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CWA # 57, 23 September 2018

India External
BIMSTEC: A Bay of Good Hope?

  Sourina Bej

In twenty years, India, Bangladesh, Sri Lanka, Thailand, Myanmar have undergone huge economic and political transitions. BIMSTEC was formed at a time when the ASEAN countries were suffering from severe financial crisis in 1997-98 and both Thailand and Myanmar experienced political turmoil in the following decade. The member countries’ economies are more viable and largely liberalised thereby attracting greater interest from foreign investors outside of the region

Sourina Bej is a Research Associate at the ISSSP, NIAS

 

Is the time ripe for BIMSTEC to finally function as a sub-regional grouping? How has BIMSTEC fared in the past? And what opportunity can the grouping provide to the member countries?

 

Has the time come for BIMSTEC?

Nearly two weeks after the BIMSTEC Summit in Kathmandu on 30-31 August, the member countries of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) have met near Pune for their first ever week-long anti-terror exercise (10-11 September).

Since its inception 21 years ago, the August Summit in Nepal was indeed august. With a vision for maintaining a ‘Peaceful, Prosperous and Sustainable Bay of Bengal Region’ the countries made a clear reference to the Bay and paved a strategic path that is likely to focus on integrating this region with the larger Indian Ocean. The groundwork for conceptualising the Bay of Bengal was laid last year at the first ever meeting of the BIMSTEC National Security chiefs, hosted by India, which concluded with a strong fillip to the Bay of Bengal as a “common security space.”

The Kathmandu Declaration concluded at the meet saw its member countries India, Bangladesh, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal delve on common security issues from terrorism to connectivity and energy needs. Recognising the need for energy, the countries signed a MoU for the establishment of the BIMSTEC Grid Interconnection. In addition, 167 connectivity project of $50billion was agreed upon. However what was significant was the establishment of the BIMSTEC Permanent Secretariat in Bangladesh along with the BIMSTEC Cultural Industries Observatory in Bhutan and BIMSTEC Centre for Weather and Climate in India. These institutional developments are important in the sense that it reflects the commitment of the countries towards the vision of the grouping also indicating a larger drive to integrate the region.     

Secondly, apart from clearly charting out priority areas and institution building, several non-state actors have also pushed for the idea of BIMSTEC. The reasons for renewed hopes in BIMSTEC started two years back with the Leaders’ Retreat held in Goa, on October 16, 2016, wherein the leaders pledged to work collectively. In addition along with the Outreach for Leaders, the BIMSTEC Network of Policy Think Tanks (BNPTT) was also established to reach out to the scholars. In addition, business groups, for example, FICCI convened a Core Group on BIMSTEC in 2017. The initiative concluded with a report ‘Reinvigorating BIMSTEC, An Industry Vision for the Next Decade’ which identified market and policy bottlenecks and laid out recommendations including the creation of a BIMSTEC fund, strengthening of BIMSTEC Secretariat and improving government-to-business interface in the functioning of BIMSTEC. This indicates a strong enthusiasm among the business groups to engage deeply in the countries. Even though the interest has primarily been shown by India, but a consorted economic driver through the multilateral framework would keep BIMSTEC financially viable.

 

How BIMSTEC operated in the past?

The summit in Kathmandu was the fourth summit in 20 years. BIMSTEC has been perceived differently by different countries. For Bangladesh, BIMSTEC is more of a launch pad for the creation of a larger free trade area focussing on the blue economy, energy collaboration and more people to people contact. For India, BIMSTEC forms a corollary to its Act East Policy with a maritime component in the Bay of Bengal region. For Thailand, BIMSTEC is a platform to pursue its Look West Policy. Myanmar, Nepal and Sri Lanka have been a comparatively new entrant in the grouping and have thus taken time to anchor its position in the grouping.

In this context, the most amount of strategic rebuff has come from Nepal. It is interesting to note that, soon after this year’s summit, the host country, Nepal has opted out of the anti-terror exercises and have gone on to leverage for SAARC’s revival with Pakistan. A review of the public perception in Nepal clearly indicates that there is confusion in the political and public that why Nepal should be interested in the Bay of Bengal? Among BIMSTEC’s 14 priority areas, Nepal leads the ‘poverty alleviation’ component. And unlike other member nations, Nepal has not undertaken a single regional initiative as part of the grouping. This indicates that over the years BIMSTEC has been caught in its nascent stage trying to fit the right regional security architecture which could bring all the member countries on the same footing with a prominent ideational and physical driver.   

The contemporary situation has changed. In twenty years, India, Bangladesh, Sri Lanka, Thailand, Myanmar have undergone huge economic and political transitions. BIMSTEC was formed at a time when the ASEAN countries were suffering from severe financial crisis in 1997-98 and both Thailand and Myanmar experienced political turmoil in the following decade. The member countries’ economies are more viable and largely liberalised thereby attracting greater interest from foreign investors outside of the region, including for smaller countries like Myanmar and Bangladesh. In this context, BIMSTEC could be viewed as an economic opportunity.

 

What BIMSTEC could do to the member countries?

Firstly, the trade potential for BIMSTEC is huge. It is home to 1.6 billion people, or nearly 22% of the world’s population, and has a combined gross domestic product of $2.8 trillion. However, a long-standing negotiation on FTA is yet to reach its fruition. According to India’s Ministry of Commerce, the BIMSTEC trade negotiating committee has held 19 sessions of negotiations on areas like tariff concessions on trade in goods, customs cooperation, services and investments, hence negotiating an FTA could be the first area of opportune for the BIMSTEC.

Secondly, although BIMSTEC was initially established to tackle sub-regional economic and social development issues, its potential to be more has come only in recent times. Hence never areas of cooperation in the field of oceanic mineral resources, fisheries, energy, disaster observatory centres could be forged.  Bangladesh has the sovereign right to fish in up to 200 nautical miles but the vessels can go up to only 40 nautical miles. This indicates that the country lacks deep see fishing apparatus and mining. As a region, BIMSTEC could invest in funding and pooling in resources that could solve the technological gap in deep sea mineral resources. Medicines such as cod liver oil, cosmetics and toiletries can be produced with marine resources but Bangladesh lacks investment in the sector and so does India or other member countries.

Thirdly, every grouping needs a driver. In this case, India along with Bangladesh has the resources and political establishment to invest in the grouping. India is supplying Bangladesh with power from its grid and has agreed to finance $1.5-billion coal-fired power plant. India has also invested around $224 million in Myanmar in 2015-16. Such large-scale investment by India has suggested that the renewed hope pinned in BIMSTEC is mooted and navigated by India itself, but will also invigorate a renewed interest in the member countries as well.  

Fourthly, the member countries reflect an aligning interest with India. Sri Lanka’s strategic ‘rebalance’ (2015) is evident in its increased participation in regional maritime-related initiatives and Bangladesh’s strong advocacy of the ‘blue economy’ alongside efforts towards naval modernisation could also help BIMSTEC pursue its vision. Thailand is also eyeing opportunities in South Asia, and in particular, Myanmar. BIMSTEC could be one bridge between Southeast Asia and South Asia.  

Even though conclusion about BIMSTEC after the Kathmandu Declaration could be wishful thinking, the geopolitical environment is conducive for the grouping’s revival.


COMMENTS

Aparupa Bhattacherjee

Why is there a keen interest in the Bay of Bengal for the BIMSTEC members especially for Nepal and Bhutan, who are not even the proximity? Secondly, is there a possibility that BIMSTEC will be capable to fill up the vacuum left by SAARC in the future? 

 

Harini Madhusudhan

One more question needs to be addressed:  When the West (mostly US) has started to look inwards, is it the right time to push for better regional cooperation?

Considering that the group hasn’t made many significant achievements, why now? 

 

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