Look­ing Be­yond Con­flict

Is trade be­tween In­dia and Pak­istan a re­al­is­tic pos­si­bil­ity with­out the res­o­lu­tion of out­stand­ing con­tentious is­sues?

Southasia - - Cover story - By Dr. Moo­nis Ah­mar

“I think our re­la­tion­ship with Pak­istan is be­com­ing a lit­tle more sta­ble than it was ear­lier.” In­dian For­eign Min­is­ter, S. M. Kr­ishna “The trust deficit that typ­i­cally ex­isted be­tween the two coun­tries for many years has been re­duced to a large or­der. I can tell you cat­e­gor­i­cally that the cabi­net gave its ap­proval for nor­mal­iza­tion of trade ties with In­dia. We will not back­track on cabi­net de­ci­sion.” Pak­istan For­eign Min­is­ter, Hina Rab­bani Khar

Not only did the For­eign Min­is­ters of In­dia and Pak­istan ex­press op­ti­mism about the nor­mal­iza­tion process on the side­lines of the SAARC sum­mit re­cently held in the Mal­dives but the Prime Min­is­ters of the two coun­tries also spoke of open­ing a new chap­ter in their un­pre­dictable re­la­tion­ship. The 17th SAARC sum­mit held to “build bridges” in South Asia how­ever, re­peated its rhetor­i­cal stance about fur­ther­ing the process of trade lib­er­al­iza­tion and pro­mot­ing peo­ple to peo­ple in­ter­ac­tion.

A sig­nif­i­cant shift is tak­ing place in South Asia in terms of the re­gional environment and the pos­i­tive han- dling of crit­i­cal is­sues. For a long time, the ap­proach that dom­i­nated the par­a­digm of re­gional co­op­er­a­tion in South Asia re­volved around “nui­sance value” of con­tentious is­sues be­tween In­dia and its neigh­bors, par­tic­u­larly that with Pak­istan. Brain child of Bangladesh Pres­i­dent, Zia-urRehman, SAARC was ini­tially faced with se­ri­ous reser­va­tions from var­i­ous sides due to out­stand­ing un­re­solved is­sues, par­tic­u­larly Jammu and Kash­mir that were bound to im­pede any break­through for a mean­ing­ful eco­nomic and po­lit­i­cal co­op­er­a­tion in South Asia. Un­re­solved and con­tentious is­sues in South Asia to­day are not con­sid­ered an ob­sta­cle for trans- form­ing SAARC from a stag­nant to a vi­brant re­gional or­ga­ni­za­tion but the fear re­mains that such is­sues pos­sess the ca­pa­bil­ity to vi­ti­ate gains ac­com­plished in the realm of sig­nif­i­cant eco­nomic co­op­er­a­tion.

Trade and com­mer­cial ties in a re­gion, which for decades re­mained a con­flict zone, seem to have as­sumed a prom­i­nent po­si­tion. Un­like Euro­pean Union, ASEAN and NAFTA, where re­gional trade was able to build bridges of peace, co­op­er­a­tion and sta­bil­ity, in South Asia, in­ter-re­gional trade has re­mained merely 5% of the to­tal trade of the re­gional coun­tries. Un­der the South Asian Pref­er­en­tial Trade Ar­range­ment (SAPTA) and World Trade

Or­ga­ni­za­tion ( WTO), bi­lat­eral and mul­ti­lat­eral trade among the SAARC coun­tries can­not be de­layed.

The is­sue of grant­ing Most Fa­vored Na­tion (MFN) sta­tus is a case in point. For 16 years, Pak­istan has re­fused to grant that sta­tus to In­dia on ac­count of un­re­solved is­sues with its east­ern neigh­bor. It is only re­cently that the fed­eral cabi­net of Pak­istan de­cided to grant MFN sta­tus to In­dia and that too only in prin­ci­ple! How­ever, if the de­ci­sion of grant­ing MFN sta­tus to In­dia is im­ple­mented, can trade be­tween New Delhi and Is­lam­abad bring any qual­i­ta­tive change in ame­lio­rat­ing the po­lit­i­cal and se­cu­rity environment of South Asia? Will bi­lat­eral trade suc­cess­fully build trust and con­fi­dence be­tween the two coun­tries or will the MFN sta­tus re­main fu­tile due to a lin­ger­ing “trust deficit?”

Trade and eco­nomic co­op­er­a­tion in South Asia needs to be ex­am­ined in the light of three ma­jor fac­tors. Firstly, for the suc­cess of trade be­tween two hos­tile coun­tries, it is es­sen­tial that the gains in mu­tual trade out­num­ber the costs. Some Pak­istani traders have ex­pressed reser­va­tions about grant­ing the MFN sta­tus to In­dia by ar­gu­ing that Pak­istan will not be able to pro­tect its own in­dus­tries be­cause bet­ter prices of­fered by New Delhi will dom­i­nate the mar­ket. A mu­tu­ally ben­e­fi­cial sce­nario will be one where Pak­istan will at­tain a con­sid­er­able mar­ket share in In­dia for its com­mod- ities in re­turn for In­dian ac­cess to not only Pak­istani mar­kets but also those in Afghanistan.

Se­condly, for a suc­cess­ful trade regime in South Asia, it is es­sen­tial that bu­reau­cratic nepo­tism and the un­pro­fes­sional way of han­dling things be con­trolled. Un­nec­es­sary trade re­stric­tions through tar­iffs and quo­tas will not ben­e­fit the peo­ple of South Asia. Ef­forts should be made to pro­vide modern in­fra­struc­ture for mean­ing­ful trade in the re­gion.

Thirdly, trade can build bridges be­tween In­dia and Pak­istan, pro­vided mis­trust, para­noia and neg­a­tive rhetoric, which for more than half a cen­tury have jeop­ar­dized peace and sta­bil­ity in South Asia, are sub­stan­tially re­duced. Along with nor­mal trade, a re­lax­ing of visa regimes be­tween the two coun­tries is nec­es­sary so that the walls of sus­pi­cion and hos­til­ity are de­mol­ished. It is im­per­a­tive that New Delhi and Is­lam­abad re­lax un­nec­es­sary travel re­stric­tions and fa­cil­i­tate greater ex­changes of pro­fes­sion­als, stu­dents, teach­ers, traders and those be­long­ing to di­vided fam­i­lies. Deny­ing travel to gen­uine vis­i­tors un­der the pre­text of “national se­cu­rity,” is more of an em­bar­rass­ment than a pre­cau­tion.

Crit­ics in Pak­istan ar­gue that nor­mal trade with In­dia with­out the res­o­lu­tion of con­tentious is­sues, such as Jammu & Kash­mir, would be very risky. Ter­ror­ist or vi­o­lent acts can in­stantly sab­o­tage an al­ready sen­si­tive

... if the de­ci­sion of grant­ing MFN sta­tus to In­dia is im­ple­mented, can trade be­tween New Delhi and Is­lam­abad bring any qual­i­ta­tive change in ame­lio­rat­ing the po­lit­i­cal and se­cu­rity environment of South Asia?

ini­tia­tive but that is a risk that needs to be taken if a bet­ter and pros­per­ous fu­ture is en­vi­sioned. Min­i­mal trade al­ready ex­ists be­tween the In­dian and the Pak­istani con­trolled parts of Jammu & Kash­mir. A cur­rent po­ten­tial of more than 10 bil­lion dol­lars of for­mal trade be­tween In­dia and Pak­istan al­ready ex­ists and can be ex­panded to an­other 5 bil­lion dol­lars by 2015.

Changes will how­ever, not be vis­i­ble overnight. The ac­tual ben­e­fits of nor­mal Indo-pak trade will sur­face in ten years when trade and eco­nomic stakes will not only bring pros­per­ity to the ad­join­ing trad­ing zones of the two coun­tries but will also make it very dif­fi­cult for ‘hawks’ to sus­tain the environment of high pro­file con­flict and hos­til­ity.

Pos­i­tive signs pro­ject­ing op­ti­mism in the strength­en­ing of Indo-pak trade are nu­mer­ous. For in­stance, Pak­istan’s Fed­eral Com­merce Min­is­ter, Amin Fa­heem and the Com­merce Sec­re­tary, Za­far Mehmood re­cently vis­ited In­dia. Such vis­its help in bridg­ing the trust deficit be­tween the two erst­while neigh­bors, par­tic­u­larly in ar­eas of eco­nomic and com­mer­cial co­op­er­a­tion.

Since par­ti­tion, neg­a­tive pre­con­ceived no­tions have pit­ted In­dia and Pak­istan, the cra­dle of some of the world’s old­est civ­i­liza­tions, against each other. The ben­e­fi­cia­ries of con­flict have thrived while the or­di­nary peo­ple of the two coun­tries have suf­fered tremen­dously. Per­haps, this time In­dia and Pak­istan may be able to pur­sue a ground­break­ing ap­proach, hav­ing missed sev­eral op­por­tu­ni­ties for peace in the past. Un­doubt­edly, a bright fu­ture of South Asia de­pends on mean­ing­ful re­gional co­op­er­a­tion and in essence, a vi­brant bi­lat­eral Indo-pak trade. The writer is a Vis­it­ing DAAD Fel­low at the Willy Brandt School of Pub­lic Pol­icy, Univer­sity of Er­furt, Ger­many and Pro­fes­sor, Depart­ment of In­ter­na­tional Re­la­tions, Univer­sity of Karachi.

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