In Pakistan today, there is practically a cross-party consensus for having better relations with India. More significantly, Prime Minister Nawaz Sharif has invested considerable political capital in promoting this agenda. Te military leadership that traditionally has been opposed to rapprochement is now supportive of this policy in light of the changed threat scenario and emerging geopolitical and strategic imperatives. In contrast, the response from New Delhi has been lukewarm, with one exception — to promote trade and commerce with Pakistan. Although at a personal level, Prime Minister Manmohan Singh favours broad normalisation of relations, he is politically constrained and too preoccupied with domestic challenges to give relations with Pakistan any priority.

Nonetheless, both countries, at least on matters of commerce, now stand committed to move on a fast track. Recently, when the commerce ministers of India and Pakistan met in New Delhi, they took some important decisions to establish normal trading relations and undertake liberalisation and facilitation measures. Important among these was the one to keep the Wagah-Attari border functional round the clock, introduce containerisation of cargo and provide Non-Discriminatory Market Access on a reciprocal basis. The latter is meant as a stop-gap arrangement to overcome the psychological barrier associated with the MFN (Most Favoured Nation) acronym. In March 2012, Pakistan moved from the ‘Positive List’ to the ‘Negative List’ and placed 1,209 items out of over 8,000 product lines that could be imported from India. In addition, the business community of both countries has stepped up their interactions and an exhibition of Indian goods is planned for the middle of next month in Lahore, which is likely to be attended by the Indian commerce minister.

Perhaps, what many are unaware of is that India-Pakistan trade is still below the 1947 and 1965 levels. This should serve as a reminder to the leaders of both countries that unless there is progress on a broad front of issues, it may be difficult to sustain progress in trade and commerce.

The fragility of the relationship could be gauged by the recent volatility on the Line of Control (LoC) that lasted over a year and only stabilised when the two prime ministers, Nawaz Sharif and Manmohan Singh, met on the sidelines of the UN to cool the tensions. This clearly demonstrates that the situation on the LoC is symptomatic of the overall political relationship.

The conduct of the two militaries is crucial in moving towards an enduring, positive relationship. It seems that the Indian military has become a major determinant in India-Pakistan relations. Recent aggressive statements against Pakistan by the Indian chief of army staff and the army’s veto on any agreement on Siachen, other than maintaining the status quo, reflect the increasing role of the military in political affairs and reinforce the assumption that the political leadership in India is yielding space to men in uniform. This may well be a consequence of the increasing role of the military in Jammu & Kashmir and in the Maoists-led insurgencies. This seems ironic, as while in Pakistan, the army, which has historically been a dominant power, is distancing itself from politics, the Indian military is gradually asserting itself.

Progress on major issues — Kashmir, Siachen and Sir Creek — is unlikely. In any case, with the Indian elections as close as May 2014, no major policy decisions are expected. The election results should be completed within a month. Probably by September 2014, the new Indian government will be in a position to define its relations with Pakistan and no progress can be expected until then. Much would depend on which party wins but with the Congress party’s abysmal performance, the BJP seems to be the front runner, with Narendra Modi, the current chief minister of Gujarat, as the prospective prime minister.

Modi is a hardliner and carries a stigma of the horrible massacre of Muslims in February 2002, in which over 1,000 Muslims died. But having improved the economy of Gujarat and known to be business-friendly, he has the full backing of India’s corporate world and right-wing political parties. Modi is, however, very divisive and controversial. The world will be closely watching him for his treatment of minorities and conduct of relations with India’s neighbours, especially Pakistan.

Modi, during his election campaign, has stated that he will follow a decentralised foreign policy and will consult the states. The idea seems far-fetched and is a reflection of his lack of experience in foreign affairs. In all likelihood, his foreign policy will be dictated not as much by a nationalistic agenda but more by the compulsions of moving the economy. It will take Modi at least two years to give any serious attention to relations with Pakistan and that, too, if he is genuine about it. Nevertheless, Pakistan will have to pay a lot of attention to the new political realities of India.

The emergence of the Aam Aadmi Party has introduced another new element in Indian politics. Its anti-corruption crusade led to the party capturing power in Delhi and the forecasts say that it might win between 50 to 60 seats in the Lok Sabha. It is to be seen to what extent the emergence of a third political force will transform the internal political dynamic of India and affect its attitude towards Pakistan and other neighbours. Interestingly, the party leader, Arvind Kejriwal, has expressed his desire for friendly relations with Pakistan.

Elections in Jammu & Kashmir this year is another major event that will be closely watched by Pakistan for its fairness and representative character. Any effort to manipulate the elections by New Delhi will create unrest among the Kashmiris with sympathetic reverberations in Pakistan.

The role of India and Pakistan during the pre- and post-withdrawal period of the US forces from Afghanistan would also be critical. The general prognosis is that there are slim chances of any reconciliation between Hamid Karzai and the Afghan Taliban, which could lead to a civil war. It would be in the interest of both countries to cooperate in promoting stability in Afghanistan.

Published in The Express Tribune, January 29th, 2014.

Both democracy and market economy are claimed by their respective champions as being relatively less imperfect systems than all other tried and tested systems of governance and economic management. But the most worrying aspect of these two almost perfect systems is that when they function side by side, it becomes almost impossible to control corruption.

Developed societies, which revere the two systems almost as if they were religious norms, have largely succeeded in keeping the unwanted side effect in the form of corruption under some control by giving full rein to a truly independent judiciary, a fearlessly free media and a genuinely powerful parliament.

These social controls make the governments accountable and thus keep corruption from becoming rampant. But even these controls have so far failed to completely eliminate corruption. That is perhaps, why in the US, the lobby system, which is clearly a corrupt practice, has been institutionalised and given the required legal cover. This is called legalised corruption.

The UK, which has signed the European convention on bribery, used what seemed to be legal means to stop an ongoing investigation into charges of bribery in a multibillion dollar aircraft deal with an oil-rich kingdom. This act of official abetment in such a high profile corruption case became the talk of the town in the UK during most of the 2007-2010 period. The British government did not seem to mind the scandal.

Some European countries are known to have sold deadly weapon systems to poor countries, which had no need for such weapons but agreed to buy them on being offered huge kickbacks to persons involved in approving the orders.

Donor countries are known to have approved ‘generous’ assistance to developing countries for projects, which the recipient countries did not need but approved in return for hefty kickbacks to the approving authorities. Most of these projects were thrust upon the recipients only to promote the donors’ domestic industries, shipping companies and consultancies, which together were meant to ensure the return of more than 99 per cent of the dollar aid back to the donor country in the form of inflated import bills.

Ironically, governments in developing countries which try to resist these shenanigans of the developed countries are, more often than not, dubbed corrupt, and using the so-called credibility and reliability of ‘foreign media’ are hounded out of power and are replaced with more pliable governments.

At some point in recent history, developed societies seemed to have sold their souls completely to the market and as a result, most political parties in these societies turned into handmaidens of big business. By 2008, it all came unstuck. And the respective governments in these developed societies were forced to use the taxpayers’ money to keep afloat many financial institutions, banks and large automobile companies, which had almost keeled over, thanks largely to market forces.

Governments in developed societies, trapped perhaps in a state of denial, continue to pump good public money into bad private sector entities just to prove that capitalism is not dead. All attempts on the part of these governments to regulate the economy, especially the financial sector, have been spurned dismissively by their banks and financial institutions.

Rich countries still have enormous assets to fall back on and their massive lead in technological developments, especially in information, telecom and nano technologies plus their control over the world’s energy reserves, are likely to help keep their economies from collapsing in the near or even perhaps, distant future, even if it is presumed that both the market and its mother, capitalism, are dead.

But developing countries like Pakistan, which practise democracy and market economy but do not possess strong enough social accountability controls, like an independent judiciary, a free press and a powerful parliament, are likely to face a more formidable challenge from the spectre of corruption.

That is perhaps, why when the banks’ spread went up to seven per cent during the Musharraf era and the service industry began enlarging its contribution to GDP, with the real economy (agriculture and manufacturing) stagnating, no one bothered to detect the financial bubble that was ballooning, as prices of real estate started galloping on the heels of files and share prices started jumping as everyone and his aunt started investing in stocks money borrowed from banks and losing.

Published in The Express Tribune, January 29th, 2014.