While the European Union may have an array of challenges at present, the formation of the EU in the aftermath of World War II has self-evidently transformed Western Europe after centuries of intermittent conflict. Open borders, free trade and a single market have served to increase prosperity and build people to people contacts.
South Asia at present looks a different place to Europe. Its two largest countries – India and Pakistan, stand at loggerheads, and tension between them has undermined broader regional integration, at least through the South Asian Association for Regional Cooperation. But 2030 is 14 years away. The origin of the European Union – the European Coal and Steel Community – was formed in 1951 at a time when Europe stood in ruins. And the Treaty of Rome came just seven years after that. Such progress must have seemed unlikely in 1945. For South Asian countries, the takeaway from the development of the EU should not be that integration will inevitably lead to a loss of control over their domestic affairs; it should be that greater collaboration can bring benefits across borders.
Discourse in South Asia regarding regional connectivity has changed over the last decade. From being something seen as economically desirable but politically far-fetched, some steps are being taken to seek benefits from working together. Bangladesh, Bhutan, India and Nepal have signed an agreement allowing road connectivity, and India and Bangladesh have signed a series of protocols allowing shipping connections, both bilaterally and allowing “mainland” India an alternative route to North East India.
Power, or shortages thereof, is an issue across South Asia. Some degree of power trading is in place between the same four countries. More could be done, but the trend is clearly towards more rather than less integration. And if there were to be a South Asian equivalent for the role coal and steel played in European integration, power trading may well be it.
Before India’s partition, around three-quarters of goods made in what became Pakistan were sold in what became India. As of 2012, 2% of Pakistan’s exports went to India. Yet even here, there are some positive signs. A bartering system has been established between Indian – and Pakistani -controlled Kashmir. A limited number of items are allowed for export – from the Indian side items such as fresh fruit, from Pakistan dried fruit. The system works on the basis of trust, and has created small, but influential, constituencies on both sides. The cross-border trade is now valued at around USD 120 million annually.
Along with tension between India and Pakistan, there are two other obvious differences between post-war Europe and South Asia. The first is that the countries of Western Europe faced a common enemy in the Soviet Union, encouraging them to come together. China plays a different role in South Asia. While India sees China as a threat, albeit concurrently as an economic opportunity, its neighbours have all, at times, “played the China card”, seeking to encourage Chinese engagement to ameliorate India’s influence.
And this reflects the second difference – the fact that India is so much larger than its rivals. This differential has political and economic components. India’s greater political power translates into concerns over Indian interference in the affairs of its smaller neighbors. While there have been times when such concerns have been justified, on other occasions India has been unfairly blamed to mask failings within its neighbors. And – as the progress between India and Bangladesh in the past couple of years has demonstrated – India now appears to accept that its own development requires stability in its neighborhood. And this in turn requires India to be a more benevolent hegemon than a regional bully.
While the political differential can be surmounted, the economic differential is an equally; if not greater, impediment to integration. 56 Indian companies featured in the 2013 Forbes Global 2000 list, while only one Pakistani firm made the list.
Reasons for this lack of competitiveness are manifold. One of them is that Pakistan’s economy is undermined by power shortages. Again, were various regional power projects – such as CASA-1000 or the Turkmenistan-Afghanistan-Pakistan-India gas pipeline – to actually come to fruition, greater integration would suddenly become much more feasible. Pakistan’s painfully slow path towards granting India most-favored nation trading status stems not from the politics but from the economics. A range of Pakistani companies are fearful that they would be unable to compete with their Indian counterparts.
In the past, political differences have served as an excuse for the lack of economic integration. Now, more voices in South Asia see the benefits of economic integration despite political differences. And if today’s small steps appear marginal, they are important in demonstrating that closer cooperation can bring benefits to both sides. China’s push for connectivity is also playing a role – thought leaders in India in particular are arguing that India should be drawing up its own framework to enhance trade and communication links rather than react to Chinese ideas.
South Asia in 2030 may well look much the same as South Asia today. But if there is a lesson from Europe, it is that transformational change is possible. What it requires is visionary leadership. And it needs this leadership to take steps in the broader good of the peoples of South Asia, frequently overcoming vested interests which benefit from the status quo. And today’s small steps could lead the region to a different, happier and wealthier, place.