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Economics, the obvious answer

What can be done between India and Pakistan that will allow both to go down a pathway that could lead, eventually, to a final settlement of the tricky issues. The obvious answer is economics.

india Updated: Apr 10, 2012 01:59 IST

In their ever convoluted attempts to not be held hostage in eternity for their words, diplomats invented concepts like non-papers to indicate trial balloons that, if later popped, should not be treated as having once been official. Prime Minister Manmohan Singh and Pakistan President Asif Ali Zardari this weekend had the equivalent of a 'non-summit' in which the air is pregnant with possibilities but neither government wants to take the risk of playing midwife. That Mr Singh raised terrorism and Mr Zardari tossed out the word 'Kashmir' is meaningless wordplay. Both know they are obliged to do so because of domestic political compulsions. Both know that neither side can do much about these topics because they can only be solved at the end of the peace process, not at the beginning. The real issue, therefore, is what can be done between India and Pakistan today that will allow both to go down a pathway that could lead, eventually, to a final settlement of the tricky issues.

The obvious answer is economics. The most dramatic development in bilateral relations between the two South Asian rivals is the decision of Islamabad to extend most-favoured nation (MFN) status to India. As is well known, MFN should be better termed 'normal trading relations' since all it does is put the two countries on the same trade footing as their other international trading partners. For decades, Pakistan had held this hostage along with various other issues to a settlement of the Kashmir issue. This past year, both the civilian and military arms of its government reached a consensus that developing a full-fledged economic relationship with India was in the country's interest and did not undermine Pakistan's overall stance on Kashmir. Once trade begins to flow, the next stage of the relationship, including investment and corporate joint ventures, could begin to take off.

None of this will be easy. Corporations will be wary given the fickle nature of the relationship. One terrorist attack in India or a change of regime in Pakistan could undermine in a day whatever progress may be made over months. Security concerns will make cross-border travels and money transfers unusually difficult. But the larger gains for India will be well worth it. These will include the creation of a broad-based constituency for stable relations across Pakistan. It will generate the sort of generation next interaction that no longer exists between the two countries. And it will help provide some political and economic ballast to Pakistan, a country whose past hostility has not been able to hold back India's rise but whose collapse would genuinely endanger India's future.