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Snapshot

India needs to relook and change its diplomatic policy towards Pakistan and its sponsored terror

India’s economic strength should be properly deployed to change Pakistan’s agenda

India has been pursuing traditional diplomacy in handling Pakistan and its use of State sponsored terror. This approach has not succeeded.

Using economic strength as an instrument of foreign policy is the best way to deal with Pakistan, in a manner that satisfies India’s domestic objectives, while ensuring that its actions don’t attract adverse international attention.

Pakistan’s ability to force its agenda on India, peaked in 1991 - when the Pakistan `won’ in Afghanistan and India’s ally, the USSR, withdrew. India had both political instability and a serious insurgency in Kashmir and had a less robust economy. India has moved ahead since then – with the gap only increasing. We hypothesise that this was because Pakistan, in 1991, chose Islamisation as its path forward, while India chose liberalisation.

By 2001, (after Kargil and 9/11), though India’s progress relative to Pakistan was obvious, Pakistan continued on a path of increasing and more radical Islamisation, which caused it to fall further behind and made a normal relationship with India impossible.

2007-08 represented a tipping point in India’s strength relative to Pakistan. Firstly, India’s per capita income overtook Pakistan (India’s GDP growth has been higher than Pakistan’s in every year since 1991) and the gap keeps increasing. Secondly, the number of security forces and civilians killed in Kashmir, since 07-08, dropped to below 100 and those numbers continue to broadly decline – while Pakistani casualties in its own war on terror have increased.

India will soon start `adding a Pakistan’ to its GDP each year. At the same time, internal conflict within Pakistan and societal divisions, have made it far more unstable than India and can give India leverage that it hasn’t capitalized upon. These include the various ethnic and social divides in the army (`Green vs greener’, Punjabi vs. Pashtun), insurgencies in Baluchistan & KP provinces etc. All happening amid steady radicalization of Pakistani society.

Added to this are unfavourable external and economic factors. Pakistan has never been more isolated internationally, with its neighbours (Afghanistan and Iran) against it as well as its traditional allies (Gulf countries & USA) having a warmer relationship with India than Pakistan.

Declining water and power availability, low literacy and adverse balance of payments are other problems Pakistan faces.

In this context, we believe the relationship between India and Pakistan would soon resemble that between South and North Korea. Thus India’s policy should be based on:

Silent economic strangulation: Measures that can be taken quietly to exacerbate Pakistan’s economic problems.

Hit exports: Textiles make up over half Pakistan’s exports, led by cotton products. Any dent in this through enhanced Indian exports, could push Pakistan’s BOP deficit over the edge- while helping our farmers. Banning cotton exports to Pakistan ($ 381 million in 2014) and a rail subsidy (eg. from Gujarat to TN) are required. The interest subvention scheme for textile exports should be extended to cotton yarn and merchant exporters, while the MEIS scheme can have a 5% benefit instead of 3% for tariff lines significant to Pakistan. Indian companies could also be subsidised to acquire assets of companies in Vietnam and Uzbekistan, which compete with Pakistan for cotton exports.

Basmati rice is Pakistan’s second largest export and given the very low exporter margins, even a minor subsidy (eg. reduced rail freight) will severely hit Pakistan’s exports.

Remittances: Remittances (mostly from the Middle East) are Pakistan’s 2nd biggest source of foreign exchange. If the Indian Government steps in as a `placement agency’ for State run companies in the Middle East, it could ensure that the cost of recruitment for both employer and worker are reduced (no commission charged), worker quality improved and more Indian’s are recruited from lower wage areas in the country (rather than higher income states like Kerala) who would be induced to work at the falling wage levels in the Gulf, thereby displacing Pakistani workers.

Trade: India should continue extending MFN (most favoured nation) to Pakistan, even if Pakistan does not, because it does not make any difference to Indian trade, but enables India to show that it believes in a prosperous Pakistan through enhanced trade (which is why normal diplomatic and track 2 engagement should continue). Trade policy should focus on the impact on inflation, or economic competitiveness in Pakistan. Thus power should not be exported, as it would alleviate Pakistan’s crippling power shortages, nor beef (the increased price of which leads to social unrest). India can also stipulate that foreign companies bidding for projects in India, cannot be a supplier to any Pakistan state run organisation (though exceptions can be made and bans can be on grounds of national security, rather than official policy). Visa denials for Pakistani executives (on the same grounds) would have a far bigger impact on the Pakistani business environment (and none in our media) than a visa denial to a performing artiste.

Afghanistan: The developing of Chabahar port in Iran and development work in Afghanistan are `baby steps’ in what should be a much larger intervention to develop Afghanistan and use it as a base to undermine Pakistan. Afghanistan has 0 duties on many items which have high tariffs in Pakistan. Exporting these items to traders in Afghanistan, who smuggle them across into Pakistan, will not only undermine Pakistan’s import duty collections, but finance freedom fighters in Baluchistan – whose representatives can handle distribution into Pakistan. To facilitate this, India needs a military presence (to train the Afghan army) in Nimroz province - bordering Iran and Baluchistan (where it has built the only highway in the province), along with enhanced development of the railway from Iran to Afghanistan and increased development work. India’s relations with Iran and Afghanistan have never been better and their relations with Pakistan have never been worse, which gives India the perfect opportunity to enhance its profile in the region.

Water: Pakistan will soon be one of the most water stressed countries on earth (per capita water availability will soon be half of India’s). Even if India sticks to the provisions of the Indus water treaty -in which 80% of Indus water goes to Pakistan, it can take several legitimate measures to restrict water availability for Pakistan such as:

-Work with Afghanistan to complete hydel projects on the Kabul-Kunar river system, (which contributes 16% of the total Indus river water available to Pakistan)

- Upper Indus rivers: Using the Kishenganga project arbitration award as a template, complete other identified `run of the river’ projects. India has exploited only about 6000 of the 20,000 MW of power potential from these rivers. Completing projects on the Indian side quickly also renders unviable Pakistan’s own hydel projects and reduces the flow of water to Pakistan in winter. India should also fully utilise the irrigation potential allowed under the treaty – currently only 0.79 million acres are irrigated, of the 1.34 million permitted.

- Lower Indus rivers: Extending the Rajasthan canal to Kutch (a project the PM identified back in 2002) and completing the Sutlej-Yamuna canal, will sharply reduce water availability to Pakistan from the 3 lower Indus tributaries (the water from which is fully allotted to India under the IWT, but not fully exploited).Taken together, these measures will badly affect water availability for Pakistan’s rabi crop.

Exploit Internal divisions in Pakistan

Kashmir dominates India-Pak discussions and puts India on the defensive. However, Pakistan’s own disaffected ethnic groups want `Azadi’ more than Kashmiri’s in India and form a larger proportion of Pakistan’s population. The increasing economic gap between India and Pakistan also means that income levels in Indian Kashmir (already higher than POK) would result in unfavourable comparisons with POK (where the level of autonomy and freedom is possibly less than in Indian Kashmir). This is missing from GOI’s narrative on Kashmir.

Increased tourism can quickly result in sharp increases in income and employment for Kashmiris. The development of tourism is constrained by poor transport connectivity in the State. The completion of the Udhampur-Srinagar-Baramula railway can be a game changer (currently barely 10% of the number of tourists visiting Vaishno-Devi, visit the Kashmir valley), as can building the Balaspur-Mandi-Leh railway – possibly a better showpiece for Japanese aid and technology and more useful to India, than the bullet train project. Increased operating hours for Srinagar airport, a massive increase in hotels and development of rural tourism are required to exponentially boost tourist numbers.

Pakistan faces serious internal conflicts from the Baluchi insurgency and from the Pak Army’s operations against the Pashtun population in its North West. If India helps Afghanistan develop TV and radio, it can have media channels (with a heavy Bollywood influence) in Pashto & Baluchi, disseminating news content influenced by India, which will strengthen the Baluchi & Pashtun people’s struggle against the Pakistan state. (e.g. Pak army kills Pashtun civilians in air strikes, though most members of terrorist groups are Punjabi). The targeted use of visas (for ethnic minorities), development work in Afghanistan, water projects that help Afghan Pashtun’s, trade from Afghanistan that helps Baluchi’s (who can also smuggle weapons) should all be undertaken.

Reduced availability of water will also exacerbate tensions between Sindh and Punjab and between South Punjab (Saraiki speaking) and North Punjab (Punjabi speaking). Military options

Pakistani Army has been able to run to country, despite failing to win a single war, because the public are unaware of its failures.

If India’s military doctrine aims at degrading Pakistan’s economic infrastructure – which can be done since its key cities, river headworks and power plants are close to the border, the impact would be quickly felt (e.g. in the form of crippling power shortages, or severed rail links) by Pakistani citizens.

India’s unofficial Cold start doctrine, which looks at a rapid mobilisation, can be tweaked, to include as the principle objectives, attacks on economic infrastructure rather than only Pakistani military formations. If India announces that it will conduct a limited duration war (e.g. punitive raids in response to a terrorist attack) and NOT seek to occupy Pakistani territory or demonstrably defeat the Pak army, the risk of the conflict going nuclear is reduced.

An Indian military presence on Pakistan’s Western border i.e. basing rights for the Indian Navy at Chabahar, an airbase (where the IAF `trains’ the Afghan air force), providing security in Nimroz province and protecting hydel projects would be a nightmare scenario for Pakistani defence planners, with the psychological impact well in excess of India’s actual military presence.

(This is a summary of a policy paper by the authors)