Pakistan and India Relations

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PAKISTAN’S RELATIONS WITH INDIA: BEYOND KASHMIR?
Asia Report N°224 – 3 May 2012

TABLE OF CONTENTS
EXECUTIVE SUMMARY AND RECOMMENDATIONS ................................................. i I.  BILATERAL RELATIONS ............................................................................................. 1  A.  TWO STEPS FORWARD, ONE STEP BACK ......................................................................................1  B.  DEMOCRATIC TRANSITION AND THE COMPOSITE DIALOGUE ........................................................2 

II.  TRADING FOR PEACE .................................................................................................. 5  A.  MOVING FORWARD......................................................................................................................5  B.  TRADE POTENTIAL .......................................................................................................................7  C.  FACILITATING ECONOMIC COOPERATION.....................................................................................9 

III. WATER AND ENERGY ................................................................................................ 10  IV. POTENTIAL SPOILERS ............................................................................................... 12  A.  THE MILITARY AND THE MULLAHS............................................................................................12  B.  THE AFGHANISTAN FACTOR ......................................................................................................14 

V.  THE VIEW FROM NEW DELHI ................................................................................. 15  A.  BILATERAL RELATIONS AND REGIONAL PEACE .........................................................................15  B.  TERRORISM AND THE NORMALISATION PROCESS .......................................................................16 

VI. THE KASHMIR IMPASSE ........................................................................................... 18  VII.CONCLUSION ............................................................................................................... 20  APPENDICES

A. MAP OF SOUTH ASIA .......................................................................................................................22 B. ABOUT THE INTERNATIONAL CRISIS GROUP ....................................................................................23 C. CRISIS GROUP REPORTS AND BRIEFINGS ON ASIA SINCE 2009 .........................................................24 D. CRISIS GROUP BOARD OF TRUSTEES ................................................................................................26

Asia Report N°224

3 May 2012

PAKISTAN’S RELATIONS WITH INDIA: BEYOND KASHMIR?
EXECUTIVE SUMMARY AND RECOMMENDATIONS
In March 2011, the Pakistan Peoples Party (PPP)-led
government resumed the composite dialogue with India,
with the rapid pace of its economic liberalisation program
demonstrating political will to normalise bilateral relations. The November 2011 decision to grant Most Favoured
Nation (MFN) status to India by the end of 2012 is not
merely an economic concession but also a significant
political gesture. Departing from Pakistan’s traditional
position, the democratic government no longer insists on
linking normalisation of relations with resolution of the
Kashmir dispute. India no longer insists on making such
normalisation conditional on demonstrable Pakistani
efforts to rein in India-oriented jihadi groups, particularly the Lashkar-e-Tayyaba (LeT), responsible for the 2008
Mumbai attacks and hence suspension of the composite
dialogue. The two countries need to build on what they
have achieved, notably in promising economic areas, to
overcome still serious suspicion among hardliners in their
security elites and sustain a process that is the best chance they have had for bilateral peace and regional...
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