Trade against terror and tragedy

The Financial Express, March 30, 2008

By Pradeep S Mehta, Abid Suleri

While reporting the terror attack on the Delhi-Lahore train, FE (February 20, 2007) carried an editorial saying, “…it is during such moments of tragedy that the real basis of subcontinental peace can be glimpsed. That basis does not lie in complex territorial negotiations, but in more and more, ultimately leading to free and open, two-sided flows of people and business”.

Despite resumption of rail-road links, the journey between the two neighbours is critically dependent upon the security and safety of travellers. The governments of the two countries must address the challenges of security to sustain the renewed interest of the people in visiting each other more frequently. The Indian Express-Dawn News-CNN-IBN opinion survey in both countries and an NDTV 24X7 debate in Karachi give a clear message that people on both sides of the border feel that friendship and cooperation (read trade) are a prerequisite for improving relations between the two neighbours.

There are enough examples showing how treaties of sharing river waters, cross-border infrastructure projects and nuclear rapprochement have partially bridged divides between hitherto not-so-friendly or even belligerent countries. The Indus Water treaty of 1960 has ironically survived more than 47 years of conflict over Kashmir. Likewise, the war between Cambodia and Vietnam has not prevented them from reaping the fruits of a 1,500-km long crossborder highway project. And the Middle East Regional Cooperation projects have encouraged trade and thereby peace and prosperity in the region.

India and Pakistan are regional nuclear powers and have recently exchanged lists of their nuclear installations. However, mere exchange of lists is not sufficient cover for an unwarranted action by either party. The Argentina-Brazilian nuclear rapprochement is an example worth emulating. They initiated bilateral efforts towards nuclear rapprochement in early 1980s. During 1985-88, they pursued the issue bilaterally and signed an agreement, which was made legally binding in 1989. Subsequently, they became the members of regional and global non-proliferation regimes by taking the issue to the international forum. This agreement encouraged the countries to seek cooperation in the economic sphere as well. Having realised that closer economic relations facilitated by free trade would further strengthen understanding and mutual cooperation, the two countries persuaded Paraguay and Uruguay to form the South American Common Market (the Mercosur) in 1991. They were joined by Chile in 1996 and Bolivia in 1997. The common market was formed with an objective to enhance trade and investment among these countries. In a similar vein, Safta offers us an opportunity to make it a vehicle of peace and prosperity in the South Asian region.

Such vehicles of peace have become very important, given the growing incidence of terrorism in the sub-continent. Until recently, it was only India that was a victim of cross border terrorism, but of late, Pakistan has also experienced it. This has demonstrated that terror has no religion and knows no national boundaries. Terrorism has thus become a common problem for both nations. Cooperation between the two countries on this issue will go a long way in building trust and confidence and mitigating myths and distrust between the nations.

Historically, Pakistan has been a close ally of the US. The US has been helping Pakistan not only economically but also in many other ways. The US considers Pakistan a great ally in combating international terrorism. Of late, India has also inked a civilian nuclear supply agreement with the US to meet its rising energy needs, and many political observers comment that in doing so, it has compromised its long-standing stance of non-alignment. Keeping such rhetoric aside, it may be beneficial to look for opportunities within the framework under construction by which the US (and EU) foreign policies can work in favour of supporting bilateral initiatives.

River diplomacy in Argentina, for example, accelerated bilateral cooperation in the nuclear arena. The initiative to expand Indo-Pak “bus diplomacy” could also flower with EU and US support. To create peace through economic (trade) cooperation in the Middle East, for example, the US has offered a Qualifying Industrial Zones scheme under its Generalised System of Preferences. Under this scheme, exports from Jordan and Egypt containing inputs from Israel can enter the US market duty free. A similar preferential access scheme, if offered by the US to India and Pakistan, would be an element in the mutual cooperation efforts between the two countries for peace in the region.

Some experts observe that there is little scope of trade expansion between India and Pakistan as the countries are competitors rather than complements in the world Economy. However, a large illegal/informal, border trade indicates the opposite. Though official bilateral trade figures currently stand at slightly less than $1 billion, the illegal trade is in the region of $1.5-2 billion. Informal trade, through a third country, is another $1 billion. Though informal and illegal trade figures are mere guesstimates, they nevertheless indicate the huge potential for enhanced trade relations between India and Pakistan.

– Mehta is Secretary General CUTS International, Jaipur and Dr Suleri is Executive Director of Sustainable Development Policy Institute, Islamabad. Dr NC Pahariya of CUTS contributed to this article. These are the personal views of the authors.

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