SAARC: The regional dream that South Asia never quite built

The South Asian Association for Regional Cooperation (SAARC), established in 1985, aimed to foster economic and social development in the region. However, despite efforts over four decades, SAARC's economic potential has remained largely unrealized. Intra-regional trade accounts for only about 5% of South Asia's total trade, far below the 25% in ASEAN and 16% in Africa.

With a population of over 1.7 billion, the region boasts markets, young demographics, rapidly growing economies, cultural connections, and some of the world's busiest trading routes. Yet, geographical proximity has become an obstacle rather than an advantage. The World Bank estimates that South Asian countries trade approximately $23bn with one another, against a potential of at least $67bn annually.

The disparity highlights the gap between economic potential and actual cooperation. While SAARC has produced declarations, conventions, committees, programmes and agreements, its overall economic promise has not materialized. ASEAN and Africa have developed habits of cooperation despite political differences, while Europe turned economic interdependence into a regional project leading to political union.

The frequent political disputes between India and Pakistan have further hindered SAARC's progress, as their nuclear-armed rivalry impacts every other member. Blaming SAARC's failure solely on India-Pakistan tensions is too simplistic, as Pakistan's resistance to integrating recognizing Indian predominance and India's reluctance to accept Pakistani demands for sovereign equality also play crucial roles.

Despite these challenges, SAARC has accomplished some useful work, such as establishing the South Asian Preferential Trading Arrangement (SAPTA) and the South Asian Free Trade Area (SAFTA), and creating the SAARC Development Fund. However, SAFTA has yet to significantly impact intra-regional trade.