On the eve of a highly forgettable third anniversary of the second tenure of the Congress-led United Progressive Alliance (UPA), it is almost impossible to spot a silver lining in the cloud of despair. Yet, there is one, and it lies outside the borders of India; ironically, it is its delinquent neighbour, Pakistan.
Yes, I am sure the popular response will be: what a preposterous thought. Pakistan? You’ve got to be kidding.
No, it’s indeed Pakistan. This is not to say that our troubled neighbour has been transformed; not yet, it is still very much a work in progress.
But the fact is that it has, albeit slowly, allowed economic linkages with India to be initiated at an unprecedented frequency. The signing of the $7.6 billion gas pipeline deal later this month will be the latest such instance. Called the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, it will transport 90 million standard cu. m per day (mscmd) of gas of which India and Pakistan will get 38 mscmd each and Afghanistan the remaining 14 mscmd. Given the countries through which the pipeline will pass, it’s no wonder that it has been referred to as the peace pipeline.
This is not an isolated instance.
Earlier, India took an in-principle decision to allow foreign direct investment from Pakistan; the two countries also opened an integrated check-post—the second at the Wagah border—to allow easier trade ties. Pakistan, after dithering for God knows how many years, took a big step towards normalizing trade relations by shifting to a negative trading list in preparation for according India the status of most favoured nation. And, finally, Pakistan has put in a request to import petroleum and power from India.
This is not to say that India and Pakistan are about to bury their hostilities. That would be naive; similar to the argument of some policy wonks in South Block that it is time to bury the hatchet on Siachen—giving up such a strategic toehold in a region where the Chinese are uninvited guests would require much, much more than deeper economic access.
But what it does show is that India and Pakistan are willing to make progress on issues on which there is some commonality of views even while they keep their differences alive. This is far better than absolutely no progress. Economic opening up is politically far more acceptable and can be effected below the national radar, particularly in Pakistan. What it will do is formalize what is already happening unofficially between the two countries; it will save on costs and, consequently, boost the volume of trade—at present, the volume of trade between the two countries is a little less than $3 billion annually.
No one will officially admit it, but part of the exports to the United Arab Emirates—India’s largest trading partner—and Singapore are routed to Pakistan. This is because the present trade regime in place in Pakistan would not allow imports of these products from India. Not surprisingly, the UAE and Singapore are among India’s top five export destinations. Together, these two countries accounted for a little under one-fifth of the total exports in April-October of fiscal 2012.
The next stage is to encourage people-to-people contacts. And for this, there is nothing like reviving cricket contacts. Already, cricketers such as Wasim Akram (the retired pace legend and my all-time favourite in cricket) are employed with Indian cricket clubs. Once the cricket ties are resumed, I am sure people from Pakistan will want to cross the border to watch the games as much as we would like to (I look forward to travelling to Lahore to savour first-hand the mutton cooked by my friend Maria’s mother; the tinned samplings she used to send across are no substitute for the original).
It may be worthwhile to insert some context so as to correct any misapprehensions that may have gained ground. No one is making a romantic case here; the military, which still influences the polity of Pakistan, could still launch a fresh covert or overt offensive. The point is very simple: a deeper relationship mitigates the chances of conflict.
And it is a fact that relations between the two countries have turned the corner, which is allowing, for now, deeper economic linkages. No matter what the motivation—popular impression is that it is being provoked by the squeeze being applied by the Americans—it is significant. Once these linkages acquire momentum, it’s very difficult for some rabble-rousing elements to reverse them easily.
From India’s point of view, it is critical. An untamed or imploding Pakistan is not good news. As a near $2 trillion economy (eight times the size of Pakistan’s) with an aspirational population of over one billion, the stakes are far higher on this side of the border. The country’s potential cannot be held hostage to hostilities from across the border.
So, to come back to where we began—the silver lining is indeed the deepening relationship with Pakistan. And this may have happened thanks more to the fact that it has eluded the focus of the political bigwigs from either side of the border. Alternatively, it could have deteriorated into a case of “full of sound and fury signifying nothing”.
Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at firstname.lastname@example.org
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