India Stands Only to Gain from Pakistan Trade Deal

If the talks collapse, India will have destabilized Pakistan ahead of NATO’s exit from Afghanistan.

As India’s commerce minister proceeds to Islamabad to talk trade, it is important to remember that progress on the India-Pakistan free-trade agreement has all but stalled. At first glance it is easy to dismiss this as typical subcontinental petty wrangling. The reality is that it is part of a much larger Indian endgame aimed at accruing maximum advantages post the 2014 NATO drawdown in Afghanistan.

When one talks of the interests of the “Pakistani business community,” these are three completely diverse streams — in this case working at counter purposes to each other.

First are the traders and transporters who comprise 90 to 98 percent of what constitute the “business community” — nonproductive middlemen who actively support the deal as increased trade volumes means increased opportunities for them. Then come the nonmilitary industrialists who will be affected by their lack of competitive economies of scale but see this deal as a very important tool to weaken the army. Lastly there is the army industrial complex, the Fauji Foundation, which according to estimates controls about 95 percent of everything including industries and land and which stands to lose the most.

India has been nudged repeatedly by the West to normalize its ties with Pakistan in order to ease the pressure on NATO in Afghanistan owing to various Pakistani geostrategic imperatives there. The devil lies in the details in exactly which sectors India will accept unilateral disadvantages which could be skewed to support either the military’s or the nonmilitary industrialist’s commercial interests. Of course should both choose to get along (highly unlikely given the current impasse) then it could strike the right balance between the two.

Engaging the Pakistan military with an active commercial stake in India is seen as the first step in ridding it of its institutionalized paranoia and bellicosity. This is not to negate the fact that India actually sees real benefits in bilateral trade but it certainly helps India gain good “street cred” with the West.

These considerations are however balanced by the more menacing undertones of this deal. Implied in it is the reality that Pakistan’s civilian government can deliberately “throw” the negotiations to damage the military’s commercial interests and in so doing advance India’s passive-aggressive democracy promotion agenda in Pakistan. Presumably some intelligence inputs would have gone in to tailor this carefully to ensure that the Pakistan civilian and military industrial complexes got equal advantages. Thus rather than being seen as a peace building exercise with India, from the Pakistani point of view, this might as well be an army defanging exercise. Given the current state of things this could actually be an internal conflict exacerbation mechanism — which India is not exactly averse to.

The sudden resuscitation of court cases against President Asif Ali Zardari and Prime Minister Yousaf Raza Gilani could thus be part of a determined thrust by the on-again-off-again judicial-military tie up. Recall that Chief Justice Iftikhar Chaudhry was reinstated because the army and intelligence chiefs refused to back Pervez Musharraf, unlike was the case during the general’s previous showdown with the Supreme Court. As a result some form of “beholdness” of the chief justice to General Ashfaq Pervez Kayani, the chief of Army Staff, cannot be ruled out.

This also explains why after the initial rush to ratify the deal, its implementation has completely stalled, in action if not in rhetoric. To be noted also is that the initial momentum this deal gained in Pakistan coincided with when President Zardari allegedly initiated the “memogate” scandal.

Gilani can also use this deal to build bridges with the military by allowing the negotiations to give military businesses their share of Indian unilateral concessions. The structure therefore is that should military-civilian compromise happen with this deal, it is good for Pakistan and India. Should it not happen, India loses nothing but gains in that it destabilizes Pakistan. Additionally a Pakistani rejection of this deal will play out as a Pakistani attempt to scuttle a peace overture.

Depending on the shape of the 2014 Afghan pullout, Pakistan’s isolation will only increase and it is at that point that the real diplomatic and political potency of this deal as a tool to either ameliorate or exacerbate tensions within Pakistan will be tested.

The logic seems to be that (just like India’s developmental, as opposed to military, assistance to Afghanistan) that whether this is a win-win situation or a zero-sum game situation — it is entirely up to Pakistan. Either Pakistan can choose to cooperate and make it a win-win or Pakistan can perceive it as a Trojan horse and score another self defeating goal.

The West cannot be ignorant of the stakes and is sold as a sign of India’s seriousness toward normalization as well as a test of Pakistan’s sincerity. On balance it is an extremely sophisticated feint and one wonders if India’s myopic transactional diplomacy actually envisioned the horns of dilemma built into this.

Ultimately, like past Indian diplomatic endgames that have been counted as “victories,” this must be seen as a result of sheer luck rather than any concerted grand strategy on India’s part.