India + Pakistan: The Business of Peace
WHY YOU SHOULD CARE
In the wake of India's elections this spring, new openings on trade and investment could help promote peace with neighboring Pakistan — an outcome good not just for South Asia, but also for the entire globe.
By Emily Cadei
When it comes to the India-Pakistan relationship, history is full of missed opportunities. But sometimes, it also offers second chances.
This spring, the Hindu nationalist Bharatiya Janata Party (BJP) is expected to win India’s massive parliamentary elections, which would usher in the controversial Narendra Modi as the party’s first prime minister since Atal Bihari Vajpayee. It was Vajpayee who, 15 years ago, boarded the inaugural Delhi-to-Lahore coach line to visit the historic Pakistani city, the first trip made by an Indian prime minister to its Muslim-majority neighbor in a decade.
Given Modi’s crediblity among hard-line Muslims, it could actually open a sort of Nixon-to-China moment for Delhi.
Pakistani Prime Minister Nawaz Sharif was the one to welcome Vajpayee in that historic bid at “bus diplomacy” back in 1999 — just a year after both countries tested a nuclear weapon. And, after losing power in an unceremonious coup d’état just months later, who should once again be at the helm of Pakistan’s government? Sharif, who returned to power in the 2013 elections, the first democratic handover of power in the country’s history. Chief among the Pakistani prime minister’s election pitches: picking up where he left off on improving ties with India.
South Asia commentators are quick to point out that Modi is no Vajpayee — he’s far more of a firebrand with a troubling tendency for tolerating anti-Muslim behavior. But all the teeth gnashing over that history, and what it means for Muslims in India as well as Pakistan, has obscured the way Modi’s election could actually warm the frosty relationship, using economic ties as the tip of the spear.
Though no one expects a military détente between the two nations — once part of the same British colony — anytime soon, experts roundly view trade and investment as the way to begin to thaw decades of mistrust, utlimately lessening the risk of nuclear war on the combustible subcontinent.
That would be good news for the international community, and particularly for the United States at a time when it’s looking to wind down its security presence in the neighborhood.
Pakistan’s exports amounted to just $25 billion in 2013, while India, despite its size, registered $312 billion in exports, a mere fraction of rival China’s $2.2 trillion.
The economy and business are “the leading edge of the relationship,” says Alyssa Ayres, until recently a senior State Department official working on South Asia policy. And historically, “that’s been a great way that countries have managed to normalize relations.”
Modi’s Nixon Moment
The popular narrative paints Modi as hostile towards Muslims — he’s been accused of looking the other way during Gujarat’s bloody anti-Muslim riots in 2002. But surprisingly few South Asia analysts expect that to factor into India-Pakistan relations after he takes office. In fact, given Modi’s crediblity among hard-line Muslims, it could actually open a sort of Nixon-to-China moment for Delhi (though prior Indian leaders have laid far more groundwork for Modi than the United States president did on his groundbreaking 1972 visit).
Even in Pakistan, the reaction to the rise of Modi and his Hindu nationalist party has been relatively mild — and some in both India and Pakistan even hope he could be a change agent.
That optimism is based on the growing consensus among the powerful business communities in both countries on expanded bilateral trade and investment. According to the World Bank, South Asia is the least commercially integrated region in the world, restricting economic growth across the subcontinent.
Pakistan’s business class was one of Sharif’s key constituencies in 2013, and continues to have important sway. The same is now true for Modi in India.
”All the moneybags are with [Modi],” says Majyd Aziz, a prominent Pakistani businessman and former president of the Karachi Chamber of Commerce & Industry. ”They are the ones who are very pro-trade with Pakistan.”
Modi’s economy-first stance will require a large dose of pragmatism — and peace.
It’s obvious why Pakistan would want better access to India’s market of more than 1.2 billion people for its textiles and other leading industries, as well as more Indian investment and services. But India also stands to benefit from market access to its western neighbor, which has a population of 180 million and growing fast, and is a gateway to Iran, the Middle East and energy-rich Central Asia.
A Trading Civilization
Another sign of the new Indian government’s attitude towards its neighbor: the BJP political platform released this month, which puts a much heavier emphasis on trade than in the past. Ayres points, in particular, to changes in the manifesto that de-emphasize Hindu nationalism and instead promote India “as a great trading civilization.”
Modi’s economy-first stance — agenda item No. 1 is returning India to the high-flying economic growth it enjoyed a decade ago, while attacking the corruption that’s contributed to current stagnation — will also require a large dose of pragmatism … and peace. ”An unstable Pakistan-and-India relationship would only destabilize the region and discourage investment,” observes Tanvi Madan, the director of the Brookings Institution’s India Project.
So does this mean that the newly seated prime minister will be hopping the first bus to Lahore? Doubtful.
Both he and Sharif have their plates full with domestic challenges — and future overtures could easily get derailed. Worst-case scenario? Another terrorist act staged by Pakistani militants like the horrific 2008 Mumbai attack, which would all but guarantee an Indian military response.
All the same, in a relationship steeped in pessimism, it says something that the incentives are, for the moment, aligned in a positive direction. The question is whether India and Pakistan’s new leaders will seize that opportunity.