Setting the summit agenda

Dr Farrukh Saleem
The author is an Islamabad-based
freelance columnist
farrukh15@hotmail.com

People who begin trading goods shall eventually stop trading bullets. That is the way out of Kashmir. Come July 14, President General Musharraf and Prime Minister Vajpayee are planning to board cosmic cruisers to do star hopping for three consecutive days. Starting from Rashtrapati Bhavan to Raj Ghat, Darya Ganj (Musharraf's ancestral home), Taj Mahal, Jaipur, Ajmer Sharif and then back to the Land of the Pure.

There is politics all around Kashmir and then there is this force, so far hidden, called commerce. Vajpayee says that at the top of his summit agenda is "Pakistan-occupied Kashmir". India remains adamant - and the world around us seems to agree with India - that the time for redrawing maps is over. We say that the whole of Kashmir is ours.

The dispute over Kashmir seems existential. The dynamics of a trade-off over Kashmir may slowly be changing but neither Indians nor Pakistanis are prepared for a compromise, at least not in the short to medium term. As a matter of record, shelling across the Line of Control (LOC) has declined. Secondly, the Indian army is in the process of transferring responsibility of maintaining law and order to paramilitary forces. Third, the odds of a full-scale war between the two nuclearised subcontinental neighbours are falling by the day. To be certain, the whole 'business of jihad' and deep-rooted financial interests in war are going to prolong Kashmir for as long as they can. There, however, is a powerful constituency both in Pakistan and in India, which believes that economic interdependence has the potential of solving long-standing political conflicts.

From a purely Kashmiri perspective, there actually are three Kashmirs: the Indian-controlled Kashmir (ICK), Pakistan-controlled Kashmir (PCK) and Chinese-controlled Kashmir (CCK). The 'Greater Kashmir' has a total land area of some 220,000 sq kilometres whereby almost 90 percent of Kashmir is mountainous. Of the 220,000 sq km, around 100,000 sq km is currently under Indian control, 80,000 sq km is being controlled by Pakistan while more than 42,000 sq km is under Chinese control (in 1962, China also wrested part of the Ladakh area of eastern Kashmir from India during its victory in the Sino-Indian War). With a total population over 10 million, close to 80 percent resides in the Indian-controlled region (that also has most of Kashmir's arable land area) and no more than 3 million live in the Pakistan-controlled Azad Kashmir. Of the 10 million, around 8 million of the Kashmiri population is Muslim. Hindus and Sikhs are concentrated in and around Jammu while a Buddhist minority lives in the north-east. The Indian-held state of Jammu and Kashmir has less than one percent of India's total population, but is the only Indian state with a two-third Muslim majority.

Our two-time prime minister Benazir Bhutto has predicted that President General Musharraf will come back from India "empty handed". On Kashmir, there is nothing that Vajpayee can give to Musharraf that Musharraf can then sell it to his constituency. The way to prove Bhutto wrong is to introduce economics into the summit agenda. Official two-way trade between India and Pakistan currently stands at $200 million. Estimates on unofficial trade range from a low of $500 million to over $2 billion a year. Potential two-way trade under freer, more open trade is some 200% of unofficial figures.

Look at the US-Canadian border, for instance. This is the largest bilateral trade relationship that exists on the face of the planet. Total Canadian exports to the world stand at $275 billion. Of the total, 87% or $241 billion worth of exports go to the US. Such a huge consumer market sitting south of the Canadian border has been the secret to Canadian prosperity. Products made in Canada and exported to the US include motor vehicles, natural gas, trucks, lumber, newsprint, modems, electrical apparatus, chemical wood pulp and tractors.

Opening up trade across the Line of Control (LOC) shall be a bonanza for the two subcontinental neighbours. The Indian industry is awfully hungry for natural gas. Simply getting it from Iran or Qatar and exporting it to India could generate hundreds of millions of dollars a year in transit fees for Pakistan. Then there have been exceptional new discoveries at Zamzama, Marri Deep, Miano, Sawan and Bhit. Our water coolers, for example, have long been a hot smuggled item in India. Imagine a billion, sun-boiled, thirsty buyers.

Then there are textiles, surgical equipment and the sporting goods industry. Imagine a billion cricket fans and a few millions football players. That would all make Sialkot and Wazirabad grow exponentially and there inhabitants more prosperous and busy for years to come.

Pakistan and India can actually be the ideal trading partners. To be certain, there has to be a lot of restructuring on both sides. Our engineering sector won't be able to compete. It's true that they shall have access to a much larger market bringing in economies of scale but it will be a tough survival. There shall be give-and-take on both sides but the eventual winners shall be a billion Indian and 140 million Pakistani consumers.

Freeing up trade with India won't, however, be easy. There is the jihadi lobby and then there are some corporate lobbies that are always more organised than consumers. Our engineering, auto and electrical goods sectors are well organised and all against free trade with India. Companies like Al Ghazi, Agriauto, Atlas Honda, Pak Suzuki, Millat Tractors, Hinopak Motor, Pioneer Cable and Pak Cables would either have to become competitive or shut down shop.

Would imports from India destroy jobs in Pakistan? Here are two things from the Centre of Trade Polices Studies (the Centre's stated objective is to "increase public understanding of free trade"): First, "imports do not cause a net loss of jobs in a nation's economy. Imports may displace some workers in less competitive industries, but the overall level of employment is determined by monetary policy, labor market flexibility and other non-trade factors." Second, the "historical record is very clear that free trade bestows many benefits to the average person. Those countries that lower trade barriers and open their markets enjoy higher economic standards of living. Consumers have access to a wider range of higher quality products at prices lower than they would otherwise pay. The average person also benefits in terms of wages and job opportunities. When labor and capital flow freely to the most productive areas of the economy, workers are employed in better, higher quality jobs with higher wages. While there are inevitable short-term transition costs in some sectors of the economy, the long-term benefits of free trade for all far outweigh such costs."

For Pakistan's leaders, both military and otherwise, Kashmir has been a fruitful distraction. Focusing on Kashmir is easier than gazing into real problems of poverty and illiteracy. A summit agenda with Kashmir at the centre will take the summit participants nowhere. Freer trade, on the other hand, is bound to create powerful new constituencies both for Musharraf and for Vajpayee.