At the Crossroads of Collapse: South Asia’s Existential Crisis
BY YUVIKA SINGH / NOVEMBER 30, 2024
DESIGNED BY JIYA MAROLY
South Asia, shackled by historical animosities and geopolitical tensions, ironically upholds the notion that cooperation breeds defection. How can a region poised for unparalleled growth falter under the weight of zero-sum thinking and mistrust?
outh Asia is projected to be the fastest-growing region globally, with a growth rate of 6.4% in 2024, according to the World Bank. However, this economic momentum masks a deeper, more complex reality. Despite its rich cultural, historical, and economic ties, the region remains plagued by significant vulnerabilities, from internal divisions to geopolitical tensions. These persistent challenges, coupled with entrenched factionalism, hinder the region’s ability to integrate fully. As a result, South Asia stands as one of the least integrated regions in the world, limiting its capacity to translate growth into lasting stability and shared prosperity (World Bank, n.d.).
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Given the high population density of the region coupled with common civilisational inheritance, South Asia has the potential to be a significant economic and geopolitical powerhouse. Instead, it is stagnating – resulting from age old mistrust, ideological warfare, and border clashes. Countries including Afghanistan, Sri Lanka and Pakistan have faced challenges in recent years, often exacerbated by external factors and geopolitical pressures, hindering their ability to prioritise regional cooperation and self-reliance.
Further, the region's potential for economic growth is stifled by a lack of infrastructure and political will. This hinders development and diverts resources from essential social welfare programmes. Intra-regional trade falls short of its capacity due to significant tariff and non-tarrif barriers. Despite the adoption of liberalisation by several South Asian countries since the 1980s, the average tariffs are still high: in 2016, they were more than double the world average, even though the regional free trade agreement (SAFTA) was signed in 2006 (World Bank, 2020). Additionally, transaction costs of trading in South Asia continue to be exorbitant, primarily due to poor infrastructure development and maintenance across borders, including inadequate road networks, inefficient rail networks, limited air connectivity, and suboptimal border crossings. This situation is more so a choice rather than a result of economic inability, because most countries in the region possess the technology and resources to make trade easier. Nevertheless, the disruptions to key industries in the rest of Asia as a result of COVID-19 and the broader technology realignments and trade tensions provide opportunities for South Asia if it can put in place the necessary structural conditions through further liberalization and regulatory reforms (Peiris et al., 2022).
The social, political and economic development in South Asia has been deeply hindered by internal or inter-nation conflicts. The region is deeply entrenched with ethnic hostility, communal violence, and numerous wars. Some conflicts are well-documented and analysed, such as those in Kashmir and Sri Lanka. However, others remain in the shadows of acknowledgement, such as the Madhesi movement in Nepal and the ongoing insurgency in Balochistan. Even if a region is not personally involved, there are spillover effects observed throughout the territory, mainly due to close borders. The ongoing migration influx that started in 2021 with the US’s abandonment of Afghanistan, the military coup in Myanmar, and the most recent government overhaul in Bangladesh, has further destabilised the region.
The social, political and economic development in South Asia has been deeply hindered by internal or inter-nation conflicts. The region is deeply entrenched with ethnic hostility, communal violence, and numerous wars.
Further, South Asia has substantial appeal to major global powers, regional stakeholders, and international investors due to its strategic geographic location. Nestled between the Arabian Sea and the Bay of Bengal, the region acts as a bridge between the Pacific in the East and Mediterranian in the West.
India occupies a unique position in the South Asian region by virtue of its sheer geographical size, location, and economic potential. India accounts for 80% of the regional economic output, automatically making it a leading figure in geo-politics (SCMP, 2021). However, The country’s rapid economic growth and rising emphasis on enhancing intra-regional trade are often seen by its neighbours as efforts primarily aimed at benefiting itself, rather than contributing to broader regional development.
The trade war which began with tit-for-tat tariffs between Washington and Beijing in 2018 has now been raging for nearly seven years. With the re-election of Donald Trump in America, it will intensify in 2025.
Despite India’s strategic clout in South Asia, the region has not been immune to structural influence caused by the dynamics between US and China. The tussle between US and China has escalated since 2017 mainly due to ideological differences and the US’s perception of China as a threat to its powerful position in the world. Under the Trump administration, the interactions between the world’s two largest economies transformed into a trade war. In 2018, the US imposed sweeping tariffs worth USD 50 billion on Chinese imports, prompting retaliatory tariffs on a range of US products by China. Simultaneously, both the nations have been engaging with Indo–Pacific countries – through political alignment, economic partnerships, and military deployments, which often result in a degree of interference in the domestic affairs of these countries – as a way to heighten their influence in the region. The trade war which began with tit-for-tat tariffs between Washington and Beijing in 2018 has now been raging for nearly seven years. With the re-election of Donald Trump in America, it will intensify in 2025. But the trade war is also spreading geographically. The number of countries being dragged into spats over trade with China is increasing, posing difficult decisions for governments (Bird, 2024). It is beneficial for both US and China for accessing and maintaining their presence in the Indian ocean by securing the sea lines for communication and trade.
But the trade war is also spreading geographically. The number of countries being dragged into spats over trade with China is increasing, posing difficult decisions for governments (Bird, 2024). It is beneficial for both US and China for accessing and maintaining their presence in the Indian ocean by securing the sea lines for communication and trade.
China’s investments across the region in huge infrastructure projects are widely seen by policymakers, analysts, and regional governments as a way to counter India’s relationship and influence in the Indo – Pacific. China began channeling its investments into the region in 2013 through the Belt and Road Initiative (BRI), and these investments have grown substantially ever since. China has deepened its ties with Pakistan through BRI and CPEC in recent years, while also expanding its footprint in Sri Lanka, Nepal, and Maldives. China's investments there are driven by strategic advantages, particularly in terms of maritime trade routes, resource access, and geopolitical influence. By investing heavily in infrastructure projects like roads, railways and ports, China aims to enhance connectivity, reduce transportation costs, strengthen its maritime influence in the region and secure access to key shipping lanes. These countries, drawn by immediate development opportunities with China, usually distance themselves from India, further complicating the pathway to regional integration. For example, Sri Lanka’s reliance on China’s loan for the Hambantota Port, leased to China for 99 years, has deepened ties with Beijing while distancing it from India.
Source: Anonymous. (2019, December 11). Pakistan revives Belt and Road projects under Chinese pressure. [Map]. Financial Times.
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Simultaenously, the US takes interest in India to push back against China. As the U.S. and China vie for influence in South Asia, regional nations find themselves caught in the crossfire. This great power competition pressures these nations to choose sides, hindering regional cooperation and integration.
However, South Asian countries are not passive victims of this rivalry: despite advocating for non–alignment, these countries actively leverage the presence of both US and China, recognising that they both offer unique benefits.
However, South Asian countries are not passive victims of this rivalry: despite advocating for non–alignment, these countries actively leverage the presence of both US and China, recognising that they both offer unique benefits. While this sounds advantageous, in the long run, these countries end up acting as disrupting forces to each other without any concrete fulfillment of their development goals in sight. The economic dependence on foreign entities for aid threatens their economic growth as well as political sovereignty. A clear instance occurred in 2021 when Bangladesh was advised by China to not join QUAD (Quadrilateral Security Dialogue), a strategic group involving the United States, Japan, India, and Australia, to preserve its growing relations with China since its participation in BRI in 2016. It exposed Bangladesh to potential diplomatic isolation from Western powers and India, who are wary of China's influence in the region.
Against this backdrop, India has been consistently pushing its “neighbourhood first” policy in an effort to strengthen ties with its immediate neighbours. The pursuit of this policy reflects India’s intent to maintain as well as foster regional stability and integration through economic cooperation, security partnership, and developmental assistance. This is evident in initiatives like the India-Bangladesh friendship pipeline to transport natural gas from Bangladesh to India, joint military exercises with neighbours, and development assistant programmes such as Lines of Credit for infrastructure projects. While this policy has yielded these specific short-term benefits, its long-term impact remains uncertain. Neighbours, especially Pakistan and Nepal, continue to remain strategically aligned with US and China, leaving India vulnerable to shifts in allegiances, especially in the context of regional instability or potential conflict.
Climate vulnerability in South Asia
South Asia is also a prominent climate change hotspot, despite only contributing 8% to the Global carbon emissions (Unicef, n.d.). The region is living through a new climate “normal” with intensifying hate waves, cyclones, droughts, and floods. Apocalyptic floods in Pakistan in 2022 led to catastrophic consequences – death, homelessness, and millions worth of food loss. Similarly, India and Bangladesh have both suffered from extreme weather events, with regions experiencing droughts and floods simultaneously. India has lost significant portions of its wheat and rice production, while Bangladesh has also faced similar agricultural losses due to these climatic extremes. Models like DSSAT and APSIM paint a grim picture, predicting significant yield declines in key staples like rice and wheat. DSSAT estimates a 15.2% reduction in rice and 14.1% in wheat, while APSIM projects even steeper drops of 17.2% and 12%, respectively (Frontiers, 2022). These projections, while based on specific climate scenarios, underscore the urgent threat to food security in the region. Climate change has also intensified the water cycle, leading to extreme rainfall events and droughts. For instance, some Pakistani regions experienced rainfall 4-5 times the annual average in just weeks (USIP, 2022).
The region is living through a new climate “normal” with intensifying hate waves, cyclones, droughts, and floods.
These pressing concerns can be tackled through cross-border environmental treaties or joint water management, among other effective solutions. Despite the urgent need for climate action, multilateral efforts are hindered by concerns over sovereignty and domestic politics. While South Asia contributes minimally to global emissions, it bears the brunt of its effects. Rich nations, historically responsible for the bulk of emissions, owe a 'moral debt' to the Global South. As Esther Duflo argues (FT, 2024), this debt includes both financial reparations and the transfer of technology, which would enable South Asia to more effectively tackle climate challenges. A unified regional front could amplify South Asia’s voice on the global stage, pushing for reparations from major historical polluters.
The unwillingness to collaborate on common pressing issues reveals a deep-seated pattern of mistrust that prevades the geopolitical relationships in South Asia, which can be effectively analysed through classic game theory concepts – prisoner’s dilemma & tragedy of commons. The prisoner's dilemma is a concept in game theory used to understand decision-making in situations where two players must choose between cooperation and self-interest, with the outcome determined by their combined choices. While cooperation is ideal, mutual distrust often causes both sides to betray each other, resulting in the worst outcome for all. Similarly, the tragedy of commons describes how shared resources are overexploited when individuals or nations prioritise immediate, short-term gains over long-term collective welfare.
These theoretical frameworks are especially relevant to the economic and geopolitical landscape of South Asia, a region of shared legacy, history, culture, and paradoxes. Despite shared challenges and the existence of platforms like SAARC (South Asian Association for Regional Cooperation) for 27 years now, the sheer amount of contradicting policy measures taken by member countries is threatening. Nations prioritise building arms over building trade – stagnating GDP, sacrificing collective wealth because of age old rivalry and differences.
Nations prioritise building arms over building trade – stagnating GDP, sacrificing collective wealth because of age old rivalry and differences.
To demonstrate the existence of such frameworks in South Asia, the India–Pakistan relationship stands as a classic example of prisoner’s dilemma. Both nations, despite recognising the collective benefits of peace and cooperation, often find themselves caught in a cycle of mistrust and tension. The dread of being disadvantaged by the other leads to a preference for unilateral actions, including excessive defense spending, even if they harm the collective interest. This dynamic hinders regional integration, stifles economic growth, and perpetuates instability.
Furthermore, the tragedy of commons is evident in the region’s environmental crises. Shared resources like the Indus River and regional air quality issues transcend national borders, yet countries often treat these resources as a zero-sum game – where the gain of one party equals the loss of the other, resulting in no net wealth creation, only continued depletion. For instance, the worsening air quality index (AQI) in cities like New Delhi (where AQ levels have exceeded 1000, indicating hazardous air quality) and Lahore (which is experiencing AQ levels above 2000) highlights the urgent consequences of this mindset. Pollution in one area negatively impacts neighbouring regions, exacerbating environmental challenges for all.
Each nation exploits the resources for its own benefit, disregarding the broader environmental damage caused by such actions. This behaviour leads to widespread degradation, ultimately harming all parties involved. Despite the collective costs, nations persist in pursuing self-interested policies, reinforcing the cycle of short-term thinking and environmental depletion.
South Asia, today, stands at a decisive juncture. It has the potential to drive prosperity, yet remains bound by historical grievances and fragmented policies. Much like the “tragedy of commons, where each nation’s pursuit of self-interest depletes shared resources, mistrust undermines collective stability and economic potential. Elinor Ostrom’s pioneering research on the governance of shared resources challenges the assumption that common goods will inevitably be overexploited. She highlights that through effective cooperation and self-organised management, communities can sustainably manage these resources, counteracting the depletion typically predicted by traditional theories.
In such a scenario, cooperation is paramount. By prioritising dialogue, diplomacy and shared interests, South Asian nations can break the cycle and work towards a sustainable future. By investing in sustainable development and addressing climate change collectively, South Asia can mitigate the risks of a tragedy of the commons and secure a prosperous future.
Keywords
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South Asia, Economic growth, Integration, Geopolitical tensions, Intra-regional trade, Tariff barriers, Infrastructure, Regional cooperation, Ethnic hostility, Communal violence, Strategic location, India’s role, US-China dynamics, Trade war, Regulatory reforms
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References
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