Search

To date, there has been no confidence-building measure capable of locking India and Pakistan into an irreversible relationship and acting as a powerful catalyst for bilateral development, prosperity and regional stability. In the absence of mutual trust, confidence and cooperation between these two countries, it becomes imperative to identify potential areas of cooperation to reduce threat perceptions in the region. Although the economic relationship alone does not play a pivotal role in strengthening the foundation on which the political relationship is built, it could be argued that economic factors have a considerable leverage in influencing the political relationship. In this regard, a focus on energy trade gains significant attention. The energy trade between India and Pakistan has enormous potential to lock them into an irreversible economic interdependence, thereby reinforcing their efforts to intensify relations in other potential areas of cooperation. This paper is an effort to identify the scope for energy trade to act as an economic confidence-building measure in Indo-Pakistan by studying the cost–benefit analysis of Pakistan's inclusion in an Indo-Iran natural gas pipeline project. It analyses in detail India's energy strategy and the economic rationale for trans-Pakistan pipeline. Finally, the paper analyses the potential benefits of a trans-Pakistan pipeline for both India and Pakistan, and its possible impact in creating political constituencies essential for reducing regional conflict. [ABSTRACT FROM AUTHOR]

The effectiveness of the South Asian Regional Association for Cooperation (SAARC) hinges upon its dominant Indo-Pakistan axis. A stronger Indo-Pakistan relationship would realise multiple benefits for all the countries of the region, including reduced defence expenditure, enhanced economic growth from increased trade and the sharing of South Asia's water, oil and natural gas resources, and would increase the scope for further integration. However, this article argues that the failure of India and Pakistan to normalise their political and trade relationship hinders the growth of SAARC, including the possibility of its future as a viable trading bloc. Nonetheless, argues this article, the relative inaction of the Indo-Pakistan axis in SAARC must not prevent other countries in the region from entering into bilateral, sub-regional and extra-regional agreements to reap the benefits of enhanced co-operation. Although such arrangements would undermine the efficacy of SAARC, it would be a move forward from the existing SAARC framework, which Indo-Pakistan intransigence has made virtually obsolete. [ABSTRACT FROM AUTHOR]