Regional cooperation in South Asia and Southeast Asia 9789812304353, 9789812304261, 9789812307200

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Regional Cooperation in South Asia and Southeast Asia

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Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional centre dedicated to the study of socio-political, security and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. The Instituteʼs research programmes are the Regional Economic Studies (RES, including ASEAN and APEC), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). ISEAS Publications, an established academic press, has issued almost 2,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publications works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world.

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Kripa Sridharan with T.C.A. Srinivasa-Raghavan

Institute of Southeast Asian Studies, Singapore

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First published in Singapore in 2007 by ISEAS Publishing Institute of Southeast Asian Studies 30 Heng Mui Keng Terrace Pasir Panjang Singapore 119614 E-mail: [email protected] Website: http://bookshop.iseas.edu.sg All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. © 2007 Institute of Southeast Asian Studies, Singapore The responsibility for facts and opinions in this publication rests exclusively with the authors and their interpretations do not necessarily reflect the views or the policy of the publisher or its supporters. ISEAS Library Cataloguing-in-Publication Data Sridharan, Kripa, 1949– Regional cooperation : South Asia and Southeast Asia. 1. Regionalism—Asia. 2. Regionalism—Southeast Asia. 3. Regionalism—South Asia. 4. Southeast Asia—Economic integration. 5. South Asia—Economic integration. I. Title JZ5333 S77 2007 ISBN: 978-981-230-435-3 (hard cover) ISBN: 978-981-230-426-1 (soft cover) ISBN: 978-981-230-720-0 (PDF) Typeset by International Typesetters Pte Ltd Printed in Singapore by Oxford Graphic Printers Pte Ltd

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Contents Preface

vii

1

INTRODUCTION: WHY REGIONALISM?

1

2

REGIONALISM: THE INSTITUTIONAL FRAMEWORK

3

THE POLITICAL DIMENSION OF REGIONALISM

4

PATTERNS OF ECONOMIC REGIONALISM 205 T.C.A. Srinivasa-Raghavan

5

SOCIAL ISSUES AND REGIONAL COOPERATION

279

6

SUMMARY AND CONCLUSION

329

43 113

Index

353

About the Authors

370

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Preface An unspoken but widely acknowledged view about regionalism suggests that it is better to have regionalized and faltered than never to have regionalized at all! Taking this as its point of departure, this study provides a comparative sketch of regional cooperation in South and Southeast Asia in the light of various political, economic and social developments in the two regions. Since regionalism is both a pervasive and amorphous phenomenon, a straightforward account of its similarities and differences cannot be easily set down. But the broad patterns of behaviour of the regional actors who gather under a regional roof can be captured. This study regards regionalism both as a formal entity and a process and seeks to explain the dynamics of regional cooperation from this intertwined perspective. Regionalism represents the wisdom of hanging together howsoever difficult that may be for states within a given geographical space. The different sides of their existence are played out within a regional context since their conflicts and confabulations are mostly with their immediate neighbours. Region is therefore both a threat and an opportunity. Increasingly, states are convinced that unless they relate well to their neighbourhood they are unlikely to make an impact in the wider world. There is also recognition that a regional platform can be extremely

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useful in keeping at bay the undesirable elements of a rapidly globalizing world. But cognizance does not automatically ensure appropriate behaviour and therefore we find that some regional experiences have fallen far short of expectations. Although the vehicle has not been abandoned, it is not confidently striding ahead either. Such situations call for introspection and course correction. Learning from the experience of others can yield some benefits in this respect and therefore comparing notes may not be such a bad idea. To compare is not only understand but to improve and avoid the avoidable. In the following pages, an attempt has been made to highlight the highs and lows of regional experiences mainly in South and Southeast Asia interspersed with references to the European Union (EU) where relevant. Europe is not exactly used as a benchmark but only as a point of reference since it has had a long stint in making regionalism work. Some people may argue that the jury is still out on the success of the European venture, and EU should not be used as a yardstick because it is exceptional. While there may be good reasons for such thinking, it is also apparent that leaders and policymakers often refer to the advances made by the EU in the context of the gaps in their own regional efforts. To dismiss this as mere rhetoric, in my opinion, is inappropriate. Therefore, this work refers to the European experience where relevant. For Europe, regional cooperation was a creed; for the Association of Southeast Asian Nations (ASEAN), it was a strategy and for the South Asian Association for Regional Cooperation (SAARC), it is so far, neither. This study seeks to outline certain practical problems that hobble regional cooperative efforts. It is mainly

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Preface

ix

addressed to those who take a lively interest in regional cooperation. It starts with a broad survey of the objectives and course of regionalism so as to indicate its conceptual and practical evolution. It does not claim to provide a rigorous and direct comparative analysis of regionalism. Its main purpose is to appraise the readers of the relative progress made by regional organizations in South and Southeast Asia. It is more of an illustrative comparison rather than a comparative case study. My gratitude and thanks are owed to a great many people who made this study possible. Before mentioning their names I must state that the usual disclaimer applies. I take the responsibility for all the errors of omission and commission in the study. I should first of all thank the Institute of Southeast Asian Studies, Singapore and its Director, Mr K. Kesavapany in particular, for the sponsorship of this project. Without Mr Kesavapanyʼs sustained interest, encouragement and cheerful confidence, this work would not have seen the light of day. I would also like to thank Dr Chin Kin Wah, Deputy Director, ISEAS, for his valuable comments when this research was presented in a seminar in ISEAS. I wish to thank the Department of Political Science, National University of Singapore for granting me study leave during non-teaching periods to work on the manuscript. I would also like to place on record my thanks to the staff of ISEAS, especially Mrs Y.L. Lee for all the help that I received in the course of working on the project. I am very thankful to Mrs Triena Ong and her colleagues in the ISEAS Publications Unit for their helpful editorial

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support. I should also take this opportunity to thank the two anonymous reviewers for their comments on the manuscript. This is an appropriate occasion to thank my former teacher Professor A.J.R. Groom, Emeritus Professor, University of Kent, U.K. who first introduced regionalism to me as a subject of scholarly enquiry. But for his exceptional instruction and training I would have remained ignorant about the great possibilities of regional endeavours. I am enormously indebted to him for this. Of course, any gap in my understanding of regionalism is entirely due to my inadequacy. The writing of this book was made exceedingly pleasant by the help that I received from my research associate T.C.A, Srinivasa-Raghavan, Consulting Editor, Business Standard, New Delhi. The chapter on the economic dimension of regionalism is written by him. I thank him for his contribution and intellectual support which I have always valued highly. I would like to thank Aparna Shivpuri, Research Associate, Institute of South Asian Studies, Singapore, for her splendid research help and valuable inputs for the section on social issues in South Asia. A great many scholars, officials and informed observers deserve my special thanks for generously sparing their time to talk to me about various aspects of regionalism in South Asia and Southeast Asia. In particular, I would like to thank the current Secretary General of ASEAN, Ong Keng Yong, former Secretary General Rodolfo C. Severino, and former SAARC Secretary General Abul Ahsan for sharing their views with me.

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Having lived in the Southeast Asian region for a number of years, I have had the opportunity to listen to, and talk with regional experts about the evolution and progress of ASEAN. Since they are far too many in number I have not listed their names individually. I would like to thank all of them for their help and useful comments. The generosity of the scholars and policymakers from South Asia who spared the time and effort to share their insights with me is greatly appreciated. The following people deserve special mention: Leela K. Ponappa, Veena Sikri, Prabhu Dayal, S. Ramasundaram, Sudhir Devare, A.N. Ram, Eric Gonsalves, Nagesh Kumar, Anwarul Hoda, Nisha Taneja, Samar Varma, Charan Wadhva, S.D. Muni, P.R. Chari and S. Raja Mohan. Thanks are also due to Sridhar Khatri, Saeed Shafqat, Imran Ali, Inam Ul-Haque, Sajjad Ashraf, M. Macky Hashim, Saman Kalegama, Ponna Wignaraja, Basil Ilangakoon, Godfrey Gunatilleke, Munshi Faiz Ahmad, M. Ruhul Amin, Iftekhar Zaman, Abdur Rob Khan, Humayun Kabir, A.K.M. Abdus Sabur, Rehman Sobhan, and Farooq Sobhan for sparing the time to talk to me. Last but not least, my grateful thanks to all the members of my immediate and extended family for their encouragement and help. Special thanks to my husband Sridhar, and my sons, Anirudh and Akilesh for cheering me on and keeping my spirits up. Their support and faith in me made my task easy in many ways. I would like to dedicate this work to them. Kripa Sridharan January 2007

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Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

1 Introduction: Why Regionalism? Regionalism, or more broadly regional cooperation, has been in vogue since the end of World War II as a mechanism for maintaining regional order. In very simple terms, regionalism refers to cooperation between states occupying a common regional space. The form of cooperation may be either inter-governmental, grounded in the principle of sovereign autonomy, or it may be supranational where there is an authority structure that transcends state sovereignty. Regionalism, in terms of form or substance, may not have produced uniform results across the world but it has been fairly popular as a forum for engagement and interaction between proximate states belonging to a region. Scholarly preoccupation with regional cooperation, however, has been less consistent. A great deal of interest was apparent in the 1950s and 1960s. But this began dwindling in the 1970s despite the expansion in the number of regional initiatives on the ground. The early 1990s witnessed a pronounced increase in regional trading arrangements. This period coincided with the deepening of the European integration project.1 Whatever the motivations or the nature of regional initiatives, these two developments confirmed the primacy of regions in the calculations of states, a calculation which has continued to grow strong. Therefore, the assertion that regionalism

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remains the “central concept for organising world politics”2 is not really far off the mark. It would also not be an exaggeration to say that state identities have been acquiring a regional hue in spite of the pulls of nationalism on the one hand and globalism3 on the other. Globalism implies universalism and a compelling boundary-blind logic whereas regionalism is more cognizant of discontinuities. It is alive to the differences that are natural among proximate states but at the same time it has the potential to deal with heterogeneity within a common framework. Since its ambit is much less sweeping than globalism it tends to have a wider appeal.4 Arguably, a similar distinction marks the relationship between nationalism and regionalism. The former speaks to more particularist interests with a rigid notion of sovereignty whereas regionalism is cosmopolitan in its orientation and a better reflection of the interdependent nature of world politics. To the extent that states seek a collective regional existence they also defy the Westphalian logic of sovereign autonomy, i.e. where states enjoy the right to determine their domestic authority structures without any external influence.5 Even in the absence of supranational authority structures, membership in a regional arrangement entails obligations that can and do impact on national sovereignty. A collective lowering of tariffs is a good illustration of this. Why then do states join a collectivity and how can one explain their seemingly contradictory behaviour where they simultaneously respond to the nationalist, regionalist and even globalist impulses? Arguably, nationalism, regionalism

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Introduction: Why Regionalism?

3

and globalism with their different logics should not be able to co-exist. But they do. One answer to this puzzle is provided by Karen Litfin through the concept of “sovereignty bargains”. Litfin argues that it is better to think of sovereignty as an aggregated concept rather than as a monolith, whose constitutive elements are autonomy (independence in policymaking), control (the ability to produce an effect) and legitimacy (the recognized right to make rules).6 To the extent that states suffer a loss in one of the elements and gain in another, they will be willing to bear the cost of cooperation or integration and move beyond a mere national existence.7 But this does not mean that it is easy to let the regional interest supersede national interests. If it were so, states in some regions would not be so reluctant to move beyond inter-governmentalism. Evidently, states are keen to protect their autonomy but not averse to banding together at the regional level because of perceived gains. In sum, regionalism moderates both nationalism and globalism. Its appeal lies in this. States are at once independent and inter-dependent and they are well aware of the pulls from different planes. One might say that the 1990s demonstrated the push-pull factors rather well. Both the integrating and disintegrating tendencies prevalent among states were brought to the fore in certain regions. For instance, no sooner did some of the constituent units leave larger combines like the former Soviet Union or Yugoslavia that they started fashioning a new regional forum or showed an eagerness to join organizations that functioned in their vicinity. The prominent example was the creation of the

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Commonwealth of Independent States (CIS) in 1991, by the republics that split from the Soviet Union. A similar desire for cooperation led the independent Baltic republics and Slovenia to seek membership in the European Union (EU). The idea of regionalism, on the whole, has enjoyed a near universal support except from those economists who are votaries of multilateral trading arrangements and who fret about regional trade pacts. They decry regionalismʼs negative impact on the economic welfare of third parties and hence have reservations about its benefits. Nevertheless, compared to globalism and/or insular nationalism, which are very contentious and controversial, regionalism possesses a motherhood–and-apple-pie-value. “In much of the political and academic debate, then, there is a strong implication that regionalism is a naturally good thing.”8 It stands as an acceptable middle-ground between the exclusivity associated with state sovereignty and an unnerving, boundary-blind globalism. This positive aspect of regionalism was instinctively sensed by many states who at various times have initiated or supported regional projects. Regional cooperation schemes have generally found endorsement because of their potential to ameliorate or dampen frictions between neighbours. The best example of successful regionalism is that of Europe. The remarkable result it achieved in converting Western Europe into a zone of peace and prosperity has acted as a model of sorts for other regionalist endeavours which were, and are tempted to, replicate its effect. However, they are less enthusiastic about imitating the structural features of the European model. They are equally aware that Europeʼs success did not come easily.

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5

Europe in the post World War period witnessed regional constructions of various types. The Western European examples, both functional and security-related, in turn, led to the creation of regional entities in the Communist dominated Eastern Europe, albeit as a competitive gesture. These may not have been altogether voluntary like the Western European ones but, the reaction to the moves in Western Europe took the form of a regional response which is noteworthy. The Council for Mutual Economic Assistance (COMECON) created in 1949, spoke the language of cooperation among like-minded states and later added integration as a desirable goal. The underlying reason for forming the council was, no doubt, to ensure Soviet domination, but the initiative was equally triggered by the need to counter the possibility of some Eastern European states joining the U.S.-sponsored Marshall Plan. COMECONʼs military counterpart was the Warsaw Pact. It was an answer to the North Atlantic Treaty Organization (NATO) which came into being in 1949. Warsaw Pact was formed in 1955 and was officially dissolved in 1991. Lumping together all these different organizations under the category of regionalism is not without its problems. Apart from the inherent differences between the Western and Eastern European arrangements of that period, the distinction between the functional and security orientations of these organizations must also be borne in mind. Defence pacts, free trade agreements and broad-based regional cooperative organizations are not similar entities. They tend to vary widely in terms of their boundaries, aims, functions and membership. They are also not co-extensive and neither can it be supposed that the formation of any

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one of them will automatically lead to the other two. It happened to be so, more or less, in the case of Europe but not elsewhere.9 The point about the formation of regional bodies is simple: regionalism has always enjoyed a measure of popularity because of an easily comprehensible piece of folk wisdom, namely, that neighbours are better off if they are friendly and not fractious. Regional cooperation is supposed to create the necessary atmosphere for converting foes into friends. Banding together in a regional organization and acquiring the habits of cooperation are expected to gradually transform enmity into amity. Admittedly, mere membership in a regional organization would not do the trick. But as part of a regional arrangement there was bound to be plenty of interaction and, as these links became thicker, the expectation was and continues to be, that the incentive to use force to resolve disputes will decrease in due course. Such projections have had a strong instrumental and procedural content to them, but they were not merely that. It is realized that if they could be made to work properly by adopting suitable strategies, as in the case of the European Community/Union, the fundamentals of inter-state interactions might be reconfigured. With the current growth in the number of regional organizations and the different levels of competence that they display it is inevitable to look for some conceptual clarifications to understand their working. Contemporary literature on regional projects distinguishes between regionalism, defined as the state-led project of cooperation based on formal agreements and inter-governmental deliberations often moving in the direction of a formal

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structure; and, regionalization, defined as the processes of cooperation led by markets, private businesses, trade and investment flows.10 Regionalism is also characterized as an ideology and programme. Thus, regionalization is more of an empirical process which is alleged to have received less attention because of the excessive concern with regionalism as a product. Regionalization can be described in terms of the levels of “regionness” that is apparent.11 This essentially means defining a region in terms of regional coherence and community. These constitute the basic tenets of contemporary regionalism which draws its inspiration from international political economy and is “extroverted rather than introverted”.12 This leads to a caveat: explaining the enthusiasm for regionalism among practitioners or identifying the regionalization impulse is only one part of this introductory survey. Reviewing the broad strands of regionalist literature, both old and new, is the other important task. Since no two regional experiences are exactly alike, it is essential to have some idea about the conceptual underpinnings of regionalism as it has evolved over time. First Generation Regionalism: Theory and Practice Despite the success of the European regionalist experience interest in the study of regionalism which began in the 1950s visibly declined by the 1970s. Initial enthusiasm about regionalism was closely linked to expectations of integration. Form was expected to follow function, which, of course, did not always happen.

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Initial theorizing about regionalism took its cue from the European Communityʼs experience. Neo-functionalists like Ernst Haas13 projected that the spillover effects from functional cooperation would cumulate towards economic and eventually, political integration in Europe. Theorists of Haasʼ persuasion14 also extrapolated from the European experience and wrote about the prospects for regional integration in non-European settings. Neofunctionalismʼs influence on the theory and practice of European regionalism was considerable and many of its concepts entered the political lexicon. The projections and generalizations about integration were not just confined to the scholarly community. Practitioners too dabbled in a variety of schemes to promote regional cooperation outside Europe15 aware of the neo-functionalist logic even if not completely persuaded by it. As “the formation of interstate groupings on the basis of regions flourishe(d)”16 so did its study and analysis. But the scholarly enthusiasm was not very long lasting. Disillusionment set in by the early 1970s. The halting manner in which regionalism was progressing in Europe and elsewhere began exposing the weaknesses of regional integration theories. A number of functional arrangements outside Europe, like the Latin American Free Trade Area and East African Community, had clearly failed. Nor were omnibus entities like the Arab League, Organization of African Unity and Organization of American states doing any better. Secondly, the European integration process itself had considerably slowed down owing to the particularist pulls exerted by nationalism. The anticipated progress

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towards supra-nationalism thus proved elusive. European cooperation was being undermined by the antics of strong leaders like Charles de Gaulle as well as by the compulsions of domestic politics within the member countries. Europe itself was beginning to exhibit the disjuncture between theoretical projections and empirical reality. This did not auger well for academic interest in the study of regionalism. But despite the sombre note struck by those who were explaining the fate of regional integration schemes,17 empirical evidence suggested that regional inter-governmental organizations were merrily proliferating on the ground no matter how ineffective their performance. Joseph Nye wryly noted that, there will continue to be strong incentives for elites to create and use regional organizations … if the demand for identity should lead to widespread dissatisfaction with existing nation-states and the development of strong regional attitudes, the technological changes that are reducing — but not eliminating — the importance of proximity could lead statesmen to support more effective regional institutions. If identitive demands are not intense at the regional level, it seems more likely that technological changes will lead in the direction of functional type organizations.18

One of the important developments was horizontal expansion, represented by the number of regional intergovernmental organizations. But there was no comparable vertical integration process in sight. In other words, states were willing to become part of regional organizations not so much to pool their sovereignty and progress towards

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supra-nationalism but, in fact, hoping for exactly the reverse to happen — that is, to use regionalism to strengthen their sovereignty and willing to cooperate only if the costs of cooperation were kept within acceptable limits. What was acceptable was left to each government of the day to decide. This was especially true of regionalism in the non-European context and, what is even more remarkable, it remains the defining feature of these regional efforts to this day. In other words, it was not as if regionalism was not happening. It was, but not along expected lines. Even so, the number of regional arrangements continued to grow through the 1980s in Asia and Africa. This should have stimulated some theoretical interest but true to form, academics were unwilling to account for something that did not work in theory even if it did in practice! This was indeed true detachment from the real world. Be that as it may, there is an important question that needs answering: why did regional organizations continue to grow and why did governments in the developing world prefer them more than they did the global arrangements? Paul Taylor in his admirable survey on regionalism provides the answer:19 First, developing countries were persuaded to explore the regional option once they had become convinced that their quest for a New International Economic Order (NIEO) was a non-starter. The failure of the Group of 77 or the United Nations Conference on Trade and Development (UNCTAD) to materially alter the skewed international economic system led them to seek redress in regional arrangements. The worsening debt crisis of the 1980s dulled

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their interest in the solutions offered by the International Monetary Fund (IMF) and led them to question the role of the international institutions in mitigating their economic woes. It was at this time that the European Community was moving in the direction of signing the Lome Convention with forty-six developing countries from Africa, the Caribbean and the Pacific (ACP) to stabilize their export earnings. The agreement made the Southern countries realize the benefits of cooperative bargaining.20 Lome One however did not go very far in the direction of helping intra-South trade which Lome Three (1986–90) sought to correct.21 Second, increasing awareness among the people of the developing world about their entitlements exerted its own pressure. This was especially true of the educated class which demanded better governance. These people were irked by the inefficient implementation of various developmental schemes initiated by their countries. Disappointed with the lack of any material progress many of the citizens in these countries began turning to nongovernmental organizations (NGOs) for the articulation and aggregation of their demands. They also looked towards the successful European experience as a model that could be emulated in their own regional neighbourhood. This demonstration effect plus the accompanying literature on the benefits of regional economic cooperation, as outlined by some prominent economists, exerted a powerful pull in the direction of regionalism. The third reason for the growth in regional organizations can be attributed to elite preferences. The political leaders perceived an opportunity to enhance their individual profiles

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by participating in regional forums. In addition, the status of their countries received a boost from regional summit meetings held there. Regional gatherings also improved the channels of communication with neighbouring governments and in some cases, it even provided an opportunity to reach out to people across their borders. An equally important reason for favouring regional endeavour was the chance of hosting its headquarters in the country and drawing some mileage from the international visibility that it yielded. Together these factors made regionalism rather appealing. Finally, as these states saw it, there was little to be gained in swimming against the tide and ignoring the regional option. The world was becoming increasingly inter-dependent and states were not in a position to solve their problems by themselves. So it made sense to join regional institutions which aimed at closer cooperation and coordination among states facing common challenges. In sum, howsoever disenchanted the academics were about the future of regionalism, the practitioners seemed to be embracing it with zeal. There were very few regions without regionalism in some form or another. Interestingly, South Asia was a glaring exception but even here signs of change could be discerned in the early 1980s with the smaller states, Bangladesh in particular, taking the initiative to build an institution. The move succeeded in 1985 with the formation of the South Asian Association for Regional Cooperation (SAARC). In Europe itself some throwback to the neo-functionalist dream was evident. In the mid-1980s European integration received a shot in the arm when the single market plan

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Introduction: Why Regionalism?

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was zealously pursued under the Delors Commission. The Single European Act (1986) and the transformation of the European Community into European Union helped push the member states towards a single currency. The Act was a milestone in the integration process and it included a clutch of initiatives to promote multi-dimensional integration. European efforts once gain proved to be the inspiration spurring integration efforts in other regions. The drive was both a desire to imitate as well as an answer to the emerging “fortress Europe”. But more significantly, the collapse of the international bipolar structure and the inexorable advance of globalization made it imperative to explore the regional route to cooperation. Second Generation Regionalism: Theory and Practice As mentioned at the outset, regionalism received a renewed emphasis at the end of the Cold War, and this revival could very well be termed as second generation regionalism. This phase of regionalism was noteworthy for paying attention to what was being practised at the empirical level, unlike in the first phase, where the tendency was to visualize a specified regional path culminating in supranational institutions. Even though neo-functionalism had considerable impact on the theory and practice of regionalism in the European context, as the European Community evolved, criticism against the theory grew. Its relevance for the non-European regional experience proved shakier. Yet regionalism in one form or another was widely making its presence felt which then had to be explained in slightly different terms. A more

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flexible understanding of regionalism was thus needed to capture the different strands. One way of dealing with this was to treat regionalism as an aggregated concept comprising the following categories: regionalization; regional awareness and identity; regional inter-state cooperation; state-promoted regional economic integration; and, regional cohesion.22 The interrelationship between these distinct analytical categories could shed better light on regionalism as it was conceptualized and practised. The stress was on the dynamic elements that constituted regionalism rather than on formal institutions alone. Even inter-governmental processes could be defined in terms of regimes (rules and norms) de-emphasizing, but not ignoring, the institutional aspects of regional arrangements. In this slightly revised view of regionalism, the context of regionalism was also a factor of considerable importance. It had a bearing on the relationship between regionalism and globalization, which we touched upon earlier. The context, naturally, received due attention from scholars, resulting in some awkward questions. Thus, if globalizaton was making states redundant, surely it must have an equally negative effect on regionalism as well, especially as most regional integration efforts were and are born out of state initiatives and are inter-governmental in nature? But interestingly, regionalism has flourished better in regions where viable and strong state structures exist in contrast to regions where state collapse and failure have been prominent. On the whole, states seem less threatened by regionalism than by globalization and have therefore been more active in promoting the former. Does this mean that regionalism is

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being used as a shield by the states? In doing so are they depriving themselves of the benefits of globalization? There are different views on the relationship between regionalism and globalization, particularly economic regionalism and economic globalization (defined in terms of multilateralism). The most widely noted is of course, the antithetical relationship between the two as the former has been regarded as positively injurious to the promotion of the latter. It has been pointed out that preferential free trade areas and customs unions are “stumbling blocs”23 and would undermine multilateral trade liberalization. In a globalized world where state borders have become meaningless creating regional borders are considered absurd and counter-productive. But there are others who argue that there is no apparent contradiction in the development of regional arrangements in a globalized world and that these can even strengthen the sinews of multilateral trade. “Regional preferences can strengthen export constituencies, provide insurance against failures, lock in unilateral liberalisation and encourage competitive liberalisation”.24 The proliferation of such regional arrangements attests to its popularity. The EU, Japan and the United States have been the major promoters of this “competitive liberalization”. Renato Ruggeiroʼs lament about burgeoning regional trade arrangements that could harm global trade is well known.25 At the same time, going by the number of such actual and potential regional arrangements this option cannot simply be wished away. What was earlier the European tendency became the American preference in the 1980s as the United States began championing the cause of “new” regionalism in

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the form of free trade areas beginning with NAFTA, Free Trade Area of the Americas, Trans-Atlantic Free Trade Area and so on. Americaʼs APEC enthusiasm too could be fitted into this framework. The American explanation for the choice of regional arrangements in the 1980s was typically couched in terms of “stepping stones” or “building blocs” for multilateralism.26 If one followed this logic regional arrangements need not necessarily scuttle multilateralism. They may be regarded as an interim step leading towards global trading arrangements. The supporters of “state-led formal regionalism often argue that the regional level may aggregate individual national policy positions on to a joint position vis-a-vis third parties and thus facilitate both the establishment and the implementation of global multilateral agreement”.27 Thus regionalism can be viewed as facilitating global liberalization. As Vayrynen28 suggests, this liberal interpretation of preferential trading agreements and open regionalism, to some extent, is supported by the reality of international trade flows. Trade within regions has shown expansion and there is also no evidence that the world is on the verge of a war between different regional blocs. Ever expanding open regionalism is therefore an encouraging development and the only thing to guard against would be closed regionalism which is undoubtedly a retrograde step. Support for regionalism also emanates from those who view regionalism as a protection against the onslaught of globalization. The gains may not be economic in this case — as the proponents of open regionalism argue — but “non-economic or social values like distribution and

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social justice as the main driving force for regionalism, in contrast to the basic model of open regionalism that emphasises the search for efficiency and competitiveness as a key driving force”.29 This is conceptualized in terms of developmental regionalism. A related argument for regionalism asserts that economic globalization makes it imperative for states to move towards deeper regional integration. If foreign direct investment (FDI) is brought into the picture along with trade, the need for efficient regional production and service clusters that reduce transaction costs becomes clear.30 The globalization of FDI induces regionalism to become more complete, moving it beyond preferential trading arrangements. In the context of Southeast Asia, the need for deeper regionalism in a globalized world was asserted by one of the former secretaries general of ASEAN in following terms: Southeast Asia has no other alternative. Regional integration, in todayʼs world, is the only way to generate sufficient economic activity, improve efficiency, heighten competition, attract investments, and thus create jobs. No single Southeast Asian nation — not even Indonesia or Singapore — can prosper outside the framework of regionalism. The forces of globalization require closer regional integration if Southeast Asian countries and Southeast Asian firms are to hope to be competitive in the global economy. That is obvious enough. But this imperative is made even more urgent by the disturbing trend of intensifying protectionism and trade distortion in

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the developed world amid its rhetorical homage to globalization and free trade.31

Similar concerns about creeping globalization can also be heard in South Asia where a case is made for closer economic integration by some advocates. SAARC Secretary General Chenkyab Dorji recently warned that “the challenge of globalisation can only be tackled by greater regional integration” and added that the last two SAARC summit deliberations reflected this concern in ample measure.32 Regionalism thus acquires an instrumental dimension as it can be a means of mitigating the ill-effects of globalization. It acts as a pull factor for FDI to flow to the region and this aspect of its attractiveness remains undiminished even after the distressing experience of financial crisis in the East Asian region in 1997.33 If anything, the continuing belief is that the limitations of regionalism can only be corrected by more, rather than less, regionalism. Either as a facilitator or as a firewall, regionalism in a globalized world has an appeal as can be seen from the strategies underway in many regions. This is not to say that the desired level of integration is uniform across the regions, or that there is an absolute consensus even within the regions on complete integration. These issues are still up in the air, no matter how far or fast some regional arrangements might have travelled. The EU is as much subject to contradictory pulls from its member states, some of whom are passionate about a closer union while the others are content to keep to a limited agenda. Within ASEAN, also, opinion is divided on the need to

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accelerate the integration process versus a preference for a minimalist approach and unwillingness to move beyond a simple associational level. SAARC, whose record has been more modest, is also torn between those who advocate a more vigorous regional economic agenda and others who see this as a hegemonial ploy. But none of these debates are against regionalism per se. Nor do they question the value of regional cooperation. Even where the achievements have been poor, the general feeling is that it is better to have regionalised and lost than never to have regionalised at all! Theoretical fascination with regionalism also continues and is now usually approached from the perspective of neo-realism, pluralism, neo-liberal institutionalism and, of late, constructivism. Building on some of these earlier contributions the new regionalism approach (NRA) advocates a more open-ended stance for understanding the transformations under way in the world of regionalism. It stresses that “regionalism and regionalization must be understood in a global perspective, as well as that the inter-related global-regional-national-local levels cannot easily be analytically separated. …”34 Following from this, but not strictly bound by all its tenets, this study uses the term regionalism to denote both the formal and informal elements of regional interactions of states that are members of a regional organization. In short, regionalism is used in a broad sense aware of its various manifestations as the foregoing survey on the theory and practice of regionalism suggests. Globalization and national preferences both impact on regionalism and shape it in a particular way. They could

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propel it towards deeper integration or could slow down the process. Europe and Southeast Asia exemplify these two possibilities. These two regions have been substantially different in terms of the level of institutionalization and formal arrangements because of the push-pull factors of globalization and nationalism. European regionalism is of a much more advanced nature than the loose and informal type of interactions that one sees in Southeast Asia or for that matter in East Asia. ASEAN has often been likened to a club of national governments rather than an integrated entity. South Asian regionalism has taken its cue from its neighbouring region since SAARC is also an intergovernmental arrangement and has been even more reticent than ASEAN in moving to a higher regional plane. While the regional states recognize the need to cohere in order to cope with globalization they are unenthusiastic about resolving the tension between the demands of sovereignty and the need for collective action. Yet they do not want to be a region without a regional structure. To that extent they are keen to be a part of the mainstream. Regionalism as a Middle Path: The Asian Context As mentioned earlier, regionalismʼs appeal has been steadily rising despite the uneven nature of the regional projects underway in different settings. Regionalism has been developing in tandem with global or universal arrangements, but it is not clear that it is pursued with a view to strengthen

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these arrangements or, in a way, substitute them. Given the pull of nationalism, which resents encroachment from globalization, regionalism is seen to provide a mitigating effect with substantial positive potential for other benefits. Therefore, even where achievements have been minimal or where regionalism has failed to be spectacularly effective — or, indeed, even where it is practically non-existent — the enthusiasm for regionalism continues to flourish. This can be seen, for example, in Asia albeit in different measures. A look at the three proximate regions suggests that in the case of South Asia, the effort has been tepid; in Southeast Asia the performance has been reasonably steady; while Northeast Asia is still awaiting the dawn of regionalism. The Northeast Asian states have failed so far to create a regional organization and the prospects of regionalism do not look very bright there even though it is not bereft of regionalization (that is, interactions across borders initiated and dominated by private businesses as seen between Japan, China, and South Korea). The Southeast Asian region, on the other hand, has the best record on regional cooperation among the three regions. South Asia is a mix of the two — there is a regional organization which is twenty years old but interactions among the member states resemble the Northeast Asian situation. The presence of a regional organization, in other words, has not materially changed the regional environment in South Asia as it has done in Southeast Asia. Recent contributions 35 that detail the slow and uncertain progress in regionalist endeavours in Northeast Asia list several reasons for the failure of regionalism

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in that part of Asia. Though Northeast Asia and East Asia are used interchangeably by informed observers, the main members of these regions are China, Japan, North and South Korea, Mongolia and the Russian Far East. A glaring lack of trust among the core members of the region, excessive attention to domestic and local priorities, irreconcilable national identities and enduring bilateral problems have come in the way of creating a common regional platform in Northeast Asia. Judged from the common requirements underpinning economic regionalism Northeast Asia seems to possess them all in ample measures. A relatively high level of prosperity, eagerness to integrate with the international economy, complementarily among the states, robust intra-regional trade and inter-sub-regional cooperation are all present there and they should have pushed the region towards integration. Given this, the promised land of regionalism should have been within the grasp of the countries. But, as one scholar notes: Nationalism was, indeed, the culprit along with unresolved tensions between globalization and regionalism and insufficient local vitality for decentralization to become a positive force for regionalism. The dream of a single, economically integrated region dissolved in a caldron of great-power rivalries and divided countries torn by narrow notions of national interest and distrust.36

While a dedicated Northeast Asian regional organization has so far failed to emerge, a sort of compound regionalism has been fashioned through the ASEAN+3 (APT) cooperative process.

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The APT initiative was a culmination of a process that started with the idea of an East Asian Economic Grouping (EAEG) as proposed by then Malaysian Prime Minister Mahathir Mohamad. It met with strong opposition from the United States. The idea did not receive any support from Japan and Indonesia either. Therefore it was dropped and later it resurfaced in the form of an East Asian Economic Caucus (EAEC). The caucus was envisioned as a consultative forum within the APEC platform. But the 1997 regional financial crisis brought home the necessity of a regional response which neither ASEAN nor APEC managed to provide. Their ineffectiveness prompted a search for a better way to address the mounting challenges faced by the regional economies and the answer was found in APT.37 The APT knits together the Northeast and Southeast Asian regions. The first APT Summit was convened in December 1997 to look into the possibility of financial cooperation. APTʼs first notable achievement was the Chiang Mai Initiative (CMI) of May 2000 which was a currency swap arrangement. ASEANʼs existing currency swap framework was expanded to include China, Japan and South Korea. The other component of the CMI was the expansion of the ASEAN surveillance process to include the three Northeast Asian countries. For the time being, this seems the only way of nudging the core Northeast Asian states — China, Japan and South Korea — in the direction of regionalism. But even this is not assured. The downturn in SinoJapanese relations in 2005 bodes ill for any major breakthrough in regional cooperative efforts. The diplomatic tiff was not confined to only these two major Asian players.

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Japanese-South Korean relations also hit a new low over similar issues that have plagued Sino-Japanese relations namely, Japanʼs unrelenting stand on its historical atrocities and conflicting maritime territorial claims. In fact, the rising tensions between the Northeast Asian neighbours only managed to reinforce the need for a regional forum which could have mitigated the ill effects of these flare-ups. Highlighting the need for a suitable forum where these disputes could be raised, one observer noted: “… the Northeast Asian states can perhaps take a lesson from the ASEAN experience and think of setting up a body aimed at not only addressing present difficulties but also promoting amity and cooperation in the long run. Moves to set up such a Northeast Asia dialogue have yielded limited results so far.”38 In the absence of such a forum the APT acts as an alternative. The APT process has grown steadily and it now has forty-eight mechanisms that coordinate sixteen areas that fall within its purview. A special APT unit was established in the ASEAN Secretariat in December 2003. The East Asia Summit which was held in December 2005 was an idea that developed out of the discussions held by the APT countries desirous of seeing the emergence of an East Asia community. The first East Asia Summit convened in Kuala Lumpur to which India, Australia and New Zealand were also invited. The summit generated a great deal of enthusiasm among some ASEAN states who were convinced that it will “boost economic cooperation and mitigate the negative impacts of globalization in the region”39 and “accelerate the process of Asian economic integration” and also “build the long-term

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architecture of peace and cooperation in Asia, with ASEAN at the centre”.40 But doubts also surfaced about the ability of the summit to accomplish any of these aims considering the reluctance of the ASEAN states to “formalize rules, deepen integration and broaden the scope of cooperative arrangements across the region”.41 Nevertheless, even in its most imperfect form, such efforts confirm that region-building activity in many regions finds enough support among key elites to keep the different projects going. In short, where regionalism exists the preoccupation is to bolster it and make it work better. Where it has not yet come into being it is often promoted as the best way to address regional problems. A region shorn of some rudimentary level of regionalism has become a kind of anathema. Even a poorly performing, stunted sort of regionalism is preferred to no regionalism at all. So it can perhaps be said that the most distinguishing feature of contemporary world politics is the foregrounding of the region. This also means that if regional cooperation is pursued sincerely it can transform a regional system of states into a society, and a society into a community. But just as there are so many different regions there are many different types of regionalisms, too, with widely contrasting capabilities. By comparing their evolution and growth one can understand their performance or predicaments better. Comparisons and Lessons: EU, ASEAN and SAARC The above proposition leads to an intriguing problem: if local genius, rather any template, is being increasingly

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relied upon to conceive, concoct or construct regionalism, is there any sense in talking about lessons that can be learnt from any of the different regional practices? The answer is yes, primarily because there are certain commonalities in the way in which regionalism is approached. Not relying on a template does not automatically mean a sui generis and totally innovative approach or method. In the developing world, Southeast Asian regionalism has had a fair amount of following although no particular arrangement has exactly been modelled on the ASEAN. Just as ASEAN was inspired by, but did not (or could not) hope to imitate the European effort, many of the regional organizations born in the 1980s similarly looked upon ASEAN as providing the right spirit for their own efforts to cooperate regionally. Some of the effusive praise showered upon ASEAN by these putative regional endeavours is evidence enough for this. SAARC, in particular, began its regional journey somewhat doubtfully but once the edifice was erected, the member countries were keen to invoke the best practices followed by ASEAN. They admired ASEAN for transforming the tenor of intra-regional relations in Southeast Asia from hostility to harmony. ASEANʼs demonstration effect was unmistakable, but the difficulty of replicating it was also evident. Just as ASEAN is grappling with the project of community building but is reluctant to move away from an inter-governmental mode of operation, SAARC too is desirous of achieving the level of cooperation that ASEAN has achieved but is unwilling to make due sacrifices for it. In short, the question that

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bedevils ASEAN is how to integrate without integrating and for SAARC, how to cooperate without cooperating! Some answers for this can be found by learning from the experience of others. A mix of imitation where possible, and adaptation where necessary, can prove useful for nurturing the prevailing regional processes. This is proposed with the full knowledge that fluidity and flux are inescapable in managing any regional integration process. Even the mighty are not spared the distress which sometimes accompanies associational life. Even the EU is faced with the predicament of deepening the integration process. As for ASEAN, last year it was agonizing over the prospect of Myanmar as the next chair of the association. It faced the difficult choice of intervening without appearing to do so by prevailing upon Yangon to introduce democratic reforms or step aside without hurting the ASEAN process. In SAARCʼs case the problem was even more basic as it was struggling to hold its yearly summit, which had been postponed twice in 2005. That year also happened to be the twentieth anniversary of its founding and it was painful to see that the association had not achieved the bare minimum of ensuring a regular schedule for its summits. In the European case, until the predicament of 2004 European integration had gone on relatively unhindered because the elites were assured of a supportive European population who did not seriously question the fundamentals or the strategies of the integration process. But this situation changed as popular Euroscepticism42 became more pronounced in the last two years. According to one account:

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The impact of this public opposition is felt in different ways. It has normative implications for the democratic credentials of the European integration project when a significant and growing section of the EU populace does not buy into the European project. Direct, and less theoretical effects can be seen when European populations have a direct input into the integration process or into the EU institutions. Referendums on treaties in member states have rejected significant moves forward. European Parliamentary elections have seen Eurosceptic MEPs elected. In indirect ways we can also see the impact of this Euroscepticism as member-statesʼ governments in traditionally Europhilic states, take positions that allow them to distance themselves from aspects of the European project while bringing them closer to the Eurosceptic elements of public opinion.43

Even if such negative attitudes prevail among a minority it is of significance because of its potential to obstruct the future course of EUʼs development. Besides, the EU is perceived as having reached a plateau and is stuck at the “half-way integration” station where the economic side of integration has reached spectacular levels but political integration is woefully inadequate. A shared creed at the popular level also remains elusive.44 The body blow received by the worldʼs most accomplished regional organization proves that nothing in regionalism can be taken for granted. No matter how mature or well established a regional enterprise might be, its best laid designs can go awry at a critical time. The twin jolts to the EU when the French and the Dutch resoundingly

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voted against the EU constitutional treaty45 which was followed by a fractious summit meeting on the Unionʼs budget, made this abundantly clear. The crisis faced by the EU was endlessly analysed and reflected upon by both Europeans and non-Europeans alike. It could not have been otherwise as EU happens to be regionalismʼs poster child. Any serious threat to it could very well mean the beginning of the end of comprehensive regionalism. The slender cracks on the European wall bode ill for the further expansion and integration of the continent. The painfully put together European house obviously needs some serious repair. Those who had been prescribing the EU pill of greater institutionalization for the other ailing regional organizations can no longer be sure that the medicine is fool-proof. Europeans themselves seem to be questioning the wisdom of deepening the integration process and losing control over livelihood issues. Whether this is a correct reading or not, is not important. That a sizeable section of Europeans should show their disapproval of top-down elitist prescriptions for a better Europe was the key message from the referendum on the constitution. Rejecting the constitution and the squabble over the budget were perhaps merely symptoms of a much deeper malaise. At present, Europeans seem to be feuding over competing ideas that will determine the future shape of the continent.46 The main contest in Europe is between the Franco-German social model versus the Anglo-Saxon neo-liberal model. Surveying the European and Southeast Asian regional scenes Pascal Lamy in one of his speeches observed that the ambitious experiment in supra-national governance that

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Europe represents is born of a unique paradigm which is not easy to replicate.47 According to him the particular chemistry of European integration stemmed from three inter-dependencies: desired inter-dependence, defined interdependence and organized inter-dependence. These three stood at the core of the European paradigm. The burden of his message was that the three components that made the European project possible included a political will to integrate; an agreement on the goals sought; and, the necessary machinery required to achieve the goals. These three components made Europe move step by step from coal and steel in the 1960s to internal markets in the 1980s to the euro in the 1990s. The importance of the machinery or the institutions in realizing the goals of European integration therefore should not be underestimated. Comparing the situation among the ASEAN-10 he noted that the three ingredients do exist in Southeast Asian regionalism but in different proportions, of which the institutional imperative is least recognized by the member states as being vital to community building. Desire to integrate is evident but the definition is unclear. Two models of regional integration that best explain the difference between EU and ASEAN, in Lamyʼs view, are the family model and the good neighbourhood model. The latter is more limited and represents soft integration. It also indicates that there is no strong machinery to build common rules. In short, institution building is front-loaded in EU but back-loaded in ASEAN, according to Lamy.48 Since ASEAN has openly articulated its goal to build an ASEAN community it would do well to reflect on the European experience and draw appropriate lessons.

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The need for learning from the EU is now being stressed by ASEAN leaders themselves. The call is not for across-the-board imitation but is more slanted in the direction of an economic community. But even here there are some inhibitions. As one analyst notes: “Notwithstanding the similarity of terminology, ASEAN is proposing to effect a transition to economic community, without putting in place a customs union, or requiring the formulation of common policies or strengthening the capacity of existing institutions to deal with issues beyond trade.”49 Thus several Rubicons remain to be crossed. For example, as long as there is no common tariff or sanitary or phyto-sanitary standards or a common voice in WTO or no movement towards a monetary union or no solidarity provisions (important for both efficiency and moral reasons) community formation will not be easy. The ASEAN political and social community path is strewn with even bigger boulders. Progress is hampered by an ambivalent attitude towards formal structures. Although a tortuous process, it is also imperative to sequentially construct mechanisms to anchor the process of integration. ASEAN wants to move forward but with one hand tied behind its back. Naturally, doubts are raised about the commitment for creating an integrated Southeast Asian community. SAARC also faces certain grim challenges at a more fundamental level. Not having made any spectacular strides in regional cooperation, the challenge to move forward is formidable. Hampered by enormous intra-regional asymmetries the regional vehicle gets bogged down very often due to incompatible interests of the member states. SAARC is not even able to observe the formality of

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holding regular summit meetings. The 2005 meeting was postponed twice even though the 2004 Summit ended on a euphoric note. Three major documents of significance were signed during that summit: a Framework Agreement on South Asian Free Trade Area (SAFTA), the SAARC Social Charter and the Additional Protocol to the SAARC Regional Convention on Combating Terrorism.50 A concrete achievement on the bilateral front was also registered. The Indian and Pakistani leaders agreed to resume their Composite Dialogue after a long interval. It was expected that these combined gains would provide the much needed momentum for kick-starting the regional cooperative process especially since SAFTA was slated to come into effect in 2006 January. The 2005 Summit was supposed to have paved the way for the smooth implementation of SAFTA but the summit was hopelessly delayed. This created the usual uncertainty that has been SAARCʼs hallmark. It is often said that lack of political will hampers the progress of regionalism in South Asia but in fact the weak regionalist effort can equally be regarded as a manifestation of a strong political will to get by with the bare minimum. The difference between the statist regionalisms of ASEAN and SAARC is that while ASEAN is at least “state-driven”, SAARC is, by and large, “state-stalled”. Both can benefit from the experience of others. In the case of ASEAN, the EU has become a point of reference of late and for SAARC it is ASEAN which acts as a model. This study will therefore discuss some of the salient features of these different regional processes given the interest of the regional states to improve their existing arrangements. Therefore what is attempted here is an illustrative comparison of

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entities that share some attributes but differ in others. The understanding of the unfamiliar can thus be gained by referring to the familiar attributes. Structure of the Book Despite regionalismʼs varied record one thing seems striking. No matter how inefficient its performance may be seldom do we see a roll-back or dismantling of a regional arrangement. One common thread that runs through these efforts is to keep the enterprise alive as much as possible. Obviously, an orderly regional environment is valued by the member states no matter how erratic their efforts towards strengthening the regional edifice may be. Since this is the reality it is worthwhile surveying the gaps and accomplishments of some of these endeavours. In the pages that follow an attempt is made to compare the regional cooperation experience in South and Southeast Asia. SAARC and ASEAN regionalism is the primary focus but references to the EU also figure in the explanation. This is not a comprehensive but a selective comparison of salient structures, practices and trends that have consequence for the overall performance of regionalism in the two regions. The study seeks to outline the practical problems that hamper regional cooperative efforts mainly for a general audience as per the brief of the project. It starts with a broad survey of the objectives and course of regionalism so as to indicate its conceptual and practical evolution. It does not claim to provide a rigorous comparative analysis of regionalism. Its main purpose is to appraise the readers

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of the relative progress made by regional organizations in South and Southeast Asia. It is not a conventional comparative case study. The pervasiveness of regionalism has naturally spawned a vast scholarly literature on the subject. While the survey provided in the Introduction cannot be called exhaustive it has nevertheless tried to capture certain essential turning points. As mentioned in the beginning of this chapter, regional cooperation schemes have attracted the attention of the economists whose main preoccupation has been with free trade arrangements and customs union. Political scientists have been largely concerned with issues of regional order, stability, identity and the potential for moving towards supranationality. In comparison to the enthusiasm for regionalism at the empirical level (as evidenced in the efforts by countries to create formal regional entities even if they perform inadequately) academic interest in the subject has always tended to fluctuate. But with the proliferation of regional schemes of various sorts the attention of the academic, as well as, the policy community in regionalism has increased markedly in recent times. The survey of regionalismʼs origins and accompanying theoretical developments in the study of regional cooperation that is presented in this chapter provides the broad context for regionalism as conceived and practised in South and Southeast Asia. Chapter 2 deals with the formal structures of consequence to the working of regionalism. It begins by emphasizing the need for a proper institutional mechanism that can help the regional enterprise in its task. ASEANʼs institutional deficit relative to the situation within the EU is

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highlighted. This is followed by a comparison of ASEAN and SAARC structures. While ASEAN is still in the process of crafting a formal charter SAARC adopted a charter soon after its formation. Notwithstanding this lag the institutional framework that SAARC possesses is very much modelled on ASEAN. The functioning of the formal and informal mechanisms within the two associations is comparatively assessed. The chapter concludes by drawing attention to some possible improvements in the institutional machinery keeping in mind the avowed aims of community building (ASEAN) and enhanced cooperation (SAARC). Chapter 3 provides a broad coverage of the political and security underpinnings of regionalism as they have evolved in the two regions. The chapter begins by referring to the positive experience of the European states who overcame their age old rivalries by consciously opting for a regional design which to a large extent was an inspiration for many a regional effort that followed. This chapter explains the motivations, challenges and achievements of regional cooperation in South and Southeast Asia and uses Hedley Bullsʼs concept of a “society of states” and a “system of states” as a point of departure. Problems associated with asymmetry and intra-regional/intra-mural differences and their impact on regional cooperation are explained. There is also a discussion on inter-regional, trans-regional and multi-regional initiatives in which both the South and Southeast Asian states have participated. The chapter concludes by arguing that whatever be its limitations the ASEAN region displays the characteristics of a regional society whereas South Asia has not moved beyond the stage of a regional system of state.

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Chapter 4 examines the economic dimensions of regionalization in the context of ASEAN and SAARC with a view to identifying the necessary and sufficient conditions for economic integration in a region to succeed. It examines whether these conditions were satisfied for EU and ASEAN and goes on to suggest that for SAARC they are not. The chapter also says that India, which is the dominant economy in South Asia, has undergone a transformation of its economic structure in a manner that has further reduced its complementarities with the rest of the South Asian economies. It then points to the dominance of the military in Pakistanʼs industrial economy as an obstacle to greater South Asian regional integration. Finally, it says the better way to approach the problem might be to focus on creating and developing regional public goods, both of soft (environment, health) and hard (transport, energy grids) varieties. On the whole, however, it does not see the prospects for SAARC as being very bright. Bearing in mind the current concerns about social issues and a general feeling that regionalism lacks a popular base, Chapter 5 attempts to survey the social side of regionalism. The SAARC Social Charter and the commitment towards poverty alleviation, in the light of UNʼs Millennium Developmental Goals are highlighted in this chapter. The problem of trafficking in women, health, and people to people exchanges in both the regions are some of the issues that this chapter surveys. To conclude, this study puts forth the following propositions. First, regionalism as a driver of national and foreign policies is here to stay. But, second, there is no one-size-fits-all model, so each region relies on an

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adaptation strategy to keep the regionalism process on track. Third, economic integration requires some prior conditions to be fulfilled and does not happen merely because governments wish it to happen. Fourth, in view of the above, there are limits beyond which comparisons between regional arrangements cannot be stretched. Finally, therefore, as an area for future research, the likely trajectories of ASEAN and SAARC, including their converging into a giant Asian regional arrangement, should be explored. Notes and References 1. For instance, the Single European Act, 1987 and the Maastricht Treaty, 1992 enhanced the authority of European Community institutions. The various initiatives “negotiated during 1990 and 1991, seemed to provide further evidence that, after the relative stagnation of the 1970s and the first half of the 1980s, EC institutionalization was accelerating and was moving well beyond the trade issues traditionally of interest to the Community”. Joseph M. Grieco, “The Maastricht Treaty, Economic and Monetary Union and the Neo-Realist Research Programme”, Review of International Studies 21, no. 1 (January 1995): 21. 2. Peter Katzenstein, “Regional States: Japan and Asia, Germany and Europe”, in The End of Diversity? Prospects for German and Japanese Capitalism, edited by Kozo Yamamura and Wolfgang Streeck (Ithaca: Cornell University Press, 2003) p. 89. Also see Peter Katzenstein, A World of Regions: Asia and Europe in the American Imperium (Ithaca: Cornell University Press, 2005). 3. Globalism and globalization are used interchangeably here. They denote a complex web of inter-connectedness across states and societies involving the flow of finance, goods, services, people, ideas and information, thereby eroding state capacity and exposing the redundancy of state borders.

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4. It is argued by some that the relationship between global processes and regionalism is a symbiotic one. See Andrew Wyatt-Walter, “Regionalism, Globalisation and World Economic Order”, in Regionalism and World Politics: Regional Organisation and Regional Order, edited by Loiuse Fawsett and Andrew Hurrell (Oxford: Oxford University Press, 1995) pp. 74–121. Also see Bjorn Hettne, “Globalisation and the New Regionalism: The Second Great Transformation”, in Globalism and the New Regionalism, edited by Bjorn Hettne, Andras Inotai and Oswaldo Sunkel (London: Macmillan, 1999) pp. 1–24. 5. Contemporary ideas of sovereignty emanated from the Peace of Westphalia (1648) which saw the European powers agreeing to honour the principle of territorial integrity. Sovereignty, according to Stephen Krasner, is not an organic whole. He unbundles the concept of sovereignty by looking at its different aspects; inter-dependence sovereignty, domestic sovereignty, international legal sovereignty and Westphalian sovereignty. Krasner argues that the four elements need not always go together. See Stephen Krasner, Sovereignty: Organised Hypocrisy (Princeton: Princeton University Press, 1999) Chapter 1, pp. 3–42. 6. Karen T. Litfin, “Sovereignty in World Ecopolitics”, Mershon International Studies Review, 41, Supplement 2 (November 1997): 169. 7. Explaining the concept of sovereignty bargain in the South Asian context one analyst argues that in South Asia the tendency is to think of sovereignty only in terms of autonomy. See Pratap Bhanu Mehta, “SAARC and the Sovereignty Bargain”, Himal Southasian, November–December, 2005 . 8. Andrew Hurrell, “Explaining Regionalism”, Review of International Studies 21, no. 40 (October 1995): 334. 9. It must be pointed out that the League of Arab States (Arab League), a regional entity, came into being much before the birth of the European regional organizations. Prodded by the British in 1942 for the purpose of using the Arabs as its allies against

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Introduction: Why Regionalism?

10.

11.

12.

13.

14. 15.

16. 17.

01 Intro p1-42.indd 39

39

Germany, the Arab League officially came into existence in March 1945. This regional organization is a linguistically-based union. Arabic should be the dominant language of a state for it to be accepted as a member. Shaun Breslin, Richard Higgott and Ben Rosamund, “Regions in Comparative Perspective”, in New Regionalisms in the Golabal Political Economy: Theories and Cases, edited by Shaun Breslin, Christopher W. Hughes, Nicola Phillips and Ben Rosamund (London: Routledge, 2002) pp. 13–14. For this characterization see, Bjorn Hettne and Frederick Soderabum, “Theorising the Rise of Regionness” in ibid., pp. 33–47. Michael Schulz, Frederick Soderbaum and Joakim Ojendal, “Introduction: A Framework for Understanding Regionalism”, in Regionalization in a Globalizing World: A Comparative Perspective on Forms, Actors and Processes, edited by the authors (London: Zed Books, 2001) p. 4. E.B. Haas, The Uniting of Europe (Stanford: Stanford University Press, 1968). Also, E.B. Haas, Beyond the Nation State (Stanford: Stanford University Press, 1964). Leon Lindberg and Stuart Scheingold, Regional Integration, Cambridge (Mass.: Harvard University Press, 1971). This was the time when ideas of Asian regionalism too began flowering. To begin with, in the 1950s Asian regionalism was conceived in broad, macro and functional terms comprising the independent states of the region. By the 1960s, however this gave way to sub-regionalist (mainly Southeast Asia) endeavours like ASA (1961) and the still-born MAPHILINDO (1963). These proved to be precursors to ASEAN which was formed in 1967. Joseph Nye, ed., International Regionalism (Boston: Little, Brown & Co., 1968) p. vii. E.B. Haas, The Obsolescence of Regional Integration Theory (Berkeley: University of California Press, 1976). Also Bruce M. Russett, International Regions and the International System: A Study in Political Ecology (Chicago: Rand McNally, 1967).

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18.

Joseph S. Nye, “Regional Institutions”, in Regional Politics and World Order, edited by Richard A. Falk and Saul H. Mendlovitz (San Francisco: W.H. Freeman and Company, 1973), p. 92. Quoted in Paul Taylor, “Regionalism: The Thought and the Deed”, in Frameworks for International Cooperation, edited by AJR Groom and Paul Taylor (London: Pinter Publishers, 1990), p. 154. Paul Taylor, ibid., pp. 162–66. “Southern bloc unity at a propitious historical moment with a negotiating partner with long-term economic interests in the bloc were the main ingredients of the Lome success.” Robert A. Isaak, Managing World Economic Change: International Political Economy (New Jersey: Prentice Hall, 1995), p. 182. The Second Lome Convention or Lome 2 (a five-year aid and trade arrangement) which was negotiated in 1979, achieved only very modest results. Hurrell, “Explaining Regionalism”, pp. 334–38. Jagdish Bhagwati, The World Trading System at Risk (Princeton: Princeton University Press, 1991). Raimo Vayrynen, “Regionalism: Old and New”, International Studies Review 5, no. 1 (March 2003): 33. Renato Ruggeiro, “Implications of World Trade in a Borderless World”, Speech to the World Trade Congress, 24 April 1996 . See Atsushi Yamada, “Between Regionalism and Multilateralism: New Dilemmas in US Trade Policy” . Morten Boas, “The Trade Environment Nexus and the Potential of Regional Trade Institutions”, in Breslin, et. al. op. cit., p. 48. Vayrynen, “Regionalism: Old and New”, p. 33. Helen E.S. Nesadurai, Globalization, Domestic Politics and Regionalism: The ASEAN Free Trade Area (London: Routledge, 2003) p. 35. Robert Z. Lawrence, Regionalism, Multilateralism and Deeper Integration (Washington D.C.: Brookings Institution Press, 1996).

19. 20.

21.

22. 23. 24. 25.

26.

27. 28. 29.

30.

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Introduction: Why Regionalism? 31.

32. 33. 34. 35.

36. 37.

38. 39. 40.

41.

42.

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41

Rodolfo C. Severino, “Globalisationʼs Challenge to Regional Economic Integration”, Speech delivered on 30 May 2002 . The Rising Nepal, 16 April 2005. Paul Bowles, “Regionalism and Development After(?) the Global Financial Crisis”, in Breslin et. al., op. cit., pp. 80–103. Schulz, Soderbaum and Ojendal, Regionalization in a Globalizing World, p. 13. See the following: Gilbert Rozman, Northeast Asiaʼs Stunted Regionalism: Bilateral Distrust in the Shadow of Globalisation (Cambridge: Cambridge University Press, 2004); Claes G. Alvstam, “East Asia: Regionalisation Still Waiting to Happen?”, in Shulz, Soderbaum and Ojendal, op. cit.; The Emerging NorthSouth Divide in East Asia: A Reappraisal of Asian Regionalism, edited by Hank Lim and Chyungly Lee (Singapore: Marshall Cavendish, 2004); Naoko Munakata, “Has Politics Caught up with Markets? In Search of East Asian Economic Regionalism”, in Beyond Japan: The Dynamics of East Asian Regionalism, edited by Peter Katzenstein and Takashi Shiraisi (Ithaca: Cornell University Press, 2006). Rozman, Northeast Asiaʼs Stunted Regionalism, p. 2. Douglas Webber, “Two Funerals and a Wedding?: The Ups and Downs of Regionalism in East Asia and Asia-Pacific after the Asian Crisis”, Pacific Review 4, no. 3 (2001): 339–72. K. Kesavapany, “ASEAN Proves to be Regional Blessing”, Straits Times, 18 April 2005. Views expressed by Malaysiaʼs Deputy Prime Minister Najib Razak, Jakarta Post, 29 July 2005. See Singapore Foreign Minister George Yeoʼs speech at the Global Leadership Forum in Kuala Lumpur, Straits Times, 8 September 2005. Views expressed by Indonesiaʼs State Minister for National Development Planning, Sri Mulyani Indrawati, Jakarta Post, 29 July, 2005. The term Euro-scepticism is “derived from journalistic discourse rather than political science” but what it denotes is a “disparate

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42

43.

44.

45.

46. 47.

48. 49.

50.

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Regional Cooperation in South Asia and Southeast Asia bundle of attitudes opposed to European integration in general and opposition to the EU in particular”. Aleks Szcerbiak and Paul Taggart “Theorising Party-Based Euroscepticism: Problems of Definition, Measurement and Causality”, Sussex European Institute Working Paper no. 69, 2003, p. 6 Paul Taggart and Aleks Szcerbiak, “Crossing Europe: Patterns of Contemporary Party-Based Euroscepticism in EU Member and the Candidate States of Central and Eastern Europe”, Paper prepared for presentation at the European Consortium for Political Research and Joint Workshops, Turin, March 21–27 2002, p. 3 . Amitai Etzioni, “How to Build a European Community?”, USEurope Analysis Series (Washington: Brookings Institution, July 2005), p. 1. “Dutch Reject EU Constitution”, CNN International, 1 June 2005 . Philip Blond and Adrian Pabst, “Europe Needs to Start Thinking Locally”, International Herald Tribune, 25 June 2005. Pascal Lamy, “Lessons of Europe for Global Governance”, First Anniversary Public Lecture, Lee Kuan Yew School of Public Policy, 15 August 2003. Ibid. Alfredo C. Robles, Jr., “The ASEAN Free Trade Area and the Construction of Southeast Asian Economic Community in East Asia”, Asian Journal of Political Science 12, no. 2 (December 2004): 79. “Outcomes and Implications of the 12th South Asian Association for Regional Cooperation Summit, Islamabad”, Views presented by the SAARC countriesʼ ambassadors to the EU, Contemporary South Asia 13, no. 1 (March 2004): 79–90.

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Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

2 Regionalism: The Institutional Framework The experience of the last half-century shows that while regional cooperation schemes are significantly shaped by interests, ideas and identities, institutions are equally important for sustaining the process. The institutional architecture and its impact on governance has now become a staple in the study of domestic political systems. This was not so in the 1970s and 1980s when formal institutional structures were regarded as less important than understanding the dynamics of competing group interests and cross-cutting identities within a society. But now that good governance has become a critical issue of focus for practitioners and scholars alike, there is a renewed emphasis on institutional factors.1 Failed states and democratization have both pushed the concerns about institutions to the top of the academic and policy-making communityʼs agenda because of the widespread belief that institution building is a vital prerequisite for good governance. What applies at the domestic level is also applicable at the regional and global levels. The concern for institutional strength is reflected in the ongoing debates about the need for reforms in the structure of international organizations like the United Nations. Some regional organizations are also engaged in the task of refurbishing their existing machinery to suit new conditions. It is in this context that

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the benefits and shortcomings of the formal machinery of regionalism are discussed here. Our discussion begins with a short comparative sketch of EU and ASEAN institutions. It then moves on to some of the formal and informal mechanisms within ASEAN and SAARC, including the role of summit meetings, the secretariat and the secretary generalʼs role, revenue and funding, and external linkages of these associations. It concludes with suggestions for managing the institutional shortfalls in the two Asian regional arrangements. The focus is no doubt narrow but relevant and what is offered here is a flavour rather than a full recipe. The chapter also deals with inter-sub-regional initiatives, comprising states from South and Southeast Asia as well as sub-regional cooperation in the form of growth triangles. Formal Framework of Cooperation Regionalismʼs institutional apparatus varies from region to region. European regionalism is endowed with an elaborate structure which makes it somewhat unique. In comparison, regionalism in Southeast Asia walks with a light step, so light that it almost levitates. It is not anchored in strong structures and there is no supranational overlay. ASEANʼs simple organizational arrangement has been a subject of comment both within and outside the region. ASEAN came into being after ten years of the birth of the European Economic Community, but it did not emulate the institutional path that the EEC (subsequently called the European Union) followed. Few people allow for it, but the fact is that the EU is much more than

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an inter-governmental organization because it possesses a special legal status and enjoys a supra-national status in certain designated areas. The term supra-nationality is used “to characterise a political body that has acquired some of the attributes usually associated with a nation, such as political loyalty and decision-making powers — based not on an aggregate of national decisions or those made by representatives of the member states, but rather on those made by the supra-national bodies”.2 Supra-nationality also means that it enjoys substantial enforcement capacity. ASEAN, on the other hand, was conceived quite differently from the EU. The Bangkok Declaration was neither a treaty nor a charter. It was more like a framework agreement urging the member states to cooperate, rather than imposing an obligation to do so. It did not envisage any delegation of authority to the regional organization. It was basically a mechanism to engage with one another — a basis, if you will, for cooperation rather than a structure of cooperation. Right from the beginning the association rested on the principles of consultation and consensus. No particular timetable was laid out at the outset for the achievement of any specific goal. ASEANʼs objectives were couched in very general terms necessitating a case by case, paragraph by paragraph, sentence by sentence process of reaching a common agreement. This is the hallmark of a typical inter-governmental set-up that is unwilling to cede any authority to a higher body. Much of the blame for the glacial pace at which the organization has moved so far has been ascribed to this particular fact.

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In a sense, this was inevitable because in the Southeast Asian context there is a compelling logic that favours this cautious approach. This was starker in the early days of ASEAN. “The objective was to avoid compromising fragile political cohesion by conflicts over concrete functional programmes and projects where competitive national interests will come into play.”3 Even today the association is unable to shake off this apprehension and initiate any move that smacks of supra-nationalism of even a rudimentary nature. History, culture and elite preferences have largely determined the formal features of regional organizations everywhere. The result is that no two cases of formal cooperation are exactly the same. Some features may be shared but, by and large, regional arrangements are marked more by differences than similarities. There is thus a noticeable difference in the institutional structure of the EU and ASEAN as mentioned in the last chapter. Even when there are certain common structures, their actual functions may substantially vary as noticed between ASEAN and EU and also between SAARC and ASEAN. The EU has four main institutions. The first is the Council of Ministers which is the main decision-making body, comprising the foreign ministers of member states who meet once a month. It has the power to approve the policy of the community fashioned by the European Commission. The council is supported by 2,600 staff based in Brussels. (This is different from the European Council which brings together heads of governments and states along with the president of the European Commission and meets twice a year). Roughly similar bodies are found in

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ASEAN except that the foreign ministers meet only once a year (ASEAN Ministerial Meeting or AMM) and the AMM is not the supreme decision making body. SAARC has a similar body, the Council of Ministers comprising foreign ministers who meet at least twice a year. The second important institution of the EU is the European Commission which is the administrative and executive body. More than two dozen commissioners nominated by their national governments and approved by the European parliament serve for five years as commissioners. The commission enjoys the power to propose and draft legislation. All the politico-administrative competencies of the EU are concentrated in the Commission. Much of the criticism about “democratic deficit” in the EU stems from the commissionʼs policymaking style and lack of transparency. The commission headquartered in Brussels is supported by a staff of 20,000. ASEAN does not have an equivalent body. Neither does SAARC. The third important organ is the European Parliament whose members are democratically elected by the citizens of Europe and serve for five years. The main function of the parliament is to scrutinize EU institutions and it is supported by 4,200 staff members. ASEAN has no such body and while formal-ASEAN has not endorsed the idea of a parliament, several calls for it have been made by the ASEAN Inter-Parliamentary Organization (AIPO). The Philippines delegation to AIPO in 1980 first tabled the motion for the creation of such a body. The idea of a parliament is supported by non-governmental organizations and other interest groups. The European Parliament has also been very keen to offer its help and experience in building

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a multinational and multilingual legislative institution that could boost regional integration in Southeast Asia.4 In the case of SAARC, some scholars5 have floated the idea of a South Asian parliament but other than the Association of SAARC speakers and parliamentarians, there is no proposal for the setting up of a regional legislature. The European Court of Justice is the fourth key institution within the EU, composed of a judge from each member state. The court interprets and rules on legal matters and disputes involving EC law. ASEAN and SAARC do not have a regional court. The EU institutions6 have been critical in integrating Europe especially in the economic field. This is not matched in the area of a common European foreign or security policy, where sensitivities still abound. In these two areas the mode of operation is inter-governmental. Despite this the institutional sinews of EU are substantially strong. The founders of European regionalism had intended that they should be so. No other regional organization quite matches the EU in this respect and ASEAN and SAARC are no exception. ASEAN’s Institutional Dilemmas ASEAN as a regional cooperative body had an uncertain beginning but it managed to make a mark in the Asian and the wider international system as a successful “diplomatic community” in the 1980s.7 Even after the end of the Cold War it was remarkably agile as it set about expanding its membership to cover the whole of Southeast Asia, moved towards a more ambitious functional agenda, and, played a

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prominent role in the development of broader economic and security forums like the Asia-Pacific Economic Cooperation (APEC) and the ASEAN Regional Forum (ARF). But by the latter half of the 1990s grave doubts about the relevance and durability of the organization began surfacing. The 1997 regional economic meltdown had a great deal to do with the pessimism that became pervasive. The regional economic crisis was compounded by the ugly bilateral spats between the member states and the inability of the regional organization to provide even a token solution to any of the problems confronting the region (these will be elaborated in the next chapter). Observers were quick to blame the lack of proper structures and mechanisms for ASEANʼs poor response to the regionʼs multiple problems. Their absence, it was said, prevented the regional organization to rise to the occasion. Some felt that an organization that had been in existence for three decades should have been more nimble and active in tackling the regional malaise. These problems were not merely confined to the economic realm but also included ecological and ethnic issues. Essentially, the criticism that has dogged the ASEAN states is their failure to create a supranational authority that could act as a regional decision-making body. The necessity of such a body has been a matter of debate. Clearly, institution-building (the hard variety) has not been ASEANʼs strongest suit. Typically, those who take a narrow view of cooperation argue that the members had never aimed at supranationality. The member states had made a conscious decision to keep the range of cooperation limited to the horizontal plane and did not envisage any

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significant role for ASEAN to address such problems. Furthermore, it is asserted that such an arrangement has served the organization reasonably well and, therefore, the need for any radical departure from this tried and tested path was not necessary. In other words, sprouting a Brussels equivalent is neither feasible nor desirable. If anything, ASEAN elites had consciously kept clear of that objective. This naturally ensured the continued survival of the organization albeit with a diminished impact. There was always reluctance on the part of the members to be steered by a thicket of rules and regulations.8 ASEANʼs preferred option has been to rely on conventions and customs that were wholeheartedly shared and endorsed by members. Consensus-based decisions, non-dilution of sovereignty and scrupulous adherence to the principle of non-intervention formed the bedrock of what is famously called the “ASEAN Way” (discussed in the next chapter) and it served to keep the enterprise intact.9 Much like the practice of countries which govern without a written constitution, that is, Britain, by relying on customs, traditions and conventions, ASEAN, too, seems to have opted for this model. Not surprisingly, many regional observers question the necessity of changing this practice. If countries can be run without a codified set of rules and regulations, goes the argument, why not a regional organization? Persuasive though it may be, this argument is valid only up to a point because the unit of analysis is not the same. What applies to a single country cannot be valid for a group of sovereign states. Besides, it is not as if the countries lacking a written constitution (Britain, New Zealand and

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Israel) do not have any binding laws or institutions to govern them. Secondly, ASEANʼs avowed goal now is community-building. While minimal institutionalization may have served the purpose until now, it is plainly inadequate for propelling the regional states towards a greater level of economic and social integration which they seem to desire. Those who are critical of ASEAN fault it for this glaring inadequacy and point out that it might become irrelevant owing to this lacuna. It is pointed out that a more definitive regional framework or a more forward approach to regionalism can provide solutions to the regionʼs problems from within the region. The remedies need not then be initiated by outsiders while ASEAN helplessly looked on. In short, institutional deficit has been a major point of contention in the evaluation of ASEANʼs performance. This deficit has been emphasized by both regional and outside scholars. Take for instance the agonizing case of framing and resorting to a proper dispute settlement mechanism (DSM) in the context of ASEAN Free Trade Area (AFTA). Four steps are involved in any DSM — consultations, a neutral entity that will hear the issues in the case, appeals by both parties, and the final verdict. ASEAN has a DSM which entered into force in 1996 followed by the 2004 protocol on an enhanced DSM. But interestingly, the mechanism has not been used so far. As one analyst notes: One of the most important initiatives introduced in Bali (2003) was the creation of an enhanced dispute settlement mechanism (DSM) with more effective

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powers to resolve trade disputes among member states. This is clearly crucial to the success of the ASEAN Economic Community (AEC) as the number of trade disputes will definitely rise significantly as the region moves towards a higher level of economic integration. However, without sufficient resources to enhance the DSM, it will remain an ineffective and unused mechanism. Moreover, the complete depoliticisation of the DSM — one of the main aims of the new DSM — would be a difficult task to achieve. For instance, despite highly legalistic proceedings at the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA), trade disputes among member states in both institutions continue to be politically charged. A major stumbling block towards greater economic integration would be ASEANʼs weak institutional structure. Many economists argue that ASEANʼs slow progress in tackling non-tariff barriers is due to its weak institutions and lack of an effective enforcement mechanism. In this regard, the European Union (EU)ʼs experience is worth noting as institutional development started at an early stage of economic integration.10

ASEANʼs DSM is fashioned after the WTO DSM and the latter has received some 330 cases of appeal. DSM in ASEAN is yet to open its account and this is not because there are no disputes to settle. Three reasons have been advanced for the lack of cases filed in ASEAN: Foremost is the fact that not all ASEAN countries have nominated their experts for the DSM Appellate Body (as provided in the new DSM Agreement).

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Secondly, timeframes are foreseen to be exceptionally long in ASEAN since the deciding body (the ASEAN Economic Ministers) meets only twice a year, which means that the time gap between AEM meetings could be between 90 to 180 days. Finally, there is still no clear established method to effectively determine and implement compensatory relief to an aggrieved party.11

All in all, weak institutionalization undercuts the effectiveness of the mechanism. The question of greater institutionalization continues to be a hotly debated issue and has acquired particular salience in the wake of the proposals for an ASEAN Community and the proposed ASEAN Charter. The ASEAN Vision 2020 proposal which was further refined in the ASEAN Concord II envisages greater integration in the form of an ASEAN Security Community (ASC), ASEAN Economic Community (AEC) and ASEAN SocioCultural Community (ASCC).12 It is increasingly felt that a community can hardly be realized unless a rulesbased framework is adopted and better institutionalized cooperation is undertaken. Apparently, the difficulty of conducting the business of regionalism in a community mould is not feasible in the absence of a tighter organizational framework, which is essential for ensuring predictability. Some members are still wary of going along with the idea of a rule-bound institution. “ASEAN relies almost entirely on a policy regime and does not have a legal regime. Consequently, the rule of the bureaucrat and not the rule of law governs decision-making and also the implementation phase.”13

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But community-building and consolidation cannot occur without a formal constitution or charter. This contributes to an anomaly. As it stands, there is no legal recognition of ASEAN in the domestic laws of the member countries except for Indonesia.14 The reason Indonesia made the provision in the 1970s was because the ASEAN Secretariat was going to be located in Jakarta. But the other ASEAN countries have made no such provision. As pointed out by Secretary-General Ong Keng Yong, It is not very difficult for the members to provide a legal recognition to ASEAN. Legal status can be bestowed by introducing a subsidiary legislation. Even an ordinance can be promulgated for the purpose. In the case of Singapore which has an International Organization Act passed by parliament, an annex can be added to correct this anomaly.15

A legal standing under the domestic law has various advantages such as sourcing for funds and other forms of support from the business community for its projects. But right now companies hesitate to make donations when they cannot claim a tax write off: … since ASEAN has no legal entity, it cannot obtain any tax-exemption status. This shortcoming deters big multinational corporations from contributing funding support to ASEAN projects. How can you contribute to a non-entity? And even if you really want to, you cannot claim any tax deduction benefit because ASEAN is not recognized as a non-profit organization in any of its own ten Member Countries.16

The lack of an ASEAN charter is now being seriously looked into. Back in the 1970s Thailand and the Philippines

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had initiated the move for a charter but the effort was inexplicably given up. Presently, there are plenty of models that ASEAN could choose from, but the preference is for something that is simple and straightforward. Obviously, the voluminous, but not necessarily luminous, EU document is not the favourite. According to Mr Ong, “the SAARC charter seems appealing. It is a brief but clear document comprising 10 short articles. Perhaps, this is one area where SAARC could provide ASEAN with some leads.”17 The necessity of a charter is now well recognized and during the Tenth ASEAN Summit, leaders agreed to work towards formulating it. ASEAN, as pointed out above, had never aspired to become a supra-national organization. Nor did it begin its life with a clear-cut time table for closer integration. Its goals were modest, and its approach was cautious. Despite this, over the years, several attempts have been made by the members to address the institutional weaknesses that stalled its progress. But these did not lead to any major improvement of the existing structure even though the need for improving the organizational machinery seemed quite self-evident. A task force was constituted in 1982 to assess the associationʼs machinery. Its recommendations did not go down well with the governments. Then in 1986, the Group of Fourteen which was sponsored by the ASEAN Chambers of Commerce and Industry prepared a report entitled, ASEAN: The Way Forward. In 1991, yet another set of recommendations emanated from the Group of Five. The reports from none of these groups sounded sanguine about the existing mechanisms and processes that guided the association. But this did not stimulate the

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grouping to undertake any immediate reforms. Instead, whatever marginal changes that were later undertaken by the ASEAN states resulted from the epochal shifts that occurred at the global and regional levels in the early 1990s. They provided the much needed stimulus for reforms but even so, the results fell far short of expectations. ASEANʼs institutional evolution can be divided into three phases.18 The first decade of its existence was marked by a very loose, disjointed structure which was dominated by a few committees headed by officials. There was no effort made to coordinate the work of these committees in an ASEAN-wide manner. Although the committees generated numerous plans, projects and cooperative schemes there were few approvals and little project implementation. Notably missing from the regionalist orientations of the functional committees was any agency to connect ASEAN developmental cooperation to the national developmental priorities and programmes of its member states. This was a fatal pill for future ASEAN initiatives. ASEANʼs bureaucratic backstopping was decentralized in national secretariats tasked with carrying out the work of the organization on behalf of their country as well as serving the AMM and other committees. The national secretariats had no horizontal links with each other or to any centralizing coordinating body above them.19

The next phase from 1976 to the early 1990s did not prove to be a great turning point for institutional development. Nevertheless, a slight change could be discerned. The first summit in 1976 produced the “Declaration of ASEAN Concord” and the Treaty of Amity

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and Cooperation (TAC). Significantly, an administrative secretariat was instituted headed by a secretary general of the ASEAN Secretariat rather than of the association, appointed for a two-year term on a rotating basis. The secretariat was a very minimal outfit with no independent powers or role. The AMM continued to remain the key decision-making body, the main ASEAN organ below the heads of government. The 1992 ASEAN Summit held in Singapore was the third phase of institutional evolution. It moved the cooperative process in a more decided way by first of all institutionalizing the ASEAN summits. These were to be held every three years, interspersed with informal summits in between. Following the decision made during the summit to establish an ASEAN Free Trade Area (AFTA), the bureaucratic structure related to economic cooperation was revamped. The Senior Economic Officials Meeting (SEOM) was put in place to undertake the responsibility for handling economic cooperation measures that were earlier the responsibility of the ASEAN economic committees which were abolished. The responsibility for the implementation of AFTA was placed in the hands of a ministerial council. An AFTA Bureau was created within the secretariat and tasked with providing technical support for its implementation. (There are three other bureaus in the secretariat: Bureau of Economic Cooperation, Bureau of Functional Cooperation and the Bureau for ASEAN Cooperation and Dialogue Relations). The decision to establish a free trade area was itself a significant development on the road to integration. Although AFTA belonged to the lower rungs of the economic

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integration ladder, it was still a giant step in ASEAN terms. The qualifications and escape clauses that accompanied it no doubt diminished its value. But this was to be expected given the reluctance of the member states to embark on any supranational institution or mechanisms. In any case, after missing the original deadline AFTA was launched a year later in 1994. The third phase also witnessed changes in the secretary-generalʼs term (extended to five years), position and role. An incremental change in the assigned role of the secretary-general is now perceptible who is now “mandated to initiate, advise, coordinate and implement ASEAN activities”.20 He is assisted by fifty professional staff appointed on the basis of open recruitment and regionwide competition. The secretariat is assisted by 140 locally recruited support staff. The secretary-generalʼs office has been re-designated as the Secretary General of ASEAN and he has been given a ministerial status instead of an ambassadorial one and … the appointee is now recruited on a competitive basis rather than on a rotational basis. Yet, the change in the status of the Secretary-General does not signify a fundamental change in the nature of ASEAN as a loose, intergovernmental form of cooperation that continues to accord priority to the primacy of national sovereignty and to the central role played by foreign ministers.21

The secretary-generalʼs position has, no doubt, been upgraded but his authority still remains limited at a time when so many new initiatives have been mooted by ASEANʼs leaders. The ASEAN Secretariat is not vested

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with any power to enforce the implementation of the various plans and programmes undertaken by the association. It can merely communicate with the parties that fail to comply and make a report to the heads of government. If it acquires even limited powers of enforcement it might help the association to creatively fudge the principle of non-intervention. Once the responsibility to ensure compliance is shifted to a formal body like the secretariat, the whole process can be insulated from political complexities that bedevil implementation deadlines and other commitments. Even when there are regulatory regimes like the ASEAN Transboundary Haze Pollution Control Agreement, they are ineffective. Environmental regionalism is visible in Southeast Asia but its progress is hobbled by the lack of “legally binding treaties with institutional supervision by the ASEAN Secretariat to facilitate compliance”.22 First of all, Indonesia which is the main culprit has not yet ratified the 2002 anti-haze treaty. (So far only eight members have ratified the agreement). This means that any regional response to the problem is out of the question and timely action is impossible. For instance, the choking haze from the forest fires in Sumatra in 2005 covered parts of Malaysia but no swift action could be taken to combat it. Malaysia and Singapore were ready to offer their services to put out the fires but Indonesia dithered.23 Whatever help ultimately materialized, either in the form of cloud seeding by Singapore Armed Forces or the help rendered by Malaysian fire fighters, was not exactly an ASEAN undertaking and to that extent the response exposed the fragility of the institutional process. With the recurrence of the haze problem in 2006 the pressure was again on

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Indonesia to take mitigating action to address the menace. A special meeting of representatives from the countries affected by the haze was convened in Pekanbaru in October 2006 which agreed to set up a high-powered regional panel of environment ministers from the affected countries, and decided that Indonesia would organize a regional workshop to seek international assistance to tackle the haze problem.24 But in the absence of Indonesian ratification, no immediate solution to the challenge posed by haze could be expected other than the usual rhetoric of joint action. The upshot, therefore, is that tried and tested ways of running the regional project continue to exert their hold on ASEAN. This is notwithstanding the enthusiastic call made during the 2003 Bali Summit to steer the region towards the realization of an ASEAN community. It would seem that ASEAN is capable of displaying a collective will, a collaborative will even, but it is still wary of moving beyond inter-governmentalism. However, in the context of the modest level of institutionalization, it is worth noting that some changes did occur tangentially during the mid- to late 1990s. The first was membership expansion. ASEAN members enthusiastically welcomed the rest of the Southeast Asian countries within their circle. It could be said that between broadening and deepening of the association the former enjoyed a greater preference. On their part, the newer members, Cambodia, Laos, Myanmar and Vietnam (CLMV) also felt quite comfortable in belonging to an organization that underwrote the sanctity of national sovereignty and was in no hurry to acquire any supranational trappings. In some ways the deepening of the regional institution

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has perhaps been made more difficult now. The CLMV countries are even more circumspect about compromising their autonomy and would be wary of supporting any move that dilutes their sovereignty. Thus the prospect for greater institutionalization and consolidation has become that much more complex now. In sum, the post Cold War environment did make ASEAN acutely aware of the need to accelerate the process of cooperation and integration. But so far the declaratory dimension has been the most robust part of the transformation agenda. This should be a cause of concern for a region that wants to realize its vision of a comprehensive ASEAN community and it is this prospect that dominates its current thinking. EU as a Model? Whenever criticisms are levelled against the stunted growth of institutions in ASEAN, it is based on either an implicit or explicit comparison with the EU. But not everyone agrees with the wisdom or fairness of such a comparison because using the EU as an example means setting the bar for regionalism too high. But in some sense using the EU yardstick has also become inevitable. Increasingly, ASEAN leaders themselves have been signalling the need for strengthening the formal procedures for economic integration. Singaporeʼs Senior Minister Goh Chok Tong spoke about the necessity of following the EU example of community-building through greater integration. 25 Dr Mahathir of Malaysia emphasized the necessity of

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nurturing an ASEAN community “by taking a leaf from the process which led to the formation ultimately of the European Union”.26 Not long ago Malaysiaʼs Foreign Minister Syed Hamid Albar asserted that for realizing deeper integration in the community mould ASEAN could learn some lessons from the EU.27 Thus what we see is an awareness of the need for a rules-based community on the one hand and, on the other, an extreme circumspection to give any concrete expression to it. This was apparent in the half-way measures adopted on dispute settlement procedures as referred to earlier. Since the 1996 mechanism got caught in the proverbial bureaucratic maze, an Enhanced Dispute Settlement Mechanism had to be crafted to address the gaps in the earlier protocol. The particular problem that the earlier protocol had was that it relied on political rather than on administrative or juridical procedures for mitigation. Of equal concern in this regard has been the practice to rely on bilateral negotiations to resolve differences which means that there is a reluctance to adopt a transparent framework for resolving any dispute by keeping politics out of the equation. Because once bilateral remedies are resorted to, then it becomes awkward to apply any standard operating procedures which an organization relies on to avoid bias. The incremental changes made in formalizing the most basic procedures of the association have left ASEAN miles behind the EU. This is echoed in the views of an EU scholar in the context of regional disparities and the measures adopted to control its negative fall out for the weaker ASEAN members:

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Comparing the EU and ASEAN with respect to the explicit institutional, as well as, the implied and built-in solidarity mechanisms, it clearly appears from the outset that the EU, while delegating national sovereignty in some areas to the supra-national level, disposes of deeper and more powerful mechanisms of solidarity than ASEAN. This is quite apparent if we look at regional policies at the EU level, which are based on well-defined policy targets using EU policy instruments …Contrary to the largely supra-national approach of the EU towards regional disparities, the ASEAN approach is that of sub-regional cooperation … (which) are largely informal and are facilitated by the Asian Development Bank (ADB) which also provides technical, administrative and logistical support. ADB is not a supra-national body of ASEAN but a development bank….28

This situation occurs because ASEAN is firmly guided by the national approach as opposed to an associational approach although it is not unaware of the imperatives of closer integration and an accompanying change in approach. One of the major triggers for a mild rethinking on greater integration currently has been the competition for investment which China is soaking up at an inexorable pace. The calls for an AEC and an East Asian Community stem from the necessity of making the region attractive in the face of such economic challenges. In the process of making AEC more meaningful, ASEAN has had to innovate in a way that has marginally added to its institutional strength. Three new bodies have been envisaged in this context:

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An advisory legal unit within the ASEAN Secretariat for trade disputes; a consultative mechanism to solve trade and investment disputes (ACT), modelled after the EUʼs SOLVIT mechanism for quick resolution of operational problems; and an ASEAN Compliance Body, modelled after the WTOʼs Monitoring body.29

This shows that it is not as if the costs of loose, unstructured arrangements are not apparent to ASEAN states. Had it been so the Enhanced Dispute Settlement Mechanism that replaced the 1996 protocol would not have been necessary. Some of the objectives that the association has set for itself cannot be achieved without remodelling it. But creating the machinery alone is inadequate if it is not used properly. Secondly, too much institutionalization might be as bad as too little institutionalization. While the EU may be held up as a model for integration the mind numbing bureaucracy that Brussels has spawned to run the regional machinery is a lesson that is well avoided.30 It is an acknowledged fact that a bloated bureaucracy can be expensive and dilatory. Many international and regional organizations are criticized for these sins. This is not an affliction that affects ASEAN at the moment but greater institutionalization may lead it in that direction. It must also be borne in mind that not all ASEAN countries are in a position to divert their fragile human resources away from domestic to the regional level. This is particularly so in the case of the newer ASEAN members. All the same, the creation of certain necessary monitoring frameworks is unavoidable within ASEAN. The implementation component too needs to be strengthened.

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Arguably, the existing mechanisms in ASEAN can be improved and expanded to make this feasible. But the continuing lack of an enforcement mechanism is bound to hobble the economic integration process. The EU example may be instructive here. But other EU practices could be avoided especially, the creation of wordy documents like the 265-page EU Constitution which even the Europeans, despite their long experience with rule-based structure, find hard to digest. Super institutionalization thus can be a boon and a bane. Some of the EUʼs present problems stem from the excessive elite commitment to fashion a rigidly structured and legalistic entity. The EU has come under strong criticism for having lost touch with the ordinary people. Its “disconnect” with the European public is repeatedly emphasized by its critics. It is said that ordinary Europeansʼ understanding and familiarity with the EUʼs maze of community institutions and policies is minimal despite the massive number of EU rules and regulations that they are subject to. Neither has the EU taken the trouble to communicate its mission and message to its people very effectively.31 If anything, among the general population of Europe, Brussels has come to represent just the opposite of what the EU elites regard it to be. Such negligence has cost the EU dearly and was most painfully evident when the people of France and the Netherlands voted against the EU Constitution in 2005.32 Secondly, the EU has also been faulted for its democratic deficit. It has constructed elaborate structures and a thicket of rules without any democratic surveillance. Ironically, for an institution that requires a country to be democratic

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to join, the EU is undergoing a legitimacy crisis because of the general perception among the Europeans that the institution has been captured by political and technocratic elites. Popular will is conspicuous by its absence when layers of rules and regulations are conceived and applied. Indeed, despite all that the EU has achieved, it is being criticized by the Europeans themselves for its obsession with politico-administrative integration. Therefore, talking about models and lessons can be problematic in more ways than one. Emulation is never that simple and straightforward especially if the model itself is facing some challenges. That said, there are certain enduring achievements of regional cooperation that bear a close study and to that extent a pedagogic slant is not without its uses. ASEAN as a Model? So far the discussion has touched on the lessons that ASEAN might draw from the EU. But it should be emphasized that there are some regional organizations like SAARC which are yet to reach ASEANʼs level of stability. They, on their part, would like to learn from ASEANʼs experience. For the SAARC states EU is a far cry because as of now regional cooperation in South Asia is at a fairly rudimentary stage. It may thus be more realistic for SAARC to follow the ASEAN model as a first step. But this does not mean that it has to go through all the dilatory processes that have marked ASEANʼs institutional trajectory. It has the benefit of avoiding some of the dilemmas that ASEAN has had to face. To that extent, the learning process does not have to be blindly imitative.

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As we saw earlier, institutionalization in ASEAN was deliberately kept slow, incremental and modest. Structurally, the apex body is the meeting of ASEAN heads of government, followed by the ASEAN Ministerial Meeting comprising the foreign ministers of member states. The other pertinent bodies are ASEAN Economic Ministers, Sectoral Ministers Meeting, ASEAN Standing Committee, Senior Officials Meeting and Senior Economic Officials Meeting. There is a National Secretariat within the foreign ministry of each ASEAN country which oversees ASEAN-related activities at the national level. The ASEAN Secretariat is the coordinating body for the various regional activities. This minimalist approach to the institutional structure has lent a non-threatening air to cooperation. The ASEAN elites instinctively recognized what would work in the regional context and fashioned the structures accordingly. Nevertheless, provisions for multiple regional meetings to carry on the associationʼs tasks were made and they have been a critical part of the process. For instance, the ASEAN calendar for the year 2003–04 records 441 such meetings. This has had a consolidating effect not to mention the windfalls of socialization. ASEAN may be institutionally weak, but it is ideationally robust. This leads to the question: if in practice things have worked out satisfactorily should one insist on an elaborate design? Regional introspection, as mentioned earlier, is engaged in searching for a suitable mix of soft and hard institutionalization. It would be most comfortable for some members if a rule-based structure could just be restricted to a few areas like economic integration. But this is clearly

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impractical since institutionalization is a package deal. This has led to a great deal of soul searching and no clear answers are in sight. South Asian observers do not yet fully comprehend that ASEAN is at a crossroads. While they are right in acknowledging its relevance for SAARC, they should perhaps also pay attention to the current anxieties on the road to greater integration. There is also a feeling among some informed observers in South Asia that SAARC had been needlessly restrictive in not having looked at the experience of other regional organizations. EU and ASEAN were the only ones that figured in the calculations of South Asians decision-makers. Of the two, the former was regarded as far too institutionalized and advanced for the regional statesʼ taste. This left only ASEAN as a viable model and that is why there is considerable resemblance between the two bodies.33 There was thus a conscious preference from the very beginning in South Asia to emulate the thin structural edifice of ASEAN.34 Partly because of this and the positive regional environment that ASEAN has managed to create that SAARC leaders and officials have generally extolled the virtues of ASEAN. They continue to view it as an example worth following and this was openly articulated by the last SAARC secretary-general, Mr Q.A.M.A. Rahim, who said that SAARC still had a lot to learn from ASEAN in terms of its processes and functioning style.35 If we compare the corresponding stages of development in SAARC and ASEAN, some interesting features are clearly discernible. First, the main difference between Southeast Asian and South Asian regionalism is the respective regional associationʼs geographical scope. In

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the case of ASEAN it did not become co-terminus with the whole Southeast Asian region until 1999. This meant that before the process of expansion began in the mid-1990s a differentiated Southeast Asia was the reality as the region was split between the ASEAN and Indochina states. The two halves of Southeast Asia were in a conflict mode. Between 1967 to the aftermath of the Cold War, ASEAN members adopted three different strategies towards Indochina: insulate, isolate and integrate. In the first phase the concern was to insulate the ASEAN region from the spread of communism. Then when Vietnam invaded Kampuchea and set up the Heng Samrin regime there, the ASEAN states expended their energies in isolating the Vietnamese. After the Cold War when Vietnam withdrew its forces from Cambodia the attention turned towards integrating the Indochinese states into ASEAN. Much of ASEANʼs thirty years became noteworthy for pursuing these regional strategies. The dream of one Southeast Asia was thus on hold till the reconciliation with Indochina came about in the 1990s. In the case of SAARC, however right from the beginning all the regional countries were the founding member of the association. There were no exclusions, unless of course one considers the case of Afghanistan. But its status as a South Asian country was not all that clear. Nonetheless, it did request for a membership in 1987. India supported the move but the other members were unwilling to admit it. They explained that their refusal was not based on any geographic criterion but because they perceived that Afghanistanʼs sovereignty, independence and non-aligned character could not be vouched for, given

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the Soviet presence there.36 Barring this case, right from the beginning SAARC, at least in terms of membership, fully embraced the region. Secondly, in some respects, SAARC moved more swiftly on the path of organizational evolution in comparison to ASEAN. Not only did SAARC produce a charter fairly quickly, it also established a secretariat in 1987. Yet another note of distinction was that the largest country in SAARC refrained from bidding for the location of the secretariat in its capital unlike in the case of ASEAN, where Indonesia pressed for the claim to host the secretariat. The Philippines which was enthusiastic about locating it in Manila decided to defer to Indonesia so as not to hurt President Suhartoʼs feelings and withdrew its claim in the interest of regional harmony.37 (Lt-Gen Dharsono of Indonesia was appointed as the first secretary general and his dismissal by Indonesia for “domestic political reasons” right away exposed the clout of the associationsʼ dominant member and ASEANʼs truncated institutional autonomy).38 These facts about Indonesiaʼs role are important to note especially for those who criticize India for not following the example of a low-profile Indonesia within ASEAN. The latter was not all that supine as is assumed. Unfortunately, asymmetry is unavoidable in most regions but what compounds the problem is misperception that asymmetry often evokes. This can be a troublesome legacy for a regional enterprise and SAARC has had a fair share of it. Misgivings about Indiaʼs size have abounded in South Asia right from the start and India itself was not particularly supportive of the move to establish a regional entity. Yet to everyoneʼs surprise the region did create an organization

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after much hesitation. No one doubts that the example of ASEAN exerted a strong influence on the South Asians to move in the direction of regional cooperation. SAARC’s Institutional Design South Asiaʼs regional design is enshrined in the SAARC charter. As mentioned earlier, one of the noteworthy differences between the South and Southeast Asian regional organizations is that it took SAARC only two years, from the time that the New Delhi Declaration was signed in 1983, to fashion a charter in 1985. The SAARC Charter was signed at the first summit held in Dhaka in 1985. ASEAN is still to establish a charter and as mentioned earlier, the preliminary work has just begun. ASEAN had considered several models from which to draw upon, ranging from the UN, Organization of American States, Andean Pact, EU and SAARC. The preference seems to be for an uncomplicated and a general document that can act as a basic legal framework. But it is also feared that a charter that satisfies everybodyʼs wish could end up being a very loose document. An Eminent Personsʼ Group (EPG) has been constituted to provide practical recommendations for an ASEAN charter which will virtually fulfil the aims of a constitution with binding provisions.39 Based on the guidelines provided by the ASEAN heads of government, the EPG has been working on a report that is expected to serve as the basic framework of the charter.40 Admittedly, the process is not a simple one given its implications. ASEANʼs hardy perennial, privileging state sovereignty

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above anything else, might come in the way of any radical change that smacks of supranationalism.41 But it is also conceded that without a minimal lurch in this direction, an ASEAN Community will remain a mirage. Arguably, the formulation of the charter is one of the most tricky political undertakings but also inevitable at this stage. Much of the effortʼs success will depend upon balancing the demanding principles of non-interference and consensus with the charterʼs requirements of binding obligations, should that be on the cards. The 2007 summit held in January formally approved the charterʼs blueprint. The EPGʼs recommendations indicated the possibility of majority voting to reach decisions on certain issues and suspension of membership if rules were breached. No doubt, these provisions are an improvement but there is still an unmistakable mark of hesitation for adopting a definitive rules-based regime. For instance, instead of using the term “sanctions” to check violations, the preferred wording is “measures to address non-compliance”, which the former Indonesian Foreign Minister Ali Alatas (who is an EPG member), insisted meant the same thing as sanctions but it was “simply softer” and therefore more acceptable.42 What is clear however, is that the days of conducting business within an informal and loosely structured entity is now relatively difficult since certain pronounced economic integration measures have been adopted. ASEANʼs expanded list of economic activities demand common policies and all round capacity-building. A charter has thus become a plain necessity. But consensus on a preferred design remains elusive. A draft blueprint was presented during the Kuala Lumpur summit in December 2005. Whether the charter will

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be a departure from the present loose structure or merely a cosmetic exercise remains to be seen. In all probability since a charter has to be produced soon, and given the divergent persuasions of the member states, it could turn out to be a watered-down version which could be a regressive step. There are apprehensions that the ASEAN charter will just end up formalizing the informal and fail to ensure the establishment of a rule-governed body. SAARC on the other hand possesses a charter which is an uncomplicated document with just ten short articles. Among the key SAARC institutions outlined in the charter are the annual summit meetings, a Council of Ministers comprising the foreign ministers of the member states, a Standing Committee composed of foreign secretaries and several technical committees as provided for in the charter. In 1991 the Committee on Economic Cooperation comprising SAARC commerce secretaries was established. The charter makes a specific provision for the formation of Action Committees on any matter that is of interest to more than two members. All SAARC decisions are based on unanimity and Article X (2) of the charter expressly excludes bilateral and contentious issues from the ambit of SAARC. The charter is a minimalist document and its greatest virtue is that it gives SAARC a legal standing. But it falls short of acting as a binding instrument and affords the members a great deal of autonomy to do as they please. Summit: The Highest Authority The SAARC process has been summit-centric. Unlike ASEAN which held its first summit after nine years of its

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TABLE 2.1 SAARC Summits since 1985 1st SAARC Summit 2nd SAARC Summit 3rd SAARC Summit 4th SAARC Summit 5th SAARC Summit 6th SAARC Summit 7th SAARC Summit 8th SAARC Summit 9th SAARC Summit 10th SAARC Summit 11th SAARC Summit 12th SAARC Summit 13th SAARC Summit 14th SAARC Summit

7–8 December 1985 16–17 November 1986 2–4 November 1987 29–31 December 1988 21–23 November 1990 21 December 1991 10–11 April 1993 2–4 May 1995 12–14 May 1997 29–31 July 1998 4–6 January 2002 2–6 January 2004 8–13 November 2005 3–4 April 2007

Dhaka Bangalore Kathmandu Islamabad Maleʼ Colombo Dhaka New Delhi Maleʼ Colombo Kathmandu Islamabad Dhaka New Delhi

Source: SAARC Secretariat

birth, SAARC heads of state/government are mandated by the charter to meet annually. Apparently, the SAARC Council of Ministers had recommended that the summit should meet once every two years. But the Heads themselves changed it to once a year at the first summit in Dhaka, in December 1985, providing the first of many instances which show that SAARC summits have generally taken a more activist view of the association than have lower level institutions.43

But subsequent summits have been less proactive. That apart, SAARC has been notorious for its inability to ensure the regularity of its summits. Member states,

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TABLE 2.2 ASEAN Summits since 1976 1st ASEAN Summit 2nd ASEAN Summit 3rd ASEAN Summit 4th ASEAN Summit 5th ASEAN Summit 1st Informal Summit 2nd Informal Summit 6th ASEAN Summit 3rd Informal Summit 4th Informal Summit 7th ASEAN Summit 8th ASEAN Summit 9th ASEAN Summit 10th ASEAN Summit 11th ASEAN Summit 12th ASEAN Summit

23–24 February 1976 4–5 August 1977 14–15 December 1987 27–29 January 1992 14–15 December 1995 30 November 1996 14–15 December 1997 15–16 December 1998 27–28 November 1999 22–25 November 2000 5–6 November 2001 4–5 November 2002 7–8 October 2003 29–30 November 2004 12–14 December 2005 9–15 January 2007

Bali Kuala Lumpur Manila Singapore Bangkok Jakarta Kuala Lumpur Hanoi Manila Singapore Bandar Seri Begawan Phnom Penh Bali Vientiane Kuala Lumpur Cebu, Philippines

Source: ASEAN Secretariat

India in particular, have used several excuses to postpone a scheduled meeting. Going by the experience so far, one wonders whether SAARC should have opted for annual summits. Summits have been rescheduled several times and worse still, not held at all in some years. In its twenty years of existence so far, only thirteen summits have been convened. This is not a glowing record by any means. Perhaps, instead of persisting with annual summits it would be better for SAARC to copy the earlier ASEAN practice of summits once in three years. ASEAN leaders decided on this only

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in their fourth summit in 1992. It was also decided in the same meeting that informal summits would be held in the intervening years. The purpose of the summits is “to review ASEAN affairs, ratify and endorse the various proposals and initiatives that are to be undertaken in the name of ASEAN, and take note of regional and global events having a bearing on ASEAN interests”.44 For an organization that started of as being summit-shy, it not only has institutionalized this mechanism but holds several summits with its partner countries — ASEAN+3 summits with China, Japan and South Korea and also holds separate summits with these countries. India has also been added to this list. But ever since ASEAN decided on yearly summit meetings it has more or less maintained the schedule except for the postponed Twelfth Summit. Summits have also been relatively productive. As against this, the SAARC story on summits is highly embarrassing. Summits were supposed to be the engine propelling the SAARC process. But they have become the major hurdle now and a victim of member statesʼ political whimsicalities. India has been mainly responsible for stalling a number of summits for which it has been duly criticized. That said, even though there is a great deal of hand wringing that goes on about the postponement of summits one needs to ask whether annual summits are really that critical for moving the regional process forward. Regional observers, however, support the view that summits are crucial for energizing the process. The SAARC Group of Eminent Persons (GEP) that was established at the Male summit in 1997 strongly recommended the continuance of the annual summits but felt they should

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be made more business-like and focused. The reason for suggesting that the practice of annual summits should be continued perhaps stems from the fact that summits have not been entirely devoid of results. For one thing, they have provided opportunities for informal political dialogues between the heads of state. During the Ninth Summit in Male it was decided that such informal political consultations could become part of the SAARC process. Since summits tend to be highly formal and ritualistic, substantive work often gets crowded out. For instance, the GEP report which should have been considered during the 1998 summit was barely mentioned during the proceedings due to shortage of time. The next SAARC summit was held only in 2002, by which time the report lost its urgency. Summitry as an established instrument of multilateral diplomacy is widely practised. Regional cooperation schemes have been one of the main catalysts for the proliferation of summits. Inter-dependence of the world economy, the communication revolution and periodic international crises are the other contributory factors that have made summits important. The usefulness of summits is underscored by the personalized nature of interaction that they spawn. These are more conducive for resolving intractable issues or in breaking a deadlock. But summits are also notorious for being ceremonial, symbolic and a public relations exercise shorn of substance. It is this which makes one sceptical about the value of summits. It could well be asked whether the effort and the resources that are expended on a summit could not be put to better use. If holding a summit is expensive postponing a summit on short notice is probably even more wasteful. SAARC suffers

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considerably from this affliction. Abrupt cancellation or postponement also extracts a cost in terms of upsetting the schedule of other important meetings of the organization.45 For instance, the twice postponed Thirteenth Summit was to have signed agreements on mutual administrative assistance in customs matters and on avoidance of double taxation. These important measures had to be delayed because of the postponement. The 2005 summitʼs first postponement was due to the tsunami which affected India, Sri Lanka and the Maldives. One would have thought that a natural disaster of this kind which afflicted several SAARC members should have been a good reason to sit and deliberate on human security concerns. This would have been a good opportunity to harness the regional machinery to undertake relief measures cutting across state boundaries. Natural disasters are not essentially state-induced and therefore the question of sensitivity should not have been a factor in cooperation. The scale of suffering should have automatically triggered cooperation at the regional level which would have made SAARC look more purposeful. But ironically the tsunami became an excuse to postpone the summit. Shortly thereafter, a second date for the summit was proposed. It was expected that, among other things, this summit would discuss the possibility of setting up a tsunami early warning centre for the region. But the summit failed to materialize because of Indiaʼs objections to the internal conditions in two SAARC countries. The move by the Nepalese king to disrupt the democratic process and Indiaʼs apprehensions about the security situation in Bangladesh where the summit was to have been held, were quoted as reasons for the second

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postponement. Notwithstanding the fact that during the 2004 summit in Islamabad SAARC leaders had agreed that annual summits should not be postponed on any account,46 India chose to overlook it. Postponing or cancelling a scheduled summit has its costs. It not only disrupts the other formal activities of the association, it also generates unnecessary ill will and poisons the regional atmosphere. The postponement of the 2005 summit was a double blow since it was supposed to have marked twenty years of SAARCʼs existence and therefore carried a symbolic value. No doubt, some people rightly wondered whether it was worth agonizing over a missed opportunity to celebrate the twenty year anniversary of an association that had very little to show by way of concrete achievements. But an occasion like this could have also served to remind the members of their commitments and the missed opportunities of the two decades. But all that marked the associationʼs twentieth anniversary was mutual recrimination. The postponed summit was eventually convened in November 2005 which produced the Dhaka Declaration.47 The agreement to implement the free trade area was one of its highlights. Towards this end three documents were signed: Agreement on Mutual Administrative Assistance in Customs Matters, Agreement on the Establishment of SAARC Arbitration Council, and the Limited Agreement on Avoidance of Double Taxation and Mutual Administrative Assistance in Tax Matters. The fifty-three-point Dhaka Declaration pledged that SAARCʼs next cycle will focus on implementation. The ratification of the Additional Protocol to the SAARC convention on Suppression of Terrorism by all the members was viewed as a triumph by

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some leaders. Common efforts for disaster management also featured in the deliberations and so did a pledge to consider the modalities for a Regional Environment Treaty. But the Thirteenth Summit will be best remembered for the politics that attended the decision to include Afghanistan as the eighth member and the granting of observer status to China and Japan.48 The Fourteenth Summit was held in New Delhi in April 2007 and it went off smoothly without any major surprises. SAARC ‘Retreats’ It is widely acknowledged that the ritualistic proclamations and the highly formal nature of SAARC summit meetings contribute little towards the implementation of elaborately laid out plans. As a result, when the idea of holding “retreats” was introduced during the 1997 Male summit, it was an indirect recognition of the limitations of the formal summit. The retreat is said to have some positive effect since it facilitates meaningful deliberations away from the public glare. During the retreats leaders might engage in free and open exchange of views on bilateral matters which would be imprudent to raise in a formal setting. Some of the SAARC retreats have also made it possible for leaders to be more flexible in resolving certain intractable issues even at the cost of upsetting their own bureaucrats who tend to be more obdurate. There is enough evidence to show that retreats have been singularly effective in promoting trust and goodwill among leaders because of personal chemistry. The late Sri Lankan Foreign Minister Lakshman Kadirgamarʼs graphic account of the achievements of the

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1997 and 1998 SAARC retreats confirms the importance of such informal, face-to-face interactions.49 For example, the 1997 retreat resulted in the Indian prime ministerʼs generous offer of unilateral concessions on trade to his smaller neighbours. Similarly, a unanimous decision on the draft Declaration of the 1998 summit was made possible because of the retreat. While the relaxed atmosphere of the retreat has a singular effect on the conduct of diplomacy, it is not without its downsides. According to one observer, a lot of time gets wasted in travelling to and from the site of the retreat which is usually located in remote destinations. This naturally leaves very little time for any “sustained and resultoriented interaction” to take place.50 Despite the validity of this concern, there is benefit in conducting this type of personalized diplomacy in a secluded venue. Conventional literature on negotiation and mediation are highly supportive of such strategies for achieving unexpected results. A walk-in-the-woods environment free from media intrusions enables the participants to concentrate on substantive issues. There is also more room for candour in such deliberations leading to some unexpected results.51 It is worth recounting one such episode from the memoirs of Indiaʼs former foreign secretary, the late J.N. Dixit. The occasion was the retreat following the 1993 Dhaka Summit where the leaders were wrestling with the finalization of the SAPTA Agreement. Reportedly, Prime Minister Nawaz Sharif of Pakistan was unwilling to give his nod to the final agreement. Neither was he keen to accept a time frame for bringing the agreement into force. This had naturally created a deadlock and provoked President

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Premadasa of Sri Lanka, in Dixitʼ words, to ask “Nawaz Sharif point-blank as to why Pakistan was being a stick in the mud when the remaining six members of SAARC were ready to move forward on this regional trading arrangement. Premadasa indulged in this type of assertively spontaneous diplomacy when the heads of state and government were taking a boat ride at the retreat.”52 The account further adds that, “a somewhat abashed Nawaz Sharif agreed to join and expedite the SAPTA” following this exchange.53 Thus retreats can produce positive decisions goaded by peer pressure although it would be facile to conclude that they are always productive. In comparison to the summits which are mostly photo opportunities, retreats can be effective at times. They can break a deadlock without causing anyone to lose face. Secretariat Unlike the ASEAN Secretariat which was set up after nine years of the associationʼs birth, the SAARC Secretariat was established in 1987. Before the establishment of the secretariat the institutional mechanism that steered the association was the Standing Committee. Not that the secretariat was endowed with substantial powers but it was useful as a coordinating agency. The SAARC Secretariat is headed by a secretary-general who is appointed by the Council of Ministers upon nomination by the member states. The appointment is by rotation. The seven SAARC directors who head various functional divisions are nominees of the member states, who are formally appointed by the secretary-general. The secretariat also has general

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services staff. According to the MOU signed in 1987 the secretary-general is charged with the responsibility of coordinating and monitoring SAARC activities. He acts as a channel of communication between SAARC and international organizations but only when authorized to do so by the Standing Committee. He assists in the preparation and conduct of the various SAARC meetings. He is the custodian of SAARC documents and publications. He serves for a three-year period, and following the decision made at the 2002 summit, he holds the rank of a minister. But this has not redounded to his benefit in terms of enhancing his stature since he still does not enjoy the power to take any major initiative or monitor the implementation of SAARC programmes. The Standing Committees and the Technical Committees which comprise the representatives of member states, in effect, monitor and coordinate SAARC activities. Being the appointees of the respective governments they naturally operate by keeping the interests of their countries above those of the organization. Their lack of specific expertise in various areas is a handicap for the organization and affects its effectiveness. Merit-based recruitment for dedicated programmes would be a better way of ensuring the usefulness of the secretariat but that does not seem to be on the cards. As mentioned earlier, the ASEAN Secretariat in comparison fares better since it comprises several professionals recruited on the basis of merit. Unlike the case of ASEAN, the SAARC secretarygeneral is not a spokesman for the association and neither does he have the mandate to develop purposeful links with external entities. The modest role assigned to the secretarygeneral is a clear indication of the limited value that is

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placed upon this office. As the first secretary-general of SAARC ruefully noted: In matters related to SAARC agreements, protocols and understandings, the Secretary-General has little role. A look at the Agreement on Establishment of SAARC Food Security Reserve indicates that the drawing of food grains from the reserve is left to the borrowing and lending countries. The two parties will agree on the terms of the borrowing and simply notify the details to the Food Security Board, which comprises representatives of member states. It is to be noted that since inception in 1987, no food grains was ever withdrawn from the Reserve. To take another example, any request of a contracting party for extradition of an alleged offender from another party for violation of provisions of SAARC Regional Convention on Suppression of Terrorism is left to the concerned member state to deal with. The SAARC Secretary-General is the depositary of all SAARC agreements and conventions but his role is restricted to transmit notification about their ratification and the date of their enforcement. Thus all SAARC agreements may be seen merely as an intention on the part of member states to address some common regional issues but for all intents and purposes it is left to the member states to work out their implementation as they deem fit.54

Despite its limited ambit the secretariat plays a useful role in promoting the regional agenda. For instance, its contribution towards the preparation of the Regional Poverty Profiles, 2003 and 2004, and a draft declaration

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for the consideration of SAARC commerce ministers in anticipation of the WTO Cancun Ministerial, indicate the potential of the secretariat in advancing the regional cause. If the member-states so willed, SAARC could become a more visible body with the secretary-general acting as the official head of the association and representing SAARC at the international level. All this does not mean that SAARC ought to be secretariat-driven. This is not so in the case of ASEAN and is true of any inter-governmental set-up. But changes like recruitment of professional staff and devolving oversight functions to the body should not be difficult to introduce. Some South Asian observers feel that in order to galvanize the regional body and act as its effective coordinator, a secretary-general is needed who has a commanding regional presence enabling him/her to have direct access to the heads of governments.55 But this is only possible if the member states desire it. At present there is little indication of this. The case for beefing up the secretariat is neither unreasonable nor infeasible. But the fundamental question that comes to mind is to what purpose. Unless the level of integration or cooperation warrants it there is no point in proposing an enhancement in the secretariatʼs authority and increasing its size. As mentioned before, a bloated bureaucracy is the hallmark of most multilateral organizations. The EU is a case in point. But at least the number of functions it is involved in is a justification of sorts for its large bureaucracy. As is well known, downsizing or rationalizing a bureaucracy is next to impossible. Not for nothing is it said that the closest thing to immortality

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on earth is a government bureau! In the case of SAARC, unless more activities come on stream, strengthening and expanding the secretariat could well mean putting the cart before the horse. SAARC is still very much a consultative body, and so far not a single collaborative project has been undertaken by it. In the absence of rules that mandate enforcement, disputes that demand settlement or actual projects that need monitoring, a beefed up secretariat may have little to occupy it.56 As long as SAARC members are reluctant to embark on any regional project, there is probably no valid reason to augment the reach of the secretariat. Cynics argue that for all intents and purposes, the secretariat, at present, is yet another location which comes in handy for national governments to park some of their officials. Budget and Funding ASEAN and SAARC outlays are miniscule in comparison to the EU budget which is about 100 billion euros. (Of course, there is no ASEAN or SAARC budget in quite the same way as an EU budget. The reference here is to the operating budget of the association). The main source of EUʼs revenue is customs duties, agricultural levies, VAT-based contributions, and contributions from members calculated on the basis of their Gross National Product (GDP). EU money is spent on common agricultural policy (CAP), structural operations (redistributing wealth from richer to poorer countries), external action (overseas development, disaster relief and so on), internal policies (research and development, transportation, human resource

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development, energy) and, five per cent on administration. Last year the European Commission called for increase in the budget to the tune of 124.6 billion euros. This demand and the proposed correction in the mechanism of net contribution to the budget caused a lot of ill-will between the member states and the commission. The commission justified its demand on the basis of the EUʼs enlargement and several other priorities set by the member states but it was unable to convince all members to increase the budget. The concerns over revenue and spending even in a consolidated enterprise like the EU periodically lead to bitter debates. Member states press the necessity for efficient use of resources but the EU bureaucracy emphasizes the constantly expanding function of the community which requires more funding. The unsavoury budget wrangles in the EU are not surprising given the gap in perception between the commission and the national governments. That said, no regional organization quite matches the EU in outlays. ASEAN budget consists of two accounts: one is the budget for the secretariat which is about US$7.5 million to US$8 million and this is equally shared by all the members. Each member pays ten per cent of the total amount despite the uneven economic strength of its members. Then there is the project account which the dialogue partners have been persuaded to contribute to. ASEAN countries only provide the seed money for some of these projects. The ASEAN Development Cooperation Programmes are supported by “funding schemes such as the ASEAN Fund, Science and Technology Fund, Cultural Fund, as well as a number of exchange and cooperation funds jointly established by ASEAN and its Dialogue

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Partners”.57 To address the development divide within the region the Initiative for ASEAN Integration (IAI) was evolved and, in the first half of 2004 there were eighty-five projects under this plan and about US$14 million worth of projects were funded by grants. Republic of Korea, Australia, Norway, Japan and EU were the major donors to the project fund accounting for US$10 million.58 It is being increasingly felt that in the context of expanding functions of the organization there is a real need to augment funding for ASEANʼs various activities. This is particularly crucial given the fact that ASEANʼs dialogue partners no longer want to continue with the current arrangement of sole funding for the ASEAN projects, and have called instead for co-funding to be a standard feature in future projects. In this regard, there are ongoing discussions regarding the possibility of increasing the financial contributions of more developed ASEAN economies to improve the financial standing of the association.59

Suggestions to adopt an EU style VAT percentage for funding the secretariat have also been made. If funding is an issue in a relatively better endowed ASEAN it is much more so in SAARC. As of now, SAARC depends on voluntary contributions from the member states. Calls have been made to change this unsatisfactory arrangement. According to Article IX of the SAARC Charter: 1. The contribution of each Member State towards financing of the activities of the ASSOCIATION shall be voluntary.

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2. Each Technical Committee shall make recommendations for the apportionment of costs of implementing the programmes proposed by it. 3. In case sufficient financial resources cannot be mobilised within the region for funding activities of the ASSOCIATION, external financing from appropriate sources may be mobilised with the approval of or by the Standing Committee.

Funding in SAARC is usually reserved for specific activities. For instance, India volunteered to contribute US$100 million to the SAARC Poverty Alleviation Fund for projects outside India but within the region. But so far no progress has been made on setting up the fund or on project proposals. Meanwhile, Bangladesh has proposed a development fund for South Asia with contributions from member states based on their particular share of the combined GDP of South Asia. This would mean that India would have to contribute about 77 per cent of the total. This would be a different formula as compared to the contribution that members make for the cost of running the secretariat for which India pays 32.1 per cent of the total, and Pakistan about 20 per cent followed by the other members in proportion.60 Some idea of the nature of funding for the activities and its breakdown can be gleaned from one of SAARCʼs Regional Centres. For example, the funding for SAARC Meteorological Research Centre has three components: capital cost budget which is borne 100 per cent by the host country (in this case Bangladesh); institutional cost which is borne by the member countries in different ratios; and programme cost budget which is shared by the member

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countries in different proportions, the larger countries contributing a higher amount.61 During the Eighth SAARC Summit in 1995 a South Asian Development Fund (SAD fund!) was created for institutional and human resources projects, as well as, to cover social and infrastructural projects. This fund now has US$45 million. It was aimed to cover social sector cooperation and poverty alleviation. Feasibility studies to examine whether the private sector could participate in the scheme were proposed but no actual project ever emerged out of it. So far US$50,000 has been spent on other feasibility studies without any positive outcome. Obviously, the development fund was not a very well conceived fund. Some governments now feel that the time has come for SAARC planning and finance ministers to either think in terms of operationalizing the fund quickly or closing it down completely.62 Despite this uninspiring experience, during the 2004 summit, the idea of establishing a South Asian Development Bank was mooted. Funding from External Sources There was initially some hesitation among SAARC countries about seeking funds from outside the region. But tapping this source became possible after 1991 when India waived its objections to the move. So far, Japan is the only external party to have created a special fund for promoting cooperation among the South Asian countries and for the purpose of promoting intellectual exchange between SAARC countries and Japan. Total cumulative contribution by the government of Japan to Japan/SAARC

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Special Fund is US$212.5 million.63 Apparently this fund has also not been effectively used by the SAARC states. As a result, since 2002 Japan has suspended payments to the fund. The secretary general of SAARC has now been authorized by the member states to work out a mutually acceptable arrangement for renewal of payments through appropriate consultations with the Japanese Government. What is clear from this experience is that external parties are willing to come forward with necessary funds but SAARC has not found a way to utilize them properly. It is remarkable that no proper long-term projects have even been identified as yet for this purpose. In 1996 the EU signed an MOU with the SAARC Secretariat to provide for technical assistance in the economic sector. In 2004 the EU came forward with a contribution of five million euros to assist in institution building, harmonization of regulations and customs.64 These are the areas where the EU has a wealth of experience which can be of considerable use to SAARC. This fund is mainly intended for the implementation of SAFTA but there is no indication that the South Asian states are in a hurry to make use of the offer. Regionalism and External Linkages: Dialogue Partnership and PMC Regionalism beyond the region has become a common practice among regional organizations as they explore inter-regional and trans-regional linkages. ASEAN has been quite unique in engaging external powers through the mechanism of its dialogue partnership. This process became

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more streamlined within the newly created framework of the Post-Ministerial Conference (PMC) which follows the annual AMM. The PMC has provided an opportunity to intensify political and security discussions with the dialogue partners. This in itself was a departure from the past practice of confining regional discussions to functional issues. Interviews with SAARC and ASEAN officials suggest that one of the practices most admired by the former is the dialogue partnership scheme that has been successfully used by ASEAN to engage extra-regional powers in a benign and non-threatening way. Its novelty and utility cannot be underestimated. Without inducting the extraregional powers as members of the association and, at the same time making sure that they had a stake in the regionʼs security and development was an innovative move that has yielded worthwhile dividends. The success of the strategy is evidenced in the number of states aspiring to become ASEAN dialogue partners and their willingness to abide by the conditions underlying such a partnership. The dialogue partnership has had a strong demonstration effect. For instance, the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) has adopted this mechanism and has five dialogue partners now.65 ASEAN did not merely evolve as a vehicle for promoting intra-regional cooperation but it devised an external wing, so to speak, that allowed it to interact collectively with non-regional entities. Initially of course, it lacked a dedicated institution to promote this, but gradually its efforts came to be crystallized in the much acclaimed dialogue process. ASEAN initiated such dialogues with major external powers and organizations — with the EEC

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in 1972, Australia in 1974, New Zealand in 1975, Japan, Canada, the United States and UNDP in 1977, South Korea in 1991, India in 1995 and, Russia and China in 1996. The relationship, especially the earlier ones, with the main trading partners proved useful for emphasizing common ASEAN position on trade, aid and investment issues. Over the years the ASEAN dialogue partner relations have become a forum for the following: • • • •

Technical and development assistance for common ASEAN projects; Trade and economic concessions through ASEAN collective lobbying; Strengthening of political relations with the dialogue partners; and Boosting ASEAN economic standing.66

These goals are rather general no doubt, but dialogue partnerships have served the member states well in bonding closely with countries that are critical for trade and investment. This mechanism was not meant to supplant existing bilateral arrangements between individual ASEAN members and their dialogue partners but to complement them. Dialogue discussions have provided the regionʼs officials and leaders an “on the job training” for dealing with external powers from a position of strength. ASEAN has had different categories of dialogue partnerships: full, sectoral and consultative. The first is comprehensive in scope while the others are more functionally circumscribed. Apart from economic issues dialogues have also helped in airing common viewpoints on regional security.67 This became particularly relevant at the time of the Cambodian

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crisis but not until 1979 did a specific mechanism come into existence to regularize the discussions with the dialogue partners. Thus was born the PMC convened immediately following the AMM. The first PMC was held in Bali in 1979 and ever since then it has become a regular feature. Only the full dialogue partners participate in the ASEAN PMC. ASEAN and its dialogue partners have, on the whole, enjoyed a fair convergence of views on common threat perceptions. Therefore the parallel political dimension of the dialogue mechanism has been of great significance. The gains from engaging the extra-regional powers have been both tangible and intangible and fairly obvious to those who would like to emulate this loose but effective form of linkage. As recently as July 2004 the Twenty-fifth SAARC Council of Ministers Meeting held in Islamabad “resolved that it would look into modalities for establishing dialogue partnership with other regional bodies and states outside the region taking into account the experience of other regional organizations like ASEAN”.68 One would be hard put to see a more open endorsement for the ASEAN practice. This mechanism in the South Asian context is of considerable importance. The role of outside powers has been one of the major controversies that have plagued intra-regional relations in South Asia. Indian views on this are well known. New Delhi has regarded any external intrusion into the region as highly objectionable because of its implications for its security. Exactly the opposite has been the view of its regional neighbours who have traditionally looked to outside powers to bolster their strength within an India-dominant region.69 The usefulness of the dialogue

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partnership mechanism lies precisely in addressing this gap in perceptions. Engaging the external powers through the medium of SAARC can ameliorate the misgivings of the member states. The very fact that SAARC foreign ministers have given the go-ahead for exploring the possibility of institutionalizing this in South Asia should be a cause for cheer. But due care must also be taken not to make the external relationship the centrepiece of the SAARC process. ASEAN has been criticized for concentrating too much attention on its exchanges with its dialogue partners instead of focusing on intra-regional issues of importance. One critic says that these meetings have tended to “become useful as a distraction from ASEANʼs own modest progress”.70 Be that as it may, the dialogue process is certainly favoured by SAARC which has been discussing the modalities of introducing it in South Asia. SAARCʼs version of this came in the form of conferring observer status to China and Japan in 2005. The EU has also now been brought in as an observer.71 Even the United States is said to be keen to seek this status. Inter-Regional Exchanges SAARC-ASEAN interactions are now formalized and meetings between the two organizations have been taking place since 1997 on the side lines of the annual United Nations General Assembly (UNGA) meetings. The meetings are attended by the respective chairs accompanied by the secretaries-general. But occasionally the composition can change in an impromptu fashion as it did in 2004 when the foreign ministers from Bhutan, Nepal and Sri Lanka

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also attended the meeting along with Pakistan which held the SAARC chair. The ASEAN side, however, comprised just the secretary-general and the country that held the ASEAN chair. At these meetings the two organizations consult and cooperate in the areas of poverty alleviation, free trade arrangement, tourism and HIV/AIDS. In 2004 the two secretariats held consultations on cooperation in standardization of pharmaceutical products. The prospect for ASEAN-SAARC inter-regional relations to expand in any significant way is limited. Neither of them has advanced institutionally that far to make an inter-regional relationship meaningful. Even in the case of EU and ASEAN inter-regionalism is shorn of substance because of the different levels of integration prevalent in the two regions. ASEANʼs institutional ambivalence as against EUʼs established regional structures makes it difficult to expand the scope of cooperation other than in very specific areas. As a more firmly established regional entity the EU “possesses significant material resources, in the form of autonomous financial resources as well as of the ability to implement policies, notably market access, throughout an integrated region”; in contrast, ASEANʼs institutional weakness impedes “the conceptualization and financing of regional projects”.72 Nonetheless, regular exchanges and collaboration between the European Commission and the ASEAN Secretariat have been ongoing. The main objective has been to learn about institutional practices. But on the whole, the inter-regional level cooperation has been largely “uneven and unexciting”.73 If an inter-regional exchange between EU and ASEAN after so many years of interaction faces

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such challenges one can imagine how feeble the effort would be between ASEAN and SAARC. However, this has not prevented individual countries from the two regions to create common inter-sub-regional organizations. One of the platforms that brings together some of the member states from both regions is the Bay of Bengal Initiative for Multi-Sectoral Technical Economic Cooperation (BIMSTEC) 74 which was established in 1997. Currently, it comprises Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand. The cooperation under this forum covers the following six areas: trade and investment; technology; transport; communications; energy; tourism; and, fisheries. Member states agreed to establish a BIMSTEC free trade area for which the framework agreement was signed in 2004. A Trade Negotiating Committee (TNC) has been set up and Thailand is the permanent chair of the committee. The other inter-sub-regional initiative is the MekongGanga Cooperation (MCG) which was launched in November 2000. Its members are Cambodia, India, Myanmar, Laos, Thailand and Vietnam. The Vientiane Declaration marking the inauguration of MCG noted that it had been “inspired by a common desire to develop closer relations and better understanding among the six countries to enhance friendship, solidarity and cooperation”.75 MCG is organized around an annual ministerial meeting, senior officials meeting and five working groups dealing with tourism, education, culture, communication and transportation. The development of the East-West corridor and the progress of Trans-Asian Highway have figured prominently in its programme of action. India

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has made a US$100,000 contribution to the MGC fund in addition to the US$1 million grant announced by the Indian Prime Minister for the establishment of a Traditional Textile Museum in Cambodia.76 The meetings of the MCG take place back-to-back with the ASEAN Ministerial Meeting and Post-Ministerial Conference that are held annually. While the MCG is a laudable effort to knit together an area that is also home to a great many poor people the effort is still very much in its infancy. How effective this cooperative venture will be in harnessing the natural resources in the area to improve the life of the people remains to be seen. From its aims and the thrust of the statements made by the leaders the expectation is that the MCG will offer ample opportunities for enhancing people-to-people contacts and communication which could eventually contribute to the socio-economic development of the countries straddling this sub-region. Sub-Regional Endeavours SAARC, like ASEAN, has made a provision for subregional cooperation. The ASEAN growth triangle concept, an idea promoted by Singaporeʼs Prime Minister Goh Chok Tong, was a novel initiative that aimed to “link three areas with different factor endowments and different comparative advantages to form a larger region with greater potential for economic growth. The differences in comparative advantage” was expected to “complement one another rather than compete with each other”.77 The 1992 Singapore Declaration endorsed the growth triangle idea and four

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such growth zones were mooted: the Indonesia-MalaysiaSingapore Growth Triangle; Indonesia-Malaysia-Thailand Growth Triangle; the Brunei Indonesia-Malaysia-Philippines Growth Area; and, the Greater Mekong Sub-region Growth Zone. Of late, the Asian Development Bank has been an enthusiastic supporter of sub-regional initiatives in South Asia just as it has been in Southeast Asia. The SAARC growth zone idea received official endorsement at the 1997 Male Summit. It was proposed that sub-regional cooperation, which involves development of specific projects involving three or more Member States, can be pursued under the SAARC umbrella. The objective of a Quadrilateral Growth Initiative comprising Bangladesh, Bhutan, India and Nepal (BBIN) was to create an enabling environment for rapid economic development through the identification and implementation of specific projects. Sectors identified (were) Multi-Modal Transportation and Communication, Energy, Optimal and Sustainable Utilisation of Natural Resource Endowments, Trade and Investment Facilitation and Promotion, Tourism and Environment.78

Subsequently, India proposed another sub-regional growth zone partnering Sri Lanka and the Maldives. But no concrete projects under these schemes have materialized so far because of national sensitivities and reservations from some of the member states. For instance, the Bangladesh Nationalist Party (BNP) regards these initiatives as a Machiavellian ploy by India to scuttle SAARC and dominate the smaller states.79 Pakistan has been extremely

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wary of endorsing sub-regionalism because it feels that India is using this to isolate it. It should be pointed out that other than India, Pakistan does not share a border with any other SAARC state80 which makes it apprehensive of these exclusive, mini-growth zones. In South Asia the politics surrounding these schemes has so far managed to trump the economics that rationalizes them. Even in the case of ASEAN, sub-regionalism has had its fair share of troubles. The most impressive achievement has been the Indonesia-Malaysia-Singapore Growth Triangle but the rest have languished. The Asian economic crisis halted the growth zone process but even after the crisis was over, movement has been slow in the Indonesia-Malaysia-Thailand Growth Triangle, as also within the Brunei-Indonesia-Philippines East Asian Growth Area where no projects have surfaced so far. The Greater Mekong Sub-regional Growth Zone coordinated by the ADB since 1992 has proposed several projects but the conflicting national interests of its multiple members as well as the competition for funding has impeded its progress. The most debilitating factor for this is “the loose organizational setting and the fragmentation of regional decision making” which has undermined the efforts to bring any momentum to this sub-regional cooperative activity.81 But some observers regard the initiative in more positive terms since it has opened up a shipping corridor of significance where the flow of goods is governed by new navigation and border agreements. In fact, the ADB has been so heartened by the success of this cooperative process that it is prescribing the same for the South Asian region.82

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Conclusion This chapter has touched on a range of formal and semiformal mechanisms devised to realize the full potential of regional cooperation in both South and Southeast Asia and it has done this by using the European experience as a backdrop. It has tried to argue that the present mechanisms are insufficient to achieve the objective of cooperation or to further the integration process in the two Asian regions. Even in the case of ASEAN with its record of achievements in select areas, the institutional deficit is glaring. If ASEAN means to tread the community path in earnest, it can ill-afford to duck the issue of institution building in the form of a legalised structure. The legal foundation of the association remains underdeveloped although the need for remedying this situation is often mentioned. The need for more legalised integration machinery should obviously be the strategic choice.83 But there are as yet no clear signals that the regional states are ready to make a conceptual leap in the direction of community-building in the full sense of the term. Authority structures that transcend geographical boundaries are still shunned by them even while the necessity for such structures is apparent. This obviously requires reconfiguring the institutional apparatus to suit local conditions. One model that may be of relevance here is the “parallel national action process” as practised by the Scandinavian countries.84 This has much in common with the ASEAN Way and at the same time it is integrative in some sense. It eschews the rigid constitutional approach or the creation of supra-national institutions. Strictly premised on

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the sanctity of state sovereignty, it provides for integration at the behavioural level. It is characterized by a consensusbuilding process and consciously avoids the practice of majority voting in formal decision-making institutions. Instead, cooperation agreements are implemented by adopting identical national laws and regulations by the member states. In Scandinavia these are most visible in the area of public law — “Identical or very similar laws exist in citizenship law, family law, inheritance law, property laws, bankruptcy laws, laws on purchases, commercial practices, stocks, bonds, insurance, patents, brand names, copyright, maritime law, air travel law, law on nuclear energy installations, and penal law.”85 The advantage of this mode of cooperation is that it “can lead to a surprising level of practical and effective integration through extensive routine policy adjustment” as “compatible parallel legislations or practices are separately instituted by different actors in order to reduce the impact of boundaries”.86 Parallel national action is not an elite-driven or a top-down process. It makes a creative use of interest groups, non-governmental organizations, parliamentarians, political parties and professional associations to consult and make recommendations to the executives of the different states which then get adopted at the national level. “The outcomes of the parallel national action process have been an extensive equalisation of societal conditions in legal, social and economic issue areas and the removal of barriers to interaction by the creation of an open flow of people, goods and services within the region”.87 The emphasis on this type of integration is more akin to the suggestion that is made about steering ASEAN

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in the direction of a legalistic rather than a structured framework. If imaginatively applied the benefits of this could be seen in specific areas of consequence to the ASEAN countries. It has been suggested that in the economic field, especially in enhancing the investment climate in the region, a code of commercial and technical requirements for foreign investors will be easier to assimilate if its core features are harmonised across countries… Harmonisation of legal and regulatory environment has the potential to encourage intra-regional investment as well as make the region more attractive for extraregional investors, particularly those involved in global production networks.88

A slow beginning has been made in this area with the ASEAN finance ministers signing the ASEAN Harmonized Tariff Nomenclatures scheme in August 2003 which has been applied since 2004. A technical committee whose decisions are binding has been charged with resolving the disputes arising out of its application.89 A limited amount of progress has also been made in the harmonization of product standards across the region but the time taken to reach agreements on these measures falls far short of expectations. One increasingly hears of the absolute necessity for ASEAN to graduate from a “policy regime” to a “legal regime”. The dilemma that ASEAN faces is that while greater institutionalization might erode the unique ASEAN style/spirit, the present mode of operation is inadequate to arrive at the community-building destination. An

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institutional review thus has become imperative for ASEAN as argued by its secretary-general, who is convinced that the association needs to address this important issue with a view to ensuring that ASEAN decisions are carried out predictably as committed. ASEAN should study the pros and cons of transforming itself into a legal entity founded on a constitutional framework. This process need not start from scratch. ASEANʼs goals, principles, structures, and instruments have been laid down in various legally binding agreements, such as the TAC, SEANWFZ, AFTA and others. ASEAN needs only to reaffirm them in a consolidated form. ASEAN should enhance its juridical status, promote rules-based decision-making and ensure greater predictability.90

These tasks could apply to SAARC as well. SAARC no doubt has a charter but it is still at the rudimentary level of the cooperation game. The transformation of national egos in South Asia has not even begun to take place, which means the gulf between declaration and deed is a formidable one. SAARC adopts charters and protocols with alacrity. But members have so far failed to appreciate that real cooperation does not rest on intention but on implementation. The abundance of the former and the deficit in the latter can only enervate regionalism where even routine practices are abandoned without much concern for the future of the association. SAARC is yet to consolidate itself by sticking to the simple pledges that it has made. Therefore, to propose that it should embrace greater harmonization of rules and procedures seems premature. Its record so far tempts one to borrow a remark

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that the well-known historian Barbara Tuchman made about the League of Nations (the first formal international cooperative endeavour): “The tragedy of mankind is that it can draw the blueprints of goodness but it cannot live up to them.”91 The reasons for this are many but politics stands out as a major determining factor in creating the chasm between proclamation and practice. The next chapter deals with the political variable and its impact on regional interactions. Notes and References 1. Andrew MacIntyre, The Power of Institutions: Political Architecture and Governance (Ithaca: Cornell University Press, 2003). 2. Amitai Etzioni, From Empire to Community: A New Approach to International Relations (New York: Palgrave, 2004), p. 179. 3. Donald Weatherbee, International Relations in Southeast Asia: The Struggle for Autonomy (Lanham: Rowman & Littlefield, 2005), p. 98. 4. “European Parliament Delegation Visit to Vietnam” . 5. Reportedly, the Congress Party in India had included in its 2004 election agenda a proposal for a South Asian Parliament. See S.D. Muni, “A South Asian Parliament”, South Asian Journal (October–December 2004) . Also see Shrikant Paranjape, “Development of Order in South Asia: Towards a South Asian Association for Regional Cooperation Parliament”, Contemporary South Asia 11, no. 3 (2002): pp. 345–56. 6. Apart from these main institutions the EU also has a Court of Auditors, the Economic and Social Committee, the Committee of the Regions, the European Ombudsman, European Central Bank,

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European Investment Bank and assorted Community Agencies

7. Michael Leifer, “Regional Solutions to Regional Problems?”, in Towards Recovery in Asia-Pacific, edited by Gerald Segal and David Goodman (London: Routledge, 2000), p. 111. 8. The reference to rules here is made in a narrow sense and in the context of institutional structures rather than in terms of regime theory. It should be pointed out that ASEAN has developed certain regimes like the Treaty of Amity and Cooperation (TAC). The widely accepted definition of regime is that it is a set of “implicit or explicit principles, norms, rules and decision-making procedures around which actorsʼ expectations converge in a given area of international relations”, S.D. Krasner, International Regimes (Ithaca: Cornell University Press, 1983), p. 2. 9. David Capie and Paul Evans, “The ASEAN Way”, in The Second ASEAN Reader, compiled by Sharon Siddique and Sree Kumar (Singapore: Institute of Southeast Asian Studies, 2003), pp. 46–51. 10. Denis Hew, “Beware Trade Bloc Losing Momentum”, Straits Times, 18 April 2005. 11. Raphael B. Madarang, “ASEAN and its Dispute Settlement System”, Price Waterhouse Coopers, 18 August 2006, . 12. “Declaration of ASEAN Concord II”, 7 October 2003 . 13. Muthiah Alagappa, “Institutional Framework: Recommendations for Change”, in The Second ASEAN Reader, compiled by Siddique and Sri Kumar, p. 24. 14. I am grateful to Mr Ong Keng Yong for this information. The details found in this paragraph are owed to him. The necessity for a legal recognition of ASEAN in domestic law was particularly emphasized by Mr Ong. Personal interview, 26 March 2005. 15. Ibid. 16. Ong Keng Yong, “ASEAN and the 3 Lʼs: Leaders, Laymen and Lawyers”, Singapore Law Review Public Lecture, March 2005 .

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19. 20. 21.

22.

23. 24. 25. 26.

27.

28.

29.

30.

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Ong Keng Yong, personal interview, op. cit. Chin Kin Wah, “ASEAN Institutional Building”, in ASEAN Towards 2020: Strategic Goals and Future Directions, edited by Stephen Leong (Kuala Lumpur: ISIS Malaysia, 1998), p. 153. Weatherbee, International Relations in Southeast Asia pp. 97– 98.

Hadi Soesastro, “ASEAN in 2030: The Long View”, in Reinventing ASEAN, edited by Simon S.C. Tay, Jesus P. Estanislao and Hadi Soesastro (Singapore: Institute of Southeast Asian Studies, 2001), p. 280. Simon Tay, “The Environment and Southeast Asia: Regionalism, State and Community”, in The Naga Challenged: Southeast Asia in the Winds of Change, edited by Victor R. Savage and May Tan-Mullins (Singapore: Marshall Cavendish, 2005), p. 412. Straits Times, 17 August 2005. Ibid., 17 October 2006. Ibid., 28 March 2003. See his remarks in response to President Magawatiʼs farewell remarks during the Ninth Summit, 7 October 2003 . Speech by the Minister of Foreign Affairs at a Seminar on “Regional Integration in Europe and Asia — Comparisons and Lessons”, 29 April 2004 . Ludo Cuyvers, “Contrasting the European Union and ASEAN Integration and Solidarity”, Fourth EU-ASEAN Think Tank Dialogue, Brussels, 25–26 November 2002 . Alfredo C. Robbles Jr., “The ASEAN Free Trade Area and the Construction of Southeast Asian Economic Community in East Asia”, Asian Journal of Political Science 12, no. 2 (December 2004): p. 99. Senior Minister Goh said in a speech that East Asian regionalism would be “far less institutionalized than Europe … Such a looser and less bureaucratized structure will be more appropriate to the diverse East Asia than the EU model”. Speech given at the

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108

31.

32. 33. 34.

35.

36.

37. 38. 39. 40. 41.

Regional Cooperation in South Asia and Southeast Asia Asia Society Conference, Bangkok, 9 June 2005 < http://www. asiasociety.org/conference/goh.html>. It is argued that Europeʼs social integration is impeded by the lack of a “political public sphere”. See Marlis Buchmann, “European Integration: Disparate Dynamics of Bureaucratic Control and Communicative Participation” in European Societies: Fusion or Fission?”, edited by Thomas P. Boje, Bart van Steenbergen and Sylvia Walby (London: Routledge, 1999), pp. 33–52. Financial Express, 31 May and 2 June 2005. These views are based on the authorʼs discussion with Dr Sridhar Khatri, Director RCSS, Colombo, 16 May 2005. This was explained by Mr Farooq Sobhan, former Foreign Secretary of Bangladesh who was closely involved with SAARC activities in the formative years. Interview in Dhaka, 15 July 2005. “Recent Developments in SAARC and Future of SAARC-ASEAN Cooperation”, statement of the secretary-general of SAARC, 20 Janauary 2004 . Leo E. Rose, “A Regional System in South Asia”, in Asian Security Issues: Regional and Global, edited by Robert A. Scalapino, Seizaburo Sato, Jusuf Wanandi and Sung-joo Han (Berkeley: University of California Press, 1988), p. 385. Afghanistan however, is now a SAARC member. A. Jorgensen Dahl, Regional Organization and Order in Southeast Asia (London: Macmillan, 1982), p. 185. Weatherbee, International Relations in Southeast Asia, p. 98. Business Day (Thailand), 19 July 2005. Straits Times, 8 August 2005. A glimpse of the difficulty of changing the present orientation of ASEAN can be gleaned from an interview by the Vietnamese Foreign Minister Nguen Dy Nien who while reassuring that Vietnam will work closely with the other ASEAN members on the charter also tellingly observed that ASEANʼs success and strength rested on the “ASEAN Way” and it will never become a supra-national body. Non-interference is priced even more highly by the newer members who are understandably reluctant

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42. 43.

44. 45.

46.

47. 48. 49.

50.

51.

52. 53. 54.

109

to modify existing provisions in any way. For the interview see . “ASEAN Faces ʻCritical Periodʼ in a Changing World”, interview with Ali Alatas, Jakarta Post, 17 January 2007. Pran Chopra, “SAARC and ASEAN: Comparative Analysis of Structures and Aims”, in SAARC-ASEAN: Prospects and Problems of Inter-Regional Cooperation, edited by Bhabani Sen Gupta (New Delhi: South Asian Publishers, 1988), p. 14. Weatherbee, International Relations in Southeast Asia, p. 99. Mr Inam Ul-Haque, former Minister of State for Foreign Affairs, Pakistan, elaborated the complications caused by repeated postponements of SAARC summits, personal interview, Singapore, 23 June 2005. This was repeatedly mentioned by all those officials from SAARC countries whom this author had a chance to speak to. They were from Pakistan, Sri Lanka and Bangladesh. See Dhaka Declaration, 13 November 2005, SAARC Secretariat . See Kripa Sridharan, “Beijingʼs Role in SAARC Expansion Unsettles Delhi”, Straits Times, 23 November 2005. Lakshman Kadirgamar, “The Seven Sisters of South Asia: Where Are they Going?”, The Tenth Lal Bahadur Shastri Lecture, mimeographed (New Delhi, 11 January 2003). Niaz A. Naik, “SAARC: Institutional Structures and other Issues”, in SAARC in the Twenty First Century: Towards a Cooperative Future, edited by Dipankar Banerjee (New Delhi: India Research Press, 2002), p. 269. The efficacy of informal processes can be gauged by the experiences of the 1978 Camp David Accords and the Norwegianbrokered back-channel mediation between the Israelis and the Palestinians in the 1990s. J.N. Dixit, My South Block Years: Memoirs of a Foreign Secretary (New Delhi: UBS Publishers, 1996), p. 387. Ibid. Abul Ahsan, “Critiquing SAARC Secretariat” SAFMA Regional Conference, 20–21 August 2004 .

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55.

Views expressed by Mr Farooq Sobhan, personal interview, op. cit. At present the secretariat does not appear to be even performing the function of an information-provider to interested parties. In the course of my research I had sent several e-mails to the SAARC secretariat to find out more about its staff strength and budget outlays. The Secretariat is yet to respond to this request even though one of its directors promised to furnish the information. A similar request to the ASEAN Secretariat yielded a prompt and efficient response. . ASEAN Annual Report 2003–2004 . Towards Realizing an ASEAN Community: A Brief Report on the ASEAN Community Roundtable (Singapore: Institute of Southeast Asian Studies, 2004), p. 2. Hindu, 27 January 2005. For details see Personal interview with officials in Bangladesh and Sri Lanka. Yoshitaro Fuva, “New Paradigm of Security and South Asian Regional Cooperation”, Development Cooperation Forum, Tokyo, 27 April 2000 This was Mr Chris Pattenʼs observation during a press conference following the India-EU Troika Ministerial Meeting, 16 February 2004 . Saman Kelegama, “India Ocean Regionalism: Is There a Future?”, Economic and Political Weekly, 22 June 2002, pp. 2422–25. B.A. Hamzah, ASEAN Relations with Dialogue Partners (Petaling Jaya, Malaysia: Pelanduk Publications, 1989), p. 3. Khong Yuen Foong, “ASEANʼs Post-Ministerial Conference and Regional Forum: A Convergence of Post-Cold War Security Strategies”, in US-Japan Relations and International Institutions

56.

57. 58. 59.

60. 61. 62. 63.

64.

65. 66. 67.

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68. 69.

70. 71.

72.

73.

74.

75. 76. 77.

78.

111

after the Cold War, edited by Peter Gourevitch et al., (San Diego: University of California Press, 1995), pp. 41–43. Dawn, 22 July 2004 . Pervaiz Iqbal Cheema, “SAARC Needs Revamping”, in The Dynamic of South Asia; Regional Cooperation and SAARC, edited by Eric Gonsalves and Nancy Jetly (New Delhi: Sage, 1999), p. 97. Philip Bowring, “Doing the ASEAN Sidestep”, International Herald Tribune, 3 December 2004. The Twenty-seventh SAARC Council of Ministers meeting in Dhaka in August 2006 approved EUʼs application for an observer status. “EU- India Summit”, The Council of European Union, Brussels, 13 October 2006 . Alfredo C. Robles, The Political Economy of Inter-Regional Relations: ASEAN and the EU (Aldershot: Ashgate, 2004), pp. 166–69. Brian Bridges, “Europe and the Asia-Pacific: Two Regions in Search of a Relationship”, in Twenty-First Century World Order and the Asia-Pacific: Value Change, Exigencies, and Power Realignment, edited by in James C. Hsiung (New York: Palgrave, 2001), p. 167. the former expansion of BIMSTEC was “Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation”. But once the members decided to include Nepal and Bhutan into the fold the full form of the acronym was cleverly modified to the “Bay of Bengal Initiative for Multi-Sectoral Technical Economic Cooperation” or BIMST-EC. The Hindu (International Edition), 18 November 2000. Ministry of Foreign Affairs, Thailand . Lee Tsao Yuan, ed., Growth Triangle: The Johore-SingaporeRiau Experience (Singapore: Institute of Southeast Asian Studies, 1991), p. 3. .

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79.

A.K.M. Abdus Sabur and M. Humayun Kabir, Conflict Management and Sub-Regional Cooperation in ASEAN: Relevance for SAARC (Dhaka: Academic Press and BIIS, 2000), pp. 166–84. Now that Afghanistan has become a SAARC member this situation has changed. Weatherbee, International Relations in Southeast Asia, p. 116. Barun Roy, “Hands Across Borders”, Business Standard, 29 September 2005. This line of argument is advanced by Paul J. Davidson, ASEAN: The Evolving Legal Framework for Economic Cooperation (Singapore: Times Academic Press, 2002). For a succinct analysis of this model see Gunnar Nielsson, “The Parallel National Action Process”, in Frameworks for International Cooperation, edited by A.J.R. Groom and Paul Taylor, (London: Printer Publishers, 1990), pp. 78–108. Ibid., p. 91. A.J.R. Groom and Alexis Heraclides, “Integration and Disintegration”, in International Relations: A Handbook of Current Theory, edited by Margot Light and A.J.R. Groom (London: Francis Pinter, 1985), p. 177. Nielsson, op. cit., p. 102. Prem-chandra Athukorola, “Trends and Prospects for FDI Flows in ASEAN and India”, Paper presented at the ASEAN-India Forum, Singapore, 9–10 February 2004, p. 23. Rodolfo C. Severino, Southeast Asia in Search of an ASEAN Community: Insights from the Former ASEAN Secretary-General (Singapore: Institute of Southeast Asian Studies, 2006), p. 234. Report of the Secretary-General of ASEAN to the 37 AMM, Jakarta, 29 June 2004 . Barbara Tuchmen was referring to the failure of the League of Nations. See her The Proud Tower: A Portrait of the World Before the War, 1890–1914 (New York: Macmillan, 1966), p. 162.

80. 81. 82. 83.

84.

85. 86.

87. 88.

89.

90. 91.

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Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

3 The Political Dimension of Regionalism Regionalismʼs attraction stems from its potential to create an enabling environment for the conduct of amicable intraregional relations. Where it has functioned reasonably well it has reduced the security anxiety that is natural between squabbling neighbours or between the region and predatory extra-regional powers. The expectation is that if and when the regional states achieve a minimum level of order, their energies can be fruitfully expended in nationbuilding and developmental tasks. The distraction caused by a persistent feeling of insecurity is greatly reduced if there is a basic commitment among the members that conflicts will be managed in a non-threatening way, even if the regional organization is not specifically mandated to ensure this or is not preoccupied with this task. Security, order, predictability and peace are thus ensured by relying on diplomacy and recognized international principles with the conviction that over a period of time the characteristics of a regional “society of states”, as opposed to a “system of states”, will emerge. Hedley Bull who made these two phrases famous, in the context of the international political system, defined them in the following manner: A system of states (or international system) is formed when two or more states have sufficient contact between them, and have sufficient impact on one

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anotherʼs decisions, to cause them to behave — at least in some measure — as parts of a whole … A society of states (or international society) exists when a group of states [already forming a system], conscious of certain common interests and values, form a society in the sense that they conceive themselves to be bound by a common set of rules in their relations with one another, and share in the working of common institutions.1

Bull clarified what he meant by the rules of mutual relations and commitment to common institutions: states “should respect one anotherʼs claims to independence, they should honour agreements into which they enter, and that they should be subject to certain limitations in exercising force against one another”.2 In Bullʼs conceptualization, of the two, the society of states is more evolved than a system of states. A society of states suggests a conscious moulding and melding of common values. As Alan James elaborates, Where a group has such cooperative features, the term society is well employed to describe its general behavioural character, and is a better term than system. For it carries a much greater measure of warmth, and hence suggests more commonality, than the latter. “System” has a rather chilly, distant and mechanical resonance suggesting little more than the existence of a set of arrangements. The associational implications of “society”, on the other hand, speak almost of collegiality and intimacy.3

In other words, a system of states is more of an assortment where states are just thrown together and get

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along as best as they can. In the context of regionalism such an assortment is merely a function of geographical proximity without a sense of bonding. Over time, a society of states has the potential to evolve as a peaceful community of states. The European Union has successfully traversed this path. ASEAN has edged very close to the society of states point on the scale and is now making a bid for a community although it is still a long way off. Insofar as the process and effect of regional cooperation is concerned, the distinction between South and Southeast Asian regional enterprises is somewhat similar to the distinction drawn by Hedley Bull between a “system of states” and “a society of sates” in the international realm. ASEAN (that is, the core members) is almost society-like, whereas SAARC retains all the sharp edges of a system of states despite two decades of organizational life. The difference between a system and society is more pertinent for the political and conflict mitigation planks of regionalism as reflected in adherence to norms, diplomatic rules, pursuit of common interests as opposed to obsessive self interest, and finally, shared values. These are more firmly established among the EU members, fairly consolidated among the original ASEAN members, and very weak among the SAARC group of states. A system of states is a necessary but not a sufficient condition for regional cooperation just as a society of states is a necessary but not a sufficient condition for regional integration and community-building. In that sense, not only SAARC but even ASEAN needs to rethink its strategies to move towards greater cohesion and realize the avowed aim of an ASEAN community.

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This chapter will first begin by probing the motivations for regionalism, then consider the problems associated with asymmetry and how that impacts on regionalism, explain the nature of bilateral conflicts in both regions and their implications for regional cooperation, and conclude by assessing ASEAN and SAARC in the light of the characteristics of a society of states and a system of states. Imperatives of Regionalism For the past six decades the states in Western Europe have been at peace with one another and this situation is certain to continue, notwithstanding their periodic disagreements about the future course of European integration.4 These states have virtually renounced the use of force to resolve mutual differences. According to Robert Jervis, the explanation for this renunciatory behaviour is provided by the constructivists through their emphasis on altered ideas and identities; by the liberals in terms of the bounties of democracy; and by the realists who point to nuclear bipolarity and American hegemony.5 Jervis sees merit in all these explanations but is keen to emphasize that the existence of a “community” and the non-use of force amongst these countries points to the feasibility of achieving “uncoerced peace without a central authority”. In this sense these states have come a long way from the uncertainties of their war-torn world of the 1940s. In the aftermath of World War II, security was an allconsuming concern for the European states and this was the predominant motivation that launched the European project

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in the 1950s. The trauma of the wars of past centuries had convinced the European leaders and their people that a better way had to be found to manage inter-state relations. One of the prominent triggers of some of Europeʼs major wars had been the historical rivalry between France and Germany. Unless this permanently operating factor was radically transformed, Europe, they believed, had little chance for enjoying stability or progress. Franco-German reconciliation was thus critical for peace in Europe. The Schumann Plan was the chosen strategy to bring about this reconciliation. It established the European Coal and Steel Community (ECSC), a common market for the three commodities, coal, steel and iron ore, evidently the backbones of the armament industry. The inter-dependence in heavy industry was expected to curb the conflict-prone behaviour of the individual states. Secondly, this was expected to gradually augment the areas of cooperation and infuse more trust among neighbours. Finally, the strategy also envisaged a cluster of supranational institutions that would induce people to transfer their loyalty from the national to the supranational level. Together these were expected to lay the foundations for a peaceful and prosperous Europe. The three inter-dependencies mentioned by Pascal Lamy to which a reference was made in the introductory chapter, ecapsulate this expectation. The Franco-German factor, however, was only one of the security conundrums that confronted Europe at that time. A more powerful concern was the emerging bipolar confrontation between the two superpowers and the looming Soviet threat. European unification was also a response to the emerging hostile external environment.

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On its part, America as the hegemonic power encouraged Western European integration for strategic as well as economic reasons. The integration and cooperative efforts of the Europeans succeeded in the creation of a “security community” where a sense of community denoted “a belief … that common social problems must and can be resolved by processes of ʻpeaceful changeʼ ”.6 In a pluralistic security community, such as Europeʼs, the likelihood of the use of force to resolve conflicts became practically nil as the region gradually transcended the compulsions generated by international anarchy. Neither has there been any evidence, since the beginning of the integration process, of military plans or deployments aimed at the other members of the community. Within a remarkably short time Europeans managed to create for themselves a zone of peace which has been the most outstanding accomplishment of European regionalism. It is this enviable record of amity that many a region has striven to emulate more than anything else. The emulation, however, was selective. Not all aspects of the European project appealed to the purveyors of regionalism in the developing world. The pooling of sovereignty, which was an integral part of the European scheme, was the least attractive element. For instance, in Southeast Asia a process of cooperation for economic prosperity, social progress and cultural identity was to be pursued strictly by avoiding any commitment towards pooling sovereignty. As in Europe, in Southeast Asia too regional reconciliation as well as internal and external security threats were very much a part of the regional scene. Even though security was not openly mentioned by the founders of ASEAN it was a palpable concern. Even so, no authority structures above the state were

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envisaged to bring about regional reconciliation or to meet the various threats. What these states desired above all was a non-confrontational regional environment, a greater predictability in inter-state relations and conflict mitigation without indulging in any kind of sovereignty trade-off. As one scholar notes, “Although ASEAN denied it was a security arrangement and continued to do so for twenty-five more years, it represented an attempt by five, and later six, non-communist states in the post-colonial era to stabilise their part of the region by providing an organization for promoting a code of behaviour for the peaceful resolution of disputes.”7 The member states sought to tackle the intertwined nature of internal and external threats by bolstering what the Indonesians famously called “national and regional resilience”. The motivation that led to the formation of SAARC8 was vastly different from ASEAN. Notwithstanding the rhetoric, SAARC was not born out of an intense urge on the part of the regional states to create a cooperative mechanism to address their problems at the domestic, regional or international level. Neither did South Asia, before the formation of SAARC, dabble in any prior regionalist schemes as the Southeast Asian states did when they experimented with the Association of Southeast Asia (ASA) and Maphilindo. South Asians took a comparatively longer time to embrace the notion of regionalism. Besides, only when their attempts to transcend the region in search of cooperation failed did they shift their gaze inwards. It is widely acknowledged that SAARCʼs origin owed more to a failure on the part of some of the South Asian countries to find a berth in their preferred adjacent regions, such as Pakistan in West

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Asia or Sri Lanka and Bangladesh in Southeast Asia. Since they could not pull this off their attention turned towards their own geographical area. They were, at best, reluctant regionalists. In Galbraithean terms, the South Asian states eventually did the reasonable thing but only after having exhausted all other possibilities. Thus for a long time South Asia was a “region without regionalism”, an oddity at a time when most regions could boast of some sort of formal arrangement, either relating to trade or security. This glaring anomaly was also a major factor that prompted the states in the region to band together. One might say that it was shame rather than guilt that begat South Asian regionalism, although guilt should have been the natural trigger. The pursuit of economic and developmental cooperation as a means to lift the region out of poverty should have been the driving force but the effort was not considered worthwhile until much later. Neither neo-liberal nor neo-realist proclivities were evident in regional thinking particularly on the part of the political elites. They stirred themselves only after they experienced a sense of deprivation. Given their initial insouciance, it was truly amazing that they eventually created a regional organization. Once they reached that decision, they deftly made a case for regionalism by proposing four major objectives for regionalism: improving the peopleʼs quality of life through economic growth; promoting collective self-reliance among the regional countries; to strengthen cooperation among themselves in international forums; and, to cooperate with other states and international bodies. There was nothing staggeringly original about these aims. Most regional organizations begin with these declarations

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and so did SAARC. But how sincerely they sought to pursue these goals was another matter. Clearly, some of the basic ingredients for a successful functioning of a regional organization were considered absent in South Asia. According to one perceptive scholar, such ingredients are a congruence in security perceptions; similar political systems born of common ideological dispositions; common foreign policy orientations; and, a consensus regarding the role of the pivotal power shared by the pivotal power itself.9 Therefore the chances of SAARCʼs creation or success were thought to be slim right from the beginning. The challenges experienced by regional cooperative projects, in general, amply confirm the importance of these variables. In South Asia they starkly stand out. The odd thing about SAARCʼs origin was that it became possible due to the initiative of the smaller states of the region. Bangladesh is duly credited for taking the lead. This is unlike ASEAN where the largest state, Indonesia, was keen to create a mechanism through which a process of regional reconciliation could take place. In Europe the momentum was provided by the efforts of France and Germany. Douglas Webber assigns a great deal of importance to the “Franco-German ʻtandemʼ in the EU, a coalition of leading states” (emphasis in the original) that contributed to successful integration.10 Elsewhere Webber goes into the details of this fortuitous condition by convincingly arguing, Historically, the rhythm of European integration has closely followed the capacity of the French and German governments to find common political ground.

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The likelihood that rival regional “co-leaders” will reach bargains that facilitate closer integration is greatest where and when they have powerful incentives to cooperate bilaterally.11

Contrast this with the situation in South Asia where the two larger states, India and Pakistan, were not only the least enthusiastic proponents of regionalism but have had difficulty in finding anything in common that would steer the region towards enhanced cooperation. If anything, their enduring hostility has been one of the major crippling factors for regionalism. This holds true for most of the period that SAARC has been in existence. South Asia at once defies and confirms the key hypothesis regarding the conditions that make regionalism function better. The presence of a regional hegemon enjoying “undisputed leadership” should conduce towards a successful integration process as Walter Mattli suggests.12 This simply means that in a number of regions where institutionalisation has succeeded, there has been a significant resource asymmetry within the confines of a unipolar system with the initiative for regional institutionalisation coming from the biggest power in the region or a duopole. Interestingly, in regions where institutionalisation has failed or stagnated, a hegemon has normally been lacking.13

Interestingly, in South Asia both structures (unipole and duopole) prevail in some sense but the consequence for regionalism has been negative. In the South Asian case, India has a dominant presence but it does not enjoy “undisputed leadership” and therefore

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is not in effect a hegemon.14 Neither is the region unipolar since Pakistan, with outside help (the United States and China at different times) effectively balances India, thus making the structure bipolar even though Bary Buzan and Ole Weaver entertain doubts on this score: On the face of it, the evidence about bipolarity pulls in opposing directions. On the one hand, the achievement of nuclear parity equips Pakistan with the great equaliser, and therefore confirms the bipolar power structure in South Asia. But, on the other hand, there is much suggesting that Pakistan is steadily fading away as a plausible rival to, or balancer of, India. In other words it is in danger of losing its status as a distinct number two to India and sinking down towards being more of a nuisance than a challenger.15

Whatever may be the distribution of power in South Asia, the point is, since the two bigger regional powers do not see eye-to-eye on any issue, they have not been able to create the necessary synergy to act together in integrating the region. This has been so ever since the formation of SAARC. Therefore, in South Asia, despite the presence of Mattliʼs conditions that might have stimulated and sustained regional integration elsewhere, there has been a contrary effect. At the formative stage of the cooperation process India fretted that the forum would be used by the other members to exert their combined pressure on issues that bedevilled their relations with New Delhi.16 There was also a feeling that behind the regional initiative lurked an unseen external hand which could prove injurious to

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Indian interests.17 Pakistan too had its own doubts about joining a regional organization “which (it) feared would give India an economic dominance in the region and might compromise Pakistanʼs own affiliations with West Asia”.18 But once the momentum picked up for the establishment of the organization, the regional rivals felt that it was better to be inside rather than outside. Their enthusiasm just extended thus far and no further. They did not feel it was necessary to exert beyond this step. By insisting upon certain conditions for regional cooperation India made sure that the regional forum would not be used against it. It demanded that all bilateral and contentious matters be kept out of SAARCʼs deliberations19 and that the forum should be governed by the principle of unanimity. Among the factors that are blamed for SAARCʼs abysmal progress, these two conditions rank high. The contrary view is that had these issues been allowed to be aired within the SAARC forum it would have collapsed without a trace. Among the other commonly cited impediments responsible for SAARCʼs unremarkable progress are regional asymmetry and the protracted bilateral conflicts between the member states. Big is not Beautiful in South Asia Asymmetry has been SAARCʼs bugbear. The other side of the asymmetry coin is Indo-centricism.20 The two in tandem have cast their long shadow on intra-regional relations. Indiaʼs sheer presence is seen as dominance whether it behaves in that fashion or not.21 Elsewhere (for example, the United States in North America) this sort of

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dominance may have given rise to resentment but it is also accompanied by a degree of pragmatism on the part of the weaker neighbours who rely on problem-solving rather than a fault-finding approach to address the issue of asymmetry. It is often pointed out by most of Indiaʼs neighbours that its role is critical for the success of regionalism but only if it adopts a benign, low-profile style of functioning. A range of perceptions about Indiaʼs regional role dominates the debate in South Asia. Indiaʼs critics plainly see it as an overbearing bulldozer with no consideration for the welfare of weaker neighbours. A slightly nuanced view is that India is not uniformly inconsiderate but it nonetheless comes across as a bully.22 This is seen as being ultimately harmful to its interest because without securing the region, Indiaʼs quest for a global power status would be unachievable. Therefore, it is felt that New Delhi ought to be guided by a policy of enlightened self interest. It should be broad-minded, generous and follow a policy of benign unilateralism which would better serve its own cause and that of its neighbours. But in some quarters within India, such a policy is frowned upon as of little value because it is argued that no amount of generosity is likely to convince the neighbours that India means well. Secondly, there is also a strong feeling that generosity is often interpreted as weakness which then encourages the other side to make impossible demands. Indiaʼs neighbours fondly cite a non-assertive and affable Indonesia as the role model. While it is true that Indonesia within ASEAN has practised moderation and has been careful not to cause unease among its neighbours, this does not mean that its approach has been supine all along

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or its behaviour impeccable.23 Its insistence on the location of the ASEAN Secretariat and its rigid views on the role of external powers within the region, which were cited earlier, point to a sense of entitlement that Jakarta has always entertained. Neither does it have an unblemished record on being gracious to smaller neighbours. In the recent past two of its presidents, B.J. Habibie and Abdurrahman Wahid, were openly derisive about its tiny neighbour, Singapore. The former called the republic “that unfriendly little red dot” and the latter, in an off-the-cuff remark in November 2000, chided Singapore for being highly selfish, materialistic and disdainful of Malays in general, as evidenced by its ungenerous response to the effects of the financial crisis that devastated the region.24 Abdurrahman Wahid even suggested that Malaysia and Indonesia should act together to cut off the supply of water to Singapore.25 These remarks indicate that Indonesiaʼs attitude is not uniformly courteous and its affability cannot be taken for granted even if these outbursts were an aberration. Secondly, Indonesiaʼs low profile which has been the norm can also be explained from another angle. It has been able to maintain such a role because its ASEAN partners have always been careful in extending a marked level of deference to it. They have been sensitive to its status as the pivotal regional power. Thus there was always an unstated understanding among the original members that a certain amount of courtesy was due to it. In South Asia this has not been the case. No benefit of doubt is ever given to India by its smaller neighbours. Indians do not expect that Pakistan will be thus disposed but what is baffling is that the rest of its neighbours should be equally reticent, even

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though Indians think that by and large, they have done well by these states.26 This is probably why India is less than generous in its attitude towards them which in turn breeds more resentment. An even-handed view on the complexities of big power-small power relations in any regional set up is difficult to obtain. While Indiaʼs unhelpful regional role is often invoked, evidently this is not something that is caused unilaterally. One Bangladeshi scholar puts this dilemma in perspective by comparing the situation in both South and Southeast Asia, particularly the equations between the regionʼs bigger and smaller powers: Indonesiaʼs policy towards its neighbours, at times, has been far more abrasive than the Indian one. Nonetheless, ASEAN could devise a common ground where Indonesiaʼs regional ambitions and consequential security concerns could be accommodated…Political denial on the part of Indonesia gave ASEAN a remarkable political ballast from the very outset and contributed significantly to the normalisation of the politico-security environment in the region…A similar role played by India is likely to produce the same results in the context of SAARC…Similarly, the smaller South Asian countries also need to reconsider their policy towards India…While pressing for concessions from India, smaller South Asian countries will also have to find out ways and means of accommodating some of Indiaʼs regional aspirations. That does not necessarily involve any sacrifice of jealously guarded national sovereignty. Indonesiaʼs smaller neighbours have conveniently accommodated some of its regional aspirations without sacrificing

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their core concerns. In the changed circumstances, highly vigilant smaller South Asian countries need to be more visionary in dealing with India.27

Asymmetries are unavoidable in most regions but the South Asian situation is somewhat exceptional because of Indiaʼs gigantic size and its geographical position. One often hears the lament that the smaller neighbours are India-locked. Table 3.1 captures the extent of this asymmetry. Nonetheless, management of asymmetry, particularly the suspicions it spawns, is critical for the success of a regional enterprise. Without a spirit of give and take no regional blueprint can deliver on its promises. In this equation the larger country is expected to make unilateral concessions to its smaller neighbours. But the smaller neighbours should also play their part in such a way that the larger state finds that it is worthwhile to be generous. In the long run, having the pre-eminent state as the principal stakeholder would redound to the benefit of the smaller states. But even this is not without its problems in South Asia. When India initiates a scheme or makes a unilateral gesture that too is viewed with suspicion. One example is the US$100 million that India has pledged towards poverty alleviation programmes that could be initiated in any SAARC country other than India. Reportedly, Pakistan has countered this with the proposal that the fund should have a pro-rata contribution from all the member states instead of relying on one donor.28 This indicates that any Indian action, well-meaning or otherwise, is liable to provoke misgivings. If India is proactive it is faulted and if it appears withdrawn then it is berated. Whether

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Pakistan

Bangladesh

Nepal

Sri Lanka

69.18 billion

89.33 billion

Exports (recorded, USD)

Imports(USD)

14.0 billion

15.07 billion

347.3 billion

778,720 24.4%

10.03 billion

7.48 billion

275.7 billion

133,910 4.4%

1.42 billion

568 million

39.5 billion

136,800 4.3%

7.26 billion

5.31 billion

80.6 billion

64,740 2.0%

196 million

1.54 million

2.9 billion

47,000 1.4%

734,000 0.07%

Bhutan

392 million

90 million

1.3 billion

300 0.0091%

290,000 0.03%

Maldives

*Above: figure for given nation Below: as a percentage of India Source: Kanak Mani Dixit, “The Inevitability of Bilateral Multilateralism”, Himal Southasian, November–December 2005,

3.32 trillion

2,973,190 (100%)

1,084,700,000 162,420,000 133,377,000 27,677,000 19,400,000 (100%) 15% 12% 3% 1.8%

GDP (purchasing power) (USD)

Area* (land mass) (km2)

Population*

India

TABLE 3.1 “SAARC’s Symmetry”

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justified or not, Indiaʼs size, its disposition and behaviour invite the same kind of reactions within the region as American actions do worldwide. Interestingly, precisely those aspects of American behaviour that Indians have always found irritating are the ones attributed to India by its neighbours. This is galling to India but it is unable to change the perception of its neighbours. Indiaʼs size is often played both ways by its neighbours. At the bilateral level its bigness is sometimes invoked in positive terms for gaining concessions from it, just as a smaller sibling would from an understanding older brother. But at the multilateral level it is usually used in an accusatory manner to emphasize Indiaʼs lack of generosity and bullying behaviour.29 Even Pakistan which perceives itself to be on par with India, will sometimes acknowledge that India is the largest regional power but this is done only to rub the point that “it should shoulder the responsibility proportionate to its size”.30 This implies two things: despite being big India tends to be unduly petty in its dealings with the smaller neighbours; and secondly, its size sits ill with its inflexible position on regional conflicts, Kashmir in particular, and this has prevented the region from realizing its full potential. It would be wrong to say that India alone has faced this predicament. Pakistan also had a taste of it in one of its encounters with Maldives. In 2004 Maldives reacted strongly against Islamabadʼs alleged failure to observe the necessary protocol in extending a proper invitation to President Abdul Gayoom for the Islamabad SAARC summit.31 Apparently, it is customary for the foreign minister of the host country to visit each member state and

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extend an invitation to the head of government to attend the summit. Maldives was somehow overlooked and it felt that it had been slighted by Islamabad. But for the timely corrective, this could have resulted in President Gayoom absenting himself from the summit altogether (his decision would have been even more remarkable considering that he is the only leader to have attended all SAARC summits so far), instead of conspicuously leaving a day before the closing ceremony. As one official from a SAARC country put it, “small power syndrome” is an equally complicating variable in regional relations which should be borne in mind by the bigger countries.32 Barring this incident where Pakistan faced the displeasure of a smaller neighbour, it is usually India that evokes all manner of fears and suspicions in the region. Enhanced cooperation is hampered by the discomfort that Indiaʼs giant size invokes and the consequences that flow from that. The real and perceived consequences of asymmetry have made the history of inter-state relations a tortuous one in South Asia. Even after twenty-one years of its existence, SAARC has not been able to foster a rudimentary level of regional harmony or understanding among neighbours. Indiaʼs looming presence casts its shadow not merely in a territorial and material sense but also in ideational and psychological terms. India provides a civilizational link to the regional states but this simultaneously creates an identity crisis for them. Asymmetry and the anxiety it evokes has led to several adverse consequences in South Asia. It has resulted in divergent views on security among regional states. A common threat perception, internal or external has been

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glaringly lacking in the region and worse still, the sources of such threats have been perceived to emanate from within the region itself rather than from outside. The largest state is perceived to be the main culprit on this score.33 This has led some regional states to seek the help of outside powers to ensure their security thereby allowing extra-regional actors to penetrate the region. India has found this highly intrusive and harmful to its strategic interests. As the inheritor of the strategic concept of the regionʼs defence as expounded by the British when they ruled the sub-continent, India has always held that the region falls within its sphere of influence. India has therefore been opposed to any intervention from outsiders except on its terms. While lacking comparable capability like the United States which could enunciate a Monroe Doctrine, India nevertheless came up with its own exclusivity rule called the Indira Doctrine. It assigned to itself the task of promoting a regional security order which not only sought to make the region out-of-bounds to non-regional powers but also expected that the smaller regional states should apply to India for help in their internal and external security problems before seeking the service of outsiders. This has naturally riled the smaller states who are understandably irritated by this injunction. The ill-will born out of such hegemonic strictures has damaged Indiaʼs relations with its neighbours. In any case, Indiaʼs insistence that outsiders should acknowledge it as the pre-eminent regional power and leave the region to its care has never been honoured either by the regional states or their external mentors. This is particularly so in the case of Pakistan which has been

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extremely successful in denying this luxury to India. The external powers have been equally dismissive of Indiaʼs claim even if they grudgingly admit that it is a regional heavyweight. Time and again, they have supported Pakistan in its bid to balance India. Since this was congruent with their own larger interests, it proved conducive for them to champion Pakistanʼs cause. This holds true even now when the United States regards Pakistan as a vital ally in its war against terrorism and underplays Indiaʼs accusations about cross-border terrorism in Kashmir. The Indira Doctrine, of course, has not been the only regional strategy practised by India. In the mid1990s a benign initiative like the Gujral Doctrine took centre stage. It was anchored in the belief that as the bigger neighbour, India should make unilateral gestures and concessions without insisting on reciprocity.34 This is naturally the stance that the smaller countries prefer and is therefore vastly appealing. They never fail to point out the great windfall in goodwill that India stands to reap by being generous. But not all Indian governments have been faithful to the doctrine, perhaps because they feel that one should be just before one is generous. In other words, India expects some recognition of its concerns before it can be magnanimous. The lack of generosity on Indiaʼs part is not, however, attributed to the Indian people or even its political leaders as much as to the Indian bureaucrats, especially the South Bloc officials, who are the key actors in bilateral and regional negotiations. One often hears endless tales of woe about the obduracy, insensitivity and arrogance of Indiaʼs officialdom which is perceived as one of the

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greatest obstacles to regional cooperation. While it is admitted that officials in all countries tend to be inflexible in their own ways, the Indian officials seem to be a class apart. As Edward Luce, the author of an acclaimed book on India notes in another context: “There are not many diplomatic corps around the world that are as accomplished at semantic nit-picking as Indiaʼs foreign service … Indiaʼs habit of approaching diplomacy in the manner of a clever high-school debater has ruffled the feathers of many governments around the world at one time or another”.35 Unfortunately, in South Asia the perceived behaviour of Indian bureaucrats colours the overall view about India itself. Indians are amazed by this because they regard themselves as being generally fair and honourable in their dealings with their smaller neighbours. What makes this even more painful for India to bear is that it sits badly with New Delhiʼs yearning to be loved and approved not only within its own neighbourhood but universally. Indians are thus dismayed and baffled by the reception they encounter at the regional level. These images and perceptions ultimately determine the tempo of regional relations leaving little scope for mutual goodwill. Whether the conflicts in the region involve hardcore territorial issues or sharing of resources much of the blame for their protraction is laid at the doors of Indiaʼs unhelpful and big brotherly attitude. For instance, the water disputes between India and three of its neighbours, Pakistan, Bangladesh and Nepal, are perceived as arising out of “Indian hegemonic attitude towards smaller countries”, who are convinced that the sanctity of the treaties will be violated by New Delhi.36 Similar charges are made against

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Indiaʼs intransigent stand on transit rights for Nepal, or for that matter, Bangladesh. Strangely enough while India is faulted for being cussed and ungenerous, no such blame is pinned on Pakistan when it refuses permission of transit rights to Afghanistan (now a SAARC country) which is land-locked and desperate for relief material that India wants to send across. As one Indian report notes: So unreasonable have the Pakistanis been on this that they have not even allowed the UN Food for Work officials to take to Kabul consignments of high-protein biscuits India has committed to supply free for Afghan children. A consignment of buses gifted by India to Kabul has been turned back. Both, the biscuits and the buses, have had to be taken to Mumbai, shipped to Bandar Abbas in Iran and then driven, over nearly 2,000 km, into Kabul.37

But this barely merits mention in the region. Neither does one hear any criticism of Pakistan from these states for refusing to grant the Most Favoured Nation status to India,38 even though it is obliged to do so under global trading rules. Indians find such double standards bewildering and unjustified. The perception that New Delhiʼs attempt to “transform its natural pre-eminence into an imposed predominance”,39 is thus very strong. While India puts this down to churlishness, the neighbours obviously interpret it differently and feel that their sense of grievance is well-founded. It is a measure of policy failure on Indiaʼs part that it should be perceived in such hostile terms in its immediate region. At the same

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time these attitudes also reveal the limitations of the policies of the smaller neighbours towards New Delhi. They have not been particularly successful in endearing themselves to India. Instead of harnessing Indiaʼs strength in a positive way they expend their energy in scoring points against it. This naturally makes India sullen and less forthcoming. From time to time it even sports indifference towards its neighbourhood, which is not necessarily a good thing for the region. Currently, there is little to suggest that India is about to do anything radically different to correct the gap in perceptions. On the contrary, it has reiterated that positive regionalism should be animated by a spirit of give and take. In early 2005, then Indian foreign secretary candidly outlined Indiaʼs hopes and fears for the future of South Asian regionalism and emphasized that the economic road to cooperation was the best option, given the irreconcilable political and security perceptions within the region.40 Through cross-border economic linkages India, he said, hoped to reduce the level of mistrust but it would be truly unfortunate if SAARC were to be used by its neighbours “as a vehicle primarily to countervail India or to seek to limit its room for manoeuvre”.41 The Indian foreign secretaryʼs observations were very pointed and deserve to be quoted at length: Countries across the globe are beginning to see India as an indispensable economic partner and seeking mutually rewarding economic and commercial links with our emerging economy. Should not our neighbours also seek to share in the prospects for mutual prosperity India offers to them?

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… It is true that as the largest country in the

region and its strongest economy, India has a greater responsibility to encourage the SAARC process. In the free markets that India has already established with Sri Lanka, Nepal and Bhutan, it has already accepted the principle of non-reciprocity. We are prepared to do more to throw open our markets to all our neighbours. We are prepared to invest our capital in rebuilding and upgrading cross-border infrastructure with each one of them. In a word, we are prepared to make our neighbours full stakeholders in Indiaʼs economic destiny and, through such cooperation, in creating a truly vibrant and globally competitive South Asian Economic Community. However, while we are ready and willing to accept this regional economic partnership and open up our markets to all our neighbours, we do expect that they demonstrate sensitivity to our vital concerns. These vital concerns relate to allowing the use of their territories for cross-border terrorism and hostile activity against India, for example, by insurgent and secessionist groups. As countries engaged in the task of economic cooperation, we need to create a positive and constructive environment by avoiding hostile propaganda and intemperate statements. India cannot and will not ignore such conduct and will take whatever steps are necessary to safeguard its interests.42

The speech understandably aroused strong regional reactions. It was interpreted by some as talking down to neighbours and cutting SAARC to size. While the speech was hard-hitting, some felt that its redeeming feature was

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its clarity. India had placed its priorities on record and made it clear to the regional states that it was better to pursue the feasible over the desirable. Indiaʼs preference for economic regionalism was not a new theme. Right from the 1998 Colombo Summit, this has been the burden of Indiaʼs song but at that time, it lacked conviction for obvious reasons. But now that its economic weight and potential have received universal endorsement, its exhortations to its neighbours to make a push for attaining “collective prosperity” is beginning to sound credible. From the Indian point of view, the more the other South Asian states demur the more will be Indiaʼs disenchantment with SAARC since it is convinced that one cannot wait for contentious issues to be resolved before embarking on economic cooperation. Indian policy elites feel that one way of breaking the thick web of bilateral differences that stifles the region is to seek the economic path to betterment which might eventually lessen the weight of the historical baggage. But this view does not enjoy a regional consensus since some believe that political reconciliation must precede economic cooperation. This apart, when Indiaʼs proposal to bind the region economically is read together with its colossal size, it makes the neighbours nervous and wary of deepening the regional process despite the fact that empirical experience suggests otherwise. For instance, the bilateral FTA between India and Sri Lanka has proved the sceptics wrong by benefitting the latter. Even so, lingering suspicions of being swamped by India haunts the thinking of policymakers who are unwilling to change course. Asymmetry is not easy to overcome but if mindsets were to change it is also not impossible to work around it. Clearly, the onus

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is on both sides to craft suitable strategies to manage the disparity in such a way that it becomes an asset rather a liability for cooperation. Intra-regional Rifts in South Asia The prospects for regional cooperation in South Asia are no less marred by bilateral disputes that abound in the region. A minimum threshold of understanding is the sine qua non of any collective effort. But this is glaringly absent in South Asia. Intra-regional conflicts are the main handicaps holding back the progress of regionalism. These conflicts are of long standing duration. The presence of a regional organization has not blunted the edges of age old irritants nor has it ameliorated the levels of suspicion and distrust. Many of the conflicts are products of the colonial past but their exacerbation has also been due to the policies of the regional states. That said, in some ways, sovereign states cannot be entirely blamed for short-changing cooperation given their existential problems. Drawing our attention to the inextricable link between security and cooperation and how this hobbles SAARC, A.P. Rana perceptively notes that the South Asian countries driven by their obsessive quest for creating a “nation-legitimising state within the set territories left behind by (the) colonial masters” cannot avoid getting “into conflicts and difficulties related to such issues” with their counterparts and, “such conflicts inevitably cut the ground from beneath the feet of any regional cooperative enterprise, unless it is relatively perfunctory, or carries no possible adverse implications for the priority of the political

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enterprise”.43 Satisfying this national priority inevitably spawns bilateral tensions because of the spillover effect from the domestic to the external realm. Instead of finding ways of dampening these tensions they are sometimes fanned by the regimes themselves for boosting their legitimacy. Since the performance of the governments in most of these countries leaves much to be desired, the ruling elites do not have the luxury to command allegiance based on delivery. Regime security is therefore sought by externalizing the problem. Hypernationalism comes in handy to redirect popular grievances in the direction of the neighbours which complicates bilateral relations. Since there are a number of unresolved bilateral issues between the states this deleterious practice makes even a small conflict spin out of control and defy any pragmatic solution. Exactly the opposite tendency obtains amongst the ASEAN states. It is not as if there are no serious differences between them. But because of their self-restraint and the value placed upon regional amity, every effort is made to play down the differences and contain their negative fallout. Rarely ever does emotional outburst get the better of sober rationalism. Several instances from the past can be cited in evidence but recent examples like the Indonesia-Malaysia fracas over maritime claims in the Sulawesi Sea or the ThaiMalaysian differences on the Southern Thailand Muslim insurgency movement or the deft handling by Singapore of the adverse comments on the city state made by former Indonesian presidents Habibie and Abdurrahman, prove the point. Needless to say that these would have been treated in a substantially different way by the SAARC countries.

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They would have been quick to garner as much political capital as possible from such incidents, thereby exacerbating bilateral tensions. The South Asian regionʼs myriad conflicts range from strategic and boundary disputes, water resource management and migration issues, trade and transit questions to ethno-nationalist tensions. Conflicts born of these sources are both protracted and intractable of which the running feud between India and Pakistan tops the list. The distrust between the regional rivals and the main contours of their troubled relationship has remained intact ever since they attained their independence. The genesis and trajectory of the dispute is too well-known to bear repetition here but it is worth pointing out that its debilitating effect on regionalism has been phenomenal and continues to determine its course. The decades-old divide between the two countries received fresh impetus from the 1998 nuclear tests. But despite this they did surprise everyone by attending the 1998 SAARC gathering. The fate of the Tenth Summit initially seemed to hang in the balance but the situation was saved by some proactive diplomacy by Sri Lanka.44 Not only did the meeting go ahead it also proved significant for providing a mutually acceptable forum where the prime ministers of India and Pakistan could meet and talk. Just by doing that the political relevance of SAARC was highlighted. Unfortunately such gains from regional diplomacy were short-lived. The year 1999 proved to be a disastrous one for India-Pakistan relations. The euphoria generated by the Lahore bus diplomacy by Prime Minister Vajpayee was rudely interrupted by the Kargil War which was provoked

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by Pakistanʼs violation of the Line of Control. India successfully expelled the intruders from its soil but the war poisoned relations between the two countries. This was followed by a military coup in Pakistan by General Musharraf, who had masterminded the Kargil operation. India was understandably reluctant to engage with the Pakistani leader whom it found to be untrustworthy. Indiaʼs ire was unfortunate for SAARC since the summit could not be held. Subsequent differences over Pakistanʼs continued support for cross-border terrorism, the 2001 terrorist attack on the Indian Parliament and the amassing of troops on the border by both countries put paid to any hopes for reconciliation. The stand-off between the two countries made it impossible for the annual SAARC summits to be held for the next three years. But the pendulum slowly began swinging the other way after the leaders of the two countries briefly shook hands during the 2002 Kathmandu Summit. The Twelfth Summit paved the way for subsequent peace initiatives and a gradual improvement in relations. The momentum was kept up leading to the 2004 Islamabad Summit with its notable achievements on SAFTA and the Social Charter. Clearly, India-Pakistan equations have a strong bearing on the tenor and rhythm of regionalism in South Asia although there is no guarantee that this by itself is sufficient to ensure the success of the SAARC process. This is because South Asian regionalism is vulnerable to other frictions as well. One set of conflicts involves India and its smaller neighbours and the other is between some of these countries themselves. India and Bangladesh have tiffs over a whole host of issues like the sharing of water from common rivers,

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divergent claims on maritime boundaries and newly formed islands, Indiaʼs alleged involvement in Bangladeshʼs ethnic problem in the Chittagong Hill Tracts, accusation and counter-accusation about illegal migration from Bangladesh into India, the bitterness over the construction of border fence by India, Bangladeshʼs alleged softness towards the insurgents from Northeast India who find shelter there, Indiaʼs ire over the use of Bangladeshʼs territory for crossborder terrorism by Islamic militants, a yawning trade gap, and, Dhakaʼs demand for a corridor through Indian territory for Nepalese goods to Bangladeshi ports and access to hydroelectric potential in Bhutan. The decision by India to postpone the Thirteenth SAARC Summit which was to have been held in Dhaka in early 2005 on the grounds of “deteriorating security situation in the host nation”, accentuated the resentment. Besides, SAARC once again bore the brunt of its member statesʼ bilateral differences confirming the fragility of the regional process in South Asia. Indo-Sri Lankan relations have been no less acrimonious starting with Indiaʼs intervention in the islandʼs ethnic conflict born of its sympathies towards the Tamils, to competing maritime interests. Although the Kachchativu island dispute between the two countries was resolved bilaterally in the mid-1970s, it continues to be a bone of contention because of the problems faced by Tamil Nadu fisherman in the Palk Bay.45 More recently, the proposed Sethusamudram Shipping Canal Project which is likely to cut through a chain of islands between the two countries has been opposed by Colombo.46 Bilateral tensions between the two countries in the 1980s had an impact on the 1989

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SAARC summit when the Sri Lankan president decided to boycott it because of the presence of Indian Peacekeeping Forces (IPKF) on Sri Lankan soil. Political relations have often fluctuated with the ethnic strife casting a long shadow. India has learnt to be more circumspect in its reactions to the conflict and has been wary of involvement after its disastrous experience of the late 1980s. Fortunately, at the economic level the two countries have had smoother interactions which made it possible for both countries to enter into an FTA in 1998. The agreement has yielded benefits but residual political and security concerns still dog the relationship between India and Sri Lanka. Indiaʼs ties with Nepal have also been anything but harmonious. The postponed Thirteenth SAARC Summit in February 2005 was also due to Indiaʼs objection to the scuttling of democracy in Nepal following the palace coup by King Gyanendra. The last five decades have seen considerable turbulence in Indo-Nepal relationship with its fair share of “lost opportunities, costly misjudgements and avoidable misunderstandings”.47 The controversial Treaty of Peace and Friendship signed by the two countries in 1950 rankles the Nepalese who regard it as an unequal treaty with its onerous security obligations in return for certain economic advantages that India bestowed on Nepal. While this is a perennial irritant Indo-Nepal relations have also been affected in recent years by adverse events like the 1999 hijacking of an Indian Airlines flight from Kathmandu, derailing of democracy by the king, Maoist insurgency and increasing penetration by Pakistan-aided Islamic fundamentalist groups into Nepal. Nepalese resentment against India, in addition to the 1950 treaty, centres on

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the Mahakali river treaty, Kalapani border dispute and trade and transit rights. Even though some of these issues have been successfully addressed, the level of indignation against India has not significantly abated and sometimes manifests itself in the form of anti-Indian rioting. All in all, Indiaʼs relations with its smaller neighbours (barring Bhutan and Maldives) are a prickly affair born of a clash between insensitivity on Indiaʼs part and impossible expectations on the neighboursʼ part. However, it would be wrong to assume that South Asiaʼs cup of woes is limited to these conflicts. The region has other conflict dyads too, albeit less virulent in nature. For instance, Bangladesh and Pakistan continue to wrestle with their unresolved disputes over the repatriation of stranded Pakistanis in Bangladesh who have been living there ever since the 1971 liberation war, and also over the division of assets and liabilities.48 These people owe allegiance to Pakistan but they have not been able to relocate to Pakistan as there has been no diplomatic resolution of the issue between the two countries. Because of the expense involved in relocation and the fear that their presence in Pakistan might have an impact on the domestic demographic profile, the issue has been allowed to drag on and the Biharis continue to be stateless. “By a quirk of fate, they belong nowhere; neither in their country of origin, i.e. India, nor in their ʻchosenʼ country, i.e. Pakistan, and nor in their country of residence, i.e. Bangladesh.”49 Similarly, Nepal and Bhutan are yet to amicably resolve the problem of the controversial status of a large number of people of Bhutanese origin who constitute the minority in that country. Bhutanʼs policies on the cut off period for

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citizenship eligibility, its imposition of the cultural code of conduct demanding that all the Bhutanese should embrace the majority Drukpa culture, and, its decision to classify a vast number of people of Nepalese origin as non-nationals forced its minority population to flee Bhutan and seek refuge in Nepal and India.50 The issue of these stateless people have soured relations between the two Himalayan countries. Nepal is desirous of Indian intervention in the dispute so that the refugees who fled Bhutan, and who are now in camps in Nepal and India could return to their homes in Bhutan. Nepal believes that given the strong ties between India and Bhutan the former is in a position to influence Thimpu to be more flexible. But precisely because India has such good relations with Bhutan, it has been wary of interfering in the dispute, cognizant of Bhutanʼs view against an Indian role. The differences between these two countries cast their shadow on the Sixth SAARC Summit which had to be postponed. The foregoing account reveals the extent of bilateral tensions and bitterness that pervades the region, sapping the energy of the regional states and preventing them from attending to more crucial developmental tasks. Well-meaning and forward looking elites (serving and retired officials, academics, strategic analysts) in many of these countries who are guided by long-term regional interests are convinced that with a more enlightened and consistent South Asia policy, India could help steer regional cooperation in a way that benefits New Delhi and the region at the same time.51 They are also of the opinion that had India been more generous in its dealings with these countries, a large pro-India constituency would have

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emerged over time and compelled their governments to be more flexible in their bilateral encounters with New Delhi. A policy of positive unilateralism is what the neighbours yearn for but India unfortunately comes across as insensitive bully. The point is not whether this is a fair assessment of Indiaʼs policy towards its neighbours but this is how it is largely perceived. The worst part of all this is that the discords between the South Asian countries have manifested in outright wars, low-intensity conflicts, subversion, a debilitating arms race and hostile propaganda notwithstanding their common membership in a cooperative organization. No region is bereft of intra-regional differences and within the ASEAN region too there are a host of unresolved bilateral issues even among the core members. But it seems far-fetched that any of these disputes would result in open warfare in Southeast Asia unlike in the case of South Asia. To that extent, the Southeast Asian states have moved more firmly in the direction of a regional “society of states” eschewing the use of force to settle their conflicts. The quarrels between the regional states and the way they have been managed bear this out. Intra-regional Relations in Southeast Asia The Initial Phase It is not as if ASEAN did not have to contend with a host of challenges at its inception. The lingering suspicion between the pivotal regional power, Indonesia, and its neighbours Malaysia and Singapore, and the dispute between Malaysia

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and the Philippines made for a very wobbly start. The first ten years of ASEAN were just that and no real progress in regionalism materialized. A stirring began to occur only after one and a half decades of the associationʼs existence. The year 1976 was a defining moment for ASEAN when it had its first summit, following the communist victories in Indochina in 1975. A slew of proposals followed but more importantly, there was a realization on the part of the member states that the external environment made it imperative for them to get their act together, which they eventually did. A broad framework of multi-dimensional cooperation in economic, political and cultural fields was unveiled by ASEAN leaders at this time. The 1976 Bali Summit was also significant for its emphasis on economic cooperation as it outlined specific programmes related to the establishment of industrial projects, preferential trading arrangements between member states and measures to intensify production of basic inputs such as food and energy. Not that all these proposals found successful implementation in subsequent years. In fact, ASEANʼs record of achievement in economic cooperation lagged far behind its achievements in the politico-diplomatic sphere. The success in the diplomatic realm was most in evidence during the Third Indochina War when ASEAN states relentlessly kept up the diplomatic pressure on Hanoi to reverse its 1978 invasion of Cambodia. Added fallout from that conflict was that it engendered extraordinary cohesion among the members and breathed a purpose into the organization. It also indirectly enabled the ASEAN states to concentrate on their economic development,

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knowing full well that the Vietnamese were preoccupied with their consolidation in Indochina. In the 1980s therefore, ASEAN acquired a remarkable visibility at the international level for keeping the Cambodian issue alive and frustrating Vietnamʼs attempts to gain legitimacy for its invasion of that country. During this time the regional states made impressive economic strides. The ASEAN region began experiencing economic prosperity, largely owing to the enlightened policies adopted by individual member states rather than any exertion on the part of their regional organization. However, with the winding down of the Third Indochina War and the resultant agreements of the Paris International Conference on Cambodia in October 1991, the regional states decided to focus more closely on regional economic initiatives. In the 1992 Singapore Declaration member states pledged “to move towards a higher plane of political and economic cooperation to secure regional peace and security”. These were still ASEANʼs heydays. But there was also a creeping worry that unless the focus on regional cooperation became sharper the association might lose its relevance especially in the wake of the Single European Act and NAFTA. It had become commonplace by this time to regard ASEAN as the most successful regional organization outside of Europe. Constructivists have provided a glowing account of ASEANʼs ability to acquire a regional identity through constant engagement and trust-inducing behaviour. Some neo-liberals attributed inter-dependence as the primary driving force that has kept the enterprise on the move. Others have not been so generous with their praise because of ASEANʼs propensity to shy away

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from institution-building and greater integration. The most sceptical have been the neo-realists who fault the association for side-stepping thorny issues and carrying on as if they would just go away.52 Pessimists question the long-term viability of an association that made a virtue out of necessity to form a collectivity rather than out of any sense of a common regional identity.53 All the same, ASEAN has been perceived as a security community with a pronounced commitment against the use of force to settle mutual differences.54 It is argued that ASEAN “by facilitating socialization among elites, the consolidation of some regional norms, and relatively successful collective action on a number of external issues (Cambodia, economic dialogue with major trading partners), has contributed to the creation of a sense of community among member states”.55 This was no mean achievement and it was an effective strategy to mitigate the uncertainty inherent in an anarchical international system. Mutual trust and confidence among member states in the politico-security realm should produce a ripple effect so that cooperation along other relatively non-controversial dimensions occurs automatically. This then, was the ASEAN success story which the other nascent regional organizations could well emulate to their benefit. The architects of SAARC could not have missed recognizing the strides made by their ASEAN neighbours who through their regional cooperation, their outward orientation and successful integration of their economies with the global economy, had effectively transformed their region into a vibrant entity. More importantly, regionalism had made the ASEAN states less quarrelsome and more mature

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regional actors. Much of this achievement was owed to the “ASEAN Way”. The ASEAN Way The ASEAN story is mainly about how the member states creatively side-stepped thorny issues which could have unravelled their enterprise in its first few years. Over time they perfected a model that has virtually become their badge of honour. ASEANʼs consensus model has served the association and its members superbly. To sustain the model members have had to make some compromises but overall, the costs of the compromises have been quite bearable. Arriving at a consensus is a laborious process and it is not as if there is always a perfect agreement among the parties. But the lack of complete unanimity has been managed through an astute strategy of consensus minus X. This allows a member to abstain or opt out and let those who are in favour of a scheme to proceed unhindered without causing rancour. What is famously called the “ASEAN Way”56 of managing inter-state relations involves internalization of certain behavioural norms and acting in accordance with the ASEAN spirit. “ASEAN Way” refers to a regional political culture that stresses informality, consensus-building and non-interference in the internal affairs of member states.57 Consensus is the critical element in the ASEANʼs decisional process. Along with the decision making norms are several consensus techniques. First, no issue is put onto the agenda unless all agree to it. Divisive issues that

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arise anyway are shelved for future discussion if no consensus emerges. Second, the members agree to disagree and present a united front publicly. Third, there is a process of slow deliberations involving consultation, compromise and concessions. Fourth, and important, the member most vitally concerned with an issue is allowed to take the lead, and the views of the “lead state” carry considerable weight. Finally, although it was originally decided that bilateral conflicts should be resolved in-house through a High Council, the practice of outside third-party mediation has evolved as less risky to ASEAN harmony.58

Relying on international arbitration and adjudication is a sagacious option. It removes the sting from messy territorial claims by depoliticizing them to a large extent. Once an award is made by an international body, there is less chance that the parties in dispute would renege on the obligations. After having volunteered to refer the matter to the third party they cannot do otherwise. This also makes it easy for states to sell the outcome to domestic constituencies even if they lose the case. For instance, Indonesia and Malaysia had both claimed jurisdiction over two small islands, Sipadan and Ligitan on the northeast coast of Borneo. In 1996 the leaders of the two countries decided to solve this long-running problem once and for all by agreeing to refer the dispute to the International Court of Justice (ICJ) which they did in 1998. Indonesia pledged not to upset the status quo of Malaysian control over the islands till the court had made its ruling. In 2002 the ICJ ruled in favour of Malaysia and even though Indonesia was displeased with the verdict and popular sentiment

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was on the boil, Indonesian leadership wisely abstained from fanning the flames of popular discontent. Despite its displeasure Jakarta was scrupulous in honouring the verdict.59 Singapore and Malaysia have also taken the ICJ route to resolve their contending claims on a tiny islet called Pedra Branca or Pulau Batu Putih. The dispute was taken to the ICJ in 2003 and a judgement is expected in a year or two. Similarly, the two countries decided to seek the help of an international agency for resolving yet another dispute that marred their relations. In 2003 Malaysia initiated international arbitration proceedings against Singapore to prevent it from reclaiming land in the Johor Straits. Kuala Lumpur maintained that Singaporeʼs action was narrowing the shipping lanes and harming its maritime interests. Navigation safety and environmental damage were also quoted by Kuala Lumpur as matters of grave concern. Malaysia approached the International Tribunal for the Law of the Sea to order Singapore to halt the reclamation process. The Hamburg based Tribunal ruled that reclamation by Singapore could continue but at the same time it ordered both countries to set up an independent group of experts to study the impact of the reclamation. Amicable relations were restored after the disputants agreed to use the recommendation of the experts group as a basis for finding a lasting solution.60 While such actions indicate the regional statesʼ preferences for finding a peaceful solution to bilateral problems, critics point out that referring bilateral differences to an external agency confirms the inadequacies of the “ASEAN Way”. But the positive thing about this is the willingness of the states

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to opt for a rational approach. These moves also show that the ASEAN states are gradually giving up the habit of shoving their disputes under the carpet or imagining that they do not exist. This is a major step for states that are notoriously rule-shy and structure-averse. As Mely Caballero-Anthony notes: While one could argue that this mechanism is outside the ASEAN ambit, the use of such legal recourse is indeed a significant development for an organization that had been long uncomfortable with resorting to legal structures and institutions in resolving disputes. Yet it can also be argued that because it is outside the ASEAN framework, it ensures that the dispute can be resolved objectively without members having to lose face.61

The “ASEAN Way” is not a typical conflict resolution mechanism but it has evolved as a conflict avoidance technique relying on the software arm of regional understanding rather than the hardware elements of formalized, rule-based instrumentalities. This should not be frowned upon as it has served the regionʼs interest fairly well. However, it is not as if there are no formal instruments to manage conflict in the ASEAN scheme of things. Apart from the founding document, that is, the 1967 Bangkok Declaration, there are other agreements and treaties that have a strong bearing on security and regional cooperation. These are, the ASEAN Concord, Treaty of Amity and Cooperation in Southeast Asia (TAC), Zone of Peace, Freedom and Neutrality declaration (ZOPFAN), Treaty on the Southeast Asia Nuclear Weapons Free Zone (SEANWFZ), ASEAN Declaration on the South China Sea,

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ASEAN Regional Forum (ARF), Rules and Procedures of the High Council on the TAC and the Declaration on the Conduct of Parties in the South China Sea. The formal and informal elements present in some of these instruments are closely intertwined and they cumulate towards a network of arrangements aimed at keeping the region safe, stable and peaceful. Self-restraint, de-escalation and non-threatening behaviour have been the main ingredients of conflict management in the ASEAN region. Inter-state conflicts at least have been tackled adhering to a decent code of behaviour even if the story is different when it comes to intra-state conflicts. Extreme military force and political repression have not been uncommon in this domain with a few benign strategies thrown in by way of mitigation. Under the latter some efforts for improving the socioeconomic lot of the deprived sections of the population have been undertaken by the governments but the results have been mixed. In any case, to ASEANʼs credit, it must be said that bilateral conflicts among the member states have never been allowed to assume ugly proportions as they normally do in regions where mutual restraint is conspicuously absent. The pursuit of harmony, based on inter-subjective understanding of certain norms, at the regional level has been a noteworthy feature among the members of this society of states. Challenges to the ASEAN Way However, nothing in regionalism can be taken for granted. What served ASEAN so well in its first three decades

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began losing its lustre towards the latter half of the 1990s. Features that consolidated the regional enterprise at one level also exposed its vulnerability at another, as the association lacked the necessary tools for tackling the multiple problems that hit the region simultaneously around this time. Since these problems transcended conventional state boundaries, it became that much more complex to deal with them without violating the cherished principle of non-interference. This placed ASEAN in a dilemma. In order to tackle the fallout from economic, ecological or ideological (human rights and democratization) problems, the rules on non-interference needed to be relaxed. But the fear was that if this was done then it would unravel the painfully put together ASEAN enterprise. It was equally clear that one could not wish away these problems by denying their existence because they vitally affected the well being of the states at a very immediate level. It was hoped that ASEANʼs enviable achievements of the last three decades could be pressed into service to address and alleviate some of these problems. This almost assumed a taken for granted character especially since regional states were on the crest of prosperity. It was generally held that ASEAN was poised to enter the new millennium confidently and could well stake a claim to being a model for successful regionalist endeavours in the developing world. ASEAN was all set to celebrate its success by expanding the membership to embrace all the ten states of Southeast Asia on the occasion of its thirtieth anniversary. As one seasoned and influential observer of the ASEAN region put it:

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Before 1997, optimism was the orthodoxy. Then, the ranks of the high priests of this orthodoxy were indeed impressive, comprising no less than most of the regionʼs expert economists and top government officials, the World Bank, the IMF, the Asian Development Bank, and Western investment advisers and rating agencies. If anyone had dared to predict that 1997, the 30th anniversary of ASEAN, would be an annus horribilis ... for the regionʼs economies, he or she would have been accused of heresy or ignorance or both.62

Unfortunately, at this critical period in the regionʼs development ASEAN was challenged by factors such as the rapidly deteriorating regional economic environment; ecological disasters in the form of the haze from uncontrolled forest fires in Indonesia; movement of illegal labour across state boundaries; the targetting of ethnic minorities in the wake of the economic crisis in Indonesia; and, issues of human rights and democratization. The combined effect of all these problems put considerable strain on intra-regional relations affecting their tenor to a visible extent. Despite years of cultivating mutual goodwill and understanding within a well-worked out regional framework, with the dissipation of external threats the glue that held the organization together began to weaken. In a sense, what ASEAN was facing was a confirmation of the inter-connectedness between global, regional and national issues and the proverbial difficulty of managing them through conventional means. To begin with, the strains of the regional economic crisis, as witnessed in the run on the Thai currency in July 1997 with subsequent falls in

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currency rates across the region proved devastating. The reasons for the crisis were macroeconomic in nature related to export performance, collapse of bubble economies, excessive production inventories and short term capital movements, particularly speculative ones. In the process of shoring their currencies most of the countries grew heavily indebted and were forced to adopt hard policies. The very financial and economic inter-dependence of the region led to a contagion effect leading to a sharp decline in growth. The region as a whole was slated to record a negative growth for the first time since the establishment of ASEAN. During all this economic turbulence, remarkably little alleviation came from the regional level. Some proposals were put forward such as using national currencies in intra-ASEAN trade in order to reduce the dependence on hard currencies. A regional rescue fund was also proposed and a new regional mechanism to provide early-warning to members about impending economic trouble was mooted. But even this minimalist surveillance mechanism stood threatened as some members (like Vietnam and Myanmar) were troubled by the request for data which they perceived to be intrusive.63 Among those who were clearly unimpressed by the lack of suitable measures to stem the downward economic slide was Singaporeʼs then Senior Minister Lee Kuan Yew. Addressing an international conference in Japan,64 he said that the regional response to the crisis was not “confidence building” but rather “confidence destroying”, and cited the following examples: Thai Prime Minister Chavalit Yongchaiyudhʼs initial reluctance to close down insolvent finance companies; Prime Minister Mahathirʼs initial angry

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rhetoric against currency speculators; Indonesian President Suhartoʼs unwillingness to follow through on IMF reforms. Mr Lee observed, “It was really a generation of leaders that did not understand the world around them had changed — and that they were not operating in the 1960s but the 1990s.”65 The failure of the leadership apart, ASEAN as a regional organization scarcely made its presence felt in the mounting debate on the regional economic crisis. Among the issues over which its silence was the loudest was the proposed stabilization fund, a portion of its trade conducted in regional currencies and, the debate over IMFʼs austerity policies.66 Equally distressing at this juncture was the yearly hazeinduced pollution in the region. The large scale palm oil plantations in Indonesia which started the fires by burning the forests were the prime suspects in causing the problem in the first place. Their action was compounded by the ill effects of El Nino. The loss of primary forests has been an ongoing process in the region and undoubtedly led to the debilitating effects of El Nino. But ASEAN reticence would not allow anything but a very mild voicing of the member-statesʼ concerns. It was inconceivable that there would be a candid exchange of views between Indonesia and its most affected neighbours even when it was apparent that nothing but drastic measures on the part of Indonesian authorities were needed to stem the rot. The sticking point as always was the sacrosanct non-intervention principle which meant that the countries had to be left to their own devices to meet this challenge. This, at a time, when it was apparent that the nature of the problem was transnational

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and could only be dealt with multilaterally. ASEAN abjectly failed to address a regional environmental disaster even though its principal cause was not hard to detect. During a two-day workshop of ASEAN officials on trans-boundary atmospheric pollution, no consensus emerged on how to deal with the causes leading to the Indonasian forest fires. An Asian Development Bank official addressing the meeting said that three fundamental issues still had not been addressed: the question of the adequacy of scientific measures and the level of outside help needed; the nature of the regional arrangements and supportive national policies; and, policies to back up a regional haze action plan that had been drawn up.67 Even after three decades of close interaction with one another, member states could not reach appropriate levels of comfort to put pressure on Indonesia to act decisively in this matter. Intra-regional Tensions of the Late 1990s and the Non-interference Principle The association also became vulnerable to the demands of its membersʼ state centric behaviour manifested in the various bilateral disputes that suddenly resurfaced around this time. While some of the bilateral problems between member states had always been a part of the ASEAN regional scenario they never vitiated the atmosphere to such an extent as they did in the late 1990s. Issues such as cross-border intrusions on the Thai-Malaysian border, allegations of support by Malaysia to the Muslim insurgents or seizure of Thai fishing trawlers by Malaysia; disputed territorial claims between Malaysia and Indonesia over the

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islands of Sipadan and Ligitan, or that between Singapore and Malaysia over Pedra Branca, had been there for some time.68 In the late 1980s there was also a loss of goodwill between regional neighbours over Singaporeʼs invitation to the Israeli President Chaim Herzog to visit the republic. Bilateral tensions had also resulted between Singapore and the Philippines over the hanging of a Filipina maid in Singapore. But the virulence and ill-will that marked intraregional relations in the wake of the economic crisis were of a different order. The usual reserve and self-restraint were conspicuous by their absence which made one wonder whatever happened to the much touted ASEAN spirit and mutual understanding. These seemed to resemble the animosities so typical in the SAARC region rather than among the courteous ASEAN states. The deteriorating relations between the core ASEAN members were a striking feature of this period. Singaporeʼs ties with Indonesia showed visible strains. The veiled doubts expressed by Senior Minister Lee Kuan Yew over Suhartoʼs choice of his vice-presidential nominee B.J. Habibie did not augur well for mutual relations. In an interview President Habibie expressed his reservations about Singaporeʼs worth as a friend and observed that Singaporeʼs belated congratulations on his elevation to the presidency was disappointing.69 Not satisfied with this he also colourfully referred to the island republic as a mere “red dot” on the world map. More troublesome however, was Malaysia-Singapore relations which touched a new low. The following account from the Far Eastern Economic Review summed it all up:

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Ties hit a low in March 1997 when Singapore Senior Minister Lee Kuan Yew in an affidavit in a lawsuit disparaged the southern Malaysian city of Johore Baru as ʻnotorious for shootings, muggings and car jackingsʼ. Malaysia protested, Lee apologised and relations gradually mended. The calm began to fade in early July when Malaysiaʼs tourism minister accused Singapore of leaving Malaysia out of a conference on tourism in Southeast Asia. A few days later, Prime Minister Mahathir Mohammad asked why Singapore would not allow Malaysian workers who had stopped working in the city-state to withdraw their forced retirement savings until they reached the age of 55.70

In July/August, 1998 fresh controversy erupted between the neighbours over the relocation of Malaysian Customs, Immigration and Quarantine facilities from Tanjong Pagar railway station to the Woodlands border. Reportedly, Malaysian authorities had been tampering with the pages of the passports of Singaporeans crossing over to Malaysia. At the height of these differences Malaysia announced the cancellation of the joint defence exercises conducted under the Five Power Defence Arrangements of which both Singapore and Malaysia were members. The Malaysian Government also put an end to the trading of Malaysian shares on Singaporeʼs over-the-counter market. Public bickering and recriminations had been rare in the ASEAN region. The general ASEAN norm had been to soft-pedal their disputes rather than highlight them but this behaviour was rapidly giving way to mutual recriminations. Admittedly, these were not major problems but the manner

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in which they were being aired suggested a high level of discord among ASEAN members which was odd, considering they had been so assiduous in projecting an image of regional unity born of mutual understanding. Perhaps, when there was a perceived external threat and a booming economy in the region there was an air of tolerance which helped in underplaying the differences between regional partners. Given the general level of amity that prevailed between the states that would have been an appropriate time to openly deal with some of the tough bilateral issues. Putting them on the backburner had only postponed the problems, it seemed. The ASEAN image was further tarnished at the Annual Meeting of the Foreign Ministers which convened in Manila in July 1998 when it got mired in the controversy over the Thai proposal on “flexible engagement”.71 In that meeting Thailandʼs Foreign Minister Surin Pitsuwan set the cat among the pigeons by articulating a need for change in ASEANʼs hallowed principle of noninterference. He suggested that after thirty-one years of ASEAN it was time that this old rule of non-interference was discarded in favour of a vigorous discussion of domestic affairs, especially if they had an impact beyond the member nationsʼ own borders. His only supporter was the Philippinesʼ foreign minister who saw much merit in this approach. A precedent of sorts on the issue had been made when Malaysiaʼs Anwar Ibrahim had suggested the year before that ASEAN should move towards constructive intervention. His remarks were made in the context of the 1997 Cambodian coup which was not favoured by ASEAN but which could not be very vocal about it as it was

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bound by the non-intervention principle. Nonetheless, an ASEAN-Troika was formed to act as a mediator to nudge the Cambodian Government towards free and fair elections. In the meantime ASEAN delayed admitting Cambodia as a member and only did so in 1999 after fresh elections were held and a new government was formed. Oddly, no such conditions were considered necessary for bringing in the military junta-ruled Myanmar into the ASEAN fold although not all ASEAN members were sanguine about taking a relaxed view of the juntaʼs policies. Foreign Minister Surinʼs advocacy for a modification in the non-intervention norm was in fact provoked by the repressive policies of Myanmar that had led to a flood of refugees crossing into Thailand. Bangkok was understandably annoyed with the Myanmar regime. A bit of plain speaking, it reckoned, was needed. According to the Thai foreign minister, ASEANʼs policy of constructive engagement had clearly failed with respect to Myanmar. In addition, Myanmarʼs inclusion in the association had also strained ASEAN-EU ties. Therefore a search for an alternative strategy seemed appropriate. But the Thai suggestion met with a cold ASEAN response and it was given a quick burial. To most ASEAN members the Thai proposal could not have come at a worst time. The conservative ASEAN members regarded this as a dangerous move. A face-saving formula was eventually concocted which was labelled as “enhanced interaction”. This was typical ASEAN fudge. Not surprisingly, at the Hanoi Summit in 1998, ASEAN members decided to reaffirm their commitment to “the cardinal principles of mutual respect, non-interference, consensus, dialogue and consultation”.72

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Thus the old way of managing intra-ASEAN relations could not be dislodged. Nevertheless, the Thai initiative made two things clear — a new debate had been opened within ASEAN on the norm of non-intervention and some members were impatient with the proverbial ASEAN reticence to address vital regional issues. To some extent this mood was visible in the reactions that emanated from some ASEAN members on the Anwar Ibrahim affair. Anwar was sacked as Malaysiaʼs finance minister in September 1998 and subsequently arrested on charges of corruption and sodomy. While in custody he was a victim of police high-handedness. This became apparent when he appeared outside the court with bruises and a black eye. Not only did this shock the Malaysians but it also drew heavy criticism from the Philippines and Indonesia. Non-interference was tossed aside by President Estrada and President Habibie when they unequivocally criticized the Malaysian Governmentʼs treatment of Anwar. This was a significant departure from the ASEAN norm and that too, over a purely domestic issue with no apparent regional ramifications. Even if this was an aberrant case it exposed the fragility of inter-state relations in a region where trust-building had been assiduously pursued. Fortunately, since neither the Philippines nor Indonesia persisted with the criticisms, no visible damage in regional relations ensued. These events, however, proved one thing — non-interference was no longer that sacrosanct as it had been before. Not only this, there was also a creeping recognition that it could become a liability at times. This was made clear during the East Timor crisis. The association did not cover itself in glory by remaining

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incredibly mute in the face of the mounting tension in East Timor. It typically prevaricated and failed to play a meaningful role in searching for a solution. Fearful of breaching the non-intervention code, it remained on the sidelines both when the crisis was brewing and when it reached its peak. President Habibie of Indonesia suddenly announced in 1999 that he favoured a referendum organized by the United Nations to determine East Timorʼs independence. The announcement followed brutal attacks on the civilian population by the Indonesian Army and pro-Indonesian militias but even this did not produce any collective ASEAN response or revulsion. The subsequent intervention by the International Force for East Timor (INTERFET) which was led by Australia exposed ASEANʼs non-role in the episode. The initiative passed into the hands of external players despite the regional statesʼ well-known reservations about non-regional powersʼ initiatives in regional affairs. It was not only inaction but also the marked divergence of views between the members about the propriety of participating in INTERFET that was remarkable. While Malaysia and Singapore initially demurred, Thailand and the Philippines decided to join in the efforts of the Australian-led forces. The newer ASEAN states resolutely kept away from participating in it. The eventual presence of the core ASEAN members in the peacekeeping mission, however, was not a collective but an assorted effort. Unfortunately, ASEAN had completely failed to take the initiative in addressing one of the most critical conflicts within the region. It could not cajole Indonesia towards adopting a prudent course and neither did it

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offer anything but an awkward response to the actions taken by outside powers. ASEANʼs conflict management modalities proved inadequate and dented its credibility as a bulwark of stability and order in the region. This then was the downside of one of the crucial planks of the “ASEAN Way”. Non-interference proved to be a limited and limiting option. Even so, the regional statesʼ belief in its utility remained undiminished and it was unlikely that any formal move would have been made then, or later, to modify it. In sum, it was a weakened although not a broken ASEAN that emerged from the regional crises of the late 1990s. Even though it appeared as though 1997 was the beginning of the end for the kind of regionalism that had made Southeast Asia unique, ASEAN somehow managed to survive the ordeal. Admittedly, an introspective mood was in evidence in the aftermath of the crisis. Different ways of bolstering the relevance of the association were debated within the region and such debates are still going on. Meanwhile, the regional states have continued to grapple with newer challenges both at the bilateral and multilateral levels. For instance, bilateral differences between Singapore and Malaysia on the water issue, the replacement of existing causeway and the dispute over the development of Malayan Railway land remain unresolved. Singapore-Indonesian relations have also had their share of stress. Differences over extradition treaty, export of sand for Singaporeʼs reclamation project and the controversies surrounding the dumping of hazardous waste have plagued bilateral ties.73 As mentioned earlier, Malaysia and Indonesia also have their difficult moments with their continuing maritime

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disputes. Thai-Malaysian relations have also come under strain due to the developments in Southern Thailand. Bilateral relations between Thailand and the newer members who are its neighbours have also not been trouble free. In August 2003, exasperated with the flow of narcotics into Thailand from Myanmar, the Thaksin government warned Yangon that if it did not take necessary action the Thai Army would cross the border and shut down the methamphetamine labs operating out of Myanmar.74 The Thai-Myanmar border had seen scuffles before and trading of charges between the two sides was not uncommon but even so, the threat made by the Thaksin governmnet was considered extreme. Fortunately, a better understanding between the two countries was reached thereafter but bilateral relations have not been entirely free of tension. Equally touchy have been Thai-Cambodian relations which are burdened by a heavy historical baggage. In 2003 a row erupted between the neighbours which soon turned ugly. A supposed claim by a Thai actress, which was subsequently found to be false, that the famous Khmer temple, Angkor Wat, belonged to Thailand, resulted in a popular outburst in Cambodia. In the race-based riots that followed, Thai businesses and Thailandʼs embassy were targetted by Cambodian mobs. Prime Minister Thaksin was livid over the Cambodian Governmentʼs inaction, particularly its failure to curb the mob frenzy. Thai planes and troops were despatched to evacuate Thai citizens. Thailand also expelled the Cambodian ambassador and downgraded its mission.75 This was an unusual action for an ASEAN member to initiate against a fellow member. Thailand demanded compensation for the destruction of

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Thai property and an apology from Cambodia. This was eventually rendered by the Cambodian Government which defused the crisis. But in the process the tenuous nature of intra-regional relations was exposed. ASEAN itself maintained its proverbial silence over the whole episode although external powers like the United States and China were not so reticent.76 Disagreements between member states, other than at the bilateral level, have also been apparent since the major debate that marked the 1998 AMM. In 2005 differences arose on the issue of Myanmarʼs chairmanship of ASEAN in 2006. Most ASEAN states were keen for Yangon to voluntarily forego its term and pass the chairmanship to the next member, the Philippines. The frustrations with the obdurate military regime in Yangon which had consistently failed to make any progress on democratic reforms and in addition, continued to keep Aung San Suu Kyi in detention were openly voiced in some of the ASEAN states. The disappointment over the juntaʼs actions even reached the portals of national parliaments in some regional countries. ASEAN members were understandably concerned that if Myanmar were to become the next ASEAN chair the EU and the United States would take a sabbatical from ASEAN meetings, which would have been an embarrassing snub.77 The country which championed the cause of Yangonʼs membership in the teeth of international criticism, namely Malaysia, felt sorely betrayed by Myanmarʼs obstinacy. ASEAN states went against their cherished non-intervention tradition and brought considerable pressure on Myanmar to stand down. To the relief of everyone, during the July 2005

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AMM, Yangon announced that it would relinquish its right to be the next chair.78 Even though this was a welcome development Malaysia continues to fret over Myanmarʼs obduracy. It perceives this as an ASEAN problem and is now importuning China to exert pressure on Myanmar.79 The Myanmar issue shows the difficulty of balancing conflicting norms and adhering to a consensual approach. The gap between the two for a variety of reasons is sometimes difficult to maintain. Lack of consensus can be a great handicap in a set-up where consensus is the organizing principle. This came into sharper relief when ASEAN was trying to project a united stand on the war against terrorism. The War on Terror and Regional Differences While ASEAN is known for presenting a common diplomatic position on any major international issue, the post-9/11 international developments have made it considerably difficult to maintain this practice. At the declaratory level impressive steps have been agreed upon by the ASEAN states to combat the terrorist threats within their region. The designation of Southeast Asia as the second front of terrorism was initially very disturbing to the local states but it was something which could not be ignored. Over time, this triggered some fresh thinking. The members responded with declarations countering terrorism. But it proved tricky to go beyond declarations and undertake some tangible steps. This was not surprising because the non-interference principle allows only a narrow room for manoeuvre when it comes to actual cooperation on

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sensitive issues. Countries with large Muslim populations have been wary of undertaking any radical measures for tackling the terrorist threat because of the fear that these may prove counter-productive. This was partly the reason why Indonesia seemed complacent in the beginning and only after the Bali bombings did it come to grips with the problem facing the region. The role of the United States in the global war against terrorism has proved to be a divisive issue among ASEAN states. The core members who have traditionally spoken with one voice on major international events were however acutely divided in their attitude towards the Iraq crisis. The deep split among the members was apparent during the annual retreat of the ASEAN foreign ministers who met in Sabah on the eve of the war with the aim of finding a common ground. But as it turned out, the ministers could merely compare notes on Iraq and found it impossible to reach any agreement on the issue. This confirmed that differences in regional perceptions were too wide to reach a common stand.80 Even more startling was the fact that in the absence of a common position the member states abruptly cut short their meeting (a very unASEAN practice) ahead of the U.S.-led attack. Malaysia and Indonesia were openly critical of the U.S. decision to act outside the UN framework.81 Indonesia condemned the U.S. action as illegal since there was no second UN resolution adopted against Iraq. Indonesian Muslim leaders characterized the attack as an imperialist action without any consideration for the UN.82 Popular sentiment against the war was in full display as evidenced in the number of demonstrations that were regularly held

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in Jakarta and elsewhere. The Indonesian Government spoke out strongly against the step taken by the coalition forces. As anticipated, Malaysia expressed its deep resentment against the war and declared that the U.S. action had made the UN utterly superfluous. The Malaysian foreign minister described the unilateral action aimed to topple the Iraqi regime as a violation of the sovereign right of states.83 Dr Mahathir accused the United States of targetting the Muslim countries and pressed for re-opening the Iraq debate in the Security Council. He simultaneously canvassed for a special meeting of the General Assembly.84 (The Malaysian prime ministerʼs ire was not just reserved for the United States. He also turned his invective against Singapore by stating that it was unfortunate that the latter should have supported the use of force as a way of solving inter-state problems. By that logic, he said, Singapore should also expect war to be waged against it.)85 Among the ASEAN states that supported the U.S. move were the Philippines, Singapore and Thailand. As part of the “coalition of the willing” President Arroyo of the Philippines defended the U.S. decision. She described it as “a battle between tyranny and freedom” and spoke of her administrationʼs moral and political support to get rid of the Iraqi regime as well as emphasized the mutual interests of her country and the United States in fighting terrorism both at the regional and global levels.86 The Singapore Government, after due deliberation, decided in favour of backing the U.S. move against Iraq. Foreign Minister Jayakumar justified his countryʼs support because it was necessary that Iraq should be disarmed.87

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He felt that only this way could the right message be sent to states like North Korea and to the terrorists who were eager to possess such weapons. He pointed out that Iraq had a deplorable record of ignoring UN Security Council resolutions. He also said that a second resolution might have been a good option but in the absence of it, Resolution 1441 provided sufficient grounds for action against Iraq which had been in material breach of its obligations. He reassured that war was not the best solution but sometimes it became inevitable and this was one such moment. The foreign minister was at pains to point out that Singapore was not blindly subservient to the United States. It had differed with it on many issues including the Palestinian question where it had voted in support of all the seventeen UN resolutions favouring the Palestinians, sometimes in the face of U.S. opposition. But the necessity to disarm Iraq, dangers of international terrorism and the pointlessness of inaction, made it imperative for the United States to act, he said. Thailandʼs position was more cautious as the Thaksin government tried to balance the obligations of a traditional ally with that of the demands of his domestic constituents. Afraid to upset the Muslim minorities in the South, the Thai Government did not rush to endorse the American policy. The prime minister feebly explained that Thailand had long supported the UN attempts to settle the conflict peacefully but that it was also desirous of closely cooperating with the United States on security matters and would be immensely glad to help with post-war restoration work.88 He chided the opposition parties for unnecessarily politicizing the issue. His ambivalence stemmed from the fact that there

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was an Islamic insurgency problem in the South which the government had not been deft in handling. Secondly, he was also aware that this was causing tension in ThaiMalaysian relations which could have an impact at the regional level. Terrorism induced security threats have no doubt nudged the regional states to conceive of a suitable strategy but so far there has been no robust response to tackle the menace. The ASC proposal highlights the necessity for cooperation and this has been followed by a number of statements of intent without any change in the machinery that is vital for managing the threat. Apart from the proverbial frameworks of action, nothing of concrete value has emerged at the regional level owing to the hesitation of the member states. Some countries have no doubt been more focused and stern in dealing with the problem but others “continue to treat homegrown Islamists cautiously, being concerned primarily with the threat of separatism, political instability, and social upheaval, as well as their own political fortunes”.89 One might add here that regional states have been equally tardy in devising proper means for ensuring the continued safety of the Malacca Straits. Littoral states are divided on the issue. Malaysia and Indonesia have been reluctant to involve outsiders in the effort while Singapore thinks differently. There is now some shift in the position of Malaysia which has agreed to aerial patrols involving Indonesia, Malaysia, Singapore and Thailand. Phase two of the operation is supposed to include the participation of the international community in this “eyes in the sky” initiative.90

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An Assessment of ASEAN’S Intra-regional Relations and Its Wider Effects The above discussion has covered a wide spectrum of bilateral and other differences between ASEAN states that became particularly acute in the wake of the regional crises of the late 1990s. In subsequent years also the regional states have had to wrestle with many a thorny problem arising out of regional and international developments whether they involved high or low politics issues. Divergent interests and perceptions have, no doubt, caused tensions among members at different times but within limits. These intra-regional equations underscore three points of relevance for regionalism: firstly, Southeast Asia is as susceptible to intra-regional disputes as any other region; secondly, whatever may be the national sensitivities surrounding these disputes they have not been allowed to overwhelm the regional process; and, finally the presence of these disputes have not led to war or war-like situations and disrupted the regional process at any point. Even Michael Leifer, who is known for his less than effusive view of ASEAN, admitted: “These bilateral tensions have never been serious enough, so far, to constitute a casus bellum. Nonetheless, the ASEAN governments have been determined not to allow such tensions to jeopardise their common goals of state-building and regime maintenance based on economic development”91 (emphasis added). Neither have they allowed these differences to derail the regional process. This is no mean achievement and proves that despite certain irreconcilable problems, the ambit of cooperation need not be circumscribed if the members address their problems with equanimity.

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In some quarters in South Asia, there is a misunderstanding about ASEAN as a mechanism for conflict settlement and conflict resolution which it is not. What ASEAN has been able to accomplish is conflict mitigation. The continued presence of disputes between the states attests to the fact that ASEAN regionalism is neither placid nor free of contentions. That said, the member states are also careful not to precipitate matters to the point where they get ugly. Self-restraint, shared regional interests and positive-sum cooperation have been valued more than a wanton display of ill-will or outright threats. The “ASEAN Way” may have made for slow progress, but progress all the same without disrupting the overall rhythm of regionalism. Not only this, ASEAN modalities have been imported into other regional arrangements such as ARF, APEC and ASEM. ASEAN has emerged as the primary driving force within these groupings. In this respect the evolution and growth of the ARF is striking. It enshrines the principles that have guided ASEAN and embodies the effort to create a security regime across the Asia-Pacific region relying on the formula that has served ASEAN so well. This is aptly portrayed as the transformation of the “ASEAN Way” into the “Asian Way”.92 ARF emerged in the wake of several uncertainties that the region witnessed in the 1990s: the impact of the end of the Cold War, the prospect of an attenuated U.S. presence in the region and a palpable anxiety about a potentially assertive China. The ARF arose as a broad security forum comprising two dozen states from within and outside the region. Much like ASEAN, it is strong on confidencebuilding and consensus engendering activities rather

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than possessing “a remit for regional problem-solving”.93 Nonetheless, its record of achievements lie in expansion of the Forum from 18 to 24 members, with others clamouring to join; the inclusion of defence officials in the ARFʼs activities; the strengthening of the Forum with an ARF unit in ASEANʼs Jakarta Secretariat; the signing of the Declaration on the Conduct of parties in the South China Sea, and the readiness with which the Forum was mobilised to cooperate on counter-terrorism measures such as interdicting terrorist financing and beefing up maritime security.94

This is, of course, a highly positive account of the forum which some may question. The evaluation of the ARF is very much subject to the perspective one adopts — realists perceive its performance as inadequate but constructivists share a more optimistic view about its efficacy, much like what ASEAN has been in the context of Southeast Asia. From Here to There: Association to Community Incremental, consultative and consensus based approach is not without its merits. Even mainstream conflict management literature acknowledges the long-term benefits that flow from such non-confrontational, trust-inducing strategies. ASEAN can therefore take credit for embracing a formula that dampens rather than inflames conflicts even though it is not explicitly an institution for conflict settlement or resolution.

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But in view of ASEANʼs aim to create an ASC it has to be asked how effective is the associationʼs time-tested procedure (consultation and consensus) for realizing the proposed goal? ASC envisages enhanced political and security cooperation measures but it should be pointed out that no new structures have been envisioned for these to occur. There is no mention of any additional instruments other than existing ones like ZOPFAN, SEANWFZ and TAC. The High Council of the TAC is emphasized as an important component of the ASC not because it has actually passed any real test but because it reflects the commitment of the members to resolve their disputes peacefully. The conceptualization of ASC is restricted to that which obtains now rather than leaping into a brave new world of security cooperation. Arguably, if by security community is meant waravoidance in the classic Duetschian sense, then ASEAN has already reached that nirvana. What more is needed then to craft a security community or consolidate it further? The other question is, can a community be realized without adaptation or modification of the institutional underpinnings of the association as it stands now? The degree of integration that a community demands is far higher than what exists right now within ASEAN which, as has been mentioned before, is more like a regional society. The difference between the two is significant: “Whereas the members of a community are united in spite of their individual existence, the members of a society are isolated in spite of their association.”95 This means that society is still a lower form of integration life even though it is vastly better than the more primitive form, which is merely a system in this context.

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From a society to a community is a more feasible jump. In the case of EU this has been realized, judging by the scale of connectivity among its members and the vast body of laws, the so called acquis comunautaire, emanating from specific treaties as well as from the various directives and regulations made over the years. There are 80,000 pages of such laws and rules from which no permanent derogation is allowed. A community is more than a reconciliation of common interests on select subjects. It means “sharing a robust common purpose and interest, which inevitably entails making considerable sacrifices for others”,96 which obtains in Europe more than anywhere else. Yet Europe is also on a quest — a movement in the direction of a comprehensive union which is at the moment in abeyance. The story in Southeast Asia however, is about graduating to the community stage which is a significant step forward. The proposed ASC is meant to lift the present level of political and security cooperation in the region to a higher plane. In April 2004 Indonesia convened a meeting of ASEAN senior officials to discuss a draft plan of action for ASC which included a proposal for a regional peacekeeping force to help in ethnic conflicts within the region. But this did not meet with the approval of Singapore and Vietnam.97 The raft of proposals made by Indonesia to reach the community goal has since been whittled down. As such, the proposed ASC does not go beyond the present mode of operation. If so, what is so significant about the exercise? The ease with which Indonesiaʼs suggestions have been set aside also proves

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the diminishing importance of Jakarta as a central actor in the ASEAN scheme of things, which is of course another issue.98 Southeast Asia, to all intents and purposes is still in search of an ASEAN community.99 While these reflections are vital for infusing ASEAN with a renewed sense of purpose they are not half as urgent as the questions that plague SAARC. The latter has not even begun in earnest to overcome the serious hurdles on the road to cooperation. Despite the existence of SAARC, South Asia continues to be regarded as the most “troubled region” of the world where states are divided across all domains: no shared values, no common interests, and, no commitment to honour mutual agreements. Therefore, even association-level behaviour is proving hard to sustain in South Asia. Interestingly, an extraordinary thing about the South Asian states is that they are more accommodating in other regional settings than their own. A few examples are enough to highlight the point. For instance, India is willing to be part of the security discussions in the ARF but will not brook it in SAARC. Similarly, India was averse to attending the SAARC summit following the military takeover in Pakistan in 1999 but did not mind participating in ASEAN PMC meetings or ARF where Myanmar (ruled by a military junta) was an integral part of the proceedings. Similarly, Pakistan routinely urges that SAARC discussions should include contentious bilateral problems by which it means the Kashmir issue. At the same time, when it wanted to join the ARF it was willing to abide by the ARF code and promise that if admitted it would refrain from using the forum to raise bilateral issues such as Kashmir.100

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Such contradictions also surface over economic issues. Bangladesh adopts a tough stance within the region on getting due compensation for tariff abolition and even threatens to close down trade routes with India, but in the signing of the framework agreement on BIMSTEC, it was willing to be more flexible. After raising initial objections to the BIMSTEC FTA Framework Agreement on the grounds of inadequate attention to LDC concerns, it meekly affixed its signature to it in June 2004 by arguing that as a founder member of the group it felt that it should not hamper its progress.101 In the same vein, the yawning trade gap between India and Bangladesh is also being addressed not via SAFTA but through BIMSTEC. Bangladeshʼs Foreign Secretary Hemayetuddin announced that his country was thinking of putting together a basket of goods for duty-free or lower duty access from India under the Bangkok Agreement among BIMSTEC members for least developed states.102 Strangely, the compromises that seem acceptable in non-SAARC forums are anathema within SAARC even though it is clear that such a stance is detrimental for the health of regionalism. Notwithstanding these anomalies some observers argue that a vigorous Indian role could inject a sense of purpose into South Asiaʼs somnolent regionalism. There have been moments in the history of South Asia when regionalism did receive the necessary push from Indian leaders but these were few and far between. The smaller statesʼ fixation with Indian hegemony no doubt leaves very little room for action but the more important question is whether India regards SAARC as relevant at all. Doubts on this score abound.

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Nowhere is the need for conflict management through cooperation greater than in South Asia and nowhere is it as patchy as it is there. There is no common understanding among the member states on what should be the guiding force of regionalism. Thus SAARC seems to be a victim of two irreconcilable notions underlying regional cooperation. Some members are of the opinion that without achieving peace and security in the region and without providing for any mechanism to resolve bilateral conflicts, it is pointless to expect any meaningful progress in regional cooperation. Pakistan adopts this view and to some extent, Sri Lanka too sees merit in this line of thinking. Both have wanted to modify the provisions of the charter which forbid the raising of bilateral issues in SAARC meetings. Expressing her reservations about the approach followed in SAARC, President Kumaratunga during the Tenth Summit remarked that even though contentious issues must be kept away from SAARCʼs deliberations, “regional cooperation without some kind of political consultation will be rather tame”.103 Pakistan strongly favours amending the SAARC charter to make it possible to discuss bilateral issues within its ambit. In contrast, India is steadfastly against any change in the present arrangement. It is more persuaded by the functionalist logic with its emphasis on economic cooperation leading to a “spillover effect” that will inject mutual trust and goodwill within the region. The benefits from economic cooperation are expected to eventually dampen political differences between the regional states and strengthen the SAARC process. It sees absolutely no reason for amending the charter and is convinced that

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more harm than good will result from any alteration of the formal provisions. Bangladesh is also of the same view and is opposed to the amendment of the charter to make way for discussions on bilateral matters.104 Disagreeing with the Pakistani view on this matter, Foreign Minister Morshed Khan of Bangladesh said that bilateral wrangles should not be dragged into the regional forum as that would greatly weaken it.105 Interestingly, both India and Pakistan make creative use of the experience of EU and ASEAN in defence of their respective positions on regionalism. In his speech at a conference of SAARC information ministers, former Prime Minister Vajpayee dwelt on the merits of putting economics before politics. He warned SAARC members that “they would miss the opportunities unleashed by globalisation unless they followed the example of EU and ASEAN where the member states had forgotten their traditional political rivalries and embraced the economic path to prosperity”106 (emphasis added). According to him, this was the best way to transform bitter hostilities into friendly relations. Speaking at the same forum, Pakistanʼs Information Minister Sheikh Rashid, however took an exactly opposite view of EU and ASEANʼs experience. He said that, “close cooperation and (economic) development can only develop in a regional grouping when there is complete political harmony among its members” (emphasis added), as had been the case with other regional organizations.107 Generalized statements such as these best illustrate Oscar Wildeʼs pithy remark that “in all pointed sentences some degree of accuracy must be sacrificed to conciseness”. If it was merely this it would be harmless. But what this

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exposes is a much deeper reality, namely, the regional rivalsʼ disagreement on the very basics of regional cooperation. In the early part of this chapter a reference was made to the Franco-German tandem that enabled European regionalism to forge ahead. Exactly the opposite is the case in South Asia and hence the dismal result. India stresses the economic logic and Pakistan the political one. In keeping with its preference for economic regionalism India has made a series of proposals for a South Asian economic union, South Asian currency, multilateral tax treaty, investment dispute settlement mechanism and so on. Pakistan has been brushing aside these as fanciful and premature in the absence of the right political atmosphere without which no economic integration, according to Islamabad, is feasible.108 Pakistanʼs firm belief in prioritizing the political over the economic is clearly revealed in its reluctance to extend the most favoured nation (MFN) status to India. It feels that without resolving the core issue, that is Kashmir, it cannot justify a gesture like that. Both India and Pakistan should share the blame for subordinating the larger regional interest to parochial concerns. Indiaʼs declarations about bolstering regional economic cooperation smack of insincerity when they are read together with its record of obstructionist policies exemplified by innumerable summit cancellations at its behest. Secondly, its attraction for functionalist logic is only a recent phenomenon. It is also perceived to be paying only a lip service to it. In comparison to the access it has had to the markets of its smaller neighbours following their market friendly policies since the mid1990s, its own markets remain inaccessible to them. The

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trade surpluses India enjoys vis-à-vis its neighbours and New Delhiʼs inadequate response to their pleas irritate and alienate them. Given this negative feeling, well-intentioned announcements about a South Asian Union fail to make any impression. As for Pakistanʼs take on regionalism, the regional perception is that it would like to use SAARC to advance its own agenda rather than genuinely work towards regional reconciliation. Therefore, its proposal to amend the charter is not universally welcomed. Some smaller states feel that it would be dysfunctional to open the SAARC forum for discussion on bilateral issues. It is feared that it would be completely swamped by the Kashmir problem, leaving absolutely no room for any other business.109 The stalemate born of these contradictory policies and the foot-dragging by individual members on issues close to their hearts have led to disenchantment with the SAARC process. This is one of the reasons that has prompted India to search for alternatives such as trans-regional, super-regional, sub-regional, inter-regional and bilateral cooperative arrangements. It has been pursuing these quite vigorously of late. Of these, the India-ASEAN formal linkage through a dialogue partnership and membership in the ARF fall under the first category. The Asian Economic Community (Japan, ASEAN, China, India and South Korea or JACIK) vision is a super-regional formula. Invitation to the East Asia Summit is a culmination of Indiaʼs objective of becoming a part of the extended Asia-Pacific region and is a substitute for entry into the APEC which India was unable to join. Last year Prime Minister Manmohan Singh spoke of the Asian Economic Community as an “arc

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of advantage” which will surpass the EU in income and NAFTA in trade.110 According to the 2004-2005 Economic Survey of the Government of India, the JACIK countries have now replaced the EU as Indiaʼs dominant trading partner, accounting for 19.9 per cent of its external trade.111 It would seem that Indiaʼs eastward quest is not devoid of substance. Its Look East policy112 which it put in place in 1991 has now become a vibrant trans-regional vehicle. As for sub-regional cooperation the BangladeshBhutan-India-Nepal Growth Quadrangle (BBIN-GQ) is the preferred option although it is yet to take off. Inter-regional cooperation is reflected in the BIMSTEC initiative, and the bilateral cooperative track is evident in India-Bhutan, India-Nepal economic cooperation and in the India-Sri Lanka FTA. New Delhi has also signed a Comprehensive Economic Cooperation Agreement with Singapore and has an FTA with Thailand, both of which are region-plus initiatives. In sum, India has broken out of the regional straightjacket in some ways as a reaction to the stalemate that prevails in South Asia. Not everyone agrees that it is wise to abandon the region which these moves supposedly imply. This is because, try as it might, India cannot ignore its neighbourhood and achieve its interests by leapfrogging into other areas without securing its backyard. A more vigorous engagement with the region is considered vital by some observers for an India that seeks to play a wider international role.113 India is not alone in casting its eyes beyond the region. Some of Pakistanʼs initiatives also reflect its extra-SAARC bias. Bilateral FTAs are being seriously pursued by it.

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It has signed one with Sri Lanka and is exploring the possibility of having a similar arrangement with Singapore. Pakistan is an ASEAN sectoral dialogue partner and is now a member of the ARF and it greatly values these interactions. It is slated to become a full-dialogue partner of ASEAN soon.114 SAARCʼs lack of progress is also encouraging its other members to be itinerant regionalists. Sri Lanka has begun to perceive the limits of progress within the SAARC framework and is not averse to moving beyond a SAFTA-centric position. It has started exploring bilateral and trans-regional options. Colombo is cognizant of Indiaʼs strategy of seeking a foothold in Asia-Pacific regionalism not only as a reaction to the stagnant South Asian situation but also because of New Delhiʼs increasing economic clout. Sri Lanka is keen to leverage on Indiaʼs economic strength and find a berth in the regional arrangements beyond South Asia.115 Of all the regional countries, India is certainly the best placed to realize the benefits of super-regionalism. Its growing economic weight is recognized by the East and Southeast Asian countries who welcome its presence amidst them.116 This has certainly made India more enthusiastic about carving a place in the larger Asian region. Apart from this, even though India recognizes that it cannot ignore South Asia, it is also aware of its uninspiring neighbourhood. For instance, the first annual Failed States Index published by Foreign Policy and the Fund for Peace, an independent research organization, mentioned a list of sixty states that faced the risk of cracking up. Of these, most belonged to Africa but disturbingly four were SAARC

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countries – Bangladesh at 17, Bhutan at 26, Nepal at 35 and Pakistan at 34.117 In the 2006 index, Pakistan is ranked 9, Afghanistan 10, Bangladesh 19, Nepal 20 and Sri Lanka 25. In comparison, India is ranked 93.118 If so many SAARC members are headed in this direction, India might well wonder about investing more effort into SAARC even if it realizes that the consequence of being surrounded by failed states can be horrendous. While India may feel that given the constraints there is not much that it can do by itself to improve the conditions in its neighbourhood such an assessment would be unfortunate both for India and the region. Conclusion: Regionalism, System of States and Society of States South Asian leaders recognize regionalismʼs mediating effect on the tenor of intra-regional relations. They are well aware that ASEANʼs presence has done wonders for that region and hence the quest for a similar outcome in South Asia. But so far their efforts show very little in common with the experience in Southeast Asia. This naturally makes one suspect that what they are after are the fruits of regionalism without bothering to make the necessary sacrifices for it. A stable regional environment is desired by all of them but there is no commitment to observe the basic neighbourly courtesies without which such an environment cannot be created. They are reluctant to embrace the practices of a society of states with all that it involves in terms of subscribing to certain essential norms, rules, agreements and common interests.

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Rules do not necessarily mean that they should be of a hard variety. Soft rules or “operational rules or rules of the game, worked out without formal agreement or even without verbal communication”119 will do. This is because, “it is not uncommon for a rule to emerge first as an operational rule, then to become established practice, then to attain the status of a moral principle and finally to be incorporated in a legal convention…”120 Such operational rules are present in ASEAN. The Association has developed over the years into a working diplomatic community and has concurrently grown in international stature becoming in the process a factor of some significance in the calculations of both regional and extra regional states. To that extent, despite intra-mural differences, it has been able to assume a prerogative role of a kind in an international process of negotiations about establishing regional rules of the game121 (emphasis added).

Within a society of states such rules are supposed to provide an enabling environment in which predictable state interactions occur. Although some form of rules may also be present in a system of states, the level of commitment may greatly vary, which means friendly interactions cannot always be taken for granted. In the case of SAARC the rules of behaviour are at a primitive stage as a result of which even routine procedures are hard to uphold. The cancellation or postponement of annual summits exemplifies this vividly as does the lack of progress in other areas. As mentioned earlier, one of the ways in which the ASEAN states resolve their disputes is by opting for

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international mediation or arbitration and honouring the rulings made by these bodies. This mechanism is not greatly favoured in South Asia. Even when there are treaties that cover subjects like water sharing, the tendency is to question their credibility. For example, India and Pakistan sensibly signed the Indus Waters Treaty in 1960 which has worked quite well. But recently Pakistan sought the World Bankʼs arbitration to settle the difference with India on a hydro project that India has been building on one of the rivers which is covered by the treaty. Pakistan regards this as a violation of the treaty and is therefore keen to settle the issue by opting for arbitration. India was not particularly happy with the move and has been insisting on resolving the difference bilaterally, which is not helping matters. In this context the startling statement made by Pakistanʼs Education Minister Qazi Javed Ashraf, who said that there was nothing to be hoped for from the World Bank and war was the only option to resolve the issue,122 can only complicate matters (emphasis added). The other treaties that India has with its smaller neighbours have fared no better. The 1996 Mahakali Treaty with Nepal and the Ganges Water Treaty concluded between India and Bangladesh are also the subject of endless controversies. This is a far cry from rule-based behaviour (that is, honouring agreements that states enter into) that Hedley Bull cites as a critical component of a society of states. The nature of communication and the usual courtesies that are observed in diplomatic practice is another indicator proving the existence of a society of states. The diplomatic instruments used by states confirm their preference for peaceful conduct of relations and also

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indicate their allegiance to accepted practices and norms. A society of states is likely to make use of this channel of communication to cement ties and avoid friction rather than to score points against one another. Even if it was not possible for SAARC members to present a common regional diplomatic front as ASEAN usually does, at least diplomacy should not be used to unnecessarily embarrass regional partners. In South Asia, India and Pakistan have had a history of reciprocal rudeness in their diplomatic exchanges. Several times the two countries have expelled one anotherʼs diplomats out of pique. Recalling their high commissioners has also been quite common. The reason that ASEAN is closer to the society-of-states end of the spectrum of regional behaviour is reflected in the diplomatic behaviour of the member states both within and beyond their region.123 For instance, take the case of the Southern Thailand situation where clashes between the Muslim minority population and the Thai Government escalated in 2004, claiming the lives of 550 people. Even though Malaysia and Indonesia were understandably upset about the action of the Thai Government, they were very measured in their reactions. Even when the Thai militaryʼs brutal action resulted in the death of 87 Muslim protesters, most of whom died from suffocation, the Malaysian Government showed a great deal of self-restraint in its comments. Not only this, Malaysia which chaired the fifty-seven-member Organization of Islamic Conference (OIC) agreed not to table the Southern Thailand issue at the OIC Foreign Ministers Conference held in Yemen in June 2005.124 This is not to say that the Thai Governmentʼs heavy-handed action

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in the South was not a matter of concern for the Islamic states within ASEAN. It was even widely speculated that Thailand might be put on the mat by its ASEAN partners during the November 2004 ASEAN summit. Prime Minister Thaksin openly threatened that if the issue was raked in the meeting he would walk out. Mercifully the noninterference principle came to Thailandʼs rescue. While it is understandable that within an ASEAN conclave a member would not be embarrassed but what is noteworthy is that the same decorum was maintained at an international meeting like the OIC. The absence of Thailand in this body could have been exploited by those ASEAN members who are part of the OIC and they could have used the forum to vent their feelings against Thailand indirectly. A comparable restrained behaviour among South Asian countries is inconceivable. In fact, for Pakistan the OIC has been a very important diplomatic forum for projecting the Kashmir issue and other India-related concerns. The following extract from official Pakistani source would make this point clear: The OIC has extended strong and unanimous support to Pakistan on all issues of concern to us. The OIC has three Jammu & Kashmir related Summit and Ministerial resolutions … The resolutions support the initiative of the Government of Pakistan to engage India in a serious, substantive and meaningful dialogue for resolution of all outstanding issues including the core issue of Jammu & Kashmir and encourage India to reciprocate positively. The resolution express deep concern at the prevailing tension that threatens the security and peace in the region as a result of large scale deployment of Indian troops in the Indian held Jammu & Kashmir … The OIC has a resolution

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on the destruction of Babri Masjid. The resolution strongly condemns the destruction of Babri Mosque by Hindu extremists holding them responsible for this outrageous act of desecration and sabotage. …The OIC has been a forum of strong and credible political and economic support to the Government of Pakistan. This relationship has gained strength over a period of time.125

Repeated recriminations can muddy diplomatic waters and create more distrust. Pakistan and India mutually fault each other for not observing the norms of diplomatic conduct and they both suffer the consequences of poor use of communication channels. None of this helps in building common interests and values between these two major regional rivals. Bullsʼ third indicator for a society of states is the presence of common interests. Regional harmony born of the non-interference principle is an interest that is shared by all the members. ASEAN statesʼ commitment for maintaining peaceful relations between the member states often leads them to refer their differences to external arbitration agencies. Secondly, their engagement of external powers in order to ensure regional stability is indicative of the presence of vital common interests among the members that guide their behaviour. This is yet another reason to view them as a society of states. The near total absence of any such recognized or recognizable common interest puts the South Asian states squarely in the system of states category. A grouping that is not at peace with itself cannot further the cooperative project. In fact, SAARC membersʼ record shows a decline in the subscription to norms in the second decade of the associationʼs existence more than in the first. This is certainly a retrograde step.

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Besides, in a society of states acceptance of certain obligations denotes that sovereignty bargain is at play. States are willing to accept a few limitations in exchange for certain perceived gains. Notwithstanding the statist nature of their regionalism they have a better appreciation of sovereignty as an aggregated phenomenon. In other words, they know that what is lost on the swings may be gained on the roundabout although the inhibition to jettison inter-governmentalism still has a strong hold. This chapter began by alluding to the imperatives of regionalism in Europe, Southeast Asia and South Asia. The trajectory of regionalism in these regions have not been alike, to say the least. Consequently, their regional cooperation experiences can be respectively summed up as progressive, regressive and retrogressive. Despite the troubling questions that are currently daunting the EU, it is still a clear winner in the integration race and thus belongs to the progressive category. Warts and all, ASEAN has also chalked up some impressive achievements although it is still stuck in a groove, painfully trying to move forward but unable to. In that sense it is regressive. SAARC is at an impossibly undeveloped state where member states are so sharply divided on all issues that it keeps sliding back, which is what retrogression is all about. If politics makes for combative regionalism, can economics make things better? Surely, the tangible benefit (that is, economic prosperity) flowing out of cooperation and pooling of resources should be a powerful reason to underplay divisions and build on synergies. Economic regionalism is premised on these beliefs but this does not

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mean that its practice and performance have been the same everywhere. The presence or absence of certain conditions, which the next chapter highlights, seems to be the ultimate determinant of the outcome. Notes and References 1. Hedley Bull, The Anarchical Society: A Study of Order in World Politics (London: Macmillan, 1977), pp. 9–10 and 13 (italics in original). 2. Ibid., p. 13. 3. Alan James, “System or Society?”, Review of International Studies 19, no. 3 (July 1993): 280–81. 4. There is a vast literature on European integration. The following is a representative sample: Robert O. Keohane and Stanley Hoffmann, eds., The New European Community, (Boulder, Colorado: Westview Press, 1991); William Wallace, Regional Integration: The West European Experience (Washington, DC: Brookings Institute, 1994); Simon Bulmer and Andrew Scott, Economic and Political Integration in Europe: Internal Dynamics and Global Context (Oxford: Blackwell Publishers, 1994); Paul Taylor, The European Union in the 1990s (Oxford: Oxford University Press, 1996); Andrew Moravcsik, The Choice for Europe: Social Purpose and State Power from Messina to Maastricht (Ithaca: Cornell University Press, 1998); Desmond Dinan, Ever Closer Union: An Introduction to European Union (Boulder, Colorado: Lynne Rienner, 2005; and), Christopher Hill and Michael Smith, eds., International Relations and the European Union, Oxford: Oxford University Press, 2005. 5. Robert Jervis, “Theories of War in an Era of Leading-Power Peace”, American Political Science Review 96, no. 1 (March 2002): 1–14. 6. Karl W. Deutsch et al., Political Community and the North Atlantic Area (New Jersey: Princeton University Press, 1957), p. 5. 7. Diane K. Mauzy, “Challenges of Regional Political and Economic Cooperation”, in The Asia-Pacific in the New Millennium:

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8.

9.

10. 11.

12. 13.

14.

15.

16. 17.

18. 19.

Regional Cooperation in South Asia and Southeast Asia Geopolitics, Security and Foreign Policy, edited by Shalendra D. Sharma (Berkeley: University of California, 2000), p. 258. For a discussion on the origins of regionalism in South Asia, see S.D. Muni and Anuradha Muni, Regional Cooperation in South Asia (New Delhi: National Publishing House, 1984). Mohammd Ayoob, “The Primacy of the Political: South Asian Regional Cooperation (SARC) in Comparative Perspective”, Asian Survey 25, no. 4 (April 1985): p. 444. Douglas Webber, “Two Funerals and a Wedding?”, Pacific Review 14, no. 3 (2001): 345. Douglas Webber, “Regional Integration in Europe and Asia: A European and Historical Perspective”, Paper presented at the INSEAD-ASEF Conference, 7–8 July 2003, pp. 13–14. Walter Mattli, The Logic of Regional Integration: Europe and Beyond (Cambridge: Cambridge University Press, 1999). Thomas Pederson, “Cooperative Hegemony: Power, Ideas and Institutions in Regional Integration”, Review of International Studies 28, no. 3 (October 2002): 678. For the reasons why India cannot be deemed to be a hegemon within the region, see Bhupinder Brar, “SAARC: If Functionalism has Failed Can Realism Work?”, South Asian Survey 10, no. 1 (January–June 2003): 40. Barry Buzan and Ole Weaver, Regions and Powers: The Structure of International Security (Cambridge: Cambridge University Press, 2003), p. 116. J.N. Dixit, My South Bloc Years (New Delhi: UBS Publishers, 1996), pp. 383–84. S.D. Muni, “Post-Cold War Regionalism in Asia: With Special Reference to the SAARC Sub-Region”, Visiting Research Fellowʼs Monograph Series, no. 25, Institute of Development Economics (Tokyo), February 1996, p. 54. V.L.B. Mendis, SAARC: Origins, Organization and Prospects (Perth: Indian Ocean Centre for Peace Studies, 1991), p. 24. On the face of it such a condition automatically precluded any politico-security role for the association. Nevertheless, some

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20.

21.

22.

23.

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scholars perceived the association in potentially different terms and argued that it represented an attempt to fashion a regional security order in South Asia. See Kanti Bajpai, “The Origins of Association in South Asia”, unpublished Ph.D. dissertation, Urbana-Champaign; University of Illinois, 1990. Shelton Kodikara, “Political Dimensions of SAARC”, South Asian Journal 2, no. 3, (September 1989): 368. Ross Mallick, “Cooperation Among Antagonists”, Contemporary South Asia 2, no. 1 (1993) 41–42. P. Sahadevan, “Competing Regional Interests in South Asia” in the author edited, Conflict and Peacemaking in South Asia (New Delhi: Lancerʼs Books, 2001), pp. 1–59. P.R. Chari, “National Security and Regional Cooperation”: The Case of South Asiaʼ, in Regional Economic Trends and South Asian Security, edited by Iftekharuzzaman (Dhaka: University Press Ltd, 1997), p. 190. When I alluded to this perception about India entertained by its neighbours during my interview with a senior Indian diplomat, she retorted that “a bully is never called a bully to its face except in the case of India which is very odd. Maybe we are not a bully after all”. There is a section of opinion in India which sees some truth in this. For instance, the year before last the Director of Bangladesh Rifles accused India of having had a hand in the serial bombings that shook Bangladesh on 17 August 2005. He said this during a press conference in New Delhi and his words were warmly greeted in Bangladesh. However, Indians found it remarkable that “a mere official from Bangladesh could stand in Indiaʼs capital, insult India and get away with it”. See Udayan Namboodiri, “Anti-India Rhetoric May Queer SAARC Pitch”, Pioneer, 22 October 2005. In fact, one analysis categorically states that ASEAN was perceived by some members as a way of taming Indonesiaʼs “disposition to hegemony” and “ASEAN was partly about coping with Indonesia just as the original European Economic Community (EEC) had been about managing German power”. Ralf Emmers, Cooperative Security and the Balance of Power

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in ASEAN and ARF (London: Routledge Curzon, 2003), p. 62. 24. South China Morning Post, 20 November 2000. 25. Asian Wall Street Journal, 1 December, 2000. 26. Authorʼs interview with officials and informed observers in South Asia, 2004. 27. A.K.M. Abdus Sabur, “Management of Intra-Group Conflicts in SAARC: The Relevance of ASEAN Experiences”, South Asian Survey 10, no. 10 (January–June 2003): 95–96. 28. Interview with government officials in Colombo and Dhaka, May and July 2005. 29. Views garnered from interviews with officials in India, April 2004. 30. Prime Minister Shaukat Azizʼs statement quoted in Dawn, 26 February 2005. 31. One Pakistani retired official I spoke to even speculated that India must have put Maldives up to this mischief. 32. Personal interview with an official in Dhaka, July 2005. 33. Kanti Bajpai, “Security and SAARC”, in The Dynamics of South Asia: Regional Cooperation and SAARC, edited by Eric Gonsalves and Nancy Jetly (New Delhi: Sage, 1999), p. 79. 34. I.K. Gujral, Continuity and Change: Indiaʼs Foreign Policy (Delhi: Macmillan, 2003). 35. Edward Luce, In Spite of the Gods: The Strange Rise of Modern India (London: Little Brown, 2006), p. 244. 36. Farzana Noshab and Nadia Mushtaq, “Water Disputes in South Asia” in Strategic Studies Also see S.B. Pun, “Some Musings on the Mahakali Treaty”. . This is a review of two articles on that controversial treaty. 37. Shekhar Gupta, “Our Pipeline of Control”, Indian Express, 30 July 2005. 38. Other than Saman Kelegama, the well-known Sri Lankan expert on regional economic relations and his colleague, D. Weerakoon who have commented on this, there are not very many nonIndian criticisms against Pakistan. See S. Kelegama, “A Need

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39. 40.

41. 42. 43.

44. 45. 46. 47. 48.

49.

50.

51. 52.

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For a New Direction For SAARC: An Economic Perspective”, South Asian Survey 9, no. 2 (2002): 178. Abdus Sabur, op. cit., p. 95. Shyam Saran, “India and its Neighbours”, Speech given at the India International Centre, 14 February 2005, pp. 1–4, . Ibid. p. 2. Ibid. pp. 2–3. A.P. Rana, “Evaluating the Bases of Regional Cooperation in South Asia”, South Asian Survey 10, no. 1 (January–June 2003): p. 20. L. Kadirgamar, op. cit., pp. 14–15. V. Suryanarayan, “The Kachchativu Dispute”, in Sahadevan, op. cit., pp. 346–62. Hindu, 14 August 2005. This project is also being vehemently opposed by environmentalists in the region. K.V. Rajan, “Nepal”, in External Affairs: Cross Border Relations, edited by J.N. Dixit (New Delhi: Roli Books, 2003), p. 97. Hasan Askari Rizvi, “South Asia as Seen by Pakistan”, South Asian Journal, August–September 2003 . Zarin Ahmad, “The Bihari Muslims of Bangladesh: In a State of Statelessness”, in Missing Boundaries: Refugees, Migrants, Stateless and Internally Displaced Persons in South Asia, edited by P.R. Chari, Mallika Joseph and Suba Chandran (New Delhi: Manohar, 2003), p. 177. Lok Raj Baral, “Bhutanese Refugees in Nepal: Quest for New Confidence Building Measures” . Views gleaned from interviews and exchanges during the authorʼs visits to the region in 2004 and 2005. These perspectives are condensed from the excellent analysis provided by Greg Felker, “ASEAN Regionalism and Southeast Asiaʼs Systemic Challenges” in Twenty-First Century World Order and Asia-Pacific: Value Change, Exigencies and Realignment, edited by James C. Hsiung (New York: Palgrave, 2001),

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pp. 212–53. 53. Shaun Narine, Explaining ASEAN: Regionalism in Southeast Asia (Boulder, CO: Lynne Rienner, 2002). 54. Amitav Acharya, “The Association of Southeast Asian Nations: ʻSecurity Communityʼ or ʻDefence Communityʼ”, Pacific Affairs 64, no. 2 (Summer 1991): 159–78. 55. Muthiah Alagappa, “Regionalism and Conflict Management: A Framework for Analysis”, Review of International Studies 21, no. 4 (October 1995): 374. 56. For a succinct explanation of this see Amitav Acharya, The Quest for Identity: International Relations of Southeast Asia (Singapore: Oxford University Press, 2000), pp 127–28. 57. David Capie and Paul Evans, The Asia-Pacific Security Lexicon (Singapore: Institute of Southeast Asian Studies, 2002), pp. 14– 27. 58. Diane K. Mauzy, “Challenges of Regional Political and Economic Cooperation”, p. 262. 59. Even though Indonesia felt aggrieved by the ruling, it endorsed it. In February 2005 the island issue once again cropped up when Malaysia awarded exploration rights to an international oil company in the waters around the islands in the Sulawesi Sea. Indonesia seriously objected to the decision and sent its warships there. The warships of the two countries had close brushes but the dispute was defused when their foreign ministers met on the sidelines of a regional conference and decided to resolve the issue peacefully, thus affirming the strength of the ASEAN Way. See Straits Times, 7 and 9 March 2005. 60. Straits Times, 14 January 2005. 61. Mely Caballero-Anthony, Regional Security in Southeast Asia (Singapore: Institute of Southeast Asian Studies, 2005), p. 78. 62. Sukhumbhand Paribatra, “Preparing ASEAN for the 21st Century”, ISEAS Trends, no. 96, 29–30 August 1998. 63. Economist, 1 August 1998, p. 25. 64. For details see Nikkei Weekly, 8 June 1998. 65. Ibid. 66. Asiaweek, 7 August 1998, p. 18.

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67. Straits Times, 2 September 1998. 68. N. Ganesan, “Rethinking ASEAN as Security Community in Southeast Asia”, Asian Affairs 21, no. 4 (Winter 1995): 217– 18. 69. Asiaweek, 4 September 1998, p. 28. 70. Far Eastern Economic Review (FEER), 23 July 1998, p. 20. 71. For the coverage of the Manila meeting, see Asiaweek 31 July and FEER, 6 August 1998 pp. 24–25 and 24–28, respectively. 72. Straits Times, 17 December 1998. 73. Abdilla Toha, “Extradition Talks and Singapore Lectures”, Jakarta Post, 2 March 2005. 74. “Rangoon Told To Do More To Help”, Bangkok Post, 22 August 2003. 75. Robert Carmichael, “Anti-Thai Riots: Cambodia Counts Costs”, Online Asia Times, 31 January 2003, . 76. Weatherbee, International Relations in Southeast Asia: The Struggle for Autonomy (Lanhiam: Rowman & Littlefield, 2005), p. 123-24. 77. “US-ASEAN Ties at Risk Because of Myanmar”, Straits Times, 5 May 2005. 78. Straits Times, 27 July, 2005. 79. “Any Chinese Help on Myanmar Welcome”. This was the Malaysian foreign ministerʼs message on the eve of the ChinaASEAN summit. Straits Times, 30 October 2006. 80. Bangkok Post, 20 March 2003. Also see Kripa Sridharan, “The Asia-Pacific Region and the War in Iraq”, Margin, 35, no. 3 (April–June 2003): 19–34. 81. Straits Times, 20 March 2003. 82. Jakarta Post, 25 April 2003. 83. Ibid., 19 March 2003. 84. FEER, 10 April 2003, p. 8. 85. For the Foreign Ministerʼs speech, see Straits Times, 27 March 2003. 86. Manila Star, 21 March 2003. 87. Straits Times, 15 March 2003. 88. Bangkok Post, 21 March 2003.

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89. Ralf Emmers and Leonard Sebastian, “Terrorism and Transnational Crime in Southeast Asian International Relations” in Weatherbee, International Relations in Southeast Asia, p.182. 90. Straits Times, 14 September 2005. 91. M. Leifer, The ASEAN Regional Forum (London: International Institute for Strategic Studies, Adelphi paper Series 302, 1996), p. 14. 92. Amitav Acharya, “Ideas, Identity and Institution-Building: From the ʻASEAN Wayʼ to the ʻAsia-Pacific Wayʼ?”, The Pacific Review 10, no. 13 (1997): 319–46. 93. M. Leifer, “Regional Solutions to Regional Problems?”, in Towards Recovery in Asia-Pacific, edited by Gerald Segal and David S.G. Goodman (London: Routledge, 2000), p. 113. 94. Khong Yuen Foong, “The ASEAN Regional Forum: Still Thriving After All These Years”, IDSS Commentaries 46, 27 July 2005, p. 2 95. George Schwarzenberger, Power Politics (London: 1941), p. 35 quoted in Alan James, “System or Society?”, Review of International Studies 19, no. 3 (July 1993): 281. 96. Amitai Etzioni, From Empire to Community: A New Approach to International Relations (New York: Palgrave), 2004, p. 4. 97. “ASEAN Makes Good Progress on Security Proposals: Indonesia”, AFP, 5 April 2004, . 98. See Donald E. Weatherbee, “Indonesian Foreign Policy: A Wounded Phoenix”, Southeast Asian Affairs 2005” (Singapore: Institute of Southeast Asian Studies, 2005, pp. 150–70. 99. This is the title of the book recently published by a former secretary-general of ASEAN. See Rodolfo C. Severino, Southeast Asia in Search of an ASEAN Community (Singapore: Institute of Southeast Asian Studies, 2006). 100. In fact, only after receiving this solemn assurance did ASEAN approve Pakistanʼs inclusion in the forum. See Dawn the Internet Edition, 13 May 2004. 101. Interview with a senior official of the Ministry of Foreign Affairs, Bangladesh, Dhaka, 17 July 2005.

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102. Daily Star, 24 June 2005. 103. The Hindu (International Edition), 8 August 1998. 104. Interviews with various officials and scholars in the South Asian region in 2004–05. 105. “Bilateral Issues: Dhaka Opposes Change in SAARC Charter”, The Hindu (the Internet Edition), 29 November 2005. 106. Dawn (online edition), 12 November 2003. A very similar view was expressed by Foreign Minister Pranab Mukherjee during his recent visit to Pakistan. Hindu, 15 Jauary 2007. 107. Ibid. 108. The Pioneer, 3 January 2004. 109. Interview with officials and informed observers in Dhaka, 15–17 July 2005. 110. Business Standard and The Hindu, 20 October 2004. Indiaʼs key role in East Asia is stressed by Singapore, Japan and Indonesia. They prefer a wider grouping so that China does not become too dominant in the region. See Straits Times, 17 Janauary 2007. 111. New Asia Monitor, (RIS) no. 2 (April 2005): p. 3. 112. This policy was unveiled by Prime Minister Narasimha Rao in 1991 to strengthen links with ASEAN and the Asia-Pacific region. See Kripa Sridharan, “The ASEAN Region in Indiaʼs Look East Policyʼ in India and ASEAN: Foreign Policy Dimensions for the 21st Century, edited by K. Raja Reddy (New Delhi: New Century Publications), 2005, pp. 111–37. Satu P. Limaye, “Indiaʼs Relations with Southeast Asia Take a Wing”, Southeast Asian Affairs 2003 (Singapore: Institute of Southeast Asian Studies, 2003), pp. 39–51. 113. See C. Raja Mohan, Crossing the Rubicon: The Shaping of Indiaʼs New Foreign Policy (New Delhi: Viking, 2003), pp. 257–59. 114. The Nation (Pakistan) 7 June, 2006 . 115. Interview with Sri Lankan officials and academics, 15–17 May 2005. 116. For regional views on Indiaʼs growing economic relevance see Kripa Sridharan, “Facets of a Maturing Relationship: India

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117.

118. 119. 120. 121.

122. 123.

124. 125.

Regional Cooperation in South Asia and Southeast Asia and Southeast Asia”, Indian Foreign Affairs Journal 1, no. 3 (July–September 2006): 43–62. “The Failed States Index”, Foreign Policy, July–August 2005, . Also see T.C.A. Srinivasa Raghavan, “The Imperatives of Imperium”, Business Standard, 5 August 2005. “Failed States Index 2006”, The Fund for Peace . Bull, The Anarchical Society, p. 67. Ibid. Michael Leifer, “ASEANʼs Search for Regional Order”, Faculty Lecture 12 (Singapore: FASS, National University of Singapore, 1987), p. 14. Daily Jang and Times of India, 16 February 2005. ASEAN members in the 1980s emerged as a solid diplomatic community when they acted successfully to ostracize Vietnam after its invasion of Kampuchea and pressured it to reverse its action. But at that time Vietnam was not an ASEAN member so there was no need to extend the kind of courtesy that obtained between the members. Following the expansion of membership, ASEAN has struggled to apply the norm to all its new members even though some like Myanmar, are making the task challenging. Dow Jones International News, 9 June 2005. “Pakistan and the OIC”, Ministry of Foreign Affairs, Government of Pakistan .

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Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

4 Patterns of Economic Regionalism T.C.A. Srinivasa-Raghavan

Introduction — Why Regional Trade Agreements (RTAs) It is a seeming paradox that along with the accelerated trend towards globalization over the last two decades, there has also been a new wave of regionalism. In the decade since 1996 alone, when the WTO agreement was signed, almost a hundred regional agreements have been negotiated. Several explanations have been offered for this trend. None of them is complete in itself but, together, they form a fairly convincing body of opinion about the usefulness of regionalism. Simply put, if so many countries are embracing it, there must be something to regionalism, whatever its critics may say. We have already discussed the political, institutional and security aspects of regionalism. Here we discuss its economic aspect. We also discuss which drives which: political and security aspects the economic or the other way around. Opinion is divided on this and it is hard to arrive at a firm judgement. But there is one thing that can be said with certainty: regionalism is here to stay as much as globalization is.

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It might even be argued that regionalism is on the increase because of increasing globalization. It is, if you will, a form of defence against globalization. In that sense, the only issue, as in the case of globalization, is of managing it. We should note, though, that while in the case of globalization, managing has connotation of containing or slowing down, in the case of regionalism, it is the opposite. This is inherent in the defensive use of regionalism. To the extent that the perceived threat from globalization is mainly economic, preferential trade arrangements (PTAs) are the pillars on which regionalism rests. The essence of these, as the name suggests, is to treat some countries on a preferential basis so that they can help each other in the face of the “threat” from global capital. Multilateralism or globalism, on the other hand, often ignoring politics, takes a dim view of such preferences. It believes in the equal treatment for all countries. In some cases, the defensive aspect of regionalism has almost reached maturity. In the European Union (EU), the original trade agreements have eventually evolved to an economic and monetary union. The EU today is the most important counter to U.S. economic power, especially where an alternative medium of exchange (or monetary unit, namely, the Euro) is concerned. If the dollar is what gold used to be in the old days, the most preferred store of value, the Euro has become the counterpart of silver. This is entirely the consequence of successful regionalism. In most other regions, however, progress has been halting and at a varied pace. Indeed, some would argue that it took even Europe, which could be said to have a greater

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consensus on the idea of forming an economic bloc, nearly half a century to get there. But surely the more interesting part is the fact that eventually it did. It has not yet reaped all the economic benefits of a 300-million strong market, largely on account of the rigid labour markets in Germany and France (though Germany may start reforming now with a new chancellor). The need for scale in production characterized by increasing capital intensity leaves no other option for small national markets. They have to join up and hang together if they do not wish to hang separately. The Association of Southeast Asia Nations (ASEAN), too, is moving rapidly towards becoming a giant economic bloc, and the eventual objective of forming an Asian Economic Community (AEC) seems closer now. When it comes into existence by around 2015, ASEAN will become a single market and production base and a key segment in what is called the global supply chain. This does not, however, mean that ASEAN is working either towards a common currency or free movement of people. That sort of economic union is still some distance away. The most important step in this direction was taken with the resetting of the deadline for integration, which is now five years ahead of the previous schedule. There were two important reasons for this. ASEAN believes that by 2014 many of the FTA negotiations with China, Japan, South Korea, Australia and New Zealand would have been concluded. This means there may not be any need to wait till 2020. Secondly, and perhaps more importantly, this is being seen as a way of catalyzing and energizing internal changes in the member countries.

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As was recently stated by the president of the Asian Development Bank, I believe an Asian economic community is not only desirable and feasible — it is already emerging, with great potential for consolidating the gains the region has achieved in recent decades. But as we all know, the region still faces many large development challenges. Much remains to be done by Asian countries — individually as well as collectively — to bring such a vision to fruition.1

This is not surprising because four of the ten largest world economies — Japan, China India, and Korea are in Asia. They account for almost 30 per cent of total world GDP. This, incidentally makes it easier for India to integrate with ASEAN. The Indian economy has been growing at over 8 per cent for the last three years and may touch 9 per cent in the next five. Meanwhile, intra-regional trade in East Asia has risen from 43 per cent of total trade in the early 1990s to 55 per cent now. For NAFTA the corresponding figure is 46 per cent and for the EU, 62 per cent. South Asiaʼs intraregional trade is less than 10 per cent. With India as the engine, it is natural that it should look to ASEAN as a partner. However, while business has welcomed the accelerated calendar, not everyone thinks this is a good idea because of concerns over the ability of the less-developed countries in the region to catch-up. But there is also an expectation that if infrastructure is improved in the less developed countries, these concerns will appear exaggerated when the

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time actually comes. In other words, catch-up may not be that problematic as the critics say it will be. In contrast, it is perhaps typical of South Asia that it witnessed the opposite trend fifty years ago when India was partitioned in two. When Europe started to integrate, South Asia started falling apart. (It is worth reminding readers here of something that everyone overlooks. This is that while India may have been split in two in 1947, at the same time it was also stitched together by the inclusion of the former independent states outside the control of British India. This was the equivalent in those days of what the EU has achieved). South Asia is now trying to reverse the consequences of partition, which in fact led to three countries by 1971 when Bangladesh broke away from Pakistan. At present the three biggest South Asian countries, in spite of their common history which was interrupted only recently in 1947, currently barely trade with each other, at least formally. Informal trade, however, is booming it seems but being informal, by definition, no one knows its magnitude. Guesstimates put the trade at around US$4 billion between Indian and Pakistan and around US$1 billion for India and Bangladesh. Of the remaining four, two (Nepal and Bhutan) are land-locked and two (Bhutan and Maldives) have populations below three million and are thus not very attractive as markets. Sri Lanka fits neither category but remains industrially out of sync with India in the sense that, industrially, it has neither the depth nor the width of the Indian economy. As such, it can neither be a very large market for Indiaʼs industrial products nor a source of supply. Its long term economic interests require the

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TABLE 4.1 Regional Trade as a Share of Total Trade (%) Regional Imports TE 1982 TE 1985 TE 1992 TE 1997 TE 2000 TE 2002 Bangladesh India Maldives Nepal Pakistan Sri Lanka South Asia

3.8 1.0 13.7 22.0 2.1 5.6 2.1

3.1 0.7 10.5 35.8 1.9 6.9 2.0

8.1 0.6 13.6 16.8 1.5 9.7 2.5

15.6 0.5 18.2 26.2 1.9 12.5 4.0

14.1 0.9 23.2 20.4 2.2 10.3 3.9

13.4 0.8 23.0 18.7 2.5 12.1 3.5

Regional Exports TE 1982 TE 1985 TE 1992 TE 1997 TE 2000 TE 2002 Bangladesh India Maldives Nepal Pakistan Sri Lanka South Asia

8.4 3.0 12.1 41.7 5.9 8.0 4.6

9.2 3.3 19.3 45.6 3.8 5.0 4.2

3.5 3.3 19.7 9.7 4.1 2.9 3.5

2.3 4.9 19.1 18.4 2.8 2.6 4.3

2.1 4.4 15.4 33.0 3.9 3.0 4.3

1.5 4.2 15.1 40.3 2.8 3.5 4.1

Regional Trade (Imports + Exports) TE 1982 TE 1985 TE 1992 TE 1997 TE 2000 TE 2002 Bangladesh India Maldives Nepal Pakistan Sri Lanka South Asia

4.9 1.7 13.7 27.1 3.3 6.5 2.9

4.6 1.6 12.2 38.3 2.5 6.1 2.8

6.6 1.8 14.9 14.4 2.6 6.8 3.0

11.2 2.6 18.2 24.3 2.3 7.9 4.1

9.8 2.4 20.5 24.7 3.0 7.1 4.1

8.7 2.3 19.9 27.0 2.6 8.3 3.7

Source: IMF: Direction of Trade Statistics

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achievement of a greater degree of complementarity with the Indian economy. Overall, the result is that nowhere else in the world is regional trade lower than in South Asia. For this reason alone, perhaps, the Framework Treaty on creating South Asian Free Trade Area (SAFTA) signed in January 2004 represents an important effort to enhance regional cooperation. But the nagging question is: will it work? The answer depends on a very large set of factors, not all of which are economic. Unlike in Europe where economics drove the politics, in the final analysis, in South Asia it looks as if politics will determine the outcome. In a sense, the three largest countries of South Asia — India, Pakistan and Bangladesh — are in a mode that is not unlike that of late nineteenth and early twentieth century Europe, namely, nationalistic to a fault. However, assuming that eventually the politics will move into a more cooperative mode, it is useful to analyse the economics of regional arrangements. The case against PTAs is, of course, well known: they are less efficient because they divert trade, rather than creating it and they encourage domestic inefficiency. But it needs also be borne in mind that much of the anti-regional literature and beliefs stem from economists either working or trained in the West, which stands to lose the most if other regions integrate. The fact is that there are conditions under which PTAs can improve welfare in the member countries — if it is done properly. If it is not done properly, like everything else, regionalism too can fail to deliver. What is even less understood is that done right, regionalism can actually speed up multilateral liberalization. ASEAN is a case in point. Although in the initial decade

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after it was launched there was not much intra-regional trade, over time this has changed. ASEANʼs overall trade has grown from US $10 billion in 1967 to almost a trillion dollars in 2004 (but remains at 20 per cent of total ASEAN trade since 1967). In the face of such growth, it is hard to argue that PTAs always cause harm. Perhaps a better way of looking at PTAs is to recognize that, as far as the practical consequences for trade and investment are concerned, a PTA area is no more than a non-state entity that participates in international trade. Once we do this, many of the misgivings turn out to be unfounded. In any case, businessmen rather like them and prefer bilateral trade agreements even more because they are simpler to understand and follow. Be that as it may, a few essential facts about PTAs are in order as they are useful for restoring the perspective. Since 1990, the number of PTAs has gone from 55 to 230 and 60 more arrangements are under negotiation. Nearly every country belongs to at least one PTA. And, amazingly, the industrial countries belong to the most PTAs, with an average number of thirteen per country. The share of trade between PTA areas stands at about 40 per cent of total world trade. Clearly, PTAs hold major attractions. But not a single South Asian country has signed a bilateral agreement with an industrial country, even though an increasing number of PTAs include a large industrial country. As a senior official of the IMF put it at recently, “this suggests the growing importance of a ʻhub-and-spokeʼ structure in world trade. In a hub-and-spoke system, the largest countries sign bilateral agreements with many small countries. Such a system could marginalize the spokes,

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where market access conditions are much less advantageous than in the hub, which enjoys improved access to all of the spokes.”2 But there is also what Professor Jagdish Bhagwati has famously called the “spaghetti bowl” effect where there are so many rules and agreements that no one any longer knows what exactly is happening. True, this has resulted in the market access among smaller countries improving but only at the cost of very complex trading rules. But cost to whom? There is no clear answer to this. Measured in an aggregative, national way, the picture looks discouraging. But governments also have an obligation to protect domestic capital and labour. At the firm level, the costs are much less or are at any rate, worth paying. This is why businessmen prefer PTAs and bilateral agreements. In their search for the best, economists tend to ignore this aspect and make it the enemy of the good. The reasons why countries enter regional arrangements are several but the underlying motive is always the desire to have a larger market in which to operate and to protect domestic labour and capital. To view the issue purely from a fundamentalist economic view does not result in very many practical solutions, least of all to policymakers who have to manage both the politics and the economics. Regional agreements also help in attracting FDI. This is very useful when the domestic savings ratio is low, as in most South Asian countries. One important consequence of regional trading agreements that is not often acknowledged is the way in which they induce and reinforce internal reforms.

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And, of course, trade policy has emerged as an important instrument of foreign policy. South Asia is an exception to this general rule. In the debate over regionalism versus multilateralism perhaps the only issue to be determined is whether in the medium term such an arrangement allows member countries to restructure to a higher level of efficiency. Multilateral arrangements tend to treat minnows and lions on par and break down when the minnows protest, as happened at Cancun talks of the Doha trade round when the four cotton producing African countries walked out over the way they had been treated by the big countries who wanted others to reduce everyoneʼs subsidies but their own. That said the case for regional trading arrangements cannot be pushed beyond a point because, first, they are inherently temporary in nature as their benefits to the more light-footed countries begin to diminish with time. These then want to move up on the ladder. Second, purely from an incentives point of view, RTAs create more problems than they solve because they create the wrong sets of incentives, especially in the complex rules of origin game. Third, they tend to distort the pattern and composition of trade in a manner that does not benefit the economy as a whole but only some sectional interests. In other words, they must be viewed purely as shortterm arrangements of convenience. Can RTAs co-exist with multilateral arrangements? Theoretically not, but in practice they do because given a particular technology, distances and transport costs do create optimal trading areas outside of which it makes no real sense to trade except for grossly undervalued

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currencies, such as that of China now and Japan in the 1970s and 1980s. Now that oil prices are set to remain high, it will be interesting to see what effect there is on the pattern of international trade? It is perhaps no coincidence that the biggest fillips to regional trade have come after sudden and permanent upward movements in the price of oil. The real issue, therefore, about RTAs and multilateral arrangements is not whether they can co-exist but whether the multilateral system should move away from sovereign state membership to RTA memberships. Thus, WTO members will not be countries but organisms like SAARC, ASEAN, NAFTA, EU and so on. True, this would not address issues that arise from the interplay of domestic political forces. But it might lead economists to revise their opinion about RTAs. Finally, it is necessary to add a word about the role that RTAs can play in mitigating or preventing the emerging resource crises and perhaps even conflicts, including armed ones. The view has been gaining ground that with India, China and Asian economies growing so fast, and given the existing demand from the developed countries, the twentyfirst century will see an increase in the conflicts over the control of natural resources. Many people believe that the Iraq war was only the first of such conflicts because the U.S. and UK oil reserves are running very low at six years for the former and eleven for the latter. Be that as it may, the question is worth asking: can RTAs help in reducing or eliminating these conflicts? If so how? What is the record of RTAs in this regard? This is an area for further research.

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Distance and Integration There are many reasons why countries trade with each other. Unilateral trade liberalization and participation in the multilateral trading system are two good reasons. Decline in trade costs, including transport and communication costs, is another important but neglected reason. The fact that it is now possible for Indians to deliver disembodied services cheaply has led to the Business Process Outsourcing (BPO) phenomenon because satellite delivery, apart from solving the immigration problem, completely neutralizes the distance factor. This author has written extensively on this subject in the 1980s. The decline in transportation costs in the twentieth century has also resulted in monumental changes in patterns of trade and investment. Again, attention here has been focused on how faraway places have begun to trade with each other. What is less focused upon is that this process has resulted in greater regional integration. The most striking example of this is Europe. But the same thing has been happening elsewhere also — less speedily perhaps but quite as surely. East Asia is a case in point. The literature on trade and distance suggests that distance continues to play an important role in determining trade. Some researchers have found that the impact of distance on trade is increasing over time, that is, the proportion of trade over shorter distances increases over time in relation to trade over longer distances. In short, while there is no clear consensus, one thing seems certain: distance is an important determinant of trade. As Huang has shown, nations trade much less with distant

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partners; geographic distances also reflect unfamiliarity and informational barriers which means the further away you are, the more uninformed you are likely to be, so doing business with distant places becomes a problem.3 The Conditions for Regional Integration This section deals with the issue of what makes some regional arrangements succeed and others fail, or at least, not be as successful. Since there is often a tendency to make comparisons without first clearly delineating the points of reference of the comparison, it is necessary to identify the necessary and sufficient conditions for ensuring success. Or, conversely, the absence of the conditions that ensure failure or very limited success. Necessary conditions, as the term suggests, are those without which the desired outcome will not be achieved no matter what else happens. Political will is an example of this as is the existence of a regional trading agreement. Sufficient conditions are those conditions alone that ensure the outcome by being present. But these are very rare because the requirements are stronger for a condition to be sufficient. It is rare, or well-nigh impossible, to find a condition that is both necessary and sufficient. It is the purpose of this section to identify such a set of conditions. That requires the examination of successful RTAs. To create what can be called a benchmark, a birdʼs eye view is provided of the European experience, which is rooted equally in politics and economics.

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European Union The political impulse for regionalism in Europe arose from the threat posed by the Soviet Union after 1945. It is however not clear whether the political impulse led to economic integration, which turned out to be spectacularly successful, or whether it was the other way round. One school of thought is that “the beginnings of economic cooperation were strongly influenced by security considerations. In order to control Germanyʼs industrial base and to prevent another uncontrolled rearmament, the French Foreign Minister Robert Schuman developed a plan in 1950 to supervise the entire production of coal and steel of Germany and France by a common authority.”4 Our own view is that it was the latter, namely, that the imperatives of economics drove the later movement towards greater political integration in order that economic ends could be served better. In 1951 Germany, France, Belgium, the Netherlands, Luxemburg and Italy signed the treaty establishing the European Coal and Steel Community (ECSC). In 1957, the Treaty of Rome laid the foundation for the European Economic Community (EEC). In 1965 ECSC and EEC and Euratom were merged under a single authority. The customs union was done in 1968. From here on the process acquired a dynamic of its own, which eventually led to the Treaty of Maastricht in 1993 and all that it has entailed, including expansion of membership. The key point to note is that there was a voluntary handing over of national sovereignty to supra-national institutions. “Decisions in policy fields like agriculture were no longer taken in the

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national capitals but in Brussels.”5 There were exceptions, of course, like Britain, which had its “special relationship” with the United States to rely on. This brief recapitulation tells us a lot about the necessary and sufficient conditions that make for successful regional arrangements. From the European experience, it seems possible to postulate that the presence of an external security threat (USSR) was a necessary condition. So perhaps was the strong French perception that a German resurgence had to be prevented by supervising it. But these were only necessary conditions and not sufficient in themselves. Regionalism also needed the (unstated and unacknowledged) threat on the economic side from the United States, namely, the apprehensions of European businessmen that if they did not expand the size of the European domestic market to match that of the American domestic market, they would be swamped. A great deal of attention has been focused on the Marshall Plan but relatively little on the European responses to the inflow of U.S. investment. EU was as much a defensive response as NATO was. Taken together these two conditions proved adequate because they satisfied the conditions of necessity as well as sufficiency. Later on other conditions were added, but it is our view that these two threats — the external military one from the USSR and the external economic one from the United States were both necessary and sufficient to push Europe towards integration and make integration succeed. There may appear to be a paradox in the United States being seen as both a provider of security and a threat but the security was military and threat was economic.

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It is also worth noting how countries where such conditions do not exist, seek to create them. The following excerpt is very instructive in this regard: Growth triangles (GTs), as these are called, are a unique response of the Asia-Pacific region to the above developments. Several factors seem to have combined to help in the formation of growth triangles in this region. Important among these are geographical proximity, economic complementarity, political commitment, policy coordination and infrastructural development. This slowness in the promotion and implementation of regional investment projects within the framework of SAARC and the remarkable success achieved by relatively smaller but compact regions in the growth triangles of South-East and East Asia together brought about a realisation among SAARC members of the importance of cooperation at a much smaller and compact level. This type of cooperation would be both geographically meaningful and economically viable and beneficial. The proposed South Asian Growth Quadrangle is seen as a practical solution to this sub-regionʼs socio-economic problems without forcing the participants to change their macroeconomics policies and institutional approach to wider issues of governance. The SAGQ will aim at the integration of the local economies for the efficient use of manpower, infrastructure, trade opportunities and economic resource endowments. In due course, the expected economic restructuring and greater specialisation in production and human resource development will lead to a higher level of economic activity through the “virtuous circle” of

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regional cooperation and will allow this sub-region to acquire a competitive edge in the world market.6

The point about the conditions needed for the success of regional arrangements has also been made by A.K.M. Abdus Sabur and Mohammad Humayun Kabir: From the above analysis, it appears that there are certain factors or conditions that ensure successful functioning of a sub-regional growth area. These are, of course, not new; nevertheless they need to be highlighted particularly for the attention of the opinion formers as well as the policy makers in South Asia. These requirements or pre-conditions may be divided into two sets, namely, the essential factors and the facilitating factors;7

and using the analysis of Donald Weatherbee, they say they are also suggestive of the measure of success of the sub-regional economic cooperation initiatives which are: (i)

The larger the number of participant state units, the more likely the possibility that conflicting interests and policies will operate as obstacles to zonal development. (ii) The more extensive the perceived asymmetries between the states in a proposed “economic growth zone”, the more likely “zero-sum” calculations will affect the decisions of “weaker” members. (iii) In the hierarchy of national interests, those related to the security and integrity of the national state will have higher priority and take precedence over

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the promotion of export-oriented industrialisation through co-operation in sub-regional economic zones. (iv) The development of a formal sub-regional economic zone will be facilitated in cases where the national partners have had prior successful experiences in co-operative behaviour. (v) The development of a sub-regional economic zone as a transactional structure of sub-regional multilateralism will be facilitated if it takes place within a larger existing institution of regional co-operation.8

ASEAN Regional cooperation in Southeast Asia is often held up to be as an exemplar for South Asia. Several books have been written on the subject and seminars held. And it is indeed true that compared to other such arrangements, ASEAN has worked much better, even though as a percentage of total trade, intra-ASEAN trade at 20 per cent remains at the same level as it was in 1970. Clearly, problems exist but on the whole, the countries of Southeast Asia have succeeded in pulling together far more successfully than most other developing countries with regional arrangements. It is therefore useful to examine the conditions that allowed this to happen. Since this section is concerned with the economic factors, it is suffice to mention that the communist threat arising from Indo-china had an important role to play. One of the necessary conditions, namely, the presence of an external threat, was thus fulfilled. The main objective of regional cooperation was to strengthen stability so that

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there would not be much by way of troubled waters in which to fish. The other condition arose from the economic side and it was internal to the region. Singly, none of the ASEAN countries had a big enough market to make large-scale investments viable. Like all small countries in history after the industrial revolution, they needed an external outlet for their products. This external source could come from regional trade, which required a fair degree of coordination of domestic economic policies, or it could come from destinations outside the region, which it has. Or as regional integration and globalization proceeded, it has come from both. In the initial years, the first option was not feasible as the ASEAN economies were at very different stages of development and had very few complementarities. There was also a certain amount of mutual suspicion and ignorance about each other. The national governments also wanted to avoid creating winners and losers, which may have happened if all had followed similar economic policies. Local conditions also prevented the emergence of such coordination. Each member was looking to external markets in which they were all competitors. But from the mid-1970s, there was a fundamental change in approach. ASEANʼs PTA was signed in 1977 and renewed in 1991, with a proposal for an ASEAN FTA. This was adopted in 1992 with a much broader scope in goods liberalization and a full implementation date of 2008. The reasons for this are clear. ASEANʼs overall trade had grown from US$10 billion in 1967, US$14 billion in 1970, US$134 billion in 1980, and to US$302

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billion in 1990. With its combined trade value, ASEAN is the fourth largest trading entity in the world after the European Union, the United States and Japan. The five tables below show what has happened to the pattern and volumes of trade of ASEAN. The most immediate impact has been on the GDP growth rate, which shot up from about 3 per cent on average for the region as a whole in 1970 to an annual average of over 7 per cent over the next three decades. It was, as it has come to be called, a miracle. Today, Southeast Asia has a total market of about 500 million people and a combined GDP of more than US$ 700 billion. While the combined GDP of Southeast Asian countries was only 4 per cent of world GNP in 1960, it was 25 per cent in 1992 and is projected to be 33 per cent by 2010. Southeast Asian central banks now hold close to 45 per cent of the worldʼs foreign reserves. This has led to the idea of setting up an Asian Investment Bank on the well founded grounds that there is no need for East Asia to subsidize the U.S. consumer, because that is what results when the reserves are parked in U.S. Treasury bonds at low rates of interest. The miracle happened in two ways: first, although each member country of ASEAN followed its own economic policy and there was no attempt to harmonize domestic policies, the group was able to present a united face to the rest of the world on a number of key issues. In a sense, it was not unlike the EU before the Maastricht Treaty. Second, internal competition amongst the member states to attract more foreign investment — crucial for generating employment — resulted in policy convergence, with import tariffs and tax regimes becoming very similar.

04 Patterns p205-278.indd 224

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04 Patterns p205-278.indd 225

63

1

Pakistan

Sri Lanka

55

Malaysia

Philippines

2

59

0

0

335

16

413

3

32

0

0

318

5

359

1994

16

103

0

0

479

9

607

1995

12

189

0

0

866

10

1077

1996

5

129

0

0

697

7

838

1997

4

157

0

0

293

4

458

1998

2

122

0

0

275

6

407

1999

11

131

0

0

525

8

676

2000

7

193

0

0

486

5

691

2001

6

85

0

0

638

5

734

2002

2004

2005

7

19

3

47

0

0

6

51

0

0

23

46

0

,0

666 1,102 1,052

5

720 1,166 1,141

2003

0

81

407

0 52

525

0 57

517

0 65

579

0 81

2595

0 90

823

0 127

865

0 65

627

0

0

0

0

0

0

0

55

115

94

114

183

229

322

606 1,131 1,005 1,037 1,138 1,682 2,149

235

406

737 1,095

867

842

933 1,109

986 1,191 1,702 2,772 3,447

22,005 25,929 27,280 28,328 32,013 40,629 42,902 41,698 27,349 24,003 33,515 30,962 31,289 32,549 46,524 57,700

345

Total Export

278

19,977 23,186 24,358 25,312 28,727 34,242 36,941 35,591 22,815 19,476 26,696 25,038 24,114 24,651 34,593 41,171

184

Rest of the World

Thailand

0

100

0

0

216

14

330

1993

1,283 1,698 1,671 1,793 1,877 2,367 2,875 3,411 2,543 2,526 3,789 3,147 4,100 4,155 6,083 9,471

0

290

Indonesia

Singapore

2

48

0

0

226

3

279

1991 1992

1,812 2,464 2,592 2,603 2,927 5,781 4,883 5,269 4,076 4,120 6,143 5,232 6,441 7,178 10,765 15,388

0

ASEAN-5

0

Nepal

151

1

216

1990

Maldives

India

Bangladesh

SAARC Countries

Countries

TABLE 4.2 Indonesia Import from SAARC, ASEAN-5 and Rest of the World (c.i.f., US$ Million)

Patterns of Economic Regionalism 225

4/27/07 3:15:19 PM

04 Patterns p205-278.indd 226

49 26

40 23

0 0

11 762

836

1997

13,021 1,477 0 1,383 7,902 2,259

30 8

0 0

6 467

512

1998

15,025 1,757 0 1,635 9,166 2,467

47 5

0 0

7 530

590

1999

19,198 2,269 0 1,991 11,763 3,176

53 6

0 0

15 725

800

2000

16,300 2,241 0 1,839 9,293 2,927

44 5

0 0

15 772

837

2001

17,846 2,551 0 2,596 9,541 3,158

55 6

0 0

21 643

725

2002

54 7

0 0

17 1,289

1,368

2004

62 8

0 0

11 1,473

1,555

2005

19,694 24,505 46,177 2,939 4,194 3,774 0 0 0 3,115 2,819 2,703 9,811 11,705 33,446 3,829 5,789 6,254

45 6

2 0

15 672

741

2003

29,173 36,754 39,935 45,628 59,562 77,633 78,458 79,059 58,338 65,502 8,2204 73,358 79,513 82,735 104,304 120,028

67 25

0 0

11 740

826

1996

Total Export

63 9

0 0

9 549

649

1995

23,429 29,145 31,360 36,129 47,939 63,661 62,336 62,325 44,805 49,887 62,206 56,221 60,941 62,300 78,431 72,297

60 10

0 0

16 411

500

1994

Rest of the World

67 5

0 0

6 398

474

1993

5,483 7,262 8,139 9,025 11,123 13,323 15,296 15,899 316 506 636 718 942 1,213 1,426 1,464 0 0 0 0 0 0 0 0 156 165 240 219 322 461 800 908 4,308 5,700 6,269 6,955 8,386 9,613 10,475 10,434 702 892 994 1,134 1,474 2,037 2,594 3,093

46 10

0 0

8 355

435

1992

ASEAN-5 Indonesia Malaysia Philippines Singapore Thailand

41 2

Pakistan Sri Lanka

0 0

6 284

0 0

347

2 215

1991

261

1990

Maldives Nepal

SAARC Countries Bangladesh India

Countries

TABLE 4.3 Malaysia Import from SAARC, ASEAN-5 and Rest of the World (c.i.f., US$ Million)

226 Regional Cooperation in South Asia and Southeast Asia

4/27/07 3:15:20 PM

04 Patterns p205-278.indd 227

110 0 79 0 0 29 2

1991 122 8 85 0 0 29 1

1992 148 4 111 0 0 28 3

1993 187 8 147 0 0 25 7

1994 227 9 176 0 0 33 8

1995 823 0 823 0 0 0 0

1996 304 8 264 0 1 23 7

1997 175 8 142 0 0 10 14

1998 157 6 136 0 0 14 1

1999 195 2 167 0 0 24 3

2000 276 10 248 0 0 15 3

2001 452 0 428 0 0 17 5

2002 324 1 304 0 0 12 7

2003 307 3 283 0 0 14 6

2004

383 4 344 0 0 25 9

2005

622 0

792 1,017 0 0

924 0

979 1,307 1,080 1,293 1,359 1,981 1,779 0 0 0 0 0 0 0

979 1,489 1,278 1,689 2,287 1,740 1,742 2,325 2,073 2,311 2,542 3,421 3,727 179 212 422 575 865 794 822 879 925 1,052 1,361 1,572 1,583

487 0

12,994 12,946 14,569 17,642 22,544 28,297 31,867 39,142 29,531 30,753 34,491 33,057 35,427 37,505 44,039 47,414

551 138

358 0

Total Export

475 100

413 0

11,700 11,678 13,163 15,636 19,773 25,128 27,988 33,895 25,306 26,349 29,092 27,944 29,554 31,090 35,818 38,939

508 150

Singapore Thailand

403 0

Rest of the World

288 0

1,145 1,157 1,283 1,859 2,585 2,942 3,056 4,943 4,050 4,247 5,203 4,837 5,421 6,091 7,914 8,092 200 178 181 343 398 620 0 773 592 705 693 760 765 829 939 1,003

148 2 87 0 0 52 7

1990

Malaysia Philippines

ASEAN-5 Indonesia

SAARC Countries Bangladesh India Maldives Nepal Pakistan Sri Lanka

Countries

Philippines Import to SAARC, ASEAN-5 and Rest of the World (c.i.f., US$ Million)

TABLE 4.4

Patterns of Economic Regionalism 227

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04 Patterns p205-278.indd 228

64 54

71 51

9 1 60 47

10 1

48 1,048

1,213

1997

38 48

4 1

45 606

742

1998

59 38

1 1

59 739

898

1999

45 55

5 8

87 1,076

1,275

2000

49 33

3 9

68 1,118

1,280

2001

57 50

7 4

67 1,158

1,344

2002

44 52

6 4

103 1,444

1,653

2003

48 74

4 3

132 2,787

3,047

2004

37 59

3 2

95 4,079

4,274

2005

79301 96,561 101,875 102,636 77,935 84,701 101,351 86,931 86,009 88,122 114,310 135,504

60,959 66,269 72,177 85,386 102,642 124,397 131,338 132,601 101,612 111,074 134,633 116,020 116,483 127,996 162,967 189,745

68 57

3 1

32 1,012

1,175

1996

Total Export

67 40

3 1

24 921

1,068

1995

50,169 53,118 57,890 66,503

82 29

2 1

33 790

951

1994

Rest of the World

109 46

5 2

33 676

819

1993

10,239 12,510 13,607 18,064 22,390 26,768 28,288 28,752 22,935 25,475 32,007 27,809 29,130 38,221 45,610 49,967 0 0 0 0 0 0 0 0 0 0 0 0 0 8,330 97,29 10,452 8,257 10,128 10,609 14,042 16,725 19,250 19,722 19,955 15,692 17,292 22,848 20,094 21,218 21,549 24,956 27,347 313 275 317 504 780 1,100 1,390 1,983 2,394 2,936 3,358 2,555 25,03 2,827 4215 4,650 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,670 2,107 2,681 3,518 4,885 6,418 7176 6,814 4,849 5,246 5,801 5,160 5,409 5,514 6710 7,518

86 33

Pakistan Sri Lanka

5 5

29 533

680

1992

ASEAN-5 Indonesia Malaysia Philippines Singapore Thailand

6 5

56 421

47 374

Maldives Nepal

641

550

SAARC Countries Bangladesh India

1991

1990

Countries

TABLE 4.5 Singapore Import from SAARC, ASEAN-5 and Rest of the World (c.i.f., US$ Million)

228 Regional Cooperation in South Asia and Southeast Asia

4/27/07 3:15:21 PM

04 Patterns p205-278.indd 229

1991 615 5 528 4 1 52 25

1994 738 20 629 1 0 65 23

1995 826 19 640 5 0 141 21

1996 675 14 594 8 0 29 30

1997 554 28 430 9 0 46 40

1998 608 41 454 10 0 47 57

1999 800 42 620 6 1 57 75

2000

0

0

0

0

0

0

0

0

0

0

0

0

1,081 1,352 1,548 2,904 3,270 4,153

0

1,881 5,377

9,184 10,932 13,573 18,488 1,559 1,771 2,323 3,134 3,640 4,540 5,549 8,096

1,448 29 1,276 45 1 84 13

2005

33,414 37,957 40,686 46,192 55,092 77,085 74,939 63,466 43,703 50,350 61,924 62,057 64,721 75,824 94,410 118,191

0

2004

Total Export

0

2003

915 1,039 1,259 25 30 13 776 879 1,140 22 26 32 0 1 2 86 94 61 7 8 10

2002

28,822 32,374 35,170 40,196 47,592 67,698 64,988 55,192 37,046 42,326 51,965 52,832 54,622 63,852 79,578 98,256

0

1,129 2,854

8,424 1,364 3,078

801 29 673 6 1 54 39

2001

Rest of the World

Thailand

109 98 121 181 353 580 575 548 625 817 1,098 2,480 2,990 2,970 2,969 3,439 4,162 4,004 3,147 2,383 2,980 3,416

659 21 522 11 1 83 21

1993

Philippines Singapore

538 16 335 7 0 157 22

1992

3,912 4,498 4,978 5,337 6,885 8,649 9,124 7,599 6,103 7,416 9,158 198 220 291 513 452 672 939 884 897 1,107 1,299 1,125 1,190 1,595 1,674 2,641 3,235 3,606 3,019 2,198 2,512 3,344

681 1,085 1 3 544 937 23 11 0 0 82 1,12 30 21

1990

ASEAN-5 Indonesia Malaysia

SAARC Countries Bangladesh India Maldives Nepal Pakistan Sri Lanka

Countries

TABLE 4.6 Thailand Import from SAARC, ASEAN-5 and Rest of the World (c.i.f., US$ Million)

Patterns of Economic Regionalism 229

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04 Patterns p205-278.indd 230

449 110

282 114

14 1 289 104

12 2

120 2,134

2,660

1999

309 151

11 9

155 3,112

3,746

2000

355 86

9 11

126 3,298

3,885

2001

300 74

30 5

118 3,643

4,170

2002

243 76

36 5

153 3,965

4,478

2003

228 103

37 5

172 6,602

7,146

2004

Source: IMF: Direction of Trade Statistics, 2005.

62,462 50,186 56,283 71,709 62,603 68,022 82,115 102,367 3,122 2,966 3,568 4,261 4,365 4,875 13,869 17,185 24,856 19,441 21,389 28,630 25,257 27,189 28,587 34,168 3,567 4,467 5,444 6,562 5,617 6,293 7,476 8,810 19,279 14,568 16,413 21,292 17,366 18,856 19,778 25,362 11,638 8,744 9,469 10,964 9,997 10,810 12,405 16,843

281 112

18 2

91 1,938

2,441

1998

138,112 18,363 39,371 9,556 52,020 18,801

253 112

49 4

158 8,224

8,800

2005

158,545 179,854 194647 223,176 271,854 348,041 359,504 355,966 260,533 281,682 346,766 315,453 327,432 356,609 452,244 533,078

331 126

14 1

87 3,366

3,865

1997

Total Export

240 102

5 1

72 4,082

4,728

1996

134,097 149,501 161943 183,776 223,332 287,290 294,128 289,639 207,906 222,739 271,311 248,965 255,240 270,016 342,730 386,166

297 76

7 2

71 2,754

3,288

1995

30599 36,888 45,910 57,463 60,647 1108 1,573 1,792 2,505 2,365 13142 16,591 20,431 25,702 24,943 731 961 1,521 2,221 2,855 11460 12,696 15,190 17,421 19,043 4158 5,066 6,977 9,614 11,441

435 58

12 2

67 2,194

2,611

1994

Rest of the World

344 81

12 2

81 2,043

2512

1993

22,591 27,891 713 904 9,960 12,129 633 618 8,579 10,864 2,706 3,376

324 73

Pakistan Sri Lanka

16 5

74 1523

2,105

1992

ASEAN-5 Indonesia Malaysia Philippines Singapore Thailand

29 5

69 1,947

53 1,372

Maldives Nepal

2,462

1,857

SAARC Countries Bangladesh India

1991

1990

Countries

TABLE 4.6 – Continued Aggregate Import of ASEAN Countries from SAARC, ASEAN-5 and Rest of the World (US$ Million) 230 Regional Cooperation in South Asia and Southeast Asia

4/27/07 3:15:22 PM

Patterns of Economic Regionalism

231

This becomes clear when a comparison is made with South Korea which was not a member of ASEAN. The Chaebol system in Korea led to very different policies. Although the results of the ASEAN approach have been dramatic, it has become fashionable to debunk the traditional analysis of the way in which integration affects growth. This approach, as mentioned above, says that integration expands markets and therefore provides domestic industries an opportunity to gain from economies of scale. The alternative view is that integration results in an overall raising of what economists now call “implicit knowledge” in the economic system because it comes embedded in foreign R&D, traded goods, technology transfers, foreign direct investment, process innovation, best practice etc. There is an accretion to human capital at all levels, and this is what leads to the growth effects. Closer scrutiny, however, reveals that this is not really an alternative approach but only a consequence of the first approach. The simple fact is that closer integration releases impulses that have a direct bearing on growth but in ways that are neither fully identifiable nor measurable. ASEAN economic cooperation can be divided into a pre-1992 era and a post-1992 one. The foundations were laid during the first twenty-five years. After 1992, real progress began in promoting the whole region as a competitive international production base. Thus, ASEAN has initiated many measures in the last twelve years to encourage the free flow of goods, services and investment within the region. That it was encouraged by the creation of EU and NAFTA and the post-Dunkel period in the progress towards the creation of the WTO is self-evident.

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232

Regional Cooperation in South Asia and Southeast Asia

Tariffs have been reduced at an accelerated pace and cover all products. The new members (Cambodia, Lao PDR, Myanmar and Vietnam) have been coming along nicely, as can be seen from their efforts to meet their tariff commitments. The ASEAN Investment Area (AIA) initiative has led to national treatment for all ASEAN investors in the manufacturing sector. Agriculture will soon be opened to all investors, with the usual impacts on output and employment. At this point, it is worth noting a great irony to come out of the efforts to unify the international trading regime. After the Uruguay Round was completed, regionalism was supposed to gradually fade away. Instead, it gained momentum. This happened because of the reason stated at the outset: it became a defence against global capital. Where ASEAN is concerned, it led to the formation of the ASEAN Free Trade Area (AFTA) after the Fourth Summit in Singapore in 1992 under the Common Effective Preferential Tariff (CEPT) scheme for harmonizing internal tariff rates. The aim was to improve competitiveness, expand intra-ASEAN trade and generate economies of scale. Given that ASEAN savings were not enough to generate the sort of investment momentum that was required, it was also hoped that more foreign direct investment would flow into the region. ASEAN was to reduce tariff rates to 0–5 per cent by 2008. But then the pressure of world-wide events forced ASEAN to reduce the timetable to ten years, that is, by 2003. The admirable thing is that even after the crisis of 1997, the timetable was not slowed down. To be sure, the differences in the member economies led to some objections, but on the whole, the disagreement

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Patterns of Economic Regionalism

233

was on detail, not on the principle of acceleration. Even Cambodia, the latest to join ASEAN will complete its AFTA commitment in 2010. But, Tariff reduction is only part of the liberalization process. At the multilateral and regional levels, other issues have been negotiated, such as a trade in services and intellectual property rights. The EU has integrated into a single market with freer movement of investment and goods, and harmonized customs. APEC has also moved to other areas beside tariff reduction, including sector liberalization, and trade facilitation. Hence, ASEAN has launched the economic initiatives to deepen cooperation among member countries.9

However, this was only a part of the story because trade in services and intellectual property rights have also been covered as also an ASEAN investment area, customs harmonization, and growth areas. In short, ASEAN is well on the way towards much fuller and deeper economic integration, for precisely the same economic reasons as EU — larger markets and economies of scale. The success of the proposed AIA depends on the political willingness of member states to make it work. The incremental rolling out of the AIA- along with AFTA- over the next decade or so will pose significant challenges for some of the existing subregional arrangements in Southeast Asia, such as the various growth triangles and Greater Mekong initiatives… [The] successful implementation of the AIA should also be regarded as a process that members will be undertaking, and that process will

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234

Regional Cooperation in South Asia and Southeast Asia

be more challenging for some countries than others. The transitional countries will probably find the road to AFTA- and AIA- compliance an uphill struggle. More specifically, the policy-makers in the transitional countries will find it an uphill struggle to cajole ambivalent — and sometimes hostile — leadership and public opinion not to veto the sorts of economic reforms that are necessary to comply with AFTA and the AIA.10

The financial crisis of 1997 has made the need for cooperation even more pressing. But even though an East Asian Economic Community seems to be a logical solution, its realization will need very strong leadership. Also, as has been pointed out, the European model may turn out to have limitations in the East Asian context. There are doubters, too. Walden Bello who teaches at the University of the Philippines and is the executive director of the Bangkok-based Focus on the Global South, has asked if the vision of an East Asia economic group would work.11 He has pointed out that when former Prime Minister Mahathir of Malaysia first proposed such a group in the late 1980s, the leading ASEAN economies were growing by 6–8 per cent a year. But, he says the context has changed now because it is mainly Thailand and China who are pushing for greater integration. Thailand is looking for agricultural markets and China wants to expand duty-free access to both markets and resources in Asia, including South Korea and Japan. It wants to become the worldʼs factory. He goes on to explain why ASEAN regional integration remained elusive even after thirty-seven years.

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Patterns of Economic Regionalism

235

The ASEAN project has had three fundamental flaws: The ASEAN governments have no common vision of the goal of a free trade area. While some, like the Singapore government, see ASEAN free trade as a step towards global free trade, others see the objective as the creation of a platform for accelerating and deepening the industrialization of the region by maintaining barriers to the entry of strategic goods and services from third countries. ASEAN remains principally a project of government leaders and technocrats, with national industrial elites evincing little interest in industrial integration. Indeed, in 2001, intra-ASEAN exports accounted for only 20 per cent of ASEANʼs total exports — the same proportion as in 1970! Japan and the US remain overwhelmingly the main trading partners of ASEANʼs member countries. ASEAN remains a technocratic project, with little effort to make it a popular democratic enterprise. Not surprisingly, “ASEAN brotherhood” (for ASEAN elites do not speak of “ASEAN sisterhood”) has very little resonance at the grassroots… In short, ASEAN remains a very weak economic entity. Moving quickly to a free trade agreement with China would be to court disaster. Even if many exemptions from steep tariff reductions are agreed upon by China, ASEAN would be locked into a process where the only direction that barriers to super-competitive Chinese industrial and agricultural goods is downwards. An ASEAN-China FTA at this juncture can only lead to de-industrialization and agricultural crisis in ASEAN.12

Another sceptical voice comes from Peter Drysdale, this time on technical grounds.

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236

Regional Cooperation in South Asia and Southeast Asia

Japanʼs changing role in the regional economy prompted policy initiatives such as espousal of bilateral free trade agreements (FTAs) aimed at closer East Asian regional economic and political links. This fundamental shift in Japanʼs trade policy diplomacy was effected without public debate in Japan and the reactions to it from partner countries, almost entirely unanticipated by Japanese policymakers, led to some confusion in policy strategy. Discriminatory regional trade arrangements do not reflect the needs and circumstances of the East Asian economy at the beginning of the twenty-first century, and specifically the need to accommodate the growth and opening of the Chinese economy within the regional and global economic systems. The proliferation of FTA arrangements, with increasingly complicated rules of origin, is more likely to distort and derail rather than to encourage broader and deeper economic integration. The objectives of “closer economic partnership” arrangements are better served by nondiscriminatory trade agreements than by distorting and limited bilateral FTAs. Many of the features of the East Asian economy have not fundamentally changed. It continues to be distinguished by its extra-regional trade and economic reach. Large flows of FDI, particularly into China, cement economic interaction with the global economy. Both economic and political considerations have influenced thinking among the Chinese leadership about the change in trade policy strategy. The sensible and rational choice for China is a global choice, the acceptance and entrenchment of global obligations and responsibilities in a multilateral “pluralist” setting.13

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Patterns of Economic Regionalism

237

Hadi Soesastro also comes to a similar conclusion. ASEAN economic cooperation is simultaneously deepening (through commitment to the establishment of an ASEAN Economic Community) and widening (through greater cooperation with China, Japan and South Korea). How can these potentially divergent paths be reconciled, especially when, at the highest policy level, the emphasis of ASEAN+3 cooperation has moved away from region-wide efforts and towards separate ASEAN+1 agreements focused on trade… the leaders of the ASEAN+3 countries should not focus on bilateral FTAs; rather, they should immediately make a systematic effort to form an East Asia Free Trade Area.14

Doubts have also been expressed about the “+3” economies. Suiwah Leung says their economies are still very fragile.15 The author says that these three newcomers have to develop better market institutions and not rely on administrative fiat to achieve their goals. Their domestic market structures are still very much under-developed, with heavy protection of the state sector in terms of tariff structures and bank credits, and inadequate legal and judiciary developments. As a result, foreign investment flows which went principally into the state-owned enterprises in Vietnam and Lao PDR, and into the quota-dependent garment sector in Cambodia, peaked in the mid-1990s and have been declining ever since. Private sector developments have been retarded, and the process of building a commercial/legal infrastructure to support private enterprise has only just begun. Meanwhile, modern

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238

Regional Cooperation in South Asia and Southeast Asia

production technologies and processes involving component manufacturing in different countries and then assembly in yet a third country (the so-called “component production and assembly within integrated production systems”) means that the cost of doing business includes not just labour cost but also cost of services such as transport, telecommunication, electricity, insurance and banking. The latter are high cost industries dominated chiefly by SOEs in Vietnam and Lao PDR. The bilateral agreements already in place and the WTO agreements (when negotiated) will set deadlines for the three countries to open their service sectors to entry by international firms.16

And, of course, there is always the ever-present challenge of macroeconomic stability in the face of rapid opening up of the economy. These countries may not be very well prepared to handle those challenges. Another sort of criticism comes from Andrew Elek who says that high protection to a few sensitive sectors such as agriculture continues and that in such circumstances, there is little need for formal agreements to liberalize trade in most products, while seeking such agreements to liberalize trade in sensitive sectors is likely to prove either impossible or divisive. It would seem more efficient to leave attempts to deal with sensitive sectors to the World Trade Organization (WTO), while pursuing cooperation among East Asian economies on other matters… If these agreements (PTAs) merely meet the minimum requirements of the WTO, they will avoid the hard issues and it will not prove possible to link them to an East Asia-wide trading arrangement. They could make it harder to

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Patterns of Economic Regionalism

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pursue other mutually beneficial opportunities for region-wide cooperation.17

In spite of all this, however, it might very well be that ASEAN is on the way to becoming another EU — and for exactly the same reasons. There will be delays and hitches but the consensus and the political will both appear to exist to make this a reality. Regional Cooperation in South Asia The seven countries of South Asia (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka) have established a formal body for economic cooperation, SAARC and have agreed to create an area-wide trading bloc to be known as the South Asian Free Trade Area (SAFTA). Two immediate points to be noted about it are that, first, efforts in this direction are comparatively of recent origin and, second, perhaps as a consequence (but probably not) there has not been much headway. The history of the sub-continent in the immediate post-colonial period that started in 1947 did not permit much progress in regional cooperation. Even now, this history, with its unresolved problems, stands in the way of it. This has had its impact on intra-regional trade, which has remained low. In the late 1990s, intra-regional trade in South Asia was only between 3 to 4 per cent of total trade, compared to Europe or ASEAN. Trade liberalization and the impact of SAPTA have led to a small increase of 1 per cent. Nor, on current reckoning, does there seem to be much scope for a very huge expansion. The complementarities are simply not

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there. On the contrary they compete with their major export goods on the world market. As far scholarship is concerned, a huge body of literature has come into existence since SAARC was formed in 1985. The first thing that strikes a reader is the profusion of euphemisms and the explicit or implicit conclusion by all but a few commentators that enhanced economic cooperation is possible only after all major political issues have been settled. This is a recurrent theme and, indeed, it is implicit in the charter itself, which requires unanimity amongst members. Conversely, it confers a veto on each of them. The practical consequence of this has been that whenever tensions between two member countries have been high, progress has been halting or even halted. The political problems are many but altogether the most important one is the Kashmir issue between India and Pakistan. Thus, although a great deal of progress was made in the 1990s, it was a stop-go affair because of the persisting conflicts between India and Pakistan. Enhanced sub-regional cooperation has sometimes been seen as a way out of the resulting impasse but it, too, has tended to become a prisoner of political issues between the smaller countries and India. This does not mean that several commentators, mainly Indian, have not suggested that the order of cooperation should be reversed so that political issues are sorted out after greater economic cooperation is achieved. But that does not seem possible on current reckoning. The first fourteen years of SAARC, in spite of several misgivings, saw fairly rapid progress on a range of economic issues. However, as mentioned earlier, it

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was a stop-go affair because of the persisting conflicts between India and Pakistan throughout the 1990s. SAPTA came into operation in December 1995, well before its stipulated 1997 date. Some progress was also made on customs duties by lowering them, sometimes to almost zero. Much of what happened then suggests that much of South Asia, and India in particular, had not lost faith in regional cooperation. The prime reason for this was that India still saw its economy as being complementary to the overall South Asian economy and believed that it could gain from greater regional economic cooperation. From 1985 when SAARC was founded, until the collapse of the USSR in 1991, an important strand in the Indian view was that progress in SAARC would depend on the degree of influence that the United States and the USSR exerted on the region.18 In other words, it would depend on the state of the Cold War. This was suggestive of the perception that many influential Indians thought that South Asian disputes were a result of the Cold War and that unless the root cause disappeared, the by-products would persist in spite of South Asian intent to the contrary. Another strand, perhaps of greater importance, was that it would depend on the state of the dispute over Kashmir,19 the persistence of which, it was argued, was the result of the Cold War. A somewhat less heard but nevertheless important view was that the emphasis on process, as opposed to outcomes, in the SAARC Charter was a critical determinant.20 This view has never deserved the attention it merits even though it was probably more responsible than the other causes for the slow progress in SAARC. Overall, few expected progress to be smooth while expressing the

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desire for it to be rapid.21 It is worth noting here that process versus outcome is the typical “ASEAN Way”. In fact, many would say that the Western and Eastern way of institution-building is based on this fundamental difference. This is seen even in negotiation styles. Thus, while Western countries are keener on achieving an outcome, most nonWestern cultures prefer to emphasize style or process as being more important, leaving outcomes to a later date. Pakistani scholarship in the period under review is patchy and not as extensive as its Indian counterpart. The emphasis tended to be India-centric and the focus political, with special but often unstated reference to Kashmir. Pakistani economists saw no particular benefits in enhancing South Asian trade and the literature, such as it is, focused on trade with non-SAARC countries.22 The sense was that the EU model would not work in South Asia until South Asia also sorted out its political issues.23 Pakistan during this period, was concentrating on the war in Afghanistan and its fallout. The official policy, which was to pay lip service to regional cooperation in South Asia, is reflected in the literature of the period. Even publications sponsored by foreign think tanks in Pakistan tended to include a section on Indian “designs”.24 Bangladesh, at the time of SAARCʼs formation in 1985, was only thirteen years old. It had seen three coups since its formation. Its economy was widely being written off as a “basket case” and its budget relied to the tune of 70 per cent on foreign grants. Bangladeshi scholars saw SAARC as an important means of getting their country a role in South Asian affairs.25 In sharp contrast to Pakistan, Bangladeshi scholarship was much more positive, even

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though it too was not very extensive during the first decade. The focus, it would appear, was on persuading India and Pakistan about the virtues of regional cooperation.26 The Bangladesh view in those days was that if we donʼt hang together, we will hang separately.27 The collapse of the USSR in August 1991 had a profound impact on South Asia. First, it led to a dilution of U.S. focus, notably on Pakistan. Second, partly as a result, it led to Pakistan to initiate a low-intensity conflict in Kashmir. Third, it forced India to review its relations with the United States. Fourth, India lost a huge market in the USSR, which it sought to replace by trade diversification to East Asia. Fifth, the apparent success of ASEAN in expanding trade and investment, the creation of NAFTA (1992) and the Maastricht Treaty (1993) all brought home the urgency of the need for enhanced regional cooperation in South Asia. Lastly, as far as India was concerned, the China factor began to drive some elements of subregional policy, in the success of which SAARC was seen an important instrument. The irony is that, despite the problems that India and Pakistan had between themselves during this period, and which should have left SAARC floundering, it was instead the period that saw major progress on regional trade with the creation of SAPTA and later SAFTA. An important reason, as stated above, was the fact that South Asia, especially India, still believed in regional cooperation. The non-reciprocal benefits offered by India stand testimony to this. The literature during this period reflects this, inasmuch as while on the one hand it underscores the need for a speedy solution of Indo-Pak problems, on the other it is

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replete with discussions of trade issues.28 One important question is why SAARC showed such a tendency for schizophrenic policies even though its charter specifically excluded bilateral political issues. The answer lies in the virtual veto given to each country to block initiatives. Progress came only during periods of thaw between India and Pakistan, such as in 1995 and 1997. There are several discussions of the issues that dominated the period between 1994–97.29 The most striking aspect is the change in the tone, tenor and emphasis. On a superficial reading, there seems to be little difference between the discussions until 1993 and after that. A more careful reading, however, quickly reveals the concerns of South Asia about being left behind and the need to use regional economic cooperation as a means of catching up.30 Within this, there is also the concern voiced by the smaller SAARC nations that they are being left behind not just by the rest of the world but also by their South Asian neighbours.31 These countries wanted some sort of special and differential treatment within SAARC. Many in India at the time advocated that India should unilaterally announce zero tariffs from its neighbours. Eventually, some of these concerns were reflected in SAPTA and SAFTA. The exception throughout this period is Pakistan, which seemed more concerned with defence spending than enhancing regional cooperation. Defence spending, which in the rest of the SAARC countries during this period was declining as a percentage of GDP, increased from 5 to almost 7 per cent of GDP for Pakistan. Talk about regional economic cooperation has very much been on the agenda. That is why SAARC Preferential

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Trade Arrangement (SAPTA) came into existence in December 1995. This has moved forward quite well. In the beginning the arrangement lowered the tariffs only around 220 products. After various negotiating rounds, the number of products has risen to nearly 5,000 products but the impact has been very slight. In 1997 India, Nepal, Bhutan and Bangladesh established the South Asian Growth Quadrangle (SAGQ) to develop the physical infrastructure between their countries. Now SAFTA itself has into force but it remains to be seen how effective the arrangements will be. In 2001, I.N. Mukherji, professor at the Jawaharlal Nehru University, New Delhi, had examined the impact of tariff concessions on Indiaʼs preferential trade in the first three rounds of SAPTA negotiations in relation to its total bilateral trade with Bangladesh, Maldives, Pakistan and Sri Lanka covering the period 1996–97 to 2002–03. He found that “owing to lack of proper targeting, low preferential margins, non-concern with a variety of non-tariff barriers, and the emergence of more ambitious Indo-Lanka Free Trade Agreement, the performance of Indiaʼs preferential trade under SAPTA has been lacklustre.”32 But he did find some reason for hope. There has been relatively better targetting of trade preferences between India and Pakistan leading to increasing share in Indiaʼs preferential trade in recent years for products exchanged preferences in the Second Round. Bangladesh has been the main beneficiary of Indiaʼs offer of duty-free access to least developed countries on selected products under the Third Round and their immediate positive response

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in terms of increasing shares in Indiaʼs preferential imports is just beginning to be observed.33

He then went on to suggest some ways for achieving a smooth transition from SAPTA to SAFTA. Basically, he said, it would not do to “merely tinker with modest preferential margins”. But that is what has happened, with an unduly long phase-out period. As he predicted, this has “made SAFTA largely irrelevant”.34 The most trenchant criticism of SAFTA has come from Saman Kelegama, the Sri Lankan scholar who thinks there is much left to be desired. He has written that: Many important items critical for the success of SAFTA are left for negotiations such as the rules of origin (Article 18), negative list, areas for technical assistance, etc. this could cause considerable delay and might make it difficult to have the SAFTA process fully operational by 01 January, 2006 (the declared date)... There is a fear among smaller countries that the main beneficiary from tariff liberalisation would be the larger countries. Irrespective of the theoretical viewpoint, the perception of smaller countries needs to be recognised, and it was this realisation that led to the “Gujral Doctrine” to be introduced by India in 1997/1998. However, there is some dilution of the doctrine in recent years… The agreement is silent on how SAFTA is going to integrate the existing bilateral free trade agreements between some SAARC countries (such as the Indo-Lanka BFTA, Indo-Nepal BFTA, and the ones that are under consideration, for example, Pakistan-Sri Lanka BFTA and Indo-Bangladesh BFTA) into the SAFTA agreement. If integration is not an option, will SAFTA operate parallel to the existing

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treaties? This seems to be most likely and will create a “spaghetti bowl” type of phenomenon… Thus, SAFTA will basically boil down to trading between India and Pakistan. If the remaining bilateral FTA with India, viz., Indo-Bangladesh comes into operation soon, there are reasons to believe that there will be less enthusiasm among some SAARC countries about SAFTA... The movement to SAFTA is taking place in an environment where: (1) the precursor to SAFTA, i.e., the four rounds of SAPTA have failed to show concrete results, (2) several bilateral FTAs are well entrenched in the South Asian trading system, and (3) South Asian tariffs are already coming down under World Bank/IMF structural adjustment programmes... The third factor in effect is automatically reducing the preferential margin. Moreover, there are a number of shortcomings, clauses open for interpretation and items for further negotiations in the SAFTA agreement. This shows that most of the research work that was done by the SAARC second-track “think tanks” has not been fed in effectively to the SAARC first-track or the official process... Not much can be expected from SAFTA. The initial euphoria that comes with the signing of the SAFTA agreement will soon taper away. The realities and the geo-politics of the region will once again determine the pace of negotiations in SAFTA. By that time, the bilateral FTAs would have delivered most of the results for the smaller South Asian countries and SAFTA will be an agreement mainly to promote India-Pakistan trade.35

But of late some symbolic progress at least has been made. SAFTA came into force from 1 January 2006. The agreement was signed on 6 January 2004, during the

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Twelfth SAARC Summit in Islamabad. Although because of the India-Sri Lanka FTA, exports of both countries to the other have grown over 100 per cent, SAFTA is not expected to lead to any immediate quantum jump in trade, mainly because 884 specific product groups have been kept on the Sensitive List where the trade liberalization programme would not be applicable. But under Article 7 of SAFTA, a phased tariff liberalization programme from the date of its coming into force is envisaged. Even after two decades, intra-SAARC exports are a mere 5 per cent of the total exports of the region. So in many ways it is business as usual. Indiaʼs total trade with SAARC countries rose from US$4,816.88 million in 2003–04 to US$5,205.57 million last year, logging an increase of 8.07 per cent. The one thing everyone seems to agree on is that SAFTA has a better chance of success than SAPTA. The difference is that SAFTA might be investment, rather than trade, led especially in energy. Only time will tell if the SAARC countries can bury their political differences sufficiently to give their economies a chance. After all, Pakistan is yet to give MFN status to India. SAFTA, however, will work in favour of low income countries. For example, Bangladesh, which is already a low-cost manufacturer of textiles, would gain hugely from preferential access to India. Economic Structures as Obstacles to Regional Integration To what extent is the structure of an economy an obstacle to integration? This question is not often asked in SAARC because it is considered impolite to do so. But it is a

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crucial issue and in a recent paper Nihal Pitigala poses the following questions:36 • • • • • •

How important is South Asia as a trading partner for member countries? How has regional trade evolved over time with increased global integration? How does South Asia compare with other regional trade blocs? Is South Asiaʼs export product-mix diverse enough to support further regional integration? How complementary are the countriesʼ respective import-export profiles? What do South Asiaʼs comparative advantages reveal about the prospects for increasing regional trade?

Pitigala has used the “natural trading partners” hypothesis to ascertain if it applies to South Asia. He uses different definitions of the “natural trading partner” hypothesis, such as trade volume, geographic proximity and complementarity to show that the South Asian countries are only moderately so. He shows how none of the above criteria apply in full. There are simply too many obstacles. Thus, the volume of trade criterion does not apply because although Bhutan and Nepal because they are land-locked and smaller trade a lot with India, they are the exceptions to the overall trading pattern in the region. Geographical proximity and their shared histories should have led the South Asian neighbours to trade more, but they do not. South Asians trade more with partners outside South Asia.

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Then there is trade complementarity, which is the third criterion of the natural trading partner hypothesis. Here too the region falls short. “Indiaʼs, and to a limited extent Pakistanʼs, more efficient exports complement the import demands of a number of countries in the region, particularly those of Bangladesh and Sri Lanka. However, the other South Asian countries display efficiencies in only a limited range of products that can fulfil Indiaʼs or any other regional membersʼ major import requirements.”37 Indeed, with the exception of India the other countries compete fiercely with each other. It remains to be seen, though, what impact the on-going process of trade liberalization and unilateral measures, especially by India will help in the successful implementation of SAFTA. Meanwhile, since all countries of South Asia grow much the same things because of climatic and geographic similarities, they do not trade with each other except at the margin. Substantial trading could take place if South Asian farmers specialized but, given the average sizes of land holdings, that is impossible unless a significant proportion shifts to horticulture. Even if all trade barriers were removed, the volume of agricultural trade within South Asia, for the next generation at least, would be very insignificant, either as a proportion of GDP or of even overall trade. The internal dynamics for enlarging trade are not present. An important argument against the idea of distancebased naturalness is that trade depends on complementarities because the volume of trade depends on trade policy. Others think that it is better to view the issue as complementarity, rather than substitutability. But again there is no

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conclusiveness in the debate. In any case, intra-regional trade simply does not matter to the larger countries in the region. It matters only to the land-locked countries because they do not have a choice in the matter. The conclusion is inescapable that the South Asian countries are not natural trading partners as long as their economies do not become complementary to each other. The low complementarities between the South Asian economies suggest that they will find it difficult to support greater regional trade integration. In fact, analysis by economists of the trade data demonstrates that with the exception of India, the rest of the South Asian countries are significantly competitive with each other in their exports. For example, nearly 90 per cent of Bangladeshʼs exports are similar to those of at least one or more regional trading partners. Pakistanʼs exports closely follow with an 83 per cent share in competition with another member. The shares for Sri Lanka and Nepal are 77.1 per cent and 73.9 per cent, which sums up the extent to which these four members are competing with each other in third markets. More than 89 per cent of Bangladeshʼs globally competitive exports coincide with those of at least one regional partner. The extent of competition among Nepal, Pakistan, and Sri Lanka is marginally lower than that of Bangladesh;

and, in short, concludes Pitigala, “… the lack of complementarity and high degree of competition in export structures imply daunting prospects for expanding regional trade in South Asia”.38 What actually causes two countries to trade has also been the topic of study for a very long time. The latest

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studies show that trade also depends on productivity, and not just costs and trade policies. Bergin and Glick have shown that it sometimes helps more to lower the fixed costs of trade.39 In other words, there is no single determinant of trade, which can take place for many reasons (or, equally, not take place). The main message to come out of the above analysis is the fact that while it is all very well to promote the idea of regional cooperation, the conventional methods of trade and investment may not suffice. The situation requires a different approach, which is described in another section. South Asian Dilemmas The challenges for SAARC are much more serious than for other regional organizations. The biggest problem is its inability to put bilateral political problems on the backburner in order to proceed with regional economic cooperation. As a noted Pakistani scholar put it: South Asia must develop a framework in which both the big and small countries of the region can work harmoniously with a vision of collective entry into the 21st century. While the obsession with the size and dominance of the larger regional country needs to be shed, the powerful regional neighbour also needs to opt for a more realistic outlook giving due consideration to smaller regional countriesʼ sensitivities. Indeed there are problems that are going to adversely affect the pace of cooperation but it must be stressed that time has come to overcome the shackles of troubled heritage. Perhaps the moist difficult obstacle on

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the road to progress lay in the general provision of the Charter. The two general provisions impeding SAARCʼs progress revolve around the “unanimity of decision” and the exclusion of “bilateral and contentious issues” from its deliberations. Almost all of the troubles within South Asia fall within the ambit of bilateral relationships. The time has come to amend the Charter. If both provisions that are effectively impeding progress can be modified, at least efforts need to be directed to modify provisions relating to discussions on bilateral contentious issues. Unless and until bilateral issues are not allowed to be subjected to collective discussions, the chances for improving the atmosphere would remain somewhat clouded unnecessarily and periodic setbacks would continue to take a much heavier toll that what the actual situation warrants. It is also possible that allowing a discussion on bilateral issues may generate tensions and may cause unnecessary hurdles but till then it is much better than pushing the contentious issues under the carpet. For how long can we opt for evasion and avoid facing the real issues? Continued avoidance of bilateral contentious issues/disputes reflects the weakness of commitment to enhance the strength of a multilateral regional approach. Time has come to revamp the SAARC structure with a view to making it an effective multilateral regional organisation. The challenge of transforming the incumbent conflict situations into one of complimentarity of interests require concerted efforts and deserves sincere cooperation of both the governments as well as of the people.40

But this could be changing as India and Pakistan, subsequent to their overt nuclearization, and under pressure

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from the United States, begin to adopt a more mature approach to their bilateral squabbles. India, in spite of its many shortcomings, has tended to be more proactive than the rest. For example, in 1997 it set aside the principle of reciprocity and was willing to give more concessions to smaller countries that they were able to return. But Pakistan has been dragging its feet, even to the extent of not giving India MFN status. This has persuaded India that bilateral agreements may provide a way out of the larger impasse faced by regional cooperation. India and Sri Lanka and Sri Lanka and Pakistan have already signed such pacts, and India is negotiating with Bangladesh and Nepal for similar arrangements. Hopefully, at some later date these free trade agreements can be converted into an SAFTA. That this poses a challenge to SAARC has not gone unnoticed. Nor is the challenge to SAARC restricted to the bilateral agreements India is negotiating. It has also been seeking to look beyond the region and recently signed an FTA with Thailand, which has had its teething problems that are being sorted out. The key elements of the agreement cover FTA in goods, services and investments as well as areas of economic cooperation. The agreement also provided for an Early Harvest Scheme with a common list of eighty-four items on which tariffs would be gradually eliminated in two yearsʼ time-frame. The Early Harvest Scheme of the India-Thailand FTA has been implemented for eighty-two items with effect from 1 September 2004. Two items out of eighty-four agreed ones, namely polypropylene and polyethylene, could not pass the “Early Harvest” test.

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For some years now, taking the cue from the then Thai Trade Minister Supachai Panitchpakdi, India has been talking of a regional trading arrangement with Bangladesh, Myanmar, Sri Lanka, and Thailand, called BIMSTEC. Bhutan and Nepal have also signed up. In recent years India has also intensified her economic, political, cultural and institutional links with ASEAN. An agreement for a free trade area between India and ASEAN was signed at the Summit in Bali in October 2003. More recently, an FTA with the United States has been suggested. It is not India alone that is moving in this direction. Pakistan is looking for closer links with Central Asian republics with the help of the Economic Cooperation Organization (ECO). It is also looking at FTAs with Indonesia, Malaysia and China and and a PTA with Morocco. Sri Lanka is also working on FTAs with countries such as USA, Pakistan, Singapore, Egypt, Thailand, Malaysia, Bangladesh, Qatar, Iran, Iraq, South Africa and Madagascar. But so far only India has signed an FTA outside SAARC because only it has something significant to offer. Recently, India concluded a Comprehensive Economic Cooperation Agreement (CECA) with Singapore. India and Singapore had been working on getting into some kind of special arrangement for nearly a decade and CECA is a culmination of those efforts. The agreement has taken effect. The main consequence is that 80 per cent of Singaporeʼs exports to India become duty free. The immediate beneficiaries will be the IT companies. Singapore banks are to get unrestricted entry into India, provided they set up fully-owned subsidiaries. There is also provision for the avoidance of double taxation. In effect,

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this will mean zero capital gains tax for Singapore-based companies. It is hoped that the agreement will go beyond tariffs and market access. The countries clearly intend to work together and have thus recognized the mutuality of long-term interests, in which economics becomes the facilitator. This turning away and outwards from South Asia has been a concern for some time and had invited misgivings. As one scholar noted the trend some years ago: What does intrigue me is that SAARC is now at a watershed in its development; it faces the immediate challenge of forging viable processes of economic cooperation which will inevitably influence foreign policy debates and raise them as an issue within SAARC. In addition, SAARC is faced with the challenge that currently India is involved in a larger regional dialogue-the Indian Ocean dialogue- which would refocus Indiaʼs concerns away from SAARC thereby undermining the ability of the organization to survive as a meaningful institution into the next century. Put most simply, since March 1995 India has been involved with six other Indian Ocean states — Australia, Singapore, Oman, Kenya, South Africa and Mauritius — in exploring the possibility of regional economic cooperation at a government-to-government level. Since March, two other regional meetings (a second-track meeting in Perth in July and a second government-to-government meeting in Mauritius in August) have pushed the pace of exploration, and as a result of the Perth meeting a lively second-track dialogue involving some 20 Indian Ocean countries is now taking shape. The problem for SAARC is that

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this emerging regional dialogue (both at the official and non-official level) is evolving with no reference to the older organization.41

On the possibility of ASEAN and SAARC getting closer in economic terms with both the regional groupings advancing towards free trade arrangements among their respective members by the end of this and the beginning of the next century, S.D. Muni had the following observation: Even otherwise, when initiative like the Indian Ocean Rim cooperation makes substantial progress, it would reflect the overlapping interests of and participation from the prevailing regional groupings like SAARC, ASEAN, APEC and South and East African communities. At that stage, it would neither be possible nor desirable on Indiaʼs part to keep Pakistan out of the Indian Ocean Rim grouping. The movement in the direction of expanding regionalism, is therefore evolving gradually. Its development remains to be watched carefully as it will depend upon the interests and strategies of global as well as regional forces, though it seems certain that geographical definitions of any regional grouping for cooperative development will not remain the sole criteria.42

Looking at how little they trade with each other, it is difficult to see that South Asia is, in fact, one of the best-defined economic and geographic sub-systems in the world. Until 1947, it was a single geographic and economic entity with trade and accompanying transit facilities that went back two millennia. But since decolonization and the ensuing events, there was, until recently at least, little

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economic or political linkage between them. The smaller countries, who number six of the seven, tended not to accord regional cooperation high priority for economic as well as political reasons. India, by far the biggest and dominant, saw the advantages but given the size of its domestic market, chose to emphasize the political over the economic aspects of regional cooperation. Besides, each South Asian economy was highly protectionist, with the result that the regionʼs share of world trade fell from 3.5 per cent in 1947 to less than 1 per cent in 1997. An important side consequence of this, as mentioned before, was that the ratio of intra-regional trade in South Asia became (and remains) lower than any of the regional groupings elsewhere in the world. Indeed, even in the 1990s when trade began to be liberalized, intra-regional trade continued to decline. So as a share of the total imports of South Asia, intra-regional trade amounts to no more than 3 per cent, a reflection of the particularly limited trade between India and Pakistan. The trade consists mainly of food commodities (around 37 per cent) and agricultural raw materials (around 17 per cent). The region has more people living below the poverty line than in the whole of Africa. The seven countries face common problems: rapid population growth, pressure on land, limited natural resources and high levels of poverty intensified by skewed asset and income distribution. The gains from regional trade can be huge, especially for the smaller countries. Since the early 1990s, all South Asian countries have been lowering their protection levels as a part of broader economic reforms. Such reforms are badly needed in South Asia, since all the countries in the

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region (with the exception of Sri Lanka) have historically maintained high levels of protection. A regional trading arrangement in South Asia is being put in place. A PTA came into force in end-1995. The consolidated national schedules of concessions covering nearly 2,000 items were ratified by the member countries. India has already announced a list of 2,400 items that will not attract any duty, provided the origination is in South Asia. It has also entered into a free trade agreement with Sri Lanka. Efforts are on to devise a similar agreement with Bangladesh as well. Some major initiatives are nearing maturation. SAPTA aims to set preferential terms for all traded goods, including agricultural and other primary commodities in their semi-processed as well as raw forms. But will these initiatives align South Asia more closely not only with one another but also with the economies of the greater Asia-Pacific region and the world at large? This seems doubtful. This report finds that the objective economic conditions in South Asia create neither the pressures nor the incentives to move in the direction of greater regional cooperation. This is not to say that the ASEAN economies did not face the same set of problems. They did. But there was a crucial difference in the way they coped and in the way South Asia coped. ASEAN took the pragmatic road. It invited foreigners to invest and decided to expand international trading. South Asia stayed wedded to socialist ideology and chose to rely on domestic resources while paying lip service to international trade. In other words, ASEAN opened up; South Asia remained closed.

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The timing could not have been better for ASEAN and worse for South Asia because the 1980s saw the U.S. deficits and imports balloon. Just as China is taking advantage of the American spending spree now, ASEAN took advantage of it in the 1980s. South Asia did not come to the party. ASEAN growth rates shot up past the 10 per cent mark and stayed there for almost fifteen years; South Asian growth rates also went up but from around 3.5 per cent to 5.5 per cent. In the case of Pakistan and Bangladesh, growth actually slipped. By the end of the decade many South Asian economies were back at the IMFʼs doors. Not opening up had cost them a decade of growth and missed opportunities. Another major impact on ASEAN of the open policies of the 1970s and 1980s was the impetus they created for regional cooperation and integration. The region had now become the manufacturing base for nearly a quarter of the worldʼs production of industrial goods. This meant two things. One, the regional market had become substantial and, two, cut-throat competition for expanding the share of the rest of the world market had become counterproductive. ASEAN did what firms do when faced with a similar situation: it chose to start a policy that in the case of firms is called implicit collusion but in the case of countries, regional cooperation. The net effect, however, is the same. In contrast, thanks to the policies followed until about fifteen years ago, the South Asian economies are still in a disjunctive mode. The ground for stronger regional cooperation is still to be laid. So even without politics, the objective criteria of economics are missing. These have to evolve for greater cooperation.

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Since 1999, the emphasis has shifted away a bit from trade alone and has begun to encompass areas like energy as well. But efforts in this direction have been sporadic and lackadaisical. Overall, it is probably correct to say that the analysis of South Asian regional cooperation is driven more by hope and faith than experience and realism. It thus tends to be largely descriptive and narrative, rather than analytical. Such comparisons as are made with the practices in other regional arrangements like ASEAN tend to be of a superficial nature, not really coming to grips with the detail. It is therefore fair to ask if it enhances our understanding of South Asian regionalism. It is almost as if the writers have been afraid to ask the key questions, lest they be seen as behaving badly. What are these real questions? They pertain mainly to the political domain but there are also some key problems in the economic domain that need to be faced up to squarely. There are four sets of issues, three arising out of the developments in India, which is the main economy of South Asia and one from the nature of the Pakistan economy. The first set concerns the structure of the Indian economy; the second consists of the rate at which it is growing and the inability of the rest of South Asia to keep pace with the rapid changes that this growth entails; the third is in respect of the growing role of the private sector and what this entails for regional cooperation. The fourth is about the involvement of the Pakistani military in the economy. The first three factors when taken together and viewed from Pakistan or Bangladesh or Sri Lanka appear as threatening as the economic strength of the United

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States appears to India. To understand why the smaller SAARC countries are not so keen on encouraging regional cooperation, one only has to look at the reasons why Indian interests resist closer economic cooperation with the United States. The fact is that the largest Pakistani company is less than a tenth of the size of the largest Indian firm. Also, India has become to South Asia what China has become to East Asia. But the difference is that whereas ASEAN has been able to work out not just a modus vivendi with China, and even profit from it, the smaller South Asian countries are nowhere close to being able to do that. The structure of the Indian economy has come in for a lot of discussion in recent years. The essence of this debate is the peculiar manner in which Indiaʼs service sector has come to dominate the economy, without the country first having gone through a prolonged phase during which manufacturing dominates economic activity. In that sense, the Indian economy resembles the U.S. and EU economies more than it does typical developing country economy, say, of China where manufacturing accounts for almost half of the GDP. No one has been able to figure out how exactly this has happened — though explanations abound — but the net consequence is one of profound economic significance: Indiaʼs capital needs are much lower than that of other countries. Not just this, even this smaller capital injection, whether domestic or foreign, leads to much higher multiplier effects and therefore higher growth rates. This is the reason why the Indian economy, in spite of such a large dependence on agriculture and such a mediocre rate of industrial growth, has still been able to grow at over

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7 per cent in the last few years. Orthodox economists are flummoxed but the answer is a very straightforward one: India uses capital more efficiently than other countries. That is why it grows at 7 per cent even when the savings rate is so low at 24 per cent. The reason its private sector uses capital efficiently is that the interest rates are high compared to international rates. And, not to be overlooked, the reason why the public sector uses capital inefficiently is that it has no hard budget constraint and is thus impervious to the rate of interest. This brings us to perhaps the most important of the three questions, namely, the growth of the private sector and the manner in which its role has been enhanced in India. Basically, what has happened is that since reforms began in 1991, the space vacated by the public sector and the new space created by the government has been filled by the private sector. The rate and efficiency with which this has happened is not matched by the other South Asian countries. The result is that although the Indian private sector sees a huge potential for business development in South Asia — even Pakistan permitted it — the opportunities outside South Asia are much bigger and altogether more profitable. That is also why India has been looking outside South Asia. This suggests that at the government level, a different approach to regional cooperation is called for. But before that, we have to briefly note the militaryʼs role in the Pakistan economy, which has become ubiquitous. “With the growth of Military Inc., we see new vested interests and stakes being created by the military in the socio-political and economic structure that is Pakistan.”43

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Zaidi quotes Ayesha Siddiqa who has pointed out that “the Pakistan military as a major stakeholder in the economy has gradually moved from the traditional paradigm of claiming [the] stateʼs resources from the national budget to a situation where it has built stakes in all segments of the economy such as agriculture, service and manufacturing industries.”44 In very stark terms, not putting too fine a point on it, the military controls almost a quarter of the formal corporate sector. This is done via two foundations, the Fauji Foundation and the Army Welfare Trust. “Because of the militaryʼs supremacy in Pakistanʼs political settlement and in the state, it has far grater power to influence economic decisions, both at a macro level related to the economy more generally, and also with regard to its own specific, micro-level, interests.”45 Therefore, Akbar Zaidi concludes, “democratic forces in Pakistan have to contend not only with the militaryʼs political ambitions and agenda, but as much with its economic programme and interests.”46 To which might be added, it is not just the Pakistani people, but also the international community that has to deal with the Pakistani military as an economic force. The consequences of this for South Asia would require another study. An Alternative Approach to Regional Cooperation In the final analysis, however, regional cooperation is a function of enlightened self interest. As we have seen, this enlightened self interest can prevent countries from cooperating in the conventional areas such as trade and

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investment. But it may be worth their while to examine if they can consider cooperation in the less conventional areas. One helpful pointer in this direction comes from the concept of global public goods (such as health, education, etc.) which can be narrowed down to regional public goods consisting mainly of the infrastructure that facilitates cooperation. It is also not often recognized that regional cooperation can either create “regional public goods” that have impacts across borders within a given region or the creation of such public goods can result in increased cooperation simply by being there. The road links between Southern China and Myanmar are a case in point. In theory, a regional public good is a service or resource whose benefits are shared by neighbouring countries. The benefits of pure regional public goods are “non-rival” in the sense that one countryʼs consumption does not subtract from the amount available to other countries and “nonexcludable” in the sense that no country in the region can be excluded from benefiting, except at prohibitive cost. In reality, however, these regional public goods tend to be “mixed” in that they are neither completely non-rival nor completely non-excludable. It is possible to have three sorts of streams in the quest for regional public goods. One is investments in knowledge, basic research into technologies for the public domain and negotiation of agreement on shared standards and policy regimes. The second is intercountry mechanisms for managing adverse cross-border externalities or creating beneficial ones such as investments in cross-border infrastructure. The third is the creation of regional institutions to facilitate solutions.

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Basically, therefore, it is necessary to recognize that the scope of such regional public goods is larger than a single nation but less than “global”. Unlike traditional public goods where national governments provide the institutional framework for correcting market failures, there is no corresponding institutional mechanism to address the challenges of regional public goods. This is the key issue that need to be addressed. The conceptual boundaries of providing public goods require some rethinking, especially in the context of aid and development. First, the potential benefits of many so-called “global public goods” (such as clean air) are actually regional in nature. A good way to supply such goods may lie in regional solutions. Second, the provision of regional public goods may reduce the transaction costs associated with multi-country coordination inherent in the provision of many global public goods. Third, quite crucially, it is interesting to note that where financing is concerned, although multilateral agencies and bilateral donors have been supporting the provision of global public goods for many years, there has not been a matching approach on their part to regional public goods. The Asian Development Bank and the World Bank have been pressing for such initiatives but actual projects are yet to get off the ground. This despite the fact that regional public goods are likely to contribute hugely in particular countries and may even be a prior condition for better economic performance. For the production of regional public goods to take place or, where they exist, to increase the production, it is first necessary to integrate regional programmes and country-based activities. These latter include regional

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programmes and policy frameworks and activities focused in one country but whose benefits spill over to others. Complementary activities, on the other hand, prepare countries to consume the regional public goods that the core activities make available, while at the same time creating valuable national public goods. Regional public goods, as with other goods, come in two forms: intermediate and final. Final goods are broad outcomes or manifestations of well-being such as peace, the absence of extreme poverty, a well-managed physical environment, etc. The real question is whether these final goods can be produced without the intermediate ones like shared policy frameworks, institutions and certain kinds of joint investments. Such an approach would need a great deal more cooperation at the local level so that the big differences in development and culture at the aggregate level are not so stark and do not come in the way of cooperation. This is especially true at the sub-regional levels where infrastructural facilities are poor. Since individually the members cannot generate enough resources for investment, it may be useful for them to consider both private participation and joint ventures between governments. Integrating the transport infrastructure into a common network provides a particularly compelling reason. A key factor, often not recognized, is that logistical efficiency is a function of networks. The better the network, the higher is the efficiency. This applies particularly to transport logistics. The question, of course, is how is this to be done? This is where regional cooperation becomes important. A central objective of state policy must be to view sub-regions as

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areas where transport networks can be treated as though national boundaries existed only for the purpose of levying customs duties. For all other purposes, the sub-region should be treated as if there were no borders. This is what will make the circulation of goods possible at a cheaper rate and lead to the formation of production clusters. This springs directly from the fact that transport, in addition to reflecting a variety of different types of products and services, also has a spatial dimension. The services are best provided over a network. Thus, increase in the capacity in the Delhi-Lahore segment of the railroad can increase value for the users of the Bombay-Colombo segments through the network effects of transport. These externalities are an inherent feature of all networked systems but difficult to quantify. This is something policymakers never explicitly build into the operating frameworks. The case for transport integration was best summed up, by M. Rahmatullah, former head of the Transport Division at UN-ESCAP, as follows: The integration of the South Asian transport networks cannot be sustained in a vacuum. In order to ensure that all the countries of the region benefit from it, attention needs to be given to the question of more balanced trade flows among these countries, based on the development of greater complementarity among their economies. An increase in the number of joint ventures among South Asian entrepreneurs could help achieve this objective. In this respect, there is an immediate need for collaboration between the private and public sectors with a multilateral framework. … While the full integration of national networks

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similar to the Trans-European Transport Network should remain a long term goal, the South Asian countries should first address the more modest challenge of establishing a basic level of cross-border transport services among themselves. As emphasized earlier, unless progress is made in this direction soon, the subregion will become the missing link in an otherwise integrated regional and world transport network, not to speak of the lost opportunities in terms of exploiting their full economic potential and a fuller participation in the global economy.47

In a like manner, integrating the supply and distribution of energy across borders is also an increasingly important concern. Making the supply of electricity more reliable and lowering unit costs requires competition and the attainment of economies of scale. This calls for the integration of the power grids in the region. South Asia needs to move in this direction by creating markets for electricity in the same way as the Scandinavians and West Europeans have done. But even if South Asia as a whole does not, some parts of it are doing so via BIMSTEC, whose energy ministers are studying the possibilities of setting up power and gas pipelines to promote energy cooperation. It will be interesting to see how far this initiative gets. Finally, in juxtaposition to global capital there is regional capital. This needs to be harnessed in some manner for use in the region, rather than be invested in low yield U.S. Treasury Bills. A first step towards this could be the Asian Investment Bank that unlike the Asian Development Bank is more of a commercial venture.

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There is enough capital in the region to make possible a subscription of around at least half a billion dollars per country. Richer countries could subscribe more. The initial capital would thus be around US$25 billion. This will make a handy start for financing regional public goods. It is an idea whose time has come and it needs to be vigorously explored by the regional governments, not least because it could become an important building block for an Asian Economic Community. Conclusions First, along with the rapid movements towards globalization consisting of greater international flows of capital (though not yet labour) and trade, there has also been a simultaneous move towards regionalism. Since 1990, the number of PTAs has gone from 55 to 230. Because of this increase in the number of agreements, the share of global trade taking place between PTA members has also risen and has reached almost 40 per cent of total world trade. But the World Bank estimates that only about half of this intra-PTA trade is actually on a PTA-related preferential basis. Economic regionalism is an excellent defensive strategy because regional economic arrangements reserve space for members, within which they get preferential access and treatment. The EU is the most successful and visible example of this. So, to a lesser extent, are NAFTA and ASEAN, in that order. Also, trade between regional groupings that follow multilateral trading rules is not very different from trade between sovereign states. However, for the model to be completely successful, it is necessary

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that the members of regional arrangements remove all barriers to trade, investment and labour mobility amongst themselves. The reason why EU is so successful is because it has almost achieved this. An important caveat is that regional integration can harm member countries if the PTA shuts out more efficient producers. Second, there is distance and, related to it, logistics. Neither factor used to be explicitly acknowledged but this is changing now as economists come to terms with the obvious: it is easier to trade with nearby destinations than with ones that are further away. Of course, the economies have to complement each other. An increase in trade volume pushes down transport costs per unit and is helpful in promoting integration because the proportion of trade over shorter distances increases over time in relation to trade over longer distances. China has thus replaced the United States as Japanʼs largest trading partner. Indiaʼs trade with China has grown more than it has with Japan. The top ten export destinations of India include the United Arab Emirates, Hong Kong, China, Singapore and Japan. Third, there is nothing automatic about the success of regional trading agreements or some other form of regional arrangement. In order to convert intention into reality, a great deal of concerted effort is required. Mostly, the impetus for this has to come from the political side but often even when the political will is there, the economic conditions may not lead to more cooperation. This latter requires a separate set of initiatives that have to be finetuned constantly. That said, it is possible to distinguish between some necessary and sufficient conditions for, first, the formation of a RTA and, then, its success. Sufficient

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conditions are those conditions alone that ensure the outcome by being present. But these are very rare because the requirements are stronger for a condition to be sufficient. It is rare, or well-nigh impossible, to find a condition that is both necessary and sufficient. The end of World War II created such sufficient conditions for cooperation between France and Germany in two industries, steel and coal. The success of that gradually persuaded the others to work towards greater integration. Finally, to answer the original question about why ASEAN has worked better than SAARC, the answer must surely lie in current circumstances outweighing the historical context of the region. In spite of the many frictions between them the members of ASEAN have been able to see with greater clarity the need to work together. In South Asia, partly because of history, geography and geo-politics, this perception has not gained ground. The larger members have seen greater benefits in striking alliances outside South Asia rather than within it. The sheer size of India and the imperatives generated by its political system have diversified its economy in a measure that is not matched by any other country in South Asia. This has meant hugely restricted complementarities, and therefore reduced opportunities for trade. As for investment, since all South Asian countries are short of capital, and only India, which of late has liberalized its rules, has the surplus to invest abroad, there has been no progress worthy of note. Last but not least, the Indian economy has surprised everyone by moving into services-led growth, rather than the more traditional Kuznetsian transformation which takes countries from the dominance of agriculture

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into manufacturing and then finally into services. No one knows for sure why this has happened. There are many explanations, but perhaps the most likely one is the fact that because agriculture is constrained by nature, and manufacturing by the government, the residual sector which is not constrained by either, has grown very rapidly. In a sense, it has been the default option. Whatever the reasons, this development has meant that Indiaʼs interests have turned even more firmly away from South Asia. Its waning interest in the region is therefore not only the consequence of politics but also economics. India, the largest economy in the region by far, and the second fastest growing one in the word, sees no particular benefit or advantage in trading with its neighbours. What it wants from them — energy — they will not give and what they need — cheap manufactures — India does not have (but China does). To sum up, until the rest of South Asia, mainly, Sri Lanka, Pakistan and Bangladesh, catch up with India, South Asian regional cooperation will remain at a low level, more useful for serving as a platform to bring the leaders of the countries together than to act as a major bulwark of economic prosperity. All things considered, therefore, the prospects for SAARC do not appear very bright. The reason is simply that none of the necessary and sufficient conditions exists. There is no threat to the region from outside and, India with its billion-plus population and superior economic endowments is big enough to provide any firm with the scale economies it needs. The only, or main, motivation for regional cooperation is political, and that too, is not very strong. But to the extent it operates, SAARC is the

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only forum where confidence-building measures can take place at the highest political level. Obviously, this is not sufficient by itself and some other sources of driving the process are required. What these could be is anybodyʼs guess. The best place to start is with the creation of regional public goods, to which a reference has been made above. These can be hard or soft. Since hard goods will take time and money, it might be better to start with the soft ones. For example, it has been suggested that the earthquake of 8 October 2005 in Muzaffarabad, could be used to good effect for normalizing relations between India and Pakistan. Fanciful as this might seem, it hides a basic desire to separate hard politics from the softer elements of international relations, notably those that involve the welfare of people in areas like health, education or gender issues. Given how abysmal the record of South Asia has been in this regard, it may not be wholly fruitless to explore enlarged cooperation in the social sector. It is to this aspect we now turn. Notes and References 1. “Toward an Asian Economic Community” Speech by Haruhiko Kuroda, President, Asian Development Bank, at the Jeju Summer Forum — International Management Institute, The Federation of Korean Industries, Jeju Island, Republic of Korea, 28 July 2006 . 2. Agustín Carstens Deputy Managing Director of the International Monetary Fund, Speech at the 20th Annual General Meeting and Conference of the Pakistan Society of Development Economists, Making Regional Economic Integration Work”,

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3.

4.

5. 6.

7.

8. 9.

10. 11. 12. 13.

14.

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Islamabad, Pakistan, 12 January 2005 Rocco R. Huang, Distance and Trade: Disentangling Unfamiliarity Effects and Transport Cost Effects, 2005, The World Bank and The University of Amsterdam . Christian Wagner, European Integration and its Relevance to Regional Co-operation in Asia: Lessons for SAARC, Asia Development Bank Institute (ADBI) Workshop on Sharing the Expertise and Experiences in Regional Cooperation, Tokyo, 9–2 December 2003 . Ibid. Muchkund Dubey, Lok Raj Baral and Rehman Sobhan, South Asian Growth Quadrangle: Framework for Multifaceted Cooperation (New Delhi: Macmillan, 1999), p. 11. A.K.M. Abdus Sabur and Mohammad Humayun Kabir, Conflict Management and Sub-regional Cooperation in ASEAN: Relevance for SAARC (Dhaka: Academic Press and Publishers Limited, 2000), pp. 191–92. Ibid. Nattapong Thongpakde, “ASEAN Free Trade Area: Progress and Challenges”, in ASEAN Beyond the Regional Crisis: Challenges and Initiatives, edited by Mya Than (Singapore: ISEAS, 2001), p. 53. Nick Freeman, “ASEAN Investment Area”, in ibid., p. 113. Walden Bello, “Is ASEAN Irrelevant?”, Philippine Daily Inquirer, 17 December 2004. Ibid. Peter Drysdale,“Regional Cooperation in East Asia and FTA Strategies” Pacific Economic Papers, no. 344, 2005 . Hadi Soesastro, “An ASEAN Economic Community and ASEAN+3: How Do They Fit Together?”, Pacific Economic Papers, no. 338, 2003 .

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15. Suiwah Leung, “Integration and Transition — Vietnam, Cambodia and Lao PDR” . 16. Ibid. 17. Andrew Elek, “Beyond Free Trade Agreements: 21st Century Choices for East Asian Economic Cooperation” . 18. K.P. Saxena, “Asean-Saarc Cooperation: The Role of Extraregional Powers”; Mizanur Rahman Shelly, “Role of External Powers in Promoting/Inhibiting Regional and Inter-Regional Cooperation”; Bhabani Sengupta and Sudha Raghavan, “SAARCASEAN Cooperation in Global Perspectives”, in SAARC-ASEAN: Prospects and Problems of Inter-Regional Cooperation, edited by Bhabani Sen Gupta (New Delhi: South Asian Publishers, 1988). 19. Nancy Jetley, “India and Saarc”; Kalim Bahadur, “Pakistan and Saarc”; S.D. Muni, “Regional Conflict in South Asia and the Role of Saarc”; Uma Singh, “Indo-Pak Relations and the Changing International Peace Dynamics”, in The European Community and SAARC, edited by K.B. Lall, H.S. Chopra, and Thomas Meyer (New Delhi: Radiant Publishers, 1993). 20. Pran Chopra, “Saarc and Asean: Comparitive Analysis of Structures and Aims”, in Sen Gupta, SAARC-ASEAN, pp. 2–23. 21. For the most comprehensive distillation of the different views and strands of thought during this period, see Ross Masood Husain, “Promotion of Greater Inter-governmental, Inter-institutional and Inter-people Understanding in South Asia”, Islamabad: Friedrich Ebert Stiftung, 1992 22. Khuaja Sarmad, “ Saarc-Asean Trade: Prospects and Expansion”, in Sen Gupta, SAARC-ASEAN, pp. 165–70. 23. Moonis Ahmar, “European Union as a Model for SAARC: Pakistanʼs Perspective” in The European Community and SAARC (New Delhi: Radiant Publishers, edited by Lall, Chopra, and Meyer 1993). 24. Annexure 1 in Husain, “Promotion of Greater Inter-governmental, Inter-institutional and Inter-people Understanding in South Asia”.

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25. Atiur Rahman, “The Politial Economy of Inter-regional Cooperation” in Sen Gupta, SAARC-ASEAN, pp. 107–39. 26. Dalem C. Barman, “Bangladeshʼs Perspectives on Saarc” in Lall, Chopra, and Meyer, The European Coomunity and SAARC. 27. For the most comprehensive statement of Bangladeshʼs concerns and objectives, see Muhammad Shamshul Huq, Bangladesh in International Politics: The Dilemmas of The Weak States (Dhaka: The University Press Ltd., 1993). 28. “Coordinating Group for Studies on South Asian Perspectives”, Perspectives on South Asian Cooperation, Islamabad: Friedrich Ebert Stiftung, 1994. 29. Iftekharuzzaman, ed., Regional Economic Trends and South Asian Security (Delhi: Manohar, 1997). 30. Nasir A. Naqash, SAARC: Challenges and Opportunities (New Delhi: Ashish Publishing House, 1994). 31. See the relevant Chapters by South Asian scholars in Iftekharuzzaman, ed., Regional Economic Trends and South Asian Security. 32. Indra Nath Mukherji, Towards a Free Trade Area in South Asia: Charting a Feasible Course for Trade Liberalization with Reference to Indiaʼs Role . 33. Ibid. 34. Ibid. 35. Saman Kelegama, “SAFTA: A Critique”, South Asian Journal 4 (2004): 10–16. 36. Nihal Pitigala, “What Does Regional Trade in South Asia Reveal about Future Trade Integration? Some Empirical Evidence”, World Bank Policy Research Working Paper 3497, February 2005, available from . 37. Ibid. 38. Ibid. 39. Paul R. Bergin and Reuven Glick, “Tradability, Productivity, and Understanding International Economic Integration” NBER Working Paper no. 11637, NBER, 2005 .

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40. Pervez Iqbal Cheema, “SAARC Needs Revamping”, in The Dynamics of South Asia: Regional Cooperation and SAARC, edited by Eric Gonsalves and Nancy Jetly (New Delhi: Sage, 1999), p. 102–03. 41. Kenneth McPherson, “SAARC and an Indian Ocean Dialogue,” in ibid., p. 108. 42. S.D. Muni, “South Asia Outside SAARC”, in ibid., pp. 125– 26. 43. S. Akbar Zaidi, Issues in Pakistanʼs Economy, Second Edition (Oxford: Oxford University Press, 2005), p. 507. 44. Ayesha Siddiqa, “The Politics of the Militaryʼs Economic Interests”, Unpublished paper written for DFID 2004 quoted in ibid., p. 507. 45. Ibid. 46. Ibid. 47. M. Rahamattullah, “Integration of Transport Infrastructure: A Key to Economic Dynamism in South Asia” in South Asia 2010: Challenges and Opportunities, edited by K.K. Bhargava and Sridhar K. Khatri (New Edlhi: Konark, 2001), pp. 158–159.

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Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

5 Social Issues and Regional Cooperation Social and economic well-being are closely related and this is well recognized by the promoters of regional cooperation. The framework documents that form the basis of cooperation among regional states reflect this in ample measure but very rarely do regional organizations back this up with binding commitments. By and large, the social dimension is addressed in a perfunctory and incremental fashion. Even when associations adopt a plethora of charters and protocols that list relevant areas of concern, the implementation lag is so enormous that the whole exercise ends up as a mockery. The social side of regional integration obviously requires efficient mechanisms and enormous resources similar to the undertakings made at the national level. It also calls for a massive commitment from political elites to push for social policies at the regional level. Once again it is the EU which has the most elaborate provisions backed by enforcement mechanisms to realize its stated social goals. ASEAN has been rather incremental in its approach. SAARC possesses a Social Charter which was adopted in 2004 but it suffers from a huge implementation deficit. A little recognized fact both in ASEAN and in SAARC is that social policies form the core of the EUʼs agenda.

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Member states are obliged to adhere to EU law pertaining to social issues. This does not however, mean that these issues have not generated any controversies among the members. Britain, for instance, opted out of the Social Charter from 1989 to 1997. But it is generally conceded that the social dimension has been the cornerstone of the EU project which has made a serious effort to convert pious intentions into concrete policy measures. The European Social Charter was adopted in 1961 followed by an additional protocol in 1988. In 1995 a complaint mechanism was added to that and a revised charter was adopted in 1996. The Social Charter of 1989 (annexed to the Treaty of Maastricht) addresses matters relating to labour market, vocational training, equal opportunities and the working environment. The European Commission is mandated to craft proposals for translating the provisions of the charter into legislative acts. Social action programmes quickly followed the adoption of the Charter which is a political instrument that carries obligations to make sure that social rights are properly respected. Before the Charter was ratified there was no document that clearly defined the fundamental freedoms and human rights of the people at the regional level, even though the expansion in EUʼs powers had the potential to affect individual rights to a substantial extent. What makes the EU Social Charter significant is that it has its own monitoring system. The European Committee on social rights comprising independent experts examines whether have been applied effectively by the governments. the charter provisions. This is revealed in the reports the member states submit to the committee on a regular basis.

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Based on the committeeʼs conclusive findings national legislations and compliance measures have to be introduced by the member countries. In this sense the charter is not a mere declaration but a binding treaty. The EU constitutional treaty, which is at the moment in limbo, incorporated the EU Charter of Fundamental Rights which was proclaimed in December 2000. It brought together in a single text all the personal, civic, economic, political and social rights enjoyed by EU citizens. This charter has had a significant impact because of the backing it receives from the European Court of Human Rights. On the whole, the various social provisions prevalent within EU have created a social model which the Europeans cherish enormously. Although the model has now become a subject of debate within the EU (it is perceived by some members as an expensive luxury if Europe wants to be internationally competitive), the Europeans, in general are extremely reluctant to forego the benefits that it bestows. Europeʼs social charter has been widely admired for its generous provisions on the rights of the individual. It has provided sufficient inspiration for other regional bodies to come up with their own programmes of social action for the betterment of the weaker sections of society but none of these provisions are as far reaching as they are in the case of Europe. The 1967 Bangkok Declaration listed social progress and cultural development as important aims of ASEAN. Summits since then have reiterated the need to bolster this dimension of regionalism.1 The first summit in 1976 called for intensified cooperation in social development to improve peopleʼs standard of living. The 1977 ASEAN

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Summit envisaged expanded cooperation in human resources development, elimination of poverty and disease, rural development policies and action to curb drug and narcotics abuse and trafficking. The 1987, 1992 and 1995 summits strongly reiterated the importance of functional cooperation. The ASEAN Vision 2020 document spoke about a “socially cohesive and caring ASEAN where hunger, malnutrition, deprivation and poverty are no longer basic problems”. The document also mentioned that before 2020 one can expect to see a Southeast Asia free of illicit drugs, free of their production, processing, trafficking and use. The year 1997 saw the establishment of the ASEAN Foundation for promoting functional cooperation in the region. The foundation was mandated to address issues of unequal economic development, poverty alleviation and socio-economic disparities. Building on the Vision 2020 initiative, the October 2003 Bali Concord II envisioned an ASEAN Socio-Cultural Community (ASCC) as one of the three pillars of the emerging ASEAN community. A commitment was made to “foster cooperation in social development aimed at raising the standard of living of disadvantaged groups and the rural population” and it also sought to promote “the active involvement of all sectors of society, in particular women, youth, and local communities”.2 Among the other steps aimed at promoting ASEANʼs social agenda the following merit attention: Permanent Committee on socio-cultural activities, 1971; ASEAN Committee on Social Development (COSD), 1978; ASEAN Senior Officials on Drug Matters, 1984; and, ASAN Senior Officials on Rural Development and Poverty Eradication,

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1997. In 2001 the COSD was dissolved and senior officials meetings were mandated to coordinate labour, health, social welfare and development, youth, women, education and disaster management.3 The Vientiane Action Programme 2004 concerning the ASCC put forth the theme of nurturing human, cultural and natural resources for sustained development in a harmonious and peoplecentred ASEAN. Since its inception, SAARC has also devoted a great deal of attention to the social side of regional cooperation at the declaratory level. The Group of Eminent Persons (GEP) Report had strongly recommended a SAARC Social Charter that would address the challenges in the area of poverty eradication, population, education, womenʼs empowerment, health and environment. Such a charter has now been adopted. Apart from this, SAARC has also been enthusiastically designating certain years and even decades dedicated to the task of combating the social ills that abound in the region. But no integrated action has so far emerged to make any great difference to the situation on the ground. The social sector certainly intrudes into the deliberations of the elites but very little has been achieved beyond problem-identification. The adoption of the Social Charter was no doubt a significant milestone but the real test will be when a specific role for SAARC is assigned for implementing the provisions. As the present secretary-general himself noted, beyond the national plans of action in the social arena, no regional dimension is as yet visible.4 Before discussing the specific items in the social sector, it may be instructive to take a look at the South

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and Southeast Asian statesʼ record on participation in the UN human rights regime. Even though accession or ratification may not mean much in terms of actual delivery, it does provide some indication of the varying extent of commitments towards the rights regime in general, and the following conventions in particular: 1. 2. 3. 4. 5. 6.

Convention on the Elimination of all Forms of Racial Discrimination (CERD) Covenant on Civil and Political Rights (CCPR) Covenant on Economic, Social and Cultural Rights (CESCR) Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT) Convention on the Rights of the Child (CRC).

TABLE 5.1 Status of SAARC States’ Accession, Ratification and Signature to International Rights Convention Country INDIA PAKISTAN SRI LANKA NEPAL BHUTAN MALDIVES BANGLADESH

CERD CCPR CESCR CEDAW

CAT

• • • • ------• •

• • • • •

------

•

•

•

•

• •

• •

•

•

• •

CRC • • • • • •

• Ratification, accession or succession ------ signature not yet followed by ratification. Source: Human Development Indicators 2003 .

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TABLE 5.2 Status of ASEAN States’ Accession, Ratification and Signature to International Rights Convention Country Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

CERD CCPR CECSR CEDAW • • •

•

•

-------- --------

•

•

•

• •

• •

• •

• • • • • • • • •

CAT • •

•

CRC • • • • • • • • • •

• Ratification, accession or succession ------ Signature not yet followed by ratification. Source: Human Development Indicators 2003 .

Some of these rights are of relevance to the social goals that form part of the declarations adopted by both SAARC and ASEAN. As mentioned earlier, SAARC achieved a milestone of sorts when it adopted the social charter but the charter is not a mandatory instrument. There is no ASEAN equivalent of the SAARC Social Charter but that has not prevented it from laying down plans for social action. SAARC Social Charter The preparation and adoption of a social blueprint for the region had been a long-standing aim of SAARC.

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Social issues had found their way into the SAARC process from the 1991 Colombo Summit onwards under dedicated headings. The Dhaka Declaration of 1993 added development of women to the list and the 1995 Delhi Declaration talked about people-to-people contact and illiteracy.5 Usually these declarations have been followed by certain specific initiatives, meetings and workshops such as the Rawalpindi Conference on Children in 1996, which sought to deal with child welfare, health, water, sanitation, and gender equality. SAARC Summit declarations are replete with commitments on a wide variety of social goals. Ministerial meetings have identified certain regional level efforts essential for achieving these goals. The GEP recommendation stressed the necessity for a comprehensive social charter. At the Tenth Summit in Colombo in 1998 the suggestion for developing a SAARC social charter was given formal shape. This resulted in two initiatives — one inter-governmental and the other a more inclusive and bottom-up process involving the civil society and other concerned parties. This initiative was spearheaded by the South Asia Centre for Policy Studies (SACEPS).6 The inter-governmental process culminated in the adoption of the charter by the SAARC heads of state during the 2004 summit. The charter focuses on issues of poverty, ill-health, illiteracy and lack of education, malnutrition, protection of women, child welfare, youth mobilization, population stabilization, drug de-addiction rehabilitation and reintegration.7 However, unlike the European Social Charter, there is no mention of workerʼs rights in the South Asian document.

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The need to address these long-standing issues in South Asia should be apparent to any casual observer but the enthusiasm for meaningful action has been rather tepid. Even in the formulation of the charter, no broad based effort was made by the governments to invite inputs from the relevant segments of society. The task was kept at a fairly low level within government bureaucracies, which reflected the modest priority assigned to this task.8 Since the inter-governmental initiative failed to engage in broad-based consultations with the principal stakeholders, SACEPS decided to plug this gap. Thanks to its efforts a Citizensʼ Social Charter for South Asia was drawn up along with the national citizensʼ social charters in six of the SAARC countries. The general awareness about the official SAARC Social Charter even among political leaders has been rather low. For instance, Bangladeshʼs minister for law, justice and parliamentary affairs openly admitted that he was unaware of the adoption of the charter.9 Although impressive in terms of its coverage the charter does not have the same bite as other international treaties and covenants, which makes it very open-ended. Among the myriad items of social relevance, the focus in this chapter will be on some select areas of common concern such as: poverty alleviation, trafficking in women and children, health and peopleʼs regionalism. Poverty Alleviation South Asiaʼs poverty is a well-documented fact. The region contributes the largest share of the worldʼs poor, illiterate,

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hungry, and medically deprived people. Sri Lanka and Maldivesʼ contribution are comparatively less but that has not made much of a difference to the overall picture. South Asia, with GNI per capita at US$510 in 2003, is home to 40 per cent of the worldʼs poor living on less than US$1 a day.10 Since 1990 the region has experienced rapid GDP growth, averaging 5.3 per cent a year, which is regarded as an improvement in some marginal way. But the current pace of poverty reduction in South Asia is too tardy for achieving the Millennium Development Goals (MDG) target date for the region.11 As a World Bank fact sheet notes: “Challenges remain in key areas such as child malnutrition, primary and secondary completion rates, maternal mortality, and gender balance in education and health outcomes: nearly half of all children under the age of five are malnourished and youth illiteracy is high — 22 per cent for males and 38 per cent for females. The resurgence of tuberculosis and the threat of HIV/AIDS are also a cause for concern. In general, the quality of statistics on social MDGs needs to be improved considerably to make cross-country comparison meaningful”.12 These enduring problems make it even more daunting for South Asian cooperation to make any headway. The social realities of the region are too overwhelming but at the same time they can only be ignored at the peril of condemning the region to a permanent state of deprivation. Not surprising then that the Colombo Summit of 1991 decided to set up the Independent South Asian Commission on Poverty Alleviation (ISACPA-I). This initiative involved collaboration between the governments and a group of

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committed individuals from the region who shared an interest in poverty related social issues. The commissionʼs terms of reference were to identify the reasons for the failure of past attempts at poverty alleviation, as well as to look at the instances of success where peopleʼs participation had yielded beneficial results, and finally, to come up with a workable strategy for poverty alleviation.13 ISACPA-I came up with an impressive document emphasizing the inadequacy of conventional development measures to address the monumental task of poverty reduction. It highlighted the need for a political rather than reformist remedies and strongly recommended a pro-poor development approach in which the poor would be “the subjects and not objects of development”.14 The commissionʼs recommendations were endorsed by the leaders during the 1993 summit and in subsequent summits as well. Incredibly, the 1993 summit claimed that by 2001 poverty would be eliminated in South Asia. Typically, after showing some initial interest in the recommendations of ISACPA-I, the regional states slipped back into their usual insouciance. No further activity might have ensued but for the 2000 Millennium Summit and the MDGs that resulted from it. The MDGsʼ emphasis on halving extreme poverty, and the fact that nothing much had been done to achieve it, acted as a catalyst for the formation of ISCAPA-II. Its report was submitted to, and endorsed by, the 2004 SAARC Summit. ISACPA-II has been tasked with monitoring both the poverty trends in South Asia and the rate of progress towards the MDGs. It has also been mandated to disseminate its report as widely as possible within the region and to share experiences and best practices. It was

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expected that a minimalist agenda like this would be easier to implement. At the same time, there is also a feeling that there is very little SAARC can do to alleviate poverty since this task remains the paramount obligation of the member countries. Given the situation of political and social variables, it is less clear how far ISACPA can discharge its role as a watchdog of the progress in poverty alleviation in South Asia without major backup from both the political parties and civil society of South Asia.15

Apart from ISACPA-II, provision has also been made since 2002 for a continuous appraisal of the Regional Poverty Profile, to be prepared by the SAARC secretary general with the support of UN agencies and other institutions. The reports for 2003 have 2004 have been published. The 2003 report acknowledged the role of the NGOs in poverty alleviation programmes. But more importantly, it outlined an empowerment approach to poverty reduction by advocating that the poor should be made active partners in the fight against poverty, much as what the MDG proposes.16 Another initiative that figured in the Islamabad Summit was Indiaʼs pledge of US$100 million for projects to be undertaken in any of the SAARC countries other than India. So far no move has been made to operationalise this offer. Some observers have suggested that the proposed South Asia Poverty Alleviation Fund could be used to set up a South Asia Health Foundation with the aim of establishing region-wide hospital and medical services to

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create model hospitals staffed by medical personnel from the region. If properly implemented, apart from providing relief to the poor, it might act as the best advertisement for regional cooperation. A practical scheme like that might also propel regional cooperation to move beyond the seminar circuit.17 The other important proposal that was discussed along with the poverty alleviation fund in the Islamabad summit was a special project on Freedom from Hunger which envisaged a SAARC Food Bank. Since food security is closely tied to the concerns of poverty, questions are being raised about the consequences of fall in the commodity prices in the agriculture sector. It is feared that by 2015 the region would be food deficient by 16 million tonnes. By 2030, this could climb to the order of 26 million tonnes. Of equal concern is the quality of food available in the region. South Asia is host to almost 330 million malnourished people.18 These issues have assumed salience and could become critical with the implementation of SAFTA. Obviously, more than mere proclamations are needed to cushion the effect of some of these adverse developments. Both trade and non-trade measures are required at the regional and national levels to ensure food security if any dent is to be made in the fight against poverty. The 2005 Dhaka Declaration loftily proposes 2006–15 as the decade of poverty alleviation in the SAARC region. As it stands, the funds available for fighting poverty in the region are meagre but more daunting is the task of dovetailing national programmes with the regional plan to alleviate poverty.

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The scale of the problem of poverty in South Asia is staggering and even though poverty alleviation can best be addressed by national governments, regional cooperation can play an enabling role. Therefore some critical initiatives at the regional level in South Asia have been proposed.19 These include: • • • •

Setting up a data-base on poverty alleviation best practices and regional cooperation programme on dissemination; Promotion of rural technology; Review of laws and policies of relevance to the livelihood issues of the poor; Cooperation and sharing of experience in the area of agriculture research, protection of biodiversity, natural calamities and their management, social sector policies, etc.

What emerges clearly from the discussion on poverty is the gaps in implementation which are mostly caused by lack of coordination, inadequate decentralization, weak accountability, massive corruption and irresponsible leadership. The best of programmes can come to grief if these first order issues are not attended to, as can be seen from the South Asian experience. Poverty is also a major concern among some ASEAN countries. Expansion of the association has brought in economically weaker countries into the fold. But according to the ADB, Southeast Asian countries have achieved better results in curbing poverty and the elimination of hunger. The incidence of poverty using the US$1-a-day standard is close to zero in Malaysia and 2.5 per cent and 7.2 per cent

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in Indonesia and the Philippines, respectively.20 Cambodiaʼs rural poverty is about 4.4 million while Vietnam has 33.9 million of the population living in rural poverty.21 While the level of poverty has tapered off in some countries, its ill effects continue to haunt those countries which suffer from a high level of income disparity. The Initiative for ASEAN Integration (IAI) has been one of the instruments by which the advanced ASEAN countries help their less well-off newer members. The main ASEAN strategies for poverty eradication are to encourage economic growth and bolster rural development. The 1997 economic crisis made the situation of the poor and disadvantaged more desperate in some regional countries. One of the immediate responses was to accelerate the process towards closer regional cooperation. The Hanoi Plan of Action adopted in 1998 sought to mitigate the plight of the poor by mandating ASEAN to implement the Plan of Action on Rural Development and Poverty Eradication as well as on Social Safety Nets to relieve the burden on the weaker sections of society. Reviewing the progress of the poverty alleviation scheme the ASEAN Ministers on Rural Development and Poverty Eradication (AMRDPE) in December 2002 called for “new priorities for ASEAN cooperation in rural development and poverty eradication, particularly with regard to effectively responding to the challenges arising from globalisation, trade liberalisation and regional integration”.22 A new framework plan for the next six years (2004–10) is addressing emerging priorities such as globalization, narrowing the digital divide, and encouraging local participation in sustainable rural development.

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In fulfilling the objectives laid down for poverty eradication, ASEAN members have been keen to involve their dialogue partners, private sector, NGOs and the civil society. Countries like Malaysia and Thailand have been engaged in sharing their national experiences with others in select areas which can have an impact on rural development and poverty alleviation. ASEAN states stress the need for human capital development through education and skills upgrading as the key to get the people out of the poverty trap. Food insecurity is also an agenda item in tackling poverty in Southeast Asia as in South Asia. But “the concept of national food security varies among countries, ranging from absolute self-sufficiency to a more flexible vision of self-reliance. ASEAN has had a difficult experience recently when attempting to improve food security”.23 Nonetheless, ASEANʼs Vision 2020 objectives related to poverty alleviation match the Millennium Development Goals. Through sustainable socio-economic development both seek to bolster food security and alleviate poverty. At present the thrust is for a better regional profile on the production and availability of food in the region. An ASEAN Food Security Information System Project (AFSIS) has been launched to plug the information gap. This is an ASEAN-Japan initiative which aims to facilitate food security planning, implementation and monitoring various regional and national projects on data collection related to food production. The AFSIS is a five year project which started in 2003 and hopes to come up with a more reliable estimate of food supply and demand in the region. Despite the efforts that have been made so far and the attention

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paid at the national level towards economic and social development what is still lacking is a regional impact. “One of the reasons may be that there has not been strong and solid effort towards the establishment of a common food production (agricultural policy) in ASEAN”.24 But overall, the food security situation is more stable in Southeast Asia than it is in South Asia. Trafficking In Women and Children Trafficking in people is one of the worst problems that the developing world faces. It is estimated that about 150,000 in South Asia and 250,000 from Southeast Asia fall victim to this practice. Given the clandestine and criminal nature of this whole operation it is a formidable task to tackle this dreadful problem. It bears emphasizing that a majority of the trafficked people are women and children. Regional organizations have made an effort to focus on this evil practice and towards this end, SAARC member countries signed the SAARC Convention on Combating the Trafficking of Women and Children for Prostitution in 2002. The SAARC Trafficking Convention in Article VIII Clause 7 states: “The State parties to the Convention shall endeavour to focus preventive and development efforts on areas, which are known to be source areas for trafficking.” Since Southeast Asia is equally burdened with this problem, a Declaration Against Trafficking in Persons Particularly Women and Children was adopted by the ASEAN countries in 2004. Multilateral institutions like the ADB in their studies and reports have highlighted the linkage between trafficking

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and poverty. ADB started a regional technical assistance (RETA) study for India, Bangladesh, and Nepal. RETA had two key aims: to increase the ADBʼs understanding of how its existing country programs and regional policy dialogue can be used to support and strengthen anti-trafficking efforts in South Asia; and, to contribute to capacity building and other efforts by stakeholders to develop and implement policies and programming that will effectively combat trafficking of women and children in South Asia.25

It is well established that the lure of jobs and better quality of life causes population movement both internally and externally in many of these countries. With the exception of Maldives, all the other SAARC countries act as both sources and hosts of displaced people. It is instructive to note that in a work devoted to the problems of South Asian migrants and refugees, SAARC gets a mention only for its failure to address the issue.26 SAARC is the only organization with a regional scope but is too frail to make a difference. However, trafficking has become an international concern. As the ADB notes: While human trafficking may have been an integral part of the informal economy and the cycle of movement of people within South Asia, it has only recently been recognized as an international concern as trafficked persons are found in a growing number of countries. Recent studies and analyses are demonstrating changes in the process and economy of trafficking in the South Asia region as it becomes more integrated into

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transnational criminal activities, and the demands for trafficked labour adjust to globalizing economic structures.27

In the South Asian context, the ADB study confirms that trafficking in South Asia is first, a highly gendered process; secondly, traffickers conveniently exploit the opportunities thrown up by pervasive migration; and, finally, a concerted effort to understand the demand side of trafficking could go a long way in combating the evil.28 The study highlights the inter-connected nature of trafficking that takes place across the borders between Bangladesh, India, and Nepal, along which a vast majority of the trafficking women and children often travel. One of the complications in accurately pinpointing and verifying trafficking activities along the India-Bangladesh border is due to the similarity in physical features and language profiles of the trafficked women. The other, is of course, a lack of integrity among the police and border patrol officers who make it easy for miscreants to flout the law. Bangladesh has considered establishing information booths at bus shelters close to the border for those seeking help to return to their homes. Other activities like this could be explored along the Bangladesh-India border crossings to stem the tide of trafficking. This is not to say that these remedies are easy to implement. In the case of Nepal one of the complicating factors is that many Nepalese go across to India for employment in homes as domestic help or as security guards and chefs. The soft border between the two countries makes detection difficult. The Indo–Nepal border has fourteen legal entry

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points, but no substantial data is officially available from enforcement agencies or government departments about border crossing and other migratory activities. The lack of data and information are attributed to poor identification mechanisms and the failure to distinguish between trafficking and migration.29 Improved and standardized data collection on cross-border flows can be a useful exercise in detection and correction. At the individual country level measures from the governments, NGOs and outside agencies have been useful in some ways to address this massive problem. But more government agencies should be persuaded to participate in this crucial task to build on the successes that have been achieved. It is only now that the South Asian governments are slowly beginning to understand the importance of cooperation in this area. But the usual sensitivities have stalled any progress. The ADB study recommends new mechanisms under the existing SAARC Trafficking Convention. Article VIII of the SAARC Trafficking Convention provides several pointers for measures to prevent and interdict trafficking in women and children. In 1987, the first SAARC Technical Committee on Women and Development was set up and adopted a common framework for developing a guidebook of Women in Development in the SAARC region. This meant evolving a general format and methodology acceptable to all member countries. A similar exercise is required on the issue of collection of standardized data regarding the extent and scope of trafficking of women and children for prostitution, as a starting point

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for collaboration. This could be taken up by the focal points in the three countries through the mechanisms of the Regional Task Force mandated in the SAARC Trafficking Convention.30

In short, there is sufficient scope for addressing the issue at the regional level provided the governments are willing to collaborate. A SAARC Police Conference was convened in Nepal in August 2002 where senior police officials from South Asian countries met to discuss how to combat terrorism and the trafficking of women, children, and drugs. The aim of the conference was to bolster cooperation among the law enforcement authorities of the member countries.31 One of the significant proposals of the conference was to create in South Asia a body similar to EUROPOL or ASEANPOL to deal with the regionʼs multiple criminal activities. The SAARC Convention on Trafficking itself could be made broader to include trans-boundary jurisdiction for the trial and sentencing of perpetrators of trafficking. Only if such stringent measures are adopted by the regional states can one hope for any improvement in the rapidly deteriorating situation. But this seems easier said than done. Southeast Asia also accounts for a high number of trafficked women and children and it faces similar problems both in terms of the root causes and the difficulty of controlling this trade. Ease of crossing borders and poor economic conditions at home usually trigger the desire to seek better prospects in a relatively prosperous neighbouring country. In mainland Southeast Asia Thailand acts as a magnet for the desperately poor in Cambodia, Laos, and Myanmar. Cultural and linguistic similarities are equally

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important in making Thailand the preferred choice. As one study notes: The demand is usually for work in the sex industry, and since 1990, it has been reported that about 80,000 women and children have been trafficked to Thailand for prostitution, predominantly from Myanmar, the Yunnan province of China, and Laos. On the other hand, its central location has made Thailand an ideal regional transit point to more affluent destinations in the region, such as Malaysia, Hong Kong SAR, Taiwan, Japan, and Australia.32

Roughly, cities within the Southeast Asian region attract 60 per cent of the trafficked women and children and the remaining 40 per cent reach destinations beyond the region. A number of ASEAN declarations relating to the problem of trafficking are on record. The second Informal ASEAN Summit in December 1997 called for serious measures to combat trafficking in women and children.33 The Hanoi Plan of Action further stressed the need for stern action against trafficking. Three ASEAN bodies are involved in pursuing initiatives and activities against trafficking in women and children: the ASEAN Ministerial Meeting on Transnational Crime (AMMTC), the ASEAN Chiefs of National Police (ASEANAPOL), and the ASEAN Sub-Committee on Women (ASW). The AMMTC was established in December 1997. It meets once in two years to review the work undertaken by the various ASEAN bodies on transnational crime and to set the pace and direction for regional collaboration on

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combating such crimes. It is assisted by the Senior Officials Meeting on Transnational Crime, which meets at least once a year. The ASEANAPOL meets annually and deals with preventive, enforcement, and operational aspects of cooperation against transnational crime.34

At the Ventiane Summit ASEAN leaders pledged to work more intensively to fight against trafficking. They decided that more coordination was needed to prevent tampering of passports and other travel documents that facilitate the problem. Better exchange of information on migration and prompt medical help and other assistance for the victims were put forward as necessary measures. In July 2004 there was a closed door meeting between the officials from Cambodia, China, Laos, Myanmar, Thailand and Vietnam to discuss a fresh framework for fighting against the menace of trafficking in the region. A workshop on protection of Asian women migrants convened by the United Nations Development Fund for Women (UNIFEM) strongly recommended that migration should be put on the agenda of regional organizations like SAARC and ASEAN; and, greater efforts should be made to forge and implement multilateral agreements on minimum work standards, welfare services and sharing of information on undocumented migration.35 Obviously, appropriate national level measures against exploitation of women migrants should complement multilateral efforts otherwise there can be no improvement in the situation. In sum, there is definitely a growing recognition both in South and Southeast Asia that trafficking is a major non-traditional security threat and that it can only be

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addressed through cooperation. But judging by the efforts of the regional organizations, it is evident that the problem is not being tackled on a war footing and to that extent, it is obviously not yet a priority concern for them. Health The South Asian region has one of the most deplorable health care indicators in the world. It has the largest number of people with micronutrient deficiencies and diabetes; carries 40 per cent of the worldʼs tuberculosis burden, and has a high burden of cardiovascular diseases and one of the worst indicators for reproductive health in the world. In addition, issues of rural health, risks posed by close contact with animal population and high prevalence of zoonotic diseases, highlight issues of a regional nature that could be amenable to locally tailored public health strategies.36

The health situation in SAARC countries, however, is not uniformly bad. Sri Lanka possesses the best health indicators with life expectancy at seventy-three years and very low infant and maternity mortality rates. Within India, the state of Kerala alone has matched these levels. In both these cases, investments in education and primary care along with a high level of awareness have greatly helped. Unfortunately, these practices have not been replicated elsewhere in the region. What bears emphasis is that most deaths in South Asia result from the inability to prevent simple infections and the bulk of the victims are children. Unless something

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drastic is undertaken, the region will not be able to meet the MDG of two-thirds reduction in child mortality rates by 2015. With the exception of Sri Lanka, the public health system in South Asia is rather poor. Since most countries lack a well-integrated centralized system of healthcare, it is perhaps premature to think in terms of a region-wide initiative. But some public health measures aimed at prevention rather than aiming for secondary and tertiary treatments could be efficacious. SAARC has the potential to knit together the health professionals within the region who can help achieve better health outcomes. It provides an ideal platform for cooperation between the medical communities on health issues. In fact, one of the five original areas identified for cooperation at the regional level was Health and Population Activities for which a technical committee was set up in 1984. Within its ambit fell maternal and child health, primary health care, disabled, and handicapped persons, control and combating major diseases in the region such as malaria, leprosy, tuberculosis, diarrhoea, rabies, and AIDS. In line with the stated goals in this sector, certain initiatives have been taken to prevent the resurgence of communicable diseases such as malaria, TB, waterborne diseases and the emergence of HIV/AIDS as major health hazards. Regional-level training and research programmes on preventive strategies have also figured in SAARCʼs agenda. A noteworthy development was the establishment of the SAARC Tuberculosis Centre (STC) in Kathmandu in 1992 which

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… is playing an important role in the prevention and control of tuberculosis in the SAARC region by coordinating the efforts of the National TB Control Programmes of the Member States. A joint four-year SAARC-Canadian International Development Agency (CIDA) Regional TB and HIV/AIDS project was funded by CIDA to enhance the capacity of the STC to coordinate the joint efforts of the SAARC Member States in meeting a major concern of the region — the combined toll of TB and HIV/AIDS.37

Since August 2000, SAARC has also signed several MOUs with external bodies like the World Health Organization (WHO), Joint United Nations Programme (UNAIDS) and United Nations Fund for Population Activities (UNFPA). But these measures are clearly inadequate to deal with the problems the region faces on the health front. South Asian countries have no doubt adopted WHOʼs integrated management of childhood illness initiative but due to the proverbial implementation snags, no great dent has been made in reducing the child mortality rate. Equally morbid is the situation of South Asiaʼs women. The maternal mortality ratio provides a sad reading and shows a wide disparity among regional countries with 23/100,000 live births in Sri Lanka to 539/100,000 for Nepal. Even though Maldives has done better in terms of infant mortality rates, maternal mortality numbers continue to remain high. On the whole, not much progress has been made in allocating sufficient resources for healthcare in the region. The two largest states in the region have abysmal healthcare figures. Except for Bhutan and Maldives, public

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TABLE 5.3 SAARC

Country Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka

Public expenditure on health (as per centage of GDP) 2001 1.6 3.6 0.9 5.6 1.5 1.0 1.8

Source: Human Development Report 2004 .

expenditure on health is low throughout the region as can be seen from the following table. Article IV of the SAARC Social Charter specifically deals with health. It recognizes the need for closer collaboration among the member states to address common health-related problems. It states that the member countries should strive to adopt regional standards on drugs and pharmaceutical products. It also aims to develop a system for sharing information regarding the outbreak of any communicable disease among their populations. The First SAARC Health Ministers Meeting was held in November 2003 to discuss the effect of the product patent regime on the pharmacy sector. SAARC has signed a Memorandum of Understanding with WHO to promote

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close collaboration in several key health areas. In April 2003 Maldives took the lead to convene an emergency meeting of SAARC health ministers on Severe Acute Respiratory Syndrome (SARS) epidemic. An emergency meeting of SAARC senior officials was convened by India in 2004 to initiate a joint effort against the spread of Avian Flu.38 The meeting recommended the setting up of two national focal points to monitor livestock and human health. It also emphasized the need to set up a SAARC Surveillance Centre and a Rapid Deployment Health System to tackle emerging and re-emerging diseases in the region. While discussions on these new health threats have been held and initiatives mooted, the necessary groundwork is still largely absent. Despite a slightly better public health profile among the Southeast Asian countries, regional collaboration on healthcare has been on the ASEAN agenda since 1980 when the health ministers met and declared that health would be treated as an integral part of overall socio-economic development. In April 2000 a framework for a “Healthy ASEAN 2020” was adopted with the guiding principle of health as a fundamental right of the people. It also spoke about strengthening the organizational machinery for ASEAN cooperation in health development. The need to expedite the implementation of the various plans of action was emphasized and recommended. A special unit for health development has been created in the ASEAN Secretariat. The Sixth ASEAN Health Ministers Meeting in 2002 noted that the ASEAN countries were undergoing rapid changes in demographic, economic and epidemiological sectors which could have significant implications for peopleʼs health

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and welfare. To meet these challenges it was suggested that more awareness about healthy lifestyles should be promoted, health literacy should be developed, effective monitoring mechanisms should be put in place and more resources should be mobilized than what obtains today. The following table reflects the expenditure on health in the ASEAN region: TABLE 5.4 ASEAN

Country Brunei Darussalam Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

Public expenditure on health (as per centage of GDP) 2001 2.5 1.8 0.6 1.7 2.1 0.4 1.5 1.3 2.1 1.5

Source: Human Development Report 2004 .

The economic strides made by some ASEAN countries prior to the financial crisis naturally produced beneficial effects on health and nutrition in the region. The regionʼs positive life expectancy figures and the increase in the

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average level of nutrition reflect this. But of late, the region has been wracked by a spate of pandemics that has triggered interest in collective actions. ASEAN set an example in regional cooperation to fight against the spread of SARS. All the ASEAN member countries along with China came together and endorsed a common set of procedures to combat SARS. In fact, ASEAN became the first region to be declared SARS-free in the world because of cooperative and joint efforts by all the countries.39 This summit was the first high-level coordinated ASEAN attempt to share information on how each country was tackling or preventing SARS and to decide collectively on region-wide measures to contain the disease. Several mechanisms were put in place to address the pandemic. Better coordination and cooperation among relevant enforcement agencies like health, immigration, customs and transport were fostered. Travel procedures were harmonized to make it feasible to put in place proper procedures for health screening at the point of departure and arrival. At the same time social responsibility was stressed through region-wide communication and education measures which proved critical in containing the damage. Making the whole effort people-centric helped in creating awareness and instilling a better sense of public hygiene which minimized the adverse consequences of this public health nightmare. However, ASEAN has still far to go in terms of standardizing things like medical supplies since each country follows its own approval standards. Also, there is a need to speed up the process of mutual authorization of medical doctors and nurses. Without these vital steps

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a collective regional effort to combat diseases will not be possible. Admittedly, there are several other important areas in the social sector that merit consideration in this chapter. But judging by the record of the few areas that have been covered so far, it is apparent that regional action in the social arena has hardly made any real progress. Identifying the problem and pledging to cooperate have been the main responses so far. As was mentioned in the beginning of the chapter, social issues have not been a priority item on the regional menu. Some people are even sceptical about the efficacy of regional action in this area. National strategies are probably the best way to tackle issues like poverty, literacy and human resource development. If some of the countries were to sincerely implement their existing national developmental plans that in itself would improve the regional profile. In the absence of this bare minimum, the grand plans that are drawn up at the regional level seem rather hollow. Ideally, national and regional efforts should be linked together for better results. A genuine regional commitment to cooperate across borders can make a big difference in alleviating the social problems. For instance, trafficking in people, infectious diseases, environmental hazards and natural disasters which are intimately connected with human security require coordinated action which regionalism can greatly facilitate. A SARS or a tsunami makes such cooperation imperative and exposes the limitations of uncoordinated national efforts. It is for this reason that proper mechanisms should be devised on a region-wide basis so that they can be quickly mobilized when the need

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arises. This is beginning to be realized by the countries in both South and Southeast Asia but reservations and sensitivities still abound and therefore the effort remains restricted to drawing up broad plans of action without corresponding enforcement mechanisms. For a start, regional entities could consider undertaking regular reviews of existing conditions related to any of the above mentioned social issues which might exert some pressure on national governments to follow through on their commitments. Civil society can also a play an important role, as it has done in some ways in South Asia to raise awareness and nudge official bodies to craft cross-border social agendas. Non-formal Regionalism The discussion on social issues makes one thing very clear. Regionalism can ill afford to be an esoteric activity far removed from the concerns of ordinary people. For regionalism to yield a positive social outcome, it is imperative to make it relevant for people at all levels. Interactions and dialogues among the elites — political, intellectual, and business — is only a part of the process. A deeper engagement with the public at large is equally essential. The involvement and contribution of the nonofficial track in regional reinforcement bears emphasis. Accordingly, in this section the interface between policy institutes and regionalism, the role of civil society and peopleʼs regionalism will be discussed. The exertions of ASEAN Institute of Strategic and International Studies (ISIS) and South Asia Centre for Policy Studies (SACEPS) in this regard have been noteworthy.

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Apart from formal regionalism and the multifarious meetings and dialogue it generates the informal bodies have also helped oil the wheels of regional cooperation. The inputs from ASEAN-ISIS have been an integral part of the regional process in Southeast Asia. ASEAN-ISIS assumed a formal presence when its charter was adopted in 1988 and was registered as an NGO with the ASEAN Secretariat. ASEAN-ISIS confabulations, particularly the annual Asia-Pacific Roundtable hosted by them have been instrumental in creating a climate of trust and confidence within the region. The contribution made by this Track2 forum has been considerable as can be seen from the following excerpt: In June of 1991, ASEAN-ISIS began sending policy reports to their respective governments. The reports recommended steps for ASEAN to take. Steps recommended in the first report included convening a politico-security dialogue in ASEAN (which became the ASEAN Regional Forum, or ARF); striving for enhanced economic cooperation through the ASEAN Free Trade Agreement (AFTA); thinking about enhancing security cooperation among the military, civilian leaders, and government officials; and holding regular ASEAN summit meetings every two years. Reports since then have dealt with such issues as human rights, confidence building and security, ASEANʼs continued involvement in Cambodian reconstruction, the South China Sea, and Vietnamʼs involvement in ASEAN (in a confidential memo).40

Track-2 can be a useful conduit only if it has some influence with key decision-makers from Track-1. Judging

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by the activities of ASEAN-ISIS, it does seem to have won endorsement from ASEAN officials and leaders who have heeded its recommendations. This Southeast Asian network has been a noteworthy player in the regionʼs diplomacy.41 South Asia does not have an equivalent network with a comparable reach. Significantly, the one forum that it has, namely SACEPS, is mainly composed of economic and development-oriented think-tanks. A group of eminent persons from the region was responsible for its creation and it was officially launched in 2001 in Dhaka. It set up six task forces on energy, investment, citizensʼ social charter, WTO, SAFTA and macro-economic policy. Since the regional cooperative process in South Asia is starkly inter-governmental and since the process is subject to disruptions caused by intra-regional rifts it was felt that an effort could be made at the non-official level to provide important inputs into regional policy-making. As SACEPSʼ mission statement notes: At the outset, SACEPS will, therefore, seek to establish an institutional base, which could be used to reach out to and network with some of the wellestablished national institutions within the region, which can provide the building blocks for a South Asia community. To this end, SACEPS will not only seek to build business and professional networks within South Asia but will also aim to draw together the initiatives of socially motivated NGOs of the region towards realising a shared agenda for social transformation within the region. The central objective of SACEPS will be to activate policy dialogue and interactions to provide a regional perspective to public discourse

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and debates across these countries and also project a regional profile in the global arena.42

SAARC has found it useful to tap into the SACEPS Task Force reports.43 The SAFTA framework agreement, the declarations relating to energy cooperation and a common stand in international forums, to some extent, reflect the suggestions made by relevant SACEPS task forces. The Social Charter that was adopted in 2004 by SAARC leaders drew upon some of the recommendations of the SACEPS initiative on the Citizensʼ social charter. SACEPS is now actively engaged in the task of furthering the process of a South Asian Economic Union. Development research, policy studies and policy advocacy that would boost regional cooperation remain the core focus of this Track-2 South Asian initiative. As mentioned earlier, SACEPS was very effective in preparing a Citizensʼ Social Charter for South Asia based on an inclusive process of taking on board the inputs from a broad constituency of South Asians involved at the grassroots level. The official SAARC Social Charter did not comprehensively reach out to the people when it was being formulated and to that extent, it fell short of civil society expectations which the SACEPS initiative sought to plug. South Asia has a very lively civil society sector which has been a keen advocate of greater people-to-people cooperation. The region is alive to the fact that closer economic and social interactions are desired by the public at large but unfortunately there are far too many political barriers in the way.

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In December 2000 the South Asia Partnership International initiated a South Asia Peopleʼs Summit. This summit is held parallel to the SAARC Summit and provides a platform for South Asian civil society organizations to commonly address the problems faced by the people of the region.44 So far five peopleʼs summits have been held, the latest in February 2005. Similarly an NGO forum, called the South Asian Peopleʼs Forum, was launched during the 2003 Peopleʼs Summit. The important role by NGOs in combating trafficking and in delivering services to many trafficked persons is now being recognized. Governments in the region have started working closely with civil society organizations, although there is still room for improvement in making these interactions more productive. As yet there is no great involvement of civil society in the formulation, revision or amendment of various social protocols and conventions. Unfortunately, these organizations are not treated as partners in implementation or monitoring regional activities. In 2001 the South Asia Civil Society Network (SACSN) met in Kathmandu under the banner of “Fighting unitedly against poverty, hunger, and injustice”.This meeting brought forth a more focused body called the South Asian Alliance for Poverty Eradication (SAAPE). SAAPEʼs goal is to establish suitable mechanisms to ensure peopleʼs participation in the decision-making process. In this regard, the role of NGOs with regional health mandates and initiatives like Heartfile which have had a good record of producing health initiatives, some believe, could be strengthened.

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SAAPE since 2001 has undertaken the following activities:45 •

• • • • •

•

Organized a meeting of sixty participants in January 2002 to launch the Bangladesh chapter of SAAPE, with the Bangladesh Nari Progati Sangha, as the country focal point; Organized an SAAPE workshop at the Asian Social Forum in January 2003 in Hyderabad; Promoted principles of SAAPE through strengthening legal base of NGOs in Maldives; In Nepal, various peopleʼs organizations, including trade unions and womenʼs organizations are involved in SAAPE; Members of WTO Watch in Pakistan have been working for peace initiatives to free up more resources for pro-people development; Grassroots education about the negative impact of globalization is conducted throughout the country, and movement for National Land and Agricultural Reform (MONLAR), the country focal point is involved in 100 workshops every year; Adopted a special resolution on Nepal in June 2005 to fight against internal violence.

SAAPE and the International Collective in Support of Fish-workers (ICSF) organized a meeting on the theme of “A Peopleʼs Process for Post-tsunami Rebuilding” from 24–26 April 2005 in Sri Lanka. The peopleʼs organizations and their supporters from Sri Lanka, India, Maldives, Indonesia, Thailand and Somalia came together to discuss the post-tsunami rebuilding processes in the six affected countries.

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Since 2001 a South Asian Regional People and Policy Programme (SARPPP) under the South Asia Partnership Programme has been active in seeking to get peopleʼs participation in choosing a relevant development path and in establishing a SAARC Watch to monitor the human development commitments made by the SAARC countries. As can be seen from the presence of these bodies, there is no lack of enthusiasm for promoting the peopleʼs cause and to raise these issues in a regional platform. The relentless effort by some of these organizations have raised awareness and also compelled official SAARC to pay heed to their demands. However, to translate words more firmly into deeds a partnership between the national establishments and the citizens is needed. This also “demands an alert, informed and committed civil society which will need to bond together within each country and across the region to build a collective identity that can empower them to play the role of both advocate and custodians for the rights of the deprived majority of South Asia”.46 NGOs and Civil Society Organizations (CSOs) are also active in the ASEAN region. Fifty-three NGOs are accredited to ASEAN, of which six deal with the social sector and they are primarily engaged in the following activities:47 •

Submitting written statements containing recommendations and views on policy matters or on significant events of regional or international concern, to the ASEAN Standing Committee through the ASEAN Secretariat;

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• • • •

317

Submitting project proposals for third party funding to be channelled through the ASEAN Secretariat to the Standing Committee for approval; Initiating programmes of activities for presentation to its link body for appropriate action; Attending meetings at the discretion of the chairman of the link body on matters and issues of direct concern to the NGO; Being allowed access to ASEAN documents on a selective basis in consultation with the ASEAN Secretariat of its link body.

CSOs and NGOs are typically referred to as Track-3 participants, which to begin with, had very little engagement even with Track-2 actors within ASEAN. Their interaction with Track-1 was practically nil,48 which meant that they had to resort to meetings of their own. These were convened at the same time as the formal summits. Since November 2000, however, a modest beginning was made by ASEAN to engage with these groups through the ASEAN Peopleʼs Assembly (APA) mechanism. APA was born through the exertions of ASEAN-ISIS with the aim of making ASEAN relevant to every member of the Southeast Asian community. The first APA meeting was attended by hundreds of representatives from the grassroots, think-tanks, private sector and NGOs. It received the support of the ASEAN secretary general and also drew some ex-ASEAN leaders and former officials. APAs have been held annually since 2000. The most recent meeting was held in May 2005 in the Philippines where a call was made for Myanmar to be denied the privilege of being the next yearʼs chair given its

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dismal progress on democratic reforms. The CSO and NGO also stressed that the people of the region should press the governments to be more accountable to the pledges that were made during the last ASEAN summit. An important handicap that the APA suffers from is resources. For APA to be a critical actor in fostering a regional spirit, it should be provided with adequate material support. APA does not have any dedicated funding for its activities. For its first meeting it had to rely on the generosity of the dialogue partners. Its efforts to obtain support from the ASEAN Foundation did not prove fruitful. Despite these snags the APAʼs value is self-evident. For regionalism to be made more meaningful for ordinary people, a public forum like this is invaluable. While it is heartening to see that Track-3 players now appear on the radar screen of official-ASEAN, their impact remains modest. This is both due to the inadequacy of these groups to present a cogent and workable agenda at the national and regional levels as well as the reluctance of governments to adopt a more inclusive approach in governance by treating these organizations as partners in development. In comparison to Southeast Asia, the civil society outfits at the national level in South Asia are more visible and vibrant. Even at the regional level, their presence is more noticeable unlike in the ASEAN region. People and Regionalism Bringing the people into the regional equation has of late become a dominant concern in many a regional project. Even Europe is feeling the pressure of the disconnect

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between the ordinary people and the EU which is perceived as an elitist enterprise. Interestingly, European citizens are at once sceptical and supportive of their integration process. According to a survey by Time magazine in 2001, one third of the young people between the ages of twenty-one to thirty-five confessed that they felt more European than French, Italian or German.49 But many Europeans have also come to regard the EU as a remote authority whose bureaucrats are good at churning out rules and regulations without any reference to popular consent. The EUʼs popularity has consequently dipped. A 2002 Eurobarometer survey revealed that less than half the European population from the member states alone could relate to EU institutions or recognize their relevance. This represented a seven per cent drop from the previous record and the slide has been steady since then. That said, many Europeans are also aware and thankful that they do not have to contend with inconvenient border controls or restrictions regarding employment, study and stay in any of the member countries. They have also benefited enormously from the hassle of having to change currencies when they move around in their region. Within the Euro zone banks do not charge any supplementary fees for cash withdrawals and because of single standards, Europeans can use their mobile phones across the continent at unbelievably low costs.50 These are not achievements that can be scoffed at. Nonetheless, there is a feeling of despair which is now being slowly recognized by the regional leaders. As one Spanish member of the European parliament lamented: “There is a big gap between leaders and voters today, and

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we cannot go on with European integration as we always have. The motto of enlightened despotism — everything for the people but without the people — no longer works … Whatever the face of EU tomorrow, getting citizens on board will be a pre-condition.”51 A similar concern pervades the ASEAN and SAARC regions. People-to-people contacts and identity-creation are now finding their way into the regional agenda. Secretary General Ong Keng Yong admitted that ASEAN faces a formidable challenge for making itself relevant to the 536 million people of the region where “public awareness of ASEAN is low in ASEAN capitals and virtually non-existent in the provinces.”52 Prime Minister Lee of Singapore also emphasized the need for ASEAN to connect with and mean something to the people of the region for it to realize its true potential.53 Spreading the ASEAN idea and fostering a common creed among the regionʼs people through an understanding of culture and history is now being stressed. Several cultural and educational programmes that would help in creating a regional identity are seen as important strategies to weld the regionʼs people together. Closer contacts by encouraging the young to travel within the region are also being propagated. An ASEAN Day is now celebrated annually as a way of instilling an ASEAN creed among the regionʼs inhabitants. The ASEAN Foundation, which came into being seven years ago, was established with the specific aim to create greater awareness about ASEAN throughout the region and for bolstering people-to-people interactions. Promotion of ASEAN studies, strengthening of the ASEAN University Network and cultural immersion programmes

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are among the foundationʼs strategies for achieving its objectives. The current preoccupation with people-centric ASEAN is naturally motivated by the larger vision of a socio-cultural community. Without the involvement of the people a community will not emerge, and without making ASEAN relevant to the people no involvement will be feasible. ASEAN might have succeeded in forging a feeling of regional identity at the elite level but this has not percolated downwards which has now become a point of concern. The charter formulation task that ASEAN is currently engaged in presents a good opportunity for a broad engagement with the people to learn about their dreams of a future ASEAN house. Augmenting the chances for peopleʼs participation even if it is merely to engage in consultations can go a long way in creating a Southeast Asian public sphere as well as in persuading the people to buy into the ASEAN project. If the charter-making process is strictly confined to the elites, two consequences could follow: those who are not aware of ASEAN will never be brought into the mainstream and those who are aware will feel alienated from the regional endeavour since they were denied the chance to participate in the process. South Asian regionalism is also keen to fill a similar lacuna. SAARC is even more remote to its people. This is causing some belated anxiety and the last secretary general in one of his speeches alluded to this. He strongly suggested that SAARC leaders should emphasize the celebration of the SAARC Charter Day on 8 December, as well as take some concrete measures like visa fee reduction, opening of separate SAARC immigration counters at the airports and a

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reduced rate of entrance fees at museums and historical sites for SAARC citizens to instil into them a regional vision.54 While these efforts are necessary to galvanize popular support, the most meaningful way for SAARC to make an impression among the broader public would be for the member states to make a genuine push for cooperation, leading to a more orderly and stable regional environment. Given the cultural and social commonalities that exist in the region it should not be such a daunting task to promote the concept of a South Asian identity. But this can be scarcely achieved if the regionʼs politics continues to remain hopelessly fractious. In South Asia, unfortunately, the elites themselves exercise little ownership of the regional project unlike in the case of EU or ASEAN. It is perhaps this which is inducing some people to push more vigorously for popular regionalism in the fond hope that demand from below may persuade and pressurize the political leadership to get serious about regional cooperation, which appears moribund sometimes. South Asiaʼs civil society is more restive than its elites to make regionalism work and if its exertions succeed, then this would perhaps be a unique case of bottom-up regionalism. Even though the prospect is tempting, the signs are too weak for comfort. Conclusion The key conclusion that emerges from this discussion on social issues is that notwithstanding a whole host of declarations and statements of intent that are produced by regional organizations, the social sector remains a low priority area within regionalism. It is marked by

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a lot of activities but very little action. The former, in fact, substitutes for the latter. Between the two regions the record of ASEAN is slightly better than SAARC. In areas like food security and trafficking it has achieved some progress. The region is also on track for meeting the MDG target on poverty reduction, gender equality in school enrolment, sanitation, child mortality figures and bettering the living conditions of many of its citizens. South Asia can and should draw some lessons from its adjacent region as well as from the European experience, both of which it regards as successful. Even in the region where the delivery on the social side is better as in the case of Europe, there is no guarantee that peopleʼs support for regionalism will be constantly high. It could falter if it is perceived that regionalism is divorced from livelihood issues, a predicament that the EU is currently facing. But it should not be forgotten that much of the EUʼs past popularity is owed to the human face of its regionalism as reflected in its progress on social issues. It is the fear that this might change which is making the Europeans sullen. The social side of regionalism thus can be a make-or-break point and therefore needs to be carefully tended. Europeʼs experience, both positive and negative, on this score should be closely observed by ASEAN and SAARC. The same applies to social integration where people bond together, develop a feeling of solidarity and a sense of community. These can be enhanced not only by providing a basis for social well-being but also through an active promotion of regional themes and issues in public arenas. Regional content in media and education, interface with civil society organizations and participatory

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decision-making on regional matters could do wonders for fostering a sense of community and shared identity. Ultimately, regionalism has to be a shared endeavour between the elites and the people for it to succeed and make a positive impact. Notes and References 1. For details of functional cooperation in Southeast Asia, see Estrella D. Solidum, The Politics of ASEAN: An Introduction to Southeast Asian Regionalism (Singapore: Eastern Universities Press, 2003), pp. 116–56. 2. Declaration of ASEAN Concord II . 3. “Building Health and Social Welfare Resources in ASEAN”, Paper prepared for the Second ASEAN-Japan High Level Officials Meeting on Caring Societies, 29 August–2 September 2004 . 4. This was stated by the current secretary-general, Chenkyab Dorji in an interview to the press. See The Rising Nepal, 15 April 2005.

5. Godfrey Gunatilleke, “The SAARC Social Charter: Perspectives and Issues”, in South Asia 2010: Challenges and Opportunities, edited by K.K. Bhargava and Sridhar K. Khatri (New Delhi: Konark, 2001), p. 347. 6. Godfrey Gunatelleke, “How to Take Forward the SAARC Social Charter”, in Promoting Cooperation in South Asia: An Agenda for the 13th SAARC Summit, edited by Rehman Sobhan (Dhaka: The University Press Ltd, 2004), p. 19–24. 7. For more information on this, see . 8. Views expressed by Professor Rehman Sobhan. Personal interview, Dhaka, 16 July 2005. 9. .

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10. Regional Fact Sheet from the World Development Indicators 2–5: South Asia . 11. “Poverty Balance Sheet”, in Our Future Our Responsibility, Report of the Independent South Asian Commission on Poverty Alleviation, Kathmandu: SAARC Secretariat, 2003, pp. 20–25. 12. Regional Fact Sheet from the World Development Indicators: South Asia . 13. Ponna Wignaraja, “Conceptual Framework”, in Pro-Poor Growth and Governance in South Asia: Decentralization and Participatory Development, edited by Ponna Wignaraja and Susil Srivardan (New Delhi: Sage, 2004), p. 34. 14. Interview with Dr Wignaraja, Colombo, 16 May 2005. 15. Rehman Sobhan, ed., Promoting Cooperation in South Asia, p. 15. 16. SAARC Regional Poverty Profile 2003 , p. 60. 17. Interview with the director of SACEPS, Dhaka, 16 July 2005. 18. Sachin Chaturvedi, “Regional Cooperation for Poverty Alleviation and Food Security in South Asia”, New Delhi: RIS Discussion Paper no. 87/2004, p. 4 . 19. Kamal Uddin Siddiqui, “What Strategies for Poverty Alleviation in South Asiaʼ, in Sobhan, ed., Promoting Cooperatin in South Asia, pp. 29–30. 20. ADB Southeast Asia Annual Report 2004 (accessed 5 September 2005). 21. (accessed 5 September 2005). 22. . 23. Statement by Mr Ong Keng Yong in the Conference on Subregional Cooperation for Eradication of Poverty and Food Insecurity in the Asia and the Pacific, Bangkok, 23–24 February 2004 .

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24.

Mya Than, “Food Security in ASEANʼ, in ASEAN Beyond the Regional Crisis: Challenges and Initiatives, edited by Mya Than (Singapore: Institute of Southeast Asia Studies, 2001), p. 170. Combating Trafficking of Women and Children in South Asia, Regional Synthesis paper on Bangladesh, India and Nepal, Manila: Asian Development Bank, April 2003, p. 1 . P.R. Chari, Mallika Joseph, and Suba Chandra, eds., Missing Boundaries: Refugees, Migrants, Stateless and Internally Displaced Peoples in South Asia (New Delhi: Manohar, 2003), pp. 34–36. Combating Trafficking of Women and Children in South Asia, p. 5. “Gender and Development” . Combating Trafficking of Women and Children in South Asia, op. cit., pp. 171–72. Ibid., p. 172. Debra Armentrout, “Child Trafficking Continues to Threaten Young Women in India” . Frank Laczko and June J.H. Lee, “Developing Better Indicators of Human Trafficking for Asia”, Paper prepared for the Expert Group Meeting on Prevention of International Trafficking, Seoul, Korea, 22–23 September 2003 . S. Puspanathan, “Fighting Trafficking in Women and Children in ASEAN”, Paper presented at the 7 ACPF World Conference on Crime Prevention and Criminal Justice, 23–26 November 1999, New Delhi, India Ibid. The Jakarta Recommendations for Action on Recognising, Protecting and Empowering Women Migrant Workers in Asia, December 2003 .

25.

26.

27. 28. 29. 30. 31.

32.

33.

34. 35.

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36. Sania Nishtar, “South Asian Health: What is to be Done?” (Letters), BMJ, 328 (3 April 2004): 837. 37. Health and Population Activities . 38. . 39. Joint Statement of the Special ASEAN+3 Health Ministers Meeting on Severe Acute Respiratory Syndrome (SARS), Siem Riep, Cambodia, 10–11 June 2003 . 40. Report on the paper presented by Carolina Hernandez on ASEAN-ISIS, Asia-Pacific Agenda Project, Second Forum, Bali, 11–12 January 1997 . 41. For details, see Mely Caballero-Anthony, Regional Security in Southeast Asia: Beyond the ASEAN Way (Singapore: Institute of Southeast Asian Studies, 2005), pp. 157–72. Also see Hiro Katsumata, “The Role of ASEAN Institutes of Strategic and International Studies in Developing Security Cooperation in the Asia-Pacific Region”, Asian Journal of Political Science, (June 2003): 93–111. 42. . 43. Rehman Sobhan, ed., Agendas for Economic Cooperation in South Asia, p. xiv. 44 . South Asia Partnership International . 45 . See . 46 . Rehman Sobhan, ed., Promoting Cooperation in South Asia, p. 16. 47 . See Michael Chai, “Civil Society Making Headway in the Association of Southeast Asian Nations”, The Social Development Review 7, no. 2 (December 2003), pp. 9–13. 48 . Carolina Hernandez, “A Peopleʼs Assembly: A Novel Mechanism for Bridging the North-South Divide in ASEAN”, in The Emerging North-South Divide in East Asia: A Reappraisal of Asian Regionalism, edited by Hank Lim and Chyungly Lee (Singapore: Eastern Universities Press, 2004), p. 160.

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49.

Kattrine Bennhold, “Quietly Sprouting: A European Identity”, International Herald Tribune, 26 April 2005. Thomas Fuller, “Euro Zone Eliminates Many Fees”, Ibid., 10 August 2005. Kattrine Bennhold, “Old Europe, but New Ideas that Work”, Ibid., 10 August 2005. Quoted in Katrin Bennhold, “EU to Hold Together, but with New Focus”, Ibid., 16 June 2005. Ong Keng Yong, “ASEAN and the 3 Lʼs: Leaders, laymen and Lawyers”, Singapore Law Review Public Lecture, March 2005 . Straits Times, 29 September 2005. “SAARC Identity”, Statement by S.G. Rahim .

50.

51. 52.

53. 54.

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Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

6 Summary and Conclusion The last quarter of the twentieth century witnessed several paradoxes. Amongst these was the determined movement by countries towards “regionalism”, wherein despite their proud proclamations about nationalism and sovereignty, several countries actually chose to abridge the latter and go easy on the former. It is true that governments often need to say one thing and act in the opposite way. This resembles what sociologists call “decoupling” where there is a split between norms and behaviour.1 But it is not often that so many governments do so at the same time. Clearly, regionalism was (and is) not just attractive as a fad but holds out the prospect of positive benefits, not just for the elites of countries but for the populations as a whole. Regionalism thus has an instrumental dimension to it. Despite misgivings about the loss of autonomy states pursue it and convince their people that it is the best insurance against the tide of globalism. Strength in numbers is a powerful argument and that is the reason why even illperforming regional outfits trundle along. The strategies underway in many regions to enter into RTAs are evidence enough for this. But this is not to say that regionalism acts as an impediment to multilateral arrangements. On the contrary, many people regard regionalism as a stepping stone and not a hurdle. Neither is regionalism perceived

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as being harmful to nationalism defined narrowly as national interest. Being a part of the regional whole has a comforting effect on smaller states. This is where the concept of “sovereignty bargains”2 is useful. It makes us aware of the underlying logic that pushes states to opt for regional cooperation. It is hard to say with any degree of confidence exactly when nations became aware of the virtues of banding together with others in the region. But it is generally conceded that the late 1940s was when the idea germinated. Shortly thereafter Germany and France came together to form a common market for their steel and coal which effectively launched the regional project. In all probability, this was the response of French capital to the perceived threat from American capital, which was flooding Europe at the time in the drive towards post-war reconstruction. In part, also, there was the genuine desire in Europe, after the bloodbaths of the two World Wars that were separated only by two decades, to behave in a more civilized manner. The movement towards regionalism began with the formation of the Franco-German steel and coal grouping. It has not looked back since, as the economic virtues of larger markets and access to larger pools of capital, chiefly to counter the United States, have become increasingly apparent. The result is the creation of the EU, a giant, albeit a somewhat potbellied one. As an economic unit and force, the EU is now second only to the United States. But economics was not the only driving force. The threat from the USSR too was a potent reason for banding together. But given that NATO had already been formed as

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a way of providing a common West European defence, just how far security considerations drove the regionalization process is not very clear. But it is also true that the security umbrella that NATO provided made the regionalization of economic interests easier. If one does not have to worry about the perimeter fence, the tending of the garden can be done in a tranquil and constructive manner. It took a while for the European integration project to gain the worldʼs attention. It was not until the 1960s that other countries began to nudge each other as to what was going on there. As with the proverbial elephant and the blind men, different proponents saw different virtues. But the important thing was that the balance was overwhelmingly in favour of the advantages. Disadvantages were steadily steamrollered. Overall, therefore, a consensus developed in different regions — albeit for different reasons — that countries there should form regional groups. This consensus is surviving well in spite of the current difficulties that the EU is facing. The main inference is that the painfully put together European house needs some serious repair. Those who had been prescribing the EU pill of greater institutionalization for the other ailing regional organizations can no longer be sure that the medicine is foolproof. Europeans themselves seem to be questioning the wisdom of deepening the integration process and losing control over livelihood issues. (The anxieties are increasing with the expansion of the EU which has brought in countries from Eastern Europe, where the political picture is getting increasingly clouded).3 Whether this is a correct reading or not, is not important. That a sizeable section of Europeans should show their disapproval of

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top-down elitist prescriptions for a better Europe was the key message from the referendum on the constitution that were held in France and the Netherlands. Rejecting the constitution and the squabble over the budget were perhaps merely symptoms of a much deeper malaise. Several questions have arisen from the success of the EU project and the relative lack of success, in terms of scale, of the other attempts at regional cooperation. Of these, possibly the most significant addresses itself to the role of institutions in helping regional impulses to go forward. The issue can be stated as follows: while regional cooperation schemes are significantly shaped by interests, ideas and identities, can these factors alone drive the process forward in the absence of institutions devised and operationalized specifically for the purpose? After all, if institutions are important in other contexts, surely they must be so in the context of regionalism as well? An examination of the EU institutions quickly reveals how crucial they are to the process. ASEAN recognized this but unlike the EU, it kept the organizational arrangement simple and even as some have suggested, vague. ASEAN was conceived very differently from the EU, inasmuch as the Bangkok Declaration was neither a treaty nor a charter, but simply a means of engagement — a basis, rather than a structure of cooperation. The watchword was caution, not to commit to too much and to take things forward as convenient. There is thus a noticeable difference in the institutional structure of the EU and ASEAN.4 Even when there are certain common structures, their actual functions vary. But all things must change and by the end of the 1990s, driven largely by the crisis of 1997, ASEAN began to see

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the importance of proper structures and mechanisms. Their absence, it was said, prevented the regional organization from responding meaningfully to Southeast Asiaʼs multiple crises. The institutional deficit has been a point of contention in the evaluation of ASEAN. This deficit has been emphasized by both regional and outside scholars. The key question was: should there be a supranational authority to act as a regional decision-making body. It is unlikely that it will be settled anytime soon. Sprouting a Brussels equivalent is not on the cards. But that leaves open the question: if not this, then what? How far and deep should the institutionalization of ASEAN go? No one is exactly sure what constitutes the right mix. SAARC, meanwhile, has had an interesting history. It moved more swiftly on the path of organizational evolution by establishing a secretariat in 1987, a mere two years after SAARC was set up via a charter. The ASEAN Secretariat was established only after nine years of its founding. The SAARC Declaration is uncomplicated with just ten short articles. The secretariat is not endowed with substantial powers and only performs a minimal coordination function. Its secretary-general also has very limited powers. However, despite its limited room for operation the secretariat can be a useful player in promoting the regional agenda. But the member states are not terribly enthusiastic about expanding its responsibilities. The charter provides for annual summit meetings, a Council of Ministers comprising the foreign ministers of the member states, a Standing Committee composed of the foreign secretaries and several technical committees as provided for in the charter. In 1991 the Committee on Economic Cooperation comprising SAARC commerce

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secretaries was established. The charter makes a specific provision for the formation of action committees on any matter that is of interest to more than two members. All SAARC decisions are based on unanimity and Article X(2) of the charter expressly excludes bilateral and contentious issues from the ambit of SAARC. But an odd thing has happened: SAARC has become summit-centric even though there is often nothing to hold a summit for other than the fact that the heads of state/ government are mandated by the charter to meet annually. These summits have fallen far short of expectation with the result that SAARC itself has earned a bad name. Besides, in its twenty-one years of existence, only thirteen summits have been held. Perhaps this practice needs to be reviewed and the number of summits reduced to once in three years. On the whole, it emerges that the various formal and semi-formal mechanisms in both South and Southeast Asia are insufficient. There is no escaping the need for building stronger institutions. But this requires the political elites in all the countries, whether in SAARC or ASEAN, to agree to certain basic minimum regional imperatives in a practical way, namely, by ceasing to shun authority structures that transcend geographical boundaries. Just how this can be done is a matter for discussion and evolution. Integration can be behavioural, characterized by a consensus building process and that avoids majority voting in the decision-making institutions. Cooperation agreements are implemented by adopting identical national laws and regulations by the member states. But at present, even this is distant, especially in South Asia, which adopts charters

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and protocols with alacrity but draws back when it comes to actual action. This only serves to weaken the already weak regionalism in South Asia. At the root of the problems faced in building strong institutions, even when the need is apparent, lies mutual suspicion. Competitive politics, colonial legacies, divided societies, intransigent bureaucracies, and, above all, economies that do not complement but compete with each other all are preventing the emergence of strong and effective institutions. Only time can solve these problems. This leads to another interesting question: which of the issues, political or economic, if they were to be solved first, would result in better institutions and therefore quicker progress towards genuine regionalism rather than just the appearances of it? The answer, as usual depends on perspectives. Some prefer solving the politics first, saying that economics and commerce will follow. Others say the exact opposite. In sum, institutionalization cannot have a definitive end point. It is largely a work in progress involving grand designs followed by scaling down and achieving the achievable. Regionalismʼs political attraction lies in its potential to create an enabling environment for everyone to co-exist peacefully as has been the case in Europe. ASEAN, too, is getting there, very slowly and is now even making a bid for a community. SAARC knows about the fruits of regionalism but fights shy of acting decisively to reap them. The regional states regard sovereignty as a monolith and not as an aggregated concept.5 Hence they find it difficult to understand that sovereignty bargains can be struck. As

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always in politics, the core issue for politicians and political parties is that if there is to be a pooling of sovereignty, who will take the first step? In societies that place a high premium on nationalism, this can be a major problem. And where politics is highly competitive, the problem can be compounded. Aspirants to successful regionalism want it without making the most crucial of sacrifices, the necessary abridgement of national sovereignty. In consequence, emulation of sovereignty-pooling regionalism has been selective. Southeast Asia provides a good example of this. Regional reconciliation and internal and external security threats were very much a part of the regional scene. But unlike in Europe, no authority structures above the state were envisaged. All that these states desired was a non-confrontational regional environment, a greater predictability in inter-state relations and conflict mitigation without indulging in any kind of sovereignty trade-off. Of late, however, there are signs that a more nuanced understanding of sovereignty might be emerging. In the context of ASEAN, this means a slight movement away from a rigid adherence to the principle of noninterference. SAARC, unlike ASEAN, was not born out of an intense urge to create a cooperative mechanism. Rather, SAARC owes more to the failure of some South Asian countries to find a berth in their preferred adjacent regions. This led to a sort of reluctant regionalism. It continues to be reluctant, and with Indiaʼs newly emerging economic might and interests looking beyond South Asia, SAARC may well survive more in form than in substance and spirit.

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There is one odd thing about SAARC that is noteworthy. It became possible only at the initiative of the newly created state of Bangladesh. This is unlike ASEAN where the largest state, Indonesia, had taken the lead. In Europe, the momentum was provided by the efforts of France and Germany. In contrast, India and Pakistan had difficulty in finding anything in common that would steer the region towards enhanced cooperation. Their enduring hostility has been one of the major crippling factors. South Asia is in fact a peculiar instance where India has a dominant presence but does not enjoy “undisputed leadership” because Pakistan, with the help of external powers like the United States and China, effectively balances it. Since the two big powers do not see eye-toeye on any issue, they have not been able to create the necessary synergy to act together in integrating the region. This has been so ever since the formation of SAARC. If asymmetry has been SAARCʼs undoing as an effective regional body, Indo-centricism has been the other problem. The result is that India is becoming even more lukewarm to the idea of regionalism. But, it also needs to be said that a vigorous Indian role could inject a sense of purpose into South Asiaʼs tepid regionalism. The smaller statesʼ fixation with Indian hegemony no doubt leaves very little room for action but the more important question is whether India regards SAARC as relevant. Doubts on this score abound and get reinforced when India adopts its summit-stalling tactics and looks to other regional options. India has been actively engaged in a strategy to move closer to East and Southeast Asia since the early 1990s when it announced its Look East policy.6 In the last fifteen

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years a comparatively thicker web of interactions has developed between New Delhi and its ASEAN neighbours. It is nothing short of breathtaking to note the strides that India has made in its relations with these countries. More significant is the vast change in perception between New Delhi and its Southeast Asian neighbours about their mutual relevance. Even a casual content analysis of media coverage, official statements, academic outputs and popular observations would confirm that India has firmly established itself in the radar screen of this vast region. It is not only regarded as a major Asian actor but as a global player of consequence to Southeast Asia. This is a fundamental transformation which has resulted not because of Indiaʼs diplomatic exertions alone but also because of economic developments within India that have had an external resonance. Indiaʼs buoyant economic performance has now placed it alongside China as the country with tempting opportunities for trade and investment. Despite the fact that it has a lot of catching up to do with China, Indiaʼs potential has made an indelible mark in the imagination of the Southeast Asian elites. It has become commonplace now to hear the region speak both about the opportunities and competition from India and China in the same breath and how these should be leveraged to benefit the regional states. This is a significant departure from the earlier phase when India did not merit much mention. Instead Japan and China were the reference points. Also, fifteen years ago when India inaugurated its Look East policy, the wooing was being mainly done

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by New Delhi. It was trying hard to impress upon the regional states the changed orientation of its policies. Now the regional states are eager to exhibit their Look West stance with the primary aim of drawing India into the region. This has led to a greater integration of India in the regional level activities of the Southeast Asian countries. Therefore it is not surprising that India has been showing more interest in trans-regional explorations where its efforts are paying better dividends than its involvement in South Asian regional activities. It has also been scrupulous in attending several ASEAN-led forums and meetings where it is beginning to feel more comfortable. SAARC conclaves, in comparison, seem less conducive. This was confirmed by the experience of the Thirteenth SAARC Summit. When that summit convened in November 2005, it held some uncomfortable surprises for India. While for the record the summit will be remembered for the decision to admit Afghanistan into the SAARC fold, and for welcoming China and Japan as observers, the more significant aspect was the last minute surprise sprung by Nepal to link Afghanistanʼs membership with the granting of observer status to China. For India, this was a cause for some concern; for the smaller countries, a matter of satisfaction. Indians were therefore asking if it signified a failure of diplomacy and another triumph for China and Pakistan. India reportedly raised some technical concerns about the modalities of Chinaʼs association with SAARC.7 Then Foreign Secretary Shyam Saran indicated that an MOU would have to be signed with China much like what SAARC had done with Japan, Germany and the EU before

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China formally interacted with SAARC. Interestingly, Indiaʼs position on the modalities of cooperation was supported only by Bhutan which does not have any diplomatic relations with China. Pakistan rightly claimed credit for pushing Chinaʼs case in SAARC, which it had been keen to do. Since there were no terms of reference to induct a country as a SAARC associate, Islamabad persuaded the others to agree to a deadline of ninety days to draw up the terms. Prime Minister Shaukat Aziz also stated that his country would strongly support Chinaʼs full membership in SAARC in future when the opportunity arises.8 Chinaʼs status within SAARC was formalized when it attended the Fourteenth Summit in April 2007 as an observer and was also given an opportunity to speak on the occasion (the other SAARC observers are Japan, South Korea, United States, and EU). The long term consequence of Chinaʼs presence is the end of Indiaʼs dominance of SAARC. The space that China has now gained within the South Asian region is likely to expand as it moves from a purely bilateral mode of operation to a regional one. This will further complicate Indiaʼs intra-regional relations and reach. India can no longer hope to pursue the policy of exclusion since the region has now become increasingly porous.9 Chinaʼs formal presence in South Asia should prod India to ponder its options. India can perhaps capitalize on its improving ties with China and move in tandem with it to augment regional cooperation not only in South Asia but in the larger Asia-Pacific region. It can also reinforce the economic logic governing cooperation and lead from the front to make SAFTA work. But this seems doubtful.

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Although during the Fourteenth Summit, India, as befits a host, made some minor trade concessions by extending duty free access for goods from the least developed countries — Afghanistan, Bangladesh, Maldives, and Nepal — this is not likely to advance SAFTAʼs cause since it is only a unilateral initiative. Within the SAARC framework India has been stressing the economic benefits of regional cooperation but to little avail. It has made a series of proposals for a South Asian economic union, South Asian currency, multilateral tax treaty, investment dispute settlement mechanism and so on. Pakistan has been brushing them aside as fanciful. The result has been a stalemate and India has now begun opting for trans-regional, super-regional, sub-regional, interregional and bilateral alternatives. A case could be made that India is not overly worried about SAARCʼs weak progress because in terms of economic complementarities it has more in common with East Asia than its immediate neighbours. Its aproach to SAARC now is, if it works, wonderful; if it doesnʼt, never mind. In the end, one old fact remains: distrust. Until this is dispelled, SAARC will remain dysfunctional as a regional body and intra-regional conflicts will continue to sap its strength. What is the way out then? One of the ways in which ASEAN resolves disputes is by opting for international mediation or arbitration and honouring the rulings made by these organizations. But this mechanism is not greatly favoured in South Asia. Mostly, everything boils down to scoring points. The exigencies of highly fractious domestic politics simply do not permit any progress. South Asia, in other words, has to grow up. The deficit in cooperation in

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South Asia demonstrates another key difference between regionalisms in South and Southeast Asia. This is that while ASEAN is “state driven”, SAARC is, by and large, “state-stalled”. Yet another point of contrast is that for the Southeast Asian states, ASEAN is an important foreign policy plank. Not so in South Asia, where SAARC is merely treated as an appendage. The heavy hand of politics keeps SAARC to the fringes of the region. The impact of this is evident in the patterns of interaction in South Asia. The regional states still constitute a system of states rather than a society of states. The difference between a system and society is highly relevant for political disagreement and conflict mitigation planks of regionalism as reflected in adherence to norms, diplomatic rules, pursuit of common interests as opposed to obsessive self interest, and finally, shared values. Among the EU members there is a high degree of cohesion because they have internalized these values. ASEAN states are not in the same league but they are closer to that end of the spectrum,10 unlike the South Asian states who have barely begun moving in that direction. Could it be that the absence or poor emphasis on economic issues is preventing regionalism in South Asia? The answer lies in the economic dimensions of regionalism to which we now turn. It does not make for a very encouraging long-term prospect, in spite of SAARC adopting PTAs which have for other regions formed the backbone of regional agreements. The Framework Treaty on creating SAFTA signed in January 2004 represents an important, but so far largely unsuccessful effort because of the antagonisms between India, Pakistan and Bangladesh

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which refuse to abate. But the imperatives for regional and sub-regional cooperation are self-evident and if a fully regional approach is not always and immediately feasible, there is considerable scope for sub-regional cooperation at least. This would be unlike the experience of ASEAN where sub-regional cooperation was initiated only after ASEAN was consolidated. Be that as it may, the point for consideration about SAARC is that none of the necessary and sufficient conditions for regional cooperation exist. There is no threat to the region from outside and India, with its billion-plus population and superior economic endowments, is big enough to provide any firm with the scale economies it needs. The only, or main, motivation for regional cooperation is political, and that too, is not very strong. But to the extent it operates, SAARC is the only forum where confidence-building measures can take place at the highest political level. Obviously, this is not sufficient by itself and some other sources of driving the process are required. The low complementarities between the South Asian economies suggest that they will find it difficult to support greater regional trade integration. All analysis of past evidence points to just one conclusion: this is a negative attribute for the formation of a successful FTA. Even economic theory says that the higher the difference in factor endowments, demonstrated by comparative advantages, the greater are the prospects for trade among partners. Previous analysis by economists of the trade data demonstrates that with the exception of India, the rest of the South Asian countries are significantly competitive with each other in their exports.

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This is not to say that the ASEAN economies did not face the same set of problems. But there was a crucial difference in the way they coped and in the way South Asia coped. ASEAN took the pragmatic road. It invited foreigners to invest and decided to expand international trading. South Asia stayed wedded to socialist ideology and chose to rely on domestic resources while paying lip service to international trade. In other words, ASEAN opened up, South Asia remained closed. But this has been changing since the early 1990s. Another major impact on ASEAN of the open policies of the 1970s and 1980s was the impetus they created for regional cooperation and integration. Southeast Asia had now become the manufacturing base for nearly a quarter of the worldʼs production of industrial goods. This meant two things. One, the regional market had become substantial and, two, cut-throat competition for expanding the share of the rest of the world market had become counterproductive. ASEAN did what firms do when faced with a similar situation: it chose to start a policy that in the case of firms, is called implicit collusion, but in the case of countries, regional cooperation. The net effect, however, is the same. In a nutshell, ASEAN has seen the wisdom of exploiting commonalities. In contrast, thanks to the policies followed until about fifteen years ago, the South Asian economies are still in a disjunctive mode. The ground for stronger regional cooperation is still to be laid. So even without politics, the objective criteria of economics are missing. These have to evolve for greater cooperation. Regional cooperation being a function of enlightened self interest, there has to be some catalyst that will set the process going.

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One helpful pointer in this direction comes from the concept of global public goods (such as health, education, etc). These can be narrowed down to the regional level as well, in the form of regional public goods. Such goods could be infrastructure that facilitates cooperation, especially trade. SAARC should focus on the creation of these goods. In theory, a regional public good is a service or resource whose benefits are shared by neighbouring countries. Its benefits are such that one countryʼs consumption does not subtract from the amount available to other countries. Also, thanks to treaty obligations, no country in the region can be excluded from benefiting. Typically, such goods could comprise investments in knowledge, inter-country mechanisms for investments in cross-border infrastructure and the creation of regional institutions. South Asia needs to move in this direction. But the problem is India. Its size and diversified economy make trading with its immediate neighbours a last option. Even where investment is concerned, only India has the surpluses and prefers non-South Asian destinations. Last, but not least, is Indiaʼs economic structure. The dominance of knowledge intensive services also gets in the way of regional trade. The markets are not in South Asia, nor the sources of supply of high technology that India craves. So Indiaʼs interests have turned even more firmly away from South Asia. But even in this regard, its efforts are at best minimalist. This is because its huge internal market, which is now growing rapidly, removes the pressures that economies with smaller domestic markets experience. To be sure, India needs to trade but the key fact is that even with less than 1 per cent share in world

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trade, it has been clocking a growth rate of over 6 per cent for the last five years. And now that Indo-U.S. technology cooperation is prospering, even that problem is on the way to being solved. Its waning interest in the region is therefore not only the consequence of the adversarial politics in the region but also economics. India, the largest economy in the region by far, and the second fastest growing one in the world, sees no particular benefit or advantage in trading with its neighbours. What it wants from them — energy — they will not give; and what they need — cheap manufactures — India does not have. Until the rest of South Asia, mainly, Sri Lanka, Pakistan and Bangladesh, catch up with India, South Asian regional cooperation will remain at a low level, more useful for serving as a platform to bring the leaders of the countries together than to act as a major pillar of economic prosperity. That said, some positive developments can still be expected if Pakistan and Bangladesh begin to view India not from the prism of sibling rivalry but as a country with which business will benefit them. The same holds for also Nepal. Each of these countries possesses the key to the one thing that India badly needs — energy. Pakistan can help by assuring India about the supply of gas and oil from Iran. Bangladesh can sell its gas to India. And Nepal can be more realistic about allowing India to exploit its hydroelectric potential. It is truly amazing that all three refuse to do so. It is, if you will, like countries in the Middle East refusing to sell oil. It makes no sense to persist with such blinkered policies. Even where there is no room for contentious political issues SAARC falters. Nowhere is the need for cooperation

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more than in the social sector. SAARC has an elaborate social charter which it adopted in 2004 but mostly as a cosmetic exercise. There is a huge implementation deficit in the social sector, even at the national level, within the SAARC countries. This puts a bigger question mark on regional endeavours even though all the states have committed to the MDGs. The emphasis by international institutions on augmenting this dimension of regionalism is clearly evident. For example, the ADB strongly bets on regional cooperation as the best remedy for socio-economic ills and towards this end, in 2005 the ADB established the Office of Regional Economic Integration.11 A little recognized fact both in ASEAN and in SAARC is that social issues form the core of the EUʼs agenda and the European Social Charter was adopted as far back as 1961. A revised charter was adopted in 1996. At the heart of this charter lies the protection of individualʼs rights and this charter has been inspiring other regional bodies to come up with their own programmes of social action, but in a more limited way. Where ASEAN is concerned, the Bangkok Declaration did list social progress and cultural development as important aims. These have been periodically reiterated. Among the aims articulated in the ASEAN Vision 2020 document in 1997, a prominent spot was accorded to a vision of a “socially cohesive and caring ASEAN where hunger, malnutrition, deprivation and poverty are no longer basic problems”. An ASEAN Foundation was also set up to address issues of unequal economic development, poverty alleviation and socio-economic disparities. These objectives were further amplified in the Vision 2020 initiative the October 2003 Bali Concord II, which saw ASCC as one

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of the three pillars of the emerging ASEAN Community. And, there have been a host of mechanisms to further these objectives. SAARC has also not lagged behind, at least in the matter of a declaratory style and lofty rhetoric. The main focus of the charter, as defined by the SAARC Summit Declaration, is on the issues and problems of socially deprived and weak segments of the society — the issue of poverty, ill-health, illiteracy and lack of education, malnutrition, protection of women, child welfare, youth mobilization, population stabilization, drug de-addiction rehabilitation and reintegration. But very little has been achieved beyond that and perhaps the less said about these efforts, the better. As was pointed out a little earlier, such is the underlying antagonism within SAARC that the member states have not been able to get anywhere even in this area. This, despite the fact that almost half a billion people in the region live in abject poverty, earning less than US$2 a day. According to a recent report, millions of South Asians are still living in abysmal conditions because of their governmentsʼ failure to provide essential services.12 But since SAARC has hopes of emulating ASEAN, its members have to see that the latter is well on track in achieving the MDGs of poverty reduction, gender equality in school enrolment, child mortality reduction, sanitation in urban areas, and improvement of the lives of slum dwellers. The South Asian states need to learn from this and move ahead. To help the region along, it might like to draw a simple lesson from the EU, which it regards has having been successful: some, at least, of

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its success owes to having had a human face, a social dimension, that makes it acceptable to the people, rather than only the elites. At this point it is necessary to pause and ask what could be that single spark that will energize SAARC into a truly regional organization, one that enables the political and economic elites in the member countries to think on regional, rather than, nationalist lines. If it is true that self-interest drives all actions, even altruism, it is difficult to get away for very long from the key ingredient of selfinterest — economic betterment. One of the truly extraordinary and inexplicable features of SAARC is that the absence of economic growth leading to growth in per capita incomes and, even more importantly, better income distributions appears to have almost no impact on the fortunes of the political elites. Such a de-linking can be explained away if it endures only over an election or two at best. But in South Asia it has lasted over half a century. Nor has this been owing to the lack of choice. India, for example, has a large number of political parties as do the other members of SAARC. Yet, the poor economic indicators do not translate into radically different political choices. The cart rumbles on along the beaten track. Three of the biggest South Asian countries barely trade with each other. Of the remaining four, Nepal and Bhutan are land-locked and Bhutan and Maldives have populations below three million and are thus not very attractive as markets. Sri Lanka fits neither category but remains industrially out of sync with India. Nowhere else in the world is regional trade lower than in South Asia. This despite the fact that until 1947

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South Asia was a single geographic and economic entity with trade and accompanying transit facilities that went back two millennia. But since decolonization and the ensuing events, there was, until recently at least, little economic or political linkage between the seven states that comprise it. In sum, then, a comparison of ASEAN and SAARC, using the EU as a point of reference, suggests that while ASEAN has done reasonably well in pushing regionalism along, SAARC has to overcome several difficulties before South Asia can deal with itself and the rest of the world as a region. Regional cooperation was approached as a creed by the Europeans who were driven by the desire not to repeat the mistakes of the past that had led to so many destructive wars. Suitable strategies were then designed to realize the goal of a peaceful regional order. In the ASEAN region cooperation started off as a strategy to keep communism at bay by building national resilience. ASEAN is now keen to make cooperation a creed so that everyone buys into the regional community-building project. Where SAARC is concerned, the process of cooperation is at such a rudimentary stage that it can neither be called a creed nor a strategy. It is not as if ASEAN has not had its problems, the most important of which perhaps is its belief that it can somehow get by without developing strong institutions. But the key difference between ASEAN and SAARC is in the willingness to be cooperative. There is a big deficit on this account in SAARC, which can only be made up if a new catalyst, which undoes the strong political reasons for not cooperating, comes along. This can only be greater trade

06 SumConcl p329-352.indd 350

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Summary and Conclusion

351

and investment between the countries of South Asia. But to a very large extent that is predicated on undoing the political knots. So it might be best if the countries focused on creating regional public goods in the hope that, in the fullness of time, these will have the effect that public goods generally have, namely, create an enabling environment that helps politicians to take bold steps. Overall, the story of regionalism is one of hope over experience, which in some respects is reassuring because it indicates the will to persist and make things better. But these hopes are never uniformly shared by every member of the regional group. The committed regionalists want to highlight the positive over the negative to build further. But there are others who want to stick to the known and not worry about deepening the integration process. The rest are uncertain but are not outrightly hostile to the notion. The proverbial silver lining is that all three, in their different ways, support some form of regionalism which is something to cheer about. Notes and References 1. The concept of “decoupling” in the context of sovereignty was used by Stephen Krasner in an interview where he explained that states will normally endorse a principle but their actions would be the opposite of it. See “ Stephen D. Krasner Interview: Conversations with History”, Institute of International Studies, UC Berkeley, 31 March 2003 . 2. Karen T. Litfin, “Souvereignty in World Ecopolitics,” Mershon International Studies Review, 41, Supplement 2 (November 1997): 169. 3. See “Backsliding in Europe” (Editorial), Washington Times, 28 October 2006.

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Regional Cooperation in South Asia and Southeast Asia

4. According to Peter Katzenstein, “weak institutionalization makes (Asian regionalism) distinctive” and “… Asian regionalism is yet to be described adequately in terms of formal institutions”. Peter J. Katzenstein et al., Asian Regionalism (Ithaca: Cornell University Press, 2000), pp. 1 and 4. 5. Pratap Bhanu Mehta, “SAARC and the Souvereignty Bargain”, Himal Southasian, November–December, 205 . 6. Due to a number of reasons the interactions between India and the ASEAN countries were minimal before this period even though there were no bilateral disputes between India and any of these countries. For an analysis of India-ASEAN relations, see Kripa Sridharan, The ASEAN Region in Indiaʼs Foreign Policy (Aldershot: Dartmouth), 1996. 7. Daily Times (Pakistan), 13 November 2005. 8. Outlookindia, 14 November 2005 . 9. C. Raja Mohan, “SAARC Reality Check: China Just Tore Up Indiaʼs Monroe Doctrine”, Indian Express, 14 November 2005. 10. This is not to claim that ASEAN states have no disagreements on what constitutes a proper diplomatic conduct. For instance, in November 2006 Indonesia accused Singapore of trying to internationalize the haze issue by referring to it in the UN Committee on Sustainable Development. Jakarta felt that this was “unethical” and a violation of ASEAN norms, Straits Times, 6 and 9 November 2006. 11. “ADB: Relevant, Responsive and Results-Focused”, Chairmanʼs Message, 2006 . 12. “South Asia: Millions Live in Lack of Basic Needs”, ADB Institute e-newsline, 23 October 2006.

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Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

Index A

Abdurrahman Wahid, 126 Action Committees, 73 Acharya, Amitav, 200, 202 Afghanistan, 69, 135, 339 Agreement on Establishment of SAARC Food Security Reserve, 84 Agreement on the Establishment of SAARC Arbitration Council, 79 Agreement on Mutual Administrative Assistance in Customs Matters, 79 Akbar Zaidi, 264 A.K.M. Abdus Sabur, 221 Ali Alatas, 72 American hegemony, 16 Andean Pact, 71 Annual Meeting of Foreign Ministers, 163 Anwar Ibrahim, 163, 165 APEC, 16 A.P. Rana, 139 Arab League, 8, 38 Army Welfare Trust, 264 ASEAN see Association of Southeast Asian Nations ASEAN Chambers of Commerce and Industry, 55

07 Index p353-369.indd 353

ASEAN Charter, 53, 71–72 ASEAN Community, 53, 72, 348 ASEAN Concord, 154 ASEAN Declaration on the South China Sea, 154 ASEAN Development Cooperation Programmes, 87 ASEAN dialogue partners forum for various issues, 93 ASEAN Economic Community (AEC), 52, 53, 63 ASEAN Economic Ministers, 67 ASEAN Finance ministers, 103 ASEAN Food Security Information System Project (AFSIS), 294 ASEAN Foundation, 320, 347 ASEAN Free Trade Agreement (AFTA), 51, 57, 232, 233, 311 ASEAN Fund, 87 ASEAN Harmonized Tariff Nomenclature, 103 ASEAN Health Ministers Meeting, 306 ASEAN Institute of Strategic and International Studies (ISIS), 310

4/27/07 1:21:40 PM

354 ASEAN Inter-Parliamentary Organization (AIPO), 47 ASEAN Investment Area (AIA), 232 ASEAN Ministerial Meeting (AMM), 47, 94 ASEAN Ministerial Meeting on Transnational Crime (AMMTC), 300 ASEAN Ministers on Rural Development and Poverty Eradication (AMRDPE), 293 ASEAN Peopleʼs Assembly (APA), 317 ASEANPOL, 299 ASEAN Regional Forum (ARF), 49, 155, 176, 177, 180, 185 ASEAN regional integration, 234 ASEAN-SAARC inter-regional relations, 96 ASEAN Secretariat, 54, 58, 82, 83, 333 ASEAN Security Community (ASC), 53, 179 ASEAN Socio-Cultural Community (ASCC), 53 ASEAN Standing Committee, 67 ASEAN states commitment for maintaining peaceful relations, 193 failure to create supranational authority, 49

07 Index p353-369.indd 354

Index reluctance to formalize rules, 25 self restraint, practice of, 140 ASEAN Summit, 57 since 1976, 75 ASEAN+3 (APT), 22 bringing together Northeast and Southeast Asian regions, 23 growth in process, 24 ASEAN+3 cooperation, 237 ASEAN+3 summits, 76 ASEAN-10, 30 ASEAN: The Way Forward, 55 ASEAN Transboundary Haze Pollution Control Agreement, 59 ASEAN-Troika, 164 ASEAN Vision 2020, 53, 282, 294 Asian Development Bank (ADB), 63, 99, 157, 160 Office of Regional Economic Integration, 347 regional technical assistance (RETA) study, 296 Asian Economic Community, 185, 207, 270 Asian financial crisis, 157, 158 Asian Investment Bank, 224 Asian regional arrangement, 37 Asia-Pacific Economic Cooperation (APEC), 49 Association of Southeast Asia (ASA), 119

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Index Association of Southeast Asian Nations (ASEAN), 17, 20, 208, 269, 270, 272, 274, 350 aggregate imports, 230 avoid compromising fragile political cohesion, 46 budget and funding, 86–90 community-building objective, 51 conception, 44 conditions for regional integration, 222–39 consensus-based decisions, 50 dispute settlement mechanism, 52 economic bloc, as an, 207 economic cooperation, 231 engaging extra-regional powers, 92 free trade agreements, 207, 223 from policy to legal regime, 103 glaring institutional deficit, 101 guided by national approach, 63 institutional dilemmas, 48–61 institutional evolution, 56 institutional review, 104 intra-regional relations, 175 lacking in institution building, 30 model for regionalism, as, 66 need to rethink strategies, 115

07 Index p353-369.indd 355

355 non-interference principle, 160–70, 192 not a supranational organization, 55 not imitation of European effort, 26 objectives written in general terms, 45 operational rules, 189 overall trade, 212 political and social community path, 31 preferential trade agreements, 212, 223 regional cooperation and integration, 344 resolving disputes through international mediation, 341 response to regionʼs problems, 49 security arrangement, 119 state driven, 32 towards a community, 177–88 war on terrorism, 170 Aung San Suu Kyi, 169 Australia invited to East Asia Summit, 24 Avian flu, 306 Ayesha Siddiqa, 264

B

Bali bombings, 171 Bali Concord II, 347 Bali Summit, 60

4/27/07 1:21:40 PM

356 Bali Summit (1976), 148 Baltic Republics, 4 Bangkok Declaration, 45, 281, 332, 347 Bangladesh, 121, 134 concerns and objectives, 277 conflict with Pakistan, 145 differences with India, 142–43 Bangladesh-Bhutan-India-Nepal Growth Triangle, 186 Bangladesh-India border, 297 Bangladesh Nationalist Party, 99, 242, 337 Bay of Bengal Initiative for Multi-Sectoral Technical Economic Cooperation (BIMSTEC), 97, 181, 255, 269 FTA Framework, 181 Bhutan, 143, 146, 249, 349 big power-small power relations, 127 bilateral agreements, 238 bilateral conflicts, 155 bilateral FTAs India and Sri Lanka, 138 bilateral tensions, 161 B.J. Habibie, 126, 161, 166 Brunei-Indonesia-Philippines East Asian Growth Triangle, 100 Bull, Hedley, 113–15 Bureau for ASEAN Cooperation and Dialogue Relations, 57

07 Index p353-369.indd 356

Index Bureau of Economic Cooperation, 57 Bureau of Functional Cooperation, 57 Business Process Outsourcing, 216 Buzan, Barry, 123

C

Caballero-Anthony, Mely, 154 Cambodia, 60 coup in, 163 delay in admission into ASEAN, 164 poverty, 293 race-based riots, 168 Vietnam invasion of, 69 Cambodian crisis, 93, 94 Camp David Accords (1978), 109 Cancun talks, 214 Chaebol system, 231 Chavalit Yongchaiyudh, 158 Chiang Mai initiative, 23 China, 22, 76 relations with SAARC, 339 Chittagong Hill Tracts, 143 Civil Society Organizations, 316 code of commercial and technical requirements, 103 Cold War end of, 48 Colombo, 187 Colombo Summit (1998), 138, 286

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Index Committee on Economic Cooperation, 73, 333 common agricultural policy EU, 86 Common Effective Preferential Tariff (CEPT), 232 Commonwealth of Independent States (CIS), 4 community definition, 179 community-building, 51 competitive liberalization, 15 Comprehensive Economic Cooperation Agreement (CECA), 186 concessions trade and economic, 93 constructivists, 149 Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT), 284 Convention on the Elimination of All Forms of Discrimination against Women, 284 Convention on the Elimination of all Forms of Racial Discrimination (CERD), 284 Convention on the Rights of the Child (CRC), 284 Council for Mutual Economic Assistance (COMECON), 5 Council of Ministers, 46, 73

07 Index p353-369.indd 357

357 Covenant on Civil and Political Rights (CCPR), 284 Covenant on Economic, Social and Cultural Rights (CESR), 284 cross-border economic linkages, 136 Cultural Fund, 87

D

Declaration of ASEAN Concord, 56, 324 Declaration on the Conduct of Parties in the South China Sea, 155 decoupling, 329 de Gaulle, Charles, 9 Delors Commission, 13 democratization problems, 156 Deutsch, Karl W., 195 Dhaka Declaration, 79, 286, 291 dialogue discussions, 93 Director of Bangladesh Rifles, 197 dispute settlement mechanism (DSM), 51 in ASEAN, 52 Doha trade talks, 214 draft Declaration (1998), 81 Drysdale, Peter, 235

E

East African Community, 8 East Asia, 22 intra-regional trade, 208

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358 East Asian Community, 63 East Asian Economic Caucus (EAEC), 23 East Asian Economic Community, 234 East Asian Economic Grouping (EAEG), 23 East Asian regionalism, 107 East Asia Summit, 24, 185 East Timor, crisis, 165, 166 East-West corridor, 97 Economic and Social Committee, 105 Economic Cooperation Organization, 255 economic regionalism, 194, 195 Economic Survey of the Government of India, 186 Elek, Andrew, 238 elite preferences, 11 El Nino, 159 Eminent Persons Group (EPG), 71 Enhanced Dispute Settlement Mechanism, 62, 64 EU Charter of Fundamental Rights, 281 Euro-scepticism, 41 Europe example of successful regionalism, 4 European Central Bank, 105 European Coal and Steel Community (ECSC), 117, 218

07 Index p353-369.indd 358

Index European Commission, 47 call for increase in budget, 87 European Community, 6 European Court of Justice, 48 European Economic Community (EEC), 21, 44 European integration, 8, 195 European integration project, 1 European Investment Bank, 106 European Ombudsman, 105 European Parliament, 47 European regionalism, 8 European regionalist experience, 7 Europeans creating a zone of peace, 118 European Social Charter, 280, 347 European Union, 4, 52, 115 budget and funding, 86–90 bureaucracy, 64 conditions for regional integration, 218–22 Constitution, 29 Council of Ministers, 46 Court of Auditors, 105 criticisms against, 65 European Court of Human Rights, 281 European Commission, 47 European Parliament, 47 half-way integration, 28 institutions of, 46, 47 integration process, 27

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Index MOU with SAARC Secretariat, 91 need to learn from, 31 popularity dipped, 319 trade agreements, 206 voting for Constitution, 65 EUROPOL, 299 evolution, 13

F

Far Eastern Economic Review, 161 Fauji Foundation, 264 Five Power Defence Arrangements, 162 foreign direct investment (FDI), 17, 213 pull factor for, 18 Foreign Policy and the Fund for Peace, 187 foreign policy orientation common, 121 framework of cooperation, 44–48 France rigid labour market, 207 Franco-German reconciliation, 117 Franco-German social model, 29 Franco-German tandem, 184 Free Trade Area of the Americas, 16 free trade arrangements, 96 future research, 37

07 Index p353-369.indd 359

359

G

Ganges Water Treaty, 190 GEP Report, 77 Germany rigid labour market, 207 globalism, 2 globalization effect on regionalism, 14 impact on regionalism, 19 relationship with regionalism, 15 global processes, 38 global public goods, 266 Goh Chok Tong, 61, 98, 107 governments protection of domestic capital and labour, 213 Greater Mekong initiatives, 233 Greater Mekong Sub-regional Growth Zone, 100 Group of 77 failure, 10 Group of Eminent Persons (GEP), 76, 283 growth triangles, 220 Gujral Doctrine, 133

H

Haas, Ernst, 8 Hadi Soesastro, 237 Hanoi Plan of Action, 293 health, 302–310 HIV/AIDS threat of, 288

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360

I

I.N. Mukherji, 245 Independent South Asian Commission on Poverty Alleviation (ISACPA-I), 288, 289 Independent South Asian Commission on Poverty Alleviation (ISACPA-II), 290 independent states eagerness to join organizations, 3 India capital needs, 262 Comprehensive Economic Cooperation Agreement (CECA), 255 differences with Sri Lanka, 143–44 economic structure, 345 economy, 338 economy dominated by service sector, 262 focussed away from South Asia, 273 invited to East Asia Summit, 24 nuclearization, 253 railway network, 268 yet to obtain MFN status from Pakistan, 254 India-Bangladesh border, 297 India-Thailand FTA, 254 Indo-Lanka Free Trade Agreement, 245

07 Index p353-369.indd 360

Index Indonesia, 59 Foreign Minister, 72 imports, 225 poverty, 293 role in ASEAN, 70 inter-governmental processes, 14 International Monetary Fund (IMF), 11, 274 intra-ASEAN trade, 232 intra-regional asymmetries, 31 intra-regional trade East Asia, 208

J

James, Alan, 114 Japan, 76, 90 Japanese-South Korean relations, 24 Japan/SAARC Special Fund, 91 Jervis, Robert, 116 J.N. Dixit, 81 Johor Straits, 153 Joint United Nations Programme, 304

K

Kalapani border dispute, 145 Kargil War, 141 Kashmir, 130, 240 Kashmir issue, 180 Kashmir problem, 185 King Gyanendra, 144 Korea Chaebol system, 231 Kuala Lumpur summit, 72

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Index

L

Lamy, Pascal, 29, 117 Laos, 60 Latin American Free Trade Area, 8 League of Arab Nations see Arab League League of Nations, 105 failure, 112 Lee Kuan Yew, 158, 161, 162 Leifer, Michael, 175, 202, 204 Leung, Suiwah, 237 Ligitan, 152 Limited Agreement on Avoidance of Double Taxation, 79 Line of Control Pakistanʼs violation of, 142 Litfin, Karen, 3 Lome Convention, 11 Lome One, 10 Lome Three, 10 Look East Policy, 186, 337 Luce, Edward, 134

M

M. Rahmatullah, 268 Maastricht Treaty, 37 Mahakali river treaty, 145 Mahakali Treaty, 190 Mahathir Mohamad, 23, 61, 172 Malayan Railway land in Singapore, 167 Malaysia, 174 claim over Pedra Branca, 153 imports, 226

07 Index p353-369.indd 361

361 Maldives, 99, 130, 349 Male Summit (1997), 80 Manmohan Singh, 185 Maoist insurgents Nepal, in, 144 Maphilindo, 119 Marshall Plan, 5, 219 Mattli, Walter, 122 Mekong-Ganga Cooperation (MCG), 97 Millennium Development Goals (MDG), 288, 294, 303, 323, 348 Mohammad Humayun Kabir, 221 Monroe Doctrine, 132 most favoured nation, 184 multilateral system, 215 Multi-Modal Transportation and Communication, Energy, Optimal and Sustainable Utilisation of Natural Resource Endowments, 99 Muni, S.D., 196 Muslims, 171 Mutual Administrative Assistance in Tax Matters, 79 Myanmar, 27, 60, 170 chairmanship of ASEAN, 169 inclusion into ASEAN, 164

N

nation-legitimising state, 139 national preferences impact on regionalism, 19

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362 national sovereignty impact of membership in regional arrangement, 2 nationalism effect on regionalism, 8 relationship with regionalism, 2 neo-functionalists, 8 Nepal, 134, 249, 346, 349 differences with India, 144–45 Netherlands voting against EU Constitution, 65 New Delhi, 123 New Delhi Declaration, 71 New International Economic Order (NIEO) non-starter, 10 new regionalism approach, 19 New Zealand invited to East Asia Summit, 24 Nguen Dy Nien, 108 Nihal Pitigala, 249, 251 non-governmental organizations (NGOs), 11, 298, 316 North American Free Trade Agreement (NAFTA), 16, 52, 149, 270 North Atlantic Treaty Organization (NATO), 5, 330 Northeast Asia, 22 Northeast Asian, 21

07 Index p353-369.indd 362

Index North Korea, 173 Nye, Joseph, 9

O

Ong Keng Yong, 320 Secretary-General, 54 Organization of African Unity, 8 Organization of American states, 8, 71 Organization of Islamic Conference (OIC), 191 overseas development, 86

P

Pakistan, 96, 122, 124, 131, 132, 134, 254, 337, 346 Information Minister, 183 Minister of Education, 190 nuclearization, 253 refusal to grant MFN status to India, 135 refusing transit rights to Afghanistan, 135 role of military, 263 stress on politics, 184 Palestinian question, 173 Palk Bay, 143 Parallel national action, 102 parallel national action process, 101 Paris International Conference on Cambodia, 149 Peace of Westphalia, 38 Pedra Branca, 153

4/27/07 1:21:42 PM

Index Philippines imports, 227 Plan of Action on Rural Development and Poverty Eradication, 293 positive unilateralism, 147 post Cold War environment, 61 Post-Ministerial Conference (PMC) 92 poverty, 293 poverty alleviation, 96, 287–95 preferential trade agreements (PTAs), 206 case against, 211 principle of non-intervention, 50 Professor Jagdish Bhagwati, 213 Pulau Batu Putih 153

Q

Q.A.M.A. Rahim, 68 Qazi Javed Ashraf, 190

R

regional arrangements, 213 membership entails obligations, 2 proliferation of, 15 regional capital harnessing, 269 regional cooperation alternative approach, 264–70 end of World War II, 1 imperatives, 343 objectives, 6 scholarly preoccupation, 1

07 Index p353-369.indd 363

363 social issues, 279–328 strengthening stability, 222 regional cooperation schemes, 4 Regional Environment Treaty, 80 regional gatherings, improving channels of communication, 12 regional institutions creation of, 265 regionalism, 188–95 against multilateralism, 214 Asian context, 20–25 attraction of, 113 characteristics, 7 comparative analysis, 22 connection with nationalism, 2 dialogue partnership, 91–95 distinguished from inter-governmental deliberations, 6 driver of national and foreign policies, 36 facilitating global liberalization, 16 first generation, 7–13 flourishing in spite of failure, 21 formal structures, 34 imperatives of, 116–24 institutional apparatus, 44 institutional framework, 43–112 middle path, as, 20–25

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364 mitigating ill effects of globalization, 18 non-formal, 310–18 people, involvement of, 318–22 pervasiveness, 34 political and social aspects, 35 political attraction, 335 political dimension, 113–95 relationship with globalization, 15 second generation, 13 support for, 16 regional integration conditions for, 217 obstacles to, 248–52 regional inter-governmental organizations, 9 regionalization definition, 7 economic aspects, 36 regional organizations, reasons for growth, 10–12 Regional Poverty Profile, 290 regional public goods, 265, 267 regional trade South Asian nations, 210 regional trade agreements (RTAs), 205–15 case for, 214 co-existing with multilateral arrangements, 214 discriminatory, 236 preventing resource crises, 215 strategies, 329

07 Index p353-369.indd 364

Index research and development EU, 86 Ruggeiro, Renato, 15

S

SAARC see south Asian Assciation for Regional Cooperation SAARC-ASEAN interactions, 95 SAARC-Canadian International Development Agency (CIDA), 304 SAARC Convention on Combating the Trafficking of Women and Children for Prostitution, 295 SAARC Convention on Trafficking, 299 SAARC Council of Ministers Meeting (25th), 94 SAARC Council of Ministers meeting (27th), 111 SAARC Food Bank, 291 SAARC foreign ministers, 95 SAARC Health Ministers Meeting, 305 SAARC Meteorological Research Centre, 89 SAARC Police Conference, 299 SAARC Preferential Trade Arrangement (SAPTA), 245, 246, 259 SAARC Regional Centres, 89 SAARC Regional Convention on Combating Terrorism, 32

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Index SAARC Rules and Procedures of the High Council on TAC, 155 SAARC second-track “think tanks”, 247 SAARC Secretariat, 91 SAARC Secretary-General, not spokesperson for association, 83 SAARC Social Charter, 32, 142, 285–87, 305, 313 SAARC Summit (6th) postponement of, 146 SAARC Summit (12th), 248 SAARC Summit (13th), 143 SAARC Summit Declaration, 348 SAARC Surveillance Centre, 306 SAARC Tracking Convention, 298 SAFTA, 142, 181, 247, 248, 250 SAPTA Agreement, 81 Scandinavian nations, 101, 102 Science and Technology Fund, 87 Sectoral Ministers Meeting, 67 Security Council, 172 Senior Economic Officials Meeting (SEOM), 57, 67 Sethusamudram Shipping Canal Project, 143 Severe Acute Respiratory Syndrome (SARS), 306 regional cooperation in fighting, 308

07 Index p353-369.indd 365

365 Sheikh Rashid, 183 Singapore backing U.S. moves, 172 bilateral differences with Indonesia, 161, 167 bilateral tension with Philippines, 161 claim over Pedra Branca, 153 handling of adverse comments, 140 imports, 228 Singapore-based companies zero capital gains tax, 255, 256 Singapore Growth Triangle, 99 Single European Act, 13, 37, 149 Sino-Japanese relations, downturn in, 23 Sipadan, 152 Slovenia, membership in European Union, 4 small power syndrome, 131 socialist ideology, 344 society of states, 114, 188–95 South Asia, 12, 120, 121, 128 dilemmas, 252–64 distribution of power, 123 intra-regional rifts, 139–47 need for conflict management, 182 regional cooperation in, 239–48 regionalism, 181 South Asia Centre for Policy Studies (SACEPS), 286, 287, 310, 312, 313

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366 South Asia Civil Society Network (SACSN), 314 South Asia Development Fund, 90 South Asia Health Foundation, 290 South Asian Alliance for Poverty Eradication (SAAPE), 314, 315 South Asian Association for Regional Cooperation (SAARC), 12, 19, 26, 104, 128, 131, 180, 240, 241, 272, 296, 340, 341, 350 abysmal progress, 124 asymmetry, 124 budget and funding, 86–90 challenges, 31, 252 charter, 73, 88 confidence-building measures, 343 Council of Ministers, 74 external funding, 90, 91 Fourteenth Summit, 340, 341 genuine push for cooperation, 322 Group of Eminent Persons, 76 Health and Population Activities, 303 inclusion of Afghanistan, 69 institutional design, 71–73 lack of progress, 187 non-subscription to norms, 193, 194 postponement of summits, 78, 79

07 Index p353-369.indd 366

Index problem with asymmetry, 70 programmes, 83 restrictive, 68 retreats, 80–82 rules of behaviour, 189 Secretariat, 82 Secretary-General, 18, 68 Social Charter, 279, 280, see also SAARC Social Charter state stalled, 32 summits, 73–80 summit-centric, 73, 334 symmetry, 129 Tenth Summit, 141 Thirteenth Summit, 339 South Asian Economic Community, 137 South Asian Free Trade Area (SAFTA), 32, 211, 239 South Asian Growth Quadrangle (SAGQ), 220, 245 South Asian nations, regional trade, 210 South Asian Peopleʼs Forum, 314 South Asia Partnership International, 314 South Asia Poverty Alleviation Fund, 290 Southeast Asia, 17, 179 Southeast Asian region best record on regional cooperation, 21 divergent interests, 175 gross domestic product, 224

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Index Southeast Asian regionalism, 26, 120, 136 Southern bloc unity, 40 Southern Thailand Muslim insurgency movement, 140 South Korea, 76 sovereign autonomy Westphalian logic, 2 sovereignty bargains concept of, 3 Soviet Union break up of, 4 effect of collapse on South Asia, 243 Special ASEAN+3 Health Ministers Meeting joint statement, 327 Sri Lanka, 82, 99, 187 as a market, 209 Standing Committee, 73, 83 states facing common challenges, 12 protection of autonomy, 3 Straits of Malacca, 174 structural operations EU, 86 sub-regional endeavours, 98 sub-regionalism problems, 100 sub-regional level poor infrastructure, 267 Suharto unwillingness to follow IMF reforms, 159

07 Index p353-369.indd 367

367 Sulawesi Sea, 140 Sumatra forest fires in, 59 supranational institutions, 13 Surin Pitsuwan, 163 Syed Hamid Albar, 62 system of states, 188–95

T

Tamil Nadu fishermen, 143 Taylor, Paul, 10 technical and development assistance ASEAN projects, for, 93 Technical Committees, 83 Textile Museum Cambodia, in, 98 Thai currency run on, 157 Thailand bilateral relations with CLMV, 168 imports, 229 Muslim minorities, 173, 174, 191 Thai-Myanmar border scuffles, 168 The ASEAN Way, 151–55, 167, 242 challenges to, 155–70 Third Indochina War, 148, 149 trade between India and Bangladesh, 209

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368 between India and Pakistan, 209 impact of distance, 216 trade liberalization, 216, 239 traditional public goods, 266 trafficking, women and children, in, 295–302 Trans-Asian Highway, 97 Trans-Atlantic Free Trade Area, 16 transport infrastructure integration of, 267, 278 Treaty of Amity and Cooperation (TAC), 57, 154 Treaty of Maastricht, 218, 224, 243 Treaty of Peace and Friendship, 144 Treaty of Southeast Asia Nuclear Weapons Free Zone (SEANWFZ), 154 Tribunal for the Law of the Sea, 153 tsunami, 78 tuberculosis resurgence of, 288 Tuchman, Barbara, 105

U

UN Committee on Sustainable Development, 352 United Nations General Assembly (UNGA) meeting, 95

07 Index p353-369.indd 368

Index United Nations, 43, 71 United Nations Conference on Trade and Development (UNCTAD), 10 United Nations Development Fund for Women (UNIFEM), 301 United Nations Fund for Population Activities, 304 United States, 132 regard Pakistan as ally, 133 role of, 171 U.S. Treasury Bonds, 224

V

Vientiane Action Programme, 283 Vientiane Summit, 301 Vietnam, 60, 149 invasion of Cambodia, 69 poverty, 293

W

war on terrorism, 170–74 water disputes, 134 Weatherbee, Donald, 105, 202, 221 Western Europe peace, 116 Westphalian logic sovereign autonomy, 2 World Bank, 157, 190, 266 fact sheet, 288 World Bank Policy Research, 277

4/27/07 1:21:44 PM

Index World Development Indicators, regional fact sheet, 325 world economy inter-dependence, 77 World Health Organization (WHO), 304 World Trade Organization (WTO), 31, 52

07 Index p353-369.indd 369

369 World War II aftermath of, 116

Z

Zone of Peace, Freedom and Neutrality (ZOPFAN), 154

4/27/07 1:21:44 PM

Reproduced from Regional Cooperation in South Asia and Southeast Asia, by Kripa Sridharan (Singapore: Institute of Southeast Asian Studies, 2007). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

About the Authors Kripa Sridharan is a Senior Lecturer in the Department of Political Science, National University of Singapore where she teaches International Relations and South Asian Politics and Foreign policy. She has won Teaching Excellence Awards a number of times. Her articles have appeared in Contemporary South Asia, Asian Studies Review, Third World Quarterly, Round Table, Diplomacy and Statecraft, and Asian Thought and Society. She has authored a book entitled The ASEAN Region in Indiaʼs Foreign Policy (Dartmouth: U.K. and USA) and has co-edited Human Rights Perspectives (Singapore: UNAS). She is an Associate Fellow at the Institute of Southeast Asian Studies, Singapore. She is currently working on two research projects: Indo-U.S. Relations which is sponsored by the Institute of South Asian Studies, Singapore; and Regional Organisations and Peace Security, a project of the Crisis State Research Centre, London School of Economics. T.C.A. Srinivasa-Raghavan is a journalist by profession. He is currently the Consulting Editor at Business Standard and Consultant to the History Cell of the Reserve Bank of India. He is also a Senior Fellow at the Asian Institute of Transport Development. He has been a Press Fellow at Wolfson College, University of Cambridge, and a Visiting fellow at Queen Elizabeth House, University of Oxford. He was a Visiting Fellow at the Delhi School of Economics in 1999.

08 AbtAuthor p370.indd 370

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