SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION (SAARC)

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1 SOUTH ASIA Asia is the world s largest and most populous continent, of great geostrategic importance to the EU, which is forging closer ties with countries in South Asia as a strong economic player and a major development and aid donor, working to foster institution-building, democracy, good governance and human rights. The EU also has security concerns in the region, such as the Kashmir conflict and Afghanistan. This Fact Sheet describes the South Asia region. See also the Fact Sheets on East Asia (5.6.8) and Southeast Asia (5.6.9). LEGAL BASIS Title V (EU external action) of the Treaty on European Union (TEU); Articles (trade) and (international agreements) of the Treaty on the Functioning of the European Union (TFEU); Partnership and Cooperation Agreements (PCAs) (bilateral relations). SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION (SAARC) The EU encourages regional integration and supports the South Asian Association for Regional Cooperation (SAARC). The member countries of the SAARC are Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. The EU, China, Iran, Japan, South Korea, Mauritius, Myanmar and the US have observer status with the SAARC. The EU is the SAARC s top trading partner, to a total of EUR 112 billion (2016 figures); it accounts for around 15% of the SAARC s overall trade with the world and 22% of its export market (2015 figures). Development cooperation between the EU and the countries of South Asia covers financial and technical aid as well as economic cooperation. Priorities include regional stability, poverty alleviation, human rights, sustainable development, good governance and labour rights. EU-SAARC cooperation seeks to promote the harmonisation of standards and the facilitation of trade and to raise awareness of the benefits of regional cooperation. A. India The EU and India formed a strategic partnership in order to promote trade and economic cooperation. They each have regions that differ vastly in terms of economic strength, language and culture, a very large market, and a geostrategic position that poses security policy concerns. On 6 October 2017, India hosted the 14th EU-India Summit in Delhi. Leaders adopted a joint statement reaffirming their commitment to strengthening the EU-India strategic partnership, and discussed foreign and security policy, migration, trade, climate, research and innovation. India has huge potential for economic growth and as a major international strategic player. Fact Sheets on the European Union

2 The Prime Minister, Narendra Modi, is carrying out political and economic reforms focused on modernising the administration, good governance, fighting corruption with demonetisation and transparency programmes, tackling social problems, developing the economy with the Make in India and Invest India initiatives, and imposing a nationwide goods and services tax. India is a nuclear power, like its neighbours Pakistan and China, and has to face security problems, terrorism and armed border clashes, particularly with Pakistan in the autonomous state of Jammu and Kashmir. India s caste system is one of the world s oldest forms of social class organisation. The country is also an ethnic and linguistic mosaic, with tensions in a number of states and reports of human rights abuses and violations of women s rights. The EU is India s top trading partner, with a 14.0% share of its overall trade in goods. Total trade, including services, exceeded EUR 105 billion in 2016, standing at EUR 289 million per day. The two-way trade in goods between the EU and India is estimated at over EUR 77 billion in 2016, with a hefty surplus of EUR 1.5 billion in India s favour. The EU is also one of India s most important sources of investment, with EUR 63 billion in outward stocks and EUR 15 billion in inward stocks in India currently benefits from unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP). B. Pakistan EU-Pakistan relations date back to the first agreement between the two in 1962, and are now based on the 2004 Cooperation Agreement. The EU is a strong economic partner of Pakistan and a major development and aid donor, fostering democracy and institution-building in the country. Pakistan, a nuclear power, plays a strategic role in South Asia. Its political stability depends on the balance of power between the civilian administration, the military and the judiciary. The Panama Papers revelations in 2016 concerning former Prime Minister Nawaz Sharif and his family weakened the government. Shahid Khaqan Abbasi has been prime minister of Pakistan since August He is continuing the economic reform and privatisation programmes, as well as improving the rule of law and good governance in Pakistan. The poor security situation is a source of instability, and the army is still involved in the country s politics, particularly with regard to security, defence and foreign policy, with a broad counterterrorism mandate. Pakistan s international relations are conditioned by fear of war with India over Kashmir, by US military interference and by instability in Afghanistan. The EU is concerned about the restoration of the death penalty, the blasphemy law, the situation of ethnic and religious minorities and the establishment of special military courts to try civilians accused of acts of terrorism. Pakistan is a major beneficiary of the EU s unilateral trade preferences, under the GSP+ component of the GSP scheme. The EU is one of Pakistan s top trading partners, with trade worth a total of EUR 11.6 billion in 2016 and the EU taking over 33% of Pakistan s total exports. Pakistan enjoys a hefty EUR 1 billion trade surplus with the EU. The EU is a significant donor of development assistance and humanitarian aid to Pakistan. Funding under the Development Cooperation Instrument for amounts to EUR 653 million and is focused on rural development, education, and good governance, human rights and the rule of law. C. Afghanistan Afghanistan completed its first democratic transition in September 2014, when Ashraf Ghani was sworn in as president. The outcome of the presidential elections caused a serious Fact Sheets on the European Union

3 institutional crisis and the president s political rival, Abdullah Abdullah, was appointed government CEO. Lengthy negotiations delayed the formation of a full cabinet. The International Security Assistance Force (ISAF) withdrew in December 2014, but some US and NATO troops remain (Resolute Support mission) with a training and advisory role. The Taliban and, more recently, the so-called Islamic State (IS) group pose serious security challenges. Afghanistan is in danger of becoming a failed state. Greater regional cooperation would be an important driver of national and regional stability. In September 2017, the US deployed additional troops and asked NATO to match this deployment. The EU, with strong support from the European Parliament, seeks an Afghan-led, Afghan-owned and Afghancontrolled peace process. After the fall of the Taliban regime in 2001, the EU opened a delegation in Kabul. On 26 June 2017, the VP/HR appointed a Special Envoy who took office on 1 September The current partnership is guided by the Joint Political Declaration of 2005, the 2014 EU Strategy for Afghanistan, the Council conclusions of July 2016 and the joint communication of the High Representative and the Commission of 24 July 2017 on Elements for an EU Strategy on Afghanistan, adopted by the Council conclusions of 16 October The Afghanistan-EU Human Rights Dialogue underlines the Afghan Government s continued commitment to improving the human rights situation. Afghanistan is the largest recipient of EU development funding in Asia. The EU currently allocates EUR 1.4 billion to Afghanistan for the period, focusing on agriculture, rural development, health, the rule of law, policing, democratisation and accountability. Some 20% of the funds are reserved for incentive payments tied to reforms. The EU-Afghanistan Cooperation Agreement for Partnership and Development (CAPD) was signed on 18 February The Brussels Ministerial Conference on Afghanistan hosted by the EU on 5 October 2016 was a success. It gathered together 75 countries and 26 international organisations which endorsed the Afghan Government s reform agenda and pledged EUR 13.6 billion. The EU and its Member States committed EUR 5 million. Parliament has expressed serious concern at the growing insurgency and at the Taliban s actions against minorities such as the Shia Hazaras. Afghan nationals made up the secondlargest contingent of refugees arriving in the EU during the big wave of 2015 and In October 2016, the EU and Afghanistan signed a document entitled Joint Way Forward on migration issues. The EU is also providing support for the large numbers of returnees going back since 2016 to Afghanistan from Pakistan and Iran. The EU mission supporting the building of an Afghan civilian police (EUPOL), which was set up in 2007, was closed at the end of The EU is Afghanistan s 13th largest trading partner. Afghanistan benefits from the Everything But Arms (EBA) trading arrangement with the EU. D. Bangladesh EU-Bangladesh relations date back to The 2001 Cooperation Agreement covers trade, economic development, human rights, good governance and the environment. The EU has committed up to EUR 690 million under the Multiannual Indicative Programme. The EU is broadly supportive of the Bangladesh Government s reform agenda, and emphasises the need for it to deliver on its promises and ensure compliance with its human rights obligations. The EU is also the biggest trading partner of Bangladesh. Bangladesh is a parliamentary democracy where power alternates between two parties, the Awami League (AL) and the Bangladesh Nationalist Party (BNP). The AL won the last legislative election in 2014, and Sheikh Hasina became prime minister. Following violent Fact Sheets on the European Union

4 clashes in 2015 between the two parties, the political situation remains fragile, with security instability and rising religious extremism. The BNP organises periodic strikes, with strong support among students and workers. There are currently reports of increasing human rights abuses and an escalation of political and sectarian violence. Thanks to a dynamic private sector and a low-cost workforce, Bangladesh s economic growth is currently around 7% and it is among the few countries to have achieved the Millennium Development Goals. Working conditions and labour rights in the textile industry have improved since the Bangladesh Sustainability Compact, launched in July However, labour unrest continues to be a serious issue in Bangladesh, especially in industrial garment factory areas around Dhaka. As a Least Developed Country (LDC), Bangladesh benefits from the EBA arrangement, the most favourable trading regime available under the EU s GSP. Since August 2017, at least Rohingya refugees have fled persecution in Myanmar to Bangladesh. Most of them do not have access to nutrition or basic infrastructure. The situation can only be resolved if Bangladesh and Myanmar implement their repatriation plan of 23 November E. Sri Lanka EU-Sri Lanka relations date back to the 1975 Cooperation Agreement, upgraded in 1995 by a third-generation Cooperation Agreement on Partnership and Development. The EU granted Sri Lanka the benefits of GSP+ in May 2017 as an incentive for political reforms and compliance with international conventions on human rights, labour rights, environmental protection and good governance. The EU has provided Sri Lanka with EUR 760 million in development assistance over the past decade. Sri Lanka suffered a civil war from 1983 to 2009 between the Sinhalese-dominated government and the Liberation Tigers of Tamil Eelam (LTTE). Encouraged by the army s victory, the then President, Mahinda Rajapaksa, called early presidential elections in January 2015 but was defeated by Maithripala Sirisena of the Sri Lanka Freedom Party (SLFP). President Sirisena appointed as his Prime Minister Ranil Wickremesinghe, of the United National Party (UNP). After parliamentary elections in August 2015, the UNP formed a unity government with the SLFP, based on an agenda of good governance, national reconciliation and re-engagement with the international community. The change of government has led to strong economic growth and enhanced cooperation with the EU. The upcoming political challenge is to consolidate political stability and to strengthen democratic institutions with a new constitution, to be adopted in Sri Lanka has made further progress with the reform of its fisheries governance system, and in April 2016 complied with its international obligations by introducing a legal framework for fighting illegal, unreported and unregulated (IUU) fishing. F. The Maldives EU-Maldives relations date back to 1983, when the head of the Commission Delegation in Colombo was accredited as non-resident ambassador. Although there is still no formal cooperation agreement, the EU is providing cooperation support for rural communities, tourism and climate change mitigation. After a period of political turmoil in 2015, the current President, Abdulla Yameen Abdul Gayoom, and his family are now firmly in control of all organs of state power, as well as of the ruling party, the Progressive Party of Maldives (founded by the former dictator Maumoon Abdul Gayoom, who is also the president s half-brother). Since then, the human rights situation has progressively deteriorated, with increasing repression of the opposition. In Fact Sheets on the European Union

5 July and August 2017, President Yameen ordered the army to shut down the parliament, thus avoiding impeachment. The Maldives is known as a luxury vacation destination. Extremely vulnerable to climate change, this fragile archipelago is exposed to rising sea levels and coastal erosion, which pose a serious threat to the viability of the country. The other reality is high youth unemployment, gang violence and drug addiction, with increasing social unrest. The Maldives graduated in 2011 from the UN s Least Developed Country (LDC) category and attained upper middle income status in The economy is based mostly on tourism and fisheries. Jorge Soutullo / Anna Saarela / Fernando Garcés de los Fayos 01/2018 Fact Sheets on the European Union