The NDA government has upped the ante on Prime Minister Narendra Modi’s declared intention to isolate Pakistan by examining the Indus Waters Treaty and boycotting the Saarc Summit due to be held in Pakistan in November. It is also considering taking action against Pakistan for its failure to accord the Most Favoured Nation (MFN) trading status to India. All these moves would hurt Pakistan and damage its image, but they may not be enough to force Pakistan to put an end to cross-border terrorism.
All three moves are among the non-military options that have been bandied about among the commentarati and avidly taken up by hawks demanding stern action against Pakistan. Each one of them has been loudly hailed for their anticipated effect on Islamabad. While each would have an impact on Pakistan, they also have other implications that would limit their use and impact.
Postponement of the Saarc Summit would be a blow for Pakistan, especially as three other Saarc members — Afghanistan, Bangladesh and Bhutan — have also conveyed their intention to stay away from the summit. Saarc summits have been postponed more than half a dozen times in the past. Some of the postponements have taken place as a result of strained ties between New Delhi and the host government. But this time Pakistan stands pilloried on the issue of terrorism as half the Saarc membership has declined to attend a summit. Summits require that leaders of all Saarc nations attend the annual gathering.
India conveyed to Nepal, the current Saarc chair, that “increasing cross-border terrorist attacks in the region and growing interference in the internal affairs of member states by one country have created an atmosphere that is not conducive to the successful holding of the 19th Saarc Summit in Islamabad in November 2016," according to the official statement. Bangladesh and Bhutan also cited the deterioration in regional peace and security due to terrorism for their absence. It has shaken the regional organisation as it is the first time that such an open rift has occurred within Saarc.
While the cancellation of the South Asian summit hurts Islamabad’s pride, the Indus Waters Treaty has a much greater impact on the Pakistani psyche. It impinges on Pakistan’s primordial fear of India cutting the supply of water in rivers flowing from India into Pakistan. The government has not talked of revoking the Indus Waters Treaty. Revocation of a treaty brokered by the World Bank and financially backed by six friendly countries has a host of implications.
The treaty was negotiated on the basis of a World Bank proposal for equitable division of the waters in the common rivers. The US, UK, Australia, West Germany, New Zealand and the World Bank provided the financial assistance for building dams and replacement canals in Pakistan and some irrigation works in India to divide the waters. Revoking a treaty would have legal consequences and would affect India’s image as a responsible emerging power. It would also send negative signals to India’s other neighbours regarding the sanctity of its bilateral agreements on sharing and utilising river waters. The government has instead set up an inter-ministerial task force to review its usage of water from the three western rivers that flow into Pakistan. It also put off the next meeting of the Permanent Indus Commission, a body comprising of India and Pakistani officials that reviews the implementation of the treaty.
Under the treaty, water from three western rivers were allocated to Pakistan while water from three eastern rivers were India’s share of the six common rivers. India was allowed water from the western rivers for limited amount for “domestic and non-consumptive use, for hydropower and agriculture”. However, India has not fully utilised its share of the western waters. Pakistan has raised objections to any Indian project on the western rivers even when the projects are either navigational or run-of-the river hydel plants that do not limit the water flow to Pakistan.
Pakistan’s agriculture-based economy is dependent on the waters of these three rivers. Some parts of Pakistan have faced water scarcity and Pakistani politicians and militant leaders have whipped up public opinion by accusing India of cutting down water flows. A Pakistani delegation is currently in Washington to talk to World Back officials on the Ratle and Kishanganga hydropower project on the Indian side of the Chenab and Jhelum rivers. If India picks up the pace to complete its river projects, it would reduce the water flowing into Pakistan. However, these projects are long gestation projects and there will not be an immediate impact on Pakistan except to raise public apprehensions.
On the economic front, revoking MNF status to Pakistan or enforcing economic sanctions would not have a significant effect on Pakistan. Indian exports would bear the brunt of the action as Indian exports to Pakistan far surpass Pakistani exports to India. Indian exports are US $2.2 billion while it imports $0.4 billion from Pakistan. The major part of trade between India and Pakistan is not direct trade, but is routed through third countries like Dubai. India gave MFN status to Pakistan in 1996 in accordance with the WTO rules, but Pakistan is still to reciprocate. India can approach the WTO dispute resolution mechanism on the issue. It would be another source of embarrassment for Islamabad.
Pakistan is a master of brinkmanship and can brush off minor embarrassments. The Indian government will need a much more sustained campaign to convince Islamabad that the damage being done to its image requires a change in its policies.