The Pakistan economy is caught in a death spiral, coming out of which is no longer possible with the traditional tools of living on the dole from ‘friendly’ countries like China, Saudi Arabia and the United Arab Emirates (UAE). Even if Pakistan gets the stalled International Monetary Fund (IMF) programme, which will unlock a few billion dollars from its friends, it will merely be enough for a couple of months. What Pakistan needs to do is rethink and restructure its economy. Doing this will necessarily entail junking some of the pernicious foreign, defence and security policies that Pakistan has followed, even internalised, in relation to India. The good news for Pakistan is that some Pakistanis – a few sensible ones – have increasingly been talking of the need to reach out to India and reconnect or recouple its economy with India’s. The bad news is that there aren’t many takers for this advice in the Pakistani system and society.
Even the ones who advocate normalising ties with India by opening up trade, commerce and investment links, harbour some rather unrealistic notions. They seem to think that it is as easy and simple as flicking on a switch. All Pakistan needs to do is offer normalisation and a desperate India will come running to clasp its hand. The template these people want Pakistan to follow is that of China and India – the political and territorial disputes running parallel to the trade and economic relationship. The fact that there are serious strains in the India-China relationship and a growing desire to steadily reduce dependence on China and decouple India’s economy from China’s doesn’t seem to have registered with the Pakistanis. They think that they can continue political hostility, export terrorism and keep their irredentist claims over Kashmir and at the same time enjoy a profitable economic relationship with India. Another underlying assumption, a rather heroic one, is that normalisation is as much in India’s interest as it is in Pakistan’s. In other words, it is a win-win because India cannot afford to have a failing, tottering and hostile Pakistan as that will retard India’s growth and become an obstacle in India’s rise.
The Pakistanis appear to have convinced themselves that “regions prosper, not countries”. This means that by turning its back on Pakistan, India will never be able to achieve its ambitions. What the Pakistanis don’t get is that regions can indeed prosper even if some countries do not become part of a regional block. For example, in Europe, the countries that were not part of the European Union (EU) did not benefit as much as the countries that became part of the EU. Similarly, in the sub-continent, it is entirely possible that other countries might become part of a regional block for economic cooperation and prosper, even though Pakistan is not part of the block. In any case, do the Pakistanis even consider themselves part of this region? After all, they all deny their Indian heritage, culture and roots and prefer to think of themselves as Arabs, Persians, Turks or Central Asians, and also see their country as part of one of these regions. As far as India is concerned, compared to Pakistan, there is far greater potential and positivity in building closer economic ties with other countries of the sub-continent, some of whom have already benefitted from their relationship with India.
Clearly, it is a load of hogwash when Pakistanis declare that India cannot do without them. In recent months, Pakistanis have been disabused of the long-held belief that they are too dangerous to fail and that they are so important that no one will let their economy melt down. Their much-vaunted geo-strategic location has also lost its value. Even as they are coming to terms with their growing irrelevance which has robbed them of the rents they extracted because of their location, and the dangers that a failed Pakistan posed to global security, they have started to nurture another delusion – India needs them as much as they need India. But this too is going to come crashing on the rocks of reality. The simple fact of the matter is that this boat has sailed a long time back. While Pakistan definitely needs to normalise with India to climb out of the hole in which it finds itself, the converse is not true. Pakistan is quite irrelevant to India’s story. It is at best, or at worst, a bit player as far as India is concerned. The reality is that as things stand, there is a complete decoupling – political, economic, social, cultural and even psychological – between India and Pakistan.
The Pakistanis who keep crowing about their geo-strategic location and glibly talk about geo-economics becoming their new paradigm fail to open their eyes to a stark new reality. Their earlier locational advantage was in the context of wars in Afghanistan or as a base for observing the erstwhile Soviet Union. That equation has no utility anymore. Today, the buzzword is connectivity. But who and what does Pakistan connect to, especially since there is no connectivity to the fifth-largest economy in the world – India. By the end of this decade, or perhaps by the middle of the next decade, India is expected to become the third-largest economy in the world. But Pakistan has no connectivity links to India, something that deprives it of benefitting from the India growth story.
If Pakistan presents itself as a bridge, then a bridge to where? A bridge between what, since that bridge doesn’t connect to India. The severance of trade means that Pakistan cannot become a manufacturing base for anyone looking to enter the Indian market. It is a bit like cricket – Pakistan is out of the Indian Premier League (IPL) and has to make do with a small and quite irrelevant Pakistan Super League (PSL) of its own. This is exactly how trade and economics will play out. Simply put, Pakistan desperately needs connectivity to India which can easily find other routes to markets in Afghanistan (a small, insignificant economic player) and Central Asia (not the most critical market for India) which are safer, more secure and not much more expensive than going through Pakistan.
Connectivity aside, the trajectory of development in both countries since the 1990s belies the Pakistani assumptions about their importance for India. Sensible economic policies and reasonably good economic management have widened the gap between India and Pakistan over the last three decades. During this period, relations between India and Pakistan have been hardly anything to write home about. And yet, India’s growth story did not falter. The rather anaemic trade that India had with Pakistan was less than marginal in India’s over-foreign trade. When Pakistan cut its nose to spite India’s face by severing trade relations in 2019 in response to the Constitutional reforms in Jammu and Kashmir, the total trade between the two countries was around $2.5 billion. Since then, India’s total foreign trade in goods and services has been over $1.5 trillion. This means Pakistan was less than a quarter percent of India’s total foreign trade. If this is not of total irrelevance to India’s growth story, what is? Even if all the grossly exaggerated and highly unrealistic studies of trade potential between the two countries being around $30-40 billion were to be proved correct, Pakistan would still not be able to either stall India’s growth or assist it. The bottom line is that trade with Pakistan brings very little to the table as far as India is concerned.
All this is not to argue against trade or connectivity with Pakistan, but only to bust the myth that Pakistan can hold India’s progress and its rise hostage. The lunacy is taken to the next level when Pakistanis declare that normalisation is possible only after India settles the Kashmir issue (needless to say, to Pakistan’s liking and satisfaction). It is almost as if the Pakistanis believe that it is India that needs trade and economic relations with Pakistan and not the other way round. If India is ready to contemplate and work towards reducing its more than $100 billion trade with China because of Chinese aggression, then it is a no-brainer that India will not bat an eyelid to normalise with Pakistan if it involves a compromise on territory or sovereignty over an integral part of India.
If indeed Pakistan wants to benefit from the India story, it needs to get off its Kashmir hobby horse, dismantle the jihadist infrastructure, reverse the anti-India and anti-Hindu indoctrination of its people, and stop the hostile propaganda and inimical actions that seek to destabilise India. Without this, the normalisation of relations and economic cooperation is a non-starter. Pakistan might think that it still has nuisance value that it can deploy against India and blackmail her into resuming trade and commerce. But this nuisance value will become redundant, in fact terribly expensive, for Pakistan as the gap between the comprehensive national power of the two countries widens. The question is whether Pakistan can use its current crisis to smell the coffee and take the necessary steps for normalisation with India; or continue with its bloody-minded policies and keep digging the hole in which it finds itself even deeper.
The writer is Senior Fellow, Observer Research Foundation. Views expressed are personal.
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