime minister of Pakistan in the late 1990s, he was the first to espouse economic liberalisation, but it was India in the same decade that opened its sails to the jet-stream of global deregulation. The results have been spectacular: at home, high-rise construction, conspicuous wealth, middle-class suburbs and strident triumphalism where such things had scarcely existed; internationally, more clout, less censure and some sincere efforts at imitation. For Pakistanis, Bangladeshis and Nepalis have also entered the global labour market, whether by emigrating or sweat-shopping. A deluge of overseas remittances steadies domestic economies, then a fitful flow of diasporic investment fires them up. Call centres generate infotech skills, garments make way for semiconductors. What worked for India is working for its neighbours.

97RajnathSingh Union Home Minister Rajnath Singh with the Indian delegation at SAARC home ministers' conference in Islamabad | AFP

But not, it seems, for South Asia as a whole. Or not imminently. Yet the prospect of the entire region becoming a 21st century powerhouse is at last achievable. Thirty years should be long enough. And a good start would be to end the cross-border badmouthing and explore the enormous potential of neighbourly collaboration.

Back in 1948, when India and Pakistan were emerging from the first of their Kashmir wars, two other war-prone neighbours adopted a proposal that would preclude all future hostilities. In the words of the proposal’s architect, it would ‘make war not only unthinkable but materially impossible’. The countries primarily involved were France and what was then West Germany, and the mechanism they favoured was an institutional initiative called the European Coal and Steel Community (ECSC).

France had long been dependent on Germany’s industrial resources, while West Germany opposed any settlement that would prejudice its own post-war reconstruction. In effect, the signatories were consigning to a common market those commodities needed for rearmament and so denying invidious access to them. Signed in Paris in 1952, the ECSC pact was thus part trade deal, part peace treaty. But it was also something much more momentous; for to implement the deal and manage the new market the signatories approved the creation of a supranational ‘high authority’, backed by a representative Common Assembly, a Court of Justice and a Council of Ministers. With further add-ons, the ECSC became the European Economic Community in 1957 and the European Union in 1993. An agreement about resource management had eliminated an ancient rivalry and created one of the world’s great power blocs.

Something similar needs to happen in South Asia. Indeed it nearly did. Just when France and Germany were setting up the ECSC, India and Pakistan were agonising over another contested resource. In this case it was water. Partition had awarded the lower and middle reaches of the Indus River to Pakistan but its upper reaches and most of its tributaries to India. Agriculture on both sides of the new border depended on irrigation networks fed by these rivers. India could withhold the water needed for Pakistan’s crops; Pakistan could threaten war if its pre-partition water-share was not respected. Complicated by ongoing recriminations over Kashmir, an edgy stalemate lasted until 1960. Then, courtesy of the World Bank and some ingenious engineering, an Indus Waters Treaty was finally signed.

98Pakistani Pakistani trucks parked at the Trade Facilitation Centre at Salambad in Uri | PTI

Like the Paris Treaty, the Indus Waters Treaty included a permanent commission to oversee its implementation and manage problems. Despite wars and near-wars, the treaty still stands and the commission still meets. The treaty is one of the world’s most enduring water-share arrangements; it is also ‘the only agreement to be faithfully implemented and upheld by both India and Pakistan’. The commission, on the other hand, has a largely technical remit. It plays no role in the region’s other water-sharing disputes, has no supranational status like the ECSC, and is never likely to spawn any kind of South Asian economic community.

More is the pity; for neither is the South Asian Association for Regional Cooperation (SAARC). Set up in 1985, SAARC could have become an ASEAN, if not an EU. It championed tariff reduction and cross-border travel. It ordained a free trade area in 2006, a university in 2010 and has even toyed with the idea of a single currency. But its tangible achievements have been minimal. Trade between SAARC countries is stuck at a fraction of its potential. Vital deals on transit and river management remain unimplemented. India, SAARC’s main donor, has just slashed its aid allocation. According to a former Indian foreign secretary, SAARC is ‘a failed experiment’.

Well, it needs to be revived or replaced. The times are favourable. Nepal and Sri Lanka are no longer ravaged by civil war. Democratic practice is respected even in Myanmar. And the lull in hostilities between India and Pakistan seems to be lasting. Above all, South Asia, and India in particular, needs to respond to the encircling web of seaways, pipelines, economic corridors, overland ‘belts’ and ‘silk roads’ projected by Beijing. A good start, and the best possible centennial achievement, would be a buoyant, productive and fully integrated South Asian economic community.

Keay is a British historian.

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