Darkness beset Delhi last week as India witnessed the largest blackout in world history. On two consecutive days, seven hundred million people simultaneously were without power for hours—an ignominious feat for an aspiring superpower. Today, India’s rise looks more ambiguous than it was at the height of the current global economic crisis. Declarations of India’s arrival have proven to be premature. But amid the gloom, light shines from its western border as the doors of trade with longtime rival Pakistan slowly open.
The 1947 partition of British India and three subsequent wars progressively reduced the flow of people and goods across the Pakistan-India border. Over time, historic trade routes and many border crossings were closed. Despite a host of trade barriers, bilateral commerce has continued by way of the black market and indirect routes like Dubai, adding to the costs of both consumers and manufacturers and denying Islamabad and New Delhi much-needed tax revenue.
But economic pragmatism is making its way into South Asia. In late July, India announced that it would permit foreign direct investment from Pakistan, except in sensitive industries that deal with national security. The move comes nearly a year after Pakistan granted India most-favored-nation (MFN) trading status. Bilateral trade liberalization is part of a larger normalization process that in the past thirteen years has seen its ups and downs, with alternating fits of bonhomie and scorn. A comprehensive Pakistan-India peace has been elusive, but what is clear is that the two countries are proficient in the language not only of war but also of peace. The challenge has been to enact the script of peace.
The subcontinent has seen three major attempts at Pakistan-India rapprochement since the late 1990s. In 1999, less than a year after conducting nuclear tests that shocked the world, Pakistani prime minister Nawaz Sharif and his Indian counterpart Atal Bihari Vajpayee—a leader of the Hindu nationalist Bharata Janata Party—held historic talks in Pakistan. But months after the summit, Pakistan’s army chief General Pervez Musharraf launched a daring, tactically brilliant but strategically unsound operation to seize the Kargil region of Indian-controlled Kashmir, nearly precipitating a full-scale war. Musharraf’s goal was to internationalize the Kashmir conflict, to compel foreign actors to see it as in the world’s interest to bring India to the bargaining table with Pakistan.
Musharraf did this without the consent of Sharif, whom he would overthrow by the fall of that year. But in 2002, Musharraf too began a determined effort for peace in South Asia, effectively continuing the process Sharif initiated. Courageously, he rolled back support for Kashmiri jihadis, which spurred multiple assassination attempts on him and brought about a war between the Pakistani state and its former jihadi assets that continues today. The Musharraf-led peace venture met its end as Musharraf’s political troubles grew in 2007, culminating with his resignation from the presidency the next year. But the two sides were closer to a deal than ever before. In clandestine talks, Pakistani and Indian officials drafted a “nonpaper” that articulated the broad outlines of a comprehensive peace deal, according to a report by journalist Steve Coll. As bilateral dialogue came to a halt, the 2009 terrorist attacks on Mumbai perpetrated by the Pakistan-based Lashkar-e-Taiba (LeT) brought the two countries to the brink of war once again.
Beginning last year, the pendulum has swung once again toward normalization. Pakistan has given India MFN status and allowed for the transit of Afghan-Indian trade through its territory. The Pakistani and Indian prime ministers have conversed briefly on the sidelines of global summits. Formal bilateral meetings have risen to the ministerial level. Pakistan and India have held two rounds of talks on eight issues, including on Kashmir and more resolvable disputes over the Sir Creek waterway and Siachen Glacier. In September, India’s top diplomat will head to Islamabad. Prime Minister Manmohan Singh could follow him later in November. Retired Pakistani diplomat Najmuddin Sheikh has speculated that Singh and his Pakistani counterpart could conclude agreements on Siachen and Sir Creek—gateway issues to a final resolution of Kashmir.
Sheikh’s forecast is perhaps a bit too sunny. Pakistan-India talks are moving at a glacial pace. Each side is hindered by sclerotic bureaucracies. Meanwhile, the future of the government is uncertain. An activist supreme court might disqualify a second prime minister this year. Coalition allies could abandon their leader, the Pakistan People’s Party, and compel it to call early elections in the winter. A caretaker government in the lead-up to the polls would not be able to conclude agreements with New Delhi. The process would have to be put on hold temporarily.
Despite the instability in Pakistan, the latest phase of Pakistan-India rapprochement has legs. The process was not impeded by the disqualification of Prime Minister Yousuf Raza Gilani in June. And whoever leads Pakistan’s civilian government in the coming years is likely to support peace with India. Indeed, there is a broad political consensus in Pakistan in support of normalizing relations with its neighbor to the east. Pakistan’s five largest parliamentary parties—which together hold 90 percent of its lower-house seats—all support a negotiated resolution to the Kashmir conflict and expanding trade with India. On the other side of the border, Prime Minister Singh has been a steady advocate of peace, though his voice is drowned periodically out by more strident elements in his Congress party.
So what holds back a peace settlement? First and foremost is Indian complacency. Being the larger power and in control of most of Kashmir, the status quo is more favorable to New Delhi than Islamabad. There has yet to be an Indian politician who has matched Musharraf's resolve to make concessions for the sake of a comprehensive agreement.
Second, there is the unfinished business of the Mumbai terror attacks of 2008. Pakistan has yet to conclude the trials of LeT operatives charged with involvement the terror attacks, nearly three years after they were charged, making it difficult for New Delhi to trust Islamabad.
Third is the uncertain regional outlook amid a U.S. withdrawal from Afghanistan. As American forces depart, will Pakistani jihadists set their sights on Kabul or face east toward Pakistan or India? Pakistan's leadership lacks a coherent strategy to subdue the jihadists. The default option might be to toss the jihadi hot potato in India's direction. Alternatively, Pakistan could transition actors like the LeT's Hafiz Saeed into a type of public role that resembles political activism, though this likely would produce violent splinter groups.
These impediments along the way to normalization are real. But both countries cannot dismiss the costs of maintaining the status quo. Pakistan and India are poverty-ridden countries in the world's least economically integrated region. They are tied for the lowest life expectancy in South Asia, excluding Afghanistan. Sixty-five percent of Indians and 52 percent of Pakistanis lack access to improved sanitation, according to a 2012 UNICEF report. In India, a glaring 50 percent of the population practices open defecation (double the rate in Pakistan). Pakistan's economy is expected to grow by less than 4 percent this year. And India will experience a massive drop in the rate of growth, falling below 6 percent for the first time in a decade. Both countries' economies are growing at rates below what's necessary to employ their massive young populations.
Neither India nor Pakistan can shine with the lights off. Energy starved, both would benefit from gas pipelines originating in Iran or Turkmenistan. Either one would cross Pakistan into India. With Indian doors at last open to Pakistani capital, business houses such as the Nishat Group can now invest in India's cement, retail and textile industries. Likewise, Indian venture capitalists can leverage opportunities in Pakistan's information technology sector, which needs infusions of both cash and strategic direction.
The pull of history, hard-liners and a power imbalance have kept Pakistan and India apart. Ironically, economic difficulty could be the tie that binds the neighbors together and raises the prospects of their respective populations flourishing amid a new sense of regional security.
Arif Rafiq is an adjunct scholar at the Middle East Institute and president of Vizier Consulting, LLC, which provides strategic guidance on Middle East and South Asian political and security issues. He tweets at @pakistanpolicy.