Some pertinent questions about one billion Indian loan
Wednesday, 29 September 2010
Badrul Islam
A proper evaluation of public opinion and also reaching of some kind of a national consensus are a must before a government signs any agreement with major countries, particularly with India in this region. However, the government signed the US$1.0 billion loan with India on August 07, 2010. This loan will finance 14 projects in Bangladesh. Reports in many newspapers say that most of this fund would be utilised for development of railways and other communication infrastructure. And, indications are that these will mainly facilitate transshipment of Indian goods to its north-eastern region. The Indian Prime Minister, Manmohan Singh, had sent Indian Finance Minister Pranab Mukherjee to execute the deal after which was earlier decided in principle by the government of India six months back. Mr. Mukherjee also announced, during his visit to Dhaka, that India would export 300,000 tonnes of rice and 200,000 tonnes of wheat.
Many critics of the Indian loan deal have pointed out the loan from India was not required as Bangladesh's foreign exchange reserve is now hovering between $10 to $11 billion. One billion dollar could have been set aside from this reserve. That would have helped reap three big advantages: (1) the 14 projects could be completed then through competitive bidding, facilitating other countries besides India, to participate better quality equipment could be acquired, alongwith the benefit of utilising Bangladesh's own experts and manpower, (2) the terms of the deal with India could be made more favourable to Bangladesh, by making efforts, in tandem, to resolve all outstanding bilateral issues with India sooner than later and (3) the continuity of Bangladesh's share of marketable goods to the northeastern states could be ensured well and now, it will clearly be doubtful after the establishment of transit. This advantage, as the critics note, has now been lost by accepting this loan from India.
Foreign Minister Dipu Moni said that when donors provide loans or grants, they protect their own interest. We are all aware of the fact that donors do discuss the pros and cons of how their loans would benefit the recipient country. Did the government really press for making a better not bargain on points that could be more advantageous to Bangladesh?
The chairman of Fair Trade Advocacy, Mr. Manzur Ahmed, in his article "Passage of Indian cargo through Ashuganj" writes, "Bangladesh should have absolutely no obligation to allow "transit and transshipment" of goods from one place in India through Bangladesh to another place in India under the governing principles of "Transit and Transshipment in International Trade" as mentioned under Article V of GATT 1994(binding on both Bangladesh and India as members of WTO). The bait of carriage charge for Indian cargoes at the cost of marginalisation of our natural advantage and perpetual loss of our export to seven sisters can never be an option. Bangladesh should adopt as its strategy and uphold the doctrine of third country transit as stated by Dr. Manmohan Singh in the inaugural session of 13th SAARC summit, that "All South Asian countries would provide to each other, reciprocally, transit facilities to third countries".
Why did not our authorities think of the above two points? Why was there not any coordination between the different concerned ministries? Why did they show so much enthusiasm to receive this loan from India? However, we deem it proper to remind our authorities about the philosophy of late Bangabandhu Sheikh Mujibur Rahman, the architect of our independent Bangladesh. He expressed his gratitude to India for supporting our liberation struggle but he also desired that Bangladesh-India relationship be imbued with the spirit of equality. Late Mujib was clear in his mind that he did not like to be over- dependent on India. He did not wish that Bangladesh be dubbed as any client state of its neighbour, as was being anticipated by political analysts and observers from different parts of the world. Is it not wise for us all to follow the vision of the architect of the nation?
Since embarking on economic reforms in 1991, "emergent" India's growth rate has risen dramatically and has been about 9.0 per cent a year for the last five years. Yet India's service to its people ranks below countries with neither democracy nor high growth, writes Sarmila Bose, Senior Research Fellow, in her article, "Indians will vote but will they really have democracy?". In the same article she states that India has failed to deliver even the basics of a decent life to most of its citizen. Indians vote but they go hungry. The International Food Policy Research Institute ranks India 66 out of 88 countries in its 2008 Global Hunger Index: hunger is at "serious" level in 4 of its 17 biggest states, "alarming" in 12 and "extremely alarming" in 1. This poor performance is unrelated to state-level economic growth or who hold power: this is a systemic failure.
This description is now considered by many including this writer as the reason why India seeks trans-shipment/transit facilities through Bangladesh. But while doing this, will Indian authorities bear in mind that Bangladesh's ongoing marketing of some of its products to both India and the northeastern states must not be jeopardised? Our daily newspapers carry worrisome reports about the obstacles the Indian government is creating to hinder the smooth business. We quote herein three examples: (1) Jute bags faced a setback last month as India wants exporters to print country of origin, a rule, previously ignored for last eight years, to the benefit of Indians who re-exported them to other countries. India previously imported 500,000 bales of jute; now it is down to 175,000 bales, (2) Food exporters found it hard to access the north-eastern states of India as the region is customs authorities have set a new rule asking importers to store in bonded warehouse from June this year. Delays in this test from Indian labs and showing bank solvency certificates by importers is discouraging them and (3) the issue of non-tariff barriers is being discussed for last eight years, says a top official of Bangladesh Tariff Commission. But such talks have still remained inconclusive.
The demand for transit/transshipment by India has been there from the then East Pakistan times and following independence of Bangladesh, Lt. Gen Jacob writes in his book, "Surrender at Dacca", that he suggested to D. P. Dhar, then an adviser to late Indira Gandhi that it is important to get from Bangladesh government an agreement of three essentials: guarantee for Hindu minority, rationalisation of enclaves, and transit rights by rail and inland waterways through Bangladesh with use of facilities at Chittagong port. What Jacob didn't know then, that Chittagong, Khulna and Mongla ports were strewn with mines and non-operational.
In this connection, the contrasting attitude of India is noteworthy. While Jacob asked Dhar to seek guarantee from Bangladesh for use of ports, our late Sheikh Mujibur Rahman, learning about mines in our ports, requested India to permit use of Calcutta (Kolkata) port for six months for Bangladesh. The request was turned down on grounds of security. The habit of demanding things, right or wrong, from Bangladesh started right after independence (as seen from Jacob's statement) and friendship indeed started with suspicion from the side of the Indian authorities, as can be felt from their denial of above. Also India withdrew the Indian army from Bangladesh only after signing the 'controversial' 25-year agreement and on insistence of late Mujibur Rahman.
Professor Bidwai, an eminent Indian columnist, in his article, "India seeks an exalted global profile" mentions that the characteristic of India's ruling elite is its insatiable appetite for symbols of grandeur and obsession with exclusivity. New Delhi's policy-makers want to raise India's high profile. Consider India's hubris-driven attempt to transform itself from an official development assistance (ODA) recipient to an aid donor. In 2003, it kicked all aid donors excepting six (US, UK, Russia, Germany and EU) and declared that it wouldn't accept tied aid and launched a tiny ODA for poor countries to balance the growing Chinese influence in Africa.
But China is an altogether different league. Its ODA is US$25 billion. India's is under $1.0 billion. However, much of India's aid is tied to Indian goods and services which is in contrast with India's own refusal to accept such tied aid. It is under such terms that the $1.0 billion loan was given to Bangladesh by India. Does this kind of contrasting foreign policy of India benefit its neighbour, particularly Bangladesh?
The author is a freelance writer. He previously worked for Foreign Chartered Coaster Administration, BIWTA and the United Nations Agencies in Bangladesh,
Somalia and Uganda.
He can be reached at
e-mail: bislam66@gmail.com
A proper evaluation of public opinion and also reaching of some kind of a national consensus are a must before a government signs any agreement with major countries, particularly with India in this region. However, the government signed the US$1.0 billion loan with India on August 07, 2010. This loan will finance 14 projects in Bangladesh. Reports in many newspapers say that most of this fund would be utilised for development of railways and other communication infrastructure. And, indications are that these will mainly facilitate transshipment of Indian goods to its north-eastern region. The Indian Prime Minister, Manmohan Singh, had sent Indian Finance Minister Pranab Mukherjee to execute the deal after which was earlier decided in principle by the government of India six months back. Mr. Mukherjee also announced, during his visit to Dhaka, that India would export 300,000 tonnes of rice and 200,000 tonnes of wheat.
Many critics of the Indian loan deal have pointed out the loan from India was not required as Bangladesh's foreign exchange reserve is now hovering between $10 to $11 billion. One billion dollar could have been set aside from this reserve. That would have helped reap three big advantages: (1) the 14 projects could be completed then through competitive bidding, facilitating other countries besides India, to participate better quality equipment could be acquired, alongwith the benefit of utilising Bangladesh's own experts and manpower, (2) the terms of the deal with India could be made more favourable to Bangladesh, by making efforts, in tandem, to resolve all outstanding bilateral issues with India sooner than later and (3) the continuity of Bangladesh's share of marketable goods to the northeastern states could be ensured well and now, it will clearly be doubtful after the establishment of transit. This advantage, as the critics note, has now been lost by accepting this loan from India.
Foreign Minister Dipu Moni said that when donors provide loans or grants, they protect their own interest. We are all aware of the fact that donors do discuss the pros and cons of how their loans would benefit the recipient country. Did the government really press for making a better not bargain on points that could be more advantageous to Bangladesh?
The chairman of Fair Trade Advocacy, Mr. Manzur Ahmed, in his article "Passage of Indian cargo through Ashuganj" writes, "Bangladesh should have absolutely no obligation to allow "transit and transshipment" of goods from one place in India through Bangladesh to another place in India under the governing principles of "Transit and Transshipment in International Trade" as mentioned under Article V of GATT 1994(binding on both Bangladesh and India as members of WTO). The bait of carriage charge for Indian cargoes at the cost of marginalisation of our natural advantage and perpetual loss of our export to seven sisters can never be an option. Bangladesh should adopt as its strategy and uphold the doctrine of third country transit as stated by Dr. Manmohan Singh in the inaugural session of 13th SAARC summit, that "All South Asian countries would provide to each other, reciprocally, transit facilities to third countries".
Why did not our authorities think of the above two points? Why was there not any coordination between the different concerned ministries? Why did they show so much enthusiasm to receive this loan from India? However, we deem it proper to remind our authorities about the philosophy of late Bangabandhu Sheikh Mujibur Rahman, the architect of our independent Bangladesh. He expressed his gratitude to India for supporting our liberation struggle but he also desired that Bangladesh-India relationship be imbued with the spirit of equality. Late Mujib was clear in his mind that he did not like to be over- dependent on India. He did not wish that Bangladesh be dubbed as any client state of its neighbour, as was being anticipated by political analysts and observers from different parts of the world. Is it not wise for us all to follow the vision of the architect of the nation?
Since embarking on economic reforms in 1991, "emergent" India's growth rate has risen dramatically and has been about 9.0 per cent a year for the last five years. Yet India's service to its people ranks below countries with neither democracy nor high growth, writes Sarmila Bose, Senior Research Fellow, in her article, "Indians will vote but will they really have democracy?". In the same article she states that India has failed to deliver even the basics of a decent life to most of its citizen. Indians vote but they go hungry. The International Food Policy Research Institute ranks India 66 out of 88 countries in its 2008 Global Hunger Index: hunger is at "serious" level in 4 of its 17 biggest states, "alarming" in 12 and "extremely alarming" in 1. This poor performance is unrelated to state-level economic growth or who hold power: this is a systemic failure.
This description is now considered by many including this writer as the reason why India seeks trans-shipment/transit facilities through Bangladesh. But while doing this, will Indian authorities bear in mind that Bangladesh's ongoing marketing of some of its products to both India and the northeastern states must not be jeopardised? Our daily newspapers carry worrisome reports about the obstacles the Indian government is creating to hinder the smooth business. We quote herein three examples: (1) Jute bags faced a setback last month as India wants exporters to print country of origin, a rule, previously ignored for last eight years, to the benefit of Indians who re-exported them to other countries. India previously imported 500,000 bales of jute; now it is down to 175,000 bales, (2) Food exporters found it hard to access the north-eastern states of India as the region is customs authorities have set a new rule asking importers to store in bonded warehouse from June this year. Delays in this test from Indian labs and showing bank solvency certificates by importers is discouraging them and (3) the issue of non-tariff barriers is being discussed for last eight years, says a top official of Bangladesh Tariff Commission. But such talks have still remained inconclusive.
The demand for transit/transshipment by India has been there from the then East Pakistan times and following independence of Bangladesh, Lt. Gen Jacob writes in his book, "Surrender at Dacca", that he suggested to D. P. Dhar, then an adviser to late Indira Gandhi that it is important to get from Bangladesh government an agreement of three essentials: guarantee for Hindu minority, rationalisation of enclaves, and transit rights by rail and inland waterways through Bangladesh with use of facilities at Chittagong port. What Jacob didn't know then, that Chittagong, Khulna and Mongla ports were strewn with mines and non-operational.
In this connection, the contrasting attitude of India is noteworthy. While Jacob asked Dhar to seek guarantee from Bangladesh for use of ports, our late Sheikh Mujibur Rahman, learning about mines in our ports, requested India to permit use of Calcutta (Kolkata) port for six months for Bangladesh. The request was turned down on grounds of security. The habit of demanding things, right or wrong, from Bangladesh started right after independence (as seen from Jacob's statement) and friendship indeed started with suspicion from the side of the Indian authorities, as can be felt from their denial of above. Also India withdrew the Indian army from Bangladesh only after signing the 'controversial' 25-year agreement and on insistence of late Mujibur Rahman.
Professor Bidwai, an eminent Indian columnist, in his article, "India seeks an exalted global profile" mentions that the characteristic of India's ruling elite is its insatiable appetite for symbols of grandeur and obsession with exclusivity. New Delhi's policy-makers want to raise India's high profile. Consider India's hubris-driven attempt to transform itself from an official development assistance (ODA) recipient to an aid donor. In 2003, it kicked all aid donors excepting six (US, UK, Russia, Germany and EU) and declared that it wouldn't accept tied aid and launched a tiny ODA for poor countries to balance the growing Chinese influence in Africa.
But China is an altogether different league. Its ODA is US$25 billion. India's is under $1.0 billion. However, much of India's aid is tied to Indian goods and services which is in contrast with India's own refusal to accept such tied aid. It is under such terms that the $1.0 billion loan was given to Bangladesh by India. Does this kind of contrasting foreign policy of India benefit its neighbour, particularly Bangladesh?
The author is a freelance writer. He previously worked for Foreign Chartered Coaster Administration, BIWTA and the United Nations Agencies in Bangladesh,
Somalia and Uganda.
He can be reached at
e-mail: bislam66@gmail.com