5 key takeaways on regional cooperation in South Asia in 2023

Of my travels across South Asia this year, my visit to the living roots bridges in Meghalaya, India, stood out for its uniqueness. The roots of the rubber fig trees—planted on either side of the river— intertwine and are carefully crafted by the Khasi people into natural bridges. The more these bridges are used, and the more pressure applied on them, the sturdier they become. These bridges are symbolic of regional cooperation efforts in #OneSouthAsia, where despite external pressures and strains, cross-border ties are strengthening in many areas. Looking back on 2023, here are 5 key takeaways on regional cooperation in South Asia :

1. Energy cooperation is moving ahead. This year there were small, but sure steps towards a regional electricity market. India opened doors to the neighboring countries including Bangladesh, Bhutan, and Nepal to buy and sell power in the real time energy market via the India Energy Exchange. This allows countries to trade electricity closer to real time as and when available and required. Nepal is the first South Asian country to participate, where it can sell 44 MW of power in real time. India and Nepal also agreed on a long-term plan to purchase 10,000 MW of power from Nepal in the next 10 years. The momentum of the India-Sri Lanka interconnector—which will link the national grids of India and Sri Lanka—has picked up.  In response to the Government of Sri Lanka, the World Bank will support preparatory and analytical studies for the interconnector. Once operational, the interconnector will open opportunities for market-based trading between India and Sri Lanka as well as the rest of the region. A regional electricity market will increase synergies among clean energy resources, allow the region to tap its immense hydropower potential, especially in Nepal and Bhutan, and ensure low-cost energy access in South Asia. At the World Bank, we estimate that it can lead to a 4.5% reduction of CO2 emissions by 2035, and potentially yield up to $17.4 billion in cumulative economic benefits in 2023-2035.
    
2. There were many fresh starts in regional trade and connectivity.  The Akhaura -Agartala rail link between India’s northeastern state Tripura and Bangladesh was inaugurated this year, and Bangladesh gave India access to its Chattogram and Mongla ports for transit and cargo vessels, pushing regional connectivity in the Bay of Bengal area. India and Sri Lanka revived their ferry service after 40 years, while India and Nepal renewed the Treaty of Transit,  giving Nepal access to India’s inland waterways along with agreements for new rail links. India and Bhutan also agreed to bolster regional connectivity with a focus on the first-ever rail link between Assam and Bhutan, and on upgrading border post infrastructure. Bangladesh and Bhutan signed a transit agreement enabling Bhutan to use Bangladesh’s roads, waterways, railways, airways, and seaports for its third-country trade. Our Accelerating Transport and Trade Connectivity (ACCESS) program facilitates cross-border trade and connectivity with support to improved and modernized transport, border, and customs infrastructure, digital systems, and processes in the sub-region, with a focus on Bangladesh, Nepal and Bhutan.  During my visit to South Asia’s largest border posts between Bangladesh and India — Benapole-Petrapole post — I saw the impact that delayed border crossings have on trade and, on the upside, the potential to accelerate trade via digitization and modernization of key processes.
    
3. In the face of crisis, the neighborhood responds. This year I traveled to Sri Lanka a few times, and the conversations about regionalism have been encouraging. Much of the credit goes to the neighborhood’s response to Sri Lanka’s economic crisis and recovery. India provided multi-pronged assistance of about $4 billion, while Bangladesh provided a loan of $200 million. The region’s role in Sri Lanka’s crisis recovery and its continued economic growth has become central as the country looks to renegotiate Free Trade Agreements with the neighborhood and beyond, improve access to regional markets, increase the volume of trade processed in its ports, and boost regional investments.  The idea of “neighborhood first” resonated in many instances, and some of these examples of neighborhood collaborations have been also illustrated in our Good Neighbors Series.  

4. Climate cooperation is imperative. South Asia’s climate vulnerability remains high and even this year, extreme climate events like floods and soaring temperatures continued to hit the region. There is a greater consensus on the need to work together on climate and environmental issues. This year, in partnership with the UK’s Foreign, Commonwealth and Development Office, we launched the Resilient Asia Program, which is a $65 million program over the next eight years to accelerate transformational and collaborative climate action in South Asia, with an initial focus on air pollution management, disaster risk management, thermal cooling, biodiversity conservation in the Sundarbans, and transboundary water cooperation. Given the spatial interdependence of air pollution, we are working with the countries of the Indo-Gangetic Plain to foster collaborative action on air quality management. Our analysis estimates that collaborative approaches cost almost 45% less and will achieve more effective air quality results.
    
5. There are many new and exciting opportunities for cooperation.  At the World Bank, we have extended our operational approach for regional integration, cooperation and engagement, (RICE) through 2025.  Our work is venturing into new areas of cooperation including higher education and pandemic resilience and response. Among South Asian countries, cooperation in the areas of digital connectivity, digital infrastructure, and cross-border digital payments is moving fast.  We continue to support networks, platforms, and enhanced engagement with our stakeholders and development partners to find ways to synergize and scale our efforts for greater impact and results. With support from our development partners, the UK’s Foreign, Commonwealth and Development Office, and Australia’s Department of Foreign Affairs and  Trade, our portfolio of analytical work, 20 projects and close to $5 billion in financing directly contributes to the World Bank’s vision to end poverty on a livable planet.

As the year closes, there is much to celebrate on the regional cooperation front, but a lot more to accomplish ahead.  In 2024, let’s continue to build bridges that will be resilient and will stand the test of times—a lesson well learnt from nature and its fascinating living roots bridges.