The Indian Prime Minister Narendra Modi invited the leaders of the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) countries during the second term of his swearing-in ceremony. During his first swearing-in ceremony in 2014, he had invited the leaders of the SAARC (South Asian Association for Regional Cooperation) countries. It clearly indicates that India will prioritize BIMSTEC over SAARC.
Why this Shift?
The invitation of the heads of the states of SAARC countries, including Pakistan, to the first swearing-in-ceremony in 2014 clarified that he would give priority to his neighbours. He reflected his ‘Neighbourhood First policy’ through action by starting his foreign visits from Bhutan and Nepal. He visited Nepal three times in four years while no Indian Prime Minister had paid any visit in the last 17 years. He made a surprise visit to Pakistan on his way back from Afghanistan. However, there were a series of the cross-border terror attack at Pathankot, Uri and Pulwama. It not only jeopardized India’s ‘Neighbourhood First policy’ but put India-Pakistan relations on freeze. The 19th SAARC summit that was to be held in Islamabad got cancelled as India withdrew from it stating that “talks and terror cannot go together”. Hence, India’s shift from SAARC to BIMSTEC was primarily to isolate Pakistan and pressurize it to stop encouraging and providing sanctuary to terrorists involved in terror attacks in India.
SAARC, SAFTA, (South Asian Free Trade Area) and SAPTA (SAARC Preferential Trading Arrangement) have not made much progress in the last three decades. It has failed to tap the benefits due to India-Pakistan rivalry. The volume of bilateral trade between India and Pakistan is very low, ranging between a mere 2 to 3 per cent of each country’s total trade that is also concentrated into a few commodities. The SAARC intra-regional trade stands at just 5 percent of the total share of intra-regional trade of South Asia. Similarly, foreign direct investment is also dismal, which is 4 percent of the total foreign investment. Moreover, India was not happy with the inclusion of China as the observer in SAARC. Thus, India sees BIMSTEC as the best alternative with immense opportunities.
With a combined GDP of USD 2.7 trillion, BIMSTEC member countries bring together one-fifth (22 percent) of the world’s population that live in the seven countries around it. The region has vast untapped natural resources, such as hydro-power, oil and gas. Despite economic challenges, all these seven countries have been able to sustain average annual rates of economic growth between 3.4 percent and 7.5 percent from 2012 to 2016. The region is strategically important as around 25 percent of the world’s trade happens via the Bay of Bengal. India has already invested in India-Myanmar-Thailand Asian Trilateral Highway, the Kaladan Multimodal Transit Transport Project and the BIMSTEC Motor Vehicle Agreement which will transform the movement of goods and vehicles through the member countries.
BIMSTEC, which includes five countries from South Asia and two from ASEAN is a bridge between South Asia and Southeast Asia and fits best in India’s Act East Policy. During the 20th anniversary speech in 2017, Modi said BIMSTEC connects not only South and Southeast Asia, but also the ecologies of the Great Himalayas and the Bay of Bengal. He said that “For India, it is a natural platform to fulfil our key foreign policy priorities of ‘Neighbourhood First’ and ‘Act East’”.
Due to its location and size, the Bay of Bengal has tremendous economic and strategic leverage for India and the member countries. It is a crucial avenue for India to project its naval capabilities at the time when China has made a rapid rise in its naval power and is seeking access to the Indian Ocean. It is economically rewarding for India as it can benefit immensely through greater regional connectivity. One-fourth of India’s total population inhabit in the four coastal states (Andhra Pradesh, Odisha, Tamil Nadu and West Bengal) along the Bay of Bengal. Similarly, around 45 million Indians are in landlocked Northeastern states who can experience economic development by establishing connectivity to Bangladesh, Thailand and Myanmar through the Bay of Bengal. The initiative also realizes India’s new economic interests and geostrategic ambition to connect beyond immediate neighbours by connecting the Bay of Bengal to Southeast Asia.
At the time when most of the neighbours of India have been part of China’s ambitious Belt and Road Initiative (BRI) for economic development and connectivity around the region, BIMSTEC can be an Indian alternative to BRI. It is significant when SAARC has failed to bring regional cooperation and economic integration due to India-Pakistan rivalry. From the strategic perspective, the Bay of Bengal, a funnel to the Malacca Straits, has emerged a key theatre for China in maintaining its access route to the Indian Ocean Region. China has undertaken a massive drive to finance and develop infrastructure in South and Southeast Asia through the BRI in almost all BIMSTEC countries, except Bhutan and India.
Similarly, BIMSTEC complements India’s ‘Neighbourhood First Policy’ as it provides immense opportunities to its neighbours, who are in the grouping. For Bangladesh, the organization provides an ideal platform to position itself in Asian and global order than just a small state in the Bay of Bengal. To an island nation, Sri Lanka, it offers connectivity to Southeast Asia that can provide an opportunity for it to emerge as the subcontinent’s hub for the wider Indian Ocean and Pacific regions. Landlocked Nepal and Bhutan can have easy access to the Bay of Bengal region to reap high economic growth rate. Myanmar and Thailand can get access to the rising consumer market of South Asia and at the same time, they can balance Beijing and develop an alternative to China’s massive inroads into Southeast Asia.
In spite of having tremendous opportunities, the Bay of Bengal region is one of the world’s least integrated regions with abysmal levels of trade, connectivity, and cooperation. In fact, it has become less integrated today than they were fifty years ago. Despite its rising economic potential and geostrategic centrality, the region remains largely on the sidelines of key global developments. Similarly, the member states of BIMSTEC have pursued different political and socio-economic models. For instance, India followed protectionism; Thailand welcomed liberal market reforms and regional integration with its neighbours to the south and east. While New Delhi adopted a non-aligned path and insulated its immediate periphery from Cold War competition, Bangkok chose to ally with the United States and develop under the protective umbrella of the Southeast Asia Treaty Organization (SEATO).
Similarly, the region is also infected by different complexities like nontraditional security threats, such as trafficking of narcotics, weapons, and people; the illegal exploitation of natural resources; refugee flows; rebel insurgencies and terrorist groups; and natural disasters. Before increasing connectivity, the member countries have to prepare themselves to deal with these problems.
Moreover, like SAARC, the progress of BIMSTEC is also at a snail’s pace. It took 17 years for the organization to come with a permanent secretariat, located in Dhaka. Only four summits have been held so far in the last two decades. Most importantly, it has failed to come with a charter.
In order to meet these challenges, there is an immediate need to empower the BIMSTEC secretariat with greater human and financial resources to proactively drive the organization’s agenda. This would be possible only when the member countries provide greater autonomy to the organization. Similarly, the Secretariat should work to revive the initial enthusiasm that drove the initiative by holding high-level meetings regularly. In 2017, the ministerial and senior official level meetings were held after the gap of three years. A new secretary general was appointed in August 2017 which added new vigour to the organization. In 2017, the seven member states pledged to work collectively towards making BIMSTEC stronger, more effective, and result oriented. They emphasized that their geographical contiguity, abundant natural and human resources, rich historical linkages and shared cultural heritage provide BIMSTEC with the ideal platform to promote peace, stability and prosperity in our region.
Due to the convergence of the national interest of the member countries of BIMSTEC, there is greater interest in empowering the Bay of Bengal initiative for enhanced trade and connectivity in the region. BIMSTEC should give high priority to enhance connectivity and develop world-class infrastructure for greater regional trade. They should emphasize more on connectivity with Bhutan, Nepal and the Northeastern states of India. India, being a greater beneficiary with greater economic leverage, should play an important role by benevolently contributing more in strengthening the organization without affecting the interests of other member states. The member states should push for multilateral institutions like the Asian Development Bank (ADB) or the Asian Infrastructure Investment Bank (AIIB). During the Senior Officials Meeting of BIMSTEC member countries held in Kathmandu in August 2018, the member states responded positively on Nepal’s proposal of setting up BIMSTEC Development Fund and BIMSTEC Infrastructure Bank to implement various infrastructure projects that can enhance economic cooperation and connectivity.