Why a win-win situation is important for strengthening Indo-Bangladesh bilateral relations
Thursday, 30 September 2010
Badrul Islam
THE rate of interest to be charged on the $1.00 billion loan deal with Bangladesh by India has some relevant points for consideration. This rate 1.75 per cent per year with an additional commitment charge of 0.5 per cent for unutilised credit at the end of a year. The entire amount of loan is repayable in 20 years with a grace period of five years. The clock for interest has understandably started ticking soon after signature on August 7, 2010. This means at end of 20 years, the principal amount of $1.0 billion plus the interest of amount 262.5 million dollars (1.75 x 15), will have to be returned to Exim Bank of India.
What is not clear is how the commitment charges of 0.5 per cent will be applied. Will this be charged on the balance amount, if any, after the entire project is completed i.e. after 20 years, or will this be charged every year? Already an estimated amount of $601.84 million has been earmarked for expenditure of 14 projects. The balance amount of $398.16 million is yet to be allotted against approved projects. So, if this amount remains unutilised till August 07 of next year i.e. 2011, will 0.5 per cent commitment charge be applied on this amount? If so, then an additional amount of $199.080 million will be added to above amount of interest.
This needs to be efficiently monitored; otherwise, the interest amount for payment will be accumulating. The Indian Finance Minister has mentioned that the terms of this loan, the largest India is giving (comparing to African countries mentioned earlier) are extremely favourable. Did he imply that the terms are very favourable to India. This seems to be the case at least on three counts: (1) India will get this loan back with profit from interests: (2) It probably earns some additional profits accrued from on the unutilised portion of the loan; and (3) And, most importantly, the 0.5% commitment charge has potential political gains as this loan, with this particular clause, becomes binding for the government of Bangladesh. The present government or any other one government which might be elected by the people on the basis of their free and fair choice will have to honour the commitment. In case of any political dispute it may be debated that this is a clause of the Bank and not influenced by the government of the government.
Now it is imperative that transparency and efficiency by both, Bangladesh and Indian authorities, be maintained not to create any scope for suspicions and corruptions in its implementation. The smooth operation will be a litmus test of India's friendship to Bangladesh since the operation of all 14 projects will be with Indian equipment that is due to arrive soon in Bangladesh. The Indian authorities will need ensure that all the project equipments, to be exported from India to Bangladesh, are of quality.
It perhaps needs an explanation at their stage to why the emphasis is being put here on transparency and efficiency. ANI reports that the first power project of Oil and Natural Gas Corporation of India, which received permission from the government of Bangladesh for a one-time transit, has set up its unit of 726-megawatt power plant. It will reportedly be run by gas provided by Bangladesh. The plant is located at 60 miles away from Agartala, bordering Bangladesh, where there is gas reserve of 8.4 trillion cubic feet. This will be commissioned in December 2010 and the second plant by March 2011. R. S. Sharma, Chairman of ONGS is happy on the cooperation received from the government of Bangladesh. Now note that the report specifically indicated that the plant will run by gas provided by Bangladesh. However, we have not yet seen any agreement to this effect. However, in the comments column a person using code name "Mod" has opined that this statement is false and there is no such official confirmation. Somebody from the Bangladesh side should immediately take this up with the Indian government and clarify this matter for this is of great concern and can cause misunderstanding to all these efforts of a friendly venture.
Within Bangladesh, the government's enthusiastic announcement that this loan will bring benefits to Bangladesh, in terms of "receiving electricity" through the Indian power grids from the plants being set up mostly in border areas and, "financial benefits" will accrue from creation of regional hub, are, however, being viewed by many with a great deal of scepticism due to the following reasons: (1) The authorities of both the countries are still not able to decide on electricity sharing modalities from the border areas on various technical grounds. The situation is similar to that of the Joint Rivers Commission that till date has not been able to solve the water sharing problems with Bangladesh: (2) Though the government of Bangladesh has issued a SRO for trans-shipment/transit fees to be levied on vehicles/containers and cargo, no formal agreement has yet been signed with India, Nepal and Bhutan. It was earlier reported that India wants a waiver to this effect: (3) Also no formal agreement has yet been signed with Bhutan and Nepal. The foreign minister says an exchange of letters between the three countries is sufficient: (4) No formal agreements have been signed for procedures to be followed in case of irregularities/corruption/denial to have banned/controlled items to be scanned or for random customs check at borders; And (5) no formal agreement has been signed that "No military equipment, transports or such similar cargoes will ever be shipped through Bangladesh.
We have also some questions about acceptance of 300,000 tonnes of rice and 200,000 tonnes of wheat. The report by Ms. Sarmila Bose on the prevailing hunger report indicates that India would benefit more from this stock than Bangladesh. Is this offer a political stunt to reap benefits for the upcoming general elections, particularly from minority Muslim community in India? On earlier occasions, Bangladesh had unsavoury experiences on this count. The earlier offer of rice for SIDR areas may be cited here. Bangladesh was forced to pay more(approximately $150 per tonne) than the original price fixed by India.
Kuldip Nayar, eminent Indian Columnist in his article, "India's Tiananmen Square" writes. "The right to choose is what Prime Minister Indira Gandhi confiscated when she imposed the Emergency. The Allahabad High Court disqualified her for having used the government machinery for election purposes. After getting a stay order from Supreme Court, she suspended the Constitution itself and played havoc with the nation. Her son Sanjay Gandhi, who had by then emerged as extra-constitutional authority helped her. Later, he took over and ordered the arrest of practically every known critic of his mother, smothered protest and used the government machinery to implement his scheme of things: one person rule. Three of those who helped Mrs. Gandhi and Sanjay Gandhi are today ministers in Manmohan Singh's cabinet. They are Finance Minister Pranab Mukherjee, Information and Broadcasting Minister Ambika Soni and Minister for Highways and Roads Kamal Nath. Placating political masters has become a duty with them; in return, they got out of turn promotion or cushy postings. Sanjay Gandhi put so much fear in the minds of the bureaucrats that it still works. I am not surprised over the findings of a study that India has the most corrupt bureaucracy."
It is important to ignore this above-noted psyche of the government of India. The observations by three noted Indian experts, namely Kuldip Nayar, Sarmila Bose and Professor Bidwai are relevant here. Then only one can also understand why, in 60 years, as quoted by Sarmila Bose, India has been unable to solve armed conflict in Kashmir, its north east or with the growing communist "Naxalite" movements in its heartland. India's human rights record is poor - not just in Kashmir or north east. The latest figures from National Human Rights Commission show that the largest number of complaints comes from states outside conflict zones. Corruption is endemic. Contrary to assumptions in the West, anyone who has lived in India knows that the country is yet to have effective institutional arrangements for establishment of the rule of law. Democracy is supposed to produce greater accountability but it is yet to be seen to be properly responded to in India in the context of the needs of its people.
If it is true that domestic policy of a government policy is largely reflected in its foreign policy. For this, it is not too difficult to understand, why in spite of its efforts to have a high global profile, India is yet to develop a proper rapport with most of its neighbouring countries. Two examples can be cited here: Sri Lanka has recently agreed to the $1.5 billion port project funded by China and this has fuelled Indian concern. Likewise, India is losing its influence over Nepal. Mr. G. Parthasarathy, in his article, "Remove neighbours doubt about India", says, "There are legitimate concerns in Nepal that Indian diplomats are acting like pre-consuls. Even friends of India express dismay of what they consider crude Indian "meddling" in their internal affairs. Nepal is yet to have an elected Prime Minister; but failing to do so because of alleged Indian conspiracy to have their henchmen elected. Maoists now have the greater influence and they are pro-Chinese.
As for relationship with Bangladesh, India really needs to make a dramatic change in its attitude. New Delhi should reciprocate the good gesture of our Prime Minister Sheikh Hasina. What can India do? Ms. Smruti Patel, Research Fellow, Institute for Defense Studies and Analysis, offers her valuable opinion, "India needs to walk the extra mile and, if necessary, provide unilateral trade concessions already hinted by the Finance Minister. But any concession or policy announcements must not be allowed to get tangled in bureaucratic red tapes leading to broken promises."
The Bangladeshis will be keenly observing the developments and progress of 14 projects that have been identified for implementation with the Indian credit unit and also some more that will be added in the future, on a priority basis. Let us all hope that wisdom will prevail on both governments and that none will try to outfox the other; most importantly all concerned would eagerly expect that India will not use its old tricks on us, as it previously did, for operating the Farakka Barrage.
Badrul Islam is a freelance writer. He previously worked for Foreign Chartered Coaster Administration, BIWTA and for United Nations Agencies in Bangladesh, Somalia and Uganda. He can be reached at e-mail: bislam66@gmail.com
THE rate of interest to be charged on the $1.00 billion loan deal with Bangladesh by India has some relevant points for consideration. This rate 1.75 per cent per year with an additional commitment charge of 0.5 per cent for unutilised credit at the end of a year. The entire amount of loan is repayable in 20 years with a grace period of five years. The clock for interest has understandably started ticking soon after signature on August 7, 2010. This means at end of 20 years, the principal amount of $1.0 billion plus the interest of amount 262.5 million dollars (1.75 x 15), will have to be returned to Exim Bank of India.
What is not clear is how the commitment charges of 0.5 per cent will be applied. Will this be charged on the balance amount, if any, after the entire project is completed i.e. after 20 years, or will this be charged every year? Already an estimated amount of $601.84 million has been earmarked for expenditure of 14 projects. The balance amount of $398.16 million is yet to be allotted against approved projects. So, if this amount remains unutilised till August 07 of next year i.e. 2011, will 0.5 per cent commitment charge be applied on this amount? If so, then an additional amount of $199.080 million will be added to above amount of interest.
This needs to be efficiently monitored; otherwise, the interest amount for payment will be accumulating. The Indian Finance Minister has mentioned that the terms of this loan, the largest India is giving (comparing to African countries mentioned earlier) are extremely favourable. Did he imply that the terms are very favourable to India. This seems to be the case at least on three counts: (1) India will get this loan back with profit from interests: (2) It probably earns some additional profits accrued from on the unutilised portion of the loan; and (3) And, most importantly, the 0.5% commitment charge has potential political gains as this loan, with this particular clause, becomes binding for the government of Bangladesh. The present government or any other one government which might be elected by the people on the basis of their free and fair choice will have to honour the commitment. In case of any political dispute it may be debated that this is a clause of the Bank and not influenced by the government of the government.
Now it is imperative that transparency and efficiency by both, Bangladesh and Indian authorities, be maintained not to create any scope for suspicions and corruptions in its implementation. The smooth operation will be a litmus test of India's friendship to Bangladesh since the operation of all 14 projects will be with Indian equipment that is due to arrive soon in Bangladesh. The Indian authorities will need ensure that all the project equipments, to be exported from India to Bangladesh, are of quality.
It perhaps needs an explanation at their stage to why the emphasis is being put here on transparency and efficiency. ANI reports that the first power project of Oil and Natural Gas Corporation of India, which received permission from the government of Bangladesh for a one-time transit, has set up its unit of 726-megawatt power plant. It will reportedly be run by gas provided by Bangladesh. The plant is located at 60 miles away from Agartala, bordering Bangladesh, where there is gas reserve of 8.4 trillion cubic feet. This will be commissioned in December 2010 and the second plant by March 2011. R. S. Sharma, Chairman of ONGS is happy on the cooperation received from the government of Bangladesh. Now note that the report specifically indicated that the plant will run by gas provided by Bangladesh. However, we have not yet seen any agreement to this effect. However, in the comments column a person using code name "Mod" has opined that this statement is false and there is no such official confirmation. Somebody from the Bangladesh side should immediately take this up with the Indian government and clarify this matter for this is of great concern and can cause misunderstanding to all these efforts of a friendly venture.
Within Bangladesh, the government's enthusiastic announcement that this loan will bring benefits to Bangladesh, in terms of "receiving electricity" through the Indian power grids from the plants being set up mostly in border areas and, "financial benefits" will accrue from creation of regional hub, are, however, being viewed by many with a great deal of scepticism due to the following reasons: (1) The authorities of both the countries are still not able to decide on electricity sharing modalities from the border areas on various technical grounds. The situation is similar to that of the Joint Rivers Commission that till date has not been able to solve the water sharing problems with Bangladesh: (2) Though the government of Bangladesh has issued a SRO for trans-shipment/transit fees to be levied on vehicles/containers and cargo, no formal agreement has yet been signed with India, Nepal and Bhutan. It was earlier reported that India wants a waiver to this effect: (3) Also no formal agreement has yet been signed with Bhutan and Nepal. The foreign minister says an exchange of letters between the three countries is sufficient: (4) No formal agreements have been signed for procedures to be followed in case of irregularities/corruption/denial to have banned/controlled items to be scanned or for random customs check at borders; And (5) no formal agreement has been signed that "No military equipment, transports or such similar cargoes will ever be shipped through Bangladesh.
We have also some questions about acceptance of 300,000 tonnes of rice and 200,000 tonnes of wheat. The report by Ms. Sarmila Bose on the prevailing hunger report indicates that India would benefit more from this stock than Bangladesh. Is this offer a political stunt to reap benefits for the upcoming general elections, particularly from minority Muslim community in India? On earlier occasions, Bangladesh had unsavoury experiences on this count. The earlier offer of rice for SIDR areas may be cited here. Bangladesh was forced to pay more(approximately $150 per tonne) than the original price fixed by India.
Kuldip Nayar, eminent Indian Columnist in his article, "India's Tiananmen Square" writes. "The right to choose is what Prime Minister Indira Gandhi confiscated when she imposed the Emergency. The Allahabad High Court disqualified her for having used the government machinery for election purposes. After getting a stay order from Supreme Court, she suspended the Constitution itself and played havoc with the nation. Her son Sanjay Gandhi, who had by then emerged as extra-constitutional authority helped her. Later, he took over and ordered the arrest of practically every known critic of his mother, smothered protest and used the government machinery to implement his scheme of things: one person rule. Three of those who helped Mrs. Gandhi and Sanjay Gandhi are today ministers in Manmohan Singh's cabinet. They are Finance Minister Pranab Mukherjee, Information and Broadcasting Minister Ambika Soni and Minister for Highways and Roads Kamal Nath. Placating political masters has become a duty with them; in return, they got out of turn promotion or cushy postings. Sanjay Gandhi put so much fear in the minds of the bureaucrats that it still works. I am not surprised over the findings of a study that India has the most corrupt bureaucracy."
It is important to ignore this above-noted psyche of the government of India. The observations by three noted Indian experts, namely Kuldip Nayar, Sarmila Bose and Professor Bidwai are relevant here. Then only one can also understand why, in 60 years, as quoted by Sarmila Bose, India has been unable to solve armed conflict in Kashmir, its north east or with the growing communist "Naxalite" movements in its heartland. India's human rights record is poor - not just in Kashmir or north east. The latest figures from National Human Rights Commission show that the largest number of complaints comes from states outside conflict zones. Corruption is endemic. Contrary to assumptions in the West, anyone who has lived in India knows that the country is yet to have effective institutional arrangements for establishment of the rule of law. Democracy is supposed to produce greater accountability but it is yet to be seen to be properly responded to in India in the context of the needs of its people.
If it is true that domestic policy of a government policy is largely reflected in its foreign policy. For this, it is not too difficult to understand, why in spite of its efforts to have a high global profile, India is yet to develop a proper rapport with most of its neighbouring countries. Two examples can be cited here: Sri Lanka has recently agreed to the $1.5 billion port project funded by China and this has fuelled Indian concern. Likewise, India is losing its influence over Nepal. Mr. G. Parthasarathy, in his article, "Remove neighbours doubt about India", says, "There are legitimate concerns in Nepal that Indian diplomats are acting like pre-consuls. Even friends of India express dismay of what they consider crude Indian "meddling" in their internal affairs. Nepal is yet to have an elected Prime Minister; but failing to do so because of alleged Indian conspiracy to have their henchmen elected. Maoists now have the greater influence and they are pro-Chinese.
As for relationship with Bangladesh, India really needs to make a dramatic change in its attitude. New Delhi should reciprocate the good gesture of our Prime Minister Sheikh Hasina. What can India do? Ms. Smruti Patel, Research Fellow, Institute for Defense Studies and Analysis, offers her valuable opinion, "India needs to walk the extra mile and, if necessary, provide unilateral trade concessions already hinted by the Finance Minister. But any concession or policy announcements must not be allowed to get tangled in bureaucratic red tapes leading to broken promises."
The Bangladeshis will be keenly observing the developments and progress of 14 projects that have been identified for implementation with the Indian credit unit and also some more that will be added in the future, on a priority basis. Let us all hope that wisdom will prevail on both governments and that none will try to outfox the other; most importantly all concerned would eagerly expect that India will not use its old tricks on us, as it previously did, for operating the Farakka Barrage.
Badrul Islam is a freelance writer. He previously worked for Foreign Chartered Coaster Administration, BIWTA and for United Nations Agencies in Bangladesh, Somalia and Uganda. He can be reached at e-mail: bislam66@gmail.com