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P 261129Z JAN 10
FM AMEMBASSY KATHMANDU
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RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUCNDT/USMISSION USUN NEW YORK 3811

UNCLAS SECTION 01 OF 03 KATHMANDU 000072 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/INSB 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECIN SAARC IN PK NP
SUBJECT: SAARC: REGIONAL POLITICS LIMIT POTENTIAL 
 
¶1. (SBU) Summary:  The South Asian Association for Regional 
Cooperation (SAARC) lacks clout among its member states, 
preventing it from reaching its full potential.  SAARC has 
facilitated some regional economic and social cooperation, 
but has little influence over regional geopolitical issues. 
The SAARC Secretariat is very small, with only 30 staff 
members.  Member states are responsible for implementing 
SAARC initiatives, many of which wallow for lack of capacity, 
resources, and political backing.  SAARC will hold its next 
summit in Thimpu, Bhutan, April 28-29, 2010.  End summary. 
 
¶2. (SBU) This report draws on meetings with SAARC Secretary 
General Sheel Kant Sharma, SAARC Indian Director Vinay 
Kwatra, Tribhuvan University Professor Bishwambher Pyakuryal, 
and Kathmandu-based Indian, Pakistani, and European diplomats. 
 
SAARC: An Underutilized Institution 
----------------------------------- 
¶3. (U) The South Asian Association for Regional Cooperation 
(SAARC), established in 1985, aims to foster economic and 
social development in its eight member states.  (Note: 
Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri 
Lanka are the original members; Afghanistan formalized 
membership in 2007.  Nine countries are observers: 
Australia, China, the EU, Iran, Japan, Mauritius, Burma, 
South Korea, and the United States.  End note.)  Sheel Kant 
Sharma, the former Indian Ambassador to Austria and 
international organizations in Vienna (2004-08), was 
appointed the Secretary General of SAARC in March 2008 for a 
three-year term.  The position of Secretary General rotates 
among member states in alphabetical order; the next Secretary 
General will come from Maldives (after India in alphabetical 
order), beginning in March 2011. 
 
¶4. (U) The SAARC Secretariat, based in Kathmandu, coordinates 
SAARC activities and serves as the channel of communication 
between member states and international organizations.  The 
Secretariat is small (less than thirty people), with almost 
no in-house capacity to implement programs; instead, SAARC 
outsources technical work as needed.  Indian Director Vinay 
Kwatra compared SAARC's meager resources to the 
comparitively-robust secretariat of the Association of 
South-East Asian Nations (ASEAN), which has more than 150 
staff members. 
 
¶5. (SBU) Most regional and international observers believe 
SAARC is an ineffective, underutilized institution.  Rivalry 
between India and Pakistan limits SAARC's ability to serve as 
a regional forum, especially in the area of cross-border 
trade.  Individual members interact with neighboring regional 
bodies such as the Shanghai Cooperation Organization, the 
Association of South-East Asian Nations (ASEAN), and the Bay 
of Bengal Initiative for Multi-Sectoral Technical and 
Economic Cooperation (BIMSTEC), but SAARC itself has limited 
involvement with these institutions.  Secretary General 
Sharma said he has been promoting expanded cooperation 
between SAARC and other international organizations, 
specifically the Asia Development Bank and the United Nations 
Development Program. 
 
Facilitator, Not Implementer 
---------------------------- 
¶6. (SBU) Ambassador Sharma painted a pessimistic picture of 
SAARC's ability to increase its regional influence.  SAARC's 
focuses on trade, economic, and cultural integration, not 
political affairs.  Its role is to facilitate meetings and 
allow member governments, even those with politically "frosty 
relations" like India and Pakistan, to work together on 
larger thematic issues.  Because most action lies in the 
hands of individual governments, SAARC cannot do any more 
than what member governments are willing to do -- and this is 
where the potential for regional cooperation is wasted. 
Sharma used SAARC's counterterrorism efforts as an example. 
A number of regional instruments are in place, including a 
mutual legal assistance treaty signed in Colombo in 2008, to 
 
KATHMANDU 00000072  002 OF 003 
 
 
encourage cooperation and information exchanges.  The 
governments have yet to implement these instruments, and 
SAARC states continue to approach counterterrorism in a 
disjointed, ad hoc, stove-piped manner. 
 
Regional Vision? 
---------------- 
¶7. (SBU) SAFTA's major accomplishment, according to SAARC 
India Director Kwata, is the development of "concrete 
regional perspectives" on a host of key issues, from 
agriculture to health, disaster management to human 
trafficking.  SAARC's ten "regional centres" are developing 
concrete plans to advance SAARC's regional action plans, but 
Kwata admitted that implementation relies on member states, 
many of which lack capacity.  SAARC has two regional centres 
in Bangladesh (agriculture and meteorological), two in India 
(documentation and disaster management), two in Nepal 
(tuberculosis and information), two in Pakistan (human 
resources and energy), one in Sri Lanka (cultural), one in 
Maldives (coastal zone management), and one in Bhutan 
(forestry). 
 
¶8. (SBU) Kwata also highlighted SAARC's three-year-old, USD 
300 million regional development fund, which is financed 
entirely with funds from member states (USD 200 million from 
India; USD 100 million from other states).  The development 
fund is supporting three regional projects on women's rights, 
maternal/child health, and teacher training.  SAARC's 
(largely Indian-funded) South Asia University is scheduled to 
open in August 2010 in New Delhi, and will include students 
and faculty from all SAARC member states, with the goal of 
promoting a "regional vision." 
 
SAFTA Minimal Impact 
-------------------- 
¶9. (SBU) On trade, SAARC India Director Kwata said that 
implementation of the South Asia Free Trade Agreement (SAFTA) 
is proceeding at a faster pace than planned, but its impact 
on regional trade is minimal.  The list of goods exempted 
from SAFTA (the "negative list") is extensive, and in most 
cases, the bilateral trade regimes are more preferential than 
SAFTA.  The one exception is Bangladesh-India trade, which 
has grown under the SAFTA framework, according to Kwata. 
Professor Bishwambher Pyakuryal, senior economics professor 
at Tribhuvan University and former consultant to SAARC, 
argued that the main impediment to regional trade is not 
tariffs, but rather non-tariff barriers; SAARC has done 
little to address that issue. 
 
¶10. (SBU) Professor Pyakuryal suggested that South Asian 
governments do not fully appreciate the advantages of 
regional trade, which he believes are substantial.  He noted 
that South Asia does not have a history of regional trade, so 
countries are largely unaware of their technical and 
productive comparative advantages, and of regional demand for 
products.  Non-political, technical studies that highlights 
the benefits of regional trade and investment could be useful 
in building consensus on regional economic integration, 
Pyakuryal said.  He suggested that an economic study by 
Pakistan Institute of Development Economics (PIDE) was a 
significant factor in Pakistan's decision to sign SAFTA, in 
part because it gave the Government of Pakistan "cover" to 
sign the economic accord. 
 
16th SAARC Summit 
----------------- 
¶11. (SBU) The leaders of SAARC member states will convene at 
the 16th SAARC Summit in Thimpu, Bhutan, April 28-29, 2010 to 
discuss progress on agreements from the last summit (Colombo 
2008) and prepare for the year ahead.  This will be Bhutan's 
first time hosting the summit, which rotates capitals each 
year.  (Note:  There was no summit in 2009; the previously 
chosen host, Maldives, declined to organize the summit 
because of economic concerns.  End note.)  According to 
Sharma, the overall summit theme will be climate change. 
 
KATHMANDU 00000072  003 OF 003 
 
 
Other agenda items will likely include SAFTA, expansion of 
the SAARC development fund, food security, and energy. 
 
Comment 
------- 
¶12. (SBU) While regional politics limit SAARC's 
effectiveness, SAARC remains a low-cost, low-risk platform 
for promoting regional cooperation on cultural, economic and 
technical issues.  With time, this cooperation could spill 
over into the political realm.  SAARC also provides a 
convenient forum for regional leaders to meet, even when 
bilateral dialogue is politically-difficult.  Post will 
continue engage the SAARC Secretariat and seek opportunities 
to support SAARC's ongoing regional work. 
ORDWAY