11

THE INDIA–PAKISTAN PEACE PROCESS: INCREMENTAL PROGRESS?^∗

Satyabrat Sinha

India–Pakistan relations have been in a state of constant flux. The ceasefire on the Line of Control (LOC) in Kashmir and the general warm rhetoric flowing across the Radcliffe Line in 2005 marked a radical transformation in the state of India-Pakistan relations. However, the bitterness creeps into the relationship after every terrorist attack, sparking accusations and counter-accusations that tend to hinder the peace process. The current developments are even more striking if viewed against the nine-month military standoff following the 13 December 2001 attack on the Indian Parliament. India-Pakistan relations in recent times—starting from the Lahore peace initiative to the current peace process that continues despite a spate of terrorist attacks—has exhibited a resilience that would have been inconceivable just a few years ago.

This paper attempts to examine the current phase of India–Pakistan relations, namely the peace process initiated by the National Democratic Alliance (NDA) regime under Atal Behari Vajpayee’s leadership. The argument is embedded within the Indian state’s aspirations of great power status and is located in India’s South Asia policy. It is Pakistan’s low-intensity conflict in Kashmir and the general challenge to Indian superiority that has boxed India within South Asia. In an effort to free itself from the region to concentrate on the global level, the Indian government continues to make efforts to reach a settlement with Pakistan with little success. The paper will also briefly examine the state of trade relations between the two South Asian states.

The history of bickering relations between the two successor states of what was the British Indian Empire has been amply dealt with and repeated ad nauseam. The facts on the ground was that the ceasefire line in the 1948 war divided the erstwhile princely state of Jammu and Kashmir(J&K) into Pakistan Occupied Kashmir (POK), or Azad Kashmir, and J&K, or Indian Kashmir. The 1965 and the 1971 wars did not change the status quo on the LOC. The Pakistani state, under the euphoria of the successful jihadi struggle against the Soviet Union in Afghanistan, applied the same formula first in Punjab and then in J&K. Over the years beginning in 1989, the low-intensity conflict shocked and sent the successive governments in New Delhi into a hapless frenzy. This low-intensity conflict in tandem with the growing nuclear capabilities of the two countries made South Asia the ‘most dangerous place’ in the world and resulted in four advanced nuclear crises.¹

The conflict has taken its toll on India for over 15 years and there seems to be no peace at the end of the spiralling violence. In fact, since the mid-1990s, the Indian government toyed with the idea of adopting a policy of active pursuit but this was espoused only after the Kargil war.² ‘Active pursuit’ would have involved chasing the terrorists into POK and destroying the jihadi infrastructure that spawned them. It appears this policy was not followed through because of the fear that the lowintensity conflict could escalate to the nuclear level.³

After the subcontinental nuclear tests in 1998, the then Prime Minister Atal Behari Vajpayee attempted reconciliation with Pakistan and visited Lahore in February 1999, when Nawaz Sharif was at the helm.⁴ The effort was wrecked by the intrusion of the jihadis, backed by the Pakistan military, in Kargil which resulted in what is known as the Kargil War. Some remnants of the Lahore peace process still remain, namely, the Lahore–Delhi bus and the general confusion as to who was responsible for Kargil and how much was Prime Minister Sharif privy to the military’s plans. The Lahore Declaration is also important in the events that led to the Pakistan army coup d’ état in 1999 that brought the army back to power for the third time.

By the time of the Agra summit in 2001, the situation in Kashmir had not improved as the violence continued unabated. The conventional military balance in South Asia, coupled with the absence of any effective American pressure on Pakistan and Pakistani insistence on the centrality of Kashmir in the dispute resolution talks with India, precluded any valuable outcome from the summit. It would be important to mention that the issues of trade and granting of Most Favoured Nation (MFN) status to India were discussed but they were subsumed by the magic K-word.

The stalemate would have continued had it not been for the momentous and haunting figures of 9/11 that found their way into our vocabulary. The 11 September 2001 attacks on America apparently by Al Qaeda terrorists, affected the world as significantly as the end of the Cold War. Terrorism was the new war, the world’s hyper-power was going to fight and it began in South Asia, to be exact in Afghanistan. The links between the 9/11 attackers and Osama Bin Laden may be steeped in controversy, but the links Osama Bin Laden, the Taliban, and Pakistan’s Inter Services Intelligence (ISI) had with the Kashmiri militants were not.

An upswing in Indo-US relations after President Clinton’s visit, together with some imaginative diplomacy and the increasing economic profile of India, made the Americans aware of the Taliban–ISI–Kashmir links. The phrase, ‘your terrorist is my freedom fighter’ attained notoriety for being politically incorrect and put Pakistan’s low-intensity conflict policy in Kashmir in the doldrums. Thus, the war on terrorism can be flagged as the most decisive and important pointer to the change in the Pakistani military mindscape. The establishment in Pakistan could no longer persist with its earlier policy, especially in the post-9/11 scenario, as that would have meant going against the United States ‘war against terror’. The global war on terror together with the Indian military mobilization in the aftermath of the December 2001 attacks on Parliament produced two promises from Musharraf in January and May 2002 to end terrorism in Kashmir by dismantling the Kashmiri terror infrastructure in Pakistan.

South Asia: Regional Order

South Asia can be historically seen as a contiguous civilizational area which is bound on the south by the seas and in the north by the Himalayas. The eastern and the western boundaries of the region can be found in the inhospitable Karakoram and the Hindu Kush ranges in the west and the tropical forests and the Arakan Yomas in the east. The region gained unity and legitimacy over centuries through the various empires in the South Asia demarcating its geographic and civilizational reach. The British Colonial Empire (BCE) in India was probably the most hegemonic and successful in bringing this vast swathe of land under a single sovereign space.

India’s defence policies and strategic vision since Independence has been tied umbilicially to the legacy of the British Empire in India. However, there were remarkable spatial differences in the post-Partition Indian state and the BCE and for that matter in South Asia. The strategic unity that the British gave to the subcontinent was broken in the east (East Pakistan and later Bangladesh and also Myanmar) and, the west (Pakistan). Second, the ancient Chinese empire found its feet and, by the early 1950s, was knocking on the doors of Tibet. These two factors are most crucial to understanding the challenges to the defence oflndia in the new geo-political world. With the Chinese integration of Tibet, the strategic insulation of South Asia from the China had changed forever.

Despite these differences with the BCE, India is the largest power in South Asia in terms of size, population and resources. India is also bigger than the rest of the South Asian states combined together. Moreover, none of the South Asian states have common boundaries with each other and India borders all the states in the region. Apart from its sheer size, the geographic constraint makes India the most important state in the subcontinent. In a region, the dominating power is expected to define the configuration of regional order according to its own ideology and identity. The importance of a regional order in an anarchic, self-help world cannot be underestimated especially so in an era where regional forces have been on the ascendant since the end of the Cold War.⁵

The success of the economic reforms and the nuclear tests in 1998 has turned the spotlight on India once again. India is a de facto nuclear power, its economy is driven by the success of the information technology industry and it is the home to one-sixth of the world’s population. This new perception of India is in sharp contrast to the world of Nehru or his immediate successors. India then was seen as a land of tigers and snake charmers, of teeming poverty and a non-violent Mahatma. But those are bygone days and, if the current growth rate of 6 to 8 per cent per annum can be sustained, by the middle of the 21st century, India will become the third largest economy in the world. Economic powers, taken together with military power i.e. nuclear capability and long-range delivery systems, makes India a rising power, knocking at the gates of great power status.

The political elite in India has always believed that the country should aspire to be ranked among the great powers of the world—with that belief anchored in its superior attributes including its geo-political status, hegemonic presence in South Asia, the perception of its potential economic and military capabilities, and civilizational ethos. With such aspirations, India has in the last 50 years managed to be an emerging though still a minor player in the world order with substantive influence in certain sectors while lagging behind in others. But what has been remarkable is India’s efforts to protect its influence in South Asia. In the past half a century, India has been obsessed with security concerns within the region and especially so in the smaller states like Nepal, Bhutan and Sri Lanka. Indian influence in the domestic politics as well as foreign relations of these smaller states has been crucial factors in the internal configuration of power. In the steps towards the elusive great power status, it is very important that India manages its neighbourhood to achieve its ends and secure the region for itself.

Regional order can be maintained in two ways.⁶ The first is when the pivotal or the dominating power acts as the security manager for the entire region. The dominating power draws its legitimacy by providing public goods for the other members of the system. The pivotal, or the pre-eminent, power has hegemonic or managerial aspirations. This pivotal/pre-eminence provides coherence to the system by arranging the security concerns of the region around its ambition and capabilities. Such powers have the potential to dramatically exacerbate the contours of conflict if disputed or challenged. In the absence of consensus and challenges to its legitimacy, the region will suffer from chronic instability. In simple terms, a pivotal power gives a region cohesiveness, provides a sense of security and keeps interfering external powers out. The second path to regional order stems from equal powers contending with each other to maintain stability by checking each other’s ambition.

The situation in South Asia is that none of these conditions holds true. Neither has India succeeded in dominating the entire region nor has the Pakistan challenge managed to countervail India’s superiority. This gap between the two positions is what is responsible for the instability in the region which precludes predictable behaviour or successful resolution of disputes. India’s position in the region has been variously described as that of ‘weak unipolarity’ or ‘arrested unipolarity’.⁷ The contested unipolarity has been as much a result of an underdeveloped economy as much as it has been a result of the challenge from Pakistan. The challenge from Pakistan came through external alliances with the United States and later with China. In the aftermath of the 1971 war and the emergence of Bangladesh, it was assumed that the challenge from Pakistan was over and India would be able to regain its pre-partition position of pre-eminence. However, the changes in the post-1971 period ironically went against India, as the United States established ties with the People’s Republic of China through the good office of the Pakistanis. And militarily, West Pakistan without the eastern province was better defensible.

The Pakistan Challenge: Bringing Extra Regional Actors

Pakistan has often been described as an ‘insecure state’ that perceives itself not only as small and disadvantaged but also on the defensive against a real and present threat, with its survival at stake.⁸ Thus, a central element of Pakistani policy has been to reach outside South Asia to find support that might offset Indian dominance within the South Asian security system and to avoid bilateral arrangements that would put Pakistan in a one-on-one relationship with India. While Pakistan recognized the fact of overwhelming American predominance in an essentially unipolar world of 1947, it was only in the 1950s that Pakistan looked seriously for strategic support from the USA.⁹

The source of political backing and for modern military equipment were soon found when Pakistan joined the Central Treaty Organization (CENTO) and the Southeast Asian Treaty Organization (SEATO). However, the US–Pakistan ties suffered a temporary setback when Washington saw a chance to draw India closer to itself through economic assistance and support against the growing Chinese threat in the aftermath of the 1962 Sino-Indian conflict. But this was also the window of opportunity for Pakistan and Zulfikar Ali Bhutto recognized it immediately.¹⁰

The deteriorating relations between India and China also created an opening for Pakistan. Beijing responded in kind, and the foundation was laid for a remarkable political relationship. But amid all these adventures, Pakistan maintained close relations with the United States, which remained Pakistan’s only substantial source of support, howsoever unreliable. Pakistani ties to the United States have been extremely profitable for Islamabad and were especially important in giving it a secure basis from which to operate in the early years.

Pakistan’s relationship with China has been a steady prop, especially valuable in filling the gaps that the American relationship left behind and, apparently, in the nuclear and missile areas where the Chinese support has been critical. At the start of the China–India crisis in 1959 over the road across Aksai Chin, Zulfikar Ali Bhutto’s sharp political mind recognized this simmering conflict as a major source of potential diplomatic advantage for Pakistan if properly exploited. At the UN Session in 1960, Bhutto broke ranks with the US position on China, by abstaining rather than voting against Beijing’s membership in the world forum. In the face of US dissatisfaction, when the foreign minister Qadir retracted Bhutto’s discretionary powers on future UN votes, Bhutto wired back, ‘I feel that the time has come for Pakistan to adopt an attitude in the United Nations more consistent with its recognition of the Peking regime than has been the case since 1954’. Bhutto bolstered his China argument by noting how important it was to ‘strengthen our position’ among the third world Asian Africans. He viewed Sino-Pakistani friendship not only as a counter to Indian hegemony but as one part of his blueprint for an Afro-Asian ‘third force’.¹¹ Bhutto’s first rna jor achievement as foreign minister was to conclude a Sino-Pakistan boundary agreement on 2 March 1963 that became the cornerstone of Pakistan’s strongest, most important Asian alliance. ‘We have our friends…. we have assurances also from other countries that iflndia commits aggression against us, they will regard it as an aggression against them … we shall never be alone in facing aggression’.¹² Thus, Bhutto laid the foundation of an enduring relationship, which flourished especially with regard to defence trans fers.¹³

In the past decade, despite the hiccups caused by the nuclear tests, India has managed to work around the relationship with China. While the intractable border dispute remains a source of potential danger, the two governments have shown the political will to work out the modalities of its resolution. The Chinese and the Indian governments have also decided to move ahead in other sectors which will move independently of the border dispute and the quantum leap in trade ties as well as general cooperation at multilateral forums are an indications of their vast potential. Whatever the past, the future of the Sino-Pakistani relationship looks to be more limited. The Cold War complusions were responsible for Chinese attachment to Pakistan are no more and, for Beijing, India is more interesting as a negotiating partner than as an enemy shared with Pakistan.

Back to the Future: The Peace Process

The current process of rapprochement began in April 2003 when former Prime Minister Vajpayee extended a hand of friendship towards Pakistan while delivering a speech in Srinagar.¹⁴ The two sides took tentative and slow steps towards im proving relations. These steps included the appointment of high commissioners, the resumption of the Delhi–Lahore bus service, ceasefire along the LOC and along the Actual Ground Position Line (AGPL) at the Siachen glacier as well as the resumption of air links and over flights. The formal agreement for resumption of the composite dialogue process between the two countries was signed by Presi dent Musharraf and Vajpayee on 6 January 2004.¹⁵

The composite dialogue process is based on the working groups identified during the foreign secretary-level talks held in June 1997. The working groups were: (i) peace and security including CBMs and Jammu and Kashmir; (ii) Siachen; (iii) Wullar Barrage project; (iv) Sir Creek; (v) Terrorism and drug trafficking; (vi) Economic and commercial cooperation; and (vii) promotion of friendly exchanges in various fields.¹⁶

Soon after the composite dialogue agreement, general elections in India led to the replacement of the NDA by a Congress-led coalition government at New Delhi in May 2004 with Dr Manmohan Singh as the Prime Minister. Although the change in government at New Delhi was not expected to wreck the peace process, there were concerns regarding its continuity even though the Congress had backed the peace process when it was in the opposition. The doubts were laid to rest when the common minimum programme of the Manmohan Singh government was released on 26 May 2004 stating that dialogue with Pakistan would be pursued systematically and on a sustained basis.¹⁷

Recent Developments

Over the course of almost three years since the 6 January 2004 statement, India–Pakistan relations went through the usual cycles of troughs and crests. So far there has been no transformative event to either wreck the ongoing peace process or provide it a major boost. In the immediate past, there have been two incidents that threatened to disrupt the peace process—the first was the attack on the make-shift temple at Ayodhya on 6 July 2005 and the other was the serial blasts in Mumbai on 11 July 2006. The Indian establishment regarded both of them as ‘major incidents’ capable of disrupting the peace process. During an interaction with the press, Prime Minister Manmohan Singh made it clear that the success of the peace process depended public opinion and support and that an incident like the Ayodhya attack would seriously undermine the Indian government’s ability to carry the people’s support.¹⁸ On the Mumbai blasts issue, in reply to a question in Parliament, the Minister of State for External Affairs, E. Ahamed, stated that ‘India has conveyed to Pakistan that the dialogue process between the two countries can be sustained and carried forward only if Pakistan takes effective action to dismantlethem. frastructure of terronsm,.¹⁹ The Havana statement²⁰ is an important marker as it came after the devastating Mumbai blasts inJuly 2006 which led to the postponement of the secretary-level talks. New Delhi suspended the peace process and demanded that Pakistan demonstrate its commitment to the various assurances it had given to India since January 2004. The statement which condemned the terror attacks started the stalled peace process once again.

July 2006 also saw the implementation of the South Asian Preferential Trade Agreement (SAFTA) concessions. The frost and thaw in the relations bring forth the contradictions that exist between the peaceniks (pro-trade, seeking interdependence in South Asia) and the hardliners (conflict groups that perpetuate higher levels of conflict and mistrust in South Asia). These entrenched interest groups fear that regionalization and greater Indo-Pakistan bonhomie will adversely affect their domestic coalitions and erode their privileges. Therefore, moves towards mutual cooperation have repeatedly been sabotaged but what is true is that there has never been such sustained and focussed discussions on the crucial issue of Kashmir as in the past two-and-a-half years.

The Indian state has repeatedly conveyed to Pakistan that is continues to violate its most fundamental commitment of 6 January 2004 to curb terrorism against India and that India has ‘concrete’ evidence of cross-border terrorism and the sup porting infrastructure.²¹ From the Pakistani perspective, it appears that terror remains a key policy to keep India at the Kashmir table. In 2005, a series of meetings were held between the two sides on commercial and economic cooperation, nuclear and conventional CBMs and the two home secretaries met for the third round of talks on issues of terrorism, narcotics and organized crime.²² The month of August 2005 saw the end of the second round of composite dialogue between the two countries. The foreign secretaries met at the end of the month to review the progress and assessed the developments in bilateral relations since the last review meeting of the composite dialogue held in September 2004. Both sides expressed satisfaction with the results at the end of two rounds.²³The year 2006 saw constant interaction over the working groups on the various issues agreed to in the composite dialogue process. There was a hiccup due to the Mumbai blasts but the talks continued after some damage control exercise by both countries.

Siachen

The negotiations relating to the Siachen dispute are locked in a stalemate as both sides have stuck to their respective positions. The Indian stand was that any withdrawal from the glacier was possible only after authentication and demarcation of the Actual Ground Position Line (AGPL) as they fear a Kargil-type occupation after withdrawal. This position is opposed by Pakistan as it believes that the issue of Siachen is tied to the core issue of Kashmir and views that demarcation and delineation of the AGPL as legitimizing what it calls Indian aggression and treachery. The Siachen case is an important test to build trust and move the peace process forward and is seen as the simplest and the perhaps the most urgent, but trust seems to be lacking between the two sides. The ninth round of negotiations on the Siachen Glacier issue between the defence secretaries of India and Pakistan took place in May 2005. ²⁴ The one positive outcome of the talks was the decision to continue the ceasefire in force in the Siachen areas in Jammu and Kashmir since November 2003. There have been no developments in the Siachen issue. The foreign secretaries exchanged views on Siachen in their meeting on 14–15 November 2006. The two sides exchanged ‘some ideas’ on the Siachen issue at the last round of foreign secretary talks in Delhi, and it would be taken up at the next round in February 2006. It has been suggested in the media that the Indian Prime Minister has been discussing the Siachen issue with the Indian military keenly and wishes come to an agreement when he visits Pakistan in March 2006.²⁵ The Indian army is deeply suspicious of a violation of the agreement if they withdraw and Dr Manmohan Singh does not want to go ahead without the express concurrence of the military.

Trade

The collapse of communism and the Soviet Union ushered in an era of free trade promoted by the multinational corporations backed by US foreign policy. The days of the command economy were over and the world witnessed an exuberance of liberalized trade policies from formerly closed economies like China (it would be pertinent to point out that the Chinese economic reforms began much before in 1978) to a mixed economy like India (the process began in early 1980s but it was the reforms of 1992–93 which set India on the road to liberalization). The world had decided to put economics over politics and the current wave of globalization spread its roots.

In the period prior to Partition and Independence, the economies oflndia and Pakistan were complementary as they were part of the same economic and political unit.²⁶ Despite the Partition and the striferidden relations, India and Pakistan have continued to trade except in the years 1965-72, though it should be mentioned that the trade volumes have been low²⁷ In the period 1947-65, India was Pakistan’s most important trading partner: 60 per cent of Pakistan exports found their market in India, which exported 17 per cent of its total exports to Pakistan.²⁸ Trade resumed in 1974 when the two countries signed a protocol for resumption of trade following the Simla Agreement in 1972.In this period, early trade was carried on mainly through governmental corporations and the role of private sector in the bilateral trade has been extremely limited.

After the opening up of the Indian economy and the liberalization of governmental controls, the subsequent release of economic energies sought opportunities in Pakistan. India granted MFN status to Pakistan in 1995. But the cycles of crisis between the two nations and the political uncertainty owing to the low-intensity conflicts together with Pakistan’s non-cooperation with regard to trade issues blocked any impetus for economic cooperation. By 1999–2000, India’s share in Pakistan’s global trade was an abysmal 0.3 per cent.²⁹

This state of affairs was deplorable considering the economic logic. The physical proximity of India and Pakistan meant lower transportation costs, shared ethnic and cultural similarities taken together with the product complementarities, and the general availability of basic infrastructure of the pre-Independence times could reduce communication and transaction barriers drastically. The economic advantage for Pakistan appears astounding as it imports goods from as far as the United States, Germany, Brazil and trades in Indian goods through third countries.

According to experts, there are a number of problems which hinder trade development between India and Pakistan. First, Pakistan insists that the intractable Kashmir issue be solved before it permits significant growth of trade and economic ties. Then, there are numerous structural problems which limit trading, for example, the presence of indigenous companies and MNCs which have taken advantage of the situation to create monopolies. These companies are major barriers to trading with India and it suits their interests to link trade issues to the Kashmir issue. Second, some experts point to the fact that foreign economic aid to Pakistan is largely tied to its foreign trade and of the total foreign economic assistance available in December 1980, over 91 per cent was tied to specific projects and commodities. This meant that Pakistan had to import a number of its products from these aid donors.³⁰

But there are hopes for a better trading future. While the Indian establishment has been proactive on the issue of trading across the western frontier, the business and trading sections in Pakistan have also shown considerable initiative in this regard. It was during Vajpayee’s 1999 Lahore visit that the India–Pakistan Chambers of Commerce and lndustry(I-PCCI) was formed with the objective of strengthening bilateral economic relations and to provide a common officially recognized platform for promotion of economic activities. At the Agra Summit too, President Musharraf and Vajpayee reiterated the importance of restoring trade ties.³¹

Since the mid-1990s, trade between the two countries achieved significant levels. In fact, trade volume reached its pea k during the year of the nuclear test in 1998 at $354 million. Some writings on the trade potential between the two countries assert that there is no relation between political tensions and the level of bilateral trade. The 1998 figures are touted as an example, but it would be pertinent to note that despite the exceptional year of 1998, the following years saw a drop in total trade by over 50 per cent, back to the levels in 1996.³² What is not disputed is the estimates of informal (through third countries and others through smuggling) trade between the two countries that place the figures at $2 billion!³³

The Indian goods in demand in Pakistan are machinery, cement, tyres, tea, medicines, videotapes, alcoholic beverages, chemical products, steel utensils, iron ore, transport equipment including scooters, motorcycles, cars, plastics, textiles, coffee and agricultural products. In the informal trade of low-cost mass produced goods, Indian branded goods are in high demand. The Pakistani products which can find a market in India are food items, synthetic fibres and some chemical products.³⁴

The most talked about area of cooperation between the two countries can be in the energy sector. Pakistan’s role in this instance would be a transit route for energy-deficient India from Iran and the Central Asian oilfields. The two countries have set up a joint working group on pipeline projects to explore and study the feasibility of gas transfer from the oil rich Central Asian states as well as Iran. The Iran-Pakistan-India pipeline, which has received much media attention, is to be the pilot project and a test case for Pakistan. The 2,670-km gas pipeline is expected to deliver Iranian gas to India. The estimated $4 billion pipeline would run about 1115-km in Iran, 705-km in Pakistan and 850-km in India. A successful negotiation of the terms of the agreement and the other aspects of the deal would make the pipeline operational by 2010, thereby satisfying the growing energy needs in India. A successful settlement of this pipeline is expected to feed beneficially into the lndo-Pak peace process and make larger economic cooperation mutually beneficial to the South Asian neighbours. However, there are a number of issues with regard to the pipeline; the first is the American opposition to the pipeline and the possible confrontation over Iran’s nuclear ambitions. The second is the Indian hesitation over the pipeline despite Pakistani enthusiasm.

Barriers to Trade

The first and the most important barrier to trade between India and Pakistan is the Pakistani propensity to link economic and trading cooperation to progress on the Kashmir issue. While hindering progress, this also has the potential to undermine the ongoing dialogue between the two countries.³⁵ The Pakistani government has also tried to limit trade between the two countries by ‘cherry picking’³⁶ items of economic cooperation from the list oflndian proposals. The Pakistani government has been very keen on the pipeline project but has been lukewarm to most other Indian proposals.

The second problem relates to the withholding of the MFN status for India by Pakistan. While this is compatible with Article XXIV of GATT, the real reason for withholding the MFN status is said to be largely political.³⁷

The other bottlenecks in the slow development of trade ties are weak infrastructure like the absence of road trade routes, irregular railway tariff, expensive shipping as also the difficulty, delay and restrictions in procuring visas.³⁸ Both countries will mutually benefit from the regional and bilateral trading arrangements which are transforming economic activity. For Pakistan, the advantages are manifold. The Indian economy is far more robust and has been growing at about 7 per cent for the past decade and Pakistan could derive benefits from interacting with India. Pakistan could also ride on India’s successful record of negotiations of regional or bilateral trading arrangements as well as reach out to the rest of South Asia with its comparative advantages. Moreover, the lndia–ASEAN negotiations for a free trade arrangement would make India a part of the largest regional free trade area comprising China, Japan, Korea and South East Asia.³⁹ A successful economic rapprochement would also provide a fillip to the South Asia Free Trade Arrangement (SAFTA) which came into force in 2006 as also build trust and ties between the two countries and building a symbiotic relationship which could be expected to ameliorate political disputes.

SAFTA, paving the way for free trade of goods among countries of the region, came into force in July 2006.⁴⁰ As per the agreement, SAARC member countries India, Pakistan and Sri Lanka will bring down their customs duties to 0–5 per cent by 2013 while the least developed members Bangladesh, Maldives, Nepal and Bhutan will do it by 2018.⁴¹ Pakistan ratified the SAFTA on 15 February 2006 but trade between India and Pakistan will not be initiated under this agreement, instead it will continue under the existing import regime or the positive list mechanism.⁴² Pakistan in September 2006 included an additional 302 items in its positive list for trade with India to the existing 773 goods.⁴³ India interprets this as a ploy to continue to deny it MFN status a clear violation of the SAFTA. Pakistan has reservations about open trade with India until political issues are resolved. However, India has challenged Pakistan’s stance before the SAARC Secretariat and is demanding that the latter allow it all SAFTA benefits. India raised the SAFTA benefits issue at the meeting of the SAARC Council of Ministers in April 2007. The foreign secretary’s media briefing states that ‘differing views on whether or not what Pakistan has done vis-à-vis India is in compliance ofSAFTA or not … There is a SAFTA Ministerial process within SAARC and that has been asked to sort this problem out.⁴⁴

As a part of the composite dialogue process, in30 August 2005, Indian proposals were discussed for promotion of bilateral trade and commercial and economic cooperation. The two sides announced a working group to discuss Pakistan’s objections to the Indian proposals. The key points of discussion are granting transit facilities for Indian goods for export to Afghanistan and Central Asian Republics, permitting private airlines to operate between India and Pakistan, opening of Indian banks and amendment to the Shipping Protocol of 1974 to permit third country vessels to operate between the two counties.

The joint statement issued at the conclusion of the talks agreed to take steps to improve trade and commercial cooperation and upgrade shipping, rail, air and postallinks.⁴⁵ The second meeting of the joint study group (JSG) is proposed to be held at an early date in Islamabad. A meeting of the sub-groups on non-tariffbarri ers and customs cooperation and trade facilitation will formulate recommendations for consideration by the JSG.⁴⁶

However, notwithstanding the continuing dialogue on trade issues a number of practical difficulties remain. The Pakistani establishment remains glued to its rhetorical stand on the need to resolve the core dispute of Kashmir with India for enhanced trade ties. India also requires transit rights for Indian goods to Afghani stan, Gulf and Central Asia.⁴⁷ The general pace of these trading developments are rather slow and certain reports in the media mention that leading Indian business houses namely, Bajaj Auto, Bharat Hotels and the Tata group—interested in investing in Pakistan have not been given permission to invest in ventures in Pakistan.⁴⁸

Peace and Security: CBMs and Jammu and Kashmir

Since Vajpayee’s offer of India’s ‘hand of friendship’ to Pakistan in April 2003, a series of modest confidence building efforts were made from October 2003 onwards that built positive momentum, specifically the ceasefire along the Line of Control and at Siachen. Together with international prodding tied to economic aid and the December 2003 assassination bids on President Musharraf, there was an honest admittance on the part of the Pakistan establishment that fundamentalist elements had penetrated state institutions. The mullah-military alliance that gained ascendancy during the struggle against the Soviets made Pakistan the centre of Islamic jihad and this resulted in the rising sectarianism as well as the proliferation of arms and ammunition, which were financed with the narcotics trade from the North West provinces and from Afghanistan. This rising tide of jihad has produced greater cleavages in the Pakistani society and intensified their own internal conflicts.

Kashmir as an issue retains its central focus, but it would be imprudent to expect any solution in the near future. However, what is important is that the two sides remain in constant discussion. The most remarkable gain has been the bus service from Srinagar to Muzaffarabad in Pakistan-occupied Kashmir. The bus service began in April 2005 under militant threats and continues to operate. The two sides envisage turning the LOC into a soft border with more bus services as also opening it for trade. An important step in Pakistan’s opinion would be a reduction in the Indian troops in the valley.⁴⁹ India insists that any reduction in troops in Kashmir is contingent upon the situation in the valley.

During President Musharraf ‘s visit to New Delhi in April 2005, exactly a year since the hand of friendship was extended, the two sides in effect agreed to the formulation that the existing borders cannot be redrawn, yet the LOC cannot be made into an international border and that borders must be made irrelevant by making them soft—through people to people contact, trade and communication links.⁵⁰

Today, both India and Pakistan possess nuclear weapons and the delivery capacity by aircraft and ballistic missiles. Both countries are acknowledged to be nuclear weapons states though outside the ambit of the Non-Proliferation Treaty (NPT). Even while the capabilities remain in a state of non-deployed, non-weaponized state, CBMs are expected to ‘contribute to generating an atmosphere of trust and mutual understanding’⁵¹ between the two countries. This is a new mindset and is reflected in the two sides setting deadlines to the CBM measures planned and have termed the peace process irreversible.

The India–Pakistan technical level talks on enhancing interaction and cooperation across the LOC were held in New Delhi on 2–3 May 2006.⁵² The operation of the Srinagar Muzaffarabad bus service and of the five crossing points was reviewed. It was also agreed to start the Srinagar Muzaffarabad truck service to facilitate cross-LOC trade in the first half of july 2006 and a indicative list of goods for trade was exchanged. The two sides agreed that Poonch-Rawalakot bus service would commence from 19 June 2006.

In an interview with an Indian news Television, President Musharraf went yet another step forward in his efforts to draw closer to the Indian position when he stated that Pakistan opposes Kashmiri independence.⁵³ The four point agenda mooted was: withdrawal of both armies from the region; neutralization of Kashmiri borders without changes in the Line of Control; self-governance, with both countries patrolling the region; and neutralization of the LOC. The Indian establishment has welcomed the proposal.

Nuclear Confidence-Building Measure (CBM) Talks

The expert level meeting on 5–6 August 2005 in New Delhi on Nuclear CBMs was the third round of dialogue between India and Pakistan. The last two meetings were held in June 2004 and December 2004. The past talks remained inconclusive because of disagreement on exchange of information on specification of weapons, exact launching time of missiles, their type and range etc.⁵⁴ The meeting finalized agreements under negotiation and putting new proposals on the table. The agreement is aimed at enhancing mutual confidence and engendering predictability and transparency of intent between the two actors. The joint statement issued by the two sides has three crucial elements, first is the understanding on the proposed agreement on pre-notification of flight testing of ballistic missiles.⁵⁵ Under the existing system, too, the two sides inform each other of a scheduled missile test. But after these talks, the two countries have agreed to have a structured procedure. The testing of Babur, a cruise missile, within a week of the nuclear CBM talks led to consternation among the Indian media. Though it would be pertinent to clarify that during the negotiations Pakistan had sought to expand the agreement to include the launch of cruise missiles but India was focused on ballistic missiles since they remain the primary delivery system for nuclear weapons.⁵⁶ Cruise missiles have introduced a new, uncertain and dangerous variable in the India-Pakistan strategic balance.

The second is the operationalization by September, of the hotline link proposed to be established between the foreign secretaries and the third was the discussions on their respective security concepts and nuclear doctrines and which also included a draft agreement undertaking national measures to reduce the risks of accidental or unauthorized use of nuclear weapons under their respective control.

The Pakistani delegation did not agree to the Indian proposal of a series of CBMs which covered exchanges like holding of seminars between academics and research institutions dealing with strategic and defence-related issues. The Indian proposal also called for exchanges, lectures, seminars between the defence training establishments like the National Defence Colleges.⁵⁷

The fourth round of Pakistan-India expert level dialogue on nuclear CBMs was held on 25–26 April 2006. Both countries continued, ‘consultations on security concepts and nuclear doctrines to develop measures for confidence building. They reiterated their desire to keep working towards further elaboration and implemen tation of nuclear CBMs within the framework of the Lahore MoU’.⁵⁸ There was satisfaction on the signing of the agreement on pre-notification of flight testing of ballistic missiles and the operationalization of the hotline link between the two foreign secretaries. More importantly detailed discussions were held on the draft text of an agreement to reduce the risk from accidents relating to nuclear weapons, and agreed to work towards its finalization. The nuclear CBM’s would be discussed, reviewed and monitored by the periodic expert level talks as is stipulated in the Lahore MoU.

Conventional Confidence-Building Measure (CBM) Talks

The talks on conventional CBMs were held in New Delhi on the 8 August 2005. The two sides have so far produced two conventional military CBMs in the last 15 years: prior notification of army exercises of a certain size near the border and a commitment by the two air forces not to violate each other’s airspace. The joint statement issued after the 8 August talks reflected the concurrence between the two sides.⁵⁹

The first was that both sides agreed to periodic flag meetings of commanders at designated points on the Line of Control (LOC), as well as measures to reduce inadvertent crossing on the Line of Control. The monthly flag meetings, between local commanders, would be held at Kargil/Olding, Uri/Chakothi, Naushera/ Sadabad and Jammu/ Sialkot sectors. They would enable speedy return of inadvertent ‘line’ crossers, and to work out a comprehensive framework to that end.

The second was the decision to ‘upgrade the existing hotline between the two Director Generals of Military Operations by the end of September 2005’ and not to develop any new posts and defence works along the LOC. This is to be seen as a separate issue to the fencing of the LOC, which Pakistan has allowed India to go ahead with. The joint statement also said the two sides ‘exchanged views on their respective security concepts’. They reaffirmed their commitment to uphold the ongoing ceasefire along the LOC and in Siachen and implement the 1991 agreement on air space violations in letter and spirit. The statement finally concluded with a pronouncement to periodically review the existing CBMs.

The conventional CBM talks received a fillip from the successful negotiation of the pre-notification of missile tests. While some of the differences between the two sides remained intact, the agreement has laid the foundation for a more durable and trusting relationship between them.

The third round of Pakistan–India expert level dialogue on conventional Confidence-Building Measures (CBMs) was held on 27 April 2006.⁶⁰ Security concepts continued to be discussed to build confidence aimed at avoiding conflict. As indicated in the joint statement of 18 January 2006, the Pakistan side presented a draft agreement to the Indian side on the prevention of incidents at sea in order to ensure safety of navigation by naval vessels, and aircraft belonging to the two sides.⁶¹ The two sides agreed on the following CBMs aimed at avoidance of conflict:

1. Finalization of border ground rules for implementation along the international border,
2. Modalities for holding flag meetings quarterly and on a needs basis of sector-level commanders in specific sectors. Modalities for communication in this context would be further discussed.
3. Elaborating, consistent with its intent, the agreement reached on no development of new posts and defence works along the LOC.
4. Finalization of an agreement on speedy return of inadvertent line crosser(s).

Other Issues

Beyond the crucial issues on which this paper is focussed, India and Pakistan also continued talks on Sir Creek in May 2006, the third round of talks on terrorism and drugs trafficking, on ‘promotion of friendly exchanges in various fields’, a discussion on the Wullar Barrage and Storage Project/fulbal Navigation Project.

The foreign secretaries met on 14–15 November 2006 to review the progress in the third round of the composite dialogue. In pursuance of the Havana Joint Press Statement,⁶² they discussed terrorism and the need to effectively deal with it. They agreed to set up a three-member anti-terror mechanism to be headed by the additional secretary (international organizations) from the ministry of external affairs of lndia and the additional secretary (UN &EC) from Pakistan’s Ministry of Foreign Affairs. Its mandate would be to consider counter terrorism measures through regular and timely sharing of information.

Conclusion

Pakistan remains India’s greatest foreign policy challenge and it has to be managed as it is crucial for the success of internal developmental goals as well as for external policy benefits. Over the past decade, India has tried almost every strategy to bring Pakistan around. The Narasimha Rao government ignored it, Deve Gowda and Gujral tried to embrace it, Vajpayee threatened it and yet a settlement has been elusive.⁶³ A safer neighbourhood and amicable relations with the neighbours would go a long way in achieving domestic stability and pursuing the path of economic development. Economic interaction and cooperation within the region would also generate a number of positive political and economic externalities.

The peace process in itself generates a lot of passion in the two countries and the media reflects the ambiguity that surrounds the chances of its success. The overarching beliefin both the countries is that the current peace initiative is quite fantastical and probably the most successful effort. The process is real in the sense that there is a quid pro quo involved with India agreeing to a discussion on Kashmir and Pakistan making efforts to reduce visibly its support to militants operating in Kashmir. However, the difference or the cynicism is expressed in the differing goals each side sets in store.

India believes that Pakistan is not sincere in its efforts to reduce infiltration across the LOC or destroy the jihadi infrastructure in PoK and is merely soft pedalling the issue to keep India talking. For Pakistan, the infiltration gun pointed at the Indian head ensures Indian engagement. Pakistan also believes that the Indians see the peace process as an end in itself and that India wants to carry forward a host of issues while delaying any substantial movement on the Kashmir front. Doubts have also been raised in India regarding the continuity of the peace process in the event of a fundamentalist-backed army coup.

But we do have a number of reasons to be animated about the current engagement. First, the level of people to people contact owing to flows across the borders is unprecedented. The exchange cricket series between the two countries, Pakistanis travelling to India for medical treatment, pilgrims travelling across the borders and cultural groups, students, lawyers, old associations have come alive and in many respects civil society groups are instrumental in playing an important role in maintaining and keeping the acceleration. The changed mindsets are also reflected in the discussions for bus service between Amritsar–Lahore, Kargil–Skardu and the rail link between Rajasthan–Sindh.

Second, the change in mindsets also has resulted in increasing attention in Pakistan on India’s international profile. With the economy in high gear, driven by the information technology engine and the international media discussing India as the next big thing after China, Pakistan is envious of the Indian success story. The current phase of globalization and the forces of economic regionalization could also propel this benign view of India and foster cooperation.

The third point is President Musharraf’s effort at institutionalising the role of the armed forces in the formal power hierarchy. This could be an extremely important development. With the Pakistani army at the centre of domestic action de jure, hopefully the bogey of the Indian threat may be dispensed with. This is based on the assumption that in the past, to stay central to Pakistani polity the army harped on the Indian threat. But with the institutionalization of its domestic role, the military will dispense with this high cost option of demonizing India.

Fourth, in the current process too, both sides have expressed willingness and have charted a mid point between the extreme posturing positions. For example, the earlier Indian insistence to use passports for the Srinagar–Muzaffarabad bus service gave way to use of local identity papers as travel documents. The second important example was Pakistan’s insistence on tying progress on all issues to Kashmir which has purportedly been dispensed with as their call for a definite time period to achieve results.

Fifth, it can be said that positive outcomes from the peace process generates trust and confidence which was earlier lacking. This would be remarkable in coming to an agreement on the otherwise contentious issues of Siachen and the Sir Creek, where the two sides are said to be inches away from a solution.⁶⁴ The economic and commercial agreements while being an end in themselves can also have positive spin offs on political issues.

It would not be inaccurate to state that the international environment is not conducive to the earlier Pakistani policy of low intensity conflict in Kashmir but the hobble of the peace process has given rise to numerous speculations. One dominating account believes that the current Pakistani engagement has a purpose and that is only to keep a lull until the situation changes in its favour.⁶⁵ However, despite the negativities being expressed, it may be more cogent to focus on the gains even though small through the CBMs and the general peace along the LOC in Kashmir.

In conclusion, the Pakistan challenge through external balancing has for over 50 years boxed India into its immediate region. For an aspiring global power, it is important to secure its immediate region to exercise and influence power in other regions. An amicable settlement on Kashmir can also be expected to have a domino effect on the other festering self determination movements across India as well as boost its international reputation as a responsible and an influential state.

 

Table 11.1 India’s Trade with Pakistan

 

Further Readings

Daily Times, 27 July 2005, ‘Wagah Opens for Indian Exports.’

Daily Times, 25 August 2005, ‘Pakistan ties Trade with India to Resolution of Core Issues.’

Lake, David A. and Patrick M. Morgan (eds), Regional Orders: Building Security in a New World (Pennsylvania: Pennsylvania State University Press, 1997).

Nayar, Baldev Raj and T.V Paul, India in the World Order: Searching for Major Power Status (Cambridge: Cambridge University Press, 2003).

Spotlight on Regional Affairs, ‘Determinants of South Asian Stability’, Vol. 24, No. 1, January 2005, p.4.