Opinion India and Pakistan can bond over economic issues to bypass enmity


Field Marshal
Field Marshal

by Zarnaab Adil Janjua

As the airstair on Pakistan One slowly unraveled at Palam Airport in New Delhi on the 26th of May 2014, many naively hoped that this was the dawn of a new chapter in the historically tense Indo-Pak relationship. Pakistan One was carrying the Prime Minister Mian Nawaz Sharif as he landed in Delhi to attend his counterpart’s inauguration. The coveted handshake was beamed all over the world as those with a keen eye on South Asian affairs hoped that this BJP Prime Minister would bring the same vivacity to Indo-Pak relations that Atal Bihari Vajpayee did. Understandably, Modi enjoyed a tainted reputation in Pakistan but if Sharif was willing to overlook it so were many others.

The presence of the other South Asian leaders was dwarfed by the Nawaz-Modi dynamic but as long as their union meant prosperity for their region, they did not mind. Fast forward four years and Indo-Pak relations are at their lowest ebb in perhaps a decade with cross-border attacks, the Jadhav case and lack of progress on terror cases causing discontent on both sides.

What many don’t realise are the spillover effects of the enmity between the two warring neighbours. Due to the friction between Pakistan and India, all of South Asia has to suffer. Despite being home to a whopping 1.7 billion (almost one-fourth of the global population) and with an average economic growth per annum of 7 per cent, South Asia is perhaps the least socio-economically integrated region in the world. This fact is alarming in light of the fact that the region enjoys shared history, culture and geography and political systems.

The World Bank reports that Intra-regional trade accounts for only 5 per cent of South Asia’s total trade, compared to 25 per cent in ASEAN republics and intra-regional investment is smaller than 1 per cent of overall investment. An interesting tidbit on the situation is the fact that it costs India 20 per cent less to trade with Brazil over 9000 miles away than it does with to trade with Pakistan just next door due to red tape. The South Asian region has one of the highest working-age populations and a fertile environment for entrepreneurship.

Despite this array of possible opportunities, this potential remains untapped. Due to this hitherto untapped potential the region is home to 40 per cent of the world’s poor with high poverty and abysmal statistics for school enrolment and access to healthcare and sanitation.

All of these problems can be undone with greater regional integration but this seems a mammoth task due to a number of reasons. Chief amongst these are the historical political tensions, security issues and cross-border conflict as well as the relative asymmetry in the size of South Asian countries. Another hindrance is the high trade costs, regulatory impediments and lack of infrastructure.

Past experiences of efforts to foster regional cooperation have been met with hostility from skeptics (often right-wing) and those who oppose it due to sheer misinformation. Though risky, efforts at regional integration can pay high dividends and prove exceptionally rewarding. There are a number of reasons for doing so.

Let us look at the US-Mexico model for inspiration. Despite the underlying animosity, much of which came to the fore during President Trump’s run for office both countries are major trading partners with the total money value of all commodities traded coming up to $580 billion dollars. This gives both countries a stake in the other and keeps a healthy relationship going despite any figurative or actual walls that might be built.

Similarly, despite being arch-rivals, the United States and China enjoy a total two-way trade of up to $578 billion. Even in the Middle East, despite a total diplomatic boycott, the Emirates still get 45 per cent of its energy needs from the state of Qatar. There is certainly a leaf to be taken out of the books of these countries as far as South Asian countries are concerned.

For the two largest economies in the region, Pakistan and India, economic ties are virtually non-existent. This vacuum gives way for extremist narratives to dominate mainstream discourse; the establishment on the Pakistani side and the socio-political right wing in India. For a stable peer dynamic, it is essential to rise above the extremist rhetoric and give each other a stake in each other’s economy.

Not only will this greater communion make Indo-Pak tensions harder to come by but will also open doors for other South Asian countries, such as Afghanistan, Nepal and Bangladesh. Again, as the World Bank reports, trade between India and Pakistan can rise up to $20 billion and Bangladesh can increase trade with India by up to 300 per cent. And one hopes this synergy will lead to greater constructive discourse on forums such as SAARC and also give us a fruitful implementation of treaties such as the SAFTA.

The implementation of greater regional cooperation requires a two-fold approach. Firstly, there needs to be a narrative built around this cooperation with greater people-to-people contacts. Secondly, there is the technical aspect of doing away with regulatory impediments and doing away with needless red tape and building the required infrastructure. Policymakers on both sides need to have an informed policy dialogue with an aim of realising the inimitable benefits of increased regional cooperation. Greater prosperity for the region awaits, all we need to do is look past petty biases.