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Business News/ News / World/  Time to reset Indo-Pak ties: Shahid Javed Burki

Time to reset Indo-Pak ties: Shahid Javed Burki

The economist and former finance minister of Pakistan on why there has never been a better time in history for ties to move on than now

Shahid Javed Burki says India and Pakistan should work together to develop the South Asia and Central Asia corridor for building electric grids, oil and gas pipelines and more roads for boosting commerce.Premium
Shahid Javed Burki says India and Pakistan should work together to develop the South Asia and Central Asia corridor for building electric grids, oil and gas pipelines and more roads for boosting commerce.

Singapore: It is time for a total re-set for Pakistan-India relations and finally (to) put the past behind" says Shahid Javed Burki, an eminent global economist and a former finance minister of Pakistan, who has spent a significant part of his life in Washington, in the senior most echelons of the World Bank. “There has never been a better time in our shared history than now to move forward, with (Narendra) Modi and (Nawaz) Sharif, at the helm."

There was a brief window earlier, he concedes, during the time of Prime Minister Manmohan Singh and President Pervez Musharraf, when both tried through back-channel diplomacy to soften the borders and boost trade. Indeed, Burki recalls that Singh met him on a visit to Delhi with great enthusiasm, and asked him to deliver a key message to General Musharraf.

“Tell him that I am an accidental Prime Minister and he is an accidental President. So, let’s use this rare opportunity to do some good for our nations," recalls Burki, who is presently a senior visiting fellow at the Institute of South Asian Studies at the National University of Singapore.

Although Musharraf reciprocated the sentiment, Burki says, it was not meant to be then, due to circumstances that spiralled beyond their control, but he believes that history can be made again with the new leadership.

“The Modi Pakistan moment today is parallel to the Nixon China moment when a tremendous, unexpected shift happened in the diplomatic relations between the two nations, which finally paved the way for economics to trump over decades of dirty politics," says Burki.

When asked if Modi will realistically be able to overcome long held issues of mistrust in Pakistan to forge lasting peace, Burki sounds an optimistic note.

“While (senior Bharatiya Janata Party leader L.K.) Advani, himself once ruefully told me that he was largely misunderstood in Pakistan despite his roots there, I believe that Modi will be able to overcome this barrier of mistrust, if he plays the trade and economics card right," he says.

Burki—who was born in Simla, before his family moved to Rawalpindi in 1947—notes that for so long, Pakistan’s relations with India, “its sibling", were based only on two considerations: Pakistan’s claim over Kashmir, and its perception that there were powerful elements within the Indian establishment who, even almost seven decades after partition, were not reconciled to the division of the Indian subcontinent.

Further, the “idea of Pakistan and India", were founded on two very different definitions of nationhood that produced endless conflicts, says Burki.

“For India, its future depends on its ability to accommodate dozens of different religious, linguistic and social groups within one nation," notes Burki. “Pakistan, on the other hand, was created to provide a homeland for the Muslims of British India. India was to be an inclusive state; Pakistan an exclusive one. It was inevitable that these two concepts of nationhood would clash and they often did."

Burki comes from one of the most distinguished families in Pakistan, which has produced many stars in military and sports. His first cousin, Javed Burki, was the captain of the Pakistani team; Imran Khan is also a part of his extended family. His father-in-law, Majid Khan, led the Indian Olympic team in Berlin and then held the national record for pole vault. His uncle, General Wajid Ali Khan Burki, was one of the three generals who orchestrated Ayub Khan’s coup.

He studied in some of the most elite institutions in Pakistan before he got selected as a Rhodes Scholar to study Economics at Oxford. In the late 1960s, Burki moved to Harvard to study Public Policy as a Mason Fellow. While at Harvard he wrote his first book, A study of the Chinese Communes, and was widely lauded as an insightful peek into China.

In the mid 1970s, Burki joined the World Bank as a senior economist. Here, he had the opportunity to work closely with his Indian peers Arun Shourie and Montek Singh Ahluwalia, whom he considers close friends.

In 1987, he was appointed as a director of the China programme at the Bank. During his term, the Bank’s lending to China increased from $400 million to $3.5 billion a year.

Burki is well known for having prevented the shutdown of the China programme after the Tiananmen Square debacle, when the G7 passed a resolution in Houston, Texas, asking the World Bank (and other multilateral banks) to cease all lending to China.

Burki convinced the then World Bank president Barber Conable otherwise, despite massive resistance from his western counterparts.

“My reasoning was that the World Bank is not a political organization but an economic one, and there was no economic justification for stopping lending to China, which was trying to enter the global economy then," he recalls.

Needless to say, the Chinese considered him a valuable friend and later came to his rescue when he served briefly as the finance minister of Pakistan in 1996-97, and needed urgent help.

Burki recalls that he came to Pakistan when it was almost bankrupt and had only $32 million in foreign currency reserves left, which was not sufficient to pay its loans.

“I recall the sense of desperation then. At 4am, I called the then President Farooq Leghari—who was a good friend from Oxford days—to discuss our realistic options. He requested me to somehow save Pakistan from this crisis. So I took the next plane and flew to China, and with the aid of my good friend, Zhu Rongji, who was the Chinese premier, secured a loan of $500 million."

Burki says that while he was asked to continue to serve as finance minister by Nawaz Sharif, who came to power in February 1997, he declined because “I could not have functioned for very long in that political environment".

Although he went back to the Bank, he took early retirement in late 1999 and set up EMP Financial Services, the consulting arm of private equity firm Emerging Markets Partnership.

In 2006, Burki also established the Institute of Public Policy at Lahore and became its non-resident chairman.

Today, he is busy writing books, doing critical research and passionately arguing in both Pakistan and India to let peace take hold between the “two siblings" through greater trade. He sees patterns emerging in both nations “that must be seized".

“There has been a complete collapse of the Left-leaning parties in Pakistan as well as in India," he notes. “The Pakistan People’s Party was reduced to a political rump last year; and this year, the same has happened to the Congress party in India."

Burki says that for the first time in Pakistan’s history, it is ready to place economics at the centre of foreign policymaking. “India must take advantage of it, as this moment may not come again for a long time," he says. He believes that the new government under Modi understands this well and may pave the way, in the near future, for a historic shift in India Pakistan relations.

Edited excerpts from an interview:

What are some of the key ways that India and Pakistan can boost trade and economic ties?

In any kind of economic relationship between a large and small economy, greater trade will naturally benefit the smaller nation more. So, it is indeed in Pakistan’s interest to have a closer relationship with India, and it should now work fastidiously on nurturing this relationship.

Pakistan should develop, as a start, supply chains to feed into the Indian (and also Chinese) manufacturing industry. For instance, in India’s booming automobile industry, Pakistan can supply from its well-developed auto parts industry. This is just one such example and there are many more.

Also, Pakistani should try and export more high-value textile products into India.

India and Pakistan should also work together to develop the South Asia and Central Asia corridor for building electric grids, oil and gas pipelines and more roads for boosting commerce.

Indeed, Modi’s comments in Bhutan reflect that he is interested in such kind of regional co-operation which will also include Pakistan. So, we are headed in the right trajectory. One can only hope that the economy does not get derailed by politics this time over.

How do you see Pakistan foreign policy shaping up under Nawaz Sharif? How will it affect India politically and economically in your view?

I think Prime Minister Sharif has responded well to New Delhi to forge better relations with India. There is no longer talk in Islamabad about India posing an existential threat to Pakistan and there being paranoia around India.

The past process was negatively “India-centric" in the sense that Pakistan tried, sometimes with desperation, to balance India’s growing military might. That approach proved costly.

In a 2007 report, I wrote for the United States Institute of Peace, in which I estimated the cost to Pakistan—the Kashmir dispute alone had cost 2.25% to 3.2% a year of growth loss in GDP (gross domestic product) terms. Compounded over a period of six decades, this suggests the magnitude of the colossal damage Pakistan has done to its economy by following this particular quarrel with India.

Further, this study used purely economic factors; it did not take into account the undeniable fact that some of the cost of this approach towards India contributed to the rise of Islamic extremism in the country. That, too, has resulted in serious economic losses for Pakistan.

There has been a big upsurge in violence recently in Pakistan, with the attack on Karachi airport. Why? What can be done realistically to curtail it?

Over time, Karachi, a mega city of an estimated 20 million people, has indeed become the favoured space for extremism and one of the world’s most violent cities.

Ethnic rivalries, sectarianism and extremism have created an explosive situation in the city.

A year into its tenure, the government of Prime Minister Nawaz Sharif seems committed, but very much struggling, to develop its response to the rise of extremism. I think the government should look at the root causes and, simultaneously, address all in a systematic way instead of one at a time, which is the case presently.

The first critical step will be for the government of Pakistan and Afghanistan to work much more closely to curtail the alarming rise of Taliban in both nations. This is crucial and is not being done presently to the degree that is needed.

The second contributing fact to the rise in terrorism is sectarianism, which needs to be addressed urgently. Orthodox groups, influenced heavily by Saudi Arabia, are again on the rise and are targeting minorities, including the Ahmadiyya community as well as the Christians. Furthermore, even Muslims have not been spared, with the Shias bearing the brunt of extremist attacks. They need to be dealt with more stringently.

The third form of extremism is spatial rather than ideological. It has grown roots in Karachi and is the consequence of the way that the city has grown and developed. The state has to develop some key institutions that can mediate between these groups or else violence will remain the preferred form of political expression.

What is the state of Pakistan-China relations today, and what are some of the key projects underway?

China is working with Pakistan on a number of multi-billion infrastructure projects. These include several large dams on the Indus River, called the “Indus Cascade" programme supported by the World Bank.

China will also provide financial support and technical advice for the development of this project as well as for the China-Pakistan Economic Corridor.

One of the many ways in which China will seek to counter the American pressure is to open an access to the Indian Ocean by improving the land corridor that connects its western parts with Pakistan.

In July 2013, Sharif signed a memorandum of understanding to build what is called the China-Pakistan Economic Corridor. Making use of the already operational Karakoram Highway, the corridor will connect the port of Gwadar on Pakistan’s Balochistan coast with the autonomous region of Xinjiang. This can be seen as China’s “look west" policy.

What implication does this greater China-Pakistan engagement have for India?

India can benefit enormously from all of this connectivity Pakistan has built with China. For example, Pakistan has a very good highway system that connects the Indian border to the Afghanistan border. India should be allowed to use this motorway for greater efficiency, and Pakistan, too, can benefit from getting transit fees.

India should also be allowed to use this motorway—that connects to Karakoram Highway—to get its goods to the western provinces of China faster and cheaper than it does presently. Again, Pakistan can benefit from charging transit fees. These small steps can lead to greater trust-building through trade between the two nations and both can benefit economically, too.

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Updated: 20 Jun 2014, 12:30 AM IST
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