Monday, December 7, 2015


From Business World of 22 March 2005.

Befriending Bangladesh

In February, India broke up the SAARC meeting in Dacca before it was held. The reasons given were the security situation in Bangladesh – the finance minister in the earlier Awami League government had recently been killed – and the coup in Nepal – the king who had taken power was not acceptable to India as representative of Nepal. These reasons, while they may look reasonable from our point of view, did not have the same resonance in Bangladesh; it was peeved that a brusque stroke from the Big Brother had sent the arrangements for security and hospitality that it had been made at the cost of 120 million Takas down the drain.
There is an impression in the government that the Awami League, Bangladesh’s opposition party, is sympathetic to India and the ruling Bangladesh National Party is inimical to our interests, infiltrated with communal elements and inclined towards Pakistan. In turn, we tend to be more friendly to Bangladesh when Awami League is in power. This policy is a byproduct of our heritage from the days of the cold war, when we divided the world into us and them and fashioned foreign policy around simple concepts of friendship and hostility.
That was a more or less adequate response at a time when we did not matter in the world; the cold war left no freedom of manoeuvre to individual countries, and not just we but richer and more powerful countries like Japan and Germany also had their policies cut out: they just went along with the dominant power.
That world, however, changed irrevocably after the fall of the Soviet Union. Although all countries are now obliged to get on with the US, it is much more relaxed about how they deal with one another; and in South Asia, it actually expects India to take leadership. Leadership is not loading a neighbour with gifts when a friendly party is in power and treating it roughly when a less friendly party comes to power; it is to acquire and use levers of power. The supply of petroleum products to Nepal was cut off only once, 15 years ago; but Nepal remembered the lesson for all these years.
Levers of power are not necessarily coercive. After the 1998 Free Trade Agreement, Sri Lanka’s trade in India has gone up by leaps and bounds. Sri Lanka’s exports of tea and pepper upset producers in India; but they cheapened supplies for Indian consumers and broadened their choice, and today, they figure in Sri Lanka’s policy calculations today. A friendly overture has worked wonders with Sri Lanka; we should try one with Bangladesh.
The end of the multi-fibre agreement on January 1 has improved the prospects of Indian textile exports; now they can compete on equal terms with exports from least developed countries, including Bangladesh. Exports of yarn from India have declined already, which means that Bangladesh’s garment exports are probably not doing very well. It would give Bangladesh a helping hand if the Indian textile market were opened up to it; and it would actually help exports from India by making the capacity of Bangladesh available. This is the most immediate possibility; but the principle can be applied to other products of Bangladesh, for instance tea and jute. Their free imports can only help our exports.
The commerce ministry would want to build such concessions into a free trade agreement – to get a pound of flesh for them. This is shortsighted. All imports from Bangladesh strengthen India’s position; while we are sitting on $130 billion’s worth of exchange reserves, a billion or two’s worth of exports to Bangladesh makes no great difference.
Let us try to make some friends in Bangladesh; and as a first step, let us open up unilaterally to exports from it. But such a measure will be ineffective if the cesspool that is Petrapole is not cleared up. It is a haven of corruption; both the border security force and the customs like postings there. Thanks to the two, trucks have to wait for days before crossing the border. And the road capacity is grossly inadequate. If the government is intent on improving high-intensity highways, the Calcutta-Petrapole highway must come high on its list. It should be turned into a six-lane highway with a customs post at the end that would clear trucks in seconds instead of weeks. Irrespectively of what we think of its government, economic prosperity of Bangladesh is in India’s interest.