BIMSTEC: Challenges and Implications for India

Image: BIMSTEC leaders at 4th BIMSTEC Summit at Kathmandu

BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), initially known as BIST-EC (Bangladesh-India-Sri Lanka-Thailand Economic Cooperation), was formed after representatives from the aforesaid four countries met at Bangkok in June 1997. Myanmar joined the group as a full member in December of the same year.  Nepal and Bhutan too joined in February 2004 and the grouping was renamed as the BIMSTEC. It now comprises Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand, and brings together 1.6 billion people or 22% of the world population and a combined gross domestic product (GDP) of over $2.8 trillion.

According to the Bangkok Declaration, the objective of building such an alliance was to harness shared and accelerated growth through mutual cooperation in different areas of common interests by mitigating the onslaught of globalisation and by utilising regional resources and geographical advantages. It also envisioned to create a transparent, liberal and facilitative foreign direct investment regime.

 

A Case of Converging Interests

The confluence of interests has created an opportunity for this organisation to make the ‘bay region’ more integrated. For India, the founder member, the prime interest was to engage economically vibrant Southeast Asia concomitantly with ASEAN (Association of Southeast Asian Nations). This engagement envisaged India having a direct connectivity with Southeast Asia via Northeast India; engage Myanmar for anti-insurgency cooperation and gain access to its alternative energy resources.

Other members also joined realising its potential in achieving their national goals and regional aspirations. Myanmar, for example, joined as it was facing serious international criticism at that time, due to its junta regime. Its entry in a regional and sub-regional grouping like this would have provided its military rulers with some sort of recognition among the regional stakeholders.

Thailand, on the other hand, was lucky as the ambit of its ‘Look West’ policy suitably complemented and aligned to India’s then ‘Look East’ policy. For a country like Sri Lanka, BIMSTEC was an inevitable economic opportunity to engage with the booming economies of Southeast Asian countries. Sri Lanka was also keen especially after its several failed attempts to join ASEAN prior to the establishment of BIMSTEC.

In the case of Bangladesh, it was a perfect platform to address some of its major concerns, such as food and energy securities; upgradation of cross-border transport linkages and harmonisation and liberalisation of trade procedures. In the case of land-locked countries like Nepal and Bhutan, BIMSTEC was a win-win and an opportunity for enhancing their connectivity with the rest of the region.

 

Then What Mars BIMSTEC

Despite its huge potential, the forum has long suffered from lack of resources and proper coordination among its member states. Many factors have contributed towards the sluggishness of BIMSTEC and it is still beset with difficulties. India, its largest member, has often been blamed for not providing a strong leadership. Consequent to slow progress of its mandate, Thailand and Myanmar have often seen ignoring BIMSTEC for ASEAN Forum.

The relevance of BIMSTEC as an organisation can be gauged from the fact that, only four meetings have been held since its inception 21 years back. It took seven years for its first summit to take place in 2004 at Thailand; the second one was held four years later in 2008 at India; the third one six years later in Myanmar in 2014 and the fourth summit has just concluded in Nepal on 31 Aug 2018. It also took 17 long years for this Forum to establish its permanent secretariat at Dhaka in 2014.

The BIMSTEC Free Trade Agreement (FTA), signed in 2004, is yet to be implemented. The protectionist economies of South Asian countries and so-called national interests are making free trade an unattainable objective. Countries like Bangladesh on the other hand often fear that whenever India discusses connectivity, it means benefits only for India. Such fears & apprehensions question the basic fabric of BIMSTEC and foster mistrust, thus blighting any prospect of free movement of goods. Till this fear psychosis persists, cooperation can only be a dream.

Another challenge lurking the forum is the impression that it is an India-dominated bloc, a problem that India faced for a long time in SAARC too. This perception of Indian hegemony, coupled with over-dependence of BIMSTEC Countries, on China, seems to be a major impediment for this Forum’s success. Nepal pulling out of ongoing BIMSTEC military exercise being conducted in India probably substantiates this point. Underlying aspiration of China to be part of BIMSTEC, on the same lines as it harnesses a desire to be a permanent part of SAARC groupings, further aggravates the problem. Overlapping of BIMSTEC’s mandate with SAARC is another factor attributing to BIMSTEC’s slowdown.

So the biggest question that arises today is, whether BIMSTEC has lost out and has merely been a talking shop so far? Or it still holds any relevance?

 

Present Dynamics & Renewed Initiative

The organization currently faces a challenge of realizing its vision of an integrated economic space and a bridge between South and Southeast Asia that drove its founding members. It presently lacks a strong institutional framework to pursue its mandate. This is the reason why bilateral conflicts similar to current Rohingya refugee crisis, which have complicated relations between Bangladesh and Myanmar, may affect BIMSTEC’s multilateralism in future and completely derail its efforts to foster regional cooperation.

BIMSTEC Secretariat, established in 2014 at Dhaka, has been unable to adequately contribute to the development of the organisation, and its negligible budget affects its capacity to perform a basic convening function.

However, two recent developments have generated renewed hopes for BIMSTEC to forge as an effective regional group for broader economic integration. First being the Outreach Summit, held in Goa, India in October 2016, wherein the BRICS-BIMSTEC leaders pledged to work collectively towards making BIMSTEC stronger. This Summit, brokered by India, has certainly reinvigorated BIMSTEC by inviting its members to participate in a larger platform like BRICS, comprising five major emerging economies of the world.

Second being the recently concluded Fourth summit of BIMSTEC at Kathmandu from August 30 to 31, 2018. The theme of the summit was ‘Towards a Peaceful, Prosperous and Sustainable Bay of Bengal Region’. Representatives of all member nations explicitly showed their renewed desire to forge ahead on mandated objectives with the signing and adoption of the Kathmandu Declaration.

The 18-point Declaration is expected to enhance the effectiveness of the BIMSTEC Secretariat by engaging it in various technical and economic activities in the region. Foreign ministers of BIMSTEC countries also signed a Memorandum of Understanding on the establishment of BIMSTEC Grid Interconnection.

The Declaration stresses on ending poverty in the region by 2030 & strongly condemns terrorism in all its forms and manifestations. It covers issues such as agricultural technology exchange, gradual reduction of the impact of climate change, increases trade and investment and ease in visa processing for the people of member states. It also highlights the importance of trade and investment as one of the major contributing factors for fostering economic and social development in the region.

It now remains to be seen as to how all the seven members can take this momentum forward in making BIMSTEC more ‘effective’, ‘visible’ and ‘result-oriented’ as well as draw synergies with other groupings to hasten the process of integration for the benefit of 1.6 billion people in the region.

 

Relevance for India

For India, BIMSTEC stands at the very important juncture of ‘Neighbourhood First’ and ‘Act East Policy’. Its relevance to India is driven by two key factors, one, the potential economic rewards of greater regional connectivity it provides. Second, the rapidly changing geostrategic context of Asia and India’s need to look at the Bay of Bengal as a key theatre for containing an increasingly capable and assertive China.

BIMSTEC, unlike SAARC’s subcontinental focus, is the only forum that brings together India’s strategic peripheries under one single grouping. Regional integration comes more naturally to India through BIMSTEC vis-a-vis SAARC, which is dominated and hamstrung by tensions between India and Pakistan. BIMSTEC also allows India to push a constructive agenda to counter Chinese investments.

Three projects pending with BIMSTEC, when finished, are likely to transform the region, especially India. One is the Kaladan Multimodal project linking India and Myanmar. The project envisages connecting Kolkata to Sittwe port in Myanmar, and then Mizoram by river and road. India and Myanmar had signed a framework agreement in 2008 & is yet to be finished.

The second one is the Trilateral Highway connecting India and Thailand through Myanmar. The highway will run from Moreh in Manipur to Mae Sot in Thailand via Myanmar thereby establishing connectivity between India and Southeast Asian countries. The project is currently underway.

The third, which was signed in the year 2015 and is awaiting internal clearances of some members, involves the movement of goods and vehicles. Bangladesh, Bhutan, India and Nepal (BBIN) have signed this pact. Trial runs are on.

India has finally realised that the lack of importance given to BIMSTEC can seriously jeopardise its economic and strategic agenda. Consequently, it has committed to re-energising BIMSTEC, which was evident during the BRICS Outreach Summit. This pragmatic step on India’s part lucidly demonstrated its intentions &potential to play the role of a regional leader.

 

Challenges & Implications for India

India faces few challenges which need to be ironed out for the smooth functioning of BIMSTEC.

From the strategic perspective, two factors merit as a challenge; the first being India’s realisation that, regional integration in South Asia would work only if Pakistan was not involved. Thus projecting BIMSTEC as more relevant in spite its overlapping mandate and members with SAARC, appears a daunting task for India.

The second factor being the China’s strategic & economic influence on BIMSTEC members, who can make BIMSTEC hostage to Indo-China regional rivalry. India, therefore, will have to carefully navigate through this emerging regional geopolitics& reassure South Asia that the region can work together to achieve common goals with India playing its due role.

India is currently the largest contributor to the BIMSTEC secretariat’s budget with an annual contribution of Rs 2 crore (32% of the total budget) for 2017-18. With the secretariat now planning to strengthen its capacity, India may need to consider allocating more resources. India’s generosity would be a key test of its commitment to the subregional grouping.

Another issue that besets BIMSTEC is that it is an India-dominated bloc. However, due to changing geo-economics, most of the smaller neighbours today are more willing to engage India due to its economic rise. India needs to proactively engage them and show sensitivity to their concerns.

 

Way Ahead for BIMSTEC

BIMSTEC as a Forum is well equipped in facilitating this new regionalism. However, its visibility needs to be enhanced for which its member states should:-

  • Instil in the organization a vision for a cooperative, multilateral regional order which is based on principles of liberalism, not on unilateralism.
  • Empower the BIMSTEC secretariat with greater financial resources enabling it to proactively drive the organization’s agenda.
  • Prioritize sustained physical connectivity and high-quality infrastructure, to facilitate greater regional flows of goods& services.
  • India’s role as an informal leader has to be expanded.
  • Open BIMSTEC to cooperate with regional powers committed to inclusive regionalism to include Australia, European Union, Japan, and the United States.

In conclusion, BIMSTEC holds the catalytic potential to transform economies of member states and create a peaceful, prosperous and integrated neighbourhood. The road from potential to reality will be successfully traversed only when all actors and stakeholders come together to play their role well to achieve a shared dream of peace, stability and prosperity for this dynamic region.

 

Col Rajeev Kapoor is a Senior Fellow at CLAWS. He wrote this piece originally for CLAWS

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Kootneeti Team

 

 

 

References

“BIMSTEC: The Road Ahead”Research and Information System for Developing Countries (RIS), New Delhi, 2016, p. 1 (Accessed June 14, 2017)

“Prime Minister’s message on 20th anniversary of establishment of BIMSTEC”Ministry of External Affairs, Government of India, June 06, 2017 (Accessed June 08, 2017).

ShoumikHassin, “Building a stronger BIMSTEC in next 20 years”bdnews24.com, May 29, 2017 (Accessed June 16, 2017).

https://idsa.in/idsacomments/bimstec-at-20-hopes-and-apprehensions_skundu_20061

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