When a neighbour is in dire need, it is only civil to help them to the extent one can. In India, we call it ‘padosi ka dharma’ ─ the duty of a neighbour. The said neighbour may not have the best of relations with you. But if you rush to them with a sincere and no-strings-attached offer of assistance, who knows, your neighbour might realise the virtue and long-term benefits of good-neighbourliness.
Pakistan’s Economic Crisis
Pakistan needs help. With Imran Khan being voted in as the new Prime Minister of Pakistan, all reports emanating from Islamabad state that the biggest challenge the new government will face is the fast-deteriorating state of the economy. The country is on the verge of a balance-of-payments crisis, which will endanger the value of its rupee, and its ability to pay for the soaring import bill. “We will have weeks, not months to act,” according to Asad Umar, who is most likely to be the new finance minister.
Reportedly, Pakistan will seek a USD 12 billion bailout from the International Monetary Fund (IMF).
However, the United States, which has the highest voting rights in IMF, is disinclined to help what was once its strongest ally in the region for the longest period of time. US Secretary of State Mike Pompeo has said, an IMF bailout must not be used to help “repay Chinese debts that Pakistan has incurred under the China-Pakistan Economic Corridor (CPEC)”. This has angered Pakistanis. Umar has hit out by saying, “One friendly advice to the Americans: We’ll worry about our Chinese debt, but I think they better handle their own Chinese debt first.”
Why Is Pakistan Going Bankrupt?
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Should India help Pakistan? Of course, it should. Indeed, it must. If India doesn’t, what is the meaning of Prime Minister Narendra Modi congratulating Imran Khan over the phone, after his victory in the elections, and telling him, “We are ready to enter a new era of relations with Pakistan”? Modi also conveyed his “vision of peace and development in the entire neighbourhood” during his conversation with Khan. This vision does not have a ghost of a chance of becoming a reality in South Asia, without India and Pakistan beginning to cooperate like good neighbours, each showing sensitivity to the other’s concerns.
Here is an opportunity, also a neighbour’s duty, for Modi to back up his laudable greetings to Khan, with prompt and positive action.
Now is the time to assure the new government in Islamabad that New Delhi is ready to help. Modi should firmly assure Pakistan’s would-be PM, ‘We know you have several sources to seek help from ─ China, Islamic countries, even the Pakistani diaspora in the UK, USA and elsewhere. But remember that India too is your neighbour. Do not say no to our offer’.
Can India Lend $4 Bn to Pakistan?
Here is how we can help. First of all, as the world’s fifth largest economy, we are now in a position to assist Pakistan. Not many Pakistanis know that India is now an aid-giver, and no longer a mere aid-receiver. After having been one of the highest recipients of multi-lateral development aid for several decades after independence, India has become a net provider of aid to foreign countries. India’s aid to other developing countries stood at Rs 8,970 crores (nearly USD 1.3 billion) in 2016-17. Of course, given its very healthy level of foreign exchange reserves (USD 425 billion), India can, and should, increase its developmental aid manifold.
Most of India’s foreign aid goes to its neighbours. The highest allocation, about 63 percent, is for Bhutan.
But Afghanistan, Bangladesh, Nepal ─ indeed, all other countries in South Asia (except Pakistan) ─ also receive our assistance. In recent years, India has considerably stepped up its aid to African countries, and also to other distant friends such as Mongolia.
Indian aid and loans have contributed to socio-economic development in all these countries — for instance, the Himalayan Kingdom of Bhutan has been able to harness hydro-electric power. In Afghanistan, India has constructed hospitals, the Parliament building, and a cricket stadium. In Sri Lanka, India has been constructing houses for rehabilitation of the Tamil population uprooted by the prolonged ethnic war. India has so far provided nearly USD 3 billion in line of credit to Bangladesh, for developing its infrastructure of railways, ports, roads and communications.
All this is part of New Delhi’s ‘Neighbourhood First’ policy.
Sadly, our western neighbour’s doors have so far been closed for this policy, for reasons that are well known. However, if Pakistan is willing ─ and that is a big ‘if’ ─ the doors can now be opened because of Islamabad’s current financial woes and Modi’s own stated intention (one hopes the intention is genuine) of beginning “a new era of relations”.
Need for Healthier India-Pakistan Ties
To begin with, India should fully back the IMF’s bailout to Pakistan. Our stand will be in sharp contrast to that of Washington, and Pakistanis will surely see it in a positive light. That is the least we can do, and there is a lot more we should do.
New Delhi itself can easily offer a loan, on low interest rates, of USD 4-5 billion to Islamabad.
A part of this assistance should be used for importing a significant amount of goods from Pakistan ─ goods that India needs and Pakistan can sell. This will boost the stagnant and pathetically low trade between our two countries. Ajay Bisaria, Indian High Commissioner to Pakistan, while addressing the Lahore Chamber of Commerce and Industry (LCCI) in March, has rightly said that there is no better way of improving bilateral relations than mutually beneficial economic ties.
He has also pointed out that, after removal of non-tariff barriers, liberalisation of visa and normalisation of mutual relations, the two-way trade can easily go up from the present USD 5 billion to USD 30 billion. Notably, Imran Khan, in his highly conciliatory post-election comments on the need to promote friendly relations with India, has also highlighted the need to increase Indo-Pak trade ties.
Let’s Aim for India-Pakistan-China Cooperation
Another part of India’s aid can be in the form of development assistance, tied to some signature projects that have both high visibility, and also high potential to generate goodwill on both sides of the border. Going forward, how about an ambitious ‘Punjab Jodo’ initiative with a multimodal PPEC (Punjab-Punjab Economic Corridor) ─ also a Rajasthan-Sindh Economic Corridor and a Mumbai-Karachi Economic Corridor ─ providing road, rail, water, market and digital connectivity?
Then there is a third track, which can truly be a game-changer.
New Delhi’s timely financial assistance can lay the foundation for an India-Pakistan-China triangular cooperation in connectivity and economic development.
I presented this idea at a conference in Islamabad in June, organised by the Pakistan Institute of Peace Studies.
After the path-breaking informal summit between Prime Minister Modi and Chinese president Xi Jinping in Wuhan in April, India has now begun to look at opportunities to participate in mega projects under the Belt and Road Initiative, without formally joining BRI. Individual projects under the USD 62 billion China-Pakistan Economic Corridor ─ road, rail, power, industrial townships and other projects ─ are ideally suited for Indian participation, even without India formally joining CPEC (to which New Delhi continues to be unreconciled).
Indian engineering, capital goods, construction and power companies will love this opportunity.
Is this a crazy and impossible idea? No. Just look at what Modi himself said in his speech at the Shanghai Cooperation Organisation Summit in Qingdao in June. “We have reached a stage,” he remarked, “where physical and digital connectivity is changing the definition of geography. Therefore, connectivity with our neighbourhood and in the SCO region is our priority.”
Towards Win-Win Relations
Now, it should be obvious to all the observers of the Asian scenario, especially the South Asian scenario, that if New Delhi's priority is physical and digital connectivity with its neighbourhood, and in the wider SCO region, it simply cannot bypass either China or Pakistan. The sheer compulsion of geography will not allow it to do so.
Even though our assistance to Pakistan should be without any strings, we can visualise its potential to herald “a new era” of win-win relations.
For example, New Delhi, Islamabad and Beijing can begin talks over a connectivity project which gives India land access to Afghanistan (and beyond to Central Asia) through Pakistan. This will also give Pakistan wider access to the vast Indian market. Modi and Xi have decided in Wuhan that India and China will work together on development projects in Afghanistan.
Why can’t Pakistan also be included in this partnership?
Isn’t this a very practical way of realising Modi’s vision, which he conveyed in his telephonic conversation with Imran Khan, of achieving both “peace and development in the entire neighbourhood”? Peace and development are mutually both protective and promotive. Therefore, the question about India-Pakistan-China cooperation is not ‘if’, but ‘how soon’.
And who knows, if this India-Pakistan good-neighbourliness materialises and grows, it might also help the two countries resolve the Kashmir issue amicably?
(The writer, who was an aide to India’s former Prime Minister Atal Bihari Vajpayee, is engaged in promoting India-Pakistan and India-China relations. He tweets @SudheenKulkarni and welcomes comments at email@example.com. This is an opinion piece and the views expressed above are the author’s own.The Quint neither endorses nor is responsible for the same.)