As the new Indian government settles in, questions arise about the future of the Indian-Pakistani relationship—questions prompted mostly by the new Indian prime minister’s history of Hindu nationalism.

Frederic Grare

But a more revealing lens for analyzing this relationship might be to regard it from the perspective of Pakistan. Pakistan’s “dysfunctional civil-military relations” suggest an uncertain political future, leaving India in an essentially reactive role. That dynamic, may have an even more powerful impact than Narendra Modi’s politics.

Modi’s decision to invite his Pakistani counterpart, Nawaz Sharif, to his swearing-in ceremony together with all the other heads of state or government from the South Asian Association for Regional Cooperation, was considered a positive gesture on both sides of the border. The meeting between the two prime ministers was cordial and frank but—to no one’s surprise—not groundbreaking.

While Pakistani leaders are unanimous and sincere in welcoming warmer relations with India, civilians and military officials have opposing long-term objectives. It is doubtful that the Pakistani military supports such a change for any reasons beyond the narrowly tactical, and in fact will fight fiercely against such a change affecting its territorial claims. Sharif is pursuing an opposite strategy—trying to turn a tactical rapprochement into a more permanent arrangement.

India is likely to adopt a “wait and see” attitude. While the election of a new government may have elevated resolve to punish Pakistan in case of a terrorist attack, it has not increased India’s capacity to coerce its neighbor into any specific outcome. New Delhi will have to walk a fine line between ignoring Pakistan, which it can’t control and does not need economically, and keeping the door to better relations open enough to provide a real incentive for Islamabad to adopt meaningful new policies—all without making unilateral concessions to Pakistan.

Most-Favored-Nation Status

A year ago, then-candidate Sharif made the normalization of relations with India a central plank of his platform. Hopes were high, therefore, that Pakistan would finally extend India Most-Favored-Nation (MFN) status, removing tariff and other trade barriers. Sharif did not spell out any preconditions. But, twelve months later, the issue is still pending. Pakistan is now stipulating that the MFN status will be attributed to India only if New Delhi reopens the composite dialogue, a stalled executive-level negotiation process.

Awarding the MFN status to India is important in its own right. A substantial part of the business community, in particular small- and medium-sized enterprises, seem to fear being overwhelmed by a massive arrival of cheaper Indian products on the Pakistani market. Nontariff barriers to India’s market have also been invoked as a justification for Pakistan’s hesitations. Yet, the Pakistani government continues to insist on the need to facilitate bilateral trade between the two countries. It blames several Indian lobbies (the automobile, textile and pharmaceutical industries as well as the agricultural lobbies) for obstructing the negotiations and maintains that awarding India MFN status would benefit Pakistan.

However, the MFN issue provides clues to a larger domestic political dynamic in Pakistan. The main political parties support Sharif’s policy. Jihadi organizations, on the contrary, oppose any trade deals with New Delhi as long as Kashmir remains under Indian control. Here, as elsewhere, the jihadis are joined by the military—whose opposition Sharif seems to have underestimated. The nomination of Raheel Sharif as replacement for Ashfaq Parvez Kayani as Chief of Army Staff (COAS) did not usher a more receptive posture in Rawalpindi. It was the military that insisted that the government take the small- and medium-sized enterprises’ objections to heart. It also lent its explicit support to their cause, warning the Sharif brothers “against making rapid concessions, particularly in the run-up to India’s general election.” In February 2014, Shabaz Sharif, the prime minister’s brother, obliquely accused the military of obstructing trade normalization.

Awarding the MFN status to India would thus serve the interests of the civilian government, not to mention the country, whose economy would benefit from free trade with India. But such a move would only partly benefit the military. This relative convergence opens some diplomatic and political space that the government can exploit, providing it can keep its relations with the military under control. Yet, a spectacular advance in trade relations between India and Pakistan is unlikely. In the delay, Pakistan, whose economy is in shambles, has much more to lose than India does. New Delhi can afford patience. Its economic future lies in its integration in the global economy, not in any specific trade relation with its South Asian neighbors. More

© 2014