In the post-Cold War era, geo-economics emerges as an alternative to geopolitics to conduct foreign policy. A shared vision of the future, economic complementarities, geographical proximity, and cultural affinity have helped in bringing regions together. The success of the European Union as an economic entity provides a template for nations around the globe to take geo-economics seriously. Although geopolitics still dominates the international political landscape as evident in form of the ongoing Russia-Ukraine conflict, however, the success of a group like ASEAN showed how economics can be used to enhance political clout and promote national interest.
While regions benefited from transitioning their focus to geoeconomics, in the case of South Asia, barring geographical proximity, none of the other necessary conditions for the success of regional economic integration were fulfilled. Asian Development Bank (ADB) called South Asia the least integrated region for trade. South Asia has an intra-regional trade of only 5% of total trade while the comparable figure for ASEAN is 25%. In terms of absolute numbers total trade in South Asia is just $23 billion which is far below the estimated potential of $67 billion. Constrained relations between Pakistan and India are considered one of the key factors behind the lack of integration in the South Asian region. Indo-Pak hostility on Kashmir, the use of terrorism and non-state actors as a tool of statecraft by Pakistan, and the dragging of bilateral relations in domestic politics in both countries have hampered the prospects of any fruitful economic cooperation. So, can geo-economics be a viable tool to thaw the current frosty relations between India and Pakistan?
Analysis of bilateral relations in the last three decades shows a lack of consistency at the policy level from both India and Pakistan. Relations are mostly driven by the personal preferences of top leadership and domestic political calculations. Failure of Lahore bus diplomacy due to adventurism in Kargil by Pervez Musharraf, and failure of backchannel talks between Satinder Lambah and Tariq Aziz during Dr. Manmohan Singh’s government due to the lawyer’s movement in Pakistan are a few examples of the volatile nature of Indo-Pak relations. On the Pakistani side lack of civilian supremacy, ideological hostility against India, and skepticism over Indian development projects in Afghanistan are some of the factors which prevented any meaningful economic cooperation.
In contrast with Indo-Pak relations, economic ties between India and China grew manyfold despite tension over the line of actual control (LAC). Despite the Galwan incident of 2020 India and China’s bilateral trade touched an all-time high of $115 billion in 2021-22. With Bangladesh also, issues like border enclaves and water sharing have not prevented an upsurge in economic relations. Similarly, geoeconomic integration, if made, between India and Pakistan has prospects to boost the relationship between them.
The decline in geopolitical stature of Pakistan in recent years due to the deterioration in macro-economic fundamentals of its economy, the withdrawal of coalition support funds posts the American retreat from Afghanistan in 2021, the weakening of patronage from its Gulf partners like Saudi Arabia and UAE, has forced the ruling elite of Pakistan to do an introspection. This change was articulated by the last army chief Qamar Javed Bajwa during the Islamabad security dialogue where he calls for non-interference in affairs of neighboring countries, building intra-regional trade and connectivity, and bringing sustainable development via investment and building an economic hub within the region. This “Bajwa Doctrine” was further crystallized in the national security document of Pakistan released in 2022, which calls for a shift from geopolitics to geo-economics to ensure the long-term security of Pakistan.
This shift is a marked contrast from the traditional stance of Pakistani rulers like Zulfikar Ali Bhutto’s infamous statement of “eating grass to make an atomic bomb” or Zia-ul-Haq’s policy of bleeding India with a thousand cuts. This shift got further accentuated by factors like the rise of India as an economic powerhouse, the emergence of the Indo-Pacific as the main theatre of geopolitical contestation with the centrality of India and rapidly changing dynamics of West Asia with countries like Saudi Arabia refusing to write anymore blank cheques to Pakistan.
From India’s perspective, improved ties with Pakistan will give it access to its market and opens up the possibility of transit trade and market access to Central Asia. The transit route to Central Asia and Iran will fulfil India’s energy needs through future collaboration projects in line with the Turkmenistan–Afghanistan–Pakistan–India (TAPI) gas pipeline. Also, the opening of a trade route via Pakistan opens up a new possibility for India-Afghanistan trade along with the prospect of a working South Asian Free Trade Area (SAFTA).
From the Pakistani perspective, given its dire economic condition with an acute shortage of essential items like food and medicine, trade with India provides immediate relief in the form of cooling inflation. In long term, India provides a huge market for Pakistani agricultural products like cotton and mango, and cooperation in information technology will help boost Pakistan’s emerging IT sector. Energy cooperation through initiatives like the SAARC grid will improve the electricity deficit in Pakistan. The cultural affinity, common language, and similar economic and social systems further provide an ideal foundation for broader India–Pakistan trade ties.
However, this vision cannot be materialized as long as the use of terror groups in Kashmir, infighting among the Pakistani elite, and the perpetuation of anti-India indoctrination in textbooks of Pakistan continue. At present, Pakistan’s domestic political situation is highly fluid with Imran Khan challenging the army leadership and all institution including the judiciary are at loggerheads, which makes any meaningful dialogue with Pakistan virtually impossible. However, once the political situation gets stabilized, most probably, after the elections this year, the Bajwa doctrine can provide an opening for ruling elites in Pakistan to start a meaningful dialogue with India. The lesson can be learned from the European Union and ASEAN, as they not only found the right balance between geopolitics and geoeconomics but also utilized the latter to address the challenges of the former. Similarly, despite their long-standing differences over the issue of sovereignty, China-Taiwan economic ties are very deep with China being the number one trade partner of Taiwan.
History is filled with examples where prosperity through economic cooperation helped in overcoming traditional hostilities. Countries like France, Germany, Italy, and England which fought each other during the world war are a model of economic cooperation today. Similarly, major geopolitical changes are observed in West Asia also, where Saudi Arabia is trying to focus on economic opportunities in the region by turning down hostility with its long-time adversary – Iran. Restoration of Most Favored Nation (MFN) status will work for both nations. Indo-Pak relations can follow the same trajectory if similar foresight is shown by both countries, especially Pakistan. As Winston Churchill once famously said that any great crisis shouldn’t get wasted, it’s time for Pakistani elites to follow this wisdom.
[Photo (cropped)by Guilhem Vellut, via Wikimedia Commons]
The views and opinions expressed in this article are those of the author.
The author is a Ph.D. student at the Centre for South Asian studies, School of International studies, Jawaharlal Nehru University, India.
