India/Bangladesh: Cement the relationship!

WHEN PRIME Minister Manmohan Singh makes his much-awaited visit to Dhaka in early September, he needs to be alert to the polarised nature of Bangladesh politics. Through diplomatic initiatives led by Prime Minister Singh and his counterpart, Sheikh Hasina, the two economies have finally arrived at a point of coordination after nearly 50 years of bifurcation, particularly on trade and transport. But even as Prime Minister Hasina has gone out on a limb to improve relations with the giant neighbour, the challenge will be to carry along the entire Bangladeshi polity – and especially the sullen Bangladesh Nationalist Party (BNP) of Begum Khaleda Zia – so that the advances made in trade, transit, development assistance and security cooperation are taken ahead beyond the present-day players.

In January 2010, a memorandum was signed between Dhaka and New Delhi. Under this, Bangladesh agreed to provide transit rights to India through its territory and also responded to security concerns to the satisfaction of India’s national-security establishment (see ‘Connectivity: the India-Bangladesh land bridge’, February 2011). Now India needs to respond to what Dhaka desperately needs: the promise of adequate payment for transit through Bangladesh to reach the Indian Northeast, and the dropping of trade barriers so that the balance of trade – currently in New Delhi’s favour – will correct itself. On the ground, beyond resolving the niggling border disputes, New Delhi must also put an end to the shootings at the frontier by the Border Security Force (BSF), which continue to kill innocent economic migrants and householders.

On the whole, the expected agreements between Dhaka and New Delhi are expected to push back the hostility that has kept commercial and infrastructural collaboration at bay since as far back as the 1965 India-Pakistan conflict. At that time, there was significant ‘connectivity’ between Indian and Bangladeshi (then East Pakistani) road, rail and river navigation. This hostility between what should theoretically have been the friendliest countries of Southasia (with the Indian support in the Liberation War of 1971) has been holding back progress not only in Bangladesh but in the Indian Northeast as well as West Bengal. It has also kept Nepal and Bhutan (and the Northeast) from accessing Bangladeshi ports, to provide healthy competition to those at Calcutta and Haldia. If New Delhi’s political class can now look to India’s long-term interests and rein in its sometimes rigid bureaucracy, and if Sheikh Hasina is successful in overriding kneejerk anti-Indianism – as looks likely – a new era of economic growth could well be in the offing in the Ganga-Brahmaputra (Padma-Jamuna) region.

Anti-Indianism

The overwhelming presence of India’s polity and economy at the centre of Southasia creates conditions of real and presumed hegemony. The dimensions of the Pakistan-India relationship, impacted as they are by the wounds of war and the question of Kashmir, are at a different level from that of the relationship between New Delhi and Dhaka, Kathmandu or Colombo. In these three capitals, it is the real and perceived swamping by Big India that has affected the possibilities of collaboration for many a decade. Overt Indian intervention, such as the adventurism that was the Indian Peace-Keeping Force in Sri Lanka during the late 1980s, has affected bilateral relationships, as has the occasional ham-handed Indian ambassador (or high commissioner) in the neighbouring countries, or the imperious desk officer back at South Block.

On the whole, though, the anti-Indianism in the neighbouring countries is largely the creation of national elites, who tend to seek populist support by trying to fashion themselves as ‘Davids’ fighting the Subcontinental ‘Goliath’. Over the years, this attitude has harmed the economic growth of the smaller countries while leaving New Delhi unmoved. Dhaka and Kathmandu in particular have often stubbed their toes while trying to spite India. Thus, Bangladesh has been unable to reap the benefits of providing India-to-India passage through its territory, thought to be worth about USD 1 billion a year in transit fees alone, or take advantage of Indian investment to convert its natural gas into value-added electricity and fertiliser. The 2006 withdrawal of the India-based multinational Tata from a USD 3 billion investment was only the most glaring example of lost opportunities when Dhaka’s leaders, prodded by ultra-nationalism, over-negotiated.

In the case of Nepal, the underlying anti-Indianism among Kathmandu’s intelligentsia has contributed to the country’s continuing inability to produce and export hydropower to India (and put its own population at the mercy of drastic load-shedding) or convert its east-to-west Tarai plains into a production-and-distribution hub that can feed the populous adjacent Gangetic plain. Even as Kathmandu’s consumer class is seduced by Indian goods, services and cinema, the continuous undercurrent of anti-Indianism that is evident on a host of issues – including the supposedly nefarious Indian designs on Nepal – has the result of keeping investment out. A case in point is the difficulties being faced currently by Indian companies in proceeding with sanctioned hydropower projects on Nepali rivers.

Colombo, though faced with significant challenges in its relationship with India in the context of the civil war, was able to overcome domestic scepticism to conclude a free-trade agreement (FTA) with New Delhi as far back as 1998. Despite challenges in its implementation, this accord has led to a surge in commerce between India and Sri Lanka. While there have been attempts to get a regionwide South Asia Free Trade Area Agreement going – something that is bound to gain traction in the long term – there is no doubt that emulation of the India-Sri Lanka FTA deal on a bilateral basis between India and its other neighbours would benefit all sides, while simultaneously building a Subcontinent-wide network of common interests.

The eastern half

Prime Minister Singh surely appreciates the political risks taken by his Bangladeshi counterpart in going ahead with the agreement of January 2010. While the exclusionary politics pursued by
Prime Minister Hasina within Bangladesh are indeed worrisome, she must be credited for having utilised her overwhelming majority in Parliament, achieved in the elections of 2008, to move the bilateral relationship with India to a higher level. What Sheikh Hasina requires during the Manmohan Singh visit are commitments in terms of transit fees, ease of investments, development assistance, transit rights through India for Nepal and Bhutan (to reach the Mongla and Chittagong ports), agreement on border disputes and a restraining hand on the BSF. In terms of balance of trade, India must convince its bureaucracy to withdraw tariff and non-tariff barriers so that Bangladesh can begin to export in earnest, particularly with regard to processed food and garments.

Some Dhaka commentators suggest that Sheikh Hasina needs two terms in office to cement the new relationship with India for the benefit of both countries. However, given the trend of incumbent governments in Bangladesh typically being routed in elections, it is better for India to try and deliver such positive conditions that even a future BNP government would enthusiastically proceed under the new deal.

The importance of a Bangladesh-India economic and diplomatic rapprochement is vital, offering the possibility of bringing prosperity to Bangladesh, the seventh-largest country in the world by population. Some believe that Bangladesh has nearly reached the limits of development and economic growth within its own territory, and that to reach a higher level of economic growth it must be able to reach out to the rest of the Subcontinent. This is what the Manmohan-Hasina deal promises. At the same time, the economic reverberations of such a demarche would also impact all of the eastern half of Southasia, including the Indian Northeast, Nepal, Bhutan and states as far afield as Odisha and Bihar. Let Manmohan Singh now clasp a hand that has already reached out.

First published in the Himal magazine, Kathmandu, Nepal, September 2011