x Abu Dhabi, UAE Thursday 20 July 2017

Bangladesh and India improve ties

Prime minister's first visit to India results in pacts to open transit routes and seaports, and drop several tariffs on Bangladeshi goods.

NEW DELHI // Bangladesh's prime minister, Sheikh Hasina, ended her three-day visit to India last week with a series of treaties and agreements that could, some analysts say, signal a new era in bilateral ties while offering a model of South Asian co-operation.

"It was a very important visit, and the outcome was a new spirit of co-operation now and in years to come," said Mustafizur Rahman, the executive director at the Centre for Policy Dialogue in Dhaka. Among the agreements reached, the most important were a deal to co-operate more closely to combat terrorism and a pact to open up Bangladesh's two underused seaports to marine traffic not just from India, but also Nepal and Bhutan.

New Delhi agreed to open up Indian transit routes to connect Nepal and Bhutan to Bangladeshi ports, to drop a number of tariffs on Bangladeshi goods and services and to extend an infrastructure credit line of US$1 billion (Dh3.67bn). This will dramatically improve connectivity and trade throughout the region, while easing Indian access to its seven north-eastern states. "Yes, we do want better relations, and rightly so," said Srinath Raghavan, an analyst at the Centre for Policy Research in New Delhi. "Since 1973 onwards, we have always suffered from the problem of India as the dominating partner, but now we have a new government willing to risk some kind of domestic opposition to build better ties."

This was Sheikh Hasina's first visit since winning a landslide victory in the presidential election in December 2008. She has played an active role in Bangladeshi politics since the impoverished state separated from Pakistan in 1971, and has always been considered pro-India. As a sign of the growing goodwill between the two countries, New Delhi awarded her the Indira Gandhi Prize for Peace, Disarmament and Development, worth 2.5 million Indian rupees (Dh200,000), which Sheikh Hasina is donating to charity.

Others were less happy at the warmer relations between the two countries. The Bangladesh National Party (BNP), led by hardline nationalists, termed the visit a "sell-out" and said it would turn the country into an "Indian market". The party is threatening protests. Most analysts, however, said the pacts would go a long way to rectifying Bangladesh's chronic trade deficit with India, which is widening at a rate of about five per cent per year. Recent figures put Indian exports to Bangladesh at $2.8bn while imports were just $275 million.

"We need to have a trade balance between the two countries. We want Bangladesh to become a poverty-free country," Sheikh Hasina told Indian industry leaders. Her trip came just days after confirmation that India's Bharti AirTel is buying 70 per cent of Bangladesh's Warid Telecom from the Abu Dhabi Group. Intra-regional trade accounts for only three per cent of all trade within the South Asian Association for Regional Cooperation (SAARC), said its president, Annisul Huq.

By comparison, intra-regional trade accounts for 52 per cent of trade within the EU, and 28 per cent with the Association of South Eastern Nations area. SAARC comprises India, Bangladesh, Bhutan, Nepal, Pakistan, the Maldives and Sri Lanka. Significant infrastructure investment will be required for Bangladesh to gain the benefits of these deals, however, including the widening of roads and the expansion of its ports at Mongla and Chittagong, both of which are operating significantly under capacity.

"We need to build up container capacity at Chittagong," said Mr Rahman from the Centre for Policy Dialogue. "But we are also thinking about a second deep-sea port at Chittagong, and this would only be economically viable if we have sufficient trade and commerce, so this is very important." The pacts also remove hurdles stalling development of the $1bn gas pipeline linking Myanmar to India via Bangladesh.

Dhaka insisted upon a reduction of its trade deficit, and the establishment of a trading corridor for Nepal and Bhutan, as conditions for implementation of a development agreement signed three years ago. China has since stepped into the breach and is building pipelines to export Myanmar gas, but the fields in question are considered large enough to supply India and Bangladesh as well. "Something could happen in two to three years with Indian companies such as Gail, Essar Oil, ONGC and IOC exploring gas in Myanmar," Myanmar's ambassador to India, U Kyi Thein, said recently, according to Asia Times.

Mr Rahman confirmed that China had also expressed interest in access to Chittagong as part of its "string of pearls" drive to improve its overall seaport access. But Mr Raghavan at the Centre for Policy Research said Chinese interest was not the driving force behind New Delhi's decision to sign the pacts. "Access to these ports would help India smooth access to its north-eastern states. This is more internally driven than externally driven," he said. "Beyond that, as a counterpoint to China - I am not convinced that the 'string of pearls' has a strategic purpose rather than a political purpose."

He said the port of Gwadar in Balochistan province of Pakistan, for instance, is being built by the Chinese as a container port and not as a naval base, which has very different requirements. This is just about "building equities with people," Mr Raghavan said. Most of the agreements are in framework form and details have to be sorted out, but they are expected to include the extension of existing water protocols between the two states, the resolution of some longstanding territorial disputes along the border and the Indian export of 250MW of power to Bangladesh (one megawatt is enough to power 1,000 western homes).

India is expected to cede up to 4,000 hectares to enable the assimilation within national boundaries of a series of small parcels of land held by both countries on either side of the border. foreign.desk@thenational.ae