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On the sideslines of the conference, the foreign secretary, when queried on the issue of construction of a dam at the Zangmu site on the Chinese side of the Brahmaputra river, which was confirmed by the National Remote Sensing Agency (NRSA) as per media reports, said, "What I want to say is that this matter has been taken up not just once but on a number of occasions with China and China has consistently denied that it is engaged in any such construction activity on the Brahmaputra."

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Thank you for asking me to speak at this important Conference on South Asia organized by the Institute of Defence and Strategic Analyses.

That we strive for a peaceful and stable neighbourhood, and for building peaceful and mutually beneficial relations with our neighbours goes without saying. This is an issue of critical importance since in the absence of such a neighbourhood, our efforts to play any substantive regional or global role, in accordance with our size and economic strength, and also our unhindered economic development would stand to be affected. Therefore, having a peaceful and stable neighbourhood is one of our top most foreign policy goals.

The proposed theme of this Conference on the prognosis for the South Asian region in the coming decade is indeed of critical relevance to India and the region. The sub-text – moving towards cooperation or conflict – is in a sense also reflective of our collective efforts in the region to forge a more integrated South Asian region and the successes and shortcomings of the SAARC process, which is a tangible expression of these efforts. A certain sense of disappointment is understandable. While, we have indeed come a long way since SAARC was established in 1985, there is also no denying the fact that SAARC has not moved as quickly and substantively as all of us would have desired. An example that readily comes to mind is ASEAN. The ASEAN experience is a clear signal to potential opportunities that can be realized if we were to accelerate the process of regional integration. Greater economic cooperation and connectivity should be the lodestars for this endeavour.

Given our shared history and common cultural, linguistic and ethnic ties, there has always existed an implicit assumption that greater regional integration should have been easy to achieve. But that has not been the case. How do we do achieve this goal? What are the challenges we face on the path to such achievement? What is our approach to the region?

We believe that the future of peace, security and development of South Asia has to be embedded in the paradigm of common economic prosperity. India is also already engaged in this process at the bilateral level and collectively as part of the SAARC process. The challenge today for us is to build inter-dependencies which not only integrate our region but also create a vested interest in each other’s stability and prosperity. Critical to this endeavour is connectivity of goods, people and ideas. India has also actively provided development assistance and is engaged in capacity augmentation and institution-building exercises in our neighbouring countries. Within this overall approach, there is the challenge of evolving differentiated responses best suited to the requirements of our neighbours as they are in varying stages of transition both on the political and socio-economic fronts.

I would argue that it is the threat of terrorism that is the most important threat facing us and which if not addressed immediately and collectively has the potential to engulf the region and beyond. At the same time, there are other developments that signal cautious optimism. Most of our neighbours are going through major internal political transformations that express the voice and aspirations of their peoples. India has been actively engaged with its neighbours to promote peace and stability in the subcontinent. There is also the challenge of managing relations with our immediate neighbours on account of the geography of the region and also because our bilateral relations cannot be seen solely from the foreign policy perspective.

Let me elaborate. Geography has played an important role in shaping perceptions of our neighbours in South Asia towards India. That India is a large country is a given fact. This in itself causes apprehensions of so-called domination among our neighbours. It is also a fact that most of our neighbours share borders not only with India but also in most cases with one more country in the region. However, in an almost gravitational sense, they have to necessarily depend on India for physical connectivity in the region. This dependence is more acute for land-locked countries. India has thus to play a central role in carrying forward the process of improving connectivity in the region. What is it that India can do to ensure that our neighbours feel more secure about us and that our approach is seen as more inclusive? Today, with sustained high economic growth rates over the past decade, India is in a better position to offer a significant stake to our neighbours in our own prosperity and growth. We have consistently conveyed to our neighbours that they need to see India as an opportunity and that India is ready to work with them for mutual benefit.

There is also a need to recognize that our relations with immediate neighbours in South Asia also have a clear domestic dimension. For example, our relations with Myanmar need to take into account the presence of tribal groups across our borders that can influence developments and impact on security in our bordering states of Arunachal Pradesh, Nagaland, Manipur and Mizoram. At the same time, these links could also be a powerful binder. Our dealings with Nepal need to take into consideration perspectives of bordering States such as U.P., Bihar, Sikkim. Similarly, our initiatives with Bangladesh need to take into account perspectives of West Bengal and our North-eastern States on issues such as migration, water sharing, trade or transportation.

There is also the challenge of globalisation that has brought problems of a transnational nature in its wake and that makes it mandatory for us to seek collaborative inter-state and regional responses. These problems include issues such as organised crime, money-laundering, pandemics, food security, energy security, etc.

Terrorism remains a central challenge to regional security. This was again underscored by the terrorist attack on our Mission in Kabul on 8 October 2009 as also previously by frequent terrorist incidents including the 26/11 Mumbai attacks. There is a real challenge posed by resurgence of the Taliban and Al Qaeda. There is a need for the international community to recommit itself in assisting Afghanistan. India is also playing its due part. Our assistance programme in Afghanistan worth US$ 1.2 billion has been focussed on building indigenous Afghan capacities and institutions for an effective state system that is able to deliver goods and services to the Afghan people.

There is a growing consensus that the increase in terrorist activities in Afghanistan is linked to the support and sanctuaries available in the contiguous areas. The international community should put effective pressure on Pakistan to implement its stated commitment to deal with terrorist groups within its territory or else the gains of the past eight years in Afghanistan would be wiped out. Failure to act effectively runs the risk of catapulting the region into a spiral of violence that would inevitably adversely affect the region including India. Recent incidents in our neighbourhood are also a stark reminder that those who strike Faustian bargains with such elements are often left to rue the consequences. We cannot afford to lose the battle against the ideologies of hatred, fanaticism and violence. We must act jointly and with determination to meet the challenge posed by terrorism and to defend the values of pluralism, peaceful coexistence and the rule of law.

We firmly believe that a stable Pakistan at peace with itself and region is a desirable objective. We have, on several occasions, conveyed to the Pakistani leadership our desire to engage in meaningful discussions and to develop our relations in a positive manner. This is only possible when Pakistan fulfils its commitment not to allow its territory to be used for terrorist activities against India.

Notwithstanding the threat that terrorism poses, other developments in the region, which if sustained and handled carefully, augur well for the region. India is also playing its due role to ensure that these developments become a source of greater stability in the region. Nepal today is undergoing a transition towards to a democratic polity. India has supported this process. We had also provided assistance to the peace process, including vehicles, communication equipment, electronic voting machines and other logistical support worth Rs 150 crores. We have been encouraging all political parties to cooperate with the new government in working towards early conclusion of the peace process on the basis of widest possible consensus.

The comprehensive defeat of the LTTE in Sri Lanka provides the country with a historic opportunity to ensure a future free from terrorism and conflict. We support a lasting political settlement in Sri Lanka that meets the political aspirations of all communities through the effective devolution of power. We have extended humanitarian assistance to Sri Lanka including for the rehabilitation of internally displaced persons. We are moving from purely relief efforts to a broader rehabilitation and reconstruction phase. The Government has already committed Rs. 500 crores for this purpose. Our assistance so far covers humanitarian supplies such as food, medicines, shelter material, and other essential supplies. We set up an emergency field hospital that treated over 50,ooo people in the past six months’. Four Indian de-mining teams are presently working in Northern Sri Lanka. We are also providing assistance to revive agriculture there. Both sides are also discussing our readiness to assist in reconstruction of critical civil infrastructure in Sri Lanka.

A welcome development was the return of Bangladesh to multi-party politics. We are working closely with the newly elected Government to build further on our historical bonds of friendship and to take our relations forward in a mutually beneficial way. The Bangladesh leadership has assured us that Bangladesh’s territory will not be allowed to be used by elements inimical to the interests of India.

Our close relations with Bhutan had developed further during the last one year and since the introduction of democracy in Bhutan. The India-Bhutan Friendship Treaty updated in 2007 not only reflects the contemporary nature of our relationship but also lays the foundation for their future development in the 21st century.

With Myanmar, India has consistently maintained that the national reconciliation process should be expedited and be more broad-based. We hope that free and fair elections would be held in Myanmar in 2010 as scheduled. Our engagement with Myanmar has grown constructively in recent years.

India welcomed the first multi-party elections held in Maldives in October 2008. Both governments are committed to maintaining and developing our close and friendly relations.

The SAARC process offers an important vehicle for achievement of a peaceful, prosperous and stable South Asian region. As the largest country in the region and its strongest economy, India has expressed its willingness to assume greater responsibility to encourage the SAARC process. In recent years, SAARC is undergoing a transformation from a declaratory to an implementation phase. Its core institutional mechanisms have been activated, namely, the SAARC Food Bank, the SAARC Development Fund, the South Asian University, the SAARC Arbitration Council, and the SAARC Regional Standards Organization. We have also disbursed our voluntary and assessed contributions of US$190 million. This is in line with India’s asymmetric and non-reciprocal commitments to SAARC.

We are also pursuing several other regional economic cooperation mechanisms involving the region. These include the Bay of Bengal Initiative for Multi-sectoral Technical and Economic Cooperation, BIMSTEC. India is also a Summit Partner of the Association of South East Asian countries. These ties are growing exponentially as was witnessed during last week’s Summit meetings in Thailand.

With regard to bilateral economic and commercial relations in the South Asian region, India has taken the lead. India is largest trade partner and one of the most important foreign investors in our neighbouring countries. We have established a free trade arrangement with Sri Lanka. There is duty free access wef January 1, 2008 for products originating from Bangladesh, except for items in the sensitive list, which has also been substantially pruned down.

In terms of trade infrastructure and connectivity, there are 15 transit routes from Kolkata /Haldia to Nepal for its third country trade. We have now agreed to add Vishakhapatnam port for this purpose. The creation of an ICD in Birgunj and extension of the railway line from Raxaul to Birgunj has facilitated movement of goods in transit by rail. There is also a direct road transit route from Nepal to Bangladesh for bilateral and third country trade. A direct railway transit route is under discussion. With Bangladesh, we have more than 20 operational land customs stations, 4 points for movement of goods by train and 8 routes for movement through river systems. Dhaka is connected with Kolkata by road and train service and to Agartala by bus service. With Myanmar, we are undertaking the Kaladan Multi Modal Transit Project involving sea, river and road connectivity and several road projects across the border.

Better connectivity is necessary to fully utilize our geographical resources endowment. The Government has embarked on an ambitious programme for upgradation of border infrastructure along our borders with Nepal, Bhutan, Myanmar and Bangladesh. These projects involve upgradation of highways, extension of railway lines into neighbouring countries, restoration of rail links with Pakistan and Bangladesh and setting up of integrated check points. These projects would lead to improvement of infrastructure in our bordering areas and improvement of transport connectivity with them.

SAARC has also already identified a number of projects based on its regional multi-model transport study. In addition to increasing connectivity between India and its neighbours, several road corridors have been identified linking Afghanistan-Pakistan; Afghanistan-Pakistan-India-Nepal; Bangladesh-India-Nepal, etc. There is also a proposal to restore the ferry service between India and Sri Lanka through Colombo-Cochin route.

Our aspirations of full regional connectivity would not be met merely through physical connectivity. We also need to put in place enabling mechanisms to make travel freer and easier. India has taken measures to liberalise visas for students, teachers, professors, journalists and patients from SAARC countries. South Asia University is an ambitious project reflecting our effort to enhance connectivity of the mind. The SAARC University Project, which is scheduled to open in less than a year, would cater to more than 5000 students, when fully operational in five years’ time.

Development cooperation is a natural and well-recognized method to promote closer regional ties. Our own fast pace of economic growth exerts a ripple effect in the region as it attracts our neighbours to access the benefits that stem from the growth of our market, our infrastructure, and our level of development in various fields, be it education, healthcare, financial services, and communications. As mentioned earlier, India has been actively involved in providing development assistance to our neighbours.

We have also begun discussing issues such as food security and climate change that impact on our development strategies and need our focused attention. The South Asia region is highly vulnerable to the effects of climate change in particular due to potential melting of glaciers and inundation of low lying islands and coastal areas. Increased glacier melts would initially cause floods but would eventually lead to reduced water flows in our major rivers. All these developments would have severe implications for food and water security in South Asia.

India is constructively engaging in the multilateral negotiations taking place under the UN Framework Convention on Climate Change (UNFCCC). The main principle on which the Convention is based is the principle of “common but differentiated responsibilities and respective capabilities”. We firmly believe that Climate Change should not be an excuse to add a greater burden or impose conditionalities onto the development challenges that developing countries face. We also have to move away from concentrating on ‘mitigation’ only and ensure that there is a focus on adaptation, which is critical for developing countries.

Cognizant of the threat that Climate Change poses, India has already taken several independent initiatives. India has launched National Action Plan on Climate Change and India stands ready to share its experience with our neighbours. There are number of areas that are relevant to them such as our mission on sustaining the Himalayan ecosystem, protection of coastal areas, disaster management strategies and collaborative research on climate change modeling.

My address would be incomplete without addressing the subject of our relations with China, our largest neighbor. China borders our region of South Asia, and with India alone, it shares a border of almost 3500 km. The relationship we have with China is complex but growingly variegated in texture and substance. The rapid growth of both India and China is a phenomenon that in many ways is a source of energy and dynamism in the regional and global context. I see our dialogue with China acquiring further substance and relevance in the years to come, with even more effort and political will being invested in seeking a fair, reasonable and mutually acceptable settlement of the outstanding boundary question between the two countries. The maintenance of peace and tranquility in the border areas will receive close and continuing attention in this scenario. We are however conscious of the fact that outstanding issues in our relationship with China will take time to be resolved.

China’s relations with our South Asian neighbours are also growing in many areas with increased trade and economic activity, political level interaction, and cultural and educational exchanges, apart from transportation links and connectivity. But the compelling logic and rationale for closer ties between our South Asian neighbours and India must not be deterred or diluted by such developments. These are ties dictated by geography, the need for security and stability, mutual economic advantage, transit and connectivity, shared cultural traditions, the movement of people, common approaches to the management of natural disasters and climate change, and developmental priorities that can only be achieved by close cooperation and constant dialogue.

In conclusion, and on balance, I believe that we can look to the future with a sense of optimism and purpose. We stand committed to both bilateral and regional efforts in building a stable, peaceful, vibrant and economically prosperous South Asia. The year 2020 is an achievable target date and we must jointly work to this end.

I am also certain that deliberations at this important conference would come up with useful ideas and suggestions that governments in the region can draw upon in our endeavour to forging closer regional integration. I wish the conference all success.