SAARC Framework Agreement for Energy Cooperation was signed in 2014 and is considered to be major step towards a SAARC Market for Electricity (SAME). Its objective is to improve power availability in the entire region and facilitate integrated operation of the regional power grid.

Comment

This concept is there in minds of policy makers for many years, but so far little progress has been made. One reason is lack of political will, and frequent political tensions among the countries. However, the major issue is that when all SAARC countries are power deficient, how an interconnected power grid can be feasible. The countries actually are relying on tapping the untapped potential to realize such a grid. The idea is that if there is enough power generation, one region / country can fulfil demand of other country and prerequisite for that is a seamless SAARC power grid within the next few years. Secondly, SAARC countries are located in different time zones and peak demand in each of them occurs at different point of time. Thus, the seamless connectivity can also address issue of load shedding. Thirdly, Nepal has its annual peak {demand} in winter while India and other countries have the same in summer. If Nepal produces enough power, it can supply its surplus power to India and can import surplus power from India in winter. {Read this blog for details}

In March 2016, an agreement was reached to create a SAARC environment and Disaster Management centre between India and Pakistan as a split entity. While India will host the Disaster Management Centre, Pakistan will house the offices for the Environment and Energy Centre.

Comment for Analysis

The way this new body was split between the two countries shows how the members of SAARC have competed with each other in almost every matter of importance. The region faces numerous challenges related to climate change, environment degradation and natural disasters and none of them is fully capable to deal with them. There was an idea of merging Disaster Management, Forest Management, Coastal Area Management Centre and Environment centres into a dedicated SAARC Environment and Disaster Management Centre. But they have failed to set up it as a single centre because both India and Pakistan had laid claims to house the new body; and thus an agreement was reached to set up it as a split body. Previously, the countries had planned to set up a SAARC Disaster Management Rapid Action Force (SDMRAF) in the aftermath of Nepal earthquake, but then failed to set up that also.

In 2014, SAARC countries had agreed to set up a South Asia Economic Union (SAEU) on the lines of European Union by facilitating a common market and removing trade barriers. This had to be achieved in a phased manner going through various stages viz.  Free Trade Area, a Customs Union, a Common Market, and a Common Economic and Monetary Union.

Analysis

The leaders of SAARC countries are great dreamers. They had dreamt of a SAFTA (South Asian Free Trade Area) in 2004 to foster intra-regional trade by creating a unified South Asia market. However, not much has happened since then. In 2014, the intra-regional trade in South Asia accounted only for 5% of total trade and is worth around 0.25 billion dollars which is abysmally low as compared to other such regional organizations. Though a clear road map { from FTA to Monetary Union}, but to begin to move in that direction, South Asian Free Trade agreement (SAFTA) needs to be implemented first. Based on SAFTA experience so far, the SAEU also appears a distant dream.

The socio-economic disparity, political differences and disturbances, mistrust; dangers from non-state actors in internal security, civil and ethnic conflicts etc. are some of the problems which don’t allow realizing a SAFTA or SAEU dream. At the same time, the geographical disparities and challenges hinder the intra-regional trade. Absence of required infra, required financial institution, cross border warehousing facilities, issues of smuggling and so on are some of the other major problems. The progress is slow and mainly visible in recent times in the form of BBIN-MVA.

Kindly note that the countries have also planned to start a SATIS {SAARC Agreement on Trade in Services} to spur trade in services between the countries. It also seems to be a distant reality as of now.

SAARC Development Fund (SDF) was inaugurated in 2010 during the 16th SAARC summit at Thimphu. It’s precursor was South Asian Development Fund (SADF), which itself was launched in 1996 by merging two existing facilities called SAARC Fund for Regional Projects (SFRP) and the SAARC Regional Fund.

SDF was created “umbrella financial mechanism” for all SAARC projects and programmes. Its core objective is to accelerate the economic growth, social progress and poverty alleviation in the region. It funds the projects in South Asia region via three windows viz. Social Window, Economic Window and Infrastructure Window. At present, only Social Window is in operation, the other two windows are yet to open.

The Social window currently funds the projects mainly on poverty alleviation, social development focusing on education; health; human resources development; support to venerable/disadvantaged segments of the society; funding needs of communities, micro-enterprises, rural infrastructure development. Some of the key projects taken up by SDF include:

1. SAARC Business Association of Home based workers {SABAH} established in Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. These are Civil Society Organizations for promotion of welfare for home based workers and their skill development
2. Establishment of Trade Facilitation Centers established in Bhutan, Nepal Pakistan and Sri Lanka
3. Strengthening Maternal and Child Health Including Immunization
4. Scaling up of Zero Energy Cold Storage (ZECS) technology for the horticultural commodities in the high hills of SAARC countries
5. Empowering Rural Communities “Reaching the Unreached” via establishing Community Centres in various countries.
6. South Asia Initiative to End Violence Against Children (SAIEVAC)
7. Post Harvest Management and Value Addition of Fruits in Production Catchments in SAARC Countries

We note here that SDF currently struggling with lack of finance for the effective implementation of projects. After it was formed, only social window has been activated so far. No such progress has been done towards Infrastructure window which is equally important for region.

BBIN an ambitious initiative by four countries of South Asia i.e Bangladesh, Bhutan, India and Nepal with the aim to facilitate movement of vehicles carrying cargo and passengers in each other’s territory without the need for trans-shipment of goods from one country’s truck to another’s at the border. As of January, 2018, three countries viz. India, Bangladesh and Nepal have agreed on the text of the passenger protocol, the document detailing procedures for cross-border movement of buses and private vehicles. Bhutan had earlier signed the agreement but failed to ratify it.

Background

The agreement came in the backdrop of Kathmandu summit 2014 wherein India proposed SAARC Motor Vehicle Agreement which could not progress due to resistance by Pakistan. So, India conceived BBIN on similar lines.

It was signed by all the member countries in June, 2015 but its enforcement had not yet come into play because of non-ratification by Bhutan (Other three countries have ratified).

Perceived advantages of the agreement

This agreement enables the vehicles to enter into any of the four countries without need for trans-shipment of goods from one country’s truck to another’s at the border. Under the system, cargo vehicles are tracked electronically; E-permits are issued online and sent electronically to all land ports. Vehicles are fitted with an electronic seal that alerts regulators every time the container door is opened. This saves not only time but also cost. For example, earlier a truck would travel 1540 kilometres through Indian territory to reach from Kolkata to Agartala. Once this agreement is in force, the same truck travelled only 640 kilometres via Dhaka. Thus,

• Once the agreement comes into force it will save a lot of time in movement of goods between member nations.
• It will create a seamless supply chain thus reducing the cost of doing business across borders and promoting the overall economic development of the region.
• It will strengthen the sub regional unity between these nations. Once the connectivity will be established then it can be further extended to southeast and east Asia.

Role of Asian Development Bank

The Asian Development Bank (ADB) has been providing technical, advisory, and financial support to the BBIN MVA initiative as part of its assistance to the south Asia sub-regional economic cooperation (SASEC) programme, a projects-based economic cooperation initiative that brings together the BBIN countries, Maldives, Sri Lanka and more recently, Myanmar.

Current status of the project

The ratification of the agreement was stuck in Bhutan’s upper house in 2017 due to which they have postponed the decision till 2018 parliamentary elections. As of January, 2018, Bangladesh, India and Nepal have given nod to operating procedures for movement of passenger vehicles under the agreement. The three countries have also agreed to conduct more trial runs for cargo vehicles under the agreement. Trial runs for Cargo vehicles were earlier conducted along the Kolkata-Dhaka-Agartala and Delhi-Kolkata- Dhaka routes.

Reasons for Opposition in Bhutan

The bill which was approved by lower house of  Bhutanese parliament  is struck in its upper house due to following reasons :

• The act will increase the traffic in Bhutan from other nations and will hamper livelihood of the Bhutanese truckers. So, Bhutan wants a cap to be fixed on the number of vehicles entering its territory.
• Being the smallest nation, among all four members it fears that it will be overwhelmed with tourists and pollution from all other member nation which will lead to environmental damage.
• Apart from these there are also political reasons. The govt fears that the permitting Nepal’s trucks in their territory would upset their electorate, thus, can suffer a big blow in 2018 parliamentary elections.

Significance

The significance of this agreement can be ascertained from various angles. Firstly, Since Pakistan was not involved here; it took only 6 months to flag off the first truck to run between India-Bangladesh-India route. This was second major multilateral agreement between South Asian Countries and marks heralding the idea of SAARC-minus-Pakistan {First I consider BIMSTEC, which was launched on initiation of New Delhi}. The further events have further strengthened that notion. Secondly, it is first stage of the $8-billion road connectivity project between these four countries and Myanmar and Thailand. The latter two countries have agreed to develop a similar agreement and take ahead this economic cooperation to the door of Association of Southeast Asian Nations (ASEAN) region

In 2011, the SAARC Leaders had endorsed a SAARC Seed Bank Agreement and a Framework for Materials Transfer Agreement. Objective of the proposed seed bank was to foster “seed security” in the region; increase seed replacement ratio; address seed shortage via collective action and act as a Regional Seed Security Reserve for member states of SAARC.

This agreement required ratification from all members to come in effect. Out of eight members, only five viz. BBIN & Sri Lanka could ratify the agreement. No action was taken from Pakistan, Afghanistan and Maldives side.

The agreement is thus currently in limbo. There are several other issues related to its functioning, mechanism etc. also which would come to fore only when it comes into existence.

Kindly note that there were talks to set up Regional Vaccine Bank and Regional Livestock Gene Bank also. None of them is in operation right now.

In the 2014 Kathmandu Summit, India had announced launch of a SAARC Satellite, whose total cost (around 235 Crore) would be borne by India and which would help in telecom, TV, DTC, tele-education, telemedicine and disaster management support to neighbour countries. At present, its in planned stage and is supposed to be launched by March 2017. Pakistan opted out of it because of its security interest and saying that they have their own space programme under SUPARCO {Space and Upper Atmosphere Research Commission, its corresponding organization of Pakistan to ISRO}, though Pakistan itself has no capacity to launch a satellite on its own. Pakistan had initially shown interest and also offered to “help” which India rejected.  All SAARC countries apart from Pakistan have signed up the project so far.