New opportunities and new modalities should be identified to foster regional cooperation

In the ever-changing landscape of South Asian regional dynamics, it is clear that the conventional strategies of regional cooperation are insufficient. Traditional approaches of regional cooperation of South Asia are too top-down, government-led, and too focused on economic growth and development. A more people-centred approach involving non-state actors, such as civil society and the private sector is needed, in developing and implementing regional cooperation initiatives.

Regional cooperation currently centres around infrastructure and connectivity, but there is a need to broaden the focus to include higher education and public health. In terms of higher education, this means fostering cross-border collaboration for standardised certification, accreditation, and managing the growing demand for tertiary education. Additionally, it involves institutionalising lessons learned from the Coronavirus Disease 2019 (COVID-19) pandemic to effectively address public health challenges.

These are some of the insights that emerged at the second plenary session of the Fourteenth South Asia Economic Summit (SAES XIV) titled ‘Identifying new opportunities and new modalities for fostering regional cooperation in South Asia’ held on 4 November, 2023 at the Sheraton Hotel, Dhaka.

The Chair of the session, Dr Debapriya Bhattacharya, Distinguished Fellow, Centre for Policy Dialogue (CPD), underscored ‘We can already recognise changes in terms of regional cooperation. For instance, we have moved from manufacturing to the service sector. Cooperation in the areas of health and education, multimodal and digital connectivity are becoming increasingly visible. We are talking about opportunities for financial cooperation as well’.

Dr P. Nandalal Weerasinghe, Governor, Central Bank of Sri Lanka, discussed about the economic situation of Sri Lanka and said ‘The new government in 2019 faced challenges with access to capital markets even before the onset of the COVID-19 pandemic’. He further discussed the economic measures taken by their government to address and solve these issues.

‘We should promote student exchanges to advance cooperation and invite singers, artists, and media personalities from each other’s countries to foster cultural harmony within South Asia’, recommended Dr Ishrat Husain, Former Governor State Bank of Pakistan & Former Advisor to the Prime Minister on Institutional Reforms & Austerity, Pakistan.

Dr Shekhar Shah, Vice Chairman, Academic Advisory Council, Indian School of Public Policy (ISPP), India, proposed the idea of creating a forum similar to the Group of Twenty (G20) or Group of Eight (G8), but specifically for South Asian countries, where the leadership from these nations could meet periodically in a rotational manner. The goal would be to provide top-level guidance to their respective governments, facilitate problem-solving, and commit to maintaining unity among the countries involved.

While commenting on issues of South Asian Association for Regional Cooperation (SAARC), Ambassador Durga Prasad Bhattarai, Former Foreign Secretary, Federal Democratic Republic of Nepal, opined ‘Completely abandoning SAARC would be detrimental for South Asia. It is indeed possible to build pressure from within countries to encourage their governments to collaborate. This can be accomplished through the active engagement of Civil Society Organisations (CSOs), the private sector, and by organising professional events like SAES’.

Mr Md. Jashim Uddin, President, SAARC Chamber of Commerce & Industry, Bangladesh, emphasised the importance of private sector involvement in promoting regional products, noting the disparity between Bangladesh’s exports to India and the potential for increased trade.  He suggested that private sector initiatives, beyond government efforts, are crucial for effective product promotion and trade expansion.

In the session, the speakers discussed the potential agreement between India and Pakistan to grant each other the most-favored-nation status, which came to a halt in 2014 due to elections. This was a missed opportunity. The agreement needs to be revived as it would have been linked to South Asian Free Trade Area (SAFTA), decreasing the negative risks associated with exports from Bangladesh, Pakistan, India, Sri Lanka, and Nepal.

The question at hand was whether regional cooperation in South Asia had transitioned from an aspirational and ambitious approach to a more pragmatic and realistic model. In this scenario, adopting a variable geometry approach could be a viable path forward. Instead of trying to involve everyone, the focus would be on including whatever strategies and partnerships prove effective.

SAARC appears to be lacking in the learning department when compared to other regional groups like Association of Southeast Asian Nations (ASEAN), particularly in the realms of trust-building and having a clear sense of purpose. To address this, there was a suggestion for an extraordinary or emergency meeting of the Council of Ministers within SAARC. The aim would be to seek political guidance and consensus, given the current absence of agreement on regional issues.

Sri Lanka’s journey can offer valuable lessons for its neighboring countries. With a substantial portion of its debt in the commercial market, the shift from concessional to commercial debt sparked worries about debt sustainability. To tackle this, Sri Lanka’s central bank had to take measures such as suspending foreign debt payments, raising interest rates significantly to manage inflation, floating the currency, and engaging in negotiations with the International Monetary Fund (IMF) to address the sustainability of its debt. This highlights the importance of implementing safeguards and measures to secure central bank independence and accountability.

Enhancing regional trade and fostering business growth hinges on addressing the pivotal issue of trade and travel logistics in the region. It is imperative to take additional measures to improve the current situation and facilitate smoother trade and travel operations.

High-level policymakers, political leaders, academics, development practitioners, civil society activists from Bangladesh and the South Asian region attended the conference and shared their valuable insights.