So for years the talk has been of war, militancy, terrorism, and now the nuclear threat. And yet history entwines the two countries together with bonds of paradox. India derives its name from the river Indus, which flows in Pakistan. The Partition of 1947 created a state for India's Muslims, but there are more Muslims in secular India than in Islamic Pakistan. The two countries share common languages, costumes, customs, and cuisines; when their citizens meet abroad, they slip easily into camaraderie. (Many is the time a Pakistani cabbie in New York has refused to take money from an Indian passenger, saying only, “You are my brother.”) Indian films, music, and clothes remain wildly popular across the border, and Pakistani cricketers and musicians are lionized in India. A national of either country visiting the other is soon overwhelmed with the hospitality showered upon him by anyone discovering where he is from.
Strikingly, as part of his peace overture in Islamabad, Prime Minister Vajpayee, once a leading member of a party whose platform called for the undoing of Partition and the re-creation of an “undivided India,” suggested that the two countries and their sibling, Bangladesh (once East Pakistan), jointly commemorate the 150th anniversary of the great revolt of 1857. His proposal was received warily; history has so far been a force for division on the subcontinent, not of unity. But Vajpayee had proved he could transcend the past by paying tribute at the Minar-e-Pakistan in Lahore, a shrine to that country's founding. And Musharraf, a trained man of war whose own family left India for Pakistan upon Partition, has shown signs of his determination to reinvent himself as a man of peace.
“History has been made,” President Musharraf told a news conference after his meeting with Prime Minister Vajpayee. The challenge for both countries is now to demonstrate that history has also been overcome. Till then, those who contemplate peace also find their hands shaking — with fear of the alternative.
66. Trade for Peace
FOR YEARS, INDIA SEEMED PERVERSELY PROUD of its declining foreign trade. During the first four decades of our independence, our exports of manufactured goods grew at an annual rate of 0.1 percent until 1985; as a result, India's share of world trade fell by four-fifths, or 80 percent, from 1947 to 1987. This was perhaps understandable in the postcolonial context because India's closed and statist economic policies were principally a political and cultural reaction to British imperialism. After all, the East India Company had come to trade and stayed on to rule. So our idea of self-reliance combined a Nehruvian concern for distributive social justice with a profound mistrust of the international economic forces that had enslaved the country for two hundred years. Economic self-reliance was seen as synonymous with independence itself. So who needed trade when we were going to make everything we needed ourselves?
The attitude sank deep roots in the national consciousness. We saw it as recently as the mid-1990s, in the hue and cry that erupted over the “Uruguay round” negotiations of the General Agreement on Tariffs and Trade (GATT), which culminated in the establishment of the World Trade Organization (WTO). Ideologues fearful that free trade would involve surrender to foreign imperialist interests made common cause with protected industries anxious about new patent rules; both were supported by idealists dreading the effects of free trade on the common man (for instance, the end of affordable medication for the Indian poor). Of course, many of the fears were exaggerated, but agitators called for India to pull out of GATT/WTO altogether, even if this would have been calamitous for the country.
How different things have been with India's leading role in the WTO on the current “Doha round” of trade negotiations. The most significant proof of India's maturity as an independent country has been the willingness of our leadership to accept, at long last, that economic interdependence is not incompatible with political independence. Around the world, leaders have realized that the main reason developing countries have not caught up more rapidly with developed ones is that they were closed to the world economy and therefore to the benefits of increased trade and foreign investment. Whereas not very long ago, 90 percent of the developing nations — members of the “Group of 77,” which actually comprises over a hundred countries — ran closed economies, today only Myanmar (and that too not entirely) resists the siren call of the global marketplace. In every country, trade barriers are being lowered, imports and exports increased, foreign capital avidly sought, legal systems are being brought into line with the needs of international business, tax and property laws are being reexamined against foreign standards, and restrictive rules and regulations are being scrapped. More and more economies are being “plugged in” to the global system in what is a self-reinforcing process.
What is true at the global level is not, however, what is practiced next door to home. India-Pakistan trade is negligible. The two countries, which shared the same economic and political space before Partition, and which should logically be each other's major trading partner (as Canada is to the United States, or Belgium is to the Netherlands) hardly buy from each other. Only 0.2 percent to 0.4 percent of our exports go to Pakistan, and only 0.2 to 0.6 percent of our imports come from there. (Of course, a great deal of illegal trade is being conducted by smugglers on both sides, but one can scarcely count that.) The general assumption is that the tensions and the history of conflict between the two countries condemns us to a continuation of this pattern; indeed, given that for nine years (1965–74) there was no trade at all between us, the attitude is that the modest level of trade we have is better than nothing.
Indians also point out that much of the reluctance to open up trading relations comes from the Pakistani side, both out of a fear of being swamped by Indian products and from a policy posture that normal economic relations cannot be established until Kashmir is solved to Islamabad's satisfaction. That being the case, the conventional wisdom is that any Indian argument for free trade across the border is essentially self-interested. So I was all the more intrigued to read an essay by Karachi-based social scientist S. Akbar Zaidi in the quarterly South Asian Journal arguing that not only do both countries stand to gain from freer trade between them, but that Pakistan stands to gain more.
The case is clear enough. Pakistani consumers are still buying Indian goods — but they are buying at double or triple the price by importing them from countries like the United Arab Emirates, which repackage Indian-made products for profitable resale to Pakistan. Yet, even at times of political tension, India remains the only obvious source of immediate essential food supplies whenever shortages arise in Pakistan. In 1990, Zaidi writes, India “helped Pakistan tide over a potato and onion crisis,” and during a sugar shortage in 1997, it imported fifty thousand tons of Indian sugar. Where else could Pakistan have acquired food supplies on an emergency basis but from its biggest neighbor?
Zaidi cites a study from Pakistan's Ministry of Commerce pointing to various practical advantages — lower transportation costs, cultural affinities, similar tastes — which point to complementari-ties between India and Pakistan as trading partners. The ministry concluded that “the economic benefits of liberalizing trade with India outweigh the costs.” Not only would Pakistanis pay lower prices for Indian goods, thereby increasing their purchasing power, but smuggling would decrease, leading to improved revenue for the government of Pakistan from legal trade. The Karachi Chamber of Commerce and Industry has conducted a sector-by-sector survey of the impact of greater trade with India on the Pakistan economy and argued that even the obvious negatives had positive implications. For instance, though cheaper iron and steel from India would impact on those industries in Pakistan, they would also reduce high inventory costs in Pakistan's engineering sector. Cheaper Indian raw materials could revive ailing Pakistani businesses and help generate more employment. And, of course, a vast Indian market would open up for Pakistani manufacturers. No wonder Zaidi concludes that, from a Pakistani point of view, trade with India is “a win-win situation.”