28-May-2024-Editorial

THE RECENT UNREST IN PAKISTAN-OCCUPIED KASHMIR 

The unrest in Pakistan-occupied Kashmir (PoK) has heightened due to economic woes, including soaring prices and financial strain.  

Pakistan’s economy faces significant challenges, marked by high inflation, escalating energy costs, and trade disruptions with India.  

These factors have contributed to economic instability in regions like PoK, exacerbating the already dire situation. 

Reasons for Pakistan’s Economic Struggles 

High Inflation: 

• Pakistan has been grappling with soaring inflation rates, surpassing 20% since May 2022 and peaking at 38% in May 2023. 
• Such high inflation erodes purchasing power, making essentials unaffordable for many. 

Rising Energy Costs: 

• The cost of energy has seen a steep rise in Pakistan, adding to the overall inflationary pressures. 
• Increased energy costs have cascading effects on the prices of goods and services, further burdening consumers. 

Trade Disruptions with India: 

• Following the Pulwama attack in 2019, India accused Pakistan of harboring terrorists and revoked its Most Favored Nation (MFN) status. 
• India imposed a hefty 200% import duty on Pakistani goods, including dry dates, rock salt, cement, and gypsum. 
• Suspension of trade across the Line of Control (LoC) has severely impacted Pakistan’s exports to India, particularly affecting regions like PoK. 
• The decline in exports to India has crippled local traders and exacerbated economic instability in PoK. 

Revocation of Article 370: 

• India’s decision to revoke Article 370 escalated tensions between the two countries. 
• Pakistan perceived this move as an attack on the disputed territory of Kashmir, further straining diplomatic and trade relations. 

Reasons for India’s Reluctance to Resume Trade 

Minor Role in Overall Trade: 

• Trade with Pakistan constitutes less than 1% of India’s total exports and imports. 
• Given its minor economic impact, India may prioritize other trading partners with greater significance. 

Political and Economic Risks: 

• Pakistan’s political instability, coupled with its smaller market size and stricter visa policies, pose risks for Indian businesses. 
• India may be cautious due to concerns about Pakistan’s low foreign reserves and economic instability. 

Security Concerns: 

• India remains wary of security threats posed by cross-border terrorism and smuggling activities originating from Pakistan. 
• While the threat perception from Pakistan’s military is considered minimal, security concerns persist, influencing trade decisions. 

Prospects for Future Trade Negotiations 

Private Negotiations: 

• Historically, successful negotiations between India and Pakistan have often occurred discreetly, away from public scrutiny. 
• The post-2024 Indian general election environment may offer a conducive backdrop for renewed diplomatic efforts. 

Ceasefire and Reduced Terrorism: 

• The sustained ceasefire along the LoC and the absence of major terrorist incidents since Pulwama provide a favorable premise for restarting bilateral relations. 
• A conducive security environment could foster trust-building measures and pave the way for trade negotiations. 

Economic and Strategic Opportunities: 

• Business-to-business links between India and Pakistan could be revitalized, leveraging shared economic interests. 
• Pakistan’s potential role in facilitating Indian trade to Afghanistan and Central Asia through its territory presents strategic opportunities for both nations. 
• Improved trade relations could not only boost economic growth but also enhance India’s regional influence amidst growing competition from China. 

Pakistan Occupied Kashmir (PoK) 

Historical Context: 

• Originally part of the princely state of Jammu and Kashmir. 
• Invaded and occupied by Pakistan in 1947 after an incursion by Pashtun tribesmen and the Pakistani Army. 

Geographical Extent: 

• Covers an area of 13,297 sq km with a population of over 40 lakh people. 
• Divided into 10 districts, with Muzaffarabad as its capital. 

Territorial Loss to China: 

• In 1963, Pakistan ceded over 5,000 sq km of PoK’s land to China in the Shaksgam area. 

Gilgit Baltistan (GB) 

• Geographical Location: Located to the north of PoK and east of Khyber Pakhtunkhwa province in Pakistan. 
• Historical Background: GB was leased to the Dogra ruler of Jammu by the British and later handed over to Pakistan in 1947. 

Administrative Status 

Autonomous Territories: 

• PoK and GB are not officially part of Pakistan’s four provinces. 
• Considered “autonomous territories” ruled directly from Islamabad. 

International Dispute: 

• Pakistan maintains this fiction to avoid compromising its stance on the Kashmir dispute internationally. 

India’s Position 

Integral Part of Jammu and Kashmir: 

• India considers PoK and GB as integral parts of the state of Jammu and Kashmir. 
• This stance is backed by a 1994 Parliamentary resolution asserting sovereignty over the entire region.