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Mainstream, VOL XLIX, No 39, September 17, 2011

Indo-Bangladesh Relations — Failure of Leadership on the Indian Side

Friday 23 September 2011, by Muchkund Dubey


The attitude of most of Indian political leaders, senior officials, business magnates and strategic thinkers towards Bangladesh has been one of disdain and apathy. Very few of these people either understand the dynamics of the domestic politics of Bangladesh or have grasped the full import of Indo-Bangladesh relations. The most glaring example recently of the abysmal ignorance of Bangladesh’s politics was the Indian Prime Minister’s remark towards the end of June 2011 that 25 per cent of the population of Bangladesh is very anti-Indian and, therefore, the political landscape in Bangladesh can change at any time. The only saving grace for the Prime Minister is that he alone cannot be blamed for the ignorance betrayed in this statement. For, his factually erroneous and diplomatically unwarranted remark must have been based on the precious advice given to him by the cronies around him. The simple fact that seems to elude the comprehension of most of our Pak-centric politicians, senior officials, journalists and analysts is that Bangladesh is not another Pakistan unless India, through its sheer ineptness and negligence, forces it to become one.

The supreme significance of Bangladesh for India lies in the fact that it holds the key to the integration of the North-Eastern region of India with the mainland, it is the pathway to the integration of our economy with those of the South-East and East Asian countries, and it is one of the most important markets in the world for our manufactured products. Taking up the last point first, our total exports to Bangladesh through the official channel during the last two-three years have been between $ 2.5 and 3 billion. If we add to it the exports through the informal channel, which according to various estimates are nearly equal to that through the formal channel, the total comes to about $ 5 to 6 billion. Until three-four years ago when it was overtaken by China, India was the largest exporter to the Bangladesh market. We are still the largest if exports through the informal channel are included. We have recently surrendered to China nearly half the space occupied by us in the Bangladesh market. This has happened in spite of our competitive advantages derived from proximity and common language, culture and consumer preference which together go a long way towards reducing transaction costs and directly contributing to the expansion of service exports. Analysts in India try to attribute China’s penetration into the Bangladesh market to some sinister design by China to drive India out of the Bangladesh market or the political predilection in Bangladesh against India. But the fact is that Chinese exports to Bangladesh are almost entirely market-driven. China has outdone its competitors in Bangladesh, mainly India, by the sheer quality and price competitiveness of its products and by the speed of their delivery.

During her visit to India in January 2010, Sheikh Hasina, the Bangladesh Prime Minister, had agreed to provide a number of transit facilities to India through its major railways, roads, ports and waterways. If operationalised, these measures have the potentiality to make a major contribution to both integrating the North-Eastern region of India with the rest of the country, and promoting their growth and prosperity. This would also help in establishing linkages between the economies of India and Bangladesh with those of the South-East and East Asian countries.

The integration of the economies of India and Bangladesh is also likely, through the demons-tration effect, to give fill-up to the stagnating regional integration in South Asia. The other countries of South Asia, including Pakistan, would see the immense advantage that Bangladesh is likely to derive by its linkages with the dynamic Indian economy, and would try to emulate Bangladesh. This would pave the path for South Asian integration as few other factors can do. This can enable South Asia to emerge, by the middle of the next decade, as the third largest economic bloc in the world, next only to China and the United States. The consequent enhancement of their bargaining power would enable these countries to provide a big push to Pan-Asian economic integration in which they would play a key role.

Finally, if India is able to realise the full potentialities of its relationship with Bangladesh it would add immensely to its prestige and standing in the world and turn out to be a conducive factor in managing its relations with other important neighbours. In particular, this would have a sobering effect on China and Pakistan in dealing with India.

THE above potentialities of Indo-Bangladesh relations have come alive after Sheikh Hasina’s resounding victory in the parliamentary elections in Bangladesh held in December 2008, and particularly after some of the far-reaching, visionary and courageous moves she made towards improving relations with India after coming to power. These potentialities had remained dormant during most of the period after the brutal assassination in 1975 of Sheikh Mujibur Rahman, the father of the Bangladesh nation and the first Prime Minister of that country. This was mainly because of the political instability in the country due to frequent political upheavals and the negative attitude towards India adopted by most of the governments that came to power during this period, because of the influence of extremist religious elements on which they had to rely in order to keep the Awami League away from power.

In the 2008 parliamentary elections, Sheikh Hasina had received an overwhelming mandate to restore the rule of law, deal with the extremist religious elements, bring the long-delayed justice to those who were killed during the liberation war and control terrorist elements, including those carrying out terrorist activities in India, from the Bangladesh territory. Within months after coming to power, Sheikh Hasina took decisive measures towards the fulfilment of these mandates, including those which were of high concern to India. The Bangladesh authorities clamped down on the ULFA terrorists operating from Bangladesh territory and apprehended and handed over some of their important leaders, including Rajkhowa, to India. On coming to India, they engaged in peace talks with the representatives of the Central and State govern-ments which resulted in the signing of an interim agreement just before the Indian Prime Minister’s visit to Dhaka. By carrying out death sentences against some of the leaders of the extremist religious groups and putting a sizeable number of them behind the bar, Sheikh Hasina sought to take care of another major Indian concern, that is, acts of terrorism in India perpetrated by agents operating from Bangladesh.

During her visit to India in January 2010, the Bangladesh Prime Minister announced a number of measures which taken together represented a giant step towards restoring railway, riverine and road transport connectivity between India and Bangladesh that were adversely affected after the partition of the subcontinent and virtually disrupted after the 1965 war between India and Pakistan. She agreed to make the facilities at the Chittagong and Mongla ports available for the passage of goods from the North-Eastern region to other parts of India and to foreign lands. She conceded enlarged connec-tivity through the riverine routes. She announced that Bangladesh would permit the containerised transport of Indian goods through its railways and highways. She also agreed to the construc-tion of a railway siding to link Akhaura in Bangladesh with Agartala. This, when completed, will provide through passenger traffic transit from the North-East to West Bengal. As a temporary measure, she agreed to allow the passage through the riverine route of ODC (over-dimensional cargo) for expediting the completion of a major power project in Tripura. As an icing on the cake, the Bangladesh Government for the first time officially supported India’s candidature for the permanent membership of the UN Security Council and also agreed to the restoration of border haats for trade at selected places along the Indo-Bangladesh border.

The two reciprocal measures that India announced during Sheikh Hasina’s visit were the extension of a credit of $ 1 billion for the restoration, strengthening and building of road, railway and riverine infrastructure in Bangla-desh and the provision of an additional route for Nepal’s rail transit traffic to Bangladesh. India also agreed to provide to Bangladesh 250 megawatt of power, of which there is an acute scarcity in the latter. It further agreed to build inter-grid connectivity for facilitating power transfer and to undertake a joint venture for setting up a 1320 megawatt coal-based power plant in Bangladesh.

The measures announced by India were by no means adequate to match the steps taken by Bangladesh to meet India’s major concerns relating to security and transit. Bangladesh was, therefore, anxiously waiting for a return visit by the Indian Prime Minister to Bangladesh in which the implementation of the projects to be undertaken under the $ 1 billion credit could be reviewed and additional measures, designed to take care of Bangladesh’s concerns in the areas of trade, sharing of the waters of the common rivers, border management and land boundary, could be announced. One sensed palpable disapp-ointment in Bangladesh when the Government of India kept on postponing the Prime Minister’s visit. The visit ultimately took place on September 6-7, 2011 after a long gap following Sheikh Hasina’s visit to India. This was in sharp contrast to the habits of the European leaders who fly to each other’s capital at hours’ notice to deal with serious problems that crop up from time to time.

THE delay in the PM’s return visit could have been forgiven if the intention was to put on the ground before the visit some of the important projects to be implemented under the $ 1 billion credit and to reach agreement on some of the pending issues of concern to both the countries. A few days before the departure of the Prime Minister, the Government of India managed to put together a decent package consisting of measures and agreements to be announced during the visit. In addition, some agreements had been reached and announced prior to the visit, which lent further substance to it. These included an agreement reached between the Home Ministers of the two countries on a coordinated Border Management Plan with a view to preventing not only criminal activities and illegal movement but also acts of violence and loss of lives along the border areas, and the initiative by India to develop seven Integrated Check-Posts to facilitate trade between the two countries.

The measures and agreements included in the package by the Government of India were by no means complete or adequate to meet the concerns of Bangladesh. A lot more could have been done. But the package, on the whole, had the potentiality of turning around the relations between the two countries and pushing further upward the high trajectory on which these relations were put during Sheikh Hasina’s visit to India. But this would have been possible only if the package would have been maintained intact and no major component of it was withdrawn or diluted. Unfortunately, what transpired just on the eve of the Prime Minister’s visit detracted significantly from the overall impact and the transformative character of the package. We will come to this a little later. The four important components of the original package were:

(a) Reduction of the Negative List of products for import from Bangladesh;

(b) Protocol to the Boundary Agreement;

(c) The Agreement for Sharing of the waters of the Teesta and Feni Rivers; and,

(d) The Framework Agreement on Cooperation for Development.

(a) Negative List:

The Government of India took a major step forward in meeting the concern of Bangladesh regarding the widening trade gap between the two countries by removing all the 46 textile lines, which are of interest to Bangladesh, from India’s Negative List for the least developed countries (LDCs) under the provisions of SAFTA. A notification to this effect was issued on the day of the Prime Minister’s visit to Dhaka, which will enable these items to be imported duty-free into India. Bangladesh has recently demonstrated its capacity to capture an increasing space in the Indian market. Over the last five years, its exports to India increased five-fold and have now reached the level of 500 million dollars. After the Government of India increased the tariff quota for certain textile items from eight million tonnes to 10 million tonnes, Bangladeshi exporters utilised 7.5 million tonnes of the quota during the first seven months of the year for which it was granted, thus holding out the promise of exceeding the enhanced quota. Now with the duty-free and restriction-free entry of all the textile items in which Bangladesh had indicated export interest, there is no doubt that the exports will further expand.

What is intriguing, however, is the reluctance shown by the Prime Minister in accepting the suggestion emanating from several quarters, including from the writer of this article, for altogether eliminating the negative list for Bangladesh. India’s main concern till recently was the disruption that imports of textile items would cause to the relevant Indian industry because of the competitiveness edge which Bangladesh has acquired in these items. If the Government of India can remove from the negative list the items which are the cause of real concern, then what is the need for maintaining the negative list at all? Is it because the PM is trying to develop a consensus on it with the Ministry of Commerce?

The PM would have been well advised if he had declared during his visit that there would be no negative list for Bangladesh and hence-forward the Bangladeshi exporters should treat the entire Indian market as an extension of their domestic market. This would have not only enhanced the prospect of Bangladesh narrowing the trade gap with India but, more important than that, would have provided incentives to Bangladeshi manufacturers and their Indian and foreign collaborators to invest in industrial development in Bangladesh with an eye on the vast Indian market.

(b) Protocol to the Boundary Agreement:

By signing the Protocol to the Boundary Agreement of 1974, India and Bangldesh have resolved boundary issues which had been pending for nearly 40 years; this had given grist to the mill of the anti-India elements in Bangladesh and was causing immense sufferings to the common people in both the countries, particularly to those living in a stateless condition in the enclaves. By signing the Protocol, the two governments finalised the issue of enclaves and the territories in adverse possession, and the undemarcated areas. India also agreed under the Protocol to provide 24-hour access to Bangla-deshis to the enclave of Dahagram-Angarpota across the Tin Bigha Corridor. It may be recalled that the Sheikh Mujib-Indira Gandhi Border Agreement had been ratified by Bangladesh in 1974 itself, but had remained unimplemented for want of commensurate action by India.

(c) Framework Agreement on Cooperation for Development:

I personally feel gratified by India and Bangladesh signing the Framework Agreement on Cooperation for Development. I had suggested at the time of the visit of the Bangladesh Foreign Minister, Dipu Moni, to India in September 2009 that the two sides should try to negotiate a Comprehensive Economic Partnership Agree-ment (CEPA) failing which they should at least agree on a Framework Agreement on Economic Cooperation. I had reiterated this suggestion to the ministerial level representative of Bangladesh when he had come to Delhi, preparatory to Sheikh Hasina’s visit to India. I had advanced this suggestion in several second-track seminars as well as to the Government of India when, once for a change, they consulted me on the Prime Minister’s visit to Dhaka. The main advantage of this initiative is that it puts in place an institutional framework for exploring new avenues and approaches, negotiating new MOUs and agreements, and undertaking new projects for cooperation in the economic field. This kind of institution existed between the Planning Commissions of the two countries soon after the liberation of Bangladesh and a number of very important projects were identified and being pursued.

In the modern context, under this Framework Agreement the two countries can, if they muster the necessary political will, negotiate a Free Trade Agreement (FTA) or a CEPA which can include measures of deeper integration including in areas identified in the text of the Framework Agreement, that is, Energy, Transport, Science and Technology, Environment, Agriculture, Health and Education. A significant provision in the Frame-work Agreement is the establishment within this framework of a Joint Consultative Commission for effective and smooth implementation of the Agreement. Separately, a decision has been taken to establish a Joint Commission under the leader-ship of the Foreign Ministers of the two countries. An important omission from this Agreement is the suggestion, that I have made several times, regarding the two countries undertaking a commitment to come to each other’s rescue/assistance in situations of natural disasters, sudden shortages of essential supplies, particularly food, and acute balance-of-payment crises.

(d) Record of Implementation:

In the Joint Statement issued at the end of the Indian Prime Minister’s visit, both sides expressed their satisfaction with the progress in the implementation of the $ 1 billion credit extended by India. In his speech at the Dhaka University, the Prime Minister of India stated that the two sides mutually agreed on projects worth over 750 million US dollars. This implies that during the period of one year and eight months after Sheikh Hasina’s visit to India, hardly any important project under the credit granted by India has been implemented. In the meantime, the Indian Prime Minister announced grants which are qualitatively of considerable significance. These include construction of an India-Bangladesh Cultural Centre in Dhaka, undertaking a feasibility study for the upgradation of the Dhaka-Chittagong railway line, new Indian scholarships to 100 students for higher studies, and setting up of an IT Lab in a model school in each of the 64 districts of Bangladesh, and of IT Centres in leading training institutes in Bangladesh.

With the operationalisation of the transit facilities granted by Bangladesh, India would develop a great stake in the railway, roadways and riverine infrastructure of Bangladesh. Given this stake, the renovation and expansion of this infrastructure will be equivalent to the renovation, modernisation and expansion of India’s own infrastructure. Surely, if India is planning to invest $ 500 billion for the development of infrastructure in its territory, $ 1 billion, and that too as a credit, earmarked for the develop-ment of infrastructure in the Bangladesh territory, is too meagre an amount. India should, in due course after the implementation of projects under the $1 billion credit, commit several times larger resources, say, in the range of $ 5 to 10 billion, mostly as grant rather than as credit.

Very few of the projects under connectivity and others agreed upon during Sheikh Hasina’s visit to India, have taken off the ground. The only projects which seem to have materialised are:

(i) The opening up of only one border haat in the border area between Meghalaya and the adjacent part of Bangladesh;

(ii) Operationalisation of Ashuganj and Shilghat as additional Ports of Call;

(iii) The passage of ODC cargo for the Palatana power plant; and

(iv) The additional rail route provided by India for transit of Nepalese goods to Bangladesh.

As regards other projects in the Joint Statement, the two Prime Ministers exhorted the authorities concerned in the two countries to expedite work without, however, setting dead-lines. This certainly is not good enough. This demonstrates India’s proven incapacity for speedy and timely delivery of projects in foreign countries. It is true that part of the blame for the tardy implementation of projects lies on the Bangladesh side; but surely it should have been possible for India during the last one year and eight months, to have delivered the promised 250 megawatt of power, built the bridge over the Feni river, prepared a feasibility study of the joint venture power project and sign a Memo-randum of Understanding for building the rail link between Akhaura and Agartala.

(e) Treaty for the Sharing of the Waters of the Teesta and Feni Rivers:
The withdrawal at the last minute of the Agreement on the sharing of the waters of the Teesta amd Feni rivers drastically devalued the package offered by the Indian Prime Minister. The Government of India officials claimed that the agreement on it had been reached weeks, if not months, before the Prime Minister’s visit to Dhaka. Unfortunately, at the last minute, because of the objection raised by the Chief Minister of West Bengal, this agreement was withdrawn from the package. The Chief Minister, Ms Mamata Banerjee, also refused to join the Prime Minister’s delegation to Dhaka. The withdrawal of this single item from the package significantly detracted from the importance of what was poised to be a historic visit from the Indian side. This is because of the importance that the Bangladesh Government and people attach to reaching an agreement on the sharing of the waters of the common rivers. As a lower riparian, Bangladesh finds itself at the receiving end of the bargain and hence insists on reaching an agreement through which it can withdraw water as a right and not at the mercy of India, the upper riparian. Anything which amounts to a denial of this right is perceived by the Bangladeshis as an assault on their sovereignty and as an example of India’s “hegemony”, “high-handedness”, “big brotherly attitude” and “a desire to dominate”. This is also seen as India’s callousness towards Bangladesh’s major concern. The sharing of the river waters, therefore, is a highly emotive issue for the Bangladesh Govern-ment, people and media.

The immediate response of Bangladesh to the withdrawal of the Teesta Agreement was its decision to postpone the signing of the MOUs for the operationalisation of several of the concessions made by Bangladesh on the transit issue. This included the operationalisation of the port facilities at Chittagong and Mongla and the construction of the Akhaura-Agartala railway link. By all accounts, Bangldesh’s political parties and media have reacted very adversely to India’s inability to deliver on the sharing of the Teesta water. This issue is likely to become the focus of protests by the Opposition political parties in an attempt to not only run down the whole package offered by India but also derail the process of improvement in the relations between the two countries, and undermine Sheikh Hasina’s political position.

It is not clear as to why Ms Mamata Banerjee changed her mind at the last moment. There was indeed too much at stake for the nation for her to have been swayed entirely by local political considerations. On the other hand, given the importance of the subject, the Prime Minister should have personally discussed this issue with Ms Banerjee instead of accepting at the face value his Adviser’s view that the agreement had her blessing.

The Chief Ministers of the States of the North-Eastern region, who accompanied the Prime Minister, must have been deeply disappointed by the non-operationalisation of the decision to permit them to send their goods to other parts of India and foreign countries through the Chittagong and Mongla ports. The Bangladesh side must have got the impression that recently there has been a sharp decline in the power of the Central Government and that its dictate does not run in the States. They would also be perplexed as to whom they should deal with in India in resolving bilateral issues of major significance. It is very sad that we are fast reaching a situation in the governance of the country where every agent or entity involved in the decision-making process has a veto.

The Bangladesh Prime Minister displayed great maturity and soundness of judgment in not allowing this issue to mar the entire visit and the consequent progress in the relations between the two countries. In the Joint Statement, the two Prime Ministers “welcomed that there have been progress in the principles and modalities of interim agreements on the sharing of waters of Teesta and Feni rivers on fair and equitable basis. They directed the concerned officials to work towards concluding the agreements at the earliest.” The situation can be still salvaged if a mutually satisfactory agreement between the two countries is reached within six months, which can be announced along with the signing of MOUs for the operationalisation of the agreements related to transit. It is also important that India should ratify the Protocol on the Boundary Agreement at the earliest and not to allow it to languish as happened with the 1974 Boundary Agreement.

Prof Muchkund Dubey is a former Foreign Secretary with deep knowledge of Bangladesh where he functioned as the Indian High Commissioner for several years. He is currently the President, Centre for Social Development, New Delhi.

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