This is yet another case of deja vu. Amid all the hype that accompanies such occasions, the foreign ministers of Pakistan and India meet and conclude that such meetings may continue. Yes, the two countries have agreed to ease visa regimes and improve air and marine links and made some catchy statements. Yet, there is no progress on any of the contentious issues.
There is much discord between the two South Asian nuclear powers: Kashmir and Siachen, Sir Creek and the Wullar Barrage, cross-border militancy and external interference. Their relations have been characterised by mistrust, which is both a cause and an effect of the persistence of these problems. The bilateral relationship is remarkably deficient in utility and strongly embedded in sentiments and has been exploited by the elements on either side, in the name of national interest and religion, who fear to be the losers in case of détente. The logical outcome of such a situation is that each country prefers maintaining the equilibrium to taking any bold step.
If the problems are left unresolved, something nasty crops up, antagonism escalates and the so-called confidence-building measures come to naught. This is what happened in November 2008 when, in the wake of the Mumbai killings, the Pakistan-India composite dialogue came to a halt.
The only notable exception to this approach is Pakistan’s decision to normalise trade with India. This is arguably the most momentous decision taken by the present government in Pakistan. The positive list for import from India has been replaced with a negative list, which will be phased out by the end of the current year, culminating in grant of most favoured nation status to India. The MFN status will be in accordance with the rules of the World Trade Organisation, of which both countries are founding members. As part of the trade normalisation process, India has allowed foreign direct investment from Pakistan.
Pakistan’s strategic argument for restricted trade with India had been political. Normalisation of trade with India was made contingent upon settlement of the “core” problem of Kashmir. The argument was partly “ideological” and partly pragmatic. On its ideological side, the argument embodied the Pakistani government’s commitment to the Kashmir cause even at the expense of any economic benefits which the normalisation of trade with India promised. On its pragmatic side, the argument gave a clear message to India that it must settle the Kashmir issue if it wants to enjoy the fruits of full trading relations with its western neighbour.
New Delhi’s counter argument was that political problems, including Kashmir, should not bear upon commercial relations. A related argument was that restoration of normal economic relations between the two countries would create common stakes, which in turn would contribute to addressing the political issues.
The Kashmir problem is still on the table. However, the Pakistani government has delinked trade with India from that. This is a major departure from Islamabad’s traditional stance. Of course, this doesn’t mean that the Kashmir issue has been put on the backburner.
What it means, however, is that economic and political issues with India, which have their separate dynamics, will be dealt with in their own right and that the bilateral relations will no longer be made hostage to a single problem. China and India have a territorial dispute on which they have also gone to war but at the same time they have bilateral trade of more than $60 billion. Beijing is an economic superpower in the making, while New Delhi has the ambition of becoming one. Both nations realise that letting political issues bottleneck greater bilateral economic cooperation will be to the detriment of each.
Thus the normalisation of trade with India signifies the application of a fresh approach on the part of the Pakistani government to a perennial problem-how to live with a country much bigger and traditionally deemed an antagonist. This also means that Islamabad has finally subscribed to New Delhi’s argument for the delinking of political and economic issues.
While the strategic shift in the Pakistani government’s stance is a welcome move, one cannot be oblivious of at least two potential problems that it entails: One, economic integration may drive up, rather than drive down, political tensions in the event that its fruits are not evenly distributed. To put it differently, while economic integration may increase the size of the cake, if one country takes away a disproportionately large slice, the other may feel marginalised.
Trade is a double-edged sword. If trade can create jobs, it can also eliminate jobs. If trade can spur industrialisation, it can also cause deindustrialisation. Since India is enormous, politically more stable and technologically more advanced, it is likely, at least in the short run, to derive greater benefits from opening up of trade with Pakistan. Already, New Delhi enjoys a trade surplus of $1.7 billion with Pakistan out of the total bilateral trade of $2 billion.
Two, notwithstanding the most earnest efforts, it is well nigh impossible to completely segregate matters political and economic in our part of the world. Thus, lack of progress on addressing political issues is likely to undermine the attempts to upgrade economic relations, especially when one country is far better placed than the other to secure most of the gains from an opening up of markets. This makes it crucial that the two countries make real headway towards a settlement of political issues. Talking for the sake of talks, though it does make national and international headlines, is fruitless and may even prove counter-productive.
The writer is a freelance contributor based in Islamabad. Email: firstname.lastname@example.org