Lessons from the EU

The worldwide proliferation of politico-economic groupings, including multilateral institutions, in the aftermath of World War II has been substantial. However, only a handful of them can claim to have achieved success in terms of economic and/or political cooperation and integration. One such successful example is that of the European Union. Like Southasia, Europe has experienced some of the most horrific intra-state conflicts over the course of its history, even during the late 20th century. So what has made 27 countries, whose people speak 23 different tongues, come together to form one of the most successful customs unions known so far, while similar integration has been eluding Southasian countries?

Cooperation among West European countries in the immediate aftermath of World War II was conceived as an endeavour in conflict transformation and peace promotion. The principal strategy adopted to attain the objective of peace and coexistence among these countries was through economic cooperation, and later economic integration. In 1949, West European countries established the Council of Europe; by 1951, six countries, namely Belgium, France, Germany, Italy, Luxembourg and Netherlands, had signed a treaty to operate their heavy industries under common management.

The European Economic Community (EEC), which came into operation on 1 January 1958, also formulated a common agricultural policy. Ten years later, the same countries entered into a customs union, thereby removing customs duties on goods imported from each other, and introducing uniform import duties for goods imported from elsewhere. Their various national currencies were allowed to fluctuate against each other; this exchange-rate mechanism was the first step towards a common European currency, the Euro, introduced in 2002. The EEC gradually formulated social, environmental and regional policies in addition to its economic ones, and became known as the European Community. The Maastricht Treaty, signed on 7 February 1992, made this transformation complete and paved the way for a single European market – heralding free movement of goods and services, finance and people.

In comparison, a quarter-century after its inception, SAARC remains as it started, primarily a political body. One of the main impediments to the process of regionalism in Southasia has been the 'mandatory consensus' required in decision-making. This provision, enshrined in the SAARC Charter, has stifled progress in economic cooperation and integration. Thus, every proposal submitted by a member country or group of countries has to be agreed upon and ratified by the entire SAARC membership, in order to be implemented. The political culture in SAARC has prevented meaningful progress due to this binding requirement. Conversely, individual countries were allowed to opt out of treaties and agreements reached by the majority of the member countries of the EU. This has allowed the EU to forge ahead successfully despite individual countries opting out of some of the treaties, policies or agreements. Examples include Britain's refusal to embrace the Euro and, more recently, Ireland's rejection (through a referendum) of the Lisbon Treaty to draw up a common constitution for the EU.

Minion mindset
The fact that SAARC Summits can take place only if all heads of states or governments agree to attend has postponed these meetings several times, mainly due to the refusal of India or Pakistan to attend for one reason or the other. Indeed, during its nearly 23 years of existence, there have been only 14 summits. On the economic front, preferential trade agreements among SAARC members have barely increased intra-regional trade, due to exemptions through the so-called 'sensitive lists', and the agreement on the South Asian Free Trade Area (SAFTA) is yet to be fully implemented for similar reasons. Even the bilateral free-trade agreements that have been signed between some SAARC members contain 'sensitive lists', whereby thousands of goods are excluded from duty-free trade.

Another reason for active political and economic cooperation in the EU is that new legislation and policy proposals primarily emanate from the bureaucrats of the European Commission rather than from the politicians, upon approval by the European Parliament and the Council of Europe. The SAARC Secretariat, on the contrary, plays second fiddle to the political heads of Southasia, and is thus ineffective in developing and implementing legislative and policy proposals.

India's population and geographical area are about three times larger than all other Southasian countries combined, and now its demographic and physical domination is also compounded by its rapidly growing economy. Given these circumstances, India provides both challenges and opportunities for greater politico-economic cooperation and integration among Southasian countries under the aegis of SAARC. While India should be accommodative of and sensitive to the concerns of its neighbours, the rest of Southasia should shirk its minion mindset and take advantage of the opportunities thrown up by India's economic growth. The Netherlands, Singapore, Switzerland, Taiwan and many more countries have proven that size does not matter in an interdependent globalised world. Indeed, Hong Kong has emerged as an economic powerhouse despite the overbearing presence of mainland China.

For now, it appears that SAARC member countries have put the cart of politics before the horse of economics. It is high time the political leaders and bureaucrats of Southasia realise this and change course, in order to do justice to their respective taxpayers and to the region as a whole.

~ Muttukrishna Sarvananthan is principal researcher at the Point Pedro Institute of Development, Sri Lanka.