Policy Alert #90 | December 9, 2014

On November 26-27, leaders from Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka gathered in Kathmandu to attend the 18^th South Asian Association for Regional Cooperation (SAARC) summit. Under this year’s theme of “regional integration,” leaders sought to conclude three much-expected, showpiece agreements concerning road, rail, and power connectivity, aimed to boost the intra-regional trade for the energy-starved region. However, they fell short of expectations and were only able to agree on the energy deal. In this Policy Alert, we examine commentary from India and China on the outcomes of the SAARC summit.

INDIA

Expectations for the SAARC summit were high in India given Prime Minister Narendra Modi’s surprise invitations to the leaders of SAARC member states to his inaugural ceremony in May, a decision that has stood out as a “game changer.” Indian commentators especially focused on the summit’s economic promises for South Asia, whose intra-regional trade is less than 5% of its total trade and accounts for less than 2% of its GDP.

• “South Asia has the world’s largest working-age population and a quarter of middle-class consumers. With greater regional integration, seamless connectivity, and removal of trade and investment bottlenecks, the region has the potential to break out,” argued Chandrajit Banerjee, the Director General of the Confederation of Indian Industry.
• “For Prime Minister Modi, who has sought to establish a strong foreign credential in his first six months in office, this [the Summit] will be his biggest, diplomatic test,” wrote The Pioneer.

The failure of the summit to meet these expectations, however, raised disappointments from Indian newspapers.

• The Times of India bashed the summit as just “a talking shop” and “another unproductive SAARC summit.”
• In an editorial titled “The Fading SAARC Initiative,” The Hindu lamented, “It is…disappointing to see that…the meeting between the South Asian leaders did not produce much more than a few face-saving agreements forged at the last moment.”
• “The South Asian forum which turns 30 next year has largely been a disappointment, if not an entirely failed project. Look at it any which way you want but there is no denying that SAARC has been unable to deliver on two of its basic promises: Prevent war between its member states and encourage greater economic cooperation among them,” wrote Mayuri Mukherjee, Senior Assistant Editor at The Pioneer.

Criticisms against the summit’s failure were targeted not only toward Pakistan, which rejected road and rail connectivity agreements on the grounds of lack of sufficient “internal processes” and advocated for China’s accession from an observer to member state status, but also toward India, whose rivalry vis-à-vis Islamabad stifled negotiations.

• Former Indian ambassador Neelam Deo blamed Pakistan and host country Nepal, saying that “realistic expectations for connectivity were belied by perennial India-Pakistan dissonances and the joint Pakistan and Nepali push for observer China to become a SAARC member, knowing India’s reservations precluded any positive outcome.”
• She added, “The failed summit has clarified that Modi’s ambitions for greater connectivity must be focused on India’s North, East and South, regrettably leaving Afghanistan physically cut off from the rest of SAARC. This is an appropriate admission of the difficulties inherent in Pakistan’s stubborn rivalry with India; that it repeatedly sacrifices its own economic interests for an illusory equality with India.”
• The Times of India agreed, arguing, “nothing prevents New Delhi from pursuing… cooperation with eastern neighbors such as Nepal, Bhutan, Myanmar and Bangladesh -as well as Sri Lanka to the south- an area where it too has been tardy. If all of south Asia minus Pakistan becomes thriving and prosperous, then the incentive for Pakistan to join would be enormous.”
• The newspaper also criticized India, saying that “It’s not just Pakistan that plays a spoiler at SAARC summits, India too hasn’t taken this regional grouping seriously enough in the past. And other countries may just be tired of endless territorial quarrels between India and Pakistan usurping everything else at SAARC.”
• “India fancies itself as a global power. However, its claims to leadership have always been undercut by the fact that it has failed to deliver on its home turf in South Asia…India, its Pakistan problems notwithstanding, has also failed  in its role as the group’s natural leader,” seconded The Pioneer.
• “That Modi held bilateral discussions on the sidelines with leaders of all countries except Pakistan was…an indication that India and Pakistan were drifting away from each other, which might pose a grave challenge to smooth functioning of SAARC in future,” lamented Ashok Behuria, Coordinator and Fellow at the South Asia Centre, Institute for Defense Studies and Analyses, New Delhi.

Meanwhile, Indian newspapers discussed India’s challenges posed by China, which has promised $30 billion investments in the region over the next five years and sought membership status in SAARC.

• Srikanth Kondapalli, Professor in Chinese Studies at Jawaharlal Nehru University, warned that “China’s ancient strategy of hexiao kongda [cooperate with the small countries to counter the big] was implemented in South Asia to counter India.”
• Sheel Kant Sharma, former Secretary General of SAARC, critiqued Chinese economic involvement. “China does not belong to South Asia. China’s own trade with all SAARC members is heavily skewed against them. Its promised investments on infrastructure are not likely to balance trade.”
• The Hindu expressed a more moderate view, claiming “India would do well to counterpoise China’s economic weight by engaging its neighbors more deeply to formulate a consensus, instead of being seen as obstructing a closer SAARC-China engagement.”

CHINA

China has held observer status with SAARC since 2006 and pledged to increase engagement with the bloc at the summit.

• Liu Zongyi, an assistant research fellow at Shanghai Institutes for International Studies, wrote an op-ed in the Global Times criticizing India for blocking China’s entry to SAARC. New Delhi is “is afraid that an anti-India group will take shape once China joins SAARC,” according to Liu.
• Another editorial in People’s Daily added that India is “apprehensive that China’s entry will undermine its political and economic clout in the grouping” and that “India’s biggest concern is that once China enters the grouping, its dominance in the region would be shaken, and also that smaller countries in the grouping will find a countervailing force in China and settle scores with India.”
• Debate over whether to restrict China to its observer status or allow it to play a more active role in SAARC intensified during the summit, with Dr. Nischal Nath Pandey, director at the Center for South Asian Studies in Nepal observing that the “EU and China are the most active observers to the SAARC. We cannot lump them up with other observers, some of whom have not done anything.”
• “China has put forward a series of initiatives, (including) increasing trade between South Asia and China to 150 billion US dollars and investment to 30 billion US dollars in the next five years,” announced Liu Zhenmin, Chinese Deputy Foreign Minister and head of the Chinese delegation.
• “China hopes the SAARC will “contribute more to regional peace, stability and development” and that China will “continue dialogue and cooperation with the SAARC in this direction,” according to Chinese foreign ministry spokeswoman Jiang Yu at a regular press briefing.