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Border flare-up: economic implications

The ongoing India-Pakistan border skirmishes are neither going t? be the first nor the last in the ongoing Indo-Pakistan tangle. Eventually they shall fizzle out but these mini crises perpetuate mutual distrust and prevent the Confidence Building Measures (CBMs) gains achieved, if any, over the years. The near-normal ambience attained in South Asia is again vitiated by the heating up of borders. These negative developments add grist to mills of hardliners in military, business, bureaucracy, clergy and media on both sides whose vested interest lies in keeping the political disputes festering and alive.

There are apprehensions that India-Pak rapprochement is likely to further slowdown, if not altogether halt; the modest movement towards increased trade and economic relations with India may reversal. Although Islamabad reached a Transit Trade Agreement (TTA) with Afghanistan in 2010 it is blocked to grant access to that country and thus to Central Asia via land route.

As compared to former prime minister Manmohan Singh, the trade prospects do not seem bright. Especially the textile industry has suffered since the new government of Narendra Modi assumed office. In 2013, trade between India and Pakistan grew by 20 percent to nearly $2.5 billion. Presently, the trade taking place mostly via Dubai, has reached over $4 billion level but the potential exists for $6 billion – if conditions are conducive. Experts believe that should the trade level reach $10-15 billion it would be powerful enough to outweigh geo-strategic concerns and nudge both countries towards serious co-operation.

Nawaz Sharif government is partly to blame for stalling important decisions and this has been compounded too by the hawkish policies of otherwise pro-business Modi government. Most Favoured Nation (MFN) status and other major trade issues will face tough negotiations if and when they are resumed. The Iran-Pakistan-India (IPI) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline deals after signing remain in the doldrums due to US pressure, especially the former. Any further hardening of official Pakistani perspective on greater trade access to India could be against Obama Administration’s policy that seeks to link India with Central Asia via the “New Silk Road.”

It is hoped India and Pakistan will “agree to disagree” on major issues as China and Japan are doing on trade, investment and business – minus issues of borders and territories. But this analogy is, maybe over-stretched as both India and Pakistan are nuclear-armed powers, with trade and investments at very meager levels, and their public opinion hostage to powerful lobbies.

India nourishes overweening ambitions to graduate into higher councils of world powers from the present regional power ranking. Its ambition is to match China in East Asia. The Modi leadership buoyed by international success has whipped up nationalist sentiments for state elections in occupied Jammu and Kashmir (J&K). Already, the BJP has swept the polls in Maharashtra and Haryana state elections, which were erstwhile Congress strongholds.

The prevailing deep sense of alienation amongst post-1990 generation in Indian-held Kashmir cannot be appeased with administrative measures of mere abrogation of Article 370 and granting J&K autonomous status. Besides, should India’s relations with immediate neighbours such as Pakistan remain troubled, this will affect its own socioeconomic rise as envisaged in the BJP election manifesto.

Needless to say, both India and Pakistan are plagued with scourges of over-population, poverty, disease, militancy and terrorism, poor education, environmental hazards, nuclear weapons, disaster management, and regional non-connectivity.

Pakistan, on its part, has to share the blame, too, to a great extent for poor governance, a lack of state writ, support of favoured militant groups and pursuing flawed ‘strategic depth’ policies in Afghanistan. After all, the Nawaz government has not been delivering well even after coming into power for the third time in Pakistan. The recent sit-ins have politically enfeebled him and some even predict his government may not complete its full term.

In times of crises, dire scenarios in Pakistan are floated. Given Indian commitment to business and investment, the present border scenario should be equally worrying for India too. The 2nd November Wagah border post attack by terrorist outfits causing more than 55 dead and injuring many is most likely in response to the ongoing military operations in North Waziristan and meant to stop Indo-Pak trade and raise the level of hostilities between the two countries.

Hopefully, this would not affect trade as it is an internal issue of terrorism, and trade with India is a separate matter and will continue after some disruption. Pakistan has to put its house in order first and foremost before normal relations with neighbours such as India, Afghanistan and Iran are ensured. It is hoped that the “terrible twins” of Partition [India and Pakistan] soon mature politically and their leaderships realise that as responsible nuclear powers it is important not only to defuse tensions but also to vigorously strive for durable regional peace and development. This is imperative for the welfare of the people or else South Asia will continue to languish in poverty, violence and even may in advertently slide into major conflict.

Can political will, some catastrophic event or epiphany shake the two out of their complacency and torpor? Up-till now wars, recurring crises, daunting problems have not induced any sober realisation. Interestingly, Nobel Peace Prizes for Peace (2014) have been jointly conferred on Malala Yusufzai, a young Pakistani educational activist and M. Kailash Satyarthi, a senior committed Indian children rights’ worker. Perhaps this should motivate and inspire their youth and bring moral pressure on their leaders in re-setting national priorities. Needless to say that India and Pakistan desperately deserve peace and development for their teeming millions together with an early escape from the vicious cycle of distrust and animosity.

(The writer is Adviser, International Relations Programme COMSTAS Institute of Informational Technology, Islamabad. The views expressed in this article are not necessarily those of the newspaper)

Dr. Maqsudul Hasan Nuri, "Border flare-up: economic implications," Business recorder. 2014-12-30.
Keywords: Political science , Political issues , Political relations , Economic issues , Pak-India relations , Border situation , Economic inflation , Gas pipeline , India-Pak rapprochement , CBMs