The Economic Route to India-Pakistan Rapprochement

Ayush­man Jamw­al

Pak­istan has reached a major mile­stone in its his­to­ry, hav­ing suc­cess­ful­ly held elec­tions after a demo­c­ra­t­i­cal­ly elect­ed gov­ern­ment com­plet­ed a full term. Nawaz Sharif stormed ahead of the oth­er par­ties in the polls gath­er­ing over 100 seats at the very onset of the elec­tions. The Pak­istan People’s Par­ty (PPP) faced the brunt of crip­pling anti-incum­ben­cy while their lead­ers didn’t even put up a fight dur­ing the polls. Democ­ra­cy in Pak­istan has been reg­u­lar­ly thwart­ed by mil­i­tary gen­er­als on the pre­text of pro­tect­ing nation­al inter­ests by remov­ing ‘cor­rupt’ politi­cians. Yet, unlike the Turk­ish mil­i­tary, Pakistan’s mil­i­tary has nev­er had a demo­c­ra­t­ic out­look in its rela­tion­ship to the civil­ian lead­er­ship. It has always sought to pro­vide mil­i­tary states­man, and nev­er nur­tured demo­c­ra­t­ic insti­tu­tions or allowed smooth tran­si­tions. It is there­fore hard to pre­dict the way Pakistan’s civ­il-mil­i­tary rela­tion­ship will go. In the cur­rent polit­i­cal cli­mate it is imper­a­tive for Sharif to swift­ly act on his elec­tion promis­es to keep any anti-gov­ern­ment sen­ti­ment at bay, which the mil­i­tary may cap­i­talise on. As the nation suf­fers from a mas­sive deficit, crum­bling infra­struc­ture, and an inter­nal secu­ri­ty cri­sis, it’s a mam­moth task for the new Prime Min­is­ter.

A major key to improv­ing Pakistan’s econ­o­my is bet­ter rela­tions with India, which would also open more finan­cial avenues for Indi­an com­pa­nies. Most impor­tant­ly, strong eco­nom­ic rela­tions will help reduce the decades-long secu­ri­ty ten­sions between the two coun­tries and ful­fil a des­tiny of strong region­al part­ner­ship. The pre­vi­ous gov­ern­ment of Pak­istan and the Indi­an gov­ern­ment pushed a lot of mea­sures to boost eco­nom­ic rela­tions, as both agreed to estab­lish a rela­tion­ship sim­i­lar to Sino-Indi­an diplo­ma­cy, mak­ing bor­der dis­putes sec­ond pri­or­i­ty to the eco­nom­ic advan­tages of bilat­er­al trade.

Accord­ing to the Fed­er­a­tion of Indi­an Cham­bers of Com­merce and Indus­try (FICCI), India-Pak­istan trade stood at $3 bil­lion in 2012, but has the poten­tial to rise up to $10 bil­lion in the next four years. Trade cur­rent­ly involves a trick­le of trucks car­ry­ing per­ish­able goods, sports goods, processed food prod­ucts, machin­ery and sta­ple cot­ton amongst oth­ers across the Line of Con­trol. It also includes expen­sive and time con­sum­ing tran­sit trade via Mid­dle East­ern cap­i­tals like Dubai and Tehran.

In Sep­tem­ber 2011, Pakistan’s Com­merce Min­is­ter, Makhdoom Amin Fahim met his Indi­an coun­ter­part, Anand Shar­ma to kick start talks to nor­mal­ize trade. Fahim became Pakistan’s first Com­merce Min­is­ter to vis­it India in 35 years and the Trade min­istries of both nations made a joint state­ment to lay out a time­line for remov­ing all non-tar­iff bar­ri­ers. Pak­istan took a his­toric step grant­i­ng ‘Most Favoured Nation’ (MFN) sta­tus to India in 2011 and announced its plans to cut its Neg­a­tive Goods trade list to open up its domes­tic mar­kets to Indi­an busi­ness­es. In Decem­ber 2011, India and Pakistan’s Trade min­istries end­ed 6 rounds of talks, chart­ing a plan to imple­ment the Pref­er­en­tial Trad­ing Agree­ment. The talks includ­ed nego­ti­a­tions to open trad­ing points along the Indo-Pak bor­der, eas­ing For­eign Direct invest­ment rules, allow­ing cross-bor­der bank­ing ser­vices, and imple­ment­ing a lib­er­al visa regime. How­ev­er, in Feb­ru­ary 2012 the Pak­istani gov­ern­ment deferred its deci­sion to prune its Neg­a­tive List after promi­nent politi­cians raised con­cerns of Indi­an goods flood­ing Pakistan’s mar­kets and ham­per­ing its domes­tic indus­tries. Nonethe­less, both gov­ern­ments stayed the course. The same month, Anand Shar­ma became India’s first Com­merce Min­is­ter to vis­it Pak­istan in 64 years and achieved a com­mit­ment from Pakistan’s Trade Min­istry to boost trade to $6 bil­lion in the next three years, and start­ed talks on open­ing bor­der trad­ing points at the Attari-Wagah bor­der and Mona Bao in Rajasthan. Last year, an Inte­grat­ed Check Post was inau­gu­rat­ed at the Attari-Wagah bor­der to boost the vol­ume of cross-bor­der trade. The ICP allows 10 times the cur­rent 200 trucks which cross the bor­der check­point dai­ly. In March 2012, Pakistan’s Petro­le­um and Nat­ur­al Resources Sec­re­tary, Muham­mad Ejaz Chaudhry held talks with his Indi­an coun­ter­part, G.C Chaturve­di dur­ing the 7th Asian Gas Part­ner­ship Sum­mit in New Del­hi. Both agreed to speed up the com­ple­tion of the Turk­menistan-Afghanistan-Pak­istan-India (TAPI) gas pipeline project and facil­i­tate a quid pro quo trade of Indi­an oil and Pak­istani cement and chem­i­cals. Even post the Pak­istan polls; Sharif com­mu­ni­cat­ed his com­mit­ment to stronger ties with India, while Arvind Mehta, the joint sec­re­tary in the Com­merce Min­istry told the Eco­nom­ic Times on Wednes­day that the Indi­an gov­ern­ment had already com­mu­ni­cat­ed to the incom­ing regime to take the Indo-Pak free trade agree­ment for­ward.

From nego­ti­a­tions, infor­mal meets, pho­to-ops and trade fairs, last year has been full of good signs for Indo-Pak trade rela­tions. Nawaz Sharif will do a great ser­vice to Pak­istan and India if he con­tin­ues to strength­en bilat­er­al ties with a sus­tained will and vision of nur­tur­ing a strong and his­toric part­ner­ship. Eco­nom­ic coop­er­a­tion can set the foun­da­tion for the active cross-bor­der move­ment of intan­gi­ble indus­tries like edu­ca­tion, the­ater, music, film and art. Imag­ine Pak­istani movies air­ing in our mul­ti­plex­es and Pak­istani fash­ion brands becom­ing the toast of fash­ion events across the coun­try. Imag­ine Pak­istani and Indi­an teach­ers active­ly cross­ing the bor­der to teach in schools, uni­ver­si­ties and aid in the fight against illit­er­a­cy. In west­ern uni­ver­si­ties, Indi­an and Pak­istani stu­dents active­ly min­gle with each oth­er as they share a com­mon lan­guage, pop­u­lar cul­ture, polit­i­cal frus­tra­tions, and gain a rare insight into a ‘for­eign’ cul­ture just across the bor­der. Why should such sol­i­dar­i­ty only be enjoyed thou­sands of miles away? Imag­ine Indi­an and Pak­istani stu­dents active­ly cross­ing the bor­der to study in uni­ver­si­ties and oth­er insti­tu­tions for cul­tur­al expo­sure and bond­ing oppor­tu­ni­ties, denied and untapped for so many decades. The strength­en­ing of such coop­er­a­tion can bring two extreme­ly sim­i­lar yet estranged soci­eties clos­er togeth­er for the pros­per­i­ty and wel­fare of future gen­er­a­tions. This is the des­tiny of both nations and I hope both gov­ern­ments will be for­tu­nate enough to have such a vision.