Monday, January 02, 2006

Refusing Transit to India : Is Bangladesh missing something?

In part one of this series of blogs covering Bangladesh refusal of UNESCAP to join under their plans, I would like to put my view on the contensious transit issue.

What is this transit issue altogether?
The transit for a country is mainly access through a country to the third one. For example, India has a transit to Afghanistan through Iran. So, Indian goods can board from Iranian ports and go through to Afghanistan. However, due to geographical complexity, in this case, the transit refers to connectivity between North-East Indian seven states with mainland India, especially West Bengal. The goods carried from North East, comes to mainland India through a strip of Assam and North Bengal, taking a route miles longer than what could have been a shortest through Bangladesh. Bangladesh govt. never allowed India to have a transit in return of a hefty transit fee offerred by India. The transit, that could have been a win-win situation, has been refused as a threat to National security. The other point of interest here could be the transhipment. Here, Transit refers to the passage across Bangladesh territory of Indian goods to and from the north Eastern states of India using Indian owned surface transport, while transhipment refers to the same movement using Bangladesh-owned transport.

History
The transit was used by India till 1965 war, since then it got stopped. The war was between India and Pakistan. In the mean time, Pakistan broke, Bangladesh was born, but situation remained unchanged. Though after independence, Bangladesh allowed India the transit in air-routes and river, the major issue of road-transit is still not tackled. The river-transit is almost abandoned for being incompetitive, the mutual air-transit is still in use.

Transit - How India gains out of it
The main gainer of this whole process would be the people of North-East of India. Right now, anything produced in that region can not be marketed in the rest of India, due to the distance from port (Kolkata). From past decade, India is becoming more dependent on foreign and private investments in growth picture. But, no company will want to invest in this remote corner of the Northeast, because of the logistical problems of Sevens Sisters linking in with the rest of India. So the only real economic future of Northeast lies in reopening its route through Bangladesh to its West and with Myanmar and South-East Asia to the East. For additional benefit, if they are allowed to use a Bangladesh port, the export oriented business can also come up in this region. The region is rich in energy resources, like natural gas and hydro-electricity. The economic progress in this region can stop a long-standing grievence and insurgency resulted.

Transit - How Bangladesh gains out of it
The gain of Bangladesh can be manyfolds.

1. How Bangladesh can become a regional transport hub, was described by ADB Country Director Hua Du in a seminar recently. She mentioned - "You can benefit tremendously through opening up transit and great opportunities for crossing from east to west and giving the land-locked neighbours access to the sea".The Chittagong port can become a modern busy port like Singapore serving the SAARC countries and even China. Huge foreign investment may be attracted to Bangladesh and finally a throbbing service sector like banks, insurance, hotels, rest houses, petrol pumps etc. may develop around the Trans continental roads and railways.
2. There is an estimate of direct economic gain from transit fees. It ranges from 500 crore taka to 4,666 crore taka.
3. The last but not the least, is the mutual transit. Bangladesh, in return, will get a much shorter route to China, which already is its second largest trading partner. Unfortunately, most of the trading nowadays takes place through sea-route. The cost of import increases, as well as Bangladeshi goods loose competitiveness in Chinese market. If Bangladesh wants to access South Chinese underdeveloped market, they must go through India. This was a point of concern for the Chinese delegates during Kunming initiative in 1999, an initiative to link Chinese province of Yunan with Seven Sisters of India, Myanmar, Thailand and Bangladesh. See reference map to link Kunming in China with Bangladesh.


The potential damages Bangladesh could suffer

1. The corridor through Bangladesh could increase Indian Intelligence Service activities in Bangladesh.
2. It could lead to spreading of AIDS and could become a potential route for drug-trafficing.
3. The road and ports of Bangladesh could get overcrowded, thus resulting in poor efficiency in domestic industries.

Keeping in view the benefits, it seems the above mentioned risks are too small, from economic perspective. But, a country is not made up of its economy only, it has its political, ideological and popular faces also. To sum up the whole condition, Bangladesh currently does not allow India the transit because of non-economic reasons.

Conclusion

The entire article views the issue of transit as a bilateral matter, not a multilateral one. The problem complicates when the same issue becomes a multilateral one, crops up as a part of a multilateral development program. Unfortunately, Bangladesh has refused to join Asian Highway project fearing it would allow transit to India. The anti-India bias of the Bangladesh foreign policy has come out once more.

The future of the economy of a country depends on how the policies remain focused on economy overcoming the political pressure. This is a proven truth in case of China, Japan and might be India in near future. Hence, giving up economic advantages to some non-economic causes will never help a poor country in a poorest region to grow out of its poverty. Hope, the leaders of Bangladesh will understand these, the sooner the better.

Another article on the same topic can be found here, but that is in Bengali.

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