Regionalism in South Asia

The dramatic surge in regional integration schemes over the past two decades
has been one of the most important developments in world politics. Virtually all
countries are now members of at least one regional grouping. South Asia is no
exception to this trend. In December 1985, seven South Asian countries came
together to establish South Asian Association for Regional Cooperation
(SAARC) to address issues of peace and development in the region. This book
examines regionalism in South Asia, exploring the linkages between institu-
tional structures, government capabilities, and domestic actors’ preferences to
explain the dynamics of regional cooperation. It considers the formation and
evolution of SAARC, explaining why its growth in terms of institutional devel-
opments and program implementation has remained modest and slow over the
past two decades. It also addresses the impact of important issues such as the
acquisition of nuclear capabilities by India and Pakistan, the unending conflicts
in Kashmir, the war against global terror in Afghanistan, and India’s growing
economy. Drawing on a wealth of empirical research, including elite interviews
and trade transaction data, this book sheds new light on the main cooperation
issues in South Asia today and provides important information on the trends and
prospects for regional cooperation in future years.

Kishore C. Dash is Associate Professor of Global Studies at Thunderbird

School of Global Management. His research interests are in the areas of inter-
national political economy, Asian studies, and political economy of contempor-
ary South Asia. He has published in international journals, and he is the coeditor
of International Political Economy: State–Market Relations in a Changing
Global Order.
Routledge contemporary South Asia series

1 Pakistan
Social and cultural transformations in a Muslim nation
Mohammad A. Qadeer

2 Labor, Democratization and Development in India and Pakistan

Workers and unions
Christopher Candland

3 China–India Relations
Contemporary dynamics
Amardeep Athwal

4 Madrasas in South Asia

Teaching terror?
Jamal Malik

5 Labor, Globalization and the State

Workers, women and migrants confront neoliberalism
Edited by Debdas Banerjee and Michael Goldfield

6 Indian Literature and Popular Cinema

Recasting classics
Edited by Heidi R.M. Pauwels

7 Islamist Militancy in Bangladesh

A complex web
Ali Riaz

8 Regionalism in South Asia

Negotiating cooperation, institutional structures
Kishore C. Dash
Regionalism in South Asia
Negotiating cooperation, institutional
structures

Kishore C. Dash
First published 2008
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York, NY 10016

This edition published in the Taylor & Francis e-Library, 2008.

“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2008 Kishore C. Dash

All rights reserved. No part of this book may be reprinted or reproduced or

utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Dash, Kishore C., 1956–
Regionalism in South Asia: negotiating cooperation, institutional
structures/Kishore C. Dash.
p. cm. – (Routledge contemporary South Asia series; 8)
Includes bibliographical references and index.
1. South Asian Association for Regional Cooperation. 2.
Regionalism–South Asia. 3. South Asian cooperation. I. Title.
DS335.D37 2008
341.247-dc22
2007036117
ISBN 0-203-93036-3 Master e-book ISBN

ISBN10: 0-415-43117-4 (hbk)

ISBN10: 0-203-93036-3 (ebk)

ISBN13: 978-0-415-43117-0 (hbk)

ISBN13: 978-0-203-93036-6 (ebk)
To My Parents
Contents

List of figures viii

List of tables ix
Acknowledgments x
Map xii

1 Introduction 1

2 Explaining regional cooperation in South Asia 20

3 Regional dynamics 45

4 Origin and evolution of SAARC 79

5 The challenge of regionalism in South Asia 110

6 Domestic politics and regional economic cooperation in

South Asia 142

7 Domestic preferences for regional cooperation:

cross-national comparisons 170

8 Conclusion 187

Notes 217
Bibliography 226
Index 241
Figures

2.1 Government strength, domestic support, and regional

cooperation policy initiatives 31
4.1 Organizational structure of SAARC 92
6.1 Regional leadership, potential market gains, and regional
integration outcomes 146
6.2 Nature of political coalitions, potential market gains, and
preferences for free trade arrangements 166
7.1 Relative benefits and contributions of South Asian countries 177
7.2 Positive issues of SAARC 179
7.3 Issues with negative effects on SAARC’s growth 180
Tables

2.1 Characteristics of foreign, domestic, and community issues 22

3.1 Key indicators of SAARC member countries 47
3.2 Socioeconomic profile of SAARC member countries 50
4.1 Contribution of SAARC countries to annual budget
expenditures of the secretariat 95
5.1 Dominant power in selected regional groupings 112
5.2 Hegemony and regional cooperation dynamics in South Asia 113
5.3 The balancing act – India and Pakistan 115
5.4 Comparative government strength in South Asia, 1990–99 128
5.5 Ruling party’s strength in South Asia, 1990–2005 129
6.1 Regional complementarities 148
6.2 South Asian market sizes 150
6.3 Share of foreign trade in GDP (percentage) 152
6.4 Intra-SAARC trade in relation to world trade 152
6.5 South Asian trade dependence indices (in percentages),
1980–2006 153
6.6 Sensitive lists of SAFTA members 163
7.1 Affective and utilitarian support questions 173
7.2 Interviewees according to occupational categories 174
7.3 Comparison of measures of affective support 175
7.4 National image of SAARC countries 176
7.5 Attitudes toward expansion of regional cooperation in
South Asia 182
Acknowledgments

One of the most rewarding aspects of working on this project is that it has
brought me into contact with many extraordinarily generous people. I have
incurred many debts of gratitude in the preparation of this work. I cannot hope
to include all to whom I owe such debts, but the following are among those who
can not be ignored.
My deepest debt of gratitude goes to Prof. Michael Haas, my mentor and
my dissertation advisor at the University of Hawaii at Manoa, for his constant
support, encouragement, and detailed critical comments on drafts of my chap-
ters which not only sharpened my thinking but also enhanced my understand-
ing of regional cooperation dynamics. I am also deeply grateful to my two
other mentors Dr Charles Morrison, president of the East–West Center at Hon-
olulu, and Prof. Majid Tehranian, director of Toda Institute for Peace, for their
intellectual support. Other scholars that I owe great gratitude for their critical
insights and comments are Carolyn Stephenson, Richard Chadwick, Seiji
Naya, William James, Harry J. Friedman, Tsuneo Akaha, Muthiah Alagappa,
Yaacov Vertzberger, Richard Baker, Mark Valencia, Ali Riaz, and Larry
Smith.
In South Asia, I owe deep gratitude to the numerous embassies, academic
institutions, think tanks, government officials, political leaders, industry associ-
ations, Parliament staff members, and staff members of the SAARC Secretariat,
who provided forums and very helpful intellectual exchange during my travel to
the region. Although it is not possible to list them all, which will take several
pages, I do, however, want to list some of them, which provided too many ser-
vices to be detailed here. Without their tremendous personal and institutional
support, the project could not have been carried through to completion. They are
the SAARC Secretariat (Kathmandu), SAARC Documentation Center (New
Delhi), Marga Institute (Colombo), Bandaranaike Center for International
Studies (Colombo), Bangladesh Institute of International and Strategic Studies
(BIISS), Center for Policy Research (New Delhi), Center for Studies of Devel-
oping Society (Delhi), Institute of International Strategic Studies (Islamabad),
Indian Council of Social Science Research (New Delhi), Indian Council for
Research on International Economic Relations (New Delhi), Institute for
Defense Studies and Analysis (New Delhi), Teen Murty Library, Central Library
 Acknowledgments xi
of Delhi University, Sapru House, and Jawaharlal Nehru University Library at
New Delhi.
To the following individuals, I give my deep thanks for their tremendous per-
sonal and professional help: Ibrahim Hussain Zaki, SAARC Secretariat staff
members, Bimal Prasad, Lok Raj Baral, B.B. Thapa, Mana Ranjan Josse, Puru
Risal, Barun Gurung, S. Sultana, A.K.H. Morshed, Rehman Sobhan, Muham-
mad Shamsul Huq, Emajuddin Ahamed, Imtiaz Ahmed, Mohammad Humayun
Kabir, Ataus Samad, Md Abdur Razzaque, Subrata S. Dhar, Kajal Dhar, Gitiara
Nasreen, V. Kanesalingam, Godfrey Gunatilleke, Ray Forbes, Gamini Weer-
akoon, Manik De Silva, Victor Gunawardena, Ponna Wignaraja, Siri Ranas-
inghe, Jayadeva Uyangoda, Ven. Dodampahala Chandra Siri, Ven. T. Mithabani
Thera of Gothama Thapowanaya, S.D. Muni, I.N. Mukherjee, Muchukund
Dubey, Manoranjan Mohanty, Subrata Mukherjee, Neera Chandhoke, Rajni
Kothari, Vijay Pillai, Uday Kumar, Ali Baquer, Charan Wadhva, Partha S.
Ghosh, S.P. Gupta, Jasjit Singh, GVC Naidu, Rupa Narayan Das, Nasir Ahmed,
K. K. Panda, and Lynette Wageman.
I would like to thank Thunderbird Research Center for a generous research
grant to complete this project. I would like to thank my colleagues at the Inter-
national Studies Department of Thunderbird for engaging me in many intellectu-
ally stimulating discussions. At Thunderbird, I owe a special gratitude to
Georgia Lessard for her outstanding research and editorial help.
I am very grateful to Dorothea Schaefter and Tom Bates at Routledge (Asian
Studies), who provided me with timely reviews and constantly encouraged me to
complete this work. Without their help, this work could not have been com-
pleted.
Above all, I am indebted to those 780 respondents who consented to be inter-
viewed and shared their thoughts, perception, and vision with me. This book
simply could not have been written without them, their insights, and their views
of South Asian regionalism. In acknowledging my indebtedness to these many
individuals and institutions, I would like to stress that the ultimate responsibility
for any conclusions or errors in this work remains mine alone.
Throughout this project, I have been blessed with the love and support of my
family. To Arun and Tara: thanks for being there when I needed you most. Your
zest for life is a constant source of inspiration for me. Most of all, I would like to
thank my wife, Sagarika. She has been of tremendous help in virtually every
way possible. Despite her extremely demanding teaching schedule, she was able
to find time to offer me crucial advice in difficult times of my research. Her infi-
nite reserve of good-natured patience and understanding and intellectually stim-
ulating comments on some aspects of this research have been a repeated source
of inspiration during the research and writing of this book.

Kishore C. Dash
TURKM. UZB.
TAJIKI STAN
National capitals
Other cities
AFGHANISTAN
Kabul Line of Chinese
Indian claim
Control
Srinagar
JAMMU AND
line of
control
South Asia
Islamabad KASHMIR

HIMACHAL CHINA
PRADESH
Simla
PUNJAB
Chandigarh Dehra Dun
UTTAR-
PAKISTAN HARYANA
ANCHAL

Delhi DELHI ARUNACHAL

PRADESH
New Delhi NEPAL SIKKIM
UTTAR Kathmandu BHUTAN Itanagar
PRADESH Gangtok
Thimphu
RAJASTHAN Lucknow
Jaipur Dispur ASSAM NAGALAND
Kohima
Patna Shillong
MEGHALAY MANIPUR
BIHAR Imphal
BANGLADESH
Agartala
Gandhinager JHARKHAND
WEST Dhaka Aizaw
Ranchi TRIPURA
Bhopal BENGAL MIZORAM
Kolkata Aizaw
MADHYA PRADESH (Catcutta)
GUJARAT CHHATTISGARAH

Raipur BURMA
Diu Daman
Shvassa
MAHARASHTRA
DAMAN AND DIU DADRD AND Bhubaneshwar
ORISSA
NAGAR HAVELI
Mumbai
(Bombay)

Rangoon

Hyderabad
PONDICHERRY

Panaji ANDHAR
GOA
PRADESH Bay
Arabian KARNAT AKA of
Sea Bengal
Chennai (Madras)
Bangalore

Port Blair
PONDICHERRY
Cuddalore
TAMIL NADL
Kavaratti PONDICHERRY
KERALA ANDAMAN AND
LAKSHADWEEP NICOBAR ISLANDS

Trivandrum
SRI
LANKA

Colombo

INDONESIA
Indian Ocean

MALDIVES Male
1 Introduction

Revival of regionalism
The dramatic surge in regional cooperation schemes in the post-1980 period has
been one of the most important developments in world politics. Significantly, coun-
tries like the United States, Canada, Japan, and China, which showed little interests
in regionalism in the post-World War II period, have embraced regionalism with
considerable enthusiasm in the post-Cold War era.1 What accounts for this recent
spurt in regionalism? At least four developments seem to have come together in the
late 1980s to create a momentum toward regionalism: expansion of European
integration; the demise of Soviet Union; the shift in US strategy; and changing per-
spectives on regional trade and foreign investment in the developing world.
Unlike the “locust years” of disillusionment in the 1970s, during which
regional integrative activities declined in Western Europe (Euro-sclerosis) as a
result of the revival of nationalism (Clark 1988: 1424–1425), the late 1980s wit-
nessed several new integration initiatives in Europe. The continued expansion of
the European Union in terms of scope, depth, and geographical area is a signific-
ant achievement.2 This success has had a demonstration effect, encouraging
emulation of regional integration initiatives in other parts of the world.
A related development during this time was the end of the Cold War and col-
lapse of Soviet Union. This led Eastern European and Baltic countries to
embrace democracy and capitalism. Western Europe entered into several
regional economic arrangements with these countries to accelerate their trans-
ition. Such moves increased the appeal of regionalism as an instrument of eco-
nomic development and political transformation.
The decision of the United States to embrace regionalism in the post-Cold
War era, as Bhagwati (1992: 535–555) argues, has been an important driving
force for the growth and success of “second regionalism.” The changed attitude
of the United States toward regional integration, from active hostility to broadly
enthusiastic support, has both fostered regional integration schemes and reduced
the diplomatic pressure for countries from engaging in the formation of regional
schemes. The shift in the US policy was partly driven by its frustration with the
slowness of the multilateral process and partly by its desire to gain increasing
access to large regional markets.
2 Introduction
The formation of the European single market and North American Free Trade
Agreement (NAFTA) led to apprehension among the developing countries that
the major centers of economic powers – notably Western Europe and North
America – may form trading blocs and pursue protectionist policies.3 Such pol-
icies would, many developing countries feared, prevent their effective participa-
tion in the global economy and hamper the prospects of their national
development (Hveem 1989: 269). In such a situation, their aspirations for eco-
nomic development would perhaps be best realized through some kind of
regional cooperative arrangements among themselves (Gilpin 1987: 294). The
regional arrangements, many policymakers of these countries reasoned, would
provide them more secure access to regional markets.
Growth of regional cooperation among the developing countries appears to
have been guided by what Ernst Haas (1990: 65) called an “ideology of prag-
matic antidependency” which seeks to promote regional interdependence among
the developing countries without delinking them from the global system.4
Through increasing intraregional trade, the Third World countries aspire to
achieve “structural empowerment” (Mortimer 1980) and, thus, hope to reduce
their degree of dependence on the North and at the same time increase their
collective bargaining in the global economy (Hettne 1992: 198).
A logical prerequisite for the success of pragmatic antidependency was that
countries in the developing regions had to implement trade liberalization pol-
icies. To do so, they had to abandon their inward-looking domestic-oriented
import-substitution model, which had dominated thinking in the 1960s and
1970s, and, instead, embrace an outward-oriented market liberalization model.
The examples set by the phenomenal success of the East Asian “tigers” and the
collapse of the Soviet system validated the market liberalization model of devel-
opment. The pro-market philosophical shift in the 1980s became the basis for a
growing number of free trade agreements (FTAs) among developing countries
and between developed and developing countries (Frankel 1997: 10).
One of the important goals of economic liberalization and trade liberalization
policies in many developing countries is to attract more foreign investment and
technology. The success of these policies requires regional stability, which
would make the region more attractive for foreign investors by reducing geopo-
litical risks. Policymakers in many developing countries believe that regional
cooperative arrangements can help achieve such goals. Through regional coop-
eration, the developing countries also desire to help neighboring countries stabi-
lize and prosper for altruistic reasons and to avoid spillovers of unrest and
population (Schiff and Winters 2003: 9). Thus, in the post-Cold War era,
forming regional cooperation schemes and FTAs have become a pragmatic goal
for many developing countries.
Finally, from a policy coordination point of view, regionalism appears more
practical and feasible than global cooperation. Balancing divergent interests and
a coordination of policies is easier among relatively few partners than among a
large number of member states at a global level as represented by GATT/WTO.
Developing countries are also convinced that regional cooperation can build
 Introduction 3
upon existing cultural, economic, or even security ties between neighbors. A
global option does not present this dynamic.

Regionalism in South Asia

South Asia is no exception to such worldwide trends. After more than eight
years of negotiations, seven South Asian countries – Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan, and Sri Lanka – came together in December 1985 to
form the South Asian Association for Regional Cooperation (SAARC). The
formation of this regional association represented a major diplomatic initiative
by the South Asian leaders to address the issues of peace and development in the
region. But since its origin, SAARC has experienced only limited growth in
terms of institutional developments and program implementation. This has led
some observers to argue that the organization is likely to experience what Ernst
Haas describes as “turbulent nongrowth” in coming decades (1990: 109–125).
According to Haas:

Turbulence in an organization’s life refers to a phase where participating

actors are utterly confused about the goal and purpose of the organization,
pursue many objectives simultaneously as they are unsure of the trade-offs
among them, and demonstrate ambiguity and lack of commitment in any
negotiation.
(1990: 111)

“Nongrowth is characterized by stable or shrinking budgets, the failure to

acquire new tasks, low morale, and failure to recruit needed personnel” (Haas
1990: 109). When non-growth occurs in a setting of turbulence, the organization
experiences “turbulent nongrowth,” which over a period of time leads to either
the demise or the reevaluation (replacement) of the organization.
Some other observers, however, argue that SAARC may not be a panacea to
the region’s problems, but its existence has certainly provided an opportunity for
the policymakers and other techno-economic experts of South Asia to meet
regularly and hold informal discussions on important bilateral and regional
issues at the highest level. These informal discussions among the leaders have,
at least, opened doors for improved relations among the South Asian countries.
What lies ahead for SAARC? What are the prospects of deeper regional cooper-
ation in South Asia? Given decades of mutual hostility and distrust, will South
Asian leaders be able to pursue deeper regional cooperation that involves taking
concrete initiatives to strengthen the existing regional arrangements and building
new regional institutions to achieve mutual benefit?5
This book analyzes the prospects of deeper regional cooperation in South
Asia by linking the process and outcome of regional cooperation with domestic
politics. Understanding the prospects of growth of regional cooperation, I argue,
requires an examination of the domestic system, different domestic sources of
motivations of the policymakers, and various kinds of domestic institutional
4 Introduction
constraints and opportunities that policymakers usually face while pursuing
regional cooperation policies. Such an examination will address two fundamen-
tal questions about regional cooperation. First, why do governments form or join
regional arrangements? Second, once a regional cooperation scheme has been
launched, what forces drive the process further and determine the chance of sus-
tained growth? Focusing on the interrelationship between domestic politics and
regional cooperation policies, this book argues that the interaction of the
domestic actors’ (both political and societal actors) preferences within the
context of their domestic institutional structures determines when expansion of
regional cooperation is possible and what its terms will be. This book seeks to
link the nature of the institutional structures, government capabilities, and
domestic actors’ preferences to explain the dynamics of regional cooperation in
South Asia.
While there is no dearth of books and articles on country specific studies in
South Asia, and studies related to India–Pakistan rivalry, very few systematic
studies are available on South Asian regional cooperation. Besides, the existing
studies on regional cooperation in South Asia have focused mostly on historical
analyses and interpretation, structural economic, and security analyses. Studies
related to different domestic sources of motivations of the policymakers – for
example the nature of domestic institutions, various kinds of domestic institu-
tional constraints and opportunities, domestic actors’ support or opposition to
regional cooperation policies – have received inadequate attention. It is neces-
sary to understand the dynamics of domestic politics and domestic actors’ pref-
erences in order to explain why or why not South Asian countries seek to deepen
regional cooperation.
This introductory chapter is organized as follows. First, I provide a review of
the major schools of integration theory and suggest why these theories offer only
partial explanations of the regional cooperation process. Second, I identify
several important implications of Euro-centric focus of the integration literature
for understanding regional cooperation efforts in Third World regions. Third, I
provide a brief preview of the analytical arguments of this study and introduce
the organization of this book.

Theoretical approaches to regional integration: a review

Transactionalism
One of the early theories of regional integration, transactionalism (or communi-
cations theory), was developed by Karl Deutsch, the Czech-born German polit-
ical scientist. Deriving his paradigm from cybernetics and information theory,
Deutsch developed a communications approach to address the issue of commun-
ity building in the international arena. His most substantive contribution to
integration theory is found in his pioneering work Political Community and the
North Atlantic Area (1957). In this book, he defined integration as “the attain-
ment, within a territory, of a sense of community and of institutions and prac-
 Introduction 5
tices strong enough and widespread enough to assure, for a long time, depend-
able expectations of peaceful change among its population” (Deutsch et al.
1957: 5). By “peaceful change,” Deutsch refers to “the resolution of social prob-
lems, normally by institutionalized procedures, without resort to large-scale
physical force” (1957: 5).
The central objective of Deutsch’s theory was to develop a political commun-
ity to avert war and thus enhance the prospect of peace and prosperity among
nation-states. In contrast with Durkheim’s pessimistic construction of world
society,6 Deutsch believed that people can learn to give up their narrow
parochial orientations and form organizations to promote peace (1978: 285).
Deutsch’s effort, as Arend Lijphart (1981: 236) perceptively remarks, revived
significantly the Grotian paradigm of world society, which challenged the tradi-
tional paradigm of international relations. Traditional international relations
theory revolved around the notions of state sovereignty and its logical corollary,
international anarchy. Such notions reflected the Hobbesian paradigm, which
underlined the fact that nation-states live in an international state of nature with
no guarantee of security. Thus, they are forced to survive in a condition of
mutual competition and conflict. Challenging this axiomatic view of the rela-
tionship between anarchy and war, Hugo Grotius and his followers claimed that
the world consists of a society of states with a common framework of moral and
legal norms and that “the normative consensus of international society is suffi-
ciently strong and pervasive to render the image of the state of nature, at least in
the Hobbesian sense of international anarchy, inapplicable” (Bull 1966: 51).
Deutsch’s analysis of political communities seems to be in line with this
paradigm.
According to Deutsch, political communities can be of two types: pluralistic
security communities and amalgamated security communities. An amalgamated
security community exists whenever there is “formal merger of two previously
independent units into a single larger unit with some kind of common govern-
ment after amalgamation . . . with one supreme decision-making center” (1957:
6). Deutsch cites the United States as an example. Alternatively, a pluralistic
security community exists when nation-states retaining the legal independence
of separate governments and maintaining their separate national identities
pursue common goals and harmonize their policies to achieve joint economic
rewards. Of these two communities, Deutsch observes, the pluralistic security
community is easier to attain and maintain. He further suggests that for the cre-
ation of both kinds of communities, changes in the political attitudes and behav-
ior of individuals, in other words, development of a “we feeling,” are absolutely
necessary. According to him, through transactions such as trade, migration,
tourism, cultural and educational exchanges, and the use of physical communi-
cation facilities, a social fabric is built not only among elites but also the masses,
instilling in them a sense of community or a “we feeling” (1957: 29).
To Deutsch, the success of integration is linked to the development of a
“sense of community” among nation-states. To measure this “sense of commun-
ity,” he and his associates quantified transaction flows – such as mail flows,
6 Introduction
electronic communication, student travel, tourism, and relative levels of intrare-
gional trade – among nation-states. On the basis of aggregated data on social
communications and public and elite opinion, Deutsch and his colleagues (1967)
concluded that the process of European integration, at least in the sense of the
growth of supranational state or sense of community, had come to a halt. They
observed that integration in Europe was at its peak in 1954; integration reached
a plateau from 1957 to 1958 and from then on integrative trends declined (218).
Deutsch’s conclusion, however, was challenged by Inglehart and many other
scholars. Using identical data, Inglehart (1968) found out that regional integra-
tion in Europe, rather than declining, was progressing toward a fuller integration
during the same time period studied by Deutsch and his associates (122).
Sharing Inglehart’s view, Lindberg (1970) commented that Western Europe,
during the five-year period after the formation of European Economic Commun-
ity (EEC) in 1958, experienced substantial progress toward integration (24). Carl
J. Friedrich (1969), using other indicators, concluded that Western Europe had
become more integrated since 1957, the year of the signing of the Rome Treaty,
creating the Common Market. He criticized Deutsch and his associates both for
their choice of indicators and for their use of statistical data in supporting their
conclusion (196–215).
Ernst Haas (1958) found Deutsch’s paradigm inappropriate to account for the
emergence of the European Coal and Steel Community (ECSC). Haas argued
that if one had to consider Deutsch’s transactionalist criteria to gauge the level
of regional integration in Europe, then ECSC would not have come into exist-
ence, because the six countries were not enjoying a high level of transactions
among themselves. Haas also did not find Deutsch’s three qualitative indicators
– mutual predictability, mutual responsiveness, and value compatibility – useful
in case of ECSC. Instead, Haas argued that political leaders and their expecta-
tion of mutual economic gains played crucial roles in the emergence of the
ECSC.
These criticisms led Deutsch to reevaluate his conclusions about European
integration from 1954 to 1967. In a subsequent study with Richard Chadwick
(1973), Deutsch reported statistical errors for measuring relative trade concen-
tration [relative acceptance (RA) indices], which led to his earlier conclusion
that European integration has reached a plateau in the mid-1950s. Instead, the
study of Chadwick and Deutsch (1973: 84–109) suggested that steady growth in
the EEC had occurred since 1954–67.
Despite these revisions, many critics remained unconvinced about the applic-
ability of Deutsch’s transactionalist framework in the 1970s and 1980s. The
major weakness of this approach was that Deutsch’s emphasis on quantitative
measures of transaction flows led him to ignore other critical international and
domestic political and economic factors in the decision-making process. His
analysis neglected the role of international organizations, structural dynamics of
state power, and the self-interested national decision-makers. By focusing on
quantitative transaction flow indicators to measure structural integration in
Europe, his study paid inadequate attention to various international and domestic
 Introduction 7
constraints and opportunities that policymakers face in pursuing integration pol-
icies. This was a major deficiency of Deutsch’s transactionalist approach, which
was criticized by scholars of neo-functionalism and intergovernmentalism.

Functionalism
Functionalism, as developed by Hungarian political economist David Mitrany
(1966), rests upon two central assumptions. First, political divisions are a source
of conflict among nations. Nation-states can transcend these divisions gradually
by seeking out areas of mutual interests and establishing a “working” web of
international institutions, managed by technical elites. Second, in today’s inter-
dependent world, no nation-state can individually solve all its economic and
social problems. Hence, there is a need to identify common international eco-
nomic and social problems and to create regional and global organizations to
deal with them.
However, Mitrany did not favor an organization like the League of Nations,
which failed, according to him, because of its all-encompassing nature and
overemphasis on military issues. Instead, he argued for monofunctional or
functionally specific organizations because they can address a single inter-
national problem and strive for its ultimate solution. Technical experts, rather
than political actors, Mitrany believed, will play a vital role in these functional
organizations. Once people are able to perceive increased benefits and the
greater ability and efficiency of these organizations, demands will be raised for
the solution of other problems with other functionally specific organizations.
This process, known later as “spillover”7 or what Mitrany calls “the doctrine of
ramification,” will result in “ever-widening circles” of social and economic
integration. As the role and number of these functionally specific organizations
grow, the state system will collapse, resulting in the transfer of “slices of sover-
eignty” from nation-states to regional organizations. Thus, functionalism sug-
gests that promotion of cooperation in the “low politics” (technical, social, and
economic) will bring about greater political cooperation among the nation-
states in the long run and may result in the emergence of supranational institu-
tions. Mitrany hoped that the technical experts would create a new world
culture dominated by “technical rationality” that would replace the narcissistic
nation-state system.
The major weakness of Functionalism is its deterministic solution that func-
tional cooperation in “low politics” area would gradually lead to cooperation in
“high politics.” Summing up these deficiencies of functionalism, Dougherty and
Pfaltzgraff (1990) comment:

It is difficult, if not impossible, to separate the economic and social tasks

from the political; that governments have shown themselves unwilling to
hand over to international authority tasks that encroach upon the political;
that certain economic and social tasks do not ramify or spill-over into
the political sector; and that the road to political integration lies through
8 Introduction
political “acts of will,” rather than functional integration in economic and
social sectors.
(458)

In light of the Western European experience since World War II, there is
little evidence to suggest that technology or economic growth per se had pro-
duced integration through functional cooperation. Political influences and
pressures from various interest groups, political parties and regimes have mat-
tered greatly in the integrative process of Western Europe. In short, there
has been little or nothing that is “non-political” in the integration
experience of Western Europe since World War II (Pentland 1973: 98). Thus,
the relative neglect of political factors undermines the explanatory value of
functionalism.

Neo-functionalism
The concepts and assumptions of functionalism were refined and then embed-
ded into an analytical framework to study the logic of regional integration by
neo-functionalism. Ernst Haas, the chief exponent of neo-functionalism, in his
pioneering work The Uniting of Europe, provides the original framework of
neo-functionalism. Later, this framework was expanded to include contribu-
tions from several other scholars, Leon Lindberg (1963) and Joseph Nye
(1968), to name a few. The central objective of neo-functionalism was to
explain how and why nation-states cease to be wholly sovereign, how and why
they “voluntarily mingle, merge, and mix with their neighbors so as to lose
the factual attributes of sovereignty while acquiring new techniques for resolv-
ing conflicts between themselves” (Haas 1970: 610). More specifically,
neo-functionalism defines integration as “the process whereby political actors
in several distinct national settings are persuaded to shift their loyalties,
expectations, and political activities towards a new and larger center, whose
institutions possess or demand jurisdiction over the pre-existing states” (Haas
1958: 12).
Neo-functionalism postulates that the key actors in the integration process are
national and regional elites, political parties, pressure groups, and supranational
institutions. It is the expectation of gain or loss of these groups that becomes the
driving force for the regional integration process. As actors realize that their
interests are best served by a commitment to a larger organization, learning con-
tributes to integration. Besides, actors who experience gains from supranational
institutions in one sector will tend to favor integration in other sector. Thus,
there is an “expansive logic” of sector integration that contributes to “spill over”
from one sector to another (Haas 1964: 48).
Sectoral integration, neo-functionalists argue, makes two types of spillovers
possible: functional and political. Functional spillover, as Walter Mattli (1999:
25) argues, is based on the assumption that the different sectors of a modern
industrial economy are highly interdependent and that any
 Introduction 9
integrative action in one sector creates a situation in which the original goal
can be assured only by taking further actions in related sectors, which in
turn creates a further condition and a need for more action, and so forth.

Stephen George (1985: 21) provides an illustration of this functional spillover in

the context of European integration. He argues that the removal of tariff barriers
will not in itself create a common market. The fixing of exchange rates is also
required in order to achieve that end. But the surrender of control over national
exchange rates demands the establishment of some sort of monetary union,
which, in turn, will not be workable without the adoption of central macroeco-
nomic policy coordination and which itself requires the development of a
common regional policy, and so forth. Thus, sector integration, as Haas argues,
“begets its own impetus toward extension to the entire economy even in the
absence of specific group demands” (1958: 297).
Political spillover describes the process of adaptive behavior of national
interest groups and political parties at the supranational level in response to sec-
toral integration. According to neo-functional framework, sectoral integration
leads to a gradual shifting of expectations and the changing of values of national
elites and interest groups, resulting in more favorable response to integrative
efforts. Like functionalism, neo-functionalism also posits that functional cooper-
ation must begin on the relatively low politics areas, that is economic, technical,
and social areas. But unlike functionalism, neo-functionalism argues that eco-
nomic, social, and political problems are ultimately inseparable and accepts the
linkage between economics and politics in the integration process. As Haas
describes, “The supranational style stresses the indirect penetration of the polit-
ical by way of the economic because the purely economic decisions always
acquire political significance in the minds of the participants” (1968: 152).
With the advent of the first major crisis of the European Community in 1965,
when President de Gaulle refused to accept further expansion of European
integration, neo-functionalism seemed to have lost much of its appeal as an ana-
lytical framework for explaining regional integration. Critics pointed to the
failure of neo-functionalists to recognize the importance of nationalism, the
autonomy of the political sector, and the interaction between the international
environment and the regional environment (Hoffmann 1966: 862–915). In light
of these criticisms, several neo-functional scholars suggested reformulation of
this theory to include factors that neo-functionalism neglected until this point.
Concepts such as spillback (Lindberg and Scheingold 1970: 137) and
spillaround (Schmitter 1970: 840) were introduced to note the halt in the integra-
tion process as a result of participating actors’ wavering of commitment.
Explaining spillback, Schmitter argued that in the regional integration process
“spillback” may occur, “whereby in response to tensions actors consequently
withdraw from their original objective, downgrading their commitment to
mutual cooperation” (1970: 840). Spillaround refers to an increase in the scope
of functions performed by an integrative organization but not a corresponding
growth in authority (Schmitter 1970: 846). For Haas, the role of external actors
10 Introduction
and events in the integration process was considered peripheral. Exploring this
variable in some detail, Joseph Nye came to the conclusion that both external
actors and events should be included as a “process mechanism” in the evolution
of any integrative scheme, with particular emphasis on the role of external actors
(1971: 64).
Roger Hansen criticized the neo-functionalists for their failure to relate the
process of regional integration to factors in the surrounding international system.
The neo-functionalists, according to Hansen (1969), tend to deny rather than
investigate the discontinuity between “high” (national interest) politics and
“low” (welfare) politics, a distinction developed by Hoffmann (1966). The neo-
functionalists also failed to recognize, Hansen argued, that sizable economic
gains would result from a common market coordinated by sovereign states
rather than managed by ceaselessly expanding supranational authorities
(1969: 270).
These criticisms forced neo-functionalists to take a closer look at their analyt-
ical framework. Many accepted their analytical inadequacy and argued for a new
framework to explain the process of integration. In the contemporary world,
Haas (1975) found that more emphasis was laid on national self-interest than
approaching issues on the basis of a joint incrementalist strategy. European
integration in the 1970s can therefore be more fruitfully studied, Haas sug-
gested, through a concept of global interdependence. He identified global inter-
dependence as “fragmented issue linkage” (1975: 25). “Issue linkage” occurs,
Haas pointed out, “when older objectives are questioned, when there is a clamor
for satisfaction of new objectives, and when the rationality accepted as adequate
in the past ceases to be a guide to future action” (1975: 26). Thus, regional
integration, according to Haas, “has become a fragmented, disjointed process,
heavily dependent upon motives of actors and their ability to link the solution of
one problem with the solution of prior problems” (Duffy and Feld 1980: 499).
Despite these reformulations, many critics remained unconvinced about the
applicability of neo-functional framework in the 1970s and early 1980s.
However, with the revival of European integration in the mid-1980s, neo-
functionalism regained popularity in the international relations literature as a
framework for explaining the process of integration. In particular, the focus of
neo-functionalism on subnational actors and the role of supranational institu-
tions as catalysts for integration have proven to be relevant for explaining
regional integration in Europe. Nevertheless, neo-functionalism suffers from
several shortcomings.
First, the argument of neo-functionalism that technocratic problem solving is
the main basis of motivation for national decision-makers in pursuing regional
integration remains inadequate. This neo-functionalist view is based on a lack of
understanding of the preferences of governments and how these preferences are
shaped in a particular society and political system. Rewarding and protecting
domestic constituency upon which decision-makers are dependent for political
support and survival are also important considerations for national decision-
makers. In addition, policymakers’ decision to cooperate or not is shaped by the
 Introduction 11
structure of the society and government. In sum, neo-functionalism fails to ade-
quately explore the range of motives, constraints, and opportunities that policy-
makers face in pursuing regional integration policies.
Second, the overemphasis of neo-functionalism that supranational institutions
have the capability to initiate integrative activities neglects the role of nation-
states as the dominant decision-making institutions (Keohane and Hoffmann
1991). In fact, as the evidence of European integration process and elsewhere
suggest, nation-states continue to play significant roles in expanding (or lack of
expanding) regional integration activities. More precisely, the nature of develop-
ment of regional integration is affected by participating members’ system capac-
ity, system support (domestic opinion), demand (for integration), and leadership
preferences rather than the exclusive roles of regional actors and supranational
institutions as emphasized by neo-functionalism.8

Intergovernmentalism
Another popular school of integration theory is intergovernmentalism, which has
based its analysis on the central assumptions of structural realism. According to
the structural realist paradigm, the unitary states are the central actors in an anar-
chic international system, seeking to maximize their national interests (Waltz
1979; Grieco 1990). Following this, intergovernmentalism reinforces the states
as primary actors in the regional cooperation process. These sovereign states
seek to pursue regional integration only when their national interests are com-
patible with the regional integration goals. Thus, as intergovernmentalism
argues, regional integration process involves a series of bargains between the
heads of governments of the states in a region. Nation-states’ search for balance
of their national interests with regional integration goals is not easy and often
slows down the pace of regional integration. Further, in this interstate bargain-
ing, the heads of governments are often reluctant to sacrifice their national sov-
ereignty to attain common goals. Thus, intergovernmentalism is much more
cautious about the growth prospects of regional integration than is neo-
functionalism and seems to account for the uneven and slow pace of European
integration in the 1960s and 1970s (Huelshoff 1994: 259).
The emphasis of intergovernmentalism on the centrality of unitary states as
sole actors in international relations was criticized by the interdependence
school (Keohane and Nye 1977). Pointing to the need to disaggregate states,
interdependence school focused on the interaction among the domestic actors
and fragmented state. This theme was later picked up and expanded by neo-
liberal institutionalism, which has replaced interdependence school in recent
years. Neo-liberal institutionalists were particularly critical of intergovernmen-
talism’s emphasis upon the centrality of the unified state, system-derived inter-
ests, and relative gains motivations, which lead to little regional integration
(Milner 1992). By emphasizing the role of the unified state, intergovernmental-
ism is unable to systematically analyze the domestic sources of the motivations
of states in regional integration and thus offers only a partial explanation of the
12 Introduction
integration process (Huelshoff 1994: 260). Neo-liberal institutionalists, instead,
focus on the existence of fragmented states, multiple actors, and multiple defini-
tions of national interests to overcome this limitation of intergovernmentalism.
Faced with such criticisms, intergovernmentalists have sought to expand their
theoretical approach. Building on the original postulates of intergovernmental-
ism, Andrew Moravcsik has developed a new version of this theory called
“liberal intergovernmentalism” (1991: 19–56). The theory posits a two-stage
approach to explain the integration process of the European Community in the
late 1980s. Walter Mattli has summarized these two stages as follows:

In the first stage, national preferences are primarily determined by the con-
straints and opportunities imposed by economic interdependence. In the
second stage, the outcomes of interstate bargains are determined by the rela-
tive bargaining power of governments and the functional incentives for
institutionalization created by high transaction costs and the desire to
control domestic agendas.
(1999: 30)

This expanded approach is undoubtedly an improvement over the original version

of intergovernmentalism. But the focus of liberal intergovernmentalism on the
interaction between domestic preferences, government bargaining, and supra-
national institutions in the regional integration process shows a strong influence of
neo-functionalism. Critics point out that this new theory offers nothing new but the
central arguments of neo-functionalism and thus suffers from the same kind of criti-
cisms that are leveled against neo-functionalism (Caporaso 1998: 336).
In light of the above argument, it would be problematic to apply the liberal
intergovernmental approach to fully explain regional integration in Europe and
elsewhere. Like neo-functionalism, liberal intergovernmentalism points out the
important roles of governmental actors, groups, and supranational institutions in
the regional integration process. But, it fails to explore adequately domestic
sources of motivations of policymakers.

Dynamics of Third World regionalism: limitations of eurocentric

explanations
The Eurocentric approaches of neo-functionalism and intergovernmentalism –
and its later reformulation in the form of liberal intergovernmentalism – are
inadequate to explain regional cooperative efforts among developing countries.
In fact, regional cooperative arrangements in Third World regions were down-
played by Eurocentric scholars. Haas and Schmitter (1964) predicted that integ-
rative efforts in the Third World countries would be less likely to succeed
because of the absence of four “background conditions” – relative equality in
size and power; substantial rates of transaction among them; existence of a plu-
ralistic sociopolitical structure; and high degree of complementarity of the
values existing within the proposed union (268–269).
 Introduction 13
Amitai Etzioni (1965) cited three reasons for the failure of regional unifica-
tion efforts among developing countries. The first reason is a “restricted
horizon” of the illiterate publics. Second, the developing countries “lack citizens
with the organizational and political skills to handle regional unification.” Third,
these countries are so preoccupied with their own domestic problems that they
have very little time left to think of regional unification (319–321). Roger
Hansen (1969: 258) came out with additional explanations for the lack of
success in the integrative efforts of the Third World countries. The superpowers’
interference in the economic and political systems of these countries is a major
impediment in their integrative efforts. Moreover, integrative efforts, Hansen
argued, would be impossible so long as developing countries were still engaged
in the nation-building process.
Following Karl Deutsch and his associates’ observation that all integrative
efforts have built-in expectations of gains and rewards, Lynn Mytelka argued
that Third World integrative systems will fail unless there is a solution to the
problem of unequal gains (1973: 236–250). Characterizing the Third World
countries’ dependence on the industrialized nations for capital, markets, and
technology as asymmetrical interdependence, John Ravenhill (1979) argued that
the Third World countries’ vulnerability to external economic influence may
impede their regional cooperation efforts (231).
These arguments explain why many regional arrangements in Africa, Latin
America, and Central America did not achieve the desired success during the
1970s and 1980s. A central argument in this literature is that regional coopera-
tion efforts in the Third World are unlikely to succeed because members of
regional arrangements in the Third World have very little to offer one another
(Haas 1990: 247). According to this literature, remedies for Third World prob-
lems can be provided only by the wealthy North and not by “regional partners in
poverty.” This argument seems to have ignored the fact that most Third World
countries have pursued development strategies based on aid and trade with the
developed world for more than four decades. Yet, very few of these countries
have actually been significantly successful in alleviating poverty. The export
performance of many Third World countries have been sluggish in the face of
the protectionist policies of their main trading partners in the developed world.
The stalemate in the North–South dialogue, the worsening terms of trade in the
global markets, the growing dependence on external assistance, and mounting
debt have turned the vision of the New International Economic Order (NIEO)
into an illusion. With the end of the Cold War and end of the European schism,
most Third World countries are faced with the ever-increasing prospect of being
marginalized in the international economy. Today, regional cooperation is no
longer just an option but a necessity for policymakers in most of the Third
World countries. As a result of global changes, it is likely that more and more
Third World countries will engage in regional arrangements for trade and
technology transactions. However, given the resource crunch of the Third World
countries, these regional arrangements are likely to be more outward looking
and likely to have more external linkages than in the past.
14 Introduction
Regional cooperative efforts have increased in the Third World regions
during the 1980s, and thereafter. The Association of South East Asian Nations
(ASEAN) came into existence in 1967 and, after almost a decade of “non-
action,” has become a successful regional organization in Asia and thus a model
of regional cooperation for developing countries. The members of ASEAN
agreed to create an ASEAN Free Trade Area (AFTA) in 1992. ASEAN has also
enlarged by admitting new members since 1980s – Brunei (1984), Vietnam
(1995), and Laos, Cambodia, and Burma (1997). Inaugurated in 1971, the South
Pacific Forum (SPF) has grown in strength since early 1980s as a regional
organization in the Southwest Pacific-Oceania region (Haas 1989b; Palmer
1991). In Middle East, the Gulf Cooperation Council (GCC), which was formed
in 1981, has been growing in stature since its inception (Nakhleh 1986). With
the inclusion of Bolivia as a new member, the Latin American Free Trade
Association (LAFTA) formed in 1960 was supplanted by the Latin American
Integration Association (LAIA) in 1980. In Latin America, several other
regional cooperation schemes have emerged in the early 1990s. The most
notable of these regional arrangements was the Mercado Comun del Sur (MER-
COSUR) in 1991 comprising Argentina, Brazil, Paraguay, and Uruguay. The
Andean Pact and the Central American Common Market (CACM) were resur-
rected in 1991 and 1993, respectively. In 1995, the Group of Three (G-3) –
Colombia, Mexico, and Venezuela – FTA was established. A recent organi-
zation to join the list of cooperative efforts in the Third World countries is the
SAARC which came into existence in 1985. What is remarkable about these
regional organizations is that they have emerged in regions which, unlike
Europe, have little prior experience of regional integration.
How can one explain the emergence of such regional cooperation schemes in
the developing world when the integration theorists predicted failure? The
integration theorists’ attempts to explain and predict regional integration efforts
in Asia and elsewhere were clearly inadequate. One of the critical reasons for
this is that Eurocentric theorists overemphasized integration, ignoring other
more realistic regional cooperation approaches. As Norman Palmer comments,
“By concentrating too heavily on integration, which was interpreted in many dif-
ferent ways, they gave inadequate attention to the conceptualization and encour-
agement of other forms of regional cooperation of less intensive but more
realizable nature” (1991: 11). Michael Haas (1992b: 235) observes that the
central weakness of the integration theorists is their emphasis on the creation of
a supranational authority, which presupposes “a slicing of sovereignty” of the
nation-states.9 The Third World countries, still extremely emotional and sensi-
tive about sovereignty, seem to resent any idea of surrender of their sovereignty
(Krasner 1985: 73–75). Thus, while regional cooperation for mutual gains is
considered as a pragmatic policy and is appealing for Third World leaders,
regional integration which involves setting up a supranational authority by sur-
rendering their sovereignty (or going completely “beyond the nation-state”)
seems undesirable for most of these leaders.
Capturing this tension between regional integration and regional cooperation,
 Introduction 15
Michael Haas (1992b) has advanced a Communitarian perspective to explain the
process of regional cooperation in Third World regions. He has developed this
perspective after comparing some 75 regional institutions in Asia and the Pacific
since the 1950s. According to this perspective:

modest technical cooperation pursued for joint economic gain, leads to the
development of communitarian culture of interaction, which spills over into
the building of a political community that is so firmly rooted in cultural
affinity that economic collaboration proceeds and spillback becomes
impossible.
(Haas 1992b: 294)

Central to the communitarian perspective is what Michael Haas (1989a) calls

the Asian Way to cooperation. The Asian Way advances three main arguments:
regional cooperation should proceed from less controversial issues (because
consensus can be easily achieved on those issues) to more complex political and
economic issues; political actors should take an incremental approach rather
than embracing any blueprintish grand designs; and there should be a stress on
cooperation rather than integration (Haas 1992a: 240). Although mainly derived
from his observations on regional institutions in Asia, Michael Haas’ conceptu-
alization contains various practical principles that can be adopted to explain
regional cooperation activities in most Third World regions, including South
Asia. In particular, his emphasis on regional cooperation rather than regional
integration and consensus building, which is necessary because of the interplay
of domestic and regional political and economic dynamics, has important
implications for this study.
The central empirical issue in this study is to explain the growth of regional
cooperation in South Asia. Thus, the first task is to define what is regional coop-
eration? Defining regional cooperation is important for two reasons. First, it
allows one to distinguish policy coordination among nation-states (an attribute
of cooperation) from devolution of decision-making power to a supranational
authority, which is an essential attribute of regional integration. Second, it
allows to shift the focus of analysis from predominantly economic areas (as
found in regional integration) to other areas of cooperation among regional part-
ners such as security, social welfare, environment, and technology. The liter-
ature on international cooperation (Keohane 1984) and international regimes
(Krasner 1983) provides useful insights on the meaning of cooperation and basis
of cooperation among nation-states. Based on these insights, regional coopera-
tion in this study is defined as a process of policy coordination through which a
group of states in a region agree to establish a common set of rules and proce-
dures to guide state actors’ policy choice in economic and/or non-economic
areas. It is obvious from this definition that regional cooperation entails a set of
reciprocal commitments and obligations on the part of participating members to
abide by some common rules of conduct (Rodrik 1995: 176). In a sense, as
Andrew Moravcsik suggests, regional cooperation can be considered as an
16 Introduction
intergovernmental regime to manage state actors’ expectations in the economic
and/or non-economic areas (1993: 474). The management of expectations means
that participants in the regional arrangement agree to play by the same rules.
This study argues that participating actors’ willingness to play by common rules
of conduct and enter into reciprocal commitments and obligations is determined,
to a large extent, by domestic politics.

Domestic politics and regional cooperation

The central argument of this study is that the growth of regional cooperation
activities is affected by the domestic politics. Growth of regional cooperation is
primarily measured by the extent to which regional groupings manage to match
their stated cooperation goals with subsequent achievements. Intergovernmental
negotiations to realize regional cooperation goals often fail because of domestic
politics. Also, political leaders often fail to implement regional cooperative
agreements because of domestic politics. Thus, domestic considerations play a
critical role in shaping the possibility and nature of regional cooperative agree-
ments. In explaining the growth of regional cooperation, an examination of
domestic constraints and opportunities becomes essential at least for three
reasons. First, domestic politics facilitates our understanding about various
actor’s preferences, how national interests are constructed, and how states calcu-
late their gains (absolute or relative gains) from any cooperative arrangements.
For example, if the dominant domestic actors share a strong perception of
inequity, that is, their country sacrifices more and benefits less, regarding an
arms control treaty, or a preferential trade arrangement, decision-makers will
find it difficult to pursue cooperative policies toward such agreements. Second,
domestic factors explain the kinds of strategies decision-makers usually employ
to realize their goals. Of course, a state’s structural position is important, but at
the same time, the nature of its political system, the role of bureaucracy and mil-
itary, the influence of special interests, and public opinion may ultimately deter-
mine which strategies the decision-makers can realistically pursue at the
international and regional levels. Third, the policymakers can always negotiate
international and regional agreements, but the implementation of these agree-
ments require domestic support. Hostile or negative domestic reactions for any
agreement may eventually lead the decision-makers to abandon or postpone
regional cooperation policies.
Thus, this study posits the need to focus on domestic politics in order to
explain the growth of regional cooperation in South Asia. Many scholars have
noted the need for studies that emphasize a linkage between domestic politics
and foreign policy to explain regional cooperation process, but few have been
offered in the literature. Again, these few studies are confined to explaining the
European integration process only. No such study has been attempted in explain-
ing regional cooperation process in other regions. In this study, I have sought to
explain the importance of domestic politics for the growth of regional coopera-
tion in South Asia by combining three interrelated perspectives. First, building
 Introduction 17
on the concept of issue areas, I argue that regional cooperation policies do not
fall strictly into the category of either domestic or foreign policy issue areas.
Rather, these policies are in the realm of community policies, possessing some
characteristics of both domestic and foreign policy issue areas. An important
implication of this argument is that domestic groups’ involvement in regional
cooperation issues can be high and support of various domestic groups is neces-
sary for the decision-makers to pursue regional cooperation policies. Second,
employing Robert Putnam’s framework, I argue that regional cooperation is a
two-level process in which domestic support and regional bargains and negotia-
tions must overlap if cooperation is to proceed. Third, drawing on the literature
of institutional analysis, I argue that the interaction of the domestic actors’ (both
political and societal actors) preferences within the context of their domestic
institutional structures determines when expansion of regional cooperation is
possible and what its terms will be.

The plan of this book

This book is organized in the following way. Chapter 2 examines three inter-
related perspectives in the areas of international relations and comparative poli-
tics – i.e. issue areas, two-level game, and institutional analysis – to frame the
central argument of this study. Building on these three theoretical insights, this
chapter argues that to explain the nature, process, and outcome of regional coop-
eration in South Asia, it is necessary to understand domestic institutional struc-
tures, government capacity, domestic support, and preferences of political and
societal actors toward regional cooperation.
Chapter 3 explores the nature of interstate relationships among five major ori-
ginal SAARC member countries: India, Pakistan, Bangladesh, Nepal, and Sri
Lanka. It first identifies major characteristics of each state that affect their pol-
icies toward the neighboring countries and countries outside of the region. It,
then, examines the influence of history, which plays a significant role in defining
the South Asian countries’ regional diplomacies. In addition to history, it exam-
ines other features of the structure of the South Asian regional system – reli-
gious affiliations, ethnic relations, state capabilities, Indo-centric geography, and
leaders’ contrasting conception of their state’s relative roles – that affect their
relationships. The Indo-Pakistan rivalry and the implications of security
dilemma for the entire region are examined. This chapter also examines how the
smaller states are affected by their relations with their larger neighbors and how
these relations create opportunities and challenges for their leaders. Finally, this
chapter explores the relations between South Asian states and extraregional
powers and the implications of these relations for the South Asian region.
Regional cooperation is not a new development in South Asia. In the post-
independence period, regional cooperation issues were discussed in at least three
conferences: the Asian Relations Conference in New Delhi in 1947, the Baguio
Conference in the Philippines in 1950, and the Colombo Powers Conferences in
1954. After examining these earlier initiatives for regional cooperation by South
18 Introduction
Asian leaders, Chapter 4 explores the important domestic and external factors that
led Bangladesh to take some concrete initiatives for regional cooperation in South
Asia in the late 1970s. Examining the dynamics of domestic politics and the inter-
relationship between domestic and regional politics, this chapter explains why
smaller states in South Asia (Bangladesh, Nepal, and Sri Lanka) took the initi-
atives for regional cooperation and why India and Pakistan were initially reluctant
to join the regional grouping. It examines the domestic and external factors that
led to changes in India’s and Pakistan’s decision in favor of joining the regional
association? This chapter then provides an overview and evaluation of SAARC’s
record in terms of institutional developments and program implementation. Some
of the major security-related and trade-related agreements, i.e. SAARC convention
on suppression of terrorism, and SAARC Preferential Trading Arrangements
(SAPTA) are examined in detail to explain if SAARC has been able to increase
the capacity and extend the scope of its institutions.
Chapter 5 assesses the prospects of deeper regional cooperation in South Asia
by examining some of the major challenges of the region. This chapter identifies
several “facilitating conditions” in the literature to explain the growth of
regional cooperation activities. First, regional groupings operating with the pres-
ence of a benevolent hegemonic power are more likely to experience an
enhanced sense of regionalism accompanied by the creation of regionalist insti-
tutions than are groups without a benevolent hegemonic power. Second, regional
groups with strong governments are more likely to pursue cooperative efforts
than regions with weak governments. Third, ruling coalitions committed to eco-
nomic liberalization policies are likely to seek deeper regional cooperation.
Given these conditions, this chapter explores several key questions. First, how
has India’s hegemonic status affected the process of regional cooperation in
South Asia? This chapter has drawn four major arguments from the literature –
balance of power, regionalist entrapment, bandwagoning, and declining hege-
mony – that explain how hegemonic power can provide powerful stimulus for
the growth of regional institutions. These are then examined in the context of
South Asian regional dynamics, and their implications for deep regional cooper-
ation in South Asia are discussed. Second, how has the strength of South Asian
governments and their interactive dynamics with civil society affected the
process of regional cooperation? This chapter then examines India’s and Pak-
istan’s nuclear policies and their special implications for regional cooperation in
South Asia. Finally, this chapter considers how ethnic relations transcend fron-
tiers and affect South Asian state’s interrelationships. The implications of ethnic
dynamics for national cohesion and accommodative diplomacy among South
Asian countries are examined here. This discussion lays the groundwork for
assessing the future prospects of regional cooperation in South Asia.
A key facilitating condition for the growth of regional cooperation is the
existence of significant market potential for economic gains from market
exchange within a region. Given this condition, Chapter 6 profiles the market
size and structure of economy of South Asian countries. It then examines the
levels of intraregional imports and exports among South Asian countries to
 Introduction 19
determine the extent of their economic interdependence. It explains several
reasons for South Asia’s limited intraregional trade with a focus on domestic
policies toward regional trade. This chapter then examines the question: will the
latest economic liberalization polices launched by South Asian countries and
their new economic interests drive these countries toward deeper economic
cooperation? By signing South Asian Free Trade Area (SAFTA) agreement in
Islamabad in January 2004, South Asian leaders have taken an important step to
intensify their intraregional trade cooperation. What are the prospects of
SAFTA? This chapter examines the nature of political coalitions, preferences,
and initiatives of two key actors – policymakers and business groups – to
provide a realistic assessment of the prospects of SAFTA.
Using primary data derived from extensive open-ended interviews with 780
elites from five South Asian countries (India, Pakistan, Bangladesh, Nepal, and
Sri Lanka) over a period of three years, Chapter 7 provides an assessment of
domestic preferences for deeper regional cooperation in South Asia. The respon-
dents were drawn from the following occupational categories: political leaders,
civil servants, retired military personnel, university professors and research
fellows, journalists, business groups, trade union leaders, religious leaders, and
other professional groups. This chapter presents our findings on the following
issues/questions, which have important bearing on the future growth of SAARC.

1 To what extent do South Asians believe that their country’s national interest
will be promoted through regional cooperation?
2 Do South Asians perceive inequity in any SAARC arrangement, that is, do
they feel that their country will contribute more and benefit least, or vice
versa, from SAARC arrangements?
3 What are the evaluations of South Asians about their country’s concrete
gain or loss from SAARC membership?
4 What kind of national images do South Asians have about their neighboring
countries in terms of the following attributes: political stability, authorit-
arian, economically dependent, external orientation, aggressively militaris-
tic?
5 What do South Asians think about India and Pakistan becoming nuclear
powers?
6 Do South Asians ever think of themselves not only as a citizen of their
country, but also as a citizen of South Asia?
7 Are South Asians willing to undergo economic sacrifice for the sake of
other SAARC members?
8 In general, are South Asians for or against efforts being made to expand
regional cooperation in South Asia?

The concluding chapter discusses the main findings of this book and consid-
ers the implications of these findings for regional cooperation in South Asia.
This chapter also discusses some important lessons for the future growth of
regionalism in South Asia.
2 Explaining regional cooperation
in South Asia

In Chapter 1, I argued that Euro-centric approaches of the integration theorists

are inadequate to explain regional cooperative efforts among developing coun-
tries. One reason for this is that Euro-centric theorists overemphasized integra-
tion and the creation of supranational institutions with authority to override the
participating members’ decision-making institutions. By focusing too heavily on
integration, they gave inadequate attention to other more realistic forms of
regional cooperation efforts. For example, regional cooperative agreements
among developing countries can exist on a specific issue area such as trade,
monetary exchange, security, social welfare, science and technology, and meteo-
rology without any “spillover effect” as integration theorists would argue. Poli-
cymakers in developing countries are more comfortable in coordinating their
policies on specific issue areas with each other rather than pursuing any kind of
integration, which presupposes surrender of sovereign policy-making power to a
supranational institution. Sometimes, policymakers’ concerns on different issue
areas are intertwined intermittently. In such a context, they may pursue coopera-
tion on several issues simultaneously. However, the choice of issue areas for
cooperation and the nature and terms of regional cooperation depend much on
the participating member countries’ domestic politics and leadership prefer-
ences.
Thus, I argue in this study that to explain the nature, process, and outcome of
regional cooperation in South Asia, it is necessary to understand domestic insti-
tutional structures, government capacity, domestic support, and preferences of
political and societal actors toward regional cooperation. This chapter examines
three interrelated perspectives in the areas of international relations and compar-
ative politics – i.e. issue areas, two-level game, and institutional analysis – to
frame the central argument of this study.

Regional cooperation as a community policy issue area

If we accept the traditional distinction between domestic and foreign policies,
regional cooperation policies can be technically described as the representative
of the latter. But such simple characterization seems to be inadequate because
the member states’ regional cooperation policies, in many ways, resemble the
 Explaining regional cooperation in South Asia 21
patterns of domestic policy-making process. In light of this, Charles Pentland
has suggested a useful third category of policy – community policy – to describe
the policies of cooperating states toward each other (1973: 220). Pentland’s dis-
cussion of the concept of community policy is based on Rosenau’s analysis of
foreign and domestic policies as issue areas (1967: 15–43).1 According to
Rosenau (1967), domestic and foreign policy issue areas exhibit three important
differences, that is motivational differences, role differences, and interaction dif-
ferences. An analysis of these three differences appears to provide some scope to
establish the existence of a third issue area, namely that of community policy
issue area. The extent and nature of differences between foreign, domestic, and
community policy issue areas are summarized in Table 2.1.
The first difference that Rosenau describes between the foreign and domestic
policy issue areas is related to the type and degree of motivation found in each.
For citizens, Rosenau argues, foreign policy matters, being largely beyond their
immediate concern, interest, and control, are likely to generate motivation “that
is less complex and ambivalent, and therefore more clear-cut and intense, than is
the domestic area” (1967: 24). While the intensity of people’s motivation toward
external environment is high, their motivational extensity toward external devel-
opments is generally narrow. This is because the citizens often fail to connect
external developments with their daily needs and wants. However, the case is
different for the political elites. Since the political elites are aware of the exten-
sive nature of foreign policy issues as well as the interdependence of foreign and
domestic politics, their motivational extensity is much greater and motivational
intensity much less in foreign policy matters than ordinary citizens. Thus, unlike
the domestic issue areas, the foreign policy issue areas are marked by a “motiva-
tional gap” between citizens and policymakers. One important implication of
this motivational gap is the apparent freedom of officials in foreign policy
matters, unlike the domestic areas where public involvement is generally high
and is, thus, a constraint on official action.
In the case of community policy, citizen motivation is the same as in the case
of domestic issues. But unlike pure foreign policy issues, the public motivations
in community policies are somewhat “less stark, simple and intense” (Pentland
1973: 221). Besides, a motivational gap exists not only between the citizens and
the policymakers, but also among political elites. Some members of the political
elites tend to treat community policy issues as domestic, others try to make
diplomatic gains from the interdependence of participating states’ economic and
political systems, while a third group tends to see such issues as opportunities to
increase the level of cooperation among cooperating states.
A second distinction between the foreign and domestic issue areas, according
to Rosenau, is based on the number of actors involved and types of roles they
play in each of these issue areas. Domestic issues, Rosenau argues, involve the
distribution of resources and arrangement of relationship at home. Thus, the
enactment of these issues usually involve a number of generalized social roles, as
represented by “the healthy and the sick, the old and the young, the rich and the
poor in the society,” and large categories of occupational roles as represented by
Table 2.1 Characteristics of foreign, domestic, and community issues

Motives Roles Interaction sequences

Intensity Extensity ■ Number Identity ■ Direction Degree

Citizens and groups Foreign policy issues High Narrow Few National leaders Vertical Low
Domestic policy issues Low Wide Many All strata Horizontal High
Community policy issues High + low Narrow + Many All strataa Vertical + Low +
wide horizontal high
Policymakers and agencies Foreign policy issues Low Wide Few National Vertical Low
Domestic policy issues Low Wide Many National and local Horizontal High
Community policy issues Low Wide Many National and locala Vertical + Low +
horizontal high

Sources: James N. Rosenau, Domestic Sources of Foreign Policy (New York: Free Press, 1967), p. 46; Charles Pentland, International Theory and European Integra-
tion (London: Faber, 1973), pp. 220–224.
Note
a Not always.
 Explaining regional cooperation in South Asia 23
businessmen, workers, farmers, teachers, housewives, doctors, other profession-
als, and leaders of interest groups. On the other hand, issues of foreign policy,
being concerned with resources and arrangements abroad, do not normally
involve the roles of such large classes of people. Basically, the occupational roles
of government leaders, foreign ministers, and senior officials are involved in the
formulation of foreign policies (Rosenau 1967: 39–41).
In community policy, although the official actors play a dominant role, actors
playing traditionally domestic roles, such as interest group leaders and opinion
leaders, are often involved. The main reason for this is that a state involved in
the regional cooperation process may have to pursue accommodative policies
and to take actions jointly for which the mobilization of support from different
strata of the society becomes necessary. Moreover, since community policies
encompass issues of both high politics (security) and low politics (economics,
technology, and culture), they require the involvement of foreign policy officials
and non-official actors.
The third distinction that Rosenau draws between the foreign policy and
domestic policy issue areas is related to the patterns of interaction among
various actors and various agencies involved in the policy-making process.
While the patterns of interaction in foreign policies, according to Rosenau, are
largely hierarchical or “executive,” these patterns are mostly horizontal or
“legislative” in the domestic policies. Often, it is necessary to take quick and
decisive action to deal with an external environment. Because of this, in all
political systems, foreign policies are made by few officials in the executive
branch of the government. Invariably, the decision-making structure in the
foreign policy areas is hierarchical with a vertical flow of information, initi-
atives, and guidance coming from the executive branch. The pattern of inter-
action in the domestic policy areas, by contrast, is not so hierarchical and is
highly competitive between various actors of the society. As Rosenau has
argued, since every segment of the society has some claim on the resources,
decision-making in the domestic issue areas is dispersed rather than concen-
trated in a few hands. Accommodation of different views and demands is neces-
sary for successful enactment of domestic policies. Thus, unlike foreign policy
areas, a horizontal pattern of interaction among various societal actors is found
in case of domestic policy areas.
Community policy differs from the pure models of both the domestic and the
foreign policy issue areas. Since community policy deals with distribution and
rearrangement of the cooperating state’s internal as well as external resources,
both the horizontal and the hierarchical patterns of interaction among various
actors are necessary. Besides, as the states become more deeply engaged in the
regional cooperation process, they need to deal with more and more border-
crossing issues. A time comes when it becomes impossible for the traditional
foreign policy hierarchy “to coordinate all the policies advocated and pursued by
different departments and agencies-all with their different foreign and domestic
clientele, different priorities and perceptions, different methods, personnel and
contacts” (Pentland 1973: 224). It is in this kind of environment that a unique
24 Explaining regional cooperation in South Asia
pattern of interaction – neither absolutely hierarchical nor totally horizontal –
takes place. According to Pentland (1973), such a pattern of interaction is pos-
sible in the context of a community policy.
Based on this discussion, it seems reasonable to argue that a state’s regional
cooperation policy does not exclusively fall in the realm of the traditional
domestic or foreign policy areas. Rather, it falls in the category of community
policy areas, possessing some characteristics of the domestic and foreign policy
issue areas.2 It is in this context that the influence of various domestic groups on
regional cooperation policies acquires added significance.

Regional cooperation as a two-level game

Robert Putnam’s (1988) conceptualization of the two-level game provides a
useful framework to analyze the role of domestic politics in the regional cooper-
ation process (Mayer 1992: 793–818; Evans et al. 1993; Iida 1993: 403–426). In
negotiating an international agreement, decision-makers, Putnam argues, are
typically engaged in two simultaneous games, one at the domestic level and the
other at the international level. Putnam describes two-level games as follows:

At the national level, domestic groups pursue their interests by pressuring

the government to adopt favorable policies, and politicians seek power by
constructing coalitions among those groups. At the international level,
national governments seek to maximize their own ability to satisfy domestic
pressures, while minimizing the adverse consequences of foreign develop-
ments. Neither of the two games can be ignored by central decision makers.
(1988: 434)

In the ultimate analysis, the outcome of an international agreement depends on

what other states will accept and whether or not the terms of the agreement are
acceptable to the decision-makers’ domestic constituencies. Thus, in inter-
national negotiation, prospects of domestic ratification are an important concern
for the decision-makers.
At the domestic level, decision-makers’ strategic moves are largely deter-
mined by the nature and size of what Putnam calls a “win-set.” Defining the
win-set as a set of international agreements that will gain majority support
among domestic constituencies, Putnam develops two main hypotheses:

1 The larger the win-set, the greater the possibility of a successful agreement
(regional cooperation in this case); the smaller the win-set, the more likely
that the policymakers will be reluctant to conclude an agreement.
2 Decision-makers with large win-sets are likely to have weaker bargaining posi-
tions in international negotiations than decision-makers with small win-sets.

The latter will have larger (stronger) bargaining positions internationally as they
can make domestic pressure a credible alibi to disagree with unfavorable deals.
 Explaining regional cooperation in South Asia 25
The size of win-sets is, therefore, important to understanding the outcome of
an international negotiation. What determines the size of the win-sets? Here,
Putnam offers three factors. First is the nature of domestic coalitions and their
preferences for a specific agreement. The pattern of domestic coalitions and their
role in negotiations are shaped by a combination of the following: the degree of
heterogeneity of the constituents, saliency of the issue for a particular group (to
what extent the issue at hand affects the interests of a particular group), and the
cost of “no agreement” for the domestic constituents. Second, the size of win-
sets is determined by the nature of domestic institutions. A country’s ratification
procedure can change the size of the win-sets. Here, Putnam’s discussion intro-
duces the weak–strong distinction of states based on the autonomy of the central
government from domestic pressure. For example, in a democratic political
system, strong party disciplines and the strong strength of the government as
determined by the extent of legislative autonomy of the decision-makers can
increase win-sets. In contrast, weak governments, which do not enjoy legislative
autonomy and are subject to domestic pressures, will have only narrow win-sets.
Decision-makers in an authoritarian political system may not have to go through
a rigorous legislative ratification process and thus may have large win-sets for
international agreements.
Third, the size of domestic win-sets is also influenced by what Putnam calls
synergy. A hallmark of Putnam’s concept of the two-level game, synergy
means the promotion of mutual benefits through cooperation in the inter-
national bargaining game to create coalitions favoring cooperation in negotiat-
ing countries (Snyder 1993: 104). In the pursuit of synergy, a critical concept
that assumes significance in the two-level game is that of positive or negative
reverberation, in which concessions or threats from one state affect coalition
politics inside another state (Putnam 1988: 454–456). Positive reverberation
can expand the domestic win-set and facilitate international agreements. Negat-
ive reverberation, on the other hand, can create a domestic backlash and impede
international cooperation. It is quite clear that hard-line policies and coalitions
in one negotiating state can sometimes reinforce hard-line policies and coali-
tions in another negotiating state, thus impeding the progress of international
agreements. Since international cooperative agreements have significant
domestic distributional consequences (Milner 1997: 61–65), positive and negat-
ive reverberation play a critical role in terms of generating domestic support or
domestic backlash for any particular international agreement. Putnam also sug-
gests that decision-makers can employ several innovative strategies – such as
transnational linkages, side payments, and targeting swing voters – to transform
the domestic politics and thus expand their win-sets for any particular inter-
national agreement.
The two-level approach strikes a middle-ground between the state-centric
theories and “second-image-reversed perspectives.”3 Unlike the state-centric the-
ories, the second-image-reversed approach does not consider the state as a
unitary rational actor. Rather, a state is a fragmented unit consisting of different
groups or units. According to this analysis, states are no longer the actors.
26 Explaining regional cooperation in South Asia
Central decision-makers, legislatures, and domestic groups become the agents.
A state’s policy preferences often are expressions of coalitions of interests of
these units or agents. Focusing on this dynamic of a state’s decision-making
process, Putnam argues, “Unlike state-centric theories, the two-level approach
recognizes the inevitability of domestic conflict about what the national interest
requires” (1988: 460). Thus, the definition of national interest and how it is con-
structed and pursued become a central focus of analysis in this approach.
Applying Putnam’s framework to the process of regional cooperation, it can
be argued that decision-makers will show more enthusiasm for those regional
agreements which meet the demands of enough domestic groups to guarantee
ratification and the leaders’ political survival. In other words, domestic and
regional bargains must overlap if cooperation is to proceed. Domestic support,
thus, is of crucial importance for policymakers to pursue regional cooperation
policies. Employing Putnam’s framework, a number of scholars have focused on
the links between the domestic politics and intergovernmental bargaining to
explain the progress of the European integration process in the late 1980s.4
The central attraction of the two-level game framework for regional cooper-
ation is that it offers a better conceptual framework in which negotiations are
no longer viewed as binary game based on cooperation or defection, but as a
continuum where many tactics and bargaining tools are employed (Jervis
1988). The framework allows to explain variations in policy outcomes across
various issues even when the domestic and international factors remain con-
stant. By avoiding the binary two-by-two game theoretic model, Putnam
provides useful analytical tools to explain suboptimal cooperation. Unlike
the game theoretic model, Putnam’s framework acknowledges that “coopera-
tion below the Pareto frontier” to use Krasner’s term (1991) is possible
and indeed very common because of the domestic game that decision-makers
have to engage in simultaneously. Thus, more than the game theoretic models,
the two-level game framework can better account for the various cooperative
outcomes.
Specifically, Putnam’s two-level game approach allows one to examine three
interrelated domestic level variables that have significant impact on intergovern-
mental bargaining at the regional level – institutional structures and policy-
making process, the strength of the government, and the policy preferences of
domestic actors. In the following section, these three variables and their linkage
with intergovernmental bargaining are analyzed to explain the process and
outcome of regional cooperation.

Institutions, preferences, and regionalism

Helen Milner’s conceptualization of the state as a polyarchy provides a useful
framework to analyze the role of domestic actors in the regional cooperation
process. The term polyarchy was first coined by Robert Dahl to refer to the
degree of democracy present in a country (1984: 75). Milner has used this term
to refer to power-sharing arrangements among domestic groups. Challenging the
 Explaining regional cooperation in South Asia 27
realist paradigm (Waltz 1979: 88), in which state is considered as a unitary actor
and decision-making usually flows along a vertical hierarchy, Milner argues:

States are not unitary actors; that is, they are not strictly hierarchical but are
polyarchic, composed of actors with varying preferences who share power
over decision making. The struggle for political power domestically is crit-
ical for them . . .. “International politics and foreign policy become part of
the domestic struggle for power and the search for internal compromise.”
(1997: 11)

This analysis focuses on the important roles of domestic actors and their pref-
erences in a country’s policy-making process. Based on Milner’s analysis, I
argue that understanding the actors and their preferences within a given institu-
tional context is essential to explain why a state behaves the way it does. Such a
focus provides additional insights to help explain questions on three fundamen-
tal issues of regional cooperation:

1 why states differ in their commitment to increase information and trans-

parency;
2 why states evaluate gains associated with each outcome differently;
3 whether relative gains matter more than absolute gains.

The relevance of domestic politics assumes significance in a country’s

policy-making process once the realist assumption of the state as a unified
actor is relaxed. The question, then, is: who are the actors involved in the
policy-making process in a domestic political setting? Usually, there are three
sets of actors in domestic politics, who play important roles. The first two sets
of actors are political actors – executive and legislature, and the third set of
actors are the societal actors. The executive refers to the executive branch of
government that includes head of a government (president or prime minister or
dictator), the bureaucracy, or the various departments and ministries of
government. The legislature refers to the legislative branch of government
where policy issues are discussed, debated, and voted by legislators to become
laws. A country’s legislature is also important for the ratification of inter-
national and regional agreements and treaties negotiated by the policymakers.
The third set of actors are societal actors who include interest groups and
opinion leaders. The societal actors are assumed to exercise indirect influence
on the policy-making process in terms of supporting or opposing a particular
policy. Examining the dynamic interaction of preferences between the political
and societal actors is the key to understanding the policy-making process in a
country.
The interaction of preferences between the political and societal actors takes
place within an institutional context. The relative roles of each actors and the
extent of their control over policy-making are determined by a country’s institu-
tional structures. It is, thus, useful to examine a country’s institutional structures
28 Explaining regional cooperation in South Asia
and how different policy preferences of actors are aggregated by domestic polit-
ical institutions to explain the nature and outcome of national policies.

Domestic political institutions

There is a growing consensus among political analysts that institutions play a
critical role in shaping politics. As March and Olson observe: “political institu-
tions define the framework within which politics takes place” (1989: 18). Robert
Putnam (1993: 7–8) provides further explanation to this observation: “The rules
and standard operating procedures that make up institutions leave their imprint
on political outcomes by structuring political behavior . . .. Institutions influence
outcome because they shape actor’s identities, power, and strategies.” Douglass
North offers a useful definition of institutions. According to him, “institutions
are the rules of the game in a society or, more formally, the humanely devised
constraints that shape human interaction” (1990: 3). Agreeing with this broad
definition, Jack Knight provides an additional dimension to explain the scope of
institutions: “First, an institution is set of rules that structure social interactions
in particular ways. Second, for a set of rules to be an institution, knowledge of
these rules must be shared by the members of the relevant community or
society” (1992: 2). The common theme of these definitions is that institutions
are considered as socially accepted constraints or rules that shape human interac-
tions.
Domestic political institutions determine how much control each of the three
domestic actors – executives, legislatures, and societal – has over policy-making
process. In a country’s policy-making process, the relative influence of domestic
actors is based on their varying degrees of control over three crucial elements of
power: the ability to initiate and set the agenda, to amend any proposed policy,
and to ratify or veto policy (Milner 1997: 18). The extent of control over these
three elements of power determines whose preferences are likely to be more
reflected in the ultimate policy choice. Constitutions often assign certain power
to each set of domestic actors. However, it is obvious that the constitutional pro-
vision of power in a democratic system differs from a non-democratic system.
In a non-democratic system, legislatures are often subservient to the execu-
tives. However, although executives have exclusive control over the policy-
making process, policies are rarely formulated by a single person. The support
of the bureaucracy, professional military, big business, landed oligarchy, reli-
gious leaders, opinion leaders, and/or a political party is usually necessary for
even autocratic leaders to implement their policies and remain in power. Thus, it
is reasonable to argue that these groups can often exercise veto power over the
executive’s policy proposals and may share power with the executives by partic-
ipating in the agenda setting functions. Historical evidence suggests that even
such autocratic leaders as Hitler, Stalin, and Franco depended on the support of
internal groups to retain their positions and make policy.5
In many democratic countries, the executive is most often given the power to
initiate and formulate policies. Although the legislatures act as a representative
 Explaining regional cooperation in South Asia 29
body, they have almost no power to initiate policy proposals. At the same time,
the legislatures enjoy the power to ratify or reject the executive’s policy pro-
posals. This power of ratification and rejection gives the legislature a veto power
that executives must have to deal with in making a policy. Another issue for
democracies is that both executive and legislative actors must be sensitive to the
demands of their constituents and effective to address those demands. Inability
to address the societal actors’ demands is a recipe for the loss of power for the
political actors. It is in this context that domestic societal actors exercise influ-
ence over the policy-making process. In nutshell, the executives in a democracy
require the support of legislative actors and societal actors for the formulation of
policies. In non-democracies, the executives may not depend on the legislature
for their policies. But, they do depend on professional elites and opinion leaders,
military, landed elites, labor union leaders, and big business to formulate and
implement policies. In light of this argument, the strength of government
becomes a useful variable to explain the nature and outcome of policies, includ-
ing regional cooperation policies.

The strength of government

The importance of domestic politics for the growth of regional cooperation
acquires added significance when governments involved in the cooperation
process are “weak.” In the statist literature, there has been too much emphasis
on the weak–strong conceptualization of states.6 A state is said to be either weak
or strong on the basis of the centralization of decision-making authority. Cen-
tralized institutions and single-party governments are usually the two main
attributes of strong states. Weak states, on the other hand, are associated with
division of powers between executive and legislative branch of governments
(federalism), judicial independence, coalition governments, and para-public
institutions. However, this institution-based categorization of states neglects the
role of leadership and, thus, is clearly arbitrary and limited in scope. Not surpris-
ingly, many scholars have criticized this institution-based categorization.7 Often,
popular leaders are able to overcome the institutional weaknesses and pursue
their own agendas of national interest. It is, therefore, analytically useful to dis-
tinguish between institutions (i.e. constitutional arrangements) and governments
(i.e. political leaders who operate within these constitutional arrangements), to
determine the ability of decision-makers to resist domestic demands and pursue
their views of national interests.8
Thus, I have focused on the variable “government strength” in this study
because it allows space to distinguish between institutions and the power of
political leaders who constitute government. Centralization of decision-making
authority, legislative independence, single-party system, and wide popular base
of the political leaders is some of the essential attributes of a strong government.
Weak governments, on the other hand, are associated with unpopular heads of
government, divisions within legislature, and/or constitutional order that limit
the power of heads of government.9 Because of their lack of broad public
30 Explaining regional cooperation in South Asia
support and social base, the leaders in weak governments are less able to design
and implement policies independently without the support of dominant domestic
actors.10 Thus, policymakers in weak governments are likely to remain more
responsive to domestic opinion in order to pursue specific policies, including
regional cooperation policies. Two important reasons why policymakers in weak
governments depend on the support of domestic actors are:

1 the latter’s ability to politicize issues, thereby making ratification and imple-
mentation of regional agreements more difficult;
2 the leaders’ concern for political survival.

To insure their political survival, weak coalitions are under greater pressure
to accommodate the varying demands and interests of their political opponents
than strong coalitions. Thus, as Etel Solingen shows, weak coalitions often
pursue more populist, nationalistic policies, and it often becomes difficult for
leaders of weak coalitions to downplay regional security threat and to ignore
scapegoating (blaming external enemy) as an instrument of their national pol-
icies (1997: 68–100). In any intraregional negotiation, it is quite possible that
weak governments will take larger bargaining positions because they must be
more responsive to domestic demands than are leaders in strong government.
Strong governments tend to have smaller bargaining positions as leaders are not
forced to seek out support from various domestic actors. In this case, the
leaders’ own values and beliefs will help determine the bargaining positions.
Thus, while leaders in strong governments can take bolder regional cooperation
initiatives, weak governments remain tentative about taking more active regional
cooperative initiatives unless these initiatives have strong domestic support and
thus are strategically important for the leaders’ to retain their political power.
Figure 2.1 captures the above arguments in a stylized way. The horizontal
axis describes the strength of governments. The vertical axis describes the nature
of domestic support. The cells represent four possible types of outcomes. If
domestic support remains weak for regional cooperative activities, policymakers
in weak governments lose enthusiasm and are unlikely to pursue further regional
cooperation policy initiatives. In such a situation, as cell A shows, the policy-
makers’ regional cooperative initiatives are likely to be ambiguous, sporadic,
and fragmented, leading to a stop-and-go pattern of regional cooperation, in
which implementation of regional policies and development of regional institu-
tions remain uncertain.11 Conversely, it is possible for policymakers in weak
governments to pursue regional cooperation policy initiatives if regional
arrangements receive strong or adequate domestic support and if such arrange-
ments are considered strategically important for the government’s legitimacy,
leadership, and popularity (see cell D). Weak democratic governments of the
United States and Canada have often pursued regional integration successfully
because of the strategic importance of such integration schemes in terms of
enhancing job growth, overall economic growth, and competitiveness. As the
example of NAFTA illustrates, once the strategic importance of a regional
 Explaining regional cooperation in South Asia 31

Government strength
Weak Strong

A B
Deeper regional
Weak Stop-and-go (SAG) cooperation initiatives
possible

Domestic
support
D C
If strategically important for
the government, further Deeper regional
Strong
regional cooperation policy cooperation successful
initiatives possible

Figure 2.1 Government strength, domestic support, and regional cooperation policy
initiatives.

integration scheme is established, it becomes possible for the policymakers in

weak governments to generate adequate domestic support for such schemes. In
contrast, as cell B shows, the absence of strong domestic support may not deter
policymakers in strong governments to engage in regional cooperative arrange-
ments. Policymakers in strong governments usually remain reasonably confident
that a positive outcome of a regional cooperative arrangement can create synergy
and turn public opinion in favor of their policy. The ideal context for the success
of regional cooperation is when the government is strong and strong domestic
support is available for regional cooperation policy initiatives (see cell C).
As suggested by the two-level game framework, the strong/weak categoriza-
tion of government is useful in understanding the dynamics of domestic
decision-making. By focusing on the relative responsiveness of policymakers to
domestic demands, it also sheds light on policymakers’ bargaining positions at a
regional level. For example, whether or not the decision-makers are able to take
a large or small bargaining position while negotiating a particular regional issue
relating to trade, or security, or social welfare can be explained by the relative
strength of their governments and domestic political environment. The domestic
variables, thus, determine what the decision-makers take to regional bargaining
and the extent to which they might be able to accommodate regional interest
over their own narrow national interest.

The preferences of political actors

The central argument of this book is that the preferences of both political and
societal actors hold a key to understanding the dynamics of regional cooperation
in South Asia. This argument is based on the assumption that a country’s policy
32 Explaining regional cooperation in South Asia
choices are influenced by the preferences of both political and societal actors.
The strategic interaction among the actors’ preferences within a given institu-
tional context determines a specific policy choice. Thus, to understand the scope
and nature of regional cooperation, it is important to understand the actors’ pref-
erences and how they interact in a given institutional context.
Preferences are defined in this study as the specific policy choice that actors
believe will maximize their benefits – that is maximizing chances of retaining
political office for political actors and maximizing chances of benefits in terms
of income, security, or social welfare for societal actors (Milner 1997: 15). Pref-
erences, as Milner reminds us, need to be differentiated from interests:

Actors’ interests represent their fundamental goals, which change little . . ..

Although all political actors may share the same interest, their policy prefer-
ences will vary according to their political situation, for example, their party
affiliation, constituency, characteristics, and so on. The same is true for eco-
nomic actors. Interests are the stable foundation on which actors’ prefer-
ences over policy shift as their situation and the policy area vary.
(1997: 15)

What is important to note here is that actors’ policy preferences are situation-
specific and constituency-driven. Unlike interests, preferences are dynamic, and
they change as a country’s domestic political and economic conditions change.
Since domestic politics influence regional politics and vice versa, it is reasonable
to argue that actors’ regional cooperation policy preferences will not remain
static for ever.
In this context, an important question to explore is: under what conditions
will political actors show preferences for regional cooperation? The answer to
this question requires an understanding of the fundamental goals and motiva-
tions of political actors. The primary goal of political actors is to retain their
political office, maintain or increase their power and authority. Thus, political
actors’ preferences for regional cooperation are determined by the extent to
which regional cooperation policies serve their fundamental goals. If regional
cooperation policies enhance political actors’ prospects of retaining power or
remaining in office, then these policies are likely to be enthusiastically pursued.
Otherwise, political actors are likely to show little preference for these kinds of
policies.
In democratic political systems, the political actors need to participate in the
electoral process to achieve their “office-seeking” or “office-retaining” goals.
Thus, electoral considerations motivate their policy choices. In order to maxi-
mize their chances of reelection, the political actors need to worry about two
issues: the overall economy and the preferences of their domestic constituents. If
the general performance of the economy is good and voters are relatively
content, it is possible that political actors will not show interest in regional coop-
eration. This is because their expected marginal benefit from regional coopera-
tion in terms of improved reelection chances or simply in terms of retaining
 Explaining regional cooperation in South Asia 33
political power is minimal and thus not worth the cost of regional cooperation.
The political cost of regional cooperation is some degree of loss of political
autonomy in policy choices which many political leaders are unwilling to do as
long as their economies are relatively prosperous. However, if the general
performance of the economy is not good, voters may choose to support the
opposition parties in the hope that the latter can improve the situation. The
voters’ power to reward or punish the incumbents on the basis of their perform-
ance forces political actors in democracies to be concerned not only with the
policies that benefit domestic interest groups but also with those that serve the
general economy.
In non-democratic political systems, political actors do not face the pressure
of a regular electoral cycle to stay in power. But, in order to secure their legiti-
macy and retain their power for a relatively longer period of time, they also need
to be sensitive to the preferences of their domestic constituencies – for example
military, bureaucracy, industrial, and landed elites, religious groups, and the
general health of the economy. A continuously declining economy is a recipe for
social unrest that no political actors like to face. Thus, they would be inclined to
pursue policies that can improve the overall state of the economy, thereby
enhancing their probability of remaining in office. This “power-retaining” moti-
vation guides political actors in both democracies and non-democracies to
embrace only those specific regional cooperation policies that improve their
country’s economy and promise to bring economic benefits to their con-
stituency, whose support is necessary for them to stay in power for a longer
period of time.
In addition to “office-retaining motivation,” political actors’ preferences for
regional cooperation are also shaped by the following factors. Several studies
support the argument that the presence of externalities shape political actors’
preferences for regional cooperation (Milner 1997: 42–44; Mattli 1999: 46–50).
Externalities refer to unintended consequences of one country’s policies on other
countries’ economies. Milner defines externalities as follows: “When through its
choice of policies a foreign country generates costs or benefits for another
country that are not included in the foreign country’s calculation of the optimal-
ity of the policy, we can speak of externalities” (1997: 43). Externalities can be
positive or negative. While positive externalities are beneficial for a country’s
economic growth, negative externalities are generally considered to be a burden.
Several studies have shown that in issue areas like exchange rate policy, indus-
trial and trade policy, and monetary policy, the presence of externalities are
likely to generate demand for cooperation among political actors (Cooper 1986;
Frankel 1988; Webb 1991).
However, the effects of externalities vary from country to country and
depend on the extent of openness of a country. The more open a country’s
economy is – that is the more a country’s economy is integrated with global
economy – the greater the effects of externalities. In a closed economy, the
effects of externalities are difficult to determine because of several policy distor-
tions by political actors. If a country is open to global economy in terms of its
34 Explaining regional cooperation in South Asia
trade, investment, and monetary exchange rate, it is reasonable to assume that
any policy change by foreign countries on these areas is likely to impact the
home country’s economies. To deal with these externalities, political actors
often seek cooperation.
In a regional context, geographical contiguity makes the issue of externalities
even more important. Countries in a region are affected more by externalities
when they share resources – such as rivers, fishing grounds, hydroelectric
power, or transport connection (rail connections). For example, the upstream
industrial plant which discharges industrial wastes in the river thus reducing the
scope for fishing downstream is said to impose an externality on the fishermen.
Unilateral exchange rate policies, such as devaluation or appreciation, tariff
reductions, and other trade-related polices by one country, can impose external-
ity on another country in a region. The resolution of these issues requires coop-
eration between the affected countries. A coordinated approach to
policy-making within a framework of regional cooperation becomes a desirable
strategy when countries in a geographically contiguous area seek to alter the pol-
icies of their neighboring country to reduce the negative externalities or increase
positive externalities these policies create for them. However, it is worth noting
that countries sometimes are unwilling to cooperate because of national pride,
lack of trust, political tension, the inequitable distribution of costs and benefits,
and so on. Regional cooperation agreements can help to build trust among
parties by facilitating collaboration and frequent contact between political
leaders.
Political leaders may also seek to join a regional cooperation scheme to
enhance their country’s security. This motivation is based on the belief that
increasing intraregional trade would reduce the risk of intraregional conflict. The
association between trade and security has been supported by several studies on
European integration (Milward 1984), the Association of Southeast Asian
Nations (ASEAN) (Anwar 1994; DeRosa 1995; Acharya 1998), and the CACM
(Page 1996). The fundamental argument of these studies is that negotiations
between political leaders on trade issues gradually build trust that lead elites to
form cross-national coalitions for subsequent collaboration. Collaborations on
various economic activities eventually make war undesirable and enhance
regional security (Mansfield 1993: 199–217; Gowa 1994). As perceptively
argued by the founding fathers of the European Community, Robert Schuman
and Jean Monnet, economic integration would make war “materially imposs-
ible,” because interlocking of steel, coal, and other strategic industries would
leave countries unable to wage war against each other (Milward 1984).
Many scholars, however, disagree with the above argument. According to
them, regional trade policy can redistribute income and produce outcomes that
worsen intraregional security. In the case of East African Common Market,
Kenya enjoyed disproportional income transfers that were created by the
common external tariff on manufacturers. Tanzania and Uganda consistently
complained about this income transfers. They also feared that Nairobi would
attract increasing concentration of manufacturing industries because of its relat-
 Explaining regional cooperation in South Asia 35
ively well-developed infrastructure. Arguments about compensation for the
income transfers led to the collapse of the Common Market, the closing of
borders, and the confiscation of Community assets in 1978 (Robson 1998). Sim-
ilarly, in the CACM, the dissatisfaction of Honduras over the distribution of
benefits is cited as one of the factors for the 1969 military conflict between Hon-
duras and El Salvador and the subsequent withdrawal of Honduras from the
CACM (Pomfret 1997).
Thus, it seems that regional cooperation is a double-edged sword with respect
to intraregional security – sometimes promoting intraregional security and
sometimes worsening it. Which of the two consequences is likely to result
depends upon the economic characteristics of the member countries. If the
members have a similar size of economy and level of economic development,
regional cooperation can enhance intraregional security. But, in the case of
uneven economies, redistribution problems can arise and cause conflicts among
the member countries. Thus, the preferences of political actors for regional
cooperation are often determined by their countries’ economic conditions.
Sometimes, intraregional security may not be the political impetus for
regional cooperation. The need to unite to face a common external threat can
also serve as a driving force for regional cooperation. Typically, the regional
hegemon is perceived to be the potential threat by the small countries of the
region. For example, the formation of the Southern African Development
Coordination Conference (SADCC) in 1980 was the result of a collective desire
among the small countries of the region to provide a united front against the
apartheid regime in South Africa (Foroutan 1993). The GCC was established in
1981 partly in response to the potential threat of regional powers like Iran and
Iraq (Kechichian 1985). The communist threat from Vietnam was one of the
reasons for the creation of ASEAN in 1967. A major motivation of Central and
Eastern European countries in seeking EU membership in the 1990s is protec-
tion against a perceived threat from the Russian Federation.
Thus, security considerations – either intraregional or extraregional – often
serve as powerful motivations for political actors’ regional cooperation policy
preferences (Lake and Morgan 1997). Regional cooperation, of course, has eco-
nomic consequences. Sometimes the economic effects will be favorable, offer-
ing political leaders positive political payoff – such as enhanced security,
political legitimacy, and longer stay in power. Sometimes the economic effects
will be unfavorable, forcing decision-makers to choose non-cooperative policies
or to withdraw from cooperative agreements.
Regional cooperation agreements may allow leaders to “lock in” or bind
themselves to their preferred polices. If there is a conflict of preference between
domestic groups and political leaders about a particular policy and the political
leaders believe that domestic preference for a policy is not beneficial to their
political interests, they may choose to “lock in” regional cooperative agreements
to prevent themselves from being forced domestically to adopt such policies.
There is a circular logic involved in this strategy. For example, political leaders
often pursue economic reforms to attract more investment to their country. But,
36 Explaining regional cooperation in South Asia
investors will not invest unless they are confident that economic reforms will
persist. If a country has no track record of reform or a history of reversing
reform, then investors’ confidence in the persistence of reform may be low. In
that case, the country may not experience a steady inflow of foreign investment.
In the absence of adequate investment, government is likely to face increasing
domestic pressure to reverse the reforms. To escape from this situation, leaders
often need institutions or commitment mechanisms that enable them credibly to
lock in to their decisions. Regional cooperation agreements offer such commit-
ment mechanisms.
Regional cooperation agreements can serve as a well-designed piece of
commitment mechanisms in a variety of policy areas – such as economic
reforms, trade liberalization, market-based exchange rate as opposed to unilat-
eral exchange rate policies, democratic reforms, and security-related policies.
Through regional commitments, governments of developing countries can
improve their problem of credibility gap for sustaining economic reforms.
Regional cooperation schemes can also increase the credibility of commitments
via signaling to the private sectors that “rules of the game are now changing for
good” (Rodrik 1995: 111). Some of the examples where regional cooperation
agreements have proved useful as commitment mechanism are Mexico gaining
credibility through NAFTA; Eastern Europe through accession agreements with
the EU; North Africa through association agreements with the EU; and MER-
COSUR members’ commitment to democracy and free trade (Rodrik 1995:
110). Despite some obvious advantages of lock-in strategies, political leaders
choose these strategies on the basis of a careful evaluation of political costs. The
most important political cost is their loss of unilateral control over a policy
instrument. Thus, in all likelihood, political leaders will choose regional cooper-
ative agreements only when political costs are expected to be less than the
benefits.

The preferences of societal actors

Political actors remain the formal initiators of regional cooperation negotiations.
As Evans et al. (1993: 403) observe in their comprehensive survey of two-level
games, “There is little doubt that agenda-setting usually reflects leaders’ prefer-
ences. International initiatives in direct response to constituency pressure were
surprisingly rare.” Thus, the terms and nature of regional cooperation agree-
ments are largely determined by the preferences of political actors. Nevertheless,
societal actors have much indirect influence on regional cooperation agreements,
because their preferences often have a significant bearing on political actors’
policy preferences. In one of his earlier works, The Nerves of Government
(1963), Karl Deutsch provides a systematic analysis of the effect of societal
actors’ feedback on the decision-makers. According to Deutsch, government
policies become successful and are reinforced only when they receive a “posit-
ive feedback” from the societal actors, that is, when the domestic groups react
favorably agreeing with the decision that has been made. “Negative feedback,”
 Explaining regional cooperation in South Asia 37
i.e. unfavorable domestic reactions to the government policies, has a dampening
effect on decision-makers. For integration policies to be successful, Deutsch
argues, policymakers need to have positive feedback from domestic actors.
This argument is consistent with the insights from the “distributional politics”
literature and a wide range of research in international political economy.
According to this literature, the preferences and political pressures of societal
groups are key determinants of both foreign economic policy and international
cooperation (Gourevitch 1986; Milner 1988; Rogowski 1989; Frieden 1991).
Two reasons explain why political actors’ policy preferences are influenced by
societal actors’ preferences. First, following the logic of two-level game, a
number of scholars agree that political actors can negotiate regional agreements
on their own, but the subsequent ratification or implementation of these agree-
ments require domestic groups’ support (Huelshoff 1994). Since political actors
desire to retain their office or stay in power for long, they anticipate the reac-
tions of societal groups on specific cooperation policies and generally avoid
those policies that will bring them into confrontation with dominant domestic
groups. In this sense, political actors tend to choose cooperation policies that are
more or less consistent with the policy preferences of key societal groups.
The second reason for the influence of the societal groups is related to polit-
ical actors’ sensitivity to business interests (Lindblom 1977). Business groups
play an important role in generating employment, income, and tax revenues and
even in providing “bribe money” or “campaign contributions” to politicians.
Given these economic benefits, political leaders are particularly careful not to
pursue those policies which will undermine “business confidence” and adversely
affect the overall economy. Instead, they anticipate business reactions to their
economic cooperation policies and pursue those that are agreeable to the domin-
ant business community. Sometimes, political actors pursue economic coopera-
tion policies under the sustained pressure from business groups. The
“relaunching” of European integration in the mid-1980s (Sandholtz and Zysman
1989: 95–128) and the creation of NAFTA in the mid-1990s (Haggard 1995: 90)
are in great part attributable to the pressure of the business community. Thus,
societal groups, including business groups, may not play a direct role in regional
cooperation negotiations process. But, they play a major, often indirect, role in
shaping policy-making and influencing regional cooperation.
What shapes the preferences of societal actors? In other words, are societal
actors interested in all kinds of regional cooperation policies? To address this
question, it is necessary to understand who these societal actors are. The key
societal actors include business and labor groups, landed elites, retired civil ser-
vants and military leaders, religious leaders, professional elites, and opinion
leaders – such as communication media leaders and academics. Given this com-
position of societal groups, it should be clear that not all societal actors are con-
cerned with all kinds of regional cooperation policies. Different issue areas will
evoke the attention of different societal actors. For example, regional trade liber-
alization policies might evoke the attention of different societal groups than
would regional security policy coordination or environmental policy
38 Explaining regional cooperation in South Asia
coordination. It follows that if a group is unaffected by the policy change in a
particular issue area, that group is unlikely to become involved in the given issue
area. Thus, the policy preferences of societal groups remain issue specific and
are shaped by the relative saliency of a particular issue area for the specific
groups’ self-interests.
The issue-area approach suggests that societal actors’ preferences for regional
cooperation policies are determined by their self-interests. Societal actors, like
political actors, seek to maximize their utility. Thus, their support for a particu-
lar regional cooperation policy will be determined by their perceived utility (that
is costs and benefits) from such a policy. David Easton’s analysis of public
support for political institutions (1965, 1975) provides useful insights into this
utilitarian dimension of societal actors’ preferences for regional cooperation.
Easton’s analysis specifies how and under what conditions utilitarian evaluations
of societal actors influence their preferences for regional cooperation.
David Easton’s model posits that public support for political institutions is
based on their affective allegiances to these institutions and their utilitarian evalu-
ations of institutional outputs and performance (1975: 444–448). Deep public
affective allegiances are an important source of legitimacy for the institutions.
When affective allegiances are low or non-existent, the level of public support for
the institutions can be determined by utilitarian evaluations (Gabel 1998: 11).
According to Easton, utilitarian support refers to perceived benefits or satis-
faction from governing institutions and policies. When these perceived benefits
decline or cease, the citizens’ support to these institutions will do likewise
(1975: 439). Thus, utilitarian support is not permanent or stable, and it changes
with the change in the performance of institutions. Affective support represents
an allegiance, attachment, or loyalty to governing institutions and policies that
may develop as a result of “accumulated positive utilitarian appraisals of gover-
nance” (Easton 1975: 445). According to Easton, “it consists of a reservoir of
favorable attitudes or good will that helps members to accept or tolerate outputs
to which they are opposed or the effects of which they see as damaging to their
wants” (1975: 444). In contrast to utilitarian support, affective support does not
swing much in either positive or negative direction over time on the basis of
short-term institutional performance. Thus, it provides a stable long-term
environment for governance.
Easton contends that these two dimensions of public support are interlinked.
Affective support toward governing institutions derives from positive utilitarian
evaluations of these institutions’ performance. If citizens are discontented with
the performance of these institutions over a long enough period of time, it may
gradually erode their affective support.
Applied to the regional cooperation context, Easton’s model explains that
both affective support and utilitarian support are necessary for the growth of
regional institutions. Utilitarian support for regional cooperative arrangements
can grow with the perception of mutual economic and political benefits (for
example increased standard of living or a guarantee of peace). This perception of
mutual rewards and gains will, in turn, enhance peoples’ affective support,
 Explaining regional cooperation in South Asia 39
which is related to their shared values, attachment, sympathy, trust, confidence,
and loyalty to a regional organization and its institutional arrangements. Thus,
Easton’s focus on the interlinked aspect of utilitarian and affective support pro-
vides a useful explanatory tool to examine the societal actors’ preferences
toward the growth of regional cooperation.
Several previous studies have applied the Eastonian model to the EU context.
Lindberg and Scheingold (1970) found that the strongest basis of support for the
European Community was utilitarian. Using the reasoning of game theorists,
Lindberg and Scheingold (1970) argued that utilitarian support for European
integration was based on the perception that involved parties were likely to gain
more by cooperation than by an independent or non-cooperative stance. Their
study concluded that although weaker in comparison with utilitarian support,
levels of affective support were sufficiently high to provide a “permissive con-
sensus” in favor of European integration. Because of the existence of permissive
consensus, “National and (European) Community decision-makers can expect to
operate relatively freely without encountering significant opposition” (Lindberg
and Scheingold 1970: 252–260). Later studies have confirmed a pervasive and
stable level of affective support for European integration (Shepherd 1975; Slater
1983: 74; Smith 1993: 72–76). More recent empirical studies, however, have
challenged these findings. Matthew Gabel (1998), for instance, has found low
affective support for EU and argues that citizens’ utilitarian appraisal of the
impact of the Union on their individual welfare will remain a crucial determi-
nant of their preference toward European integration. While the debate on the
aggregate-level domestic support for EU continues, there is a convergence of
opinion among many scholars of European integration that a systematic exami-
nation of domestic support along the utilitarian and affective dimension remains
a useful method to explain the scope and speed of integration in Europe.
In this study, I adopt the Eastonian model of public support to examine the
affective and utilitarian preferences of South Asian societal actors toward the
growth of regional cooperation in South Asia. However, unlike European Union,
where Easton’s model has been extensively employed by many scholars to study
public opinion, I have restricted the scope of this study to the examination of
elite preferences for the growth of regional cooperation in South Asia for pri-
marily two reasons discussed in the next section of this chapter.
Preference-based approaches have been employed by many scholars to
predict domestic support for and opposition to European integration. I contend
that with some modification, this preference-based approach can explain the
scope and speed of regional cooperation in other regions, including South Asia.
In the past, scholars of regional integration have focused their analysis either on
societal actors’ preferences (public opinion literature) or on political actors’
preferences (intergovernmentalism; neo-functionalism) to explain the dynamics
of regional integration. This study seeks to move beyond the earlier work by
combining political actors’ preferences with those of societal actors. By so
doing, this study acknowledges the interdependence among political and societal
actors in policy-making toward regional cooperation.
40 Explaining regional cooperation in South Asia
Understanding regional cooperation in South Asia
As reviewed above, scholars of regional integration, international relations, and
comparative politics have offered various useful perspectives as to why, when,
and how regional cooperation is possible. In what follows, I discuss how these
theoretical arguments can be applied to the study of regional cooperation in
South Asia. The central assumption of this study is that regional cooperation is a
process of action, that is, initiatives by governmental actors, and reaction, that is,
support or opposition to those policies by domestic societal actors. Focusing on
either governmental actors or societal actors captures only one aspect of regional
cooperation, leading to an unnecessarily restricted view of the process. On the
basis of this assumption, this book advances the following arguments that will
be elaborated and examined in the following chapters.
First, consistent with Pentland’s (1973) discussion on issue areas, I argue in
this study that South Asian countries’ regional cooperation policy does not
exclusively fall in the realm of the traditional domestic or foreign policy areas.
Rather, it falls in the category of community policy issue areas, possessing some
characteristics of both the domestic and the foreign policy issue areas. It is in
this context that the domestic political economy and the preferences of various
domestic actors (both political and societal) for the formulation and implementa-
tion of regional cooperation policies acquire significance and thus must be
understood in order to explain adequately the process of regional cooperation in
South Asia.
Second, based on Putnam’s (1988) framework, I argue that regional coopera-
tion is a two-level process in which domestic support and regional bargains and
negotiations must overlap if cooperation is to proceed (Putnam 1988). Attempts
to achieve regional cooperative agreements involve bargaining and negotiations
among governmental actors in various issue areas. But, domestic support is
essential for implementation of these negotiated agreements. Policymakers
know this, and hence, when negotiating regionally, they always anticipate
domestic reactions. The larger the domestic win-sets, the greater the possibility
of a successful agreement; the smaller the win-sets, the more likely that the poli-
cymakers will be reluctant to conclude an agreement. Thus, policymakers’ antic-
ipation and calculation of the size and nature of domestic win-sets largely
determine their scope of bargains and negotiation on various regional issues.
In case of South Asia, the two-level game framework provides useful insights
for understanding South Asian countries’ interstate relationships. What kind of
domestic constraints or opportunities, along with international ones, do the
South Asian governments face in pursuing policies of cooperation with their
neighbors? How do South Asian governments use external threats at home?
How do issues of macroeconomic compatibility or incompatibility weigh on the
process of regional cooperation among South Asian countries? In case of the
existence of narrow win-sets for a specific regional cooperation agreement, are
there ways of expanding the win-set during the regional cooperation negotiation
process? The answer to these questions requires an understanding of the South
 Explaining regional cooperation in South Asia 41
Asian countries’ domestic political and economic dynamics and their link to
international and regional factors. Understanding this linkage is essential to
explain the prospects for regional cooperation in South Asia.
Third, external factors, outside pressure for opening domestic markets,
private capital flows, and country’s degree of economic openness critically
affect leaders’ political calculations about deeper regional cooperation policy
initiatives. But, external factors alone are not enough. Growth of regional coop-
eration is also critically dependent on the nature of domestic institutional struc-
ture and strength of the government. When the governmental actors enjoy
legislative autonomy and are relatively well insulated domestically, they can
afford to pursue bold and accommodative regional policies. Conversely, a weak
government may force governmental actors to pursue more nationalistic and
domestically oriented policies, with regional cooperation initiatives a prime
casualty. It is, therefore, important to understand the nature of domestic institu-
tions and the strength of the government, in order to explain why states do or do
not deepen regional cooperation initiatives.
In light of this argument, this book examines the institutional structures and
the strength of the governments in South Asia. South Asian countries experience
various kinds of political systems – democratic, authoritarian, and quasi-
democratic political systems. As discussed in Chapter 5, almost all South Asian
governments have suffered from considerable weakness in terms of their polit-
ical leaders’ narrow political base and lack of legislative autonomy since 1990s.
Given the weakness of their governments, political leaders are likely to pursue
more domestic-oriented policies, making regional accommodation a difficult
goal.
Fourth, under what conditions will political actors show preferences for
regional cooperation that involves coordinating policies with another country?
The answer to this question requires an understanding of the fundamental goals
and motivations of political actors. The primary goal of political actors, as dis-
cussed above, is to retain their political office, maintain or increase their power
and authority. Thus, political actors’ preferences for regional cooperation are
determined by the extent to which regional cooperation policies serve their fun-
damental goals. If regional cooperation policies enhance political actors’
prospects of retaining power or remaining in office, then these policies are likely
to be enthusiastically pursued. Otherwise, political actors will show little prefer-
ence for these kinds of policies. In addition, externalities, intraregional and
extraregional security consideration, and lock-in are the main motivations that
shape political actors’ preferences toward regional cooperation.
To what extent do regional cooperation policies serve the power-retaining
objectives of South Asian political actors? What is the overall impact of regional
cooperation policies on the economy of South Asian countries? Given their geo-
graphical contiguity and the fact that they share water and land resources, South
Asian countries have to deal with externalities on a continuous basis. In fact,
many experts believe that regional cooperation in South Asia can be useful for a
number of issues facing South Asian countries – such as natural disasters,
42 Explaining regional cooperation in South Asia
destruction of ecosystems, pollution, droughts, irrigation, fishing, transportation
bottlenecks, equitable water sharing, hydroelectricity generation, and energy
issues. According to many outside observers, regional cooperation is likely to
help South Asian countries to effectively deal with these issues by increasing
trust between policymakers and by embedding the issues in wider negotiations
where trade-offs are more feasible and agreements easier to reach. Do South
Asian policymakers share these beliefs or they find themselves unwilling to
cooperate because of national pride, political tensions, lack of trust, and the
asymmetric distribution of costs and benefits?
Another issue of critical importance for regional cooperation in South Asia is
intraregional and extraregional security considerations among South Asian
leaders. One of the main contributions of the realist scholars has been the
emphasis on the security dilemma and how it serves to aggravate intraregional
security environment, thereby weakening regional cooperation efforts. This
study explores to what extent security dilemma, particularly between India and
Pakistan, has been a crucial barrier to effective regional cooperation in South
Asia. Another underlying assumption in the realist literature that shapes prefer-
ences of political actors for regional cooperation is the need for extraregional
security, that is, the need to unite to face a common external threat. The poten-
tial threat can come from a regional hegemon or other extraregional power.
Given this line of reasoning, this book advances the argument that the potential
for regional cooperation in South Asia will greatly improve when intraregional
and extraregional sources of insecurity are eliminated in the region.
Another source of motivation for political actors to pursue regional coopera-
tion policies is the potential of regional cooperation agreements to help lock in
or to create a commitment mechanism for trade liberalization and economic
reforms policies. To what extent regional cooperative arrangements have facilit-
ated trade liberalization policies in South Asian countries? Has regional cooper-
ation proved useful for political actors as a lock-in mechanism for the
continuation of economic reforms in South Asia? Has regional cooperation
facilitated an increase in intraregional trade among South Asian countries?
These questions are addressed in the following chapters with a focus on the
domestic political and economic dynamics of South Asian countries.
Based on the insights from the “distributional politics” literature, this book
argues that while political actors negotiate regional agreements, their prefer-
ences for specific regional cooperation policies are influenced by the preferences
of societal actors. The “power-retaining” motivation of political actors forces
them to anticipate the reactions of societal groups on specific cooperation pol-
icies and avoid those policies that will bring them into confrontation with
dominant domestic groups. In this sense, political actors tend to choose coopera-
tion policies that are more or less consistent with the policy preferences of key
societal groups.
Following David Easton’s theory of public support, this study argues that
preferences of key societal actors for specific regional cooperation policies are
based on their utilitarian evaluation of and/or affective allegiances toward
 Explaining regional cooperation in South Asia 43
regional cooperation agreements. While utilitarian preferences are determined
by their perception of benefits – economic, security, social welfare, and so on –
from a specific regional cooperative arrangement, affective allegiances are based
on their shared values, attachment, sympathy, and trust toward a regional organi-
zation. Several empirical studies in the context of EU show that examining the
level of utilitarian and affective support provides a useful explanation in under-
standing the scope and speed of integration.
Based on this understanding, the present study seeks to examine the nature of
domestic support along the utilitarian and affective dimensions for regional
cooperation policies in South Asia. However, in exploring the nature of
domestic support toward regional cooperation in South Asia, this study has
focused on elites. My decision to focus on elites rather than mass publics is
based on two specific assumptions. First, in a region where almost half of the
population lacks formal education, knowledge of regional cooperation issues is
extremely limited. South Asian mass publics are generally uninformed and
unconcerned about regional cooperation. Thus, to explore preferences for a
variety of complex regional cooperation policies, it is necessary to target edu-
cated and well-informed elites such as business groups, labor union leaders, reli-
gious leaders, retired civil servants, and opinion leaders – academics, mass
media. Second, elites in South Asia have greater potential to influence indirectly
the course of government policy. As opinion leaders, these elites have the capa-
bility to politicize issues, mobilize masses, and even increase saliency of a
particular issue by means of debates, media writing, and discussion. Hence, the
perspectives of these elite groupings are of particular significance for gauging
trends in policy formulation.12
In the context of examining the nature of elite opinion, it is useful to under-
stand the elite structure of South Asian countries. The elite structure of India and
Sri Lanka can be described as pluralistic. In such a system, political decision-
making is more often a case of bargaining among functional elites than one in
which a single elite imposes its will on others. While governing elites are
directly responsible for policy through initiation, legislation, and administration,
other functional elites – opposition political leaders, business, or labor leaders or
the communication media or religious leaders – may play a less direct role in
policy-making. Sometimes, they act as interest groups lobbying to secure certain
goals; at other times, they act as veto groups who must be placated before a
given policy can be implemented. In order to understand why a particular policy
is adopted in India and Sri Lanka, it is usually necessary to know what pressures
were put on decision-makers by such interest groups. It is in this sense that
understanding domestic elites’ preferences becomes useful.
The elite structure of other SAARC member countries – Pakistan,
Bangladesh, Nepal, Bhutan, and Maldives – remains tightly integrated to a
varying degree, where few functional elites – notably, the military, bureaucrats,
industrial, and landed elites and religious leaders – have access to power and
wealth. In such a system, a leader may enjoy more autonomy in the policy-
making process. Even then, it will be unreasonable to assume that a leader
44 Explaining regional cooperation in South Asia
initiates and implements single-handedly policy measure to keep an entire
country functioning. A leader must rely upon associates comprising various
functional elites who tell him what the major problems are, offer information
and advice, suggest solutions, and assist in carrying out decisions. The number
of these elite groupings surrounding the leader is few. But, typically, these few
elite groupings, as Karl Deutsch et al. (1957) reminds us, have a support base on
which the leader must depend in order to expand his own support base for legiti-
macy and retaining power. Hence, it is useful to examine the perspectives of
these elite groupings to understand trends in policy formulation.
3 Regional dynamics

Geographically, South Asia is easily demarcated. It is bounded on the north,

northwest, and the northeast by the Himalayas and its sub-ranges. The vast
expanse of the Indian Ocean, with the Arabian Sea to its west and the Bay of
Bengal to its east, marks off the region from the rest of the world. The region
has one of the largest alluvial soil systems of the world formed by three great
rivers, the Indus, the Ganges, and the Brahmaputra. The eight countries of this
region – Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan,
and Sri Lanka – share common rivers, mountain systems, oceans, and ecological
cycles. Except for narrow water corridors between the subcontinent and Sri
Lanka and Maldives, the whole region is a contiguous land mass without any
natural barriers between the countries. In addition to geographic contiguity, the
eight countries in South Asia share a common colonial past, historical ties, reli-
gious and cultural traditions, linguistic affinities, and values and social norms.
These commonalities should have provided a solid ground for regional coop-
eration among South Asian countries. But, the growth of regionalism – the
efforts to build institutions to foster regional cooperation – has been notably
absent in South Asia in the post-independence period, leading one observer to
comment that South Asia has been “a region without regionalism” (Lyon 1992:
126). What explains the lack of growth of regionalism in South Asia? This
chapter seeks to answer this question by exploring the nature of interstate rela-
tionships among five original SAARC member countries: India, Pakistan,
Bangladesh, Nepal, and Sri Lanka. It first identifies major characteristics of
each state that affect their policies toward the neighboring countries and coun-
tries outside of the region. It, then, examines the influence of history, which
plays a significant role in defining the South Asian countries’ regional diploma-
cies. In addition to history, it examines other features of the structure of the
South Asian regional system – religious affiliations, ethnic relations, state cap-
abilities, Indo-centric geography, and leaders’ contrasting conception of their
state’s relative roles – that affect their relationships. The Indo-Pakistan rivalry
and the implications of security dilemma for the entire region are examined.
This chapter also examines how the smaller states are affected by their relations
with their larger neighbors and how these relations create opportunities and
challenges for their leaders. Finally, this chapter explores the implications of
46 Regional dynamics
the relations between South Asian states and extraregional powers for the South
Asian region.

South Asian states – differences and shared characteristics

The South Asian region is Indo-centric. India is at the center of the South
Asian system, sharing frontiers with every country in the region. While all the
countries in South Asia share borders with India, none of them shares borders
with one other except for Pakistan and Afghanistan. India is the world’s
second most populous country with more than one billion people and is
expected to surpass China’s population in 2025. It occupies over 3,288,000
square kilometers, which is four times larger than the next big state in South
Asia – Pakistan. India is a thriving multiethnic democracy with 29 states and
six union territories. It has more than 16 officially recognized languages and
200 other languages and dialects. Constitutionally secular, India is a home to
all major religious faiths of the world – Hindus (80.5 percent), Muslims (13.4
percent), Christians (more than 2 percent), Sikhs (2 percent), Buddhists (1
percent), and Jains (less than 1 percent). In terms of population, size, natural
resources, military power, and industrial capability, India is enormous com-
pared to its neighbors (see Table 3.1).
Pakistan is the second most important state of the region in terms of popu-
lation, size, military power, and industrial capability. It occupies over 796,000
square kilometers with some 150 million people. Although created as a Muslim
state as a result of the partition of the subcontinent in 1947, Pakistan is a multi-
ethnic state with at least five regional languages. Unlike India, however, Pak-
istan has been ruled by the military in the vice-regal tradition for most of its
existence. For a brief period in early 1970s and more than a decade in late 1980s
(1988–99), Pakistan experienced a “quasi-democracy,” where political leaders,
despite their victory in parliamentary elections, remained critically dependent on
the support of the military and bureaucracy for foreign and domestic policies.
Since 1999, there has been once again a military rule in Pakistan.
Bangladesh, formerly East Pakistan, became an independent state in 1971 by
breaking away from Pakistan after a prolonged civil war over issues of
representation, economic policies, and language issues. Situated at the mouths of
the great Brahmaputra and Ganges rivers, Bangladesh occupies about 144,000
square kilometers (seven times less than Pakistan’s total size) with a population
of more than 144 million (nearly the same number of people as Pakistan).
Unlike India and Pakistan, however, Bangladesh is culturally relatively homo-
geneous with nearly everyone speaking Bengali. About 88 percent of its popu-
lation are Muslims, 11 percent are Hindus, and 1 percent are Christians and
others. Following its independence in 1971, Bangladesh was governed for four
years by the charismatic Sheikh Mujibur Rahman. After his assassination by a
group of army officers in 1975, the army generals ruled the country for 15 years.
Since 1991, there have been parliamentary elections at regular intervals with two
political parties – Awami League and Bangladesh Nationalist Party (BNP) –
Table 3.1 Key indicators of SAARC member countries

Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka

1 Area (thousands of square km) 144 47 3,288 0.30 141 796 66

2 Population (millions), 2004 139 0.896 1,080 0.321 27 152 19
3 GNP per capita (US$), 2004 440 760 620 2,410 250 600 1,010
4 GDP per capita annual growth rate (%), (2003–04) 4.3 2.3 5.4 8.1 1.4 3.9 4.5
5 Total external debt (millions of US$), 2004 20,344 245 122,723 316 3,332 32,566 10,061
6 Total debt service as % of export of goods and services (2004) 5.2 4.6 14.9a 4.5 5.5 21.2 8.5
7 Current account balance (millions of US$), 2004 –279 –20.3 6,853 –10.5 197 –808 –648
8 Structure of output (% of GDP), 2004
(a) Agriculture 21 38.2b 21 16.4b 40 22 18
(b) Industry 27 36.5b 27.0 18.4b 23 25.0 27.0
(Of which Manufacturing) (16.0) (11.6) (16) (6.5) (9.0) (18.0) (15.0)
(c) Services 52 25.4b 52 64.7b 37.0 53.0 55.0
9 Foreign trade
(a) Imports of goods and services (% of GDP), 2004 21 60b 23 76b 31 15 46
(b) Exports of goods and services (% of GDP), 2004 16 30b 19 93b 18 16 36
10 Gross domestic savings as % of GDP (2004) 31 37.9b 23 – 27 23 19
11 Armed forces personnel (thousands) 251 – 2,617 – 131 921 239

Sources: World Bank, World Development Indicators 2006.

Notes
a 2002 figure
b indicates data for 2000.
– indicates non-availability of data.
48 Regional dynamics
dominating the political landscape. These parliamentary elections have brought
civilian governments to power in Bangladesh, with the military back in the bar-
racks.
Situated at an important Indian Ocean crossroad, Sri Lanka is an island state
and is separated from India by a narrow 20-mile Palk Strait. It has a population
of 20 million people and an area of 65,000 square kilometers. It has a more
varied and cosmopolitan population than Nepal or Bangladesh, with Buddhist
(mostly Sinhalese, 70 percent), Hindus (Tamils, 15 percent), Christian (8
percent), and Muslim (7 percent). Until independence in 1948, Sri Lanka was
directly ruled from London as a Crown Colony. Sri Lanka is the only country in
Asia which has had universal adult franchise since 1932. Historically known for
its robust electoral democracy, the country’s government has been dominated by
a two-party system until the 1970s and multiparty system since then. Since the
mid-1970s, the country has plunged into one of the world’s most intractable
civil conflicts between Sri Lanka’s Tamils minority in the northern and eastern
parts of the island and Sinhalese majority in other parts of the country. Given the
domestic compulsions driven by natural sympathy of its Tamil population
mostly from Tamil Nadu, geographical proximity, and the concern for regional
peace and security, India has been drawn into Sri Lanka’s civil conflicts as a
major player.
Nepal is a landlocked country, occupying 141,000 square kilometers. Nepal’s
location along the 16,000 kilometers of frontier dividing India and China has
made it strategically important for India. It has a population of about 25 million
out of which 90 percent are Hindus, 5 percent are Buddhists, 3 percent are
Muslims, and 2 percent are Christians and others. Nepali is recognized as offi-
cial language, but its people speak many other languages and dialects. Until
1990, the country was run by an autocratic king under a system of governance
known as the panchayat. Although touted as a representative system, the pan-
chayat system in reality comprises a cluster of like-minded undemocratic politi-
cians who were primarily chosen by the king and obeyed the will of the king. In
1990, following months of popular unrest and agitation, King Birendra, on the
throne since 1972, finally gave in to popular demands to create a democratic
state with elected representatives rather than king’s chosen upper caste and class
elites. But, Nepal’s political leaders were unable to manage complexities of
democratic governance. In particular, the leaders were unable to forge effective
political alliances with other parties to form politically stable governments. Con-
sequently, Nepal had 14 governments from 1991 to 2001. From 1996 until 2001,
Nepal experienced a civil war between Maoist groups and the various govern-
mental forces. In 2001, Nepal returned to a monarchical rule under King Gya-
nendra when King Birendra’s entire royal family was massacred by his son and
Crown Prince Dipendra.1 However, the monarchical rule of King Gyanendra
with a government of unqualified cronies and demoralized army unable to main-
tain Nepal’s peace and stability came to an end in 2006 as a result of months of
popular protest. Since then, parliamentary democracy has been restored, and
there has been a multiparty government in power in Nepal.
 Regional dynamics 49
Shared characteristics
Although different in the nature of their political systems and regimes, size,
population, economy, and military power, South Asian states also share certain
characteristics. More than half of the world’s poor live in this region. Per capita
income, despite some improvements in recent years, still remains very low
among South Asian countries. As shown in Table 3.2, even after five decades of
independence, over 28 percent of the total population in India, 32 percent in
Pakistan, 49 percent in Bangladesh, 30 percent in Nepal, and 25 percent in Sri
Lanka live below the poverty line. More than 52 percent Indians, 74 percent
Pakistanis, 82 percent Bangladeshis, 68 percent Nepalis, and 41 percent Sri
Lankans survive on less than two dollars per day. In these countries, infant mor-
tality rates are among the highest in the world and life expectancy at birth is just
63 years on average. Almost 50 percent of children under five suffer from mal-
nutrition. In South Asia, the incomes and consumption levels are highly skewed,
with the rich enjoying a disproportionate amount of resources. As summarized
in Table 3.2, other social statistics such as literacy rates (except for Sri Lanka),
availability of doctors and medicines, drinking water, and other sanitary levels
also indicate the widespread existence of poverty in South Asia.
All South Asian countries have experienced high rates of population growth
during the past four decades. While the population density at the global level is
about 49 persons per square kilometer, it is 1,069 in Bangladesh, 300 in Sri
Lanka, 363 in India, 186 in Nepal, and 197 in Pakistan (World Bank World
Development Report 2006). With an annual average growth rate of little less
than 2 percent, the population in the region is likely to account for almost a
quarter of the world’s population by 2010. The rapid increase in population
during the past decades has led to an adverse dependency ratio in the South
Asian countries. The ratio of population in the dependent age group (between
0–14 and 60 years and above) is 95.4 percent in Bangladesh, 90.1 percent in
Pakistan, and 82.7 percent in Nepal, in comparison with 64.7 percent globally
and only 11.7 percent in the United States.
While the economies of the East Asian newly industrializing countries
(NICs) (Hong Kong, Singapore, South Korea, and Taiwan) grew annually at an
average of 9.0 percent and the ASEAN-4 (Indonesia, Malaysia, Philippines, and
Thailand) at 7.0 percent, the South Asian countries achieved a modest annual
growth rate of 4.6 percent during the past three decades (World Bank World
Development Report 1991: 39). Both the industrial growth rates and the agricul-
tural production of the South Asian countries remained low during the 1980s, in
comparison with East Asia and ASEAN countries (World Bank World Develop-
ment Report 1991: 38, 41). The slow growth rate in South Asian economy can
be attributed to the import-substitution development strategy of these countries
during the 1970s and 1980s. The increasing debt-burden of all the countries,
which has further contributed to the slow growth of economy, certainly is a
serious obstacle to human development in the region.
Dualism and uneven economic development have been the dominant feature
Table 3.2 Socio-economic profile of SAARC member countries

Bangladesh India Nepal Pakistan Sri Lanka

■ ■ ■ ■
1980 2004 1980 2004 1980 2004 1980 2004 1980 2004

Population density (people per square km) 656 1,069 231 363 102 186 107 197 226 300
Average annual population growth rate (%) 2.5 2.1 2.2 1.7 2.1 1.8 2.8 2.1 1.3 1.0
Life expectancy at birth (years), 2004 49 63 54 63 48 62 55 65 68 74
Infant mortality rate (per 1,000 live births) 129 56 113 62 133 59 105 80 35 12
Physicians per 1,000 0.12 0.3 0.37 0.6 0.03 0.2 0.29 0.7 0.14 0.5
Population below the poverty line (national %) – 49.8 – 28.6 – 30.9 – 32.6 – 25
Population per capita income (less than $2 a day) (%) – 82.8 – 52.4 – 68.5 – 73.6 – 41.6
Malnutrition, in children under age 5 (%) 48 – 48 38 30
Female adult literacy rate (% ages 15 and older) 17 31 27 48 7 35 14 35 79 89
Male adult literacy rate (% ages 15 and older) 40 50 55 73 37 63 40 62 91 92
Income Distribution (share of poorest quintile in national
consumption or income %) – 9.0 – 8.9 – 6.0 – 9.3 – 8.3
Access to improved water source (% of population), 2002 – 75 – 86 – 84 – 90 – 78
Access to improved sanitation facility, 2002 – 48 – 30 – 27 – 54 – 91
Deforestation (average annual % of total land mass)a – 0.1 – –0.4 – 1.6 – 1.7 – 1.2
Official development assistance ($ millions) 1,281 1,404 2,192 691 163 427 1,183 1,421 390 519
Foreign direct investment, net inflows (% of GDP) 0.05 0.8 0.04 0.8 0.02 0.0 0.27 1.2 1.07 1.2
Human Development Index (HDI) – World Rankingb (2003) 0.364 0.520 0.438 0.602 0.333 0.526 0.386 0.527 0.649 0.751

Sources: World Bank, World Development Indicators 2006; UNDP Human Development Report, 2006.
Notes
a Negative numbers indicate increase in forest area.
b Human Development Index Report, 2005 (2003 and 1980 trend data given).
 Regional dynamics 51
of South Asian economies. Vast disparities exist between different regions and
different strata of population in the same region in South Asia. The metropolises
of South Asian countries have more economic, cultural, and social linkages with
the industrialized world than with their own hinterlands. “Enclaves” of modern
industries and urban living are found in all countries of South Asia.
Regional imbalances are also common features of South Asian countries. The
western states of India are more developed than the eastern states of Bihar,
Bengal, and Orissa. The per capita incomes in Punjab, Maharashtra, and Gujarat
are much higher than in the three eastern states. The northeastern states of
Assam, Manipur, Tripura, Nagaland, and Meghalaya have almost no industries,
and their per capita incomes are far below the national average. In Pakistan,
Punjab is far more prosperous than Sind, Baluchistan, and North West Frontier
Province. While Karachi and Lahore have been extensively industrialized and
commercialized, the rest of the country suffers from lack of industrialization.
The capital cities, Dhaka in Bangladesh and Kathmandu in Nepal, are qualita-
tively different from the rest of the country. Such regional imbalances often con-
tribute to social and political tensions in South Asian countries.
South Asia has an integrated environment. Three major rivers and their tribu-
taries – Ganges, Indus, and Brahmaputra – flow through India, Pakistan,
Bangladesh, Nepal, and Bhutan. Majority of South Asian countries share the
Himalayan ecosystem, and all of these countries share common ecological
cycles. The rapid increase in population has put enormous pressure on this
ecosystem. In recent years, there has been an increase in natural disasters in
South Asia, bringing untold miseries to millions of people. The increase in the
frequency of natural disasters in South Asian region are due to the break down
of the Himalayan ecosystem caused by extensive deforestation. Unless all the
countries in South Asia make collective efforts to protect the ecosystem,
environmental disasters are likely to continue.
In recent decades, there has been an increase in ethnic polarization and
social conflicts in South Asia. The Tamil militancy and Sinhalese violence in
Sri Lanka, terrorist activities in Kashmir and northeast regions in India, anti-
mohajir violence in Karachi, tensions in Sind and Baluchistan, and, above all,
communal violence in India, with some spill over effect in Pakistan, and
Bangladesh have adversely affected the interstate relationships in South Asia.
As discussed in detail in Chapter 5, in all the states of South Asia, there are
ethnic groups who have close relatives in the neighboring states. This explains
how ethnic conflicts in one country affect ethnic politics of its neighbor. At
least three factors can be identified that have contributed significantly to the
increasing ethnic violence in South Asia: large-scale unemployment resulting
from the slow growth of economy and population explosion; uneven develop-
ment in each country, which has led some ethnic and linguistic groups to
believe that they have been marginalized from the process of development and
denied the benefits of economic growth; and gradual erosion of credibility of
the state and other political and legal institutions. A combination of populist
and repressive policies of South Asian ruling elites have alienated some ethnic
52 Regional dynamics
groups and contributed to growing social rifts and violence in South Asian
societies.
Given the shared characteristics of the South Asian societies and similar
problems facing the governments of these countries, it is reasonable to argue
that some sort of collective efforts would have been mutually beneficial to
address the nation-building issues in South Asia. But, instead, political leaders
of these countries drifted away from each other because of their insecurity and
fear of India’s domination. Since independence, the political leaders of South
Asian countries have actively sought external assistance to offset the power of
India. The intense rivalry between the two principal states in South Asia – India
and Pakistan – has a profound impact on the nature of interaction among South
Asian countries. In fact, it is fair to say that the subcontinental rivalry between
India and Pakistan has shaped the most consequential relationship in South Asia.

The influence of history

History has deeply influenced the interrelationship of the South Asian countries.
With a five millennia old heritage, South Asian history is complex and open to
many interpretations. For the purpose of this chapter, however, some major
historical developments with a direct bearing on the shaping of interstate rela-
tions in South Asia are briefly discussed here. From the beginning of the Second
millennium BC, periodic migrations of tribal communities from Afghanistan and
Central Asia to the fertile plains of the northern part of the Indian subcontinent
contributed significantly to the region’s emerging socioeconomic structure. The
South Asian societies grew constantly with the absorption of new kinds of social
organizations and methods of economic production introduced by the migrants.
Gradually, with the settling down of the agrarian communities across the
plains of the Indus and the Ganges, different types of local polities emerged in
the region. The local polities were governed by clans of warrior elites who con-
trolled rights over land and appropriated the agricultural surplus. Subsequently,
social conflicts and warfare between the local polities led to the formation of
regional states by the middle of the First millennium BC. Either a chieftain or a
dominant kinship group controlled the power structure of the local polities and
the regional states. Both monarchical and republican systems of administration
were prevalent during this period. With the passage of time, the monarchical
system became dominant form of macro-political organization. At the micro-
level, however, different communities and tribal groups continued to exercise a
substantial measure of self-rule through popular assemblies known as sabha and
more select gatherings known as samiti (Bose and Jalal 1998: 15).
By the Third century BC (322 BC), a few years after Alexander the Great’s
brief foray into northwestern India, a subcontinental polity was established for
the first time in South Asia under the Hindu king Chandragupta Maurya. The
Maurya empire achieved a far-flung reach under the reign of Chandragupta
Maurya’s grandson, Ashoka (268–231 BC), who expanded the empire beyond
Southeast Asia. Under Emperor Ashoka’s patronage, Buddhism spread to East
 Regional dynamics 53
and Southeast Asia, Central Asia, and Ceylon. During their rule, the Maurya
kings developed a centralized bureaucracy and an intricate network of spies and
informants to maintain domination over their far-flung empire. As Romila
Thapar (1966: 91) observes, a high degree of central control over revenue was
necessary to support a vast army or subsidize imperial enterprises.
The nature of Indian statecraft, political and social organization under the
Mauryan empire are discussed in Kautilya’s Arthashastra, which literally means
“science of wealth” but reads like a manual for the kings in the same way as
Machiavelli’s Prince. The Arthashastra, written about the same time as Thucy-
dides’s The Peloponnesian Wars and Sun Tzu’s Art of War, is no longer
regarded as a unitary text by historians of Ancient India. It is, however, an influ-
ential, entirely indigenous political text, comparable to the writings of Aristotle
and Plato (Schwartzberg 1992: 254–261; Cohen 2001: 10). It offers many
important insights on the doctrine and practice of Mauryan kings’ foreign
policies.
One of the important foreign policy doctrines of Mauryan empire as
described in Kautilya’s Arthashastra is based on the mandala, which literally
means a circle or ring. According to this doctrine, a state is surrounded by a
circle or ring of 12 neighbors: some allies, some enemies, and some neutrals. In
this mandala of existence, a state’s immediate neighbors are likely to be the
enemy; beyond that ring are a number of potential allies (who are the enemy’s
enemy) and so forth. Kautilya describes a range of six types of foreign policy
options for a ruler based on this circular arrangements of states: agreement with
pledges (peace), offensive operations (war), threats to the enemy, indifference
(neutrality), subordination within an alliance, and “duplicity,” or the dual policy,
that is, forming an alliance with one power while making war against another.
An underlying assumption of the mandala doctrine is the justification of military
strength of a state to achieve balance of power in a regional system. These prin-
ciples of statecraft are comparable to the modern-day realists’ architecture of the
international system based on the military capability of the sovereign states and
balance of power.2
The Mauryan Empire disintegrated soon after the death of Ashoka. With
the disintegration of this far-flung empire, the Indian subcontinent experienced
establishment of many autonomous regional kingdoms – the Shaka and
Kushana kingdoms in western and northern India are among the most notable
ones – from c.200 BC to c. AD 300. During these five centuries, India enjoyed
a good deal of economic prosperity and cultural glory with thriving coastal
trade with Southeast Asian region and long-distance trade with the Roman
empire. Historians have noted Indian cultural influence in countries like
modern-day Thailand and Kampuchea during this period (Bose and Jalal 1998:
18–19).
The process of empire building was renewed by the Gupta dynasty (represen-
ted by well-known emperors like Chandragupta I, Samudragupta, and Chan-
dragupta II) from AD 320 to the early decades of the sixth century. The Gupta
empire was not as centralized as their Maurya predecessors. Nonetheless, the
54 Regional dynamics
Gupta reign witnessed comparable political security and economic prosperity.
Described as the “golden era” of Hinduism, the Gupta period produced some of
the best-known literary, scientific, and cultural works. This period was represen-
ted by one of the greatest literally figures Kalidasa – known for his famous play
Shankutala and poem Meghaduta (The Cloud Messenger) – and a great mathe-
matician and astronomer Aryabhatta – known for his remarkably accurate calcu-
lations of the length of the solar year.
From the early sixth century onward, the Gupta empire started crumbling
down under a number of Hun invasions. Although briefly reversed during the
reign of Harshavardhana, the founder of another short-lived empire in northern
India between AD 606 and 647, the trend toward imperial disintegration con-
tinued in India until the establishment of the Mughal empire in 1526. During this
period, many powerful regional kingdoms emerged in India. The most famous
of these kingdoms was the Chola kingdom in southern India from the tenth to
the twelfth century AD. Near the end of the tenth century, Chola king Rajaraja I
conquered Sri Lanka while his son Rajendra I made military forays into the
north during 1022–23 and Southeast Asia couple of years later. In 1026, he
defeated the forces of the great South East Asian empire Srivijay and established
deep economic and cultural exchange between southern India and Southeast
Asia.
In the early eighth century, Muslims came to India’s Sind via the Arabian Sea
and later to the Malabar coast in the South. Fresh migrations from West and
Central Asia led to the development of new technologies of warfare, political
organization, economic production, and, above all, a new faith, Islam, which had
a far-reaching impact on the South Asian region. There are two schools of
thought among historians of medieval India about the impact of Islam on the
process of political, social, cultural, and economic transformation in the subcon-
tinent. While the first school of thought provides a popular narrative of Indian
history supported by most Hindu nationalists, the second school of thought pro-
vides a more dispassionate view of the subcontinent’s medieval history under
Mughal rule. According to the first school, Islam is a religion of violence and
Muslims are generally intolerant of other faiths. This view is supported by the
series of military conquests, lootings, attack on the Brahmin-dominated Hindu
social order, destruction of Hindu temples – most notably, the destruction
Somnath temple in the Indian state of Gujrat by Mahmud of Ghazni during a
series of raids between 997 and 1030 – and religious conversions undertaken by
early Muslim invaders and rulers. Writing in the early eleventh century, the
Central Asian scholar Alberuni provided one of the most vivid accounts of these
conquests:

Mahmud of Ghazni utterly ruined the prosperity of the country, and per-
formed there wonderful exploits, by which the Hindus became like atoms of
dust scattered in all directions, and like a tale of old in the mouth of the
people. Their scattered remains cherish, of course, the most inveterate aver-
sions towards all Muslims.3
 Regional dynamics 55
On the other hand, the second school of thought based on recent research on
the spread of Islam in the subcontinent offers several important insights. First,
the historical interpretation of a monolithic Islamic community in India is chal-
lenged. Instead, the research focuses on the great variety of Muslims – Turks,
Mongols, Persians, Arabs, and Afghans – who came to India motivated less by
religious zeal than by political and economic objectives. Second, the research
questions any general model of Muslim conversions in the subcontinent and
instead reveals cultural and economic regional specificities to explain conver-
sions of Hindus into Muslims (Eaton 2002: 46–56). Finally, the research shifts
the focus from an Islamic religious identity to an Indo-Islamic historical identity.
It brings attention to the issues of Indo-Islamic accommodation at various levels
of society and culture and the eventual emergence of the Indian subcontinent as
the hub of an Indian ocean world with “a distinctive historical identity that
stretched from the Mediterranean to the Indonesian archipelago” (Bose and Jalal
1998: 26).
By 1290, nearly all of India came under the domination of Muslim rulers.
After two and a half centuries of internecine war among Muslim, Hindu, and
Sikh rulers, the Mughal empire was established in the early sixteenth century.
Most historians agree that the Mughal emperor Aurangzeb’s brutal treatment of
his subjects and his several attempts to extend his control to South India led to a
crisis and weakening of Mughal empire. After his death in 1707, the Mughal
empire started to decline. The empire lasted until 1858, when the British finally
brought an end to it.
British domination in India started in the 1750s beginning with the British
conquest of Bengal led by the East India Company. The company, which was a
private company chartered by the British Crown, developed a civil and military
administration throughout most of the subcontinent well before 1858, when
India formally became a colony. The dual pretext of Company rule and Mughal
sovereignty came to an end and the British Raj (rule) in India officially com-
menced following the sepoy (sipahi in Urdu which means soldier) mutiny of
1857.4 Politically, the British raj established a unified administrative structure by
setting up strong bureaucratic and military institutions for effective governance
in India. Although the British raj sought no mass conversions or state-sponsored
religion, its cultural penetration – through the English language and Western
education – was as deep and lasting as the Mughals. Economically, from 1858 to
1914, Britain is said to have derived maximum strategic and economic benefits
from its prize colonial possession – India is often described as the jewel in the
crown of the empire. Summing up Britain’s strategic colonial advantage during
this period, Bose and Jalal (1998: 97) aptly observes:

India was being fashioned into a colony not only to play a critical role in the
international system of payments of the capitalist world economy for the
sustenance of its hegemonic core, but was also indispensable in the strategic
defense of that hegemony. . . . India’s economy was twisted to fit a classical
colonial pattern of importing manufactured goods from the metropolis and
56 Regional dynamics
exporting a variety of agricultural raw materials. Britain enjoyed a trade
surplus with India. But it had a growing deficit in its overall international
trade which was offset in this period by India’s substantial export surplus
with the rest of the world.

From 1914 onward, however, the British rule had to deal with a variety of
Indian independence struggles led by moderate nationalists, militant nationalists,
and radical revolutionaries. The most successfully organized freedom struggle
was led by Mohandas Karamchand Gandhi (popularly referred to as Mahatma
and Bapu or Father of the Nation) that eventually resulted in India’s independ-
ence and partition in August of 1947.
There is a rich polemic literature on the partition of the Indian subcontinent.
For Indian nationalist historians, Muslims’ demands for a separate Pakistan
arose mainly in the post-1919 period when the British tried to divide the two
communities to rule them. For another group of secular historians, in addition to
the British machination, the failure of the Indian National Congress to accom-
modate the Muslim League demands for autonomous provinces also contributed
to the demand for a separate homeland for Muslims. For many Pakistani histor-
ians, however, the idea of a separate Pakistan was rooted in the British victory in
1857 and their subsequent preferential policies toward Hindus. By favoring
Hindus in education, administration, and economic spheres, the British alienated
Muslims culturally, economically, and politically. The British introduction of
democracy and parliamentary elections, according to many Muslim leaders, was
meant to perpetuate Hindu domination and the minority status of Muslims in a
Hindu-majority Indian state. The fear of Hindu domination in the political, eco-
nomic, and sociocultural spheres was one of the root causes that drove early
Muslim leadership to demand for a separate status for India’s Muslims.
The idea of a separate Muslim nation can be traced back to the thinking of the
leading jurist and educator Sir Saiyid Ahmad Khan (1817–98), who vigorously
argued for the recognition of Indian Muslims as a separate nation and their equal
treatment with the Hindu nation in the distribution of power and patronage.
However, the actual territorial description of a separate Muslim state was first
articulated in the 1930s by Choudhary Rahamat Ali, a student in Cambridge.
Inspired by Saiyid Ahmad Khan’s thinking and later Muhammad Iqbal’s
demand for a separate Muslim nation in the December 1930 session of All-India
Muslim League, Rahmat Ali outlined a plan for a federation of several Muslim
states, which he named “Pakistan” – means “land of the pure” – by drawing
letters from the provinces with a Muslim majority. According to this scheme,
“P” stood for Punjab, “A” for Afghan, “K” for Kashmir, “S” for Sind, and “tan”
for Baluchstan. Although dismissed initially, Iqbal and Rahamat Ali’s idea
gained momentum subsequently and came to be supplemented by a plethora of
Muslim schemes most of which were predicated on Mulims being a nation and
not a minority. By the late 1930s, All-India Muslim League formally demanded
for an independent nation for Indian Muslims under the leadership of Moham-
maed Ali Jinnah, referred to as the Quaid-i-Azam (or great leader) in Pakistan
 Regional dynamics 57
today. In a historic address at the annual session of the All-India Muslim League
at Lahore in March 1940, Jinnah articulated the logic of an independent Pakistan
based on a two-nation theory:

The Hindus and Muslims belong to two different religious philosophies,

social customs and literatures . . . they belong to two different civilizations
which are based mainly on conflicting ideas and conceptions . . .. It is quite
clear that Hindus and Musalmans derive their inspiration from different
sources of history. They have different epics, their heroes are different, and
they have different episodes. Very often the hero of one is a foe of the other,
and their victories and defeats overlap.5

Jinnah’s two-nation theory essentially served as the basis of a political move-

ment by All-India Muslim League for an independent Pakistan. The protracted
debate following the Cabinet Mission Plan of 1946 for a three-tiered all-India
federation between the liberal leaders of the Indian National Congress led by
Jawaharlal Nehru and the Muslim League under Jinnah intensified bitterness and
fear between the Muslims and Hindus. Competing political leaders of the two
communities did little to address these fears and instead played on the fears and
psychological anxieties of Muslim minority and Hindu majority to develop loyal
political following. The brutalities and savageries of the pre-partition period,
which were perpetrated by the frenzied members of both communities, were
largely the result of the fears and anxieties of Muslim minority of Hindu domi-
nation and the anxieties of Hindu majority of Islamic intolerance and insensitivi-
ties to Hindu social order. Such fears and anxieties, which were partly aided by
the construction of mutually hostile political and historical narratives by the
leaders, continue to profoundly influence the post-independence relationships
between India and Pakistan.6 Although historians continue to debate about the
impact of partition on the psyche of the people, the subcontinent has never really
recovered from the colossal human tragedy and the nightmarish experience of
human resettlement of Hindus, Muslims, and Sikhs during the partition.7

Structure of the regional system: India and Pakistan –

unequal rivals
In addition to historical tension, the rivalry between India and Pakistan is also a
reflection of their structural problems. Separated by a historically arbitrary
border and with no natural frontiers and buffer state between them to check their
rivalry, India and Pakistan have continued their rivalry unchecked in the post-
independence period. The relative size of India and Pakistan also contributes to
their rivalry. Since both the states are not nearly equal in size, leaders have not
attached any strategic importance to reciprocity in their relationship. Yet, Pak-
istan before 1971 was not substantially smaller to accept India’s domination
more readily. Instead, unlike other smaller states, Pakistan remains India’s prin-
cipal rival for influence within South Asia and regularly stakes its claim to play
58 Regional dynamics
a larger or even coequal leadership role in South Asian regional system much to
the disliking of India.
The intense rivalry between India and Pakistan can also be explained, albeit
not entirely, by the useful framework of the security dilemma (Jervis 1988:
167–214; Buzan 1983: 106). The security dilemma, which is based on an
action–reaction effect within a region, is a negative consequence of anarchy in
the international system. The security dilemma paradigm suggests that steps
taken by a state to reduce its own anxieties about its neighbor, in turn, con-
tributes to an intensification of that neighbor’s sense of insecurity. As Howard
Wriggins et al. (1992: 11) observe: “Because the margin of safety for one state
is often seen as the margin of danger for its neighbor, these can provoke defen-
sive efforts that only reinforce the sense of threat.” Thus, security dilemma is
often considered a prime cause of arms race, in which neighboring states waste
large sums of money on acquiring mutually threatening weapons that do not ulti-
mately provide security. Since their independence, both India and Pakistan have
engaged in a continuously unhealthy arms competition that has ultimately rein-
forced their insecurity against each other.
The acute rivalry between India and Pakistan in South Asia has led to what
Barry Buzan describes as security complex, in which the primary security con-
cerns of India and Pakistan are so closely linked that their national security
problems cannot be considered without one another (Buzan and Rizvi 1986: 8).
Other smaller states’ securities in South Asia are bound to this security complex
for geographical reason. Buzan has further added amity/enmity axis to explain
the pattern of security relationships among South Asian countries (Buzan and
Rizvi 1986: 9). According to this view, security relationships and patterns of
alignments among South Asian countries are determined not only by considera-
tions of relative strength of the states or the distribution of power, as balance of
power theory suggests, but also by the legacy of colonial rule and such domestic
issues as religious and ethnic conflicts and other ideological perceptions of indi-
viduals and leaders.
The rivalry between India and Pakistan is built around this amity/enmity axis.
Reasons for interstate hostility between India and Pakistan include historic rival-
ries between Hindus and Muslims, past conquests of one group over the other,
the bitter memory of partition, territorial disputes in Kashmir, mutually antago-
nistic constitutional principles such as India’s secular as opposed to Pakistan’s
Islamic foundation of the state, and the memory of three major wars that the two
countries have fought since independence. In addition, structural asymmetry
intensifies the security dilemma between the two states. Despite great disparity
between India and Pakistan in terms of population, size, economy, and military
capability, Pakistan has constantly refused to accept India’s domination in the
region.
Pakistan has sought to achieve a balance of power in the subcontinent basi-
cally through two means. First, it has successfully secured military and eco-
nomic assistance of foreign powers including the United States, China, and
Islamic countries in the Gulf and the Middle East. While the assistance from
 Regional dynamics 59
Islamic countries is mainly economic, the assistance from China and the United
States is both economic and military. Pakistan’s strategic position as a frontline
state in America’s struggle to contain communism in the 1960s and after Soviet
Union invasion in Afghanistan in 1979, and the US fight against terrorism in
Afghanistan after 2001, has mainly led to massive US military and economic
assistance to the country. Given the Sino-Soviet and Sino-Indian rivalry from
the late 1950s to the end of the Cold War period, China has also joined the
United States in continuing its support for Pakistan. The cumulative effect has
been the development and modernization of Pakistan’s military that is able to
challenge India.
Although Pakistan has benefited substantially from military and economic
assistance from the United States and China, Pakistani policymakers recognize
the vulnerabilities of relying exclusively on foreign powers. Past experience has
shown that the US support to Pakistan is unreliable. The support is only a stra-
tegic alliance and can shift with the change of geostrategic situation. Although
China can be counted as a trusted ally, it cannot match the sophistication of the
US defense technology. Moreover, Pakistan also knows well that no matter how
much the country spends on defense, it will not be able to match India in terms
of conventional weapons and military personnel. Thus, acquisition of nuclear
bomb remained a critical policy option for Pakistan to achieve a strategic mili-
tary parity with India. After the 1971 military defeat, Pakistani policymakers
sought to develop nuclear weapons with a sense of urgency to achieve the
balance of power with India. By acquiring nuclear bomb in May 1998, following
India’s nuclear test, Pakistan seems to have met its objective of improving
balance of power with India. As discussed in Chapter 5, the development of
nuclear weapons by both India and Pakistan, however, does not guarantee
lasting peace or growth of cooperative activities between these two principal
rivals in South Asia.

Kashmir dispute
The territorial disputes over Kashmir remain the most divisive issue in the sub-
continent and a major source of bitterness between India and Pakistan. Both the
countries have fought three wars – 1948, 1965, and 1999 – over the Kashmir
issue. The roots of the problem in Kashmir can be traced to the partition of the
subcontinent in 1947. The last viceroy Lord Mountbatten passed an edict that
required the division of the states of British India on the basis of demographics,
i.e. Muslim-majority states and areas would go to Pakistan and Hindu-majority
states would go to India. The “princely states” which enjoyed nominal independ-
ence during the British rule were given the choice to join either India or Pak-
istan. Mountbatten made it clear that the decision of these princely states should
be based on considerations of geographic location and demographic features.
Based on this principle of partition, 500 odd states were integrated without any
problem. However, in three cases – Junagadh, Jodhpur, and Hyderabad – where
rulers decided either to remain independent or to accede to Pakistan in violation
60 Regional dynamics
of the principle of partition, India used force to integrate them with the Indian
union. The loss of both Junagadh and Hyderabad, where the rulers were Muslim
but the population was Hindu, increased Pakistani leaders’ distrust toward
Indian leaders’ motive.
The situation in the princely state of Kashmir was exactly the opposite. The
state had a Hindu ruler, Maharaja Hari Singh, and more than 75 percent of
Muslim population. Threatened by a tribal invasion from Pakistan’s North West
Frontier Province, allegedly supported by Pakistani army, Maharaja Hari Singh
signed an Instrument of Accession to India in October 1947 on the advice of
V.P. Menon, the Government of India’s secretary for the Princely States. After
the signing of the Instrument of Accession, Nehru, the then Indian Prime Minis-
ter, agreed to airlift Indian troops to stop the onslaught. By the time the first
Indo-Pakistan war ended with a cease-fire resolution by the United Nations in
January 1949, some two-thirds of Kashmir was under Indian control and the
remaining one-third under Pakistani control. Between 1948 and 1965, there had
been several multilateral efforts mainly led by the United Nations to resolve the
Kashmir issue. But, these efforts had failed because of the intransigence of both
Indian and Pakistani leaders.
For Pakistani leaders, the claim to Kashmir is irredentist, a moral issue
because it is linked with Pakistan’s identity as the homeland of Muslims of
South Asia. Pakistan’s former Prime Minister, Zulfiquar Ali Bhutto, in his The
Myth of Independence (1969) captures this sentiment well:

If a Muslim majority can remain a part of India, then the raison d’etre of
Pakistan collapses. These are the reasons why India, to continue her domi-
nation of Jammu and Kashmir, defies international opinion and violates her
pledges. For the same reason, Pakistan must unremittingly continue her
struggle for the right of self-determination of this subject people. It would
be fatal, if in sheer exhaustion or out of intimidation, Pakistan were to
abandon the struggle, and a bad compromise would be tantamount to aban-
donment; which might, in turn, lead to the collapse of Pakistan.8

Thus, throughout 1950s and 1960s, Pakistani leaders remained unreconciled

to the disputed status of Kashmir and pursued multilateral, diplomatic, and mili-
tary strategies to wrest Kashmir from India. For Indian leaders, however, con-
ceding to Pakistan’s demand over Kashmir would weaken India’s secular
structure and lead to other secessionist demands. Not surprisingly, Indian leaders
ignored Pakistan’s demands and tightened India’s grip by passing an ordinance
in Indian Parliament in 1964 to extend Articles 356 and 357 to Jammu and
Kashmir. This ordinance enabled the central government at New Delhi to pro-
mulgate President’s rule in the state during the crisis, essentially eroding
Kashmir’s special autonomous status provided under Article 370. Needless to
say, from Pakistan’ perspective, such actions were interpreted as India’s efforts
to integrate Kashmir more formally with Indian union and thus a blow to Pak-
istan’s irredentist claim on the state.
 Regional dynamics 61
After her humiliating defeat in the Sino-Indian border war of 1962, India
embarked upon a substantial military modernization program, by securing mili-
tary aid from Britain, the Soviet Union, and the United States. As expected,
Indian military planners deployed few infantry divisions along the Sino-Indian
border. But, surprisingly for Pakistan, India deployed majority of its infantry
divisions in Kashmir and along the western borders with Pakistan. Such arms
buildup by India generated considerable anxiety among Pakistani decision-
making elites. For them, any further military buildup by India in Kashmir and
along the India–Pakistan border would close Pakistan’s “last window of
opportunity” (Rizvi 1986: 108; Ganguly 2001: 31) to seize Kashmir through
military offensive. In addition, the following factors explain Pakistan’s decision
to launch a military attack in Kashmir and on India in 1965.
First, a lack of Indian counterattack against a limited Pakistani military cam-
paign in early 1965 along the Rann of Kutch (near the western Indian state of
Gujrat) disputed area and India’s ready willingness to accept a third party inter-
vention to resolve this issue convinced the Pakistani leadership about India’s
military weakness and an apparent unwillingness to engage in any major mili-
tary conflict with Pakistan. Second, after an eight-day visit to China in March
1965, President Ayub Khan and Foreign Minister Zulfiqar Ali Bhutto were con-
vinced of China’s military assistance in the wake of a war with India. Third,
following India’s military defeat in the Sino-Indian war in 1962 and the sub-
sequent death of Indian Prime Minister Jawaharlal Nehru in 1964, India’s
domestic politics were passing through considerable political turbulence. For
outsiders, India’s domestic politics at this time seemed to be in disarray marked
by an intra-party leadership squabble in the Congress party leading to a compro-
mise selection of Lal Bahadur Shastri as the next prime minister, the political
defeat of Congress party in a number of states, Tamil agitation for an
autonomous Dravidian state, and communal riots in most part of the country. In
such a situation, India’s military resolve to fight against a Pakistani attack was
considered weak by Pakistani leaders. Finally, following the theft of a holy relic
– claimed to be the sacred hair of the Prophet Muhammed – a widespread and
violent agitation by Kashmir Muslims against India erupted in December 1963.
This was construed by Pakistani leaders as a popular support of Kashmir
Muslims for Pakistan. On the basis of this belief, Pakistani leaders planned
Operation Gibralatar to recover Kashmir in May 1965. According to this plan,
specially trained Pakistani troops would infiltrate in small numbers into India-
occupied Kashmir area and help spread the armed rebellion against Indian
authorities. In the wake of Indian authority’s measure of suppressing the rebel-
lion, Pakistani troops would launch a military attack on Indian forces. Pakistani
leaders reasoned that this would be a localized war in Kashmir and that India
would not cross the disputed cease-fire line (CFL) in order not to antagonize
world opinion. At the same time, the limited localized war would bring inter-
national attention to the Kashmir dispute leading India to accept a Rann of
Kutch type of agreement with international mediation.
These Pakistani assumptions proved wrong. First, contrary to Pakistani
62 Regional dynamics
leaders’ belief, the rebellion in Kashmir was not pro-Pakistan. This became clear
when Kashmiri Muslims apprehended Pakistani commandos after they crossed
the CFL in Kashmir in August 1965 and handed them over to Indian authorities.
Second, again contrary to Pakistani belief, Indian troops actually crossed the
Indo-Pakistan international boundary in their counterattack, forcing Pakistani
troops to defend their own territory. A full-fledged war between India and Pak-
istan broke out on September 5, 1965, and 15 days later, this war came to a halt
with Soviet Union initiated UN cease-fire resolution on September 20, 1965.
The Soviet diplomacy for brokering peace between the two subcontinental
rivals was based on a strategic calculation to expand Soviet influence in South
Asia and limit China’s influence in Pakistan. On the invitation of Soviet Prime
Minister Alexei Kosygin, Pakistani President Ayub Khan and Indian Prime
Minister Lal Bahadur Shastri met at Tashkent to resolve their differences on
January 4, 1966. The Tashkent meeting did not produce any substantial result so
far as the resolution of the Kashmir issue was concerned. It merely restored the
status quo ante over Kashmir.
The Indo-Pakistan war in 1965 had at least two critical consequences for Pak-
istan. First, as the failure of Pakistan’s Operation Gibralator suggests, the anti-
India agitation of Kashmiri Muslims should not be interpreted as a movement
for Kashmir’s merger with Pakistan. Second, and more critically for Pakistan,
the 1965 war demonstrated Pakistan’s Kashmir fixation. Pakistan’s preoccupa-
tion with Kashmir led its leaders to neglect East Pakistan’s Bengali subnational-
ist movement, which gathered considerable momentum during and after the
1965 war.

The 1971 Indo-Pakistan war

While the Indo-Pakistani conflicts in 1948 and 1965 were initiated by Pakistan,
the 1971 war was a result of India’s strategic initiative. However, the roots of
the 1971 conflict can be found in the failure of Pakistani domestic politics since
1950s. There was widespread resentment among Bengalis of East Pakistan
against the domination of Punjabis in Pakistan’s politics, military, and economy.
The Bengalis of East Pakistan had always resented against the imposition of
Urdu as the national language, inadequate representation of East Pakistanis in
military and civil services, and a disproportionate allocation of foreign aid and
domestic revenues to West Pakistan. In Pakistan’s first democratic election in
October 1970, the Awami League under the leadership of Sheikh Mujibur
Rahman won an absolute parliamentary majority. Emboldened by this victory,
the Awami League demanded for the immediate implementation of its six-point
program for autonomy. But, the military regime under General Yahya Khan
refused to concede to these demands and instead launched a military invasion of
East Pakistan to negate the popular mandate. A full-scale civil war erupted in
March–April 1971 in East Pakistan in protest against this attack. Pakistani army
resorted to large-scale atrocities against East Pakistani population (Bose and
Jalal 1998: 219).
 Regional dynamics 63
The extreme brutality of the Pakistani army caused a massive influx of
Bengali refugees into the eastern part of India (state of West Bengal). The
number of East Pakistani refugees reached four million by the end of May in
1971 with about 60,000 refugees crossing the border per day (Sisson and Rose
1990: 152). Describing as humanitarian intervention, India provided massive
logistics and sent its troops across its eastern border to join Mukti Bahini (libera-
tion army) to fight against Pakistani army. Finally, in response to Pakistan’s pre-
emptive air strikes against Indian air installations on December 3, India declared
the war on December 5, 1971. On December 16, Dhaka fell and Bangladesh was
born. India’s motivation to fight this war of 1971 was based on the following
strategic objectives. The liberation of East Pakistan would undermine Pakistan’s
two-nation theory; weaken Pakistan’s claims to Kashmir; and reduce Pakistan’s
size so that she would not be able to challenge India’s predominance in the
region.
India’s decisive victory in the 1971 war essentially changed the political geo-
graphy of the subcontinent. With the emergence of Bangladesh as an independ-
ent state, Pakistan experienced a substantial structural reduction in terms of
losing half of its population and territory. Undoubtedly, India emerged as the
dominant power in South Asia. Although analysts differ, it can be argued that
the subsequent withdrawal of the United States from South Asia reflects a tacit
recognition of this reality by the US policymakers. In 1972, India and Pakistan
had signed the Simla Accord, according to which both the countries agreed to:

1 respect the Line of Control (LoC) as determined by the cease-fire agreement

on December 17, 1971;
2 resolve their disputes peacefully through bilateral negotiations or any other
mutually acceptable means.

The agreement on the new LoC gave India control over the strategically signific-
ant areas of Tithwal and Kargil and thus made any future attempt by Pakistan to
dislodge India from Kashmir extremely difficult (Mansingh 1984: 229). In nut-
shell, this agreement essentially froze the Kashmir dispute by making the Line
of Actual Control (LAC) the de facto boundary between Indian and Pakistani
parts of Kashmir (Hagerty 1998: 137). For India, Simla agreement supplanted
the UN resolutions as a point of reference for the resolution of Kashmir dispute.
For Pakistan, however, the Simla Agreement became just another means of
resolving the dispute, but it did not replace the UN resolutions. The other agree-
ment on the principle of “bilateralism” meant that both Pakistan and India would
no longer seek the intervention of third parties to resolve a bilateral issue.
Instead, they would seek to directly work with one another, making extrare-
gional diplomacy irrelevant. Given India’s insistence on bilateral negotiations
and opposition to external intervention on a South Asian regional issue, this pro-
vision of the Simla Agreement was a diplomatic triumph for India.
Pakistan’s defeat and the emergence of Bangladesh as an independent state in
1971 challenged the basic assumptions of the two-nation theory. No longer,
64 Regional dynamics
religion could be considered as the sole basis of state-building in South Asia.
Other ethno-linguistic issues should also constitute as a foundation for state-
building. In addition, Indian policymakers argued that the outcome of the 1971
war had considerably weakened Pakistan’s claim on Kashmir. Although Pak-
istan agreed for a pragmatic solution by soft-pedaling the Kashmir issue and
accepting the LoC as existing on December 17, 1971 (Rizvi 1986: 118), it never
really relinquished its moral claim on Kashmir. Further, to maintain Pakistan’s
Islamic identity and to attract much-needed international support, President
Bhutto turned to the oil-rich Islamic states of the Middle East by projecting the
Pakistani state as not only a South Asian state but also a Southwest Asian state
(Hagerty 1998: 77).
The Bangladesh debacle intensified a national debate on the Pakistani secur-
ity issues inside Pakistan. Given India’s overwhelming conventional military
security, some Pakistani policymakers led by President Bhutto were convinced
that the only way Pakistan could achieve strategic security parity with India was
through a nuclear option. As discussed in Chapter 5, India’s 1974 nuclear test
further increased Pakistan’s resolve to develop nuclear weapons.
After a brief period of relative peace following the Simla Agreement, the
Indo-Pakistan relations again ran into a rough patch in the 1980s. With the
Soviet invasion of Afghanistan in December 1979, and the subsequent American
involvement to fight against the Soviet occupation, South Asia’s security land-
scape changed dramatically. In 1981, the Reagan administration decided to
provide a six-year, $3.2 billion economic and military aid to Pakistan, because
of the country’s frontline status in the scheme of American defense strategy
against soviet occupation in Afghanistan. This substantial economic and military
aid enabled Pakistan’s new military ruler, President Zia-ul-Haq, who ousted
President Bhutto in a military coup and later hanged him despite unfavorable
international public opinion, to modernize Pakistani army. It also provided him
with confidence to challenge India by exploiting her domestic weakness.
Four important developments marked Indo-Pakistan relations in the 1980s.
First, staking claims over the Siachen glacier, both India and Pakistan deployed
troops in 1984 on the glacier.9 Throughout the 1980s and 1990s, the Siachen
dispute remained one of the major bones of contention in Indian and Pakistani
diplomacy (Khosa 1999: 195). Second, a major source of political conflict
between India and Pakistan was each country’s alleged support for ethnic insur-
gencies on the other’s territory. In 1981, a Sikh insurgency led by the Akali Dal
had begun in the Indian state of Punjab demanding more autonomy for the state
and recognition of the city of Chandigarh as the capital of Punjab only as
opposed to the current status of the city as the capital of both Punjab and the
neighboring state of Haryana. The failure of negotiation between the Sikh
leaders and Indira Gandhi government led the more extremist Sikh leaders to
demand for Khalistan – an independent Sikh state. In June 1984, the Indian
army launched Operation Bluestar, an assault on the sacred Golden Temple,
where militant Sikh leaders had taken refuge. After three-day military siege and
death of an estimated 1,000 people because of fighting between the army and the
 Regional dynamics 65
militants, the crisis came to an end. Subsequently, Prime Minister Indira Gandhi
was assassinated by her two Sikh bodyguards in October 1984 leading to wide-
spread riots between Hindus and Sikhs. An estimated 2,700 Sikhs were killed in
Delhi’s worst violence since partition (Hagerty 1998: 95). Denying Indian
government’s accusation of Pakistan’s support for the Sikh extremist move-
ments in Punjab, Pakistani leaders launched a counter-allegation against Indian
government’s role of inciting violence between Sindhis and other communities
in Pakistan in the southern Pakistani province of Sindh.
In the midst of this accusation and counteraccusation, a third significant
development related to nuclear issues took place in 1985. By 1983, both the US
intelligence report and the Indian intelligence suggested that Pakistan had
developed nuclear weapon capabilities but not the nuclear bomb (Spector 1988:
127). There was a widespread speculation in South Asia and Washington that
India had finalized a plan for an “Israeli-style” attack on Pakistan’s Kahuta
nuclear facility to shut down the plant. However, laying the speculation to rest,
both India and Pakistan announced an agreement in December 1985 not to
attack each other’s nuclear facilities. Fourth, this relative goodwill in Indo-
Pakistan relations in 1985 came to an end with a series of India’s largest ever
military exercises, collectively known as Brasstacks, along its western border in
Punjab during 1986–87. Although consistently denied by the Indian policymak-
ers, Indian military movements during the Brasstacks crisis were largely an out-
growth of New Delhi’s anxiety about the instability in Punjab and its wider
implications for the integrity of the country. In response to India’s military exer-
cises, Pakistan moved its armed forces to the border leading to a “war-like” situ-
ation. Although the Brasstacks crisis subsequently subsided with an agreement
between President Zia-ul-Haq and Prime Minister Rajiv Gandhi to pull back
their troops to their normal positions by 1988, the crisis increased Islamabad’s
determination to acquire nuclear weapons to achieve strategic military parity and
nuclear deterrent vis-à-vis its larger neighbor.
The Indo-Pakistani relations deteriorated further in the 1990s with the advent
of three major crises – the 1990 Kashmir crisis; acquisition of nuclear weapon
capability by both India and Pakistan in 1998; and the Kargil war between India
and Pakistan in 1999. These three crises, which are discussed in Chapter 5,
intensified the Indo-Pakistani rivalry. The rivalry between India and Pakistan is
based on a deep-seated historical, structural, and ideological animosity and is
thus unlikely to disappear soon. India’s secular ideology, the presence of the
third largest Muslim population in the world, and the emergence of Bangladesh
as an independent state with the help of India constantly challenge the “two-
nation theory” and the religious basis of the partition of the subcontinent,
making the creation of the Pakistani state and its claim as the homeland for
Muslims in South Asia questionable. In contrast, Pakistan’s determination to
challenge India’s hegemony in South Asia and its continuing assertion as the
homeland for South Asian Muslims are the primary sources of irritation for
Indian leaders. The unresolved Kashmir dispute, over which India and Pakistan
have fought three major wars, reflects this deep-seated animosity between India
66 Regional dynamics
and Pakistan. Another indication of this animosity is the acquisition of nuclear
bombs by Pakistan following India’s nuclear tests in 1998. While the acquisition
of nuclear bombs by India is based on its strategic regional and global calcula-
tions, Pakistan’s acquisition of nuclear bomb was solely based on its objective
of achieving a strategic balance of power and nuclear deterrence against India.
The acquisition of nuclear bombs by both India and Pakistan, as discussed in
Chapter 5, may have introduced a stability–instability paradox into the South
Asian region. But, it has not led to and is unlikely to result in the elimination of
rivalry between India and Pakistan in near future given their historically shaped
animosity.

The other South Asian states and their relations with

neighbors
The relations among South Asian states are primarily shaped by the rivalry
between India and Pakistan and divergent perceptions of each other. Indian poli-
cymakers consider South Asia as India’s legitimate sphere of influence and
oppose any external intervention in South Asian affairs. Leaders of other smaller
South Asian states, however, constantly worry about India’s predominance in
the region and her influence and potential intervention in their domestic affairs.
In nutshell, India is perceived by smaller states as a source of threat. Not surpris-
ingly, the primary basis of foreign policy of the South Asian states, from the
beginning, has been how to cope with India’s overwhelming power in ways that
would not precipitate direct Indian intervention in their domestic affairs (Wrig-
gins et al. 1992: 120). Several Indian actions in the past have contributed to this
fear of South Asian leaders. India’s military intervention in the independence
movement of Bangladesh in 1971, absorption of Sikkim into Indian Union in
1975, deployment of Indian troops to deal with Sri Lanka’s ethnic crisis in 1987,
sending Indian troops to Maldives to foil a coup in 1988, and profound influence
in Nepal’s domestic affairs are often interpreted by Indian neighbors as India’s
willingness to exercise its military power to support its strategic objectives in
South Asia. It is not surprising that India’s neighbors have pursued classic bal-
ancing policies by seeking the support of external powers and encouraging mul-
tilateral as opposed to bilateral engagements to deal with India. The following
section explores this.

Bangladesh
After becoming independent in 1971, Bangladesh signed a Treaty of Friendship,
Cooperation, and Peace with India for closer economic and political links. With
her extreme poverty, limited natural resources, proneness to frequent floods and
cyclones, absolute aid dependency, and limited industrial, scientific, and techno-
logical development, Bangladesh’s capacity to cope with the nation-building
process was severely limited. Thus, Bangladesh had an enormous interest in
developing strong bilateral economic and political cooperation with India. A
 Regional dynamics 67
generous flow of foreign aid and economic aid from India provided the neces-
sary support for Bangladesh’s economic development. But soon, the flow of
foreign aid dried up. There were resentment among Bangladeshi entrepreneurs
and middle class against Indian economic domination. Demand for protection-
ism against Indian industrial goods grew in Bangladesh, contributing to eco-
nomic and political tension between the two countries. The cancellation of three
joint Indo-Bangladesh projects (i.e. urea fertilizer plant, sponge iron project, and
cement plant) during 1973–75 provides evidence of such tension (Sobhan 1991:
44–45). More importantly, the Indo-Bangladesh relations deteriorated after the
assassination of President Mujibur Rahman – whose government India had sup-
ported so actively – in a coup d’etat in 1975.
One of the critical issues that adversely affected Bangladesh’s cordial rela-
tionship with India in the post-1975 period related to the conflict over the
sharing of the Ganges water. In the early 1950s, India developed a plan to build
the Farakka Barrage to divert the Ganges flow during the dry season into Bhagi-
rathi–Hoogly river to flush out the silt from Kolkata port. With the completion
of the construction of Farakka Dam, the plan became operational in April 1975.
India’s diversion of Ganges water deprived Bangladesh of adequate supply of
water needed for its downstream agriculture, fishery, and navigation. India’s
unwillingness to negotiate an increase in the supply of water with the
post–Mujibur Rahman military regime led by Ziaur Rahman intensified
Bangladesh’s bitter feelings toward India. The main argument of Indian political
leaders was that since 2,036 kilometers of the 2,177 kilometers of the Ganges
flow through Indian territory, India as the upper riparian state is entitled to as
much water as it requires (Mansingh 1984: 298). Such a legalistic argument by
India was seen by Bangladesh as India’s insensitivity to the needs of
Bangladesh. Capturing the emotional intensity of Bangladeshi feeling on this
issue, some analysts observed that the Farakka by 1975 had become the
“Kashmir of Bangladesh’s grievance against India” (Rizvi 1986: 135). Almost
two decades later, and after several rounds of negotiations, India and
Bangladesh signed a 30-year Treaty on Ganges water sharing in December
1996. While Indian leaders attempt to showcase the agreement as a model of
bilateral cooperation to resolve bilateral issues, Bangladeshi political leaders do
not consider this as the permanent solution. In addition, an Indian proposal to
develop a mega project by linking all major rivers that flow through both India
and Bangladesh (India and Bangladesh have some 54 rivers in common) has
produced resentment in Bangladesh.
There are several other irritants in Indo-Bangladesh relations. The Indian
occupation of New Moor Island (known as South Talpatty to Bangladesh) near
Sundarban in 1981 despite strong claim to it by Bangladesh convinced Bang-
ladeshi leaders of India’s uncompromising attitudes on territorial issues. Another
thorny issue that had generated increased tension in Indo-Bangladeshi relations
was the flow of refugees across the border to India as a result of the tribal insur-
gency in the Chittagong Hill Tracts. Bangladesh blamed India for supporting the
Chakma Shanti Bahini who were fighting the Bangladesh government for
68 Regional dynamics
greater autonomy for the tribal people of the Chittagong Hill Tracts. India, in
turn, blamed Bangladesh for supporting Mizo National Front rebels against
Indian Union. India’s decision to erect a barbed wire along the Indo-Bangladesh
border reflected the lack of goodwill between India and Bangladesh. India’s con-
tinuation of the deployment of its Border Security Force (BSF) along the Indo-
Bangladeshi border to check the migration of Bangladeshi citizens to Indian
eastern territory for economic reasons is seen in Bangladesh as India’s efforts to
exercise undue influence in the domestic affairs of Bangladesh.
The political realities of India and Bangladesh in the post-1990 period have
made the leaders of these two countries less accommodative. Successive weak
governments (defined in terms of narrow political base, coalitional nature of
governments, and weak legislative control) in India since 1990s have con-
tributed to a lack of willingness among the political leaders to take a bolder
policy initiative on these politically sensitive issues. On the other hand, the
existence of weak governments in Bangladesh in the post-1990 period offers
only limited opportunities for the leaders to take any bold or innovative
approach to resolve the bilateral problems with India. Instead, the Bangladeshi
leaders seem to thrive by resorting to combative regional postures and scape-
goating (blaming India for its intransigent attitudes).
Except for India, Bangladesh has no outstanding disputes with any SAARC
country. Bangladesh’s political and economic relations with Pakistan have
improved after a brief disruption from 1971 to 1975. Throughout the 1980s,
Pakistan accounted for almost 60 percent of Bangladesh’s exports to South Asia.
There is still more scope to improve Bangladesh’s exports to Pakistan in such
items as tea, newsprint, jute goods, and leather. In turn, Bangladesh can import,
at a competitive price from Pakistan, such items as textiles, cement, light engin-
eering goods, machinery, and railway rolling stock. The visit of Bangladesh
Prime Minister Khaleda Zia to Pakistan in April 1995 and her cordial and high-
level political talks with Pakistani Prime Minister Benazir Bhutto revived trade
cooperation between the two countries. In a bold move, President Pervez
Musharraf offered a near-apology to Bangladeshis for the 1971 events during his
visit to Bangladesh in 2002, the thirtieth anniversary of Bangaldesh’s separation
from Pakistan (Cohen 2004: 77). During this visit, President Musharraf
expressed his confidence that the bilateral relations between Pakistan and
Bangladesh would improve further given their common religious and cultural
heritage. Trade cooperation between the two countries can be restored soon
because it is relatively easy for the entrepreneurs of both Pakistan and
Bangladesh, who were either involved in interregional trade or had been located
in the two countries prior to 1971, to renew and reestablish their contacts. The
main motivation that drives both Pakistan and Bangladesh to come together is
their shared concern about India.
Bangladesh’s relations with India are shaped by the political and economic
dilemma of a relatively smaller regional state and a strong proclivity to assert
the separateness of its identity to counter India’s sociopolitical and sociocultural
influence. Not surprisingly, Bangladesh has pursued a strategy of “demonstra-
 Regional dynamics 69
tive distancing” from India after 1975. Bangladesh’s assertion of its Islamic
identity, closer links with Pakistan, Middle Eastern states, China, and the United
States, and quest to play an active role in international forums are part of this
strategy. Surrounded by India on three sides and having no common boundary
with other South Asian states (India-locked as Bangladeshi observers like to put
it), Bangladesh’s ability to counter Indian domination is extremely limited.
Thus, the Bangladeshi leaders prefer and insist on multilateral ties with some
hopes of using the collective strength of smaller states to counter Indian hege-
mony. Bangladesh’s initiatives to create a multilateral regional forum, SAARC,
in the late 1970s, as discussed in the next chapter, are based on this logic.
At the economic level, the Bangladeshi leaders know that India has the capa-
bility to meet Bangladesh’s need for manufactured goods, such as steel, chemi-
cals, light engineering goods, capital goods, coal, and limestone. At the same
time, India can increase its imports substantially in such areas as urea, sponge
iron, semi-processed leather, and newsprint from Bangladesh to reduce the
latter’s trade deficit with India. Besides, both India and Bangladesh can agree to
set up joint ventures to improve the latter’s export base and the mutual capacity
of the two countries. But a lack of political will between the leaders of these two
countries has restricted the trade on mutually beneficial items and prevented the
prospect of setting up industries with Indian capital and technology in
Bangladesh. Given the current trend of a limited flow of official development
assistance (ODA) from developed economies to the South Asian countries in the
face of competition from countries in Eastern Europe and the Central Asian
republics, Bangladesh’s limited structural abilities, and the hesitation of the
World Bank and the International Monetary Fund to provide continuously con-
cessional loans, Bangladesh’s need to improve economic cooperation with India
and other countries in South Asia has increased in recent years. Of late, India
has shown considerable interest in expanding economic cooperation with
Bangladesh. But given the Bangladeshi leaders’ apprehensions and political sen-
sitivity to continuing dependence on and potential domination by India, closer
economic cooperation with India appears to be more feasible under the cover of
multilateral arrangements, such as SAARC programs, rather than bilateral
arrangements with India.

Nepal
The relations between Nepal and India have been determined by geography,
history, and culture. Geographically, Nepal is landlocked between India and
China. Both India and Nepal share the Gangetic plain, and there are no natural
frontiers between the two countries. Nepal covers nearly 500 miles of India’s
northern border, and three Indian states – Uttar Pradesh, Bihar, and West Bengal
– are located on the west, south, and east side of Nepal. Nepal shares nearly a
1,000-mile border with Tibet to its north, which is critical to India’s security
interest vis-à-vis China. Therefore, India has always sought to maintain a close
strategic relationship with Nepal.
70 Regional dynamics
Nepal has close ethnic and cultural links with India. About 90 percent of
Nepal’s population are Hindus, and the Hindu caste system is widely prevalent
there. There are over a million Indian settlers in the fertile Terai region of Nepal.
Over five million Nepalese live and work in India and over a 100,000 seasonal
workers come to India every year. Although Nepali is the official language of
Nepal, Hindi is widely used in the country. There is no visa restrictions for
travel between Nepal and India. India remains the preferred vacation destination
for many rich and upper-class Nepalis who also send their children to school in
India. Not surprisingly, majority of Nepal’s elites maintain close political, eco-
nomic, and cultural links with India.
Given Nepal’s geographical proximity, cultural affinity, and strategic import-
ance for India’s security, India has sought to maintain a special relationship with
Nepal since independence. However, India’s overwhelming influence in the
political and economic life of Nepal has produced tensions in their bilateral rela-
tions. Five major issues can be identified in the bilateral relations between India
and Nepal. First, given the critical significance of Nepal as a buffer state, British
India signed a defense treaty with Nepal in 1923. Three years after independence
from Britain, India signed a Treaty of Peace and Friendship with Nepal in 1950,
essentially reiterating the security provisions of 1923 treaty (Muni 1998: 143).
The 1950 Treaty of Peace and Friendship obligated the governments of Nepal
and India to consult with each other in devising effective countermeasures to
meet a security threat to either of the countries emerging out of foreign aggres-
sion. The treaty also stipulated that the two governments must inform each other
of any serious friction or misunderstanding with any neighbouring country that
may be likely to adversely affect the friendly ties between India and Nepal
(Baral 1986: 104). The Nepalese ruling elites under the monarchical regime
have long resented this provision of the treaty because it essentially restricted
the autonomy of Nepal in conducting its foreign policy and provided scope for
Indian domination. It is not surprising that Nepal occasionally attempted to use
the China card to move away from the Indian sphere of influence. The most
serious Indo-Nepalese dispute occurred when Nepal allowed China to build the
Lhasa–Kathmandu road after the Sino-Indian conflict in 1962 (Rose 1971: 137).
India considered this move as Nepal’s acquiescence to China’s overall military
strategy in South Asia which was a serious threat to India’s security interest.
Consequently, throughout the 1960s and the 1970s, Indo-Nepal relations
remained at a low ebb.
The second major issue in Indo-Nepalese relations is related to the declara-
tion of Nepal as a zone of peace and India’s reluctance to endorse this proposal.
India’s annexation of the autonomous state of Sikkim into India in 1975 led to a
growing apprehension among Nepal’s ruling elites about a similar Indian design
for Nepal. Consequently, Nepal sought to distance itself from India in defense
and security matters by developing closer relationship with China and demand-
ing a status of zone of peace for the country.
Third, both India and Nepal accuse each other of exploiting the open Indo-
Nepal border. Nepal argues that the open border has encouraged Indian migra-
 Regional dynamics 71
tion into Nepal and the smuggling of Indian goods to the detriment of Nepal’s
economy. The Gurung Commission report of 1983 found that of the total immi-
grants in Nepal’s Terai region, more than 97 percent came from India. The
report alleged that the total control of Terai’s commercial and industrial sectors
by the Indian immigrants and their indulgence in capital flight and tax evasion
adversely affected Nepal’s economy. Accordingly, the report suggested that
Indian and other foreigners should not be allowed to work in Nepal without
work permits (1983: 17). Nepal’s accusation of Indian demographic invasion
drew strong condemnation from New Delhi. According to Indian officials,
Nepal’s accusations seemed baseless as more than five million Nepalese live and
work and over a 100,000 seasonal workers come to India every year (Rizvi
1986: 143). In addition, substantial number of Gurkha armed personnel are
employed in the Indian army. Although there has been significant improvement
in the Indo-Nepal relations in the post-1990 period (Prasad 1989: 38–41), the
migration issue remains one of the major irritants and need immediate attention
to further improve the two countries’ bilateral relations.
The fourth major issue in Indo-Nepali relations is Nepal’s limited economic
autonomy and a total economic dependence on India. With one of the world’s
lowest per capita income and gross domestic product (GDP) growth over the
past decades, Nepal desperately needs economic development. Nepal has no
strong industrial sector, and its export base is quite narrow. The country is criti-
cally dependent on India for foreign assistance and its imports, including oil,
petroleum, cement, and coal. Nepal’s India-centric economy has occasionally
produced tension in the Indo-Nepal bilateral relationship. One of the major irri-
tants in Indo-Nepali relations relates to the trade and transit treaties between
both countries. These two treaties were concluded in 1978, providing Nepal with
favorable trade terms and transit rights. But, in 1989, Rajiv Gandhi administra-
tion refused to renew these two treaties and, instead, imposed a trade embargo
on Nepal and closed 13 of 15 transit routes into the landlocked kingdom (Taras
2006: 64). The main reason for India’s action was Nepal’s decision to purchase
anti-aircraft and armored personnel carrier from China without prior consulta-
tion with India in violation of the 1950 Treaty. Some Indian sources claimed that
Nepal’s arms agreement with China also included surface-to-air missiles and an
alleged secret intelligence sharing agreement between Nepal and China (Rose
1990: 53), leading to a serious security threat to India. Although Nepal’s govern-
ment retaliated by ending duty-free privileges for goods coming from India, the
trade embargo exposed the limited nature of Nepal’s economic autonomy and
caused enormous economic difficulties in Nepal, increasing Nepali govern-
ment’s bitterness toward India’s “bullying” behavior. Some analysts observe
that worsening economic conditions following India’s economic blockade led to
political turbulence and ultimately to a change in Nepal’s political system
(Ahmed 2004: 11). The Indo-Nepali relations, however, improved substantially
following three significant developments in the 1990s: the establishment of
democratic regime in Nepal; India’s economic liberalization; and India’s enunci-
ation of “Gujral Doctrine” named after the former Prime Minister I.K. Gujral
72 Regional dynamics
(1996–97), making what is often referred to in New Delhi’s policy circles as
“non-arithmetical reciprocity” or non-expectation of reciprocity as a basis for
improving India’s bilateral relations with her small neighbors.
The fifth major issue that influences Indo-Nepali relations is related to the
political system of Nepal. While a multiparty, representative government in
Nepal has sought to maintain balance between its two giant neighbours, India
and China, and has shown more preference to pursue accommodative diplomacy
with New Delhi, a monarchical regime had been perceived as more pro-Beijing.
From 1962 to 1990, Nepal was run under a system of governance known as pan-
chayat democracy. The panchayat (national assembly), which consisted of high
caste and high-class political elites chosen by the king and thus obeyed the will
of the king, largely played an advisory role. Popular resentment against decades
of this undemocratic political system under the absolute monarchical rule of
King Birendra, on the throne since 1972, led to a democratic revolution in Nepal
in 1990. This revolution produced a more pro-Indian coalition government led
by Nepal’s Congress Party leader, Girija Prasad Koirala, who had long associ-
ation with India. But soon, Prime Minister Koirala found himself unable to
manage the complexities of democratic governance. His inability to manage
intra-party infightings and to forge successful coalitions with other political
parties led to the collapse of his government and a new election in 1994. Since
1994, Nepal had 12 governments, with each government lasting for only few
months (Adams 2005: 125). Political instability and uncontrollable political cor-
ruption led to widespread disappointment and disillusionment among common
people in Nepal, providing a conducive environment for the Maoist rebel groups
to start a civil war in 1996. The violent Maoist insurgency has proven to be
costly for Nepal in terms of the loss of human lives and political and economic
instability.
Nepali political leaders focus on the transnational links between the country’s
Maoist rebel groups and India’s Naxalites in six states – West Bengal, Bihar,
Uttar Pradesh, Andhra Pradesh, Orissa, and Chattisgarh. Given these links and
the frequent visits of Maoist leaders to India for material help, it is widely
believed that India has the leverage to shape the outcome of this conflict. India,
on the other hand, seems to be concerned with the links between Nepali Maoist
groups, violent Naxalites movements, and secessionist movements in India’s
restless northeast region. It is this security threat posed by the transnational
Maoist movement that has prompted both Nepal and India to start a pilot
program that requires more rigorous documentation checking along a popular
Nepal–India border crossing point (at Nepalguni) in 2005. It also has led to an
Indian plan to increase its border troops to 40,000 along the Nepal and Bhutan
frontiers by 2007 (Taras 2006: 66). While political leaders in both countries
seem to understand the rationale for such Indian actions, these actions have led
to an increasing uneasiness among Nepali population. Public denial notwith-
standing, political leaders in both New Delhi and Kathmandu agree that a long-
term solution to Nepal’s Maoist movement requires the representation and
participation of Maoist groups in the country’s governance process.
 Regional dynamics 73
Indo-Nepali relations suffered a major setback following the palace massacre
of June 2001. King Gyanendra, who was anointed as the next monarch because
he was the nearest surviving male kin, ended Nepal’s decade-long experiment
with democracy in October 2002 by sacking the prime minister, assuming exec-
utive authority himself and postponing elections indefinitely. King Gyanendra
maintained the pretense of democracy until February 2005, when, working hand
in hand with the army, he staged a military coup and seized all political powers.
While China, Pakistan, and Russia viewed the king’s power grab as a purely
domestic issue, India, along with Britain and the United States, reacted nega-
tively and suspended military supplies. India’s suspension of military aid in
response to the king’s coup was a significant move for two reasons: first, India is
Nepal’s main military weapon supplier; second, although a thriving democracy,
India has never made democracy an integral part of its diplomacy. By linking
military aid with restoration of democracy in Nepal, India for the first time
departed from its long-held diplomatic principle of non-interference in internal
affairs of a country. The Indian government also refused to attend the annual
SAARC meeting in 2005 in order not to meet the king and ligitimise his coup.
Pakistan made a public offer to replace any economic and military aid sus-
pended by India (Adams 2005: 129). But, Nepal refused to accept it for the fear
of offending India. Under sustained pressure from India and other Western
powers, and months of popular protest in Nepal, the king finally relented and
gave in to popular demands by inviting political parties to form a democratic
government in 2006.
The Indo-Nepali relations reflect a typical South Asian structural dilemma.
As the major regional player, India can intervene more substantially in Nepal’s
domestic politics. However, any overt intervention in Nepal would be a strategic
mistake for India. Because such a move would almost certainly bring China’s
opposition and involvement, leading to regional instability. At the same time,
lack of Indian initiatives and involvement in Nepal has its own risks. Nepal’s
social and economic development could be undermined by continued political
violence and instability, providing further fuel for insurgencies. Indian strate-
gists worry that a weak, unstable, and “failing” Nepal might provide China with
opportunity to directly interfere in South Asia. Thus, from New Delhi’s
perspective, a balanced (and not too blatant) intervention remains a necessary
course of action to maintain Nepal’s political and economic stability. From
Nepal’s perspective, while friendship with India is her strategy for survival,
good relationship with South Asian neighbors and other external powers is
necessary to balance Indian influence.

Sri Lanka
While other countries in South Asia have contiguous neighbours besides India,
Sri Lanka has only India as its neighbor to the north, and on all other sides, there
is the Indian Ocean. Sri Lanka is separated from the southern Indian state of
Tamil Nadu by a mere 20 miles of the Palk Strait. Such a geographic reality,
74 Regional dynamics
coupled with India’s overwhelmingly superior size, population, natural
resources, military, economic, and technological power, generates a great deal of
anxiety in Sri Lanka. While Sri Lanka recognizes India’s dominant power, it
does not want to be overshadowed by India’s domination. Not surprisingly,
since its independence in 1948, Sri Lanka has always been keen to maintain its
distance from India. Sri Lanka was the first South Asian state to sign a defense
agreement with an external power, Britain, and in the 1950s, 1960s, and 1970s,
it sought membership and active role in such international or regional organi-
zations as the United Nations, the Colombo Plan, the Non-Aligned Movement
(NAM), and ASEAN. Sri Lanka’s interest was shaped by the thinking that mem-
bership in a regional or international organization would provide some scope for
developing a collectivity of small states anxious about larger neighbours.
The Indo-Sri Lankan bilateral relationship is also shaped by a persistent con-
flict between the two main ethnic groups of Sri Lanka – the Sinhalese-speaking
Buddhists who constitute over 70 percent of the population and the Tamil
minority who constitute about 20 percent of the island’s population and are
mainly Hindus. The Tamils were originally brought to Ceylon from southern
India by the British in the mid-nineteenth century to work for the tea and rubber
estates. After independence in 1948, Sri Lanka passed a series of citizenship
laws which discriminated against the Tamils. According to the two Citizenship
Acts in 1948 and 1949, various ethnic groups in Sri Lanka (Sinhalese, Sri
Lankan Tamils, Moors, and Burghers) were considered natural citizens by
descent. But Indian Tamils were required to prove a two-generation ancestry in
Sri Lanka to be granted citizenship status. According to one estimate, only 12
percent of 825,000 Tamil applicants became eligible for citizenship on the basis
of two-generation ancestry criteria (Kanesalingam 1991b: 182). To deal with the
remaining people, Sri Lanka’s government created a “stateless” category of
Indian Tamils and sought to have India “repatriate” them. After several negotia-
tions, an agreement was reached between Sri Lankan President Sirimavo Ban-
daranaike and Indian Prime Minister Lal Bahadur Shastri in 1964, which
stipulated that India would grant Indian citizenship to 600,000 stateless Tamils
and repatriate them, while Sri Lanka would grant Sri Lankan citizenship to
375,000 such persons. Until the 1980s, stateless Indian Tamils did not receive
full Sri Lankan citizenship (Kanesalingam 1991b: 183). Frustrated with this
long-drawn process, some of the Indian Tamils started migrating to the northern
and eastern province of Sri Lanka, where Tamil militancy was growing.
A series of anti-government riots by Tamil militants in the Jaffna peninsula in
the 1980s and the subsequent crackdown by Sinhala-dominated government
forces intensified ethnic crisis. In 1983, anti-Tamil riots by Sinahalese zealots in
Colombo with the help of some members of government killed hundreds of
Tamils and burned hundreds of Tamil business and homes. Unable to get urgent
protection from the government, thousands of Tamil families fled to Tamil Nadu
in India (Kanesalingam 1991b: 180–183). These events not only provoked angry
protests from Tamil Nadu politicians, but also radicalized many Sri Lankan
Tamils who were neutral until this point, believing that a negotiated compromise
 Regional dynamics 75
solution was still possible. Under the pressure of Tamil politicians in Chennai
(formerly Madras), New Delhi decided to provide humanitarian and military
assistance and training to Tamil militants in Sri Lanka.
With the memory of Indian interventions in East Pakistan and the consequent
breakup of Pakistan in 1971 not so distant, Sri Lankan leaders acted quickly to
engage India in becoming a part of the solution. Unable to defeat the Jaffna
militants or to concede to the independence demands of the Tamil Tigers, organ-
ized under Liberation Tigers of Tamil Eelam (LTTE) with Velupillai Prabakha-
ran as its leader, President Jayewardene signed a Peace Accord with Indian
Prime Minister Rajiv Gandhi in late June 1987. According to this Accord, India
agreed to deploy an Indian Peace Keeping Force (IPKF) at President Jayewar-
dene’s invitation to maintain peace and stability in the Jaffna peninsula. By
signing this bilateral Peace Accord, Sri Lanka acknowledged India’s geostrate-
gic security concerns and accepted India’s role as the region’s dominant power.
The approval of the treaty by both the United States and the Soviet Union was a
tacit recognition of India as South Asia’s preeminent power.
The Indian military engagement in Sri Lanka’s civil war proved to be largely
unsuccessful. Instead of laying down their arms, the Tamil militants fought
guerrilla warfare against the IPKF, causing loss of lives of about 1,000 Indian
soldiers between 1987 and 1989 (Rao 1988: 19–37). In addition, the Tamil
Tigers carried out a series of assassinations of Indian political and military
figures. There were also some evidence of support provided by the Tamil Tigers
to the separatist groups in Kashmir and northeastern region in India (Cohen
2001: 240). After three years of bitter and unsuccessful war with the Tamil
militants in Sri Lanka, India finally pulled out its troops. India’s failure in Sri
Lanka raised serious questions about New Delhi’s military ability to manage
regional conflicts. But, given the close emotional ties between Tamils in both
sides of the Palk Strait, a pure military solution leading to Sri Lanka’s disinteg-
ration is not in the interest of India.
Not surprisingly, in order to deal with the ethnic crisis in Sri Lanka, India
supports a policy of maximum devolution within a sovereign and territorially
integral Sri Lanka. Several Indian concerns have shaped this policy. First, Sri
Lanka’s division along the ethnic lines would have a spillover effect on the
violent separatist movements in India’s northeastern states. Second, the emer-
gence of a separate Tamil state in Sri Lanka might revive Tamil nationalism in
India and the demand for a greater Tamil-speaking state, in a Tamil version of
the “two-nation” theory. Third, Sri Lanka’s disintegration would be a challenge
for India’s claim as a regional power capable of maintaining regional stability.
Thus, India is engaged in a delicate balancing act: it provides training to Sri
Lankan army but refuses to sign a defense treaty with Colombo to avoid any
perception of supplying lethal weapons to Sri Lankan troops that can be used
against Tamil fighters. Making a departure from its earlier stance, India has also
quietly allowed other powers like the United States, United Kingdom, Canada,
Australia, and most recently European Union in May 2006 to assist Sri Lanka.
However, it is unlikely that India would tolerate any direct foreign intervention
76 Regional dynamics
in Sri Lanka. At the same time, India cannot allow further deterioration of the
situation. This dilemma has led to New Delhi’s decision to add LTTE to its list
of banned terrorist groups so as to intensify diplomatic isolation and cut off
external sources of funding to put pressure on LTTE for a negotiated settlement.
To what extent these policies will succeed remains uncertain. But given the
magnitude of this crisis, assisting Sri Lanka to find a political solution to the
ethnic problem in a reasonable time period is in India’s own long-term interest.

External influence and regional balancing

In South Asia’s regional system, the structural imbalance between India and
Pakistan and other smaller states has created contrasting policy objectives.
Given their relatively small size, population, economic underdevelopment, and
geographical location, the smaller states in South Asia cannot hope to exert
much influence in the South Asian regional system. At the same time, these
states do not want to be overshadowed by India. In order to limit India’s pre-
dominance inherent in bilateral relationship between large and small states, the
smaller South Asian states have shown preference for multilateral diplomacy
and actively sought to engage external powers in their bilateral disputes with
India. On the other hand, India’s policy objectives since independence reflect
her grand strategy based on both regional and global ambition. Explaining
India’s grand strategy, C. Raja Mohan (2006: 19) aptly observes:

India’s grand strategy divides the world into three concentric circles. In the
first, which encompasses the immediate neighborhood, India has sought
primacy and a veto over the actions of outside powers. In the second, which
encompasses the so-called extended neighborhood stretching across Asia
and the Indian Ocean littoral, India has sought to balance the influence of
other powers and prevent them from undercutting its interests. In the third,
which includes the entire global stage, India has tried to take its place as one
of the great powers, a key player in international peace and security.

While India’s policy objectives in the second and third concentric circles –
that is at the extended regional level and global level – are yet to be fulfilled, her
policy objectives at the regional level have met with some success. Given her
preeminent regional position, Indian policymakers have sought to advocate a
policy of autonomy at the regional level. Regional autonomy, as articulated by
New Delhi, requires the whole of South Asia be free of outside influence. Thus,
India has always opposed outside intervention in South Asian affairs. This
policy appears to be successful in the case of Nepal and Bhutan. India exerts
significant control over Nepal and Bhutan because these two countries depend
on India for all their import and export needs as well as their access to the
outside world. The same, however, cannot be said in the case of Pakistan, Sri
Lanka, and Bangladesh.
Of all the South Asian countries, Pakistan’s economic, security, and ideo-
 Regional dynamics 77
logical challenge to India’s predominance in South Asia has remained the most
substantial. The security dilemma, as discussed earlier, remains one of the major
driving forces for an unhealthy arms race, including nuclear weapon develop-
ment between India and Pakistan, making regional cooperation a prime casualty
(Carranza 1998: 111). It is true that rivalries between India and Pakistan and
their domestic politics are the fundamental reasons for the lack of growth of
accommodative policies between India and Pakistan. At the same time, the role
of external diplomatic, economic, and security assistance in enhancing a
country’s comparative capability and, in turn, helping sustain its rivalry with the
neighbor cannot be undermined. External helps to Pakistan from China, Gulf
states, and the United States from mid-1950s to 1965, 1980s–90s, and again
from 2001 onward have contributed to Pakistan’s resistance to India’s claim of
natural domination and a hierarchical regional order in South Asia. Similarly,
external support of Soviet Union made India less willing to accommodate Pak-
istan’s claims during the Cold War period. Whether the end of the Cold War,
shifting US support to India in the 1990s, and improving Sino-Indian relations
since the late 1990s would help India and Pakistan to be more accommodating
or would only intensify their rivalry remains to be seen.
India’s ability to exert too much control over Bangladesh and Sri Lanka is
limited by three factors. First, although India has provided considerable aid and
assistance to her smaller neighbors because of her relatively more developed
economy, she is not fully capable of meeting with all their development needs.
Hence, the smaller states have sought external aid and assistance, limiting
India’s influence over them. Second, the Indo-Pakistan rivalry, Sino-Indian
rivalry, and China’s ready willingness to support the independent status of the
smaller South Asian states have provided these states with an opportunity to
demand larger political and economic concessions from India, which, given their
size and economic vulnerability, would not have been otherwise possible.
Finally, most South Asian countries perceive their main security threat to be
India. Accordingly, South Asian states have actively sought military, economic,
and diplomatic assistance from external powers to offset India’s influence. In
such an environment, regional accommodation policies have become increas-
ingly difficult.
Two other issues are worth noting to explain the dynamics of South Asian
regionalism. First, South Asian countries do not share a common external threat
perception, which makes it difficult for the leaders of these countries to work
toward common regional security strategies. While the South Asian states per-
ceive their main security threat from India, New Delhi perceives an external
threat from cross-border terrorism and Pakistan’s military challenge with the
support of external powers. The narrow political base of South Asian ruling
elites provides few opportunities for them to ignore this perceived regional
security threat. Consequently, blaming the neighbor (scapegoating) has become
a preferred policy for South Asian ruling elites, making growth of regional
cooperation an extremely slow process. Second, South Asian states also worry
that any regional trade arrangements will favor India, and Indian goods will
78 Regional dynamics
dominate the regional market. This concern explains why Pakistan remains
opposed to any Indian initiative for trade liberalization in South Asia. In nut-
shell, India’s hegemony, the lack of trust among South Asian states, and Pak-
istan’s continuing challenge to India’s domination in South Asia have
contributed to the slow growth of regional cooperative arrangements under the
rubric of SAARC. Has the prospects of SAARC in terms of institutional devel-
opment, new initiatives, and program implementation improved after the first
decade of its existence? This is examined in Chapter 4.
4 Origin and evolution of SAARC

Although the idea of SARC was discussed by South Asian leaders from time to
time in the post-independence period, the concrete initiatives for establishing a
comprehensive regional organization in South Asia came only in the late 1970s.
After examining the earlier attempts for regional cooperation by South Asian
leaders, this chapter explores the important domestic, regional, and external
factors that led President Ziaur Rahman of Bangladesh to take some concrete
steps for regional cooperation in South Asia in 1977. Examining the dynamics
of domestic politics and the interrelationship between domestic and regional
politics, this chapter explains why smaller states in South Asia – Bangladesh,
Nepal, and Sri Lanka – were more enthusiastic for regional cooperation and why
India and Pakistan were initially reluctant to join the regional grouping. It exam-
ines the domestic and external factors that led to changes in India’s and Pak-
istan’s decision in favor of joining the regional association. This chapter then
provides an overview and evaluation of SAARC’s record in terms of institu-
tional developments and program implementation.

Early regional cooperation efforts in South Asia

The idea of a South Asian regional forum can be traced to April 1947, when
the non-official Indian Council of World Affairs convened the Asian Relations
Conference in New Delhi. Attended by delegates from 25 Asian countries and
presided by Indian Prime Minister Jawaharlal Nehru, the Asian Relations
Conference, which was held from March 23 to April 2, 1947, devoted much
time to the question of Asian unity, economic development of the newly
independent post-colonial states in Asia, and the need for greater regional
cooperation (Gupta 1964: 34). However, the two Asian giants, India and
China, made their differences open on two issues at this conference. First, both
India and China were in contention about their respective desires to assume
the leadership role in Asia. Second, the Chinese objected to a map which
showed Tibet as a separate state (Gupta 1964: 36; Ganguly 1993: 274). The
conference ended without any concrete proposals for regional cooperation.
The next meeting, scheduled for China in 1949, did not take place because of
the civil war and the Chinese Revolution. After ten years of inconsequential
80 Origin and evolution of SAARC
existence, the Asian Relations Organization was quietly dissolved in 1957
(Haas 1989a: 276).
An important official initiative for Asian cooperation was taken by India,
when Prime Minister Nehru invited concerned Asian governments to participate
in a conference on Indonesian situation following the Dutch invasion of Indone-
sia on December 18, 1948. This conference on Indonesia, held in New Delhi on
January 20, 1949, was attended by 18 Asian countries. Among the three resolu-
tions adopted at the Indonesia conference, the first two resolutions condemned
the Dutch invasion on Indonesia and urged the UN to take effective action
against the Dutch action. The final resolution called for establishing an institu-
tional base for cooperation among Asian countries (Gupta 1964: 40). Based on
this third resolution, the Indian Council of World Affairs at New Delhi, which
organized the Asian Relations Conference in April 1947, published an article
describing the informal structure of an Asian Union or the Organization of Asian
States. The article further argued that the structure of the proposed Organization
of the Asian States should be less formal than the Organization of American
States (Gupta 1964: 32). However, the Indian urgency for regional integration in
the Asian region eroded in 1949–50 with the establishment of Communist
regime in China and the onset of two blocs Cold War politics in Asia. Prime
Minister Nehru realized that the commitment for an Asian regional grouping had
weakened among the Asian countries as the urgent task for all the countries in
Asia was now to devise a policy toward the Cold War and to face the rise of
communism in Asia. Consequently, Nehru became more interested in develop-
ing a Third World NAM rather than focusing on regional integration initiatives
in Asia.
With Indian lack of enthusiasm for a regional grouping, the Philippines took
the initiative next in convening a conference of Asian countries to discuss the
prospects of regional cooperation in Asia. At the invitation of the Philippines
government, India, Pakistan, Australia, Indonesia, Thailand, and Ceylon
attended the Baguio Conference of May 1950, held in the Philippines, to carry
out discussion about the possibilities of regional cooperation. Although this con-
ference exhorted its members to promote greater cultural cooperation, in sub-
stantive terms the conference achieved little (Gupta 1964: 47). The Cold War
division was very much evident in this conference. While Australia and the
Philippines were distinctly pro-West and anti-Communist, India, Pakistan,
Indonesia, Thailand, and Ceylon were neutral to varying degrees.
With the intensification of the Cold War tensions, the idea of regional cooper-
ation in Asia underwent a shift at this point. Instead of exploring the possibilities
of regional cooperation, the focus now turned to the possibilities of keeping Asia
free from superpower competition. Jawaharlal Nehru played a major role in
stressing this idea. His main concern was that involvement with the superpower
conflicts would not only lead to the militarization of Asian societies, thereby
jeopardizing the prospect of peace in Asia, but also would divert the leaders’
attention from the urgent task of economic development. Nehru’s ideas, though
detested by the superpowers, found favor with some Asian leaders.
 Origin and evolution of SAARC 81
Influenced by Nehru’s ideas, the Prime Minister of Ceylon, John Kotelawala,
invited the leaders from Asia to Colombo in April 1954 to exchange views and
discuss problems of common interest. This conference, known subsequently as
the Colombo Powers Conference, was attended by Burma, Ceylon, India,
Indonesia, and Pakistan. The leaders at this conference discussed such diverse
issues as events in Indochina, atomic bomb tests, representation of China in the
United Nations, problems of Tunisia and Morocco, difficulties of Arab refugees
in Palestine, and considered proposals relating to economic cooperation and
mutual aid (Haas 1989a: 276). The bilateral differences, particularly Pakistan’s
efforts to bring up the unresolved question of Kashmir, and divergent views
about the Cold War limited the scope of discussion regarding regional coopera-
tion in this conference (Ganguly 1993: 276). The conference participants,
however, agreed to convene a meeting of African–Asian nations to explore areas
for cooperation among these countries. After the first Afro-Asian conference
convened in Bandung in April 1955, the Colombo Powers never met again,
believing perhaps that the task of building Third World solidarity was on its way
(Haas 1989a: 276).
Although the Bandung conference of 1955 discussed the idea of regional
cooperation in the area of energy among South Asian countries, no machinery or
institutional means for achieving such cooperation were specified (Salahuddin
1985: 16). The leaders’ divergent perception about the world politics and acute
shortage of funds to implement any cooperative venture may have contributed to
the lack of agreement on specific proposals. Despite the lack of progress of the
Bandung conference in the area of regional cooperation, the conference provided
the basis for a larger Third World movement, known as the NAM, and enumer-
ated a long agenda of cooperative ventures between African and Asian
countries.
After 1955, the idea of a South Asian regional forum was discussed inform-
ally from time to time among the leaders of South Asian countries mostly at the
international forums like the United Nations and NAM. In September 1961, a
conference of Asian Economic Planners was held in New Delhi, which was
sponsored by the UN Economic Commission for Asia and the Far East
(ECAFE), to discuss the prospects of regional cooperation in Asia and among
South Asian countries. The conference was successful in establishing an Asian
Institute of Economic Development and a Regional Advisory group on Eco-
nomic Development and Planning in Asia. But the discussion on regional coop-
eration in South Asia did not produce any positive result because of India’s lack
of enthusiasm and, more importantly, lack of endorsement to the idea of South
Asian economic integration by the representatives of Ceylon and Pakistan
(Gupta 1964: 83). The opposition of Ceylon and Pakistan to the idea of a
South Asian economic integration was based on their fear of India’s economic
domination.
It is reasonable to argue that despite some earlier initiatives, South Asia
remained relatively unaffected by the “old regionalism” of 1950s and 1960s,
when Western European countries made some exciting advances toward
82 Origin and evolution of SAARC
regional integration (Palmer 1991: 75). Nehru’s focus on internationalism, Indo-
Pakistan conflicts, mutually antagonistic alliances of the two principal South
Asian states – Pakistan with the United States and India with the Soviet Union –
Sino-Indian conflict, India fear, and mutual distrust among South Asian coun-
tries seemed to have prevented South Asian leaders from taking any concrete
initiatives toward regional cooperation. Although the Bangladesh war of 1971
brought further urgency to the idea, countries of the region waited until the early
1980s to embrace regionalism (Haas 1989a: 276).

The Bangladesh initiative

In his letter to the Heads of State or Government of seven South Asian countries
on May 2, 1980, President Ziaur Rahman of Bangladesh made the first concrete
proposal for establishing a framework for regional cooperation in South Asia
(Huq 1986: xxiii). However, the Bangladesh President seemed to have been
working on the idea of an ASEAN-like organization in South Asia for at least
three years before giving it a concrete shape and presenting it to the South Asian
leaders in 1980.1 During his visit to India in December 1977, President Ziaur
Rahman discussed the issue of regional cooperation with the new Indian Prime
Minister Morarji Desai (Muni and Muni 1984: 30). During the same period, in
his inaugural speech to the Colombo Plan Consultative Committee, which met in
Kathmandu in December 1977, King Birendra of Nepal gave a call for close
regional cooperation among the South Asian countries in sharing river waters.
The King’s call was welcomed by President Ziaur Rahman during the former’s
visit to Bangladesh in January 1978 (Muni and Muni 1984: 31). President Ziaur
Rahman had also informally discussed the idea of regional cooperation with the
leaders of South Asian countries during the Commonwealth Summit in Lusaka
(1979) and the Non-Aligned Summit in Havana (1979) (Huq 1986: 67). Finally,
the Bangladesh President seemed to have given a concrete shape to the proposal
after his visit to Sri Lanka and discussion with the Sri Lankan President J.R.
Jayawardene in November 1979 (Muni and Muni 1984: 31). Why did the
President of Bangladesh seek regional cooperation in South Asia? What factors
shaped his preference for regional cooperation that involved coordinating pol-
icies with the neighbors? The following section examines the domestic, regional,
and international factors during 1975–79 that shaped President Ziaur Rahman’s
choice for seeking to establish a regional organization in South Asia.2

Domestic factors
As outlined in Chapter 2, the main motivations that shape political actor’s pref-
erences toward regional cooperation are power-retaining objectives, externali-
ties, intraregional and extraregional security considerations, and lock-in
dynamics. To what extent these motivations influenced the Bangladesh Presid-
ent’s initiatives for establishing a regional organization in South Asia? General
Ziaur Rahman came to power in a military coup in 1975 after overthrowing the
 Origin and evolution of SAARC 83
popular civilian regime of Sheikh Mujibur Rahman, who was supported by India
during both the freedom struggle and post-independence era of Bangladesh.
General Ziaur Rahman’s top most priority was to retain his power that required
legitimacy for his military regime through domestic and external support.
Domestically, he understood that for a young Bangladeshi state, the most press-
ing needs were economic growth, employment, and political stability. Exter-
nally, his most immediate concern was to improve the bilateral relations with
India so as to insure India’s economic and security support for his regime.
India’s support was necessary not only for the legitimacy of his coup d’etat
regime, but also for domestic political problems and economic growth. At the
same time, given the Bangladeshi sensitivity to India’s economic and security
domination, the President believed that Bangladesh’s bilateral problems with
India could be better addressed in a regional forum than through bilateral
approach.
President Ziaur Rahman’s interest in regional cooperation was also fueled by
the need to deal with externalities or spillover effect of India’s policies on the
economy and security of Bangladesh. The President knew that his overthrow of
the democratically elected and India supported Mujib regime was a major
setback to Indian foreign policy. It was a matter of deep concern for him that
Indira Gandhi-led Congress administration during this time had come to believe
that the new military regime in Bangladesh might seek external assistance more
to legitimize its rule.3 He was aware that such a move of the new regime in
Bangladesh would not be congruent with India’s strategic security thinking in
the region and would, therefore, intensify India’s opposition to his rule. He
firmly believed that improved communication, regular consultations, and closer
personal connections were necessary to allay Indian misgivings about the inten-
tions of the new military regime and generate trust among the Indian leaders.
The establishment of a regional organization, President Ziaur Rahman con-
cluded, would help accomplish this objective.
Given Bangladesh’s “India-locked” geography and the fact that both India
and Bangladesh share water and land resources, Bangladesh has to deal with
negative externalities of India’s policies on a regular basis. President Ziaur
Rahman and his key advisors shared the belief that regional cooperation involv-
ing India and Nepal would be beneficial for Bangladesh on a number of issues
facing the country – such as natural disasters, irrigation, fishing, hydroelectricity
generation, water sharing, and energy issues. In his calculation, the domestic
political and economic benefits from regional cooperation outweighed the costs
– that is the outcome of non-cooperation was seen as worse than the outcome of
cooperation. His new regime concluded that in the wake of non-regional cooper-
ation, the domestic economy and security would be worse off, adversely affect-
ing the new leader’s power-retaining objectives. Thus, initiatives for regional
cooperation were seen as a “smart policy” for a military regime in search of
political legitimacy and longevity in power.4
Finally, some analysts observed that one of the reasons why President
Ziaur Rahman was so enthusiastic and took so many initiatives for regional
84 Origin and evolution of SAARC
cooperation in South Asia was that he wanted to transform his image from a mil-
itary dictator of a least-developed country to that of a powerful Third World
leader, claiming a place in history with Gandhi, Nehru, Jinnah, and Sukarno. By
becoming a leader of a regional cooperation movement in South Asia, he hoped
to bring prestige and an historical legacy of great regional leadership to his rule
(Khan 1991: 34–35).

Regional factors
India’s annexation of Sikkim as a full-fledged state in 1975 became a source of
fear for the small neighboring countries. This demonstration of muscular diplo-
macy by India created negative externalities for smaller neighbors in the issue
area of security policy, generating greater need for urgent security cooperation
with India. President Ziaur Rahman’s initiative for a regional cooperation
scheme, as some analysts observe (Datta Ray, 1992), was based on this need of
Bangladesh for security cooperation with an unstated objective of neutralizing
India’s potential expansionism. The logic of regionalist entrapment – that is cre-
ating regional institutions to contain the hegemonic power of dominant India in
the South Asian region – provided a strong basis for Bangladesh initiative for a
South Asian regional organization.
In 1977, most of the countries in South Asia witnessed changes in their
political regimes. Morarji Desai of the Janata Party became the new prime minis-
ter of India after defeating Mrs Indira Gandhi and her Congress Party in the elec-
tion of 1977. In Pakistan, General Ziaul Haq captured power from the civilian
regime of President Bhutto through a military coup in 1977. In Sri Lanka, Mrs
Bandarnaike’s government was replaced by the United National Party (UNP), led
by J.R. Jayawardene, in the same year. After a series of coups and countercoups
that followed the violent overthrow of the Mujib government in August 1975,
Ziaur Rahman finally established himself as the president of Bangladesh in 1977.
All these new leaders displayed a distinctive style of accommodative leadership
and put first priority on improving relations with the neighboring countries.
Moreover, the new regimes, which came to power in South Asian countries after
a prolonged power struggle, had not yet consolidated their positions in relation to
their powerful domestic opponents. They, therefore, as Muni and Muni (1984:
22) have observed, “needed each other’s help, support and understanding in
securing their respective internal legitimacy and credibility.”
During the second half of the 1970s, almost all the countries in South Asia
were suffering from an acute balance of payment crisis, which was further
aggravated by the second oil crisis in 1979. In 1974–75, South Asia’s economic
situation deteriorated, with the growth rate reaching an all time low at 2.2
percent, while population increased at 2.4 percent (Muni and Muni 1984: 23).
With North–South negotiations not yielding any result and the protectionism of
the developed countries increasing, “South Asian countries had enough compul-
sions to look inward the region and toward each other to seek new options for
preparing themselves to meet the then prevailing challenges” (Muni and Muni
 Origin and evolution of SAARC 85
1984: 23). In fact, these developments seemed to have increased the openness of
political leaders of the smaller South Asian countries toward “logrolling” strategy
– that is “I’ll vote for your issue if you vote for mine” – at North–South and other
international forums. Empirical studies on the Scandinavian groups, ASEAN, and
CARICOM show the benefits of “logrolling” strategy for a regional grouping. By
pooling their negotiation resources, and formulating common policy stances, the
members of these groupings have been able to reduce their negotiation costs,
increase their bargaining power, and exert greater influence outside the region at
various regional, multilateral, and North–South meetings than would have been
possible had they acted unilaterally or independently (Schiff and Winters 2003:
203–204). It is reasonable to argue that the potential benefits of “logrolling” were
a major motivation during this economic crisis period that could explain the enthu-
siastic support of the political actors of smaller South Asian states for the idea of
establishing a South Asian regional organization.
After almost a decade of inaction, ASEAN was given a greater momentum in
1976, when the Southeast Asian leaders held their first summit meeting at Bali.
The Bali summit declaration with concrete programs of cooperation in the polit-
ical, economic, social, cultural, and informational and security fields (Galbraith
1980: 34) had a profound influence on President Ziaur Rahman’s thinking about
the usefulness of a regional organization. He, in fact, approached the ASEAN
for Bangladesh’s membership into the organization. After Bangladesh’s
approach to ASEAN for membership was turned down, he launched serious
initiatives for regional cooperation in South Asia (Bajpai 1990: 53).
Finally, the political actors’ initiatives for regional cooperation received
strong support from a group of scholars in the South Asian countries, who began
to exchange ideas on potential social, cultural, and economic areas of regional
cooperation. In September 1978, these group of scholars formed a Committee on
Studies for Cooperation in Development (CSCD) in South Asia to carry out
studies on specific regional projects. These projects provided detailed back-
ground analysis and information to the officials involved in working out the
details of the new regional organization, under the direction of the foreign secre-
taries and foreign ministers of the South Asian states (Rostow 1986: 131; Haas
1989a: 277; Saksena 1989: 82).

International factors
The 1970s can be described as a critical decade during which a number of initi-
atives for South–South cooperation were taken. Such international developments
as NIEO (1974), the call for South–South action programs for collective self-
reliance adopted at the successive Non-Aligned Summits in Colombo (1976)
and Havana (1979), the United Nations conference on technical cooperation in
1978, and the Arusha program of collective self-reliance adopted by the G-77 in
February 1979 underlined the need for collective approach at regional levels
among the southern countries to achieve economic growth. It is quite possible
that President Ziaur Rahman’s preference for a regional cooperation scheme in
86 Origin and evolution of SAARC
South Asia has been shaped by such international debates that produced a strong
wave of intellectual and political support for collective action among the devel-
oping countries (Khan 1991: 35; Mohanan 1992: 2).
After regime changes in South Asia in the mid-1970s, US President Jimmy
Carter and British Prime Minister James Callaghan visited India, Pakistan, and
Bangladesh in January 1978. These leaders urged the new South Asian regimes
to make special efforts to establish peace, amity, and cooperation in the region.
They also assured the South Asian leaders of economic assistance for multilat-
eral cooperative projects on sharing water resources of Ganga and Brahmaputra
(Muni and Muni 1984: 26). Such assurance of financial assistance made
cooperation on water-sharing projects and other regional projects all the more
desirable.
The Soviet military intervention in Afghanistan in December 1979 had a pro-
found impact on regional security in South Asia. The Soviet invasion undoubt-
edly led to a further deterioration of regional security in South Asia, making
regional security cooperation more compelling. But, the subsequent US decision
of military aid to Pakistan and India’s opposition to this decision made regional
security cooperation almost impossible. The Bangladesh President faced a
dilemma. On the one hand, given the new regional security situation, it was dif-
ficult for him not to include security as an issue area for regional cooperation. At
the same time, he was not sure how India would react to the idea of any security
cooperation given the great divide between India and Pakistan on the issue of
Soviet invasion of Afghanistan. Despite this uncertainty, he sent a formal pro-
posal in the form of a letter in May 1980 to the heads of the other South Asian
states, proposing a South Asian Summit meeting to discuss a framework of
regional cooperation with a goal of achieving “peace, stability, and security” in
the region (Muni and Muni 1984: 31; Palmer 1991: 81).

The reluctant partners: India and Pakistan

By the early 1980s, the South Asian political, security, and economic environ-
ment had deteriorated significantly. With substantial US military aid to Pakistan,
Indo-Pakistan tensions increased. After only two years of power, intra-party
squabbles led to the defeat of the Janata party and the Congress party under
Indira Gandhi came back to power in India. With the return of Indira Gandhi as
the prime minister, India’s commitment to regional accommodative policy
became questionable. Bangladesh President Ziaur Rahman was assassinated in
May 1981 and was immediately succeeded by Vice President Abdus Sattar, who
led the BNP (established by General Ziaur Rahman) to victory in elections held
in 1981. But, only few months later, army chief General Ershad staged a coup
and took over power from the elected government. In early 1980s, the Colombo
government faced the Tamil militancy, which later became a violent separatist
movement under the leadership of the Tamil Tigers. In addition to these turbu-
lent political and security environment, the South Asian countries faced a grave
economic crisis caused by the twin shocks of oil price increase and severe
 Origin and evolution of SAARC 87
drought. Given this regional context, initiatives for regional cooperation were
difficult, yet enormously desirable.
Understandably cautious but convinced about the benefits of regional coopera-
tion, the smaller states in South Asia – Nepal, Sri Lanka, Maldives, and Bhutan –
were first to endorse the Bangladesh proposal for establishing a framework for
regional cooperation. But both India and Pakistan were skeptical initially. India’s
policymakers, particularly Prime Minister Indira Gandhi, feared that the
Bangladesh proposal for regional cooperation might provide an opportunity for the
small neighbors to regionalize all bilateral issues and to join with Pakistan to
“gang up” against India. India was also concerned that a regional organization
might impinge on her freedom in foreign affairs. Indian policymakers realized that
if regional cooperation was institutionalized and decisions were taken by majority,
India would stand to lose. Thus, in order to protect itself against being maneuvered
by the other states in South Asia, India insisted on the following issues: unanimity
on decisions at all levels, exclusion of bilateral and contentious issues, and unani-
mous approval for external assistance or intervention. At one stage of negotiation,
India even asked its neighbors to go ahead and set up a regional organization
without India’s participation if that suited the rest. But this was merely a tactical
move to persuade the neighbors to keep the bilateral and contentious issues out of
the purview of the regional forum. India very well knew that no regional organi-
zation would succeed in South Asia without its participation (Muni 1988b: 8).
Like India, Pakistani leaders also believed that a regional organization would
impinge their freedom in foreign affairs. Thus, while Bangladesh was eager for
an early summit meeting, Pakistani leaders were hesitant, preferring step-by-step
approach to avoid raising expectations of the potential security and economic
benefits of the proposed regional organization. In addition, Pakistani leaders
assumed that it might be an Indian ploy to gather the subcontinent against Pak-
istan and insure a regional market for Indian products, thereby consolidating and
further strengthening India’s economic dominance in the region (Thornton 1991:
136; Wriggins 1992: 132–133). The Pakistani business community, an important
support base of the government, was opposed to any regional trade liberalization
policy because of the fear of Indian domination. Analyzing Pakistani opposition
to regional economic cooperation, Gowher Rizvi (1993: 147–149) perceptively
observes that historically, one reason why the Muslim bourgeoisie so strongly
supported the movement for an independent Pakistan was that they wanted to
monopolize their share of trade and commerce within a protected national
boundary and without any competition from the Hindu business elites. Since
independence, Pakistan’s dominant political and economic ideology has been to
move away from India. Growth of regional cooperation would entail at least a
partial aligning of Pakistan’s economy with that of India. Such prospects seemed
to be unacceptable to the political and business elites of Pakistan at this time.
This explains Pakistan’s hesitation and preference for a step-by-step approach
for regional cooperation in South Asia.
However, after initial reservations regarding the Bangladesh proposal’s refer-
ence to security consideration and lack of clarity about the theme of economic
88 Origin and evolution of SAARC
and social development, India and Pakistan expressed their willingness to
participate in the discussion. What followed was a series of quiet diplomatic
consultations between the South Asian foreign ministers at the UN headquarter
in New York from August to September 1980 (Muni and Muni 1984: 34).
Finally, it was agreed that given the detailed works of the initial proposal,
Bangladesh should be entrusted with preparing the draft of a working paper for
discussion among the foreign secretaries. Bangladesh prepared and circulated
the draft, which was basically a reformulation of President Ziaur Rahman’s pro-
posal, to all South Asian countries in November 1980 (Muni and Muni 1984:
35). While endorsing the idea of a regional organization, the draft paper dropped
all references to security matters and suggested that the areas of cooperation
should be confined to “non-political” and “non-controversial” items. Explaining
the rationale for a regional organization and advocating regional conferences at
various levels, the draft identified 11 potential areas for cooperation in the eco-
nomic, cultural, and scientific spheres.5
The Bangladesh draft paper became the basis for discussion among the
foreign secretaries of seven South Asian countries, who first met at Colombo
during April 21–23, 1981. The Colombo meeting identified five areas for coop-
eration: agriculture, rural development, telecommunications, meteorology, and
health and population. The Colombo meeting also decided to establish a Com-
mittee of the Whole, with Sri Lanka as its chairman, to prepare an Integrated
Program of Action (IPA) in the agreed areas of cooperation. At second meeting
of the foreign secretaries, held at Kathmandu on November 2–4, 1981, three
more areas were identified for cooperation: transport, postal services, and
science and technology. At this meeting, the foreign secretaries of smaller South
Asian countries recommended a meeting at the level of foreign ministers to
bring political urgency to the discussion. But, both India and Pakistan resisted,
calling for more progress before involving the foreign ministers and taking the
discussion to the next political level.
At the third meeting of the foreign secretaries, held at Islamabad during
August 7–8, 1982, one new area, that is, sports, arts, and culture, was added. The
Committee of the Whole then met at Colombo during January 10–13, 1983, to
draw up an IPA, which ranged from organizing workshops to the establishments
of regional institutions and eventually to major capital investment in infrastruc-
ture. At their fourth meeting, held at Dhaka during March 28–30, 1983, the
foreign secretaries approved the IPA prepared by the Committee of the Whole.
However, it was decided to launch the IPA at a meeting of foreign ministers to
be held at New Delhi. In these four meetings, the foreign secretaries were able to
prepare considerable groundwork on two major aspects of regional cooperation:
organizational aspects and identification of the areas for cooperation, including
an IPA (Muni and Muni 1984: 37).
The first foreign ministers’ conference was held at New Delhi during August
1–3, 1983, signaling the political momentum of regional cooperation in South
Asia. At the completion of the meeting, the foreign ministers launched the IPA
and adopted a Declaration on Regional Cooperation, formally beginning an
 Origin and evolution of SAARC 89
organization known as the SARC. The Delhi Declaration marked the completion
of the preparatory phase and the beginning of a new phase of active implementa-
tion of joint programs in a number of specific areas, which required political will
and cooperation of the South Asian leaders. Following the New Delhi meeting,
three more meetings of the foreign ministers were held at Male (July 10–11,
1984), Thimpu (May 13–14, 1985), and Dhaka (December 5, 1985) to discuss
institutionalization issues and determine a date and place for the first meeting of
South Asian heads of state. Given the role of Bangladesh in initiating the proposal
for regional cooperation, the Male foreign ministers meeting decided to hold the
first summit meeting of SARC at Dhaka in the last quarter of 1985. Sri Lanka ini-
tially refused to attend the foreign ministers meeting scheduled to be held at
Thimpu (Bhutan) because of alleged Indian support for Tamil militants, who were
demanding a separate Tamil state in Sri Lanka. However, India’s new Prime
Minister Rajiv Gandhi and Pakistani President Zia-ul-Haq successfully persuaded
Sri Lankan President Jayawardene to reverse his decision, thus preventing a poten-
tial breakdown of SARC movement. At the Dhaka foreign ministers’ meeting in
1985, a decision was taken to change the name of the organization from SARC to
SAARC. The change in the acronym was based on the thinking that while SARC
refers to the process of SARC, SAARC marks the establishment of an association
(organization) to promote and develop such cooperation (Kanesalingam 1991a: 1).

The Dhaka Summit and formation of SAARC

Five years after the formal process began, sufficient political momentum was
generated for the leaders of the seven South Asian nations to hold a summit
meeting to advance regional cooperation. The first Summit meeting of the Heads
of State or Government of the South Asian countries was held at Dhaka during
December 7–8, 1985. The Summit meeting formally launched the SAARC by
adopting its Charter. The Charter lists eight objectives of SAARC:

to promote the welfare of the peoples of South Asia and to improve their
quality of life; to accelerate economic growth, social progress and cultural
development in the region and to provide all individuals the opportunity to
live in dignity and to realize their full potentials; to promote and strengthen
collective self-reliance among the countries of South Asia; to contribute to
mutual trust, understanding and appreciation of one another’s problems; to
promote active collaboration and mutual assistance in the economic, social,
cultural, technical and scientific fields; to strengthen cooperation with other
developing countries; to strengthen cooperation among themselves in inter-
national forums on matters of common interests; and to cooperate with
international and regional organizations with similar aims and purposes.
(Article I)

The Dhaka Summit Declaration stated that cooperation should be “based on

respect for the principles of sovereign equality, territorial integrity, political
90 Origin and evolution of SAARC
independence, non-interference in the internal affairs of other states and mutual
benefit.” These principles are in line with India’s famous Panchsheel or “Five
Principles of Peaceful Coexistence” foreign policy enunciated by Prime Minister
Jawaharlal Nehru. The Declaration also mentioned that regional cooperation
should “not be a substitute for bilateral and multilateral cooperation but shall
complement them” and that cooperation should not be “inconsistent with bilat-
eral and multilateral obligations” (Article II of the Charter). The Declaration
further stipulated that decisions at all levels in SAARC “shall be taken on the
basis of unanimity” and that “bilateral and contentious issues shall be excluded
from the deliberations” (Article X of the Charter). The last two principles were
meant to insure that every member is equal, has a “veto power,” and that discus-
sions in the forum would not be contentious. The South Asian leaders at Dhaka
Summit decided to exclude security, bilateral, and contentious issues from
SAARC meeting discussion because of India’s stated opposition. The Summit
also reached an agreement to establish SAARC headquarter and secretariat in
Kathmandu, the capital of Nepal.
The Dhaka Summit brought out the central issues on which regional coopera-
tion in South Asia is considered absolutely desirable. As the Heads of State or
Government at the Summit (1985) acknowledged:

the countries of South Asia, constituting one-fifth of humanity, were faced

with the formidable challenges posed by poverty, underdevelopment, low
levels of production, unemployment and pressure of population com-
pounded by exploitation of the past and other adverse legacies. They felt
that, bound as their countries were by many common values rooted in their
social, ethnic, cultural and historical traditions, regional cooperation pro-
vided a logical response to these problems.6

Recognizing the differences between the member countries, the Summit

settled for a slow and steady growth of SAARC, which, the leaders felt, would
facilitate mutual confidence building more than impatient plunges and impracti-
cable undertakings. Accordingly, rather than adding anything new, the leaders
reaffirmed their commitment to the implementation of the IPA in nine mutually
agreed areas, as suggested at the New Delhi foreign ministers meeting in 1983 –
agriculture, rural development, telecommunications, meteorology, health and
population control, transport, sports, arts and culture, postal services, and scient-
ific and technical cooperation.
As expected, all the leaders of South Asia at the first summit preferred to
highlight the commonalities among the South Asian countries and their coun-
tries’ readiness to make this endeavor fruitful, an accomplishment thus far
largely unrecognized.7 Probably, the greatest success of the first Summit was
the opportunity for the leaders to meet on the sideline of the SAARC forum to
discuss their bilateral problems and reach some kind of unofficial agreement.
For example, General Ziaul Haq of Pakistan and President Jayawardene of Sri
Lanka met informally and agreed to intensify trade and other transactions
 Origin and evolution of SAARC 91
between the two countries. India’s Prime Minister Rajiv Gandhi and General
Ziaul Haq of Pakistan also met informally and discussed bilateral issues. After
the meeting, General Ziaul Haq accepted Prime Minister Rajiv Gandhi’s invita-
tion to visit India on December 17, 1985, which generated great optimism
about future Indo-Pakistan relations. A sentimental irritant between India and
Pakistan was also removed when General Ziaul Haq agreed to allow Khan
Abdul Ghafar Khan, a towering figure of India’s liberation struggle, to visit the
Congress centenary celebrations at Bombay in late December 1985 (Mohanan
1992: 67).
The Dhaka Summit also got some moral-boosting recognition from inter-
national leaders. Mr Zhao Ziyang, the Chinese premier, hailed the Summit as
“an event of great significance in the South Asian Region.”8 The US President
Ronald Reagan, congratulating the South Asian leaders, described SAARC as a
“significant new venture in international cooperation” (Tribune October 20,
1986). The UN Secretary General, Mr Javier Perez de Cuellar, expressed the
hope that the Summit would open “a new era of progress and help reduce the
tension in the region” (The Hindustan Times December 8, 1985). Mr Jacques
Delors, president of the Commission of the European Community, and the Com-
monwealth Heads of State Summit at Vancouver congratulated the leaders of
South Asia for launching SAARC and hoped that the Association would con-
tribute to the region’s peace, stability, and progress (The Statesman October 19,
1987).

Growth and achievement of SAARC: an overview

The first decade (1985–95)

In spite of a slow and cautious start, SAARC’s institutional structure developed
quite early. The Dhaka Declaration of 1985 provided for a modest institutional
structure. Since then, a complex organizational structure has emerged (see
Figure 4.1). The highest organ of SAARC, the Heads of State or Government
Meeting (also known as the Summit Meeting), meets once a year. This Summit
Meeting provides overall direction and officially approves new initiatives for
SAARC. The Council of Ministers, comprising the foreign ministers of member
states, meets twice a year and may meet in extraordinary session as and when
necessary to formulate policies, review progress, decide upon new areas of
cooperation, and establish additional mechanisms to carry out SAARC’s activ-
ities. The Standing Committee, which consists of the foreign secretaries of the
member states, meets as often as deemed necessary, but at least once a year, and
submits periodic reports to the Council of Ministers. It is entrusted with the
responsibility to monitor and coordinate programs of cooperation, approve pro-
jects and modalities of their financing, mobilize regional and external resources,
and identify new areas of cooperation based on appropriate studies. By the end
of the thirteenth summit at Dhaka in 2004, the Standing Committee has held 31
regular sessions and four special sessions.
 Heads of State or Organizational hierarchy
Government Meeting Informal channel

Ministerial Council of Ministers

Meeting Foreign Ministers

Committee on Other Standing

Economic Committees Committee
Cooperation (COEC)

Programming Action Regional Technical

Committee Committee Committee Committee
• Agriculture and Development
Secretary General • Human Resources Development
SAARC Secretariat • Environment and Forestry
KATHMANDU • Meteorology
• Social Development
• Science and Technology
SAARC Chambers of SAARC • Communication and Transport
Directors
Commerce and Industry NGOs* • Energy

General
Services Staff

Figure 4.1 Organizational structure of SAARC (source: SAARC Secretariat and Declarations).
Note
* SAARC NGOs so far; SAARC Friendship Orgs; SAARC Professional Groups; SAARC Women’s Orgs; South Asian Federation of Accounts.
 Origin and evolution of SAARC 93
The Standing Committee is assisted by a Programming Committee, which
comprises senior officials. The Programming Committee usually meets prior to
the Standing Committee sessions to scrutinize the Secretariat budget, finalize the
calendar of activities, and take up any other issues assigned to it by the Standing
Committee. The Programming Committee now has been assigned to consider
the reports of the SAARC regional centers, recommendations of the Technical
Committees and submit its comments to the Standing Committee. The Standing
Committee, when necessary, can also set up Action Committees, with represen-
tatives from member states. Action Committees are responsible to implement
projects involving more than two, but not all, member states.
Next in the hierarchy are the Technical Committees, which have representa-
tives from all member states. The Technical Committees report to the Standing
Committee and are responsible for the formulation, implementation,
coordination, and monitoring of programs in their respective areas. Chairman-
ship of the Technical Committees rotates among member states in alphabetical
order every two years. Under the new SAARC Integrated Program of Action
(SIPA), the number of Technical Committees has been reduced from thirteen to
seven mainly through the amalgamation of the different sectors covered by the
various Technical Committees. The main rationale of the reduction in number of
Technical Committees has been to increase clarity in terms of the goals and
targets of the activities undertaken, as well as to improve the quality and effec-
tiveness of the Committees by eliminating overlapping, duplication, and waste.
The seven Technical Committees under SIPA now cover: agriculture and devel-
opment; communications and transport; social development; environment, mete-
orology, and forestry; science and technology; human resources development;
and energy (ICSW 2003: 5).
Apart from these structures, SAARC has also provided for Ministerial Meet-
ings on vital areas of cooperation. Since 1985, a number of SAARC Ministerial
Meetings have been held on important areas such as trade, manufactures, and ser-
vices; basic needs; human resources development; database on socioeconomic
indicators; energy modeling techniques; and poverty alleviation strategies.
Under this rubric, the Planning Ministers and Commerce Ministers of South
Asian countries have met several times to provide policy directives for strength-
ening regional economic cooperation. The SAARC Commerce Ministers also
meet from time to time to develop common positions on issues before WTO
Ministerial Meetings. In the thirteenth Dhaka Summit (2005), the Heads of State
or Government of SAARC countries agreed for regular finance ministers
meeting immediately after every summit to explore and strengthen avenues of
financial cooperation in South Asia (Dhaka Declaration November 13, 2005). In
order to assist these Ministerial Meetings, there are several committees avail-
able. In the Male Summit (1991), SAARC leaders established a Committee on
Economic Cooperation (CEC) comprising commerce/trade secretaries of
member states. The CEC is mandated to formulate and oversee implementation
of specific measures in intraregional trade issues.
In addition to SIPA under several Technical Committees, SAARC leaders
94 Origin and evolution of SAARC
have agreed to establish several regional centers over the years to harmonize the
member countries’ efforts to carry out activities in important areas of common
interests. Each regional center is managed by a director and a governing body,
which consists of representatives from member countries. The governing board
reports to the Standing Committee (ICSW 2003: 6). So far, the following
regional centers have been established: SAARC Agriculture Information Center
(SAIC) and SAARC Meteorological Research Center (SMRC) in Dhaka
(Bangladesh); SAARC Tuberculosis Center (STC) in Kathmandu (Nepal);
SAARC Documentation Center (SDC) in New Delhi (India); SAARC Human
Resource Development Center (SHRDC) in Islamabad (Pakistan); and SAARC
Coastal Zone Management Center (SCZMC) in Male. In addition, SAARC
leaders have approved to set up four more such SAARC regional centers in
member countries: SAARC Cultural Center (SCC) in Colombo (Sri Lanka);
SAARC Information Center (SIC) in Kathmandu (Nepal); SAARC Forestry
Center (SFC) in Thimpu (Bhutan); and SAARC Energy Center (SEC) in Islam-
abad (Pakistan).
Unlike ASEAN, which got its own secretariat almost a decade after its found-
ing, the leaders of South Asian countries decided to establish a SAARC secretariat
at Kathmandu (Nepal’s capital) just one year after the first summit. Although the
first Dhaka Summit hinted about establishing a Secretariat, the details were not
spelled out. During the second Summit at Bangalore (1986), the foreign ministers
signed a Memorandum of Understanding (MOU) on the establishment of the
SAARC Secretariat, delineating in some detail the modalities of staffing, funding,
and functioning of the Secretariat.9 The Secretariat was inaugurated in Nepal’s
capital Kathmandu, on January 16, 1987. The role of the Secretariat is to coordi-
nate and monitor the implementation of SAARC activities, provide professional
service to various SAARC meetings, and serve as the channel of communication
between SAARC and other international organizations. As the headquarter, the
secretariat provides a neutral venue for various SAARC meetings.
The Secretariat comprises the secretary general, one director from each
member country, and general services staff. The Council of Ministers appoints
the secretary general upon nomination by a member country. The appointment is
based on the principle of rotation in alphabetical order and is made for a non-
renewable tenure of three years. Until the ninth SAARC Summit at Male (1997),
the tenure of the secretary general was for two years. Since, a two-year tenure is
too short a time to achieve anything, the SAARC leaders have raised the tenure
of the secretary general to three years since 1997. According to the decision of
the eleventh Summit held at Kathmandu in 2002, the secretary general holds the
rank and status of a minister. Fittingly, the first Secretary General, Abul Ahsan,
was from Bangladesh. Since then, seven other diplomats have assumed the
office of the secretary general.10 The seven directors are appointed by the secret-
ary general upon nomination by the member countries for a period of three
years. In special circumstances, the secretary general can extend a director’s
appointment for a period not exceeding three more years in consultation with the
concerned member country. A director is in charge of a functional unit called a
 Origin and evolution of SAARC 95
division. Frequent interdivisional meetings, presided over by the secretary
general, are held to insure close interaction and coordination among the divi-
sional units. Initially, four directors were appointed by India, Nepal, Pakistan,
and Sri Lanka. The Council of Ministers meeting in Islamabad in November
1989 decided to expand the numbers to seven directors. Thus, directors from
Bhutan, Bangladesh, and Maldives joined the Secretariat in 1990 (SAARC
Record November 1990: 20). The General Services Staff are appointed by the
secretary general from the nationals of the member countries through an open
recruitment process. Outside of this formal structure, several other institutions –
such as SAARC Chamber of Commerce and NGOs – exist which provide
important information on specific issues to the secretary general.
Broadly speaking, there are three levels of financial arrangements for
SAARC activities. At the first level, member countries make annual pledges for
financing SAARC activities at the national level. The allocated funds remain at
the disposal of member countries and generally cover the cost of hosting of
meetings and organization of SAARC-related events within the country and of
sending delegations to meetings, seminars, and workshops held in other coun-
tries. The second level of financial arrangements concerns with the budget of the
SAARC Secretariat. At the Bangalore Summit (1986), the member countries
agreed on a formula according to which each member country is required to
contribute a minimum of 3 percent toward the annual budget expenditure of the
Secretariat (Table 4.1). The minimum 3 percent payment indicates equality
among the seven member states. Besides, 3 percent payment, each country
makes an additional contribution assessed on the basis of its per capita income
and the economic capability. The third level of financial arrangements relates to
the expenses of regional institutions. The host country is required to bear 40
percent of the cost of regional institutions. The remaining 60 percent is distrib-
uted among all seven countries on the basis of the same formula applied to the
budget expenditures of the SAARC Secretariat.

Table 4.1 Contribution of SAARC countries to annual budget expenditures of the

secretariat

Member state Equal contribution Assessed contribution Total share

(%) (%) (%)

Bangladesh 3 8.35 11.35

Bhutan 3 2.00 5.00
India 3 29.10 32.10
Maldives 3 2.00 5.00
Nepal 3 8.35 11.35
Pakistan 3 20.85 23.85
Sri Lanka 3 8.35 11.35
Total 21 79.00 100.00

Source: Abul Ahsan (1992), SAARC: A Perspective, p. 14.

96 Origin and evolution of SAARC
Institutional evaluations
During the first decade, SAARC has evolved slowly in terms of institutions and
programs.11 However, it is true that most of the programs and achievements of
SAARC exist on paper. The much talked about SAARC Food Security Reserve
could not be utilized to meet the needs of Bangladesh during its worst natural
disaster in 1991. The Convention on Suppression of Terrorism appears to be a
failure, as both India and Pakistan have failed to curtail the movement of terror-
ists across their borders. It is also true that most SAARC activities are confined
to “soft” areas of cooperation and to the holding of seminars, workshops, and
short training programs. These activities may be useful, but they do not address
priority core areas of trade and security and therefore lack visibility and regional
focus, so essential for evolving a South Asian identity. Most importantly,
SAARC suffered from an acute resource crunch, leading to non-implementation
of most of its projects.
SAARC’s existence, however, has enabled the South Asian political leaders
to meet regularly and carry on informal discussion to address their mutual prob-
lems. This is not an insignificant achievement given South Asia’s past history
and low level of interaction among South Asian countries since their independ-
ence. Informal talks among the leaders at regularly held SAARC meetings have
led to inter-elite reconciliation on many sensitive issues, producing some note-
worthy results in South Asia. The informal talks between the Indian and Pak-
istani prime ministers at the second SAARC Summit meeting at Bangalore in
November 1986 led to the diffusion of tension between the two countries on the
issue of India’s troop exercise (Operation Brasstacks) on the Indo-Pakistan
border. An informal discussion between Indian Prime Minister Rajiv Gandhi
and Sri Lankan President Jayawardene at the 1986 Bangalore Summit eventually
led to a peace accord on the Tamil problem in 1987. As a result of an informal
meeting and discussion between the prime ministers of India (Narasimha Rao)
and Pakistan (Nawaz Sharif) at Davos (Switzerland) in 1992, the Pakistani
government took action to prevent the move of the Jammu and Kashmir Libera-
tion Front (JKLF) to cross the CFL in Kashmir later that year. The Davos
meeting was possible because of an earlier informal agreement between the two
leaders at the sixth SAARC Summit meeting at Colombo in December 1991.
Despite this utility of SAARC annual summit meetings, at least three
summits were cancelled or postponed during 1985–95 period because of polit-
ical tensions between India and her neighbors. After the Bangalore summit, the
Indian decision to use her Air Force jets to drop off relief materials in the Jaffna
Peninsula against the wishes of Colombo led to a serious crisis between India
and Sri Lanka in 1987. The Indian action was a violation of Sri Lankan airspace
and was widely condemned by all the South Asian countries as an attack on the
sovereignty of Sri Lanka. As a protest to such action, Sri Lanka refused to attend
the SAARC foreign ministers’ conference scheduled for New Delhi during June
18–19, 1987, to finalize the draft for the Kathmandu Summit. It is significant
that while all the neighboring South Asian countries condemned India’s action
 Origin and evolution of SAARC 97
in the strongest possible terms, none of them tried to cash in on India’s possible
discomfiture at the Sri Lankan boycott of the SAARC meeting. On the contrary,
they seemed anxious to stave off any such embarrassment (The Hindu June 13,
1987). Determined to keep SAARC alive, the foreign ministers of Pakistan,
Bangladesh, Maldives, and Nepal wrote personal letters to Sri Lanka’s president
and foreign minister, urging them to participate fully in the SAARC session at
New Delhi (The Hindu June 17, 1987). Pakistan took an important initiative to
diffuse the crisis. In his letter to the foreign minister of Sri Lanka, Mr A.C.
Shahul Hameed, the Pakistani foreign minister, Mr Yakub Khan, wrote: “Unfor-
tunate differences have arisen on the eve of a highly important meeting of
SAARC which has made noteworthy progress. It is of the utmost importance
that nothing should happen that should constitute a setback to the consolidation
of SAARC” (Mohanan 1992: 70). Finally, the Sri Lankan government agreed to
participate in the forthcoming SAARC foreign ministers meeting in New Delhi.
Two implications of this crisis can be noted here: no South Asian country
wanted the premature demise of SAARC, and it is fair to say that in the absence
of SAARC, each country would have dismissed the crisis as bilateral concerns
and a collective regional initiative to defuse the crisis would not have occurred.
The third Summit meeting of South Asian Heads of States or Government
was held at Kathmandu during November 2–4, 1987. There were clearly two
agendas discussed in this Summit:

1 the private agenda, which dealt with such hard issues as security of South
Asian countries, border issues, membership of Afghanistan in SAARC,
South Asia as a nuclear-free zone, and bilateral problems between the South
Asian countries;
2 the official agenda, which discussed the soft, apparently non-controversial,
issues that resulted in a common declaration.

Hard issues of the private agenda were discussed in behind-the-scene meetings

between the Heads of States or Government and foreign ministers. For instance,
the Indian Prime Minister, Rajiv Gandhi met with Sri Lankan President
Jayawardene for two hours after dinner on the first night of the Summit and
again for the same duration on the second night. They discussed a wide range of
issues, including a defense pact between the two countries. Similarly, India’s
External Affairs Minister, Natwar Singh met with his counterpart in Sri Lanka,
Hameed to discuss the Tamil issues in Jaffna. The meeting between the Indian
prime minister and the Sri Lankan president led to what could be considered the
most notable achievement of the Summit, the signing of Indo-Sri Lankan Peace
Accord (The Hindustan Times November 4, 1987).
In addition to his meeting with the Sri Lankan president, Prime Minister
Rajiv Gandhi had also informal breakfast meetings with King Birendra of Nepal
and the King of Bhutan, Jigme Singye Wangchuk, to review bilateral issues
(Dawn November 5, 1987). Indian prime minister and President Ershad of
Bangladesh met on the second day of the Summit. The two leaders agreed to
98 Origin and evolution of SAARC
start discussions at the tripartite level with Nepal to augment water flows of the
Ganges river. President Ershad was reportedly happy to know from the Indian
Prime Minister that the process of administrative and legal formalities for
handing over the Tin Bigha corridors to Bangladesh was in the final stage (The
Hindu November 3, 1987). After informal discussions over a period of three
days, Prime Minister Junejo of Pakistan and the Indian Prime Minister agreed to
convene an early meeting of their respective secretaries for economic affairs to
explore various areas of economic and trade cooperation. Both prime ministers
also agreed to convene an early meeting of secretaries for interior and home
affairs to take appropriate measure to prevent illegal crossing of borders. The
Siachen glacier issue, the second most important irritant after Kashmir in Indo-
Pakistan relations, was discussed by the two leaders, and it was decided that a
third meeting at the defense secretary level would be held to address this issue as
soon as possible. Both leaders also agreed to appoint surveyor generals for the
purpose of demarcating international boundaries at Sir Creek, close to the Rann
of Kutch. They decided to settle the maritime boundaries in accordance with the
international law covering the sea lines (Bangladesh Observer November 4,
1987). As a result of so many unexpected agreements between the two countries,
Pakistan reportedly withdrew its proposed contentious amendment – that is to
declare South Asia as a nuclear-free zone region, which India opposed – to the
draft declaration (Mohanan 1992: 78).
The Kathmandu Summit can be described as a triumph of accommodative
diplomacy. It demonstrated that high-level agreements can be reached on difficult
bilateral problems through informal, behind-the-scene negotiations. Not all out-
standing issues were addressed, much less agreed upon, in the Summit meeting.
But, given the tension-ridden atmosphere in which the conference began, the
three-day Summit meeting can be considered an important step in the growth of
SAARC. Reflecting the general sentiment of the South Asian leaders assembled
at Kathmandu, the outgoing chairman of SAARC, Rajiv Gandhi, commented:
“We have succeeded in nurturing South Asian Regional Cooperation because it is
firmly grounded in the realities of the region. Ours is a concord for cooperation
and not a concourse for controversy” (Patriot November 3, 1987).
The fourth Summit at Islamabad was held as scheduled in 1988 in a changed
regional environment. In 1988, President Ziaul Haq died in a plane crash. After
11 years of militarist rule under Zia, Pakistan had a democratic election in 1988,
and Benazir Bhutto, winning the election with a comfortable margin, became the
new prime minister. Indian Prime Minister Rajiv Gandhi’s visit to Islamabad to
attend the SAARC Summit meeting was considered significant, as he was the
first Indian prime minister to pay an official visit to Pakistan in 28 years. The
meeting between Benazir Bhutto and Rajiv Gandhi brought back historical and
personal memories of the “Simla spirit” in Indo-Pakistan relations. The slain
parents of these two leaders, Indira Gandhi and Zulfiqar Ali Bhutto, had signed
the historic Simla Agreement in 1972 to resolve Kashmir issue. As widely
expected, the informal meetings between Benazir Bhutto and Rajiv Gandhi –
described as the “representatives of a new generation” in the media of South
 Origin and evolution of SAARC 99
Asian countries – led to important bilateral agreements at the Islamabad
Summit. Both Pakistan and India agreed not to attack each other’s nuclear
installations and facilities. They also agreed to begin “constructive dialogue” on
the Kashmir issue (Dawn December 31, 1988). Benazir Bhutto categorically
stated that her country would not use the Sikh card against India any more
(Mohanan 1992: 80), a daring statement, given Pakistan’s constant denial of any
such involvement in Punjab. In short, the three most important political irritants
in Indo-Pakistan relations, that is, Kashmir, cross-border terrorism, and nuclear
issues, were deliberated privately at the Islamabad Summit. Such discussions
underlined the utility of SAARC as a confidence-building mechanism (Muni
1988a: 13–26). As Ross Masood Hussain, director general of the Institute of
Strategic Studies at Islamabad, has perceptively remarked:

But for the association [SAARC], a meeting between the Indian and Pak-
istani Prime Minister might not have been possible so soon after the revival
of representative government in Pakistan. The significance of these confi-
dence building exchanges between SAARC leaders can hardly be exagger-
ated.
(1990: 4)

After the Islamabad Summit, the SAARC movement suffered a setback, as

Colombo refused to host the fifth Summit in 1989 because of New Delhi’s
failure to completely withdraw the IPKF from the northeastern part of Sri
Lanka. When the last batch of IPKF left on March 25, 1990, Sri Lanka offered
to host the fifth SAARC Summit. It was, however, agreed at the Islamabad
meeting that Colombo would host the fifth Summit in 1989, and Maldives would
be given the special honor of hosting the sixth Summit in 1990, to coincide with
the latter’s twenty-fifth anniversary of independence from Britain (Male Decla-
ration 1990: 14). A diplomatic confrontation ensued between Maldives and Sri
Lanka. With the intervention of other SAARC members, Sri Lanka finally
relented in favor of Maldives, where the fifth Summit was held during Novem-
ber 21–23, 1990.
The successful completion of Male Summit did not mark the end of SAARC
Summit crisis. The sixth SAARC Summit, which was scheduled to be held at
Colombo during November 7–9, 1991, was postponed following the King of
Bhutan’s (Jigme Singye Wangchuk) inability to attend the Summit because of
the officially stated reason of widespread domestic violence and unrest in the
capital city of Thimpu. While the idea of holding the Summit with a representat-
ive of the King of Bhutan was agreeable to Pakistan, Sri Lanka, Bangladesh,
Maldives, and Nepal, India opposed it on technical grounds. According to Indian
arguments, holding the summit in the absence of one of the heads of state would
violate the SAARC Charter. The Charter stipulates that the Heads of state or
Government of all the member nations must be present for the summit to take
place. Moreover, India argued that holding a summit meeting without heads of
the state or government would set an unwelcome precedent and undermine the
100 Origin and evolution of SAARC
significance of summit meetings. While India might not have played a role in
instigating Bhutan to sabotage the conference, as was widely reported in the
media in Colombo and Pakistan,12 the Indian government certainly did not
empathize with the beleaguered Sri Lankan President to save the sixth Summit
(Dhanjal 1991: 25–27). Several developments can be mentioned to explain
India’s unhelpful action.
Relations between New Delhi and Colombo began to deteriorate after Ranas-
inghe Premadasa succeeded Jayawardene as the new president of Sri Lanka in
January 1989. The new president’s stubborn stance about the immediate with-
drawal of IPKF from the island, without taking into consideration the logistical
problems, was not appreciated by New Delhi. India’s proposal of a phased with-
drawal of the IPKF was rejected by the new Sri Lankan president. Even Presid-
ent Premadasa refused to host the SAARC Summit in Colombo in 1989 on this
ground. Moreover, in an effort to undermine the role of India, he invited the
LTTE leaders for direct negotiation and sought the Tamil militants’ support to
fight against the “common enemy” – IPKF. Such actions exposed the hollow-
ness of New Delhi’s foreign policy, caused quite a bit of embarrassment in New
Delhi’s policy-making circles and, more importantly, led to an increase in
tension between Tamil Nadu and New Delhi.
During 1989–91, President Premadasa’s failure to deal with the domestic
crisis in Sri Lanka was criticized by the opposition parties. In October 1991,
there was a move to impeach President Premadasa, who was convinced that the
impeachment move by the opposition party was inspired by New Delhi in order
to discredit him. To save himself from further political humiliation, he blamed
India and expelled the local correspondent of All India Radio on the charge of
false and malicious reporting. Such symbolically provocative actions further
aggravated relations between Colombo and New Delhi.
The initial cancellation of the Colombo summit was widely perceived as the
collapse of the SAARC movement. Commenting on the failure of the sixth
SAARC Summit, The Economist observed, “it [SAARC] looks more than ever
like an idea whose time has yet to come” (November 16, 1991). However, as a
result of intensive diplomatic consultation, mainly undertaken by the President
of Maldives, Maumoon Abdul Gayoom, it was agreed to hold a one-day Summit
at Colombo on December 21, 1991. The King of Bhutan’s apology for his
failure to attend the November SAARC Summit helped remove some of the mis-
understandings and bitterness among policymakers in Colombo. The holding of
the sixth SAARC Summit proved the skeptics wrong and confirmed the fact that
South Asian ruling elites were still committed to keep SAARC alive.

SAARC since 1995

Expectation for a greater momentum for SAARC in the second decade was
high following two summit meetings at Male (1997) and Colombo (1998),
where Indian and Pakistani prime ministers showed considerable warmth
toward each other and resolved to take concrete initiatives to address their bilat-
 Origin and evolution of SAARC 101
eral problems. Holding informal discussions on the sidelines of the SAARC
Summit meeting at Male in 1997, Indian Prime Minister I.K. Gujral and Pak-
istani Prime Minister Nawaz Sharif agreed to follow up the Simla Agreement
principles to resolve their outstanding issues. This initiative was significant
because the two countries came together for the first time to work toward mutu-
ally acceptable solutions in the spirit of Simla Agreement principles nearly two
decades after signing the Agreement. The Colombo summit in 1998 was
significant because it was the first contact between the newly elected Indian
Prime Minister from the BJP party, Atal Behari Vajpayee, and Pakistani Prime
Minister Nawaz Sharif after the nuclear tests by the two leaders in the same
year. The informal personal meeting at Colombo seemed to have broken the ice
between the two leaders and started a process that culminated in the Lahore bus
journey in 1999 to renew the peace efforts between India and Pakistan.
However, this optimism of a greater momentum for SAARC plummeted after
the Kargil war in 1999 and the military coup in Pakistan in the same year. From
1999 to 2002, no SAARC annual summits were held because of India’s refusal
to attend the summit meetings.
India’s decision not to participate in the SAARC summits during this period
was driven primarily by three issues. First, there was a strong official opposition
in New Delhi to the Indian prime minister’s sharing of a platform with General
Musharraf, who came to power through a military coup. Although New Delhi’s
official position was that the Indian prime minister’s visit to Islamabad would
unnecessarily confer legitimacy on General Musharraf’s military coup, which
India had condemned strongly, the real reason was a strong mistrust and suspi-
cion among Indian policymakers toward General Musharraf, who was the prin-
cipal architect of the Kargil war. Second, Prime Minister Vajpayee was deeply
disappointed with the failure of his peace initiative at the Agra summit in July
2001, where, despite India’s opposition, President Musharraf sought to focus on
the resolution of Kashmir issue. Third, Prime Minister Vajpayee, responding to
domestic pressure, took a strong stand against Pakistan’s alleged involvement in
a terrorist attack on Indian Parliament in December 2001. Although India later
agreed to attend the summit meeting in Kathmandu in 2002 – where the “famous
handshake” between President Musharraf and Prime Minister Vajpayee was
widely perceived as a peace overture between the two countries – it refused to
attend the summit in 2003 scheduled to be held at Islamabad. Indian leaders’
distrust toward Pakistani military regime, Pakistan’s insistence on Kashmir as a
core issue, and Pakistan’s refusal to reciprocate the most-favored nation (MFN)
status with India were some of the main reasons for India’s refusal to attend the
Islamabad summit meeting. Confronted with the arguments that New Delhi’s
stance was causing damage to the regional grouping, Indian Prime Minister Vaj-
payee decided to attend the delayed Islamabad summit in 2004. However, the
Dhaka summit scheduled for January 2005 got postponed twice – first time
because of the Tsunami in the Indian Ocean; second time because of the refusal
of the new Indian Prime Minister Manmohan Singh to attend the meeting.
India’s stated reason for not attending the summit was a rapidly deteriorating
102 Origin and evolution of SAARC
security environment in Bangladesh following the assassination of the country’s
foreign minister.
But, this was not the real reason for India’s decision. The unexpected polit-
ical developments in Nepal, where King Gyanendra, disregarding New Delhi’s
advice, assumed dictatorial power by dissolving Parliament and all other demo-
cratic institutions was the main reason for India’s decision. It was felt in New
Delhi that Indian Prime Minister’s sharing of a platform with King Gyanendra
would confer legitimacy on the King and his dictatorial regime, which India was
in no mood to oblige. Several months of intense diplomatic negotiations
between India, Bangladesh, and Sri Lanka, including King Gyanendra’s willing-
ness to negotiate with Nepal’s political parties to restore democracy, led India to
change its mind. Eventually, after ten months of delay, the thirteenth Dhaka
summit was held on November 13, 2005, saving another possible collapse of the
organization. Indian leaders’ decisions to cancel or delay several SAARC
summit meetings are seen as part of India’s coercive regional diplomacy by her
neighbors and have evoked resentment among the leaders of other South Asian
countries.
Although the momentum of progress of SAARC in the second decade has not
picked up as expected, SAARC summit meetings, nonetheless, have produced
some important agreements. At the twelfth summit in Islamabad (2004), two
important agreements were signed. One was a SAFTA, providing a broad frame-
work for economic cooperation among South Asian states. The adoption of the
SAFTA framework, as discussed in Chapter 6, is a major initiative to deepen
regional integration efforts in South Asia. The SAFTA framework is an
improvement over the existing SAPTA, which was signed on April 11, 1993,
and came into force in December 1995. Although SAPTA has run into troubles
because of Indo-Pakistani disagreements over the lists of tradable items with
reduced tariffs, it is fair to say that there has been some advances in the process
of trade negotiation under SAPTA to further trade liberalization in the region.13
The other important agreement signed at this summit was an Additional Protocol
to SAARC Convention on Suppression of Terrorism, outlining various measures
to combat terrorism in South Asia. The success of this protocol, however,
depends primarily on the level of cooperation between Indian and Pakistani
leaders.
At the thirteenth Summit in Dhaka (2005), the Islamic Republic of
Afghanistan was admitted as the eighth member of SAARC. At this summit,
India also agreed with other leaders to grant observer status to China along with
Japan. While Pakistan and Bangladesh supported China’s candidature to join
SAARC in the past, India was more reluctant about the prospect of Chinese
membership. Indian willingness to accept China’s observer status at SAARC
reflects the growing positive relationship between the two giants in Asia. By
2005, SAARC has secured the United Nations Observer Status in addition to
signing number of MOU with various UN agencies for collaboration. In August
2006, the SAARC Council of Ministers agreed to grant observer status to the
United States, South Korea, and the European Union. Such moves not only
 Origin and evolution of SAARC 103
enhance SAARC’s external visibility, but also may put additional pressure on
SAARC members to seek implementation of agreed upon cooperative projects.
As in the case of ASEAN, these transregional linkages can provide increasing
credibility to SAARC’s status as an important regional organization. It can also
give SAARC members a somewhat bigger voice in global institutions, including
the United Nations.
Given the magnitude of poverty in the region, the Heads of State or Govern-
ment of South Asian countries at the thirteenth Dhaka Summit decided to estab-
lish a much-needed SAARC Poverty Alleviation Fund (SPAF) with
contributions “both voluntary and/or, assessed, as may be agreed by member
states” (Dhaka Declaration November 13, 2005). This initiative was taken by
Bangladesh with full support from other members of SAARC. It was also
decided to deepen SAARC linkages with Asian Development Bank (ADB) and
World Bank to explore funding opportunities to implement various SAARC pro-
jects. The summit leaders agreed to integrate SAARC development goals with
Millennium Development Goals (MDGs) in order to tap on external resources to
implement various development projects.
Despite the promise of developing into the most important regional organi-
zation in South Asia, SAARC’s growth has remained slow in terms of institu-
tional developments and program implementation. Not surprisingly, there is
considerable basis for less positive evaluations, and the organization has
received a wide range of open criticism in the SAARC countries. In fact, two of
the principal members of SAARC – India and Pakistan – have led the chorus of
public criticisms against the organization. Expressing deep disappointment at the
lack of any substantial achievement of SAARC, Indian Prime Minister, A.B.
Vajpayee, noted at the inaugural function of the SAARC Information Ministers’
conference in December 2003:

Since its inception in 1985, SAARC has been struggling to emerge from the
concept to the practical reality of close regional cooperation . . .. It is time
we recognize what it means for all of us in South Asia. If SAARC cannot
organize itself, it will simply miss the boat. Other alignments will develop
to seize the economic opportunities offered by close integration.
(The Hindu December 9, 2003)

Pakistan’s Information Minister, Sheikh Rashid, echoed this sentiment at the

same meeting by describing that “SAARC’s role had remained marginal in
South Asia” (The Hindu December 9, 2003). In order for SAARC to grow and
become a relevant organization in South Asia, Pakistani leaders have argued at
several forums to include political and security issues in the SAARC agenda in
the pattern of ASEAN and European Union.
During the past two decades, SAARC has been able to establish a number of
regional institutions to initiate and carry out important regional programs. For
example, creation of a regional food security reserve, cooperation in the area of
meteorology, health, agriculture, poverty reduction, environment, forestry,
104 Origin and evolution of SAARC
transport, communications, biotechnology are some of the important SAARC
initiatives. But, it is fair to say that these institutions and their initiatives have
offered more promise than performance. Ironically, none of these regional
centers are truly regional as yet but can be described as national centers prone to
varying degrees of domestic political imperatives. The activities of these
regional institutions are normally confined to holding of seminars, training pro-
grams, and exchanging of information on rather low priority of issues. These
activities have so far lacked a regional focus. Since the activities of the regional
centers are mostly financed by national governments, the scope and frequency of
these activities are largely determined by domestic politics and the financial
health of a particular country. In more than a decade of existence, these regional
institutions have not undertaken a single collaborative project. There is a deep
resistance to undertaking anything that could be collaborative in nature. The
reasons for this, as explained in subsequent chapters, rest with two variables:
weak governments and lack of endorsement by key domestic groups.
The Secretariat of SAARC seems to be patterned after the ASEAN Secre-
tariat. But while ASEAN took almost nine years to set up its Secretariat,
SAARC accomplished this task in less than two years (since the first Summit in
1985). Establishment of the Secretariat within such a short time indicates will-
ingness among the policymakers in South Asia to give a sense of permanence to
SAARC. However, the role of the Secretariat and the Secretary General remain
unclear. Unlike the ASEAN and European Union, where the secretariat has the
authority to initiate programs and coordinate projects to strengthen regional
cooperation, SAARC Secretariat performs none of these roles. In case of
SAARC, the Standing Committee and the Technical Committee, which consists
of representatives of member countries, are responsible to monitor and coordi-
nate SAARC activities (Ahsan 2004: 5). Since these committees are intergov-
ernmental institutions, it is not surprising that members of these committees take
positions of their respective governments rather than sharing any regional per-
spectives. All activities of SAARC – program initiation and implementation –
are undertaken by the member states. The Secretary General has no respons-
ibility and power in matters of program initiation and implementation. As the
experiences of ASEAN and EU demonstrate, the role of a strong secretariat and
secretary general is central to the cooperative process. In case of SAARC, South
Asian leaders have not shown any preference for a stronger secretariat and
secretary general. The reasons for this rest with two issues: lack of confidence
and trust among SAARC leaders and the unwillingness of SAARC leaders to
part with their sovereignty (Ahsan 2004: 8). In the absence of a strong secre-
tariat and secretary general, it is difficult to move SAARC forward.14
The SAARC Charter also partly explains the organization’s limitation in car-
rying forward concrete cooperative agendas. The Charter provides that
“decisions at all levels in SAARC are taken on the basis of unanimity.” This
unanimity clause makes decision-making process extremely slow and difficult.
Even after a decision has been taken, SAARC has no ability to enforce imple-
mentation of agreed upon measures. Further, the Charter provides that “bilateral
 Origin and evolution of SAARC 105
and contentious issues are excluded from the deliberations of the Association.”
The inclusion of this principle in the Charter in 1980s was considered as prag-
matic, given the existence of a host of bilateral problems primarily between
India and Pakistan, but also between India and its smaller neighbors, including
Nepal, Bangladesh, and Sri Lanka. But, it has serious implications for SAARC’s
growth. While bilateral issues can be understood and well defined, the “con-
tentious issues” are clearly subjective determination of member states because
there is no specific criteria in the Charter that defines a contentious issue. In the
absence of specific criteria, a member state can consider any issue as contentious
and thus prevent its discussion or resolution at the SAARC forum. It can be
argued that by excluding contentious issues from discussion at SAARC forum,
the regional leaders lost a vital opportunity to allow a critical role for SAARC as
a mediator in regional conflicts. Consequently, SAARC has been mostly a place
for dialogue with an aversion to addressing the core issue of security and limited
involvement in concrete cooperation.

SAARC and security issues

Even though the framers of SAARC insisted that they were not setting up a
security-oriented organization, security matters have tended to dominate recent
summit meetings of top SAARC leaders. As discussed earlier in this chapter,
security concerns formed an important part of considerations for the establish-
ment of SAARC. In fact, in his initial proposal, the late President of Bangladesh,
Ziaur Rahman, underlined the need for security cooperation among South Asian
countries because of his conviction that peace and security were prerequisites
for economic progress in South Asia. However, it was necessary to leave out
such a role for SAARC because of the serious opposition from Indian and Pak-
istani leaders (Mohsin 2005: 36). The SAARC formula, which developed after a
prolonged discussion among South Asian political leaders, was to eschew secur-
ity problems, leaving these problems to national action and bilateral or multilat-
eral cooperation through other channels. The objectives of SAARC were set to
enhance economic and other forms of non-military cooperation among South
Asian countries. It was thought that increasing cooperation in the economic area
(low politics) and other soft areas would eventually lead to stability, develop-
ment, and peace in the region.
Two different visions seem to have emerged among South Asian leaders
about the role of SAARC in the region. While Indian leaders emphasize that
SAARC’s energy should be directed to achieve regional economic progress and
prosperity, other SAARC leaders see SAARC as an instrument for peace,
stability, security, and development. This divide in the vision between Indian
leaders and other South Asian leaders has prevented SAARC from addressing
the core issue of security in a transparent manner. It is true that military topics
are kept off the formal agenda of SAARC meetings of the heads of the govern-
ment and foreign ministers of South Asian countries. But, the top officials at
106 Origin and evolution of SAARC
these meetings have often taken advantage of the opportunities to discuss
security-related issues outside of formal sessions. However, after two decades
and since the Islamabad Summit in 2004, South Asian leaders have started to
openly talk about the need for security cooperation in South Asia. Commenting
on the need to strengthen regional cooperation efforts in South Asia at the
twelfth SAARC summit in Islamabad (2004), Indian Prime Minister Vajpayee
made indirect references to the imperatives of security cooperation in South
Asia. He called for an end to “mutual suspicions and rivalries” and emphasized
that “history can remind us, guide us and warn us. It should not shackle us . . ..
We have to look forward now with a collective approach in mind to achieve
peace, stability, and prosperity in the region” (Mohsin 2005: 38; emphasis
added). Other South Asian leaders were less indirect in their comments on the
need for security cooperation at this summit. Describing the twelfth Summit as a
“key watershed event,” Prime Minister Begum Khaleda Zia of Bangladesh
expressed hope that it would lead to peace and security in South Asia. Prime
Minister Zafarullah Jamali of Pakistan told the participating delegates at this
summit that greater economic integration is inexplicably linked to the creation
of requisite political climate of peace and stability. Without security coopera-
tion, he contended, deeper economic cooperation in South Asia would remain a
distant dream. Hailing the peace overtures between India and Pakistan at the
summit, Sri Lankan President Chandrika Kumaratunga observed that peace
between India and Pakistan would “boost chances of saving South Asia from
global marginalization.” While President Maumoon Abdul Gayoom of Maldives
made a strong plea for security cooperation among the South Asian countries,
Nepalese Prime Minister Surya Bahadur Thapa underscored the critical import-
ance of collective efforts to combat terrorism in South Asia.15
The open references to security cooperation by South Asian leaders reflect
the growing importance of security consideration in SARC process. They also
demonstrate that for effective implementation of regional cooperation programs
in a region like South Asia, it is necessary to address political and security
issues, no matter how controversial they are. At least, four developments can be
discussed here to explain the imperatives for regional security cooperation in
South Asia. First, the asymmetry between India and her neighbors in respect to
size, demography, military, technology, and economic capabilities has generated
apprehension among smaller South Asian countries about India’s regional stra-
tegic goals. Unlike other regions, where states demonstrate their preoccupation
with security from external interferences, smaller countries in South Asia are
preoccupied with security from Indian interference. As discussed in the previous
chapter, these countries have sought external intervention to counter the
prospect of any Indian intervention into their domestic affairs. Indian policy-
makers in recent years recognize that their failure to inspire trust and confidence
and to remove threat perceptions among South Asian neighbors will only
strengthen the prospects of more external intervention in the region. In addition,
India’s neighbors have been experiencing domestic turmoil, political instability,
and worsening security situation. India’s concern is that continuation of such
 Origin and evolution of SAARC 107
turbulence and volatile environment in her neighborhood would be less attract-
ive for foreign investors who are looking at India as a new investment destina-
tion. This would have an adverse impact on India’s economic growth and
aspiration for global leadership. Thus, with widespread instability and uncer-
tainty in the neighborhood, India has no choice but to actively engage in security
arrangements with her neighbors to bring peace and stability to the region.
The enormous economic, military, and humanitarian cost of managing conflicts
in South Asia provides the second imperative for regional and even multilateral
security cooperation. In their efforts to bring stability and peace to the region,
Indian policymakers have slowly realized that it is no longer possible and even
desirable to prevent the involvement of major powers in the region’s security
affairs. The cost of peace, the need for India’s defense modernization, and India’s
strategic goal of a major global power require India to pursue, what C. Raja Mohan
(2004) calls as a policy of “security multilateralism.” This policy tolerates inclusion
rather than exclusion of major powers in managing South Asia’s security-related
issues. In the post-Cold War era, security multilateralism is in India’s interest and
remains a realistic option for India to secure her global objective.
The acquisition of nuclear bombs by India and Pakistan and the resulting
“stability–instability paradox” that South Asian region has fallen into (Ganguly
2001: 126–129) provides the third imperative for regional security cooperation
in South Asia. After their nuclear tests in May 1998, both Indian and Pakistani
leaders sought to initiate active diplomatic engagements, including high-profile
summitry meetings, to develop preventive measures. The failure of these initial
efforts, coupled with the outbreak of Kargil war in 1999 and continuing low-
intensity conflicts in Kashmir, has increased the urgency of security cooperation
between the two nuclear weapon capable states. The possibilities of nuclear
accidents, nuclear terrorism and blackmail, misperception, unauthorized nuclear
use, and technological error have reinforced the importance of regional security
cooperation to manage conflicts between India and Pakistan. In this context, the
concept of “cooperative security” can be advanced to capture the logic of
regional security cooperation in South Asia (Dewitt 1994; Nolan 1994; Banerjee
1998; Raja Mohan 2004). Although the term “cooperative security” has been
extensively used by security scholars in the post-Berlin Wall (1989) discourse to
explain the changing international relations in Eastern Europe and former Soviet
Republics, there is no consensus on the meaning of the term. C. Raja Mohan
(2004: 7) provides a description of the term, which is specifically relevant to
South Asian security environment:

Cooperative security could be understood as policies of governments, which

see themselves as former adversaries or potential adversaries to shift from
or avoid confrontationist policies. Cooperative security essentially reflects a
policy of dealing peacefully with conflicts, not merely by abstention from
violence or threats, but by active engagement in negotiation and a search for
practical solution and with a commitment to preventive measures. Coopera-
tive security assumes the existence of a condition in which the two sides
108 Origin and evolution of SAARC
possess the military capabilities to harm each other . . .. Establishing cooper-
ative security runs into a complex process of building confidence and trust
and there could be repeated failures.

Given the reality of security and economic interdependence in South Asia

and the prevailing security complex in which both India and Pakistan develop
their security strategies, the idea of cooperative security offers a realistic frame-
work for Indian and Pakistani leaders to address the issues of conventional mili-
tary and nuclear conflict management in the region.
Finally, the most important imperative for regional security cooperation
comes from the threat of cross-border terrorism in South Asia. There is a con-
vergence of dominant public and official opinion in South Asia on the linkage
between terrorism and decline in investment and economic growth. Given the
surge in terrorist activities in South Asia after September 11, 2001, South Asian
governments have shown greater interests in regional efforts to fight against ter-
rorism. The signing of an additional protocol on terrorism at the thirteenth
Dhaka Summit by the leaders of South Asian countries is an indication of this
intention. However, South Asia’s record of implementing regional programs in
fighting against terrorism is far from impressive. The heads of government of
seven SAARC countries signed a Regional Convention on Suppression of Ter-
rorism in November 1987. After ratified by all member states, this accord came
into force in August 22, 1988. Although touted as the most significant achieve-
ment of SAARC, this accord remained a non-starter from the beginning with
only lip-service endorsements from Pakistan and other SAARC countries. The
accord exists today but perhaps as a statement of an ultimate goal than anything
else. The success of any regional accord to address issues of terrorism in South
Asia effectively requires coordination and application of complex policies. To
what extent South Asian leaders can realistically implement these policies given
their domestic political compulsions remains an open question.

Conclusion
To be fair, SAARC has produced some positive results. One of the most
significant achievements of SAARC relates to its annual summit meetings,
which is provided by the SAARC Charter. The primary objective of the annual
summit meetings is to facilitate face-to-face interaction and communications
between heads of South Asian states or governments which would not have been
otherwise possible. It is true that through improved communications and closer
personal interaction on an annual basis, South Asian top political leaders have
achieved some success in finding mutually acceptable solutions to their many
domestic and regional problems. But, during the past two decades (1985–2005),
eight annual summits – three summits between 1985 and 1995 and five summits
between 1995 and 2005 – had been missed because of political tensions between
India and her neighbors.16 The failure to hold these annual summits has,
undoubtedly, deprived the South Asian leaders of an important opportunity for
 Origin and evolution of SAARC 109
constructing relationships based on shared interests and has generally become
counterproductive for moving SAARC agenda forward.
In nutshell, rhetoric has generally outdistanced performance in South Asia’s
efforts at regional cooperation. Over the past two decades, there has been a pro-
liferation of SAARC-related meetings and declarations, while real progress has
been elusive. Deeper regional cooperation in South Asia has not been possible
because of the disparate nature of the region and Indo-Pakistani antagonism. It is
ironic that the two major powers in South Asia are simultaneously quarreling
with one another and urging greater South Asian institutionalized cooperation.
Unless Indo-Pakistani tensions diminish, real progress of SAARC will not be
possible. From the point of view of SAARC’s growth, it remains problematic
that the political leaders of both India and Pakistan find it more useful to build
relationship with China, countries in Central Asia, Middle East, and Western
powers than to invest their political energy and capital to help build a greater
commonality of interest and perspectives among themselves and their South
Asian neighbors. Despite all the big talk of growing need for regional coopera-
tion by the smaller states of South Asia, their governments remain focused on
their own internal problems and bilateral relations with their immediate giant
neighbor, India. It is not surprising, therefore, that more than 20 years after its
creation, SAARC has achieved little tangible results, and there is no real sense
of a SAARC community except among a small group of officials and scholars.
This is recognized by the political leaders of South Asian countries. Addressing
the Foreign Ministers’ meeting in November 2005, which was held just before
the thirteenth SAARC Summit meeting at Dhaka in December 2005,
Bangladesh Foreign Minister, Morshed Khan, stated: “this summit will not be a
summit of declaration, it would be a summit of implementation” (Financial
Express November 13, 2005). Lack of implementation of agreed upon programs
has, undoubtedly, diminished the relevance of SAARC. Why has SAARC not
been able to implement its programs effectively can be explained by examining
several serious challenges that political leaders face in South Asia. These chal-
lenges are discussed in the next chapter.
5 The challenge of regionalism in
South Asia

This chapter examines four major challenges that have significant bearing on the
growth of regional cooperation in South Asia: India’s hegemonic status and Pak-
istan’s continuing challenge to India’s position, existence of weak ruling coali-
tions, ethnic crisis, and nuclear issues. Specifically, I explore the following
questions. How has India’s hegemonic status affected the regional cooperation
activities in South Asia? Is India’s structural domination a “facilitating con-
dition” for the growth of regional cooperation in South Asia? How has the
strength of South Asian governments affected the process of regional coopera-
tion? What are the implications of ethnic dynamics for national cohesion and
regional accommodative diplomacy in South Asia? And finally, what are the
implications of overt nuclear capability of India and Pakistan for regional
stability and cooperation in South Asia?

Hegemony and regionalism

The growing literature on hegemony and regionalism suggests that regional
groupings operating with the presence of a benevolent hegemonic power are
more likely to experience an enhanced level of regionalism accompanied by the
creation of regionalist institutions than are groups without a benevolent hege-
monic power (Walt 1987; Hurrell 1992: 121–139; Crone 1993; Waltz 1993:
44–79). The basic line of argument in this literature is that the benevolent
leading country within a region can serve as an institutional focal point in the
coordination of rules and policies and through side-payments can help to ease
tensions that arise from the inequitable distribution of gains from regional coop-
eration. Absence of hegemonic leadership leads to coordination dilemma (CD)
and can make coordination problem very difficult to resolve. The relative
success of the European Union with Germany as the regional leader and
NAFTA with the United States as the dominant power provides evidence to this
assertion. In contrast, absence of regional leadership and the consequent CD
have led to the lack of success of many regional cooperation schemes. Some of
the examples of less successful regional cooperation schemes are the LAFTA,
the ANDEAN Pact, Caribbean Community, Arab Common Market, and Eco-
nomic Community of West African States.1
 Challenge of regionalism in South Asia 111
India occupies a preeminent position in the South Asian regional system in
terms of its size, GDP, population, and military capability. Table 5.1 provides a
comparative summary of economic, demographic, and military attributes of
regionally dominant powers in selected regional systems and their implications
for the growth of regional cooperation. India’s territory accounts for 73 percent
of the total region, and its population is more than three times of the combined
population of all other South Asian countries. India also accounts for 75
percent of the region’s GDP, 79 percent of value added in manufacturing, 78
percent of the total exports, and 60 percent of all imports into South Asia.
Additionally, India has 100 percent of the total resources in the region with
respect to iron ore, bauxite, copper, gold, lead, silver, and zinc and more than
80 percent of the region’s coal and crude oil reserves. India’s military superior-
ity remains unmatched in South Asia (The Military Balance 1999–2000,
2004–2005; World Bank World Development Data: Country Data 1999, 2000,
2005).
The literature on hegemonic stability theory offers four major arguments to
explain how a hegemonic power can provide a powerful stimulus for regional-
ism and the creation of regionalist institutions (Hurrell 1992: 129). Table 5.2
summarizes these four arguments as:

1 balance of power – states seek subregional groupings to improve their

balance of power vis-à-vis a regionally dominant or threatening state;
2 regionalist entrapment – states support the creation of regionalist institu-
tions to limit the free exercise of hegemonic power;
3 bandwagoning – weaker states seek accommodation with the regional hege-
mony in order to receive military and economic rewards;
4 declining hegemony – declining hegemony may force the hegemon to initi-
ate common institutions to pursue its interests, to solve common problems,
and to generate international support and legitimacy for its policies.

However, as Table 5.2 illustrates, South Asia presents a far more complex
regional system in which India’s hegemony has produced a dynamic that is not
always conducive to the growth of regional cooperation.

Balance of power
In many parts of the world, subregional groupings have developed as a means of
changing the balance of power vis-à-vis a regionally dominant or threatening
state. Although formed in 1967, the ASEAN was galvanized into action only in
1976 when the security threat from Vietnam increased with the victory of North
Vietnamese forces over the United States and its Southern proxy. The prospect
of improving balance of power against the overpowering presence of South
Africa in the region motivated political leaders to establish SADCC in 1980.
Similarly, the establishment of Mercosur in 1991 (presumably against the domi-
nance of the United States) and the GCC in 1981 (against the dominance of Iran)
Table 5.1 Dominant power in selected regional groupings
Name of regional
cooperation schemes
North American Free
Trade Agreement
(NAFTA)
Economic Community of
West African States
(ECOWAS)
Commonwealth of
Independent States (CIS)
Common Market for
Eastern and Southern
Africa (COMESA)
South Asian Association
for Regional Cooperation
(SAARC)
Source: World Bank, World Development Report (New York: Oxford University Press, 1999); The Military Balance 1999–2005 (London: IISS, October 1999).
Year Dominant power Outcome
signed
1992 United States Relatively successful.
• US accounts for more than 85% of NAFTA’s GDP. Role of US – serves as an institutional focal
• US population is more than double the combined point and regional paymaster.
• population of Canada and Mexico.
• US military strength is unmatched in the region.
1975 Nigeria Relatively stagnant.
• When ECOWAS was formed, Nigeria accounted for Nigeria’s domination is challenged by other
• more than 65% of the region’s GDP. Currently, members.
• Nigeria accounts for more than 42% of the region’s GDP. Coordination dilemma persists.
• Nigeria has about 54% of region’s total population.
• Nigeria’s military is the strongest in the region.
1991 Russia Limited growth.
• Russia accounts for more than 68% of the region’s GDP. Lack of mutual trust among members.
• Russia has more than 50% of the region’s total Lack of confidence on Russia’s leadership.
• population.
• Russia’s conventional military strength is the strongest
• in the region.
1993 Egypt Limited growth.
• Egypt accounts for roughly 50% of the groupings’ GDP. Lack of confidence on Egyptian leadership.
• Egypt has the largest population – more than 20% of the Egypt’s leadership is contested;
• combined population of the bloc members. Coordination dilemma persists.
• Egypt’s military is the strongest in the bloc.
1985 India Limited growth.
• India accounts for more than 75% of the region’s GDP. Lack of mutual trust.
• India’s population is more than three times of the India’s leadership is contested by Pakistan;
• combined population of the region. Coordination dilemma persists.
• India’s conventional military strength is unmatched in
• the region.
Table 5.2 Hegemony and regional cooperation dynamics in South Asia
Arguments Regional dynamics
Balance of power States seek subregional groupings to improve their
balance of power vis-à-vis a regionally dominant state
(ASEAN against Vietnam in 1976); SADCC against
South Africa until 1992; ECOWAS against Nigeria;
Mercosur against USA; GCC against Iran)
Regionalist entrapment States support the creation of regionalist institutions in
order to constrain the free exercise of hegemonic power
(European Community versus Germany in 1957)
Bandwagoning Weaker states have a tendency to seek accommodation
with the regional hegemon in order to receive security
and economic rewards (Mexico in NAFTA)
Declining hegemony Declining hegemony may force the hegemon to take
initiatives for the creation of common institutions to
pursue its interests, to solve common problems, and to
generate international support and legitimacy for its
policies (role of the US in NAFTA and APEC)
South Asian dynamics
Security dilemma between India and Pakistan,
contributing to unhealthy arms race and the
development of Nuclear Weapons
India’s fear of South Asian neighbors’ ganging up
against India. Hence, India has consistently
opposed any agenda of regional settlement of
disputes and favored bilateral settlement of disputes
Trojan Horse fears, i.e. South Asian countries’ fear
of cross-border ethnic links with India and its
potential sabotaging effect in their nation-building
process
South Asian neighbors’ fear of India’s potential
expansionism and widespread mistrust toward
India
114 Challenge of regionalism in South Asia
suggest how states in a particular region seek to form or strengthen regional
organizations to balance against a regionally dominant power.
In South Asia’s regional system, the structural imbalance between India and
Pakistan and other smaller countries is quite clear. This structural imbalance has
led policymakers to pursue contrasting policy objectives. While India desires to
maintain a hierarchical regional order, Pakistan and other South Asian countries
are opposed to this design. Of all the South Asian countries, however, Pakistan’s
opposition to India’s predominance in South Asia has remained the most sub-
stantial and has contributed to a classic security dilemma in the region (Buzan
and Rizvi 1986: 8).
This security dilemma has led to an unhealthy arms race, including nuclear
weapons development, between India and Pakistan, making regional cooperation
a prime casualty. Since independence, Pakistan’s regional policy has revolved
around two objectives: to achieve balance of power vis-à-vis India and to liber-
ate Kashmir to prove the validity of the two-nation theory.2 In order to achieve
these two objectives, Pakistan has always sought external support. During the
Cold War era, Pakistan joined the two United States-sponsored organizations,
the South-East Asian Treaty Organization (SEATO) and the Central Treaty
Organization (CENTO), to insure American support in case of any military con-
frontation with India. From 1947 to 1970, despite India’s relative victory in two
Indo-Pakistani wars on Kashmir in 1948 and 1965, Pakistan was largely suc-
cessful in challenging India’s predominance in the region with economic and
military support from the United States, China, and Turkey.
The liberation of Bangladesh in 1971, with India’s military intervention,
changed the structural dynamics of power in South Asia. The emergence of
Bangladesh as an independent state had two important implications: first, Pak-
istan suffered a substantial reduction in its structural strength; and second, the
two-nation theory became irrelevant to South Asian politics. Pakistan’s breakup
induced a deep sense of insecurity in the minds of its policy-making and polit-
ical elites. Cognizant of their military’s structural weakness to deal with Indian
conventional military superiority, the Pakistani elites chose to pursue three strat-
egies to offset India’s dominance in the region:

1 seek increasing military and economic support of China, the United States,
and the Gulf countries;
2 develop a clandestine nuclear program;
3 seek to internationalize the Kashmir issue, despite the Simla agreement of
1972 in which both India and Pakistan agreed to resolve their dispute
through bilateral negotiations.

With the acquisition of nuclear bombs in May 1998 by both India and Pakistan,
the latter’s objective of improving balance of power with India may have been
partially fulfilled. However, as illustrated in Table 5.3, India remains far ahead
of Pakistan in terms of conventional military capability.
The development of nuclear weapons by India and Pakistan does not guaran-
Table 5.3 The balancing act – India and Pakistan

India Pakistan

Defense spending (% of GDP) 2.7 (1985) 6.7 (1985)

2.7 (1998) 6.5 (1998)
2.6 (2003) 4.5 (2003)
Number of Active Armed Forces 1,200,000 (1985) 575,000 (1985)
1,180,000 (1998) 600,000 (1998)
1,325,000 (2003) 619,000 (2003)

Categories of Weapons Designation Units Date Designation Units Date

Submarine-launched-ballistic missiles Sagarika – Development – – –

Surface-to-air missile SA-3b, SA-8b, SA-16 – – – –
Cruise missile BrahMos – 2003 – – –
Surface-to-surface missile Prithivi I (150 km) – 2004 Hatf III (280 km) – 2003
Prithivi II (250 km) – 2004 Shaheen I (750 km) – 2003
Agni I (700 km) – 2004 Shaheen II (2000 km) – 2004
Agni III (3,000 km) – Development Ghauri I (1300 km) – 2004
Ghauri III (3000 km) – Development
Fighter Planes (ground attack) MiG-21 220 2003 Mirage III 43 2004
MiG-23 50 2003 F-7P&F-7PG 132 2005
MiG-27 70 2003 Mirage 68 2004
Su-30K 18 2003 – – –
Su-30MKI 10 2003 – – –
Jaguar 64 2004 – – –
Mirage 2000 40 2004 – – –
Main battle tank Arjun 124 2004 Al-Khalid 45 2004
T-90 310 2005 T-80UD 320 2004

Source: The Military Balance 1999–2000; 2004–2005, International Institute for Strategic Studies (London: IISS, October 1999, 2005).
116 Challenge of regionalism in South Asia
tee a lasting peace or growth of cooperative activities in the region. As discussed
later in this chapter, the overt nuclearization of India and Pakistan has intro-
duced a regional “stability/instability paradox” in South Asia. In the presence of
such a paradox, bilateral talks between India and Pakistan have acquired more
significance than multilateral cooperation. In addition, the Kashmir issue still
remains the major bone of contention between India and Pakistan and continues
to limit the growth of regionalism in South Asia.

Regionalist entrapment
States often take initiatives to create regional institutions in order to contain the
hegemonic power of a dominant state in a region. The position of Germany in
the European Community is a classic illustration of this regionalist entrapment
strategy (Hurrell 1995: 50–51). In South Asia, smaller states are always con-
cerned about border disputes with India and the latter’s unsolicited intrusion into
their domestic affairs. Thus, Bangladesh’s initiative to create SAARC in the late
1970s and the enthusiastic endorsement of this initiative by Bhutan, Maldives,
Nepal, and Sri Lanka is partly guided by this regionalist entrapment sentiment
vis-à-vis India. The regionalist entrapment logic explains why the initial
Bangladesh draft paper for regional cooperation in 1979 included security as one
of the areas of cooperation among the South Asian countries. However, India’s
opposition to the security matters led Bangladesh to introduce a new draft paper
in 1980, which dropped all references to security matters and suggested only
non-controversial areas for cooperation.3
Except for Bhutan and Maldives, all SAARC member countries had sought
external assistance to limit India’s exercise of hegemonic power in the region.
After the 1975 assassination of its democratically elected President, Mujibur
Rahman, military and civilian rulers in Bangladesh have often sought external
involvement from the United States, the United Nations, and member countries
of the Organization of Islamic Conferences (OIC) to resolve the Ganges water
dispute with India. During the early 1980s, Sri Lanka has made consistent
efforts to involve external powers in the sponsorship of a UN resolution to make
the Indian Ocean a nuclear-free zone. Despite the existence of an Indo-Nepal
Friendship Treaty since 1950, and India’s serious objection to the proposal of
declaring Nepal a “zone of peace,” Nepal’s monarchy during the late 1980s
sought continuous support from the United States and China to make this pro-
posal a reality. The South Asian ruling elites’ policies of externalization and
external mediation of bilateral disputes are presumably designed to limit India’s
sphere of influence in South Asia and have directly contradicted Indian ruling
elites’ objective of Indian autonomy in the region (Buzan and Rizvi 1986).
Autonomy for India, as envisioned by its political leaders, requires that the
whole of South Asia be free of outside influences. Thus, India has always
opposed outside intervention in South Asian affairs.
The Indo-centric geographic structure of South Asia has led India’s policy-
makers to articulate a regional doctrine of Delhineation (that is Delhi’s world
 Challenge of regionalism in South Asia 117
view), which essentially argues that in order to achieve regional peace, security,
and stability in South Asia, India has to remain strong and maintain military
superiority in the region (Lyon 1992: 25039). Indian policymakers believe that
once India’s military superiority is recognized by its neighbors, regional peace
will prevail in South Asia. In order to maintain its military superiority in the
region, India has engaged in various military-related activities during the late
1980s and 1990s: “Operation Brasstacks” (military exercise on the Indo-
Pakistan border) in 1987; peace-keeping operation in Sri Lanka from 1987 to
1990; sending troops to Maldives to foil a coup in 1988; and holding joint mili-
tary exercises with the United States in the Indian Ocean at regular intervals
since 1992. These moves, however, are viewed by its neighbors as India’s
aggressive hegemonistic designs and have generated a fear of New Delhi’s
potential expansionism and unsolicited intrusion into their domestic affairs. Not
surprisingly, all of India’s neighbors since the 1980s have actively sought to
promote regionalism to restrict India’s hegemonic power.
The logic of regionalist entrapment is apparent in South Asian neighbors’
insistence to place all bilateral disputes with India on the SAARC agenda for
discussion. But India remains strongly opposed to such an idea because of its
fear that discussions on bilateral conflicts will eventually lead to its isolation and
will provide an opportunity for South Asian neighbors to “gang up” against
India. India’s insistence on a bilateral approach, as opposed to its neighbors’
emphasis on using a multilateral approach to resolve bilateral conflict issues, has
further strengthened their mutual acrimony and distrust and has prevented any
bold initiatives for a permanent settlement of the Kashmir dispute and for the
growth of regionalism in South Asia.

Bandwagoning
Neo-realist literature suggests that weaker states in a regional system tend to
pursue a bandwagoning strategy – seeking accommodation with the local
hegemon in order to receive economic and military benefits (Waltz 1993:
54–61). Bandwagoning is most likely to emerge as a preferred strategy for the
small states when they are located in close geographical proximity to the
hegemon and when there is a great power disparity. In South Asia, all the states
share a common border with India. Given the geographical proximity, great
power disparity, and the potential for economic and security benefits from an
alliance with India, it would seem that bandwagoning would be a preferred strat-
egy for smaller South Asian countries. Yet, except for Bhutan and Maldives,
other small states such as Nepal, Sri Lanka, and Bangladesh have not employed
this strategy because of domestic opposition and ethnic tensions. Much of
domestic opposition from dominant domestic actors like bureaucracy, military,
business, and religious leaders is rooted in the existence of a widespread fear of
India’s overwhelming military and economic domination in the region. The
dynamics of regional ethnic relations (which is discussed later in this chapter)
and ethnic tensions in which India’s hand is generally suspected by its neighbors
118 Challenge of regionalism in South Asia
have also largely undermined cooperative endeavors of smaller South Asian
states.

Declining hegemony
A central argument of Hegemonic Stability Theory is that, by virtue of its
dominant position, a benevolent hegemon can insure the stability and smooth
functioning of regional institutions and thus can promote growth of regional
cooperation. But, if a hegemon’s dominance is extreme, it will make the process
of institutionalized regionalism irrelevant (Hurrell 1992: 52–53). On the other
hand, declining hegemony may force the hegemon to take initiatives for the cre-
ation of regionalist arrangements and institutions to promote its interest and to
generate international support and legitimacy for its policies and leadership posi-
tion (Crone 1993: 167–183). India’s active role toward promoting regionalism in
South Asia in the post-1990 period supports the declining hegemony argument.
Until the early 1990s, India’s policymakers chose to take only a cautious
approach to any regional cooperation initiative in South Asia because of their
belief that India is unlikely to accrue substantial economic benefits from any
SAARC arrangement.
But, the end of the Cold War provides many new challenges for India to reex-
amine its regional policy options. India’s aspiration for a global leadership role
has received a serious setback as a result of:

1 the Soviet Union’s demise, and consequently, India’s loss of a strong ally in
international forums;
2 growing acceptance of China’s strategic capability and leadership by the
world community;
3 declining relevance of the NAM;
4 the rise of Malaysia, Indonesia, and South Africa as new leaders on Third
World-related matters, eclipsing India’s role in such multilateral forums as
Commonwealth meetings and G-15 meetings, etc.

Indian leaders have realized that New Delhi needs to demonstrate its leader-
ship first in South Asia to generate legitimacy for its leadership in the inter-
national arena. As stated by India’s former Prime Minister, I.K. Gujral, “India’s
future depends on what its neighbors think of it. If India’s energies are wasted in
fights with neighbors, India will never become a world power” (Basu 1998: 4).
Successive Indian leaders have echoed this sentiment and have shown their will-
ingness to improve relations with their neighbors in order to accomplish India’s
larger goal of regional leadership.
Several important policy initiatives by India since becoming a nuclear
weapon capable state in 1998 illustrate India’s willingness to improve its rela-
tions with neighbors, particularly with Pakistan. First, in February 1999, Prime
Minister A.B. Vajpayee inaugurated a bus service between the border cities of
Amritsar in India and Lahore in Pakistan. At the end of this bus trip, Prime
 Challenge of regionalism in South Asia 119
Minister Vajpayee and the Pakistani Prime Minister Muhammed Nawaz Sharif
signed the Lahore Declaration, reiterating their determination to resolve bilateral
issues in a peaceful manner. The declaration, which included the principles of
Simla Agreement of 1972, led to much euphoria in New Delhi’s policy-making
circle about its potential positive spillover in the regional and international
context. However, this euphoria was short-lived. In May 1999, Pakistani troops
attempted to intrude into the Indian controlled territory in Kashmir by crossing
the LoC at Kargil sector (Ganguly 2001: 83–88). Despite a massive mobilization
of its troops, India resisted from engaging in a full-fledged war with Pakistan.
The role of international diplomacy led by the United States, the United
Kingdom, and European Union, the fear of a nuclear war, and India’s desire to
gain world’s recognition as a responsible great power can be considered as some
of the important factors for India’s decision not to engage in a full-scale war
with Pakistan over the Kargil issue.
India’s second policy initiative was Prime Minister Vajpayee’s invitation to
Pakistan’s military ruler, General Pervez Musharraf, to a high-powered Agra
Summit in 2001 to resume bilateral talks for improving relationship between
India and Pakistan despite the general’s known active role in the Kargil war. The
Summit failed to produce any positive result due to India’s objection to Presid-
ent Musharraf’s efforts to use this summit platform to raise the Kashmir issue.
Third, despite intense domestic pressures, Prime Minister Vajpayee refused to
go for any military retaliation over the sensitive issues of Pakistani-trained ter-
rorists groups’ – Lashkar-e-Taiba (LeT) and Jaish-e-Muhammad (JeM) – attacks
on Indian Parliament in New Delhi in December 2001. In addition, continuous
killings of hundreds of innocent civilians in Kashmir during 2002–03 added
pressure on Vajpayee administration for decisive military actions. Instead, Prime
Minister Vajpayee insisted on diplomatic negotiations and took another import-
ant initiative in October 2003 by offering to resume dialogue with Pakistan to
improve bilateral relations. Pakistan reciprocated to India’s peaceful overtures
by announcing cease-fire along the 150-kilometer stretch of LoC, restoring
diplomatic relations and resuming bilateral talks on all issues, including
Kashmir and intraregional trade. Finally, India’s rapid response of economic and
military support to help the earth quake victims in Pakistan-occupied Kashmir in
the fall of 2005 seems to provide an opportunity for the two countries to engage
in peaceful diplomacy.
After 2001, almost all of India’s neighbors have experienced deteriorating
economic and security conditions. Growing political instability in Pakistan,
Bangladesh, and Nepal, continuing turmoil in Sri Lanka, and the worsening
security situation in Afghanistan have led observers to describe these states as
“failing states.”4 India’s concern is that a volatile neighborhood and continuing
turbulence in the region may discourage foreign investors who are looking at
India as a new economic destination. This may retard India’s growth and its
aspiration of becoming a global player. Consequently, achieving peace, prosper-
ity, and stability in South Asia has become one of the top priorities of India’s
external policies. As Prime Minister Manmohan Singh observes:
120 Challenge of regionalism in South Asia
We face a turbulent neighborhood. It is our foremost challenge to create a
stable and cooperative atmosphere in our region that will allow us to con-
centrate our energies on tackling the problems at home and in our region.
Peace, prosperity, and stability in South Asia are the top priorities of our
external policies . . .. Our emphasis is on extending our support and coopera-
tion to our neighbors so that causes of instability are minimised.5

Moreover, Indian policymakers also know that as long as South Asia remains
one of the world’s least economically and politically integrated regions, China’s
growing influence in the region will be difficult to contain. There is a growing
consensus among Indian policymakers about SAARC’s potential to insure
regional stability, status quo in South Asia, and to provide opportunity for
improving bilateral relations through regular informal meetings. Not surpris-
ingly, Indian policymakers have shown renewed enthusiasm for improving
India’s relations with its neighbors and for the growth of SAARC in recent
years. From an economic perspective, Indian policymakers have realized that an
intraregional trading arrangement is beneficial for India’s economic interest.
This shift in attitude has strengthened New Delhi’s commitment to SAARC’s
growth in recent years.
Despite India’s renewed enthusiasm for regional cooperation, SAARC’s
growth has remained slow due to South Asian states’ fear about India’s
hegemony and its potential intrusion into their domestic affairs. South Asian
states also worry that SAARC’s growth will enable Indian goods to dominate
the regional market. This concern explains why Pakistan remains opposed to
any Indian initiative for trade liberalization in South Asia. In nutshell, India’s
hegemony, the lack of trust among South Asian states, and Pakistan’s
continuing challenge to India’s domination in South Asia have contributed to the
slow growth of SAARC in terms of institutional development and program
implementation.

Ethnic politics
South Asia is one of the world’s most ethnically and linguistically complex
regions. All the states of South Asia are home to multiethnic and linguistic
groups. Ethnic political mobilization has been a marked feature of their histories
and nation-building experience. The partition of the subcontinent in 1947, reor-
ganization of Indian states’ territorial boundaries in 1956, the secession of East
Pakistan in 1971, and the continuing civil war in Sri Lanka have been influ-
enced, to a large extent, by ethnopolitical and ethnolinguistic considerations.
Ethnic minorities in all the states of South Asia feel disadvantaged and resent
the inability of the central governments to deal with their concerns effectively.
Understandably, South Asian governments are concerned about the destabi-
lizing effect of ethnic disorder. Ethnic issues influence both domestic and
regional politics in South Asia. At the domestic level, South Asian governments
remain worried about the possibility of transformation of an ethnic crisis into an
 Challenge of regionalism in South Asia 121
autonomist–separatist movement. At the regional level, South Asian govern-
ments worry about the spillover effects of the ethnic crisis from one country to
the other and potential involvement of neighboring countries in their domestic
affairs. Some of the major ethnic crises and their implications for regional rela-
tions are discussed below.
Given the complexity of Indian society with its multitude of languages,
ethnic groups, castes (jatis), and “little societies” within which individual identi-
ties are determined by inherited affiliations, Indian state remains vulnerable to
ethnic unrest and its potential disintegrative effects (Hardgrave 1970: 8). India’s
achievement in maintaining its pluralistic political system in the face of such
diversity cannot be undermined. But, at the same time, efforts of central govern-
ment at New Delhi to maintain control over states’ politics and administration
have fostered resentment against the center among various regional and ethnic
groups and leaders. There is fear among Indian policymakers that ethnic and
regional agitation could lead to the emergence of separatist and autonomist
movements resulting in the country’s partition. Thus, New Delhi is worried
about Dravidian movement in Tamil Nadu, unrest in the northeastern hill areas
along the Chinese, Burmese, and Bangladesh borders – Assam, Nagaland and
Manipur; in Kashmir; and the Sikh Khalistan movement in Punjab in the 1980s.
The assassination of Prime Minister Indira Gandhi by Sikhs in 1984 at New
Delhi and her son Rajiv Gandhi by Tamil militants in 1991 in Tamil Nadu indic-
ates the extent of political violence ethnic bitterness can cause. Despite India’s
emphasis on secularism, political mobilization of Hindus and Muslims by their
local leaders often leads to sectarian violence, resulting in the killings of many
innocent people from two religious faiths. The spread of caste-based deadly riots
represents another dimension of ethnic violence in India. Coping with India’s
diversity has always been a challenge and the political leaders in New Delhi
often worry about the role of outsiders – in particular, Pakistan and Pakistan-
based terrorist organizations – in exploiting this diversity to weaken their
country.
Like India, Pakistani society has diverse ethnic and linguistic groups. Each of
Pakistan’s four provinces comprises a single ethnolinguistic group: Punjab with
Punjabis, Sindh with Sindhis, Baluchistan with Baluchis, and the Northwest
Frontier Province (NWFP) with Pashtuns. Punjabis are the largest single ethnic
groups and control much of Pakistan’s military and civilian government power.
Other ethnic groups – the Sindhis, Pathans, Baluchis, and Muhajirs (people who
came from India at partition) – resent Punjabi domination in Pakistan’s
economy, politics, and military. Unlike India, which has embraced federalism to
cope with its diversity, Pakistan under Jinnah and the subsequent civil and mili-
tary rulers has opted for a unitary centralized political structure to deal with its
provincial ethnolinguistic issues (Ahmed 1997: 236). The idea of greater provin-
cial autonomy has been rejected by Pakistani rulers since independence. For
many observers, this has become problematic in Pakistani politics (Cohen 2004:
227–229). Stephen Cohen provides an insightful analysis of this issue. Until the
1970s, the deepest “fault line” was between East Pakistan and West Pakistan
122 Challenge of regionalism in South Asia
with Bengalis of East resenting the domination of Punjabi-led ruling establish-
ment of West Pakistan. After the creation of Bangladesh in 1971, this “fault
line” has become more “diffused” with the spread of autonomist movements in
various provinces of Pakistan mainly as a reaction against the domination of
Punjabi-led civil–military leadership at the central government (Cohen 2004:
206).
Despite the existence of separatist movements in all the provinces of Pak-
istan, it is unlikely that the country will experience another Bangladesh or ethno-
linguistic breakup. Nonetheless, in the absence of genuine decentralization and
any democratic representation in the central government, Pakistani ruling estab-
lishment will continue to face separatist–autonomist movements in coming
years. Three factors – two internal and one regional – explain the likely con-
tinuation of these kinds of ethnolinguistic separatist movements in Pakistan.
First, until 1970s, the dominant narrative used by the Pakistani ruling estab-
lishment for the country’s national identity was to describe Pakistan as a “home-
land” for oppressed Indian Muslims. This narrative was defined entirely in terms
of Pakistan’s relations with India’s Hindu-dominated ruling elites. While it
served the interest of the military–bureaucratic elites well, it ignored the struc-
tural contradiction of Pakistani society, that is, domination-deprivation of one
groups of Muslims vis-à-vis other groups of Muslims. In the post-independence
Pakistan, while Punjabi Muslims dominated the country’s military and politics,
other ethnic groups’ experienced marginalization in terms of equal political
representation and sharing of political power. A fundamental structural issue
that intensified East Pakistan’s separatist–autonomist movement under the
leadership of Sheikh Mujibur Rahman of Awami League during 1960s was the
resentment of Bengalis against the Punjabi domination and the latter’s refusal to
address their demand for shared political power. Despite the country’s breakup,
Pakistan’s leaders are not showing any urgency to modify the post-independence
narrative and to address the issues of political representation and sharing of
political power as raised by other ethnic groups.
The second internal factor is the lack of willingness of Pakistani ruling elites
to grant more political autonomy to the provincial authorities to deal with the
ethnic issues. As the experience of India suggests, multiethnic states are difficult
to govern through centralized politics. Instead, regional autonomy may be neces-
sary to manage regional ethnolinguistic aspirations. But, Pakistan’s leaders,
including the current military regime under general Musharraf, do not seem to
have fully grasped the effectiveness of this regional management principle.
Instead, they have always sought to weaken provincial power and centralize
politics. As Stephen Cohen has perceptively observed:

It is noteworthy that almost all of Pakistan’s ethnolinguistic agitations were

triggered by the central government’s dismissal of a provincial government,
for example, in East Bengal and Sindh in the 1950s, Baluchistan in 1973
and 1988, and the NWFP in 1947 and 1973.
(2004: 229)
 Challenge of regionalism in South Asia 123
What Pakistan needs today to deal with these ethnolinguistic movements is more
provincial autonomy and representative government rather than more centralized
rule from Islamabad.
The third factor for Pakistan’s continuing ethnolinguistic separatist move-
ments has a regional dimension. Pakistan’s every ethnolinguistic group has had
cross-border ties with India and Afghanistan. From Islamabad’s perspectives,
both these states, and particularly India, have the potential to encourage ethnic
separatist movement in its soil. Thus, instead of addressing the demands of its
ethnic groups, Pakistan blames India for supporting the separatist movement.
Using ethnic unrest as an instrument of foreign policy, Pakistan resorts to a
retaliatory policy of supporting and encouraging separatist movements in India.
Thus, Pakistan has supported Kashmiri separatists for decades and housed ter-
rorists on its soil. It provided active support to Sikh separatists in the mid-1980s
possibly as a response to India’s support for Bengali separatists in the late
1960s. While blaming India serves Pakistan’s short-term objective, the long-
term solution requires the Pakistani rulers to address these ethnolinguistic sepa-
ratist movements within a pragmatic framework of political decentralization and
political representation at the center.
Sri Lanka’s ethnic crisis offers a significant lesson of how important it is for a
post-colonial state to address the issues of ethnic aspirations with urgency and in
a timely manner to achieve political stability. In Sri Lanka, there are several
ethnic groups – Sinhalese, Tamils, Moors, and Burghers. But the major ethnic
divide exists between the majority Sinhalese and the minority Tamils, who con-
stitute about one-fifth of the island’s populations. Several factors explain the
ethnic divide. First, a highly biased historical chronicle, the Mahavamsa, which
has been maintained by Buddhist monks since the third century, has kept alive
ancient anxieties among the majority of Sinhalese. The narrative of this Great
Chronicle blames successive Tamil invasions from South India between the
eighth and twelfth centuries for many of the Sinhalese problems in Sri Lanka (de
Silva 1981: 9–16; Wriggins 1992: 122). Second, after independence in 1948,
many politicians used the “threat from India” argument to mobilize the Sin-
halese support. This political mobilization of the majority around Sinhalese cul-
tural nationalism mainly to improve the leaders’ support base among the
Sinhalese seemed to have marginalized Tamil participation in the political
process. In 1956, government measures for the linguistic Sinhalese-only legisla-
tion and quotas for the Sinhalese majority at University alienated young Tamils,
making them more prone to violent methods.
Third, as discussed in Chapter 3, the issue of the future citizenship rights of
Indian Tamil estate workers who were brought to Ceylon by the British in the
mid-nineteenth century to work for the tea and rubber estates contributed to the
ethnic divide between Tamils and Sinhalese. When Sri Lanka’s citizenship laws
were enacted in 1948–49, various ethnic groups in Sri Lanka (Sinhalese, Sri
Lankan Tamils, Moors, and Burghers) were considered natural citizens by
descent. But Indian Tamils were required to prove a two-generation ancestry in
Sri Lanka to be granted citizenship status. According to one estimate, only 12
124 Challenge of regionalism in South Asia
percent of 825,000 Tamil applicants became eligible for citizenship on the basis
of two-generation ancestry criteria (Kanesalingam 1991b: 182). To deal with the
remaining people, Sri Lanka’s government created a “stateless” category of
Indian Tamils and sought to have India “repatriate” them. After several negotia-
tions, an agreement was reached between Sri Lankan President Sirimavo Ban-
daranaike and Indian Prime Minister Lal Bahadur Shastri in 1964, which
stipulated that India would grant Indian citizenship to 600,000 stateless Tamils
and repatriate them, while Sri Lanka would grant Sri Lankan citizenship to
375,000 such persons. Until the 1980s, stateless Indian Tamils did not receive
full Sri Lankan citizenship (Kanesalingam 1991b: 183). Frustrated with this
long-drawn process, some of the Indian Tamils started migrating to the northern
and eastern province of Sri Lanka, where Tamil militancy was growing.
Finally, a series of anti-government riots by Tamil militants in the Jaffna
peninsula in the 1980s and the subsequent crackdown by government forces
intensified ethnic crisis. In 1983, anti-Tamil riots by Sinahalese zealots in
Colombo with the help of some members of government killed hundreds of
Tamils and burned hundreds of Tamil business and homes. Unable to get urgent
protection from the government, thousands of Tamil families fled to Chennai in
India (Kanesalingam 1991b: 180–183). These events not only provoked angry
protests from Chennai politicians, but also radicalized many Sri Lankan Tamils
who were neutral until this point, believing that a negotiated compromise solu-
tion was still possible. Under the pressure of Tamil politicians in Chennai, New
Delhi decided to provide humanitarian and military assistance and training to
Tamil militants in Sri Lanka.
With the memory of Indian interventions in East Bengal and the consequent
breakup of Pakistan in 1971 not so distant, Sri Lankan leaders acted quickly to
engage India in becoming a part of the solution. Unable to defeat the Jaffna
militants or to concede to the independence demands of the most extreme
faction of Tamils – Tamil Tigers organized under LTTE with Velupillai
Prabakharan as its leader – President Jayewardene saw no alternative but to sign
a Peace Accord with Indian Prime Minister Rajiv Gandhi in late June 1987.
According to this Accord, India agreed to deploy an IPKF at President Jayewar-
dene’s invitation to maintain peace and stability in the Jaffna peninsula by nego-
tiating a peace agreement with Tamil militants. This engagement of India had
several serious consequences. First, instead of laying down their arms, the Tamil
militants fought guerrilla warfare against the IPKF. To deal with this situation,
India was forced to increase its military troops from the original number of
3,000 in 1987 to about 60,000 in 1989. In the process of fighting the Tamil
guerillas, India lost about 1,000 soldiers between 1987 and 1989, leading to
New Delhi officials’ allegation of lack of cooperation by Sri Lankan authority.
The second consequence of India’s engagement in Sri Lanka’s ethnic crisis is
the ultimate political price – in terms of the assassination of Prime Minister
Rajiv Gandhi – that New Delhi had to pay for its failure to contain Tamil mili-
tancy. The presence of Indian troops in Sri Lanka evoked anger among Sin-
halese nationalists. The radical Janatha Vimukthi Peramuna (JVP – People’s
 Challenge of regionalism in South Asia 125
Liberation Front) used this as an attack on Sri Lanka’s sovereignty to build a ter-
rorist movement against the government. Unable to cope with the growing Sin-
halese opposition, coupled with the failure of IPKF to defeat Tamil Tigers,
President Premadasa, Jayewardene’s successor, insisted for the withdrawal of
Indian troops in 1990. Finally, New Delhi’s perceived betrayal of the Tamils not
only angered Sri Lankan Tamils but also fuelled a discontent in Tamil Nadu.
This led to easy infiltration of Tamil militants into Chennai. One year after the
IPKF withdrawal from Sri Lanka, India’s former Prime Minister, Rajiv Gandhi,
was assassinated in Chennai by a female LTTE suicide bomber in 1991.
Since the 1990s, in addition to India, other external powers, notably, the
United States, EU, Norway, Sweden, and Denmark, have also been engaged in
the peace process without much success. Tamil militants’ repeated violation of
several cease-fire agreements, negotiated between the LTTE and Sri Lankan
government as well as outside powers over the past decade, leaves little hope for
an early solution of this crisis. This ethnic crisis, which has turned into a costly
“civil war,” has significant implications for Sri Lanka’s domestic stability as
well as India’s domestic politics. Politicians in New Delhi and Chennai remain
worried about the steady exodus of Sri Lankan Tamils to India. In 2005, 1,300
Sri Lankan Tamils crossed the Palk Strait to join the 55,000 Tamil refugees
living in 102 camps across the state of Tamil Nadu.6 At present, this may not
pose a serious challenge to India. But Indian politicians worry that if this trend is
continued, it will add to the discontent of Indian Tamils, leading to political
instability in Tamil Nadu.
India’s official policy on this ethnic crisis is to support the formula of
maximum devolution within a sovereign and territorially integral Sri Lanka.
This policy is based on several Indian concerns. First, if Sri Lanka is divided on
ethnic lines, it would have a spillover effect on the violent separatist movements
in India’s northeastern states. Second, the emergence of a separate Tamil state in
Sri Lanka might revive Tamil nationalism in India. Third, as mentioned earlier,
India’s neighbors are Asia’s most troubled countries. Another failing state on its
border would challenge India’s claim as a regional power capable of maintain-
ing regional stability. Thus, India is engaged in a delicate balancing act: it pro-
vides training to Sri Lankan army but refuses to sign a defense treaty with
Colombo to avoid any perception of supplying lethal weapons to Sri Lankan
troops that can be used against Tamil fighters. Along with the United States,
United Kingdom, Canada, Australia, and most recently European Union in May
2006, India has decided to add LTTE to its list of banned terrorist groups.
India’s basic objectives are to intensify diplomatic isolation and cut off external
sources of funding to put pressure on LTTE for a negotiated settlement. To what
extent these policies will succeed remains uncertain. But Sri Lanka’s costly
ethnic crisis has an adverse impact on the prospect of regional stability in South
Asia.
126 Challenge of regionalism in South Asia
Regional dimension
Since ethnic minorities in all states of South Asia have close affiliation with
their kinfolks in neighboring states, cross-border ethnic identities widely prevail
in South Asia. This aspect of ethnic relations has several negative implications
for interstate relations in South Asia and consequently for SAARC’s growth.
First, ethnic conflicts in one state draw natural support from the co-ethnic groups
in neighboring states, contributing to the growing strength of ethnic subnational-
ism in South Asia. This has resulted in the proliferation of separatist and terrorist
movements and the destabilization of governments in South Asia. Not surpris-
ingly, each country blames the other for assisting separatist movements on its
soil. India accuses Pakistan for encouraging separatist movements in Kashmir
and Punjab, while Pakistan blames India for the separatist movements in Pak-
istan’s Sindh province. Until the signing of the Chakma Peace Accord in
November 1997, Bangladesh blamed India for assisting separatist movement in
the Chittagong Hill tract, while India counteraccused Bangladesh of supporting
terrorist groups in India’s eastern state of Tripura. Sri Lanka blames India for its
support of the Tamil rebels’ demand for an independent state. Consequently, an
atmosphere of mutual distrust and suspicion prevails in South Asia, making the
goal of regionalism difficult to achieve.
A second negative implication for SAARC’s growth is that since India’s
ethnic groups overlap into all neighboring states, India’s hand in all ethnic con-
flicts is strongly suspected by the other South Asian states. Moreover, India’s
structural position of regional preeminence leads its policymakers to believe that
India has a legitimate role to play in resolving the ethnic crisis in neighboring
countries. Such Indian belief, however, is not mutually reciprocated by its neigh-
bors and often leads to tension in South Asia (Mansingh 1984: 238–240).
Third, the ethnic composition of South Asia is such that the majority group of
small South Asian states suffers from a minority complex (Sen Gupta 1988:
4–17; Phadnis 1989; Ghosh 1991). The Indian Nepalese of the Tarai region
together with their co-ethnics in the Indian states of Bihar and Uttar Pradesh out-
number the Nepalese of Nepal. Sri Lankan Tamils together with the Tamils of
India’s southern state of Tamil Nadu outnumber the Sinhalese in Sri Lanka.
Bhutan’s Nepalese groups together with Indian Nepalese outnumber Bhutan’s
majority Drukpas. Although Pakistan and Bangladesh do not suffer from such a
complex, the activities of Sindhis in northern India and of Bengali Hindu
refugees in West Bengal do sometimes cause worries for these two neighboring
states. Such an ethnopolitical configuration has led to Trojan-horse fears among
India’s neighbors. The Trojan-horse fears refer to the South Asian countries’
concerns that a subordinate ethnic group might use its cross-border links with
India to turn against a state in which their clan or group is disadvantaged. The
fear of India’s potential intrusion and its sabotaging effect in their nation-
building process has made South Asian countries distrustful toward India.
 Challenge of regionalism in South Asia 127
Institutional structures and government strength
An important factor for the slow growth of regional cooperation in South Asia
during the past decade was the weak strength of South Asian governments. Lack
of wide public support and social base makes it difficult for the leaders in weak
governments to pursue bold domestic and foreign policies independently
without the support of dominant domestic actors. The support of domestic
actors, as discussed in Chapter 2, is important for the leaders of weak govern-
ments in order to pursue bold policies, including regional cooperation policies
because of:

1 the domestic actors’ ability to politicize issues, thereby making implementa-

tion of regional agreements more difficult;
2 the leaders’ concern for political survival.

Weak coalitions are under greater pressure to accommodate the varying demands
and interests of their political opponents to insure their political survival. It often
becomes difficult for leaders of weak coalitions to downplay regional security
threat and to ignore scapegoating (blaming external enemy) as an instrument of
their national policies (Solingen 1997: 78). Thus, weak coalitions remain tentative
about taking more active regional cooperative initiatives.
Political leaders of all South Asian countries are encumbered with weak coali-
tions. They face various levels of domestic dissent, either in terms of cultural and
ethnic demands for political decentralization or in terms of broad-based secession-
ist movements (Jalal 1995: 65–72). South Asian leaders have not been able to
pursue bold policies to resolve these domestic crises because of their narrow polit-
ical base (limited popularity) and lack of legislative autonomy. Tables 5.4 and 5.5
provide a snapshot of South Asian countries’ government strength in terms of their
nature of regime, legislative independence, and popular support.
In Bhutan and Maldives, despite having authoritarian regimes and a central-
ized decision-making system, these governments can only be described as relat-
ively strong because of the leaders’ narrow social base of support. Since 1990s,
Nepal has experienced a deficit democracy, which refers to the reduced public
participation in the policy-making process that resulted from moving political
authority from elected representatives to Monarchy. In Nepal, the transition
from Monarchy to a parliamentary democracy in 1990, followed by King-led
authoritarian rule during 2001–06, and again transfer of power from Monarchy
to political representatives as a result of prolonged popular unrest organized by
various political parties in 2006 has not helped its government’s strength. On the
contrary, the Nepalese government demonstrates all the attributes of a weak
government: continuous conflict between the King and other political leaders,
resulting in a divided government; intra-party strife; divisions within Parliament;
and unpopular political leaders.
The Sri Lankan government suffers from considerable weakness of a divided
government because of its “semi-presidential political system.” In such a
Table 5.4 Comparative government strength in South Asia, 1990–99

Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka

Political system Parliamentary Monarchy Parliamentary Presidential Parliamentary Parliamentary Presidential

quasi- democracy quasi- quasi- quasi- quasi-
democracy democracy democracy democracy democracy
until military
takeover in
October 1999
Decision-making Centralized Centralized Semi-centralized Centralized Centralized Centralized Centralized
structure
Party system Multiparty N/A Multiparty N/A Multiparty Multiparty until Multiparty
October 1999
Political regimes Simple-majority Authoritarian Coalitional Authoritarian Coalitional Simple majority Coalitional
rule rule until October
1999, followed
by military rule
Legislative independence No Yes No Yes No No No
Popular base Narrow Narrow Narrow Narrow Narrow Narrow Narrow
Government strength Weak Relatively Weak Relatively Weak Weak Weak
strong strong

Note
Legislative independence is determined by the ruling party’s percent of seats in the lower house. If the ruling party’s strength is less than simple majority (50% plus
one), it is obvious that the ruling party forms a coalition government and requires other parties’ support to pass legislation. Popular base is determined by the percent-
age of vote the ruling party has received in the last election.
 Challenge of regionalism in South Asia 129
Table 5.5 Ruling party’s strength in South Asia, 1990–2005

Countries Ruling party % of total seats in % of votes

the lower polled
house of central
legislature

Bangladesh
1991 Bangladesh Nationalist Party 42.4 30.3
1996 Bangladesh Awami League 48.0 34.2
2001–06 Bangladesh Nationalist Party 63.6 48.0
Bhutan N/A – –
India
1991 Congress I 42.5 36.5
1996 United Front 32.4 32.0
1999 Bharatiya Janata Part 33.3 32.8
2004– Congress I 26.6 26.7
Maldives N/A – –
Nepal
1994 Communist Party of Nepal 42.9 30.8
1999 Nepali Congress 55.1 46.3
2001–05 King-led rule off and on;
Parliament dissolved in 2005 – –
Pakistan
1993 Pakistan People Party 39.6 37.9
1997 Pakistan Muslim League-Nawaz 63.13 46.8
1999–2005 Military coup and National
Assembly dissolved – –
Sri Lanka
1994 People’s Alliance Party 46.6 48.0
2001 United National Party 48.4 53.6
2004– United People’s Freedom
Alliance 46.7 45.6

Source: Banks et al. 1992, 1997, 2000–02, 2005.

system, a blend of presidential and parliamentary system is employed. As long

as the president comes from the same party that has legislative majority, this
system works like a unified presidential system and can be quite effective. But,
if the president and prime minister represent different political parties with dif-
ferent agendas, the government remains divided in which the conflict between
president and prime minister can be intense, making the government quite inef-
fective (Lijphart 1981). In Sri Lanka, the constitutional division of power
between the president and the prime minister, continuous struggle between the
two executives to demonstrate their control over the two crucial institutions of
the bureaucracy and the military, ineffective and unpopular heads of state, divi-
sion in the ruling party, and a narrow majority of the ruling party in the legis-
lature have all contributed to the weakness of government.7
130 Challenge of regionalism in South Asia
Moreover, the Colombo government confronts an ongoing vicious civil war
against the Tamil minority’s fight to secede. In the election of November 2005,
Mahinda Rajapakse of the People’s Alliance Party was elected as the new
President of Sri Lanka with the support of the Sinhalese nationalist hard-liners.
It is widely assumed that Tamil rebels engineered Mr Rajapakse’s election by
preventing Tamils in the north and east from voting. Mahinda Rajapakse got
50.3 percent vote while his opponent Ranil Wickramasinghe, who campaigned
for appeasement with LTTE, polled 48.4 percent votes. This slenderest margin
of victory, coupled with a lack of majority of People’s Alliance Party in the
legislature, makes the formulation of any bold domestic or foreign policies diffi-
cult for the Rajapakse administration.
Since independence, Pakistan has been mostly ruled by military leaders. In
between several military regimes, Pakistan has also experienced what can be
described as “quasi-democracies.”8 Quasi-democracies are fragile political
systems where the political leaders, despite their election through popular vote,
are critically dependent on the support of the military for foreign and domestic
policies. Unlike mature democracies in Western Europe and North America,
where political leaders can take bold initiatives on foreign policy issues with
wide public support, leaders in quasi-democracies are severely constrained to
formulate or implement only those kinds of policies that are supported by the
military and the bureaucracy. In Pakistan, democratically elected leaders have
often lost their power when their policies are inconsistent with the military
leaders’ goals and objectives (Lamb 1991). The intervention of the army in
securing the resignation of two elected prime ministers, Benazir Bhutto and
Nawaz Sharif, and President Ghulam Ishaq Khan in the 1990s testifies to the
continuing domination of army in Pakistan’s politics.
The military and bureaucratic elites in Pakistan have mostly shown more
preferences for domestic-oriented and external-oriented policies than policies
with a regional thrust. This attitude of the military and bureaucracy has led to a
dampening of enthusiasm among the civilian leaders of Pakistan to pursue any
bold regional accommodation policies with their neighbors. In Pakistan, the
democratically elected governments of Benazir Bhutto and Nawaz Sharif in the
1990s enjoyed only a narrow popular base and faced serious opposition from the
fundamentalist religious groups and the military, contributing to the govern-
ment’s weakness. Not surprisingly, both Bhutto and Sharif administrations
pursued the ideology of Islamic Nationalism in order to appease the military and
the fundamentalist religious groups. The central thrust of Pakistan’s Islamic
Nationalism is to promote the collective solidarity of the Muslim Pakistanis by
constantly nourishing hostility toward the Indian Hindus. For the Pakistani
ruling elites, this ideology of Islamic Nationalism has served two principal stra-
tegic functions:

1 It has provided a strong rationale to maintain a well-financed and powerful

military as a defense against India.
2 It has enabled the successive administrations to use force to silence opposition.
 Challenge of regionalism in South Asia 131
On the other hand, the ideology of Islamic Nationalism has intensified India’s
mistrust toward Pakistan and has become counterproductive for the growth of
regional cooperation in South Asia.
The military coup in Pakistan led by General Musharraf on October 12, 1999,
which ousted Nawaz Sharif’s government and brought Pakistan under direct
military rule for the fourth time since independence, has brought additional
tension to the Indo-Pakistani relations. Military regimes, when in conflict with a
neighboring democracy, tend to engage in military confrontation, scapegoating,
(i.e. blaming the neighbor for domestic problems in order to insure their political
survival), externalization of bilateral problems, and support for external media-
tion in resolving bilateral disputes (Solingen 1996: 81–86). Since independence,
Pakistan’s four wars with India (two over Kashmir in 1948 and 1965, one over
Bangladesh liberation issues in 1971, and one over Kargil in 1999) have either
been initiated by military regimes or decided by intense military pressure on
civilian regimes. Like Pakistan’s former military rulers, General Musharraf has
often resorted to scapegoating, as manifested in a series of militant anti-India
postures, to remain in power and to acquire legitimacy. Pakistan’s military
rulers, who have intermittently ruled Pakistan for 32 of its 59 years, have always
sought external engagement in resolving their bilateral disputes with India. To
insure Pakistan’s strategic significance for extraregional powers and to maintain
domestic political clout, Pakistan’s military regimes often have preferred
domestic-oriented and external-oriented policies vis-à-vis a regional thrust.
General Musharraf has already shown his preference for all these kinds of
methods in dealing with India (Bearak 1999). Such policies of externalization
and external mediation of bilateral problems, which India opposes strongly, have
prevented close and continuous regional interactions between India and Pak-
istan, making regional cooperation goals difficult to achieve.
In Bangladesh, the successive formation of coalition governments due to the
ruling party’s lack of a comfortable majority in the Parliament, coupled with
ineffective political leaders who do not enjoy a broad political base of support,
has produced consistently weak governments since 1990s.9 In the 1991
Bangladesh election, the ruling party (BNP) under Khaleda Zia secured 42
percent of the total seats in the Central Legislature and 30 percent of the total
votes polled. In the election of June 1996, the Bangladesh Awami League under
Sheikh Hasina emerged as the ruling party with a 48 percent control of the total
seats in the Central Legislature. But the party polled slightly more than 34
percent of the total votes. Besides, Prime Minister Sheikh Hasina faced serious
opposition from the dominant religious groups and opposition parties, weaken-
ing her government’s strength. In the 2001 election, BNP-led coalition under
Khaleda Zia came back to power. Although the coalition won a majority of seats
in the central legislature, it polled only 48 percent of the total votes. Since 2001,
Prime Minister Khaleda Zia has struggled to deal with intra-party squabbles
among the coalition partners, political differences between the president and
prime minister that led to a serious constitutional crisis, opposition from the
popular Awami League party on the government’s economic and foreign
132 Challenge of regionalism in South Asia
policies, continuing political violence, unrest, and strikes, and the demand from
the influential Islamic fundamentalists groups to declare Bangladesh as an
Islamic state with the institution of Islamic Shari’ah law. Such pressing domestic
issues have increased substantially the domestic insecurity of the Bangladeshi
government. To deal with these issues and to expand their domestic political
base, the governing elites of Bangladesh have increasingly pursued nationalist
and populist policies. Consequently, although regional cooperation remains an
important goal for Bangladesh, policies toward regional cooperation have
received low priority from the government in recent years.
In the case of India, the decline of the Congress Party, the formation of coali-
tion governments at the center since the 1990s, lack of unity among the party
members, unpopular and corrupt political leaders and their lack of public
support, burgeoning political parties at the regional and national levels with
diverse socioeconomic agendas, interparty strife, constitutional constraints limit-
ing the power of the Head of State, and the existence of a quasi-federal decision-
making system have contributed to the government’s weakness.10 India has
experienced four weak liberalizing coalitions since the 1990s:

1 the minority government of Narasimha Rao of the Congress Party

(1991–96);
2 United Front Party’s coalition government with outside support of Congress
party led by Deve Gowda and later I.K. Gujral (1996–97);
3 a 23 party coalition government under the leadership of A.B. Vajpayee of
the Bharatiya Janata Party (BJP) (1998–99, 1999–2004);
4 a 12-party United Progressive Alliance coalition government led by Man-
mohan Singh of the Congress Party (2004–).

Given their limited popularity and domestic political insecurity, the leaders of
these coalition governments have basically relied on three strategies – scape-
goating (i.e. blaming the neighbors, particularly, Pakistan); combative regional
postures; and nationalist policies – to advance their domestic agenda, that is,
legitimize their rule and strengthen political base. Consequently, although
regional stability remains an important goal, Indian leaders’ regional cooperative
initiatives have remained tentative and fragmented.
It is obvious from the above discussion that in almost all South Asian coun-
tries, weak coalitions are under greater pressure to accommodate the varying
demands and interests of domestic groups to insure their political survival.
Leaders in such weak coalitions require strong domestic support to pursue any
kind of bold domestic or regional accommodations policies. As discussed in
detail in Chapter 7, domestic support (in terms of affective and utilitarian
support) remains low for regional cooperation in South Asia. As a result of this
low support, weak coalitions remain tentative about taking more active regional
cooperative initiatives.
Slow growth of regional cooperation in South Asia in the past decade was
also caused by the lack of transparency in communication among South Asian
 Challenge of regionalism in South Asia 133
countries. Both print and electronic media (India is an exception) are highly
government-regulated in South Asia, thereby distorting and delaying informa-
tion flows. In addition, the intelligence agencies in India and Pakistan carry out
systematic disinformation campaigns against each other on a regular basis. As a
result, accurate and timely information about policy preferences and domestic
conditions of their neighbors are not readily available. Such lack of domestic
transparency and contained pattern of communication have several negative
implications for regional cooperation.
First, inadequate information on countries’ domestic conditions has con-
tributed to mutual distrust and has prevented transnational logrolling of people’s
support for regional cooperation. Transnational logrolling refers to spread of one
population’s support for regional cooperation to neighboring countries through
smooth exchange of information. Second, a lack of domestic transparency has
made it difficult for the partners of SAARC to predict the intention and behavior
of other partners. This is particularly evident in the dealings of two large part-
ners of SAARC – India and Pakistan. This problem of uncertainty has become
even more acute with the advent of military rule in Pakistan and weak coalition
governments in India. Such uncertainty, in addition to lowering incentives for
regional cooperation among SAARC partners and raising the cost of building
SAARC institutions, has also contributed to non-implementation of such import-
ant SAARC programs as anti-terrorism act, which was signed by SAARC
member in 1987. Third, lack of transparency has deprived SAARC partners of
positive externalities – i.e. they have been unable to develop frequent formal and
informal communication networks among policymakers and non-governmental
actors essential for strengthening regional cooperation.

Nuclear issue
On May 11 and 13, 1998, India tested a series of five nuclear devices at the
Pokhran test cite in the northern state of Rajasthan after more than two decades
of maintaining a policy of nuclear ambiguity.11 Two weeks later, Pakistan fol-
lowed suit by testing six nuclear devices on May 28 and 30, 1998, abandoning
its policy of nuclear ambiguity and equaling India’s total number of explosions
since 1974. By conducting these tests, India and Pakistan became the only two
neighboring countries in Third World region to have demonstrated a real nuclear
weapon capability. What are the implications of nuclear weapon capabilities of
India and Pakistan for South Asia? Has their decision to go overtly nuclear
enhanced the prospects of regional peace and stability or has increased the
chance of war? The following section examines these questions.

The evolution of nuclear program in India

India’s nuclear program was started by the Cambridge-educated scientist Dr
Homi J. Bhabha in 1944 at the newly established Tata Institute of Fundamental
Research (TIFR). After India’s independence in 1947, Prime Minister Nehru
134 Challenge of regionalism in South Asia
provided full support and political patronage to this program and showed strong
preference for a nuclear dual track policy – that is India’s development of
nuclear energy should be for peaceful purposes,but could be used for defensive
purposes if necessary. By early 1960s, India had developed the capability to
produce nuclear weapon. Although Nehru rejected Bhabha’s request to make a
nuclear bomb using plutonium, he kept the option open.12 Nehru’s preference for
nuclear option was further strengthened by India’s defeat in the Sino-Indian war
of 1962 and China’s nuclear explosion in 1964. After Nehru’s death in 1964,
Prime Minister Lal Bahadur Shastri continued India’s nuclear dual-track policy.
With Shastri’s death in 1965, the political push for nuclear explosion slowed
down. However, the changing political landscape of South Asia during early
1970s provided a new political momentum to Prime Minister Indira Gandhi’s
administration for carrying India’s first nuclear explosion. The US efforts to
establish rapprochement with China in July 1971 and to strengthen its relation-
ship with Pakistan incited New Delhi’s fear that the balance of power on the
subcontinent might become unfavorable. In December 1971, India sent its troops
to East Pakistan to fight against West Pakistan. In showing support for Pakistan,
the United States sent the Task Force 74 of the Seventh Fleet which consisted of
Enterprise, the world’s largest attack carrier, with 75 nuclear-armed fighter
bombers on board into the Bay of Bengal. Although India defeated the Pakistani
forces and secured Bangladesh’s independence, it was resentful of the US
gunboat diplomacy and the nuclear threat.13
In the political calculation of Mrs Gandhi and her close advisors after India’s
victory in the Indo-Pak war of 1971, a single peaceful nuclear explosion (PNE)
would offer India the best possible policy option by achieving the following
objectives:

1 India would be able to reject the non-proliferation regime, the main archi-
tects of which were the United States and the former Soviet Union.
2 It would demonstrate the limits of Soviet influence on New Delhi.
3 It would provide deterrence against China.
4 By demonstrating its capability to build nuclear weapons and then choosing
not to do so, India would be able to claim moral superiority over other
nuclear weapon states;
5 It would enable India to reassert its autonomy in world affairs and legit-
imize its non-alignment policy.

While the preparation for India’s first nuclear explosion started in May 1972
when the Purnima reactor went critical, the timing of the PNE reflected the inter-
play of domestic and external considerations. By 1974, Mrs Gandhi’s domestic
popularity had declined because of growing factionalism within the Congress
Party, rapidly deteriorating economy due to sudden rise in oil prices as a result
of Arab-Israeli war in 1973, labor unrest as represented by the ongoing longest
(three-week long) railway strike, and the wave of Jayaprakash Narayan’s move-
ment for “total revolution.” To divert people’s attention from domestic problems
 Challenge of regionalism in South Asia 135
and boost her and the Congress party’s popularity, Mrs Gandhi, after consulting
with a few of her closest advisors – P.N. Haksar, the former principal secretary
to the Prime Minister; P.N. Dhar, the incumbent principal secretary; Dr Nag
Chaudhary, scientific advisor to the Defence Minister; H.N. Sethna; and Raja
Ramanna – decided to go for a nuclear explosion. On May 18, 1974, India deto-
nated its first PNE at the site of Pokharan in Rajasthan.14
By conducting the PNE, India achieved its nuclear policy objective, that is,
its nuclear complex became more self-reliant. But the adverse international reac-
tions had a sobering effect on India’s nuclear programs. For next two decades,
Indian policymakers maintained a policy of nuclear ambiguity until the advent
of the comprehensive test ban treaty (CTBT) debate in 1995. In pushing for a
CTBT, the United States gave highest priority to the issue of non-proliferation.
For India’s nuclear establishment, this was a strategy for permanently foreclos-
ing India’s nuclear option. This belief was reinforced by the repeated statements
of several senior American officials that Washington’s goal was to “cap, reduce,
and then eliminate” India’s and Pakistan’s nuclear weapon capabilities and the
capabilities of other states (Cohen 2001: 173–174). This was a sensitive issue
for India’s pro-nuclear lobby and nationalist politicians who have long opposed
a two-class international system with “nuclear haves” versus “nuclear have-
nots” that would perpetuate the dependence of less-developed countries on tech-
nologically advanced countries.
The CTBT debate during 1995–97 created an environment in which the
decision to go nuclear was domestically permissible in India. By 1998, there was
widespread support for any decision that would preserve India’s nuclear option
and maintain the country’s pride and independence. Indeed, it was widely
agreed that India’s nuclear weapons would greatly enhance India’s quest for
great power status. The other strategic calculations of India’s political elites
were that India’s acquisition of nuclear bomb would put India on a level-playing
field with China, pressuring Beijing to negotiate seriously over the long-
contested border disputes with India. It would also insure India’s dominant posi-
tion in South Asia, dissuading Pakistan from playing any disruptive role in
Kashmir. The 1998 Indian election brought the most pro-nuclear party, the BJP,
to power. Even during his brief stint as the Prime Minister for 13 days only in
May 1996, the BJP leader, Atal Behari Vajpayee, had vowed to break with past
policy of nuclear ambiguity and to begin an openly declared nuclear buildup.
Two years later, when BJP came to power, the strategic and political reasons for
a nuclear test were there. In addition, the BJP leaders’ desire to increase the
party’s popularity so that it would retain power in the event of a fresh election
became a driving force for its decision to go for a nuclear test in May 1998.

The evolution of nuclear program in Pakistan

Although Pakistan’s nuclear research program started in March 1956 with the
establishment of the Pakistan Atomic Energy Commission (PAEC) under the
chairmanship of Cambridge-educated Dr Nazir Ahmad, the Pakistani nuclear
136 Challenge of regionalism in South Asia
program did not really take off because of lack of bureaucratic and military
support. With the defeat of Pakistan in the 1971 Indo-Pakistani war and the
emergence of Bangladesh as an independent state, President Zulfiqar Ali Bhutto
decided to acquire nuclear weapon technology (Ahmad 1999: 178–204). Pak-
istan’s basic objective of developing a nuclear bomb was to achieve strategic
military parity with India, thereby enhancing its security and national esteem
(Bhutto 1969). President Bhutto was convinced that nuclear weapons are the
contemporary currency of international power and only with them in hand could
Pakistan neutralize growing influence of India in the region and recapture some
of its lost prestige in the 1971 war.
India’s test of its nuclear device in 1974 provided further impetus to Presid-
ent Bhutto’s plan to develop nuclear weapons for military purposes. In October
1974, Pakistan signed an agreement with France for building a plutonium repro-
cessing plant, which was designed to produce fuel for a series of nuclear plants.
In 1975, Dr Abdul Qadir Khan, a prominent scientist, returned to Pakistan after
his training at a Dutch consortium, URENCO, where he seemed to have
acquired substantial knowledge on centrifuge enrichment process. President
Bhutto hired him as the head of a team of research scientists engaged in a secret
program to manufacture nuclear weapons. As the head of the team, Dr Khan was
promised sufficient autonomy from bureaucratic and military interference to
carry out his activities. With this power, Dr Khan soon got engaged in several
clandestine activities to acquire technologies and equipment from abroad, often
through third parties and subterfuge. By 1977, under the leadership of Dr Khan,
Pakistan was able to develop an enrichment plant at Kahuta, near Islamabad.
Although not enthusiastic initially, the military support for the development
of nuclear weapons program changed dramatically after General Mohammed
Zia-ul-Haq came to power in a military coup in July 1977, overthrowing the
Bhutto administration. Like India, General Zia-ul-Haq embraced a nuclear ambi-
guity policy, publicly denying any effort to manufacture nuclear weapons while
vigorously pursuing nuclear weapon development program secretly. The Soviet
invasion of Afghanistan in December 1979 led to a weakening of the US pres-
sure on Pakistan from acquiring nuclear weapons. As a part of its strategic mili-
tary plan, the United States needed to use Pakistan’s territory to funnel military
and economic assistance to Afghanistan’s resistance forces. To accomplish this
objective, the United States sought Pakistan’s cooperation by providing military
and economic aid and relaxing its pressure on Pakistan’s nuclear program.
Taking advantage of this shift in US policy which brought massive military and
economic assistance to Pakistan, General Zia was able to channel the necessary
funds for Pakistan’s nuclear weapon development program under Dr A.Q. Khan.
By 1987, Pakistan seemed to have developed some capability for nuclear
weapons.15 However, Pakistan’s first official admission that it maintains
unassembled nuclear weapons came in February 1992, when Foreign Secretary
Shahryar Khan told the Washington Post that Pakistan possesses “elements,
which, if put together, would become a device.” He also said that Islamabad had
in 1991 frozen its production of highly enriched uranium and bomb cores but
 Challenge of regionalism in South Asia 137
would not destroy its existing cores unless India reciprocated (Hagerty 1998:
173). By claiming to freeze its production of fissile material and at the same
time linking its nuclear program with India, Pakistani policymakers sought to
accomplish an important policy objective: retain a measure of nuclear deterrence
against India without suffering the negative diplomatic consequences associated
with nuclear weaponization. Several reports suggest that with China’s supply of
technology for the short-range M-11 missile and sale of magnets used to refine
bomb-grade uranium in 1995, Pakistan’s nuclear weapon program moved
forward, albeit secretly.16 Finally, the Indian nuclear test of May 1998 provided
an opportunity to the Pakistani Prime Minister, Muhammad Nawaz Sharif, who
on the advice of the senior military leaders, decided to conduct six nuclear tests
two weeks later to match India’s nuclear strength.

Nuclear deterrence and regional stability

Following the South Asian nuclear tests, an intense global debate reemerged
between the nuclear non-proliferation community and supporters of nuclear
deterrence. Fundamentally, two nuclear worldviews guide this debate. First, the
nuclear non-proliferation community led by many American analysts and
observers argue that the Indian and Pakistani nuclear tests make the South Asian
region more unstable and war-prone.17 On the other hand, guided by neo-realist
worldview, supporters of nuclear deterrence school argue that overt nucleariza-
tion of India and Pakistan will enhance regional stability. The latter group is
largely represented by South Asian decision-makers and a majority of South
Asian military and non-military observes and analysts for whom it is now an
article of faith that nuclear weapon capabilities deter war between India and
Pakistan (Subrahmanyam 1993: 184; Singh 1998; Mattoo 1999). Which one of
these views provides a more accurate assessment of South Asian nuclear
situation?
According to the nuclear proliferation analysis, given the geographical prox-
imity, historical and political tension, and systematic disinformation campaigns
(as carried out regularly by India’s Research and Analysis Wing and Pakistan’s
Inter-Services Intelligence) between India and Pakistan for decades, inadvertent
nuclear use is possible in the wake of a crisis. Any false warning of an impend-
ing missile attack from one country would produce extraordinary pressure for
the other country to launch a counter-missile attack for the fear of “immediate
decapitation” (Ganguly 2001: 109). The short flight distances between Indian
and Pakistani targets leave so little time for the decision-makers that it would be
difficult to correctly assess the situation and respond accordingly. This makes
the situation extremely dangerous.
While compelling on the surface, this argument does not hold up to sustained
scrutiny. Although they were not declared nuclear powers until 1998, both India
and Pakistan have been nuclear-armed rivals for over a decade. In addition to
numerous low-intensity crises, India and Pakistan had experienced at least two
major military crises – 1990 Kashmir crisis and 1999 Kargil crisis. There is no
138 Challenge of regionalism in South Asia
reliable evidence to suggest that either side had resorted to nuclear weapons
during these crises. Several geopolitical factors influence the Indo-Pakistani
nuclear relations. First, the logic of existential deterrence dissuades India and
Pakistan from fighting a full-scale war (Hagerty 1998: 181). Existential deter-
rence, as defined by Marc Trachtenberg, refers to:

a strategic interaction in which the mere existence of nuclear forces means

that, whatever we say or do, there is certain irreducible risk that an armed
conflict might escalate into a nuclear war. The fear of escalation is thus fac-
tored into political calculations: faced with this risk, states are more cau-
tious and more prudent than they otherwise would be.
(1985: 139)

Several prominent nuclear strategists in India and Pakistan firmly argue that
nuclear weapons have cast an existential deterrent shadow over Indo-Pakistani
relations. As Subrahmanyam observes:

In 1965 when Pakistan carried out its “Operation Gibraltar” and sent in
infiltrators, India sent its army across the cease-fire line to destroy the
assembly points of the infiltrators. That escalated into a full-scale war. In
1990, when Pakistan once again carried out a massive infiltration of terror-
ists trained in Pakistan, India tried to deal with the problem on Indian terri-
tory and did not send its army into Pakistan-Occupied Kashmir.
(1993: 184)

Concurring with Subrahmanyam’s observation, India’s former Army Chief,

K. Sundarji, argues:

The reason why Indian leaders have hesitated to take recourse to their stated
avowed strategy of reacting in the plains conventionally is because of the
nuclear equations. . . . What the nuclear capability does is to make sure that
old scenarios of Indian armour crossing the Sukkur barrage over the Indus
and slicing Pakistan in two are a thing of the past.
(quoted in Hagerty 1998: 168)

Similar views have been expressed by Pakistan’s two most prominent nuclear
strategic analysts. Abdul Sattar notes, “Pakistan’s nuclear capability has made
indispensable contribution to deterrence of aggression and maintenance of
peace” (1995: 20). Echoing this view, Pakistan’s former COAS Mirza Aslam
Beg observes, “Far from talk of nuclear war, there is no danger of even a con-
ventional war between India and Pakistan. As compared to previous years, there
is no possibility of an India-Pakistan war now” (quoted in Hagerty 1998: 168).
These observations illustrate the perspectives of many South Asians for whom
nuclear weapon capabilities serve as a deterrence to war between India and
Pakistan.
 Challenge of regionalism in South Asia 139
A second reason why nuclear first strike is not considered as a realistic policy
option by either India or Pakistan is because of the short distances separating
Indian and Pakistani targets. Policymakers in both the countries share the
concern that radioactive fallout resulting from a nuclear strike could affect their
own territory. The possibility of widespread radiation poisoning and the conse-
quent human cost is a serious concern. Also, preemptive nuclear strikes are
extremely unlikely, because of the deterrent power of “first-strike uncertainty.”
Leaders in New Delhi and Islamabad are not certain if they could destroy all of
the opponent’s nuclear weapons preemptively. The devastating consequences of
such failure are too critical for leaders to ignore. In fact, such considerations
may have formed the basis of the India–Pakistan Nuclear Non-Attack Agree-
ment in December 1988 according to which both India and Pakistan have agreed
not to attack each other’s nuclear facilities. The third reason why New Delhi and
Islamabad are dissuaded from nuclear aggression is the fear that any outbreak of
nuclear hostilities would lead to international isolation, economic sanctions, and
disruption of foreign investment, adversely impacting their economic goals.
The 1999 Kargil war between India and Pakistan offers a useful test case
about the implications of overt nuclearization on regional stability. The outbreak
of the war challenged the assumption that overt nuclearization would deter India
and Pakistan from launching a conventional war. On the other hand, the decision
not to use nuclear weapons and escalate the war horizontally by two nuclear
rival neighbors supports what Sumit Ganguly describes as “stability/instability
paradox” situation in South Asia.18 According to this argument, the knowledge
of sheer destructive power of nuclear weapons makes the execution of a full-
scale war between India and Pakistan most unlikely. At the same time, limited
and calculated incursions across the LoC are possible despite the mutual acquisi-
tion of nuclear capabilities. In fact, lower-level engagements as witnessed in
Kargil crisis in 1999 and Kashmir crisis in 1990 are likely to occur given the
policymakers’ belief that either side would not attempt a full-scale war for fear
of use of nuclear weapons by the opponent.
While the debate on the two competing positions about nuclear stability and
instability will continue, some other critical issues in South Asia are the possi-
bilities of nuclear accidents, nuclear terrorism and blackmail, misperception,
unauthorized nuclear use, and technological error. Such challenges will con-
tinue to persist unless addressed by India and Pakistan by embedding their
nuclear weapons in robust command, control, communications, and intelligence
infrastructure (Tellis 2001). Until such arrangements are made, nuclear issues
will provide an additional element of tension to the Indo-Pakistani bilateral
relations.

Conclusion
This chapter examines four critical issues in South Asia that have an important
bearing on the growth of regional cooperation: India’ hegemonic power, exist-
ence of weak ruling coalitions, ethnic crisis, and nuclear issues. What are the
140 Challenge of regionalism in South Asia
implications of these issues on the growth of regional cooperation in South
Asia?
First, as discussed in this chapter, despite India’s hegemonic position, there is
no consensus among South Asian countries to recognize India as the region’s
undisputed leader. Additionally, South Asian countries do not share a common
external threat perception, which makes it difficult for the leaders of these coun-
tries to work toward common regional security strategies. Most South Asian
countries perceive their main threat to be India. On the other hand, India per-
ceives an external threat from Pakistan’s military challenge with the support of
external powers. The narrow political base of South Asian ruling elites provides
few opportunities for them to ignore regional security threats or to transcend
their dominant domestic constituencies. Thus, blaming the neighbor (scapegoat-
ing) has become a preferred policy choice for South Asian ruling elites, making
regional accommodation a difficult goal. It is not surprising, therefore, that
SAARC-related policies and programs have received low priorities by South
Asian ruling elites over the past decade.
Second, weak strength of ruling coalitions throughout South Asia has made
the leaders of these countries critically dependent on the support of important
domestic groups. The leaders’ need for domestic support for political survival
have led them to pursue populist, nationalist, and self-reliant policies. In India
and Pakistan, the leaders have pursued not only such policies but also have
emphasized military-intensive policies. While these policies may have brought
short-term political payoffs to the ruling elite in India and Pakistan, they have
become enormously counterproductive for the growth of regional cooperation.
Third, the states in South Asia are all multiethnic and highly permeable. They
remain vulnerable to ethnic regionalism that can generate separatist movements.
This vulnerability has increased domestic insecurities in all the states in South
Asia. Each state blames the neighboring state for supporting its ethnolinguistic
separatist movements. In particular, India is blamed by its neighbors for its role
in ethnic crises. Since India’s ethnic groups overlap into all neighboring states,
India’s hand in all ethnic conflicts is strongly suspected by the other South Asian
states. Moreover, India’s structural position of regional preeminence leads its
policymakers to believe that India has a legitimate role to play in resolving the
ethnic crisis in neighboring countries. Such Indian belief is not mutually recipro-
cated by its neighbors and often leads to tension in South Asia. Consequently, an
atmosphere of mutual suspicion and distrust prevails in South Asia, which is not
conducive for the growth of regional cooperation.
Finally, the overt nuclearization of India and Pakistan in 1998 may have
introduced a regional stability/instability paradox in South Asia. On the one
hand, policymakers’ realization of the devastating consequences of nuclear
weapons makes the execution of a full-scale war most unlikely. On the other
hand, the deterrent insurance provided by possession of nuclear weapons may
tempt both sides to engage in limited war by initiating military adventurism
along the LoC. Episodes like Pakistani incursion across LoC in 1990 and Kargil
war are likely to occur until a political resolution is found in the Kashmir issue.
 Challenge of regionalism in South Asia 141
If political and military tensions between India and Pakistan remain unresolved,
regional cooperation among South Asian leaders will continue to be weak and
inconsistent, making only a “stop-and-go” pattern of growth of SAARC pos-
sible. In such a pattern of growth, some regional cooperation policy initiatives
are possible. But then, these initiatives will be followed by protracted stalemates
during which regional institutional developments and implementation of
SAARC-related programs will remain uncertain.
The recent move of the South Asian countries toward economic liberalization
has generated some optimism for increasing regional cooperation in South Asia.
Will economic interests drive the South Asian countries toward greater coopera-
tion? This issue is explored in the next chapter.
6 Domestic politics and regional
economic cooperation in South
Asia

By signing the Framework Agreement on SAFTA at the Islamabad SAARC

Summit in January 2004, South Asian leaders took an important step to intensify
their intraregional economic cooperation. Will SAFTA agreement drive South
Asian countries toward deeper regional economic cooperation? This chapter pre-
sents a political economy framework to address this question by evaluating
domestic factors in the design and evolution of regional economic cooperation
arrangements in South Asia. In Chapter 2, employing the two-level game frame-
work, I argued that regional cooperation is a two-level process in which
domestic support and regional bargains and negotiations must overlap if cooper-
ation is to proceed (Putnam 1988). While attempts to achieve regional coopera-
tive agreements involve bargaining and negotiation among governmental actors
in various issue areas, domestic support is essential for successful implementa-
tion of these negotiated agreements. In the issue area of trade, state actors’ pref-
erences for regional arrangements are shaped to a large extent by pressure from
business groups. Given this argument, the present chapter argues that willing-
ness of political actors and support of domestic business groups are necessary
for the success of deeper regional economic cooperation. As the experiences of
EU and NAFTA illustrate, the demand for regional rules, regulations, and pol-
icies by market players is a critical driving force for deeper regional economic
cooperation. Thus, the purpose of this chapter is to answer two questions. First,
under what conditions will domestic business groups support regional trade
agreements? Second, under what conditions will governmental actors show pref-
erences for regional trade arrangements?
Regional trade preferences by domestic actors are shaped by their expecta-
tions about the dynamic effects of regional integration. Studies on regional
integration identify three kinds of dynamic effects (Balassa 1961; Chase 2005:
23). First, regional integration enhances consumer interests by increasing
competition and breaking the monopolies that leads to reduction of prices.
Second, by uniting regional economies, regional integration creates larger
market, which promotes intraindustry specialization through economies of scale.
Third, reallocation of factors of production is possible because of factor price
differences between countries. While political actors show more preference to
the first dynamic effect of regional integration related to price reduction and
 Domestic politics and regional economic cooperation 143
consumer benefits, market actors like the second and third dynamic effects – that
is increased market size with scale economies and factor movements.
Thus, the existence of significant market potential for economic gains from
market exchange within a region is a critical facilitating condition for the
support of business groups toward deeper regional economic cooperation.
Several empirical studies have shown that if there is little potential for market
gain because of either lack of complementarity of regional economies or
absence of relatively large size of regional markets with insignificant economies
of scale, the process and outcome of regional economic cooperation will not be
successful (Milner 1997: 85–88; Mattli 1999: 42–43; Chase 2005: 16–27). This
is because market players will not have sufficient incentives to demand for
regional trade. These studies show that market gains are a function of three con-
ditions – increasing returns to scale (IRS); size of domestic market available to
firms; and complementarities of regional economies.
First, using the new international trade theory, recent work on regional
integration argues that firms with IRS support regional trade liberalization more
than firms which do not have IRS (Milner 1997; Chase 2005). IRS – that is firms
achieve declining average production costs as they increase their output – is
important because the firms can expect to achieve greater profit in imperfect
markets as production becomes more efficient with scale. Contrary to neoclassi-
cal economic assumption of constant returns, industries with increasing returns
achieve efficiency with level of production. As the number of units produced
increases, their cost decreases, insuring maximization of profits for firms. Cost-
reduction effects of increasing returns, as the analyses of Corden (1972) and
Pearson and Ingram (1980) show, are important motivations for firms to support
regional trade strategy. Cost-reduction is best realized when two conditions exist
– geographic proximity and economies of scale.
Geographic proximity is important because it brings down transportation
costs substantially. Free trade areas in geographically non-contiguous regions
may lose the benefits of scale because of the high costs of transport. It is recog-
nized by both classical and contemporary literature on international trade that
scale economies are important methods of production that can provide IRS to
firms in the era of imperfect market competition. The central logic of scale
economies – that is large-scale production can achieve lower costs – has been
demonstrated in the writings of Adam Smith (for example his famous pin
factory analysis in The Wealth of Nations), John Stuart Mill, and strategic trade
theory literature. As John Stuart Mill, in his classic Principles of Political
Economy, observes, “The larger the scale on which manufacturing operations
are carried on, the more cheaply they can in general be performed.”1 In more
recent strategic trade literature, Paul Krugman (1992) has advanced the export
promotion model, where import protection policies by governments encourage
domestic firms to increase their outputs with scale economies, reducing their
average costs until they can profitably export. Extending the strategic trade
logic, several scholars have adopted a political economy approach to argue that
once firms achieve scale economies, they will seek regional trade liberalization
144 Domestic politics and regional economic cooperation
to export their products to regional markets in order to reap maximum profit
(Froot and Yoffie 1993; Busch and Milner 1994; Milner 1997; Chase 2003,
2005). Building from these insights, I argue in this chapter that if IRS are large,
producers will support regional trade liberalization to increase output, reduce
unit costs, and earn more profits. If IRS are small, producers will have little
incentives in regional trading arrangements because of minimal economic gains.
Second, domestic market size influences support for FTAs. Firms with IRS
have limited opportunity to reap profits from small domestic markets. Thus, if
the home market is small, firms with IRS will support regional trading arrange-
ments to reap greater profits and reduce unit costs. In contrast, if the home
market is large, firms with IRS may be less interested in regional trading
arrangements since they may be already the beneficiaries of large domestic
markets in terms of profits and unit costs (Casella 1996; Milner 1997). By the
same logic, if the regional market is too small, then producers will not be able to
achieve cost reduction and hence will show little interest in regional trading
arrangements.
Third, complementarity of regional economies is an important condition for
FTAs. If firms produce and export similar products in a region, they will have
little incentives to support regional trading agreements because of limited or no
demand for their products. When firms compete with similar products, there is a
tendency to support for the protection of domestic markets. Trade complemen-
tarity is said to exist when the structures of a country’s important exports match
with its partners’ import basket. In case of the existence of substantial trade
complementarity, firms are likely to be more supportive of FTAs. The absence
of trade complementarity will diminish firms’ support for FTAs.
Of course, only the support of domestic business groups is not sufficient to
insure the success of regional economic arrangements. Since governments
make economic policies and negotiate regional and multilateral economic
agreements, it is clear that no change will occur unless governmental actors
take initiatives and positively respond to the demand or support of the business
groups. It is, therefore, necessary to understand preferences of governmental
actors. Thus, this chapter seeks to answer the second question: under what con-
ditions the political actors will be motivated to show preferences for regional
economic cooperation arrangements. As discussed in Chapter 2, if regional eco-
nomic cooperation policies enhance political actors’ prospects of retaining
power by significantly improving domestic economic conditions, then these
policies are likely to be enthusiastically pursued. Otherwise, political actors
will show little preference for pursuing regional economic cooperation policies.
Thus, power-retaining objective is the primary motivation of political actors for
pursuing regional economic cooperation policies (Milner 1997: 85–88; Mattli
1999: 42–43).
However, a cursory look at outcomes of various regional integration schemes
suggests that even willing political leaders may be unable to sustain regional
economic cooperation because of collective action problems (Mattli 1999). Two
types of collective action problems – prisoners’ dilemma (PD) and CD games –
 Domestic politics and regional economic cooperation 145
have been identified in the international cooperation literature to explain why
nation-states choose or not choose cooperation among themselves (Stein 1983:
115–140; Keohane 1984; Snidal 1985: 923–942; Martin 1992: 765–792; Garrett
and Weingast 1993: 173–206). These two collective action problems provide
important insights which can be relevant to the study of regional economic
cooperation in South Asia.
The PD game, where the pursuit of narrow self-interest and private gain pre-
vents two actors from reaching a desirable outcome of cooperation, is often con-
sidered as a useful framework in evaluating the difficulties of cooperation
between two states. This framework also explains defection of states even after
agreeing to cooperative arrangements because both states continue to have
incentives to defect. The extension of PD game from two-actor to the multiple-
actor (or n-actor) situation further increases the difficulties of cooperation.
Given the increasing problems of information and communications in multiple-
actor cooperative arrangements, it becomes easier for nation-states to cheat and
thus prospects of sustained cooperation diminish. However, as Robert Axelrod
(1984) has shown, by playing the PD game repeatedly and for number of times,
political actors can develop confidence in each other’s behavior and can reduce
the problems of information and communications, improving the long-term
prospects of cooperation among themselves. Similarly, as Duncan Snidal (1985)
has shown, by establishing issue-linkages across several issue areas, political
actors can improve the long-term prospects of cooperation. This is because
issue-linkages produce a fear of non-cooperation spillover, that is, non-
cooperation in one issue area may lead to the same outcome in another issue
area and thus provide less incentives for governmental actors to defect for short-
term issue-specific gains (Snidal 1985: 939).
While PD game has been studied extensively in the literature of international
cooperation and undoubtedly has offered important insights to study regional
economic cooperation schemes, the second collective action problem – CD
game – has received inadequate attention. But, as Walter Mattli (1999) has
shown, CD game is equally, sometimes more, salient for regional economic
cooperation schemes. After all, successful regional economic arrangements
require coordination of regional rules, regulations, and policies. If coordination
problems persist, it is difficult to sustain regional economic cooperation. How
can coordination problems be resolved? Summarizing the outcomes of various
regional economic cooperation schemes, Mattli (1999: 42) argues that the pres-
ence of a benevolent leading country is necessary to resolve coordination prob-
lems. He reasons:

Such a [leading] country serves as a focal point in the coordination of rules,

regulations, and policies; it may also help to ease tensions that arise from
the inequitable distribution of gains from integration, for example, through
side-payments. Contested institutional leadership or the absence of leader-
ship makes coordination games very difficult to resolve.
(1999: 42)
146 Domestic politics and regional economic cooperation
This observation supports the argument that when a region lacks an undis-
puted leader, it is difficult to sustain regional economic arrangements (Figure
6.1). This does not necessarily mean that the absence of leadership renders
regional economic cooperative arrangements impossible, but it makes their
success more elusive. In sum, this chapter argues that for regional economic
cooperation to succeed, three conditions must be present. First, strong support
from business groups (market actors) is necessary. Business groups will show
preferences for regional economic arrangements when there is strong potential
for gain in terms of regional economic complementarity or large size of regional
markets with significant economies of scale. Second, political actors must be
willing to initiate the process of regional economic cooperation. As discussed
above, political actors will be more motivated to pursue regional economic
cooperation policies if such economic arrangements serve their power-retaining
goals by improving their country’s overall economic conditions. Third, when a
regional grouping is led by an undisputed leader, its prospects of sustained
success improves considerably (Figure 6.1). As illustrated by EU and NAFTA,
the role of an undisputed regional leader for the success of a regional economic
grouping is critical because such a leader can “serve as a focal point in the
coordination of rules, regulations, and policies, and is able to ease distributional
tensions by acting as a regional paymaster” (Mattli 1999: 190).
In light of the above arguments, this chapter profiles the market size and
structure of economy of South Asian countries to evaluate regional economic
complementarities and economies of scale. It, then, examines the levels of
intraregional imports and exports among South Asian countries to determine the

Regional leadership
Uncontested Contested

3 2
European Union EFTA (after 1973)
Significant NAFTA APEC
EFTA (until 1973) MERCOSUR

Potential
2 1 CACM (after 1969)
market
AFTA
gains
ECOWAS
LAFTA
Insignificant CACM (until 1969) Andean Pact
Caribbean Community
Arab Common Market
GCC
SAFTA?

Success rate: 3  highest; 1  lowest

Figure 6.1 Regional leadership, potential market gains, and regional integration outcomes
(source: adapted from Mattli (1999).
 Domestic politics and regional economic cooperation 147
extent of their economic interdependence. It explains several reasons for South
Asia’s limited intraregional trade with a focus on domestic policies toward
regional trade. This chapter, then, examines the nature of political coalitions and
their preferences to provide a realistic assessment of the prospects of deeper
regional economic cooperative arrangements in South Asia. In conclusion, the
dynamics of India’s bilateral and transregional economic relationship is dis-
cussed.

Overview of South Asian economy

The scale of South Asian industry

One way to explain preferences of domestic business groups for regional trading
arrangements is to examine the dynamics of scale economies in a region. Indus-
tries with large-scale economies in small domestic markets are more likely to
support regional trade liberalization for realizing cost reduction and greater
profits. However, these type of industries will show less interest for regional
trade if their domestic market is large and regional markets are too small.
Regional trade liberalization is also not a preferred goal for industries with
small-scale production as they are likely to face pressure of increasing competi-
tion, price decline, possible takeover, or exit from production. Not surprisingly,
these type of industries will show more preference to national protection policies
than to regional trade liberalization.
Put in a regional context, except for few selective industries in India –
information technology, pharmaceuticals, automotives (for example motor
cycles and two-wheeler scooters), and industrial goods – there is no scale
economies for other countries in South Asia. These few Indian industries, as
represented by Tata groups, Bharat Forge, Ranbaxy, Infosys, and Wipro, support
regional trade liberalization in principle. At the same time, however, they have
not made any vigorous efforts to put pressure on Indian government for expan-
sion of regional trade because of the small market sizes of South Asian coun-
tries. Instead, they have sought global markets – United States and EU in
particular – for their investment and industry expansion. According to a report
published by ASSOCHAM in March 2007, these firms invested US$15 billion
in EU and United States in the first quarter of 2007. While this trend of global
quest for some Indian firms and industries is likely to continue, the prospect of
their regional expansion, investment, and manufacturing appears unlikely given
the insufficient market size, protected and fragmented national markets, and
limited skilled labor force of South Asian countries.
On the other hand, small-scale producers of South Asian countries have
resisted opening of their domestic markets to Indian firms because of their fear
of losing business. For example, manufacturing firms in Pakistan, Bangladesh,
and Sri Lanka are too small to effectively compete with firms from India. As a
result, South Asian countries have adopted import protection policies with high
import tariffs on import of manufactured products from India. Not surprisingly,
148 Domestic politics and regional economic cooperation
more than 53 percent of export of manufacturing goods from India goes to
NAFTA and EU, while exports of India’s manufacturing goods inside the
SAARC region is very small (Bandara and Yu 2003: 1306). In addition, there is
a lack of complementarity of regional economies, and South Asian countries
enjoy comparative advantage on a relatively narrow range of products (Table
6.1). This has led to competition among the endowment-based industries in
South Asia for the same market and same products. Given this dynamics, many
analysts believe that in the context of the establishment of a FTA, companies
from Pakistan, Bangladesh, and Sri Lanka will make fewer gains than their
Indian rivals.
The textile industry is South Asia’s traditional area of strength. Although
textile products do not constitute significant portion of India’s total exports,
Indian firms are still major players in textile industry. Pakistani, Bangladeshi,
and Sri Lankan producers also maintain strong positions in volume-intensive
textile products. A quantitative assessment by Bandara and Yu (2003: 1305)
based on GTAP model and database shows that while the wearing apparel
sector has been the most dominating export production in Sri Lanka and
Bangladesh (36 percent and 42 percent of their total exports, respectively),
textile products remain the major export item of Pakistan (about 41 percent of
the country’s total exports). In textiles and apparel, a few firms in these
SAARC-4 countries (India, Pakistan, Bangladesh, and Sri Lanka) have reached
world-class levels of outputs. But the export of these firms to South Asian
region is minimal because of state protection policies in terms of value-added

Table 6.1 Regional complementarities

Country Revealed comparative advantage (products)

Bangladesh Fish, vegetables, jute, tea, leather, textile yarn, clothing, woven cotton
fabrics.
India Food, beverages, tobacco, meat, fish, crustaceans, rice, fruits, nuts, tea,
coffee, spices, oilseeds, cotton, iron ore, concentrates of basic metals,
petroleum, petrochemical products, chemicals, synthetic materials,
medicinal and pharmaceutical products, cosmetic and soaps, insecticides
and herbicides, leather, textile and clothing, machine tools, transport
equipment, household equipment, steel, motor vehicles, motor cycles,
scooters, and bicycles.
Nepal Textile clothing accessories, floor coverings.
Pakistan Fish, crustaceans, rice, fresh and dried fruits, sugar, spices, vegetables,
cotton, oil seeds, textile and clothing, leather, medical instruments, toys
and cutlery.
Sri Lanka Fish, crustaceans, fruits, nuts, spices, tea, synthetic rubber, oilseeds, fuel
wood, paper, textile fibers, rubber tires, wood manufactures, pottery,
pearls and precious stones, textile yarn, woven fabrics, electric power
machinery.

Source: Kemal (2004).

 Domestic politics and regional economic cooperation 149
taxes, import tariffs, and labeling requirements. Instead, these firms compete
with each other for world market share. For example, a study by Bandara and
Yu (2003: 1306) shows that in case of wearing apparels, more than 80 percent
of India’s exports and 97 percent of exports from Pakistan, Sri Lanka, and
Bangladesh goes to NAFTA and EU region, while export of this good inside
South Asia is very small.
The preceding discussion suggests that given South Asia’s industrial and
manufacturing dynamics – that is domination of Indian firms, existence of
narrow range of products according to comparative advantage among South
Asian countries, and their export orientations to similar destinations – a SAFTA
offers few opportunities to South Asian firms. Instead, small-scale South Asian
firms fear that the establishment of SAFTA and the phasing out of import
restrictions would lead to disruption in sheltered national markets, negatively
impacting their profits and business. Consequently, these firms show little pref-
erence for a FTA in South Asia.

Market size
As summarized in Table 6.2, the national economies of SAARC countries differ
significantly from each other in terms of population and national income. In
terms of per capita income, all South Asian countries fall in low-income devel-
oping countries and have wide income differentials. India alone accounts for
more than 79 percent of gross national income (GNI) in the region. In contrast,
the shares of Nepal and Sri Lanka are significantly low. Nepal, Sri Lanka, along
with two other SAARC original member countries – Bhutan and Maldives – can
be described as small economies with very small market size. Although the
shares of Pakistan and Bangladesh are relatively larger than Nepal and Sri
Lanka, they are no match to India’s enormity in South Asia. The market size of
both Pakistan and Bangladesh remains significantly smaller compared to India’s
market size. This chapter argues that if the domestic market is small, firms with
IRS will support regional trading arrangements to reap greater profits and reduce
unit costs. However, firms in all South Asian countries, with the exception of
India, do not have scale economies, and IRS is non-existent. Thus, domestic pro-
ducers in these countries do not have incentives to seek regional trading arrange-
ments. On the other hand, although some Indian firms have achieved scale
economies and generally support regional trading arrangements, they have
shown hesitation to expand to regional markets for two reasons. First, India’s
domestic market size is quite large in comparison with other South Asian
markets. Even the combination of all South Asian markets will be smaller than
Indian market size, providing no extra incentives for Indian firms to seek
regional trade liberalization. Second, political tension among South Asian coun-
tries prevents expansion of intraregional trade.
Table 6.2 South Asian market sizes

Country Population in 2004 GNI in 2004

■
Millions %share in region’s Million US$ % share in Per capita
population region’s GNI income US$

Bangladesh 139 9.8 61.3 7.2 440

India 1,080 76.2 673.2 79.0 620
Nepal 27 1.9 6.6 0.7 250
Pakistan 152 10.7 90.7 10.6 600
Sri Lanka 19 1.34 19.5 2.2 1,010

Source: World Development Indicators, 2006

 Domestic politics and regional economic cooperation 151
Complementarities of regional economies
A close look at the trade and production structure of South Asian countries sug-
gests that there is a considerable degree of overlapping in agricultural products
such as jute, cotton, and tea. In the industrial sector, except for India and to
some extent Sri Lanka, other South Asian countries do not have diversified
product base. As shown in Table 6.1, with the exception of India and Sri Lanka,
South Asian countries enjoy comparative advantage in a relatively narrow range
of products. Several studies have established that there is a lack of strong com-
plementarity in the bilateral trade structures among South Asian countries
(Hassan 2001; Bandara and Yu 2003; Kemal 2004). Lack of complementarity of
regional economies has two significant implications for intraregional trade in
South Asia. First, South Asian countries do not find it useful to intensify trade
among themselves. Consequently, intraregional trade remains low in South Asia.
A World Bank study reveals that South Asia’s intraregional trade is only 0.8
percent of GDP, one-eighth of Latin America’s level and only a fraction of East
Asia’s nearly 27 percent of GDP.2 Second, these countries export similar goods
and compete for similar destinations. As discussed earlier, the major destinations
for South Asia’s exporting goods are not South Asian countries. Rather, NAFTA
and EU remain the main destinations.

Current levels of economic interdependence

The relative share of the foreign trade in GDP of a country is a significant indi-
cator of the preference and potential influence of business groups on the
formulation of trade policies. It is widely recognized that the attitudes of busi-
nesspeople engaged in foreign trade is likely to be less narrowly nationalistic
than are the attitudes of businesspeople chiefly oriented toward domestic
markets. Also, as argued in this chapter, firms with economies of scale in
smaller markets show greater preference toward regional trading arrangements
than firms from larger markets. Table 6.3 shows that among all South Asian
countries, India’s share of trade in GDP is the lowest. India’s low reliance on
trade can be explained by the fact that it has a relatively large domestic market,
providing substantial profits to its firms with economies of scale. In contrast,
Sri Lanka’s highest trade ratios indicate the country’s greater reliance on trade.
Given its narrow resource base and small domestic market, Sri Lanka’s firms
have shown more preference toward outward-orientation than other South
Asian countries. Despite their relatively smaller size of markets in comparison
with India, both Pakistan and Bangladesh have substantially less share of trade
in GDP than Sri Lanka or Nepal. This shows an inward-orientation of
Bangladeshi and Pakistani firms. Another important trade-related issue is that
higher trade ratios of smaller South Asian countries are a function of their trade
with the world, NAFTA and EU in particular, rather than with their region. As
summarized in Table 6.4, South Asian countries seem to practice only reluctant
regionalism as they have substantially lower share of intra-SAARC trade as
152 Domestic politics and regional economic cooperation
Table 6.3 Share of foreign trade in GDP (percentage)

Country 1980 1990 1995 2000 2002

Bangladesh
Share of Import In GDP(%) 7.36 8.82 11.02 15.38 14.21
Share of Export In GDP (%) 20.22 16.20 18.69 21.50 20.04
Total Trade In GDP (%) 27.58 25.02 29.78 36.88 34.25
India
Share of Import In GDP(%) 6.64 7.59 11 13.31 14.78
Share of Export In GDP(%) 10.00 9.09 12.20 14.24 16.06
Total Trade In GDP (%) 16.63 16.68 23.21 27.55 30.84
Nepal
Share of Import In GDP (%) 11.54 10.53 24.22 23.28 14.89
Share of Export In GDP(%) 18.73 21.10 34.61 32.43 29.34
Total Trade In GDP (%) 30.27 31.63 58.83 55.71 44.23
Pakistan
Share of Import In GDP (%) 7.99 16.93 16.90 18.01 16.91
Share of Export In GDP(%) 12.74 18.49 21.43 19.35 16.32
Total Trade In GDP (%) 20.72 35.42 38.33 37.37 33.22
Sri Lanka
Share of Import In GDP (%) 31.36 30.55 35.89 39.27 36.08
Share of Export In GDP(%) 53.35 38.53 45.52 49.74 42.38
Total Trade In GDP (%) 84.71 69.08 81.41 89.01 78.46

Sources: Estimated from United Nations, Statistical Yearbook (1993, 1996, 2001, 2004, 2006).

Table 6.4 Intra-SAARC trade in relation to world trade

Year Intra-SAARC trade World trade of SAARC Percentage share of

(exports + imports) countries (exports + intra SAARC trade
(US$ million) imports) (US$ million) in world trade

1980 1,210.0 37,885.3 3.2

1985 1,088.7 43,759.5 2.4
1990 1,584.7 65,490.0 2.4
1995 2,919.0 83,110.0 3.5
2000 5,315.0 14,1494 3.7
2005 14,165.4 317,796.6 4.5

Sources: Estimated from The IMF Direction of Trade Statistics Yearbook (1985, 1992, 1995, 2006),
Washington, DC: International Monetary Fund.

compared to their world trade over a period of more than two decades from
1980 to 2005.
As Table 6.5 shows, exports and imports among SAARC countries are quite
modest. The low level of intraregional imports and exports of India and Pakistan
indicate how little these two relatively developed economies in South Asia
depend on the region’s markets. By contrast, the industrialized countries remain
Table 6.5 South Asian trade dependence indices (in percentages), 1980–2006

Imports from Exports to

■
Industrial Developing Asia SAARC Industrial Developing Asia SAARC
countries countries countries countries countries countries

Bangladesh 1980 48.1 35.4 16.4 3.68 36.0 56.7 26.1 8.68
1990 42.2 42.1 34.0 6.8 71.3 24.0 10.1 3.6
2001 25.4 59.6 51.8 17.4 74.5 9.5 5.4 2.7
2003 21.3 67.8 57.4 16.6 75.3 9.0 5.2 1.7
India 1980 46.2 43.5 8.9 0.9 48.7 31.0 11.5 3.6
1990 60.6 36.1 17.2 0.4 60.3 25.8 13.0 2.7
2001 40.5 36.1 17.2 1.4 52.4 43.8 23.1 5.7
2003 34.6 45.4 23.3 0.9 50.4 45.8 25.4 4.6
Maldives 1980 67.4 32.8 29.7 23.3 60.0 40.0 31.8 26.5
1990 23.1 76.9 76.4 11.4 50.2 49.8 49.7 14.0
2001 18.8 81.2 65.5 9.2 72.9 27.1 24.5 3.7
2003 20.7 79.2 68.0 24.3 58.4 41.6 40.7 14.0
Nepal 1980 39.9 61.1 59.9 47.9 48.4 51.6 44.9 37.8
1990 39.1 60.9 60.3 11.7 72.7 27.7 26.5 7.1
2001 15.7 81.2 60.9 31.8 55.0 43.2 42.6 36.6
2003 15.8 80.5 55.4 23.9 43.4 54.4 53.5 51.6
Pakistan 1980 50.1 47.6 14.1 2.3 36.4 60.9 25.3 6.3
1990 55.2 43.8 19.5 1.6 60.8 36.8 20.9 3.9
2001 32.5 67.4 24.7 3.1 57.0 42.9 42.6 5.1
2003 34.3 65.7 28.2 2.4 55.6 44.3 18.7 2.9
Sri Lanka 1980 45.5 52.5 20.4 5.1 39.6 42.9 15.2 7.0
1990 40.1 59.7 40.5 7.0 61.5 32.3 9.6 3.6
2001 31.2 68.5 55.7 12.3 74.0 23.0 8.5 2.7
2003 30.8 66.8 56.1 17.6 68.9 26.8 11.7 6.8

Sources: Estimated from IMF Direction of Trade Statistics Yearbook (1985, 1999, 2003, 2007).
154 Domestic politics and regional economic cooperation
the major trading partners for SAARC countries. As evident in Table 6.5,
intraregional exports of SAARC members, with the exception of Nepal, have
significantly declined during 1980–2003. The relatively large exports of Nepal
to SAARC region can be explained by the existence of a preferential trade
regime between Nepal and India. Sri Lanka’s exports to SAARC region declined
during 1980–2001 but picked up during 2001–03 due to a FTA with India in the
late 1990s. Intraregional imports of SAARC members, with the exception of Sri
Lanka, also show a significant declining trend during 1980–2003. In sum, the
SAARC countries’ trade with industrial countries, developing countries, and
other Asian countries far outweigh trade among themselves.
Why is intraregional trade so low in South Asia? Several factors account for
this. First, with the exception of India and Pakistan, SAARC countries do not
have a diversified product base. Being primary producers, they tend to export
similar items and thus compete with each other. Thus, lack of complementarity
in regional economies has contributed to low level of intraregional trade. In
addition, despite their small market size, lack of scale economies, except for
some firms in India, makes exports less profitable and thus prevents domestic
producers of SAARC countries from exporting their products to each other’s
markets.
Second, the existence of a high rate of tariff and non-tariff barriers in South
Asian countries is an important factor for constraining the expansion of intrare-
gional trade.3 In the 1980s, tariffs in South Asia were nearly 70 percent on an
unweighted average basis, compared to East Asia’s 27 percent and Latin
America’s 32 percent (Newfarmer 2004: 4). Although tariffs have declined in
South Asia from 70 percent to 35 percent in the 1996–98 period and about 18
percent in 2002 (Pursell and Sattar 2004) because of trade liberalization by
South Asian countries over the last two decades, tariff rates are still higher in
South Asia than other regions. One reason that explains this disparity is the con-
tinuous tariff cuts at a more rapid pace by other regions in comparison with
South Asian countries.
The other reason is that tariff revenues are an important source of govern-
ment revenue for most South Asian countries. Political leaders in these countries
are concerned about any loss of tariff revenues because that will reduce their
ability to redistribute government funds to special interests or spend on public
welfare schemes. Given the growing budget deficits and absence of substantial
export earnings, the loss of tariff revenues poses problems for South Asian
leaders. These revenues are necessary for political leaders to enhance their
prospects of retaining power. Consequently, unlike developed countries, tariff
revenues have remained a significant part of the government budget in South
Asian countries and tariff cuts have moved at a much slower pace than other
regions of the world.
In the 1970s and 1980s, most South Asian countries pursued import substitu-
tion industrialization (ISI) policies. Sri Lanka is the only South Asian country to
have pursued trade and investment liberalization policies since 1977 after the
failure of its ISI policies from 1970 to 1977. The adoption of protectionist
 Domestic politics and regional economic cooperation 155
import substitution policies by South Asian countries turned their economies
into one of the most inward-oriented and regulated economies with stringent
trade and exchange controls and pervasive state intervention in all areas of eco-
nomic activity. Promotion of public sector dominance in the economy was pre-
ferred policy options for South Asian governments during this period. Two
implications of these policies are particularly important for intraregional trade in
South Asia. First, these policies were highly unfavorable to private sector activ-
ities in general and export production in particular. There was a significant anti-
export bias in the economy, which was not conducive to promote intraregional
trade. Under the pressure of economic crises and the multilateral agencies like
the International Monetary Fund, and the World Bank, South Asian countries
have pursued economic liberalization policies since early 1990s. While trade
and investment liberalization marked a clear departure from two decades of
import substitution policy preferences by political actors, these policies were
clearly partial and not accompanied by comprehensive reforms. South Asian
countries continue to impose restrictions on foreign direct investment (FDI)
entry on several sectors, including service sector. Consequently, South Asian
countries have not received FDI at nearly the level of other regions. According
to one estimate by the World Bank, available FDI at a global scale rose from
$15 billion in 1980–82 to $140 billion in 2001–03 (Newfarmer 2004: 6). But the
preferred destinations for most FDI inflows are East Asia and Latin America.
While China has attracted about $50 billion and Latin America has attracted $58
billion during 2001–02, South Asia has received less than $5 billion during the
same period (Newfarmer 2004: 6). The legal barriers to and limits on FDI in
South Asian countries are the primary reason for this trend.
Drawing on the evidence of NAFTA, EU, and Japanese FDI into ASEAN,
several studies have shown that FDI coming from multinational corporations
serves as an important driving force for integration through trade (Blomstrom
and Kokko 1997; Robson 1998; Newfarmer 2004; Chase 2005). The dynamics
of setting up integrated production facilities and supply chains in different coun-
tries by multinational corporations to take advantage of local factors of produc-
tion (such as local labor) is the principal reason why FDI typically facilitates
cross-border trade between neighboring countries. Geographic proximity offers
several benefits for multinational firms: lower transport cost; easier coordination
with suppliers; better prospects of just-in-time delivery of products; and shorter
lead times for quick adaptation to changes in demand or consumer tastes (Chase
2005: 32). These benefits drive multinational firms to get involved in regional
production sharing, region-specific sourcing, manufacturing, and marketing,
thereby facilitating cross-border trade. In addition, inward flows of FDI can play
a role in stimulating local production in related industries, in transferring techno-
logy, and in raising productivity in firms. These benefits of FDI generally
enhance economic capacity of a country and are helpful for improving prospects
of intraregional and extraregional trade. The limited inflow of FDI into the
region has deprived South Asian countries of potential economic gains with
serious implications for limited intraregional trade.
156 Domestic politics and regional economic cooperation
The lack of adequate transport and information links among the South Asian
countries poses serious problems for major imports and exports. Lack of com-
munication and information links between the South Asian countries has made it
difficult for business groups to know each country’s production, consumption
and trade patterns, and business opportunities in general. Not surprisingly, there
has been only negligible interaction among business groups in the region for the
past several decades. In addition, a highly unfavorable freight structure for ship-
ping services, coupled with a lack of well-developed land and water routes
between India, Pakistan, and Bangladesh, has increased transportation costs con-
siderably, making trade unattractive. For example, freight for Kolkata–Khulna
(Bangladesh) is higher than that for Kolkata–Singapore; and freight for
Karachi–Mumbai is higher than that for Karachi–Hong Kong. Shipments of
cargo through foreign vessels from India to Karachi and Chittagong are subject
to lengthy and cumbersome bureaucratic procedures. Unless shipping facilities,
licensing, and bureaucratic procedures improve, the current limited volume of
trade among South Asian countries is unlikely to change.
Finally, political differences and a lack of willingness to create trade comple-
mentarities among the leaders of the South Asian countries contribute to the
current low level of intraregional trade. In this context, the persistent hostility
between India and Pakistan is particularly important. Despite great potential for
trade between India and Pakistan, the volume of trade is insignificant between
two countries because of political tension. The share of total trade between Pak-
istan and India measured by their bilateral exports amounts only to 0.4 percent
of total exports from India and Pakistan. This is only one-fifth of the bilateral
trade between Malaysia and China, two countries of comparable GDP and prox-
imity, and only one-sixteenth of the trade that occurs between Argentina and
Brazil, other two countries of comparable size.4

Economic liberalization policies

In the post-1990 period, India, Pakistan, Bangladesh, and Nepal have adopted
policies of economic liberalization in response to their severe economic crises.
As the experiences of regional cooperation efforts in Latin America (MERCO-
SUR) and Southeast Asia (ASEAN) suggest, economic liberalization can
provide a good foundation for the growth of regional cooperation. Two lines of
argument – virtuous circle and market gains – link economic liberalization pol-
icies with growth of regional cooperation. According to the virtuous circle argu-
ment, economic liberalization policies encourage foreign investors, who
typically prefer to invest in politically stable areas. Regional cooperation efforts
reduce the propensity for conflict among the partners and promote regional
political stability. This reduces the risks for international investors and financial
institutions, resulting in the much-needed inflow of foreign investment, techno-
logy, aid, and concessional financial loans to the developing countries, benefit-
ing their leaders’ domestic economic agenda. In order to be successful,
economic liberalization policies need maximum possible saving of resources for
 Domestic politics and regional economic cooperation 157
investment in development-oriented projects. Reducing expenditure in unpro-
ductive military sectors enables the governments to save substantial resource
capital. Such a result is possible when peace prevails in the region, an outcome
facilitated by regional cooperation efforts.
According to the market gains logic, countries pursuing economic liberaliza-
tion policies require access to regional markets, which is made possible by coop-
eration commitments among participating member countries. Besides becoming
a driving force for accelerating intraregional trade and investment and maintain-
ing the region’s economic dynamism, regional cooperation can also help sub-
stantially in enhancing technology transfer, improving infrastructure, developing
natural and human resources, and protecting the environment. Such outcomes
are, indeed, some of the most important objectives of economic liberalization
policies.
The success of South Asian countries’ current economic reforms depends
upon, among other things, an increase in their exports and their ability to find
new markets both in the developed and in the developing countries. But given
the slow growth of the world economy in the 1990s, the formation and expan-
sion of such regional economic blocs as NAFTA, EU, AFTA, and MERCO-
SUR, and growing desire of these blocs to increase intraregional trade among
the participating members, the South Asian countries may not find it easy to gain
access to these markets. Since the 1980s, most of the world’s FDI has flown to
Latin America, East Asia, and Southeast Asia as a result of these countries’ eco-
nomic liberalization policies, leaving the South Asian countries with minimal
investment. For example, during the past decade, while in East Asia private
investment was 54 percent of total GDP, it was only 2 percent in South Asia.
The expectation of the South Asian countries for increase in FDI may not mate-
rialize until they are able to create a stable political climate in the region,
thereby increasing their attractiveness as a large integrated regional market for
the Western investors.
Indian policymakers’ earlier thinking that India is unlikely to get any substan-
tial benefits from any SAARC economic arrangements appears to have changed
after the mid-1990s. India’s economic liberalization policies since the early
1990s have produced significant economic growth and export opportunities for
its firms. With this change, Indian leaders realize that it is in India’s interest to
promote intraregional trade for the expansion of regional market. Not surpris-
ingly, India has agreed to implement SAPTA agreement and to expedite the
process of SAFTA agreement.5 India’s keen interest to boost trade ties with
South Asian countries is evident in what is now known as the “Gujral Doctrine,”
named after Mr I.K. Gujral, India’s prime minister during 1996–97. The doc-
trine, which is the basis of India’s recent push for a policy of positive unilateral-
ism, stipulates that India, as the region’s dominant power, should be willing to
grant its neighbors concessions without expecting reciprocity.
Such a paradigmatic shift in India’s regional policy can be explained by the
post-Cold War global political–economic developments. Indian leaders know
well that the success of their country’s economic liberalization largely depends
158 Domestic politics and regional economic cooperation
upon its ability to increase exports to new markets in the developed and devel-
oping countries. Until recently, India has achieved only restricted access to the
markets of Japan, North America, and Western Europe due to these countries’
protectionist policies and various kinds of non-tariff barriers against Indian
products.6 With the collapse of the Soviet Union and the gradual incorporation
of Eastern Europe into the West European economy, India has lost two of its
privileged market links. In an effort to expand its market links, India has
recently taken many initiatives, some of which include its active diplomatic role
in the formation of the Indian Ocean Rim Association for Regional Cooperation
(IORARC)7 in March 1997; its association with the ASEAN as a dialogue
partner; its active interest in joining the Asia-Pacific Economic Cooperation
(APEC); and its renewed focus on the “Look East” policy in order to strengthen
its trade ties with the East Asian and Southeast Asian countries. However,
although India will continue to explore markets in other regions, it can no longer
ignore its own base in South Asia, where it enjoys a comparative advantage in
almost every economic sector.
Like India, the success of Pakistan’s economic liberalization policy depends,
among other things, on increasing its exports to the markets of developed and
developing countries. But so far, Pakistan has gained only a limited access to the
markets of Japan, North America, and Western Europe because of these coun-
tries’ protectionist policies. As a result, Pakistan has taken initiatives to form the
Economic Cooperation Organization (ECO)8 to boost its exports and improve
intraregional trade with Central Asia. But Pakistan’s success in Central Asian
markets are likely to be limited, given the competition of the developed coun-
tries to capture these markets. In meeting the needs of Central Asian republics,
Pakistan’s capital and technology are no match to what the Western Europe, the
United States, Japan, and even Russia have to offer. Although the Gulf countries
remain a major destination of Pakistan’s exports, competition from other OIC
countries9 like Malaysia, Indonesia, Bangladesh, Iran, and Egypt has put a
further limitation on Pakistan’s exports to these markets. Consequently, Pakistan
can no longer ignore the South Asian markets, where, next to India, it enjoys
some comparative advantage. Reviving normal trade relations with India within
the SAPTA and SAFTA framework makes economic sense as it would give
Pakistan access to India’s large market and cheap raw materials.
Additionally, given the shortage of development funds worldwide and the
industrialized countries’ aid fatigue, Pakistan will have to compete with India
and other South Asian countries as well as Eastern Europe and the former Soviet
Union to attract ODA and private investment. The Pakistani leaders know well
that in order to survive in Pakistan’s turbulent politics, new economic initiatives
are necessary so that the country does not remain hostage to a collapsing
economy for long. One of the critical factors for the loss of power of Pakistan’s
two former prime ministers, Benazir Bhutto and Nawaz Sharif, during the 1990s
is their inability to turn around Pakistan’s rapidly deteriorating economy. The
Pakistani policymakers are also well aware of the fact that an environment of
regional confrontation will only deter foreign investors which will be detrimen-
 Domestic politics and regional economic cooperation 159
tal to Pakistan’s interest. Regional cooperation thus remains a pragmatic policy
initiative for Pakistan’s own interest.
Other South Asian countries are facing the same kind of difficulties like Pak-
istan. Given the current trend of limited flow of ODA to South Asia in the face
of competition from countries in Eastern Europe and Central Asia, World Bank
and the International Monetary Fund’s reluctance to increase concessional loans,
and their own limited structural abilities, i.e. few manufacturing sectors, small
gross domestic savings, and small scale of economies, both Bangladesh and
Nepal have an urgent need to attract more investment into their countries and to
expand economic cooperation with India, Pakistan, and other countries in South
Asia. Consequently, since 1994, both of these countries have been pursuing eco-
nomic liberalization policies to attract foreign investment and promote intrare-
gional trade.
During the 1980s, Sri Lanka reaped substantial benefits in terms of exports
and investment largely due to its economic liberalization policies. But in recent
years, Sri Lanka’s exports to the developed countries have declined significantly
because of adverse terms of trade and growing protectionism. With the smaller
size of its home market relative to the optimal scale of production, Sri Lanka
needs Indian and other South Asian markets for its exports. The country has also
been losing FDI because of its protracted civil war. Not surprisingly, Sri Lanka
has shown the most interest in regionalism and has strongly advocated for the
expansion of intraregional trade through the framework of SAPTA since 1992.

From SAPTA to SAFTA

Although one of the important reasons for the formation of SAARC was to
increase regional trade cooperation among South Asian countries, no serious
steps were taken until 1990s to achieve this objective. The first attempt to
achieve this goal was made by the SAARC Secretariat in 1990 when it commis-
sioned a study on trade, manufactures, and services. The SAARC Council of
Ministers endorsed the report of this study in July 1991 and decided to set up a
high level CEC to explore trade-related opportunities in South Asia. After a
year-long deliberations, the CEC recommended a draft agreement on SAPTA.
Following the CEC recommendation, the Heads of State at the Colombo Summit
in December 1991 approved the establishment of the Inter-Governmental Group
(IGG) to examine the institutional framework for SAPTA. On the basis of IGG
recommendations, the Council of Ministers signed an agreement to form
SAPTA in April 1993, which became operational in December 1995.
Since the launching of SAPTA in 1995, three rounds of preferential tariff
reductions have been negotiated – SAPTA-1 in 1995, SAPTA-2 in 1997, and
SAPTA-3 in 1998. Although a fourth round of SAPTA negotiation (SAPTA-4)
was initiated in 1999, it could not be ratified by member states because of the
postponement of SAARC summit. Given the highly tedious nature of
commodity-by-commodity negotiation under SAPTA rounds, the SAPTA-4 was
eventually replaced by SAFTA agreement.
160 Domestic politics and regional economic cooperation
Under SAPTA negotiations, a two-tier structure of tariff reductions for two
categories of members – LDCs and non-LDC members – have emerged in South
Asia. The tariff concessions for LDCs – Bangladesh, Bhutan, Maldives, and
Nepal – are higher than that of non-LDC members (India, Pakistan, and Sri
Lanka). The SAPTA-1 round produced modest results as only 226 products at
six-digit HS level (about 6 percent of traded goods) were granted tariff conces-
sions. After four rounds of negotiations (that is completed SAPTA-1, SAPTA-2,
SAPTA-3, and the non-ratified SAPTA-4), SAARC members have agreed to
provide tariff concessions on 4,700 six-digit HS items (Weerakoon and
Wijayasiri 2003). As expected, India has offered the largest number of conces-
sions, followed by Bangladesh and Pakistan. Out of a total list of 4,667 consoli-
dated items, India has provided concessions on 2,554 items, Bangladesh on 521
items, Pakistan on 491 items, Nepal on 491 items, Bhutan on 233 items, Sri
Lanka on 199 items, and Maldives on 178 items (Weerakon and Wijayasiri
2003).
Despite the concessions to a seemingly large number of products, the
progress of preferential trade under SAPTA remains modest. One of the most
important limiting factors of SAPTA has been the actual preferential imports by
member countries as compared to their total values of imports. Mukherji (2004)
has estimated that products imported under SAPTA concessions reached to only
15 percent of total imports among SAARC member countries. A World Bank
report on South Asian trade estimates that on average only 8.4 percent of tariff
lines in the case of imports from non-LDCs and 6.2 percent in the case of
imports from the LDCs are covered under SAPTA (World Bank 2005). These
estimates support the argument that SAPTA has little or no impact in changing
the existing low trade patterns in South Asia. At least, three reasons account for
the insignificant product coverage under SAPTA. First, negotiations under
SAPTA have been conducted mainly on a product-by-product basis, which are
extremely time-consuming. Second, proposed tariff cuts offered under SAPTA
are not deep enough to have any significant impact on trade volume. Finally,
most of products, which received concessions, are not widely traded in the
region and thus have limited trade value for SAARC member countries.
Given the slow progress of SAPTA, the signing of the SAFTA at the 12th
SAARC Summit at Islamabad in January 2004 represented a major development
in South Asia’s search for deeper economic cooperation in the region. With the
signing of SAFTA in 2004, regional trade cooperation gained momentum and
the once difficult-to-achieve objectives of a free trade area appeared increasingly
achievable in South Asia. However, the limited progress and slow movement of
SAFTA since its signing has raised some questions about its relevance as a tool
of liberalizing regional trade. There are two major viewpoints found in the liter-
ature on the prospects of SAFTA. The supporters of SAFTA hold that South
Asian economies, small economies in particular, would substantially gain if
SAFTA comes into existence (Pigato et al. 1997). Several empirical studies
show that despite the potential for trade diversion, SAFTA would bring signific-
ant benefits to small countries in the region and would facilitate unilateral trade
 Domestic politics and regional economic cooperation 161
liberalization in South Asia (Srinivasan and Canonero 1995; Srinivasan 1998).
Using the framework of gravity model, a recent empirical study by New Delhi-
based Research and Information Systems institute suggests that complete elimi-
nation of tariff under SAFTA is likely to increase intraregional trade by 1.6
times (Kemal 2004: 16).
In contrast to these findings, the second view represented by SAFTA critics
argue that SAFTA is hardly beneficiary for its members and will mostly lead to
trade diversion and slow down unilateral trade liberalization in South Asia
(Panagariya 1999). Using the example of MERCOSUR, Panagariya (1999: 376)
provides empirical evidence to support this view. He argues that after joining the
Southern American Common Market, both Brazil and Mexico have abandoned
unilateral trade liberalization and raised their tariff. He contends that such out-
comes are possible in case of South Asian countries, and from this perspective,
SAFTA is considered undesirable in South Asia. While the debate on SAFTA
continues, a general notion that a free trade area in South Asia would facilitate
deeper regional integration and thus would strengthen ties between member
countries seems to have persisted in the minds of South Asian policymakers. To
what extent this belief is consistent with the political and economic realities of
South Asian countries? The following discussion addresses this issue.
SAFTA was first mooted at the 8th SAARC Summit in Delhi (1995). It was
then suggested that SAFTA would come into effect by 2005. But frustrated by
the slow pace of progress of SAARC including SAPTA rounds of negotiations,
and driven by the potential economic and political benefits of a free trade area
agreement, the policymakers of South Asian countries took a decision at the 9th
SAARC Summit at Male (1997) to advance the effective date of SAFTA from
2005 to 2001.10 The Male Summit also decided to set up a forum called Group
of Eminent Persons (GEP) to look into various aspects of intraregional trade in
South Asia and prepare a feasibility report on SAFTA. The GEP report entitled
“SAARC Vision Beyond the Year 2000” was presented at the 10th SAARC
Summit in Colombo (1998). According to this report, the year 2008 was con-
sidered a realistic timetable for the launching of SAFTA (GEP Report 1998). On
the basis of the recommendations of this GEP report, the policymakers at the
Colombo Summit agreed to first complete a “Framework Treaty” for SAFTA by
2001. However, preparation of the Treaty by 2001 was not possible because of
rapidly deteriorating political and security environment in South Asia triggered
mainly by the following events – nuclear tests by both India and Pakistan in
1998, Kargil conflict between India and Pakistan in 1999, military coup in Pak-
istan in 1999, and India’s refusal to recognize the new military regime of
General Musharraf, political turmoil in Nepal, worsening security environment
in Afghanistan and the beginning of US military engagement in Afghanistan in
2001. The preparation of the Framework Treaty for SAFTA was finally com-
pleted in January 2004, leading to a formal launching of the SAFTA at the 12th
SAARC Summit at Islamabad in January 2004.
The Islamabad Summit Declaration provided two different timetables for
implementation of SAFTA agreements. SAFTA will become fully effective for
162 Domestic politics and regional economic cooperation
non-LDC members (India, Pakistan, and Sri Lanka) by 2013 and for LDC
members (Bangladesh, Bhutan, the Maldives, and Nepal) by 2016.11 There are
two issues in the Framework Agreement of SAFTA – tariff liberalization
program (TLP) and sensitive list of goods – that are important to our discussion
here. According to SAFTA’s TLP, non-LDC members are required to reduce
tariffs to 20 percent within two years of implementation of the agreement and to
a range of 0–5 percent in the next five years. Given the small size of economy,
Sri Lanka was given an additional one-year time to achieve this objective. LDC
member countries are required to reduce tariffs to 30 percent in three years and
to a range of 0–5 percent in the next eight years.
While the adoption of the above progressive non-linear reduction formula
takes into account differential levels of economic development of South Asian
countries and may contribute to the reduction of average tariffs, it is not without
shortcomings. It is important to note that this formula of tariff reduction is not
consistent with the recommendations of the GEP report but somewhat closer to
the suggestions made by the SAARC Chamber of Commerce and Industry
(SCCI) (Mukherji 2004). The experience of AFTA suggests that it is always
more efficient if convergence is achieved initially by all countries lowering their
tariff to a maximum rate and then proceeding further (Kelegama 2004). A
similar pattern of convergence tariff reduction followed by SAFTA-type non-
linear tariff reduction would have been more beneficial to all SAARC members.
Another shortcoming is that the TLP under SAFTA does not include trade in
services. While this may not be a major concern for LDCs for now, the non-
LDC members are certainly disadvantaged. In contrast to SAFTA, bilateral
FTAs – for example the India–Sri Lanka FTA (ISFTA) and Pakistan–Sri Lanka
FTA (PSFTA) – have included liberalization of services. The BIMSTEC group-
ing, which brings together the littoral states of the Bay of Bengal – Bangladesh,
India, Myanmar, Sri Lanka, and Thailand – has agreed to implement an FTA in
2007 that includes liberalization of services.12 Consequently, these FTAs have
become more attractive for non-LDC SAARC members.
One of the most critical issues in SAFTA is that the TLP is not applicable to
goods on the sensitive list of items by each member country. It is understandable
that SAFTA member countries, given their various levels of industrial develop-
ment, are concerned about protecting some of their sensitive industries from
increased competition. But, what is of considerable concern is the large number
of sensitive lists that member countries are allowed to keep and absence of any
binding provision in the Framework Agreement that requires member countries
to reduce the number of sensitive lists over time. According to SAFTA agree-
ment, member countries can retain a sensitive list of 20 percent of tariff lines for
non-LDC member states and slightly less for LDC member countries (Weer-
akoon and Thennakoon 2006: 3920). Table 6.6 provides the number of sensitive
lists for SAFTA members.
The large number of sensitive lists is clearly not favorable for the growth of
intraregional trade in South Asia. Since the signing of SAFTA, several eco-
nomic analyses have pointed to the negative impact of sensitive lists on South
 Domestic politics and regional economic cooperation 163
Table 6.6 Sensitive lists of SAFTA members

Sensitive items Sensitive items Value of imports Value of exports

for non-LDCs for LDCs from SAARC to SAARC
subject to NLs (%) subject to NLs (%)

Bangladesh 1,254 1,249 65.0 22.0

Bhutan 157 – – –
India 884 763 38.4 56.5
Maldives 671 – 74.5 57.6
Nepal 1,310 1,301 64.0 46.4
Pakistan 1,183 – 17.2 34.0
Sri Lanka 1,065 – 51.7 47.0

Source: Weerakoon and Thennakoon (2006); SAFTA; WITS data.

Note
NL – negative list.

Asian trade volume. Analyzing trade data for the SAFTA members from the
World Integrated Trade Solution (WITS) database, Dushni Weerakoon and
Jayanthi Thennakoon (2006) argue that nearly 53 percent of the total import
trade between SAFTA members has been subject to the negative lists of the
respective countries. This study, as summarized in Table 6.6, reveals that except
for Pakistan and India, all other South Asian countries protect more than 50
percent of their total imports from SAFTA countries under their negative lists.
Despite their negative implications for intraregional trade, why do South
Asian countries maintain such large number of items under their negative lists?
Two factors explain this. First, trade liberalization can adversely impact small-
and medium-scale industries. With trade liberalization and tariff reduction,
industries in which a country does not have comparative advantage are likely to
close down. In such a case, countries face unwelcome challenges of unemploy-
ment, political and social unrest. Second, there is a fear among smaller South
Asian countries that tariff liberalization would bring more benefits to larger
countries like India and Pakistan. These two factors have largely contributed to
lack of enthusiasm among political actors to push for rapid trade liberalization in
South Asia.
The above analysis suggests that growth of intraregional trade in South Asia
is far from satisfactory despite four rounds of SAPTA negotiations and the
signing of SAFTA agreement. It is clear that unless South Asian countries make
serious commitments to reduce the size of sensitive lists over a reasonable
period of time, SAFTA’s progress will remain limited. It is necessary to intro-
duce a formal binding provision in the Framework Agreement that will require
SAFTA members to reduce their sensitive lists. In this context, the experience of
AFTA agreement offers a useful lesson. According to the AFTA agreement,
member countries are required to phase out their temporary exclusion lists
(similar to SAFTA’s sensitive lists) in five equal installments. Although there is
a provision in SAFTA agreement for the review of sensitive lists by member
164 Domestic politics and regional economic cooperation
countries at least every four years in order to reduce the number of sensitive list
items, the provision is not binding on member countries. Such open-ended
approach to address sensitive list issues makes implementation of SAFTA provi-
sions time-consuming and difficult. It took SAARC members ten years to opera-
tionalize SAPTA in 1995. It took another nine years to move from SAPTA to
SAFTA. In the absence of any specified timetable, it remains unclear as to how
long it will take to implement SAFTA provisions.
Given the uncertainty of a regional trading arrangement, SAFTA members
have focused on various bilateral, subregional, and transregional FTAs, which
are expected to move faster than SAFTA. For example, following a policy of
“positive economic unilateralism” after the mid-1990s,13 India has signed bilat-
eral FTAs with Sri Lanka, Nepal, Bhutan, and Bangladesh. Similarly, Pakistan
has signed bilateral FTAs with Sri Lanka and Bangladesh. Since these small
countries have received far more favorable preferential treatment from India in
terms of market access and tariff reductions, their interest on SAFTA remains
limited. India has also actively participated in the creation of a subregional
grouping known as South Asian Growth Quadrangle (SAGQ). In addition to
India, Bangladesh, Bhutan, and Nepal are the members of this grouping. The
ADB, under its South Asia Sub-regional Economic Cooperation (SASEC) initi-
ative, supports various initiatives of the SAGQ. Modeled after the successful
Greater Mekong Sub-Region cooperation, the SAGQ has taken initiatives to
develop transportation, energy, waste management, trade, agribusiness, telecom-
munications, and tourism projects in member countries with the technical and
financial support of ADB. Under its SASEC initiative, the ADB has also estab-
lished a South Asia Business Forum (SABF) to facilitate private sector and
government cooperation for the promotion of trade and investment in the region.
To what extent all these bilateral and subregional initiatives will be successful
remains unclear. But their existence poses challenge to SAFTA.
In addition to bilateral and subregional trade initiatives, India is also involved
with various transregional trading arrangements – for example India–ASEAN
FTA, India–Singapore FTA, India–China trade negotiation, and BIMSTEC
FTA. All these transregional trading arrangements hold much promise for India
as they provide a larger market to Indian goods than the SAFTA market. In
addition, the BIMSTEC FTA, India–ASEAN FTA, and India–Singapore FTA
have less number of negative lists and are expected to move much faster than
SAFTA. From the perspectives of Indian policymakers and industrial groups,
the success of these initiatives will be vital for India’s trade interest.
Although business groups in South Asian countries are generally supportive
of the idea of SAFTA, their support for the implementation of SAFTA agree-
ment remains weak. Under the initiatives of the SCCI, the apex business organi-
zation of SAARC, various seminars and conferences have been conducted in
both South Asia and abroad to discuss about the promises and challenges of
SAFTA. The SCCI sponsors a SAARC Business Leaders Conclaves every year
when business leaders from South Asian countries meet in one of the member
countries to discuss various business initiatives. Two premier business associ-
 Domestic politics and regional economic cooperation 165
ations in India – Federation of Indian Chambers of Commerce and Industry
(FICCI) and Confederation of Indian Industry (CII) – have also taken some initi-
atives in organizing conferences and seminars over SAARC and SAFTA issues.
These two organizations have published several monographs and research
papers on SAFTA and South Asian economy. Various Chambers of Commerce
in Pakistan, Bangladesh, Sri Lanka, Bhutan, Maldives, and Nepal also organize
conferences and publish conference proceedings on SAFTA-related issues.
While these discussions remain useful in terms of establishing some “talking
points,” the efforts of South Asian business groups toward SAFTA can be char-
acterized as half-hearted and inconsistent.14 When it comes to solid action plan
in terms of lobbying their governments strongly for the implementation of
SAFTA agreement, business groups have generally shied away. Business groups
in Bangladesh, Pakistan, and Sri Lanka have shown little interests in removing
sensitive lists within a reasonable span of time and instead have shown more
preferences for trade protection because of their vulnerability vis-à-vis Indian
business.15 The general argument for the business groups’ preference for trade
protection is that sensitive lists are an important tool for saving their industry
and domestic market from the glut of imports, mostly from India. The lack of
strong support from business groups provides little incentives to political actors
to move forward in achieving free trade objectives in South Asia.

Political coalitions and FTAs

Despite their economic liberalization policies and the conducive international
climate for strengthening regional cooperation, SAARC’s progress has remained
limited during the past decades due to the emergence of two mutually competing
ruling coalitions – i.e. weak liberalizing coalitions in India and nationalist–fun-
damentalist coalitions in Pakistan.16 As summarized in Figure 6.2, liberalizing
coalitions show more favorable preference to regional trade arrangements than
nationalist coalitions. Ruling liberalizing coalitions (pursuing economic liberal-
ization policies) generally embrace regional cooperation policies for at least two
positive payoffs:

1 regional cooperative order enables these coalitions to avoid the enormous

opportunity cost of military expenditure and diversion of societal resources
toward developmental projects;
2 regional cooperative arrangements can offer positive global and regional
externalities by providing some access to foreign and regional markets,
capital investment, technology transfers, and foreign aid which can help the
ruling coalitions to maintain or even broaden their domestic support base.

While strong ruling liberalizing coalitions can pursue regional cooperation for
the above reasons, weak liberalizing coalitions face different domestic political
dynamics. Contrary to strong liberalizing coalitions, the political base of weak
liberalizing coalitions is narrow and unstable. Consequently, weak liberalizing
166 Domestic politics and regional economic cooperation

Nature of coalitions
Liberalizing Nationalist

Strong support for free Weak support for free

Significant
trade arrangements trade arrangements
Potential
market
gains
Weak support for free Weak support for free
Insignificant
trade arrangements trade arrangements

Figure 6.2 Nature of political coalitions, potential market gains, and preferences for free
trade arrangements.

coalitions are under greater pressure to dilute their reform agenda and may be
more inclined to accommodate the varying demands and interests of their polit-
ical opponents to insure their political survival. It often becomes difficult for
weak liberalizing coalitions to downplay regional security threat and to ignore
scapegoating17 (blaming external enemy) as an instrument of their national pol-
icies. Not surprisingly, India’s four weak liberalizing coalitions since the 1990s
– Congress administration of Narasimha Rao (1991–96), United Front Adminis-
tration of Deve Gowda and I.K. Gujral (1996–97), BJP administration under
A.B. Vajpayee (1998–2005), and UPA (Congress and Left Party alliance)
administration of Manmohan Singh (2005–) – have generally remained tentative
about regional cooperative postures, although they have not demonstrated the
same degree of antipathy toward regional cooperation policies as the national-
ist–fundamentalist coalitions.
The nationalist–fundamentalist ruling coalitions follow a combative regional
policy as they thrive on myths of self-reliance, military prowess, sovereignty,
and national pride. Their goals of military strength and economic independence
are naturally incompatible with the objectives of regional cooperation, which
involve downsizing military endowments and promoting economic interdepen-
dence through lowering trade barriers. The two main pillars of domestic support
for the nationalist–fundamentalist coalitions are the military and both private
and state monopoly enterprises. Private and state monopoly enterprises, which
generally perceive a threat from the competition of regional counterparts, resist
lowering trade barriers. The interest of the military is better served in an atmo-
sphere of regional conflict and instability. Consequently, parochialism or a
combative regional policy becomes preferred policy choices for a
nationalist–fundamentalist coalition.
In Pakistan, economic liberalization policies by weak liberalizing coalitions
under Benazir Bhutto and Nawaz Sharif since the 1990s have not contributed
substantially to any regional cooperative initiative. Rather, Pakistan has become
more tentative about the cooperative process than India and other South Asian
 Domestic politics and regional economic cooperation 167
countries. The primary reasons for Pakistan’s lack of enthusiasm for any trade-
creating scheme in South Asia are

1 its leaders’ apprehension of being dominated economically and militarily by

a stronger India and
2 the consequent backlash from the dominant domestic groups, further weak-
ening the liberalizing coalition’s position at home.

The logic of political survival forced Pakistan’s two Prime Ministers, Benazir
Bhutto and Nawaz Sharif, to pursue a reactive and combative regional policy
vis-à-vis India during 1990–99.
The military coup in Pakistan on October 12, 1999, which brought Pakistan
under direct military rule for the fourth time since independence, has produced
additional tension in the Indo-Pakistani relations. As discussed in Chapter 5,
military regimes, when in conflict with a neighboring democracy, tend to follow
one or combination of all of the following policies: engage in military confronta-
tion; scapegoating (i.e. blaming the neighbor for domestic problems in order to
insure their political survival); externalization of bilateral problems and support
for external mediation in resolving bilateral disputes.18 Since independence,
military-dominated regimes in Pakistan have fought three major wars with India
– twice over Kashmir in 1948 and 1965 and once over Bangladesh liberation
issue in 1971. Although the Kargil war of 1999 between India and Pakistan was
fought by the civilian regime of Prime Minister Nawaz Sharif, available evid-
ence suggests that this war was primarily masterminded and conducted by Pak-
istan’s military under the leadership of General Musharraf.19 Pakistan’s ruling
elites, particularly military rulers, have often resorted to scapegoating, as mani-
fested in a militant anti-India posture, to remain in power and to acquire legiti-
macy. To insure Pakistan’s strategic significance for extraregional powers and to
maintain their political clout in domestic politics, the military regimes have
often shown greater preference for external mediation in their bilateral disputes
with India and focused more on domestic-oriented and external-oriented policies
than policies with a regional thrust.
Such policies of externalization and external mediation of bilateral problems
have prevented close and continuous regional interactions between India and
Pakistan, making regional cooperation goals difficult to achieve. Despite some
initiatives, no substantial change in this type of bilateral relationship is evident
in policies of Pakistan’s present military ruler, General Pervez Musharaf.20 On
its part, India also continues to reject international mediation on the Kashmir
issue despite the wide recognition of international mediation as an effective
instrument in resolving border disputes, as evident in northern Ireland, the
Middle East, and the Peru–Ecuador border dispute in 1996. Such inflexible
posture by India has been counterproductive for the growth of regional coopera-
tion in South Asia.
It is a widely shared belief in South Asia that the political tension between
India and Pakistan has contributed to a lack of substantial progress in regional
168 Domestic politics and regional economic cooperation
cooperation and regional trading arrangements in the region. Because of this
political tension, ruling coalitions of both India and Pakistan have shown greater
interests in the growth of subregional and “spoke–spoke” integration initiatives
rather than focusing exclusively on the growth of SAARC. These
“spoke–spoke” cooperation initiatives have taken a variety of forms. Some initi-
atives can be described as “hub-and-spoke” type of cooperation, in which the
largest country in a region signs bilateral agreements with many small countries.
India’s initiatives for the growth of bilateral FTAs between India and Sri Lanka,
India and Nepal, India and Bangladesh, and India and Bhutan are examples of “-
hub-and-spoke” type of cooperation. Similarly, Pakistan has also taken initi-
atives in signing bilateral FTAs with Sri Lanka and Bangladesh. A second
variant of “spoke–spoke” pattern of cooperation is the growth of subregional
grouping within a regional grouping.21 India’s initiatives for the formation of
SAGQ with Bangladesh, Bhutan, and Nepal is an example of this type of coop-
eration initiatives. While this pattern of cooperation may lead to an improvement
of market access of smaller countries, it can also diminish the relevance of
regional FTA.

Conclusion
This chapter has argued that three conditions must be present for sustained
success of regional economic cooperation in a region – potential for significant
market gain; political actors’ willingness to pursue regional economic coopera-
tion policies; and the presence of an undisputed regional leader. Regional eco-
nomic arrangements typically entail a lengthy process of establishing rules,
regulations, and policies, which are neither easy nor automatic. Only regional
groups that satisfy the above three conditions are likely to achieve sustained
success in establishing regional institutions, while groups that satisfy none of
these conditions are least likely to succeed.
As discussed in this chapter, with the exception of India, the economies of
SAARC members are not complementary. Since SAARC countries export the
bulk of their primary commodities and manufactured goods to the same world
markets, they tend to compete in the same industrial sectors with each other.
Indeed, most of SAARC members’ trade is with the United States and Europe
than with their neighbors. Given the small size of markets and insignificant
economies of scale, there is limited scope for mutually beneficial market
exchange among South Asian countries. Consequently, demand for deeper eco-
nomic cooperation by market actors is weak.
Although SAARC members have pursued economic liberalization policies
after the early 1990s, these policies have not led to deeper regional economic
cooperation. The emergence of two types of competing domestic coalitions in
India and Pakistan – that is liberalizing coalitions and nationalist–fundamentalist
coalitions – is the important reason to account for this failure. While India’s
ruling–liberalizing coalitions have more or less supported economic liberaliza-
tion and regional economic cooperation policies, their weakness made it almost
 Domestic politics and regional economic cooperation 169
impossible for national leaders to pursue deeper regional economic cooperation
policies in the 1990s. This trend continues. The nationalist–fundamentalist coali-
tions in Pakistan, as represented by Pakistan’s radical Islamic Jamaat-i-Islam
Party and its current military regime, generally have shown less enthusiasm for
deeper regional economic cooperative arrangements.
Within SAARC, India is the largest member state in terms of size, popu-
lation, and market. But, there is no consensus among South Asian countries to
recognize India as the region’s undisputed leader. In particular, Pakistan con-
tinues to challenge India’s leadership. The continuing squabble between India
and Pakistan does not augur well for the future of SAARC. Absence of leader-
ship within SAARC implies that there is no “paymaster” or no regional leader to
ease distributional problems. Absence of leadership has also made coordination
of rules, regulations, and policies difficult and time-consuming. It is not
surprising that under SAPTA and SAFTA agreements, individual countries con-
tinue to undermine free trade principles by excluding numerous products from
tariff cuts by keeping them under the sensitive lists.
The rivalry between India and Pakistan signifies trouble for SAARC’s future
and any prospects of deeper regional economic cooperation. Already the policy
differences of India and Pakistan have driven these two countries to engage in
several “spoke–spoke” and “hub-and-spoke” type of cooperative arrangements.
In addition, both India and Pakistan are involved in other transregional eco-
nomic arrangements, such as IORARC and BIMSTEC in case of India and ECO
and OIC countries in case of Pakistan. India’s involvement in a “noodle bowl”
of bilateral trade agreements with Singapore, Thailand, Vietnam, Japan, China,
South Korea, Sri Lanka, Nepal, Bhutan, and Bangladesh and her initiatives for
the “spoke–spoke” pattern of economic cooperation among subgroups of South
Asian countries – for example SAGQ – are motivated in part by Pakistan’s
unwillingness to increase the speed of free trade negotiation with India. While
such transregional and “spoke–spoke” pattern of trade cooperation may provide
some short-term solutions to India’s need for trade expansion and market access,
given their lack of commonality and quite different rules of origin, it is not clear
as to what extent these type of trade agreements will facilitate deeper economic
cooperation. SAFTA would make a good deal more practical sense and would
be an essential underpinning of an emerging regionalism in South Asia. But, the
level of regional economic interdependence achieved so far and the pace at
which South Asian countries are progressing in their negotiation for FTAs will
leave South Asian countries at an appreciable distance from the goal of SAFTA
even after a decade. Any substantially faster rate of progress on FTAs would be
a desirable goal. But, that would require a substantially greater political effort
from South Asian political leaders – Indian and Pakistani leaders, in particular.
7 Domestic preferences for regional
cooperation
Cross-national comparisons

Regional cooperation in South Asia is an intergovernmental process, where

political leaders engage in bargaining and negotiation to promote their respec-
tive state’s multiples national interests. Growth of regional cooperation, thus,
depends on the willingness of the political leaders to pursue regional coopera-
tion policies. The political leaders’ willingness depends greatly on the payoff of
regional cooperation to political leaders. The most valuable payoff for the polit-
ical leaders is to retain political power. In order to retain political power, polit-
ical leaders need adequate domestic support for their policies. It is, therefore,
reasonable to assume that the power-retaining motivation of political actors will
force them to anticipate the reactions of key societal groups on specific regional
cooperation policies and avoid those policies that will bring them into confronta-
tion with dominant domestic groups. Thus, lack of adequate domestic support or
negative reactions for regional cooperation policies can contribute to a dampen-
ing of enthusiasm among the ruling coalitions to seek deep levels of regional
cooperation. In contrast, adequate domestic support or positive reactions from
domestic groups toward a specific regional cooperation policy can create a more
favorable environment for policymakers to pursue cooperation policies. Given
this dynamic, the present chapter examines the nature of domestic support for
regional cooperation in South Asia.
In examining the nature of domestic support for regional cooperation, this
chapter focuses on elite-level support. In South Asia, regional cooperation
policy essentially remains a foreign policy issue and is thus an issue in elite poli-
tics. Issues of regional cooperation policy are largely beyond the immediate
concern of mass citizens and do not involve large number of people. South
Asian mass publics are, thus, generally uninformed and unconcerned about
regional cooperation. The South Asian elites, on the contrary, are aware of the
extensive nature of regional cooperation policies as well as the interdependence
of regional and domestic politics. Thus, they remain more interested and
involved in the formulation of regional cooperation policies. In addition, elites
in South Asia have greater potential to influence indirectly the course of govern-
ment policy. As opinion leaders, these elites have the capability to politicize
issues, mobilize masses, and even increase saliency of a particular issue by
means of debates, media writing, and discussion.
 Cross-national comparisons 171
In a pluralistic elite structure like India and Sri Lanka, functional elites some-
times act as interest groups lobbying to secure certain goals. At other times, they
act as veto groups who must be placated before a given policy can be imple-
mented. In order to understand why a particular policy is preferred by governing
elites in India and Sri Lanka, it is usually necessary to know the nature of
support to those policies by key domestic groups. In other SAARC countries –
Pakistan, Bangladesh, Nepal, Bhutan, and Maldives – where the elite structure
remain tightly integrated to a varying degree, few functional elites, such as the
military, bureaucrats, industrial and landed elites, and religious leaders, have
access to power and wealth. In such a system, a leader may have more autonomy
in the policy-making process. Yet, it will be unreasonable to assume that a
leader single-handedly initiates and implements policy measures to keep the
entire country functioning. The leader depends on advices, information, and
support of associates comprising various functional elites. The number of these
elite groupings surrounding the leader is few. But, typically, these few elite
groupings have a support base on which the leader must depend in order to
expand his own support base for legitimacy and retaining power. Hence, the per-
spectives and preferences of these elite groupings are of particular significance
for gauging trends in regional cooperation policy formulation. Given this under-
standing, the present chapter seeks to examine the nature of elite preferences for
regional cooperation policies in South Asia.
As discussed in Chapter 2, preferences of domestic elites for specific regional
cooperation policies are based on their utilitarian evaluation of and/or affective
allegiances toward regional cooperation agreements and institutions. While utili-
tarian preferences of elites are determined by their perception of benefits – eco-
nomic, security, social welfare, and so on – from a specific regional cooperative
arrangement, affective allegiances of elites are based on their shared values,
attachment, sympathy, and trust toward a regional organization. Several empiri-
cal studies in the context of EU show that examining the level of utilitarian and
affective support provides a useful explanation in understanding the scope and
speed of regional integration.1 In the literature of regional integration, there is no
agreement among scholars about which kind of support, affective or utilitarian,
precedes the other. According to functionalists and neo-functionalists, utilitarian
support generally precedes affective support because rewards and gains are said
to be prerequisites for trust and confidence. In contrast, communitarian scholars
argue that existence of affective support facilitates utilitarian support. Trust and
confidence, communitarian scholars argues, are the prerequisites for the growth
of economic transactions between member countries of a regional grouping.
Despite the plausibility of the arguments by both schools of thought, it is prob-
lematic to determine which kind of support emerges first. However, the neces-
sity for both utilitarian and affective support for the growth of a regional
organization is widely accepted in the literature (Lindberg and Scheingold 1970;
Hewstone 1986; Gabel 1998). Following this literature, this chapter seeks to
examine the nature of utilitarian and affective support by South Asian elites for
SAARC.
172 Cross-national comparisons
To evaluate the nature of South Asian domestic elite-level support along the
affective and utilitarian dimensions toward SAARC, this chapter has sought
answers to the questions listed in Table 7.1. Using primary data derived from
extensive open-ended interviews with 780 elites from five South Asian countries
– India, Pakistan, Bangladesh, Sri Lanka, and Nepal – over a period of two years
(May 2002 to November 2004), this chapter provides an assessment of domestic
elite preferences for deeper regional cooperation in South Asia. Table 7.2
describes the profile of the elite respondents.2
Affective support is abstract and broad in nature, representing elites’ emo-
tional attachment and loyalty to such ideals as regional identity and regional
community. To tap the affective dimension of support, the respondents were
asked questions on South Asian identity, solidarity, and national image (Table
7.1). The question on South Asian identity asks specifically about respondents’
South Asian identification. The question on solidarity assesses respondents’
solidarity with South Asian citizens outside their own country and their willing-
ness to undergo economic sacrifice for the sake of other SAARC members. The
question on national image evaluates respondents’ positive or negative percep-
tion of neighboring countries in terms of such issues as military aggression,
authoritarianism, political stability, economic dependency, and external orienta-
tion. Thus, these questions capture respondents’ political identification with
SAARC and mutual obligations toward each other, which are fundamental
indicators of growth and legitimacy of regional institutions. Since utilitarian
support reflects an evaluation of the perceived benefits of cooperation, this
research has made an attempt to elicit manifest attitudes of the respondents
toward deeper cooperation by asking questions on evaluation of membership and
perception of inequity (Table 7.1). The questions on evaluation of membership
ask specifically about respondents’ level of satisfaction with SAARC achieve-
ments so far and their positions (favorable or not favorable) on the issue of
expansion of regional cooperation in South Asia. The questions on perception of
inequity evaluate respondents’ perception of their country’s relative contribution
to and benefit from SAARC arrangements. Overall, responses to these questions
should represent respondents’ perception of economic gains and losses from the
current stage of regional cooperation arrangements and their perception of likely
benefits from future economic arrangements between SAARC members.

South Asian identity and solidarity

Table 7.3 provides a comparison of the national percentage of positive responses
to the questions related to South Asian identity and solidarity. When asked about
their sense of South Asian identity, less than one-fifth of the respondents in India
and about one-eighth of the respondents in Pakistan indicated that they often
think of themselves as citizens of South Asia. With regard to this question, less
than one-fourth of the respondents in Bangladesh and more than one-third of the
respondents in Nepal and Sri Lanka answered more positively. This shows that
regional identity is much less developed in case of elites of both India and Pak-
Table 7.1 Affective and utilitarian support questions

Affective support questions

South Asian Identity 1 Do you ever think of yourself not only as a citizen of your country, but also a citizen of South Asia?
Solidarity 2 Are you, personally, prepared to make some personal sacrifice, for example paying more taxes or supporting
your country’s leaders to channel your country’s resources to help out another country in South Asia in
economic difficulties?
National Image 3 Do you think that your neighboring countries’s political behavior is conducive for regional political
stability?
4 Do you think that your neighboring countries’s economic policies are conducive for regional economic
growth?
5 How do you describe your neighboring countries in terms of the following attributes?
a Political stability
b Authoritarian
c Economically dependent
d External orientation
e Aggressively militaristic

Utilitarian support questions

Evaluation of Membership 6 Are you satisfied with SAARC’s achievments so far?

7 In general, are you for or against efforts being made to expand regional cooperation in South Asia?
Perception of inequity 8 In your opinion, which member country is likely to benefit most from SAARC?
9 In your opinion, which member country is likely to benefit least from SAARC?
10 In your opinion, which member country is likely to contribute most to SAARC?
11 In your opinion, which member country is likely to contribute least to SAARC?
174 Cross-national comparisons
Table 7.2 Interviewees according to occupational categoriesa

Bangladesh India Nepal Pakistan Sri Lanka

Civil servants (Active and Retired) 12 51 7 25 12

Journalists 33 70 23 45 32
Scholars 35 77 29 49 34
Business executives 17 59 14 36 21
Othersb 12 47 5 25 10
Total (780) 109 304 78 180 109

Notes
a Interviewees include two previous Secretary-Generals of SAARC.
b Others include religious leaders, trade union leaders, NGO leaders, retired military personnel,
judges, and lawyers.

istan than their counterparts in smaller South Asian countries. For the question
on solidarity, only about one-fourth of the respondents in India, Nepal, and
Bangladesh and less than one-fifth of the respondents in Pakistan were prepared
to make a personal sacrifice to help another SAARC member state experiencing
economic difficulties. In contrast, a slightly fewer than one-half of the respon-
dents in Sri Lanka expressed a willingness to make a personal sacrifice to help
their neighboring country in times of economic difficulties.
These results indicate the existence of a low level of affective support among
South Asian elites for the growth of regional cooperation. Only a small portion
of South Asian elites think of themselves as South Asian citizens and are willing
to make personal sacrifices to help another SAARC member state experiencing
economic difficulties. While such attitudes among elites from economically
weaker countries in South Asia are understandable, demonstration of such atti-
tudes among Indian and Pakistani elites remains problematic for the growth of
SAARC. These results have important implications for evaluating the progress
of SARC. First, it is evident that public legitimacy for SAARC institutions,
grounded in widespread affective attachment, does not exist in South Asia. The
existence of low level of affective sentiment is hardly encouraging for South
Asian policymakers to push for deeper regional cooperation policies. Second,
the low level of affective attachment among South Asian elites indicates their
strong national political loyalties and lack of development of any supranational
identity and allegiances. Such an environment is hardly conducive for the
growth of regional institutions.

National image
Several studies on regional integration have established that policies supporting
regional cooperation are more likely to receive domestic support when people in
a country perceive neighboring countries positively or favorably (Deutsch 1957;
Lindberg and Scheingold 1970; Shepherd 1975; Smith 1993). Lindberg and
Scheingold (1970: 45) argue that when people of one country have positive
 Cross-national comparisons 175
Table 7.3 Comparison of measures of affective support

South Asian identity: Solidarity:

% who often think of themselves % prepared to make
as citizens of South Asia a personal sacrifice

Bangladesh 22 27
India 19 26
Nepal 34 24
Pakistan 12 18
Sri Lanka 38 48

Source: Author.
Note
Percentages given on the basis of total number of responses in a category.

images or good feelings about another country, they tend to develop an “identi-
tive support” to regional cooperation policies. In such an environment, the
decision-makers feel more encouraged to pursue regional cooperation policies
than when people have negative images of their neighboring countries. Negative
images of their neighboring countries make people reluctant to support regional
cooperation policy initiatives. Several studies suggest that people have negative
images of a country when it is perceived as aggressively militaristic, authorit-
arian, economically dependent, and more externally oriented. On the other hand,
when a country is perceived as politically stable, economically and industrially
developed, and friendly toward neighbors, people are likely to have positive
images of that country (Hewstone 1986: 81).
Table 7.4 provides a comparison of the national percentage of positive
responses to the questions on national image. When asked about their perception
of national images of their neighboring countries in terms of the five attributes
(i.e. political stability, economically dependent, external orientation, aggres-
sively militaristic, and authoritarian), about three-fourths of the respondents
described India and about one-half of the respondents described Pakistan as
aggressively militaristic. These results indicate an absence of positive perception
of national images of India and to a lesser extent of Pakistan among the South
Asian respondents. India and Sri Lanka were viewed as least authoritarian.
Except for Pakistan, other South Asian countries were also viewed as less
authoritarian. More than three-fourths of the respondents described Pakistan as
authoritarian. In terms of economic strength and weakness, not surprisingly,
India was considered as economically and industrially most developed. Next to
India, Sri Lanka was considered as less economically dependent. More than
three-fourths of the respondents described Nepal as economically weak and
dependent. A substantial majority (70 percent) of the respondents described
Bangladesh the same way. More than one-half of the respondents viewed Pak-
istan as economically weak and dependent. Surprisingly, on the issue of political
stability, except for Sri Lanka, all other South Asian countries were considered
by more than a majority of the respondents as politically unstable. Finally, for
176 Cross-national comparisons
Table 7.4 National image of SAARC countries

India Bangladesh Nepal Sri Lanka Pakistan

(%) (%) (%) (%) (%)

Aggressively militaristic 74 5 0 3 48
Authoritarian 8 18 14 10 77
Economically dependent 14 70 80 40 54
Political instability 58 60 75 44 68
External orientation 43 65 55 60 70

Source: Author.
Note
Percentages given on the basis of total number of responses in a category.

the question on external orientation, slightly fewer than three-fourths of the

respondents described Pakistan as most externally oriented. More than one-half
of the respondents viewed Bangladesh, Sri Lanka, and Nepal as externally ori-
ented. India also scored high on this issue. A slightly less than one-half of the
respondents viewed India as externally oriented. External orientation is a detri-
mental factor for the growth of regionalism. It is evident from the high scores of
external orientation that respondents do not consider South Asian countries as
very supportive of the idea of regional cooperation.
The evidence presented in this section indicates the existence of a low level
of affective support among the South Asian elites for the growth of regional
cooperation. The existence of widespread negative perceptions of national
images of the neighboring countries has an adverse effect on the development of
any supranational identity and allegiances, making deeper cooperation in terms
of institutional development extremely problematic. Due to the low level of
affective support, the results indicate that utilitarian evaluations remain an
important determinant of support for deeper cooperation in South Asia. Do
South Asians elites demonstrate adequate utilitarian support for SAARC? The
next section explores this issue.

Perception of inequity
In this study, utilitarian support for SAARC was assessed by asking questions
about perception of inequity and evaluation of SAARC membership. In the
context of perception of inequity, four specific questions were asked:

1 which member country benefits most;

2 which member country benefits least;
3 which member country contributes most;
4 which member country contributes least.

As several studies suggest, people’s perceived inequity, that is, people’s percep-
tion that their country is likely to contribute more than it receives from a
 Cross-national comparisons 177
regional organization, appears to be related to their attitudinal support for a
regional organization.3 Individuals who believe that their own country will both
contribute most and benefit least will have more negative or indifferent attitudes
toward a regional organization than those who believe that their own country
will either contribute least or benefit most. The attitudes of the latter group will
be considerably more negative or indifferent than those of individuals who
believe that their country will neither contribute most nor benefit least.
Figure 7.1 provides a comparison of respondents’ perception of inequity.
When asked about their perception of which country contributes most to
SAARC-related activities, slightly fewer than three-fourths of the respondents
indicated that India’s contribution is highest. At the same time, more than one-
half of the respondents also indicated that India is likely to benefit most from
any SAARC arrangements. This assessment seems to be based on India’s relat-
ively larger economic size. Most Indian respondents, however, disagreed with
this assessment. A substantial majority of Indians (77 percent) viewed their
country as the least likely beneficiary from SAARC and 82 percent of the Indian
respondents felt that India is likely to contribute most.4 Indian perception of
inequity may not lead to the formation of negative attitudes toward SAARC over
the long run. But, it certainly contributes to an attitude of indifference toward
SAARC. As one respondent from India remarked: “If SAARC succeeds, it is
well and good. If it doesn’t, well, doesn’t matter.” Such an attitude is not
encouraging for the growth of SAARC.
Interestingly, few South Asians thought that their own country would be
likely to benefit most from SAARC and contribute least to SAARC. However,
after Bhutan and Maldives, Pakistan was viewed by large numbers of respon-
dents from India (56 percent), Bangladesh (54 percent), Nepal (64 percent), and

80
72% Benefits least
70
Contributes most
60

50
Percentage

40 36%

30

20 18% 17%
14% 14%
11%
10 8%
4% 2%
0
India Pakistan Bangaldesh Nepal Sri Lanka

Figure 7.1 Relative benefits and contributions of South Asian countries (source:
Author’s calculation).
Note
Percentages given on the basis of total number of responses in a category.
178 Cross-national comparisons
Sri Lanka (49 percent) as likely to contribute least. Most Pakistani respondents
(71 percent) disagreed with this assessment. On the other hand, like most
Indians, most Pakistani respondents (68 percent) felt that Pakistan would con-
tribute more and 62 percent of the respondents felt that Pakistan would benefit
less from SAARC.5 Pakistani elites’ perception of inequity, which is almost
similar to their Indian counterparts, has led to an attitude of indifference toward
SAARC. This attitude of indifference by both Pakistani and Indian elites bodes
ill for the growth of SAARC, which needs active support from both India and
Pakistan to succeed.

Evaluation of SAARC membership

Several studies on regional integration have established that evaluations of
achievements and failures of a regional organization provide useful understand-
ing about what societal actors expect from a regional organization and what are
the goals and principles that they value most (Deutsch 1963; Shepherd 1975;
Hewstone 1986). Such understandings are crucial because they provide policy-
makers with relevant information to focus on issues and areas, where policy of
regional cooperation can receive more support from societal actors and know
about issues and areas, which may need improvement or change of government
policy to strengthen cooperative activities. Given this logic, this study sought to
explore respondents’ views on positive and negative issues of SAARC.
For the question on evaluation of membership, the summary of responses is
given in Figures 7.2 and 7.3. The most widely viewed (78 percent) positive
aspect of SAARC was the practice of holding regular meetings among the
heads of states or governments, foreign and other ministers and bureaucrats.
Given South Asia’s widespread mutual distrust and limited intraregional inter-
action, it is significant that most South Asian respondents viewed the meetings
as critical for confidence-building purposes. Most respondents pointed to the
fact that informal talks among the leaders at regularly held SAARC meetings
have led to inter-elite reconciliation on many sensitive issues, producing some
noteworthy results in South Asia. The following are some of the major events
mentioned by the respondents. The informal talks between the Indian and Pak-
istani prime ministers at the second SAARC summit meeting at Bangalore in
November 1986 led to the diffusion of tension between the two countries on the
issue of India’s troop exercise (Operation Brasstacks) on the Indo-Pakistan
border. The India–Sri Lanka talks at the 1987 SAARC foreign ministers’
meeting led to their accord on the Tamil problem. As a result of an informal
meeting and discussion between the Prime Ministers of India (Narasimha Rao)
and Pakistan (Nawaz Sharif) at Davos in 1992, the Pakistani government took
action to prevent the move of the JKLF to cross the CFL in Kashmir later that
year. The famous “handshake” between Pakistani President General Pervez
Musharraf and Indian Prime Minister A.B. Vajpayee at the 11th SAARC
summit meeting at Kathmandu on January 6, 2002, appeared to have broken ice
between the two leaders and eventually led to resumption of dialogue on
 Cross-national comparisons 179

Regular meetings between heads

of state, foreign and other ministers, 78%
secretaries at all levels
Cultural, technical, and
53%
scientific cooperation

SAARC Free Trade Area initiatives 48%

People to people contact 44%

Visa relaxation for MPs,

Supreme Court Judges, and 31%
heads of academic institutions
SAARC Regional
22%
Food Security Reserve

Poverty alleviation 22%

Terrorism and drug trafficking 13%

0 10 20 30 40 50 60 70 80 90
Percentage

Figure 7.2 Positive issues of SAARC (source: Author).

Note
Percentages given on the basis of total number of responses in a category.

bilateral issues between the two countries, which were suspended after the
failure of Agra Summit in 2001.
The second most positively viewed achievement of SAARC was cultural,
technical, and scientific cooperation among the members. Many respondents
talked about the necessity of confidence-building measures in South Asia by
undertaking cooperation at cultural, technical, and scientific levels. More than
half of the respondents (53 percent) acknowledged SAARC’s positive contribu-
tion in this regard. This finding reflects a growing awareness among South Asian
elites about the importance of soft areas of cooperation in building confidence
among South Asian countries. What is significant is that a majority of South
Asian respondents view that cooperation in such areas as culture, science, and
technology is possible and desirable that can eventually lead to cooperation in
other more salient areas like trade and security.
SAFTA initiatives were mentioned as the next most positive aspect of
SAARC by nearly half of the respondents (48 percent). Given South Asian
countries’ low level of intraregional trade and their trade dependence on indus-
trialized countries (as discussed in Chapter 6), this finding is encouraging and
marks a shifting attitude toward deeper trade cooperation in South Asia.
However, while more than half of the respondents from India (56 percent) and
180 Cross-national comparisons

Indo-Pakistan
72%
conflict

Fear of India
48%
domination

Few concrete
38%
achievements

Unresolved bilateral
34%
disputes

Competition between
29%
members

Too much import–export

29%
restrictions

Too much border/

14%
passport control

0 10 20 30 40 50 60 70 80
Percentage

Figure 7.3 Issues with negative effects on SAARC’s growth (source: Author).
Note
Percentages given on the basis of total number of responses in a category.

Sri Lanka (66 percent) supported expansion of intraregional trade cooperation,

there was low support for SAFTA from Nepal (33 percent), Bangladesh (44
percent), and Pakistan (38 percent).6 Nepal’s special trade agreement with India
and the realization that it has nothing more to gain through intraregional trade
due to its relatively smaller economic size might have contributed to a lack of
enthusiasm on this issue among Nepalese respondents. Bangladesh’s fear of
Indian goods dominating the country’s market and India’s high rate of tariff and
non-tariff barriers as well as lack of any unilateral openness to Bangladeshi
products explain the existence of a low level of support for trade liberalization
under SAFTA. In fact, many respondents in Bangladesh observed that since
India is the largest economy in South Asia and makes up 80 percent of the
region’s GDP, it should unilaterally open its markets and grant its neighbors
concessions without expecting reciprocity. Similarly, low support among Pak-
istani respondents for SAFTA reflects the country’s fear of India’s economic
domination in the region.
Next to SAFTA initiative, people-to-people contact received much support
from South Asian elites. A little less than half of the South Asian respondents
mentioned about SAARC’s positive role in enhancing people-to-people contact
in South Asia. It is significant to note that currently there is only limited travel,
media, and academic interaction among South Asians. For South Asian elites,
this is detrimental for the development of a South Asian community sentiment.
 Cross-national comparisons 181
There seems to be a growing recognition among South Asian elites that SAARC
can play an important role in facilitating contacts between South Asian people.
It is more of SAARC’s potential than its actual achievement in terms of facilitat-
ing people’s interaction that received support from South Asian elites. Not sur-
prisingly, a little less than one-third of South Asian elite respondents supported
SAARC’s efforts for visa relaxation to facilitate more interaction among South
Asian people.
SAARC’s Regional Food Security Reserve and plans for poverty alleviation
were mentioned as positive aspects of SAARC by a little less than one-quarter
of respondents. Ironically, however, respondents from small and relatively less
developed countries in SAARC (Bangladesh, Nepal, and Sri Lanka), for whom
Regional Food Security Reserve is important, were less enthusiastic about the
Reserve than respondents from India and Pakistan. Such low appraisal of the
SAARC Regional Food Security Reserve by small countries may be due to their
frustration in not getting adequate support from the Reserve during their time of
need caused by natural disaster. SAARC’s efforts to combat terrorism and drug
trafficking received support from slightly more than one-tenth of respondents.
While most respondents from India (77 percent) and Pakistan (74 percent) dis-
missed this as a positive achievement of SAARC, majority of respondents in
Nepal (66 percent), Bangladesh (62 percent), and Sri Lanka (58 percent) sup-
ported SAARC’s positive role on this issue.7
The Indo-Pakistan conflict, fear of Indian domination, and few concrete
achievements of SAARC were considered as the three most negative factors in
South Asia (Figure 7.3). While 72 percent of South Asian respondents men-
tioned Indo-Pakistan conflict, about half of the respondents cited India’s domi-
nation as a major negative factor for the lack of growth of SAARC. More than
one-third of the respondents mentioned lack of any tangible achievements8 and
unresolved bilateral disputes with India as other negative factors for the growth
of SAARC. As the biggest partner of SAARC, many respondents mentioned that
India should make more unilateral sacrifices by making concessions on bilateral
issues, such as opening its markets for other small South Asian countries. The
general consensus among smaller South Asian countries, to quote a respondent
from Bangladesh, is: “India can make or break SAARC.” Other issues cited by
the respondents that had negative effects on the growth of SAARC are competi-
tion between members (29 percent) for same products, too much import–export
restrictions (29 percent), and too much border/passport control (14 percent).
Responses in Table 7.5 represent respondents’ perception of likely benefits
from future economic arrangements between SAARC members. More than a
majority of respondents in Sri Lanka and a little less than one-half of respon-
dents in Nepal and Bangladesh are convinced about future economic benefits of
SAARC to their countries and thus support expansion of regional cooperation.
In contrast, about one-third of respondents in India and less than one-third of
respondents in Pakistan favored expansion of SAARC activities. However, only
one-fifth of Indian respondents oppose SAARC’s future expansion and a little
less than one-half of Indian respondents remain uncertain about SAARC’s
182 Cross-national comparisons
Table 7.5 Attitudes toward expansion of regional cooperation in South Asia

Bangladesh India Nepal Pakistan Sri Lanka

(%) (%) (%) (%) (%)

Favor 42 34 46 30 55
Oppose 13 20 15 32 16
Don’t know 45 46 39 38 29

Source: Author.
Note
Percentages given on the basis of total number of responses in a category.

future. This result indicates that a majority of Indians remain indifferent toward
SAARC and a shift in their attitude toward SAARC’s future will depend on the
relative utilitarian achievements of the organization. The opposition to expan-
sion of SAARC activities in economic sphere by about one-third of Pakistani
respondents reflects their fear of Indian economic domination in the region. At
the same time, more than one-third of Pakistani respondents expressed uncer-
tainty about SAARC’s future. This kind of evaluation of SAARC by Pakistani
respondents is clearly influenced by lack of mutual trust between India and Pak-
istan and the Indo-Pakistani political tension over their bilateral problems,
including the Kashmir issue.
It is significant to note that contrary to popular perception, the nuclear issue is
not considered as a major impeding factor for strengthening regional cooperation
in South Asia. Although most Pakistanis (85 percent) and Indians (72 percent)
were apprehensive and critical of each others’ nuclear plan, no single respondent
from these two countries considered the nuclear issue to be an obstacle to regional
cooperation. The same view was expressed by most respondents from Bangladesh
(72 percent), Nepal (65 percent), and Sri Lanka (60 percent).9 Many respondents
even pointed to the growth of EU despite the presence of two nuclear powers –
France and United Kingdom. From this result, one can speculate that nuclear
nationalism is not a serious issue for the growth of regional cooperation. Instead,
nuclear issues, like many other bilateral problems, can be addressed by informal
meeting of South Asian leaders at various SAARC forums.

Discussion – the myth of a South Asian community

The findings of elite responses reported above suggest that across nations, vari-
ation in positive responses to the affective and utilitarian questions follows a
similar pattern. Within India, Pakistan, Bangladesh, Sri Lanka, and Nepal, the
various respondents were generally closer in their views to each other than they
were to the opinion of their counterparts in the other country. This indicates a
strong nationalist bias and lack of regional outlook among South Asians. On the
question of South Asian identity, Indians, Pakistanis, and Bangladeshis
demonstrated less positive attitude than Sri Lankans and Nepalis. It is ironic that
while most Bangladeshi elites were aware of Bangladesh’s contribution to the
 Cross-national comparisons 183
creation of SAARC, they were far away from a construct of South Asian
community. The considerably less positive attitude of Indians and Pakistanis
toward a South Asian community is a reflection of their deep divide caused by
history and continuing political tension. Memories of the partition in 1947,
Kashmir issue, and Indian role in the partition of Pakistan in 1971 are still
prominently recalled in Pakistan. Most Indian elites fault Pakistani ruling elites
for their failure to deal with its past and for perpetuating the path of confronta-
tion with India. At the same time, they recognize the need for Indo-Pakistani
cooperation for South Asia’s peace and prosperity. As one Indian scholar put it:
“Because of size, geography, history, and strategic perspectives, there will
always be common and competitive interests in our bilateral relations with Pak-
istan regardless of how wisely or unwisely we jointly manage the relationship.”
The evidence on South Asian solidarity reveals that South Asians are less
inclined to support their neighboring countries in times of economic difficulties.
While this may be a reflection of weak socioeconomic development of most
South Asian countries, such a lack of “we-feeling” among South Asian elites is
hardly encouraging for the growth of regional cooperation. A combination of
factors can be mentioned here to explain why South Asians show low sense of
solidarity with each other. Of course, limited economic opportunity is an import-
ant reason. In addition, vast differences in the nature of individual states, preoc-
cupation with domestic issues, lack of cross-border travel, less or negative press
coverage of South Asian affairs, distorted history text books, and limited inter-
action among South Asian governments have influenced, to varying degrees,
South Asians’ attitude toward each other. One of the principal goals of SAARC
was to promote people-to-contact in the region so that South Asians would be
more supportive of a regional entity. The evidence presented here indicates that
very few South Asian elites express a strong South Asian community sentiment.
Apparently, despite its existence for more than two decades, SAARC is yet to
promote a South Asian community sentiment among its people.
The picture that emerged from the analysis of national images by South
Asian countries is hardly encouraging for the development of a trans-national
entity. Most South Asian elites viewed their neighbors negatively. India was
described by most respondents as economically and militarily strong and less
authoritarian. Such positive perception of India, however, was neutralized when
most South Asians described India as “aggressively militaristic.” This indicates
a widespread distrust toward India’s role in the region. Similarly, Pakistan was
also viewed on a negative light by most South Asians on the measures of
“authoritarian,” “political stability,” and “external orientation.” While smaller
SAARC members (Bangladesh, Nepal, and Sri Lanka) were seen as less
authoritarian, Bangladesh and Nepal were characterized by most South Asians
as neither economically developed nor politically stable. Sri Lanka was viewed
relatively more favorably on the dimensions of economic development and
political stability. However, all the three smaller countries scored high on their
external orientation. Taking all the five measures of national image – militaris-
tic, authoritarian, economic development, political stability, and external
184 Cross-national comparisons
orientation – together, one can say that there is a significant presence of negative
perception of national images of their neighboring countries, which interferes
with their support for a regional entity. South Asians, in a nutshell, are less posi-
tively inclined toward a development of South Asian community.
The finding of high degrees of perceived inequities – that is their country
would contribute most but benefits least – among Indians is not surprising. But
the fact that respondents from all four other members of SAARC think the same
way offers a crass example of self-interest. In all fairness, this might have been
expected from politicians but not informed elites. The existence of perceived
inequity to varying degrees among South Asian elites along with lack of con-
crete achievements of SAARC appears to be associated with their relative indif-
ference toward SAARC. This remains worrisome and obviously requires much
effort from South Asian policymakers to convince their people that membership
in SAARC is worthwhile.
On the issue of relative cost and benefit of SAARC membership, most South
Asian respondents did see some benefits in SAARC’s role in facilitating
confidence-building process in the region. At the same time, most of them also
expressed their disappointment about SAARC’s lack of concrete achievements
in more salient issues like trade and security. Not surprisingly, continuing Indo-
Pakistan conflict was mentioned by most respondents as the primary reason for
SAARC’s lack of achievements. In addition to Indo-Pakistan antagonism, low
level of intraregional trade over the past decades has also contributed to low
level of utilitarian support for SAARC. Most respondents feel that unless there
is a substantial improvement in the current low level of intraregional trade,
SAARC’s utility will remain limited.
Existence of low levels of utilitarian and affective support for SAARC does
not augur well for the growth of the organization. It appears that the activities of
SAARC have not yet captured the imagination or interests of even the region’s
most enlightened people. This is the reason why a relatively high number of
respondents in Bangladesh, India, Nepal, and Pakistan showed lack of interest in
the expansion of regional cooperation activities. SAARC’s lack of visibility can
be attributed to its failure to address salient issues such as trade and security in
South Asia. The existence of a high degree of indifference toward SAARC
reveals the gulf between rhetoric and reality in South Asia. In brief, SAARC
suffers from a credibility gap. Some of the major reason that have contributed to
SAARC’s credibility gap are South Asian countries’ repeated failure to imple-
ment important regional conventions on terrorism and narcotic drugs, lack of
resources to implement SAARC-related projects in a timely manner, lack of sat-
isfactory progress in the creation of trade complementarities under the provi-
sions of SAPTA during the past decade, lack of urgency to implement SAFTA
provisions, and continuing political differences and hostility between India and
Pakistan. There is no denying the fact that if SAARC is to achieve sustained
success, then more positive utilitarian evaluations of this organization by key
societal actors in South Asia is necessary. Some major progress in the core areas
of economics and security will help achieve this.
 Cross-national comparisons 185
Conclusions and implications
The findings of this chapter reveal that domestic elite support for SAARC along
affective and utilitarian dimensions remains limited. The findings have two
important implications for understanding the growth of regional cooperation in
South Asia.
The first implication is that absence of strong positive domestic elite support
for SAARC-related activities has contributed to the dampening of enthusiasm
and weakening of commitments among the South Asian policymakers for bolder
regional cooperative initiatives and implementation of various regional agree-
ments. Consequently, SAARC’s growth has remained slow and modest over the
past two decades. Of course, limited domestic support is not the only factor for
the slow growth of SAARC. But when seen in the context of some South Asian
regional dynamics, that is, the existence of weak governments in South Asia and
the ruling coalitions’ need for domestic support for political survival, lack of
strong domestic support, doubtless, has contributed to the policymakers’ inertia
toward SAARC.
The second important implication is that South Asian elites expect that
SAARC has important consequences for South Asia’s political and economic
welfare related to trade, security, and regional peace and stability. The results of
the analysis indicate that South Asian elites incorporate these utilitarian consid-
erations in their appraisal of SAARC. In fact, SAARC’s few concrete achieve-
ments in the areas of trade, security, and regional peace are linked to its
credibility gap. Many South Asian elites pointed out that SAARC-related
rhetoric has generally outdistanced SAARC’s performance over the past few
decades. As long as SAARC’s credibility gap continues, societal actors’ indif-
ference toward this organization will persist. This indifference does not indicate
the formation of negative attitude. Rather, it suggests that societal actors may
not be strong catalyst and advocate for regional cooperation. At the same time,
their indifference does not put any urgent pressure on policymakers to pursue
regional cooperation policies, but it certainly provides governing elites with an
acquiescent domestic environment in which to pursue regional cooperation
policies.
The elite indifference also suggests that majority of South Asian elites could
be persuaded about SAARC’s utilitarian value by changing circumstances and
new information about SAARC achievements. As shown in Table 7.5, except
for Pakistan, fewer respondents actually oppose expansion of regional coopera-
tion activities. Taking “favorable” and “don’t know” responses together, one can
argue that majority of South Asian respondents do expect SAARC to perform
better. In nutshell, the prevailing indifference of societal actors can be trans-
formed into greater utilitarian support for SAARC with a show of more positive
results of SAARC in the areas of trade and security. In this context, the political
actors in South Asia have to play more decisive roles in realizing the goals of
regional cooperation. As this analysis indicates, two major factors – Indo-
Pakistani political tension and a general fear of India’s overwhelming military
186 Cross-national comparisons
and economic domination – remain major obstacles for the growth of SAARC.
Given this dynamic, it is reasonable to argue that resolution of Indo-Pakistani
conflict and some active positive unilateral economic initiatives by India toward
its neighbors to overcome their fear can serve as driving forces that could galva-
nize South Asian governments to move ahead with regional cooperation efforts.
The adverse impact of Indo-Pakistani conflict on the growth of SAARC is
discussed earlier. Suffice it to say here that the continuing conflict between these
two countries contributes greatly to the negative evaluation of SAARC by South
Asian domestic elites. Unless Indo-Pakistani antagonism abates, the prospects of
SAARC’s growth will not gain much lift.
There is a growing recognition among governing elites in South Asia that
while regional political tension will take time to resolve, economic issues create
some urgency for cooperation. Thus, deepening regional cooperation is seen by
many South Asian countries as a potentially important political tool to help
address conflict in the region and address political tension with India. After
1990s, smaller South Asian countries have been showing more preferences to
enter into free trade area agreements with India. The underlying reasoning for
this move is that smaller South Asian neighbors would like to tie India into a
web of reciprocal obligations and benefits that they believe will enhance India’s
self-interest in using its growing power prudently and taking fuller account of its
neighbor’s interests. On the other hand, Indian governing elites seem to have
found new confidence that given its growing strength, some positive unilateral
economic initiatives such as opening its markets to South Asian neighbors
through preferential trade agreements; granting MFN status to South Asian
neighbors without demanding reciprocity; and some restraints on its freedom of
action may be an acceptable price for reassuring the neighborhood that its
growing strength is not a threat to its neighbors. Indian governing elites also
believe that the success of SAARC will demonstrate Indian leadership in the
region and, more importantly, reduce external influence.
While the above scenario is promising for SAARC’s growth, another not-so-
promising scenario deserves to be mentioned here. As the results of this chapter
and our discussion in Chapter 6 indicate, low level of utilitarian support of South
Asian elites for SAARC can be partly attributed to low intraregional trade
dependence among South Asian countries. To the extent that SAARC members
redirect their trade toward global market away from the SAARC market, utilitar-
ian support for SAARC should decline. Indian trade interests are particularly
important in this regard. As India looks more and more to markets beyond South
Asia, its economic interests in SAARC market will decline. Given its large
market and the potential to become the main engine of South Asian economic
growth, a substantial diversion of Indian trade away from regional market could
reduce economic interdependence in South Asia and thereby reduce utilitarian
support for SAARC across its member states. In the absence of adequate affec-
tive support among South Asian elites, such a scenario will be, doubtless, detri-
mental for the future growth of SAARC.
8 Conclusion

I have argued in this book that regional cooperation is a two-level process in

which domestic support of key societal actors and regional bargains and negotia-
tions among governmental actors must overlap if cooperation is to proceed
(Putnam 1988). Attempts to achieve regional cooperative agreements involve
bargaining and negotiations among governmental actors in various issue areas.
But, domestic support is essential for the implementation of these negotiated
agreements. Policymakers know this, and hence, when negotiating regionally
they always anticipate domestic reactions. Thus, policymakers’ anticipation and
calculation of the size and nature of domestic support largely determine their
scope of bargains and negotiation on various regional issues.
External factors, outside pressure for opening domestic markets, private
capital flows, and country’s degree of economic openness, affect leaders’ polit-
ical calculations about deeper regional cooperation policy initiatives. But,
external factors alone are not enough. Growth of regional cooperation also
depends on the nature of domestic institutional structure and strength of the
government. When the governmental actors enjoy legislative autonomy and are
relatively well insulated domestically, they can afford to pursue bold and
accommodative regional policies. Conversely, a weak government may force
governmental actors to pursue more nationalistic and domestically oriented pol-
icies, with regional cooperation initiatives a prime casualty. It is, therefore,
important to understand the nature of domestic institutions, and the strength of
the government, in order to explain why states do or do not deepen regional
cooperation initiatives.
Before examining the nature of domestic institutions, I discussed in Chapter
3 some important South Asian regional dynamics – the role of history, geo-
graphy, Indo-centric structure, small versus large states – that affect interstate
relationships among South Asian countries. A major contribution of the realist
scholars has been the emphasis on the security dilemma and how it serves to
aggravate intraregional security environment thereby weakening regional coop-
eration efforts. In this chapter, I discussed the extent to which security
dilemma, particularly between India and Pakistan, has been a crucial barrier to
effective regional cooperation in South Asia. Another underlying assumption in
the realist literature that shapes preferences of political actors for regional
188 Conclusion
cooperation is the need for extraregional security, that is, the need to unite to
face a common external threat. The potential threat can come from a regional
hegemon or other extraregional power. As discussed in Chapter 3, South Asian
countries do not share a common external threat perception, which makes it dif-
ficult for the leaders of these countries to work toward common regional secur-
ity strategies. Most South Asian countries perceive their main threat to be India.
To offset India’s influence in the region, South Asian countries have actively
sought military, economic, and diplomatic assistance from external powers. On
the other hand, India perceives an external threat from Pakistan’s military chal-
lenge with the support of external powers. In such an environment, regional
accommodation policies have become increasingly difficult. The narrow polit-
ical base of South Asian ruling elites provides few opportunities for them to
ignore regional security threats or to transcend their dominant domestic con-
stituencies. Thus, blaming the neighbor (scapegoating) has become a preferred
policy choice for South Asian ruling elites, making regional accommodation a
difficult goal. Consequently, SAARC-related policies and programs have
received low priorities by South Asian ruling elites over the past decades.
This was demonstrated in the evaluation of SAARC and SAARC-related pro-
grams and institutions in Chapter 4. Although SAARC has produced some posit-
ive results – one of the most significant achievements of SAARC relates to its
annual summit meetings of South Asian heads of states or governments –
rhetoric has generally outdistanced performance in South Asia’s efforts at
regional cooperation. Over the past two decades, there has been a proliferation
of SAARC-related meetings and declarations, while real progress has been
elusive.
A central argument in this book focuses on understanding the nature of
domestic institutions and the strength of the government to explain why states
do or do not deepen regional cooperation initiatives. In light of this argument,
this book examines the institutional structures and the strength of the govern-
ments in South Asia. South Asian countries experience various kinds of political
systems – democratic, authoritarian, and quasi-democratic political systems. As
discussed in Chapter 5, regardless of their type of political systems, almost all
South Asian governments have suffered from considerable weakness in terms of
their political leaders’ narrow political base and lack of legislative autonomy
since 1990s. Weak strength of ruling coalitions throughout South Asia has made
the leaders of these countries critically dependent on the support of important
domestic groups. The leaders’ need for domestic support for political survival
have led them to pursue populist, nationalist, and self-reliant policies. In India
and Pakistan, the leaders have pursued not only such policies but also have
emphasized military-intensive policies. While these policies may have brought
short-term political payoffs to the ruling elite in India and Pakistan, they have
become enormously counterproductive for the growth of regional cooperation.
In Chapter 5, I examined the challenge of ethnic regionalism that political
leaders face in South Asia. The states in South Asia are all multiethnic and
highly permeable. They remain vulnerable to ethnic regionalism that can
 Conclusion 189
generate separatist movements. This vulnerability has increased domestic inse-
curities in all the states in South Asia. Each state blames the neighboring state
for supporting its ethnolinguistic separatist movements. In particular, India is
blamed by its neighbors for its role in ethnic crises. Since India’s ethnic groups
overlap into all neighboring states, India’s hand in all ethnic conflicts is strongly
suspected by the other South Asian states. Moreover, India’s structural position
of regional preeminence leads its policymakers to believe that India has a
legitimate role to play in resolving the ethnic crisis in neighboring countries.
Such Indian belief is not mutually reciprocated by its neighbors and often leads
to tension in South Asia. Consequently, an atmosphere of mutual suspicion and
distrust prevails in South Asia, which is not conducive for the growth of regional
cooperation.
The implications of the overt nuclearization of India and Pakistan for region-
alism are also discussed in Chapter 5. The overt nuclearization of India and Pak-
istan in 1998 may have introduced a regional stability/instability paradox in
South Asia. On the one hand, policymakers’ realization of the devastating con-
sequences of nuclear weapons makes the execution of a full-scale war most
unlikely. On the other hand, the deterrent insurance provided by the possession
of nuclear weapons may tempt both sides to engage in limited war by initiating
military adventurism along the LoC. Episodes like Pakistani incursion across
LoC in 1990 and Kargil conflict in 1999 are likely to occur until a political reso-
lution is found in the Kashmir issue. The continuation of political and military
tensions between India and Pakistan has contributed to the lack of any real
progress of SAARC over the past two decades.
In Chapter 6, I focused on the dynamics of economic interdependence and
prospects of regional economic cooperation in South Asia. This chapter identi-
fied three conditions for sustained success of regional economic cooperation in a
region – potential for significant market gain; political actors’ willingness to
pursue regional economic cooperation policies; and the presence of an undis-
puted regional leader. With the exception of India, the economies of SAARC
members are not complementary. Since SAARC countries export the bulk of
their primary commodities and manufactured goods to the same world markets,
they tend to compete in the same industrial sectors with each other. Indeed, most
of SAARC members’ trade is with the United States and Europe than with their
neighbors. Given the small size of markets and insignificant economies of scale,
there is limited scope for mutually beneficial market exchange among South
Asian countries. Consequently, demand for deeper economic cooperation by
market actors is weak.
Although SAARC members have pursued economic liberalization policies
after the early 1990s, these policies have not led to deeper regional economic
cooperation. The emergence of two types of competing domestic coalitions in
India and Pakistan – that is liberalizing coalitions and nationalist–fundamentalist
coalitions – is the important reason to account for this failure. While India’s
ruling liberalizing coalitions have more or less supported economic liberaliza-
tion and regional economic cooperation policies, their weakness made it almost
190 Conclusion
impossible for national leaders to pursue deeper regional economic cooperation
policies in the 1990s. The nationalist–fundamentalist coalitions in Pakistan, as
represented by Pakistan’s radical Islamic Jamaat-i-Islam Party and its current
military regime, generally have shown less enthusiasm for deeper regional eco-
nomic cooperative arrangements.
Within SAARC, India is the largest member state in terms of size, popu-
lation, natural resources, and market. But, there is no consensus among South
Asian countries to recognize India as the region’s undisputed leader. In particu-
lar, Pakistan continues to challenge India’s leadership. Contested leadership
within SAARC has, at least, two negative implications for regional cooperation:
first, there is no “paymaster” or no regional leader to ease distributional prob-
lems; second, the absence of a regional leader makes coordination of rules, regu-
lations, and policies extremely difficult and time-consuming. It is not surprising
that under SAPTA and SAFTA agreements, individual countries continue to
undermine free trade principles by excluding numerous products from tariff cuts
by keeping them under the sensitive lists.
The rivalries between India and Pakistan in terms of leadership and trade-
related policies have driven these two countries to engage in several
“spoke–spoke” and hub-and-spoke type of cooperative arrangements. India’s
involvement in a “noodle bowl” of bilateral trade agreements with Singapore,
Thailand, Vietnam, Japan, China, South Korea, Sri Lanka, Nepal, Bhutan, and
Bangladesh and her initiatives for the “spoke–spoke” pattern of economic coop-
eration among subgroups of South Asian countries – for example SAGQ – are
motivated in part by Pakistan’s unwillingness to increase the speed of free trade
negotiation with India. While such transregional and “spoke–spoke” pattern of
trade cooperation may have provided some short-term solutions to India’s need
for trade expansion and market access, it has proven counterproductive for the
growth of regional economic cooperation in South Asia. The level of regional
economic interdependence achieved so far and the pace at which South Asian
countries are progressing in their negotiation for FTAs will leave South Asian
countries at an appreciable distance from the goal of SAFTA even after a
decade. Any substantially faster rate of progress on FTAs would be a desirable
goal. But, that would require substantially greater political efforts from the
Indian and Pakistani leaders.
One of the basic arguments of this book is that while political actors negotiate
regional agreements, their preferences for specific regional cooperation policies
are influenced by the preferences of societal actors. The “power-retaining” moti-
vation of political actors forces them to anticipate the reactions of societal
groups on specific cooperation policies and avoid those policies that will bring
them into confrontation with dominant domestic groups. In this sense, political
actors tend to choose cooperation policies that are more or less consistent with
the policy preferences of key societal groups. In Chapter 7, I examined prefer-
ences of key societal actors along the affective and utilitarian dimension. The
findings reveal that domestic elite support for SAARC along affective and utili-
tarian dimensions remains limited. This result has two important implications
 Conclusion 191
for understanding the growth of regional cooperation in South Asia. First,
absence of strong positive domestic elite support for SAARC-related activities
has contributed to the dampening of enthusiasm and weakening of commitments
among the South Asian policymakers for bolder regional cooperative initiatives
and implementation of various regional agreements. Second, there is a gap
between what South Asian elites expect from SAARC and what SAARC has
actually achieved over the past two decades. In fact, SAARC’s few concrete
achievements in the areas of trade, security, and regional peace are linked to its
credibility gap. As long as SAARC’s credibility gap continues, societal actors’
indifference toward this organization will persist.
In this concluding chapter, I will discuss the implications of this study for
regional cooperation in South Asia. Next, examining the development of
regional cooperation so far, I will draw some useful lessons on how regionalism
in South Asia can be fully realized.

Implications for regional cooperation in South Asia

SAARC’s credibility gap

Examining the record of achievements and failure of SAARC in the past two
decades, one can argue that SAARC’s rhetoric has generally outdistanced its
performance. SAARC has achieved few concrete results in the core areas of
trade, security, and economic welfare. Not surprisingly, as the results of elite
interviews in this study revealed, SAARC activities have not yet captured the
imagination or interest of South Asia’s enlightened citizens. Rajni Kothari’s
remark sums up a generally shared view in South Asia: “SAARC may have
prospered as an inter-governmental and inter-bureaucratic organization, but as a
political process it has not accomplished any objective.”1
Since its inception, the primary operating principle of SAARC has been
“non-interference” in one another’s internal affairs. Instead of focusing on eco-
nomic development, building state capacity among its members, addressing
regional environmental issues, and assisting member countries in their fights
against poverty, illiteracy, and disease, SAARC has mostly spent its time on for-
mulating declarations and such slogans as “decade of girl child,” “decade of
implementation,” “decade of youth,” and “decade of poverty alleviation.” There
has been proliferation of meetings and initiatives without resource and political
commitments to follow up on those initiatives. Thus, it is hard to fault the critics
when they describe SAARC as a mere “talking shop” without any serious
involvement in concrete cooperation.
More than 20 years after its creation, there is still no real sense of a SAARC
community except among a small group of officials and scholars. As an institu-
tion, SAARC makes its decision on the basis of consensus and has no ability to
enforce implementation of agreed upon measures. Non-implementation of
already-signed regional conventions by South Asian countries on terrorism and
narcotic drugs, failure of the timely release of food supplies from the SAARC
192 Conclusion
Food Security Reserve to member countries at the time of the country’s worst
natural disasters, a lack of serious commitment among South Asian countries
regarding the implementation of SAPTA and SAFTA provisions, failure of
timely implementation of some already approved development-related projects,
and extreme resource crunch have contributed to SAARC’s credibility gap in
South Asia.
The results of the elite analyses in this study indicate that South Asian elites
expect that SAARC has important consequences for South Asia’s political and
economic welfare related to trade, security, and regional peace and stability.
Low level of utilitarian support of the elites for SAARC indicates that SAARC’s
performance over the past two decades has not met with the expectation of
South Asian elites. The presence of a general elite indifference toward SAARC
does not indicate the formation of negative attitude. Rather, it suggests that soci-
etal actors may not be strong catalyst and advocate for regional cooperation. At
the same time, their indifference does not put any urgent pressure on policymak-
ers to pursue regional cooperation policies, but it certainly provides governing
elites with an acquiescent domestic environment in which to pursue regional
cooperation policies.
The overall impression from the results of the elite interviews is that while
the idea of regional cooperation is considered favorably in South Asia, there is
no strong domestic support for SAARC. Overall, the elites of South Asia may be
indifferent, but they do not seem to be hostile or unduly negative toward
SAARC. Over a period of time, this indifference toward SAARC may swing in
either favorable or unfavorable directions, depending on the achievements of the
organization and the domestic politics of South Asian countries. As long as
South Asians do not turn hostile or negative, the prospect of SAARC’s survival
and even slow progress is not going to be adversely affected. However, there is a
general feeling that unless SAARC speeds up its activities and addresses such
areas as trade and security issues it is likely to become a moribund and largely
meaningless institution.

National identities prevail over regional identity

For the functionalist and neo-functionalist schools of integration, the progress of
regional integration is closely linked to the gradual shift from national to supra-
national loyalty (Haas 1968). An important indicator of this shift is when cit-
izens think of themselves as not citizens of a particular country but citizens of a
region. The shift from national identity to regional identity enables citizens to
think more in terms of supranational issues, interests, and institutions and thus
provides a conducive environment for regional integration to move forward
(Deutsch et al. 1967).
Such a shift, as our analysis suggests, has not occurred in South Asia. Results
of elite responses, as discussed in Chapter 7, reveal no strong tendency to
eschew nationalism and that very few South Asians think of themselves as “cit-
izens of South Asia.” Instead, a strong sense of nationalism prevails in South
 Conclusion 193
Asia and there is little likelihood that this sense of nationalism will be super-
seded by a new sense of supranational loyalties anytime soon. Currently, there is
no general consensus among South Asian countries, between India and Pakistan
in particular, for any kind of major common policies. Given the current dynam-
ics of domestic politics in South Asia, it is likely to take more than a decade for
South Asian leaders for the development of such a consensus to sustain a major
common regional policy.
In light of above argument, it is reasonable to conclude that South Asia
remains a region of nation-states.2 In the minds of South Asian people, con-
sciousness of the nation remains infinitely stronger than a sense of South Asian
community. In fact, it can be argued that in the absence of a complete regional
integration, this national consciousness is likely to persist. This, however, may
not be a major problem for the continuation of regional cooperation efforts.
While death of nationalism is a strong indicator of complete regional integration
or regional unification, it is not required for the progress of regional cooperation.
What is useful for the progress of regional cooperation in South Asia is the
development of multiple loyalties and identities – both national and regional –
among South Asian citizens. Development of regional identity and loyalty is
possible through concrete achievements of SAARC that can create solidarity
among South Asian people. By solidarity, we mean in this study, the develop-
ment of a “sense of community” (Deutsch 1967) or a “we-feeling among a
group of people” that work together on the basis of mutual trust and a shared
sense of common history, culture, geography, and political experience (Easton
1965: 332). So far, however, this sense of solidarity remains elusive in South
Asia. There are several reasons for this.
First, history has not been favorable for the growth regionalism in South
Asia. History has influenced enormously people’s thinking and behavior in
South Asia over the past decades. The history of the subcontinent’s partition has
cast a long shadow of distrust and suspicion over the relationship between India
and Pakistan. The ruling elites in Pakistan play the “history card” in every
opportune moment to sell the idea to the general public that “India had never
accepted the partition at heart and would not let any opportunity to undo it [par-
tition] slip by” (Prasad 1989: 14). India’s role in the emergence of Bangladesh
as an independent state in 1971 has strengthened this impression. On the other
hand, the Indian elites often show a profound sense of “historical distrust” in
their obsession with the idea that Pakistan might go to any extent to destabilize
India. Not surprisingly, Pakistan’s hand is strongly suspected in most communal
riots and secessionist movements in India. Also any move by Pakistan to mod-
ernize its defense with the help of outside powers is perceived to be a serious
danger to India’s stability.
After the partition, India and Pakistan became committed to mutually incom-
patible models of nation-building. India opted for secularism, democracy, and fed-
eralism. Pakistan, on the other hand, settled for authoritarianism, a centrally
controlled administration and an Islamic state. The practice of diametrically
opposite principles of political organization in two contiguous countries with no
194 Conclusion
natural frontiers led to enormous tension and anxiety between India and Pakistan.
In addition, the territorial disputes over Kashmir intensified bitterness between the
two countries. Despite the Simla agreement in 1972 to resolve the Kashmir issue
peacefully, conflict between the two countries has continued. The degree of viol-
ence in Kashmir and the two countries’ intransigence on reaching a peaceful solu-
tion have left deep scars on the national psyche of both India and Pakistan.
History has also played a critical role in the evolution of Indo-Bangladesh
relations. Despite India’s crucial role in the liberation movement of Bangladesh,
Indo-Bangladesh relations began to deteriorate soon after Bangladesh’s
independence principally for two reasons. First, a large section of Bangladeshi
elites shared Pakistan’s distrust for India because of their involvement in the
pre-partition freedom struggle on the subcontinent. Indeed, the people in the
eastern wing of Pakistan, which later became Bangladesh, were even more
deeply involved in the Muslim League sponsored struggle to partition India than
the people in the western wing (Prasad 1989: 14). Second, Bangladeshi elites
also shared Pakistan’s suspicion of India’s hegemonistic ambitions.
The Tamil–Sinhalese conflict in Sri Lanka is often sustained by historical ref-
erences to Tamil invasion and Sinhalese injustice by their respective protago-
nists. There is a perception among the smaller states in South Asia that
independent India’s foreign policy is more or less based on the same hegemonic,
cultural, geopolitical compulsions and calculations of the British Indian Empire
(Prasad 1989: 14). The way the princely state of Sikkim, formerly a protectorate,
was annexed by India in 1975 as the twenty-second Indian state appears to have
strengthened smaller states’ perception of India’s hegemonistic ambition. Such
actions of India have made the smaller states hyperconscious and hypersensitive
of their separateness and individuality (Ahsan 1992: 2). The smaller states not
only criticize India for practicing Kautilyan principles in its foreign policy
behavior, but they have also sought assistance on many occasions from outside
powers to limit India’s dominance in the region. India, on the other hand, views
such actions and the smaller states’ criticism of India as a hegemonistic power
as hostile and unfriendly to the cause of SAARC spirit. Despite some progress
through the 1990s in terms of increasing diplomatic intercourse and economic
cooperation between India and her neighbors, levels of trust remain low in South
Asian countries. Proliferation of SAARC meetings and ritualized friendship
toasts has not suppressed small states’ anxieties about regional ties.
Second, given their widespread poverty and development gap, South Asian
countries have given more priorities to domestic issues. Their concern and pre-
occupation with domestic problems has stood in the way of regionalism. Polit-
ical and societal elites of each South Asian country are anxious to achieve a
normal national identity after feeling humiliated and frustrated by the domina-
tion of foreign powers resulting from the colonial rule and decades of depend-
ency on economically and militarily powerful country. This dynamics of
domination and dependency has created a psychology of victimization among
South Asian elites who are essentially distrustful of development strategies that
favor regionalism with one economically and militarily dominant power.
 Conclusion 195
Third, the assumptions of realists that security dilemma between the two
major South Asian countries – India and Pakistan – has been decisively import-
ant in limiting the growth of a regional identity in South Asia are correct. In
addition, concerns for national security, perception of threats to territorial
integrity, autonomy, and balance of power have been the principal barriers to
trust among South Asian countries and seem to have trumped economic interests
in building a basis for regionalism.
Fourth, problems in bilateral relations between South Asian countries accen-
tuated partly by their focus on building national identities played an important
role in preventing the growth of regionalism. Despite frequent calls by South
Asian leaders for building trust and mutual confidence in their relations, the
ground reality remains unchanged. While the current strategy of South Asian
leaders to set aside contentious issues in order to build trust gradually through
concrete acts of economic cooperation is a sound one, it will take a long time
and test the will power of the leaders. Yet, it can be argued that any serious
effort to escape from the current level of distrust and tie South Asian countries
together will require a breakthrough in the development and implementation of
major economic projects in the region.
Fifth, the role of the national press in providing inadequate coverage of
SAARC, but excessively emotional coverage toward one or more of the other
regional countries during the past decades, is also an important reason for the slow
growth of regionalism in South Asia. The Indian and Pakistani press is particularly
responsible for fueling nationalism. Old stereotypes, lack of empathy, and negat-
ive images of neighboring countries and their leaders have dominated the press
coverage in India and Pakistan. Such a pattern of coverage has only accentuated
leaders’ worries about the atmosphere for various bilateral talks, leaving little
room for any substantial discussion on real issues of regionalism.

Cross-national differences – the Indian factor

One Bangladeshi respondent noted: “India can make or break SAARC.” The
implication of this statement is that given South Asia’s geopolitical realities, it is
clear that SAARC will face a troubled future without Indian support. However,
our analysis and evidence in this book suggest that there is low level of support
for SAARC in India. The low level of Indian support remains the most worri-
some factor for the future growth of SAARC. India’s initial hesitation about
joining SAARC and the continuing opposition to include bilateral issues in the
formal SAARC agenda are based on the Indian policymakers’ apprehension that
small South Asian countries might “gang up” against India. But this apprehen-
sion alone does not explain the relatively low level of Indian support for
SAARC. The following four snapshots explain the dynamics in which India’s
support toward SAARC can be examined.
First, in the structure of South Asian regional system, India remains at the
center and is the most powerful country. It is strongly believed by a section of
Indian elites, apparently close to the ruling circles, that regional security will
196 Conclusion
lead to India’s security and vice versa (Ghosh 1989: 221). India’s regional pre-
eminence leads its leaders and some powerful elites to believe that in order to
achieve peace, security, and stability in South Asia, India must remain strong
and maintain superiority in the region. Although a few scholars have contributed
to such belief, K. Subrahmanyam, a leading security scholar, stands out as the
most influential protagonist of this kind of thinking.3 Strongly arguing India’s
case for regional preeminence, Subrahmanyam observes that there is a necessity
for India to establish and project its military power in the region. Once India’s
military superiority is accepted by its neighbors, there is no danger of violation
of peace in the subcontinent. Subrahmanyam’s views not only reflects the Indian
government’s thinking on strategic issues in South Asia over a number of years
but also is shared by a large section of the elites in India. It is not surprising that
Indian government’s effort to maintain a high military profile in the subconti-
nent’s security affairs has always received domestic support.
The only open challenge to such a regional system comes from the region’s
second-ranking state, Pakistan. Although the smaller regional states appear to be
more reconciled to the preeminent position of India, they nevertheless resent
India’s hegemonistic aspiration and share Pakistan’s sense of frustration in
dealing with India. Indian ruling elites and opinion makers are very much aware
of such feelings on the part of neighboring countries. Consequently, Indian
public has come to share the Indian policymakers’ apprehension that SAARC
will provide an official forum for India’s neighbors to “gang up” against India. It
is no wonder that India has opposed in the past, and still continues to oppose,
any move by the member countries to include bilateral conflicts in the SAARC
agenda for discussion. Some Indians fear that India will not only be isolated but
also will lose much respect in the eyes of the international community if issues
of bilateral conflicts are discussed because of India’s involvement in almost all
the bilateral conflicts in South Asia.4
Second, a high degree of perceived inequity – that is perception that their
countries will contribute more and benefit less from SAARC – among Indians
seems to be a major impediment for the growth of SAARC. It is common know-
ledge in South Asia that SAARC suffers from an acute resource crunch. Unless
the resource situation is improved, most SAARC projects will not achieve any
success. Given, India’s economic strength vis-à-vis other South Asian countries,
it is expected that only India can contribute substantially to improve the resource
position of SAARC. This fact has contributed to the widespread Indian percep-
tion that their membership in SAARC is disadvantageous and inequitable. Such
perceptions have a negative spillover and certainly contribute to the develop-
ment of negative attitudes and low levels of support toward regional organi-
zation. While most Indians feel that their country is likely to contribute more
and benefit less from SAARC, the majority of citizens in Bangladesh, Nepal,
Pakistan, and Sri Lanka believe that India is likely to benefit most from any
SAARC arrangement. The success of SAARC as a durable political entity
cannot be guaranteed if the arrangement is perceived as benefiting some states at
the expense, or to the exclusion, of others.
 Conclusion 197
Third, Indian leader’s believed during the past decades that their country was
unlikely to get substantial economic benefits from any SAARC arrangements.
Thus, in New Delhi’s economic equation, SAARC’s importance was secondary
to India’s bilateral relations with Japan, South Korea, ASEAN, Australia, China,
Europe, and the United States. This belief, however, has changed in the post-
Cold War period. India’s attitude toward South Asian regionalism has become
much more positive. But, instead of building a vision of regionalism capable of
winning trust from others, India has failed to communicate its own trust in
regionalism to its neighbors. A primary reason for India’s failure is its leaders’
obsession with Pakistan’s external orientation. Although most South Asian
countries have developed external linkages because of their fragile political and
economic structure and the dynamics of neocolonialism, Indians seem to be
more obsessed with Pakistan’s external linkages and orientation. Since its birth
as an independent state in 1947, Pakistan has always looked westward, either
through the now-defunct Regional Cooperation for Development (RCD), which
is an intergovernmental organization with Turkey and Iran as members, or
through bilateral ties with the United States and the Arab world (Sobhan 1989:
21). In pursuing such policies, Pakistan’s ruling elites may have been guided by
their desire to make their country strong and independent vis-à-vis India. But the
policy of moving away from India has strengthened the misperception among
Indians about Pakistan’s hostile intentions and untrustworthiness. While the rest
of South Asian countries believe that SAARC’s slow progress is primarily due
to India’s lack of solid support, Indian policymakers and the press have put the
blame on Pakistan. India has always considered Pakistan’s efforts to raise the
issue of Kashmir in such international forums as the Non-alignment Summits,
the Commonwealth Summits, the United Nations, and the OIC as serious set-
backs to regional peace and stability. Indian policymakers have, on several occa-
sions, cited Pakistan’s initiatives and involvement in the OIC and the ECO with
Iran, Turkey, and the newly independent Central Asian Muslim republics as
evidence of Pakistan’s extraregional orientation and lack of sincerity regarding
SAARC.5
Misperceptions about each other’s strength and intentions have played a
crucial role in Indo-Pakistan relations. The ruling elites of both the countries,
due to insecurity at home, have time and again tried to strengthen this misper-
ception. Pakistan has always justified its policy of external linkages to neutralize
India’s domination, while India has sought to interpret Pakistan’s policy as the
primary cause of regional tension. The policymakers in both the countries
realize very well that they can gain from regional cooperation. But they seem to
suffer from a prisoner’s dilemma dynamics and thus seek unilateral advantage
by pursuing non-cooperation strategies.6 Over the years, the policymakers of
these two countries have been quite successful in conveying this message to
their citizens through the help of their press, which has strengthened the cit-
izens’ misperceptions and mutual suspicions.
Fourth, Indian leaders’ perceptions, personalities, and styles have influenced
the course of regional politics in South Asia.7 Thus, when Morarji Desai became
198 Conclusion
India’s prime minister in 1977, his restraining style assuaged neighbor’s anxi-
eties. The Janata government under Desai’s stewardship defined India’s
national interest differently and followed a friendly neighborly policy. Bilateral
relations among South Asian countries, including Indo-Pakistan relations,
improved remarkably during Desai’s premiership. Indira Gandhi, on the other
hand, during the pre- and post-Janata regime, was more concerned to assert
India’s preeminence and was perhaps less responsive to India’s smaller neigh-
bors. Accordingly, she was less trusted by other leaders of South Asia, and the
region was filled with tension and anxieties during her stewardship. Rajiv
Gandhi’s eclectic personality and sometimes his indecisiveness were a source
of confusion for the region. Both Rajiv Gandhi and Benazir Bhutto were
responsible for creating an improved environment, even though it lasted for a
short time (1988–89), in Indo-Pakistan relations. But Rajiv Gandhi’s unrespon-
sive attitude toward Nepal on trade matters during 1988–90 and toward
Bangladesh on water sharing and Chakma refugee issues during 1988–90
brought enormous tension to their bilateral relationship. Rajiv Gandhi’s policy
toward Sri Lanka during 1987–90 was a mixed bag, sometimes appreciated for
bold initiatives and sometimes condemned for insensitivity toward a small
neighbor. From 1991 to 1995, Prime Minister Narasimha Rao focused on eco-
nomic liberalization policies and basically pursued a friendly regional policy.
Since 1996, India has pursued a dual regional policy – positive unilateralism
toward small neighbors and pragmatic bilateralism toward Pakistan. The policy
of positive unilateralism, initiated by India’s former Prime Minister, I.K. Gujral
in 1996 and pursued since then by successive Prime Ministers A.B. Vajpayee
and Manmohan Singh, provides preferential access to the products from small
neighboring countries on a substantially reduced tariff basis without any
reciprocity. The primary goal of the policy of positive unilateralism is to win
the trust of its regional neighbors that can facilitate the growth of South Asian
regionalism. While India may have achieved some success in this policy toward
small neighbors, its policy of pragmatic bilateralism with Pakistan has
remained problematic. India’s policy of pragmatic bilateralism, which com-
bines accommodative diplomacy with combative regional posture, has
remained worrisome for Pakistani policymakers and has become counterpro-
ductive for the growth of regional cooperation in South Asia.

Future of regionalism in South Asia: some lessons

After more than 20 years of existence, SAARC has not produced any significant
results. Although some progress has been made, one cannot say with confidence
that regionalism is firmly rooted in South Asia. On the basis of our analysis in
this book, one can identify the following lessons that can serve as facilitating
conditions for the future growth of regionalism in South Asia.
 Conclusion 199
Lesson 1: recognizing India’s leadership
South Asian regionalism is unlikely to grow without India’s serious support. In
comparison with other South Asian countries, India enjoys an absolute compara-
tive advantage in almost every sphere. While one can empathize with neighbors’
resentment over India’s overwhelming economic and political influence in the
region, India’s dominant power and capability can hardly be questioned. Despite
Pakistan’s challenge to India’s regional leadership, it is clear that India is the
natural leader in South Asia and has a disproportionate say in the region.
While Pakistan’s challenge to Indian leadership in South Asia is driven by
historical rivalry, Kashmir dispute, and its objective to achieve balance of power
vis-à-vis India, lack of consensus among small South Asian countries on Indian
leadership is based on their fear of India’s hegemonic arrogance, potential
expansionism, and unsolicited intrusion into their domestic affairs. Generally
speaking, there is a lack of trust for India’s benevolent hegemony in South Asia.
Indian failure to build trust in South Asia has considerably slowed the progress
of SAARC in the past decades. India, on its part, remained less enthusiastic
about SAARC primarily because of two reasons:

1 potential use of SAARC platform by neighbors to discuss their bilateral

conflicts with India;
2 Indian leaders’ belief that India is unlikely to accrue substantial economic
benefits from any SAARC arrangements.

However, New Delhi’s reevaluation of its economic and political options in the
post-Cold War era drives India to overcome its earlier reticence toward regional-
ism in South Asia.
Since independence, Indian leaders’ have always desired to play a greater
role in the global arena. This desire had driven them to play a leadership role in
such multilateral forums like the NAM, the G-15, and Commonwealth meetings.
These groupings, however, have lost much of their relevance with the end of the
Cold War. Indian leaders have realized that for any country to play a global
leadership role, the demand of the new global order requires that country to
fulfill at least three conditions:

1 be an important member of WTO;

2 be able to negotiate successful FTAs;
3 be able to demonstrate capability to maintain a stable regional order.

India’s active initiatives in GATT/WTO negotiations, its decision to become a

“dialogue partner” with ASEAN, its willingness to become a member of APEC,
its eagerness to contribute to G-8 agenda and dialogue on global issues, its active
lobbying to become a permanent member of the United Nations Security Council,
and its active initiatives to implement SAPTA and achieve SAFTA are indicative
of its growing desire to play a more active regional and global leadership role. On
200 Conclusion
the issue of SAFTA, Indian Prime Minister Manmohan Singh’s comment at the
13th SAARC Summit in Dhaka in 2006 is instructive.

The region risks missing out on Asia’s dynamic economic growth if it does
not act speedily on SAFTA . . .. Is SAARC prepared to be an integral part of
the emerging Asian resurgence or is it content to remain marginalized at its
periphery?

This statement implies India’s frustration with the slow progress of SAFTA as
well as its keen desire to achieve a FTA through regionalism.
To the extent that Indian political leaders perceive that membership in
SAARC can lead to political stability in the region and future improvements of
India’s bilateral relations with its neighbors, one would expect a validation and
strengthening of New Delhi’s commitment toward regionalism in South Asia. In
fact, India’s changing attitude toward SAARC is evident in India’s post-1995
policy of positive unilateralism toward its neighbors. This policy seeks to
provide preferential access to the products from neighboring countries on a sub-
stantially reduced tariff basis without any reciprocity. India’s agreements of
bilateral FTAs with Sri Lanka, Bangladesh, Nepal, and Bhutan, which are more
or less favorable to these countries, are an indication of India’s willingness to
continue its policy of positive unilateralism. India seems to have realized that
positive unilateralism serves one of its critical policy objectives – that is to win
the trust of its regional neighbors that can facilitate the growth of South Asian
regionalism.
Indian leaders know well that the success of India’s economic liberalization
largely depends upon its ability to increase exports to new markets both in the
developed and in the developing countries. Until recently, India has achieved
only restricted access to the markets of Japan, North America, and Western
Europe due to these countries’ protectionist policies and various kinds of non-
tariff barriers against Indian products.8 Additionally, with the collapse of the
Soviet Union and the gradual incorporation of Eastern Europe into the Western
European economies, India has lost two of its privileged market links. In an
effort to expand its market links, India has recently taken many initiatives. Some
of India’s important initiatives include its active diplomatic role in the formation
of the IORARC in March 1997, its desire to join APEC and its renewed focus on
the “Look East” policy in order to strengthen its trade ties with the East Asian
and Southeast Asian countries. However, although India will continue to explore
markets in other regions, it can no longer ignore its own base in South Asia,
where it enjoys a comparative advantage in almost every economic sector.
Indian leaders have also realized that they cannot expect to win the confi-
dence of the global community without proving their leadership capability to
maintain regional order and stability in South Asia. After 2001, almost all of
India’s neighbors have experienced deteriorating economic and security con-
ditions. Growing political instability in Pakistan, Bangladesh, and Nepal,
continuing turmoil in Sri Lanka, and the worsening security situation in
 Conclusion 201
Afghanistan following the 9/11 development have led observers to describe
these states as “failing states.” India’s concern is that a volatile neighborhood
and continuing turbulence in the region will not only lead to a loss of global
confidence on India’s capability to maintain a stable regional order, it may also
discourage foreign investors who are looking at India as a new economic desti-
nation. This may retard India’s growth and its aspiration of becoming a global
player. Consequently, achieving peace, prosperity, and stability in South Asia
has become one of the top priorities of India’s external policies.
Moreover, Indian policymakers also know that as long as South Asia remains
one of the world’s least economically and politically integrated regions, China’s
growing influence in the region will be difficult to contain. There is a growing
consensus among Indian policymakers about SAARC’s potential to insure
regional stability, status quo in South Asia, and to provide opportunity for
improving bilateral relations through regular informal meetings. Not surpris-
ingly, Indian policymakers have shown renewed enthusiasm for improving
India’s relations with its neighbors and for the growth of SAARC in recent
years.
It is important for Indian leaders to realize that it is much easier to win the
trust of regional neighbors and remove their anxiety about a rising India through
projection of “soft power” rather than “hard power.” The idea of soft power, as
argued by Joseph Nye (2005), is that countries can often best achieve their
objectives by persuasion rather than force. While the instruments of hard power
are military and economic, the instruments of soft power are cultural and ideo-
logical. Soft power arises from the attractiveness of a country’s culture, political
ideals, and policies. A country’s soft power is enhanced when its images are
seen as positive, and its policies are considered as legitimate in the eyes of
others. India’s negative image among its neighbors, as found in this study,
requires to be addressed urgently by Indian leaders if they are serious to main-
tain their leadership in the region.
India’s potential for soft power in the region remains significant. Indian films,
music, and television shows are quite popular across the region. Despite official
censorship on Indian films in Pakistan, DVDs of Indian films are widely avail-
able in Pakistan. In higher education, India has some of the finest world-class
universities, medical, technological, and management institutes. Although only
few South Asian students attend these universities currently because of bilateral
problems, these universities can attract more students in future once bilateral
issues are resolved. It is encouraging that India’s support for more cultural
exchanges in the region has been growing in the past decade. With the final
agreement in 2007 to establish a South Asian university in New Delhi with sub-
stantial Indian resources, cultural exchanges among South Asians are likely to
expand as visits to India from other South Asian countries become even more
numerous.
Contested leadership will be problematic for regionalism in South Asia. The
slow growth of South Asian regionalism in the past decades can be attributed to
the lack of consensus on Indian leadership. In the absence of a regional leader,
202 Conclusion
coordination problems have become difficult to manage in South Asia, resulting
in the slow progress of SAARC. With its rising political and economic power in
the global and regional arena, and its leaders’ increasing interest to project their
soft power, India holds the key as the main pillar of South Asian regionalism.

Lesson 2: finding a political solution to Kashmir dispute

The tension between India and Pakistan is a key factor for the slow growth of
regionalism in South Asia. At the center of this tension lies the Kashmir dispute.
Experts on South Asia agree that territorial disputes over Kashmir remain the
most divisive issue in the subcontinent and a major source of bitterness between
India and Pakistan. Unless there is a political solution to the Kashmir dispute,
prospects of South Asian regionalism will remain uncertain. Although India and
other SAARC members are quite willing to give priority to economic coopera-
tion with the logic that deep commitment to economic cooperation between
India and Pakistan will eventually address Kashmir dispute, this approach is not
acceptable to Pakistan. Given Pakistan’s unwillingness to put economics over
politics and its continuation of support to Kashmir militants, political efforts to
resolve Kashmir dispute cannot be postponed to a later date if regionalism has to
make any meaningful progress.
There are compelling economic reasons for the political solution of the
Kashmir dispute. First, the trade between India and Pakistan is far below their
potential because of the prevailing political tension. Economists argue that the
Indo-Pakistan trade can easily see a ten-fold increase over the current trade
volume once SAFTA provisions are implemented.9 Second, an end to Kashmir
dispute will make it unnecessary for both Pakistan and India to go for high
defense spending that holds back their growth by diverting away resources from
more productive uses, such as investment in infrastructure. For this reason, the
business communities in both the countries support a détente between India and
Pakistan. Third, the resolution of Kashmir dispute will benefit other SAARC
members too. The conflicts between India and Pakistan have stymied the eco-
nomic integration in South Asia. The progress of SAPTA and SAFTA has
remained modest because of the frictions between New Delhi and Islamabad.
There is hardly any issue in the Indo-Pakistan relations which is capable of
arousing so much public passion on both sides of the border as the Kashmir
dispute. Therefore, Kashmir dispute cannot be set aside as if it will magically be
resolved after economic cooperation has been realized. Yet, given the nature of
Kashmir conflict, associated with deep-rooted historical and emotional scars,
religious and ideological differences, questions of political legitimacy of both
India and Pakistan, it is not easy to find a solution within a short span of time.
Kashmir conflict can only be addressed in a spirit of compromise. It will require
patience, diplomatic skill, and long-term commitment by the Indian and Pak-
istani political leaders. South Asian political leaders and public must look ahead
to goals that bind nations together. To what extent South Asian political leaders
will demonstrate urgency and spirit of compromise to resolve this issue remain
 Conclusion 203
uncertain. But one thing is beyond doubt that an end to the Kashmir dispute
would bring enormous economic and political rewards to SAARC region.

Lesson 3: establishing a South Asian regional forum

While South Asian countries have been focusing on regional economic coopera-
tion with signing of FTAs, there has been little talk of a region-wide South
Asian security cooperation. Although security concerns are and have been a
major element of South Asian countries’ foreign policy behavior, there is no ref-
erence to security in the original SAARC Charter. Many South Asians believe
that Bangladesh’s initiative for SAARC and the small South Asian countries’
immediate and enthusiastic response to the idea of regional cooperation may
have been based on security considerations – that is to contain an Indian military
threat. It is also argued in some quarters that India, after initial hesitation,
accepted the SAARC proposal to contain extraregional security links of small
South Asian countries, which might pose a threat to India’s security (Bajpai
1990). Despite SAARC agreements on cross-border terrorism and drug-
trafficking, cooperation on these issues among South Asian countries, India and
Pakistan in particular, has been generally tentative and non-serious.
In the past decades, security dilemma has defined the bilateral relations
between India and Pakistan, where neither side is willing to give the other a one-
sided advantage. This has resulted in unhealthy arms race between the two coun-
tries, contributing to the deterioration of security environment in South Asia. If
regionalism has to sustain in South Asia, a balance must be struck between the
security aspirations of India and Pakistan. The primary reason why India and
Pakistan have been unable to engage in any meaningful security cooperation is
their structural imbalance and pursuit of contrasting policy objectives to address
this imbalance. While India, as the preeminent power of the region, seeks to play
the role of a regional security manager with a focus on resolving intraregional
security issues bilaterally, Pakistan opposes this design and seeks to involve
extraregional powers to resolve security issues.
With the emerging globalization of regional security in the post-Cold War
period and more significantly in the post-9/11 era, India’s approach to manage the
security affairs of the subcontinent by itself looks neither credible nor effective.
Simply put, India does not have the necessary military, technological, and eco-
nomic resources to deal with such issues as cross-border terrorism, nuclear secur-
ity, and drug-trafficking on its own. This realization makes Indian policymakers
more receptive to the idea of security multilateralism, which refers to the willing-
ness of major powers to engage in security cooperation with a number of coun-
tries to enhance their mutual interest. India’s defense cooperation with the United
States, its willingness to cooperate with the United States in Afghanistan, its
decision to cooperate with the United States, Canada, and European countries to
resolve ethnic war in Sri Lanka, and its willingness to support Commonwealth
countries and United Nations to deal with Maoist insurgency in Nepal are indica-
tions of New Delhi’s growing commitment toward security multilateralism.
204 Conclusion
In the context of this shifting attitude of New Delhi toward security multi-
lateralism, South Asian countries should be encouraged to create a SAARC
Regional Forum (SRF) like their ASEAN counterpart, where the ASEAN
Regional Forum (ARF) has been operating since 1994. The SRF can bring all
members of SAARC and SAARC’s new dialogue partners including the United
States, Japan, Australia, China, and South Korea to an annual meeting of foreign
ministers to discuss regional security matters. While the immediate success of
this institution cannot be guaranteed, its long-term potential remains important
for South Asian security and regionalism. The creation of such an institution
acquires added urgency because, unlike the ASEAN, two members of SAARC
are nuclear powers and their conflicts have global implications. Immediately
after their respective nuclear tests of May 1998, both India and Pakistan initiated
several measures to engage in constructive dialogues with each other. But, these
measures were largely unsuccessful as exemplified by the advent of Kargil war
in 1999 and failure of a high-profile Agra Summit between India and Pakistan in
2001. The failure of these steps has reinforced the importance of SRF to provide
a regular consultation mechanism to manage conflicts in South Asia. If nothing
else, the establishment of such an institution will put pressure on SAARC
members, including India and Pakistan, to attend the annual meeting and engage
in a confidence-building process. This will also provide opportunity for SAARC
members and other major powers to consult with each other and hopefully
develop a mechanism to reduce chances of conflict in South Asia.

Lesson 4: embracing globalization

Regionalism in South Asia is likely to be guided by what Ernst Haas (1990: 65)
has described an “ideology of pragmatic antidependency” that seeks to promote
regional interdependence among South Asian countries to achieve economic
growth without delinking them from the global system.10 Embracing globaliza-
tion is essential for South Asian region whose economic growth depends on
exports to global markets. Sri Lanka’s export-driven economic growth model
since 1970s makes global linkage inevitable for its economy. In the post-1990
period, most South Asian countries – India, Bangladesh, Nepal, and Pakistan –
have adopted economic liberalization polices and regional trade liberalization
policies. However, given their low levels of economic development and small
size of domestic (with exception of India) as well as regional markets, these pol-
icies are unlikely to produce any significant positive results without global
integration. In light of this, it can be argued that the full realization of SAFTA
requires global economic integration.
Indian leaders know well that the success of their country’s economic liberal-
ization largely depends upon its ability to increase exports to global markets.
After decades of slow progress, India’s economy has grown at more than 7
percent a year since the mid-1990s, making it one of the world’s best perform-
ance economies for a quarter century. Global market links is necessary for India
to sustain its current level of economic growth. Like India, the success of
 Conclusion 205
Pakistan’s economic liberalization policy depends, among other things, on
increasing its exports to the markets of developed and developing countries. In
addition, Pakistan also needs substantial FDI from global corporations to boost
its economic growth. This economic logic requires Pakistan to maintain strong
ties with the United States, China, EU, and countries in Central Asian and Gulf
region.
The regional security dynamics in South Asia after 1998 made global linkage
inevitable for India and Pakistan. Immediately after becoming nuclear weapon
capable states in 1998, both India and Pakistan got involved in a border war
(Kargil war) in 1999. The anxiety of a possible nuclear attack, however remote
it might have been, made intensive engagement of global powers in the region
possible. Finally, the global war against terror in South Asia following the 9/11
al-Qaeda attacks on the United States in 2001 brought forces of globalization led
by the United States back to the region. Given South Asia’s ever-growing cross-
border terrorism, the need for resources to manage nuclear security between
India and Pakistan, and to fight against domestic poverty and militancy, South
Asian countries are likely to remain open to the support of global powers. The
logic of uncertainty of the war on terror and economic growth that requires
global market and global investment dictates South Asia’s firm linkage with
globalization in the coming decades.

Lesson 5: building the support of the quartet – the United States,

Europe, Japan, and Russia – for South Asian regionalism
Developing countries generally view regionalism as a path to escape from
dependency. Yet, South Asian countries have increasingly recognized that
growth of regionalism in South Asia will require the support of the quartet, com-
prising the United States, Japan, Russia, and Europe, for security and economic
reasons. Majority of South Asian experts agree that for regionalism to be real-
ized in South Asia, the US involvement needs to be greater than it was during
the Cold War period. There is little doubt that SAARC members need substan-
tial economic assistance for their growth. Although the United States has been
providing economic support to these countries, more American support in terms
of economic aid, investment, and market access is necessary. For India and Pak-
istan, in addition to economic cooperation, security cooperation with the United
States has become increasingly necessary. For the United States, South Asia’s
geostrategic importance has increased following its military involvement in the
war of terror in Afghanistan and development of nuclear weapons by both Pak-
istan and India. Pakistani support is critically necessary for the United States to
succeed in fighting against al-Qaeda led terrorists forces. At the same time, the
United States seeks active engagement with New Delhi for two reasons: stra-
tegic and ideological. Strategically, the US–Indian cooperation will provide
Washington with some ways to manage China’s growing influence. Ideologi-
cally, the United States is pleased to present India’s rise as an economic power
as a successful example of the linkage between liberal democracy, principles of
206 Conclusion
Washington consensus, and sustained economic growth. Given this mutuality of
interest between the United States and two major South Asian countries, build-
ing of the US support for South Asian regionalism will not be difficult.
Europe remains the best example of regionalism. In their pursuit of deeper
regionalism that requires development of regional institutions, South Asian
countries can learn from the EU about what works and what does not work.
South Asian countries have growing economic and political ties with some
European powers. Given the enormous economic need of the South Asian coun-
tries, there is a need to strengthen economic cooperation between Europe and
South Asia. Although many smaller European countries have been critical of the
nuclear developments of India and Pakistan, and the nuclear deals between the
United States and India, two nuclear powers of Europe, France and the United
Kingdom, have been supportive of India’s new status. Although critical of South
Asia’s record of human rights, the EU countries seek engagement with South
Asian countries for peace-keeping purpose. NATO is involved in the war of
terror in Afghanistan. Norway and the EU are actively involved in resolving Sri
Lanka’s civil war between Tamils and Sinhalese. In the last several years, many
EU countries including France, the United Kingdom, Germany, and Italy have
started to seize economic opportunities in India. France and the United Kingdom
have also been supportive of New Delhi’s regional and global leadership aspira-
tions in such multilateral forums as the United Nations and G-8 group. Overall,
strengthening economic and security cooperation between the EU and South
Asian region will be mutually beneficial.
Japan has emerged as an important partner for South Asian economic devel-
opment. It has been one of the largest donors of ODA to South Asian countries
in the past couple of decades. Although not comparable to Southeast Asia,
Japanese investment in South Asian countries – India, Pakistan, Bangladesh, and
Sri Lanka – has been growing. In fact, along with the ADB, Japan has shown
interest in joint regional projects in the area of infrastructure development.
Needless to say, such infrastructure projects if come to fruition with the help of
Japanese assistance will be extremely beneficial for the growth of regionalism in
South Asia.
Japan’s relations with India and Pakistan deteriorated after 1998. Responding
harshly to the nuclear tests by India and Pakistan, Japan resorted to economic
sanctions and diplomatic actions to censure India and Pakistan in the United
Nations and other multilateral forums. However, Japan’s fear of a growing
China, strong military cooperation between India and the United States in the
post-2001 period, India’s increasing attraction as a large market, economic
power, and as an IT service provider led Japan to significantly improve its rela-
tions with India after 2001. During his visit to New Delhi just two weeks after
Chinese Premier Wen’s visit in April 2005, Prime Minister Koizumi announced
a close “strategic partnership” with India, recognizing India as a key player in
Japan’s long-term plan for Asian security and economic prosperity. Despite
China’s opposition, Japan took initiatives to invite India to participate in the
inaugural East Asian Summit in December 2005. On its part, India has
 Conclusion 207
recognized that it is extremely beneficial to strengthen its cooperation with
Japan for three reasons – economic benefit due to growing Japanese FDI in
India, big IT opportunities in Japan for Indian companies, and Japan’s critical
role in maintaining a balance of power in Asia. Further strengthening of bilateral
relationship between two Asian democracies is expected and will be guided by
their concern for potential threat from China and calculation of mutual economic
benefits. At the same time, Japanese investment interest in other South Asian
countries are also likely to grow as a part of its need to diversify its Asian eco-
nomic portfolio. If SAARC is perceived to be instrumental in mitigating polit-
ical risks for Japanese investment in South Asia, Japan’s interest in the growth
of South Asian regionalism is likely to grow.
Although Russia’s influence has significantly declined after the end of the
Cold War, Russia’s contribution to the growth of South Asian regionalism
cannot be underestimated. Pakistan will always suspect Russia’s motive because
of its close relations with India and support to India’s global leadership aspira-
tion and stance on Kashmir. However, President Putin’s policy to support the
war on terror in Afghanistan, open condemnation for Islamic militancy schemes
to kill General Musharraf, and improved relations with China has contributed to
Islamabad’s reduced fear about Moscow in South Asia. With its surplus of oil
and gas resources, Russia can play an important role in South Asia, where
energy security is a growing concern. In fact, by actively participating in
regional energy projects and management, Russia can effectively address India’s
and Pakistan’s growing energy needs. Given its key role and position in the poli-
tics and economic management of Central Asian countries, with which South
Asian countries’ economic and political cooperation is likely to grow in future,
Russia’s participation in South Asian regionalism should be welcomed.

Lesson 6: encouraging China’s active involvement

Given its geographical proximity to five SAARC member countries (India, Pak-
istan, Nepal, Bangladesh, and Bhutan), China is an important player in South
Asian political and economic landscape. While China’s relations with South
Asian countries have remained more or less constructive, its relations with India
have fluctuated over the past years. The Sino-Indian dispute in 1962 and India’s
defeat in the hands of Chinese military in that war had made Indian leaders
extremely distrustful toward China. From India’s perspective, China’s motives
have often been suspect, given its close friendship with Pakistan and sympa-
thetic support to Nepal’s economic and political causes. During the 1960s,
1970s, and 1980s, Indian leaders feared that China was too close to Pakistan and
an integral part of Pakistan–US–China nexus. Preventing China from gaining
excessive influence in India’s neighborhood and Indian leaders’ deep-seated
reluctance to play a second fiddle to China in Asia also shaped India’s cautious
and not-so-friendly foreign policy toward China during the past decades.
However, the Sino-Indian relations have improved significantly since 1992
because of growing economic cooperation between the two countries.
208 Conclusion
Pakistan has always found China’s friendship reliable. Since 1960s, China
has been a steady economic and military partner with Pakistan, providing huge
economic and military assistance, including nuclear technology. Bangladesh and
Nepal often like to play the “China card” to neutralize Indian influence. After
1990s, China’s economic influence in Bangladesh has grown. Overall, given
China’s growing economic and political influence, South Asian countries are
likely to offer China a larger role in their economic plans. Not surprisingly, all
SAARC members, except for India, supported China’s membership in SAARC
as an observer since 2003. In 2005, SAARC admitted China with an observer
status when India dropped its opposition to China’s membership. India’s shift
toward China from hostility to friendly overtures can be explained by the polit-
ical and economic developments since 1992.
With the disintegration of Soviet Union, China’s lessened worry about India as
a client of Soviet Union enhanced prospects for improved Sino-Indian relations.
The signing of a “landmark agreement” between China and India in September
1993 to reduce troop levels in the mountainous borders of two countries and to
honor the existing border in the disputed territory of Arunachal Pradesh in north-
eastern India after three decades of hostility is an indication of this improved rela-
tions. In addition, China’s promise of not talking about Kashmir publicly after
2002 and to categorize Kashmir dispute as a bilateral dispute that should be
resolved on the basis of bilateral negotiation between India and Pakistan has
earned appreciation from India. The Chinese leaders, on the other hand, interpret
American tilting to India in the post-Cold War period as a strategic move to
counter China’s growing military and economic influence in Northeast Asia,
Asian region, and beyond. Chinese leaders have realized that improving relations
with India will be strategically much more productive than isolating India.
Recently, growing trade and business transactions between China and India (in
2007, China was the second largest trading partner of India) has brought these two
giants of Asia together. In addition, the need for energy security by both India and
China has enhanced the prospects of their strategic cooperation. In 2003, in a
spirit of compromise, India communicated to China about its decision to seek set-
tlements of its border dispute with China on a political basis rather than on the
basis of legal and historical claims. Reciprocating India’s gesture, Chinese
Premier Wen Jiabao agreed on a set of political principles to guide the final settle-
ment of Sino-Indian border dispute during his visit to New Delhi in April 2005.
With improving Sino-Indian relations, and China’s enormous potential to con-
tribute to South Asia’s economic development and political stability, China should
be encouraged to play more active role in the growth of South Asian regionalism.

Lesson 7: promoting regional identity

Despite their shared historical, political, and cultural experiences, South Asians
have reservations about their regional identity. Narrow national identities, rein-
forced by mutual distrust and problems in bilateral relations, prevail in South
Asia and have shaped each country’s interactions with neighbors in the past
 Conclusion 209
decades. Such an environment is hardly conducive for the growth of regional-
ism. What is required in South Asia is a determined and consistent effort by
South Asian leaders to overcome narrow national identities. To achieve this,
South Asian leaders must redefine and take a more consistent long-term view of
their national interests consistent with the goals of regionalism. While the redefi-
nition of national interest – in terms of political, economic, and security interests
– will take time, immediate actions in the following areas can be initiated to
strengthen regional identities in South Asia. The transnational connections
forged through sports, music, tourism, personal travel, contacts, and interaction
among citizens will deepen regional interdependence and promote peace in
South Asia.
It is widely acknowledged that people who travel to another country often
develop both a deeper understanding and a deeper appreciation for it. People
who maintain person-to-person contacts and friendships across borders seem to
be less favorably disposed to regional conflicts. Despite the enormous potential
of tourism in South Asia and SAARC’s recognition of its benefits, tourism pro-
grams have not really caught on the popular imagination because of an utterly
inadequate information campaign regarding the facilities each country provides
to the SAARC tourists. Given the substantive benefits of cross-border travel and
tourism to create a regional awareness, the South Asian governments, with the
help of SAARC Secretariat, should improve their propaganda efforts in media to
reach out to more people.
There is also a necessity to increase and make the SAARC scholarship pro-
grams more widely known to raise the number of exchange students in the
region so that more and more students can learn about the neighboring countries
and share their experiences with each other. Such kinds of networking will
improve regional sensitivity among the younger generation of the South Asian
countries. In this area, India can play a crucial role. With its world-class educa-
tional institutions in the field of technology, science, medicine, and business,
India can offer more incentives to students from all over South Asia to benefit
from its educational facilities. In this context, the decision taken by SAARC
countries in 2007 to open a South Asian university in New Delhi with substan-
tial Indian resources is encouraging. The full operation of this university is
likely to increase cultural exchanges among the younger generation of South
Asia and thus establish a foundation of deeper understanding and appreciation of
neighboring countries.
It is a positive development that the South Asian countries have agreed to
relax visa regulation for members of Parliament, Supreme and High Court
judges, senior journalists, and academic chairs of the universities for intrare-
gional travel. However, further visa relaxation is necessary to facilitate wide
interaction among the general public in South Asia. Sometimes, when heads of
state do not see their common interests because of political imperatives, ordinary
citizens try to raise awareness of such mutual interests on both sides. Travel and
discussion by private individuals and groups toward this end have been called
citizen diplomacy, and it occurs fairly regularly (though not very visibly) when
210 Conclusion
conflicting states are stuck in a cycle of hostility. Citizen diplomacy has been
particularly successful in the context of Sino-American rapprochement in 1970s
and US–Russia relations in 1980s.11 It is encouraging to note that citizen diplo-
macy, as evident in the growing number of meetings of journalists from South
Asian countries, private visit of prominent citizens both as a group and individu-
ally to various South Asian countries, visit of SAARC citizen group, which
comprises prominent citizens from the SAARC countries, to supervise elections
in the neighboring country and discuss important matters of mutual interests,
appear to be gaining popularity in South Asia. Further visa relaxation in South
Asia is necessary to facilitate travel of more ordinary citizens and promote
citizen diplomacy.
Sports competitions among South Asian countries held annually since 1984
under the auspices of South Asian Federation Games (SAF) appears to have cap-
tured the imagination of sports enthusiasts in South Asia. This is good news for
SAARC. Sports are often seen as a force for peace. Although sports competition
may sometimes stir up nationalism and animosities between neighbors, sports
also bridge differences, promote friendship, create a sense of participation in a
supranational community, and bring people from different countries together in
shared activities (Allison 1993). In the context of sports some thoughts can be
given to utilize cricket, the most popular game in South Asia, to generate active
interest in SAARC activities. Next to war, cricket seems to have the most emo-
tional appeal in South Asia. In fact, there are some evidence to suggest that
South Asian leaders have employed “cricket diplomacy” successfully to address
Indo-Pakistan tension. For example, the late President of Pakistan, Ziaul Huq,
employed “cricket diplomacy” very effectively to diffuse Indo-Pakistan border
tension created by “Operation Brasstacks” in the winter of 1987. Similarly,
President General Musharraf used “cricket diplomacy” to restart peace dialogue
with India in 2004. President Jayawardene of Sri Lanka watched a cricket match
with Prime Minister Rajiv Gandhi of India in 1987 when the talk of an IPKF
seemed to have been initiated. Given the enormous popularity of cricket in
South Asia, a cricket camp for South Asian youth can be organized with star
players from South Asian countries participating as coaches. Informal coaching
by Pakistani cricketers to Indian players and vice versa regularly occurs during
their visits to each other’s country and even at the international cricket competi-
tion venues. Such programs will go a long way to bridge the gap among the
younger generations of South Asia.12
Socially constructed knowledge, as Ernst Haas (1990: 73–75) has argued, is
extremely crucial for the policy-making process because it shapes the world
view of the decision-makers and thus influences their reaction to particular issue
areas and determines their modes of interaction at national, regional, and inter-
national level.13 Similarly, people’s reaction to a particular decision or institution
is based on their level of knowledge. As discussed in this book, even most of the
educated citizens of South Asia appear to be ignorant about SAARC and each
other. Lack of knowledge about each other has led to misunderstanding and
mutual prejudices among South Asian neighbors. One of the important goals of
 Conclusion 211
SAARC and the South Asian ruling elites, therefore, should be to create an
effective public information campaign. Without an informed public, most of
SAARC’s goals cannot be accomplished. As found out in this book, a high per-
ception of inequity in India and Pakistan is a major impeding factor for the
growth of SAARC. It is urgently necessary, therefore, for the governments of
both India and Pakistan to address this issue. Commonsense perceptions among
Indians and Pakistanis may not be in proportion to the “economic reality.” In
order to rectify this misperception, the governments of India and Pakistan should
carefully provide information to their citizens as to how these two countries’ net
budget contribution to SAARC is proportional to the “peace dividend” in South
Asia. It will not be a very hard sale to convince the citizens of India and Pak-
istan that peace and stability in the region can save these two countries substan-
tial amount of revenues which are currently spent on the acquisition of
unproductive defense arsenals.
The envisaged public information campaign cannot be assumed to have
immediate or dramatic effects on the perceptions of South Asian public regard-
ing SAARC. But it surely can be argued that a carefully conceived campaign by
the media, governments, and the Secretariat can raise the salience of SAARC,
thereby generating public interest on the regional cooperation issues in South
Asia. A clear and honest feedback – not in the form of dull, abstract statistics,
but in a form consistent with commonsense views – should be provided to South
Asian peoples on what has so far been achieved and what can be realistically
achieved. In this effort, the media in SAARC member countries should play a
supportive role. So far, a vision of regionalism is lacking in the media coverage.
A vision of regionalism can temper the degree of nationalism and emotional
intensity with which the media covers bilateral conflicts between South Asian
countries. In the past decades, the media coverage, based mainly on narrow
national interests, contributed to misperceptions and the level of distrust among
South Asian countries. A reversal in this type of coverage will improve the basis
for mutual understanding in South Asia.

Lesson 8: learning from other regional groupings

SAARC is a case of “late regionalism,” which refers to the development of
regionalism through learning. Regional organizations in one area can learn
lessons from, or what Etzioni describes “fashion” its growth after the experi-
ences of other regional organizations in other areas (1991: 317). Being a case of
late regionalism, SAARC has the distinctive advantage of avoiding the pitfalls
of other regional organizations that led to their decline. At the same time,
SAARC can incorporate their successful principles. From LAFTA’s case, it is
obvious that embarking on an overambitious project of free trade may not be
practical or even desirable for developing countries and South Asia in particular.
A slow, cautious, and gradual approach to regionalism, as demonstrated by
ASEAN, appears to be the best strategy for South Asian countries. Cooperation
at micro-level and then advancement to the macro-level, as the Nordic Council’s
212 Conclusion
experience reveals, may be more appropriate for the growth of regionalism in
South Asia.
Some principles of “late regionalism” have been articulated by various schol-
ars in various ways. Michael Haas (1992: 240), for instance, has suggested the
following six principles:

(1) respect for the equality of cultures (rather than hierarchical, coercive
methods of conducting diplomacy), (2) consensus building (rather than
value maximization), (3) incrementalism (rather than blueprintish grand
designs), (4) attention to principles (rather than technical details), (5) unique
solutions (rather than universalistic remedies) and (6) a stress on coopera-
tion (rather than integration)

Michael Antolik (1990) has proposed two principles, i.e. (7) self-restraint, as
demonstrated by non-interference in other’s domestic affairs, and (8) mutual
accommodation. To these eight principles, two more might be added: (9) accept-
ing a gradual timetable and (10) open regional communications to create an
awareness among the public about the potential benefits of a regional organi-
zation. The last principle is important because a regional organization can be
maintained only as long as both the political leaders and the public of the
member countries perceive its continued existence as advantageous to them.
While six of the above ten principles of late regionalism are already found in
South Asia, the remaining four – i.e. (4) attention to principles (rather than tech-
nical details), (7) self-restraint as demonstrated by non-interference in other’s
domestic affairs, (8) mutual accommodation, and (10) open regional communi-
cation – appear to be absent. The sooner SAARC leaders are able to adopt these
principles, the better the prospects of SAARC’s growth will be.

Lesson 9: building “engines” of regional cooperation

Some “engines” of regional cooperation need to be developed within South Asia
for South Asian regionalism to move forward. The most important engines are
joint projects, transportation corridors, energy grid, monetary cooperation, and
South Asian Development Fund (SADF).14
Development of joint projects, big or modest scale, by SAARC countries will
bring visibility to South Asian regionalism. SAARC countries should negotiate
with the United Nations Development Program (UNDP) and ADB for the devel-
opment of joint projects. Some innovative approaches such as the ADB’s vision
of growth triangles merit serious attention. Development of joint projects with
the assistance of ADB in smaller units can create new opportunities and help
establish linkages with other regions. For instance, promising economic
opportunities exist, and with respective governments’ support, extensive eco-
nomic cooperation is possible in parts of Bangladesh, Northeast India,
Myanmar, and Thailand, or South India, Sri Lanka, the Andaman and Nicobar
Islands, and Northwest Indonesia. There are other joint projects possible in
 Conclusion 213
South Asia – that is oil and gas pipelines between India and Pakistan, hydroelec-
tric projects between India, Nepal, Bhutan, and Bangladesh, joint road and
railway projects between India, Pakistan, and Bangladesh, joint energy grid
between Sri Lanka and South India. Developments of such joint projects have at
least two important implications for regionalism. First, it will generate trust,
calm fears, and enhance confidence-building process among South Asian coun-
tries. Second, joint project planning and implementation has the potential for
turning the rivalry between India and Pakistan into a workable partnership. That,
itself, will be a significant achievement.
Improved transportation facilities in each member country and their integra-
tion across the region are an important engine for the growth of regionalism in
South Asia. Most of the South Asian countries have inherited common trans-
portation infrastructure – such as railways, roads, inland water transport, and
ports – from the British. However, after independence, regional transport link-
ages were broken due to what Rehman Sobhan calls “pathologies of inter-state
and domestic politics” (2005: 10). Much of the transportation infrastructure in
South Asia is in bad condition. There are several studies which indicate that lack
of transportation connectivity and the costs associated with it is a serious imped-
iment to the growth of regional trade and cross-border interaction among people
in South Asia (Dubey 2005: 32–33; Sobhan 2005: 10–11). Many of the trans-
portation infrastructure projects can be rebuilt or repaired with reasonable cost.
The existing road and railways facilities when repaired can enable Indians, Pak-
istanis, and Bangladeshis to travel via bus or train to various urban centers in
Delhi, Mumbai, Kolkata, Lahore, Karachi, Islamabad, Dhaka, and Chittagong
more frequently. In addition to the obvious advantages of increasing cross-
border travel of South Asians, such transportation linkages will also significantly
reduce the cost of intraregional trade.
For example, imports of a consignment of cotton from Pakistan by
Bangladeshi textile industry currently take 40 days to move from West Punjab to
Chittagong via Karachi with trans-shipment in Colombo or Singapore. A freight
train from Lahore moving across India can bring the same consignment of
cotton to Dhaka within four days (Sobhan 2005: 10). Similarly, transportation of
a container from Delhi to Dhaka takes 45 days now. It will take only two to
three days through railway traffic. According to one estimate, transportation of
goods from northeastern part of India to Kolkata via Chittagong airport in
Bangladesh will cut the total journey time by 60 percent (Dubey 2005: 32).
Since no transit facilities through the Pakistan territory are allowed for Indian
goods being transported to Afghanistan and beyond to Central Asian countries,
India is currently incurring huge costs by using circuitous routes through Iran to
reach these destinations. By denying transit facilities to Indian goods,
Bangladesh and Pakistan are foregoing freight and license charges in foreign
exchange amounting to billions of dollars.
The obvious benefits of building and integrating transportation facilities
across the region are compelling to pursue these projects seriously. South
Asian leaders promised to take urgent action on this issue at the Islamabad
214 Conclusion
Summit in 2004. So far, however, there has been very little concrete action on
this issue except for few official talks. Building adequate transportation infra-
structure and establishing their connectivity across the region is a challenge
given their cost and political tension among South Asian countries. While the
“cost challenge” can be overcome by seeking financial assistance from multi-
lateral institutions and private sectors, the “political challenge” remains crit-
ical. But this challenge needs to be seriously addressed for the growth of
regionalism in South Asia.
In South Asia, India and Pakistan are energy deficit countries and share
serious energy security concerns. In contrast, Nepal and Bhutan have vast
hydropower potential through their river waters and Bangladesh has natural gas
potential. Coordinated development of these various energy resources and their
trading in the region will be substantially beneficial for SAARC members. There
is a need for common distribution system in the region based on single regional
grid which interconnects the national grids. Such a coordinated effort will go a
long way in enhancing the prospects of regional cooperation. Another
coordinated effort which can prove useful for the growth of regional cooperation
is the laying of pipelines across the region for the transportation of gas from
Bangladesh and Myanmar in the East, and from Iran, Qatar, and Turkmenistan
in the West, to India and Pakistan (Dubey 2005: 34).
Monetary cooperation is often considered as critical for deeper regionalism.
Apparently impressed by the implications of a single currency (Euro) on Euro-
pean integration process, India’s Prime Minister A.B. Vajpayee suggested for
the adoption of a common currency for South Asian region in January 2004. The
realization of a single currency requires harmonization of economic policies in
the area of exchange rates, interest rates, fiscal deficits, price support mechan-
isms, etc. Establishment of a free trade area and a Custom Union are generally
considered as preconditions for achieving the harmonization of economic pol-
icies. South Asian countries are far away from these goals. While adoption of a
single currency will take a longer time period, two other measures of monetary
cooperation hold greater promise for South Asian countries. First, SAARC
members can create a South Asian Monetary Fund (SAMF) to provide hard cur-
rency to a member country facing monetary and other balance-of-payment
crisis. Given its economic growth and considerable accumulation of reserves of
foreign exchange, India will have to play a key role in this scheme. Second, the
South Asia Development Cooperation Report in 2004 floated the idea of creat-
ing a parallel regional currency which can be used parallel with the national cur-
rencies of the individual member countries. Explaining the dynamics of this
parallel currency, Muchkund Dubey, a member of SAARC Eminent Person
Group (EPG), observes:

This currency would amount to Supplementary Drawing Rights (SDR) at

the regional level and can be used as a unit of account for settling transac-
tions under regional arrangements, like payments under a clearing system.
. . . It can also be used for funding the creation of regional public goods in
 Conclusion 215
the area of transport and communication, energy, information technology,
bio-technology, food security, tourism and science and technology.
(2005: 31)

This is an important idea, which will facilitate the growth of regional institu-
tions. South Asian countries must give serious consideration to this idea to move
their goal of regionalism forward.
Finally, it is necessary to put the already established SADF into action. The
SADF came into existence more than a decade ago but has remained inactive
because of lack of adequate resources. The SADF can undertake large regional
infrastructure projects to improve infrastructure facilities in South Asia. In addi-
tion, the SADF can finance poverty-alleviation programs, provide lending to a
comprehensive human resource development program, support intraregional and
extraregional trade by arranging finance for export credit and commodity stabi-
lization, and support the operational expenditure of the existing SAARC institu-
tions. Resources for the SADF can come from contributions of South Asian
countries, external sources, regional and international financial institutions. Rev-
enues for the Fund can also be generated through regional and international
capital markets. Japan has already shown interest in contributing 20 percent of
Japanese ODA to a common SAARC fund. Other donor countries like the
United States, the EU countries, Canada, and OECD members can also be per-
suaded to contribute some percentage of their ODA to the SADF. If adequate
resources are available to SADF, it will be able to provide the much-needed
financial support to regional projects, the completion of which will strengthen
regional interdependence among the South Asian countries.
What South Asia needs today is peace, stability, prosperity, and international
recognition, objectives that can best be accomplished through enhanced regional
cooperation. Given the nature of the nation-building process in South Asia,
SAARC may not be able to provide immediately any molecular attraction that
will induce the member states to act in unison. Bilateral differences will persist,
and they are likely to be addressed through bilateral negotiations. SAARC may
be able to facilitate dialogues among the South Asian ruling elites and to serve
as a supplementary method for advancing national development.
While the leaders of Bhutan, Maldives, and Nepal will continue to support
SAARC for the purpose of security, international prestige, recognition, and
some economic benefits, the leaders of India, Pakistan, Bangladesh, and Sri
Lanka are likely to support SAARC for the purpose of peace and stability at
home and in the region and economic benefits. It is reasonable to believe that the
ruling elites of South Asian countries have realized that there is no alternative to
SAARC. The alternatives to SAARC are economic nationalism, destabilization,
social conflicts, and ultimately political tensions that may escalate into war.
Thus, SAARC appears to provide a possible path toward a stable South Asian
regional order. At this critical moment of history, it seems unlikely that the
ruling elites in South Asia will ignore SAARC and thus miss a splendid
opportunity for peace and development.
216 Conclusion
South Asian regionalism is likely to be based on leadership initiatives from
India, a path-breaking accord between India and Pakistan over Kashmir dispute,
openness to globalization, and some special arrangements for China and the
quartet forces – the United States, EU, Russia, and Japan – so that these coun-
tries remain involved in South Asia’s regional cooperation activities and share
South Asia’s inclusive rather than exclusionary vision of regionalism. There is a
need for incremental growth of deeper regional cooperation and fostering of
regional identity that can deepen as select number of engines of regionalism tie
South Asian countries together, strengthening their mutual trust and confidence.
The burden of high expectations for progress combined with South Asian coun-
tries’ low preparedness to win mutual trust has shaped the contours of develop-
ment of South Asian regionalism over the past two decades. These contours of
development, to say the least, are disappointing. The credibility gap between
expectation and performance of SAARC has led many observers to ask the ques-
tion, Will regionalism in South Asia ever take off? What is needed for the
growth of regionalism in South Asia is a shared will, bold thinking for deepen-
ing cooperation, and high preparedness of South Asian leaders to win mutual
trust. What are not needed are excessive optimism, grandiose goals, and bunch
of political rhetoric that is not based on ground realities.
Notes

1 Introduction
1 In North America, a FTA between the United States and Canada was signed in 1989.
This agreement grew into the NAFTA when Mexico joined in 1994. Since 2001, China
and Japan have been actively engaged in signing number of FTAs with ASEAN coun-
tries. In the post-2001 period, ASEAN+3 (that is ten members of ASEAN plus Japan,
China, and South Korea) has emerged as a significant regional cooperative arrange-
ment in Asia. For various regional cooperative arrangements and initiatives in North-
east Asia, see Rozman (2004).
2 Expansion of European integration activities include the creation of a Single Market in
1992; the signing of Maastricht Treaty in 1992 seeking monetary union (EMU) and
closer political union; the signing of European Economic Area (EEA) in 1992; the
expansion of the EU in 1995 by admitting new members – Austria, Finland, and
Sweden; and the enlargement of EU in May 2004 by admitting ten new members –
Cyprus, The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slo-
vakia, and Slovenia.
3 Jagdish Bhagwati (1993: 26), for instance, has predicted a fragmented world of four
blocs: an augmented EC; NAFTA extended into the Americas; a Japan-centered Asian
bloc; and a fourth bloc of marginalized nations such as those of South Asia and Africa.
4 Ernst Haas (1990) has constructed five world-order ideologies – classical liberalism,
managed liberalism, structural antidependency, pragmatic antidependency, and eco-
holism – to explain various purposes and forms of collaboration among the nation-
states. For an explanation of these five types of ideologies and examples of regional
organizations based on these ideologies, see Haas (1990: Chapter 4, 225–226).
5 The term “deep cooperation” is used in this study to describe relentless efforts by gov-
ernments to cooperate in developing and implementing common norms or rules in a
particular area, such as trade, security, and economic welfare. Efforts to set common
norms may be limited to intergovernmental cooperation or may involve a decision to
develop supranational institutions for rule-setting. Deep cooperation is different from
“deep integration,” the term favored by Lawrence (1996: 7), in terms of scope of
coordination of economic policies. Deep integration refers to agreements such as the
EU that aim at achieving some measure of economic union and that create supra-
national institutions for pursuing this goal. In this study, deep cooperation is used for
less far reaching coordination on domestic policies and regulations.
6 For an insightful discussion comparing Deutsch and Durkheim, see Merritt and Russett
(1981: Chapter 7).
7 Although the concept of “spillover” is central to the neo-functionalist thought, the term
is used in the functional theory through such euphemistic phrases as “ever-widening
circles.”
8 For a full discussion of the implications of these variables – system capacity, support,
218 Notes
demand, and leadership – on the development of regional integration, see Lindberg and
Scheingold (1970: 115).
9 Max Weber’s theory of social change seems to have influenced the central perspectives
of integration theorists. Weber had shown how capitalism’s demand for rational calcu-
lations was responsible for certainty and stability in the society. Stability was created,
according to Weber, by the emergence of rational-bureaucratic nation-states and
society’s recognition and dependence on legitimate central authority. The integration
theorists presumed that transformation of anarchic international order was possible by
the creation of legitimate supranational authorities over states. For an overview of this
literature, see Genco (1980: 55–80); Crawford (1991: 438–468).

2 Explaining regional cooperation in South Asia

1 Rosenau’s (1967) discussion of differences between domestic policy and foreign
policy issue areas offers useful insights to my analysis of regional cooperation as a
community policy issue area. For some excellent reviews of literature and critical
examination of Rosenau’s conceptualization of issue areas, see Potter (1980:
405–427); Evangelista (1989: 147–171).
2 Shepherd (1975) provides an earlier support for this view.
3 For a representative literature on the second-image-reversed perspective, see Goure-
vitch (1986); Rogowski (1989); Katzenstein (1985); Milner (1988); Frieden (1991).
4 For representative literature, see Huelshoff (1994: 255–279); Sandholtz and Zysman
(1989: 95–128); Keohane and Hoffmann (1991); Moravcsik (1991); Bulmer (1983:
349–363); Eichenberg and Dalton (1993: 507–534); Parker and Peel (2003).
5 For a discussion of this view, see Hiden and Farquharson (1989); Ra’anan (1983);
Gunther (1980).
6 For insightful discussion on statist literature, see Nordlinger (1981); Katzenstein
(1978); Krasner (1984: 223–246); Rockman (1989: 173–203).
7 For an excellent review of this literature, see Mitchell (1991: 77–96). For various cat-
egorization of the term state in the non-Western context – such as hard state, adminis-
trative state, soft state, bureaucratic polity, and repressive-developmentalist state –
see the review of statist literature by Crone (1988: 252–268). For an excellent discus-
sion of states as quasi-states, see Jackson (1990).
8 For an extension of this argument, see Huelshoff (1994: 264–265); David (1991:
16–17).
9 This discussion is based on Huelshoff’s argument. For an excellent discussion on
weak and strong governments and their respective preferences for regional coopera-
tion policies, see Huelshoff (1994: 262–264).
10 This argument relies on the burgeoning literature concerned with such issues as the
development and form of state structures, their capacity and autonomy in particular
contexts, and the interaction of the state with various societal groups and organi-
zations. Among the many studies in this area, see the following major works: Evans
et al. (1985); Nordlinger (1981); Miliband (1969); Krasner (1978); Midgal et al.
(1994).
11 For an explanation of “stop-and-go” pattern of regional cooperation, see Schneider
and Cederman (1994: 636–638).
12 For systematic elite studies on regional integration, see Deutsch et al. (1967); and for
systematic elite studies on South Asian foreign policy issues, see Free (1950); Singer
(1964); Cortright and Mattoo (1996).

3 Regional dynamics
1 On June 1, 2001, Crown Prince Dipendra, using automatics weapons, massacred
almost the entire royal family, including his father King Birendra, his mother, his
 Notes 219
sister, his brother, and then shot himself. Gyanendra, King Birendra’s brother and the
nearest surviving male kin, was anointed as the next monarch of Nepal following this
unfortunate incident.
2 For an excellent survey of the realist principles embedded in the mandala, see Modelski
(1964: 549–560). For a modern translation of The Arthashastra, see Rangarajan (1987).
3 See Alberuni’s India edited by Sachau (1991: 22). Alberuni, whose full name was
Abu-Raihan Muhammed Ibn Ahmad al Beruni, was taken prisoner my Mahmud of
Ghazni in Khiva and accompanied him to India as a court historian.
4 The sepoy mutiny of 1857 has been described as an uprising by Pakistani historians, a
mutiny by the British, and the First War of Independence by Indian nationalists.
5 Quoted in Sherwani (1990: 10); also see Cohen (2004: 28).
6 The leaders of the Pakistan movement referred to India’s Islamic period as a golden era
during which much of high cultural, material, and spiritual progress was achieved.
Hindu nationalists, on the other hand, portrayed the Muslim rule as a dark age, marked
by the mass destruction of places of worship, forced conversions, and a frontal attack
on Hindu social order.
7 While historians debate over the exact casualty figures, it is commonly estimated that
approximately 500,000 Hindus, Muslims, and Sikhs were killed during the tragic
process of partition (Baxter 1991: 59).
8 Quoted in Ganguly (2001: 32).
9 Siachen Glacier, which is 75 kilometers long, is located in the Karakoram Range in the
disputed state of Jammu and Kashmir. Referred to as “Third Pole” because of its
extremely inhospitable cold climate (the surface temperature on the glacier drops to
minus 40 degree Celsius in the winter and blizzards in the area can generate winds up
to 150 knots), the glacier was not adequately demarcated in the 1965 and 1971 Cease-
Fire Line (CFL) agreement between India and Pakistan. It was, therefore, possible for
both India and Pakistan to stake their claim over the glacier. Because the Siachen
Glacier Complex was situated along the disputed territory of Aksai Chin (the area,
India claims, was illegally ceded by Pakistan to China), India considers it strategically
important. Although analysts differ as to which of the two countries (India or Pakistan)
staked its claim over the glacier first, overwhelming evidence suggests that India did
deploy troops on the glacier first to establish its claim. For a detailed discussion on this
dispute, see Ganguly (2001: 83–85).

4 Origin and evolution of SAARC

1 Bajpai (1990) has argued that Bangladesh launched serious initiatives for regional
cooperation in South Asia after its approach to ASEAN for membership was turned
down. Bajpai’s assertion, however, is not based on firm evidence. See for a discus-
sion, the dissertation of Kanti Prasad Bajpai (1990: 50–53).
2 For an extensive discussion on various external and domestic moves and initiatives
concerning the growth of regionalism in South Asia, see Muni and Muni (1984:
Chapters 2–3); Bajpai (1990: Chapters 1 and 4).
3 Interview with former secretary of External Affairs Ministry in New Delhi, December
17, 2002.
4 The linkage between the leaders’ concern for legitimacy and political survival and
their policy preferences for cooperation with powerful neighbors has been well
explored by Steven David in what he called an “omnibalancing theory.” For an expla-
nation of this theory and how it is different from the balance-of-power theory, see
David (1991: 233–256).
5 For the Bangladesh draft paper and the areas or items suggested for cooperation, see
Muni and Muni (1984: 35).
6 See Dhaka and Bangalore Summits’ declarations and joint press releases, Kathmandu,
1986, p. 2.
220 Notes
7 The Bangladesh Observer, on December 6, 1985, published an interview with the
Pakistan President, Ziaul Haq, who eloquently spoke about the common heritage,
culture, and necessities of regional cooperation in South Asia. He also mentioned the
utility of a regional identity in South Asia and Pakistan’s sincere desire to make
SAARC a success. Similarly, all the leading newspapers in South Asia carried head-
line news and editorials quoting statements from their respective leaders about the
positive aspects of regional cooperation in South Asia and the readiness of their coun-
tries to make this endeavor fruitful.
8 See, SAARC (1988) published by Lok Sabha Secretariat, New Delhi, p. 53.
9 The MOU on the Establishment of the Secretariat was singed on November 17, 1986, at
Bangalore, India, by the foreign ministers of the seven member countries of SAARC.
The Memorandum contains 16 articles, which spell out various aspects of the Secretariat.
My discussion about the features of the Secretariat is based on these articles.
10 The eight secretary generals of SAARC are Abul Ahsan from Bangladesh (January
16, 1987–October 15, 1989); Kant Kishore Bhargava from India (October 17,
1989–December 31, 1991); Ibrahim Hussain Zaki from the Maldives (January 1,
1992–December 31, 1993); Yadav Kant Silwal from Nepal (January 1, 1994–Decem-
ber 31, 1995); Naeem Ul Hasan from Pakistan (January 1, 1996–December 31, 1998);
Nihar Rodrigo from Sri Lanka (January 1, 1999–2002); Q.A.M.A. Rahim from
Bangladesh (January 11, 2002–February 28, 2005); Chenkyab Dorji from Bhutan
(March 1, 2005–2008).
11 Some of the important achievements of SAARC during the first decade are as
follows. In 1987, a permanent SAARC Secretariat was established in Kathmandu.
The SAARC Audio-Visual Exchange Program (SAVE) became operational in
November 1987. The same year, a SAARC Food Security Reserve of 2,415,680 tons
of wheat and rice was established for use by member states in times of natural calami-
ties. The decision to operationalize SAPTA is by far the most important achievement
of the Delhi summit in 1995.
12 Colombo accused India for wrecking the Summit. See particularly the editorials of
Daily Observer and Daily News, November 8–9, 1991. Front page articles in Pakistan
Times, November 14, 1991, also supported Colombo accusation about India’s role in
wrecking the Summit. However, editorials in prominent newspapers in India – The
Times of India (November 12, 1991), The Statesman (November 12, 1991), and The
Hindu (November 13, 1991) – supported India’s decision. For the defense of India’s
position, see the article “SAARC: A ‘Summit Fiasco,’ ” in Mainstream December,
1991.
13 For a detailed evaluation of SAPTA, see Chapter 6.
14 For a detailed evaluation of SAARC Secretariat and Secretary General, see Ahsan
(1992, 2004).
15 For detailed evaluation of the 12th SAARC Summit and its contribution to peace and
security in South Asia, see Mohsin (2005: 36–46).
16 By 2006, 13 summit meetings of the Heads of State or Government have been held
respectively in Dhaka (December 7–8, 1985), Bangalore (November 16–17, 1986),
Kathmandu (November 2–4, 1987), Islamabad (December 29–31, 1988), Male
(November 21–23, 1990), Colombo (December 21, 1991), Dhaka (April 10–11,
1993), New Delhi (May 2–4, 1995), Male (May 12–14, 1997), Colombo (July 29–31,
1998), Kathmandu (January 4–6, 2002), Islamabad (January 2–4, 2004), and Dhaka
(November 12–13, 2005). Going by the SAARC Charter mandate, South Asian
leaders should have held 21 summits by 2006 instead of 13 summits.

5 The challenge of regionalism in South Asia

1 See Mattli (1999: 59–67).
2 The two-nation theory was formally enunciated by Mohammad Ali Jinnah, the leader
 Notes 221
of the All-India Muslim League Party at the Party’s annual session in Lahore in
March 1940. According to this theory, Indian Muslims were a separate nation in
terms of their distinctive religious and sociocultural beliefs and practices. Hence, the
Muslim-majority provinces in the northwest and the northeast of India should be
grouped to constitute an independent state for the Muslims. The two-nation theory
became the basis of partition of the subcontinent into two independent countries –
India and Pakistan – in August 1947. For an excellent discussion of South Asia’s
history, the partition of India and the creation of Pakistan, see Bose and Jalal (1998:
Chapters 16–17).
3 Muni and Muni (1984: 29–31).
4 According to Foreign Policy Magazine’s 2006 rankings of failed states, Pakistan is
ranked number 9 among 148 countries surveyed. It is followed by Afghanistan (10),
Myanmar (18), Bangladesh (19), Nepal (20), and Sri Lanka (25). Foreign Policy,
May–June 2006.
5 See Prime Minister Manmohan Singh’s speech at the Ministry of External Affairs
(MEA) in Delhi on May 5, 2006, as published in India Today, June 5, 2006. Italicized
emphasis is mine.
6 Johnson and Merchant (2006).
7 Sri Lanka’s ruling party (People’s Alliance Party) controlled only 46 percent of the
total seats in the Lower House of the Central Legislature and has secured 48 percent
of the total votes polled in the election of 1994. Although Mrs Chandrika
Kumaratunga of People’s Alliance Party was reelected as the President of Sri Lanka
for the second six-year term in the election on December 21, 1999, her victory margin
was sharply lower than in 1994. She received 51.12 percent of total vote, a decline of
11 percentage points from the November 1994 Presidential Election. This decline
further contributed to her weakness to pursue any bold domestic or regional policy
initiatives. See Mydans (1999).
8 Some features of “quasi-democracy” as discussed in this article are identified by
Myron Weiner.” See Weiner (1986).
9 For Bangladesh election in 1991, see A Report on the Elections to the Fifth National
Parliament, February 27, 1991 (Dhaka: BAMNA, 1991), pp. 62–63; for 1996 elec-
tion, see The Bangladesh Times, June 23, 1996.
10 Since the late 1980s, no single political party in India has received absolute majority in
the Lok Sabha (lower house of the Parliament). As a result, only coalition governments
have been possible at the center. See David Gardner, “Indian Parliament in Disarray
over Hindu Nationalists,” Financial Times, February 25, 2000. According to the Elec-
tion Commission of India, there are over 550 registered political parties in India repre-
senting different shades of ideologies, regions, caste, color, and socioeconomic factors.
Different preferences of these political parties have contributed significantly to the
weakness of central government in India since the late 1980s. See V.J. Thomas, “India
Has Largest Number of Parties,” Times of India, July 26, 1999. For an insightful discus-
sion on several aspects of government weakness in India, see Kohli (1990).
11 Policy of Nuclear ambiguity refers to a country’s official assertion that it is not pro-
ducing nuclear weapons despite its capability of acquiring a nuclear explosive device.
The central objective of this policy is to send a signal to another nuclear capable state
that the country has a deterrent that is less threatening than an explicit weapons capa-
bility would be but that is serious enough to induce caution in any planning of unilat-
eral attack. See Subrahmanyam (1984b: 132–133).
12 On India’s capability to produce nuclear weapons, see U.S. Department of State,
Director of Intelligence and Research, “Research Memorandum, INR-16,” U.S.
Department of State, Washington, DC, May 14, 1964. For a discussion on Bhabha’s
request to make a nuclear bomb, see Kapur (1976: 221).
13 For a detailed official account of the US decision to send the Enterprise into Bay of
Bengal and its consequences, see Schwartz and Derber (1990: 103–106).
222 Notes
14 See Ramanna (1991: 88–89). According to one estimate, the cost of India’s Bomb
was US$370,000. See Nature, 250, No. 5461 (July 5, 1974), p. 8.
15 In an interview with widely respected Indian journalist, Kuldip Nayar, on January 28,
1987, Dr A.Q. Khan reportedly asserted that Pakistan had acquired the capability to
build nuclear bombs. See Ottoway (1987).
16 On China’s sale of M-11 and atom parts to Pakistan, see Weiner (1996).
17 See Proceedings of the 2000 Carnegie International Non-Proliferation Conference,
March 16–17, 2000, Washington, DC: Carnegie Endowment for International Peace.
18 For detailed explanation of “stability/instability paradox” in South Asia, see Ganguly
(2001: 126–129). For an earlier discussion of this paradox in the US–Soviet nuclear
relationship, see Snyder (1965: 184–201).

6 Domestic politics and regional economic cooperation in South Asia

1 Quoted in Chase (2005: 23).
2 For detailed discussion and policy recommendations on SAFTA, see Newfarmer
(2004).
3 For insightful discussion, see Panagariya (1999: 353–377); Pama, M. “Free Trade
Regime in South Asia,” The Economic Times, July 30, 1998.
4 For various estimates of Indo-Pakistan trade, see Newfarmer (2004).
5 SAPTA was launched at the Dhaka Summit in April 1993. After two years of negoti-
ation, SAPTA came into effect on December 7, 1995, with the ratification of the last
SAARC member Pakistan in October 1995. At the eighth SAARC summit in New
Delhi (1996), the South Asian Heads of Governments took a decision to create
SAFTA by 2005.
6 For a discussion, see Rizvi (1993: 159–162).
7 Initiated by Mauritius in 1995, IORARC was formally launched in March 1997 with
its first Ministerial Meeting in Mauritius from March 5 through 7, 1997. The 14 initial
members of this new regional grouping are India, Australia, Mauritius, Singapore,
Indonesia, Malaysia, South Africa, Oman, Madagascar, Mozambique, Sri Lanka,
Tanzania, Yemen, and Kenya. The organization’s secretariat is located in Mauritius.
8 ECO was formed in February 1992. Its members are Pakistan, Iran, Turkey, and the
newly independent Central Asian republics – Azerbaijan, Kazakhstan, Turkmenistan,
Uzbekistan, Tajikistan, and Kirghizstan. The primary objective of this organization is
to facilitate trade and other economic cooperation among member countries.
9 OIC has 57 members, most of which are Islamic countries from Africa, Middle East,
Central Asia, South Asia, and Southeast Asia. Although India has shown interest to
become a member of OIC on the basis of its substantial Muslim population, it only enjoys
an observer status in the organization because of Pakistan’s opposition to its membership.
India’s request for OIC membership is supported by Egypt and Saudi Arabia.
10 The then Indian Prime Minister I.K. Gujral took active initiatives to persuade SAARC
leaders to agree to advance the date of SAFTA from 2005 to 2001. See Bagchi, I.
‘SAARC Wants Economic Union, a la EU’, The Economic Times, July 25, 1998;
Najeeb, M. “Towards SAFTA: Import Tariff on 1200 Items to Go,” The Economic
Times, May 16, 1998.
11 To insure effective implementation of SAFTA agreement, the Islamabad Summit
decided to establish the SAFTA Ministerial Council as the highest decision-making
authority and a Committee of Experts (COE) responsible for monitoring implementa-
tion of SAFTA programs. The Committee of Experts is required to update the Minis-
terial Council every six months on the progress of the agreement.
12 Set up in 1997, BIMSTEC, named after its founding members, was known as
Bangladesh, India, Myanmar, Sri Lanka, and Thailand Economic Cooperation. With
the entry of Nepal and Bhutan, its name was changed to Bay of Bengal Initiative for
Multi Sectoral Technical and Economic Cooperation. BIMSTEC focuses on enhanc-
 Notes 223
ing cooperation among its member countries in crucial areas like transportation links,
trade, investment, tourism, fisheries, and agriculture. BIMSTEC includes five of the
seven member countries of SAFTA with the key exclusion of Pakistan.
13 India’s policy of positive economic unilateralism has its origin in what is called as
Gujral Doctrine, named after India’s former Prime Minister, I.K. Gujral. This strategy
essentially requires India to pursue favorable economic policies toward her small
neighbors in terms of market access and tariff reductions without expecting recipro-
city from them. India’s FTAs with her small neighbors are based on this principle.
14 In July 2006, the SCCI conducted a survey on SAFTA to gather inputs from business
stakeholders – business organizations, industrialists, traders, and service providers.
About 2,000 questionnaires were sent out to chosen business stakeholders to obtain
their feedback on SAFTA. Only 20 percent response was received. This shows a lack
of interest and enthusiasm in SAFTA activities. See Survey Report on SAFTA (2006).
15 One anomaly related to the negative list is that even items not produced in a SAARC
country is put in the negative lists. For example, automobiles have been put in the
negative lists by SAARC members other than India. Auto manufacturers from India
strongly argue that items not being produced and imported significantly in a member
country should not be placed in the negative list. So far, no decision on this has been
made.
16 For an insightful discussion of why different coalitions pursue different regional and
foreign policies, see Solingen (1998: Chapters 3 and 6).
17 For a discussion on why weak liberalizing coalitions prefer scapegoating strategy, see
Solingen (1997: 68–100).
18 For a discussion on the authoritarian regimes’ preference for extreme and violent
solutions of their bilateral problems with democracies, see Solingen (1996: 81–86);
Snyder (1993: 104–140); Mesquita and Lalman (1992).
19 See “Who Really Runs Pakistan?” The Economist, June 26, 1999; Perlez (1999: A.1);
Dugger (1999: A9); Weisman (1999: Section IV, 8); Kumar, D. “Secret Tapes Bare
the Strategy of a State within a State,” Times of India, June 12, 1999.
20 For detailed discussion, see Bearak (1999).
21 For a discussion on spoke–spoke cooperation initiatives at regional level, see Haggard
(1997: 41–42).

7 Domestic preferences for regional cooperation: cross-national

comparisons
1 For a detailed discussion of the utilitarian and affective dimensions of support for
European Union, see Lindberg and Scheingold (1970); Hewstone (1986: 129–135);
Gabel (1998: 16–35).
2 The study method consists of face-to-face interviews of approximately 45 minutes’
duration with individual respondents in five South Asian countries. The target
sample was 820 with 780 responses. All the respondents have college and more than
college degrees and their socioeconomic status is much higher than general popu-
lation. About 20 percent respondents were women. About 75 percent of respondents
were in the age bracket of 35–55, while about 25 percent were in the age bracket of
56–70. Two types of response percentages are given in this study: percentages are
given on the basis of total number of responses in a category and percentages are
also calculated on the basis of total number of responses from a particular occupa-
tional group in a given category. Only those statistically significant findings are
reported in the discussion.
3 Equity theory, as developed in social psychology and economics, is broadly con-
cerned with how people judge what is just, fair, deserved, or equitable and how these
perceptions influence behavior. Although equity theory has been applied to various
issues, the first systematic application of the theory to analyze perceptions of the
224 Notes
European Community was made by Hewstone (1986). In this study, by asking separ-
ate questions about which member states are likely to contribute and benefit most or
least, the level of perceived inequity of the member states of SAARC has been ana-
lyzed. For further discussion and literature review on equity theory, see Hewstone
(1986: 129–135).
4 This percentage of response is based on the responses of Indian respondents only.
5 These responses are estimated from the data set developed by the author for each indi-
vidual SAARC country.
6 These responses are from author’s data set.
7 Estimated from author’s data set.
8 Some respondents expressed disappointment over few concrete achievements of
SAARC, including the much touted two regional conventions on terrorism (1987) and
narcotic drugs (1990). The low appraisal of the SAARC Food Security Reserve by the
respondents from smaller South Asian countries is due to their frustration in not getting
adequate and timely support from the reserve during times of natural disasters such as
drought, cyclone, and flood. A few respondents also mentioned the lack of resources to
carry out SAARC-related projects and expressed their disappointment with the fre-
quent cancellation of SAARC annual summits.
9 Estimated from author’s data set.

8 Conclusion
1 Interview with Rajni Kothari at New Delhi, June 13, 1992; 2002.
2 Our analysis supports a conclusion similar to what Karl Deutsch et al. (1967) con-
cluded about European Union four decades ago – that is “Europe remains a Europe of
nation states.”
3 For some characteristic samples of K. Subrahmanyam’s earlier writings on India’s
security dynamics, see Subrahmanyam (1981, 1984a).
4 Air Commodore Jasjit Singh, noted for his study of airpower, expressed this view
during my interview with him in New Delhi.
5 A number of journalists and civil servants from India and Sri Lanka have particularly
mentioned the OIC and the ECO examples to describe Pakistan’s shift of interests
from SAARC. These elites argue that Islamabad is more likely to align its foreign
policy and make trading arrangements with the Central Asian republics and Islamic
belt than with SAARC countries. Most Pakistani respondents, however, disagree with
such views.
6 Those familiar with game theory literature will agree that many episodes in Indo-
Pakistan relations can be explained in terms of the Prisoner’s Dilemma. See also
Jervis (1976, 1988).
7 For a detailed discussion on how the leader’s perception and misperception influence
the decision-making process, see Jervis (1976); Axelrod and Keohane (1985:
226–254).
8 For a discussion, see Rizvi (1993: 159–162).
9 For the linkage between the resolution of Kashmir dispute and growth of trade in
South Asia, see Johnson (2005).
10 For a detailed discussion on pragmatic antidependency and other strategies, see Haas
(1990: 225–226).
11 For a useful discussion on this theme of citizen diplomacy, see Warner and Schuman
(1987).
12 In Israel, one of the most successful programs for bridging the gap between Jewish
and Arab children is a soccer camp in which Jewish and Arab star players (each
admired in both communities) participate together as coaches (Goldstein 1994: 420).
The historic process of Sino-American rapprochement of 1971 is said to have begun
after the US ping-pong team’s first official visit to China.
 Notes 225
13 For a useful discussion on how knowledge can transform the decision-makers’ inter-
est and improve the prospects for regional and international cooperation, see Stein
(1983: 49–53).
14 For a discussion on engines of regionalism in Northeast Asia, see Rozman (2004:
376–377).
Bibliography

Acharya, A. (1998) “Collective Identity and Conflict Management in Southeast Asia,” in

E. Adler and M. Barnett (eds) Security Communities, New York: Cambridge Univer-
sity Press.
Adams, B. (2005) “Nepal at the Precipice,” Foreign Affairs, 84: 121–131.
Aggarwal, V. and Morrison, C. (eds) (1998) Asia-Pacific Crossroads: Regime Creation
and the Future of APEC, New York: St. Martin’s Press.
Ahamad, E. (1985) SAARC: Seeds of Harmony, Dhaka: University Press Ltd.
Ahmad, S. (1999) “Pakistan’s Nuclear Weapons Program: Turning Points and Nuclear
Choices,” International Security, 23 (Spring), No. 4: 178–204.
Ahmed, A.S. (1997) Jinnah, Pakistan and Islamic Identity, New York: Oxford University
Press.
Ahmed, K. (2004) “South Asia’s Unresolved Disputes,” South Asian Journal, January: 1–15.
Ahsan, A. (1992) SAARC: A Perspective, Dhaka: University Press Limited.
—— (2004) “SAARC Secretariat: A Critique,” South Asian Journal, 6: 1–8.
Allison, L. (ed.) (1993) The Changing Politics of Sport, Manchester, UK: Manchester
University Press.
Antolik, M. (1990) ASEAN and the Diplomacy of Accommodation, New York: M.E.
Sharpe Inc.
Anwar, D.F. (1994) Indonesia in ASEAN: Foreign Policy and Regionalism, New York:
St. Martin’s Press.
Axelrod, R. (1984) The Evolution of Cooperation, New York: Basic Books.
Axelrod, R. and Keohane, R. (1985) “Achieving Cooperation under Anarchy: Strategies
and Institutions,” World Politics, 38 (October): 226–254.
Ayoob, M. (1985) “The Primacy of the Political: SARC in Comparative Perspective,” in
M. Abdul Hafiz and Iftekharuzzaman (eds) South Asian Regional Cooperation: A
Socio-Economic Approach to Peace and Stability, Dhaka: Bangladesh Institute of
International and Strategic Studies.
Bajpai, K.P. (1990) “The Origins of Association in South Asia: SAARC, 1979–1989,”
unpublished thesis, University of Illinois at Urbana-Champaign.
Balassa, B. (1961) The Theory of Economic Integration, Homewood: Richard D. Irwin.
Bandara, J.S. and Yu, W. (2003) “How Desirable Is the South Asian Free Trade Area? A
Quantitative Economic Assessment,” World Economy, 26: 1293–1323.
Banerjee, D. (ed.) (1998) Comprehensive and Cooperative Security in South Asia, New
Delhi: Institute of Peace and Conflict Studies.
Baral, L.R. (1986) “Nepal’s Security Policy and South Asian Regionalism,” Asian
Survey, 26: 1211–1227.
 Bibliography 227
Basu, T. (1998) “SAARC Summit: Shadowboxing on the Sidelines,” India Abroad, p. 4.
Baxter, C. (1991) Government and Politics in South Asia, Boulder, CO: Westview.
Bearak, B. (1999) “Democracy in Pakistan: Can a General be Trusted?” The New York
Times, November 21: 12.
Bhagwati, J. (1992) “Regionalism versus Multilateralism,” The World Economy, 15 (Sep-
tember), No. 5: 535–555.
Bhutto, Z.A. (1969) The Myth of Independence, London: Oxford University Press.
Bhuyan, A.R. (1988) “Regional Cooperation and Trade Expansion in South Asia,” in
Towards Regional Cooperation in South Asia, Manila: Asian Development Bank.
Blomstrom, M. and Kokko, A. (1997) “Regional Integration and Foreign Direct Invest-
ment: A Conceptual Framework and Three Cases,” Policy Research Working Paper
1750, World Bank, International Trade Division, Washington, DC.
Bose, S. and Jalal, A. (1998) Modern South Asia: History, Culture, Political Economy,
London: Routledge, Chapters 16–17.
Bukhari, F. (1994) “Islamabad Prepares to Tighten Belt,” South China Morning Post,
June 11.
Bull, H. (1966) “The Grotian Conception of International Society,” in Herbert Butterfield
and W. Matin (eds) Diplomatic Investigations: Essays in the Theory of International
Politics, London: Allen and Unwin.
Bulmer, S. (1983) “Domestic Politics and European Community Policy-making,” Journal
of Common Market Studies, 21: 349–363.
Busch, M.L. and Milner, H.V. (1994) “The Future of International Trading System: Inter-
national Firms, Regionalism, and Domestic Politics,” in R. Stubbs and G. Underhill
(eds) Political Economy and Changing Global Order, New York: St. Martin’s Press.
Buzan, B. (1983) People, States, and Fear: The National Security Problem in Inter-
national Relations, Chapel Hill: The University of North Carolina Press.
—— (1991) “New Patterns of Global Security in the Twenty-first Century,” International
Affairs, 67: 431–451.
Buzan, B. and Rizvi, G. (1986) South Asian Insecurity and the Great Powers,
Houndsmill and London: Macmillan Press Ltd, Chapters 3–4.
Caporaso, J. (1998) “Regional Integration Theory: Understanding our Past and Anticipat-
ing our Future,” in W. Sandholtz and A. Stone (eds) European Integration and Supra-
national Governance, New York: Oxford University Press.
Carranza, M.E. (1998) “Dangerous Optimism: Non-weaponized Deterrence and Regional
Peace in South Asia,” International Politics, 35: 107–134.
Casella, A. (1996) “Large Countries, Small Countries and the Enlargement of Trade
Blocs,” European Economic Review, 40: 389–415.
Chadda, M. (1993) “From an Empire State to Nation State: The Impact of Ethno-
Religious Conflicts on India’s Foreign Policy,” in H. Mallick (ed.) Dilemmas of
National Security and Cooperation in India and Pakistan, New York: St. Martin’s
Press, Inc.
Chadwick, R.W. and Deutsch, K. (1973) “International Trade and Economic Integration:
Further Developments in Trade Matrix Analysis,” Comparative Political Studies 6
(April), No. 1: 84–109.
Chase, K.A. (2003) “Economic Interests and Regional Trading Arrangements: The Case
of NAFTA,” International Organization, 57: 137–174.
—— (2005). Trading Blocs: States, Firms, and Regions in the World Economy, Ann
Arbor: The University of Michigan Press.
Chopra, P. (ed.) (1986) Future of South Asia, Delhi: Macmillan India Ltd.
228 Bibliography
Clark, C. (1988) “Peace in Parts: Integration and Conflict in Regional Organization,”
American Political Science Review, 82 (December), No. 4: 1424–1425.
Cohen, S. (2001) India: Emerging Power, Washington, DC: Brookings Institution Press.
—— (2004) The Idea of Pakistan, Washington, DC: Brookings Institution Press.
Cooper, R. (1986) Economic Policy in Interdependent World, Cambridge: MIT Press.
Corden, W.M. (1972) “Economies of Scale and Customs Union Theory,” Journal of
Political Economy, 80: 465–475.
Cortright, D. and Mattoo, A. (1996) “Elite Public Opinion and Nuclear Weapons Policy
in India,” Asian Survey, 36: 545–560.
Crawford, B. (1991) “Toward a Theory of Progress in International Relations,” in E.
Adler and B. Crawford (eds) Progress in Postwar International Relations, New York:
Columbia University Press.
Crone, D. (1988) “State, Social Elites, and Government Capacity in Southeast Asia,”
World Politics, 22, No. 2: 252–268.
—— (1993) “Does Hegemony Matter? The Reorganization of the Pacific Political
Economy,” World Politics, 45, No. 4: 167–183.
Dahl, R. (1984) Modern Political Analysis, Englewood Cliffs, NJ: Prentice Hall.
Dalton, R.J. and Duval, R. (1986) “The Political Environment and Foreign Policy Opin-
ions: British Attitudes toward European Integration, 1972–1979,” British Journal of
Political Science 16 (January): 113–134.
Dash, K.C. (2001) “The Challenge of Regionalism in South Asia,” International Politics,
38: 201–228.
—— (1997) “Domestic Support, Weak Governments, and Regional Cooperation: A Case
Study of South Asia,” Contemporary South Asia, 6: 57–77.
—— (1996) “The Political Economy of Regional Cooperation in South Asia,” Pacific
Affairs, 69: 185–209.
Datta Ray, S.K. (1992) “India and its Neighbors,” paper presented at the 9th Annual
Spring Symposium of the Center for South Asian Studies, University of Hawaii at
Manoa, March.
David, S.R. (1991a) “Explaining Third World Alignment,” World Politics, 43 (January):
233–256.
—— (1991b) Choosing Sides: Alignment and Realignment in the Third Word, Baltimore,
MD: The John Hopkins University Press.
De Silva, K.M. (1981) A History of Sri Lanka, Delhi: Oxford University Press.
De Silva, K.M. and May, R.J. (eds) (1991) Internationalization of Ethnic Conflict,
London: Pinter Publishers.
DeRosa, D.A. (1995) “Regional Trading Arrangements among Developing Countries,”
Research Report 103, International Food Policy Research Institute.
Deutsch, K.W. (1953) Nationalism and Social Communication: An Inquiry into the
Foundations of Nationality, New York: Wiley.
—— (1963) The Nerves of Government: Models of Political Communication and
Control, New York: Free Press.
—— (1978) The Analysis of International Relations, Englewood Cliffs, NJ: Prentice Hall.
Deutsch, K.W., et al. (1957) Political Community and the North Atlantic Area, Princeton,
NJ: Princeton University Press.
—— (1967) France, Germany and the Western Alliance: A Study of Elite Attitudes on
European Integration and World Politics, New York: Charles Scriber’s Sons.
Dewitt, D. (1994) “Common, Comprehensive, and Cooperative Security,” The Pacific
Review, 7: 1–19.
 Bibliography 229
Dhanjal, G.S. (1991) “SAARC: A Summit Fiasco,” Mainstream, December 14: 25–27.
Dougherty, J.E. and Pfaltzgraff, R.L. (1990) Contending Theories of International Rela-
tions: A Comprehensive Survey, New York: Harper and Row Publishers.
Dubey, M. (2005) “The Twelfth SAARC Summit: Deeper Integration in South Asia,”
South Asian Survey, 12: 21–34.
Duffy, C.A. and Feld, W.J. (1980) “Whither Regional Integration Theory?” in W.J. Feld
and G. Boyd (eds) Comparative Regional Systems, New York: Pergamon Press.
Dugger, C.W. (1999) “Militants Vow to Battle on in Kashmir, Defying Sharif,” The New
York Times, July 8: A9.
Easton, D. (1965) A System Analysis of Political Life, New York: John Wiley and Sons.
—— (1975) “A Re-Assessment of the Concept of Political Support,” British Journal of
Political Science, 5: 435–457.
Eaton, R.M. (2002) “Temple Desecration and Indo-Muslim States,” in D. Gilmartin and
B.B. Lawrence (eds) Beyond Turk and Hindu: Rethinking Religious Identities in
Islamic South Asia, New Delhi: India Research Press.
Eichenberg, R. (1989) Public Opinion and National Security in Western Europe, Ithaca,
NY: Cornell University Press.
Eichenberg, R.C. and Dalton, R.J (1993) “Europeans and the European Community: The
Dynamics of Public Support for European Integration,” International Organization, 47
(Autumn), No. 4: 507–534.
Erbing, L. (1980) “Front-Page News and Real-World Cues,” American Journal of Polit-
ical Science, 24: 16–49.
Etzioni, A. (1965) Political Unification, New York: Holt.
—— (1991) “A Paradigm for the Study of Political Unification,” in A. Etzioni (ed.) A
Responsive Society: Collected Essays on Guiding Deliberate Social Change, San Fran-
cisco, CA: Jossey-Bass Publishers.
Evangelista, M. (1989) “Issue-area and Foreign Policy Revisited,” International Organi-
zation, 43: 147–171.
Evans, P., Rueschemeyer, D. and Skocpol, T. (eds) (1985) Bringing the State Back In,
Cambridge: Cambridge University Press.
Evans, P., Jacobson, H. and Putnam, R. (eds) (1993) Double-Edged Diplomacy: Inter-
national Bargaining and Domestic Politics, Berkeley: University of California Press.
Feld, W.J. (1981) West Germany and the European Community: Changing Interests and
Competing Policy Objectives, New York: Praeger.
Foroutan, F. (1993) “Regional Integration in Sub-Saharan Africa: Past Experience and
Future Prospects,” in J. de Melo and A. Panagariya (eds) New Dimensions in Regional
Integration, London: Center for Economic Policy Research.
Frankel, J. (1988) “Obstacles to International Macroeconomic Policy Coordination,”
Journal of Public Policy, 8: 353–374.
Frankel, J.A. (1997) Regional Trading Blocs in the World Economic System, Washington,
DC: Institute for International Economics.
Free, L.A. (1950) Six Allies and a Neutral: A Study of the International Outlooks of Polit-
ical Leaders in the United States, Britain, France, West Germany, Italy, Japan and
India, Illinois: Free Press.
Frieden, J. (1991) “Invested Interests: The Politics of National Economic Policies in a
World of Global Finance,” International Organization, 45: 425–451.
Friedrich, C.J. (1969) Europe: An Emergent Nation? New York: Harper and Row.
Froot, K.A. and Yoffie, D.B. (1993) “Trading Blocs and Incentives to Protect: Implica-
tions for Japan and East Asia,” in J.A. Frankel and M. Kahler (eds) Regionalism and
230 Bibliography
Rivalry: Japan and the United States in Pacific Asia, Chicago: University of Chicago
Press.
Gabel, M.J. (1998) Interests and Integration: Market Liberalization, Public Opinion, and
European Union, Ann Arbor: The University of Michigan Press.
Galbraith, F.J. (1980) “ASEAN Today: Feeling the Heat,” Asian Affairs, 8: 17–34.
Ganguly, S. (1993) “The Prospects for SAARC,” in H. Malik (ed.) Dilemmas of National
Security and Cooperation in India and Pakistan, New York: St. Martin’s Press, Inc.
—— (2001) Conflict Unending: India-Pakistan Tension since 1947, New York: Colum-
bia University Press.
Garrett, G. and Weingast, B. (1993) “Ideas, Interests, and Institutions,” in J. Goldstein
and R. Keohane (eds) Ideas and Foreign Policy: Beliefs, Institutions, and Political
Change, Ithaca, NY: Cornell University Press.
Genco, S. (1980) “Integration Theory and System Change in Western Europe: The
Neglected Role of Systems Transformation Episodes,” in O.R. Holsti, R.M. Siverson
and A.L. George (eds) Change in the International System, Boulder, CO: Westview.
George, S. (1985) Politics and Policy in the European Community, Oxford: Clarendon
Press.
GEP Report (1998) “SAARC Vision Beyond the Year 2000,” SAARC Document, New
Delhi.
Ghosh, P.S. (1989) Cooperation and Conflict in South Asia, New Delhi: Manohar
Publications.
—— (1991) “India’s Relations with its Neighbors: The Ethnic Factor,” in K.M. de Silva
and R.J. May (eds) Internationalization of Ethnic Conflict, London: Pinter Publishers.
Gills, B. and Rocamora, J. (1992) “Low Intensity Democracy,” Third World Quarterly,
13, No. 3: 501–523.
Gilpin, R. (1987) The Political Economy of International Relations, Princeton, NJ:
Princeton University Press.
Goldstein, J.S. (1994) International Relations, New York: HarperCollins College Pub-
lishers.
Gonsalves, E. (1993) “Regional Cooperation in South Asia,” Mainstream (April 17), No.
23: 5–7.
Gourevitch, P. (1986) Politics in Hard Time, Ithaca, NY: Cornell University Press.
Gowa, J. (1994) Allies, Adversaries, and International Trade, Princeton, NJ: Princeton
University Press.
Grieco, J.M. (1990) Cooperation among Nations, Ithaca, NY: Cornell University Press.
Gunther, R. (1980) Public Policy in a No-Party State, Berkeley: University of California
Press.
Gupta, S. (1964) India and Regional Integration in Asia, Bombay: Asia Publishing House.
Haas, E.B. (1958) The Uniting of Europe, Stanford, CA: Stanford University Press.
—— (1964) Beyond the Nation State, Stanford, CA: Stanford University Press.
—— (1968) “Technocracy, Pluralism, and the New Europe,” in J. Nye (ed.) International
Regionalism, Boston, MA: Little, Brown.
—— (1970) “The Study of Regional Integration: Reflection on the Joy and Anguish of
Pretheorizing,” International Organization, 24: 607–646.
—— (1975) The Obsolescence of Regional Integration Theory, Research Series, No. 25,
Berkeley: Institute of International Studies, University of California.
—— (1990) When Knowledge Is Power: Three Models of Change in International
Organizations, Berkeley: University of California Press.
Haas, M. (1989a) The Asian Way to Peace, New York: Praeger.
 Bibliography 231
—— (1989b) The Pacific Way: Regional Cooperation in the South Pacific, New York:
Praeger.
—— (1992a) Polity and Society: Philosophical Underpinnings of Social Science Para-
digms, New York: Praeger.
—— (1992b) “A Paradigm of Community for the Post-Cold War World,” in Kathrine
and Majid Tehranian (eds) Restructuring for Peace: On the Threshold of the Twenty-
First Century, New Jersey: Hampton Press, Inc.
Haas, E.B. and Schmitter, P. (1964) “Economics and Differential Patterns of Political
Integration: Projections about Unity in Latin America,” International Organization,
18: 705–737.
Hafiz, M.A. and Iftekharuzzaman (eds) (1985) South Asian Regional Cooperation: A
Socio-Economic Approach to Peace and Stability, Dhaka: Bangladesh Institute of
International and Strategic Studies.
Hagerty, D.T. (1998) The Consequences of Nuclear Proliferation: Lessons from South
Asia, Cambridge: MIT Press.
Haggard, S. (1995) The Developing Nations and the Politics of Global Integration,
Washington, DC: Brookings Institution Press.
—— (1997) “The Political Economy of Regionalism in Asia and the Americas,” in E.D.
Mansfield and H. Milner (eds) The Political Economy of Regionalism, New York:
Columbia University Press, pp. 20–49.
Handley, D.H. (1981) “Public Opinion and European Integration: The Crisis of the
1970s,” European Journal of Political Research, 9: 335–364.
Hansen, R.D. (1969) “Regional Integration: Reflections on a Decade of Theoretical
Efforts,” World Politics, 21 (January): 242–271.
Hardgrave, R.L. (1970) India: Government and Politics in a Developing Nation, New
York: Harcourt Brace.
Hassan, M.K. (2001) “Is SAARC a Viable Economic Block? Evidence from Gravity
Model,” Journal of Asian Economies, 12: 263–290.
Herman, E.S. and Chomsky, N. (1988) Manufacturing Consent: The Political Economy
of the Mass Media, New York: Pantheon Books.
Hettne, B. (1989) “Global Crisis: European Options,” World Futures, 26: 65–100.
—— (1992) “Peace and Development in the Post-Cold War Era,” in Katharine and Majid
Tehranian (eds) Restructuring for World Peace: On the Threshold of the Twenty-First
Century, New Jersey: Hampton Press, Inc.
Hewitt, V.M. (1992) The International Politics of South Asia, Manchester and New York:
Manchester University Press.
Hewstone, M. (1986) Understanding Attitudes to the European Community: A Social-
Psychological Study in Four Member States, Cambridge: Cambridge University Press.
Hiden, J. and Farquharson, J. (eds) (1989) Explaining Hitler’s Germany, London:
Basford Academic and Educational Limited.
Hoffmann, S. (1963) “Discord in Community: The North Atlantic Area as a Partial Inter-
national System,” International Organization, 17 (Summer): 521–549.
—— (1966) “Obstinate or Obsolete: The Fate of the Nation State and the Case of
Europe,” Daedalus, 95: 862–915.
Huelshoff, M.G. (1994) “Domestic Politics and Dynamic Issue Linkage: A Reformula-
tion of Integration Theory,” International Studies Quarterly, 38, No. 2: 255–279.
Huq, M.S. (1986a) “Chairman’s Address,” in M.A. Hafiz and Iftekharuzzaman (eds)
South Asian Regional Cooperation: A Socio-Economic Approach to Peace and
Stability, Dhaka: Bangladesh Institute of International and Strategic Studies.
232 Bibliography
—— (1986b) “Problems and Promises,” in Pran Chopra et al. (eds) Future of South Asia,
Delhi: Macmillan India Ltd.
Hurrell, A. (1992) “Latin America and the New World Order: A Regional Bloc in the
Americas?” International Affairs, 68, No. 1: 52–52, 121–139.
—— (1995) “Regionalism in Theoretical Perspective,” in L. Fawcett and A. Hurrell (eds)
Regionalism in World Politics, New York: Oxford University Press, pp. 50–51.
Hussain, R.M. (1990) “SAARC: The Fourth Summit and Thereafter,” SAARC Perspect-
ive, 4 (November), No. 6: 1–6.
Hveem, H. (1989) “The Mini-NIEO Alternative,” World Futures, 26: 265–280.
Iida, K. (1993) “When and How Do Domestic Constraints Matter?” Journal of Conflict
Resolution, 37: 403–426.
IMF Direction of Trade Statistics Yearbook (1985–2007) Washington, DC: International
Monetary Fund.
Indorf, H.H. (1984) Impediments to Regionalism in Southeast Asia: Bilateral Constraints
among Asean Member States, Singapore: Institute of Southeast Asian Studies.
Inglehart, R. (1968) “Trends and Non-Trends in the Western Alliance: A Review,”
Journal of Conflict Resolution, 12: 120–134.
—— (1970) “Public Opinion and Regional Integration,” International Organization, 24:
764–795.
International Council on Social Welfare (ICSW) (2003) South Asian Association for
Regional Cooperation (SAARC), London: ICSW.
Jackson, R.H. (1990) Quasi-States: Sovereignty, International Relations, and the Third
World, New York: Cambridge University Press.
Jafrelot, C. (ed.) (2001) Pakistan: Nationalism Without a Nation, New Delhi: Manohar
Publishers.
Jalal, A. (1995). Democracy and Authoritarianism in South Asia: A Comparative and
Historical Perspective, Cambridge: Cambridge University Press, Chapters 3 and 6.
Jervis, R. (1976) Perception and Misperception in International Politics, Princeton, NJ:
Princeton University Press.
—— (1988) “Realism, Game Theory, and Cooperation,” World Politics, 40: 317–349.
Johnson, J. (2005) “Peace Hopes Bring Trade Dividend Relations with India: Resolution
of the Kashmir Dispute Would Benefit Both Countries,” Financial Times, June 1.
Johnson, J. and Merchant, K. (2006) “The Tigers Tamed? Why Sri Lank’s President
Believes Peace Is Within Reach,” Financial Times, May 25.
Kamaluddin, S. (1993) “Progress by Numbers: SAARC Summit’s Belated Step to Lower
Tariffs,” Far Eastern Economic Review, April 22: 17.
Kanesalingam, V. (1991a) “General Overview of SAARC’s Achievements,” Marga, 12,
No. 1: 1–16.
—— (1991b) Political Dimensions of South Asian Cooperation, New Delhi: Macmillan
India Ltd.
Kapur, A. (1976) India’s Nuclear Option: Atomic Diplomacy and Decision Making, New
York: Praeger Publishers.
Katzenstein, P. (ed.) (1978) Between Power and Plenty, Madison: University of Wiscon-
sin Press.
—— (1985) Small States in World Markets, Ithaca, NY: Cornell University Press.
Kechichian, J. (1985) “The Gulf Cooperation Council: The Search for Security,” Third
World Quarterly, 7: 853–881.
Kelegama, S. (2004) “SAFTA: A Critique,” South Asian Journal, 4: 1–8.
Kemal, A.R. (2004) “SAFTA and Economic Cooperation,” South Asian Journal, 6: 1–21.
 Bibliography 233
Keohane, R.O. (1984) After Hegemony: Cooperation and Discord in the World Political
Economy, Princeton, NJ: Princeton University Press.
Keohane, R.O. and Hoffmann, S. (eds) (1991) The New European Community: Decision-
making and Institutional Change, Boulder, CO: Westview Press.
Keohane, R.O. and Nye, J.S. (1977) Power and Interdependence: World Politics in
Transition, Boston, MA: Little, Brown.
Khan, Z.R. (1991) SAARC and the Super Powers, Dhaka: University Press Limited.
Khatri, S.K. (1992) “A Decade of South Asian Regionalism: Retrospect and Prospect,”
Contemporary South Asia, 1, No. 1: 5–23.
Khosa, R.S. (1999) “The Siachen Glacier Dispute: Imbroglio on the Roof of the World,”
Contemporary South Asia, 8: 182–199.
Knight, J. (1992) Institutions and Social Conflict, New York: Cambridge University
Press.
Kohli, A. (1990) Democracy and Discontent: India’s Growing Crisis of Governability,
New York: Cambridge University Press.
Kothari, R. (1989) Transformation and Survival: In Search of Humane World Order,
New York: New Horizons Press.
Krasner, S.D. (1978) Defending the National Interest, Princeton, NJ: Princeton Univer-
sity Press.
—— (ed.) (1983) International Regimes, Ithaca, NY: Cornell University Press.
—— (1984) “Approaches to the State: Alternative Conceptions and Historical Dynam-
ics,” Comparative Politics, 16: 223–224.
—— (1985) Structural Conflict: The Third World against Global Liberalism, Berkeley:
University of California Press.
—— (1991) “Global Communications and National Power: Life on the Pareto Frontier,”
World Politics, 43: 336–366.
Krugman, P. (1992) “Import Protection as Export Promotion: International Competition
in the Presence of Oligopoly and Economies of Scale,” in G.M. Grossman (ed.) Imper-
fect Competition and International Trade, Cambridge: MIT Press.
Lake, D.A. and Morgan, P.M. (eds) (1997) Regional Orders: Building Security in a New
World, Pennsylvania: The Pennsylvania State University Press.
Lamb, C. (1991) Waiting for Allah: Pakistan’s Struggle for Democracy, New Delhi:
Viking, Penguin.
Lawrence, R. (1996) Regionalism, Multilateralism, and Deeper Integration, Washington,
DC: Brookings Institution Press, p. 11.
Lijphart, A. (1981) “Karl Deutsch and the New Paradigm in International Relations,” in
R.L. Merritt and B.M. Russett (eds) From National Development to Global Commun-
ity: Essays in Honor of Karl W. Deutsch, London: George Allen and Unwin.
Lindberg, L.N. (1963) The Political Dynamics of the European Economic Integration,
Stanford, CA: Stanford University Press.
Lindberg, L.N. and Scheingold, S.A. (1970) Europe’s Would be Polity, Englewood
Cliffs, NJ: Prentice Hall.
Lindblom, C. (1977) Politics and Markets, New York: Basic.
Lipson, C. (1984) “International Cooperation in Economic and Security Affairs,” World
Politics, 37: 1–23.
Lyon, P. (1992) “South Asia and the Geostrategies of the 1990s,” Contemporary South
Asia, 1, No. 1: 25–39.
Malik, H. (ed.) (1993) Dilemmas of National Security and Cooperation in India and Pak-
istan, New York: St. Martin’s Press, Inc.
234 Bibliography
Malik, I. (1997) State and Civil Society in Pakistan, London: Macmillan Press.
Mannheim, K. (1972) “The Problem of Generations,” in P.G. Altbach and R.S. Laufer
(eds) The New Pilgrims: Youth Protest in Transition, New York: Mckay.
Mansfield, E. (1993) “Effects of International Politics on Regionalism in International
Trade,” in K. Anderson and R. Blackhurst (eds) Regional Integration and the Global
Trading System, New York: St. Martin’s Press.
Mansingh, S. (1984) India’s Search for Power: Indira Gandhi’s Foreign Policy
1966–1982, New Delhi: Sage.
March, J. and Olson, J. (1989) Rediscovering Institutions, New York: Free Press.
Martin, L. (1992) “Interests, Power, and Multilateralism,” International Organization,
46: 765–792.
Mattli, W. (1999) The Logic of Regional Integration: Europe and Beyond, Cambridge:
Cambridge University Press.
Mattoo, A. (ed.) (1999) India’s Nuclear Deterrent: Pokharan II and Beyond, New Delhi:
Har-Anand Publications.
Mayer, F. (1992) “Managing Domestic Differences in International Relations,” Inter-
national Organization, 46: 793–818.
Mendis, V.L.B. (1991) SAARC: Origins, Organization and Prospects, Monograph No. 3,
Perth: Indian Ocean Center for Peace Studies.
Merritt, R.L. and Puchala, D.J. (1968). Western European Perspectives on International
Affairs: Public Opinion Studies and Evaluation, New York: Praeger.
Merritt, R.L. and Russett, B.M. (eds) (1981) From National Development to Global
Community: Essays in Honor of Karl W. Deutsch, London: George Allen and Unwin.
Mesquita, B. and Lalman, D. (1992) War and Reason, New Haven, CT: Yale University
Press.
Midgal, J.S., Kohli, A. and Shue, V. (eds) (1994) State Power and Social Forces: Domina-
tion and Transformation in the Third World, Cambridge: Cambridge University Press.
Miliband, R. (1969) The State in Capitalist Society, New York: Basic Books.
Milner, H. (1988) Resisting Protectionism, Princeton, NJ: Princeton University Press.
—— (1992) “International Theories of Cooperation among Nations: Strengths and Weak-
nesses,” World Politics, 44 (April): 466–496.
—— (1997) Interests, Institutions and Information: Domestic Policy and International
Relations, Princeton, NJ: Princeton University Press.
Milward, A. (1984) The Reconstruction of Western Europe, 1945–51, Berkeley: Univer-
sity of California Press.
Mitchell, T. (1991) “The Limits of the State: Beyond Statist Approaches and Their
Critics,” American Political Science Review, 85: 77–96.
Mitrany, D. (1966) A Working Peace System, Chicago, IL: Quadrangle.
Modelski, G. (1964) “Kautilya: Foreign Policy and the International System in the
Ancient Hindu World,” American Political Science Review, 53: 549–560.
Mohanan, B. (1992) The Politics of Regionalism in South Asia, New Delhi: Atlantic Pub-
lishers.
Mohsin, M. (2005) “The Twelfth SAARC Summit: Quest for Durable South Asian Coop-
eration,” South Asian Survey, 12: 35–46.
Moravcsik, A. (1991) “Negotiating the Single European Act,” in R.O. Keohane and S.
Hoffmann (eds) The New European Community: Decision-making and Institutional
Change, Boulder, CO: Westview Press.
—— (1993) “Preferences and Power in the European Community: A Liberal Intergov-
ernmental Approach,” Journal of Common Market Studies, 31: 473–491.
 Bibliography 235
Mortimer, R. (1980) The Third World Coalition of International Politics, New York:
Praeger.
Mukherji, I.N. (1992) “Regional Trade, Investment, and Economic Cooperation Among
South Asian Countries,” paper presented in the International Conference on South Asia
as a Dynamic Partner: Prospects for the Future, May 25–27, New Delhi.
—— (1997) “Indo-Pakistan Trade: Problems and Prospects,” Himalayan and Central
Asian Studies, 1: 10–16.
—— (2004) “Towards a Free Trade Area in South Asia: Charting a Feasible Course for
Trade Liberalization with Reference to India’s Role,” RIS Discussion Paper 86/04, New
Delhi: Research and Information System for the Non-Aligned and Developing Countries.
Muni, S.D. (1985) “SAARC: Building Regions From Below,” Asian Survey, 25:
391–404.
—— (1987) “India and the SAARC,” The Journal, Souvenir Issue, December, Kath-
mandu: Nepal Council of World Affairs.
—— (1988a) “SAARC as an Approach to Mutual Confidence Building,” SAARC
Perspective, 2 (December), No. 4: 13–26.
—— (1988b) “Prospects for SAARC,” Mainstream, 26, No. 45: 7–13.
—— (1998) “India and Nepal: Towards the Next Century,” in L. Mansingh (ed.) Indian
Foreign Policy: Agenda for the 21st Century, New Delhi: Konarak.
Muni, S.D. and Muni, A. (1984) Regional Cooperation in South Asia, New Delhi:
National Publishing House.
Mydans, S. (1999) “As Sri Lankans Re-Elect the President, Ethnic War Rages On,” The
New York Times, December 22.
Mytelka, L.K. (1973) “The Salience of Gains in Third World Integrative Systems,”
World Politics, 25 (January): No. 2: 236–250.
Nakhleh, E.A. (1986) The Gulf Cooperation Council: Policies, Problems and Prospects,
New York: Praeger.
Naya, S., James, W.E. and Plummer, M. (1988) Pacific Economic Cooperation in the
Global Context, Honolulu, HI: East-West Center.
Newfarmer, R. (2004) “SAFTA: Promise and Pitfalls of Preferential Trade Arrange-
ment,” background paper for Global Economic Prospects 2005, Washington, DC:
World Bank, pp. 1–24.
Nolan, J. (ed.) (1994) Global Engagement: Cooperation and Security in the 21st Century,
Washington, DC: Brookings Institution Press.
Nordlinger, E. (1981) On the Autonomy of the Democratic State, Cambridge, MA:
Harvard University Press.
North, D. (1990) Institutions, Institutional Change, and Economic Performance, New
York: Cambridge University Press.
Nye, J.S. (ed.) (1968) International Regionalism, Boston, MA: Little, Brown.
Nye, J.S. (1971) Peace in Parts: Integration and Conflict in Regional Organization,
Boston, MA: Little, Brown.
—— (2005) Soft Power: The Means to Success in World Politics, New York: Public
Affairs.
Okolo, J.E. (1985) “Integrative and Cooperative Regionalism: The Economic Community
of West African States,” International Organization, 39 (Winter), No. 1: 121–153.
Ottoway, D.B. (1987) “U.S. Warns Pakistan on Testing Nuclear Device,” Washington
Post, February 25.
Oye, K.A. (ed.) (1986) Cooperation under Anarchy, Princeton, NJ: Princeton University
Press.
236 Bibliography
Page, S. (1996) “Intensity Measures for Regional Groups,” conference paper at European
Association of Development Research and Training Institutes (EADI) Ninth General
Conference, September 11–14, Vienna.
Palmer, N.D. (1991) The New Regionalism in Asia and the Pacific, Lexington, MA: D.C.
Heath Company.
Panagariya, A. (1999) “Trade Policy in South Asia: Recent Liberalization and Future
Agenda,” The World Economy, 22: 353–377.
Panchamukhi, V.R. (1988) “Trade and Economic Cooperation in South Asia,” Towards
Regional Cooperation in South Asia, Manila: Asian Development Bank.
Parker, G. and Peel, Q. (2003) “A Fractured Europe: Divisions Deepen between Big and
Small Countries, North and South, Elites and Their Electors,” Financial Times, Sep-
tember 17.
Pearson, S. and Ingram, W. (1980) “Economies of Scale, Domestic Divergences and
Potential Gains from Economic Integration in Ghana and the Ivory Coast,” Journal of
Political Economy, 88: 994–1008.
Pentland, C. (1973) International Theory and European Integration, London: Faber and
Faber.
Perlez, J. (1999) “US Is Expecting Kashmir Pullback by Pakistani Side,” The New York
Times, July 15: A.1.
Phadnis, U. (1989) Ethnicity and Nation-Building in South Asia, New Delhi: Sage
Publications India Pvt. Ltd.
Pigato, M., Farah, C., Itakura, K., Jun, K., Martin, W., Murrell, K. and Srinivasan, T.G.
(1997) South Asia’s Integration into the World Economy, Washington, DC: World
Bank.
Pomfret, R. (1997) The Economics of Regional Trading Arrangements, New York:
Oxford University Press.
Potter, W.C. (1980) “Issue-area and Foreign Policy Analysis,” International Organi-
zation, 34: 405–427.
Powlick, P.J. (1991) “The Attitudinal Bases for Responsiveness to Public Opinion among
Foreign Policy Officials,” Journal of Conflict Resolution, 35: 611–641.
Prasad, B. (ed.) (1989) Regional Cooperation in South Asia: Problems and Prospects,
New Delhi: Vikas Publishing House.
Pursell, G. and Sattar, Z. (2004) “South Asian Trade Policies,” Report, Washington, DC:
World Bank.
Putnam, R.D. (1988) “Diplomacy and Domestic Politics: The Logic of Two-Level
Games,” International Organization, 42 (Summer): 427–460.
—— (1993) Making Democracy Work: Civic Traditions in Modern Italy, Princeton, NJ:
Princeton University Press.
Ra’anan, G. (1983) International Policy Formation in the USSR, Hamden, CT: Archon.
Rais, R.B. (1987) “South Asian Regional Cooperation: Problems and Prospects,” in R.H.
Bruce (ed.) Perspective on International Relations in the Indian Ocean Region, Hong
Kong: Asian Research Service.
Raja Mohan, C. (2004) “Cooperative Security in South Asia,” South Asian Journal, 6: 1–12.
—— (2006) “India and the Balance of Power,” Foreign Affairs, 85: 17–25.
Ramanna, R. (1991) Years of Pilgrimage: An Autobiography, New Delhi: Viking.
Rangarajan, L.N. (1987) Kautilya, the Arthashastra, New Delhi: Penguin Books.
Rao, P.V. (1988) “Ethnic Conflict in Sri Lanka: India’s Role and Perceptions,” Asian
Survey, 28, No. 4: 19–37.
Rashid, A. (1996) “Battered Bhutto,” Far Eastern Economic Review, July 4: 18
 Bibliography 237
Ravenhill, J. (1979) “Regional Integration and Development in Africa: Lessons from the
East African Community,” Journal of Commonwealth and Comparative Politics, 17
(November): 227–247.
Regional Roundtable on Trade Liberalization in SAARC (2006) SAARC Chamber of
Commerce and Industry & Commonwealth Business Council, May 3–4.
Riaz, A. (2005) Unfolding State: The Transformation of Bangladesh, Connecticut: de
Sitter Publications.
Risse-Kappen, T. (1991) “Public Opinion, Domestic Structure, and Foreign Policy in
Liberal Democracies,” World Politics, 43: 479–512.
Rizvi, G. (1993) South Asia in a Changing International Order, New Delhi: Sage
Publications, pp. 159–162.
Robson, P. (1998) Economics of International Integration, London: Routledge.
Rockman, B.A. (1989) “Minding the State – or a State of Mind? Issues in the Compara-
tive Conceptualization of the State,” in J.A. Caporaso (ed.) The Elusive State: Inter-
national State and Comparative Perspectives, Newbury Park, CA: Sage Publications.
Rodrik, D. (1995) “What does the Political Economy Literature on Trade Policy (Not)
Tell Us that We Ought to Know?” in G. Grossman and K. Rogoff (eds) Handbook of
International Economics, Amsterdam: North Holland.
Rogowski, R. (1989) Commerce and Coalitions, Princeton, NJ: Princeton University Press.
Rose, L. (1971) Nepal: Strategy for Survival, Berkeley: University of California Press.
—— (1990) “India’s Foreign Relations: Reassessing Basic Policies,” in M.M. Bouton
(ed.) India Briefing, Boulder, CO:Westview Press.
Rosenau, J.N. (ed.) (1961) Public Opinion and Foreign Policy: An Operational Formula-
tion, New York: Free Press.
—— (1967) Domestic Sources of Foreign Policy, New York: Free Press.
Rostow, W.W. (1986) The United States and the Regional Organization of Asia and the
Pacific: 1965–1985, Austin: University of Texas Press.
—— (1990) “The Coming Age of Regionalism,” Encounter, LXXIV (June), No. 5: 3–7.
Rothschild, J. (1982) Ethno-Politics: A Conceptual Framework, New York: Columbia
University Press.
Rozman, G. (2004) Northeast Asia’s Stunted Regionalism: Bilateral Distrust in the
Shadow of Globalization, Cambridge: Cambridge University Press.
Rudolph, L.I. (1993) “The Media and Cultural Politics,” in H.A. Gould and S. Ganguly
(eds) Alliance Politics and Minority Governments in the Ninth and Tenth General
Elections, Boulder, CO: Westview Press.
Russett, B. (1990) Controlling the Sword: The Democratic Governance of National
Security, Cambridge, MA: Harvard University Press.
SAARC (1988) New Delhi: Lok Sabha Secretariat.
SAARC Study on Trade, Manufactures and Services (1991) Kathmandu: SAARC Secretariat.
SAARC Newsletter (1992) (January–March), No. 1, Kathmandu: SAARC Secretariat.
SAARC Summit Meeting: Regional Cooperation in South Asia Moving Forward (2004)
Bangkok: UNESCAP
SAARC: An Introduction (1992) Kathmandu: SAARC Secretariat.
SAARC: Moving Towards Core Areas of Co-operation (1991) A study report, prepared
by the Independent Group on South Asian Co-operation (IGSAC), September 1991,
Colombo: United Nations University, South Asian Perspectives Project.
Sachau, E.C. (ed.) (1991) Alberuni’s India, New Delhi: Low Price.
Saksena, K.P. (1989) “Institutional Framework,” in B. Prasad (ed.) Regional Cooperation
in South Asia: Problems and Prospects, New Delhi: Vikas Publishing House.
238 Bibliography
Salahuddin, S. (1985) “Problems and Prospects of SARC as an Organisation for Regional
Cooperation,” in M.A. Hafiz and Iftekharuzzaman (eds) South Asian Regional Cooper-
ation: A Socio-Economic Approach to Peace and Stability, Dhaka: Bangladesh Insti-
tute of International and Strategic Studies.
Sandholtz, W. and Zysman, J. (1989) “1992: Recasting the European Bargain,” World
Politics, 42: 1–30.
Sattar, A. (1995) “Reducing Nuclear Dangers in South Asia,” Regional Studies, 8: 14–27.
Scalapino, R.A., Sato, S. and Wanandi, J. (eds) (1996) Asian Political
Institutionalization, Berkeley: Institute of East Asian Studies, University of California.
Schiff, M. and Winters, L.A. (2003) Regional Integration and Development, Washington,
DC: World Bank.
Schmitter, P.C. (1970) “A Revised Theory of Regional Integration,” International
Organization, 24, No. 4: 836–868.
Schneider, G. and Cederman, L. (1994) “The Change of Tide in Political Cooperation: A
Limited Information Model of European Integration,” International Organization, 48:
636–638.
Schwartz, W.A. and Derber, C. (1990) The Nuclear Seduction, Berkeley: University of
California Press.
Schwartzberg, J. (ed.) (1992) A Historical Atlas of South Asia, New York: Oxford Uni-
versity Press
Sen Gupta, B. (1988) South Asian Perspectives: Seven Nations in Conflict and Coopera-
tion, Delhi: B.R. Publishing Corporation.
Shepherd, R.J. (1975) Public Opinion and European Integration, Lexington, MA: Lex-
ington Books.
Sherwani, L.A. (1990) Partition Schemes Leading to the Pakistan Resolution, Islamabad:
Quaid-i-Azam Academy.
Singer, M.R. (1964) The Emerging Elite: A Study of Political Leadership in Ceylon,
Cambridge: MIT Press.
Singh, J. (1985) Air Power in Modern Warfare, New Delhi: Lancer International.
—— (ed.) (1998) Nuclear India, New Delhi: Knowledge World.
Sisson, R. and Rose, L.E. (1990) War and Secession: Pakistan, India, and the Creation of
Bangladesh, Berkeley: University of California Press.
Slater, M. (1983) “Political Elites, Popular Indifference, and Community Building,” in L.
Tsoukalis (ed.) The European Community: Past, Present, and Future, Oxford: Basil
Blackwell.
Smith, A.D. (1993) “National Identity and the Idea of European Unity,” International
Affairs, 58: 55–76.
Snidal, D. (1985) “Coordination versus Prisoners’ Dilemma: Implications for Inter-
national Cooperation and Regimes,” American Political Science Review, 79: 923–942.
—— (1991) “Relative Gains and the Pattern of International Cooperation,” American
Political Science Review, 85 (September): 701–726.
Snyder, G. (1965) “The Balance of Power and the Balance of Terror,” in P. Seabury (ed.)
The Balance of Power, San Francisco, CA: Chandler.
Snyder, J. (1993a) “Averting Anarchy in the New Europe,” in S. Lynn-Jones (ed.) The
Cold War and After: Prospects for Peace, Cambridge: MIT Press.
—— (1993b) “East-West Bargaining over Germany: The Serach for Synergy in a Two-
Level Game,” in P. Evans, H. Jacobson and R. Putnam (eds) Double-Edged Diplo-
macy: International Bargaining and Domestic Politics, Berkeley: University of
California Press.
 Bibliography 239
Sobhan, R. (1989) “The Economic Background,” in B. Prasad (ed.) Regional Coopera-
tion in South Asia: Problems and Prospects, New Delhi: Vikas Publishing House.
—— (1991) “Political Dimesnsions of South Asian Cooperation: The Perspective for
Bangladesh,” in V. Kanesalingam (ed.) Political Dimensions of South Asian Coopera-
tion, Colombo: Marga Institute.
—— (2005) “The Twelfth SAARC Summit: Charting a Road Map for South Asian
Cooperation,” South Asian Survey, 12: 3–19.
Solingen, E. (1984) “The Domestic Sources of Regional Regimes: The Evolution of
Nuclear Ambiguity in the Middle East,” International Studies Quarterly, 38 (June):
305–338.
—— (1996) “Democracy, Economic Reform and Regional Cooperation,” Journal of
Theoretical Politics, 8, No. 1: 81–86.
—— (1997) “Economic Liberalization, Political Coalitions, and Emerging Regional
Orders,” in D.A. Lake and P. M. Morgan (eds) Regional Orders: Building Security in a
New World, Pennsylvania: The Pennsylvania State University Press, pp. 68–100.
—— (1998) Regional Orders at Century’s Dawn: Global and Domestic Influences on
Grand Strategy, Princeton, NJ: Princeton University Press.
South Asia Regional Integration, Bangladesh Country Note (2004) Promoting Regional
Integration in South Asia: A Private Sector Perspective, Washington, DC: World
Bank.
Spector, L.S. (1988) The Undeclared Bomb, Cambridge, MA: Ballinger.
Spier, H. (1950) “The Historical Development of Public Opinion,” American Journal of
Sociology, 55: 376–388.
Srinivasan, T.N. (1998) Developing Countries and the Multinational Trading System: From
GATT to the Uruguay Round and the Future, New Delhi: Oxford University Press.
Srinivasan, T.N. and Canonero, G. (1995) “Presidential Agreements in South Asia:
Theory, Empirics and Policy,” New Haven, CT: Yale Growth Center, Yale University.
Stein, A. (1983) “Coordination and Collaboration: Regimes in an Anarchic World,” in
Stephen Krasner (ed.) International Regimes, Ithaca, NY: Cornell University Press.
—— (1990) Why Nations Cooperate, Ithaca, NY: Cornell University Press.
Subrahmanyam, K. (1981) Nuclear Myths and Realities: India’s Dilemma, New Delhi:
ABC Publishing House.
—— (1983) “Dialogue with Pakistan,” Strategic Analysis, 6, No. 10.
—— (1984a) “Prospects of Regional Stability and Security in South Asia,” Defence
Journal, No. 7.
—— (1984b) “Pakistan’s Nuclear Capability,” in V.D. Chopra (ed.) Studies in Indo-
Pakistan Relations, New Delhi: Patriot Publishers, pp. 132–133.
—— (1993) “Capping, Managing, or Eliminating Nuclear Weapons?’ in K. Bajpai and
S.P. Cohen (eds) South Asia after the Cold War, Boulder, CO: Westview Press.
Survey Report on SAFTA (2006) SAARC Chambers of Commerce and Industry (SCCI).
Tanahashi, T.K. (1992) Asian Alternative for Regional Cooperation: A Quest of Asian
Strategy for Globalization, Thailand: Institute of Asian Studies, Chulalongkorn Uni-
versity.
Taras, R.C. (2006) “Rising Insurgency, Faltering Democratisation in Nepal,” Journal of
South Asian Development, 1: 51–76.
Tehranian, M. (1990) Technologies of Power: Information Machines and Democratic
Prospects, Norwood, NJ: Ablex Publishing Company.
—— (1991) “Communication and Theories of Social Change: A Communitarian
Perspective,” Asian Journal of Communication, 2, No. 1: 1–30.
240 Bibliography
Tellis, A. (2001) India’s Emerging Nuclear Power: Between Recessed Deterrent and
Ready Arsenal, Santa Monica, CA: Rand Corporation.
Thapar, R. (1966) A History of India 1, Harmondsworth: Penguin.
The Military Balance 1999–2000, 2004–2005 (1999) London: The International Institute
for Strategic Studies.
Thomas, R.G.C. (1986) India’s Security Policy, Princeton, NJ: Princeton University Press.
Thornton, T.P. (1991) “Regional Organizations in Conflict Management,” The Annals of
the American Academy of Political and Social Science, 518 (November): 132–142.
Tow, W.E. (1990) Subregional Security Cooperation in the Third World, Boulder, CO,
and London: Lynne Reinner Publishers Inc.
Trachtenberg, M. (1985) “The Influence of Nuclear Weapons in the Cuban Missile
Crisis,” International Security, 10, No. 1 (Summer): 129–146.
United Nations, Statistical Yearbook (1993–2006) New York: United Nations.
Viswam, S. (1990) “SAARC Moves Forward,” World Focus: Monthly Discussion
Journal, 10 (November–December), No. 11–12: 6–9.
Walt, S.M. (1987) The Origin of Alliances, Ithaca, NY: Cornell University Press.
Waltz, K.N. (1979) Theory of International Politics, Reading, MA: Addison-Wesley.
—— (1993) “The Emerging Structure of International Politics,” International Security,
18, No. 2: 44–79.
Warner, G. and Schuman, M. (1987) Citizen Diplomats: Pathfinders in Soviet-American
Relations and How You Can Join Them, New York: Continuum.
Webb, M. (1991) “International Economic Structures, Government Interests, and Inter-
national Coordination of Macroeconomic Adjustment Policies,” International Organi-
zation, 45: 309–342.
Weerakoon, D. and Thennakoon, J. (2006) “SAFTA: Myth of Free Trade,” Economic
and Political Weekly, September 16: 3920–3923.
Weerakoon, D. and Wijayasiri, J. (2003) “Implications to Member States of Progression
from SAPTA to SAFTA,” Institute of Policy Studies of Sri Lanka.
Weiner, M. (1986) “Institution Building in South Asia,” in R.A. Scalapino, S. Sato and J.
Wanandi (eds) Asian Political Institutionalization, Berkeley: Institute of East Asian
Studies, University of California.
Weiner, T. (1996) “Atom Arms Parts Sold to Pakistan by China, U.S. Says,” The New
York Times, February 8: A6.
Weisman, S.R. (1999) “Kashmir: A Story of Blowback in Paradise,” The New York
Times, July 17: A8.
Wilson, J.S. and Ostuki, T. (2004) South Asia Regional Integration: Trade Facilitation
and Regional Integration: Accelerating the Gains to Trade with Capacity Building,
Washington, DC:World Bank.
World Bank (2000) Trade Blocs, Policy Research Report, New York: Oxford University
Press.
—— (2005) Global Economic Prospects: Trade, Regionalism, and Development, Policy
Research Report, New York: Oxford University Press.
World Bank World Development Data: Country Data (2000–06) Washington, DC: World
Bank.
World Bank World Development Report (1991–2007) New York: Oxford University
Press.
Wriggins, W.H., Gause, G., Lyons, T.P. and Colbert, E. (1992) Dynamics of Regional
Politics: Four Systems on the Indian Ocean Rim, New York: Columbia University
Press.
Index
Figures are indicated by bold page numbers, tables by italics.
academia, support for regional cooperation
85
affective and utilitarian support 38–9,
171–2
Afghanistan, Soviet invasion of 86
Afro-Asian conference 81
Ahmad Khan, Saiyid 56
Ahmad, Nazir 135
Alberuni 54
Ali, Rahmat 56
amalgamated security communities 5
Andean Pact 14
Antolik, Michael 212
Arthashastra (Kautilya) 53
ASEAN Free Trade Area (AFTA) 14, 163
ASEAN Regional Forum (ARF) 204
Asian Economic Planners conference 81
Asia-Pacific Economic Cooperation
(APEC) 158
Asian Relations Conference (1947) 79–80
Asian Union (proposed) 80
Asian Way to cooperation 15
ASSOCHAM 147
Association of South East Asian Nations
(ASEAN) 14, 35, 85
Axelrod, Robert 145
Baguio Conference (1950) 80
balance of power and hegemony 111, 113,
114, 115, 116
Bandara, J.S. 148–9
Bandung conference 81
bandwagoning 117–18
Bangladesh 46, 47, 48; birth of 63;
economic liberalization policy 159;
government strength 128, 129, 131–2;
implications of emergence of 114;
initiative towards regional cooperation
82–6; president’s motivation for
cooperation 82–4; relations with India
66–9, 194; relations with Pakistan 68
Beg, Mirza Aslam 138
Bhabha, Homi J. 133
Bhagwati, J. 1
Bhutan 47, 127, 128
Bhutto, Benazir 98–9
Bhutto, Zulfiquar Ali 60
bilateral and subregional initiatives 164
BIMSTEC 164, 223
Birendra of Nepal, King 82, 218
Bose, S. 55–6
Britain in India 55–6
business: efforts regarding SAFTA 164–5;
influence on political actors 37
Buzan, Barry 58
CD game 145
Central American Common Market
(CACM) 14, 35
Chadwick, Richard 6
Chakma Peace Accord 126
China: impact of support from 77;
involvement of 207–8; and relations
between India and Nepal 70, 71, 73
Chola kingdom 54
Confederation of Indian Industry (CII) 165
citizen diplomacy 209–10
coalitions, political and free trade
agreements 165–8
Cohen, Stephen 121–2
Cold War 80
collective action problems 144–5
Colombo Powers Conference 81
commitment mechanisms 35–6
242 Index
Committee on Studies for Cooperation in
Development (CSCD) 85
communication, lack of transparency in
132–3
communication links between countries
156
communications theory 4–7
communitarian perspective on regional
cooperation 15
community, sense of between nations 5–6
community policy 20–4, 22
cooperation, regional 15–16; affective and
utilitarian support for 38–9; attitudes
towards expansion of 181–2, 182;
Bangladesh initiative 82–6; building
engines of 212–15; as community policy
issue area 20–4, 22; and domestic
politics 16–17; early efforts 79–82; the
India factor 195–8; low level of
affective support for 174, 176; monetary
214–15; nuclear power not obstacle to
182; and perceptions of inequity 176–8,
177, 184; and preferences of political
actors 31–6; and security 34–5; in South
Asia 40–4; and strength of government
29–31, 31; as a two-level game 24–6;
see also regionalism
cooperative security 107–8
credibility gap of SAARC 184, 185, 191–2
cricket diplomacy 210
currency 214–15
Dahl, Robert 26
democracy: deficit democracy 127; quasi
democracy 130, 221
Deutsch, Karl 4–7, 36–7
developing countries: communitarian
perspective on regional cooperation in
15; eurocentric explanations of
integration 12–16, 20; and liberalization
2 22
development fund 215
distributional politics 42
domestic issues, priority given to 194
domestic market size 144
domestic politics: actors in 27–8; and
foreign policy 20–4, 22; institutions of
28–9; and regional cooperation 16–17
domestic preferences for regional
cooperation: affective/utilitarian based
171–2; elites 170–2; national identity
172, 173, 174; and national image
174–6, 176, 183–4; solidarity with other
countries 174, 183, 193
Dougherty, J.E. 7–8
Dubey, Muchkund 214–15
Durkheim, Emile 5
East African Common Market 34–5
Easton, David 38–9
Economic Cooperation Organization
(ECO) 158, 197, 222
economic growth rates in South Asia 49
economic liberalization policies 156–9
economics as motivation for regional
cooperation 186
ecosystem of South Asia 51
elites 43–4, 170–2; elite structure and elite
opinion in South Asia 130
energy, coordination of resources 214
entrapment, regionalist 116–17
equity theory 223–4; perception of
inequity 176–8, 196
ethnic politics/violence 51–2, 120–6
ethnolinguistic movement, agitation 122–3
Etzioni, Amitai 13
Europe: regional integration in 6; support
from 206
European Coal and Steel Community
(ECSC) 6
European Union: East and Central
European countries 35; and the revival
of regionalism 1, 2; support for 39
evaluation of SAARC 178–82
Evans, P. 36
externalities (positive and negative) 33–4
failing states 119, 221
feedback: positive and negative 36–7
FICCI 165
foreign direct investment, restrictions on
155
foreign policy and domestic politics 20–4,
forum, South Asian regional 203–4
free trade agreements: bilateral and
subregional initiatives 164; and political
coalitions 165–8, 166; see also South
Asian Free Trade Agreement (SAFTA)
Friedrich, Carl J. 6
functionalism 7–8, 9
Gabel, M. 39
Gandhi, Indira 84, 87, 89, 134, 198
Gandhi, Mohandas Karamchand (Mahatma
and Bapu) 56
Gandhi, Rajiv 91, 96–7, 98–9, 125, 198,
210

Ganges water sharing 67
George, Stephen 9
Ghulam Ishaq Khan 130
global interdependence 10
globalization 204–5
government, strength of 29–31, 31,
127–33, 128
Gowda, Deve 166
Grotius, Hugh 5
Group of Three (G-3) FTA 14
Gujral, I.K.: Gujral doctrine 132, 157
Gulf Cooperation Council (GCC) 14, 35
Gupta empire 53–4
Gyanendra, King 102
Haas, Ernst 2, 3, 6, 8, 9–10, 12
Haas, Michael 14–15, 212
Hansen, Roger 10, 13
hard power 201
Hasina, Sheikh 131
Haq, Ziaul 84, 89, 91, 136
hegemony: and balance of power 112, 113,
114, 115, 116; bandwagoning 117–18;
declining 118–20; and India 111; and
regional coordination 110, 111;
regionalist entrapment 116–17
history of South Asia, influence of 52–7,
193–4
hub-and-spoke initiatives 168
Hussain, Ross Masood 99
identity, regional 172, 172, 174, 175,
192–5
image, national 174–6, 176, 183–4
import substitution industrialization (ISI)
policies 154–5
increasing returns to scale (IRS) 143–4
India 46, 47; and Bangladesh 66–9, 194;
British domination of 55–6; and China
207–8; and Delhineation 116–17;
discussions with Pakistan at SAARC
summits 100–1; dominance in the
region 66; dominance of and Pakistan
114, 115, 116; and ethnic crisis in Sri
Lanka 124–5; ethnic politics in 121; and
external influences 76; as factor in
success of SAARC 195–8; and
globalization 204–5; government
strength 128, 129, 132; as hegemonic
power 111; Indo-Pakistan war, 1971
62–4; and Japan 206–7; Kashmir
dispute 59–62, 202–3; leadership role of
199–202; limited control over
Bangladesh and Sri Lanka 77; and
Index 243
Nepal 69–73; non-attendance at SAARC
meetings 101–2; nuclear power 114,
116, 133–5, 137–9; and Pakistan 52,
57–9, 64–6, 167–8, 183, 193–4;
Pakistan and evolution of SAARC 86–8;
regional imbalances 52; scale of
industry 147; and security 203–4; shift
in economic liberalization policy 157–8;
and Sri Lanka 73–6; transregional
trading arrangements 164
Indian National Congress, 56–7
Indian peace keeping force (IPKF) 124–5,
210
industry in South Asia 147–9
inequity, perceptions of 176–8, 177, 196
Inglehart, R. 6
institutions: institutional structures 26–7,
127; of domestic politics 28–9; public
support for 38
integration: dynamic effects of 142–3;
eurocentric explanations of in
developing countries 12–16, 20
integration theory: functionalism 7–8, 9;
intergovernmentalism 11–12; neo-
functionalism 8–11; transactionalism
4–7
intergovernmentalism 11–12
international relations theory 5
intraregional trade 151–6, 152, 153, 186
IORARC 158, 200, 222
Islam 54–5
issue area 20–24, 38; foreign policy issue
area and domestic policy issue area
21–22; community policy
issue-linkage 10; fragmented issue linkage
10
Jalal, A. 55–6
Janatha Vimukthi Peramuna (JVP) 124
Japan, relations with 206–7
Jayawardene, J.R. 84, 96–7
Jinnah, Mohammed Ali 56–7
joint projects 212–13
Kargil War 131, 137, 139
Kashmir dispute 59–62, 202–3
Kautilya 53
Khan, Abdul Qadir 136
Knight, Jack 28
Kothari, Rajni 191
Krugman, Paul 143
Kumaratunga, Chandrika 106
late regionalism 211–12
244 Index
Latin American Free Trade Association
(LAFTA) 14
Latin American Integration Association
(LAIA) 14
leadership: regional 146; role of India
199–202
liberal intergovernmentalism 12
Lijphart, Arend 5
Lindberg, L.N. 6, 8, 39, 174–5
logrolling strategies 85
LTTE 124–5
Mahavamsa 123
Maldives 47, 127, 128, 129
mandala doctrine 53
March, J. 28
market gains logic 157
market size of South Asian countries 149,
150
Mattli, Walter 8–9, 12, 145–6
Maurya empire 52–3
media coverage 195
Mercado Comun del Sur (MERCOSUR)
14, 161
Mill, John Stuart 143
Milner, Helen 26–7, 32, 33
monetary cooperation 214–15
Morarji Desai 197
Moravcsik, Andrew 12, 15–16
motivation of political actors 31–3
Mughal empire 55
Mukherji, I.N. 160
Musharraf, Pervez 131, 167, 178
Muslim League 56–7
Mytelka, Lynn 13
national and regional identities 192–5
National Food Security Reserve 181
national image 174–6, 176, 183–4
Nehru, Jawaharlal 80, 82
neo-functionalism 8–11
neo-liberal institutionalism 11–12
Nepal 47, 48; economic liberalization
policy 159; government strength 127,
128; and India 69–73
Nerves of Government, The (Deutsch) 36–7
NICs 49
North, Douglass 28
North American Free Trade Agreement
(NAFTA) 2
nuclear power: as deterrent for India and
Pakistan 137–9; India 133–5; not
obstacle to regional cooperation 182;
Pakistan 59, 114, 116, 135–7
Nuclear ambiguity 221; nuclear dual track
policy 134; nuclear deterrence 137–9;
PNE 134–5; comprehensive test ban
treaty (CTBT) 135
Nye, Joseph 8, 10, 201
office-retaining motivation 32–3; power-
retaining motivation 42
OIC 197, 222
Olson, J. 28
Organization of Asian States (proposed)
80
organizational structure of SAARC 91–5,
92, 95
Pakistan 46, 47; discussions with India at
SAARC summits 100–1; economic
liberalization policy 158–9; ethnic
politics in 121–3; external assistance for
77; foreign assistance 58–9; formation
of 56–7; and globalization 205;
government strength 128, 129, 130–1;
India and evolution of SAARC 86–8;
and India’s dominance 114, 115, 116;
Indo-Pakistan war, 1971 62–4; Kashmir
dispute 59–62, 202–3; nuclear power
59, 114, 116, 135–7, 137–9; political
coalitions and FTAs 166–8; regional
imbalences 52; relations with
Bangladesh 68; relations with China
207–8; relations with India 52, 57–9,
64–6, 183, 193–4; and security 203–4
Palmer, Norman 14
Panagariya, A. 161
Pareto frontier 26
partition of Indian subcontinent 56–7
Pentland, Charles 21, 23–4
perceptions of inequity 176–8, 177, 184, 196
permissive consensus for European
integration 3
Pfaltzgraff, R.L. 7–8
pluralistic security communities 5
political actors: influence on of societal
actors 36–7; preferences of 31–6
political coalitions and free trade
agreements 166
Political Community and the North
Atlantic Area (Deutsch) 4–5
polyarchies, states as 26–7
population growth in South Asia 49
positive economic unilateralism, Indian
policy 164, 223
poverty: SAARC Poverty Alleviation Fund
103; in South Asia 49

Prabhakharan, V. 124
pragmatic antidependency 204
preferences: of political actors 31–6; of
societal actors 36–9
Premadasa 125
press coverage 195
prisoners’ dilemma (PD) game 144–5
promotion of regional identity 208–11
public information campaign 210–11
public opinion 39
public support 39
Putnam, Robert 24–6, 28
quasi-democracies 130
Rahamat Ali. Choudhary 56
Rahman, Ziaur 82–4
Raja Mohan, C. 76, 107–8
Rajapakse, M 130
Rao, Narasimha, 132
Ravenhill, John 13
regional cooperation, defined 15;
facilitating conditions for regional
cooperation 18, 19; deeper regional
cooperation 3; deep cooperation 217;
difference between deep cooperation
and deep integration 217
regional identity: and national identity
192–5; promotion of 208–11
regionalism: eurocentric explanations of in
developing countries 12–16, 20;
formation and impact of SAARC 3;
revival of 1–3; see also cooperation,
regional
regionalist entrapment 116–17
reverberation, positive and negative 25
Rosenau, J.N. 21, 23
ruling coalitions 165–7
Russia 207
SAARC Regional Forum 204; see also
South Asian Association for Regional
Cooperation (SAARC)
scale of industry in South Asia 147–9
scapegoating 166–7
Scheingold, S.A. 39, 174–5
Schmitter, P.C. 9, 12
scholarship programs 209
second-image-reversed perspective 25
sectoral integration 8–9
security: complex: 58; dilemma 57–8, 114,
195, 203; impact on of Soviet invasion
of Afghanistan 86; and India and
Pakistan 203; issues as barriers to trust
Index 245
195; multilateralism 107, 204; and
regional cooperation 34–5, 84;
relationships between countries 58–9;
and SAARC 105–8
sensitive lists 162–4, 163
sepoy (or sipahi) mutiny 55, 219
services, liberalization of 162
Sharif, Nawaz 131, 137, 167
Shastri, Lal Bahadur 124, 134
Simla agreement 63
Singh, Manmohan 119–20, 200
single currency 214
Smith, Adam 143
Snidal, Duncan 145
societal actors, preferences of 36–9
soft power 201
solidarity with other South Asian countries
172, 174, 175, 183, 193
Solingen, Etel 30
South Asia: commonalities between
countries 45; complementarity of
economies 151; dominance of India 66;
economic growth rates 49; ecosystem of
51; ethnic politics in 120–6; external
influences and regional balancing 76–8;
and globalization 205; identity in 172,
182–3, 192–93, 208–9; increasing ethnic
violence in 51–2; Indo-centrism 46;
intraregional trade 151; lack of common
external threat 77; lack of growth of
regionalism 45, 77–8; lack of
transparency in communication 132–3;
population growth in 49; poverty in 49;
regional complementarities 148;
regional cooperation in 40–4 (see also
cooperation, regional); regional
imbalences 51–2; scale of industry
147–9; security relationships between
countries 58; shared characteristics of
countries 49, 50, 51–2; see also
Afghanistan; Bangladesh; Bhutan;
India; Maldives; Nepal; Pakistan; Sri
Lanka
South Asian Association for Regional
Cooperation (SAARC) 14; benefits at
cultural, technical and scientific levels
178–9; benefits from informal meetings
96–9, 178–9; Colombo Summit 99–100;
credibility gap of 184, 191–2; criticisms
of 103–5; and cross-border ethnic
identities 126; Dhaka Summit 89–91;
early meetings 88–9; evaluation of
108–9, 178–82; financial arrangements
95; formal beginning 88–9; formation
246 Index
South Asian Association for Regional
Cooperation (SAARC) continued
and impact of 3; implications of elite
indifference 185; India and Pakistan
discussions 99–101; India as factor in
success of 195–8; Islamabad Summit
98–9; Kathmandu Summit 97–8; key
indicators of member countries 47; as
late regionalism 211–12; low level of
affective support for 174; National Food
Security Reserve 181; negative issues of
180, 181; objectives of 89;
organizational structure 91–5, 92, 95;
and people-to-people contact 180–1; and
perceptions of inequity 176–8, 177;
positive issues of 179, 181; Poverty
Alleviation Fund 103; reasons for slow
growth of 120; regional centers 93–94,
104; SAFTA 102; secretariat 94–5, 104;
secretary general and directors 94–5;
and security 105–8; socio-economic
profiles of member countries 50;
transregional and international links
102–3; unanimity and contentious issues
104–5
South Asian Development Fund (SADF)
215
South Asian Free Trade Agreement
(SAFTA) 102, 160–5, 179–80
South Asian Growth Quadrangle (SAGQ)
164
South Asian Monetary Fund (SAMF) 214
South Asian Preferential Trading
Arrangement (SAPTA) 159–61
South Pacific Forum (SPF) 14
South-South cooperation, initiatives for 85
Southern African Development
Coordination Conference (SADCC) 35
spillback and spillaround 9
spillovers 8–9, 217
spoke-spoke initiatives 168
sports competitions 210
Sri Lanka 47, 48; economic liberalization
policy 159; ethnic politics in 123–5;
government strength 127, 128, 129,
129–30; relations with India 73–6;
Tamil-Sinhalese conflict 74–6, 194
states: categorisation of as weak or strong
29; as polyarchies 26–7
stop-and-go pattern of growth of regional
cooperation 30, 141, 218
strength of government 29–31, 31, 127–33,
128
Subrahmanyam, K. 138, 196
subregional initiatives 164
Sundarji, K. 138
support, affective and utilitarian 38–9
synergy 25
Tamils situation in Sri Lanka 74–6
tariff barriers and revenues 154
tariff liberalization program (TLP) 162
textile industry 148–9
Thapar, Romila 53
Third World countries: communitarian
perspective on regional cooperation in
15; eurocentric explanations of
integration 12–16, 20; and liberalization
2
Third World regionalism 12–13
tourism programs 209
Trachtenberg, Marc 138
trade liberalisation: and domestic market
size 144; increasing returns to scale
(IRS) 143–4; and trade complementarity
144
transactionalism 4–7
transparency in communication, lack of
132–3
transport infrastructure 156, 213–14
turbulent non growth 3
two-level game, regional cooperation as
24–6
two-nation theory 57, 220
United States: and regional integration 1;
support from 205–6
utilitarian and affective support 38–9,
171–2
Vajpayee, A.B. 101, 103, 119, 132, 135,
166, 214
virtuous circle argument 156–7
visa relaxation 209
Weber, Max: theory of social change 218
win-sets 24–5
Wriggins, Howard 58
Yu, W. 148–9
Zia, Khaleda 131