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05DHAKA3841 2005-08-08 00:01:00 UNCLASSIFIED Embassy Dhaka
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					  UNCLAS DHAKA 003841 



E.O. 12958: N/A

1. Summary: At a pre-SAARC think tank seminar on transport,
trade and poverty eradiciation, Foreign Affairs Advisor Reaz
Rahman, Foreign Minister Khan, and Indian MP Arjun Sengupta
expressed their views on South Asian issues. End Summary.

2. On August 3, the South Asia Centre for Policy Studies
(SACEPS), along with the Bangaldesh think tank, Center for
Policy Dialogue (CPD), sponsored a seminar entitled Promoting
Regional Cooperation in South Asia: Issues for the Dhaka
SAARC Summit. The seminar focused on three issues:
transport, trade and poverty eradication.

3. Professor Rehman Sobhan, Chairman of CPD and Executive
Director of SACEPS, said that the nations in South Asia were
best described as "distant neighbors" who would be better off
if they had united economies, with integrated energy and
transportation sectors to better shape their shared future.
He said these seminars would lay the groundwork for SAARC by
examining transport integration which he desribed as a
regional ability to belnd infrastructure; energy cooperation
citing hoped-for Iran-Pakistan-India and
Burma-Bangladesh-India gas pipelines; and looked forward to
improved drafts of a South Asian Free Trade Agreement (SAFTA).

4. PMO Foreign Affairs Advisor, Reaz Rahman, said that the
planned SAARC summit will be a "litmus test" for regional
cooperation and, after 20 years of talk of regional
cooperation, action is expected. He said that the region
needs to improve transport linkages, but that the low volume
of interregional trade make it hard to justify such
improvements. He said that sources of funding must be
identified but regional priorities may not be national
priorities, and while there is a best practices data base to
promote the use of the best local technologies, it would be
better use of resources to monitor project implementation
instead. He criticized the low financing of the SAARC
secretariat, said the the region's focus should be on

"followup and implementation," with the key challenge one of
politics overcoming economics with a need to harmonize
macroeconomic policies.

5. Foreign Minister Khan said that South Asia is an emerging
growth area but that poverty and natural disasters are
challenges. "Progress means tearing up the map" and getting
the first building block of free trade, a free export list,
developed. However, the list must not be too limited, and
questioned the ability of developing such a list while such
issues like double taxation, non-tariff barriers, and customs
clearance remain unresolved. He said that SAFTA does not
include services or investments, and therefore the nations
need to expand the scope of SAFTA; that infrastructure needed
for trade to take-off is an important issue, and hoped that a
multi-modal study will be finished and can be implemented;
that each member contributes based on its GDP to the poverty
alleviation fund; and looked forward to sustained action and
continued stakeholder involvement at SAARC.

6. Professor Arjun K. Senguta, Chairman of the National
Commission on Enterprises in the Informal Sector and Indian
MP, noting that his party, which fought with Bangladesh in
the independence war, is back in power and looked forward to
improved relations with Bangladesh. Sengupta, perhaps taking
issue with Rahman's statement about politics, said that that
politics can not dominate economics for long but only in the
short run, as problems develop if we do not appreciate our
economic interdependence. The lack of such appreciation can
do great damage to individual countries. Sengupta said that
infrastructure interdependence is a second area where a
relationship can be mutually beneficial especially in areas
such as river transport and transit facilities. He added
that language and migration are other areas where there can
be mutual benefits.