Round-up of regional news

BANGLADESH/ INDIA
Power-hungry

Perhaps counter-intuitively, nothing leads to cooperation between Southasian countries better than crippling shortages. With much of the region reeling under severe power scarcities, there are always plans afoot to share electricity. India, for instance, has been buying power from its smallest land neighbour, Bhutan. But India also shares electricity with needy neighbours, such as resource-rich but power-poor Nepal. Now, Bangladesh is to be added to this list.

Dhaka and New Delhi are set to sign an agreement on sharing electricity during Prime Minister Sheikh Hasina's official visit to New Delhi in mid-January. The plan is to set up a 740-megawatt power plant in the Indian state of Tripura, which will provide electricity across the border. India is expected to provide power for 17 hours per day, during non-peak times. Furthermore, it will now also be possible for Bangladesh to source power from Bhutan, through Indian territory.

Meanwhile, for India, the agreement is a way to source the natural gas it desperately needs. Indian officials are saying that if Bangladesh wants any more than 23 percent of the Tripura plant's total output, Dhaka will have to supply gas for it from its own reserves in the nearby Salda fields. This is not the first time India has made a bid to get gas from Bangladesh. In 2002, New Delhi tried to import gas from the Bibiyana fields in the northeastern Hibagani District.

But that deal fell through when it became clear that the reserves there were not adequate to serve Indian domestic demand for a stipulated 50-year period. Such a deal may also result in crossborder investment in the power sector. The Tata Group recently revived its long-shelved plan to set up power plants in Bangladesh using gas from Bibiyana and then selling the surplus electricity to India. Alongside crippling shortage, after all,comes cross-border cooperation and surging business opportunity.

BHUTAN
Miracle elixir

For a country that has been so fiercely isolationist, Bhutan may well be gearing up to open the economic floodgates. To date, most industry in the country remains closed to foreign investment. But with the country's parliamentarians currently revising the country's policy on foreign direct investment (FDI), this is likely to change in the near future.

Already, companies are lining up to take advantage of the potential loosening. The first on the radar is American real-estate developer Carpenter & Company, which is said to be eager to acquire exclusive rights to sell Bhutanese mineral water outside the Subcontinent. Druk Holdings and Investment, the government's investment arm, has confirmed that it is in talks with the conglomerate, but is remaining tight-lipped on details.

So eager is Carpenter & Company to start hawking Bhutanese water that it initially approached the Bhutanese Ministry of Economic Affairs about investment possibilities in April 2009. With the laws then banning foreign investment in the water sector, however, no movement was possible. But a deal may well be possible if the new FDI draft, which allows foreign investors 74 percent equity in the mineral-water industry specifically, is passed. And considering the current government's enthusiasm for programmes to propel economic growth, the bill will in all likelihood become law.

The enthusiasm being shown by Carpenter & Company and Thimphu is, however, not mirrored in the Bhutanese private sector, which opposes allowing the American company a monopoly. Indeed, the issue goes beyond dissatisfaction as the Bhutanese Constitution specifically does not allow legislators to create laws that allow monopolies to be formed unless it is a national security matter.

INDIA
Purely filthy

There is nothing pure or holy about the filth that clogs up the River Ganga. Extreme pollution from industrial chemicals, farm pesticides and straight sewage has made it dangerous for people even to walk along the riverbank without a mouth mask in most parts. A more dreadful sight are the corpses that can be spotted in the waters.

This state of affairs is, of course, nothing new, and the Indian government has regularly promised to clean up the river for some two decades now. A 1989 plan to do so proved a failure due to its limited focus on individual aspects, such as containing sewage effluents and not enough on the Ganga water basin as a whole.

The truth, however, is that the Ganga, one of the most polluted rivers in the world, requires more than just sewage-emission controls. New Delhi appears to have only recently recognised this reality, and begun planning a new strategy of river treatment that aims to clean up the river by 2020. Of course, the central problem remains the untreated sewage that flows into the river, accounting for about 75 percentage of the overall filth. The aim is to halt contamination at the source while also addressing industrial waste, the second most significant pollutant.

The World Bank has come forward to support the new effort by providing USD 1 billion in support. The plan involves building sewage-treatment plants, revamping drains and other measures to improve water quality in the river. More importantly, this plan aims to look at the entire river network, stretching across 2500 km, affecting some 400 million people. Considering the scale of the necessary clean-up, one wonders how far a measly billion will go.

NEPAL/ CHINA
Tit-for-tat

In a high-stakes gesture of comeuppance, December saw Chinese traders refusing to allow 26 containers of goods worth USD two million headed to Kathmandu to pass into Nepali territory. Though having cleared customs at Khasa, the border point on the Tibetan side, the civilians stopped the transaction to protest the theft of USD 300,000 on the Nepali side of the border in mid-October. The crime has the dubious honour of being the largest reported theft in a foreign currency in Nepal. As it happens, holding that amount of cash in a foreign currency within the borders of Nepal is illegal.

How the disgruntled businessmen are connected to the stolen money or the victim of the theft, reportedly a Tibetan trader in Kathmandu, remains unclear. Indeed, most of the crucial details of the crime, including the parties involved and the manner in which the Nepali police are handling the case remain murky. The investigation into the theft, now over a month old, has been embroiled in controversy, with no information on where the money may be.

The case has already put the then-Metropolitan Police Commissioner Kalyan Kumar Timalsina in hot water, allegedly for overstepping his jurisdiction by holding two constables in connection to the theft. Home Minister Bhim Rawal has reassigned Timalsina and convened a panel that has concluded its report on the matter but has yet to make it public. Rumours abound that the police hopes that the case will simply disappear, an increasingly remote possibility considering the magnitude of the stolen amount and the protests by the Chinese traders.

PAKISTAN/ AFGHANISTAN
Talking the walk

Regardless of whether talks are actually ongoing, talk of talks always gets people talking. And if that's confusing, so too is figuring out whether the Taliban leadership in Afghanistan is negotiating with any of their foes, ranging from the US, the UK, Kabul or Islamabad. The latest round of such stories came in late November, suggesting that the US was looking to hold secret negotiations, mediated by Saudi Arabia and Pakistan.

With US officials now publicly stating that they would consider sitting down with the Taliban if doing so would bring stability to Southasia, this rumour may well be true. But these overtures, if they were in fact made, now appear to have been shot down decisively by the Taliban. Taliban 'spiritual leader' Mullah Omar released a typically fire-and-brimstone statement in late November, warning that the Americans only want "talks that will ensure the continuation of their occupation and dirty colonial policies".

But though the head honcho has made his views clear, a number of mid-level Taliban leaders in Afghanistan are said to have taken the US up on the offer. Amidst all this back and forth, the big news here is how conciliatory the US appears to have suddenly become, abandoning its heretofore rigid stance. US Ambassador to Afghanistan Karl Eikenberry even went so far as to offer to accept "Taliban rule" in a number of provinces – though what exactly this entails has not been spelled out – if the Taliban halt attacks on US forces and installations in Afghanistan.

Around the same time, US Special 'Af-Pak' Envoy Richard Holbrooke confirmed that Saudi King Abdullah is attempting to make contact with the Taliban, publicly stating that the US supported the effort. Saudi Arabia is said to have initiated a similar endeavour to mediate talks between Taliban leaders and Kabul in 2008, but to naught. The US appears to have some hope that this round will bear fruit.

REGION
Troublesome transit

In May 2009, Islamabad and Kabul signed a memorandum committing to implementing a trade-and-transit agreement by the end of the year. This bit of news had neighbouring New Delhi enthused, looking forward to the prospect of being allowed to use the Wagah-Khyber Pass route through Pakistan to trade with Afghanistan. Just in time to meet that deadline, the two countries came to a decision on 21 December, albeit one that leaves Delhi out in the cold.

Islamabad is permitting Afghan traffic into India, but has stalled on agreeing to trade in the reverse direction. Possibly, this 'concession' might have been made because of Islamabad's desire to smooth out the passage of Pakistani trucks through Afghanistan and into the Central Asian Republics – though it is difficult to see how Kabul will guarantee the cessation of  the 'extortion money' local warlords and authorities presently insist on.

It is no surprise that politics is also an issue for India-Afghanistan trade, with Islamabad saying it would allow India transit rights only if New Delhi proved itself a "good" neighbour – by finding a solution to the Kashmir dispute. Islamabad has eschewed outside intervention in the trade negotiations, keeping out the United States (who sponsored the talks and apparently pressured to gain passage to Afghanistan for India, its "strategic ally") and even barring World Bank officials from observing the proceedings. The Pakistani Ministry of Commerce obscurely explains that such a move would affect Pakistan's international trade. Pakistani officials have further stated that the matter of Indian trade can only be discussed at the bilateral level, with the resumption of the dormant Composite Dialogue between the two governments. This does not appear likely anytime soon.

Before 1965, Afghanistan and Pakistan had a similar agreement to the one that is being finalised now. But that agreement was plagued with problems, with massive smuggling of black tea, tyres, electronic goods, kitchen items and home appliances, among other things, into Pakistan from Afghanistan. Trade, formal or otherwise, between Pakistan and Afghanistan has not been a small matter, amounting to an estimated USD 3 billion per year. The new agreement might be a boon to both governments if it can curb the revenue loss that occurs as a result of the informal trade sector escaping taxation.

BHUTAN
Quantity vs quality

Much of the exotic and exclusive charm that Bhutan exudes is, for some tourists, a function of the exorbitant amounts of money Druk Yul charges for the experience. Having already lightened bank accounts at a rate of USD 200 a day to make the visit, it is an imperative soak up as much as possible of the reigning happiness. But an executive order scrapping the tariff, which is currently under review, has tour operators in a tizzy.

According to the entrepreneurs, their biggest concern is the impact this directive may have on the country's marketability. The cynic could, of course, say that the loss of revenue is what is actually causing palpitations. Regardless, the crux of the argument depends on how much of Bhutan's sellability relies on its non-affordability. In a related issue, concerned citizens wonder whether Bhutan has the necessary infrastructure to handle the proposed influx of tourists and whether this would do irreparable damage to the country's natural environment and cultural heritage. It goes without saying that there are no plans to do away with the USD 65, of the total USD 200, that lines the government's pocket.

This latest move comes a few months after the government paid USD 9 million to the global management consulting firm McKinsey to advise on strategies to boost Bhutan's economic growth. One of the recommendations McKinsey made in its final report was a suggestion to increase tourist arrivals to about 250,000 individuals annually within the next three to five years. Far short of these foreign ambitions, Thimpu set its target at 100,000 guests by the end of 2013, when its five-year plan expires. Meanwhile, the association for Bhutanese tour operators had planned for 50,000 visitors within the same timeframe. The kingdom hosted 28,000 tourists in 2008, a number some ten times short of McKinsey's goal.

The long leap aside, Bhutan's aviation industry will also not be able to sustain such numbers. Currently, only two 114-passenger Drukair flights are in operation. Running at full capacity, this comes to only 83,220 passengers a year. Added to the evident pressure on planes and pilots, would be the strain on "trained guides, on transport, accommodation, ponies during trekking season and so on," as iterated by an official. If a soar in tourism is what the government aims to achieve by doing away with its expensive packages, there is no alternative to a well-managed and phased approach in sprucing up the accompanying infrastructure.

NEPAL
Revisiting garments

In recent years, the Nepali export business has witnessed a massive downturn in both of its major international markets, the United States and India. Formerly, the US was the largest buyer of Nepali readymade garments, importing almost 80 percent of the total output. Similarly, Nepali exports to India have also been declining, largely due to an additional duty of four percent imposed on garments by New Delhi.

In order to revitalise the industry, Nepal has now taken a first step in the form of drafting a trade treaty with the US. Kathmandu initiated this process at the ministerial meeting of the World Trade Organisation, which concluded in Geneva in early December. In this latest round, a draft agreement was submitted to the US by the Garment Association of Nepal.

If an agreement is reached, it will be the first bilateral trade understanding ever struck between Kathmandu and Washington, DC. To date, the relationship has functioned within the contours established by the WTO. But increasingly, more so-called Least Developed Countries are finding that the WTO system does not allow them easy access to world markets. This has led to a greater focus on bilateral agreements.

In the Nepali context, industries have suffered dramatically in the last decade as a consequence of the conflict and the ensuing political turmoil. In 2005 alone, Nepali exports to the US declined by 90 percent, with about 100 garment factories closed and more than 95,000 workers losing their jobs. Many of those individuals are undoubtedly now watching these negotiations closely.

SRI LANKA
Desperately seeking

Even as phrases like alternative energy, carbon neutrality and reduced emissions have been thrown around in Copenhagen (and, seemingly, everywhere else), everybody who is anybody continues to aggressively hunt for oil back home. So it was with Colombo, which, in the midst of the climate summit in mid-December, announced that it was eager to expand drilling for oil in the waters off of its northwestern coast.

Indeed, Cairn India, a regional subsidiary of a British energy outfit, began a survey of the area the week before Colombo publicly stated its intentions. The exercise, predicted to cost USD 100 million, is scheduled to be completed by early 2011, at which point the company is assuming that it will proceed with the drilling. In 2008, the Sri Lankan government leased an exploration block of 3000 square kilometres to Cairn.

With no known reserves, Colombo is forced to import the entire quantity it requires, amounting to an expenditure of USD 3.4 billion in 2008. No surprise, then, that Sri Lanka has long been eager to get exploration off the ground in its territorial waters. Colombo even gave India and China one block each for exploration last year, though neither country has begun survey activities.

BURMA
Junta junket

All varieties of lectures on development take place across the region on a very regular basis. Highly secretive and fearful of allowing any dialogue, Burma has long been a notable exception to this. But can we see a slight opening of the door by the junta as surmised from a trip that was allowed recently? Unlikely as that seems, the jungle capital of Naypyidaw recently played host to a bonafide celebrity of the development sector.

In mid-December, Joseph Stiglitz, the Nobel Prize winner in economics and former head of the World Bank, jetted to Burma. His mission: to study the rural Burmese economy and advise the junta on what measures are needed to strengthen it. Organised by the Economic and Social Commission for Asia and the Pacific (ESCAP), a regional UN body, the visit was part of a larger attempt to engage more closely with the military state.

In addition to personal meetings with the ministers of agriculture and national planning, Stiglitz also delivered a lecture on poverty reduction. The economist was allowed to interact with diplomats as well as local and international NGO representatives, albeit during a series of meetings sanctioned by the junta.

As positive as it is that the paranoid generals allowed in Stiglitz, one wonders how the post-lecture question-and-answer session fared. An honest response to the question, "How would you rate the Burmese government's performance is providing for the rural poor?" would probably put an end to similar visits in the future.

THE MALDIVES
No recovery
The last few years have been tumultuous for the Maldives – a devastating tsunami, political upheaval and, most recently, a crippling economic crisis. But there is more bad news in the cards. According to the Maldives Monetary Authority, the national gross domestic product is predicted to contract by 1.3 percent for fiscal year 2009. Similarly the tourism sector has been hit by an 11 percent decline, and the construction sector is projected to decline by some 24 percent.

National inflation, mostly as a result of rising prices, has soared to almost 11 percent. Fishing, the major source of income for many, has also suffered. Although the first few months of 2009 did see an increase in catches, only 30 percent of the total fish caught were sold. The volume of fish exports also declined sharply, by 54 percent.

In order to cope, President Mohamed Nasheed's government has committed bringing public finances on a sustainable path, mustering adequate multilateral and bilateral assistance, and strengthening the liquidity and capital position of the banking system. In line with the second element of this programme, the International Monetary Fund has announced a bailout package worth USD 92.5 million, hopefully  thereby shoring up foreign reserves.

To bring order back into the fiscal house, the government is also planning staff reductions, scrapping some 9000 positions. Male has promised to cushion the blow by moving those given pink slips to the private sector, though many predict that things will not happen
as planned.

REGION
Gloom or boom

Just when global markets were beginning to give in to optimism, believing that the drawn-out financial recession was nearing an end, the system has been thrown a new shock. With fears flaring up over the recent tremblings in Dubai, there has been much consternation and hand-wringing in major and no-so-major financial centres. Today, the extent of the crisis in Dubai and the extent of the domino effect it may have remain unclear. What is certain, however, is that the future of the many Southasian who flock to their western neighbours in search of employment is intrinsically tied to developments in
West Asia.

It is an undeniable fact that foreign remittances have for decades shored up India's balance of payments. NRIs living and working in the oil-rich Gulf Countries contribute billions of dollars to the home economy, amounting to USD 52 billion in 2008 alone. The situation is only more remittance-reliant in the smaller Southasian nation states. In 2009, India has suffered a 35 percent drop in the number of citizens working abroad due to job losses in the Gulf. Indeed, 60,000 migrant workers returned to Kerala alone.

But India's loss might be its neighbours gain, as the total outflow of migrant labour to the Gulf from Southasia has actually increased. Estimates suggest that remittances to Southasia have increased. While Dubai has experienced a contraction in its demands for workers due to the bust of its construction boom, neighbouring Saudi Arabia accommodated those laid off to service the spurt in its construction sector. The picture is further complicated by employers, who are responding to the economic crises by decreasing benefits and even cutting salaries, something that may have an impact on remittance amounts.

Some of the six members of the Gulf Cooperation Council – made up of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates (UAE) – have also loosened visa policies, allowing laid-off workers time to find employment within the host country. But Southasian countries have proven themselves notoriously lackadaisical in protecting their migrant workers, despite the financial windfall they provide. In the fragile economic environment of today, this bodes poorly for the migrants, their families, and indeed the Sucontinent.

REGION
Digital memory

Welcome the past into your nifty laptops, as the Southasian Oral History Archive has now been put online. The archive is owned by Cambridge University's Centre of South Asian Studies, and houses over 300 recordings of interviews with witnesses of the Raj era and Independence. The complete archives include over 500 hours of audio material as well as 10,000 pages of interview transcripts, compiled during the 1960s and 70s. In order to back up the original cassettes and reel-to-reel tapes, digital copies have also been made.

Among other things, records include accounts of meetings with Mohandas K Gandhi as well as testimonies by freedom fighters who fought against the British. Moreover, there are interviews with ordinary people like doctors, missionaries, farmers and police officers, providing personal memories of the time. The entire collection is being made available in full, for free, as streamed audio at s-asian.cam.ac.uk.

In the past, the use of these invaluable resources had been strictly prohibited, due to their fragile nature. But advances in recording, playback and information technology have meant that people can now access these fading memories anywhere, anytime.