Page 31

The U.S. Government would not, however, look favorably on a pipeline that originates from Iran. "We understand and support measures that build cooperation between India and Pakistan, but we have legislation in place that prohibits contributing to Iran's economy ....We have some serious policy concerns about an Iran pipeline," Curtis said. Lisa Curtis Clark noted that several questions would also be asked about the advantages of such a project. "One has to ask just how competitive from a price stand point, will gas obtained from such a pipeline be as compared to gas available locally. Will the costs of building the pipeline be built into the price of the gas delivered?" If these costs are to be included, he suggested that for India it might make better sense to run a pipeline from Bangladesh because of lower delivery costs. It would also be politically easier to do this.

The Ghost of Enron Clark voiced his concern that parties involved in such projects would find it difficult to collect dues owed to them. Past American experience in India has been that sovereign commitments made by the Government ofIndia are extraordinarily good when they are made to other sovereigns. However, when these commitments are made to private parties, any disputes are commercial disputes and do not invoke sovereign guarantees. Indicating that this has been true more so in the energy sector, Clark was quick to add, "I don't mean to say that whatever happened in the Enron case was all because ofIndia ... [but] that experience has made it very difficult for people to raise money for such kinds of projects." Qualified industrial zones in Jordan have been developed as a way of creating employment with some value addition through labor. Investment in these areas is encouraged by designating zones which will have preferential access to U.S. markets and other markets in the world. The Taiwanese have invested in many ofthese Jordanian zones making them a huge success. However, Clark admitted, "What you can do for Jordan is probably not what you can do for India." Incidentally, a similar project-special economic zones (SEZs)-was started in India. "We were very excited about it, but it hasn't gone anywhere," Clark said. "It is very difficult to do trade and investment in India. That is going to change-in the last 10 years there has been a remarkable change." SAARC Role While many analysts and economic experts have been quick to blame political tensions between India and Pakistan for holding

back economic ties, Barua says solutions should be explored to keep South Asia engaged in the process of globalization. In her paper she wrote: "The success of SAARC (South Asian Association for Regional Cooperation) in achieving its stated goals for enhancing economic cooperation and delivering prosperity and well-being to one-sixth of the world's population has remained unfulfilled, even after more than a decade." SAARC's Vision 2020 envisages a South Asian economic union in successive stages. Nepalese diplomat Ram Babu Dhakal said people mistakenly expect SAARC to also solve political issues. "One of the organization's stated guidelines is that no contentious bilateral issues will be discussed by it," he said. "In general, part of the context for opening up India-Pakistan economic relations is SAARC," Schaffer suggested. Terming SAARC's trade goals "ambitious" and the organization "a very weak one," she said the trade agreement between India and Sri Lanka was SAARC's small success story in trade liberalization. "Liberalizing trade within SAARC, or between India and Pakistan, doesn't mean it will result in balanced trade, but it does mean that the smaller party has a chance to gain proportionately more," she said. Curtis concurred, "Many Pakistani and Indian business leaders understand the benefit of better trade, however, no strong equities have been built around this." Haqqani explained the reason for this, saying politics in the subcontinent was not driven by economics. "We have to bear in mind that at the per- Ram Babu Dhakal sonal level people always make economic decisions. But the debate on Partition was all about ideology and politics, not about economics. Back home, it is identity and ideology that drive South Asian politics," he said. The boom in the Indian economy coupled with an urgent awareness in Pakistan of the need to revive its economy and attract foreign investment has added impetus to enhancement of trade relations between India and Pakistan. In the current context of a thaw in diplomatic relations between India and Pakistan, panelists were cautiously optimistic about the potential for opening new avenues of trade between the two countries. However, they all agreed that this initiative was still vulnerable to derailment if the broader political issues in the subcontinent were not addressed. Cohen ended on a hopeful note saying that these potential road blocks to peace and prosperity were not insurmountable. D About the Author: Ashish Kumar Sen is a Washington, D.C.-based freelance journalist who contributes to India Abroad and Outlook.

Profile for SPAN magazine

SPAN: July/August 2003  

An American Gharana?; Digital Railroad to Fly; Think Tanks & U.S. Foreign Policy; Can Economic Diplomacy in South Asia Work?; Muscle & Magic...

SPAN: July/August 2003  

An American Gharana?; Digital Railroad to Fly; Think Tanks & U.S. Foreign Policy; Can Economic Diplomacy in South Asia Work?; Muscle & Magic...

Advertisement