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 206-207 (trade) and 216-219 (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. Ties were strengthened at the last EU-India summit, in March 2016, with progress on trade and investment, sustainable development, migration, climate change, energy and water.

India has huge potential for economic growth and as a major international strategic player. 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, as are 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. India 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 13.5% share of its overall trade in goods. Total trade, including services, exceeded EUR 100 billion in 2015, standing at EUR 275 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 51 billion in outward stocks and EUR 16 billion in inward stocks in 2015. 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. Equally important are Prime Minister Nawaz Sharif’s efforts to improve the rule of law and good governance and his economic reform and privatisation programmes. The ‘Panama Papers’ revelations in 2016 concerning the Sharif family weakened the government.

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 counter-terrorism 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 20% 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 2014-2020 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 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 13 000 US and NATO troops remain. 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 3 000 additional troops and asked NATO to match this deployment. The EU, with strong support from the European Parliament, seeks an Afghan-led and Afghan-owned peace process.

After the fall of the Taliban regime in 2001, the EU opened a delegation in Kabul. The EU Ambassador is also the EU Special Representative. The current partnership is guided by the Joint Political Declaration of 2005, the 2014 EU Strategy for Afghanistan, the Council conclusions of 18 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’. The Afghanistan-EU Human Rights Dialogues underline the Afghan Government’s continued commitment to improving the human rights situation. Afghanistan is the largest recipient of EU development funding. The current EU budget allocates EUR 1.4 billion to Afghanistan for the 2014-2020 period, with a focus 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 2017.

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.

The EP 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 second-largest contingent of refugees arriving in the EU during the ‘big wave’ of 2015 and 2016. In October 2016, the EU and Afghanistan signed a document entitled ‘Joint Way Forward on migration issues between Afghanistan and the EU’. 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 2016.

The EU is Afghanistan’s fourth largest trading partner, after Pakistan, India and the US. Afghanistan benefits from the Everything But Arms (EBA) trading arrangement with the EU.

d.Bangladesh

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 main areas in which the EU helps Bangladesh are economic development, human rights, good governance and the environment. Under its Multiannual Indicative Programme for Bangladesh 2014-2020, the EU has committed new aid of up to EUR 690 million. The EU is also the biggest trading partner of Bangladesh.

The current Prime Minister, Sheikh Hasina, was elected for a third term in 2014, after the victory of the ruling Awami League. The main opposition party, the Bangladesh Nationalist Party, boycotted the general election. Meanwhile, opposition discontent has risen in line with the government’s efforts to stifle it. Bangladesh has returned to the confrontational and unstable politics that have traditionally plagued the country, in the form of corruption and political violence, social unrest due to rising prices and labour protests.

There are currently reports of increasing human rights abuses and an escalation of political and sectarian violence. Rohingya Muslims continue to flee to Bangladesh from persecution in Myanmar, especially since August 2017, with around 380 000 having arrived. Most are deemed illegal migrants in Bangladesh and are refused access to basic amenities.

Following major accidents, there have been some improvements in labour rights and working conditions in the textile industry, with the EU’s support.

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 2018.

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 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 2013. The economy is based mostly on tourism and fisheries.

Jorge Soutullo / Anna Saarela / Fernando Garcés de los Fayos

09/2017