The peace dividend for South Asia is the creation of new hope and opportunity for its billion and a halfpeople. We need no stronger justification for peace than this simple statement. The investment inputs requiredto reap this dividend are pragmatic policies, rational economics and popular participation.

There can be no argument about our inherent advantages, common interests and complementary strengths, whichpresent a tremendous opportunity for our region to realize its full potential:

• First and foremost, our rich and varied human resources. Our citizens have created waves around the worldwith their technical, financial and managerial expertise. Their energies and talents can find greaterapplication in regional cooperative enterprises.
  
  
• Second, our populations are younger than the world average, and will therefore constitute an increasingproportion of the global workforce in the future.?
  
  
• Third, our technological advances have put us at the vanguard of today’s Knowledge Economy, enabling us toaccelerate our development process.
  
  
• Fourth, the size and increasing purchasing power of our collective market create economies of scale forcost-effective production.
  
  
• Fifth, efficient exploitation of our synergies can vastly enhance intra-regional trade, even as we worktowards a rule-based international trading regime.
  
• Sixth, the region has massive untapped capacities for hydropower and unexploited hydrocarbons, which can morethan meet its huge energy deficit.
  
  
• Seventh, the rich diversity of our bio-resources – in the Himalayan region and elsewhere – are yet to beexploited for our common benefit.
  
  
• Eighth, our combined political weight and economic strength can give us considerable leverage in pursuing ourshared objective for a cooperative multi-polar world order.

The peace dividend lies in converting this exciting potential into vibrant reality. Our region is heir to acenturies old tradition of tolerance, pluralism and creative interaction. We need to recapture this ethos inthe modern context.

In the post-Cold War world of globalisation, countries around the world are increasingly focusing onregional economics. Political disputes have been resolved diplomatically or quietly deferred for tackling at amore opportune time. Conflict has given way to cooperation; dialogue moderates differences. There is a clearrecognition that hostility only stunts economies, inhibits trade and retards progress.

This realization has dawned not only in the developed world, but also in developing regions that haveexperienced bitter differences and violent conflicts in the past. It encompasses Mercosur and the Andean Pact,COMESA and SADC, NAFTA and APEC. Nearer home, we have the outstanding example of ASEAN. South Asia needs thewisdom to heed these lessons.

By most estimates trade within regions accounts for nearly three-fourths of global trade. Yet inspite ofour geographical proximity, shared economic characteristics and similar development infrastructure intra-SouthAsia trade is under 5% of our total foreign trade.

We must discard the myth that, because of the asymmetries in our economies, the smaller countries do notbenefit from closer economic integration within South Asia. Our free trade agreements with Nepal and Sri Lankahave resulted in narrowing the trade deficit of both these countries with India. In fact the success of theIndia-Sri Lanka Free Trade Agreement has inspired us to expand its scope to cover services and investment in acomprehensive economic partnership agreement.

Energy is one area with the greatest promise of mutually enriching partnerships. Nepal and Bhutan todayhave an estimated potential of 100,000 MW of environmentally clean hydro-power. Bangladesh has similarlypromising reserves of natural gas. They need to sell these energy sources. India is the only viable buyer andits energy demands are expanding exponentially. There is obvious scope for win-win arrangements. Thehydroelectric projects in Bhutan illustrate this dramatically. Bhutan’s per capita income of $ 600 today isexpected to double by the end of 2005, when the 1020 Megawatt Tala power plant is completed.

The optimum management of our regional water resources for irrigation, navigation and flood control canhave a multiplier effect on infrastructure, development and growth in our entire region. This requires notonly financial investments, but also maturity of policy. We should recognise that an enduring partnership canonly be built on the basis of each country wisely exercising the rights of a lower riparian, and responsiblyfulfilling the obligations of an upper riparian.

Our region sits astride the land routes and sea lanes that connect the worlds’ big energy sources of theMiddle East to the expanding energy markets of East and Southeast Asia. With our extended neighbourhood ofIran and Afghanistan, our land mass also links the new energy sources of Central Asia with the warm waterports of the Indian Ocean in the South. It does not require much imagination to envisage how close regionalcooperation can cash in on the strategic importance of our location.

Our most important common war today is against poverty, disease, hunger and under-development. We can shareexperiences and promote intra-regional linkages for economic and social development. A small, but significant,beginning has been made by our SAARC Experts Group on Poverty Alleviation. The Group, drawn from all SAARCcountries, has extensively documented best practices in poverty alleviation programmes across the region. Ithas made detailed recommendations for regional dissemination of information on these practices and forregional capacity building. We have to show dedication in implementation of these recommendations and multiplysuch examples of regional experience sharing.

As we develop greater economic stakes in each other, we can put aside mistrust and dispel unwarrantedsuspicions. We will also develop mutual sensitivity to each others’ concerns and promote more of our commoninterests. If we provide legitimate avenues of free commercial interaction, we can eradicate the black marketand underground trade. We could jointly tackle smuggling, drug trafficking, money laundering and othertrans-national crimes, which today flourish in our region because of our mutual rivalries and inadequatecoordination. Once we reach that stage, we would not be far from mutual security cooperation, open borders andeven a single currency.

If this seems unrealistic and utopian, perhaps we are being unnecessarily cynical. Let us remember that theworld did not anticipate the sudden end to the Cold War or the collapse of the Berlin Wall. No one thoughtApartheid South Africa could be transformed bloodlessly into Mandela’s Rainbow Country. Not many politicalanalysts would have predicted that the hostile suspicion between Russia and China could be converted in such ashort time into a strategic partnership.

Each one of these developments flowed from objective factors in the global environment, but actuallyoccurred because of some enlightened and responsible decisions by people at the helm of affairs.

I would suggest that the demands of globalisation and the aspirations of our people provide the objectivebases for our energetic pursuit of a harmoniously integrated South Asia. Our people, businesses andorganisations are waiting to interact more closely with each other. This includes producers and consumers,investors and markets, doctors and patients, artists and audiences, students and universities. They are allpart of the supply and demand dynamics of a vast sub-continent. They see the unexploited potential in theirown neighbourhood. They have waited for over an half century for its fulfilment and are now impatient to moveahead.

We can sense this impatience in the outpouring of popular sentiment after our initiatives. The increasedtravel between India and Pakistan of Parliamentarians, businessmen, artists and sportsmen show the intensedesire for amity and goodwill. We have to respond to this desire by seeking every possible way to banishhostility and promote peace.

If we in South Asia look back objectively at the experiences of our freedom struggles and of ournation-building, the one stark lesson that stands out is the imperative of forging a unity based on ourcommonalities. Whenever we have dissipated our energies in internal squabbling, external forces have come into sort out our differences and stayed on to exploit our resources. We should never create the possibility ofreliving these historical experiences in new forms and on different fronts.

All these are aspects which your conference could discuss as it exchanges ideas on the economic, strategicand geopolitical future of India and South Asia, ahead of the forthcoming SAARC Summit. Our search forpragmatism, maturity and wisdom will have to involve both governments and civil society. It will also requirea wide-spread understanding that in today’s context, collective regional interest is an expression ofenlightened self-interest.