Millennium Post

Mistrust stalls South Asian cooperation

A major reason why regional economic development has been stalled in South Asia is the enduring mutual distrust and hostility between India, Pakistan and Bangladesh. The abandonment of the vitally important linkage that the proposed Myanmar- Bangladesh-India gas pipeline would have provided is a classic example. In this part of the world, national leaders with narrow political agendas do not learn from the examples of vibrant living economic models, where many countries become active participants in growth and improved communications – like the EU or ASEAN, overriding their political and cultural differences. It has been a sadly different story where the SAARC or BIMSTEC is concerned.

Fortunately, during the present tenure of Sheikh Hasina Wazed as the Prime Minister of Bangladesh, the awareness that regional economic growth can catalyse national growth and development, is gaining ground in Bangladesh. Economists, administrators and opinion-makers are beginning to understand that under Khaleda Zia and her fundamentalist government, Bangladesh hurt itself economically by opposing India at every turn. They are taking a look at the proposed pipeline. However, observers fear that Dhaka may have missed the bus. India has already progressed on the road to securing offshore energy from Myanmar proposing a new route bypassing Bangladesh. And Myanmar, upset over the delay has finalised large supplies of gas and oil to China, initially even keeping proposed supplies to India pending. Of late, the two countries are close to finalising a deal using the alternate route, as Myanmar takes advantage of its huge reserves.

The clear loser: Bangladesh. In case the India-Bangladesh-Myanmar link does not come up, Bangladesh may end up importing gas/oil from Russia in the medium term, some time during the next decade. It has held talks already. It is also pressing for inclusion in the nearly finalised pipeline proposed from Turkmenistan to India, touching Afghanistan and Pakistan along the way (TAPI). Either way, the transport cost will be much more for Bangladesh than would have been the case if the Myanmar-Bangladesh-India link had been operative! Just as India would shell out more for gas from Myanmar, if it is available along the longer route through the Northeastern states – all dues to the mulish resistance from the Khaleda Zia's BNP regime.

Obstructionism and pressure tactics dominated Dhaka's role in scuppering the proposed Myanmar- Bangladesh India gas pipeline. Its construction would have involved an immediate investment of around $150 million in Bangladesh, and an annual income of around $100 million as transit fee. The upgrading of the country's backward road and rail infrastructure would have been an added sweetener in the deal. The pipeline would have ensured a steady power supply from Myanmar, at minimum cost, when Bangladesh runs out of gas in 2017 or so.

But BNP's policymakers wanted to squeeze India economically far more than improving the economy of Bangladesh. Through endless rounds of tedious 'negotiations', from 1993 to 2006, they introduced unrelated bilateral issues into a relatively simple dialogue over the pipeline route. They pressed for transit rights to Nepal and Bhutan, from where they wanted to access 'cheap' power to meet Bangladeshi power needs. This was strange, as Nepal itself imported power from India! It sought greater 'parity' in bilateral trade and the lowering of most existing tariff on Bangladeshi items exported to India. The issue of parity was not easy to sort out as the trade gap between India and Bangladesh exceeded $2 billion.  

To their credit, both GAIL and ONGC maintained contact with Myanmar authorities in their bid to secure gas and oil supplies from the energy-rich offshore blocks all these years. The Burmese, in advanced negotiations with the Chinese over gas and oil supply to China, urged upon both Dhaka and New Delhi to hurry up and finalise an agreement. India continued to press for some more time until it became clear that Bangladesh would not respond. The inevitable happened. China concluded a lucrative deal with Myanmar. After some purposive discussion, the two countries announced in 2010 a pipeline from the Than Shwe energy field right up to Kunming, through Myanmar, through which annually 12 billion cubic feet of gas and 12 million tonnes of crude oil would be sent to the bigger country. The agreement is for 30 years. In the process, China trumped India in its own backyard. It is another matter that state-owned Chinese companies have outbid their Indian counterparts in the energy sector in Venezuela, Equador, Angola and Mongolia. Why did Bangladesh policymaker shoot themselves in the foot in their anti-Indian zeal? It seems there had always been some confusion in the country as to (a) how much energy reserves it had (b) what to do with any surplus after meeting domestic requirements (c) whether to sell it to India?

A recent estimate of Bangladesh's gas reserves puts it at five trillion cubic feet. In 1993, foreign firms were invited to assist in exploring. At present, from four gas fields, daily 501 million cft are produced. Chevron (formerly Unocal) is the biggest company producing 331 mcfd from Jalalabad and Moulvibazar areas in Sylhet. Experts believed that at present rate of consumption, with gas being used to produce power, Bangladesh reserves would last up 2017, possibly up to 2020. Unocal suggested the building of an 847 mile long pipeline from Bangladesh to Delhi, for 20 years, involving a total supply of 3.65 tcf, at a cost of taka 200 billion – big earning by international standards! But led by the Jamat-e-Islami, some circles in Bangladesh opposed the move. India must not be helped at any cost, they argued, forgetting that what was proposed was a commercial arrangement, governed by international norms. Bangladesh softened its stand on the three nation pipeline as late as in 2007, when a caretaker regime was running the country, prior to the 2009 polls. Economic adviser Iftikar Ahmed Choudhury, no India lover, nevertheless called for closer economic ties with India on a 'firm footing', no doubt under international pressure. The Awami league government which now rules has resumed a dialogue with India and Myanmar on the issue and is trying to revive the project. The Bangladeshi company Mohana is currently examining the possibility of importing gas from Myanmar, running it through Bangladesh and transmitting it into India. The project would cost $1 billion and India would pay Bangladesh annually between $100 to $120 million for the passage. Myanmar has told both countries to make up their minds fast, for other countries want a share of its gas.

This proposal comes after India has finalised plans to build a 1575 kilometres long pipeline from the promising A1 and A2 blocks off Myanmar coast to Sittwe port, continuing the link through Aizawl or Tripura, Silchar, Guwahati, Siliguri to Gaya, with a linkage to Haldia-Jagdishpur circuit. With Awami League's priority on economic development and progress, the decks are clear for some constructive co-operation between India, Bangladesh and Myanmar. Gas from Myanmar would certainly help power speedier economic growth for the long neglected Indian Northeast and India's eastern States. It would be a giant step towards the economic integration of the region, bringing together three countries in common economic interest.

It is as much in India's interest to ensure the construction of the proposed pipelines as anybody else's. After all, India has to import 80 per cent of its energy requirements from the costly Middle- West Asia oil fields, a region notorious for political volatility, big power involvement and oil price fluctuations.
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