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Overcome political issues to boost regional economy

Daily Star, Bangladesh

Overcome political issues to boost regional economy

Indian foreign secy urges neighbours

Staff Correspondent

28 June 2007

Indian Foreign Secretary Shivshankar Menon yesterday urged India’s smaller neighbours to overcome political issues to become stakeholders in the India-led regional economic growth by dismantling trade and road and water transport barriers.

Giving a talk on ’Creating a South Asian Community: India-Bangladesh Relations’ at the Bangladesh Enterprise Institute (BEI) in the city, Menon also said he was confident of improving relations with Bangladesh, but observed that "It is natural for close neighbours to have problems."

He said a benign international political environment together with present economic opportunities from India’s growth provide a unique chance to create a long-lasting structure for regional economic cooperation in South Asia.

"Whatever we do, it must last," he said, adding that the South Asian countries have a chance to remake relations. "We have a chance to overcome politics."

Regarding the Saarc, Menon said, "If Saarc fails, we will fail. We are the ones who built it. So, if there is something wrong, let us fix it."

Lamenting the lack of implementation of the South Asian Free Trade Area (SAFTA), he said the intra-regional trade of six percent is the lowest in any region in the world, except sub-Saharan Africa.

Menon said economic negotiations are no longer a zero-sum game, where short-term compromises could bring long-term economic benefits to countries.

He, however, cautioned that although economic opportunities beckon India’s neighbours, they would have to combat regional and local political challenges that risk undermining regional prosperity.

He stressed that past problems should not prevent future progressive actions that have been blocked by regional politics. "We have a chance to break out of that," he said.

Regarding Bangladesh, he said, "It is natural for close neighbours to have problems. Intimacy is not always easy. But our commonalities far outweigh our differences."

"Businessmen from both the countries are increasingly discovering that it is most convenient to procure goods and services from each other rather than from more distance sources," he said.

He also called for a greater expansion of Bangla-Indo land and water ports to open up trade access to reduce transaction costs, which in turn, would push up bilateral trade.

Menon was also confident of future cooperation in energy sector and flood-control activities.

Mutual trust is essential to develop regional cooperation and it will increase through greater interaction between the countries, he said.

’Political transitions’ in the region are also a challenge that requires local solutions, he said, adding that the decisions these countries take will have broader consequences and effects.

Menon stressed that Bangladesh needs to urgently expand the basket of goods for export to India so that it can explore deeper into the Indian market.

He said the intra-regional trade was 34 percent in 1948, which has dwindled to 6 percent in 2007.

He also said that trade levels can be increased manifold by dismantling trade barriers between the countries.

Menon said that India’s preferential trade agreements are not only reciprocal but also provide greater benefits to the smaller neighbours.

Regional economic growth can be exponentially increased through greater trade, open borders and economic cooperation, he added.