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would make them very able to deal with the other. But nuclear weapons have also had the consequence of making war between the two states impossible-no rational leader would contemplate a nuclear exchange." And so India and Pakistan find themselves stuck in what Cohen calls a "never, never world" where they cannot have peace and they cannot have war-not unlike the U.S.-Soviet relationship during the Cold War. "If either side thought having nuclear weapons would enable them to solve their strategic rivalry, it has proven to be incorrect," Cohen said. Highlighting the lack of outside interest in South Asia, Cohen said: "The rest of the world does not view this as a serious engagement. There are no economic stakes involved in South Asia-a more prosperous India or Pakistan would be trivial as compared to American investments in East Asia." The only thing that has driven the U.S. and other countries, to intervene, Cohen pointed out, has been the fear of a nuclear war. And that has largely been a sporadic intervention and a preventive one rather than addressing any specific issue. Outsourcing Not everyone shared Cohen's pessimism. Clark, while joking that "if Steve is Dr. No, then I will be Dr. Hell No," added, "but I don't agree that there is not much outside interest in India." Outsourcing, he said, was the biggest example of outside interest in India. With many American companies relocating work sites-call centers, back offices and technical support-to India, Clark noted that there was actually a "very sensitive kind of trade which deals with real-time business functions." The growth ofIndia's business process outsourcing (BPO) industry has corresponded with a rise in resentment within the U.S. against companies that are sending jobs overseas. "We are already beginning to see the signs of how big this is going to be in the form of blowback in the U.S. political system," Clark admitted. Legislation is pending in the New Jersey state legislature that, if passed, will ban outsourcing of jobs from the Garden State. Several other states across the United States are contemplating similar action. Arguments have also been made to scrap the L-l visa that allows intra-company transfers, and reduce the cap on the H-IB visa. Political Will Lacking Echoing Cohen's pessimism, senior Pakistani journalist Hussain Haqqani noted that the real challenge in the area of economic cooperation in South Asia was the lack of political will. He noted that until 1965, Indian banks had branches in Pakistan and Pakistani banks had branches in India. Several hotels in Pakistan were also run by Indian entrepreneurs like the Oberois. All that changed after the 1965 war.

"What changed it all was politics," said Haqqani, adding, "so if there is going to be a change back, it's also going to have to be political." Comparing India and Pakistan to a divorced couple that could not sit together without recalling instances when one or the other let each other down, Haqqani predicted political issues would continue to dominate this relationship. He warned that there were several elements that would try to undermine the nascent political will "at every stage in the days to come." He was optimistic, however, that the required political will could be created and once done, the present peace dividend would materialize. Haqqani said it was interesting that 16 items which were not on the India-Pakistan list of tradable items accounted for close to $2 billion of trade in smuggling between the two countries. Pakistan's largest selling brand of truck tires, Apollo, is an Indian brand. Yet, Pakistan does not legally import tires directly from India. "If illegal trade were to be legalized there would be benefits to the Government of Pakistan in terms of revenue," he said. Curtis agreed, adding, legalizing such trade would also cut transportation costs and time. But, like all illegal rackets, there are political dimensions to this as well as vested interest. Comparing the militant-smuggler nexus to the mafia networks in some of the seedier neighborhoods of New York, Haqqani said people involved in illicit trade were also political players. "They have an ideological, political and economic agenda. They are potential spoilers." Pipeline of Peace Noting that India's energy demands are growing at a rate faster than any other country in the world, Curtis made the case that the energy sector held the greatest potential for economic cooperation between India and Pakistan. There is room for similar cooperation between India and Bangladesh. "The big prize in India-Pakistan trade relations ought to be energy and energy-related trade," agreed Schaffer. She suggested that a gas pipeline between India and Pakistan originate either in Iran or Turkmenistan. "India is deeply suspicious about becoming more dependent on Pakistan," she said. Pakistan, on the other hand, now has an economic objective and is eager to build a pipeline from Iran through Pakistan and on to Northern India having figured out it would be more economical to do it that way. "This pipeline could be a peace builder in the manner of the Indus Water Treaty," said Schaffer. "The hitch is how do you deal with India's very understandable concerns about political risk-there is a deal here for the making that requires a political breakthrough. We have seen the beginnings of this breakthrough, but I think we need to see a few more steps before this kind of deal making becomes viable." Schaffer is confident that there are ways of solving this problem and added that the economic benefits of doing so would be huge.

Profile for SPAN magazine

SPAN: July/August 2003  

An American Gharana?; Digital Railroad to Fly; Think Tanks & U.S. Foreign Policy; Can Economic Diplomacy in South Asia Work?; Muscle & Magic...

SPAN: July/August 2003  

An American Gharana?; Digital Railroad to Fly; Think Tanks & U.S. Foreign Policy; Can Economic Diplomacy in South Asia Work?; Muscle & Magic...

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