1. Negotiations
2. SAFTA

One for Indo-Pak peace road: Free trade zone

Indian Express, 15 August 2005

One for Indo-Pak peace road: Free trade zone

Proposal: Former Pak Finance Minister outlines bold economic approach to durable peace in Valley

C. RAJA MOHAN

NEW DELHI, AUGUST 14: If Prime Minister Manmohan Singh is looking for a big ‘out of the box’ idea on the Indo-Pak peace process, which is poised delicately, here is one: a free trade area in Jammu and Kashmir underwritten by both countries.

Besides open borders and free trade, the proposal could involve the joint development of hydro-electric power in J&K, promotion of tourism across the state, revival of traditional synergies between the handicraft industries across the dividing line, and restoration of old road and rail links.

As Singh and Pakistan’s President Pervez Musharraf plan to meet in New York next month and impart some momentum to the peace process, a former Pakistani Finance Minister, Shahid Javed Burki, has outlined a bold economic approach to durable peace in Jammu and Kashmir.

In a series of articles over the last few weeks in Pakistan’s Dawn newspaper, Burki, a former top official of the World Bank and reputed economist, has put across a set of propositions that can easily be acted upon by Delhi and Islamabad.

His plan envisages India and Pakistan working together ‘‘to develop, help finance, and implement a programme of economic development’’ in Jammu and Kashmir.

The plan to promote economic and trade integration between Kashmir and the contiguous parts of India and Pakistan will have five central elements: ‘‘developing the state’s water resources with a view to generating electric power; rebuilding and expanding the tourism industry; developing forestry and high value added agriculture; improving physical infrastructure; and developing the human resource to engage the young in the more productive sectors of what would essentially become a new economic system.’’

Burki suggests the large volume of funds required for this plan could easily be raised from the private sector, the Indian and Pakistani governments and the international community.

In essence, the Burki plan seeks a logical extension of the first tentative steps that Singh and Musharraf have taken in J&K, including the launch of the Srinagar-Muzaffarabad bus service in April.

When they met in Delhi in April 18, they agreed to let commercial trucks ply across the LoC and open up additional bus services. India also let the Hurriyat leaders travel to Pakistan on the bus to Muzaffarabad.

In a comprehensive approach to Indo-Pak engagement in Jammu and Kashmir, Burki is calling for a ‘‘sub-regional trade arrangement that provides free and easy access, including transit rights, to the goods and commodities produced by Kashmir as well as the people of the state.’’

The tariff-free movement of goods across J&K would give a huge boost to the traditional economic activity in both parts of the state by bringing them together and allowing them to better access the markets of India, Pakistan and the world.

Burki suggests that a free trade zone in Kashmir could be implemented either under the South Asian Free Trade Agreement that is expected to come into force next year or under a separate arrangement between Delhi and Islamabad.

Burki proposes that the sub-regional free trade agreement in Kashmir must go beyond SAFTA and allow easier movement of Indian and Pakistani citizens as well as international visitors to Jammu and Kashmir, to promote tourism in the entire state.

In a radical proposal to end the current Indo-Pak conflict over water resources of J&K, Burki is calling for joint development of the power potential of the Indus waters that run through the state.

Instead of separately developing hydel power in their own parts of J&K and raising suspicions across the border, Burki proposes joint generation of hydl power for use in both parts of J&K and selling the surplus to northern Pakistan and India through a common electric grid.

Such an approach, according to Burki, does not involve either a renegotiation of the Indus Waters Treaty or a reduction of water flows to either India or Pakistan. It needs a mutually satisfactory reinterpretation of the Treaty and negotiating a sub-regional agreement on hydel power generation and distribution.