Keynote Address at the “Building Pan-Asian Connectivity” Conference by Ambassador Richard Verma

(As prepared for delivery)

Helen, thank you for the kind introduction.  Thank you also for you and your team at the consulate’s hard work on this conference.  Thanks also to Dr. Sumit Ganguly and his team at the Center on American and Global Security at Indiana University, as well as Mr. Ashok Dhar and Dr. Rakhahari Chatterji and the Observer Research Foundation.  This conference would not have been possible without their hard work and co-sponsorship.  Most of you are probably familiar with Dr. Ganguly and the many hats he wears as a foreign policy author, teacher, and scholar.  His most recent work, “How Rivalries End,” is an excellent case study on competition between nations and peoples for resources and strategic advantage – which, as he and his co-authors illustrate, can often end without violence.  We are honored he is here to share his expertise with us.

In the US, we often lament on the too few number of South Asian scholars in academia or policy circles.  But looking around this room, I see the amazing assembly of talent that has produced so much important and rich scholarship, cutting edge research and real-world application of theory to help people and governments in this region.  So, I want to especially congratulate this fine group that has been assembled for all the work they have done over the years to put South Asia and its many critical issues on the map.

I am also happy to return to Kolkata for the second time since my arrival as Ambassador.  When I was here in January, my family and I had the opportunity to take a lovely tour of Kolkata’s historic and lively city center.  That walk was an excellent reminder of Kolkata’s history and the city’s preeminent place in the history of American diplomacy as home to one of the oldest American consulates anywhere in the world.  Kolkata is, and will continue to be, one of Asia’s most important political and economic centers of gravity – and a true gateway city between South and East Asia.

President Obama’s Visit and the Road Ahead
This is my 9th trip around India in my 9 weeks as Ambassador.  Those trips are, of course, in addition to the President’s visit to New Delhi, as well as the visits from the Secretaries of State, Treasury and Commerce, and what now seems like half of the Cabinet.  On both the high-level visits and on my trips, one can feel the excitement about changes taking place in India – and one can also sense the excitement and promise for the US/India relationship.

I think historians will look back on this period as a transformative time that injected new momentum into our partnership.  As President Obama said at Siri Fort in New Delhi, his visit reflected the “possibilities of a new moment” and the objective of not only being one of India’s partners, but its best partner.

Over the course of many productive interactions during the visit, the President and Prime Minister set forth a sweeping vision for a partnership that can lead the world toward greater peace, prosperity and security.  From up close, I was struck by our leaders’ camaraderie and their shared belief that the U.S. – India relationship can be a powerful force for advancing the well-being of our nations and the world.  There was a clear recognition of an increasing convergence of interests between our two great nations, and also a growing recognition that if the US and India are the closest of friends and partners, the world will be a safer place.

As he was leaving, the President recognized that it takes more than vision to achieve results.  We talked about the promise of this moment, and the important work that now lies in front of us, in both countries.  On behalf of Mission India, let me assure you we are committed to implementing the President and Prime Minister’s ambitious agenda and, hopefully taking US-India relations to a new level of collaboration.

The President and Prime Minister are both keenly aware that the U.S. – India relationship is destined to be a force for regional and global change as well.

Indeed, they memorialized their understanding in a Joint Strategic Vision on the Asia-Pacific and Indian Ocean Regions.  The Joint Vision set out a groundbreaking architecture for our cooperation in maritime security, in resolving disputes peacefully under the rule of law, and importantly, it also set forth how our countries’ can work together to support regional economic integration, including promoting accelerated infrastructure connectivity and economic development in South, Southeast, and Central Asia.

These are large goals, and the Embassy and our counterparts in the Indian government and the diplomatic corps are hard at work on roadmaps designed to further them.  But increasing regional connectivity in positive ways will take more than the work of governments alone.  It will also depend fundamentally on the commitment of the leaders of industry, media, academia, and others who influence, carry out, and spur economic growth and policy.  That’s why this conference, and all of your work is so timely and so important.

Why Connectivity is Important
Here in Kolkata almost a year ago, Deputy Assistant Secretary of State Fatema Sumar explained our government’s thoughts on an Indo-Pacific Economic Corridor that can help bridge South and Southeast Asia.  She also laid out a vision for how the United States’ Asia policy and India’s Act East policy can work in complementary ways to increase regional trade and growth.  Fostering these connections through physical infrastructure, regulatory trade architecture, and human and digital connectivity can create linkages all the way from Central Asia to Southeast Asia, via South Asia.  This is not just strategically important for India and other South Asian countries, but for the United States.  We have a vested interest in a more stable, prosperous, and integrated South Asia.  As people from this region continue to do business together, trade together, study and work together, this has the added benefit of pulling disparate peoples, states and, yes, nations together too.  The fact is the rich network of relationships borne from inter-connectivity can be a powerful counterbalance to conflict.

But connecting what has been called the least connected region on earth will not be easy.  By some estimates, South Asia intra-regional commerce comprises only 5% of total global trade.  India trades more with Europe, the United States, and the Middle East than with its immediate South Asian neighbors.  Addressing this economic anomaly will involve overcoming some challenges, but if we do it will also create enormous opportunities for all involved.

A Case Study
Before I discuss some of the challenges, let me tell a short story of the immense potential for positive growth greater connectivity can bring.  In 2005, India’s Oil and Natural Gas Corporation (ONGC) decided to build a power generation facility in Palatana village in Tripura state to supply electricity to seven Northeastern states.  There was plenty of land and it was near a water supply, however there was one formidable logistical challenge: the conventional route to transport cargo for the project would have been through the chicken’s neck region of West Bengal into Assam and down to Tripura.  This was a distance of more than 1,700 kilometers.  It appeared transporting 100 pieces of oversized cargo weighing more than 100 tons through this hilly terrain might be impossible.  Just to make things more interesting, the U.S. partner – General Electric – needed to transport two U.S.-manufactured turbines weighing 300 tons each.

To resolve the problem, ONGC worked with the Government of Bangladesh to open a transport corridor using waterways and roads through Bangladesh.  These facilitated transportation of the heavy equipment to Tripura from the Kolkata port.  Bangladeshi authorities allowed the use of their ports and roads without charging any transit fees.  The exercise involved extensive coordination with multiple government agencies in both countries, including security and customs officials, and many district administrations.  There were many challenges.  Torrential monsoon rains swept away bypass roads.  One of the trailers carrying a turbine toppled over while turning on a narrow hilly road.

But it was done!  This unprecedented effort cut down on transport time by 50 percent, reduced distance traveled by more than 40 percent, and reduced costs by 40 percent.  On December 1 of last year, Prime Minister Modi inaugurated Phase Two of the project.  Both units of the plant are now operational and India and Bangladesh have formally agreed to trade 100 megawatts of power from the plant.  This effort shows all of us that when you want to make something work and you have a willing partner, you can literally move mountains.

Three Specific Challenges: Inclusive Growth, Governance and Climate
Now, there are no shortages of obstacles to connectivity.  You’ve covered them in detail here – from boundaries, to politics, to difficult geography, security, ecological concerns, financial capacity, and limited institutional capacity to coordinate regional strategies – I could go on, but you all get the idea.  But there are three challenges in particular that I wanted to cover: (1) inclusive economic growth; (2) good governance; and (3) climate change.

First, with regard to inclusive economic growth, I do think it’s important that we not lose sight about one of the central purposes of pan-Asian connectivity and that is ultimately giving people a better way of life, better chances for prosperity, and better chances for security.  In other words, for connectivity to be meaningful and sustainable, ordinary people – all people – have to benefit.  It is one thing to build a road to ship goods from Thailand to India and quite another to build one that takes into account the interests of local businesses and communities along the road’s path.  The second option can lead to local acceptance and improved livelihoods that ultimately will support security and stability.  This should be our goal as we work toward greater regional economic growth and integration.

It’s worth noting that India is emerging as a regional leader in creating policies to encourage inclusive economic growth.  In his recent visit here, President Obama commended Prime Minister Modi’s “Jan Dhan” Financial Inclusion initiative.  Prime Minister Modi noted that “financial untouchability” is a scourge on the poor, and that full participation in today’s economy requires savings and access to loans and insurance.  Financial exclusion in any form prevents us from reaching our full economic potential.  For the farmer, financial inclusion enhances the ability to address cyclical risks.  Inclusive policies can help the farmer address cyclical risks and can help urban migrants start or grow small businesses.  At the institutional level, inclusive policies can directly affect economic growth rates and improve financial stability and institutional integrity.     Last month, U.S. Treasury Secretary Jack Lew and I visited an Aadhaar Unique Identification Enrollment Center in a small local fishing village outside Mumbai.  We got to see what it meant to the men and women there to have access to a modern biometric identification card.  We also spoke with women who used their new Aadhaar cards to open up bank accounts.  There were learning what a difference bank access, accident insurance, and an overdraft facility could make in their lives.

The Government of India and the U.S. Agency for International Development (USAID) are finalizing an agreement to establish a public private partnership with key U.S., Indian, and international organizations to support the Government of India’s efforts to create an inclusive digital economy.  Those of you from Kolkata will surely know the impressive work Bandhan Microfinance has done over the past 14 years to promote financial inclusion based on models pioneered in neighboring Bangladesh.  Bandhan and the Government of India’s efforts to bring financial services to those at the bottom of the pyramid not only increase financial inclusivity, they are also examples of the kind of good governance we’ll need to consider to increase regional connectivity.  This is the second challenge I wanted to speak to you about.

For India, Bangladesh, and other countries in South Asia, domestic political sensitivities, corruption, and bilateral irritants all present roadblocks for better regional connectivity.  Here, India can rely on its tradition of peaceful democratic change and constructive dissent to play a leadership role in the region.  Inclusive, open and transparent political systems, with a strong commitment for the rule of law and civic engagement, will help bolster connectivity.  As we talk about financial inclusion we cannot lose sight of the need for political inclusion and to hear from those who may feel excluded or alienated from the political process.

Similarly, good economic governance, simpler and more transparent trade and economic policies are also key to expanding trade in the region.  This is one of the reasons the U.S. was so supportive of the Trade Facilitation Agreement (TFA) at the WTO.  The TFA can break down trade barriers to create new opportunities for developed and developing countries alike. It is estimated to reduce the cost of trade by 10% for developed countries and up to 14% for developing countries.  It will add significant increases to the global economy by reducing the costs of conducting trade.  Doing so will increase the economic incentives necessary to spur greater regional trade and engagement.

The successful negotiation and future implementation of the TFA can be examples of the good governance the region and globe need to move forward together.  We are pleased to see the Modi government moving forward with implementing provisions of the TFA, like single window clearance.  This initiative alone will benefit all traders as it reduces costs and delays at borders.

Finally, as has been discussed here at the conference, climate change and natural resource concerns will have a profound impact on our regional goals.    According to my friend Michael Werz at the Center for American Progress, South Asia will not only be one of the regions hit hardest by climate change, it will also have to confront significant migration away from drought impacted regions, away from conflict zones and away from the disruptions caused by severe weather.  Higher temperatures, rising sea levels, more intense and frequent cyclonic activity in the Bay of Bengal, coupled with high population density levels will create enormous challenges.  This intersection of climate change, human migration, and governance will present novel challenges for South Asia in the decades to come. India and Bangladesh are already beginning to feel the impacts: flooding in Jammu and Kashmir last year, in Uttarakhand in 2013, and in Assam in 2012 which displaced 1.5 million people.

The economic impacts of climate change will also be profound.  According to a report released by the Asian Development Bank in June 2014, South Asia risks losing an equivalent of 1.8 percent of its annual gross domestic product by 2050 if the world continues its fossil-fuel intensive energy consumption.  India alone is projected to face an annualized loss of 2.2 percent of its GDP by 2050.  And this the costs will only increase the longer we maintain a business-as-usual approach.

The challenge of managing scarce natural resources is one that should be easier for the neighbors in South Asia to overcome.  India and its neighbors have worked successfully to address multiple natural resource challenges.  The Indus Waters Treaty was brokered between India and Pakistan by the World Bank in 1960.  Despite their other disagreements, this treaty has helped India and Pakistan resolve many disputes.  It is considered to be one of the most successful water sharing endeavors in the world today.  Similarly, India and Bangladesh have been sharing the waters of the Ganges for almost 20 years. India also demonstrated its leadership and respect for a rules-based, transparent order through its decision to abide by the UN tribunal’s decision in July 2014 on delimiting the boundary in the Bay of Bengal.   We can build on the lessons learned from these agreements to address other regional concerns over natural resources.  These are some of the challenging issues we must confront as we look to build regional ties.  Addressing them may be vexing but will ultimately bring us closer to our shared goal of a more peaceful, prosperous, and stable world.

The US Role in the Years Ahead
So, where do we go from here… and what can and should the role of the United States be?  We see our role as a convener, partner and supplier.  We are committed to bringing together the countries of the region, the private sector firms, and prominent international financial institutions to identify where US engagement could make the most difference.  Our cutting edge private sector firms are a natural fit to make this vision a reality.  And, I also believe that through the promotion of dialogue, we can help build up trust, confidence and collaboration where it may not exist today.  We also want to see results.  For example, we want to foster inclusive energy cooperation that lights cities and powers economic hubs, we want to see roads and rail links coursing across the regions vast landscapes, delivering goods and people to new markets; we want to see cutting edge airports linking the cities of South Asia to global cities around the world; we want to help remove trade impediments and streamline customs modernization; we want seaports and land ports to utilize advanced digital technology to improve efficiency and global competitiveness.  And, finally, we can play a critical role in connecting people across the region which is at the heart of connectivity.  Already, our programs have brought women entrepreneurs together across South and Central Asia along with the other programs aimed at government officials, business leaders, and civil society.  We can expand these types of linkages and partnerships, which are the anchors for new economic connections and opportunities.

All of you will be critical to future progress in the region in your respective areas of expertise or perhaps in some of the areas I mentioned, like inclusive economic growth, governance and climate change.  We need your ideas, your time and boundless energy.  You’ve already shown your commitment and leadership….we will need some more of it in the months and years ahead.  Thank you again for the invitation to be with you and for all the great work you have achieved.