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Khurram Husain //DAWN: May 1, 2025
AT the time of writing, the sounds of war drums are hard and heavy, but it is as yet uncertain whether kinetic conflict will break out between India and Pakistan, and if it does, what shape and form it will take. While military experts debate the questions arising from kinetic conflict between the two nuclear-armed neighbours, it is worth pointing out that much of what India actually wants out of this whole affair has already been obtained. And that is an exit from the Indus Waters Treaty (IWT).
Long after the dust has settled and Pahalgam has been added to a list that already has Pulwama and Uri on it, the enduring effects of India’s unilateral and illegal withdrawal from the treaty will be a big chokehold on Pakistan. India’s withdrawal from the treaty amounts to illegally claiming the river water as its own property.
There is a history here, which suggests that this withdrawal from the treaty is what India wanted for a long time. It has used the present crisis as a distraction under which to take this step. The first mention made by India of its wish to withdraw from the treaty was in 2016, after the attack in Uri, when Prime Minister Narendra Modi declared that “blood and water cannot flow together”. That statement was a trial balloon, and as it turned out, the first of a series of steps India took towards laying claim to the waters of the Indus river and the two western rivers that the treaty has given to Pakistan.
The second major step came in 2019. The real response to the attack in Pulwama did not come 11 days later in Balakot, as is commonly believed. The real response came in August 2019, in the form of a presidential ordinance that illegally absorbed Indian-occupied Kashmir into the Indian federation, effectively revoking Article 370 of the Indian constitution. This was coupled with the passage of the Jammu and Kashmir Reorganisation Act, 2019.
Quite obviously, India has not only been harbouring wishes to exit the IWT, but also preparing the ground for doing so — for many years now.
Among the far-reaching legal changes brought in by this ordinance and the Act, one is of particular interest. The Act brought all land acquisition in Jammu and Kashmir under India’s central government law of 2013, and revoked Article 35A which barred non-residents of Jammu and Kashmir from owning land inside the two territories. In the years that followed, rules governing land acquisition were modified further and the J&K Land Acquisition Act of 1934 was repealed altogether.
After these changes came a surge in project-related investment in the disputed territory. One report in the Indian media, citing government figures, says 6,851 project proposals totalling over $14 billion have been received since the changes allowed outsiders to acquire land and set up businesses inside the disputed territory. More significantly, ministries like railways, transport, defence, civil aviation and power have all acquired land in the disputed territory since the changes in 2019. More directly, the Ratle Hydropower Plant project that was initiated on the Chenab back in 2013, was challenged unsuccessfully by Pakistan in 2017 and fast-tracked in India in 2021 when the government took over the project from its private sector sponsors.
In January 2023, under continued Pakistani opposition to the Ratle project and the ongoing dispute over the Kishenganga project, India finally served notice on Pakistan, citing a far-reaching “fundamental change in circumstances” surrounding the treaty and saying it no longer reflected the current reality. In August 2024, it repeated the same argument. The wording is chosen to activate Article 62 of the Vienna Convention, which allows states to exit treaty obligations if there is a “fundamental change in circumstances”.
Quite obviously, India has not only been harbouring wishes to exit the IWT, but also preparing the ground for doing so — for many years now. Having finally taken the step under the noise and fury of an ongoing stand-off, which drowns out the real importance of the step, it is now in a clear position to begin work on projects that could be capable of diverting large amounts of water from the upper reaches of the Indus river system. Pakistan has not succeeded in getting India to reverse its steps of 2019, through which it absorbed the occupied territory of Jammu and Kashmir into its federation. It now faces the uphill challenge of getting India to return to its commitments under the IWT.
There is another history to remember here. In the aftermath of the Mumbai incident in 2008, India campaigned against Pakistan’s financial system in the Financial Action Task Force for almost 10 years. I covered and wrote about this for years while it unfolded, and realised during the course of FATF-related developments that, on the Pakistani side, people were grossly underestimating the adverse impact the grey listing had on Pakistan’s economy, and equally importantly, how deeply they were misled about the real reasons why Pakistan was struggling to get its financial system cleared from the cloud of terror financing that the FATF had cast over it.
It was not until 2019 that the authorities took decisive action. Hafiz Saeed was finally arrested and later convicted on a number of charges and Jamaatud Dawa disbanded. Pakistan still spent three years trying to get off the FATF grey list.
This time we cannot afford to spend years before waking up to the real weight and importance of what India has done, under the cover provided by the sound and fury of the stand-off. In 2019, India took the disputed territory of Jammu and Kashmir and illegally claimed it as its own. Now it has done the same with the waters of the Indus river system, which by all rights belong to Pakistan.
The writer is a business and economy journalist.
Published in Dawn, May 1st, 2025
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DAWN EDITORIAL: 01 May 2025
AT a time when bellicosity — most of it originating in New Delhi — is drowning out rational discourse in the subcontinent, sanity must be given room.
Early on Wednesday, Pakistan’s federal information minister said that India could be “planning something” within a day or two. On Tuesday, Deputy Prime Minister Ishaq Dar had told the Senate that New Delhi was preparing “some form of escalation”. These warnings take on added significance when the Indian PM’s instructions giving “operational freedom” to his military are taken into account. And it is not mere words that are causing alarm; things on the ground are also heating up.
In the days following the Pahalgam tragedy, there has been regular crossfire across the LoC, while the military shot down two Indian quadcopters in AJK on Tuesday. Moreover, state media had reported that Indian warplanes had been patrolling near the LoC when they were confronted by PAF jets. On Wednesday evening, Mr Dar, along with the ISPR head and FO spokesperson, reiterated that Pakistan would respond if provoked.
India continues beating the war drums despite no credible evidence linking Pakistan to the Pahalgam tragedy. This dangerous brinkmanship can have devastating consequences for South Asia, and it is highly irresponsible of the Indian state and large sections of the Indian media to whip up war hysteria in a nuclear neighbourhood. It bears repeating that if India has any solid evidence, it should share it with Pakistan and the rest of the world.
Moreover, if New Delhi is confident of its assertions, it should agree to have a neutral third party investigate the attack. Clearly, due to the lack of any plausible evidence against Pakistan, India is trying to manufacture a crisis. This is a highly dangerous game which can have unpredictable ramifications for the entire region.
The UN chief has offered his good offices to avoid a fresh conflagration. Both sides need to take up this offer to prevent the march to war. Other common friends, such as the Gulf states, the US and Russia, can also play a part in bringing temperatures down. In this respect, the US secretary of state talked to PM Shehbaz Sharif yesterday. Nearly eight decades of hostility have given nothing positive to the region. Once the war hysteria lessens, India must calm down to consider the merits of talking to Pakistan regarding all issues — including Kashmir — if it is serious about peace. Pakistan can and will defend itself against Indian aggression, but any military engagement will result in more death and destruction for the entire region. Therefore, New Delhi must change its belligerent tone and work to resolve this crisis with statesmanship, which has been sorely missing under the BJP set-up. The window for a peaceful resolution may be closing fast.
Published in Dawn, May 1st, 2025
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DAWN EDITORIAL: 01 May 2025
THE government must treat the tax proposals of the Overseas Investors Chamber of Commerce and Industry for the FY26 budget as a cry for help from businesses — and individual taxpayers — groaning under the weight of excessive taxation and high tax rates. The recommendations of the trade body, which represents the business interests of over 200 foreign companies operating in Pakistan, mainly focus on gradually reducing the tax burden on the corporate sector by cutting the corporate tax rate to 25pc in five years and scrapping the super tax in three years for a predictable and business-friendly fiscal environment. Additionally, it has called for doubling the taxable income threshold for the salaried and other individuals to Rs1.2m to put a little extra disposable cash into the pockets of low-income, inflation-stricken individuals to boost consumption. Nevertheless, it suggests that mandatory tax filing remain unchanged for all earnings in excess of Rs0.6m to increase the number of filers. Other suggestions include a gradual reduction of the sales tax on goods to 15pc to match the regional average and expediting the harmonisation of the federal and provincial sales tax rates in order to do away with distortions and make compliance easier.
Ostensibly, the suggested reforms are not difficult to implement, but the tax targets and one of the world’s lowest tax-to-GDP ratios might cause policymakers to think twice before reducing the existing burden on taxpayers. In other words, policymakers would need to draw up a clear reform roadmap aimed at broadening the tax base, significantly improving compliance, and plugging evasion before rates can be reduced without jeopardising revenue targets and the loan agreement with the IMF. More than that, the rulers need strong political will to reform the inequitable tax system by tackling the undertaxed sectors such as retail, real estate and agriculture. According to media reports, the OICCI believes that “a more equitable contribution across all sectors, proportionate to their share of GDP, could increase the tax-to-GDP ratio to nearly 14pc from below 10pc”. The present tax regime is opaque, unpredictable and inequitable. It impedes investment, job creation and business growth, and is responsible for increasing evasion and a growing undocumented economy. If the country is to attract foreign investment in the real, productive sectors and raise its tax-to-GDP ratio, it will have to first restructure its taxation system.
Published in Dawn, May 1st, 2025
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