Our Correspondent,

Although the 14^th summit of the eight-member South Asian Association for Regional Cooperation summit in New Delhi last week raised hopes hope that finally the politics and economics of the region would be transformed, it is going to take a long time.

The primary reason is Pakistan’s increasing instability after the sacking of Supreme Court Chief Judge Iftikhar Mohammed Chaudhry, for “misuse of authority,” by President Pervez Musharraf, which made it necessary to bring the issue of Kashmir, however obliquely, back to the association forum and to put economic cooperation on the back burner. The suspension in early March triggered protests and has snowballed into a political crisis for Musharraf in the run-up to his expected attempt to seek another term.

Trade, terror and connectivity were the major themes of this year’s summit. It was thought cooperation would bring the region closer and improve the living conditions for millions of people through a South Asia Free Trade Agreement (SAFTA). It is not the case.

Intra-regional trade is crucial for the continued economic upsurge of the region. The absence of most-favored nation status between Pakistan and India has kept intra-regional trade at about five percent of South Asia’s total trade. The World Bank has some revealing statistics that highlight the challenges for closer regional cooperation in South Asia. According to the bank, intra-regional trade is less than 2 percent of GDP, compared to more than 20 percent for East Asia. The cost of trading across borders in South Asia is one of the highest in the world. The region has minimal cooperation in the field of energy, despite India, one of the most energy-hungry nations in the world, being situated next to three energy-surplus countries ? Bangladesh, Nepal, and Bhutan.

All the member countries have implemented SAFTA in full, except Pakistan, which is still trading with India on the basis of a “positive list” of items. When SAFTA came into effect in June last year, Pakistan allowed tariff reductions on the import of 4,872 products from Sri Lanka, Bangladesh, Bhutan, Nepal and Maldives but limited India to concessions on 773 items. In November last year, it expanded this list to 1,075 items.

India on the other hand has offered most-favored nation status to Pakistan and expects reciprocity, which Pakistan so far has refused. Pakistan wants the resolution of the Kashmir issue first before moving wholeheartedly on SAFTA, which has kept the trade agreement in limbo. Though SAFTA has been implemented from June last year, south Asia has not been able to draw the full benefits of agreement.

Throughout its history, the association has been hamstrung by the Indo-Pakistan rivalry. However, in recent times it has managed to somewhat improve its image especially after the ongoing composite dialogue between India and Pakistan. Perceptions about the association have also changed because of the expansion of the organization and inclusion of Afghanistan as the eighth member. Moreover, this was the first time that five observers ? China, Japan, South Korea, the United States and the European Union – attended the summit’s opening and closing sessions and some meetings as observers. Iran has also been added to this list of observers.

There have been some positive moves. Outside the association, although there has been little movement on Kashmir, Indian and Pakistani officials were meeting late last week to seek ways to resolve border disputes in the Siachen glacier area in the Himalaya and the Sir Creek marshland, the 11^th round of talks between the defense secretaries over the 23-year history of the Siachen dispute. The two nuclear-tipped countries have fought three wars since 1947, two of them over Kashmir.

Hopes were thus increasing that the organization could disentangle itself from the Indo-Pakistan rivalry and give a major impetus to trade and economic relations. But this did not happen. Pakistani Prime Minister Shaukat Aziz stymied the chance of any progress even before reaching New Delhi. On the eve of the summit, in an interview in Islamabad he said that for Pakistan, Kashmir was still the core issue.

In New Delhi, addressing the summit, Aziz, without naming Kashmir, said it was essential to remove “obstacles of the trust deficit which has hampered meaningful cooperation in the region”. He pointed out that the South Asian grouping has failed to make the desired progress due to an “environment of disputes and mistrust” and called for resolution of differences and disputes through “dialogue and compromise”.

He agreed with the association’s goals rhetorically, saying there should be enhancement of trade and economic activity, which “must show sensitivity to the need for creating a level-playing field, market access and requirements of development in each member state.” He favored a “truly open environment for regional trade ? devoid of all types of barriers.” He backed a level playing field for a "truly effective regional division of labor and production.”

India, on the other hand, contented itself once again by granting unilateral favors, though this time only to the least-developed, announcing that it will allow zero-duty access to the least developed countries of South Asia by the year-end.

India also made other concessions to increase connectivity in South Asia, in keeping with one of the major themes of the SAARC summit. It announced unilateral liberalization of visas for students, teachers, professors, journalists and medical patients from SAARC countries. It also proposed to double the intra-SAARC flow of tourists in the next five years.

There was a definite change in the attitude of India, which wanted to bring the region closer. Some thought that attitude was due to newfound confidence because of India’s economic growth, while others considered it a “soft Indian” policy to increase its influence in a region where China is gradually extending its reach. Whichever, it appears clear that India this time wanted to walk the extra mile to make the conference a success.

Economic integration and across-the-board implementation of the South Asian Free Trade Area (SAFTA) hold the key to unlocking the economic potential of the region. In their report before the New Delhi summit, the foreign secretaries recommended early and full implementation of the South Asian Free Trade Area and finalizing a draft agreement on the promotion of investment in the region. These recommendations, though, are of no use unless the leaders are willing to accept them.

Sri Lankan President Mahinda Rajapaksa said that it was high time there was a single South Asian currency to “enhance the productivity of the region and improve trade without barriers.” He expressed his concern at the failure of SAARC to realize its potential. He also sought “a sincere commitment and a strict timetable” to implement the South Asia Free Trade Agreement (SAFTA) to make South Asia “one massive region for enhancement of trade.”

For the last 22 years SAARC has been a paper-shuffling organization. On the eve of the New Delhi summit the grouping was poised to intensify economic cooperation. It was hoped that this time it would be transformed from talk to implementation. These hopes were dashed due by Pakistan over Kashmir, though in a roundabout way.

By talking of Kashmir on such occasions, the rulers of Pakistan manage to serve their short term interests, but it has made their country and the region suffer. So SAARC, for the time being, remains jinxed and will remain so until Pakistan becomes stable enough to risk crossing its borders for trade. A weak Pakistani leadership concerned about its own security will never have the courage to take those steps.