Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers


U.S.-Russian Summit

Suddenly, there's a breakthrough in the standoff between nuclear neighbors India and Pakistan. A year after 1 million soldiers faced each other along their border, both governments in early May decided to restore full diplomatic ties and exchange ambassadors. Air-travel links and cricket matches -- a key symbol of relations on the subcontinent -- will be renewed soon. Most important, both sides have indicated a new willingness to talk about the thorniest issue of all, Kashmir, over which the two countries have vied for control since they both won independence in 1947.

Why all the activity now? For starters, Indian Prime Minister Atal Bihari Vajpayee, 79, is unlikely to run for reelection in next year's national vote and longs to establish peace on the subcontinent before he ends his 50-year political career. Vajpayee touched off the flurry of diplomacy by calling for peace talks while visiting the Indian-administered part of Kashmir on Apr. 18. But Vajpayee also seems to have a willing partner in Pakistan's Prime Minister, Zafarullah Khan Jamali, who was elected last year as the country's first civilian leader since General Pervez Musharraf seized power in October, 1999.

And there may well be another reason -- what some analysts call "the Iraq effect." The American resolve in toppling Saddam Hussein's regime has caught the attention of Indians and Pakistanis alike. The fear: If the two countries can't work out their own problems, the U.S. might eventually decide to impose its own solution just as it did in Iraq. Not with force -- just forceful diplomacy. A planned trip by U.S. Deputy Secretary of State Richard Armitage to the two countries from May 8 to May 11 may have spurred New Delhi and Islamabad into action. For now, Armitage is expected to push both sides to find their own solution, rather than broker a deal. "We're just trying to get them to talk to each other," says a State Dept. official. But there's still the possibility of more muscular American action. "It is in the self-interest of both India and Pakistan to come to terms before others impose terms on them," wrote M.J. Akbar on May 4 in the influential New Delhi newspaper he edits, The Asian Age.

Another source of pressure: business in both countries. "This is very welcome news," says Akbar Ali Hashwani, a prominent Karachi industrialist. If talks succeed, "a lot of business activity is going to be generated," he adds. Officially, annual two-way trade is just $200 million, the Confederation of Indian Industry says. But unofficial trade is 10 times that, and CII estimates trade between India and Pakistan may exceed $2 billion if relations improve.

Of course, obstacles still stand. Islamabad and New Delhi differ sharply on how to solve the conflict in Kashmir, where violence continues, and critics note Vajpayee's peace efforts in 1998 and 2001 failed. But optimists point to the nations' new flexibility about their relationship. Previously, both Islamabad and New Delhi insisted Kashmir had to be resolved before talks could begin on other matters. "This time, the opening is more realistic, will be calibrated, and will begin at a modest level of diplomatic engagement," says Kanti Bajpai, professor of international politics at New Delhi's Jawaharlal Nehru University. The Bush Administration will be watching -- and hoping the Iraq effect keeps working in South Asia. President George W. Bush and his team are preparing to meet Russian President Vladimir V. Putin at a summit in St. Petersburg on June 1, but for the first time in the leaders' three-year relationship, the Americans are uncertain of the reception they will receive. Putin staunchly opposed the U.S. and British-led war in Iraq and treated British Prime Minister Tony Blair scornfully at a Moscow tête-à-tête on Apr. 29. Indeed, Putin openly mocked the coalition's inability to find weapons of mass destruction in Iraq and reiterated Russian opposition to lifting U.N. sanctions on the country.

Bush and Putin are expected to sign a treaty in St. Petersburg making deep cuts in strategic nuclear arms arsenals -- and aides say Bush is hopeful of getting the U.S.-Russian strategic partnership back on track. In particular, Washington wants Russia to back the immediate lifting of sanctions on Iraq and stop assisting Iran on developing its nuclear power industry, which the Bush Administration thinks may be a weapons program in disguise. The Kremlin aims to revive plans to secure a role in helping the U.S. construct missile-defense systems, a potential boon for Russian industry.

But Putin's parallel efforts to build closer security ties with France and other Iraq war opponents are irritating Washington. Bush Administration officials say Putin must stop all the juggling and choose between a U.S.-led or France-led Western security alliance. "It's up to the Russians," says a senior official in Moscow.

blog comments powered by Disqus