SouthAsia Stalemate

Name: Shayan Hussain Roll no: 24I-5602 Section: FT01C
South Asia Stalemate

Resuming India-Pakistan trade faces
challenges due to historical tensions,
geopolitical complexities, and
Kashmir, despite potential economic
benefits and shifting regional
dynamics.
Sher Ali Bukhari
September 09, 2024
Newspaper, Opinions, Columns
South Asia is an immense region in terms of population, comprising two billion people. Yet,
since the partition of British India, complex geopolitical realities, regional complexities,
and political and ideological differences have hampered the prospects of regional trade,
connectivity, and development from Dhaka to Kabul. In the presence of the Hindu-led
nationalist government in New Delhi, the chances of resuming and reviving regional trade
between India and Pakistan appear even slimmer.
It is remarkable that once, the South Asian region was highly integrated in terms of
trade and investment, with individuals from any background able to participate in
commerce, regardless of religion, ethnicity, or race. Famous historian William
Dalrymple has argued that from the Mauryan to Gupta to Mughal to British eras, all rulers
who played an instrumental role in unifying India also paved the way for regional
connectivity and trade. Notably, the volume of regional trade in South Asia was around 25%
before the partition of British India, but this figure plummeted to 5% by the 1950s.
The founder of Pakistan, M.A. Jinnah, envisioned an ideal and prosperous relationship
between India and Pakistan, where—despite being sovereign and independent
states—trade, investment, goods and services, and the movement of people and ideas
could flow freely between the two nations. Citing the example of the USA and Canada,
Jinnah envisioned a similar relationship between the newly born states of Pakistan
and India in 1947, during an interview with a foreign journal. As reference, the USA and
Canada are now the largest trading and investment partners.
However, reality moved in a different direction than Jinnah’s vision. The uneven division of
British India sowed the seeds of mutual hostility and led to the outbreak of the first Indo-
Pak war in Kashmir. While the Kashmir issue became the primary cause of bitterness
and antagonism, other issues such as water disputes, division of assets, and the
refugee crisis also limited the chances of a positive start between the two countries in
any domain.
Moreover, India’s actions and motivations to establish itself as the successor state to
British India, by imposing hegemonic and dominant behavior in the South Asian region,
stifled the prospects for regional trade and connectivity. The famous Indian historian
Ramachandra Guha has argued that most neighboring countries view India as a “big
bully” rather than as Vishwamitra, due to its hegemonic behavior and continuous
political interference in the domestic affairs of smaller countries in the region—an
attitude that is not conducive to establishing trade and connectivity.
From Pakistan’s perspective, due to India’s hegemonic behavior, fears of Indian

dominance, and a policy of non-engagement, the country unfortunately placed most of its
reliance on the West. By forming defense pacts such as SEATO (1954) and CENTO (1955),
involving itself in foreign wars like the Afghan Jihad (1979-1989) and the War on Terror
(2001-2021), and depending on foreign loans, aid, and soft investments, Pakistan has failed
to diversify its trade prospects beyond a few Western capitals. Thus, since its inception,
Pakistan has largely played geopolitics rather than geo-economics when it comes to
trade and investment.
However, at the turn of the new century, geopolitical and geo-economic realities shifted
dramatically. Both China and India have grown rapidly in terms of trade and GDP, alongside
improvements in human development indicators. Fears of China’s economic rise have
pushed the USA to forge a strategic partnership with India and designate it as the net
security provider in the region under the USA’s Indo-Pacific policy. Since the USA’s
withdrawal from Afghanistan, key policymakers in Pakistan have drafted a Geo-
Economic outlook, moving away from an era dominated by geopolitics and hoping for
a revival of regional trade.
In this context, Pakistan’s key policymakers are eager to revive trade relations with
India, hoping that such an opening will be beneficial, especially given the country’s
current economic crisis. The coalition government, under the Sharif family, is largely
in favor of resuming trade with India. However, from New Delhi’s perspective, the
policy of non-engagement, isolation, and rhetoric about Pakistan being associated
with terrorism remains intact under the hard-liner Hindu nationalist government led
by Narendra Modi.
There are two groups that emerge when discussions on resuming trade with India arise. The
optimistic group, which favors trade, argues that improved economic relations between
India and Pakistan would alleviate poverty, facilitate investment and development, and
promote people-to-people and cultural ties, thus reducing hostility and bitterness. Such
meaningful trade and investment could also have the potential to resolve the Kashmir issue
and other regional conflicts. On the other hand, opponents of this view argue that due to
India’s larger economy, technological advancements, and better human development
indicators, trade would primarily benefit India. This is evidenced by the trade surplus India
enjoyed between 2004 and 2008 during a brief period of heightened trade relations, where
Pakistan ran a negative balance of trade with India (approximately $3.6bn in trade volume).
Additionally, any resumption of trade without a settlement on Kashmir—especially since
the revocation of the region’s special status—would be seen as a sign of weakness by
Pakistanis and might erode Pakistan’s principled stance on the issue.
For a meaningful resumption of trade between India and Pakistan—which already seems a
slim possibility—Pakistan cannot sideline its core positions vis-à-vis India, particularly on
Kashmir. It is also worth noting that the South Asian Association for Regional
Cooperation (SAARC), the main body for regional trade and investment, remains
hamstrung and virtually paralyzed by India’s stance of non-engagement and isolation
towards Pakistan. Furthermore, credible reports of Indian involvement in terrorism and
separatist movements within Pakistan, particularly in Balochistan, make it difficult for
Pakistan to consider full trade relations with India, despite pressure from the USA to
engage with India on American terms.
Sher Ali Bukhari

The writer is a UET alumni with keen interest in Pakistan’s foreign policy.
Summary: The article discusses the challenges in resuming trade between India and
Pakistan due to deep-rooted historical tensions, particularly over Kashmir. While trade
once thrived in the region, the partition of British India, subsequent wars, and India's
perceived hegemonic behavior have severely hindered relations. Pakistan’s reliance on
geopolitical alliances with the West has also limited regional trade opportunities. Despite
potential economic benefits, including poverty alleviation and development, political and
ideological differences especially regarding Kashmir remain major obstacles. The article
emphasizes that meaningful trade revival is unlikely without resolving these core disputes,
and regional cooperation through SAARC is currently paralyzed.

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Name: Shayan Hussain Roll no: 24I-5602 Section: FT01C

South Asia Stalemate

Sher Ali Bukhari

September 09, 2024

Newspaper, Opinions, Columns

From Pakistan’s perspective, due to India’s hegemonic behavior, fears of Indian

Sher Ali Bukhari

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