As you know, this year India and Pakistan celebrate their fiftieth year of independence. I welcome the opportunity to focus on the positive developments in recent times, recognising that South Asia's familiar problems persist. Democracy and democratisation are very relevant in the South Asian context from India, where there is a mature and well-established democratic culture, to Afghanistan, where almost every remnant of democracy has been destroyed.
Over a quarter billion South Asians have come under new or restored democratic governments
in this decade. In the past two years, all of the region's functioning democracies have seen peaceful changes of government. Although institutions remain fragile in many places, they have weathered some serious crises. Democracy continues to be the system of choice in the region to address the challenges of political change and development.
This administration believes strongly the democratic advances can and should occur hand in hand with free market reforms. The two reinforce each other. Significant economic and fiscal reforms have taken place in virtually all of South Asia during the past several years. As governments have changed, commitment to the principle of economic reform has remained firm, and reform is now broadly accepted by most of the major political parties in the region.
We view South Asia as a conglomerate of mature, and
maturing market democracies, bringing to the people of the region new opportunities to improve their lives. At the same time, the ongoing changes have significantly increased opportunities for trade and investment, which helps our own economy while positively influencing political and economic conditions in the region.
The climate for American business in the region is likely to continue improving, particularly for infrastructure ventures such as power generation, telecommunications, roads, and ports. The United States remains the largest foreign investor and trading partner for both India and Pakistan. Within the past few months, American companies, have also begun to make significant investments in Bangladesh,
where newly discovered natural gas reserves hold great promise for the country's future. They are also looking closely at the enormous hydroelectric potential of Nepal.
The democratic and economic advances occurring in South Asia contribute to the growing importance of the region. Yet the nations of South Asia will be best able to support and consolidate their advances in an atmosphere of great security and safety. All of the countries of the region face internal unrest, from civil war in Afghanistan to a recent outbreak of Maoist insurgency in Nepal. Overlaying these internal difficulties are the long-standing tensions between India and Pakistan, which poison the relationship between the two most powerful states in the region, affect their relations with all other states in South Asia, and retard their aspirations for greater influence outside the region.
South Asian countries are assuming more prominent roles on the world stage. India is now a full dialogue partner with ASEAN (the Association of South East Asian Nations) and a member of the ASEAN Regional Forum, Pakistan, Nepal, India, and Bangladesh continue to be major troop contributors to UN peace keeping around the world. Positive ties between China and South Asian states are growing, a significant development given that country's growing importance to the region. China and India have adopted further confidence-building measures along their border and brought their relations to the most cordial level since before the 1962 war. The Chinese president had successful visits to both India and Pakistan last fall.
Within South Asia, we have seen encouraging examples of bilateral amity. India has concluded important water and power agreements with Nepal and Bangladesh. Indian Foreign Minister Gujral had a successful visit to Sri Lanka in January, signing significant trade agreements. His trip was in line with his stated intention to improve relations between India and its neighbours. We hope long-standing discussions between Nepal and Bhutan on the issue of refugees from Bhutan can at least bear fruit. Most importantly, India and Pakistan will soon resume senior-level talks.
India, with nearly one billion citizens, is by far the most populous and heterogeneous democracy in the world. In the fifty years since Independence, it has strengthened and expanded democratic rule on the national, state and local levels. India's institutions continue to evolve. The Indian courts have taken an increasingly activist role in combating corruption in the political system, a strong election commission has reduced abuses at the polling place and the three-year-old Human Rights Commission has carved out an important role in improving accountability for human rights abuses throughout the country.
Serious problems remain, particularly in Kashmir and the North-East where torture and extrajudicial killings of separatist militants have been a major concern. However, there is a welcome trend towards holding security force personnel accountable for human rights abuses.
In India's most recent national parliamentary elections, no party came close to securing a majority, and most parties in the coalition are based in a single state. This suggests a trend toward devolution of power from the center to he states, which could have a profound impact on the future of India's political system. Should the trend continue, as seems likely, the states will increasingly vie with each other for influence at the Centre and for foreign investment and trade.
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