Building Momentum Through Goodwill Gestures

A land swap between Bangladesh and India paves the way for progress on more challenging disputes.

By on / Dealing with Difficult People

Sometimes disputes are left to fester for years, even decades, until parties decide there is something to be gained from reaching agreement. The nations of Bangladesh and India recently seized on an opportunity to push the “restart” button on their bumpy relationship by resolving one such ongoing dispute.

Living in no man’s land

Until recently, on each side of the twisting 4,000-kilometer border between India and Bangladesh, small plots of land belonging to each nation were completely surrounded by the other nation’s territory. The origins of these so-called enclaves—111 Bangladeshi, 51 Indian—were obscure. Some said they represented drops of ink spilled by a drunken British officer as he drew the India-Pakistan border during the 1947 partition. More likely, the dots of land, which added up to just 15 square miles, were bargaining chips in a 1711 peace treaty in the region, according to the Economist.

Isolated from their home countries, the enclaves were neglected in the decades after India gained independence from British colonial rule. With neither India nor Bangladesh allowing the other to administer its enclaves, residents were trapped without hospitals, schools, courts, or travel privileges in the nation that surrounded them.

In the 1970s, the Indian and newly formed Bangladeshi governments decided to tackle the problem. The two nations agreed to swap their territories, such that each would acquire the enclaves within its borders. India said it would forgo compensation for an approximate net loss of about 10,000 acres. Those living in the enclaves could decide whether to move to their homeland to remain its citizens or stay put and become nationals of their new country, according to Reuters. However, the agreement proved unpopular and remained unratified for decades.

Dusting off an old deal

That changed this year, when the prime ministers of both countries apparently recognized that resolving the matter would benefit not only the enclaves’ residents but also them personally. Indian prime minister Narendra Modi sought to deflect attention from domestic setbacks with the land-swap agreement, which he hyperbolically compared to the fall of the Berlin Wall. And Bangladeshi prime minister Sheikh Hasina, who has been widely criticized for authorizing violent crackdowns against her political opposition, saw an opportunity to demonstrate her legitimacy on the world stage through an agreement with the world’s largest democracy, according to the Observer.

During a brief June visit to Bangladesh’s capital, Dhaka, Modi oversaw the signing of about 20 agreements with India’s neighbor, including the land-swap deal. Simultaneously, Indian conglomerates signed draft contracts to invest about $5 billion in improving Bangladesh’s aging power sector.

Those who had been stranded in the enclaves, many for their entire lives, expressed relief that their fate had been finally settled. Most decided to stay put and accept a change in citizenship. They are eagerly awaiting the arrival of infrastructure and administration. “We didn’t have hospitals, schools, electricity—nothing,” Madhusudan Mohanto, a resident of an enclave in Bangladesh, told the Wall Street Journal. “Now we hope we’ll get our rights back.”

Indian officials said the enclave agreement signaled that their nation was equipped to tackle more difficult border disputes with China and Pakistan. The deal also allowed India, long perceived by Bangladeshi leaders and citizens as overbearing on territorial and migration issues, to build trust and goodwill as it prepares to wrap up a more difficult dispute with Bangladesh about rights to the waters of the Teesta River, which flows through both countries.

Revisiting difficult negotiations

Business negotiators can absorb the following lessons from the India-Bangladesh agreement:
Never say never. Periodically revisit mothballed negotiations and ongoing disputes to examine whether changed circumstances have improved the odds of resolution.
Build goodwill. If large problems loom on the horizon, consider starting with a relatively straightforward negotiation to gain confidence and trust.
Engage leaders. To gain needed advocates, demonstrate to powerful leaders what’s in it for them.

NEGOTIATION UPDATE: Deal design flaws: A program for struggling homeowners falls flat
In the wake of the 2008 housing crisis, the U.S. government’s Home Affordable Modification Program (HAMP) emerged as a potential life raft for up to four million borrowers who had been pulled “underwater” by their adjustable-rate mortgage loans. Negotiated among the Treasury Department, the Federal Housing Administration, mortgage lenders and services, investors, and other government agencies and parties as part of the Troubled Asset Relief Program (TARP), HAMP established guidelines for lenders to consider when deciding whether to grant loan modifications to reduce the costs of mortgages to struggling borrowers.

HAMP has fallen fall short of its initial goals, according to a report issued this July by TARP’s special inspector general, Christy L. Romero, the New York Times reports. Six years after the Obama administration unveiled HAMP, only about 887,000 borrowers have received loan modifications, far short of the four million target. Banks participating in the program have rejected about 72% of applications—approximately four million.

The banks say borrowers are to blame for failing to complete paperwork or for missing payments under their new deal terms, but Romero disputes that view. She told the Times that the banks are treating homeowners unfairly and “not following the rules.” Romero and legal aid lawyers representing borrowers paint a picture of stonewalling by the banks, including evaluation processes that are riddled with errors.

HAMP’s failure to live up to its initial promise is rooted in the favorable terms negotiated by lenders and interested parties from the government during the height of the financial crisis. The deal had two “design flaws,” writes Gretchen Morgenson in the Times:

1) the program is voluntary for the banks, and 2) they were empowered to run the process as they see fit. Moreover, federal oversight of the program appears to be weak.

In most business deals, implementation poses significant challenges. When negotiating your next complex deal or dispute, think about the potential long-term pitfalls an agreement could face. Be sure to negotiate safeguards to ensure that each side will follow through on its promises rather than simply choosing to comply voluntarily. If your counterpart tries to evade responsibility for upholding its end of the bargain, it may be time to look for a new partner.

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