Asian Highway: A Comparative Socio- Economic and Strategic Impact Analysis

By Shah Mohammed Saifuddin

Bangladesh Strategic & Development Forum http://www.bdsdf.org June, 2009

CONTENTS
Introduction..............................................................................1 Route Criteria for Asian Highway...................................................1 Benefits of Asian Highway............................................................1 Associated Risks of Asian Highway................................................2 Impact Analysis..........................................................................2 AH (Asian Highway)-1/2................................................3 Economic Impact..............................................3 Social Impact...................................................4 Security Impact................................................4 Strategic Impact...............................................5 AH (Asian Highway)-41.................................................5 Economic Impact..............................................5 Social Impact...................................................6 Security Impact................................................6 Strategic Impact...............................................6 Concluding Observations.................................................................7 References....................................................................................7

Asian Highway: A Socio- Economic and Strategic Impact Analysis Introduction

The concept of Asian Highway was first conceived in 1959 to bring the Asian countries closer together through promoting trade and commerce, cultural exchanges, tourism, and people to people contacts. Rapid economic growth in the Asia Pacific region created huge demand for improved, reliable and cost-effective road networks to connect regional countries to transport goods, and therefore the Asian Highway project saw tremendous progress throughout the 60s, 70s and 80s with the help of member countries. The intergovernmental agreement on Asian Highway project was signed on 18th November, 2003 and became effective on 4th July, 2005. A total sum of $26 billion has already been invested in the project and talks are underway with the member countries to raise another $18 billion to improve the road transport capacity and efficiency of the network.[1] Now, let's look at the route criteria, the benefits to be derived, and the risks to be borne by the member countries if they implement the Asian Highway project.

Route Criteria for Asian Highway

ESCAP has set forth a set of route criteria for Asian Highway network to connect growth centers and major infrastructures of member countries to enhance trade flows. These criteria are as follows: 1. Routes should link capitals of member countries for international transport 2. Routes should connect industrial and agricultural centers, and growth triangles to link major origin and destination points 3. Routes should integrate land and sea transport networks by connecting major sea and river ports 4. Routes should integrate rail and road networks to connect major container terminals and depots

Benefits of Asian Highway

The Asian countries are expected to derive the following benefits by connecting through the multi billion dollar mega highway project: 1. Integration of regional economy through boosting trade and commerce 2. Enhanced people to people contacts through promoting tourism 3. Regional cooperation in harnessing natural resources to maximize economic benefits 4. Fostering trust, stability, and peace among the member countries 1

Associated Risks of Asian Highway

Although experts argue that economic benefits over-weigh the risks associated with this mega highway project, it is imperative that we briefly mention the risks associated with Asian Highway for objective analysis. The risks are described below: 1. 2. 3. 4. Increased Increased Increased Increased exposure to HIV/AIDS and other life threatening diseases risks of human and drug trafficking risks of environmental degradation risks of terrorist attacks on people and transport infrastructures

Impact Analysis

The Asian Highway has become a controversial political issue in Bangladesh because of conflicting choice of routes by Bangladesh and India. The three proposed routes are as follows: 2

AH-1: India-Benapole-Jessore-Dhaka-Kachpur-Sylhet-Tamabil AH-2: India-Hati Kumrul-Dhaka-Kachpur-Sylhet-Tamabil AH-41:India-Mongla-Jessore-Hati-Kumrul-Dhaka-Kachpur-Chittagong-Cox's Bazaar-Teknaf-Myanmar. While Bangladesh prefers AH-41 because it is the shortest and the most costeffective route to transport goods to ASEAN countries and China, India prefers the other routes because they connect Indian North East to mainland India through Bangladesh before connecting Myanmar. Many experts in the country are of the opinion that the preferred routes of India would diminish Bangladesh's strategic and economic advantages because they are much longer routes with both the entry and exit points in India. In light of the above discussion, let's do an impact analysis for each of the routes proposed by UNESCAP.

AH(Asian Highway)-1/2
Economic Impact: 1. These routes do not fulfill the criteria set forth by the UNESCAP because they do not connect Mongla and Chittagong sea ports, as they detour to connect India's North-East, instead of linking Myanmar's capital Yangoon. They also do not integrate major road networks such as Dhaka-Chittagong Highway to increase efficiency. 2. These are the longest and economically unprofitable routes to connect to ASEAN countries because the additional freight charges, when added to the cost of production, will raise the product price for Bangladesh to lose price competition, and therefore the lucrative ASEAN market will be lost. 3. Bangladesh will lose competitive advantage vis a vis India as the latter will be able to transport goods to North Eastern states at a much cheaper price, and therefore Bangladesh's chances to expand her export market into India will be lost. 4. India, being the entry and exit point of these two routes, will be able to control Bangladesh's external trade, in particular and the economy, in general. Once India starts to exert its influence on Bangladesh's external trade relations with other nations, it will expand its influence into other areas of vital national interest. 5. Losing competitive advantage to India could mean attaining lower than expected economic growth rate affecting reduction of poverty level, eradication of unemployment, and Bangladesh's ambition to be a major economic power in the region. 3

6. The combination of small domestic market and uncertain export market in the neighborhood e.g. North East India, ASEAN and China, may have an adverse impact on the industrialization process, reducing us as a mere trading nation. Social Impact: 1. Bangladesh may be a victim of health hazards due to absence of good health care system in underdeveloped North East India and lack of adequate surveillance and monitoring mechanism in the vast Indo-Bangla border to control the spread of diseases. Contagious and life threatening diseases such as AIDS might spread within Bangladesh if proper management and control mechanism is not put in place, which, by the way, is an exorbitantly expensive undertaking. 2. Lack of economic opportunities in the North Eastern states may cause mass migration of people to Bangladesh to alter the existing demographic composition, which may create plethora of socio-economic problems in the country. 3. Due to poor border management, Bangladesh may experience alarmingly high criminal activities such as smuggling, drug trafficking from across the border, which may affect social harmony in the country. Security Impact: 1. The implementation of these two particular routes may pose grave security danger to Bangladesh as the home-grown insurgent groups within North East India may conduct subversive activities within Bangladesh to sabotage the communication link between India's mainland and its troubled North East states. 2. Local criminals may use these routes for their movement to and from India to commit serious crimes and to escape from the law enforcement agencies. The same routes may also be used to smuggle lethal weapons in Bangladesh from India in order to carryout subversive activities within the country. 3. In the absence of adequate inspection and monitoring resources, the customs and other law enforcement agencies are unable to inspect the contents of each and every North East bound transport vehicle. This inadequacy of Bangladesh may be used to transport military hardware to troubled North Eastern states to quell insurgencies. 4. The transportation of military hardware to North East India may be construed as a declaration of war and may set the security agencies of Bangladesh on a collision course with the insurgents in North East putting the lives and properties of the people in danger. 4

Strategic Impact: 1. If implemented, these routes will let India overcome its strategic disadvantage of geographical isolation of its North East region through improved accessibility, which will diminish Bangladesh's only strategic advantage over India. 2. The 'chicken neck' will lose its strategic value as in a conflict situation, India will be able to use Bangladesh as a military corridor against China to protect its mountainous state--Arunachal Pradesh. 3. As a consequence, China may resort to military action to destroy India's military supply lines through Bangladesh to gain military advantage in the North East. This could push the war between India and China into Bangladesh territory and cause serious deterioration in the relationship between Bangladesh and China. 4. In overall calculation, Bangladesh will be the net loser for it will end up being a battleground between China and India and lose China as a strategic partner to discover herself alone in a hostile neighborhood, which will inevitably subject herself to Indian domination.

AH(Asian Highway)-41
Economic Impact 1. By connecting Mongla and Chittagong sea ports, directly linking Yangoon with Dhaka, and integrating major communication networks to increase efficiency, to enhance trade and tourism, and to improve distribution of farm products, AH-41 fulfills all the criteria set forth by the UNESCAP. 2. This is the shortest and economically profitable route to connect to ASEAN countries through which Bangladesh will be able to transport goods at the shortest time and at the minimum cost. If implemented, it will enable Bangladesh to gain competitive advantage in the ASEAN market due to time and cost advantages. 3. Using her competitive advantage, Bangladesh will also be able to establish profitable economic relations with North East India by delivering the right product at the right time and at the right price. 4. Bangladesh will be able to define her trade relations with the rest of the world based on an equal footing because, unlike AH-1 and AH-2, AH-41 creates a mutually-dependent relationship among the connected countries. 5. This route will enable Bangladesh to use her strategic geographical location and port facilities to attain high economic growth rate, reduce poverty level, eradicate unemployment and achieve major economic power status in the region through extracting economic benefits from North East India and ASEAN markets. 5

6. The expanding domestic and international market for Bangladeshi products will accelerate the process of industrialization through product innovation, process improvement and technology development. Social Impact: 1. The benefits of increased economic activities will be felt through higher standard of living, improved health care system and reduced crimes in the society. 2. Economic emancipation will create mass awareness about human rights and social justice to establish social harmony through eradicating exploitation, deprivation and misuse of power. 3. The risk of mass migration of people from underdeveloped North East India to alter the existing demographic composition will be minimized and the opportunity for equal distribution of wealth will be maximized. 4. The cross border criminal activities could be kept at the minimum level through smart border management to ensure peace, stability and tranquility at the border areas. Security Impact: 1. As the route will provide no direct road link with India's troubled North East, the threat of sabotaging trade links by North East Indian insurgent groups will totally be eliminated. 2. It will facilitate efficient border management to control cross border movement of criminals, arms smuggling and drug trafficking across BanglaMyanmar border. 3. The risk of inadvertent involvement in the conflict between India and its North East insurgent groups will be minimized as India cannot use this route to transport military goods to its turbulent North Eastern states. 4. It will facilitate improved relations between security forces of Bangladesh and Myanmar to remove suspicion and mistrust, and to foster understanding and cooperation based on mutual trust and interest. Strategic Impact: 1. Bangladesh will retain her strategic advantage over India and will continue to hold the key to stability and economic development of geographically isolated North East India, which can be used as a bargaining chip to extract concessions from India in the areas of vital national interest. 2. The absence of a military corridor through Bangladesh means the 'chicken neck' will retain its strategic value because it will still remain as the only fragile communication link between East and North East India. 6

3. India's perpetual reliance on strategic 'chicken neck' to supply military logistics to its North Eastern states will minimize the risk for Bangladesh to get involved in a conflict between India and China. 4. If implemented, this route will make Bangladesh the indispensable bridge between SAARC and ASEAN and will transform her into the nerve center of regional economic activities. 5. It will enable Bangladesh to play an important strategic role in South Asia through positively affecting the strategic direction of the region to achieve stability and prosperity. It will also facilitate a more comprehensive relationship between Bangladesh and other major players.

Concluding Observations
In the final analysis, it is imperative that the government of Bangladesh take cognizance of above mentioned factors to choose the most appropriate route to connect to China and ASEAN to maximize economic, political and strategic benefits and to minimize the risks of losing economic and strategic advantages by ensuring mutual interdependence and balance of power with other member countries.

References
1. http://www.unescap.org/ttdw/index.asp?MenuName=AsianHighway 2. Images are obtained from the Internet