India and Bangladesh: Worthy of Credit

by Uddipan Mukherjee and Rajeev Sharma

published by the South Asia Analysis Group

http://www.southasiaanalysis.org/papers41/paper4032.html



It seems that New Delhi has finally come out of its diplomatic cocoon, at least as far as its immediate eastern neighbour is concerned. A $1 billion credit outflow accorded to Bangladesh, interestingly; is the highest that both countries may contemplate thus far.




Though analysts may argue that such disbursal of funds by the ‘big neighbour’ was already in the pipeline as per the Joint Communique signed by Sheikh Hasina and Dr Manmohan Singh in January this year when the former paid a visit to New Delhi, her first ever after coming back to authority in 2009. Nevertheless, Indian Finance Minister Pranab Mukherjee’s rendezvous with Hasina at Gano Bhaban on August 8 merit attention. It gave a practical shape to diplomatic formalities and provided meaty substance to dry rhetoric. It was a reality, a rather fruitful one for both the nations and not a chimera.



There is no gainsaying the fact that Bangladesh holds both geo-strategic and concomitantly geo-economic significance for India. If New Delhi needs to permanently strengthen its strategic hold in South Asia, then forging amiable relations with the countries in its backyard is an imperative. More so, when India has to tread cautiously with belligerent states lurking around; with China and its Pakistani proxy deserving an obvious mention in this regard.



On the other hand, Dhaka has to be pragmatic. Fomenting Islamic Fundamentalism and churning anti-India tirade at the behest of countries which are separated from it geographically, linguistically as well as ethnographically would imply a further detachment from reality. Moreover, acting as a satellite state of ‘upstart’ regional powers is sure to lead Bangladesh to yet another ‘failed state’ for the worse and destabilise it at best.



However, if the two countries can maneuver their ties in the present manner, then their diplomatic boat would not be rudderless; at least in the foreseeable future.



The Hasina Era



Ever since Sheikh Hasina won the parliamentary elections in Bangladesh on December 28, 2008 and assumed office as Prime Minister on January 6, 2009 for the second time (her first tenure was from 1996 to 2001), new vistas have opened up in Indo-Bangla relations. Actually, bilateral relations between New Delhi and Dhaka had touched rock bottom during the second tenure of the then Prime Minister Khaleda Zia (2001-06). It was no clandestine affair that during Khaleda’s period, Islamic Fundamentalists found a new haven in Bangladesh in a post 9/11 world.

Begum Zia’s second tenure was virtually a proxy of Islamabad and the ISI. In fact the latter was never more powerful in that country than in those five years. This was also the time when the ‘Chinese Dragon’ could spout fire in Bangladesh.



Apart from ‘political fate’, Pakistan and China would surely blame both Hasina and to a large extent Pranab Mukherjee for the present heightened bonhomie between the two nations which does not augur well for either of them.



In fact, such is the level of synergy and proximity between Sheikh Hasina and Mukherjee that when the latter took over as the Indian Finance Minister, Hasina set aside all protocol and rang him up to congratulate him.



The Hasina government didn’t belie Indian expectations and this unprecedented line of credit by India has to be interpreted in that light. It took firm action against anti-India terrorist outfits on its soil and ordered a heavy clampdown over those groups in the last couple of years. That kind of action has led to the arrest of over a dozen suspected Islamic militants belonging to outfits like Lashkar-e-Toiba (LeT). Incidentally, the LeT, Harkat-ul-Mujahideen (HuM), Jaish-e-Mohammed (JeM) and Harkat-ul-Jihad-e-Islami (HuJI) are among the 15 foreign terror groups who were active or may be still covertly operating in Bangladesh since 1991.



The Deal



Scrutinising the Indo-Bangla one billion US dollar deal more closely, one finds that India’s diplomatic acumen was at its recent best. For instance, the main terms and conditions of the credit line agreement, inter alia, include a low fixed rate of interest of 1.75 per cent per annum. It necessarily reflects India’s magnanimity on one hand and supposedly a reverberation of the "Gujral Doctrine" in our foreign policy portfolio on the other. The said principle notes that India should stop ‘calculating’ relationships with its immediate neighbours based purely on a precept of ‘mutual reciprocity’. Rather India should shower benefits so as to generate goodwill among the masses of the concerned country.



However, a half percent commitment fee per annum on unutilised credit after 12 months from the date of approval of the contract adds a ‘business colour’ to the whole programme of apparent largesse. Nonetheless, a 20 years' repayment period including a grace period of five years is by all means a superlative rapprochement scenario for the two countries.



While finally formalising this deal in Dhaka last month, Mukherjee emphatically declared that "this one-billion-dollar line of credit is the largest ever amount given by India to any country." He also meant business through the assertion that "I am confident that this credit line will be the stepping stone for a shared destiny and will transform our bilateral engagement."



India’s Soft Diplomacy



India definitely has taken a page out of America’s diplomatic notebook (not the "Counter Insurgency" notebook though). If New Delhi is seriously keen to establish a ‘Pax Indica’ in her neighbourhood and firmly proclaim its dominance vis-à-vis China, then these kinds of diplomatic maneuvers are essential. They say: ‘when you cannot defeat them, just buy them’. And in Bangladesh’s case, they are ready to be coaxed and molycoddled. There is no rationale for a cassus belli.



Interestingly, India has enlisted a set of 14 projects, primarily infrastructural, under this rubric of Line of Credit. And though it has not set deadlines on any of them, a commitment fee per annum itself is a countervailing measure against procrastination. Furthermore, the envisaged projects shall be an augmentation of Bangladesh’s roadways, railways, port facilities and inland water system, among others.



It is evidently clear that post 9/11, India has embarked on a spirited path of ‘soft diplomacy’ in South Asia. Afghanistan was first and now Bangladesh. In the former, India has put in almost a similar amount but in a phased manner whereas in this case, it seems to be in a hurry. Actually, India is better prepared now than it was in Afghanistan and hence the results. It has been reported that India’s soft diplomacy in the ‘land of the Buzkashi’ has earned it goodwill amongst the ordinary populace. And consequently Islamabad fears marginalisation in Kabul much more now than before.



Former Minister of State for External Affairs Shashi Tharoor opines that India’s greatest asset in Afghanistan is its exhibition of ‘soft power’. Indian films and soap operas enthral the plebian in ‘the land of Abdali’. Scholastically speaking, this may be interpreted as a sort of ‘invasion’ on the "superstructure" as per Gramscian scheme of things.



And for Bangladesh, this cultural syncretism is evidently clear and does not need to be stressed further upon.



Thus New Delhi’s endeavour is exactly in that direction: to extract goodwill and respect from the citizenry of its immediate eastern neighbour. And with a friendly regime enthroned in Dhaka, life is much easier for South Block. Moreover, the fulcrum of bilateral relations between the two countries, at present is undeniably our ‘cold headed’ politician ‘Pranab-da’ under whose guidance and philosophisation, the engines of economy, trade, commerce, energy et al. is expected to run smooth without periodic lubrication.



Other Developments



To add, very recently, on September 8 2010, India and Bangladesh finalized a railway link agreement to improve connectivity. The link will reduce the distance between Agartala and Kolkata via Guwahati from an arduous 1200 km to just 519 km.



There is also the proposed 13 km long Akhaurah-Agartala railway link, 5.4 km of which would be in the Indian territory. It is to be financed by India. This was agreed upon during the last visit of Sheikh Hasina in January 2010.



Role of the Army



Somewhat surprisingly, Bangladesh Army also deserves encomiums regarding the present harmonious relations between the two countries. It had a major role to play in subduing Islamic Fundamentalism during the Caretaker Government (CG) period of 2007 to January 2009. And the most significant thing it has done is to implant, not only in the psyche of its own people but also in the minds of its neighbours; that a coup d’etat might not be a distinct possibility whenever there is a political turmoil; quite unlike that in Pakistan.



The way present Hasina government could handle the upsurge of the Bangladesh Rifles (BDR) in Feb 2009; barely a month after her re-incarnation, bespeaks the covert as well as overt support provided by the Army.



Contentious Issues



Though India and the Hasina government (present as well as past) have taken positive steps to ensure that the problematic bilateral issues are resolved; few things still remain unsolved.



For instance, the proper fencing of the 4096 km long land boundary is yet to be fruitfully achieved. It is one of the perennial problems that India, especially the province of West Bengal, faces with regard to illegal migrants from Bangladesh. The decision to settle the matter was reportedly taken at the highest political level in India on the eve of Sheikh Hasina’s visit to New Delhi. But Manmohan Singh said that small disagreements cannot be allowed to come in the way of a dynamic relationship.



During the Home Secretary level talks in Dhaka (Dec 2009), India had offered a comprehensive agreement to Bangladesh --demarcating the remaining 6.1 km of the 4096 km long boundary, plus settling the matter of adverse possessions and enclaves. Factually speaking, India holds as many as 111 enclaves within Bangladeshi territory amounting to some 17,000 acres of land while Bangladesh holds some 51 enclaves amounting to about 7000 acres in India.



India has now agreed in principle to cede control over its enclaves, even though the difference is about 10,000 acres in Bangladesh’s favour. In other words, once the negotiations are complete, the Indian enclaves in Bangladesh’s territory would be absorbed in Bangladesh and vice-versa.



The Balance of Trade is skewed towards India which Bangladesh laments. Only 1 per cent of India’s imports are from Bangladesh whereas around 20 per cent of Bangladesh’s imports come from India. Closer economic ties between the two countries can offset this huge trade imbalance which can be addressed through greater Indian investment. Bangladesh Government has evinced keen interest in reconsidering investment proposals of the Indian business conglomerate TATA in this regard.



India Trade Fair (ITF) and North East India Trade and Investment Conclave were organised in the Feb 24-28, 2010 in Dhaka. The initiative was intended to attract Indian investment in Bangladesh and it helped the entrepreneurs to explore opportunities.



Bangladesh welcomed the position of the Government of India on reduction of a number of items from India’s negative list. The Joint Communiqué issued after the Bangladesh Prime Minister’s visit indicated that India would encourage import from Bangladesh. There are also indications that India would take steps expeditiously for removal of tariff and non-tariff barriers and port restrictions faced by Bangladeshi exporters. Bangladesh, on the other hand, has agreed to the Indian request for introducing ‘Border Haats’ (haat in Bengali means market).



Another facilitation that India has offered to Bangladesh is connectivity to Nepal and Bhutan through its territory. Trucks from Bhutan and Nepal would enter 200 m into Zero point at Banglabandha-Phulbari land customs station. This would boost trade activities for Bangladesh.



On the other hand, Bangladesh agreed to the Indian proposal to facilitate movement of containerized cargoes by rail and water. In the last week of February 2010, an Indian team visited Bangladesh to discuss the possibility of movement of container cargoes through railways and waterways. A joint group of customs meeting was held in New Delhi and various steps were taken for entry of Bangladeshi products to India.



Another problem zone for the two countries is with distribution of river waters. Interactions between the two countries are being held regularly under various institutional mechanisms. The 37th Joint Rivers Commission (JRC) meeting was held in New Delhi in March 2010 and it will continue to be held regularly to reach broader understanding on the water related issues for greater welfare of both the peoples. A mechanism has been set in motion to facilitate an understanding on sharing of waters of Teesta and other common rivers.



On the Tipaimukh dam issue, which has generated controversies in Bangladesh, India has made it abundantly clear that it would refrain from doing anything that might harm the interests of the other party.



Conclusion



A common thread of pluralistic culture runs between the two countries and their peoples. Both the countries share the legacy of the visionary Rabindra Nath Tagore. Naturally, Bangladesh has expressed a desire to establish a Cultural Center in New Delhi to promote and showcase its cultural heritage.



Importantly, Bangladesh has conveyed support to India’s candidature for permanent membership of the UN Security Council as and when the reform of UN Security Council takes place.



Thus, it may be inferred that the present camaraderie between the two nation-states is expected to herald a new era of bilateral relations. In that venture, keeping in mind China’s ominous forays into Chittagong, and Pakistan’s latent presence through a religious and cultural jihad; India has embarked on the right path of Realpolitik, albeit in a benevolent and apparently libertarian manner.



Hasina’s second innings has made Indo-Bangla relations creditworthy (pun intended). And if soft loan diplomacy is the food of love and cooperation, bring it on. Keeping an eye on China, India needs to replicate its Bangladesh model of soft loan diplomacy in its near abroad, with a laser beam focus on neighbours like Bhutan, Myanmar and Vietnam.


Rajeev Sharma is a New Delhi-based journalist-author and commentator on foreign policy, international relations, terrorism and security issues. He can be reached at
bhootnath004@yahoo.com.