The Political Economy of Regional Cooperation in South Asia

Abstract

THE FORMATION OF THE SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION (SAARC) in December 1985 was hailed as a major diplomatic breakthrough in South Asia. But SAARC's slow progress and modest achievements over the past decade have evoked different reactions among different people. To some, SAARC is merely a talking shop, which can provide nothing more than a lip service to the various issues of peace and development in the region. To others, SAARC may not be a panacea to the region's problems, but its existence has certainly provided an opportunity for the policy makers, administrators, and experts to meet regularly and hold informal dialogues on important bilateral and regional issues. This practice of informalism and behind-the-scenes discussions among the political leaders on various SAARC forums has helped contain many difficult situations in the region and has contributed to the beginning of a confidence-building process in South Asia. Additionally, the ratification of SAARC Preferential Trading Arrangement (SAPTA) by all SAARC members in December 1995 and their decision to create a SAARC Free Trade Area (SAFTA) as early as possible have generated guarded optimism about the relevance of SAARC in promoting regional economic cooperation in South Asia.' Will economic interests drive the South Asian countries toward greater cooperation? If so, what is the potential for the growth of regional economic cooperation in South Asia? Given the decades of mutual hostility and distrust, to what extent will the South Asian countries be able to achieve economic interdependence? The answer to these questions requires a