BanglaBhoot
RETIRED TTA
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- Apr 8, 2007
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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 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. 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.
Some pertinent questions about one billion Indian loan
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 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. 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.
Some pertinent questions about one billion Indian loan
