Hoi hoi, hai hai, or don’t believe the hype

Posted in foreign policy, politics by jrahman on January 15, 2010

The Prime Minister has returned from India. Awami League arranged a ‘showdown’ to receive her at the airport. At least on TV screen, it seemed as if she returned from exile, not a state visit to a friendly country. Balancing this hoi hoi, the opposition BNP has said that the PM has abandoned national interest in New Delhi. No doubt we’ll see more hai hai when the leader of the opposition holds a press conference on Saturday.

But there is no reason why we at UV can’t discuss what was agreed by the two PMs. Over the fold, I give my assessment of the Joint Communique (I’d urge everyone to click on the link and read it, as this will facilitate an informed discussion). (The post is written on an explicitly ‘what it means for Bangladesh’ perspective. This is less than fortunate, but somewhat unavoidable. My personal views on the Indo-Bangla relations are here.)

To cut to the chase, my view is, ‘don’t believe the hype’. As far as Bangladesh is concerned, there really is nothing in the communique that is irreversible, or that has altered things significantly in one direction or other.

An explicit commitment by India to halt Tipaimukh would have been good, and the promise that ‘no harm will come to Bangladesh’ is a non-credible, non-binding statement. But this is how things stood before the PM’s trip, so she hasn’t signed anything away. On the other hand, the communique doesn’t require Bangladesh to seek the resolution of the maritime boundary demarcation solely through bilateral means. This is an important right the PM has retained for Bangladesh, and this should be acknowledged.

On the rest of the issues — use of the ports, transit, security deals etc — two points should be made. Nothing has been done that cannot be reversed by a future government. And there is absolutely no reason to believe any of it is definitely going to hurt Bangladesh.

It’s also important to note what’s not in the communique. There is no mention of rice. The single most profound way India can damage the welfare of an average Bangladeshi is by imposing a counterproductive export ban on rice. I find it remarkable that no one has touched on this issue. The communique doesn’t mention anything about rice. The opposition doesn’t talk about it. In fact, I have seen no mention of this anywhere.

(More at UV)

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5 Responses

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  1. Diganta said, on January 22, 2010 at 7:52 am

    waiting to see your evaluation of the same. On a whole, I agree with you.

  2. Diganta said, on January 22, 2010 at 4:54 pm

    Export ban on rice is natural for India (or even Bangladesh), because rice production enjoys a hefty state welfare subsidy. So, exporting rice would necessarily mean exporting taxpayers money – which none wants. So, rice export, unless it’s subsidy free (or paid export duty) has reasons to be banned.

    • jrahman said, on January 25, 2010 at 12:39 pm

      Diganta, I don’t follow your argument. Electricity and fuel are heavily subsidised. They are inputs into manufacturing and service exports. By your rationale, these exports should be banned!

      In any case, this is not an argument provided by any government that bans rice export. Typically what happens is this. There is some external shock (like poor weather or natural disaster). Price of rice (or other food grain) rises. There is political pressure for the government to ‘do something’. While there are things government could do to improve the situation, most of them either cost money (eg cash handouts to poor people) or are hard to implement (eg create a buffer stock from scratch) or both (eg create a food for work programme from scratch). In comparison, an export ban seems like a cheap and painless action.

      In practice, such export bans are usually counterproductive. Wholesalers and retailers see the export ban as a sure sign that the government is in a panic mode and there is excess demand in the market. They rightly figure out that the government doesn’t have enough in the stock to meet the demand. So they raise prices even more.

      And globally, when one country slaps an export ban, there are pressures for others to do the same. And the result is escalating prices that benefits no one.

      • Diganta said, on January 26, 2010 at 4:36 am

        It’s my fault that I didn’t make things clear. In India, Argo-income is tax-free but manufacturing industry income is taxed doubly (i.e. once on company profit and second on income tax of the individual owners). So, the manufacturing subsidy is paid back to Govt in the form of those two taxes. For Agro-income, both these are waived off, except for the companies traded in public (I’m not sure of the exact terms when the tax is applied). So, the subsidy goes to the consumers and is never paid back to the Govt. This justifies some tax to be imposed before the agro-products leave the country.
        Coming to the next point, you’ve offered a few suggestions on what the Govt can do as alternatives. You’re perfect and I don’t dispute that subsidy is an archaic form of benefit for citizens and even a cash-handout is more efficient than that. But once that’s implemented, the whole issue of “cheap” rice (Indian rice is less costly that what International price is) would go away and our rice price would eventually level itself with those of international prices. That’s a long term goal but I don’t see it happening in next 10-20 years.

  3. On BNP’s new India policy « Mukti said, on November 12, 2012 at 6:14 pm

    […] I don’t have access to the corridors of power.  Nor do I know the high and the mighty.  So I cannot rely on the inside story from anyone, or base my analysis on the atmospherics.  But most of the time, the detachment actually helps with the analysis.  For example, back in January 2010, when most people were either ecstatic or apoplectic about the Bangladeshi Prime Minister trip to India, I parsed the Indo-Bangla joint communique and decided to ignore the hype. […]

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