New U.S. report asks India, Pakistan to expand trade, build confidence

By Ali Imran 

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WASHINGTON, April 24 : A U.S. think tank report released Thursday called on India and Pakistan to reinvest in trade and confidence building, cautioning that in the absence of a dialogue on economic and military relations the two South Asian nuclear powers – who have been locked in a lingering conflict over disputed Jammu and Kashmir region- the issues facing them will worsen.


The Atlantic Council’s South Asia Center argues that heavy military spending in India and Pakistan has in fact been detrimental to the citizens of both countries in terms of security and economic growth.

In India and Pakistan: The Opportunity Cost of Conflict, Atlantic Council South Asia Center Director Shuja Nawaz and Nonresident Senior Fellow Mohan Guruswamy explain how high defense spending and low economic integration into South Asia’s regional economy have come at the expense of those living in poverty.

Although many now favor rapprochement, Nawaz and Guruswamy argue that unless both sides begin a dialogue on economic and military relations, these issues will only worsen.

A lack of strong bilateral trade relations between India and Pakistan has also exacerbated South Asia’s socioeconomic challenges. From GDP to job losses to investment, the non-fulfillment of trading potential is a cost that “neither of the two countries can afford to ignore.”

Nawaz and Guruswamy provide a set of actions both countries can take to decrease military spending and promote confidence building:

• Increase the distance between land forces by withdrawing from border
• Engage in direct communications between militaries, including exchange visits
• Invest jointly in energy, water, and export industries
• Open borders for trade and eventually tourism
Such measures will have a lasting impact beyond India and Pakistan, as the authors note: “economically intertwined and mutually beneficial economic systems in both countries will create a huge peace constituency that will not only be good for the two nations, but also for the region and the entire world.”

“The nub of the India-Pakistan conflict is the dispute over Jammu and Kashmir. Its acrimony is felt in all international forums where the two nations meet. Kashmir remains a potential global flashpoint that could escalate into a nuclear war very quickly,” the report says.

India has a similar conflict with China over huge tracts of territory, the two experts note.

China and India have fought twice, in 1962 and 1967 over this. “But a practical modus vivendi has existed since then. The two countries maintain normal relations and have agreed not to resort to force to settle the dispute. Both have detailed arrangements, formalized by agreements, which are expressly aimed at preventing recourse to force. There is a standstill that prevails.”

Both China and India have agreed that they will negotiate their way to a settlement at some future date. The bilateral trade between the two countries is now in excess of $72 billion and is expected to cross $100 billion by 2015.

“Whether a similar agreement can be worked out between India and Pakistan is the tantalizing question.”

The authors of the report recount that in November 2003 the two countries had entered into a cease-fire agreement that effectively terminated the nightly exchange of fire between the two armies.
“ While this did not result in the thaw that many had hoped for, some resumption of India-Pakistan intercourse in a number of fields were evident. Both countries stepped up sporting and cultural exchanges, and travel became somewhat easier.”




Categories: Economy, Storyline

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