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December 7, 2018

Politics of trade


December 7, 2018

Pakistan’s poor relations with most of its South Asian neighbours is no secret. Ties with India are virtually non-existent thanks to the policies of Indian Prime Minister Narendra Modi. Pakistan has also almost always had a tense relationship with Afghanistan that has only become worse as both countries accuse the other of supporting militancy in each other’s country. Amidst these political realities, the World Bank has come out with a report on trade in South Asia that estimates that Pakistan’s trade with other countries in the region could be increased to a potential $67 billion a year from its current total of $23 billion while trade with India could go up to as much as $37 billion as opposed to the present amount of $2 billion. In an ideal world, Pakistan would indeed establish greater ties with its neighbouring countries but the fact is that the world we live in is far from ideal. The report mentions reducing or eliminating tariffs and ending sensitive lists of items that make trade difficult and costly but has little to say about how to change the political facts on the ground that have made trade so difficult.

With Afghanistan, for example, trade is constrained by the demand of the Afghan government that Pakistan allow Indian goods to transit through its territory. At a time when the Indian government is so hostile towards us, this is a practical impossibility. In the case of India, increasing trade is difficult when the Indian government links everything to Pakistan’s supposed backing of terrorism.

The World Bank report does talk of reducing the trust deficit and points to the example of the Kartarpur Corridor as one way of doing that. What it omits is India’s response to the opening of the corridor and how it still refused to attend the upcoming Saarc summit in Islamabad or that its army chief has recently said that peace is impossible until Pakistan becomes a secular state. The freezing of ties with India adds to our difficulty of trading with other countries in the region like Sri Lanka since we cannot use Indian land as a transit point. Trade will always come second to politics, something the World Bank hasn’t acknowledged sufficiently. The answer lies not in divorcing the two but being ready to talk peace so that all countries in the region realise their futures are interlocked.

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