Heavy defense spending and economic non-cooperation between India and Pakistan are detrimental to the welfare of the citizens of the two neighboring countries, argues a report released by the Atlantic Council’s South Asia Center on Thursday.

At a briefing and launch of the report, India and Pakistan: The Opportunity Cost of Conflict, Authors Shuja Nawaz, director, South Asia Center, Atlantic Council and Mohan Guruswamy, nonresident senior fellow, South Asia Center, Atlantic Council, lamented that South Asia is the least economically integrated region in the world, mainly due to lingering territorial and political conflicts between India and Pakistan. This conflict has not only posed huge military expenditures on both countries, but has also significantly hampered economic cooperation. Guruswamy, speaking from New Delhi via Skype, maintained that the cost of economic non-cooperation was far greater than the military expenditure born by the historical rivalry.

Guruswamy mentioned examples of China and Japan, India and China, Russia and the United States, and other countries who maintained trade and economic relations despite territorial conflicts and political differences. The volume of indirect trade between India and Pakistan was around $18 billion, while direct trade remained at just $2 billion. Guruswamy argued, economic cooperation will lead towards increased direct trade, which will in turn benefit the two countries and save them from freight and transportation costs.

Citing research studies conducted by two eminent economists, Pervez Hassan and Shahid Javed Burki, Nawaz stated that had Pakistan reduced defense expenditures between 1970 to 2010, it could have added 2-2.5% yearly growth to its Gross Domestic Product (GDP). India could have seen a similar rate of growth had it opted to decreased defense spending, Nawaz maintained.

Highlighting potential areas of trade between the two countries, Guruswamy said that New Delhi alone could import 300 trucks of fruits and vegetables from Pakistan on daily basis, and India can replace a number of electronic items at half the price that Pakistan was spending on imports from distant countries.

Moreover, India and Pakistan can take several steps to build confidence and trust on both sides of the border that will lay the foundation for greater economic cooperation. Both countries should increase the distance between land forces deployed on their respective borders. More channels should be provided to strengthen people to people relations, and militaries on both the sides should engage in direct communications, such as through exchange visits. The two countries should jointly invest in energy, water, and export industries, and borders should be opened for trade. Nawaz maintained that opening the border for trade will eventually lead to greater ease in tourism visits.

“Economically intertwined and mutually beneficial economic systems in both countries will create a huge peace and development constituency that will not only be good for the two nations, but also for the region and the entire world.”

FOR IMMEDIATE RELEASE
April 24, 2014

A report released today by the Atlantic Council’s South Asia Center argues that heavy military spending in India and Pakistan has in fact been detrimental to the citizens of both countries in terms of security and economic growth, and calls on leaders to reinvest in trade and confidence building.

In India and Pakistan: The Opportunity Cost of Conflict, Atlantic Council South Asia Center Director Shuja Nawaz and Nonresident Senior Fellow Mohan Guruswamy explain how high defense spending and low economic integration into South Asia’s regional economy have come at the expense of those living in poverty. Although many now favor rapprochement, Nawaz and Guruswamy argue that unless both sides begin a dialogue on economic and military relations, these issues will only worsen.

In addition to military spending, a lack of strong bilateral trade relations between India and Pakistan has also exacerbated South Asia’s socioeconomic challenges. From GDP to job losses to investment, the non-fulfillment of trading potential is a cost that “neither of the two countries can afford to ignore.”

Nawaz and Guruswamy provide a set of actions both countries can take to decrease military spending and promote confidence building:

• Increase the distance between land forces by withdrawing from border areas
• Engage in direct communications between militaries, including exchange visits
• Invest jointly in energy, water, and export industries
• Open borders for trade and eventually tourism

Such measures will have a lasting impact beyond India and Pakistan, as the authors note: “economically intertwined and mutually beneficial economic systems in both countries will create a huge peace constituency that will not only be good for the two nations, but also for the region and the entire world.”  

Read the full report here.

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A report released today by the Atlantic Council’s South Asia Center argues that heavy military spending in India and Pakistan has in fact been detrimental to the citizens of both countries in terms of security and economic growth, and calls on leaders to reinvest in trade and confidence building.

In India and Pakistan: The Opportunity Cost of Conflict, Atlantic Council South Asia Center Director Shuja Nawaz and Nonresident Senior Fellow Mohan Guruswamy explain how high defense spending and low economic integration into South Asia’s regional economy have come at the expense of those living in poverty. Although many now favor rapprochement, Nawaz and Guruswamy argue that unless both sides begin a dialogue on economic and military relations, these issues will only worsen.

Read the Report (PDF)

In addition to military spending, a lack of strong bilateral trade relations between India and Pakistan has also exacerbated South Asia’s socioeconomic challenges. From GDP to job losses to investment, the non-fulfillment of trading potential is a cost that “neither of the two countries can afford to ignore.”

Nawaz and Guruswamy provide a set of actions both countries can take to decrease military spending and promote confidence building:

• Increase the distance between land forces by withdrawing from border areas
• Engage in direct communications between militaries, including exchange visits
• Invest jointly in energy, water, and export industries
• Open borders for trade and eventually tourism

Such measures will have a lasting impact beyond India and Pakistan, as the authors note: “economically intertwined and mutually beneficial economic systems in both countries will create a huge peace constituency that will not only be good for the two nations, but also for the region and the entire world.”

Political Islamists, as they currently operate in Pakistan, are “likely to divide our society, break it apart, and cause more violence,” warned Former Pakistan Ambassador of Pakistan to the United States Husain Haqqani. He contended that political Islamists have replaced anthropological and sociological explanations of Islam with “a puritanical formation of Islam, which is essentially totalitarian, inherently violent, and very intolerant.” Haqqani, speaking at an Atlantic Council South Asia Center event urged for a more honest evaluation of Pakistan’s own history, suggesting that as it is interpreted now, Pakistan’s history is “totally mired in myths.”

Also speaking at the event, Haroon Ullah, member of US Secretary of State John Kerry’s Policy Planning Staff, directed attention to three such myths about political Islam, each preventing better governance in Pakistan and a stronger relationship with the United States. Firstly, violence is strategic. Political Islamists utilize violence as “very powerful signaling mechanism” to instill fear and meet their goals, which include securing votes. Secondly, democratization does not necessarily lead to moderation. The winner-take-all system in Pakistan’s elections enable smaller parties to hold a disproportionate sway in the country’s politics, as they often serve as the swing vote between major parties. In fact, Ullah argued, Islamic parties “stay stronger by staying smaller.” Islamists recognize and exercise this role—they are driven by pragmatism, rather than ideology alone. Lastly, poverty does not drive militancy. Instead, Ullah urged policymakers to pay attention to the thin middle class, often a target recruitment constituency, consisting of relatively urban, educated individuals.

Haqqani contended that “while political Islamists can be a part of the political landscape of any Muslim country and probably will be,” the nature in which Pakistan’s organizations have dominated the national political discourse is problematic to the future of the country. Islamists are “veto-wielders” who “hold a sway in Pakistan totally disproportionate to their numbers.” However, this is not a new phenomenon, Haqqani argued, but rather at the core of the country’s origins. At its formation, Islamists demanded provisions in the country’s constitution, defining what it means to be an Islamic state. This role was further defined through the establishment of Islamic laws, and now, Islamists vehemently oppose overturning these laws even by a parliamentary majority. The Islamists have “usurped the Pakistani national discourse,” said Haqqani, meaning a “rational political argument is no longer possible.”

Despite Haqqani’s grim outlook, Ullah remained optimistic that clarity can provide progress—though both agreed that the change must come from within Pakistan. “This is a critically misunderstood phenomenon in a critical relationship.” Working to understand Pakistan’s political Islamic parties will facilitate necessary engagement, diplomatically and otherwise, and “provide the perfect crucible to look at religious political parties [worldwide] that use ideologies and religious symbolism to mobilize.”

South Asia is currently witnessing the “largest democratic event in the world” with 7 million, or 60% of registered voters, visiting the polls in Afghanistan last weekend, and the first wave of 815 million registered voters begin to vote this week in India’s five week parliamentary elections. South Asia Center Director Shuja Nawaz and Senior Fellow Mohan Guruswamy reported on the region’s momentous events from New Delhi, with Deputy Director Bharath Gopalaswamy reporting from Bangalore.

Immediate reports of the Afghanistan election suggest a “success of the Afghan people,” stated Nawaz. Irrespective of Taliban threats and even monetary incentives from the Taliban to deter voters, Afghans lined up throughout the country to exercise their right to vote, “a reflection of what appears to be a clearly massive demographic shift in the Afghan population.” Though the voting preferences of women, youth, and the urban population remain unclear, Nawaz contended, “the interconnectedness of youth and people in the city through cell phone technology in particular may have galvanized people to vote.”

While Afghanistan’s votes are still being counted, many are predicting a run-off election between the apparent frontrunners, Abdullah Abdullah and Ashraf Ghani Ahmadzai. The general sense surrounding this election, Guruswamy argued, is that “people in Afghanistan are not going to vote on tribal lines, they will vote to choose a man.” Both assumed leaders are well known in the United States, the region, and throughout Afghanistan, and will face the massive challenge of keeping Afghanistan stable. However, Guruswamy contends, “whoever wins, it doesn’t matter. The challenges and opportunities facing the new leader in Kabul remain the same, and lead to the candidates aligning on the major concerns facing the electorate. Rather, the relative peace and impressive voter turnout suggest a change in Afghanistan and a new era for the region. As Guruswamy states, “this is a moment of hope in the region—a great moment to seize and build on something new.”

Similar trends are expected over the course of India’s five week parliamentary elections. Half of the registered voters are estimated to be below the age of twenty-five and nearly 114 million are new voters since the last election in 2009. For the first time, Guruswamy notes, “we might see women outnumber men in most constituencies.” This is particularly significant considering women vote for different issues. Where men tend to vote with their heart, women tend to vote for issues like water and schools for their kids.

“2014 could be as transformative [for India] as 1989,” Gopalaswamy argued regarding the weight of this election. “People are expecting some kind of momentous change.” Despite, the ruling Congress Party’s achievements, they are always considered to be on the defensive, struggling to maintain support and to deflect charges of corruption from the opposition Bharatiya Janata Party (BJP).  Gopalaswamy attributes this to Rahul Gandhi, who many consider a disappointment. In fact, Congress’s true goal, Gopalaswamy argued, is to simply “win a sizable number of seats in the party elections to convince patrons the Congress Party is worth [their support].” Focus has shifted to the BJP, who are widely expected to do well in the election. With 272 seats required for a majority, no matter the leader, the winner of the election will  likely require a coalition to govern. However, if poll numbers and predicitons become reality, a large BJP seat count will result in a strong BJP government that will “make it difficult for [other] parties in the years to come” Gopalaswamy states. Though the coalition building process may have already begun behind the scenes, the election results will be announced on May 16, followed by the building of India’s new government.

South Asia Center Director is quoted by RIA Novosti on the role demographics have played in Afghanistan’s transition to democracy:

Demographics have played a huge role in the transformation of Afghanistan into a member of the democratic states of the world, according to Shuja Nawaz, the director of the Atlantic Council’s South Asia Center. “The Afghan people appear to have won another round with the Taliban and against the forces that want to derail the progress achieved by them – despite heavy odds – over the past decade plus,” Nawaz said.

Despite the Taliban’s threats of violence, some 60 percent of eligible voters in the country turned out for a presidential election on Saturday. According to preliminary estimates, 7 million ballots were cast at 6,000 polling stations across the country.

In explaining the country’s move towards democracy, Nawaz cited the youthful population “that is connected to each other and to the world” as well as increasing urbanization and the growing market economy, despite official sluggishness and corruption.