Murari Sharma: SAARC — Enemies Shake Hands

The 18th summit of the South Asian Association for Regional Cooperation has just concluded in Kathmandu adopting a 36-point declaration that commits the group to consolidating itself into an economic union in 15 years, increasing its transport and connectivity and fighting its common enemy — terrorism and extremism. If the union becomes reality, it will be the largest common market in the world. However, progress has been disappointing so far.

SAARC is an excellent idea struggling to take off due mainly to the lack of direction and conflict between its two nuclear-powered members.

Established in 1983, the 8-member SAARC aims to promote the welfare of South Asians, accelerate growth in the region, strengthen collective self-reliance among its members, expand active collaboration and mutual assistance, strengthen cooperation with other developing countries and cooperate with regional and international organizations. It has identified 16 areas for cooperation and created 11 centers to promote collaboration.

However, the result thus far remains highly wanting. SAARC has, it is widely believed, stagnated due to managerial, institutional and funding problems. Indeed, the small SAARC secretariat — headed by a nominee of a member state in rotation, based on political connection rather than managerial competence — works only as a filekeeper. It is weak and inconsequential in mandate and in funding. Nonetheless, they are not the main obstacles holding SAARC back.

The actual culprits are the lack of clear leadership and the bilateral dispute between India and Pakistan, the two members of the organization and nuclear weapons states.

SAARC has lacked a clear direction and sustained leadership since its inception. You need the largest member to steer the organization forward, as Germany for the European Union, Brazil for Mercosur, and Saudi Arabia for the Gulf Coordination Council. However, the largest member of SAARC, India, has generally been ambivalent about SAARC and reluctant to lead the regional economies toward greater integration.

While this Indian ambivalence towards SAARC has been generally under the surface, Ramesh Bhandari, the outspoken former Indian foreign secretary, brought it over the surface by, in essence, saying that SAARC was formed to enable small countries to gang up against India. I do not know about other countries, but from Nepal’s perspective, Bhandari’s apprehension is not true.

As long as this fear haunts India, SAARC summits will continue to remain a talking shop and regional cooperation a potent opportunity deliberately not tapped. Bilateral disputes, especially between India and Pakistan, both nuclear powers, are another set of the main obstacles to SAARC’s progress. Bilateral issues, though barred from discussion in formal SAARC forums by its Charter, nonetheless continue sabotage regional cooperation.

To enhance cooperation for mutual benefits, nations must put their disputes and differences on hold. The United States and China did so regarding Taiwan in 1971 and benefited enormously. However, Pakistan has refused to put Kashmir, which is divided between Indian-controlled and Pakistani-controlled parts, on hold. Both India and Pakistan accuse each other for war-mongering, sabotage, and terrorism.

Such blames are not unfounded. The two countries have fought three wars over the Kashmir dispute. Pakistani officials have been found peddling fake Indian currency notes to support anti-Indian organizations in Kashmir and Pakistan. Pakistan-based organizations committed to freeing Indian-controlled Kashmir have carried out terrorist attacks in many places in India, including in Mumbai in 2008. Pakistan blamed India for supporting terrorists in Baluchistan, where anti-Pakistan sentiment runs high. The two countries want Afghanistan in their tent.

These issues and consequent mistrust have stood in the way of regional economic integration that SAARC seeks to promote.  Therefore, the goal of liberalizing trade and creating a common market of 1.7 billion people has remained unfulfilled. Strangely, even though these two countries share 2,900 KM border, the bulk of their between Pakistan and India is still conducted through third countries like Singapore or the United Arab Emirates.

Yet, SAARC has been useful in many ways. It has created a sense of belonging in the region to its members. It has attracted other countries, including China, to participate in its activities. China, an observer now, wants to become a full member of SARRC. Common regional policies have emerged in several sectors. Visas have been liberalized for 24 categories of people.

Most notably, SAARC summits have offered a useful forum regularly for discussing bilateral issues and diffusing bilateral tensions, especially for India and Pakistan. Notably, the 11th SAARC summit in 2002 held in Kathmandu thawed the frozen relations between Indian and Pakistan. The Indian Prime Minister Atal Behari Vajpayee had refused to meet with Pervez Musharraf, who took power in a coup in Pakistan in 1999. Musharraf, after his keynote speech, went straight to Vajpayee and shook hands, which opened the door for reviving the stalled negotiations and for starting a bus service between the two countries.

This time, too, Indian Prime Minister Narendra Modi avoided his Pakistani counterpart Nawaz Sharif due to the recent exchange of fires between the two sides in Kashmir. The good will generated by Sharif’s participation in Modi’s inaugural as prime minister had vanished. It has disappointed the international community and the media, which had expected Indo-Pak talks on the sidelines on Kashmir and on Afghanistan. Only on the last day of the summit, the two leaders shook hands on the stage to a long applause.

The 18th SAARC summit turned out to be a boon for Nepal from bilateral point of view. Nepal and India have signed 10 agreements during Indian Prime Minister Narendra Modi’s Kathmandu visit to participate in the SAARC summit. They have agreed, among other things, to implement the 900-MW Arun III hydropower project jointly, start bus services between Kathmandu and Delhi and from other two points, and cooperate in the execution of several other projects.

In the coming days, we will come to know how the handshake between the rivals has helped thaw their frozen relations and how other countries have benefited bilaterally from this summit. As for the regional economic integration, not much can be expected until India takes active lead and until India and Pakistan agree to put their bilateral disputes on hold for a number of years and focus on economic growth and trade liberalization.

Murari Sharma: Dissolve NATO and Create Regional Security Arrangements for Improved Global Security

The G-20 summit ended with the Brisbane Action Plan that contains lofty promises, including increasing additional spending of 2 trillion dollars by 2018, which is unlikely to be implemented and followed up. In the summit, meant to lift the ailing global economy, Western leaders spent most of their time talking about security. It reflects the West’s obsession with global security in the teeth of eroding American global hegemony.

US President Barack Obama mentioned the Islamic State, the crisis in Ukraine and Ebola as the top three threats the world was facing. He did not mention the global economy in the global economic summit. Other Western leaders followed suit even though Europe and Japan have stagnated. The recovery in the United States and the United Kingdom is anemic. Inequality is rising in the West and elsewhere, which could prove explosive. Youth unemployment is high. Infrastructure is crumbling in the West. Even the vibrant developing economies — Brazil, Russia, India, China and South Africa (BRICS) are cooling down.

Leaders focus more on security than on economics, because the sense of security encourages investment and and also because they get more kick out of security. And the global security situation is indeed worrisome.

Ukraine is facing civil war due to internal dissent and external interference. The Islamic State is wreaking havoc in Iraq and Syria. Syria itself is imploding. The Israeli-Palestinian conflict has erupted again. Violence is killing people from Congo to South Sudan and from Afghanistan to Haiti. Tension is ratcheting up between China and other countries over several chains of islands in the South China Sea. The American imposed international order after 1945 is being challenged everywhere

However, this is neither the best nor the worst time in global security. This is one of those rare times when the mantle of global hegemon is transiting from one player to another. In the past, major wars had made such transition swift and certain, as from the United Kingdom to the United States at the end of World War II. But this time the process is slow and uncertain, which makes leaders nervous. We know the United States is losing ground, but we do not yet know which country or set of countries is going to take its place.

The process, nonetheless, is in motion, partly owing to America’s mistakes and partly to the rise of other countries. The Iraq war, illegal under international law, was a mistake. So was the Western military intervention in Libya and destabilization of Syria. To let the Israeli-Palestinian conflict fester is a mistake. So is not investing in nation-building at home — renovating the crumbling infrastructure, improving education, reducing inequality, and promoting growth.

The biggest mistake of all is to keep the North Atlantic Treaty Organization alive and let the regional security mechanism die. NATO should have been disbanded when it lost its raison-etre, Warsaw Pact, was dissolved. It should not have been expanded eastward to dare the weakened Russia to fight back, which is at the root of the Ukraine crisis. The regional security arrangements, which proved irrelevant in the ideologically divided Cold War period, should have been revived as soon as the ideological division of the world had ended.

NATO is and has been detrimental to US interest for several reasons. First, NATO cannot protect its members effectively, but gives a false sense of security. For instance, NATO countries will not directly confront Russia militarily in Ukraine. Neither will they protect Poland, a NATO member, under Article 5 of its Charter if Russia were to attack it. Direct military confrontation with the country with the second largest nuclear arsenal is too great a risk to take. The alternative is to impose economic sanctions and support anti-establishment elements to topple the unfriendly government in Russia, which NATO, a collective, cannot do.

Second, NATO has generated anti-West sentiments. Its expansion eastward to contain and control Russia has triggered the current Ukraine crisis. NATO’s participation in military operations in Afghanistan, Libya, Iraq and elsewhere, which were well outside its traditional sphere of action, have inflamed anti-West resentment in the Muslim world, prepared fertile grounds for Al-Qaida, Islamic Caliphate and other extremist groups to recruit new members and launch anti-West jihad around the world.

Third, NATO has made Western Europe complaisant about security. Hoping that the alliance will protect them, Western European countries have reduced their military budget significantly, neglected American exhortation to increase their defense budget, and left much of the burden of funding, equipment, personnel and logistics to the United States to carry, which is unfair for America. Most of the European countries are unable to defend themselves without American support. Britain and France could not launch their joint military operation against Colonel Gadhafi without American equipment and logistics.  We have seen that time and again since World War I.

While the United States and its Western allies piled up on their mistakes, other countries — particularly Brazil, Russia, India, China and South Africa (BRICS) — forged ahead on the back of the open political and economic environment brought about by economic globalization and the end of the Cold War. Further, the Great Recession of 2008 significantly dented Western economies, while the emergent economies were only marginally affected. By 2010, the Chinese economy edged past the Japanese economy to become the second largest. This year, it has surpassed the US economy in purchasing power parity. Several other developing countries have also made notable strides while America has slowed down and Europe and Japan stagnated.

Although the gap between the West and BRICS in per capita income and military expenditure is still wide, it is narrowing faster than expected. BRICS have invested in growth and in military in an effort to catch up with the West. In spite of this, the United States can prolong its global hegemony if it disbands NATO and diverts the NATO’s resources to revive and strengthen regional security arrangements to defend its friends and allies against any external aggression and internal implosion.

Such mechanisms will be more nimble, effective and economical than the stogy NATO to counter and contain the enemy. Though proved inefficacious in security guided by ideology during the Cold Wars, they will be appropriate and effective in this era of interest based security. They will be quick to deploy troops and equipment from within the region. It took nearly two months for America to transport forces and equipment for the second Gulf war to remove Saddam Hussein from Iraq. America will not have two months, even two weeks, to defend its allies if a full-fledged war were to break out over Taiwan, Senkuku or Spratley Islands, or Ukraine.

These regional mechanisms will be effective, for the troops from the region will be conversant with local landscape, sentiments and cultural complexities and conduct accordingly. Not least, they can buy much better security at a fraction of the annual spending of NATO, which was $990 billion in 2013. For instance, if such a regional arrangement existed, its members from the region would have done the actual fighting against the Islamic Caliphate in Iraq and Syria and American role would have been limited to supplying weapons and providing training. The countries of Eastern Europe, those that have joined NATO or are eager to join, could together confront Russia, without inviting the nuclear annihilation NATO’s and America’s direct involvement is likely to bring.

No doubt, American global hegemony will continue to erode, as other countries grow and strengthen their militaries, and eventually vanish, when another country and set of countries supersede America. In the 1980s, the US economy contributed more than 25% to the global economy. Now it only constitutes about 19% of the world GDP. It will decrease further in the future and with it, America’s ability to invest in its military. However, regional security arrangements will slow down the erosion and reduce America’s burden to protect its allies around the world.

As long as world leaders have significant security matters that they can use as a pretext to avoid seriously tackling difficult economic issues, they will continue doing so, as they did in Brisbane.

Murari Sharma: Test of Leadership

It was a tragedy that the first Constituent Assembly (CA) could not deliver a new constitution. It will be a farce if the second CA cannot issue the new statute by 22 January 2015, as scheduled. However, what I am most worried about is this: If CA II issues a shoddy law of the land, it will tear apart the land as we know it.

At issue are differences on the judiciary, the electoral system, the form of government, and the number and nature of federal states. All these issues, if not handled prudently, could do irreparable damage. However, any imprudent decision on the number and the names of federal provinces could prove a poisoned chalice for the country.

Two camps are pulling the federalism in divergent directions. The single-identity-state (SIS) camp, led by the Maoists, wants to have 10 to 14 provinces, each after the largest minority group of the region. Hill minority parties (HMPs) and the main Madheshi parties (MMPs) have supported the Maoists. HMPs want single-identity states to rule. The MMPs have joined this camp in a marriage of convenience — they have supported single-identity states for the Hills, but insisted on geographical provinces for the Terai.

In contrast, the multiple-identity plus viability (MIV) camp, led by the Nepali Congress, has proposed six or seven provinces. The Communist Party of Nepal (UML), a partner in the current ruling coalition, the Rastriya Prajatantra Party, and several other outfits have backed this position. There is a stalemate between the two camps.

CA I had decided identity and economic viability should be the two main criteria for creating the provinces. Unfortunately, the SIS camp has discarded the economic viability. The MIV camp has sidelined the identity.

The SIS camp has argued that identity politics should prevail over economic viability, citing two reasons. First, it is essential to empower the minorities with their dedicated states. Second, if Nepal itself is surviving on foreign aid, there is no shame if the states also rely on external assistance. Until the states become viable, Kathmandu should help them stand.

The MIV camp has contended that the provinces should reflect the multi-ethnic Nepali demographics and should be economically sustainable from start. Evidently, it has two fears. First, the largest minority group may insist on priority rights for itself over resources within the state, and smaller minority groups may resent and rebel it, creating a permanent source of conflict. Second, the economically viable states may rise against Kathmandu if it takes resources from them to support weaker states for long.

This difference between the camps persists unremittingly. It had killed CA I without procreating a new statute. Then neither camp had a two-thirds majority to approve the statute. CA II may go over the cliff as well, even the MIV camp has the requisite majority, unless this camp can push the law through, something the SIS camp has vowed to stifle.

It is easy to tackle the MIV camp’s first fear: Just mention in the new constitution that no minority group in any state will have priority rights and privileges. If there is no agreement on the names of states, let the state assemblies decide by two-thirds majority and with the approval of the federal parliament.

The second peril is more complex and problematic. Neither the MIV nor SIS camp has come up with the cost estimates for states. The MIV camp has been lazy to do it, and the SIS camp has avoided this issue, knowing that 10 states will be outright economically unsustainable.

Politics is a game of power wrapped in public service wrapper. Therefore, up to a point, I do not blame either side. However, political leaders have no right to destroy the country in their power game.

I believe recognizing identity is important for the empowerment and inclusion of the minorities. I am also convinced that development and prosperity of the minorities will bring them better life and greater dignity than backward single-identity states. Empowerment needs education and awareness and economic progress requires investment. Too many states will eat us most resources and prevent the federal and state governments from investing in education and in development.

The economic cost of states is going to be significant and formidable. If you create 10 states, there will be 12 legislatures, the upper and lower houses at the center and one assembly in each state. All federal ministries — except the foreign and defense — will have their counterparts in each state. Both federal and state governments will have their employees in every district to look after their respective jurisdictions – issues and projects.

Obviously, there will be huge expansion in structures, in the number of political officials and government employees. The resources needed for salaries and allowances, office and equipment, and expenses for water, power and telephone services will be prohibitive for a poor country.

Some might suggest that we have no basis for estimating the cost of states that are yet to be created. That is a lame excuse. We can learn from the experience of those countries that have had a federal system of government. For instance, let us take the number of employees, the largest component of regular expenses of government.

The following table shows the ratio of federal, state and local level employees in the United States, India and Switzerland:

Total Employees/ Levels United States (1) India (2) Switzerland (3)
22,040,106 11,973,000 102,000
Federal level 12.7% 21% 39%
State level 24% 61% 59%
Local level 63.3% 18%
Total 100% 100% 100%

(1). US Bureau of Census (2012)

(2). Ministry of Statistics (2012). This does not include employees working for public enterprises.

(3). From different sources (2008). State and local level not presented separately.

Nepal has now about 90,000 people working in the civil service. About 40 percent of these posts could be transferred to state governments, though the employees cannot be forced to convert to state employees. Assuming that local level offices and services are left unchanged, another 72,000 and 126,000 posts will be needed for the state level, if we follow the US and Indian ratio, respectively. And we will have no problem costing this component.

The Swiss ratio looks far more attractive, but it is irrelevant for two reasons. First, Switzerland has only seven federal ministries and cantons have less. Some cantons have just a few dozen officials. For Nepal, it is inconceivable. It has already more than 25 ministries; its states will rather follow the example of some Indian states that appoint 51 percent of state assembly members as ministers to prevent the vote of no confidence.

Second, a highly advanced Switzerland has limited government role to maintaining peace, security and justice. It implements very few development projects on its own.  In contrast, Nepal, a developing country with a small and limited private sector, will have to execute development activities across the country, requiring personnel, structures and equipment to do it.

Emotions and resentments fuel revolutions, but they do not bring stability and prosperity. Investment in development and progress do. Every extra rupee of regular expenditure means one rupee less for development expenditure. Obtaining the twin objectives preventing revolutions and bringing prosperity will stringently test the statesmanship of our leaders. The leaders failed last time. I hope this time they will pass this test.