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Nation Current Affairs 17 Feb 2019 How India can hurt P ...

How India can hurt Pakistan’s business

Published Feb 17, 2019, 1:07 am IST
Updated Feb 17, 2019, 1:07 am IST
It has already dealt a blow by withdrawing Pak’s Most Favoured Nation status.
Citizens  offer tributes to the martyred CRPF jawans of Pulwama terror attack, by lighting candles at Necklace Road on Saturday.
 Citizens offer tributes to the martyred CRPF jawans of Pulwama terror attack, by lighting candles at Necklace Road on Saturday.

Chennai: There seem to be few military options without declaring a war on Pakistan. While ground strikes and surgical strikes are certain to be planned, air strikes may prove problematic.

The planning of retaliatory strikes has been left to the armed forces. But what about economic action against Pakistan? India has already taken one with Pakistan being placed on the Financial Action Task Force grey list.


India has to now press for Pakistan to be blacklisted by October, which will happen if it doesn’t curb money laundering and terror financing.

India has also withdrawn “Most Favoured Nation” status given to Pakistan. However, India cannot remove key threats only by force. “No big state will ever be loved by its neighbours,” as author Stephen Cohen warned.

India has to capitalise on its economic power to hurt Pakistan. But, as author and strategic analyst

Dhruva Jaishankar argues in a series of relevant tweets on the subject, there is not much India can do to hurt Pakistan economically, as it has already taken considerable action in this regard.

Being on the global terrorist financing watchlist, Pakistan has found itself under scrutiny like never before. Its economy has suffered so badly that Imran Khan has been forced to go on trips with a begging bowl to Saudi Arabia and other Gulf nations, besides appealing to the IMF for bailout funds. Pakistan’s economy has been saved temporarily by large inflows from donor countries.

As Jaishankar points out, Pakistan has also been hit hard since 2014 from cuts in US aid. More so in the Donald Trump regime when the cuts have also come with hard rhetoric about Pakistan being a terror haven. The last major cut in US aid was from $1 billion to just $150 million in the last quarter of 2018.

The picture of Chinese investments in Pakistan through the Belt and Road initiative and other projects is far from rosy, with Jaishankar pointing out that total investment may be in the region of $19 billion and nowhere near the projected $60 billion. On the contrary, China’s FDI in India has been steadily increasing in the technology sector.

Jaishankar, a fellow in foreign policy studies at Brookings India and the Brookings Institution in Washington, highlights the fact that the Indian economy, which is marching towards $3 trillion now, has left Pakistan far behind in the last decade since the size of the economies were fairly similar around 2008. He estimates the current Pakistan GDP at $305 billion, which is less than that of a big Indian state like Maharashtra.

India-Pakistan trade is negligible in terms of India’s GDP but further screws can be put by placing curbs on them although India would suffer as its exports to Pakistan are near $4 billion while imports are just $720 million, including informal trade that still thrives, particularly through Dubai. Turning the screws as an economic game may appear to be the better solution.

As author and Russian studies expert Stephen Cohen said presciently a decade ago in a policy analysis speech: “We must also be prepared for strategic failure — another serious crisis with Pakistan, the further fragmentation of that state, or the expansion of the radical Islamist agenda to India itself. I am no Cassandra, but prudence suggests that we not just hope for the best, hope is not a policy.”