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By Uditha Jayasinghe in Nepal
The 18th South Asian Association for Regional Cooperation (SAARC) wound up with mixed results yesterday, underlining the significant challenges for integration in the region.
Eight leaders signed an agreement on energy cooperation amid pledges for deeper cooperation, but failed to make significant inroads to improve trade, infrastructure connectivity, climate change and poverty alleviation that were focused on as imperatives at the start of the summit.
Nepal Prime Minister Sushil Koirala reiterated his call for stronger relations at the closing ceremony, insisting his country would continue to work hard to implement a crucial liberalisation mechanism to increase engagement.
“Convergence of opinion is needed to provide tangible results. Nepal will put its best efforts to get decisions at this summit sincerely implemented. I’m confident we will be able to bring tangible results to all members,” he said.
SAARC, which was formed nearly three decades ago, has come under fire for failing to promote cooperation between members India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives, Bhutan and Afghanistan.
“Our achievements stand short of expectations,” Koirala admitted.
This was in evidence at the 18th summit, with only one of the three agreements expected to be signed receiving approval.
Following the signing of the energy cooperation framework, Koirala pledged to gather all transport ministers within three months to hash out the SAARC Railway Agreement and Motor Vehicle Agreement, but there is no timeline in place for implementation.
A 31-point document titled the ‘Kathmandu Declaration’ that touches on a wide range of issues including counterterrorism, the promotion of trade and investment, infrastructure development, youth employment, reduction of telecom tariffs, regional connectivity, social security for elderly people, literacy, and SAARC’s transformation into the South Asian Economic Union by 2030 was agreed to by the leaders.
It was also unclear whether there was any progress on the South Asian Free Trade Area (SAFTA), which has essentially stalled over the past eight years.
Intra-regional trade in South Asia accounts for around 5% of global trade, a dismal picture in comparison to other contemporary economic blocs. Most of the eight members do much more trade outside of the region.
Experts insist SAARC requires substantial investment in basic infrastructures to address the issue of physical connectivity. Asian Development Bank has estimated that South Asia needs an annual investment of $ 250 billion over the next 10 years to bridge the investment gaps in infrastructure.
But there is a huge funding bottleneck. Limited funding is available through multilateral financing institutions. The South Asian Development Fund (SADF) is not yet operational to be able to fund infrastructure projects.
Attempts to make the fund larger have so far been unsuccessful, leaving experts to suggest tapping the Asian Infrastructure Investment Bank (AIIB), backed by China. Five South Asian countries – Bangladesh, Nepal, India, Pakistan and Sri Lanka – are already signatories to the institution. They also advocate active participation on China’s 21st Century Maritime Silk Route policy. China itself has shown enthusiasm by becoming increasingly involved in SAARC, with President Xi Jingping visiting the Maldives, Sri Lanka and India in September. Nonetheless, broad consensus is yet to be reached among SAARC members on whether to allow China a seat on the organisation and elevate it from Observer status it has maintained since 2006.
Pakistan and Nepal at the closing ceremony expressed interest in cooperating on mutually-beneficial areas with all nine observers, which are led by China and the US.
Adding to complicated geopolitics is historic rivalries, especially between India and Pakistan.
A much-anticipated meeting between Indian Prime Minister Narendra Modi and his Pakistani counterpart failed to appear but the leaders’ retreat on Thursday morning was reported to have worked as an icebreaker between them, according to reports. During the retreat near Nepal’s scenic Himalayas, Prime Minister Narendra Modi and Pakistani Premier Nawaz Sharif shook hands and spoke briefly, according to Nepalese Foreign Minister Mahendra Bahadur Pandey. However, a planned meeting between the two South Asian heavyweights is yet to take place.
Pakistan will host the 19th SAARC summit in 2016 after its offer was accepted by current Chair Nepal. Yet it would seem that the next session two years from now will see many of SAARC’s issues unchanged.
