Peace between India and Pakistan is not only necessary for sustaining economic growth but also vital for building pluralistic democracies and sustaining the integrity of both states, says a new World Bank report.
"South Asia today stands suspended between the hope of a better life and fear of cataclysmic destruction," says the report noting "it is not only the poorest region in the world but also one whose citizens live in constant danger of a nuclear holocaust".
"The arms race between India and Pakistan (two countries that account for 93 per cent of the total military expenditure in South Asia) is responsible for this cruel irony," says the report "Promoting Economic Cooperation in South Asia".
India, which is ranked at 142 in terms of per capita income, ranks first in the world in terms of arms imports. Pakistan is not far behind, being ranked 119 in terms of per capita income and 10th in the world in terms of arms imports, it notes.
"The deadly nuclear dimension that since 1998 has been added to the India-Pakistan arms race is seen by the respective governments to reinforce national security through a presumed 'deterrence'."
Apart from the danger of an accidental nuclear war, the current structure of the India-Pakistan tension is such that a terrorist attack can induce military mobilisation and repeatedly bring both countries to a point at which the nuclear button could be deliberately pressed by one, then the other side, the Bank report said.
"Peace and economic cooperation with Pakistan are necessary for India not only to secure its strategic economic interests but also to maintain its secular democratic polity," argues the report.
"A high-growth, open economy framework for India today is inseparable from a liberal democratic political structure," it says, noting "the existing social forces of Hindu nationalism, intolerant of minorities, will undermine India's secular democratic structure as much as its economic endeavour".
Continued tension between India and Pakistan will only fuel extremist religious forces in both countries, to the detriment of their economy and polity, the report said.
"Pakistan, by contrast, is faced with an economic crisis whereby it is unable to sustain high GDP growth due to an aid-dependent economic structure, inadequate export capability, and recurrent balance-of payments pressures."
The persistent high levels of poverty in Pakistan and continued tension with India fuel the forces of religious extremism, it said, noting: "Armed militant groups have now emerged as rival powers to that of the state within its territorial domain, thereby threatening the structure of the state as well as the fabric of society."
"Peace with India will mean a substantially improved environment for the much-needed foreign and domestic investment," the Bank said. "This could play an important role in accelerating and sustaining GDP growth and poverty reduction in Pakistan."
"It is clear that through peace, both India and Pakistan can reap economic benefits for their people and secure their respective democratic structures against the forces of religious extremism," the report said.
"The national security of both countries is threatened not by the neighbour across the border but by internal social forces of intolerance, violence, and poverty," it said.
"A new structure of peace would reduce the danger of cataclysmic destruction from nuclear war and also provide the two nations with economic and political stability."
"Thus, by providing increased security of life and livelihood to both countries, national security in their respective nations will be enhanced," the report concluded.