Given its political, economic and strategic importance, South Asia is one of the most important regions of the world. About one-fifth population of the world lives in this region, having an area of 5.22 million square kilometres and enormous untapped economic potential. In addition to two nuclear-armed states of India and Pakistan, other important countries in the region include Bangladesh, Nepal, Bhutan, Afghanistan, Sri Lanka and Maldives.

The South Asian region’s economic growth has made it a big global market. But, the region faces numerous security challenges, both traditional due to deep-rooted historic differences and non-traditional ones like drug trafficking, terrorism, environment, climate change, food security, intra-region migration, infrastructure, energy crisis, etc. Political issues and conflicts have not allowed economic and strategic interests to take precedence in matter of policy and development.

Since the strategy of using force has not yielded desired results, this brings to the fore the need for political will and political action to break the vicious circle of conflict, insecurity and under-development in South Asia. Besides, economic policies need to be geared not just to maximise growth, but also to address the distributional or political factors that lead to conflict.

China’s involvement in South Asia, as an observer in the South Asian Association for Regional Cooperation (SAARC), is critical in terms of regional connectivity. China has shown interest in investing in several infrastructure projects in South Asia. Amongst others, these include China-Pakistan Economic Corridor (CPEC) and Bangladesh-China-India-Myanmar (BCIM) Economic Corridor. On April 20, 2015, China and Pakistan signed an agreement to commence work on the CPEC.

The CPEC aims to connect Pakistan’s Gwadar Sea Port to China’s Xinjiang region via a network of highways, railways and oil/gas pipelines. Estimated to cost $46 billion, the mega development project will run about 3,000 km from Gwadar to Kashgar. An extension of China’s proposed 21^st century Silk Road initiative, the CPEC is the biggest overseas investment by China. The corridor is expected to be operational within three years and it is expected to transform Pakistan into a regional economic hub.

In addition to transport, the CPEC will provide Pakistan telecommunication and energy infrastructure. According to the British newspaper The Guardian, the Chinese are not just offering to build much-needed infrastructure but also make Pakistan a key partner in its grand economic and strategic ambitions. The project will also open trade routes for western China and provide China direct access to the resource-rich Middle East region.

The CPEC has the potential to create a strategic nexus between Pakistan, China and Central Asia, generating billions in revenue and providing shorter land routes. It would provide links from the Caspian Sea to the Strait of Hormuz and enable Gwadar to compete with Gulf ports. Wary of Chinese strategic access to the Arabian Sea and its presence in the region, the United States has reportedly tried several times to persuade Pakistan against China’s involvement in the project. India also views the CPEC with objections.

China’s "Silk Road Economic Belt radiates throughout the Asian and European continents, the scope of which can be divided into three-layers, i.e. the core area, extended areas, radiant areas," says Bai Yongxiu in an article published in the March, 2015 issue of the Peace magazine of China. He writes: "The construction work principle is gradual development from nearby projects to distant ones, and from easy ones to difficult ones. In concrete terms, the core area of the Silk Road Economic Belt is composed of the main member states of Shanghai Cooperation Organisation and the Eurasian Economic Community including China, Russia and 5 Central Asian countries, an area of 30.6992 million square kilometres, the population size was 1560 million in 2012, the aggregate GDP of US$ 10.55 trillion. The expanded areas of Silk Road Economic Belt is other member states and observer states of the Shanghai Cooperation Organisation and the Eurasian Economic Community, including 9 countries, i.e. India, Pakistan, Iran, Afghanistan, Mongolia, Belarus, Armenia, Ukraine, and Moldova. These countries have the geographical area of 8.922 million square kilometres, the population size was 1587 million in 2012, and the total GDP of 2.87 trillion USD. The radiant areas of the Silk Road Economic Belt include other countries and regions of Asia and EU, and can be connected with other East Asian countries such as Japan, South Korea. These countries (and regions) cover an area of 9.4526 million square kilometres, with the population size of 924 million in 2012, and aggregate GDP of 26.82 trillion USD."

Along the "One Belt and One Road" are located the most emerging economies and developing countries, totalling 26 countries and regions, covering a total population of about 4.4 billion, with the economic aggregate about US$ 21 trillion, accounting for 63 per cent of the global population, and 29 per cent of the total global economy," notes Long Kaifeng in his opening article in the Peace magazine (March 2015 issue). This is a world class market and, once completed, will benefit Eurasian people and attain Eurasian lasting peace and prosperity.

The Islamabad Policy Research Institute (IPRI), in collaboration with the German Hanns Seidel Foundation (HSF)’s Islamabad office, organized a two-day international moot "Policy Approaches of South Asian Countries and their Impact on the Region" in the federal capital on June 2 and 3, 2015.

Addressing the conference, Dr Kamal Monnoo, Member IPRI Board of Governors and Director Samira Fabrics, stated that the dynamics of smooth intra-regional trade cannot only play a pivotal role in strengthening economies, but also unleash a soft process, which can be the key to resolving long standing sticky disputes. Elaborating his point, he said recent economic history is full of examples where countries have achieved higher growth through enhanced economic and trade linkages. In fact, the world economy itself over the last decade has mostly grown on the back of enhanced global trade.

In his Nobel winning work, Paul Krugman has explained that when trade barriers fall and trading increases, firms gain access to bigger markets, allowing them to expand production and reap economies of scale. According to French social critic and political philosopher Montesquieu, "commerce improves manners and cures most destructive prejudices".

Consequently, the concept is now gaining currency that intra-regional as well as inter-regional trade will lead to peace among nations that have conflicts and have seen many wars. While expansion of trade is a worthy global cause, Dr Monnoo noted, it cannot be pursued blindly. There was also trade and economic linkage between a colonised India and the Great Britain, but was that really good for India and the Indians, he asked? Therefore, we need to ensure that trade in SAARC is "fair and equitable" for all and not skewed in just one country’s favour, he added.

A participant from the Chinese Academy of Social Sciences, Ye Hailin, highlighted international and regional concerns, as expressed by the US, EU, India, Iran, GCC, CA and Afghanistan, regarding the CPEC. However, taking exception to India’s concerns, he observed: "Being a bigger country, India should have a bigger heart."

Director Kabul-based Afghanistan’s Research and Evaluation Unit, Nader Nadery, stated that the great commercial route, which would connect Central Asia with the Indian Ocean via Pakistan and Afghanistan with a complex network of pipelines, railways and highways, seemed no longer a remote dream. "As a first step, dedicated series of initial deliberation needs to start, the foundation for which could be the major regional energy projects, like TAPI and CASA 1000 as well as China-Pakistan Economic Corridor."

Two scholars from India -- Dr Subha Chandran (Director of New Delhi-based Institute of Peace and Conflict Studies) and Dr Patricia Oberoi (Vice-Chairperson Institute of Chinese Studies, New Delhi) were also scheduled to participate in the conference, but somehow they could not make it.

Meanwhile, Pakistan has assured the global community through the International Union for the Conservation of Nature (IUCN) that it would work, together with the Chinese partners, to make the CPEC undertaking "environmentally and economically sustainable." The assurance was extended by the Minister for Climate Change Senator Mushahidullah Khan to IUCN President Xinsheng Zhang when the latter met him in Islamabad on June 7, 2015.

Regional states have an opportunity, through regional integration, to work together to manage their numerous common regional issues, as underlined by IPRI in a background paper on the conference. Though considerable potential exists for reducing conflicts through regional cooperation, till recently this strategy did not receive due attention in South Asia.