A New Turn In Indo-Pak Commercial Ties

November 17, 2011 by · Leave a Comment 

By Nilofar Suhrawardy, TMO

NEW DELHI: Long viewed as permanent enemies, it is going to take a while before the world is convinced about India and Pakistan being keen to “normalize” their ties. Prime Minister Manmohan Singh and his Pakistani counterpart Yousuf Raza Gilani met recently in Maldives on sidelines of the 17th South Asian Association for Regional Cooperation (SAARC). They held delegation-level talks, followed by one-to-one meeting which lasted for around 45 minutes. Acknowledging that a lot still needs to be done, after their talks, both leaders expressed their desire for strengthening Indo-Pak relations on a positive note (November 10).

“We have wasted a lot of time in acrimonious debate in the past. The time has come to write a new chapter in relations between India and Pakistan,” Singh said. The next round of talks “should be far more productive and result-oriented and bring the two countries closer to each other,” Singh said. Similar sentiments were voiced by Gilani, who said: “We had a good meeting. I hope the next round of talks will be more constructive and open a new chapter in relations between the two countries.”

The stage for opening a new chapter in Indo-Pak ties was set when the Pakistan cabinet recently declared its decision to give India status of a Most Favored Nation (MFN) for increasing trade relations between the two countries. India had accorded Pakistan this status around 15 years ago in 1996. The decision of Pakistan was preceded by visit of Pakistan’s Commerce Minister Makhddoom Amin Fahim to India. This was the first visit of a Pakistani commerce minister to India in 35 years. Indian Commerce Minister Anand Sharma is expected to lead a trade delegation to Islamabad next February at invitation of his Pakistani counterpart Fahim. Besides, this week has been marked by two-day talks in New Delhi between commerce secretaries of the two countries, Rahul Khullar (India) and Zafar Mahmood (Pakistan).

Displaying optimism on the outcome of Indo-Pak talks, Mahmood said: “We will have interactions in the spirit of mutual cooperation and confidence so please have trust and faith in the process (as) times have changed and the world is coming closer. Through this meeting we want to create an atmosphere through which the composite dialogue can go forward.”

“Our business communities, our politicians and our citizens are looking to both our delegations to deliver a substantial breakthrough — not only for full normalisation of our trade relationship, but to go beyond and lay a strong foundation for preferential trading arrangements,” Khullar said.

At present, business between India and Pakistan amounts to less than $3 billion. During their talks, the two commerce ministers expressed their desire to increase this to $6 billion per year. Besides, it takes place through third countries via Dubai and Singapore. Once India is formally granted MFN status by Pakistan, it is expected to removal of many barriers and also lead to direct trade between the two countries, which would play a major role in cutting down the transportation costs.

It may take some time before Pakistan actually grants MFN status to India. The fact that Pakistan has voiced its decision to do so is by itself a major development. Not too long ago, Pakistan gave the impression of not even considering this till the two countries resolved their problems. Undeniably, India and Pakistan still seem to be a long way from reaching any agreement on certain major issues, including Kashmir. Against this backdrop, the decision of Pakistan to consider India as MFN is indeed a major development.

Once India and Pakistan reach the stage of exploiting their economic interaction “totally,” according to an American think tank, the Peterson Institute for International Economics (PIIE) gravity model, the Indo-Pak trade can “expand to as much as $42 billion.” One of the constraints in trade potential having not been exploited, according to PIIE, is that Pakistan has not yet granted MFN status to India. If India and Pakistan decide to pay greater attention to exploiting their trade potential, it is believed that the step would lead to lowering of tension between the countries. In this context, it may be noted that though Kashmir-issue may remains unresolved the two countries have implemented the agreement to open the controversial Line of Control (LoC) at a few points to facilitate trade and travel. They began the bus service in 2005, across the LoC between Srinagar and Muzaffarabad, capital cities of Indian Jammu & Kashmir and Pakistani Kashmir, respectively. The Poonch-Rawalkot bus service began in 2008.

The strengthening of economic ties between India and Pakistan is also expected to play a major role in enhancing commercial interaction between members of SAARC. Indo-Pak tension has hampered economic interaction between SAARC members and has also prevented its development as an important regional organization. Critics have frequently raised the question as to why has SAARC not progressed as have other regional organizations, such as NATO and ASEAN.

Against this backdrop, India and Pakistan may perhaps never accept each other as close friends, but as latest developments suggest that now they have begun serious talks to facilitate economic interaction between them. And once Indo-Pak trade takes off, it is expected to have a major impact on South Asia as a whole and also convince the world that the two countries can no longer be viewed as permanent enemies!

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Pakistan’s Road to China

June 2, 2011 by · Leave a Comment 

By Shahid Javed Burki, Project Syndicate

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Pakistan’s Prime Minister Yusuf Raza Gilani (L) and China’s Premier Wen Jiabao listen to their national anthems during a welcome ceremony at the Great Hall of the People in Beijing, May 18, 2011. Pakistani Prime Minister Yusuf Raza Gilani’s visit to China from Tuesday allows Islamabad to show it has another major power to turn to just as relations with the United States have faced intense strain after the killing of Osama bin Laden.

REUTERS/Jason Lee

Islamabad – Large events sometimes have unintended strategic consequences. This is turning out to be the case following the killing of Osama bin Laden in a compound in Abbottabad, a military-dominated town near Islamabad, Pakistan’s capital.

The fact that the world’s most wanted man lived for a half-dozen years in a large house within spitting distance of Pakistan Military Academy, where the country trains its officers, has provoked a reaction that Pakistanis should have expected, but did not. The country’s civilian and military establishment has been surprised and troubled by the level of suspicion aroused by the events leading to Bin Laden’s death – many Pakistanis call it “martyrdom” – and there is growing popular demand for a major reorientation of Pakistan’s relations with the world. Unless the West acts quickly, Bin Laden’s death is likely to result in a major realignment of world politics, driven in part by Pakistan’s shift from America’s strategic orbit to that of China.

I have personal experience of how quickly China can move when it sees its “all-weather friend” (Pakistani Prime Minister Yousaf Gilani’s phrase) in extreme distress. In 1996, when Pakistan was near bankruptcy and contemplating default, I went to Beijing as the country’s finance minister to ask for help. My years of service overseeing the World Bank’s operations in China had put me in close contact with some of the country’s senior leaders, including then-Prime Minister Zhu Rongji.

At a meeting in Beijing, after telling me that China would not allow Pakistan to go bankrupt under my watch, Zhu ordered $500 million to be placed immediately in Pakistan’s account with the Federal Reserve Bank in New York. That infusion of money enabled Pakistan to pay its bills while I was in charge of its economy.

China seems to have adopted the same approach to Pakistan today, as the United States Congress threatens to cut off all aid. Gilani recently took a quick trip over the mountains to Beijing, and returned with an offer of immediate delivery of 50 fighter planes to Pakistan. Much more has been promised. Given China’s record as a provider of aid to Pakistan, these promises will quickly be realized.

In the meantime, Pakistan continues to pay the price for Bin Laden’s death, with his supporters striking a town not far from Islamabad just days later, killing more than 80 people. That was followed by a brazen attack on a naval base in Karachi, in which some very expensive equipment, including aircraft, was destroyed. The terrorists struck for a third time two days later, killing a dozen people in a town near Abbottabad. The human toll continues to rise, as does the cost to the economy.

On May 23, the government issued an estimate of the economic cost of the “war on terror” that put the total at $60 billion, compared to the $20 billon the Americans have supposedly paid in compensation. In fact, a substantial share of the promised US aid has yet to arrive, particularly the part that is meant to rescue the economy from a deep downturn.

While Gilani was in Beijing, Finance Minister Abdul Hafeez Shaikh returned from Washington with empty hands. He had gone there to persuade the International Monetary Fund to release the roughly $4 billion that it was withholding from the $11 billion that Pakistan had been promised in late 2008 to save the country from defaulting on its foreign debt. The IMF’s decision was in response to the Pakistani government’s failure to take promised steps to increase its abysmal tax-to-GDP ratio, which stands at less that 10%, one of the lowest levels in the emerging world.

The Fund was right to insist that Pakistan stand on its own feet economically, but, in early June, Shaikh will present his 2011-2012 budget, in which he wants to ease the burden on ordinary Pakistanis. This has put Gilani’s two-year-old government in a real bind. Whether Shaikh can balance the IMF’s demands with ordinary people’s needs will not only determine the Pakistani economy’s direction, but will also have an enormous impact on how Pakistan and its citizens view the world.

The only comfort that Pakistan has received from the West came in the form of assurances given by US President Barack Obama and British Prime Minister David Cameron following Obama’s state visit to London. In a joint press conference, both promised that their countries would stand with Pakistan’s government and people. Pakistan, they said, was as deeply engaged as their countries in the war against terrorism.

Pakistan will continue to receive American and British help. But the US and Britain find it difficult to move quickly, and strong voices in their capitals want Pakistan to be punished, not helped, for its wayward ways. In the meantime, China waits with open arms.

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Pakistan Moves Closer to China

May 26, 2011 by · Leave a Comment 

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Pakistan’s PM Yusuf Raza Gilani (C) and China’s Premier Wen Jiabao (R) clap as bilateral companies exchange documents during a singing ceremony at the Great Hall of the People in Beijing, May 18, 2011.      

REUTERS/Jason Lee

The friction between Islamabad and Washington following the death of Osama Bin Laden in an American operation and the possible acceleration of the U.S. withdrawal from Afghanistan will narrow, analysts say, the relationship, already strong, between Pakistan and China.

During the visit to Beijing by Pakistani Prime Minister on Tuesday and Thursday, Chinese leaders will dispose lyrical about sixty years of “friendship” Sino-Pakistan, in contrast to recent criticisms of the West to the “land of the pure.”

The Chinese government was careful not to ask questions about the aid that could have benefited the head of Al Qaida, and gave its support to Pakistan, “at the forefront of counterterrorism efforts.”
This benevolence has not gone unnoticed. “At this crucial moment of history, do not see anyone next to Pakistan, with the exception of China,” said Nawaz Sharif, Pakistan’s most popular politician in the country.

Pakistani public opinion, exasperated by the U.S. unilateral operation against bin Laden and distrust of Washington, is increasingly convinced that the strategic alliance with the United States since 2001 has had disastrous effects: destabilization and the questioning of Pakistan in the field international.

Hence, the Islamic Republic is tempted away from the United States moving closer to Beijing, has long been a loyal ally in contrast to Washington, who had lost interest in the region after the Soviet withdrawal from Afghanistan.

According to Talat Masood, a Pakistani analyst, “Pakistan may say: ‘China is with us. Do not believe that we are isolated.”

China’s official media reveled in recent days to denounce “the arrogance” of Westerners.

“The American media do not consider Pakistan as a true ally worthy of respect but as an instrument of U.S. interests,” the Global Times newspaper.

China is the main supplier of weapons to Pakistan, as an important counterbalance to India, that closer ties with the United States.

New Delhi and Washington signed in 2008 a historic agreement on civil nuclear cooperation. Beijing, concerned to preserve the balance of forces in the subcontinent, Islamabad closed several contracts to build nuclear reactors.

The positions for Pakistan China on Taiwan and Tibet are another factor that explains the support from Beijing to Islamabad, says Kerry Dumbaugh, the Center for Naval Analyses (CNA).

“China used Pakistan as a lawyer or a vector towards the Muslim world,” he said.

Beijing also needs the cooperation of Pakistan against the Islamist threat in the Muslim region of Xinjiang (western).

According to some observers, China is convinced that Islamabad will increase by 2015, its influence in Afghanistan, taking advantage of U.S. forces withdraw from the country.

In addition to Beijing’s interest to calm reigns in the region, especially in the Pakistani province of Baluchistan. The main energy consumer worldwide through the area expected to bring oil from the Middle East through a pipeline between Xinjiang and Pakistan’s Gwadar port.

The rapprochement between Islamabad and Beijing to the detriment of the West has its limits, says the Pakistani expert Hasan Askari: “America and the West remain unavoidable due to its cutting-edge technology and weight at the World Bank or International Monetary Fund.”

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US Assured of Action Against ‘Sanctuaries’

May 19, 2011 by · Leave a Comment 

By Baqir Sajjad Syed

ISLAMABAD: A flurry of activity of Monday provided hope that the Pak-US marriage of convenience was not over despite the recent bellowing and booming of the Pakistani leadership.

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U.S. Senator John Kerry (D-MA) (L) meets with Pakistan’s PM Yusuf Raza Gilani at the prime minister’s residence in Islamabad May 16, 2011.

REUTERS/Mian Khursheed

By the end of Senator John Kerry’s day-long stay in Islamabad it appeared that the US had convinced Pakistan to undertake several steps for proving its commitment to the fight against terrorism. These included returning the wreckage of the helicopter which had malfunctioned during the May 2 raid in Abbotabad and eliminating terrorist sanctuaries in tribal areas.

In exchange Washington has committed itself to a process, which if successful, will lead to Secretary of State Hillary Clinton’s visit to Islamabad for reviving the strategic dialogue which has been stalled since the arrest of CIA operative Raymond Davis and subsequent events such as drone attacks and the unilateral US operation killing Al Qaeda chief Osama Bin Laden.

John Kerry, who heads the US Senate Foreign Relations Committee, extracted these promises from the Pakistani leadership; he warned them that “if the relationship is to fall apart …. US will always reserve the right to protect its national security”.

Senator Kerry’s tough love message was reinforced, Dawn has learnt, by the telephone calls Secretary Clinton made to President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani.

Ms Clinton rang up Mr Gilani when he, the president and Chief of the Army Staff General Ashfaq Parvez Kayani were meeting Senator Kerry. The call is reported to have lasted about 20 minutes.

The secretary of state had called Mr Zardari on Sunday.

“I think we made serious progress. Pakistan has agreed to do a number of things immediately to demonstrate its further seriousness of purpose and we agreed to have several officials from the US to come here in the middle of the week or sometime soon to carry on this discussion and prepare the ground for Secretary Clinton,” a visibly fatigued Kerry told a selected group of journalists after his meetings with Pakistani civil and military leaders.

Having met the army chief on Sunday night, Mr Kerry spent most of Monday in meetings. As he noted: “We worked harder today to talk about ways in which we can be better partners, work cooperatively and open doors to joint cooperation to fight terrorism.”

Senator Kerry met President Zardari, Prime Minister Gilani and Army Chief Gen Kayani, individually and collectively, before a joint declaration was issued by the two sides expressing the willingness to carry on with their relationship.

“In furtherance of its existing commitment to fight terrorism, Pakistan has agreed to take several immediate steps to underscore its seriousness in renewing the full cooperative effort with the United States,” the joint communiqué said.

Senator Kerry avoided divulging details of the steps agreed upon, but vaguely described it as including cooperation on counter-terrorism, intelligence sharing and targeting terrorist sanctuaries. The latter is hardly surprising; having been high on the American wish list for a long time, action against the havens in tribal areas was one of the major demands Mr Kerry brought to Islamabad.

He said: “We need Pakistan’s cooperation, we need Pakistan’s help against sanctuaries in this country from where people are destabilising Afghanistan and frankly killing … all of (those who) are trying to provide for a stable Afghanistan.”

However, he stopped of claiming that Pakistani leaders had agreed to go after the Haqqani network, one of the core contentious issues in the rocky bilateral ties. He was only willing to say cryptically that both countries had agreed to target “some entity, which is engaged in terrorism … the entity that needs to be taken on one way or the other”.

He also said that other measures to be taken by Pakistan included returning the tail of the helicopter which was left behind by the Navy Seals during the Abbotabad raid.

After it malfunctioned, the Americans exploded the helicopter before they left; this was done, it was reported, to prevent the stealth technology from falling into Pakistani, and possibly other, hands.
However, distrust is still not a thing of the past. Despite Pakistan’s new commitments, which Mr Kerry himself described as “more detailed, more precise and clarified”, he made it clear that Washington was no longer going to be satisfied by mere promises.

“This road ahead will not be defined by words. It will be defined by actions,” he told journalists.

This is why Washington is going to follow a step-by-step approach before confirming that Secretary Clinton will be taking a flight to Islamabad.

Two US officials — Special Envoy for Afghanistan and Pakistan Marc Grossman and CIA Deputy Director Mark Morrel — will visit Islamabad to follow up on Mr Kerry’s talks and discuss the agreed measures in details and possibly gauge progress on the commitments made to the senator.

Secretary Clinton’s visit remains contingent on the outcome of Grossman’s discussions. “First a meeting will take place to try to lay the groundwork for that (Clinton’s meeting) and coming out of that meeting the secretary would set the date,” Senator Kerry said. However, in the midst of all the tough talk and the conditions he set, Mr Kerry also made an effort to soothe ruffled feathers, “we are committed to working together with Pakistan — not unilaterally, but together in joint efforts” — contingent once again on Pakistani cooperation.

“But, if we are cooperating and working together there is no reason (for acting unilaterally),” he said.           

From The Newspaper

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Indian Diplomacy Towards Pakistan

September 3, 2009 by · Leave a Comment 

By Nilofar Suhrawardy, Muslim Media News Service (MMNS)

NEW DELHI: History, internal politics, regional factors as well as diplomatic pressure from other quarters play a great role in shaping India’s diplomatic ties with Pakistan. Within less than two months of inking a joint statement with his Pakistani counterpart Syed Yusuf Raza Gilani in Sharm El Sheikh on July 16, Prime Minister Manmohan Singh sent a totally different message to people at home. The joint statement described the two prime ministers’ meeting as “cordial and constructive,” during which “they considered the entire gamut of bilateral relations with a view to charting the way forward in India-Pakistan relations.” While accepting that terrorism posed a serious threat, they “recognized that dialogue is the only way forward.” “Action on terrorism should not be linked to the Composite Dialogue process and these should not be bracketed,” according to the joint statement.

On Mumbai-terror strikes, which have had a negative impact on Indo-Pak ties, while Singh “reiterated the need to bring perpetuators of Mumbai attacks to justice,” Gilani “assured that Pakistan will do everything in its power in this regard.” They also agreed that, “real challenge is development and elimination of poverty.” They resolved to “eliminate” such factors and “agreed to work to create an atmosphere of mutual trust and confidence.”

Later, expressing satisfaction on his meeting with Gilani on sidelines of Non-Aligned Movement (NAM) Summit in Egypt, Singh said that he had “good discussions” with him. During the meeting, “We discussed the present condition of India-Pakistan relations, its future potential, and the steps that are necessary to enable us to realize the potential,” Singh said.

Within less than two months of his talks with Gilani and just ahead of another top-level Indo-Pak meeting, Singh almost ruled out possibility of improving ties with Pakistan in the near future. “Until relations between India and Pakistan don’t improve and brotherhood does not increase, the atmosphere is not right for moving ahead,” Singh said at a function in the border district of Barmer in Rajasthan (August 29). At the same time, expressing his desire for improvement in Indo-Pak ties, Singh said: “I want our relations to improve.” “If relations between India and Pakistan improve, a lot of things can happen. I think border-states like Punjab, Rajasthan and other states will benefit if relations improve,” he pointed out.

Earlier in the week, while addressing the conference of Indian heads of missions, Singh said: “India has a stake in prosperity and stability of all our South Asian neighbors. We should strive to engage our neighbors constructively and resolve differences through peaceful means and negotiations” (August 25).

Difference in the diplomatic tone used by Singh on India’s approach towards Pakistan at different levels cannot be ignored. The joint statement inked in Sharm El Sheikh was certainly not confined to the Indian audience. It was released on sidelines of a multilateral summit, apparently to convince the world leaders that India and Pakistan are keen on normalizing their ties. A different message would certainly have been sent had the two prime ministers not held talks. Not only did they meet, held talks but they also released a joint statement. In other words, they exercised all diplomatic moves essential on the sidelines of another summit to assure the world that India and Pakistan are keen on improving their relations. Besides, the meeting was held a few days ahead of United States’ Secretary of State Hillary Clinton’s India-visit. India apparently was keen to convince US about its positive approach towards Pakistan. Had Singh and Gilani not held talks on an optimistic note, there prevailed the risk of United States using diplomatic pressure during Clinton’s visit for improvement in Indo-Pak ties. Thus, though the joint statement later invited strong criticism from opposition parties in India, it was framed and issued for the world leaders, including the United States. A similar diplomatic message was conveyed in Singh’s address at the conference of Indian envoys in the capital city (August 25).

The change in Singh’s tone stands out in the comments he made in Rajasthan, laying stress that atmosphere is not conducive for “moving ahead” with Indo-Pak talks. Similarly, while speaking at the inauguration of three-day conference of Indian envoys, External Affairs Minister S.M. Krishna said that meaningful talks with Pakistan would only be possible after Islamabad ended cross-border terrorism. Krishna also laid stress that India was keen to resolve its differences with Pakistan through talks. “We are still to see Pakistan take effective steps to end infiltration and dismantle the infrastructure of terrorism. We have maintained that a stable Pakistan at peace with itself is a desirable goal and we wish to address our differences with Pakistan through dialogue,” Krishna said (August 24). It cannot be missed that foreign ministers of the two countries are expected to meet in September in New York on sidelines of United Nations General Assembly meet.

Clearly, at one level the pause in resumption of Indo-Pak composite dialogue process gives the impression that two countries are still a long way off from normalizing their ties. Diplomatic significance of their holding top-level talks on sidelines of multilateral summits cannot, however, be ignored. They have not backtracked from their decision to normalize ties nor have restrained from making use of available diplomatic opportunities to shake hands and talk. While India is keen to let the world know about it favoring talks with Pakistan, at home, the government is apparently more concerned about convincing the people that cross-border terrorism remains a hurdle in normalizing ties with Islamabad!

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