Pragmatism wins the day as Pakistan reaches out to India

The recent upturn in relations between India and Pakistan could move the region further away from decades of conflict.

Bad news from South Asia seems to be a regular phenomenon dominating news cycles for years now. So when some good news emerges, it takes a while for it to sink in. Amid a failing war in Afghanistan, growing Islamist extremism and a fragile institutional fabric in Pakistan, a surprise has sprung up - India-Pakistan ties have taken a turn for better in recent weeks.

Last month, Pakistan's military speedily acted with remarkable restraint to return to the Indian military a helicopter that had inadvertently crossed the Line of Control. Meanwhile, India has supported Pakistan's bid for a non-permanent seat on the United Nations Security Council with Pakistan responding by supporting India's nominee for the post of the secretary general of the Commonwealth.

But much more significantly, Pakistan has finally decided to grant Most Favoured Nation (MFN) status to India after years of failing to reciprocate India's decision to do the same in 1996. This is clearly not a radical decision as under the terms and conditions of the World Trade Organisation, member states are supposed to bestow MFN status on each others so that there is no discrimination and all states can benefit equally from the lowest possible tariffs.

And yet the move is politically significant as the Pakistani government seems to be signalling that it is indeed serious about the dialogue process that has been resumed after a gap of three years. India had ceased all dialogue with Pakistan after the terror assaults on Mumbai in November 2008 that had spoiled the bilateral relations to an unprecedented degree.

Both New Delhi and Islamabad have realised that a lack of dialogue between the two neighbours is becoming counterproductive. And so the latest move by Pakistan should be seen as symbolically important. For the last 15 years, Pakistan has linked the MFN issue with the contentious issue of Kashmir. In the absence of MFN status for India, around 20,000 Indian export items to Pakistan have to be routed through a third nation.

With the granting of the trade status to India, it has been estimated that the bilateral trade could jump to $8 billion (Dh29.4 billion) from the paltry $2.6 billion at present over the next five years. This makes the move an important confidence-building measure that will allow the two sides to take their dialogue forward on other more contentious issues.

Islamabad announced the decision suggesting that "all stakeholders, including our [Pakistan's] military and defence institutions, were on board". India, not surprisingly, welcomed the decision, arguing that "economic engagements, trade, removing barriers to trade and facilitating land transportation would help the region".

For some time now, there has been growing support in Pakistan for normalising trade ties with India. When Asif Ali Zardari became the president of Pakistan in 2008, he articulated the need for greater economic cooperation with India but was rebuffed by the all-powerful military.

The ground realities in South Asia have rapidly evolved in the last few years. Pakistan is under tremendous pressure to prove its credentials as a responsible regional player in light of the crisis in Afghanistan and rapidly deteriorating internal security situation. Pakistan's economy is in a parlous condition with growth down to 2.4 per cent in the last financial year. After Islamabad declined to pursue the advice of the IMF to expand its tax base in March 2010, the fund decided to suspend disbursement of its $11 billion facility.

Pakistan's ties with the US have deteriorated sharply since May this year when the US Navy Seals killed Osama bin Laden in Abbottabad. Pakistan had hoped that China would fill the void but China has been reluctant to take on the mantle of its saviour.

The Obama administration's decision to suspend a portion of the US aid to the Pakistani military has led to many in Islamabad to become even more forceful in underlining Beijing's importance for Pakistan. Reacting to the US move of cutting aid, Islamabad's ambassador to Beijing, Masood Khan was quick to suggest that "China will stand by us in difficult times as it has been doing for the past years". But Chinese involvement in Pakistan is unlikely to match the US profile in the country in the short to medium term and it is not readily evident if China even wants to match the US in this regard.

This has led Pakistan to explore new foreign policy options and a more pragmatic approach towards India is the outcome. Normalising trade relations with India allows Pakistan to not only garner economic benefits from one of the world's fastest growing economies but also to alter the impression of being the perpetual troublemaker.

The decision to grant MFN status to India has provoked objections in Pakistan with some business groups, especially the pharmaceutical industry raising the spectre of Indian goods flooding the Pakistani markets. India should now be large hearted and open up its market for Pakistani exports.

The prime ministers of India and Pakistan will be meeting this week in Maldives for the summit of the South Asian Association for Regional Cooperation. They should now take these positive atmospherics forward by taking some bold moves and giving a fresh momentum to the peace process. The latest move by Pakistan is unlikely to resolve the fundamental conflict between the two rivals but it is a start. The two sides should build on this to take South Asia out of the morass of long-standing conflict.

Dr Harsh V Pant is a reader in international studies at King's College London