The recently-concluded 12th Saarc summit has ended on a note of optimism, bordering on euphoria. While cynics will continue to doubt that the organisation can outgrow its adolescence any time soon , the fact is that the time for its being taken seriously has come.

The problems facing the individual countries of Saarc, including the largest among them, can not be solved by them without close co-operation among them. This realization has grown as the problems confronting them have become more and more intractable. Increasing poverty, lagging social development and lack of dynamism in the external sector are some of the problems which are common to almost all the countries of the Saarc region.

It has become apparent to both the peoples and the governments of these countries that they have a lot of catching up to do with the rest of the world. Not only does the Saarc region lag behind other developing regions in terms of per capita income levels and growth, it is also far behind in social and human development indicators, particularly in respect of those relating to women.

Although this realization has been in existence for some time, it has achieved its consummation only in the present summit, as India and Pakistan, who provide the essential glue to the somewhat fragile structure of Saarc, have, one would hope, finally buried their hatchets and decided to live like sensible neighbours.

Indeed, although the immediate impetus for the recently-arrived Indo-Pakistan rapprochement may stem from more compelling political reasons confronting the two governments, both domestic and external, the underlying basis of a long-term detente between them is the need for making South Asia a dynamic economic region and to be better able to face the challenges of globalization. In turn, one can expect that an enhanced level of engagement in the sub-regional process, will strengthen the bilateral relationships between the two large South Asian neighbours.

The temptation to disrupt the bilateral relationship, in times of crisis, will decline as the stakes of the two countries in the subregional undertaking become larger. Subregional engagement can thus be considered as an insurance policy against deterioration in Indo-Pakistan relations, which are likely to remain volatile for some time, notwithstanding the present efforts.

The 12th Saarc Summit has raised a lot of hope about future economic co-operation among the Saarc countries. Given the present low level of interaction among them, as indicated most tellingly by the low degree of intra-regional trade among them 5 per cent of the total trade, in contrast to more than half the total trade in EU, it would be naive to assume that the region can become a powerhouse overnight. Dr. Akhtar Hasan Khan, in his article in this Review last week, pointed out in detail Saarc's failures in the past.

Although, Saarc's past cannot be simply brushed aside, it would also be unfair to take it as a predictable guide for its future, especially when the underlying conditions appear to be changing so radically. If the statements of the leaders of Saarc countries to the 12th Summit in Islamabad, duly discounted for the usual rhetoric, are studied carefully, they do seem to indicate a new degree of commitment and seriousness to the spirit of regional co-operation and a strong desire to make up for the missed opportunities in the past. As has been recognised widely, Saarc's progress has been held hostage to the unceasing hostility between the region's two major powers.

This more than anything else has been the real reason for Saarc's ineptitude in dealing with the region's economic and social problems and in making any significant contribution to its development in the past. Both India and Pakistan have blamed each other for making Saarc ineffective. Pakistan has blamed India for hijacking the organisation to fulfil its superpower ambitions, while the Indians have accused Pakistan for dragging its feet by delaying its decision to join core programs, such as Sapta and not reciprocating India's gesture to grant the MFN status.

Some in India have also accused Pakistan of being more inclined towards the countries of Western and Central Asia, more as a way to slamming the door on India to trade with the latter, rather than for promoting any real regional cooperation (ECOs record being no less dismal than Saarc's).

The rapidity with which Pakistan has changed its stance on Safta and has shown willingness to reciprocate India's MFN gesture clearly indicates that Islamabad has finally realised that its destiny is linked more strongly with the prospects of a dynamic South Asia, than with the Western neighbours it has been content to rely on in the past. Even on the eve of the Islamabad Summit, it was being speculated that Pakistan will not sign the Safta protocol unless there was some agreement on the Kashmir issue.

However, the Ministers' meeting approved the Safta protocol, even before the Musharraf-Vajpaee meeting which announced the commencement of a composite dialogue between the two countries. This critical step of delinking political with economic issues and bilateral relations with Saarc issues, is highly commendable and should clear any misgivings India may have had about Pakistan's earnestness in being a credible regional partner. Of all the 180 degree policy turns the Musharraf government has made so far, this is easily the most auspicious and sensible.

India has also taken some commendable steps at the Islamabad Summit to allay the fears of smaller countries and to disabuse itself of the charges of its hegemonic designs. By agreeing to the reservations on Safta insisted upon by the least developed countries, led by Bangladesh, India has shown large-heartedness befitting the region's largest economy. In the same spirit, Mr Vajpaee's generous offer of giving to the proposed Saarc Poverty Alleviation Fund, an initial amount of $100 million intended for use outside India, is a gesture that augurs well for the implementation of Saarc's primary goal.

Indeed, it seems both Indian and Pakistani leadership seem to have undergone a major change of heart transplant - and one only hopes that the internal body politic in both countries would not show any uncontrollable signs of rejection.

One of the major reasons, besides the political hiatus between India and Pakistan, is the piecemeal way in which Saarc has moved towards achieving its goals. Inevitably, this half-hearted approach has proved ineffectual. For instance, in the area of trade, despite considerable efforts, Saarc's flagship on regional cooperation, Sapta, has virtually been a non-starter.

Few of the products in which India was a potential market and Pakistan the potential supplier, for example, were included in the Sapta concessions. As a result, the effects of regional trade liberalization under Sapta have been rather modest at best, as has been demonstrated in many empirical studies.

Saarc is now contemplating a leap from a preferential trading arrangement to a free trade area (Safta), but given the lacklustre experience on Sapta, the new arrangement is unlikely to be more spectacular. Indeed, it would seem that it would probably have been better to make haste more slowly by focusing on the medium of unilateral trade liberalization on an MFN basis.

Nepal, a least developed country, did provide this lead by unilaterally lowering its tariffs by 10 per cent to all Saarc countries, which was ignored by other nations. In view of the renewal of political will in the region for moving in the fast lane of regional cooperation, as in ASEAN and other dynamic regions. Saarc will have to re-think and evolve a new strategy to face the challenges of globalization.

If the optimism and hope generated by the success of the 12th Summit is not to be frittered away, the governments of the Saarc region will have to look ahead rather than back and prepare a new blueprint for sustaining the momentum of regional cooperation beyond Safta. In order to fulfil the high aspirations of its peoples Saarc will need a new strategic vision. It will have to change its ways and its structure and will have to make commensurate efforts to revitalize itself.

Saarc's new vision, as vaguely articulated in a television interview by the Indian Foreign Minister, Mr Yashwant Sinha, could be seen as a bridge between East Asia, rich in its human resources and technology and West and Central Asia, rich in natural resources and finance.

The Saarc region's massive human population and educated elites could complement the needs of both the other regions, with India overseeing the eastern flank and Pakistan providing the linkage to West and Central Asia. This will help realize the dream of the Asian century alluded to by the Pakistani President in his banquet address to the Summit delegates.

It will also avoid the counterproductive competition between India and Pakistan in their respective regions of influence, which has often been a mutual diplomatic irritant between the two countries. This vision will present a win-win, non-zero-sum situation for all concerned. The only downside this vision may entail is the possible fear of smaller Saarc countries that a collusion between India and Pakistan, the reverse of the present situation and far from probable, may result in some detriment to them.

For realising this new strategic vision, Saarrc will have to considerably broaden its agenda from its present limited focus. Poverty alleviation, social development and trade liberalisation can and should remain the core issues. Among other relevant topics to be included in the Saarc agenda can be information technology, infrastructure for regional integration, rural development, intra-industrial trade, international migration and the role of South Asian diaspora in promoting the region's development.

India, which is now recognized as a leading force in IT, can be more forthcoming in sharing its experience with other countries and in helping to reduce the digital divide, both globally and regionally.

Pakistan, Bangladesh and India have interesting national experiences to share with the rest of the region in the fields of rural development, decentralization, participation of women and micro-credit schemes. As suggested by the Group of Eminent Persons appointed by Saarc, the ultimate aim of Saarc should be to move towards the establishment of a South Asian Regional Economic Community (SAREC), with the possibility of creating a common currency, as recently proposed by Mr. Vajpayee.

This will also require some degree of macroeconomic policy and exchange rate co-ordination, along with the coordination of industrial policies and encouraging FDI into the region.

This broadened agenda would require a massive amount of detailed research, as was preceded before the establishment of the European Common Market, as well as the ASEAN. Saarc should also conduct a study to draw appropriate lessons from other regional groupings and to explore the possibility of establishment of effective linkages with other Asian subregional groupings. Such a study was conducted by ESCAP some years ago, but needs to be updated and widened in scope.

If the leaders of Saarc are really eager to initiate efforts to make South Asia such a dynamic region, they should convene a special Summit to reinvigorate Saarc, redefine its mandate and restructure its functions, operations and work programme. The present Secretariat based in Kathmandu, Nepal, is too inadequate to address the massive problems of 1.6 billion people. Its technical expertise is restricted to civil servants from Saarc countries who act as Directors of the different substantive departments.

The ad hoc advice received from Eminent Persons in various fields, while valuable, can be far more useful and timely if the preliminary work for them can be undertaken by competent technical staff in the Secretariat. Saarc should also endeavour to involve the civil society and the NGOs in the formulation of its future programmes.

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