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Economic engagement

  Published July 3, 2022

INTERSTATE economic engagement has emerged as a priority strand of modern-era diplomacy. An instructive example is the US-China relationship. Both countries are vying for influence across continents, and yet remain engaged in complex economic interdependence. In 2021, the US and China traded goods and services worth $755 billion. Besides, Beijing has purchased significant US Treasury securities. Similarly, India and China have clashed over border issues yet their bilateral trade has blossomed as have investments in each other’s country.

Another feature of interstate economic engagement is the emergence of interests-based ties and coalitions. It is possible for two countries to be partners on one global or regional issue and rivals on the other. For instance, Italy and Germany are neighbours and partners in the EU, yet have divergent positions on UNSC reform, where Germany wants a permanent seat. India may be a strategic partner of the US in the latter’s competition with China, but shares many positions with China on climate change negotiations. 

Given such a competitive yet interdependent world, the one criterion that seems to rule today’s diplomacy is the pursuit of national interests on the basis of mutuality of economic and other benefits. Examples are aplenty. India hasn’t given up on its traditional friendship with Russia despite close engagement with the US in recent years. In fact, Russia remains a large supplier of military equipment to India, and more recently, India decided to buy Russian oil disregarding the Western sanctions imposed on Moscow due to its war with Ukraine. Another example is of the ties between Japan and China. Both nurse a traditionally difficult relationship, and yet are engaged in commerce, trade and investments. 

Indians and Pakistanis should be stakeholders in regional peace.

No wonder Foreign Minister Bilawal Bhutto-Zardari, speaking at the Institute of Strategic Studies Islamabad last month, called for engaging closely with regional nations to unlock the potential of regional cooperation. The approach makes sense. However, in South Asia’s case, the challenge is the deep mistrust between India and Pakistan and the lingering conflicts between them, particularly the Kashmir dispute. The other complication is that the Modi government has shunned India’s earlier policy of pluralism and secularism. It has embarked on a Hindutva-driven policy of creating a Hindu rashtra. This approach is causing a commotion in India, with severe implications for the minorities. 

To overcome this challenge, India and Pakistan could do what the rest of the world is doing. Both countries would be better off if there were ways to increase interaction not only between the two governments but also among the multiple stakeholders of their respective polities, including traders, investors, scholars and sportspersons. The objective is to make the people of India and Pakistan stakeholders in regional peace. The most promising area would be bilateral trade, which builds peace constituencies on both sides. Investments raise mutual stakes and thus act as a peace enabler. Scores of studies have been conducted to illustrate the enormous potential that Pakistan-India trade holds for the economic well-being of both peoples. 

Total disengagement works to the advantage of the detractors of peace. Pakistan has often argued with India that every time there is a terrorist attack, India suspends or stops bilateral engagement with Pakistan, thus fulfilling the aims of those who committed terrorism and stopping cooperation between the two countries. India’s disengagement policy is costly for both states. For instance, India’s suspension of dialogue with Pakistan immediately after the Mu­­mbai terrorist atta­cks in 2008 wasted considerable positive work that had been done join­tly by the Farmers Asso­ciation of Pakis­tan and the Centre for Research in Ru­­ral and Industrial De­­velopment in Chan­­digarh to promote agriculture-related cooperation. The plan had identified scores of complementarities, which could have served both countries well had India not disengaged. 

For their part, Pakistani leaders, policy practitioners, diplomats and scholars should define Pakistan’s national interests in terms of the socioeconomic well-being of our citizens. True, security is a precondition for any economic enterprise. The new thinking, however, is that while holding firm to our policy on core issues, especially Kashmir, building economic stakes with neighbours and beyond actually makes our nation far more secure. The National Security Policy unveiled earlier this year also rightly accorded primacy to economic security. Pakistan must leverage its geography to become a pivot that connects South Asia to Western and Central Asia. This would complement the North-South connectivity which Pakistan and China are pursuing through CPEC. 

The writer, a former foreign secretary, is DG, Institute of Strategic Studies Islamabad and the author of Diplomatic Footprints.

Published in Dawn, July 3rd, 2022

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