Pull Back From The Border

India needs to withdraw its army from the border quickly. This will reduce the economic costs of war tensions, and consolidate the gains of its spectacular diplomatic success in getting the US to arm-twist President Musharraf into formally renouncing terrorism.

At the  height of the war rhetoric earlier this month, I  was  asked   on a TV  programme  whether  hostilities were imminent. I replied that chances of full-scale war were close to zero. If so, I was asked, why was war rhetoric so loud?  For  two  reasons,  I answered.  The   minor  reason  was  that  war  rhetoric  enabled   the  government  to temporarily rally the nation and divert attention from the ghastly events  in  Gujarat.  The major reason,  however, was to panic the US into exerting pressure on President Musharraf.

This tactic succeeded.  The  US already  had  many  other   major  issues on its plate:  a possible fresh Al-Qaeda attack, suicide bombings in Israel, and plans to oust Saddam Hussein in Iraq.  So the US was not focused on the subcontinent. Taking advantage of this, Musharraf had released many militants arrested in January. Infiltration into Kashmir had risen, culminating in the attack on Kaluchak.

India by itself could not have checked this. Military adventures like bombing training camps in Pakistan would risk escalation into major war, yet would not have reduced cross-border infiltration. So,  bombing would have been a helpless flailing of arms, not a solution.

The only  solution lay in diplomacy,  in getting the US to intervene. This tactic had already been used successfully last December. After the attack on Parliament, India mobilized its armed forces along the border. This sent alarm bells ringing all over Washington DC. To avoid a possible nuclear war, the US told Musharraf he absolutely must crack down on jehadis. Musharraf responded with his historic  speech of  January 18, changing Pakistan’s policy decisively  and  putting  his  own   life  in  danger.   What  looked  like  a   military offensive by India was actually a diplomatic offensive that succeeded.

This June, India repeated  the tactic, again  successfully.  It  told Washington categorically that it would take overt action against Pakistan unless militant infiltration was stopped or reduced. This concentrated minds in Washington, which leaned on  Musharraf  to  explicitly disavow  cross-border  terrorism.   Cynics will say that Musharraf is not totally serious, and in any case does not control all militant groups. So, India’s diplomatic success is only partial. It remains a historic success for all that.

However, it has two attendant  problems.  First,  it  involves   substantial  economic  costs.  Second,  the  tactic of threatening war cannot be repeated endlessly: it suffers from diminishing returns.

Consider  the  economic cost.  By  convincing  the  US   State Department  that  the  risk of  war  was high, India inevitably  convinced  the  world  business community too that the risk is high. And that community responded by diverting trade, investment and  jobs to countries other than India. The computer software industry, which was all set to cash in on the global economic  revival,  now  says  many visits by many potential customers have been put off. Before the war rhetoric, several   international  firms  were  considering shifting their back-office operations to India. Some of them have decided to shift instead to the Philippines, where costs are slightly higher but war risk is lower. Those shifting to the  Philippines   will not easily  shift again  to  India. Especially not if we keep beating war drums.

The  economic  cost  so  far  has  probably  been   modest. Companies  familiar with India have  not left,  or   even stopped expanding. Only newcomers have steered clear of us.  Tourists, of course, have  steered clear too. Some importers  of  goods  are   cautious  about  placing  fresh  orders  on  either India or Pakistan. Why place orders in countries with war risk when competitive suppliers are available elsewhere in Asia?

To  date,  this  adds  up  to  only  a  modest   cost.  But the cost will keep rising with every month that the war risk continues. If we keep our Army full mobilized, if we  keep beating war drums, many more international companies will  get  nervous  and  look  for   options  in  other  Asian  countries.  India is not the only supplier of merchandise, software or back-office operations. Just a modest worsening   of  India’s comparative advantage can translate into major economic losses if this continues.

Even  in  foreign  policy  terms,  keeping  the  Army   fully  mobilized  on  the border is tactically unsound. The aim of Army mobilization is not to scare Musharraf (who is scare-proof) but to scare the USA   into action. So far, this tactic has worked brilliantly.  But  if   we  keep  threatening  covert  action  against   Pakistan  every  time there is a new  militant  attack,   we  will  either escalate into war (with huge economic costs) or else   lose  credibility, and so suffer serious diplomatic costs.

A far better policy would be to withdraw the Army from the border. This will  serve   three purposes. First,  it  will reduce tensions and hence economic costs. Second, it will  induce greater US  diplomatic interest by showing that India is willing to reward American arm-twisting of  Musharraf. Third, additional militant attacks are inevitable and unstoppable, especially with militants determined to   sabotage the coming Kashmir election in October. When this happens, it is advantageous for India to threaten  escalation  from  a  lower   rather than higher base. If the Army is withdrawn from the border, escalation can mean returning to the border. But if the Army is already fully mobilized on the border, escalation will mean bombing Pakistan, with much higher economic and political risks.

So, the way ahead is clear. Let us withdraw from the border. It will not end militancy: nothing will. But it will yield higher diplomatic and economic returns at lower cost and lesser risk.

What do you think?