Need

A Region is a broad geographic area containing a population possessing sufficient historical, cultural, economic, or social homogeneity. Regionalism, on the other hand, is an approach which can integrate specific policy and management skills to attain a defined objective for the benefit of the entire region. Looking beyond political and jurisdictional boundaries, regionalism can embrace a distinctly trans-boundary approach that recognizes the natural territory of issues (such as watersheds, ecosystems, bio or other organic regions). Also, while typically an initiative focusing on regionalism starts by targeting a relatively narrow objective, albeit transcending several countries at the time, it often eventually touches on a mix of social, economic, political, environmental and developmental issues. Regionalism becomes more interesting where patterns of “just development” are unclear and outcomes are ambiguous. And from this perspective, discussion on South Asia becomes relevant.

Indeed, despite the great potential for enhancing its socio-economic conditions and playing a key role in the global economy, the South Asia region is still ailing on several fronts, solutions being much too dependent on multi-faceted and multi-country collaboration. In view of this uniqueness, therefore, if development of the region were to become a priority, a cross-border approach would appear relevant. With this premise in the background, this note discusses a few pragmatic legal and institutional concerns that may need consideration.

Gaps

Absence of Formal Commitment: All countries in the region agree on their need for cooperating and collectively developing projects that will be of benefit to all. From a technical angle, that is quite straightforward. But politically the situation is far from being smooth. Issues of sovereignty, sharing of benefits, perception of hegemony, long and short-term adverse impacts and so forth continue to dominate the mindset of decision makers in these countries, who still continue to think of their country as a separate and isolated entity, rather than as an integral part of a region. As such, a clearly articulated commitment, an enabling policy environment, and a mechanism to help translate policies and public statements into actions and then to monitor their implementation on the basis of lessons learnt, are thus needed. Securing a formal commitment is important, but is not necessarily irreconcilable with reality, since barring a few trivial differences amongst them, the political development in the South Asian countries has revealed certain common trends. Their problems and needs as well as their goals of development are, by and large, the same.
 

Lack of Enabling Legal Framework: Unlike in most other regions, an all-encompassing multilateral treaty, facilitating development of the region as a whole, and a clear legal framework providing an enabling environment for developing regional projects do not exist in South Asia. The legal relations amongst the countries still focus on bilateralism in treaties, with the exception of the multilateralism, full of ambiguities and limitations, attempted by the South Asian Association for Regional Cooperation, de jure a regional institution.

Lengthy Process of Treaty Making: Treaty making is, generally, a long process. Its negotiations segment is even more challenging as it involves many facets of the relationship amongst States. Completing a treaty can also be time and cost-consuming because of the number of details that need to be worked out. Furthermore, the sequences involved in the process (preliminary studies, preparation of the initial drafts, negotiations, consultations, adoption and so forth), also by definition, cause time to lapse. The overall process is even longer when it involves more than two countries, and experience tells us that this process is worse when it comes to South Asia, a region where the treaty making process is, at best, poorly coordinated, and where tensions amongst countries loom large and delay any outcome. Competence to deal with particular questions exists simultaneously in different agencies of the different governments. The pace of success, as such, often depends on chance, on the topic, and on obscure political considerations that lead interested states to a specific approach and compromise, and eventually to the outcome. Because of these ground realities, the investors (private financiers and international development partners) need to be asked to be more creative in finding alternative solutions to deal with the challenges.

Flexibility

(a) Using Soft Instruments: Whenever formal legal enabling instruments are not available, during preparation of regional projects, investors should be encouraged to endorse the use of soft legal instruments. Certainly, in international law, this terminology still remains somewhat controversial, as some international practitioners do not accept its existence and some consider that there is confusion as to its status in the realm of law. However, for most international practitioners, development of soft law instruments is an accepted part of the compromises required when undertaking daily work within the international legal system, where states are often reluctant to sign up formally to too many commitments that might result in national resentment at over-committing to an international goal. The approach of soft framework may help address the impediments emanating from the need to secure hard laws in place before developing any regional project.

(b) Enhancing Risk Taking: Some difficulties arising in developing regional projects are also related to the fact that the international financing organizations, major players of development, bound by their internal policies, are excessively risk-averse, and hesitate to take even insignificant risks. Unlike the private sector practice where risk-taking is part of the trade, an international financing organization would prefer to operate in an overly safe environment, i.e. only after securing that all legal instruments (regardless of their importance) are in place. As a result, it takes a long time for a deal to come to fruition and the opportunity cost of preparation escalates for countries as well as investors, which consequently becomes a disincentive for venturing in new regional projects. Therefore, encouraging the adoption of new policies and incentivizing more risk-taking, based on specific case analysis, could help foster regional projects.

(c) Relying on Market Diktat: The investors, particularly the international development financiers, often have a tendency of getting involved in all upstream and downstream effects of projects they finance. More specifically, for international development organizations, the protection of rights and interests of member countries is an integral part of their modus operandi. They operate to protect their own rights, the rights of their member countries and those of their debtors, and to respect their policies. All these requirements emanating from the philosophy of good governance essentially from a public sector perspective, actually, have the effect of delaying the development of regional projects. Hence, for regional projects, especially when developed in partnership with private sector companies, it may be worthwhile to rely more on private sector practices and let the market rules deal with the risks.
 

(d) Indirect Leveraging: Often, by dealing with a few local partners, and placing obligations on them, the international investors can achieve what they ought to achieve. Investors can obligate the local parties to their agreements, by proxy, to obtain everything they would require for them to be in compliance with their own fiduciary obligations. This technique of ensuring rights by proxy can help facilitate negotiations and development of regional projects, since the majority of the recipient-parties or local private investors will feel less pressured by obligations vis-a-vis international investors.

(e) Multifaceted/multisided Intervention: While developing a regional project, it is important to ensure that the intervention is multifaceted, multisided and multi sector. This approach may help manage the perception (suspicion) of limitedness that a specific country may have if only one sector were to become the target of intervention. It will further help to develop a common approach particularly amongst financiers, and for efficiency purpose, for all types of development partners to be involved at a very early stage of preparation as well as to synchronize their intervention.

(f) Incentivizing regionalism: The investors, within their own institutional apparatus, should create incentives for developing and designing regional projects. Institutions that have for long focused on traditional non-regional projects should develop a system in which more funds are allocated for projects that focus on regional agenda, and give incentives for staff that prepare, and successfully manage, the implementation of such regional projects, which often take longer to complete than any other traditional (non-regional) projects.

(g) Clarifying Cross-border Roles & Responsibilities: In developing regional cross-border projects, or those involving international transport corridors, it is also important to consider operations functions early on. Early consideration of functional and jurisdictional roles can help the implementation and avoid conflict at a later stage (often cross-border). Broadly these functions can be divided into three categories: (i) national functions that are the responsibility of an individual agency in one specific country where the project, or part thereof, will be based and  which can be viewed as those that the agency would be doing anyway even if it had no involvement in cities across the border; (ii) national/regional functions that are those carried out by the national agency, without interagency collaboration but which would regionally benefit the project if done with a regional perspective; and (iii) purely regional functions that are performed for both regional and national benefits and cannot be performed without regional cooperation and collaboration between two agencies or an international agency.

Optimism

In view of the unique situation of South Asia, for whoever intends to develop a regional project, first and foremost, a detailed due diligence work becomes a prerequisite for any long term decision. It is equally crucial to concurrently garner support from all concerned national and international private or public sector partners, to collect ample data to design the project in such a way that risks are minimized and opportunity costs are reduced, and to ensure that the project will be able to improve the situation of countries, beneficiaries, and the goal of development per se.

The author can be reached at kshitiz@juno.com