The government seems serious about a ridiculous proposal — supplying Pakistan five million units of imported gas per day, enough for two large power plants. When India is desperately short of gas, this is folly.
Many Indian power plants lie closed for want of gas. The consequent power shortage translates into lakhs of farmers with idle tubewells, hundreds of industries without power, and hence thousands of people without jobs. One industry is buying gas from coal mines at $22unit, five times the government controlled price of $4.2unit, indicating high scarcity. Why deprive Indians of gas to meet Pakistani needs? Diplomats claim the gas deal will improve Indo-Pak relations. I am all for it, but why in this manner? As a free trader, I favour lifting all barriers to trade and investment between the two countries. But Pakistan says no.
For decades, it refused to normalize economic relations till the Kashmir dispute was resolved, which meant forever. In recent years, Asif Ali Zardari and Nawaz Sharif have spoken of normalizing relations. Yet neither has found it politically possible to take the first step: giving India equal trade access with all members of the World Trade Organization.
This MFN (most favoured nation) rule is the foundation of WTO: each member offers non-discriminatory access to all others. This rule can be abrogated only on security grounds. India has long granted Pakistan MFN status, but Pakistan has refused to reciprocate — an explicit declaration of hostility. India and China have a disputed border and history of war, yet grant one another MFN status.
Two Pakistani leaders have promised MFN status but not delivered. Clearly, Pakistan is not ready for normalcy.
It faces virtual civil war in its northwest, with the army battling jihadis. Nawaz Sharif’s peace talks with the Taliban have ended in disaster. He is under siege in the capital, and has lost control of the administration.
One day, Pakistan will get its act together and realize that its own interests require normal economic relations with India. Let’s wait for that day. Such realization can come only through Pakistan’s own political dynamics. It must first convince itself that normal trade is an excellent thing.
Indian giveaways cannot create that conviction.
Worse, such Indian sops will actually subsidize the antitrade lobbies in Pakistan by reducing the pain of its stupid policies. Saving Pakistan from the consequences of its own stupidity can only aggravate that stupidity, not end it.
One blunt critic says: “The diplomatic argument seems to be that if only India drops its pants and offers its rear to Pakistan, this will lead in due course lead to normal intercourse.” That’s putting it too strongly, but you get the idea.
I am not among those seeking to ban economic relations with Pakistan till it stops aiding terrorists. I believe India must give Pakistan MFN status. But if Pakistan refuses to reciprocate, it is plain silly to try and bribe it into friendship through gas deals at the expense of Indian consumers.
India imports gas from the Gulf. Pumping it to Wagah will entail much cost and energy. The Jalandhar-Wagah pipeline will cost Rs 500 crore. Don’t we have better uses for scarce funds? Pakistan is believed to have offered a price that covers costs of transporting gas to the Wagah border. So what? Surely Pakistani consumers must compete with Indians in open auctions. If Indians are willing to pay $22unit, how can Pakistan be offered a lower price? Indian consumers pay 5% import duty on gas. Yet the government proposes waiving import duty for sales to Pakistan. Why favour Pakistanis over Indians? Diplomats argue that one day gas from Turkmenistan will be pumped through Afghanistan to Pakistan and India.
By supplying gas to Pakistan today, India will create a friendly atmosphere that ensures safe Turkmen supplies.
Sorry, but if Pakistan is so unreliable that it has to be bribed in advance, why have such a deal at all? Some security experts strongly oppose the Turkmenistan deal, saying Pakistan can choke off gas to India at will. This dire outcome cannot be prevented by supplying Pakistan with gas in advance. Rather, the Turkmen deal must include a clause for supplying gas to a 4,000 MW power plant in India, jointly owned by India and Pakistan, half of whose output will be exported to Pakistan. That way, if Pakistan ever stops gas supply to India, it will automatically lose 2,000 MW of electric supply, and Lahore will suffer blackouts.
This is the sort of deal that ensures mutual benefits and trust, and discourages unilateral sabotage. That is the way to go.