May 10, 2012

TSG IntelBrief: India-Pakistan Relations: A Shrinking Trust Deficit in the Asian Subcontinent?

      As of early May 2012, the relationship between India and Pakistan remains as complex as ever. For the more than six decades since the moments of their births as independent countries, India and Pakistan have faced off in a bitter rivalry. Fighting over disputed territory has cost many thousands of lives, and both poverty-stricken nations devote billions of dollars to military spending, monies that might otherwise be used to uplift their societies. Yet recent developments have some observers seeing rays of sunlight and new strategic compulsions that may realize a more normal engagement.


The Good News is Real

Pakistani President Asif Zardari's April travel to India, though brief and informal, was the first such visit by a Pakistani head of state since 2005. His lunch meeting with Indian Prime Minister Manmohan Singh saw "fruitful" discussions and mutual intent to improve relations, especially in the realm of bilateral trade. The meeting came only days after a landslide in the Siachen Glacier region of Kashmir killed 139 Pakistani soldiers, a tragedy that brought new attention to the cost of continued India-Pakistan conflict. Pakistan's top general has since called for demilitarization in Siachen.

The most encouraging recent news came in late 2011, when Islamabad agreed in principle to grant India Most-Favored Nation trade status by the end of 2012. Lower tariffs and fewer visa restrictions could boost the value of bilateral trade as much as tenfold from the paltry $2.5 billion seen in 2010. Islamabad's shift, coming 15 years after New Delhi's similar offer, may have been a direct response to New Delhi's earlier withdrawal of its opposition to a European Union duty waiver initiative for Pakistan's textile industry. More importantly, it suggests that Pakistan's long-held insistence on progress with the "core issue" of Kashmir as a prerequisite for movement in other areas may be receding.

Differences over Kashmiri sovereignty are far from resolved, but the Indian-held, Muslim-majority valley has been mostly quiet since mid-2010, as peaceful as it's been since the launch of a Pakistan-supported separatist rebellion there in 1989. The Pakistani military, headquartered in Rawalpindi, still dictates foreign and national security policies despite the 2008 seating of a civilian government in Islamabad. Yet that military is consumed with battling homegrown militancy, especially that affecting its western border region near Afghanistan. It has lost much domestic standing after being badly embarrassed by the U.S. commando raid that took out Osama bin Laden. In fact, Pakistan's deteriorated relationship with the United States, along with signs that longtime ally China is not willing to fulfill Islamabad's resulting needs, add to Pakistani motives to make nice with India.

Then there are the "dogs that aren't barking" of late. In addition to little separatist violence in Indian-held Kashmir, it's been more than three years since a terrorist attack in India was traced back to Pakistan. This is no small gap given that such terrorism was occurring multiple times each year for most of the early 2000s. Two years after the horrific November 2008 strike on Mumbai by Pakistani terrorists, New Delhi recognized that its suspension of the "composite dialogue" peace process and coercive diplomacy was not realizing gains, and diplomatic engagements were resumed. Add to this an absence of the previously common rhetorical clashes between national leaders, and objective observers have reasons for cautious optimism.


The Commerce Angle

The argument that increased economic interactions mitigate conflict is a flawed but oftentimes persuasive one. By nearly all accounts, both India and Pakistan are losers in the current circumstances of severe restrictions on bilateral trade. Removal of these could bring significant economic benefits, as well as build the "peace constituencies" in both countries. Today, trade in services is negligible, and the goods that are exchanged typically route through Dubai, vastly increasing their costs to the end consumer. Direct, normalized trade relations would obviously bring costs down and ? although Pakistanis have concerns that Indian imports could overwhelm their textile and pharmaceutical sectors ? analyses foresee a win-win for both countries. A potential free trade agreement (well down the road, to be sure) could explode annual levels from their current $2.5 billion to $50 billion or beyond.

As a start, Pakistan is shifting from a "positive list" of some 2,000 allowable Indian imports to a "negative list" of only those goods that India cannot export to Pakistan. A meeting of commerce ministers in February resulted in modest, but useful plans to establish new border trading posts and issue more business-related visas. Freer flowing trade through Pakistan also provides India with potential land access to Afghanistan and Central Asia. India, the far stronger and wealthier power, should consider making unilateral concessions to Pakistan in the long-term interests of both parties.


Siachen as Deadly, But Representative Folly

The 50-mile-long, 20,000-foot-high Siachen Glacier wasn't an issue for the authors of 1971's Simla Agreement establishing a Line of Control in disputed Kashmir. The region was deemed too harsh and inaccessible to be referenced, but India's 1984 military occupation of the Saltoro Ridge high ground sparked Pakistani counter-deployment. Since then, the two countries have lost some 8,000 soldiers to the ""cause"" ? only a fraction of these due to combat ? and each spends about $400,000 per day to keep infantry brigades there. By nearly all accounts, the glacier has no meaningful military value ? one pundit quips it is a "struggle of two bald men over a comb" ? meaning unilateral Indian redeployment offers a low-risk means for New Delhi to gauge Islamabad's long-term intentions. Siachen, along with the maritime dispute over an area known as Sir Creek, are "low-hanging fruit" to move forward with a peace process. Yet, despite the April avalanche that brought the standoff's senselessness into high relief, both governments declare having no intention to withdraw their forces.


Formidable Obstacles Remain

Mutual intransigence over Siachen reflects the hardened positions of leaders in both capitals, positions shaped by decades of violent conflict and deep mistrust. So long as Islamist militancy continues to brew inside Pakistan and threaten India, New Delhi's willingness to make concessions will be seriously constrained. Washington's April announcement of a US$ 10 million reward for information leading to the conviction of Pakistani citizen Hafiz Saeed, leader of the terrorist group that undertook the 2008 Mumbai attack, was welcomed by India and demonstrates that Islamist extremism in Pakistan remains an international concern.  

Even aside from the terrorism issue, both civilian governments are weak and lack the political capital needed to push through any major peace initiative. But the ultimate elephant in the room is Pakistan's military, which has a long history of using militants to forward their aims vis-à-vis India. The attitudes of those in Rawalpindi thus remain key. Pakistan's generals must have acceded to the tentative steps Islamabad is taking toward normalized economic relations with their longtime rivals, but it is unclear whether this gesture arises as a tactical move to gain breathing space for a still-truculent institution, or demonstrates a new era of nonconfrontational engagement in the Asian Subcontinent.

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