India-Pakistan Trade and the China Factor
Photo Credit: AFP
By Tridivesh Singh Maini

India-Pakistan Trade and the China Factor

Jan. 08, 2019  |     |  0 comments

After the foundation stone ceremony of the Kartarpur Corridor on November 28, 2018, India and Pakistan were engaged in a war of words. Pakistan Foreign Minister Shah Mehmood Qureshi said a day after the ceremony that Prime Minister Imran Khan had thrown a googlyas a result of which India — which so far had refused to engage with Pakistan — had to send two central ministers to attend the ceremony.

India Foreign Minister Sushma Swaraj criticised Qureshi’s googly statement, arguing that this reflected Pakistan’s insensitivity towards the Sikh community. Khan did some damage control, saying that the opening of the Kartarpur Corridor was not a “googly,” but in fact a genuine overture: “The [ground-breaking] ceremony [of Kartarpur] was a peace initiative. It was a sincere effort. So was the invitation extended to the Indian ministers. It was not a googly for sure.”

Swaraj also turned town Pakistan’s invitation to attend the South Asian Association for Regional Cooperation (SAARC) Summit to be held in Islamabad (the dates of the Summit have not been finalized as yet).

Khan, in an interview with the Washington Post, dubbed the Kartarpur Corridor as an important confidence building measure between both countries. He also stated that he hoped to resume dialogue with India once the elections of 2019 were over.

Apart from some intemperate remarks on both sides, Indian media channels had been a bit skewed in their coverage, looking at the corridor merely from the security perspective. Many channels had dubbed Pakistan’s decision to go ahead with the corridor as an attempt of the Inter-Services Intelligence (ISI) to revive militancy in the state of Punjab. Some Indian politicians, including the Chief Minister of Punjab (India), Captain Amarinder Singh, too echoed these views.

While there is no doubt that certain sections of the Pakistani security establishment have been fishing in troubled waters, to dub the Kartarpur Corridor as an ISI conspiracy is rather simplistic. This argument overlooks the sentiments not just of Sikhs, but other Punjabis who are in favor of closer links between both Punjabs. Religious tourism would also benefit the Pakistan economy immensely, and the service sector of the Punjab province would benefit enormously. Khan during his speech at the ceremony had outlined his vision for developing the Kartarpur city to give a fillip to religious tourism.

The Kartarpur Corridor would not just provide opportunity to Sikh pilgrims to pay obeisance at one of their holiest shrines, but could also give a fillip to economic linkages between both Punjabs. The demand for reducing restrictions through the Wagah-Attari land crossing — the only trade route — as well as opening more trade routes, was gaining ground with a number of business lobbies demanding the same.

India-Pakistan ties are full of uncertainty, and with skepticism in certain quarters, it remains to be seen as to how this religious corridor pans out. What is interesting however is international reactions to the corridor.

The US welcomed the initiative, saying that it had always pitched for greater people-to-people contact, and that this was a step in the right direction. The US Defense Secretary also stated that Pakistan should respond to overtures of India. The Trump Administration had been tough on Pakistan, but from time to time it had pitched for greater engagement between both countries, although New Delhi had not taken very kindly to this suggestion.

If Beijing wants closer economic cooperation with India, New Delhi should pressurize China to prevail upon Islamabad to liberalize trade with India and provide India with land transit access to Afghanistan and Central Asia.

China also supported the initiative. The Chinese Foreign Ministry spokesperson stated: “We are glad to see very good interactions between Pakistan and India.”

In recent months, there had been some important developments in India-China ties, especially in the context of Afghanistan. One of the important decisions taken during the course of the Wuhan Summit was that India and China would work together in Afghanistan. The Pakistan Army put forward its apprehensions, as a result of which cooperation so far between Beijing and India remained limited. India and China did however conduct a joint program for Afghan diplomats.

Significantly, on a number of occasions, China was also pitching for Indian participation in the China-Pakistan Economic Corridor (CPEC) project, which would require the easing out of trade restrictions. The Chinese Ambassador to India, during his visit to Amritsar in 2015, had suggested that the CPEC project could be extended to the Indian side of the border (Attari). Beijing realized that India was unlikely to join the Belt and Road Initiative (BRI) in general and the CPEC project in particular, due to India’s tense relationship with Pakistan and the fact that the CPEC passed through disputed territory (Gilgit-Baltistan). Post Wuhan Summit, China categorically stated that it would not force India to join the BRI. In the Shanghai Cooperation Organization (SCO) Summit held at Qingdao in June 2018, India was the only country not to endorse the BRI. However, a number of Indian analysts argued that joining the CPEC might be a pragmatic and feasible option in the long run which would benefit India economically.

The Chinese Ambassador to India, Luo Zhaohui, visited the Wagah-Attari border days after the election of Khan and argued for more harmonious ties between India and Pakistan. In June 2018, while addressing a seminar in New Delhi, the Chinese Ambassador spoke about the possibility of an India-Pakistan-China trilateral.

Interestingly, Imran Khan on repeated occasions had also spoken about closer trade relations between Pakistan and India. On the occasion of the foundation ceremony of the Kartarpur Corridor, Khan stated that India and Pakistan should seek to strengthen economic ties. If Pakistan provides “most favored nation” (MFN) status to India, and provides land access to Afghanistan and Central Asia, not only will this be a big boost for the bilateral relationship, but it could also lead to robust trilateral linkages. Former Indian PM Dr Manmohan Singh had repeatedly spoken about the possibility of breakfast at Lahore, lunch at Amritsar, and dinner at Kabul.

New Delhi itself needs to adopt a more pragmatic approach towards Pakistan and should not be closed to more robust economic linkages. If Beijing wants closer economic cooperation with India, New Delhi should pressurize China to prevail upon Islamabad to liberalize trade with India and provide India with land transit access to Afghanistan and Central Asia. Both India and China are seeking to promote closer people-to-people linkages. During the Wuhan Summit, an India-China High Level Mechanism on Cultural and People-to-People Exchanges was set up. Hence there is no reason why they should not seek to re-imagine their trade relations in the context of South Asia.

The two Punjabs have a role not just in rekindling people-to-people linkages, but also economic ties between India and Pakistan, and ultimately could even lead to “trilateral cooperation.” Beijing’s reaction to the Kartarpur Corridor needs to be viewed in that context. Beijing, New Delhi, and Islamabad will of course need to think out of the box.

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