Why is South Asia crumbling while other regions bond?

My first visit to Europe was in 1995. This was the year when the Schengen Agreement was implemented. Under this agreement, Belgium, France, Germany, Luxembourg, the Netherlands, Portugal and Spain decided to have a common visa and had agreed to remove internal borders.

Schengen Visa became an extended version of the BeNeLux Visa. This was a common visa agreement between Belgium, Netherlands and Luxembourg. The visa agreement followed fiscal and then a currency union in 2002 when the Euro was born.

Even though the European Union is under stress and its existence is being questioned, there is still enough benefit for all members. European leaders will reform and review the Union but are unlikely to let it collapse.

Other regions in the world are bonding and creating similar unions. The ASEAN countries are closer than ever, bound together by similar cultures, common economic interests and a fear of China’s growing strength.

On its part China is boosting the Shanghai Cooperation Countries even as it creates a new grouping in central Asia for its Silk Route initiative. China has put itself in the middle of countries that were not comfortable with each other but are ready sink differences to boost regional economic growth.

The five countries of East Africa are working towards a common economic region. Kenya, Uganda and Tanzania formed the British colony of East Africa with a common currency, postal system and borders. The region broke away to create three countries. Now they are coming back together along with neighbours Rwanda and Burundi to offer a common market to global investors.

 While neighbourhoods with common interests come closer, countries in South Asia continue to squabble. Alas, South Asia remains caught up in petty politics and selfish interests that prevent the region from rising as an economic dynamo. The well-meaning South Asian Association for Regional Cooperation (SAARC) is in a coma. SAARC remained a hostage to security issues and could never evolve into an economic cooperation.

India found refuge in the artificial construct of BRICS (Brazil, Russia, China and South Africa) that had a common growth trajectory but remains too distant to be effective yet. In any case, BRICS is not a region but a collection of perceived common interests.

What of South Asia then? Pakistan and India were within the grasp of economic cooperation but futile security skirmishes spooked both countries. For two years Pakistan worked to grant Most Favoured Nation status to India that would have allowed easier import duties and trade facilitation.

But that has been pushed back further. After several rapid exchange of business delegations between 2011 and 2012, the level of distrust has risen again. At a recent industry conference in New Delhi, more than 70 delegates from Pakistan were not granted visas by India. It’s tough to say how many Indian businessmen hoping to travel to Lahore later this month will get visas from Pakistan. The opposition from Tamil Nadu politicians has undermined India’s relations with Sri Lanka. Within South Asia, India and Sri Lanka enjoy the closest economic ties. But this is being weakened by regional politics triumphing over regional economic interests.

Relations with Bangladesh were on the mend under the mature leadership of its Prime Minister Sheikh Hasina. But its history with Pakistan and a churlish West Bengal government remain impediments to economic cooperation.  Bhutan and Nepal remain open to influence by China that is keen to keeping South Asia weak. The leadership in South Asia is not helping its own cause.

The political and national leadership will have to think deep about the cost of regional distrust.
Europeans could get over differences that led to two world wars. East Africans are burying ethnic and economic differences to lift their economic status. The differences in South Asia are not higher than other regions. Divided countries in South Asia should realize that growing together will be easier than separately.

The author tracks India’s political economy.