Top, left to right: Sanjay Kathuria, Teresita C. Schaffer; bottom, left to right: Atif Mian, Arvind Subramanian

 

Pakistan and India 75 Years after Independence
By Elaine Pasquini

Washington: In August 1947, Pakistan and India separated and became independent states. During these past 75 years the two countries have competed militarily, politically, and economically. They are now both nuclear-armed states and have complicated relations with the United States. 

On June 21, the Wilson Center hosted a panel of South Asian experts to discuss where India and Pakistan now stand and the future trajectory of each country. Up until the late 1980s, Pakistan’s economic growth exceeded India’s, but since then Pakistan has fallen behind as its neighbor surged to become one of the world’s largest economies.

Arvind Subramanian, senior fellow at the Watson Institute for International and Public Affairs at Brown University, provided the perspective of India, where he served as chief economic advisor to the Indian government between 2014 and 2018.

After some bad educational choices India made initially after independence, the country did invest in higher education early on. Following the opening up of immigration in the US in the 1960s, Indian engineers went to the US and built a reputation. “When the IT revolution happened, India was poised to take advantage of it,” he explained.

Due to a reversal of some of the early mistakes that were made, there has been “a considerable revival of dynamism in the economy,” Subramanian said, although the economy slowed down considerably during the Covid-19 pandemic. And the country has turned back to protectionism, as has Pakistan and even the US, which some say is going into the “international engagement game with one hand tied behind its back.”

In the last few months, however, India has started negotiating free trade agreements, one with the UAE and another with Australia and is having discussions with the European Union in an effort to become more open. The US, he noted, is not on that agenda of negotiating these free trade agreements.

Wilson Center fellow Sanjay Kathuria reiterated that “trade pessimism” is a common feature not only between India and Pakistan but among all South Asian countries. “South Asia is not just the least integrated region in the world, but it is also the most trade-diffident or most trade-protected region in the world,” he said. That trade deficit has been increasing in recent years caused in part – at least in Pakistan – by special interest groups and foreign exchange policies.

“With respect to India…what is striking is how little has changed in the agenda of our trade dialogue,” noted Teresita C. Schaffer, senior advisor at McLarty Associates and former US ambassador to Sri Lanka. Intellectual property issues are not resolved nor issues in the cyber area and data management. “India is still working on passing a new law on data privacy,” she added. “Its name is data privacy but it’s not clear to me whether it is enhanced data privacy or enhanced Indian government control over data. When it gets into a contest between those two, the Indian government usually wins.” 

For the US and Pakistan there has been for some years now a quest for a new big issue in the relationship, Schaffer said. “Pakistan is sick and tired of having Afghanistan be the main issue in their relationship with Washington.”

Building up the economic bond “gets a lot of enthusiasm in theory from the US government,” Schaffer said. “The difficultly is that the American investors that are already in Pakistan have made their peace with the situation and are not going anywhere, but it is very difficult to persuade new investors to come in because what they read about is trouble in various ways.”

Schaffer labeled this situation as “unfair,” adding, “It would have a lot of good effects if you could get an increase in trade and an increase in investment going.”

According to Atif Mian, professor of economics, public policy and finance at Princeton University and founder of the Center for Economic Research in Pakistan, there is no one simple solution to Pakistan’s current economic problems.

What the country needs now is for political leaders to come together to form “new rules of the game going forward,” he argued. “One of the issues now in Pakistan is that no one is in full control and for that reason they cannot promise long-term reforms. I think people underestimate how much things are in flux politically.”

Mian is hopeful, however, that in a relatively short period of time Pakistan will move to a better equilibrium going forward. “Everyone knows the status quo is not working and that is nature’s way of pushing society toward change,” he said. “People want change, and those pressures make me optimistic.”

Another reason for optimism is the gains women and girls are making. “Educationally, they have closed the gap between men and women,” Mian pointed out. “If that resource could somehow get integrated into the society – the political, economic, social fabric – by empowering them in the usual ways, that can really change the future of Pakistan.”

But one alarming issue for Mian is the “institutionalizing of polarization” between India and Pakistan. “There is so much heightened animosity for each other at a public social level which I think is very dangerous for the region,” he said. “There is great value in somehow coming together as people and thinking about the common good as well.”

(Elaine Pasquini is a freelance journalist. Her reports appear in the Washington Report on Middle East Affairs and Nuze.Ink.)