Half a decade has passed since the severe breakdown of India-Pakistan relations. Today, Pakistan is embroiled in an internal crisis that needs a savior. Not just Pakistan, at present, other states in South Asia are also suffering from economic and governance crises. These acute regional crises have increased India’s space for manoeuvre in South Asia. In the critical scenario where China is withdrawing its immediate, if not absolute, interest from the region[[i]], India should not exclude Pakistan in its ‘Neighbourhood First’ Policy; because (1) it can afford to take constructive diplomacy and chances with a “forward-looking strategy” [[ii]] ; (2) it will send a message that India is not acting hegemonic, instead is cooperative even with a staunch adversary, to other South Asian states; and (3) terrorism is one of the pertinent issues of South Asia which cannot be resolved without having a regional dialogue with Pakistan, a “sorcerer’s apprentice”[[iii] ] of terrorism.
The recent discussion and debates on improving trade relations between the countries, particularly in Pakistan, have revived prospects of development in India-Pakistan relations. Of course, reopening trade with India could bring a tremendous amount of relief to Pakistan’s inflation-hit economy, but, according to Arvind Vermani, the former Economic Advisor, Government of India, it is going to be “a shared benefit” because “there is huge deadweight loss involved in routing trade through other countries”. [[iv]] Also, according to the World Bank Study (2018), the potential for trade between the countries, which is currently below USD 300 million, is USD 37 billion. [[v]]
What Started the Debate of Trade?
In mid-May 2022, the speculation regarding India-Pakistan relations, particularly trade-related, ignited politics in Pakistan. The rumours flared that the newly formed government of Shehbaz Sharif had planned to improve trade ties with India, considering the crippling economy that includes slumping foreign exchange reserves. The opposition, notably former Prime Minister Imran Khan, came out in disapproval against the Sharif government’s alleged decision to appoint Qamar Zaman, a senior officer, as the trade minister in its high commission in New Delhi. The post has been vacant for years because the previously assigned ministers did not get the visas. Later, the government, seemingly under pressure – caused by the bombardment of media criticism- clarified that it was not planning to operationalise trade ties with India.[[vi]]
On India’s side, the change of the regime in Pakistan is seen as a positive sign. However, some Indian commentators have noted that India prefers to wait for things to settle down in Islamabad. According to Avinash Paliwal, Sharifs, the rulers of Pakistan Muslim League-Nawaz (PML-N), are “serious political interlocutors”[[vii] ]who can provide room for India to take new initiatives toward Pakistan. But the political situation in Pakistan is fragile. There is speculation that the Pakistan Army may pull out its support for PM Sharif because of his growing unpopularity, and a fresh election scheduled in 2023 will be preponed.[viii] As a result, the ongoing backchannel talks or Track II discussion between the countries is yet to become an open dialogue.[[ix]][[x]] Nevertheless, some of India’s Foreign Policy commentators are of the opinion that India must “make a move” [[xi]]- because “the channels of communication between two governments are working and open hostility has subsided, if not vanished completely.” [[xii]]
What Affected India-Pakistan’s Trade?
In the past eight years, the relations faced severe shocks and crisis, which apparently has affected bilateral trade. For India, the critical concern is Pakistan-sponsored terrorism in Kashmir. Whereas for Pakistan, the vital apprehension is the change in the status quo vis-à-vis Jammu and Kashmir. On 19 August 2019, citing India’s decision to revoke the special status of Jammu and Kashmir, Pakistan officially downgraded its trade ties with India imposing a slump in bilateral trade. [[xiii]] Before that, in February 2019, after the Pulwama attack, India withdrew the Most Favoured Nation status granted in 1996 to Pakistan and imposed trade restrictions. [[xiv]]
Pakistan Attempts to Revive Bilateral Trade – ‘Stumped’ by Domestic Politics and Revisionist Policies
In the past two years, Pakistan has attempted to open the trade-relations with India. The first attempt, backed by Pakistan’s Army, was made to open limited trade with India after signing the ceasefire agreement in February 2021 – the Economic Coordination Committee announced it would allow the private sector to import white sugar from India and cotton via the Wagah border. However, the decision was rolled back following severe criticism from—PML-N and Pakistan Peoples Party, who are now in a coalition government. [[xv]] [[xvi]]
Former National Security Advisor Moeed Yousuf, who framed Pakistan’s first-ever National Security Policy, former Commerce Advisor Razak Dawood and Pakistan’s top business tycoon Mian Mohammad Mansha, who heads Nishat Conglomerate, have advised Pakistan to resume trade with India. [[xvii]] [[xviii]] [[xix]]
The Pakistan civil and military leadership is currently on the same page on their interest in engaging with India. The Chief of Army Staff, General Qamar Javed Bajwa, on platforms like Islamabad Security Dialogue and the Prime Minister Shehbaz Sharif, just after taking office, emphasised normalising the India and Pakistan relations. [[xx]][[xxi]] Their remarks indicate the establishment’s willingness to mitigate Pakistan’s paranoia about India.
The government’s intention seems practical as the reopening of trade is imperative given Pakistan’s deepening economic and energy crisis that has reached the level where the country has taken measures such as banning ceremonies after 10 pm [[xxii]] and reducing the official work week to conserve energy. [[xxiii]] But, on the other hand, Pakistan’s politics and deep-state mechanism are hard-wired against the logic of leveraging geography to enhance the socio-economic well-being of Pakistanis. The recent attempts of infiltrations in Jammu and Kashmir, using targeted killings in Kashmir to build an anti-India narrative [[xxiv]], and constantly antagonising India in its domestic politics are some examples of Pakistan’s anti-geoeconomic behaviour.
A Way Forward: India must continue to find ways to work with Pakistan.
There is a prevailing narrative in Pakistan that India wants to weaken, destroy or convert it into a satellite. [[xxv]] However, it is untrue. India fears Pakistan’s “instability more than its strength” [[xxvi]]- because- nothing could be more alarming than the spectre of the financial collapse of its nuclear-armed neighbour-cum-nemesis. Also, India’s establishment sees Pakistan as an enormous mess that one would not like to inherit. [[xxvii]] It understands that military conquest or breaking up Pakistan would not be a pragmatic approach to resolve the long-standing issue of cross-border terrorism, even if possible. Besides, India uses military means against Pakistan only when the latter acts cross the threshold, such as in the cases of the Uri attack and the Pulwama attack. Otherwise, India mainly uses diplomatic channels. In the last couple of years, India has successfully isolated Pakistan in the international system despite Pakistan’s diplomatic efforts, which include writing and circulating dossiers and reports to do the same.
The relationship between India and Pakistan is cyclical; it goes a little up and then hits the ground. In Pakistan, the Army, most of the time using the “Kashmir dispute”, pulls the thread of the government whenever things between India go up for settlement; it helps the former maintain its relevance despite knowing, but not accepting, the asymmetric nature of the rivalry.
Trade is one of the reasons why Pakistan cannot sustain its resentful policies; geoeconomics or economic interests compel it to restart trade with India. Also, Pakistan’s worsening relationship with the Taliban regime in Afghanistan and growing extremism limit the former’s geoeconomic objectives; the most critical is the delay in the China-Pakistan Economic Corridor, which is sowing frustration in both the parties.
At this moment, India must respond to Pakistan’s signs for improvement in relations generously, along with strong messaging that the latter has to stop funding and nourishing terrorism, despite knowing the unchangeable nature of the revisionist state that keeps on undoing the efforts; because South Asia, at present, is having various crises inflicted by the pandemic COVID-19. If India does not take the lead and include Pakistan in its strategic sight, the region cannot respond to various crises collectively that will ultimately aid China in furthering its strategy of ‘cooperating and combining with small to attack the big’ [[xxviii]] in the Indian Subcontinent. Also, by reducing man-made trade barriers, which in the case of South Asia is the India-Pakistan rivalry, the region can grow roughly from USD 23 billion to USD 67 billion. [[xxix]] Maintaining stability in the South Asian region is in India’s interest, as investors would not invest in an unstable region. Moreover, engaging with Pakistan will give India a geographical way to resume its engagement with Afghanistan and resource-rich Central Asian states. At last, extending a hand to Pakistan will provide an opportunity to India to balance China’s expansionist policy, which has become obvious since the Galwan crisis. [[xxx]]
[[i] ] The author attended Prof. Srikanth Kondapalli’s online lecture on China’s Role in the Current Crises in Sri Lanka and Pakistan organised by MMAJ Academy of International Studies, Jamia Millia Islamia, New Delhi. 9 June 2022.
[[ii] ] C Raja Mohan. “India needs a forward-looking strategy on Pakistan”. The Indian Express. 31 May 2022. https://indianexpress.com/article/opinion/columns/india-diplomacy-strategy-on-pakistan-international-relations-modi-govt-7944501/
[[vi] ] “Pakistan rules out trade with India”, DAWN. 12 May 2022. https://www.dawn.com/news/1689236
[[vii] ] Avinash Palliwal, Twitter. 10 April 2022. https://twitter.com/PaliwalAvi/status/1512894266506416137
[[viii] ] Pakistan’s Economic Crisis: In Dire Need Of $36 Billion – Hot Mic with Nidhi Razdan. NDTV. 4 June 2022. https://www.youtube.com/watch?v=kzzUQP9GAWk&t=10s
[[x]] Kamran Yousaf. Back channel talks going on’ to break deadlock with India. The Express Tribune. 30 May 2022. Accessed on 9 June 2022. https://tribune.com.pk/story/2359084/back-channel-talks-going-on-to-break-deadlock-with-india
[[xviii]] “Trade with India need of the hour, says Razak Dawood”, The Dawn. 21 February https://www.dawn.com/news/1676171/trade-with-india-need-of-the-hour-says-razak-dawood