Economics of Transit

By Ashfaqur Rahman

Begum Khaleda Zia, leader of the opposition, had said publicly that she was given an impression that transit to India would bring Bangladesh so much money that the country would be as rich as Singapore. Now the Indians are unwilling to give any transit fee even for the existing transit

arrangement through the river route. She was therefore critical that the government was giving erroneous impressions.

Begum Zia should know better. It is not transit charges that are likely to give Bangladesh the revenues. The income that will be generated by accessing the market of north-east Indian states for trade and investment could bring profits. How far this is correct also needs to be verified.

But let us first examine what we are getting into, on the matter of transit with India, and whether we are really going to benefit monetarily. In essence, allowing the Indians to move from one part of their country to another part through Bangladesh is not what we can strictly call as giving transit. It is essentially providing an economic corridor.

This is a special dispensation which Bangladesh will be giving to India. To be politically correct, we can use alternative words — that we are helping India to establish easy connectivity with its north-east portion through Bangladesh.

Such corridors are allowed usually in times of hostility or in very special circumstances. During the Second World War, Poland gave Germany a corridor to reach the port of Danzig. Today, Russia needs a path or a corridor through Lithuania to reach her port city of Kaliningrad.

India’s request to Bangladesh to connect to her north-eastern states is basically to fulfil her urgent interest in saving time and money in transporting essential goods and services by avoiding a trip of 1,650 km around what is known as the "chicken’s neck" north of Bangladesh to West Bengal. The road route traveling through Bangladesh would save India almost 1,000 km, and she would be able to reach West Bengal from these north-eastern states by traversing 500 to 750 km only.

The question that arises in the minds of many Bangladeshis is how much of the cost saved by India would be shared with Bangladesh. How much will India give to Bangladesh for this special consideration?

There is no doubt that Bangladesh can charge from India the usual fee for use of our roads and our railway lines. The fee would also include the cost of maintenance and upkeep of the infrastructure. Bangladesh can charge another fee for the damage caused to our environment. We can also levy a small charge for the congestion they would cause, which would not happen if no connectivity was allowed.

But beyond this it is not likely that we can levy any other charge and realise it. Of course, we need to study more about what other countries in the world that allow such passage to a neighbour do. But if nothing else is forthcoming are we going to remain satisfied with this pittance ?

Here, our government needs to look closer and work out solutions. First, India should be encouraged to invest in the roads they are going to use. These roads will be used by Indian multi-axle trucks, and they need to be made ready. Laying of fresh railway tracks to cater to transit traffic should also be Indian responsibility.

India should pay for setting up border railway stations, which would not have been set up if no connectivity was envisaged. India should pay Bangladesh to dredge Bangladeshi rivers where cargo vessels will ply. Bangladesh will, of course, sell fuel to Indian trucks and be involved in their repairs within the territory of Bangladesh.

We all know that transshipment is often cumbersome, time consuming and costly. Hence, it could be a private sector company with majority

Bangladeshi shares which can carry cargo through Bangladesh and earn carrying and service costs. Such a company’s vehicles could load in West Bengal and move into north-east India. India, Nepal and Bhutan can own minority shares in this company.

The critical question is whether India will agree to give to Bangladesh the portion of its savings due to the diversion of its cargo through the shorter Bangladesh route. Not all the states will uniformly divert all their cargo. For example Assam is likely to divert only 30% of its overall traffic.

The other states can do more, if not less. It is too early to say how much savings per ton of cargo it would have from each route used. Bangladesh would have to negotiate hard with India on this issue and get the best result.

The important thing that needs to be kept in mind, before any final decision is taken to grant connectivity to India, is that Bangladesh should raise and resolve with India some of the major bilateral issues like sharing of the waters of the common rivers, demarcation of maritime boundaries and easy access of Bangladeshi products to Indian markets. This will generate confidence about Indian intentions and give a positive spin to this exercise.

In spite of our prime minister’s keen desire to make things as transparent as possible, why is it that the Bangladeshis are kept in the dark about such a substantive issue as allowing connectivity to India? What is so secret about this. One can understand that the government cannot bind itself to any public commitment before negotiation with India.

But why can’t the Jatiya Sangshad start the discourse in its Committees and help the government. It can identify our national interests, mark out the sources of revenue and debate on the various options available to us. In any case, they can give the government a general sense of direction. The people will feel associated with the decisions that the government will subsequently take on this critical matter. History is usually unforgiving.

Ashfaqur Rahman is a former ambassador and Chairman, Centre for Foreign Affairs Studies.