India’s Promotion of BBIN Sub-Regional Cooperation: Aspirations and Challenges

Wu Zhaoli

India’s Promotion of BBIN Sub-Regional Cooperation: Aspirations and Challenges

Wu Zhaoli

The BBIN (Bangladesh-Bhutan-India-Nepal) Initiative, proposed by the Indian government of Narendra Modi to promote sub-regional cooperation in South Asia, is an important mechanism for India to reshape its regional image and for the four countries to realize regional connectivity and socio-economic development. The direction and results of the BBIN’s future development will inevitably impact on China’s vision and practical efforts to develop strategic synergy with the four South Asian countries.

Origin and Progress of South Asian Sub-Regional Cooperation

Regional cooperation in South Asia started with the establishment of the South Asian Association for Regional Cooperation (SAARC) in 1985. However, it made slow progress due to geopolitical and regional security factors and the existing economic development dynamics.1Amita Batra, Regional Economic Integration in South Asia: Trapped in Conflict? London and New York: Routledge, 2013.The SAARC increasingly showed its limits in promoting the economic development of South Asian countries and defusing tensions among them.2S. G. Pandian, “Moving South Asia’s Economies beyond the Indo-Pakistan Paradigm in the South Asian Regional Association for Cooperation,” Contemporary South Asia, Vol.11, No.3, 2002, pp.329-344.In order to dispense with the shackles geopolitical confrontation placed on regional cooperation, then President of Bangladesh Shahabuddin Ahmed, takingadvantage of the improved sub-regional political atmosphere resulting from the signing of the Treaty between Bangladesh and India on Sharing of the Ganges Waters at the end of 1996, proposed to form a new pattern of subregional cooperation among Bangladesh, Bhutan, Northeastern India and Nepal. The Bangladesh initiative got positive feedback from Nepal and the two countries became active advocates for sub-regional cooperation.3P. V. Rao, “Sub-regional Cooperation in South Asia: The Kunming Initiative,” in Dennis Rumley and Sanjay Chaturvedi, Geopolitical Orientations, Regionalism and Security in the Indian Ocean, Michigan: South Asian Publishers, 2004, p.177.In April 1997, the foreign secretaries of the four countries held their first meeting in Katmandu, the Nepalese capital, and reached consensus on sub-regional cooperation between them beyond the SAARC framework. Accepting the Nepalese proposal, they named their sub-regional cooperation the “South Asia Growth Quadrangle” (SAGQ). The meeting also announced the seven principles and objectives of the South Asia Growth Quadrangle.4Ishtiaq Hossain, “Bangladesh-India Relations: The Ganges Water Sharing Treaty and Beyond,” Asian Affairs, Vol.25, No.3, 1998, pp.144-145.

The South Asia Growth Quadrangle has positioned itself as the practical way to solve the economic and social problems in the South Asian sub-region, and does not pursue sub-regional market integration. It is project-oriented and enjoys the congenital advantages of geographical proximity and cultural similarities.5Isher Judge Ahluwalia, “Economic Cooperation in South Asia,” ICRIER, p.321, http://jica-ri.jica.go.jp/ IFIC_and_JBICI-Studies/jica-ri/publication/archives/jbic/report/paper/pdf/rp16_e09.pdf.The South Asia Growth Quadrangle is simultaneously an effort and an attempt by Bangladesh and Nepal to pursue sub-regional cooperation while avoiding the India-Pakistan antagonism. The Asian Development Bank (ADB), in support of the South Asia Growth Quadrangle , set up the “South Asia Sub-regional Economic Cooperation”(SASEC) project in 2001 and targeted transportation, trade facilitation and energy cooperation as its priority areas for development in 2005.

Nevertheless, the South Asia Growth Quadrangle made little progress and it remained fundamentally a concept due to the political environment, infrastructure conditions and lack of consensus among the relevant countries in South Asia. In the early stages of the South Asia Growth Quadrangle,some member states even couldn’t reach consensus internally. The Nationalist Party of Bangladesh was strongly opposed to the concept, believing it was a conspiracy plotted by the Awami League (AL) to blemish the contribution made by its leader Ziaur Rahman to the SAARC. Some opposition parties in Nepal, especially the Communist Party of Nepal (Unified Marxist-Leninist), were also against the sub-regional cooperation.6Md. Nuruzamman, “SAARC and Sub-regional Cooperation: Domestic Politics and Foreign Policies in South Asia,” Contemporary South Asia, Vol.8, No.3, 1999, pp.311-322.Although India gave support to the South Asia Growth Quadrangle, it turned down a request by Bangladesh and Nepal to go through the Siliguri Corridor out of security concerns. Moreover, there was no favorable political atmosphere in the region, with Pakistan, the Maldives and Sri Lanka all having reservations about the South Asia Growth Quadrangle. Since the 21st century, despite pledges made by the ADB for financial support, the South Asia Growth Quadrangle has lacked strong momentum because of a lack of both public and private investment, and the lack of infrastructure investment has become the biggest obstacle hampering the South Asia Growth Quadrangle from achieving its goals.7“Bangladesh-India Relations: The Ganges Water Sharing Treaty and Beyond,” pp.146-147.

With the South Asia Growth Quadrangle moving at a slow pace, India is determined to make a fresh start by taking the lead in putting forward a new sub-regional cooperation initiative. Earlier in the era of the United Progressive Alliance (UPA) government led by Manmohan Singh, India formed a new understanding of the importance of sub-regional cooperation. India signed with Bangladesh the Framework Agreement on Cooperation for Development (FACD) and the Land Border Agreement (LBA) to facilitate the solution of border issues inflicting upon the crossborder transportation in 2011. The substantive improvement of the India-Bangladesh relationship gives great impetus to sub-regional cooperation. In April 2013, under the Indian initiative, Bangladesh, Bhutan and India (BBI) held their first meeting on connectivity and decided to establish Joint Working Groups (JWG) on Water Resources Management and Power/Hydropower and on Connectivity and Transit. Representatives of the three countries unanimously agreed that the tripartite meeting was the first initiative on connectivity within the sub-region, and thus it was defined as the inception of the BBIN.8Sridhar Ramaswamy, “India and its Eastern Neighbours: Prospects for Sub-Regional Cooperation,”http://cf.orfonline.org/wp-content/uploads/2015/06/IssueBrief_94.pdf.The Nepalese participation to the second JWG meeting in January 2015 marked the official formation of the BBIN sub-regional cooperation mechanism covering the four countries. With the consecutive introduction and progress actively made out of the Chinese initiative of Silk Road Economic Belt and 21st Century Maritime Silk Road in 2013, Prime Minister Narendra Modi of India, who was sworn into office in May 2014, had attached great importance to regional cooperation in South Asia. Nevertheless, regional cooperation within the SAARC framework still dragged on slowly due to standstill of the comprehensive India-Pakistan dialogue.9Pradumna B. Rana, “If SAARC Stumbles: Go for Sub-regional Alternatives,” https://www.rsis.edu.sg/ wp-content/uploads/2014/12/CO14241.pdf.The Modi government, taking sub-regional cooperation as a breaking point, decided to bypass the SAARC framework to pursue a new pathway for regional cooperation propelled by sub-regional cooperation. As such, the BBIN became the landmark initiative for India to promote.

The BBIN sub-regional cooperation has inherited from the South Asia Growth Quadrangle model an emphasis on cooperation in connectivity, power and energy, cross-border trade and people-to-people exchanges among the member states. However, India didn’t follow the concept of the South Asia Growth Quadrangle, making instead a fresh start to introduce the BBIN cooperation with the fundamental consideration of seeking leadership in sub-regional cooperation and turning its role of a passive participant into an active champion. In addition, the management and decision-making mechanism of the initiative constitutes an underlying reason for India to abandon the South Asia Growth Quadrangle. The South Asia Growth Quadrangle is the cooperation initiative in the SAARC framework with its decision-making and management principles stating clearly that the projectsmust be selected and determined collectively by the four countries. It further states that the projects should be implemented by the SAARC Action Committee in accordance with Article 7 and Article 10 of the Charter.10Madhukar SJB Rana, “The SAARC Growth Quadrangle,” New Business Age, July 2015, p.32.The BBIN, on the contrary, is not restricted by the SAARC Charter and is more flexible and thus more practical for India in pursuit of sub-regional cooperation.

The BBIN Initiative proposed by India has also met with a positive response from the other three parties. The Joint Working Group mechanism has been established with one on Water Resources Management and Power/ Hydropower and the other on Connectivity and Transit. From April 2013 to January 2016, the Joint Working Groups held a total of three meetings and the Joint Working Group on Water Resources Management and Power/Hydropower was mandated to continue exploring the potential and scale of power trade and power grid connectivity, promoting exchanges of expertise and sharing of best practices in the power sector among the four countries, enhancing the interchange of hydrological data on water resources management and development of basin water resources, and giving proposals and guidance in setting up expert teams in relevant fields. The main goals for the Joint Working Group on Connectivity and Transit were to accelerate the consultation process of the BBIN Rail Agreement drawing on the draft SAARC Regional Rail Agreement template and to promote infrastructure sharing and trade facilitation process along the land borders of member states.11MOFA, Government of Bangladesh, “The Second Joint Working Group (JWG) Meetings on Subregional Cooperation between Bangladesh, Bhutan, India and Nepal (BBIN),” http://mofa.gov.bd/media/ second-joint-working-groups-jwg-meetings-sub-regional-cooperation-between-bangladesh-bhutan; MEA, Government of India, “The Third Joint Working Group (JWG) Meetings on Sub-regional Cooperation between Bangladesh, Bhutan, India and Nepal (BBIN),” http://mea.gov.in/press-releases.htm?dtl/26284/ Third_Joint_Working_Group_JWG_Meetings_on_SubRegional_Cooperation_between_Bangladesh_ Bhutan_India_and_Nepal_BBIN_January_1920_2016.

After several rounds of negotiations and talks, the Motor Vehicles Agreement within the BBIN cooperation framework (BBIN-MVA) was officially signed in June 2015. The first trial run of cargo vehiclesfrom Calcutta to Agartala of Tripura in Northeastern India via Dhaka in Bangladesh was flagged off in November of the same year, with distance of the journey reduced from 1,550 kilometers to 640 kilometers, marking the implementation of the MVA.12“Cargo Transport Trial Run Starts under BBIN Motor Vehicles Agreement,” November 1, 2015, http:// www.sasec.asia/index.php?page=news&nid=319&url=cargo-transport-trial-run-starts-under-bbin-mva.Bhutan’s National Assembly, the lower house of its parliament, ratified the MVA in June 2016 and September of the same year witnessed the dispatch of the second trial run of cargo vehicles from Dhaka and their smooth arrival in India’s Delhi.

With the MVA in place, it is imperative for the BBIN to boost railway and airway connectivity within the BBIN. The consultation on railway connectivity is one of the most pertinent goals among the countries in the wake of the MVA’s conclusion. At present, the MVA only marks the initial beginning of the BBIN cooperation mechanism, whereas for the upgrade of the transport corridor to the economic corridor targeted earlier, the BBIN has many challenges ahead.

India’s Strategic Aspirations on Promoting the BBIN

In promoting BBIN cooperation, India’s National Democratic Alliance government, led by Prime Minister Modi, started to explore new channels for regional cooperation against the setbacks within the SAARC framework. It also served the practical needs of the “Neighborhood First” policy introduced by the Modi government to improve its relations with neighboring countries. Meanwhile, it provides India with important impetus to strengthen connectivity, security and stability of its under-developed northeastern region while isolating Pakistan and offsetting the rising Chinese influence in the South Asian region.

Exploring new approaches to building a regional cooperation mechanism.India’s position on cooperation within the SAARC framework has changed from passive participation to active promotion. At present, a more active India is adopting a dual path in exploring new approaches toregional and sub-regional cooperation mechanisms. The geographic position, population size, resource endowment and economic growth rate have all added up to the India playing an important and even irreplaceable role in SAARC cooperation. However, India has, out of its fears that neighboring countries might team up in the SAARC to confront itself, has adopted a cautious approach to the SAARC for a considerably long time.13Article 10 of the SAARC Charter, which provides that: “Decisions at all levels shall be taken on the basis of unanimity.” and “Bilateral and contentious issues shall be excluded from the deliberations,” reflects India’s concerns. See http://saarc-sec.org/SAARC-Charter/5.Since the 1990s, with its nascent economic development, changes in the internal and external environment of the region, and growing demands for world major power status, India has taken an active review on the cooperation process within the SAARC framework and gradually shifted its regional integration focus from bilateral arrangements to pursuit of a regional mechanism. During a Lok Sabha (House of the People) hearing in August 2015, Minister of External Affairs Sushma Swaraj clearly admitted that India was playing a leading role in all SAARC mechanisms, working hard to eradicate trade barriers and committing itself to service trade liberalization so as to strengthen trade cooperation among the SAARC members.14“Q No.3683 Special Diplomacy with SAARC Countries,” August 12, 2015, http://www.mea.gov.in/ lok-sabha.htm?dtl/25689/Q+NO+3683+SPECIAL+DIPLOMACY+WITH+SAARC+COUNTRIES.Nevertheless, India’s ambition of leading the construction of the regional mechanism has been curtailed due to a variety of factors impacting cooperation within the SAARC framework. Therefore, it has become a top priority for the Modi government, with the aid of the BBIN, to explore new approaches for regional cooperation to realize its ambitions. Since taking office in 2014, Modi has adopted a dual path by actively promoting a regional cooperation mechanism on the one hand, while trying to re-activate the potential of subregional cooperation on the other.

Facilitating the implementation of the “Neighborhood First”policy.The Modi government readjusted its strategy towards neighboring countries in South Asia and introduced its “Neighborhood First” policy, and the BBIN naturally became the propellant for his government toimplement the “Neighborhood First” policy. It is widely believed within Indian strategic circles that a stable regional environment in South Asia is a prerequisite for the expansion of India’s regional influence.15Danielle Rajendram, “India’s New Asia-Pacific Strategy: Modi Acts East,” http://www.lowyinstitute. org/files/indias-new-asia-pacific-strategy-modi-acts-east.pdf.Should India go beyond its geographical scope to attain its due place in the world arena, it has to reduce the disputes with its neighboring countries and enhance their relevant interests in the development process of South Asia.16“Neighbourhood Views of India: South Asia Studies,” Gateway House Research Paper No.7, December 2012, p.6, http://www.gatewayhouse.in/wp-content/uploads/2013/04/Neighbourhood-Views-of-India-Online.pdf.India has, out of such recognition, increasingly deemed the SAARC as the tool to help realize its policy goals towards regional neighboring countries and moreover to achieve its major-power ambitions. However, things have not turned out as it wished. The Gujral Doctrine targeting good neighborliness was initiated in 1997 but criticized by some strategic analysts for being mere “lip service.” Then Foreign Secretary Shyam Saran further pointed out in 2005 that India was prepared to make its neighbors “full stakeholders in India’s economic destiny.”17“Foreign Secretary Mr. Shyam Saran’s Speech on ‘India and its Neighbours’ at the India International Centre (IIC),” February 14, 2005, http://mea.gov.in/Speeches-Statements.htm?dtl/2483.Then Prime Minister Manmohan Singh announced at the 14th SAARC Summit in 2007 that “India is ready to accept asymmetrical responsibilities, opening her markets to her South Asian neighbors without insisting on reciprocity.”18MEA, “Address by Prime Minister Dr. Manmohan Singh to the 14th SAARC Summit,” April 3, 2007, http://www.mea.gov.in/Speeches-Statements.htm?dtl/1852/Address_by_Prime_Minister_Dr_Manmohan_ Singh_to_the_14th_SAARC_Summit.After the BJP won the 2014 general election, the Modi government made South Asia the top priority in its foreign policy agenda, treated neighboring South Asian countries as its strategic assets instead of burden, and introduced the “Neighborhood First” policy.19Subhash Kapila, “Neighbours First: Modi’s Foreign Policy Mantra,” Diplomatist Magazine, September 2014, http://diplomatist.com/dipom09y2014/article012.html.Prime Minister Modi invited the seven leaders of neighboring countries to attend his inauguration on May 26, 2014 and paid visits to Bhutan, Nepal, Sri Lanka and Bangladesh. While expanding India’s development assistance to its neighbors, Modi took the settlement of major issues having long-termimpact on bilateral relations as the starting point for the “Neighborhood First” policy. For example, India restarted the India-Nepal Joint Commission at foreign ministerial level which had stalled for 23 years. It re-initiated the negotiations on fishing disputes with Sri Lanka, ratified the Land Boundary Agreement with Bangladesh that had been in deadlock for 41 years in the Lok Sabha, and accepted the ruling on the maritime boundary delimitation along the Bay of Bengal by the Arbitral Tribunal filed by Bangladesh and constituted under UNCLOS Article 287 and Appendix VII. It can be said that the “Neighborhood First” policy is not only the cardinal supporting pillar for India to carry out its Asia-Pacific strategy, but also provides the policy guarantee for it to promote sub-regional cooperation. More importantly, the BBIN cooperation provides a basic platform for India to practice its “Neighborhood First” policy and will play a positive role in realizing the expected policy outcome.

Developing Northeastern India and balancing domestic resource allocation.Northeastern India is not only under-developed, but also heavily devastated by civil strife and turbulence, with secessionist movements, armed riots, bloody conflicts and terrorist attacks coming thick and fast. Terrorist, religious extremist and separatist activities have been chronic, coupled with emerging ethnic conflicts, due to the lagging social and economic development. From 2000 to 2016, more than 12,000 people were killed by terrorist attacks and other violent incidents in Northeastern India. Although the security situation in the region has improved significantly since 2010, there have still been several hundred casualties.20“Annual Fatalities in North East,” South Asia Terrorism Portal, April 24, 2016,http://www.satp.org/ satporgtp/countries/india/database/northeast2016.htm.Developing the Northeastern region, improving the backward infrastructure, upgrading connectivity between the Northeastern and other regions, and enhancing regional security and stability remains one of the issues of most concern to the Indian government. On the one hand, Northeastern India currently enjoys abundance in natural resources and is particularly rich in hydroelectric resources, while on the other, it suffersfrom seriously lagging economic development. Against this backdrop, the BBIN cooperation, particularly the connectivity of transport infrastructure and power transmission network, undoubtedly provides Northeastern India with a great opportunity for development. In the first place, it may improve the development environment for Northeastern India and strengthen the fragile connectivity between the northeastern part and the middle region of India by passing through the territory of Bangladesh. Second, it may mitigate the development bottlenecks arising from the water resource distribution and imbalanced electric loading by meeting the power demand for the southern, western and northern regions of India via cross-regional transmission, such as the East-West and North-South power transmission. Third, it will help realize the diversification of financing channels for the development of the northeastern region. Fourth, it may further enhance the land bridge role of Northeastern India by producing the joint force out of the BBIN cooperation and the “Look East” and upgraded “Act East” policies.21In the 12th ASEAN-India Summit held in November 2014, Indian Prime Minister Modi explicitly announced that the “Look East” policy had been upgraded to “Act East” policy. See “‘Look East’ Policy Now Turned into ‘Act East’ Policy: Modi,” The Hindu, November 13, 2014, http://www.thehindu.com/ news/national/look-east-policy-now-turned-into-act-east-policy-modi/article6595186.ece.Based on this, India may expand the synergy of connectivity projects with Southeast Asia, such as the Mekong-India Economic Corridor (MIEC).

Getting rid of constraints of geopolitical division in South Asia and further isolating Pakistan.The SAARC has made remarkable progress in the past three decades. However, there still exist many practical problems and structural obstacles in the process of SAARC cooperation. India and Pakistan differ on their political will to strengthen the SAARC cooperation, member countries hold different perceptions of the top agenda within the framework, and some member countries lack internal stability. All these practical issues and the in-depth structural problem of small countries’ misgivings about India’s role and position in the SAARC attribute to the stalled progress of SAARC cooperation. The prolonged antagonistic relationship between India and Pakistan and the resulting geopolitical divide in South Asia pose a majorobstacle hampering the SAARC cooperation process. In the context of the serious constraints imposed on India in its efforts to strengthen the SAARC mechanism to improve regional cooperation, India has come to take the subregional cooperation represented by the BBIN as an important tool to offset the impact of geopolitical rift in the region and further isolate Pakistan. The 18th SAARC Summit in November 2014 issued the Katmandu Declaration defining “deepening integration” as the core objective of the Summit. Nevertheless, the Summit only got the SAARC Framework Agreement for Energy Cooperation (Electricity) signed, whereas the SAARC Regional Rail Agreement and the Motor Vehicle Agreement for the Regulation of Passenger and Cargo Vehicular Traffic amongst SAARC Member States that India anticipated being signed could not get through due to Pakistan’s refusal, who claimed it hadn’t completed its domestic legal procedures. An Indian official from the Ministry of External Affairs stated clearly in March 2015 that “We would like SAARC to move but if it doesn’t move the way we want, we will focus on BBIN for the time being.”22Nayanima Basu, “Bypassing SAARC’s Clogged Arteries,” Business Standard, March 30, 2015, http:// www.businessstandard.com/article/economy-policy/bypassing-saarc-s-clogged-arteries-115033001127_1. htm.The terrorist attacks since 2016 have caused a serious confrontation between India and Pakistan and the bilateral relationship is ever more tense. India has made up its mind to isolate Pakistan in the international arena and appealed for a boycott of the 19th SAARC Summit held in Islamabad. Swung by India’s lobbying, Bangladesh, Bhutan, Afghanistan, Sri Lanka and the Maldives expressed plainly their non-participation in the Summit.

Responding to the influence of the Belt and Road Initiative in the South Asian region.China is actively promoting the construction of an economic corridor with the South Asian region, which has become the important driving force for India to push forward the BBIN-centered sub-regional cooperation. Objectively speaking, the BBIN sub-regional cooperation has originated from India’s deepening understanding of regionalism and consciousness of sub-regional cooperation, reflectingone of India’s rational demands after examining the status of regional economic integration as well as the trends of world political and economic development. However, India’s sense of urgency behind the BBIN hinges more on the exemplary power endowed by the Chinese Belt and Road Initiative (BRI). To a certain extent, it is the BRI that has forced India to speed up its regional connectivity plan. The Chinese side, under the Belt and Road Initiative, hopes to work together with the Indian side to promote the construction of the 21st Century Maritime Silk Road and the Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC), and it proposed to India in June 2015 the feasibility of a China-Nepal-India Economic Corridor (CNIEC).23Ministry of Foreign Affairs of the People’s Republic of China, “Wang Yi: China and India Reach Consensus on Joint Participation in Nepal’s Reconstruction and China-Nepal-India Economic Corridor,”June 25, 2015, http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1276892.shtml.In such circumstance, India, when implementing its external strategy, deems it an important carrier to promote sub-regional, regional and trans-regional cooperation programs with itself being the backbone while bypassing the Chinese Belt and Road Initiative to avoid the potential impact on itself. On the strategic level, India put forward the macro Project Mausam to offset the Chinese initiative of the 21st Century Maritime Silk Road;24Saurav Jha, “Energy, Defense Deals Highlight Vietnam’s Role in India’s ‘Act East’ Policy,” World Politics Review, Sept. 25, 2014.on the policy implementation level, India activated sub-regional cooperation represented by the BBIN to offset the impact rendered by the BCIMEC and CNIEC on its regional influence.

Difficulties and Challenges Facing India’s Promotion of BBIN

The British scholar Peter Lyon pointed out at the end of the 1960s that South Asia is a region without regionalism.25Cited in V. M. Hewitt, The International Politics of South Asia, Manchester: Manchester University Press, 1992, p.75.Although the countries enjoy the advantage of being adjacent to each other geographically, South Asia has remained one of the regions with the lowest degree of integration, with some practical problems and structural factors hindering the deepening anddevelopment of regional cooperation. The signing of the MVA among the four countries marks a major breakthrough for South Asia to promote the BBIN cooperation. However, the BBIN, similar to the South Asia Growth Quadrangle, still faces a variety of practical difficulties and challenges given regional and international situations.

Huge demand for infrastructure investment.The development of infrastructure in the South Asian region is lagging behind, featuring a low degree of transportation connectivity internally and externally. It requires a huge demand for investment. There is a lack of sound infrastructure for the launch of the BBIN. Some scholars predicted early in 2011 that a key obstacle to strengthening regional economic cooperation is the lack of infrastructure connectivity, such as power shortage and under-development of highways, railways and ports that seriously hinder the realization of regional trade potential.26Sheel Kant Sharma, “South Asian Regionalism: Prospects and Challenges,” Indian Foreign Affairs Journal, Vol.6, No.3, 2011, p.311.A World Bank report on the infrastructure in South Asia in April 2014 stated that in terms of transportation infrastructure, the average highway mileage is only 2.9 kilometers per thousand people in South Asia, below the world average level of 4.7 kilometers per thousand people. It is even far worse in Bangladesh and Nepal, which have an average of 0.1 kilometers and 0.8 kilometers per thousand people respectively. Only 71 percent of the population in the whole South Asian region has access to power, and the power-access population percentage in Bangladesh is even below 47 percent. By 2020 the demand for infrastructure investment in South Asia is expected be between $1.7 trillion and $2.5 trillion.27Luis Andrés, Dan Biller and Matías Herrera Dappe, “Reducing Poverty by Closing South Asia’s Infrastructure Gap,” December 2013, http://www-wds.worldbank.org/external/default/WDSContentServer/ WDSP/IB/2014/04/02/000333037_20140402142820/Rendered/PDF/864320WP0Reduc0Box385179B000P UBLIC0.pdf.A reliable, stable and sufficient source of funds is required to meet the investment demand for transportation infrastructure in South Asia. Nevertheless, the huge investment gap, coupled with limited financial and fiscal resources, means there is still insufficient investment in South Asia. Among the BBINfour countries, Nepal has an under-performing economy because of the recent earthquake, domestic turbulence and informal embargo by India, and its unstable political environment has further exacerbated the economic environment. The country is currently suffering its most severe test for 14 years. According to the figures of the Central Bureau of Statistics, the Nepalese GDP growth rate in the 2015-2016 fiscal year was estimated only at 0.77 percent.28Nepal Rastra Bank, “Current Macroeconomic and Financial Situation of Nepal,” http://nrb.org.np/ofg/ current_macroeconomic/CMEs_Nine%20_Months_%20English.pdf.It has been reported by the Nepalese media that in order to promote the National Urban Development Strategy 2015, an investment of 2.22 trillion Nepalese rupiah (about US$222) is needed to address the fund gap on infrastructure construction before 2031.29“‘Rs2.22t’ Needed to Address Infra Gap,” The Kathmandu Post, August 31, 2015, http://kathmandupost. ekantipur.com/news/2015-08-31/rs222t-needed-to-address-infra-gap.html.It can be said that the biggest challenge facing the relevant BBIN countries is how to invest through various channels to meet the huge demand for infrastructure.

Low level of economic integration in the region.The BBIN subregion, at present, lacks a sound environment for achieving the targets of economic and trade cooperation. The South Asian countries, when establishing the SAARC in 1985, had in mind the objectives of regional economic integration and signed, for this purpose, the South Asian Preferential Trade Agreement (SAPTA) in 1995, the Framework Agreement on South Asian Free Trade Area (SAFTA) in 2004 and the South Asian Service Trade Agreement (SASTA) in 2010. Some scholars even called on upgrading and transforming the SAARC into the South Asia Union (SAU), following the example of the European Union.30Abhishek Raman, “South Asian Union: Divided We Stand,” IPCS Issue Brief, No.78, July 2008, http:// ipcs.org/pdf_file/issue/1396774642IB78-Abhishek-SAARC.pdf.However, regional economic integration in South Asia has, up to now, remained at a low degree due to limited connectivity level in the region as well as the political will of regional countries. According to the World Bank’s statistics, the intra-regional trade volume in South Asia accounts for less than 5 percent of the total trade volume of the region, far below the 25 percent level for the ASEAN area. Theintra-regional FDI accounts for only about 3 percent of the total FDI flow in the region. Moreover, the underdeveloped level of connectivity, together with the excessive non-tariff barriers, has led to intra-regional trade costs being 244 percent higher than inter-regional trade costs.31http://www.worldbank.org/en/programs/south-asia-regional-integration#1; MEA, “Statement by External Affairs Minister during 37th SAARC Council of Ministers’ Meeting in Pokhara,” March 17, 2016, http://www.mea.gov.in/Speeches-Statements.htm? dtl26556/Statement+by+External+Affairs+Minister+dur ing+37th+SAARC+Council+of+Ministers+Meeting+in+ Pokhara+March+17+2016.In general, the depth, breadth and speed of regional integration within the SAARC framework are disproportional to its potential of future development. Therefore, viewed from the current status, the BBIN, as a partial objective towards regional economic integration, has practical difficulties in achieving high-degree integration goals among the four countries based on enhancing infrastructure connectivity.

No ideal geopolitical environment.The prospect of future BBIN cooperation is, to some extent, affected by India’s aspiration to play the leading role within the framework, the anxiety and ambivalence of the other three countries towards India’s leadership ambitions, and the uncertainties clouding their bilateral relations. India has a relatively advantageous position in the SAARC. And without the participation of Pakistan and Sri Lanka, India will have absolute dominance within the BBIN cooperation framework. The other three countries are, on the one hand, concerned about India’s dominance of the BBIN process and anxious about their lack of say within the framework. On the other hand, they worry that the BBIN cooperation will be ineffective, even futile, as a result of India’s decreased willingness to promote sub-regional cooperation. How to reach a consensus and join forces together to build and maintain the BBIN cooperation mechanism, defining the cooperation areas and promoting the core agenda, while reducing the constraining impact of specific issues, bilateral issues in particular, remains one of the challenges for the four BBIN countries to address. Although the Modi government has been implementing its“Neighborhood First” policy, the issue of political mutual trust prevailsamong the BBIN countries. In addition, the potential impact on Indo-Nepal relations by India’s intervention in Nepal’s new constitution, Bhutan’s reservations about the free flows of people and merchandise in the subregion due to different development priorities, and the existence of many non-traditional security threats such as refugees, drug trafficking, illegal immigration and arms smuggling, will all impact, to various degrees, future cooperation within the BBIN framework.

Boycott of interest groups and lack of professionals and technical personnel.Some interest groups have now become defenders of the informal intra-regional trade in South Asia. Although the BBIN-MVA will reduce the trade costs for the participants and promote trade development, the vested interests of the existing informal trade will boycott the inter-governmental trade facilitation measures. It is estimated that the annual trade volume within the SAARC framework is between US$28 billion and $30 billion, whereas the informal trade volume accounts for $25 billion, growing at 112 percent from 2005 to 2012.32“South Asia Development and Cooperation Report: Economic Integration for Peace Creating Prosperity,” Research and Information System for Developing Countries, New Delhi 2015, http://ris.org.in/ images/RIS_images/pdf/RIS%20SADCR-2015%20Executive%20Summary.pdf.Some stakeholders, which have benefited from lack of transparency in the informal trade and low efficiency of the whole trade chain, have become external obstructions impacting cooperation within the BBIN framework. Furthermore, the present talent shortage poses another obstacle for the implementation of relevant agreements. For instance, the implementation of the BBIN-MVA asks for a team of professionals and technical personnel and particularly those information technology and civil engineering professionals who are in extreme short supply in Bangladesh, Bhutan and Nepal. Hence the boycott of the vested interest groups, coupled with the professional talent shortage, is also a restraining factor on the BBIN cooperation process.

To summarize, member states of the BBIN are significantly heterogeneous, differing not only in political stability, economic scale, development level and policy priorities, but also in major security concerns.The BBIN countries have to tackle the practical challenge of coordinating differing demands of the parties and defusing the impact of negative elements based on greater consensus, so as to promote the objectives of cooperation. Besides, being the leading country of the BBIN initiative, whether India, the dominant power, completely abolishes its traditional “carrot and stick”mindset and takes into consideration the special interests of other member states on border crossings, trade, tariff concessions, infrastructure construction and environment when pushing forward the process and especially building up mechanisms, will undoubtedly have a great impact on the future of the initiative. India’s intervention in Nepal’s new constitution and the succeeding informal embargo against Nepal under the pretext of security concerns in 2015 has aroused the suspicions of neighboring countries.

Objectively speaking, India, when promoting the BBIN cooperation, pursues a host of strategic objectives of its own. It also meets the aspiration of other BBIN member states, such as the land-locked Nepal, to improve infrastructure and promote national economic development through the realization of regional connectivity. The BBIN cooperation aims to build up the South Asian sub-regional economic cooperation framework with India at its core, providing a basic platform for the neighboring countries to take a free ride on India’s economic growth, which has thus become an advantage for India to further promote the BBIN. Although the National Council (Upper House) of Bhutan is presently opposed to ratifying the BBIN-MVA, it will neither hamper nor impact the pace and determination of the other three parties to continue to promote the BBIN cooperation.

Conclusion

China is adjacent to five official member states of the SAARC and neighbors three countries of the BBIN sub-regional cooperation. It became an observer to the SAARC in 2005. Being a neighbor gives China the impetus to promote and participate in the South Asian sub-regional cooperation and achieve the synergy of development strategies with the South Asian countries.

At present, South Asia plays a key role in China’s promotion of economic corridor construction. Three economic corridors initiated by China, the China-Pakistan Economic Corridor (CPEC), the Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC) and the China-Nepal-India Economic Corridor (CNIEC), involve South Asia, and two of them include India. In the process of pushing forward its Belt and Road Initiative, China has all along emphasized the openness and inclusiveness of the Initiative, hoping the achievements of joint construction may bring benefits to as broad an area as possible. With this in mind, China is focusing on the vision and practical promotion of the BRI-the core substance-by actively connecting the regional cooperation and development planning with countries along the Belt and Road, and working together with these countries to produce roadmaps and measures for strengthening regional cooperation. Meanwhile, China remains open to participation in the South Asian regional cooperation initiatives. The BBIN, as the landmark initiative for sub-regional cooperation in South Asia, has its inborn openness. India wishes to establish the BBIN+2 on the basis of the emerging India-Sri Lanka-Maldives sub-regional cooperation by extending the BBIN southwards to cover Sri Lanka and the Maldives. However, whether the BBIN could connect with the BCIM and/ or the CNIEC, or whether there might be a BBIN+China, depends not only on India’s strategic interpretation of China’s Belt and Road Initiative, but also Chinese policy choices and diplomatic endeavors to resolve India’s anxieties. In order to promote effective connectivity between the Belt and Road Initiative and the South Asian sub-regional cooperation initiatives, represented by the BBIN, and achieve mutual cooperation and win-win outcomes between China and the South Asian countries, both China and India have to systematically design the concept of cooperation, the means of participation and how the regional equilibrium and stability will be maintained. It is thus particularly important for the two countries to enhance their strategic communication and mutual understanding.

Wu Zhaoli is Associate Research Fellow at the National Institute of International Strategy, Chinese Academy of Social Sciences (CASS).