29 May 2020, NIICE Commentary 4905
Dr. Pramod Jaiswal
The Indian Prime Minister Narendra Modi invited the heads of BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) member countries during the swearing-in ceremony of his second term, while he invited leaders of the SAARC (South Asian Association for Regional Cooperation) member countries for the same event in 2014, at the start of his first term. It was his clear indication that he would give preference to BIMSTEC over SAARC during his second term. In this context, the article looks at what BIMSTEC means to the region in general, and to Nepal and India in particular.
Context Behind the Shift
During his first term, PM Modi started his international visits with Bhutan and Nepal. He visited Nepal three times over the next four years. He made a surprise visit to Pakistan on his way back from Afghanistan. These visits demarcated the importance of his ‘Neighbourhood First Policy.’ However, the series of the cross-border terror attacks at Pulwama, Uri and Pathankot not only jeopardised India’s ‘Neighbourhood First Policy,’ but also put India-Pakistan bilateral relations on hold. The 19th SAARC summit to be held in Islamabad got cancelled as India withdrew from it, stating that “talks and terror cannot go together.” In order to isolate Pakistan and pressurise it to stop encouraging and providing shelter to terrorists involved in the above attacks, New Delhi shifted its preference from SAARC to BIMSTEC.
On the economic front, the South Asian Free Trade Area (SAFTA) and the SAARC Preferential Trading Arrangement (SAPTA) had failed to meet their potentials due to the never-ending India-Pakistan rivalry. The volume of bilateral trade between India and Pakistan was negligible. Even the intra-regional trade was around five percent of the total trade volume of South Asia, while the Foreign Direct Investment (FDI) was also a mere 4 percent of the total FDI volume in the region. Additionally, New Delhi had lost interest in SAARC long ago in November 2005, when China became an observer member in SAARC due to pressure from the Nepalese King, Gyanendra.
Opportunities for the Region
With a combined GDP of USD 2.7 trillion, BIMSTEC member countries account for 22 percent of the world’s population. The region is rich in natural resources, such as hydropower and oil and gas. Since approximately 25 percent of the global trade goes via the Bay of Bengal, it makes the region economically and strategically important.
For India, the avenue is crucial for projecting its naval capabilities. Economically, it is equally rewarding, as BIMSTEC has given rise to greater regional connectivity. Almost 25 percent of India’s total population inhabits the four coastal states (Andhra Pradesh, Orissa, Tamil Nadu and West Bengal) along the Bay of Bengal. Similarly, according to Carnegie report, more than 45 million Indians live in Northeastern states, on whom the impact of economic prosperity and regional connectivity will be direct. The initiative also realises India’s new economic interests and geostrategic ambitions in regions beyond its immediate neighbourhood, by connecting the Bay of Bengal to Southeast Asia. Moreover, the BIMSTEC can be seen as an alternative to China’s Belt and Road Initiative (BRI), which is aimed at enhancing China’s geo-economic dominance through regional connectivity. Similarly, for Bangladesh, it provides an ideal platform to firmly position itself within the Asian and global orders than just exist as a small state in the Bay of Bengal. For Sri Lanka, it offers connectivity with Southeast Asia, which can enable it to become the center of Southeast Asian interaction with the Indo-Pacific. The landlocked nations of Nepal and Bhutan can have easy access to the Bay of Bengal, which can help them achieve a higher economic growth rate. Myanmar and Thailand can access the ever-growing consumer markets of South/Southeast Asia, and can counterbalance Beijing’s inroads into these markets.
Prospects for Nepal
For a landlocked and connectivity-deprived Nepal, regional connectivity is crucial for its economic development. Experts claim that through BIMSTEC, it would not only connect itself with the Bay of Bengal, but also with the South/Southeast Asian region through road, rail, sea and air links. It would get access to the Chittagong and Khulna ports of Bangladesh, and the Kolkata port of India. It would get to connect itself with Sri Lanka, Myanmar and Thailand through land and sea. These connectivity projects would not only enhance Nepal’s exports, but would also attract Buddhist pilgrimage from Sri Lanka, Myanmar, Thailand, Laos and Cambodia towards Nepalese Buddhist religious sites like Lumbini. Nepal can also utilise the BIMSTEC development fund to fight poverty. Moreover, BIMSTEC is the ideal platform to provide greater visibility to Nepal in the Indo-Pacific region.
Challenges
In present times, the Bay of Bengal region is one of the world’s least integrated regions in terms of trade, connectivity and cooperation. In fact, it was more integrated 50 years ago than it is today. Despite its rising economic potential and geostrategic vitality, the region remains largely on the sidelines of key global developments. Similarly, according to Xaviers, the member states of BIMSTEC have pursued different political and socio-economic models. For instance, while New Delhi adopted a non-aligned path, Bangkok chose to ally with the United States. Moreover, like SAARC, the progress of BIMSTEC has also continued at a snail’s pace. It took 17 years for the organisation to come up with a permanent Secretariat, is yet to come up with a charter, and it has held just four summits in last two decades. The region also faces strategic rivalry as it is a vital link for China to access the Indian Ocean Region. China has undertaken a massive drive to finance and develop infrastructure through the BRI in almost all BIMSTEC countries, except Bhutan and India.
The region also faces several non-traditional security threats, such as trafficking of narcotics, weapons and people, the illegal exploitation of natural resources, refugee crises, emergence of rebel insurgencies and terrorist groups, and natural disasters.
Way Forward
Due to the convergence of the national interests of the member countries, there is greater endeavour for empowering BIMSTEC, in order to enhance trade and connectivity in the region. According to Constantino Xavier, there is an immediate need to empower the BIMSTEC Secretariat with greater financial and human resources in order to proactively drive the organisation’s agenda. He states that it would be possible only when the member countries provide greater autonomy to the organisation. Similarly, the Secretariat should work on reviving the initial enthusiasm that drove the initiative, by holding high-level meetings regularly. BIMSTEC should give high priority to the development of world class infrastructure for improved regional trading frameworks. As decided during the fourth BIMSTEC summit in Kathmandu, regional connectivity and poverty alleviation should be emphasised on more, especially in Bhutan, Nepal and the Northeastern states of India.
India, being a bigger nation with greater economic leverage, should play an important role by contributing generously in strengthening the organisation without affecting the domestic interests of other member states. The member states should push for financial help from multilateral institutions like the Asian Development Bank (ADB) or the Asian Infrastructure Investment Bank (AIIB). Nepal’s proposal of setting up a BIMSTEC Development Fund and the BIMSTEC Infrastructure Bank to implement various infrastructure projects to enhance economic cooperation and regional connectivity is significant. India’s efforts towards developing the India-Myanmar-Thailand Asian Trilateral Highway, the Kaladan Multimodal Transit Transport Project and the BIMSTEC Motor Vehicle Agreement are remarkable for the easy movement of goods and vehicles in the region. With the right amount of specialised efforts from each of the member nations in overcoming the above-mentioned challenges, BIMSTEC can easily exploit its vast potential to enhance trade and connectivity for the mutual benefit of all in the region.
