Changing Economic Landscape

By Amir Zia
The News
Wednesday, May 26, 2010

The dream of South Asia's economic integration appeared dazzling. The potential of boosting Pakistan-India trade and economic relations seemed immense. However, given the present level of distrust between the two South Asian nuclear-armed nations, the target of their transformation from rivals to collaborators for peace and prosperity sounded too ambitious and difficult. But it made perfect sense. Yes, the common hopes, dreams and aspirations of the peoples of these two estranged countries remained the moving spirit behind the two-day Indo-Pakistani Business Meet in New Delhi on May 18-19.

This first of its kind, the Meet, organised by the Jang Group of Pakistan and The Times of India Group, attracted some of the stalwarts of the business and corporate world from India and Pakistan.

N R Narayana Murthy, chairman and chief mentor of Infosys Technologies Ltd, Brijmohan Lall Munja, chairman of Hero Honda Motors Ltd, and Som Mittal, president of NASSCOM, were among some of the stars from the Indian side. The Pakistani delegates included heavyweights like Dr Shahid Javed Burki, former vice president of the World Bank, Dr Ishrat Hussain, former governor of the State Bank of Pakistan, Asad Umar, president and CEO of Engro Corp, and Humayun Bashir, country general manager of IBM Pakistan.

The Business Meet, titled "Partners for Peace and Progress," was organised under the banner of the Aman Ki Asha initiative launched by the two media groups earlier this year.

The gist of the messages by almost all speakers was the importance of building bridges, which eventually would contribute to the resolution of the core and contentious political issues between the two neighbours. And, certainly, the warmth and goodwill expressed by the speakers was touching–right from the inaugural session in which Indian Finance Minister Pranab Mukherjee addressed the Pakistani participants as "brothers and sisters," underlining the need and importance of boosting economic ties between the two nations. Not long ago, in the aftermath of November 2008 terror attack on Mumbai, Mukherjee was spearheading the hard-line anti-Pakistan drive as foreign minister.

"Mr Mukherjee's speech was music to my ears," said a Pakistani businessman. "It is a good omen for Pakistan-India relations." The Times of India said that India and Pakistan's top businesspeople saw a gentler, softer avatar of Mukherjee.

The tone and tenor set in the inaugural session carried through in the rest of the five sessions. Some of the grand plans discussed were:

-Development of a South Asian energy grid.

-Building of a South Asian multi-modal transport corridor linking Central Asia to Southeast Asia, connecting all South Asian economies to one another.

-Leveraging of India's capital markets and private-sector-led global footprint for the rest of South Asia.

-Liberalisation of key service sectors, including education, health and information technology.

The regional energy grid has been conceived as an integrated electricity network that allows cross-border trade in electricity, as well as oil and gas pipelines running through South Asia. Pakistan's cooperation is critical to such a massive project as it would serve as the transit country linking Central Asian oil and gas resources and Tajik and Afghan hydropower to the rest of South Asia.

The joint declaration of the Business Meet expressed a resolve to aggressively pursue cooperation in six key sectors, including textile, agriculture and energy. It also called for removal of restrictions on up-linking from India to Pakistan, opening up of news channels in the two countries and easing of visa restrictions. The Meet noted with concern that South Asia remains the world's least economically-integrated region and urged the two governments to take necessary steps to realise the tremendous potential of trade and commerce of these countries.

Enhanced regional trade means low freight costs and cheaper raw materials and value-added goods. Already, the legal trade between India and Pakistan peaked to $2.23 billion in fiscal 2007-08 as a result of the slightly improved ties at that time, from a meagre $251 million in 2000-01. However, it fell by around 19 per cent following the Mumbai attack. Unofficial trade, which includes both smuggling and business via third countries, is estimated to be much more.

According to Dr Burki's futuristic scenario, improved trade between South Asian neighbours would help increase India's GDP to $5,551 billion by 2025, from the $1,177 billion in 2007, while Pakistan's GDP rise to $571 billion, from $143 billion.

However, while painting this rosy picture, one should not forget the existing harsh realities of Indo-Pakistani relations, which are marred by lack of trust and deep-rooted hostility--a hostility which is also shared by a vast number of people. The shared history and values of the two countries are undoubtedly longer than their divided past, but the well-nurtured animosity of more than six decades remains an overhang. It makes realisation of the dream of South Asia's economic integration a challenging and arduous task. A single terror strike has the potential to derail years of gains. Haven't we seen this happening so many times? The two governments and the peace lobbies in them should not allow Indo-Pakistan relations to be held hostage by fanatics and extremists, who could again try to disrupt peace. Pakistan and India should also be partners in fighting the scourge of extremism.

Then, there is the question of addressing the core issue–the divided Himalayan region of Kashmir, which should not be seen as an ignored or forgotten issue. There is certainly an approach that an improvement in economic, cultural and people-to-people ties would facilitate the resolution of this thorny issue–in line with the aspirations and democratic right of the people of Kashmir. Undoubtedly, there are stumbling blocks at every corner in this long journey towards peace, but at least a step–a small and important step–has been taken under the initiative of Aman ki Asha. This needs to be backed and supported by more such efforts. The trade and businesspeople certainly have the power and resources to play a historic role in efforts to bring peace and change the economic landscape of South Asia.