It is in the interest of both Bangladesh and India to have a win-win and sustainable relationship. Global trends show economies benefit by integration of markets. The proposed transit / corridor through Bangladesh would be used for transporting goods from one part of India to the other part. A strange case of segregating economies instead of integrating -- the growth scenario promoted by global agencies such as the ADB and World Bank. The transit accord of 1973 made sense when it was formulated. Bangladesh had just attained independence and the country was in ruins. Almost everything was imported. Today it is a different reality. Bangladesh is a manufacturing hub. This year Bangladesh will export goods worth $20 billion. If we can compete globally and add value to the consumers all over the world, why should we not join hands with the people of the Indian North East (NE) and provide them with their necessities? Today, we are the most logical export partner for the people of the NE. Goods that the small traders need could be reached there in a day from Sylhet, Comilla and Chittagong. They can form partnerships with Bangladeshi business much easier than with others hundreds of miles away. Concurrently we can use the raw materials that the North East India has in abundance and use our extensive manufacturing capability for processing and re-export. This is the only way integration and the development of the region and the economic wellbeing of the peoples would be speedy, sustainable and inclusive. Instead of connecting the two parts of India economically bypassing Bangladesh, the people of the region would be best served if connectivity between Bangladesh and the NE was enhanced. Though the Indian Government has earmarked $1 billion as aid for developing our transport infrastructure geared to transit, the people of Bangladesh want trade not aid. The big question is -- why should we take the economic and dependency burden of this aid package when the foundations on which it is being promoted go squarely against all interests of Bangladesh and of the economic wellbeing of the people of the region. Transit is being promoted on myths -- the regional economic integration myth As per the present draft of the transit proposal - a. Goods will be conceptualised, designed, manufactured, packaged and put into sealed containers. b. The goods will then travel through Bangladesh territory. c. They will then be unloaded in the NE. There they will be warehoused, advertised, marketed, and distributed. The activities (a) and (c) will be taking place in India. These activities will have no contribution to our economy. As the North East develops, the growth of the region will be designed on the basis of economic integration with mainland India and complete segregation with Bangladesh. The population of the NE is approximately 55 ,000 ,000. If the potential consumption of products that are manufactured in Bangladesh are valued at only $10 /month per person than the market potential for Bangladesh is $6.5 billion annually. This market will be lost because of transit. The regional connectivity myth On the North East India shares borders with China and Myanmar. There is no onward road connectivity from the NE with Myanmar and to China. Hence the concept that the transit route would provide regional connectivity to Thailand and beyond is a distant dream. To the west the road connectivity through India, faces a dead end in Pakistan and in the battlefields of Afghanistan and Iraq. Where is the regional connectivity? Where do these myths lead Bangladesh to? Strategic and Security Concerns * The contentious border of North Eastern India with China has seen armed conflict in 1962. Both sides still have claims on territory which the other controls. If there was to be military engagement or the possibility of military engagement between India and China in the NE (or for that matter in any region where the two countries are vying for influence), would India use the transit route to speedily move troops and weapons across Bangladesh? What would be China' s reactions in such a scenario? It is not for us to weigh in on the possibilities of such engagement but the view of an influential Indian politician is relevant. During recent visit to Bangladesh, the former India Minister in charge of the NE Mr. Mani Shanker Iyer stated that when the NE grows economically because of connectivity and infrastructure improvement, India would "take on China." * The NE is an area where many insurgents groups operate with separate agendas. If transit is perceived by any or all of these groups to be playing a part in the supply chain of the Indian forces it could potentially become a target for them. There would be the danger of a spillover into Bangladesh. * As a developing country, with an active and contentious political climate, the possibility of disruption of vehicular traffic due to civil or political unrest and hartals is very real. If the domestic security situation does not allow the movement of trucks for providing essentials to the people of the NE what challenges will the two governments face? * There is talk of forming a public limited company for operating the transit. Those who will buy shares of this company would like the corridor to be in full use. Against this group who will be those opposed to the use of this corridor. It could become brother fighting brother. * The transit with the massive investment required would change the development plans of Bangladesh significantly. Why should we plunge into this major digression of our national planning and spending strategy for development? Economic Concerns * Bangladesh will not only lose a potential market of $ 6 billion annually but also the job creation possibilities that would come with this. * There will be substantially increased Traffic congestion on Bangladeshi roads making the whole transport network inefficient. * There will additionally be considerable investment required for the maintenance of the road network. * There will be a negative effect on foreign investment in Bangladesh because of the lowered efficiency caused by increased traffic congestion. * There will be a negative effect on the health of the people of Bangladesh due to pollution caused by truck emissions and by diseases brought into the country. * There will be additional pressure on our foreign exchange reserves caused by the use of imported diesel by Indian trucks. Approximately 40 million tonnes of cargoes are moved from the NE to other parts of India by road. If half of this, that is 20 million tonnes, is moved through Bangladesh in trucks with an average capacity of 10 tons then approximately two million trucks may be taking this corridor. As the cost of diesel is cheaper in Bangladesh than in India, it is expected that the trucks will come empty and leave full. If the average offtake by each truck is 200 litres, an additional 400 million litres of diesel will have to be imported using our scarce foreign exchange. * The building of the transit facilities would bring about a massive increase in our national debt estimated at $ 7 billion and make us very vulnerable to externalities. The pride of self reliance that we have achieved with our blood sweat and tears and with which we are building Bangladesh will come under a new threat. Our freedom -- economic and fiscal decision making freedom, if history is to be a guide, could be eroded. The decision on whether Bangladesh should allow transit facilities to India should be made on an evaluation of the cost and benefit to both the countries. Then there are the security considerations. The basis of all negotiations must be the guarantee of our national security. This complex issue must start with the guarantee that this facility will never ever be used for transporting any military men or materiel. Bangladesh must also make 100 % inspection of all goods coming in and going out mandatory. If negotiations are carried out on the basis of transparency and fairness, on the basis of principles that clearly benefit all the people of the region, we may create a sound basis for cementing our relationship. If the gains are perceived to be one sided it is also likely to be unsustainable. And then it will become a lose-lose game.
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Wednesday, June 29, 2011
TRANSIT : The Lose - Lose Game
It is in the interest of both Bangladesh and India to have a win-win and sustainable relationship. Global trends show economies benefit by integration of markets. The proposed transit / corridor through Bangladesh would be used for transporting goods from one part of India to the other part. A strange case of segregating economies instead of integrating -- the growth scenario promoted by global agencies such as the ADB and World Bank. The transit accord of 1973 made sense when it was formulated. Bangladesh had just attained independence and the country was in ruins. Almost everything was imported. Today it is a different reality. Bangladesh is a manufacturing hub. This year Bangladesh will export goods worth $20 billion. If we can compete globally and add value to the consumers all over the world, why should we not join hands with the people of the Indian North East (NE) and provide them with their necessities? Today, we are the most logical export partner for the people of the NE. Goods that the small traders need could be reached there in a day from Sylhet, Comilla and Chittagong. They can form partnerships with Bangladeshi business much easier than with others hundreds of miles away. Concurrently we can use the raw materials that the North East India has in abundance and use our extensive manufacturing capability for processing and re-export. This is the only way integration and the development of the region and the economic wellbeing of the peoples would be speedy, sustainable and inclusive. Instead of connecting the two parts of India economically bypassing Bangladesh, the people of the region would be best served if connectivity between Bangladesh and the NE was enhanced. Though the Indian Government has earmarked $1 billion as aid for developing our transport infrastructure geared to transit, the people of Bangladesh want trade not aid. The big question is -- why should we take the economic and dependency burden of this aid package when the foundations on which it is being promoted go squarely against all interests of Bangladesh and of the economic wellbeing of the people of the region. Transit is being promoted on myths -- the regional economic integration myth As per the present draft of the transit proposal - a. Goods will be conceptualised, designed, manufactured, packaged and put into sealed containers. b. The goods will then travel through Bangladesh territory. c. They will then be unloaded in the NE. There they will be warehoused, advertised, marketed, and distributed. The activities (a) and (c) will be taking place in India. These activities will have no contribution to our economy. As the North East develops, the growth of the region will be designed on the basis of economic integration with mainland India and complete segregation with Bangladesh. The population of the NE is approximately 55 ,000 ,000. If the potential consumption of products that are manufactured in Bangladesh are valued at only $10 /month per person than the market potential for Bangladesh is $6.5 billion annually. This market will be lost because of transit. The regional connectivity myth On the North East India shares borders with China and Myanmar. There is no onward road connectivity from the NE with Myanmar and to China. Hence the concept that the transit route would provide regional connectivity to Thailand and beyond is a distant dream. To the west the road connectivity through India, faces a dead end in Pakistan and in the battlefields of Afghanistan and Iraq. Where is the regional connectivity? Where do these myths lead Bangladesh to? Strategic and Security Concerns * The contentious border of North Eastern India with China has seen armed conflict in 1962. Both sides still have claims on territory which the other controls. If there was to be military engagement or the possibility of military engagement between India and China in the NE (or for that matter in any region where the two countries are vying for influence), would India use the transit route to speedily move troops and weapons across Bangladesh? What would be China' s reactions in such a scenario? It is not for us to weigh in on the possibilities of such engagement but the view of an influential Indian politician is relevant. During recent visit to Bangladesh, the former India Minister in charge of the NE Mr. Mani Shanker Iyer stated that when the NE grows economically because of connectivity and infrastructure improvement, India would "take on China." * The NE is an area where many insurgents groups operate with separate agendas. If transit is perceived by any or all of these groups to be playing a part in the supply chain of the Indian forces it could potentially become a target for them. There would be the danger of a spillover into Bangladesh. * As a developing country, with an active and contentious political climate, the possibility of disruption of vehicular traffic due to civil or political unrest and hartals is very real. If the domestic security situation does not allow the movement of trucks for providing essentials to the people of the NE what challenges will the two governments face? * There is talk of forming a public limited company for operating the transit. Those who will buy shares of this company would like the corridor to be in full use. Against this group who will be those opposed to the use of this corridor. It could become brother fighting brother. * The transit with the massive investment required would change the development plans of Bangladesh significantly. Why should we plunge into this major digression of our national planning and spending strategy for development? Economic Concerns * Bangladesh will not only lose a potential market of $ 6 billion annually but also the job creation possibilities that would come with this. * There will be substantially increased Traffic congestion on Bangladeshi roads making the whole transport network inefficient. * There will additionally be considerable investment required for the maintenance of the road network. * There will be a negative effect on foreign investment in Bangladesh because of the lowered efficiency caused by increased traffic congestion. * There will be a negative effect on the health of the people of Bangladesh due to pollution caused by truck emissions and by diseases brought into the country. * There will be additional pressure on our foreign exchange reserves caused by the use of imported diesel by Indian trucks. Approximately 40 million tonnes of cargoes are moved from the NE to other parts of India by road. If half of this, that is 20 million tonnes, is moved through Bangladesh in trucks with an average capacity of 10 tons then approximately two million trucks may be taking this corridor. As the cost of diesel is cheaper in Bangladesh than in India, it is expected that the trucks will come empty and leave full. If the average offtake by each truck is 200 litres, an additional 400 million litres of diesel will have to be imported using our scarce foreign exchange. * The building of the transit facilities would bring about a massive increase in our national debt estimated at $ 7 billion and make us very vulnerable to externalities. The pride of self reliance that we have achieved with our blood sweat and tears and with which we are building Bangladesh will come under a new threat. Our freedom -- economic and fiscal decision making freedom, if history is to be a guide, could be eroded. The decision on whether Bangladesh should allow transit facilities to India should be made on an evaluation of the cost and benefit to both the countries. Then there are the security considerations. The basis of all negotiations must be the guarantee of our national security. This complex issue must start with the guarantee that this facility will never ever be used for transporting any military men or materiel. Bangladesh must also make 100 % inspection of all goods coming in and going out mandatory. If negotiations are carried out on the basis of transparency and fairness, on the basis of principles that clearly benefit all the people of the region, we may create a sound basis for cementing our relationship. If the gains are perceived to be one sided it is also likely to be unsustainable. And then it will become a lose-lose game.