Neighbourhood Diplomacy: Leveraging SAARC's Economic Interdependence
By Dr Srimal Fernando
4 May 2021
Regionalism in the contemporary global context. has always had a strong political motive and facilitated to fill the political vacuum through cooperation among states. Despite facing a series of internal and external challenges since its formation, the South Asian Association for Regional Cooperation (SAARC) has in the past three decades witnessed encouraging developments. Political decision making in intergovernmental organizations like the SAARC is important in developing a consensus on the promotion of interdependence in economic, social, cultural and security spheres
For this to be accomplished, regional institutions must warrant that national interests of member states are not compromised. The road to achieving regional integration has not been an easy one though some advancements have been made. South Asian nations comprising, inter alia, of eight main countries were highly reliant on trade and economics. In terms of intra-regional trade, the region still lags behind since SAARC member states are mainly influenced by national interests in their foreign policies. Moreover the foreign policies of major global actors can be described from two points of view on regionalism, old regionalism and new regionalism. The advantages that South Asian nations can enjoy as a result of successful economic integration can be understood better by converging on the role that the South Asian Association for Regional Cooperation (SAARC) has to play in it. The SAARC union has opted for a more neutral approach to its regional initiatives by creating a political conducive environment to enhance trade within the region.
Successful regional cooperation in South Asia can be accomplished by focusing on political signals and the will of the member states for clear progress towards economic integration. Regional actors stand to benefit from concentrating their resources and energies on the economic integration of the region. SAARC should learn from other regional groupings that have been able to liberalize internal trade due to such efforts. Given the fact that trading negotiations have been experienced recently in regional groupings, the economic initiatives of the SAARC are vital if economic integration is to be achieved in the region. This is because some of the South Asian nations are small and weak and therefore may not single-handedly be attracting any major investments in the region. By moving forward in terms of economic integration, SAARC nations have benefited in a number of ways such as increased bargaining power, the attraction of foreign direct investment, cooperation in security and conflict management, joint projects etc. Member states of SAARC stand to benefit from regional economic integration in a number of ways.
The absence of progress in economic integration in the south Asian region can be attributed to a number of factors such as domestic and external trading competitions amongst member states given that the South Asian Association for Regional Cooperation (SAARC) is an Intergovernmental institution, the involved member states are important players in achieving an integrated economy in South Asia. Each single south Asian government has its own set goals of achieving regional cooperation and strategies through which they believe will make the process successful. Recent developments in the South Asian intra-regional trade has shown some improvements in the trading trends of SAARC member states. According to the Asian Development Outlook 2017, the economies of South Asia are expected to grow closer to 7 percent.
Despite these benefits, SAARC can generally be said to not have been very effective in the promotion of foreign direct investment and trade. The limiting factors include lack of sufficient resources, small market size, and high trading costs. There is a need for South Asian nations and SAARC to put in place measures in order to increase regional trade and address issues that affect economic integration.
Importantly, political commitment should be sustained by SAARC member states is key in achieving all this. SAARC and the eight-member regional grouping had taken the role of strengthening the SAARC mandate through Regional Cooperation. The south Asian region can be seen as having untapped economic potential. Closer regional integration in terms of the economy of South Asia can lead to improved economic welfare and benefits.
The idea of regional cooperation can be seen to be getting stronger among the SAARC member states. States are slowly comprehending the importance of coming together in a broad regional framework and fostering cooperation in the region. In the near future, the region will be able to witness significant progress towards economic integration and trade liberalization. SAARC is in a position to encourage its member states towards achieving this by actively soliciting the reflection of regional matters through cooperation.
(Dr. Srimal Fernando received his PhD in the area of International Affairs. He was the recipient of the prestigious O. P. Jindal Doctoral Fellowship and SAU Scholarship under the SAARC umbrella. He is also an Advisor/Global Editor of Diplomatic Society for South Africa in partnership with Diplomatic World Institute (Brussels). He has received accolades such as 2018/2019 ‘Best Journalist of the Year’ in South Africa, (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of South Asian Union’)