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A post-nuclear deal Iran prepares for elections

·      AYATOLLAH KHAMENEI

·      HASAN ROUHANI

·      IRAN

·      IRAN DEAL

·      ISLAMIC REVOLUTION

Iran has kicked-off its month long election campaign with the announcement of the finalists approved by the supreme leader of the Islamic republic, Ayatollah Khamenei, after a vetting process orchestrated by the Guardian Council which works under his ambit. Current president, Hasan Rouhani, will be joined by competitors Mostafa Aqa-Mirsalim, Mostafa Hashemi-Taba, Es’haq Jahangiri, Mohammed-Baqer Qalibaf and Seyyed Ebrahim Raeisi to lead Iran in an era of uncertainty, specifically with President Donald Trump at the helm in Washington DC.

The run-up to these elections have already been filled with drama, with former president Mahmoud Ahmadinejad, despite saying he is not running for the polls, surprising the Iranian electorate by submitting his candidacy during the final minutes of the application process. In total, more than 1,600 candidates applied to contest the elections, including 137 female candidates, none of whom made the final cut.

President Rouhani, under whose guidance Iran agreed to the critical nuclear agreement with Western nations (all United Nations Security Council members plus Germany), according to analysts, will have competition from quarters of Tehran politics that he is very familiar with. His competitors can be divided into two groups, the reformists and the conservatives. First Vice President Jahangiri and former minister of mines, Hashemi-Taba along with Rouhani are from the former grouping. The conservatives are represented by the Mayor of Tehran Ghalibaf, former minister of culture and Islamic guidance Mirsalim and the odd candidacy of Raeisi, who is the custodian of the holy shrine of the eighth Shiite imam, but more importantly, touted to be a potential replacement for the now ageing Ayatollah Khamenei himself.

Popular expectations are that Rouhani, Ghalibaf and Raeisi are to be the electoral leaders in a race that is going to reflect both the political and economic outcomes of the post-nuclear deal Iran. According to a recent poll conducted by Canada based consultancy IranPoll, the economy and jobs are the foremost areas of concern that the people of Iran want their leaders to address, the same issues that were flagged before the previous elections and the subsequent swearing in of Rouhani as president. According to the poll, 52% of the participants of the modest 1,005 Iranians who took part in the study said that the economic situation in the country under the leadership of Rouhani was getting worse, while 31% agreed that it had gotten better. On a narrower question, when asked whether the economic situation of ordinary people had improved due to the successful negotiation of the nuclear deal, 72% replied in a negative tone saying that it had not improved.

Popular expectations are that Rouhani, Ghalibaf and Raeisi are to be the electoral leaders in a race that is going to reflect both the political and economic outcomes of the post-nuclear deal Iran.

The nuclear deal’s effect on the elections may be a red herring. Similar to the situation prior to the election of Rouhani in 2013 that ousted Ahmadinejad, under whom Iran’s ties with the West hit a new low, joblessness amongst the youth and lack of economic upliftment became the key political issue in Iran. Years of Western sanctions had rendered the Iranian economy severely strained, which in return gained public support in the country for its governance to thaw relations with the West. This was used by the moderate and reformist political circles in Tehran against the conservatives who, throughout the negotiation process, criticised Rouhani and Foreign Minister Javad Zarif for giving too many concessions to the West in return for Iran’s basic rights to develop civil nuclear energy resources. Even Ayatollah Khamenei often took to Twitter; the social media site banned for common Iranian citizens, to threaten the US even as Iranian delegations were in Vienna, Austria, negotiating the agreements.

Source: Khamenei.ir/Twitter

The Iranian political landscape is multilayered, with a juxtaposition of conservatives, moderates, liberals, the military, intelligence and others fighting to build influence zones within the polity. The premiere example to illustrate this is decoding the role of the Islamic Revolutionary Guard’s Corps (IRGC), a highly trained military structure directly under the command of the Ayatollah, tasked with protecting the Islamic revolution itself from foreign interventions and internal dissent.

However, the IRGC is now also heavily involved in the Iranian economy and is known to have ownership of various companies and state enterprises in fields such as construction, telecom, mining and so on. In January this year, the Iranian government along with entities closed to the IRGC signed commercial deals with the Syrian government for assisting the Bashar al-Assad regime in the Syrian war. As much as the conservative or reformist power blocks, including former presidents, matter in the outcome of the elections, the extension of the military/intelligence apparatus into electoral posturing has perhaps grown in Iran over the past few years it was under Western sanctions.

This also gives Raeisi a good chance at the presidency. Despite popular understanding seems to point towards the re-election of Rouhani, the conservative lobby along with the intelligence sector, made few qualms about its reservations over the nuclear deal known. This in effect could give the likes of Raeisi a well-orchestrated and strong bogey against the reformists club that backs Rouhani, which now includes the likes of former president Mohammad Khatami, a pro-reforms leader himself who led the Iranian government from 1997 until 2005. Such an endorsement could be of pivotal importance, as Khatami, like many of his predecessors and successor Ahmadinejad, had a falling out with the Ayatollah in his post-president years and was banished from politics.

India, one of Iran’s largest buyers of oil across the Arabian Sea, has had a relationship with the country that has been both fruitful and fractured simultaneously. Oil and gas has featured as the top most priority of the Iranian economy, and by extension, critical to political stability of the country. India and Iran are home to civilisational ties spanning thousands of years, and despite the relationship being cordial and consequential; it has more than often found it hard to develop an all-encompassing working diplomatic understanding between the two. Despite India voting against Iran at the UN over the latter’s nuclear program in 2009, predominantly under US pressure, New Delhi pushed for Washington to give it concessions from international sanctions against Iran on order to continue buying oil from the country. Along with this trade, India also committed more than $1 billion in Iran’s Farzad B oil and gas field, which has been embroiled in traditional bureaucratic entanglements that have become definitive of the bilateral dynamics between the two countries.

Oil and gas has featured as the top most priority of the Iranian economy, and by extension, critical to political stability of the country.

Beyond oil and gas, the possibility of greater strategic engagement between the two countries relies on the Chabahar port project. During previous high-level ministerial visits by Iran to India and Prime Minister Narendra Modi’s visit to Tehran last year, the mirage of the Chabahar project’s strategic importance to India has been even more elevated despite the fact that the entire dance between the two countries to develop it has been an excruciating display of bureaucratic red tape. Attempts to push forward the development of Chabahar is today an excellent, systematic and step-by-step guide on how to fail at diplomacy where both parties stand to gain significantly on their respective interests, yet fail to establish the same. India’s interests span a far-searching policy attempt, with Iran also being crucial for stability in Afghanistan and providing access to Central Asia, while Iran is perhaps yet to recognise that most of its markets for hydrocarbons for the next three decades lie towards the East.

From an Indian perspective, re-election of Rouhani could perhaps see a continuation of the stalemate between the two countries over critical issues, which now includes a war of words over the Farzad B oil and gas field as well. However, it is in India’s interest that Tehran remains on a reformist path, and the Iranian economy continues its movement towards an open market attached to global trade. While it is true that the election of Donald Trump as president of America has thrown many uncertainties over investing in Iran, the fact that the nuclear agreement is a multi-dimension one involving five other powers could be seen as both a balm and safety net over fears of an American withdrawal from the agreement.

·      STRATEGIC STUDIES

·      WEST ASIA

·      INTERNATIONAL AFFAIRS

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Removing local, old bottlenecks

It would be interesting to see how the new restructured Central scheme announced in the Union Budget for exporters and trading agents, and good on paper, unfolds in the coming days and what it holds in store for exporters and other trading agents

Indian exports are showing a downward trend since the past several years. Merchandise exports declined at a compound annual rate of 3.8 per cent, from $305.96 billion in 2011-12 to $262.29 billion in 2015-16. The constant poor export performance has alarmed policymakers who are devising strategies to reverse the trend. Rating agency Crisil remarked that the fall in Indian exports is not due to cyclical factors such as prices and world GDP growth, but due to structural (or infrastructural) bottlenecks that are internal to the country. Poor infrastructure at border check-points is one of the main obstacles for reviving Indian exports. A new scheme announced in the Union Budget for building export infrastructure at the state level, leveraging the Union Government’s support, is critical to expanding export activities.

The scheme,Trade Infrastructure for Exports Scheme (TIES), appears to be a re-packaging of an old one, the Assistance to States for Infrastructure Development of Exports (ASIDE), but with few additional features such as equal sharing of the cost burden (except for projects in the North-East and the Himalayan region States), creating modern export infrastructure in the form of common testing, labelling and packaging, and cold storage facilities at ports and custom check-points. Union Minister for Commerce Nirmala Sitharaman mentioned recently that around 50 per cent to 60 per cent of the Sanitary and Phytosanitary (SPS) measures (or norms on food safety and plant/animal health standards) and Technical Barriers to Trade (TBT) notifications issued by WTO member countries each month, can potentially impact India’s trade. Inadequate infrastructural facilities in the form of testing laboratories for these measures and standards, certification centres, etc at border check-points are the major source of transaction costs for most Indian export industries. Due to limited provision of testing facilities at the check-points, complemented by stringent rules and regulations and complex administrative procedures, exporters face procedural delays, resulting in high transaction costs for them. The high costs thus make Indian exports non-competitive in the global market.

Read also | Rethinking China’s non-market economy status beyond 2016

There is an immediate need to improve export infrastructure, particularly port-related infrastructure which impacts the smooth transit of goods across borders. The development of port infrastructure is critical to improving efficiency of Indian exports. Ports in India handle nearly 95 per cent of the country’s total trade volume and about 70 per cent of the total trade value. The 12 major ports and 200 notified non-major ports in India are administered by the Union Government and State Governments and Union Territories respectively.

Since ports are key junction points, ensuring their connectivity with various other modes of transport (roads, rail and inland waterways) is essential. About seven major Indian ports including JNPT, Paradip, Tuticorn, and Haldia have four-lane road and double-line rail connectivity, whereas only six out of 61 minor ports (responsible for handling export-import cargo) have road and rail connectivity. This highlights that Indian ports, especially the minor ones, are plagued with the problem of last mile connectivity. Some minor ports do not have requisite roads or rail network to connect them with external hinterlands. Even those that have road connectivity, have narrow roads inadequate for containers/cargo movement. This makes these ports non-feasible and unattractive for transit by exporters. The poor quality of roads, including their load-bearing capacity, needs to be upgraded for faster flow of goods within the domestic territory as well as across countries.

Moreover, many ports and border check-points in India have poor support facilities in the form of intermittent Internet connectivity, absence of storage/warehouses, quarantine testing laboratories etc. The absence of quarantine testing facilities at the border causes delays as the products then need to be sent to nearby testing laboratories. For example, due to an absence of a testing lab at the Petrapole border, the samples of goods are sent to labs in Kolkata, which increases time and cost of trading for exporters. Additionally, poor Internet connectivity affects EDI (electronic data interchange) platform established at ports to facilitate trade across borders. The absence of storage units/ cold storage also creates problems, particularly for exporters of agricultural products (fruits, vegetables, grains).

Read also | Making BITs Less Biting: India’s Reform of the Investment Regime

About 20 per cent to 30 per cent of total food grain harvest is wasted due to inadequate storage facilities in India. The new scheme aims to bridge the existing infrastructure gaps, further boosting Indian exports. The special feature of the new scheme is that the Union Government would support State regimes financially as well as supplement their efforts to create necessary export infrastructure at minor ports.

The States are also requested to align their individual export strategy with the national policy on trade.Till date, around 17 States have submitted their export strategies, including potential products for exports, potential export markets, technical standards they have to conform to and their competitors in the global market.

The recent Budget allocation of about Rs 100 crore to the new scheme, TIES, is nearly double the amount allocated to the old one — ASIDE — before its delinking from the Budget in 2015-16. The enhanced Budget would be shared equally by the Centre and State regimes to build appropriate export infrastructure at major and minor ports in India. Since the details about the projects/activities to be financed under the new scheme are not out yet from the Ministry of Commerce, it is difficult to comment on whether the new idea would create a favourable trading environment for exporters and importers. However, a recent article released by Press Trust of India disclosed a few details about the projects to be covered under the new scheme. The Government would not get involved in areas such as road construction, power sub-stations or parking spaces under TIES. Rather, it would focus on infrastructure projects like border haats, custom check-points, last mile connectivity and cold storage at ports. Still, the scheme would certainly strengthen Centre-State relations by enabling equity participation between the two.

The Federation of Indian Export Organisations (FIEO) has remarked that TIES would require sufficient funding to make an impact in the trading environment. In this way, the scheme is likely to provide greater avenues to the private sector as well to cooperate with governments at Centre and State level and synergise efforts to build adequate export infrastructure at the ports and land custom stations. It would be interesting to see how the new restructured Central scheme unfolds in the coming days and what it holds in store for exporters and other trading agents.

This commentary originally appeared in The Pioneer.

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The massive demand for jobs and the demon of India’s demography

A great deal has been spoken about India’s demographic dividend. By 2020, it is said, India will become the youngest country in the world, with its population’s median age at 29.

That means a growing working age population which can purchase goods and services, and a growing middle class.

China, by contrast, will have a population with a median age of 37. But the reality for a poor developing country like India is that the working age population must have jobs and education that will provide them jobs which will give them a reasonable income.

Massive job demand

The problems achieving this goal are obvious. At 142, India remains near the bottom of the ease of doing business list and lags in the proportion of manufacturing in its GDP mix.

Economic growth has been weak and has been further weakened by demonetisation.

Private sector investment is just not taking place and corporate earnings are down.

India needs to generate one million jobs a month to meet the demand, but according to the government’s Employment and Unemployment Survey, 2012 and 2015, it produced 5 million jobs, a deficit of 29 million.

Employment was inadequate for women, and even those that had jobs often had low quality ones such as labourers with no regular income.

Official figures show that after witnessing a slight uptick of 0.5 per cent in 2014, employment creation saw a slump of 67 per cent in 2015.

The figures for the second quarter of 2016 indicate that in eight key sectors of manufacturing – construction, trade, transport, accommodation & restaurant, IT/BPO, education and health added just 77,000 jobs in the April-June 2016 period.

The government continues to speak bravely, if somewhat rashly on the issue.

At a press conference earlier this month, the Union Minister for labour and employment claimed that the Union government would ensure jobs for 50 million people in the country by 2020.

Given the trends outlined above this target hardly seems feasible, considering it means producing a little more than 10 million jobs per annum.

Clearly, the big danger is that the demographic dividend is becoming a demographic nightmare.

This has two features – large number of people without jobs or having marginal employment and a large number of young people who have gone through the educational process, but have degrees and qualifications that simply do not provide them with the skills to hold down a good job which, of course, as we have seen from the figures above, are just not being created.

Political manifestation

This results in frustration and anger and is manifested in a variety of different ways.

You can be sure that whether it is the stone pelters in Kashmir, Jat agitators of Haryana, Marathas marching in Mumbai or Hardik Patel and his patidars – all in varying measure – are a result of this joblessness.

The government has sought to address the problem through special schemes and its ‘Make in India’ campaign.

Unfortunately, outcome of the schemes like the Pandit Deen Dayal Upadhyaya Gramin Kaushalya Vikas Yojna and the Prime Minister’s Employment Generation scheme have been disappointing.

They have created just 1,10,000 jobs in two and half years of the Modi government.

In fact, the one that has done well is the one the government wanted to squeeze, the Mahatma Gandhi Rural Guarantee Employment (MGNREGA) scheme.

Figures speak volumes

The problem does not lie with the Modi government alone. Manufacturing as a share of the country’s GDP has remained flat at a little over 15 per cent in the past decade.

But it was the Modi government that sought to give the big push to change things through its Make in India scheme.

To start with, the steps taken by the government to ease doing of business and the PM’s foreign tours helped FDI to jump to $ 45 billion in 2015-16, an all time high.

But looked at closely the figures revealed that after a record jump of $ 9.6 billion FDI in 2014-2015, FDI in manufacturing actually fell in 2015-16 and the per centage of FDI flowing to manufacturing fell to 23 per cent in 2015-16 from the figure of 35-40 per cent in the previous four years.

FDI was indeed flowing, but to the services sector which did not generate the kind of jobs that manufacturing does.

Instead of focusing on the hard grind to promote manufacturing and hence jobs -through easing land use and labour laws and pushing private and public investment to build India’s infrastructure, the BJP is slipping back to a barely masked divisive agenda to win elections.

The danger is that if the situation does not improve we will see more of the same in 2019 when Modi is up for re-election.

This article was published in DailyMail

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Today’s capabilities, tomorrow’s conflicts

As India actively aspires to shape its security environment in South Asia and beyond, the future set of demands on the Indian military will be heavily influenced by its evolving global and regional environment. India is situated in a difficult neighbourhood where security threats are expected and predictable but can also be unexpected and unforeseen. Combined with the increasing need to project power in the extended neighbourhood, this extended threat spectrum posits a new challenge.

Future threats and conflicts cannot be won by copying past responses and older means of warfare. India’s current defence spending priorities are, however, heavily weighted towards traditional means of war-fighting and conventional modes of deterrence. Current postures favour large-scale conflict in the form of a “two-front war”— an almost negligible forward presence, limited lower-end and versatile assets, and a lack of strategically mobile forces — which leaves India with limited options in responding to contemporary limited-intensity operations, like missions such as non-combatant evacuation, disaster relief, small-scale raids, and combat search and rescue.

Budgetary constraints also mean that the armed forces will not be able to invest in technological solutions wholly to leapfrog their war-fighting capabilities. Adapting legacy platforms to the changing requirements and bringing innovations in war-fighting doctrines and strategies will be the key in dramatically increasing the range and precision of the Indian armed forces to observe, nominate, and prosecute targets.

The government and the armed forces need to prepare themselves for this challenge. The Defence Primer will lead off from the principal challenges to India — long, disputed, and militarised borders with Pakistan and China — and further explore visible technological and capability gaps vis-à-vis the ever-widening threat spectrum. It will also address India’s ambitions as net security provider in the Indian Ocean and the technological/ doctrinal innovations required for those capabilities.

 Strategic Flexibility & Presence

India’s military capabilities will have to keep pace with its diplomatic outreach and geopolitical ambitions. In a fast-changing global scenario, the military deployments of the future will be dictated by challenges that may not be limited by traditional boundaries of a nation-state. These challenges, when coupled with conventional challenges, are likely to create deployment scenarios which need wide-ranging military tactics and platforms. They may at times seem redundant, but military capabilities cannot be created in a short period of time. Moreover, the best way to prevent a future conflict is to be prepared for it.

The Indian military thus needs to better invest in a diverse range of dynamic forces and assets to effectively counter adversary challenges along the full spectrum of conflict, particularly in those contests that may occur below its conventional strategic thresholds. Effective deployment, both in terms of speed and distance, is probably the greatest contemporary challenge facing the Indian military. As such, it may be useful to consider how the rapidity of a force deployment serves the policy objectives for which armed force is needed. Rapid deployment capability is expensive and weighing the costs involved in obtaining this capability against the benefits it accrues is therefore crucial.

Key in building on the potential to deploy and operate out of area will be Indian access to certain military bases in the region — like Diego Gracia, Djibouti, Bahrain and the Australian Coco (Keeling) and Christmas Islands — to extend out-of-area humanitarian assistance and disaster relief as well as anti-submarine warfare operations. Agreements like the Logistics Exchange Memorandum of Agreement with the United States, hold the potential to enable and extend these operations deep into the Indian Ocean. While mutual consent is a tenet of the agreement, Indian access to certain foreign bases would be mutually reinforcing, and is worth exploring given the potential to reduce the demands for logistical ships and tanker aircraft when combat assets need to be deployed.

If India intends to protect maritime approaches into the Indian Ocean at the Malacca Straits, Sundra Straits and the Gulf of Aden developing partnerships in the region needs to be central in its ambitions of sea control and maritime denial.

To do this in the short term (10-15 years), the Indian Navy will need to build up the ability to consistently maintain a deployed presence at key approaches in the Indian Ocean Region and the capability to monitor and prosecute targets in wide swathes across this space. Maintaining an approximate 3.0 presence (i.e., three platforms on station 12 months out of the year) in ships/submarines and anti-submarine/anti-surface warfare aircraft in the Bay of Bengal and the Arabian Gulf hence remains critical to Indian foreign policy and defence posturing.

Aviation assets and platforms supporting and complimenting them will remain key in giving New Delhi the reach it wishes to acquire. There is a corresponding need for acquiring force-multipliers and developing tactics to maximise the potential of such expensive platforms. Current disjointed procurement plans of aviation assets between all three services (Indian Air Force, Navy and Army) and the complete disregard for fleet standardisation by reducing the number of aircraft types have resulted in logistics-heavy platforms and little interoperability. These are important considerations because fleet standardisation reduces maintenance, training costs and improves interoperability/combined arms operations and platform availability for deployments.

The current organisational structure of the Indian armed forces, where each defence service operates in its own silo, is not conductive to joint military action. Jointness in command at theatre level is an eventuality that needs to be imbibed by the three services at the earliest. A future challenge cannot be met without a unified military head — not merely an advisor or coordinator — providing direct support to the top political leadership. The current government has repeatedly spoken about creating such a post, and clearly joined the debate on this subject.

This debate is especially urgent as jointness is linked to the funding issue which will drive New Delhi’s cooperative sourcing of capabilities. India’s defense preparedness and capability-development efforts will ultimately depend on building an efficient system of defense procurement, indigenous production capability, and acquisition reform in order to sustain this modernisation.

The fundamental issue relates to the quantum of funds allocated for national security, and the share of those funds for defence modernisation. While the defence budget has fallen to about 1.7% of India’s GDP, a larger share of funds is now being allocated towards salaries, pensions and other operating expenses. The shrinking amount for capital expenditure is leaving the military short of its desired state of modernisation. Reforms have been initiated to streamline the procurement and acquisition process, and create indigenous defence development and production capacities, but these will do little to ameliorate the current state of military equipping in the immediate future. The capabilities for the future, even if thought through and accepted by the government, can only be acquired if adequate resources are made available for them. This needs a change in mindset and approach, which can be expected from this government, which is showing greater signs of acting on India’s geopolitical ambitions.

The challenge to achieve the blue sky capabilities that are required under various circumstances and in different aspects as discussed in this primer, will be predicated on a stark assessment of the current state of play and an honest appraisal of the means available with the country. The Primer hopes to act as a catalyst for ideas and options for India’s security community as the Indian military goes through a number a structural and technological changes.

This article was originally published in ‘Defence Primer‘

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Fighting Islamic State: A trap for India

Located in the Sindh town of Sehwan, Lal Shahbaz Qalandar is among Pakistan’s best-regarded Sufi shrines. It is associated in popular culture with the haunting voice of Reshma, the late artiste whose family migrated at Partition from the deserts of Rajasthan to Sindh and who shot to fame as both a devotee of Shahbaz Qalandar and the singer who gave us Dama Dam Mast Qalandar. Ironically many Indians first heard that devotional song not in the voice of Reshma, but of Runa Laila, a Bangladeshi icon, establishing how culture, music and faith link the subcontinent in more ways than we can imagine.

All this makes the terrorist bombing of the Shahbaz Qalandar shrine on 16 February 2017 that much more poignant. It is an act of infamy for which the Islamic State (IS), or Daesh as it is known, has claimed responsibility. It has been suggested, correctly, that Daesh’s puritan version of an Islam practised in the medieval desolation of Arabia cannot fathom or sanction divergent and regional practices of Islam, specially in South Asia. As such, targeting a Sufi shrine that is, frankly, beyond just Islamic in its appeal is entirely in keeping with the IS worldview.

Yet, while not discounting IS, it needs to be kept in mind that attacks on Sufi shrines, on Shias, on Ahmediyyas and on forms and modes of subcontinental Islam that are considered “deviant” and “blasphemous” by Wahhabi and similar interpretations of the faith are not new in Pakistan. They have been sanctioned and supported by the ideologues of Pakistan, by a state-back religious police, and even by sections of the military.

If these traditions persist, and if a Lal Shahbaz Qalandar continues to draw thousands of pilgrims, it is because common people in Pakistan have soldiered on and still not rejected these aspects of their heritage.

It is worth recalling that the outrage felt earlier this week was similar to the response to the suicide bombing of the Data Darbar shrine in Lahore in 2010. That shrine too is a landmark in the city and was seen to be above controversy and safe from terror threats. Sufi shrines, Shia mosques, dargahs, and so on have been systematically attacked in the past decade, in Punjab, Sindh and Balochistan.

In fact, one fears for the Hinglaj Mata temple in Las Bela, Balochistan. This is the westernmost of the Shaktipeeths so sacred to Hindus. It is a location that attracts local Muslims too. They associate it with not Shiv and Sati, but with a divine calling going back to before the advent of Islam, but accepted and incorporated even after the embracing of and conversion to Islam. This is a complex reality that unsophisticated, black-and-white zealots can never comprehend.

Who threatens any Pakistani Muslim who does not conform to a narrow Wahhabi or Deobandi idea of Sunni Islam?

One need not even discuss here the predicament of Pakistan’s Hindus, Christians or its once-sizeable Jewish community; their story is in another category altogether. Spin doctors in Islamabad argue the challenge comes from the IS. In 2010, when Data Darbar was bombed, there was no IS. The villain then was the Tehreek-e-Taliban or Pakistan Taliban. In recent years, as the IS has strived to gain a foothold in the Afghanistan-Pakistan region, it has taken in former Tehreek-e-Taliban cadre. Many militants have changed labels in expectation of better pay and logistics.

Recruitment to the Pakistan Taliban and the fledgling IS, is carried out in the same Pakistani Punjab rural heartland where the Lashkar-e-Tayyaba, the anti-Shia Sipah-e-Sahaba, its affiliate the Lashkar-e-Jhangvi, and the Jaish-e-Mohammed seek to swell their numbers. Of course, each of these groups has different tactical motivations. One may focus on attacking Indian soldiers and civilians in Jammu and Kashmir and elsewhere, another may prioritise a genocide of Pakistani Shias.

Nevertheless a Sunni supremacism and a distaste for so-called unauthorised rituals in Islam is common to them. Ultimately, the syncretic appeal of a Data Sahib or a Lal Shahbaz Qalandar is antithetical to this jihadist spectrum. As such, rather than inspired by IS actions in Iraq and Syria, the bombing of Lal Shahbaz Qalandar follows a history of state-backed Sunni extremists and state-condoned Sunni militia systemically annihilating supposed “heretics” within Pakistan’s own Muslim community.

The IS has exploited this environment; it has not created it. That toxic atmosphere pre-existed IS and can be traced back to at least the Zia-ul-Haq decade, from which Pakistan has not recovered and perhaps may never recover.

The distinction between these groups is not so much in terms of theological construct, it is political.

Lashkar and similar militia are loyal to the Pakistani state and usually listen to the generals. Tehreek-e-Taliban and IS fantasise about taking over Islamabad, overthrowing the Pakistani state and building a pan-national Caliphate. The Afghan Taliban sees the Pakistani state as an ally in its effort to recapture Kabul.

Not surprisingly, Islamabad-Rawalpindi have presented IS as beyond the pale and the principal problem, but the Afghan Taliban as part of the solution. As a former Pakistani foreign secretary said at a closed-door conference a few months ago, “Tehreek-e-Taliban and IS are brigands and terrorists. (Afghan) Taliban are Afghan nationalists.” He didn’t bother mentioning Lashkar or its parent, the Jamaat-ud-Dawa.

Strategically, all these militia are a threat to India. Tactically, IS and/or Tehreek-e-Taliban is a threat to Pakistan. It may one day become a direct threat to India but at the moment, it is Pakistan that is facing the heat. That is why it is using this chance to try and mainstream the Afghan Taliban as “not-so-bad guys” who can help take on the IS.

This is poppycock. Those maverick voices in India urging that the Narendra Modi government to send troops to fight IS should know better. What they are in effect suggesting is that India walk into somebody else’s war, and somebody else’s trap.

This commentary originally appeared in The Asian Age.

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The future of work in Asia

Every year, millions of young people enter the labour markets in Asia. Creating sufficient jobs to meet this demand is a huge challenge. What solutions work best needs to be determined in the local context. What this essay aims to do is look into the global opportunity structures for development, and reflect on what changing conditions could mean for the ability to create employment in Asia’s emerging economies.

The global window of opportunity for development is closing

Ever since the Second Industrial Revolution started to peter out in the 1960s, global capitalism has faced a crisis of consumption demand. The decades that followed have been described by Wolfgang Streeck as buying time to address the root cause of the crisis: that consumption demand grows slower than the increase in productivity. The inflation of the 1970s, the public debt of the 1980s, the private debt of the 1990s and the quantitative easing of the 2000s were all strategies to create demand by injecting future resources for consumption at present.[1]

While all of these temporary fixes necessarily led to major crises, they bought the time needed to implement five strategies to “repair capitalism”: 1) the rationalisation of production through technological automation aimed at increasing efficiency; 2) the globalisation of production by offshoring, profiting from cheap labour cost in developing economies; 3) the neoliberal approach to free the supply side from any “political cost,” such as by lowering taxes, cutting back welfare and depressing wages; 4) financialisation as a strategy to sidestep the crisis by looking for profits in the financial markets; and 5) the digital revolution, understood by Philipp Staab as the latest attempt to tackle the consumption crisis by rationalising the consumptive and distributive apparatus.[2]

So far, none of these strategies has succeeded to resolve the consumption crisis. On the contrary, deindustrialisation and automation have contributed to the crisis by creating un- and underemployment in the old industrial countries, leaving fewer people with disposable income for consumption. The series of financial crises has shown the risks of the financialisation strategy. Finally, the promise of digital capitalism to create new consumption demand may equally backfire, when digital disruption automates middle class jobs and further erodes consumption demand­­­.[3]

Which of these global trends will reverse, continue or accelerate?

The technological rationalisation of the production apparatus, propelled by increasing global competition, will certainly continue. Despite the significant contribution of automation to unemployment[4], there has been no widespread political resistance to it. Most of the public anger focuses on globalization and trade. Rising productivity, on the contrary, is celebrated as the only way to survive the breakneck global competition. In the absence of any political pushback, then, digital technologies like 3D printers have the potential to unleash a new wave of productivity increases through automation.

Digital automation is eroding the comparative advantage of cheap labour. This trend is accelerated in those countries that had reached the Lewis turning point, where the reserve army of cheap labour in the agricultural sector has dried up, as well as in ageing societies where the total labour pool is shrinking and wages have started to rise.[5] For instance, in China, hourly wages increased on average by 12% annually over the last decade.[6] Some of this cost has been offset by rising labour productivity.[7] As the competitive advantage of cheap labour cost erodes, however, other factors like product quality, skilled workforce, supply chains and local governance become more prominent. Most importantly, increases in energy efficiently are making their mark. As a result, total costs of manufacture goods in some emerging economies are approaching those of the United States.[8] All things considered, manufacturing in the United States is only 5% more expensive than in China.[9]The tumbling labour cost, together with better energy efficiency, are making manufacturing in the old industrialised countries competitive again.

This cost convergence allows manufacturing industries to be more flexible and react quickly to shifting consumer demands. In the clothing and garment industries, shelf lives are getting increasingly shorter. But the long shipping time is the Achilles heel of these and other fast-moving consumer markets. Consequently, multinational companies like Walmart, Ford and Boeing, as well as small- and medium-size companies, have started to reshore production facilities back to their parent countries. The Reshoring Initiative, a non-profit organisation, estimates that 260,000 jobs have been created in the United States because of this shift.[10]At the same time, the incentives for offshoring have deteriorated. At least in emerging economies with rising wages like China, if not the total numbers, then the composition of foreign direct investment is shifting from manufacturing to financial services. Accordingly, open manufacturing positions in China have been dropping consistently since 2012, indicating that job creation in the manufacturing sector is slowing shrinking.[11] This means we may be seeing the beginning of the reverse of the offshoring trend already.

The growing resentment against globalisation in post-Brexit Europe and Trump America may further accelerate reshoring. The rage of the losers of globalisation is hardly irrational. Decades of secular stagnation and jobless growth have depressed real wages and living standards, and condemned millions to underemployment and debt.[12] Garnished with racist vitriol and nationalistic hyperbole, right-wing populists have proven that the message ‘globalisation has not worked for the working and middle classes’ can win majorities. With the promise that the ‘free movement of goods, people and ideas will benefit all’ losing credibility among voters, politicians across the political spectrum will be tempted to play with the protectionist toolbox.

While the neoliberal cost-cutting paradigm is still perceived by many decision makers as “without alternative”, public resentment against austerity is mounting. The election of Donald Trump as the US President is a watershed moment. American voters have entrusted their fate in a candidate who has vowed to lay the axe at the foundations of the liberal world order. The political battle over the new paradigm is still raging, and it is far from clear what will replace the current order. Still, it seems that neoliberalism has passed its peak, and may soon begin to reverse.

Financialisation, in times of low profitability in the “real economy,” continues to be attractive for capital looking for profitable investments. In the aftermath of the 2008 financial crisis, political decision makers have refrained from any meaningful regulation of the financial markets. This free pass may change in case of another financial meltdown. Until then, the financialisation trend is likely to continue unabated.

Finally, digital automation is only just taking off. Artificial Intelligence, robots, smart grids and 3D printers will revolutionise the way we live, work and commute. Digital utopists have high hopes of curing diseases, mitigating climate change, and democratising energy and production. Digital dystopists fear that digital automation will create mass unemployment, pulverise the middle classes, erode democracy and pave the way for a global totalitarian regime. Optimists see excellent opportunities for high-skilled work arising, but even those are hard-pressed to see much hope for low-skilled labour. Accordingly, the political debate over Labour 4.0 is fully underway. Regardless of whether the promise to unleash a new wave of consumption demand is empty, venture capital and politicians alike are putting all their hopes on the Fourth Industrial Revolution. Digital automation, it seems, is bound to accelerate.

The race for development in Asia

What will be the implications of these trends for the future of work in Asia? Most of Asia’s emerging economies have followed the export- and manufacturing-led development model. Taking advantage of its abundance of cheap labour, East Asia’s flying geese have moved from agriculture to light manufacturing to full industrialisation. What worked so spectacularly well in East Asia over the last decades, however, may no longer work under rapidly changing global conditions.

First, the global window of opportunity for export-led growth seems to be closing. Given the dark political clouds on the horizon, it can no longer be taken for granted that OECD markets will stay open for Asian exports. Donald Trump has called the Trans-Pacific Partnership “a potential disaster for our country” and vowed to kill the deal on his very first day in office. More so, the United States and the United Kingdom seem determined to re-negotiate existing trade agreements. Other countries may also go down this road. Prudently, Asian population giants like China and India have already begun to reorient their development models towards their domestic markets. Smaller countries like Malaysia or South Korea are looking to their bigger neighbours. For geopolitical reasons, China may indeed be willing to found a regional trade regime around its Regional Comprehensive Economic Partnership. However, given the need to absorb its own excess capacities, it is unclear if China would be willing to replace the United States as the “buyer of last resort.” Asia’s emerging economies would, therefore, be wise to rethink their export orientation.

Second, digital automation may lead to jobless growth. Higher labour productivity means that less workers can produce the same output, leading to the need to cut jobs. Even if investment and growth rates stay high, the factories and workshops of tomorrow will be populated with robots. Multinational manufacturers are lining up to set up production facilities, creating a few hundreds of jobs, whereas a few years ago tens of thousands of workers would have been required for the same. This poses an enormous challenge to countries with high population growths, where millions of workers are looking for jobs. In India, every month one million young people are entering the labour market.[13] Despite a benign global environment of low oil prices, leaving room for public spending on infrastructure as well as consumption demand, India’s track record in job creation has been disappointing.[14] In fact, despite being an international investors’ darling, India loses 550 jobs per day.[15] Indonesia, where the number of adults over 15 years increased by 3.1 million between 2014 and 2015, only 200,000 jobs have been created in the same period.[16]

Third, digital automation changes the quality of employment generated. A survey of employers in major industries in ASEAN countries showed that the demand for high-skilled workers far outgrows the supply.[17] Following the pattern in industrialised countries, the need for low-skilled workers dwindles. Given the low productivity in the agricultural sector, this surplus labour is likely to migrate to urban centres. In India, the urban population is projected to increase by anywhere between 300 to 400 million people.[18] What will happen if the aspirations of these internal migrants remain unmet and frustrations rise?

Fourth, global trends may increase the risk for premature deindustrialisation. Dani Rodrik observed that in a globalised market, manufacturing moves on as soon as wages start to rise, leading to premature deindustrialisation in newly industrialising economies.[19] By the time manufacturing in South Korea accounted for its highest proportion in jobs, incomes were around $12,700. In India, factory employment started to decline as a share of employment when income was around $3,300.[20] This trend is accelerated by financialisation, which encourages roaming hot money in pursuit of quick profits over long-term investments, increasing the risk for financial crises and external shocks.

Finally, the artificially intelligent robots of the future will not only compete with Asian workers from afar, they are also going to ultimately replace them. In the old industrialised countries, the service sector has long been the best hope to absorb those who were replaced by automation in the manufacturing sector. The flexible and decentralised nature of many low-skill service jobs made them so far relatively resistant to automation. Frey and Osborne, however, believe that this resistance to rationalisation may end in the current wave of digital automation.[21] Major breakthrough in big data, sensors and intuitive programming allow machines to take over tasks that seemed to be off limits only a short time ago. Plummeting costs of robotics make these machines increasingly competitive with human labour.[22] As Brynjolfsson and McAfee point out, contrary to common belief, it is not necessarily the manual jobs which are the most easily automated.[23] Billions of years of evolution have equipped humans with a sophisticated motoric apparatus, while our cognitive abilities are not as impressive as we like to believe. Consequently, in this second wave of automation, it is rather the cognitive jobs than the manual ones, which are being automated. Put bluntly, it is easier to replace a tax clerk with a robot than a cleaning maid. Artificially intelligent robots will replace service sector employees with highly repetitive tasks like tax consultants, travel agents, legal clerks or call service providers. Platforms like Uber or Amazon are likely to disrupt local markets from pharmacies to logistics and retailers. A World Bank study estimates that the proportion of jobs threatened by automation in India is 69% and 77% in China.[24]The ILO estimates that 56% of jobs are at risk of being automated in the ASEAN-5 countries.[25] The difference in labour cost, however, makes it unlikely that low-skilled service workers in emerging economies are being replaced with machines anytime soon. This is even more true if these jobs are not subject to international competition, but embedded in the domestic market.

In sum, the global window for export-led, manufacturing-led development is closing.[26] This means development has turned into a gigantic race against time.

How can emerging economies create jobs?

With the traditional route to development closed, the search for alternative development models is in full swing.

When development means to race up the global value chain, a productivity- and innovation-driven model seems like the best bet. But where will this innovation come from? In Asia’s statist polities, it seems somewhat doubtful that political leaders are fully willing to trust their fate with the Schumpeterian creative destruction of the market. The secular stagnation in the neoliberal economies of the West may further discourage market-driven experiments. In South Asian societies, traditionally in the suffocating grip of its bureaucracies, the idea of state-led innovation may seem even more alien. Even in East Asia, the development state has been put to rest. In East Asian societies, with their cultural ideals of seniority, discipline and unity, out-of-the-box thinking and going against the grain are generally discouraged. How can such a cultural and political climate encourage disruptive innovation? This, however, may spell trouble for all the hopes in digital incubators. Where freedom is lacking, creativity seems unlikely to flourish.

In the digital economy, humans are needed to cater to the hopes and needs of humans. The human economy, from tourism to fashion, from health services to elderly care, from food to arts and crafts, has enormous growth potential all over Asia. The human economy offers plenty of opportunities for employment generation. Until now, care work has largely been provided by family and neighbours, and remains largely without remuneration. Creating income from care work is especially attractive for women. Equally, the enormous potential of the tourism industry to create employment, directly and indirectly, has not yet been fully exploited. Finally, the human economy offers a new perspective for employment in the chronically unproductive agricultural sector. Organic farming, local products, and even urban farming cater to the ethics and health conscious young urban middle class consumers. Producing high quality agricultural products for this niche market can be a source of decent jobs for agricultural workers. While human economies have created millions of jobs in Thailand, the Philippines and Singapore, South Asian countries have not even begun to explore these opportunities in full.

Green growth offers new opportunities for development.[27] The International Renewable Energy Agency estimates that renewable energy employed 8.1 million people around the world in 2015.[28] China leads global employment in renewable energy with roughly 3.4 million direct and indirect jobs, followed by Brazil, the United States, India and Germany. Jobs continued to shift towards Asia and the share of the continent in global employment increased to 60%. In India, reaching the government’s goal of 100 GW through photovoltaic source by 2022 could generate 1.1 million jobs in construction, project commissioning and  design, business  development, and operations and maintenance. With its domestic focus, the construction industry seems to be better shielded against international competition than others. Enormous potential to create clean jobs also lies in energy efficiency.

So where will the jobs of tomorrow be created?

In a comprehensive study on the future of work in ASEAN countries, the ILO has looked into the impact of digital automation on the five major employment-generating sectors. New technologies like robotic automation, Internet of Things, 3D printing, sewbots, cloud computing and software robots are changing the skill set required from workers. The assessment looks very similar to the impact of digital automation in other regions of the world: while new high-skilled jobs are created to work with machines, low-skilled labour is increasingly being replaced. Engineers and technical experts are needed in the automotive, electronics and textile industries. Highly educated employees with certificates in medicine, business, finance, law, accounting and data analysis have good chances in business process outsourcing. Employees in the retail sector will need skills in data management, digital marketing and social media.

These expectations, however, need to be squared with the reshoring and protectionism trends. Asia still has many advantages going for a future in manufacturing.[29] The erosion of cheap labour’s comparative advantage, and the ability to produce better quality close to the home markets, however, suggest otherwise.

With manufacturing on the way out, and the chronical labour surplus in the agricultural sector, only the service sector is left as a major job generator. Again, the digital revolution offers hope for high-skilled labour. By putting in place the infrastructure for a global division of labour in real time, the digital revolution allows high-skilled workers in Asia to compete individually with their peers in the OECD countries. Aneesh Aneesh sees opportunities in research and development of software, engineering and design, animation, geographic information systems, processing of insurance claims, accounting, data entry and conversion, transcription and translation services, interactive customer services, finance and credit analysis, market analysis, archive administration and website development and maintenance.[30] What is different from the call centres of today is that these jobs require higher skills. Importantly, these “digital jobs” are not restricted to the IT sector, but arise across the entire spectrum of service sector. Major industry leaders have invested in crowdsourcing platforms, which allow outsourcing of tasks globally.

With its millions of highly educated workers, India is in a good position to compete in the globalising service markets. The National Association of Software and Services Companies suggests that India aims to capture 20% market share in Internet of Things sector, worth $300bn.[31] India aspires to build a cyber-security product and services industry of $35 billion by 2025, and generate a skilled workforce of one million in the security sector.[32] Following the path its IT industry has already taken, there is ample opportunity for English-speaking, highly skilled workers to create income in the global crowdsourcing industry. Compared to Western workers, which are being deprived of social security, decent wages and workplace co-determination, for Indian workers the gig economy may still offer a way to get ahead. Accordingly, domestic worker app companies are expanding between 20%-60% month-to-month, bringing together households with domestic workers, at least those who have access to mobile technology and banking.[33] However, when digital crowdsourcing platforms allow employers to choose from offers originating from labour markets with vastly different wage levels, this extreme competition between the global labour reserve armies drives a race to the bottom, where only the lowest wages can prevail.

If the service sector will reward all these hopes is by no way certain. On the one hand, the digital division of labour allows service workers to compete in many more markets globally. On the other hand, some of these emerging jobs are already being automated.[34]

In order to win the race for development, emerging economies need to move up the global value chain. Doing so requires major investment in the skills and creativity of the workforce. If human skills are the key to the future of work, policymakers need to limit the brain drain at all cost. Already today, India, China and the Philippines are major exporters of skilled labour.[35]If high-skilled workers feel they are not safe at night, or cannot find affordable housing, quality schools and health services, doctors, engineers and programmers may decide to look for a better life overseas. The key challenge is then to build liveable cities. Green and inclusive urban habitats not only create employment opportunities today, but also convince the creative workers of tomorrow to stay.

Creating jobs, therefore, is not a technical task, but a highly political one. Building a highly skilled workforce needs major investment in education, infrastructure and health services. In many transformation countries, the middle classes refuse to shoulder the tax burden for these investments. Unable to move up the global value chain, countries can then be stuck in a transformation trap of political conflict and economic stagnation.[36] Sustainable development, therefore, is only possible on a solid social foundation based on an inclusive compromise between established and emerging classes. Those societies who understand this basic equation of development will be best placed to solve the employment challenge of the 21st century.

This article was originally published in ‘Raisina Files: Debating the world in the Asian Century

[orfonlineorg-blog]

Poor health access and ongoing ‘caesarean epidemic’ in battle states

A staggering five women die every hour in India due to causes related to pregnancy and childbirth. And two-thirds of the around 45,000 such deaths annually occur outside any medical facility, that is, either at homes or en route to hospitals.

This is despite a slow improvement in the maternal mortality ratio (MMR) in the country. As appropriate medical surveillance and intervention can almost entirely prevent maternal deaths, MMR is deemed a sensitive indicator of the general quality of a health system, according to the World Health Organisation.

Hence, this abysmal mortality rate reflects a general lack of physical and financial access to healthcare, which is a fact of life for many Indian households.

Yet, a bizarre and parallel narrative is unfolding across the country.

In contrast to such under-provisioning of maternal care, there is an emergent story of over-provisioning too, in rich and poor states alike. And nothing demonstrates this phenomenon better than the “Caesarean Epidemic.”

A caesarean section or a C-section is a delivery through a surgical incision in the mother’s abdomen and uterus, in situations where a vaginal delivery could put the baby or mother at medical risk. However, disturbingly, more pregnant women in India are going under the scalpel for deliveries than is normal.

The WHO made it unequivocally clear in a 2015 statement that C-section rates higher than 10% do not help reduce maternal and newborn mortality rates. But India crossed this threshold way back in 2005 when the figure hit 10.6%.

While the media has reported on the issue before, the latest numbers released by the National Family Health Survey (NFHS 2015-16) once again underline the acute problem.

A cross-section

While national-level data is yet to be published, here’s a look at the numbers from five states: Uttar Pradesh (UP), Goa, Punjab, Uttarakhand, and Manipur.

While representing the country’s socio-economic diversity, and holding a mirror to the national situation, these states are also important because they are now at various stages of holding elections to their legislative assemblies. In each of these, the numbers pose a public health threat.

Notably, the increase in the rate of C-sections over the last decade seems to be largely driven by the private sector in these states.

As we await the latest data from UP, it is safe to say that among the five states, at least one in three deliveries in private hospitals are by C-section. And analysis of NFHS 2015-16 data shows that in states like Goa and Manipur, it is one in two deliveries.

Meanwhile, even a poor state like UP has districts like Banda (58.7%), Basti (38.1%), Gorakhpur (39.5%), Pilibhit (40.8%) and Sonbhadra (39.7%) with very high proportions of C-sections in private hospitals, as data from the Annual Health Survey 2012-13 suggests.

In many of Punjab’s districts, the share is more than half.

A bizarre fad

The main reasons cited for undergoing C-sections are: to avoid the excruciating pain of normal childbirth, doctor’s convenience, profiteering, and cultural issues like the “mahurat baby” fad. However, reducing a C-section to a minor procedure resorted to for convenience’s sake trivialises the risks involved.

As the WHO points out, like any major surgery, “Caesarean sections are associated with short and long term risk which can extend many years beyond the current delivery and affect the health of the woman, her child, and future pregnancies.”

In 2013, The American College of Obstetricians and Gynecologists issued a statement against what is known as “maternal-request caesareans” or C-sections done at the request of the mother without a medical condition. It said that women undergoing C-sections face the risk of infection as well as bladder and bowel injuries during surgery, along with serious complications like placental problems, uterine rupture, and emergency hysterectomy.

If nothing, India has another major reason to immediately deal with the epidemic. Babies born vaginally have fewer respiratory problems. A 2014 study showed that C-section babies have a considerably increased risk for asthma.

Given the alarming rates of pollution across our country, especially its cities, and the already high burden of respiratory infections, Indian parents seeking a convenient C-section may be unwittingly gifting their child a chronic disease.

Systematic studies to establish the connection between the burden of asthma in children and C-section will be a first step towards the long-term management of this public health problem, particularly in regions that are the hot spots.

It is heartening that many influential doctors have themselves begun advocating against medically unnecessary C-sections. A recent online petition demanding the union health ministry to mandate hospitals to publicly declare the share of C-section deliveries indicates a growing public awareness.

Will it turn into concrete action? Only time will tell.

Part 1: Down to the district: The health of 5 states going to polls

Part 2: #Elections2017 : UP spends least on health, reflects in its ill-health

Part 3: #Elections2017: More wasted children, anaemic men, women than before in Punjab

Part 4: #Elections2017: New worries creep into seemingly healthy Goa

Part 5: #Elections2017: Uttarakhand has rich people–and children with poor health

Part 6 : UP’s health variations: From worse than Haiti to better than India

This commentary originally appeared in Quartz India.

[orfonlineorg-blog]

Connecting South Asia with South East Asia: A reality check

TARIQ A KARIM

Bird's eye view of Irrawaddy

Source: Wikimedia

BBIN

EAST ASIA

EMERGING TRANS-REGIONAL CORRIDORS

SOUTHEAST ASIA

The Rationale

Southeast Asia and East Asia regions are already well-known economic success stories, which emanated from most of the countries in these regions adopting an outward-looking strategy with trade-oriented growth and signaled to potential investors their openness to encouraging FDI flowing in from developed countries from within Asia & elsewhere.

The South Asia region is a relative latecomer to dynamic regional growth that was perceived largely as impeded by inadequate/ very poor infrastructure, high levels of regulations & trade barriers.  Linking up South and Southeast Asia has figured in the political thinking of leadership in both regions, but somehow the conditions until recently were not conducive to embarking on such venture. The post-colonial isolationist attitude of Myanmar was a big impediment to its taking advantage of its naturally configured geo-strategic bridge between South and Southeast Asia.  Developments in Myanmar after it joined ASEAN translated into economic reforms that gradually eased the restrictions and selectively opened its economic landscapes.  The recent elections in that country signal the beginnings of a political transformation, therefore, now offer renewed hope of facilitating linking of the two regions.

However, conditions are not equally conducive at the moment for South Asian region’s westward linking with Iran and Central Asia.

Figure 1: Map of South and Southeast Asia

A Fractured Saga!

Trade and connectivity are handmaidens to each other, anywhere.  However, in the South Asian region, Land and rail connectivity have remained hostage to the negative post-Partition political syndrome.  Although road and rail corridors had been long identified by the UN ECAFE/ESCAP decades ago in its Trans-Asian Highway and Railway scheme presented to member governments concerned, progress remained excruciatingly slow – and painful, particularly within the SAARC region.  Within the SAARC framework also, while senior officials, after many years of hard, and often fruitless consultations and negotiations, finally managed to cobble together a consensus draft regional Motor Vehicles Agreement (MVA) in 2014, their result did not pass political muster by some and efforts to get an all-SAARC endorsement of the SAARC Motor Vehicles Agreement at Kathmandu Summit in November 2014 was stonewalled by Pakistan.  Following this disappointment, some of the SAARC countries, namely Bangladesh, Bhutan, India and Nepal (BBIN) in the eastern sub-region decided that their economic development aspirations that required increased physical connectivity across borders to boost trade, could not be allowed to be held hostage by some and decided to try and get a framework agreement in place at sub-regional level.  Senior officials of the four countries met in January 2015 and put final touches to a draft MVA for the BBIN sub-region (essentially along lines of the draft SAARC MVA that had aborted earlier at the summit, and declared that others in the SAARC region (or beyond) could join as and when they were ready.  On June 15, 2015, at a Ministerial meeting convened in Thimphu by Bhutan, the Ministers concerned from the four countries signed the BBIN MVA. Trial runs for passenger and cargo vehicles commenced in November, and Standard Operating Procedures tested and completed by end-December 2015.  It allows the four signatory countries to move forward with implementation of land transport facilitation measures amongst themselves, exchanging traffic rights easing greatly the rites of passage across borders crossings by passenger and cargo vehicles, thus promoting increased people-to-people contacts, trade and economic exchanges between the four countries.  The framework document signed is, ab initio, of a bilateral nature in practice, on the basis of reciprocity.  For every vehicle one country allows another co-signatory to enter its territory, makes it incumbent upon the recipient country to reciprocate in equal measure.  Passengers will still be subject to prevailing immigration requirements of countries and goods are subject to payment of taxes and levies as exist. Nevertheless, this is a very positive and historic development within the region, and paves the way for progressive easing of restrictions on ease of movement of vehicles, goods and peoples across the borders of the four countries. The BBIN MVA will become fully operational as soon as ratified by the respective parliaments of the signatory states.

BIMSTEC and BBIN

India’s earlier “Look East” policy, now metamorphosed by current Prime Minister Modi’s government into the “Act East” initiative, may be viewed as mirroring ASEAN’s “Look West” aspirations and is aimed to link up with the latter and beyond to East Asia. The BBIN sub-grouping of SAARC and its recent efforts to put in place and operationalize enhanced connectivity amongst them is an essential first step towards actually operationalizing the “Act East” initiative. The BIMSTEC (Bay of Bengal Initiative for Multi-sectoral Technical and Economic Cooperation), that was formed in the late nineties, and includes the BBIN countries as well as Sri Lanka, Myanmar and Thailand, could well also embrace the ongoing BBIN initiatives and play the bridging role between the SAARC and ASEAN regions.  The progression along this pathway has been slow but organically enlarging. The BBIN achievement could not have happened without the upswing in Bangladesh-India relations since 2010 that put in place the critical stepping-stone for forging forward.  In other words, it first required Bangladesh and India getting their relations right before meaningful connectivity aspirations, between and beyond them could be envisaged or embarked upon.

Road and Rail Corridors

ESCAP, ADB and other multilateral donors had assisted the SAARC countries over many years, to identify a number of road and rail corridors to facilitate trade and movement of people.  The BBIN MVA will (or should effectively) enable these four countries to now work together with a sense of purpose for operationalizing, in stages, the following identified road corridors, first among them and then extending beyond them to the east and linking with Myanmar (and thence with the ASEAN corridors);

SAARC Corridor 4: Kathmandu (NP)-Kakarbita (NP)-Panitanki (IN)-Phulbari (IN)- Banglabandha (BD)- Mongla-Chittagong (BD)

SAARC Corridor 8: Thimpu (BH)-Phuentsoling (BH)- Jaigon (IN)- Changrabandha (IN)- Burimari (BD)- Mongla/Chittagong

Asian Highway 2: NE India- Myanmar

Kaladan Multi-Modal Transit Transport Project: Mizoram (Mobu)-Sittwe (Myanmar)

Additionally, Bangladesh and India are collaborating on linking up existing national highways at Dalu (Meghalaya, India)-Nakugaon (Mymensingh, Bangladesh) – thus establishing a North-South corridor of great importance for Bhutan and the NE states of Meghalaya  and Assam in India.  Bhutan, in addition, has been increasingly using the ICP at Dawki-Tamabil for the last few years, using less the corridor earlier designated for them (Corridor 8), because of operational difficulties and delays experienced by them. Bangladesh and India have also worked together to upgrade earlier minimal facilities at Bhomra, further south-east of Benapole-Petrapole in a bid to augmenting capacity of the latter, plagued for long by technical and handling capacity glitches.

The operationalization of the BBIN MVA will also exponentially augment the ability of peoples of the four states traveling to each others’ countries in personal or commercial transport vehicles.  It may be mentioned here that prior to this development, passenger bus services as follows:

Kolkata-Dhaka-Agartala (operational)

Dhaka-Sylhet-Shillong-Guwahati (operational)

Dhaka-Kathmandu (announced)

Dhaka-Thimphu(announced)

Figure II: Road and Rail Routes between India and Bangladesh

South Asia Rail Corridors:

The BBIN MVA takes the long nurtured dream of road-connectivity a significant step closer to reality.  The translation of contemplated railway corridors from concept to reality, however, is still work in progress, incrementally. Of the Rail Corridors, existing or contemplated, for the SAARC region, the following are worth mentioning:

Western sector

Eastern sector

Wagah-Atari (linking India and Pakistan – notably, this particular corridor was never disrupted in last over six decades, four wars notwithstanding; but this is essentially a point-to-point connection, and trains from either country do not foray further west or east beyond these two stations into each others’ railway network).

Dhaka-Chittagong (internal to Bangladesh)

Dhaka- Darsana- Khulna (internal to Bangladesh)

Dhaka-Kolkata (operational between India and Bangladesh, point-to-point, as at Wagah-Atari, for several years now, but needs to be made more passenger-friendly in terms of customs and immigration procedures)

Khulna-Kolkata, (under active consideration between Bangladesh and India)

Agartala-Akhaura (work in progress, with Indian assistance, will link Bangladesh with Tripura State of India)

Agartala-Ramu(requested by Agartala state, under consideration, will require a bridge over Feni River which India is willing to build)

Notably, if the points between Kolkata and Agartala route are linked, either preferably with through trains of both countries or through transferring passengers with national services at destination points, the current travel distance between these two cities will be shortened from1590 kms to 499kms.

Following the decisions announced by the Prime Ministers of Bangladesh and India in their Joint Communiqué at the conclusion of the former’s game-changing visit to India in January 2010, the two sides have cooperated on upgrading, synchronizing and operationalizing existing facilities between Rohanpur-Singabad (facilitating transit to Nepal) and at Radhikapur-Birol (that will help both Nepal and Bhutan)

Additionally, a SA-SEA rail Corridor of4,430 kms Kolkata-Ho Chi Minh City corridor is also under consideration, but remains mainly on the drawing board at present. However, daunting impediments remain to realizing this dream, mainly hugely higher costs with more extensive gaps (2,493 kms of missing links) that require to be connected over somewhat difficult terrain in places, and incompatibilities of railway track gauges between different national grids.  The challenges to the entire Trans-Asian Railway project are even more daunting, with 10,500 kms missing links.  Transshipment costs between regions are also costly.

Considering the diversity in the terrain in different regions and locations, perhaps the best approach would be to adopt an organic approach and configure the corridors and linkages in a manner that best appear to be in consonance with geo-morphology of different terrain. In the northeast of India and in parts of Bangladesh, for example, the foothills of the Himalayas are composed of relatively soft clay-like soil, and roads are very expensive and extremely difficult to maintain throughout the year.  Unplanned construction of roads across hilly terrain, cutting hills and leaving naked the sides shaved without buttressing them, in combination with constant vibrations from heavy road traffic and increasingly frequent cloudbursts make many of the new arterial roads unusable for months. Extending existing railway links are also beset by multiple challenges, particularly where water bodies, hugely large and extensive, dominate much of the landscape.  Northeast India, and Bangladesh and West Bengal, prior to the Partition (and even until the mid-sixties) were always water-linked perennially.  The rivers systems had constituted the arterial system, with the railways akin to the venous system, while the roads, large and small, whether primary, secondary or tertiary, not unlike the human body’s circulatory system. We need to rethink connectivity corridors to be in synch with the diversity of the terrain that supports multi-modality of transport rather than uniformity.

Additional Augmenting Corridors

India and Bangladesh, and even Bhutan are now keen to reviving national waterways to augment national highway, in consonance with geo-morphology. Where national waterways can be linked (and the Eastern Himalayan Rivers, the Ganges and the Brahmaputra essentially are trans-national rivers), they can easily be transformed into becoming sub regional or regional waterways.  Conceptually, one could then conceive of the Lower Brahmaputra Basin network linking Bhutan, Assam and Meghalaya (India) and Bangladesh, while the Ganges Basin network could act as water corridor connecting Nepal, India and Bangladesh.

Bangladesh and India have recently entered into a direct Maritime Shipping Agreement and also signed a Coastal Shipping Agreement.  They could be expanded to embrace BIMSTEC countries, with Sri Lanka, Myanmar and Thailand also joining, thereby adding another dimension to the transport corridors between South Asia and Southeast Asia regions.

Air Corridors within South Asia and between South and Southeast Asia are still VERY inadequate.  In the eastern sub region of SAARC, Paro in Bhutan, Kathmandu in Nepal, only Kolkata and Guwahati in West Bengal and Northeast India, and Dhaka, Chittagong and Sylhet in Bangladesh are designated International airports.  Bangladesh has offered to develop Saidpur or Ishwardi as possible gateways for Bhutan and Nepal.  Airlines in the region need to more seriously consider and explore a sub-regional “Hub and Spoke” concept. A major impediment to this is the narrow and extremely conservative approach of airlines: that there is not sufficient passenger traffic to justify extra connections.  This begs the question: if there are no easily available connections, where will the traffic come from?

Other Corridors

Energy corridor

Ready and adequate availability of energy is the key to development. Without fuel, the engine of the state cannot run far.  All South Asian countries are deficient in power supply, whether for domestic, industrial or agricultural use, and still very heavily dependent on thermal power from using coal and hydrocarbons.  This, despite there being nascent capacity to generate anywhere between 70,000 mW to 100,000 mW of hydro power in Northeast India, (in addition to large capacity for generating thermal power as well), almost equal capacity of hydropower generation in Nepal, and 27000 mW in Bhutan.  The latent hydropower in the northeast is largely hostage to lack of incentives for investment, since evacuation of power from that region to the Indian national grid across Indian territory is extremely limited (15000 mW at most), unless Bangladesh were to agree to offer itself as a conduit – which it has now offered, in return for power for itself.  A petroleum product pipeline from Numaligarh refinery to Parbatipur is under active consideration, as is the evacuation of power from the NE to Muzzafarnagar via Bangladesh.

Indian and Bangladesh grids are now being linked in the eastern, western and northern sectors of Bangladesh that could open up vast new vista of cooperation, putting in place. The power grids of Bhutan and India are also linked, as are those of Nepal with India.  These three grids could eventually be triangulated to form a sub-regional grid. Eventually, an interlinking sub-regional grid of symbiotic interdependence would emerge, that would guarantee long term energy for the sub-region, and beyond, and fuel the engines of growth and development for the peoples of this sub-region.  Conceptually, with the still untapped reservoirs of power in Myanmar, the energy corridors could link the two regions dynamically in helping each other fuel their respective economies even more deeply. Were the 3-nation gas pipeline project between Myanmar, Bangladesh and India, aborted in the mid nineties, to be revived, the concept of energy corridors between SA and SEA would acquire dynamic new substance.  The main challenge to converting this concept into reality for the political leaderships is to recognize the need to cooperate in their own larger national interests, to begin with, that would then enlarge and converge into shared trans-regional prosperity.

IT Corridor

In an age today where IT dominates the power of acquiring new knowledge and research, but where bandwidth shortage can be a real impediment to vaulting national ambitions, the idea of also having an IT corridors, sharing bandwidth has now also come of age. Bangladesh happens to possess more bandwidth than it can domestically consume now, by virtue of its sea cable link acquired from Singapore. So it is exporting some of it to the -NE India, with the IT gateway in Agartala connecting Tripura to Cox’s Bazaar through Akhaura. In a sense, an IT corridor has already been established by this deal between the two regions.  One foresees further, steady expansion in this field as well.

Major challenges

While waxing eloquent on all these ambitious trans-regional linking soaring with visionary ambitions, one must at the same time keep one’s feet on the ground.

We must keep in mind that financing such cross-regional infrastructure projects always tend to pose major challenges, primarily being risk prone (subject to a complex mix of problems), mostly stemming from politics, whether domestic or regional being at cross-purposes.  Therefore, historically, there is a tendency to great wariness resulting in financing vehicles being bearish rather than bullish.  Public sector financing also tends to be increasingly constrained due to fiscal challenges to national economies.  Commercial financing has also been seen to be constrained by successive global financial crises.  In such shaky situation perhaps the best bet would be to take recourse to bond markets, and encouraging more public-private partnerships.

Having a large vision for the future

Improving trade & transport facilitation between the two regions would undoubtedly make trading between these regions easier and more stable, while also lowering transaction costs.  But this first needs to be done more within the South Asian countries, where the infrastructure in place is abysmally inadequate and of poor quality when compared with what exists in the Southeast Asian region. Each South Asian state has a daunting challenge to cope with within its own national perimeter. What is a challenge within domestic context is MORE of a challenge in regional/sub-regional context.  Therefore, it is absolutely essential that peoples, across borders in both regions must view potential gains from such cooperative linkages as being perceptively large for both regions to wish to pursue this worthwhile goal wholeheartedly.

This article was originally published in GP-ORF’s ‘Emerging Trans-Regional corridors: South and Southeast Asia.

Selected References:

Anasua Basu Ray Chaudhury, Pratnashree Basu, Mihir Bhonsale, “Driving Across South Asian Borders: Motor Vehicles Agreement Between Bhutan, Bangladesh, India and Nepal”, ORF Occasional Paper # 69, September 2015.

Connecting South Asia and Southeast Asia, A joint study of ADB and ADBI, 2015.

“India, Nepal, Bhutan and Bangladesh Sign a landmark Motor Vehicles Agreement for seamless movement of road traffic among Four SAARC Countries in Thimphu”, Press Release, Press Information Bureau, Ministry of Road Transport & Highways, Government of India, 15 June, 2015.

Jean-Francois Gautrin, “Connecting South Asia to Southeast Asia: Cross-Border Infrastructure Investments”, ADBI Working Paper, No. 483, ADBI, May 2014.

Mustafizur Rahman, Khondaker Golam Moazzem, Mehruna Islam Chowdhury,

and Farzana Sehrin, “Connecting South Asia and Southeast Asia: A Bangladesh Country Study”, ADBI Working Paper, No. 500, ADBI, September 2014.

“Through Bangladesh, a development shortcut for Northeast”, The Indian Express, November 30, 2015.

Wignaraja, Morgan and Plummer, “The case for connecting South Asia and Southeast Asia”, Asia Pathways, ADBI blog, May 2015.

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