India-Pakistan: Moving forward

Apart from the Kashmir issue, past Pakistani reluctance to grant the MFN status to India had strong economic reasons too; namely, its fears that the MFN status would be more beneficial to India than to Pakistan, and could reduce the latter to a position of economic dependence on India. It is important to remove these fears from Pakistan's mind, feels B Raman

During his visit to Pakistan in December 1996, Jiang Zemin, the then Chinese President, made a speech titled Carrying forward generations of friendly and good-neighbourly relations and endeavoring towards a better tomorrow for all in Islamabad on December 2, 1996.

He highlighted five points which, according to him, governed China's foreign policy towards South Asian countries. 

He explained one of these points in the following words, "We should look at the differences or disputes from a long perspective, seeking a just and reasonable settlement through consultations and negotiations while bearing in mind the larger picture. If certain issues cannot be resolved for the time being, they may be shelved temporarily so that they will not affect the normal state-to-state relations."

Even though he did not make any specific reference to India or Pakistan, his highlighting this point was widely interpreted in Pakistan as a hint to it that it should emulate China, which has not allowed its long-standing border dispute with India to come in the way of the development of economic and other relations between the countries.

It was seen as an advice to Pakistan that while negotiating with India on the Kashmir issue, it should not allow it to come in the way of normal economic and other relations with India.

Ever since Pakistan became independent in 1947, successive governments have been following a policy of not agreeing to a normalisation of trade relations with India till the so-called Kashmir dispute was resolved to mutual satisfaction.

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While the Pakistani authorities always cited the pending Kashmir issue as standing in the way of normal trade relations, another reason was their fear that their industries might not be able to compete with their Indian counterparts if trade was normalised.

It was reported at that time that Jiang had raised this point more explicitly with the Pakistani authorities and suggested that Pakistan should emulate China's example by normalising its trade relations with India without allowing them to remain frozen until the Kashmir issue was resolved. They reportedly did not accept his advice.

Pakistan's past policy on the question of normalising its trade relations with India consisted of the following:  

(a) Not reciprocating India's action in granting the Most Favoured Nation Status to Pakistan until the Kashmir issue was resolved.

(b) Allowing a strictly limited bilateral trade only in respect of certain commodities included in a positive list without accepting India's suggestion of having a limited negative list mentioning commodities which cannot be traded and allowing restriction-free trade in respect of all commodities not figuring in the list.

(c) Not allowing Indian investments in Pakistan.

(d) Not allowing banks to open branches in each other's territory.

Signs of a new thinking in Pakistan on the question of moving towards a normalisation of trade relations with India despite persisting differences on the so-called Kashmir dispute became evident during the third round of the bilateral talks on economic co-operation held by the commerce secretaries of the two governments at New Delhi on August 2 and 3, 2007.

The meeting reportedly took a significant decision to work for an increase in the value of the bilateral trade from $1.7 billion as it was in 2006-07 to $ 10 billion by 2010.

Among other important decisions taken were allowing specified banks of the two countries to open branches in each other's territory, expanding the trade basket, improving transportation links, reducing tariffs and mutual technical assistance in capacity building.

It became obvious that even while continuing to stick to the stand that there cannot be a normalisation of trade relations until the Kashmir issue is resolved, the Pakistani authorities had started quietly allowing a movement towards a de facto normalisation.

De jure restrictions, but de facto normalisation seemed to be the direction in which the bilateral economic relations started moving.

This trend towards a normalisation of economic and trade relations between the two countries seemed to have lost momentum after the 26/11 terrorist strikes in Mumbai, when attitude towards each other became hardened once again.

Since the beginning of this year, there are again signs of a thaw despite continuing Indian dissatisfaction over the perceived slowness of the Pakistani authorities in taking action against the Pakistan-based masterminds of the 26/11 terrorist strikes and renewed Pakistani concerns over perceived Indian activism in Afghanistan, which seemed to have moved from the economic to the military field.

This thaw became evident during the meeting in March last between Prime Ministers Manmohan Singh and Yousuf Raza Gilani at Mohali in Punjab in the margins of the World Cup Cricket semi-final between the teams of the two countries and the subsequent meeting between Foreign Ministers S M Krishna and Hina Rabbani Khar at New Delhi in July this year.

This process of thaw has since resulted in two positive moves by the two countries. The first is the reported decision of the government of Pakistan to grant the MFN status to India without linking it to the progress in the bilateral talks on the Kashmir issue.

The reported decision is yet to be formalised, but what is significant is that there are no signs of any opposition to it from the Pakistani foreign office and the Army. In the past it was the opposition from Pakistan's foreign office and the Army that stood in the way of a forward movement on this issue. The economic ministries of the Pakistan government had been in favour of this since 1996 onwards.

The lifting of opposition to the grant of the MFN status by the Army is a tentative indication that it has started looking at India through a less hostile prism.

It is important to encourage any sign of new thinking in the Pakistani Army by taking the first steps towards building a military-military relationship by inviting General Ashfaq Pervez Kayani, Pakistan's chief of the Army staff, to visit New Delhi at the invitation of his Indian counterpart.

I have been advocating this for quite some time and reiterate my continued support for it.

The second significant move has come from Prime Minister Dr Manmohan Singh during his meeting with Gilani on November 10,2011, in the margins of the South Asian Association For Regional Cooperation summit in the Maldives.

The Hindu has reported that Dr Singh said that India had decided to move towards a preferential trade agreement with Pakistan and a liberal visa regime for Pakistani nationals. His announcements were apparently meant to reassure Pakistan that its decision to grant the MFN status to India would have economic dividends to it.

Apart from the Kashmir issue, past Pakistani reluctance to grant the MFN status to India had strong economic reasons too; namely, its fears that the MFN status would be more beneficial to India than to Pakistan, and could reduce the latter to a position of economic dependence on India.

It is important to remove these fears from Pakistan's mind.

Pakistan continues to take a rigid stand on one economic issue of considerable interest to India; that is, the right of transit through Pakistani territory of Indian goods moving overland to Afghanistan.

This rigidity might continue for some time till the fears in the minds of Pakistan regarding the implications of India's strategic relations with Afghanistan are diluted. We should not allow this to stand in the way of a forward movement in respect of other economic and trade issues.

The SAARC summit provided an opportunity for meetings between the foreign secretaries, foreign ministers and prime ministers of the two countries.

Even in the absence of any substantive movement on the question of Pakistani action against anti-India terrorists operating from its territory, one is gratified to note the evolution of a new vocabulary between the two countries, which highlights the positive more than the negative and which reflects a budding feel-good atmosphere in the relations between the political leaderships and civilian bureaucracies of the two countries.

This feel good atmosphere is yet to percolate to the armies and intelligence agencies of the two countries. There are as yet no signs of any dilution in the ranks of the die-hard hawks in the analytical communities of the two countries.

It is important to bring the armies, the intelligence agencies and analytical hawks on board if this feel good trend is to be sustained and strengthened.

The only way of doing this is by encouraging greater interactions at different levels.

Nothing like personal interactions to reduce suspicion and distrust. In this connection, I reiterate what I wrote  after the Mohali meeting between the two prime ministers.