A bleed­ing econ­omy pushes Pak­istan’s gen­er­als to see the virtues of trad­ing with arch ri­val In­dia. KU­NAL MA­JUMDER re­ports


As the econ­omy bleeds, is the Pak­istan Army warm­ing up to the idea of trade with In­dia?

DAYS AF­TER the sec­ond checkpost at the Wa­gah-at­tari bor­der was in­au­gu­rated on 14 April by Home Min­is­ter P Chi­dambaram and Pak­istan’s Trade Min­is­ter Makhdoom Amin Fahim, the Pak­istan Army hosted a din­ner for a group of In­dian jour­nal­ists (in­clud­ing this re­porter) at the Pearl Con­ti­nen­tal Ho­tel in Rawalpindi. A se­nior mil­i­tary of­fi­cer de­scribed the dif­fi­cul­ties faced by the army on the western front in con­trol­ling the Tal­iban in­sur­gency. In great de­tail, he spoke about the hu­man and mon­e­tary toll on the mil­i­tary. Ac­cord­ing to the fi­nance min­istry, the war on ter­ror has cost Pak­istan $67.93 bil­lion since 2001.

As the evening pro­ceeded, the is­sue of trade came up. Was the army on board with the civil­ian gov­ern­ment when it came to pro­mot­ing trade with In­dia? The an­swer was quick, but also sig­nalled an un­will­ing­ness to dis­cuss the sub­ject fur­ther. “The army is com­pletely on board,” he said.

Why was the army sud­denly in­ter­ested in trade with a coun­try tra­di­tion­ally per­ceived as a threat? Re­luc­tantly, the of­fi­cer an­swered, “The econ­omy needs to be brought up. If busi­ness coun­cils feel trade with In­dia will help, we have no prob­lem with it.” And then, al­most as an af­ter-

thought, he added, “It (an im­proved econ­omy) will also af­fect the mil­i­tary’s bud­get. Larger the cake, larger the share.”

What the of­fi­cer ad­mit­ted per­haps of­fered a glimpse of Pak­istan Army’s think­ing vis-à-vis the thaw with In­dia. Just days be­fore, when TEHELKA asked For­eign Min­is­ter Hina Rab­bani Khar if the army was on the same page as the civil­ian gov­ern­ment on the is­sue of trade with In­dia, she didn’t seem happy. “This is old-style ques­tion­ing,” she com­plained, “If the Pak­istan Cab­i­net ap­proves some­thing, the Min­istry of De­fence is part of the decision.”

While the civil­ian gov­ern­ment is try­ing hard to con­vey to the world that open­ing up trade with In­dia was en­tirely its decision, me­dia cir­cles in Islamabad are abuzz with sto­ries of how se­nior in­dus­tri­al­ists, hit by the eco­nomic slow­down, ap­proached Army GHQ with a des­per­ate plea to open up trade with In­dia. The army gave in, some say re­luc­tantly and some feel wil­fully, de­pend­ing on who you ask.

The speed at which the civil­ian gov­ern­ment worked on im­prov­ing trade ties with In­dia has been un­prece­dented. From nar­row­ing down the pro­hib­ited im­port list to of­fer­ing In­dia Most Favoured Na­tion sta­tus (de­spite op­po­si­tion from the Is­lamist fringe), from work­ing on non­tar­iff bar­ri­ers to open­ing up the visa regime — the trade talks have seen ma­jor leaps in the past few months. This wouldn’t have been pos­si­ble with­out the army’s sup­port, ar­gues a se­nior In­dian diplo­mat in Islamabad.

Aye­sha Sid­diqa, Pak­istan’s lead­ing civil­ian-mil­i­tary re­la­tions spe­cial­ist and au­thor of Mil­i­tary Inc, a book on the mil­i­tary’s busi­ness em­pire, has a dif­fer­ent opin­ion. “The army is not en­tirely thrilled by this bon­homie,” she ar­gues. “It’s in a wait-and­watch mode.” She sug­gests the de­vel­op­ment has to be looked at in the con­text of the grow­ing fric­tion be­tween Pak­istan and its big­gest fi­nan­cial and mil­i­tary bene­fac­tor: the United States. The two coun­tries are not see­ing eye-to-eye on Afghanistan.

Shushant Sa­reen, con­sul­tant, Pak­istan Project, at the In­sti­tute for De­fence Stud­ies and Analy­ses, New Delhi, too, feels the Pak­istan Army’s co­op­er­a­tion with the West

‘An im­proved econ­omy will boost the army’s bud­get. Larger the cake, larger the share,’ says a Pak­istan army of­fi­cer

and the US is more or less reach­ing a limit. “Their tra­di­tional de­pen­dence on the western mar­ket for pro­vid­ing suc­cour to their econ­omy is not go­ing to hap­pen any­more,” he says. Sa­reen points out a num­ber of state­ments from Pak­istani of­fi­cials that show a shift­ing fo­cus to­wards re­gional mar­kets such as China, Iran, Cen­tral Asia and now In­dia. “They are in a bit of a strate­gic shift so that they re­duce their de- pen­dence on the western na­tions and tie their econ­omy more closely to the re­gion.”

IT IS not just the busi­ness com­mu­nity that is putting pres­sure on the army. Lib­eral trade re­la­tions with In­dia have wide­spread sup­port in the public, says an In­dian diplo­mat closely work­ing on the is­sue. The Pak­istan econ­omy is in a bad shape due to a small tax base, di­min­ish­ing FDI and huge public debt. But the av­er­age Pak­istani does not see In­dia through this prism. “The an­swer is more psy­cho­log­i­cal,” says the In­dian diplo­mat. “On an av­er­age, Islamabad has eight hours of load-shed­ding a day. Lahore gets only 12 hours of electricity ev­ery day. The com­mon man is suf­fer­ing and when Prime Min­is­ter Man­mo­han Singh says In­dia can pro­vide 500 MW of electricity, it helps to change some minds.”

While these might seem as pres­sure points on the Pak­istan Army to de­velop trade ties with In­dia, the Mil­i­tary Inc has plenty to gain through the var­i­ous busi­ness in­ter­ests un­der its con­trol. In in­dus­tries such as ce­ment, sugar, con­struc­tion, power and gas, the mil­i­tary has a di­rect pres­ence.

For­mer Karachi Cham­ber of Com­merce and In­dus­tries chair­man Ma­jid Aziz says ce­ment and power could be ar­eas where the mil­i­tary could di­rectly ben­e­fit. “Hon­estly, there is no lim­i­ta­tion. Who knows, to­mor­row the Pak­istan Navy might want to im­port Nano cars from In­dia,” he says. In the power sec­tor, Aziz be­lieves that there is a huge po­ten­tial if RBI al­lows Pak­istani in­vest­ment. “Like yesteryear Bollywood ac­tor Mah­mood said, Baap bada na bhaiya, sabse bada ru­paiya (It’s money that makes the world go round),” he adds.

Sid­diqa, in­ven­tor of the term ‘mil-bus’ or mil­i­tary busi­ness, re­calls a sugar scan­dal in 1997, dur­ing Nawaz Sharif ’s ten­ure as prime min­is­ter. Sub­sidised sugar was ex­ported to In­dia thereby re­sult­ing in huge prof­its for some com­pa­nies, which in­cluded ones con­trolled by the Pak­istan Army.

How­ever, there are also pock­ets of strong scep­ti­cism in the strate­gic com­mu­nity in Islamabad and Rawalpindi. To un­der­stand this bet­ter, one needs to visit the In­sti­tute of Strate­gic Stud­ies in Islamabad. Sim­bul Khan, di­rec­tor for Afghanistan and Cen­tral Asia, in­sists that trade can’t be ab­so­lutely in­de­pen­dent of other pend­ing is­sues be­tween the two coun­tries. “How do you pre­pare the peo­ple for trade when other chal­lenges ex­ist?” she asks. Her col­league Na­jam Rafique, di­rec­tor for the Amer­i­cas, says while In­dia’s of­fer for electricity is wel­come, “Un­til more doors are opened, trade might not be sus­tain­able.”

Both Khan and Rafique down­play the ben­e­fits of trade with In­dia. “Trade with In­dia is not the only so­lu­tion to Pak­istan’s eco­nomic ills,” says Khan.

But Sid­diqa be­lieves oth­er­wise. “If money is to be made, they will make it,” she says. “But that doesn’t change the per­ceived threat for the Pak­istan Army.”

In­dia fer­vently hopes that it does.


Biz push Pak­istan’s mil­i­tary-in­dus­trial com­plex stands to gain from trade with In­dia

• Cross­ing over A Pak­istani truck at the At­tari-wa­gah joint check post

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