Trading with Pak -- When hope is a policy

Mar 29, 2012, 12:55 IST | Vikram Sood

The current discourse is that India should encourage trade with Pakistan as this would lead to better relations and eventual normalisation of relations between the two countries

This reasoning is not borne by empirical facts. Trade creates profits, wealth, inequalities, vested interests and heartburn but does not solve political disputes.
There is no denying that Japan-China (US $ 300 billion) and China-US (US $ 800 billion) relations in trade are booming but political rivalry bordering on animosity and hostility is well known. Pak-China trade relations are pathetic (US $ 8 billion) yet the political-military relations are higher that the skies and deeper than the oceans.
Our trade with China is burgeoning but has it solved or even looks remotely possible that this will solve the border problem? On the other hand, trade imbalances such as ours with China and the content of the trade have inbuilt characteristics of a future conflict. Wars have been fought globally over trade and resources for centuries and continue till today. Europeans had to go through two bloody wars after years of colonial battles to seek economic advantages over each other

Disillusionment: The current mantra is that trade between India and Pakistan is the magic key that will transform India-Pakistan relations and lead to eternal peace

The mood and the rhetoric on the Pakistani street gives little scope for comfort with little evidence that the Pakistani ruling establishment has undergone a permanent change of heart. The strident anti-India and anti-Hindu attitude by organisations like the Difa-e-Pakistan is testimony to the fact that the military-jihadi complex is strong and that this is the line the rulers wish to follow. This is their first option and also the fall back position, depending upon the circumstances.

In India we continue to delude ourselves. The current mantra is that trade between India and Pakistan is the magic key that will transform India-Pakistan relations and lead to eternal peace. Once again hope has become policy. Arguments are now being discovered to buttress this hope.

The only difference today is that Pakistan, is in the middle of an economic slump. It faces an acute power and energy shortage, a low growth rate and rising deficit, high inflation and low investment, would want to temporarily shed the Kashmir-first slogan and get over its economic plight before reverting to form.

We are now rationalising why it is not necessary for India to insist on a reciprocal MFN (sabse pasandida mulk) from Pakistan because that country has compulsions. As long as they move to reduce the negative list India can live with it, is the argument. Issues like transit trade can also wait. Further to attract Pakistani business and encourage it to perform better India should be able to sell power and petroleum products to Pakistan.

The economic argument is that it is more viable (read profitable) in some situations to sell electricity to Pakistan rather than to a state within India. The offer to sell gas that we import through our terminals in Gujarat and give to Lahore via Bhatinda despite our own shortages, is misplaced generosity. It is therefore extremely illogical and we should instead be building our strategic reserves for the difficult times ahead following reduction of imports from Iran. We pretend that the wheat we sent to Afghanistan via Karachi did not originate in India and Pakistan pretends it has given transit to Afghanistan and not India.

There are other issues of implementation that would have to be resolved. What would happen to the visa regime - security related issues relating to destinations, frequency, ports of entry and exit, mode of travel are some of them. Pakistan has traditionally sought parity with India on almost every issue; the most recent being the Indo-US nuclear deal. Pakistani leaders forget that in international relations only sovereignty is generally, though not always, equal; military strength and economic power are not. Pakistan has used the jihadi and nuclear options as force equalisers. This attitude has not changed nor will it. Pakistan will not be able to accept that trade between India and Pakistan will be weighted heavily in India’s favour.

That being so, it will not be long before the Army, the main ‘stakeholder’ in the India policy -changes its mind and resorts to jihadi economics. It may be beneficial to trade, it is also desirable to be realistic.

The writer is a former chief of Research and Analysis Wing (RAW)

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