JANUARY 2017

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- Suresh Jaura
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A Vision for Prosperity in South Asia

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Remarks by Nisha Desai Biswal *

I’d like to share some thoughts on how we view engagement in South Asia in particular. This is clearly a time of great dynamism across South Asia, with elections and transitions that have been unfolding over the past year and concluding over the next few months.

And while the transition in Afghanistan is the cause of much angst and anxiety, we are focused on the opportunities and imperative it creates for connecting the economies of South Asia and Central Asia.

Through our New Silk Road vision we have been focusing our efforts in four key areas.

  • Creating regional energy markets that link Central Asia with South Asia;

  • Boosting transportation routes and investing in critical infrastructure;

  • Improving customs and borders; and

  • Linking businesses and people.

Afghanistan and its neighbors are now championing that New Silk Road vision themselves. The region is reducing barriers to trade, investing in each other’s economies, and supporting cross-border projects.

From CASA-1000 – which will bring surplus hydropower form Kyrgyzstan and Tajikistan to Afghanistan and Pakistan – to TAPI – the Turkmenistan-Afghanistan-Pakistan-India pipeline – the United States is supporting the countries of the region as they build the economic and energy linkages that will transform their individual and collective economies.

We have focused on easing the constraints to trade in this least connected part of the world. U.S. technical assistance has helped reduce custom procedures by nearly half in Afghanistan, dramatically reducing border release times.

Now clearly the biggest constraint to boosting trade and energy flows is in addressing the barriers between India and Pakistan. Indeed, while I don’t currently have responsibility for Pakistan, I can say we are encouraged by the economic progress that Pakistan has made in the past year, though it still faces many challenges ahead. And an improved climate between Pakistan and its largest neighbor can pay enormous economic dividends. India-Pakistan trade in 2013 was still a paltry $2.5 billion. There’s no reason that number can’t quadruple in a few years’ time to $10 billion. We have heard some positive murmurings in Islamabad and Delhi that both governments are moving in this direction and we are hopeful that they will make progress after the Indian election.

On the eastern front of South Asia, with the political transition in Myanmar, we also see a historic opportunity to connect South and South East Asia into an integrated economic landscape. The past several years have seen significant movement on that front as well.

  • Myanmar is seeing the economic dividend from its political transition, with foreign investment more than quadrupling since Thein Sein’s political reforms of 2011;

  • Bangladesh in particular stands to develop tremendous commercial ties with the rest of Asia and has begun to break down trade barriers with India;

  • India and ASEAN, who have been dialogue partners for 20 years, summit partners for 10 years, and now strong trade and investment partners with a FTA in services –have cultivated a lasting bond, with great complementarity to our own ties with the 10-nation bloc.

But in the end, regional growth hinges on the region’s economic engine. In South Asia, that engine is India.

But India faces real vulnerabilities. Over 400 million people in India lack reliable access to energy. Road traffic is supposed to quintuple in six years but highway construction is slated to grow at a paltry 4% a year.

India’s leaders have targeted to spend $1 trillion dollars over five years in infrastructure investment to close the infrastructure gap that prevents real growth in the manufacturing sector, yet it continues to have policies that inhibit foreign investment. India still ranks poorly amongst all countries as a hospitable place to invest and start a new business, ranked 134 out of 189 countries.

And India must meet the skills gap to grow its economy –In fact, India needs eight times the number of trained architects and civil engineers than it has now to meet its growth projections.

So, without sugar-coating its challenges – a tough neighborhood, tightening economic growth and the mounting impacts of pollution on public health – India, the world’s largest democracy, must decide its own path to the future. Will it make the reforms necessary to attract investment? Will it capitalize on the opportunities that lie in front of it?

Those are the questions that India’s voters are asking as they cast their ballots and those are the questions that we want to see answered.

We know that India has the potential to exceed all of our expectations, and it has done so in the past.

But to do so we believe India’s investment and tax policies must be designed to lure – not deter – capital flows; timely regulatory approvals and contract enforcement must be embraced; and protection of intellectual property must be enforced.

Time and again the rules-based trading system has helped grow and integrate developing powers into major players on the global scene. The more integrated India is into global markets and into the economic architecture of Asia, the more India’s economy will grow and benefit the entire global economic system.

The United States is committed to growing the trade and investment ties between our two countries. We want to grow trade to $500 billion a year. And, there’s no question that India’s economic success is vital to achieving the strategic aims that both our leaders have laid out. In that vein, we pledge to look forward, and not dwell on the past.

  • For instance, our Bilateral Investment Treaty when completed will bring even greater investment and innovation to India and stronger partnerships between our two private sectors;

  • We’re revolutionizing the way we discuss climate change issues, through bilateral cooperation in forestry, adaptation, clean and renewable energy, and on HFCs through the creation of the Climate Change Working Group;

  • We’re looking to partner with India on key global challenges, like preserving our oceans;

  • We’re connecting researchers and students at our universities, including Harvard’s School of Public Health and St John’s Research Institute in Bangalore so that they can together tackle global challenges such as malnutrition and food insecurity;

  • We’re working with India, through the Energy Dialogue, to increase energy access, share best practices, and conduct joint research on clean and renewable energy and energy efficiency; and

  • We’re partnering with India for the 2014 Tech Summit and Expo, a banner event that will bring together higher education, industry, policy makers, researchers to engage in policy discussions and explore increased collaboration.

The Importance of Regional Security

While the prosperity agenda in South Asia is critically important, so too is enhancing political stability and regional security. In order to enhance that stability and security, our foreign policy is designed around engagement – even on the toughest and most vexing issues.

Successful elections in Pakistan, Afghanistan, and India – all in the span of a year – create real opportunities for regional stability. But we can’t ignore the security challenges posed by the drawdown of NATO forces and the transition in Afghanistan.

As the countries of the region choose policies that promote economic growth and societal development, hundreds of millions of people can be lifted out of poverty and into more prosperous, healthy, and secure futures.

On that front I am optimistic. Pakistan conducted its first civilian transition of power last year. Afghanistan is in the middle of successful, broadly-participatory elections.

Nepal has made huge strides, building democratic institutions after years of conflict. Last November’s elections saw historic voter turnout of over 70%. With USAID’s assistance, Nepal has cut its infant, under-5 and maternal mortality rates roughly in half since 1996. Similarly, in Bangladesh, over the past twenty years, USAID has contributed to a reduction in under-five mortality by 60 percent. Bangladesh is the only country where we’re implementing all three of President Obama’s development initiatives – on health, food security, and climate change – and with U.S. assistance Bangladesh is one of the few countries on track to achieve its Millennium Development Goals related to child and maternal mortality

In Bangladesh, we continue to press for greater political inclusion, without which, a more stable and prosperous future is put at risk. But one must acknowledge the important gains Bangladesh has made in improving the health, food security and economic opportunity for its citizens. And while the Rana Plaza and Tazreen factory fires focused world attention on the inadequate labor conditions, we have engaged, along with European partners, in an intense effort with labor, industry, civil society and government to have great improvements in the garment sector in Bangladesh. Our security cooperation with both Nepal and Bangladesh has grown over the years, not only on the international peacekeeping front, where both countries are important contributors, but also on border security, counter terrorism and HADR.

We are particularly focused in supporting Nepal and Bangladesh as they build their capacity to respond to natural and humanitarian disasters. In Nepal, we have partnered with the Government to educate Nepalis about the importance of preparing for disasters, particularly earthquakes, to which the nation is especially vulnerable. In Bangladesh, we are helping prepare for cyclones and have built over 500 cyclone shelters since 2001. We recently transferred a U.S. Coast Guard cutter to the Bangladeshi Navy which has already played a disaster response role.

Sri Lanka has fortunately ended its civil war, though reconciliation has proved challenging. Following the March UN Human Rights Council resolution in Sri Lanka, we continue to call for credible efforts to ensure accountability and justice. We look forward to a resumption of a more comprehensive military relationship once the Government of Sri Lanka has made better progress toward reconciliation and accountability. Further south in Maldives, we’re working closely with that young democracy to protect its waters and cooperate on counterterrorism.

Our security engagement with India is a central element of the broad U.S.-India strategic partnership. That’s why we are committed to a partnership that includes a strong and influential India in the security realm. Why? Because it can contribute to the stability of the Indian Ocean region. We remain committed to working with India as we develop a joint approach security in the Indo-Pacific.

We’ve expanded our regional consultations with India to include South, Central, West, and East Asia. We’ll hold new rounds of several of these dialogues soon. With a sixth round set for early June, the U.S.-India- Japan trilateral dialogue has deepened our discussions on Indo-Pacific economic connectivity, maritime security, and coordination in multilateral fora. Our long-term geo-strategic convergence in this region with India has never been more apparent.

And last year we sent a senior-level representative to participate for the first time in the Indian Ocean Regional Association (IORA) as a dialogue partner. All told, we’d argue that almost nowhere do U.S.-India interests currently converge as much as in the Indo-Pacific, the vast littoral arc stretching from South Africa to Australia.

And last, but not least, our path-breaking defense relationship: Spanning the last decade, we’ve made significant progress in helping India modernize its armed forces and in expanding joint exercises that enhance regional security. Today, we are proud to have a growing track record of notable defense sales, including, most recently, the C-17 and C-130J transport aircraft, and the P-8I maritime surveillance aircraft. With many more projects in the pipeline that will provide top-end equipment and capabilities to our Indian partners, we’re firmly committed to a stronger co-production and co-development relationship, meeting our collective security needs and reducing costs.

Conclusion

Let me conclude by saying simply, that as I look out over the horizon and assess the challenges and opportunities for the United States to engage with the countries of South Asia, I am struck by the enormous potential for continued expansion of our relations with a region that will be increasingly consequential to our interests in the years ahead. Thank you.

* These remarks were made, on April 16, by Nisha Desai Biswal, Assistant Secretary, Bureau of South and Central Asian Affairs, Harvard University, Kennedy School of Government, Cambridge, MA

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