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Forging Economic Diplomacy: Exploring Pakistan’s Trade Prospects with India

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Since 2019, diplomatic relations between Pakistan and India have been fraught with complications and tense confrontations. On August 5th 2019, the Indian Government revoked Articles 370 and 35-A of the Indian Constitution, stripping Kashmir of its special status and planning demographic change exacerbated tensions, causing Pakistan to downgrade its diplomatic ties with India and halting commerce between the two countries. Currently, both nations have empty High Commissioner seats, with only Deputy High Commissioners and Charge D’Affaires representing each other country.

Strained Diplomatic Relations

Official attitudes on both sides have remained firm, with each side setting conditions for any prospective peace discussions or bilateral consultations. New Delhi wants Pakistan to end cross-border terrorism before any consultations can begin, while Islamabad asks that India reverse its Article 370 decision as a prerequisite for talks. Such entrenched beliefs have stalled the progress towards reconciliation besides hampering efforts to develop workable discourse.

The Pulwama Episode and Balakot Strikes

The Pulwama incident in February 2019 stands out as a watershed moment in Indo-Pakistani ties. Following the suicide explosion in Pulwama, India accused Pakistan of complicity and removed its Most Favoured Nation (MFN) status. India levied a whopping 200 per cent import charge on all Pakistani exports, virtually shutting off the bilateral commerce. Moreover, India has stopped cross-Line of Control (LoC) commerce in Jammu and Kashmir, accusing Pakistan of smuggling drugs, weapons, and counterfeit cash, besides allegations of terrorist financing and money laundering.

Pakistan categorically rejects any participation in the Pulwama assault, rejecting India’s charges as an attempt to divert attention away from its failures. Islamabad accuses India of providing little verifiable proof to back up its assertions. Instead, Pakistan accuses the BJP-led Indian Government of exploiting anti-Pakistan and anti-Muslim sentiments for political gains, particularly during its election campaigns.

India not satisfied with this response from Pakistan, chose to conduct air strikes on Pakistan. According to India, it attacked terrorist training camps in Balakot, a territory in the main mainland of Pakistan. However, New Delhi failed to provide any evidence of terrorist training camps, thus only violating the territorial sovereignty of Pakistan. Pakistan responded to those operations with air strikes on Illegally Indian Occupied Jammu and Kashmir (IIOJ&K) with BVR (beyond visual range) weapons. The exchange escalated into an aerial engagement, during which Pakistan shot down two Indian military aircraft, and captured an Indian pilot; the pilot was released two days late, following a goodwill gesture from Pakistan to de-escalate.

Pakistan’s Efforts for Peace

Despite the hurdles, Pakistan has constantly worked to reduce tensions and support regional peace. During the 2020 Sino-Indian military standoff, Pakistan avoided raising tensions alongside its eastern border, reaffirming its commitment to regional stability. Pakistan and India reactivated the 2003 LoC ceasefire accord in February 2021; welcoming development and a critical confidence-building gesture.

Furthermore, Pakistan’s decision to enable India to deliver wheat and critical medicinal supplies to Afghanistan for humanitarian reasons in November 2021 demonstrated its readiness to engage in constructive discourse and positive collaboration. Despite provocations like India’s BrahMos missile-firing incident on Pakistani soil in March 2022, Islamabad chose caution, avoided escalation and put diplomatic solutions ahead of the military conflict.

In 2023, despite broken diplomatic ties, Pakistan awarded thousands of visas to Indian Sikh and Hindu pilgrims, allowing them to participate in religious festivals and events in Pakistan. The release of Indian fishermen and civilians also reaffirmed Pakistan’s commitment to humanitarian gestures and confidence-building efforts.

Importance of Kashmir Issue for Pakistan

The long-standing Kashmir issue remains a significant impediment to substantial improvement in Indo-Pakistani ties. The Kashmir issue, that dates back to 1947, continues to exacerbate tensions and impede efforts to achieve peace. Pakistan emphasises the humanitarian aspect of the situation, pushing for the Kashmiri people’s right to self-determination, as established in UN resolutions and international declarations. Islamabad asks for serious discussions and invites India to match Pakistan’s flexibility and desire to participate in constructive talks.

Forging New Ties

Recent remarks by Pakistan’s former Finance Minister, and now the Foreign Minister Ishaq Dar, have rekindled concerns about trade possibilities with India. Dar acknowledges the problems created by the tense relationship but emphasises the business community’s appeals and needs for trade with India. He emphasises the inefficiencies and additional expenses caused as a result of indirect trade channels, emphasising the importance of doing a thorough analysis of the trade situation. Dar’s words highlight the corporate community’s determination to resume direct commercial relations between Pakistan and India, despite opposing ranks and detractors.

Conclusion

While Indo-Pakistani relations continue to confront severe challenges, there are glimmers of optimism for development and resolution. Pakistan’s attempts to de-escalate tensions and foster peace, together with the business community’s push for trade normalisation, afford chances for constructive participation. As both nations negotiate complicated geopolitical forces, economic diplomacy, and communication remain critical to attaining long-term regional peace and stability.

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