India for ‘pro-people, pro-trade’ plan to reforge Pak connection

India for ‘pro-people, pro-trade’ plan to reforge Pak connection
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First Published: Tue, Apr 22 2008. 11 47 PM IST

Roadblock? While trade movement across the Wagah-Attari border has considerably gone up, the ceremonial goose-stepping by Pakistani and Indian soldiers twice a day means that truck traffic has to take
Roadblock? While trade movement across the Wagah-Attari border has considerably gone up, the ceremonial goose-stepping by Pakistani and Indian soldiers twice a day means that truck traffic has to take
Updated: Tue, Apr 22 2008. 11 47 PM IST
New Delhi: Since 1931, the graves of three martyrs—Bhagat Singh, Sukhdev and Rajguru—located in a tiny village called Hussainiwala on India’s border with Pakistan, have been witness to several significant events.
In 1947, the British left after partitioning India into two countries. In 1971, after a major battle between India and Pakistan was fought in this sector, the age-old trade route across undivided Punjab was shut down.
Roadblock? While trade movement across the Wagah-Attari border has considerably gone up, the ceremonial goose-stepping by Pakistani and Indian soldiers twice a day means that truck traffic has to take a back seat.
As India’s external affairs minister Pranab Mukherjee prepares to travel to Islamabad on 21 May, for his and India’s first interaction with the newly installed government in Pakistan, there is talk of reopening a second trade route in Punjab, at Hussainiwala on the Indian side and at Gandasinghwala, just across the border in Pakistan.
Officials from the ministries of external affairs and commerce are tight-lipped about reopening the old trade route, but word has leaked out and Zora Singh Mann, the Akali Dal member of Parliament from Ferozepur, in which Hussainiwala village falls, has already petitioned Prime Minister Manmohan Singh about this matter, asking that the route be opened up quickly.
People of this Malwa region, Mann said, want the trade route to be reopened because it will “benefit people from both sides”. In undivided India, the Hussainiwala route was the lifeline for dry fruits, vegetables and fruits that travelled from the hills of Afghanistan to the plains of Punjab. Bilateral trade between India and Pakistan is expected to touch $2.5 billion (about Rs10,000 crore) this year; informal trade, via Dubai, is an additional $1 billion.
The government’s strategy these days, says Jairam Ramesh, minister of state for commerce and power, is to “use economics to promote political relationships. We must bury the ghosts of the past”.
And so, petroleum minister Murli Deora is travelling to Pakistan, ostensibly to hold talks on the feasibility of the Turkmenistan-Afghanistan-Pakistan-India (Tapi) pipeline, but also significantly, to take another serious look at the 2,600km-long Iran-Pakistan-India (IPI) gas pipeline.
A decision on the gas pipeline has been hanging fire at least since the Kargil conflict between India and Pakistan in May 1999, with New Delhi citing security concerns against investing large sums of money in the project. Some Indian government officials have argued against the pipeline, saying that it will pass through “a dangerous stretch in Balochistan, where the Pakistan government has little control over rebels”.
But Deora’s visit to Pakistan, only days before the day-long visit by Iranian President Mahmoud Ahmadinejad to New Delhi on 29 April, is fuelling speculation that a possible economic solution to the political deadlock can be found.
AFP quoted a senior oil ministry official, who didn’t want to be identified, as saying that Deora will hold talks with his counterpart in Islamabad on Wednesday and discuss transit and transportation fees that Pakistan wants to levy for allowing the pipeline through its territory.
While “transit fees will cover the security of the pipeline, transportation tariff is the normal fee charged for the passage of fuel”, the official said.
Islamabad is seeking around 50 cents per million British thermal units as transit fee, while New Delhi has offered 15 cents, he added.
Meanwhile, at the highest levels of government, another proposal is currently being considered: Whether or not to remove Pakistan from the list of countries banned from investing in India.
Pakistan is the last South Asian country to figure on India’s negative foreign direct investment (FDI) list because of security considerations; Bangladesh’s name was removed only a couple of months ago.
Government officials hope that it will be easier to do business with an elected government in Pakistan. It has helped that the Karachi Stock Exchange’s 100 Index is up 8% this year (especially when compared with the Bombay Stock Exchange’s Sensex, which has fallen by 23% in the same time).
According to The Wall Street Journal (WSJ), however, big tests lie ahead. “Pakistan is facing a large budget shortfall and a current account deficit equivalent to 5.3% of its GDP. Skyrocketing oil costs threaten to lead to energy shortages. And climbing food prices could raise inflation to as high as 9%, the central bank said recently. In February, inflation was 8.4% on an annual basis,” WSJ said in an April report.
Asking if political stability would encourage the new government in Islamabad to restart privatization moves that were stopped last year, WSJ pointed out that in 2006-07, “Pakistan received $5.2 billion in FDI and $1.8 billion in portfolio investment. In the last eight months, FDI is only two-thirds of what it was the year before.”
“We’re not ready yet to put in a lot more,” Slim Feriani of Progressive Asset Management, a London-based emerging markets fund that has invested $3.2 million in Pakistan, told WSJ. “We just want to let the dust settle a bit.”
Indian officials are also keenly aware that they will have to make a few key moves in Pakistan, especially if the PM is to make his long-awaited trip back to his village Gah in Jhang district of Pakistan.
Gah’s street lights have already been fixed, courtesy the New Delhi-based The Energy and Resources Institute.
On the anvil is a proposal to open a new route across the Line of Control, possibly in the Uri-Chakothi sector to promote trade. Pakistani cement, as much as 2.5 million tonnes of it, has already come into India since the ban was lifted a year ago at the New Delhi Saarc (South Asian Association for Regional Cooperation) summit.
With 17 Pakistani manufacturers already sanctioned to export cement to India, government officials, who do not wish to be identified, say that Pakistani exports, which were a lowly $323 million in 2006-07 (compared with $1,348 million from India), are likely to at least double in value this year.
Meanwhile, with the intelligence agencies admitting that the cumbersome procedures required to travel on the Srinagar-Muzaffarabad route, billed as a huge confidence-building measure when it was launched in April 2005, is having a “hugely negative impact on the Kashmir valley”, the government may soon be moving to simplify those procedures.
New Delhi is also enormously heartened by the fact that Asif Zardari, Benazir Bhutto’s widower and the power behind the throne in the country, recently told CNN-IBN that the Kashmir dispute could be put into cold storage, to be resolved another day when bilateral ties were stronger.
Zardari’s interview was followed up by comments by Pakistan’s foreign minister Shah Mehmood Qureshi, who told the Dawn News that despite Kashmir, there are “areas like trade…where we need to move on to our mutual benefit and advantage”.
“Let’s call a spade a spade,” said Qureshi to the paper. “If enhanced trade can be used as an important confidence-building (measure) to create a more enabling environment for our movement from conflict management to conflict resolution, we should not shy away from that.”
In Islamabad, Mukherjee will use the opportunity to meet leaders across the Pakistani political spectrum: Prime Minster Yusuf Raza Gilani of the Pakistan Peoples Party (PPP), Nawaz Sharif of the Pakistan Muslim League (Nawaz), PPP’s Zardari, as well as President Pervez Musharraf.
Government officials familiar with the trip, but who do not wish to be identified, say that the meeting with Musharraf will be significant, especially since the President remained in control of the powerful National Security Council and maintained his close links with the army.
“While India is happy to deal with an elected government in Pakistan, the fact remains that the PPP-PML(N) coalition has not been able to wish away Musharraf,’’ one of these officials added.
Pakistani analysts say that one reason for Musharraf’s survival in power is due to the contradictions between the PPP and the PML(N) coalition, which Musharraf had used to his advantage.
“Another reason is the overweening influence of the Americans in Pakistan. They want Musharraf to remain and fight their war against terror, despite the fact that the government wants to create conditions to initiate talks with the Taliban in the frontier areas,’’ one of these analysts, none of whom wished to be identified, added over the phone from Islamabad.
Mukherjee’s visit to Islamabad will be preceded by a day-long meeting between the foreign secretaries of India and Pakistan, Shiv Shanker Menon and Riaz Mohammed Khan, respectively.
Both sides will go over their decade-long exchange known as the “composite dialogue”, on subjects such as Kashmir, terrorism, Siachen, trade and commerce, people-to-people ties, and the problem of sharing common river waters.
After years of discussing and debating the Kashmir dispute, which has been the backbone of the tense, bilateral relationship, New Delhi is hoping that a “pro-people and pro-trade” strategy will forge enough connections between the two sides, thereby “enabling Pakistan to put Kashmir on the back burner”.
For example, India has already proposed increasing the number of goods trains across the border from one to five per day. While truck movement across the Wagah-Attari border has considerably gone up, the ceremonial goose-stepping by Pakistani and Indian soldiers twice a day means that truck traffic has to take a back seat.
To circumvent this problem 70ha has already been purchased at Attari village, to create an integrated checkpoint. “This second gate will not be burdened by the ceremonial function,” one government official, who did not wish to be identified, said.
Part 3: Bangladesh
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First Published: Tue, Apr 22 2008. 11 47 PM IST