July 30, 2008 (AFP) – South Asian leaders meeting in Sri Lanka this weekend will discuss improving commercial ties but political and other tensions have dampened hopes a regional free trade pact will be implemented any time soon, economists say. “It took the European Union 50 years to get the euro out. We’re still just 23 years old.
We’ll try to get there (to lower trade barriers and forge a currency union) much faster,” Foreign Minister Rohitha Bogallagama told reporters this week.
The eight-member South Asian Association for Regional Cooperation or SAARC first mooted a free trade pact in 1995, but it remains largely limited to paper and member states have begun cutting bilateral deals instead.
SAARC, whose leaders meet in Colombo for a two-day summit starting on Saturday, has made little headway toward regional economic integration since it was formed in 1985, analysts say.
“Politics have hijacked SAARC’s economic agenda,” HSBC economist Arjunna Mahendran told AFP.
Analysts say the group has been held hostage to hostility between India and Pakistan — its two largest members — which have fought three wars since independence from Britain, two over the disputed Himalayan region of Kashmir.
Tensions now are rising a