After Vote, Pakistan’s Strongest Ally Should Be Indiathe Editors
May 10 (Bloomberg) -- As every leading candidate has proudly noted, tomorrow’s parliamentary elections in Pakistan will mark the first civilian transfer of power in that country’s 66-year history. To ensure it’s not the last, the winner should turn to an unlikely ally: India.
Whichever party takes power in Islamabad will almost certainly have to cobble together a coalition to rule. The new government will inherit a looming foreign-exchange crisis, hours-long blackouts that have provoked street riots, and overlapping insurgencies and sectarian wars that have claimed thousands of lives. Though army chief Ashfaq Parvez Kayani has resisted the temptation to restore military rule, he will retire soon. His successors may not be so restrained.
None of Pakistan’s ills has a quick fix. But one key decision would immediately help jump-start the economy, lower regional tensions and reduce the army’s influence in politics: lifting long-standing barriers to trade with India.
The benefits of a border more open to commerce are indisputable. Trade between India and Pakistan -- currently less than $3 billion annually -- may grow tenfold or more if existing restrictions were to be lifted, according to an April report produced by the Woodrow Wilson International Center for Scholars. Millions in revenue are currently lost via smuggling and informal trade. Some estimates put the potential for Indian investment in Pakistan at $50 billion.
Equally important, a more open border would be a less fraught one. The army’s obsession with the “Indian threat” drives Pakistan’s most dangerous policies. It fuels the world’s fastest-growing nuclear stockpile and diverts the lion’s share of the country’s limited resources to defense. It has led the military to lend unofficial support to anti-India jihadist groups such as Lashkar-e-Taiba, which carried out the deadly 2008 terrorist attack in Mumbai. Pakistan has also backed Taliban factions in Afghanistan as a means of countering Indian influence there.
A remarkable consensus in favor of freer trade with Pakistan’s archrival has now developed across the political spectrum. In November 2011, the government pledged to grant its larger neighbor “most-favored nation” status -- a decision that could not have been made without the support of the military. (India afforded Pakistan the same status in 1996.) All of Pakistan’s mainstream parties have endorsed an economic rapprochement. The front-runner -- Punjabi magnate and former Prime Minister Nawaz Sharif -- has made increased trade and economic progress central to his appeal to voters.
Pakistan has yet to follow through on its 2011 pledge. Now is the time to do so. The next government should immediately trim back the list of 1,200 Indian products that still cannot be imported. Some of these restrictions are meant to defend Pakistani farmers, say, from cheaper Indian crops. But mostly they protect well-connected lobbies: More than 500 of the banned goods affect the automobile, iron and steel industries.
India needs to do what it can to help the next Pakistani government. Though India’s list of banned imports is much smaller, other informal barriers still impede Pakistani exports. It takes six months for Pakistani companies to get approval to ship cement to India, for instance. The government in New Delhi should strive to eliminate such roadblocks and to improve transport and logistics links across the border. Better trade facilities alone could pump up Pakistan’s exports to India by 200 percent.
Both sides need to act quickly, before another terrorist attack or domestic political controversy derails the current momentum. India’s next government could well be led by the Hindu nationalist Bharatiya Janata Party, whose base remains deeply skeptical of Pakistan’s trustworthiness. (Elections must be held before the end of next May.) The impending U.S. pullout could turn Afghanistan into another shadow battleground for the South Asian rivals, much like the disputed territory of Kashmir.
Delay has allowed past opportunities for reconciliation to slip away. Neither Pakistan nor India -- whose own economy is slowing dramatically -- can afford to let this happen again.
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