Indo-Pak’s underexplored relationship

A few months ago I went to an event called,“The Quest for India-Pakistan Normalization: The Road Ahead,” sponsored by the United States Institute of Peace. As the name suggests, the event was trying to focus on measures to build a more positive relationship between the two countries.

Now I say trying because, like every other India-Pakistan event, majority of the discussions revolved around the frequently debated issues of Kashmir, and the long lasting rivalry that has plagued the sub-continent for the past sixty years–which I do not intend to trivialize under any circumstances.

However, in spirit of the event and the confines we were present in, I appreciated and deemed much more valuable the presentations and conversation that flowed from the second panel which was called “The Underexplored Option: Economic Cooperation as a Path to Peace.” ‘Underexplored’ is a word that best describes Indo-Pakistan cooperation: more so, on the economic front.

Mr. Mohsin Khan, a Senior Fellow at the Peterson Institute for International Economics, provided some compelling insight into the opportunity cost of what he called an “unnaturally small” degree of trade between the two nations.

He brought attention to the huge potential for economic trade and the prospects of peace that can follow if short term and medium term measures are taken towards changing the current situation.

Based on gravity models, the ratio of actual to potential trade between India and Pakistan fluctuates between 0.02 and 0.05 or the percentage of trade between the countries is a meagre two to five percent. These numbers are shamefully small compared to the average of fifty percent trade that takes place between neighboring countries. Obviously acknowledging that India and Pakistan are not just neighbors but bitter enemies, measures to slowly but surely bridge this huge gap in trade is something that the two countries should whole heartedly pursue.

Some trade facilitation measures Mr. Khan pointed out were easing visa restrictions, facilitating sea shipments, increasing rail traffic and opening additional border crossings and bus routes (among several others). This will provide a channel to negotiate more potent issues like tariff barriers in India, and the hostage of transit trade in Pakistan.

In addition he pointed to infrastructure, energy, Information Technology (IT) and FDI, as other areas to build a trade relationship.

Building on Mr. Khan’s ideas, Sanjay Puri, the Chairman of the U.S-India Political Action Committee focused more on the impact such a changed economic relationship will have in terms of prosperity. He emphasized that tapping into the economic potential between India and Pakistan is not just an exercise in peace but a responsibility towards the people of both countries, who are facing the cost of a bitter relationship.

Cross border IT cooperation, pharmaceutical cooperation, and job mobility to a youth that deserves to be employed are among the many benefits that this relationship may bring. He concluded by pointing to the demographics of India according to which approximately seventy percent of India’s population will be under the age of thirty.

This generation will consist of citizens of the globalized world with no first hand memories of the devastating partition. For them economic prosperity and the opportunities it brings is a priority. With similar demographic trends in Pakistan, this new generation can be the drivers of change in a rivalry that has colonized the minds of Indians and Pakistanis. It’s not just a battle of arms but of the minds that needs to be fought. And that’s where the real change lies.

As a part of this generation, these thoughts resonate with my hope for progress towards Indo-Pakistan peace. Being aware of the political struggles the two countries face, I think it is of utmost importance that India and Pakistan begin taking small steps towards exploiting this ‘underexplored’ economic relationship, ultimately pushing political change and over time changing the face of the India-Pakistan relationship.