Round-up of regional news

All Illustrations by Bilash Rai

REGION
The world according to Dabur
Political unrest in Pakistan and Nepal is forcing Dabur India to reconsider its business strategy in these countries. Currently, the company operates in Nepal through a subsidiary, while the operations in Pakistan are handled by its Dubai corporation. Of the INR 3.8 billion at which Dabur is currently valued, the Nepal operation accounts for around INR 400 million and Pakistan for INR 100-120 million. But prolonged instability has disrupted operations and reduced profits in both places.

Due to both the political disturbances as well as an increase in import taxes, Dabur experienced flat sales in Pakistan last year. This year, the company has predicted better growth, expecting, or hoping, that the recently formed democratic government would normalise politics and stabilise the market. Indeed, Dabur even planned to establish a full manufacturing unit in Pakistan; currently, only basic packing operations are taking place for goods shipped into the country for domestic sales.

Similarly, Dabur Nepal has been losing production days due to regular country- and district-wide closures, as well as transportation stoppages. And now, after the Maoists entered the government in Kathmandu, Dabur has for the first time faced job action by Maoist union organisers strong enough to close down its factory in Hetauda. This had not happened in any of the earlier bouts of instability of the past few years, and at the very time that Prime Minister Pushpa Kamal Dahal was on his first visit of India, seeking Indian corporate investment in Nepal.

Dabur's manufacturing factory in the country is essentially a juice factory, which has been very profitable, exporting most of its juice to the Indian market next door. With the raw materials coming from as far away as Brazil, it takes about three months to get the production schedule back on track after every disruption of the supply chain. And, with a great deal of capital invested in the Nepal factory, leaving the country is also not a viable option in the short term, say Dabur executives.

Dabur has not yet spoken of withdrawing from theses countries – an option that would be unfortunate for the goal of promoting cross-country investment as a 'confidence-building' measure for regional peace. With both of these countries currently in tenuous make-or-break political experimentation, one way of gauging their stability could be to watch the Dabur boardroom.

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BANGLADESH/ THE MALDIVES
Maldivian brother
Experiencing severe fuel shortages, Bangladesh is branching out from traditional suppliers such as Kuwait, the United Arab Emirates and Saudi Arabia, and turning instead to an unlikely source – the Maldives. The state-owned Bangladesh Petroleum Corporation recently announced that it would import 150,000 tonnes, or more than USD 183 million worth of refined oil, from the (also) state-owned Maldives National Oil Company (MNOC). Hoping to fill a domestic demand of about 3.8 million tonnes of petroleum every year, Dhaka will import 90,000 tonnes of diesel, 30,000 tons of jet fuel and 30,000 tons of octane from Male between just October and the end of this year.

The Maldives, of course, has no proven oil reserves, and itself imports essentially all of its fuel. The country does not even have the capacity to refine these products for its own consumption. Instead, in this case, it is simply acting as a broker, transferring oil from refineries owned by the MNOC in Singapore and Malaysia. Still, Male has offered the fuel to Bangladesh at a rate lower than that of the leading producers and exporters, and this cheaper rate seems to have sealed the deal with Dhaka. The Maldives-as-broker formula could perhaps be picked up by other cash-strapped and oil-needy Southasians, especially Nepal.

That oil has not been found in the Maldives does not mean that its waters do not boast any. Official sources recently said that two companies have applied to survey the surrounding waters for any trace of black gold. A similar project was undertaken by Shell in 1991 and 1992, but they came up empty. Undaunted, however, with global oil prices being what they are, Male hopes that new technologies could well detect reserves in its waters, as has been the case recently with gas in India and Sri Lanka.

At the same time, officials in Male are naturally considering whether the islands' appeal as a pristine tourist destination could be marred by the presence of giant oil rigs in its waters. And an oil spill – god forbid!

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REGION
Big BOPper
Regardless of anything else said on the issue, New Delhi continues to believe that better fences make better neighbours. As part of its border-security strategy, the Home Ministry is setting up more than 500 additional border outposts (BOPs), or checkpoints, along the frontiers with Bangladesh and Pakistan. The estimated cost of the project is over INR 18 billion. Of the total, around 75 percent of the new BOPs will be set up along the border with Bangladesh. It is not as though there are not many there already. The new installations will only be adding to the more than 800 currently in place in the east and more than 600 in the west.

New Delhi has also been shoring up the fencing and floodlights along these two frontiers. Saying that these measures have been successful in preventing 'illegal crossborder activities', the government now plans to install floodlights along the 2840-km border passing through the Northeast, including in Meghalaya, Assam, Mizoram and Tripura.

India's fence-mending does not stop there. The Home Ministry has also announced plans to construct around 1400 km of roads along the borders between India, Nepal and Bhutan. This sounds like an excellent way of linking frontier communities together, actually, though the Home Ministry says that they are only to link together its BOPs.

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INDIA/ AFGHANISTAN
New port access

As part of its substantial reconstruction efforts in Afghanistan, the Indian government has completed construction of a 220-km road in the southwest province of Nimroz, linking the landlocked country to the southeastern port of Chabahar, in Iran, and bypassing Pakistan. Through this strategic route, New Delhi itself hopes to be able to send consignments to cities across West Asia. Thus far, India had been denied overland access to Afghanistan via ports in Pakistan.

Despite the fatal suicide attack on the Indian Embassy in Kabul in July, it does not look as if India is backing out of its deep engagement in Afghanistan. It has invested over USD 1.1 billion in projects ranging from developing infrastructure to providing food assistance, scholarship opportunities and training programmes. These initiatives have helped India to maintain a positive image and a high profile with Afghans. In turn, this has helped New Delhi to gain political leverage in its relationship with Islamabad, which has historically regarded Afghanistan as more of its turf. Beyond strategic considerations, the Pakistan government is also unhappy about the financial damage it will sustain with the opening of the new road to Chabahar – losing, as it will, the tariff it had previously earned as the main transit port.

The road project also highlights India's willingness to engage closely with Iran, even as it continues to work with a naysaying US administration on the nuclear deal between the two countries. As New Delhi and Islamabad seek to outdo each other in influencing Kabul, the latter seems to be attaining some profit.

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BURMA
Outsourcing

The secretive military regime in Burma certainly does not release unemployment numbers. But a recent decision from the Labour Ministry does hint that the junta, which has faced a year of popular protests against its policies, is under pressure to provide jobs. Under the new law, registered employment broker agencies in Burma, which number at over 200, must each place at least 300 Burmese workers abroad each year. This is up from a target of 100 imposed earlier by the junta.

The penalty for not meeting the designated target could vary from delays in renewing company licenses to complete revocation. The number of applications for jobs abroad has more than doubled in the past year, as there are few opportunities within the country. Nevertheless, manpower agencies worry that it will be difficult to reach the required number because of stiff competition, including from unregistered brokers and agencies.

While many Burmese workers take up labour positions, some also find jobs as accountants, IT professionals, engineers and hoteliers. The most popular receiving countries are Thailand, Malaysia, Singapore and Dubai, with an estimated two million Burmese workers currently in Thailand, 500,000 in Malaysia and 60,000 in Singapore.

With the political future looking bleak, the Burmese economic outlook also appears that way. Burma could therefore rise as a major labour exporter, which in the long run would definitely rebound against the tight-lipped junta.

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INDIA
Look southeast

After almost six years of negotiations, India and ASEAN have finalised a trade agreement that will create an 11-country free-trade area consisting of 1.7 billion people and a combined gross domestic product of USD 2.3 trillion. Though a deal has been finalised, both sides have ensured that a fairly significant number of tradable items will be kept on the 'negative list', excluded from the free-trade pact. India will stipulate that some 300 agricultural products be kept off the list, as well as textiles and chemicals, both of which are strong areas for ASEAN countries. In turn, the 10-member block will keep tariffs in place for automobiles and steel products.

The FTA was held up for so long over a dispute over market access for palm oil, a major export product for ASEAN members Indonesia and Malaysia. In the end, New Delhi agreed to cut import duties for crude palm oil from 80 to 37.5 percent, and for refined palm oil from 90 to 45 percent, but only by 2018. India also agreed to Malaysia's demand that there be no tax on crude petroleum imports.

The current deal covers only trading in goods, though a similar pact on services and investments is also in the works. It will be formally signed at an ASEAN-India Summit in Bangkok in December. Both sides seem confident that the target of USD 50 million in trade by 2010 between the two entities, up from the current USD 38 million, will be easily achieved. What remains to be seen is whether this FTA with ASEAN will enhance the prospect of SAFTA within Southasia.

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SRI LANKA
Transferring Kachchativu

The relationship between Sri Lanka and Tamil Nadu became somewhat tense after former Tamil Nadu chief minister, J Jayalalithaa, filed a Supreme Court case disputing the legitimacy of the 'transfer' of Kachchativu Island to Sri Lanka. Colombo argues that the island was always a part of its territory, and that what India did was merely to recognise this ownership – not facilitate any kind of full 'transfer'.

Kachchativu, which lies in the waters between Tamil Nadu and the Jaffna peninsula, is completely uninhabited, home only to a Catholic church that is maintained by the Bishop of Jaffna. Both sides claimed historic ownership of the island in a dispute that was ongoing even when the countries were still colonies. In 1974, the two sides signed an agreement on maritime boundaries, and Kachchativu was recognised as Sri Lankan territory. The language describing the 1974 agreement tends to be different in the two countries, however. While New Delhi inevitably speaks of its 'transfer' of the island to Sri Lanka, Colombo speaks of India's 'recognition' of its historic sovereignty over Kachchativu.

Jayalalithaa's court case aside, New Delhi has clearly stated that it fully recognises Colombo's claim over Kachchativu. But this story, too, is not without a twist. The disagreement here has to do with fishing rights, a sensitive issue in the bilateral relationship. New Delhi maintains that under the 1974 agreement, Indian fishermen have the right to fish in the waters surrounding the island. Meanwhile, citing the same agreement, Colombo holds that while Indian fisherman may enter these waters without special permission and dry their nets, they may not actually engage in any fishing in the area.

Amidst all this ambiguity, Jayalalithaa's court case continues, with Colombo claiming that the Supreme Court in New Delhi has no jurisdiction over Sri Lanka. Meanwhile, what of the Bishop of Jaffna, the only one whose role has been clear in all of this, who has been enigmatic in his silence?

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INDIA/ SRI LANKA
Radar competition
Time and again, the countries of Southasia gain much from the game of one-upmanship that New Delhi plays with Islamabad and Beijing. The winner this time is Colombo, which has got New Delhi rushing to provide support for air defence to counter LTTE air attacks.

A major reason for Indian support is due to the fact that Beijing could well step in, should New Delhi decide not to provide the radar and anti-aircraft weaponry. India currently provides two-dimensional radar apparatuses to Sri Lanka, which capture the distance and direction of travel of approaching aircraft. Beijing, on the other hand, has three-dimensional radar on offer, which also records the altitude at which a craft is flying. India has also recently been nervous about Colombo's growing ties, and import of arms, from Pakistan.

In fact, New Delhi only offered to provide Sri Lanka with the 2D radar after former President Chandrika Kumaratunga ordered Chinese radars to counter the air fleet of the LTTE. Now, however, it looks to be stuck in continuing these provisions, for reasons entirely separate.

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REGION
Halfway through
Mixed results are continuing to show up from Southasia in terms of achieving the standards set by the UN's Millennium Development Goals. According to the recently released 2008 MDG Report, Southasia has made gradual progress in reducing the poverty rate and improving net primary-school enrolment, but continues to struggle with food, nutrition and access to better sanitation. The poverty rate in the region fell from 60 percent in 1981 to 40 percent in 2005, and the overall net primary-school enrolment exceeded 90 percent. While this is good news, rates for child malnutrition, an important indicator in measuring poverty, remain high.

Almost every second child in Southasia is underweight, and over two-thirds of the population has no access to improved sanitation. As indicated in the report, child malnutrition accounts for more than one-third of all deaths of children under five. The region also performed dismally in the area of reproductive health, with the worst numbers among all the developing regions of the world. Southasia comes second only to sub-Saharan Africa in maternal- and child-mortality rates.

Experts at the launch of the report in New Delhi admonished the government for a lack of political will, and warned that the country was not on track to meet its MDG criteria by 2015. If Indian makes up the majority population of Southasia by far, then its improvement alone would up the regional record.

NEPAL/ TIBET
Kathmandu's Tibet protests
In recent months, Nepal has been arresting pro-Tibet protestors in Kathmandu on an almost daily basis. Now, the newly formed government has intensified its stance, handing over 106 Tibetans to the United Nations High Commission for Refugees (UNHCR). The individuals in question were arrested during protests that have been held very regularly since the uprising in Tibet in March, and had refused to answer questions when interrogated. UNHCR is said to be verifying the status of those handed over to them, while immigration authorities have said that they will not be allowed to remain in Nepal if they do not fit the criteria for refugee status. This move is said to have come about due to great pressure on Nepal by Beijing to conclusively address the regular 'anti-China' protests.

It was initially reported that those not meeting the criteria for refugee status would be deported back to -where they had come from, meaning that many could be sent back to Tibet. But new reports maintain that those unable to prove their refugee status in Nepal would be sent to a third country (a reference to India), through UNHCR. Nepal has further said that those of the 106 who continue to refuse to answer questions will be treated as illegal immigrants and kept in prison. Authorities maintain that many of the protestors travelled to Kathmandu from Dharamsala, the seat of the Tibetan government-in-exile, only to join the protests.

Nepal is home to about 25,000 registered Tibetan refugees, most of whom arrived before 1990, and were officially allowed to live in the country. After that time, Nepal changed its policy so that new refugees were handed over to UNHCR, which helped them move to India. It has been reported that even the children of formally recognised refugees are having difficulties getting their documents.

Although Nepali police have regularly been arresting hundreds of Tibetan protestors, they have often been released the same evening. Now, however, the newly formed Maoist-led government appears to be taking a much harsher stance on the issue – despite the specific inclusion in the new government's 'common minimum programme' to extend all assistance to repatriation efforts for Nepal's other notable refugee community, the Bhutanese.

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INDIA/ PAKISTAN
Whose river?

Another serious dispute is brewing between India and Pakistan, this time over the reduced flow in the Chenab River, which forms in upper Himachal Pradesh and flows down to Pakistani Punjab through Jammu & Kashmir. Pakistan is demanding compensation from India for the agricultural losses it has incurred due to the stoppage of water flow into the river, which Islamabad argues is caused by India filling up the Baglihar Dam and by a hydroelectricity project it is constructing in Doda District of Kashmir. Islamabad is seeking compensation for the estimated 40 percent reduction in the Chenab's flow.

If talks do not result in compensation, Pakistan has said that it will take the matter to the World Bank, which is the arbitrator of the 1960 Indus Waters Treaty signed by India and Pakistan. Under the Treaty, India has exclusive control of three rivers in the east, while Pakistan enjoys the same rights over three rivers in the west, including the Chenab.

In accordance with the agreement, a commission was set up to mediate any further dispute arising from the allocation of water. Since its conception in 1992, the Baglihar Dam has been a serious point of dispute. Long unhappy with the project, Pakistan asked the World Bank to stop its construction in 2005. After India made some minor changes to the plan, the Bank allowed the project to continue.

Meanwhile, India maintains that September has always been a month of low water flow, claiming that Pakistan is creating a situation only because it is unhappy that the Baglihar Dam project was allowed to continue.

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BHUTAN
Set to soar

As Druk Air celebrated its silver jubilee on the first of September, the national airline unveiled its plans to expand by including more routes and destinations. Druk is scheduled to start a Paro-Bagdora-Bangkok schedule from mid-2009, while it is also looking into the possibility of flying to the US, by using a partner airline from Bangkok.

Not that the problems facing the rest of the airline industry are not impacting on this carrier, as well. Druk Air's plan to launch a service from Kathmandu to Bombay last year was shelved due to increase in fuel prices and airport charges in Bombay. And though the airline is currently able to cover its costs, it is running at a loss due to accumulated expenses. To take full advantage of Druk's two Airbus 319 aircrafts, the carrier also rents the planes during overnight stops in Bangkok.

From a modest start in 1983, when it carried around 3000 passengers with Dornier 18-seaters, last year Druk Air ferried about 130,000 passengers – twice its national population. And now it is set to carry many more, by flying the carrier from the Indian Northeast to Bangladesh.

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REGION
Border brawls
Border disputes, whether over land or water, are a dime-a-dozen in Southasia, and none of them are close to being resolved. Talking after a 28-year-long gap, Dhaka and New Delhi were recently unable to settle their differences on the two main areas of contention: sovereignty over the island of South Talpatti (or Purbasha, as India calls it), and the exclusive economic zone in the Bay of Bengal.

The dispute over South Talpatti/Purbasha is based on contradictory claims of where exactly the mid-stream – the internationally accepted demarcation point – of the Hariabhanga River is to be found. India says the mid-stream is on the eastern side of the island, while Bangladesh argues that it is in fact on the western side. Neither side changed its position (or that of the mid-stream) after the three-day meet.

Nor was a compromise hammered out on the exclusive economic zone, which is significantly more complicated. India, Bangladesh and Burma, which share the Bay of Bengal, have never been able to agree on specific borders. And the discovery of gas in the waters within the last few years, indicating the possible existence of significant gas-and-oil reserves, has only intensified the hostility. Though each country contests the other's right to survey the waters for natural resources, all three have individually allowed bidding by companies for exploration – and even drilling, in the case of India and Burma – in the Bay.

The recently concluded meet was especially important to India, which is scheduled to present its claims on border demarcation to the UN next June. Had New Delhi been able to reach agreement with Dhaka, this process would be assured to run much more smoothly. Burma, similarly, is slated to present its claim to the UN next May, and will meet with Bangladeshi representatives in November on the issue. Dhaka, meanwhile, has until 2011 to present its claims, and it is reasonable to conclude that the issue will likely not be resolved before that time.

Maritime borders are in fact relatively simple to demarcate – under international law, each country has rights to 200 nautical miles of sea beginning from its coast. Complications in this case arise from the fact that the coasts of the three countries follow a curve, meaning that the areas overlap. So, in reality, there is no 'objective' solution to the problem, instead requiring the stakeholders to negotiate and compromise – sometime.

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