Dealing with Pakistan – Indus Water Treaty, the Most Favoured Nation Status and Cross Border Terrorism

The surgical strikes that the Indian Armed Forces carried out on the other side of the Line of Control (LoC) late September, so effectively seized the national consciousness that they displaced the other important

options being discussed to get back at Pakistan for its continued acts of terrorism against India and support to terrororganizations which target this country, and particularly in the wake of the attack on an Army camp in Jammu & Kashmir’s Uri. The ‘surgical strikes’ were interpreted as a macho response, especially when viewed against New Delhi’s insipid attitude during the tenures of the earlier Governments. The pot has since then been kept boiling, with Indian authorities indicating that, while the September counter was the first of its kind in scale and planning, it may not be the last.

This is what, one supposes, the nation wants to hear and see. Pakistan is doing itself no favour by continuing to provoke India by continuing to indulge in unprovoked and indiscriminate cross-border firing, not only to help militants sneak into our territories but also to create an atmosphere of fear amongst the civilian population residing in the border belt, killing Indian civilians and soldiers. The Indian military response has already been swift; according to reports, more than 15 Pakistan Rangers personnel have been shot by Indian security forces in the last 10 days or so. Besides, according to media reports, 14 Pakistani border posts have been destroyed. Islamabad denies it, of course, just as it has been in denial over its support to anti-India armed militants based in Pakistan. With cross-border violence escalating, the Government may well have to resort to more drastic military measures to counter the attacks. While our Armed Forces are capable of conducting any desired operation, the political leadership may have to seriously consider some non-military options as well to turn the screws on Pakistan, so to say.

Already, Indian security forces have responded forcefully to the recent cross-border firings by Pakistan that have martyred our Jawans. There are reports that at least four Pakistani positions across the LoC have been demolished in the first counter assault followed by another 14 posts flattened recently. And there is reason to believe that the Indian forces, be it the Army or the Border Security Force, will escalate the counter-attacks in the days to come if Pakistan continues its folly of breaching the ceasefire along the borders. The political and Armed Forces’ message is clear from this end: There will be no restraint if Indian interests are harmed. It is important to hurt Pakistan where it hurts most – which is to targetits Army personnel and Armed Forces installations. The renewed escalation by Pakistanshould also be seen in the context of its Army Chief, General Raheel Sharif demitting office later this year and his continuing confrontation with the civilian leadership, more specifically, PM Nawaz Sharif. Gen Sharif would want to exit with some face-saver after the humiliation of the surgical strikes or he may even be angling for an extension in service on the ground of serious threat to national security.

It may be recalled that post-Uri, before the surgical strikes, two of the non-military options being actively considered but now apparently pushed to the background, were to revisit the Indus Water Treaty (IWT) and to review the Most Favoured Nation (MFN) status India has given to Pakistan. Interestingly, just hours before the announcement of the successful surgical strikes, Prime Minister Narendra Modi had chaired a review meeting of the more than five-decade old IWT pact, and remarked that “blood and water cannot flow together”. Three weeks earlier, External Affairs Ministry spokesperson Vikas Swarup had also hinted at a relook at the MFN issue, saying that there would be a “review based on our security and trade interests”. This came in the wake of Pakistani Prime Minister Nawaz Sharif hailing the slain Kashmir-based Hizb Commander Burhan Wani.

Hopes that India would study afresh its options on IWT, were raised when India called off a meeting of the commissioners of the Permanent Indus Commission, with unnamed officials saying that the meeting would be held only in the absence of terrorism. The commissioners have been meeting roughly twice a year, and this had continued to take place even during the 1965 and the 1971 wars as well as during the Kargil conflict. The departure from past practice offered an indication of a possible change in mood and strategy in New Delhi. It was an effective means to box Pakistan into a corner, because it robbed Pakistan the chance of pushing ahead with its complaint over the issue. The IWT provides for a three-stage grievance redress mechanism: Disputes are first raised in bi-annual meetings and sought to be resolved; if there is no resolution it is referred to a neutral authority which the World Bank appoints; if the neutral expert fails to provide an acceptable solution, the matter goes to a UN court of arbitration. By delaying the commissioners’ meeting, India cleverly sabotaged the two other options Pakistan may have exercised. Unfortunately, there has been a lull since then, with attention currently focused on military option.

Many experts have warned that New Delhi cannot abrogate an international treaty, and should it decide to do so, it will lose global respect. The fear of abrogation is based on the wrong premise that India has indicated it will scrap the IWT. In fact, there are many more hints that such an idea is not even being considered in Government circles. A revisit of the treaty does not mean disowning; it means securing India’s interests to the fullest within the parameters of the pact. There cannot be a dispute that New Delhi has been extremely accommodating to Pakistan on the matter. Given Islamabad’s conduct, there is no need for India to continue with such large-heartedness, especially when it comes at the cost of our interests.

A good instance of such misplaced generosity is the Tulbul project in Jammu & Kashmir. India had unilaterally suspended work during the Congress Government in 1987, after Pakistan (which calls it the Wular Barrage) objected to it. India had begun construction of a nearly 440-feet long and some 40-feet wide barrage at the mouth of the Wular Lake located on the Jhelum river. On its completion, it would have ensured the flow of some 4,000 cusecs of water, enhanced navigation and increased connectivity between Srinagar and Baramullah, and become an economic game-changer for Kashmir. But Pakistan claimed that the construction of the navigation project went against the treaty, and that it would help India create and control the ‘flow of water’ into the Jhelum. These apprehensions were unfounded, as several experts had then observed. But the Indian Government succumbed to Pakistan’s arm-twisting when the latter threatened to move for international arbitration. Thus, three years after initiating the scheme, the Government halted it. Ironically, 24 years later, India told its neighbour that it would not wait endlessly and would initiate international arbitration to resolve the matter.

It is not surprising that Jammu & Kashmir has been for long pushing various Union Governments for a revisit of the IWT and the resumption of the Tulbul project. The State Government began work on the scheme in 1984 after apparently being fed up of waiting for Pakistan’s nod. It believed that the project could help the State manage water levels during the lean season when the water discharge comes down to only 2,000 cusecs and hampers navigation. But in the absence of a clear strategy from the Centre, the project lost momentum. Now, Jammu & Kashmir Chief Minister Mehbooba Mufti has said the State has suffered due to the treaty. At an event in Srinagar in end-September, she remarked, “There is talk of IWT. We are facing losses on account of this treaty. We should get compensation and we cannot ask Pakistan for that. Whatever we get, be it our power projects or anything, we should get.” In other words, Mehbooba Mufti asked the Centre to either exploit the IWT India’s fullest benefit or compensate the State for the loss.

It is important for the Narendra Modi Government to take a firm stand this time around and revive the Tulbul project. If Pakistan wants to go for arbitration, so be it. Islamabad has in any case not shown any gratitude to India for the latter’s magnanimity over the decades. Only recently, Pakistan Prime Minister’s Advisor on Foreign Affairs, Sartaj Aziz, claimed that India’s attempt on the issue could be seen as “act of war”. Pakistan has been constantly complaining about the Kishenganga hydro-electric plant and other projects too. According to reports, Islamabad has begun preparing for the eventuality. Leave alone the Jhelum, Pakistan has been cribbing over control of waters of the Chenab and the Neelum. Its officials led by the Attorney General met senior World Bank personnel to discuss matters relating to its request for arbitration in conformity with the provisions of the IWT. The World Bank has a crucial role to play in establishing a court of arbitration by facilitating the appointment of judges; each warring country gets to appoint two arbitrators. The World Bank also has a say here because the IWT was negotiated and finalised by India and Pakistan under the auspices of the international lending agency in 1960.

Given the present standoff, it is interesting to note that the IWT came into being in an atmosphere of bonhomie (though short-lived, since five years later Pakistan’s misbehaviour led to the 1965 war). Or perhaps, this should not come as a surprise given that the then Prime Minister Jawaharlal Nehru was ever willing to make generous concessions to even a hostile nation with a view to polishing his image abroad. Nehru and Pakistan’s President Ayub Khan signed the pact on September 19, 1960. Just consider the scale of magnanimity: Nehru gifted 80 per cent of the Indus’s water to Pakistan; it amounts to close to 6,000 tmcft every year. Contrast this with the dispute between Karnataka and Tamil Nadu, over the Supreme Court’s directive to Karnataka to release a mere 3.8 tmcft of Cauvery water to the latter State, and the enormity will strike you. But for independent India’s first Prime Minister, the generosity was a gesture of “goodwill” to Pakistan. We now know how that goodwill was reciprocated over the decades.

The treaty administers the utilisation of water of the river Indus and its tributaries. It lays down that the rivers Ravi, Beas and Sutlej would be ‘governed’ by India, while Indus, Chenab and Jhelum were to be managed by Pakistan. Since the Indus flows from India (though originating from Tibet), the country had the right to use 20 per cent of its waters. The IWT also provides for dispute redressal mechanisms, including international arbitration brokered by the World Bank.

The exit from the IWT may not be a feasible option, but at least New Delhi must push ahead with projects that utilise the Indus water to the fullest extent. Things have changed since 1960. There is no atmosphere anymore for the one-sided ‘goodwill’ to sustain. Moreover, there are reports that China has blocked a tributary of the Brahmaputra river that flows into India, in the backdrop of India seeking to re-understand the IWT. While Beijing has maintained that the hydro-electric project in Tibet will not impact India, experts here take the assurance with a pinch of salt. China’s decision is clearly to pressure India into not revisiting the Indus treaty and an assuring signal to Pakistan that Beijing will use all methods at its command to come to its help.

Like the IWT, the MFN status India granted to Pakistan in 1996 is a low-hanging fruit. The Modi Government is yet to take a call on reviewing it. While it has been 20 years since India took the unilateral decision in accordance with the World Trade Organisation’s (WTO) General Agreement on Tariffs and Trade (GATT), Islamabad has not reciprocated. Instead, it has settled for what is called the Non-discriminatory Market Access (NDMA) deal. If Pakistan is wary of granting MFN status to India because of domestic political and military compulsions, it is Pakistan’s problem. If India decides to reconsider the MFN recognition, the world community is hardly going to vehemently oppose it. Pakistan has benefitted immensely; its cement export business has gone up, for instance, and the day-cargo movement between the two nations has kept it provincial economies ticking — although just about. During the UPA regime, India had offered to extend its electricity grid across the border in Punjab and to arrange gas imports from Pakistan, but nothing came of the proposal.

There is nothing India will lose by way of business in withdrawing the MFN recognition to Pakistan. According to the Associated Chambers of Commerce of India (ASSOCHAM), Pakistan accounts for only a little over two billion dollars of India’s total merchandise trade of close to $645 billion. The country’s exports to Pakistan are a little over two billion dollars (less than one per cent of its total exports), while imports were even lesser — 0.13 per cent of the total inward shipments. Moreover, while India is progressing fast and is seen as among the fastest growing economies of the world and is courted by all and sundry, Pakistan is grappling with an economic mess that is its own making. A report in Pakistan-based Dawn newspaper quoted Bloomberg as saying that despite the economy growing well, the country risks default, since 42 per cent of its foreign debt (around $50 billion), is due this year. Seventy-seven per cent of Pakistan’s Budget is consumed in debt-servicing.

A comparison is worth making here: According to Indian Defence News, Pakistan’s foreign exchange reserves stood at $23.6 billion in September, while that of India was $371 billion. Total merchandise exports of Pakistan were $21 billion, while India posted a figure of $262 billion. Pakistan’s external debt to GDP ratio was at a staggering high of close to 65 per cent, whereas that of India was at a much manageable 23.7 per cent. Besides, Pakistan’s remittances have been on a downward trend. Quoting an editorial in The Express Tribune, the defence news website said “remittances have started to slow down with foreign direct investments down 53 per cent in the two-month period of July and August over the previous years”.

The economic crisis Pakistan faces is largely due to its anti-India fixation. Much of the energy of the Government in Islamabad goes in countering imagined offensives by India, which is euphemistically termed as a looming ‘security threat’. Pakistan’s promotion of terrorism as a state policy has led to its increasing isolation globally, and this has made investors from across the world reluctant to put their money in Pakistan. Thus, while Prime Minister Modi utilises his various visits abroad to garner investments for and in India, Pakistan’s Prime Minister goes around lamenting the Indian role in Kashmir (which nobody wants to hear anymore). Further damage is done back home, with hothead Pakistani Ministers threatening the use of nuclear weapons in case a war breaks out between their country and India.

There is something else India can do before it seeks to withdraw the MFN status from Pakistan; it can drag Pakistan to the WTO’s dispute settlement body and demand a reciprocal MFN recognition. But, even if it succeeds, it will be a symbolic win, because India will gain nothing commercially out of the victory. It must, therefore, pursue the task of withdrawing the recognition and battling it out internationally, if it has to. However, Indian policy makers are currently engaged in dealing with the unprovoked cross-border firing and breach of ceasefire that has been going on unabated, even targeting innocent civilian population. This is leading to a serious military confrontation along the IB and LoC and has to be dealt with militarily. It is imperative that a clear message should go to the Pakistan military leadership that our forces will, at all cost, defend the country’s security and sovereignty and Pakistan military will have to pay a heavy price for their unwarranted adventurism. The IWT and MNF options could therefore wait at this stage.

(The writer is Opinion Editor of The Pioneer, senior commentator and public affairs analyst)