Though anticipated, the timing of the Islamabad High Court’s verdict to release disgraced nuclear scientist A.Q. Khan from house arrest has surprised many, since it came days before the first ever visit by Richard Holbrooke, President Obama’s special envoy to Afghanistan and Pakistan. The Zardari government has tried to play safe by citing this as a decision taken by an ‘independent’ judiciary. Such arguments are, however, unlikely to find many takers. To mollify international opinion, which surprisingly has not been as forceful as expected, Islamabad has indicated the option of appealing against the verdict. However, a government which has dilly-dallied on fixing responsibility over the Mumbai attack despite evidence of involvement of Pakistan-based groups, is unlikely to seriously attempt to block Khan's release.

However, Khan’s release itself could have been masterminded by the Zardari government. There are many reasons to support this postulation. First, it could be a direct message to Holbrooke, and to Obama, that Pakistan would be assertive in its policies despite US pressure. Besides sustaining the defiance by General Musharraf on Washington’s demand to hand over Khan for interrogation, President Zardari could have wanted to project his authority and political independence through Khan’s release.

The presumptive spin-offs are many. It could be a message to the Pakistan Army on the gradual assertion of civilian (read PPP) power. Khan, a revered man in Pakistan, had been critical of General Musharraf and the Army for incarcerating him after a forced confession. Though Musharraf had pardoned Khan for his deeds, the disgraced scientist had responded to the court verdict by saying that “god had already punished Musharraf as he can’t now freely come out”. By blaming Musharraf and the Army authorities for his forced confession, Khan had struck a chord with major political parties, which had demanded his release in the run up to the general elections. The day might not be far when Khan makes a foray into politics, aspiring to assume a political or constitutional position. As for the Pakistan Peoples Party (PPP) government, Khan’s acquittal meant correcting a wrong done by Musharraf, and thus implicitly the Army. Once US pressure eases, the PPP could try to gain political mileage for ‘freeing’ Khan from prolonged incarceration. It would also be an opportunity for the Party to remove the slur of September 2007, when the late Benazir Bhutto declared in Washington that she would hand over Khan to the IAEA if returned to power.

Such domestic dimensions notwithstanding, the actual motive behind Khan’s acquittal could be political posturing towards Washington. Islamabad has consistently invoked red herrings when pressure is mounted by the US on taking action against extremist elements within Pakistan. As a special envoy on Pakistan-Afghanistan, Holbrooke had the specific task of extracting Pakistan’s commitment in dealing with the Taliban both inside Afghanistan as well as against those groups that are controlling major parts of the Federally Administered Tribal Regions (FATA).

Far from supporting US operations in the porous Afghanistan-Pakistan borderlands, Islamabad has resisted efforts by American forces to launch frontal attacks against militant groups in FATA, which has become a launch pad for the Taliban-led insurgency in Afghanistan. With Obama’s assertion that Pakistan has to be accountable for its actions against such groups, Holbrooke had the clear task of pushing Islamabad to the wall. By releasing Khan a few days before his visit with little heed for international retribution, Islamabad has signalled to Washington its determination to take decisions according to its choice. Islamabad might have felt that such assertiveness could impart it with greater leverage during negotiations with the special envoy. That Washington was floored by the Khan coup was manifested in the anti-climactic conclusion to the much-hyped first visit by Holbrooke. But for a visit to the tribal areas and reported assurances by the Pakistan government on monitoring Khan’s movements, there was little that Holbrooke could achieve in his first outing. Rather, within hours of his return to Washington, Islamabad had agreed on a truce with pro-Taliban elements in the Swat Valley. This is not just a setback to the Obama administration, but actually an affront to Holbrooke.

Earlier, on the sidelines of the Munich Conference, US Deputy Secretary James Steinberg was given a verbal assurance by Pakistani Foreign Minister Shah Mehmood Qureshi that Khan’s release would not pose a proliferation risk. Incidentally, President Obama has also maintained a discreet silence while allowing his junior officials to communicate with Pakistan on the implications of Khan’s release. Even in his phone conversation with President Zardari on February 12, Obama was not reported to have referred to Khan’s acquittal. While not wanting to let the Khan episode dilute the pressure on Pakistan’s commitment to the war on terror and anti-Taliban campaigns, an obvious reason for de-emphasising Khan’s release would be the strongly held belief that Khan no longer has the wherewithal to run a proliferation network. Further, heightened monitoring of his activities after his release could restrict him from reviving his old proliferation links.

However, not many are ready to buy such assurances as it is felt in some quarters that Khan’s network functioned with the full backing of the Pakistan Army, which can continue to use Khan through other avenues. Also, the fact that Khan’s accomplices had earlier established contact with al Qaeda is a cause for worry. Further, Khan’s potential metamorphosis into a political leader would have ominous consequences, especially if he favours an extreme right orientation. Another puzzling factor to be discerned is whether the Army had any role at all in Khan’s acquittal, despite his pronouncements against the Army.

Nevertheless, Khan’s release could come with high costs. With the infamy of being a dangerous state which hosts both terror groups as well as nuclear proliferators, Pakistan could come under immense international pressure and monitoring as more countries begin to express apprehensions on Khan’s release. Obama could be forced by the powerful US non-proliferation lobby to tighten the tab on Pakistan’s nuclear assets. For that matter, concerns over the safety of Pakistan’s nuclear assets have dominated the non-proliferation discourse in the US, especially in the Congress, where it is strongly felt that the Zardari government is a lame duck when it comes to handling nuclear weapons. Consequently, Khan in a political garb would be a bigger nightmare for Western capitals than his modest life as an extraordinary ex-scientist in pursuit of ‘altruist’ evangelism.

In its interim budget for 2009-10 the Union Government has allocated Rs. 1,41,703 crores for the country’ Defence Services that include three Armed Forces (i.e., the Army, the Navy and the Air Force), and other Departments, primarily Defence Research and Development Organisation (DRDO) and Defence Ordnance Factories. This is apart from Rs. 24,960 crores which have been earmarked to defray civil expenditures of Ministry of Defence (MoD) and its affiliated organisations, including, the Coast Guard, and for defence pension (Rs. 21,790 crores). In other words, the total resource available for the MoD and its various establishments is Rs. 1,66,663 crores. By convention, only budgetary provisions for the Defence Services constitute India’s defence budget.

Though the allocations made in the interim budget are not binding for the next government to follow, it is unlikely that the new government will make any major changes in the allocation, given the mandatory increases in certain components of the defence budget, the worsening security situation in the country’s neighbourhood and the gap in the country’s defence preparedness. This commentary examines the various components of the defence budget, analyses the impact of the budget on the modernisation requirements of the Armed Forces, and the problem of under-utilisation of resources under the capital head.

Vital Components

The defence budget for 2009-10 has increased by 34.19 per cent over the previous year’s budget estimate (BE) of Rs. 1,05,600 crores. However, BE of 2008-09 has been scaled upward by 8.52 per cent (Rs. 9,000 crores) to Rs. 1,14,600 crores at the revised estimate (RE) stage. This means, this year’s allocations has increased by 23.65 per cent over the RE of 2008-09. Of the total defence budget, revenue expenditure, which caters to the ‘running’ or ‘operating’ expenditure of the three Services and other departments, is pegged at Rs. 86,879 crores. Capital expenditure, which mostly caters for modernisation requirements, accounts for Rs. 54,824 crores. Of these two, revenue expenditure has been increased - in comparison to its last year’s growth of less than 7 per cent - at a much faster rate of 50.85 per cent (Rs. 29, 286 crores). The growth of capital expenditure has however declined, over the previous year’s growth, to 14.20 per cent (Rs. 6,817 crores). The sharp rise in revenue expenditure has taken its share in the defence budget to 61.31 per cent, from 54.54 per cent a year before. In other words, the share of capital expenditure has gone down by nearly 7 percentage points in these two years (see Table).

Table: Key Statistics of Defence Budgets, 2008-09 and 2009-10 2008-09 2009-10

The faster growth of revenue expenditure is primarily due to the hefty increase in pay and allowances flowing from the implementation of Sixth Central Pay Commission (CPC). To put the figure in perspective, total budgeted pay and allowances debited from the Services’ budgets has more than doubled from 21,891.67 crores in 2008-09 to Rs. 44,500.69 crores in 2009-10.

Service-wise, the Army accounts for the largest share of the 2009-10 budget with an approximate allocation of Rs. 76,680 crores, followed by the Air Force (Rs. 34,432 crores) and the Navy (Rs. 20,604 crores). While the Ordnance Factories (OF) have a budget of Rs.1,505.45 crores, the DRDO’s budget is Rs. 8,481.54 crores (see Figure-1 for percentage share of Defence Services).

Figure-I

Impact on Modernisation

The Indian Armed Forces are on a modernisation drive. The shopping list of the Services includes virtually all types of weapons and systems, including big-guns, fighter aircrafts, armoured vehicles, radars, missiles, naval vessels, among others. The most pertinent question is whether the latest budget makes necessary provisions to meet these requirements. Given the fact that the modernisation programme of the armed forces largely depends on capital acquisitions, it boils down to how capital budget is allocated.

Assuming that nearly 80 per cent of the capital budget is meant for capital acquisitions, the latter consisting of 60 per cent of committed liabilities and 40 per cent of new schemes, the main sub-divisions of the capital budget are as below:

• Total Capital Budget: Rs. 54,824 crores
• Capital Acquisition: Rs. 43,859 crores
• Committed Liabilities: Rs.26,316 crores
• New Schemes: Rs.17,544 crores

From the above, it is evident that a substantial amount will be available for capital procurement. Moreover, over Rs. 17,500 crores (nearly 30 per cent of the capital budget) will be available for new weapons and systems that the Armed Forces have planned for induction. While this augurs well from the modernisation point of view, much depends on how much and how the resources are spent in the coming fiscal.

Higher Allocation and Under-utilisation of Resources

The growth of over 34 per cent in India’s defence budget is one of the highest in the country’s history of defence spending (the last time the defence budget was increased by over 30 per cent was in 1987-88 when allocation was increased by 43.4 per cent to Rs. 12,512 cores). In the recent past, the defence budget, despite registering modest growth rates, has been subjected to criticism in view of its declining shares in total central government expenditure and gross domestic product. In fact, the defence budget had decreased to below two per cent of GDP in the last fiscal year (see Figure-II). The new budget, defying all criticism, has made a substantial increase in allocations. From the perspective of resources allocation, the defence budget for 2009-10 represents 14.87 per cent of total central government expenditure, and 2.35 per cent of gross domestic product (GDP). The corresponding figures for 2008-09 are 14.06 per cent and 1.95 per cent respectively.

Figure-II

However, accompanying the growth in defence budget is the problem of utilisation of resources under the capital head. As the latest budget reveals, the budgeted capital expenditure for 2008-09 has decreased by Rs. 7,007 crores (15 per cent) from Rs. 48, 007 crores to Rs. 41,000 crores at the RE stage. Its implication is also seen in the wide variation in the growth of the capital budget. If the defence establishments had fully spent the entire 2008-09 capital budget, the 2009-10 capital expenditure would have seen only 14.2 per cent growth instead of 33.72 per cent rise (Rs. 13,824 crores) that has been registered over the previous year’s RE.

It is ironical that while capital expenditure has been increased substantially over the years, not sufficient attention has been devoted to spending those resources in a time-bound manner. As a result, under-utilisation of resources has increased with the growth in each year’s capital expenditure. In absolute number, under-utilisation has increased by over four-and-a-half times between 2004-05 and 2008-09. In percentage terms, it has increased from 4 per cent to 15 per cent in the same period (see Figure-III).

Figure-III

As the defence preparedness of the country largely depends on the firepower it possess, which in turn depends on capital expenditure, the latter’s timely and efficient utilisation deserves due consideration. Though MoD in recent years has tried to improve acquisition procedure, it appears inadequate to expedite the process. The recurring underutilisation of resources is a case in point to seriously examine the weakness in the system. If necessary a complete overhaul of the acquisition system may be considered to ensure that funds are utilised in a proper time frame and for the purpose it is envisaged for.

Conclusion

India’s defence budget 2009-10 has no doubt registered an impressive growth of over 34 per cent. However, much of the growth is accounted for by the increase in revenue expenditure, which, in turn, has been inflated by the surge in pay and allowances necessitated by the implementation of the recommendations of the Sixth Pay Commission. The impact of the increased provision for pay and allowances is such that the revenue budget’s share in the defence budget has increased to more than 61 per cent, compared to its previous year’s share of less than 55 per cent. The consequent decrease in the share of capital expenditure has resulted in its modest 14.2 per cent growth amounting to an additional provision of Rs. 6,817 crores over last year’s allocations. Nonetheless, the allocation of Rs. 54,824 crores under the capital head is still substantial in absolute terms. Considering that around 80 per cent of the capital budget would be available for procurement of weapons and systems, including some new ones, the defence establishment would be under pressure to spend the resources in a time-bound manner. Experience in the recent past shows that under-utilisation of capital budget has increased with each year’s allocations. This necessitates a critical examination of the acquisition system to ensure that the Armed Forces are equipped with the right equipment at the right time.

The fourth consecutive visit of President Nursultan Nazarbayev culminated in his being the chief guest at India’s 60th Republic Day parade. This shows the increasing importance India attaches to its strategic ties with Kazakhstan, a fact that has also been acknowledged by President Nazarbayev. In fact, the custom of inviting a head of state, particularly on such an occasion, is an effort to showcase two facets of India. One, to provide a glimpse to the chief guest of vast opportunities that exists in Federal India. And second, to demonstrate its military capability and strategic attractiveness as a partner.

During this visit, Kazakhstan and India signed five important agreements/MoUs, including cooperation in civil nuclear energy, space research, hydrocarbons and legislation covering an extradition treaty and a protocol on accession of Kazakhstan to the WTO. Besides, the visiting president also expressed his serious commitment to fight against the scourge of global and regional terrorism and religious extremism. India finds Kazakhstan significant for three main reasons – its strategic location, its vast energy and mineral resources, and its secular and composite social structure.

Energy

India attaches immense importance to Kazakhstan in the field of energy security. After Russia, Kazakhstan is the only country which is endowed to help meet India’s energy security. This includes nuclear fuel and hydrocarbons. It has huge reserves of uranium as well as oil and gas. Kazakhstan has the second largest deposits of uranium at 1.5 million tons, constituting approximately 17 per cent of the world total. It is poised to emerge as the number one supplier of uranium in the world. Astana is planning to add Uranium output capacity from the current 6,673 metric tons Uranium (MTU) to 30,000 tons MTU by the end of 2018. In 2008 the President of KazatomProm, the nodal national atomic company set up in 1997, announced that it aims to increase the share of Uranium supply from the present 12 per cent to 30 per cent of total world uranium output by 2015. This will be done through joint ventures with the following prospective shares in various segments: 12 per cent of uranium conversion market, 6 per cent of enrichment, and 30 per cent of the fuel fabrication market.

The nuclear agreement signed with Kazakhstan makes it the fourth country besides the US, France, and Russia that would supply uranium to India for civilian energy purposes. Under the proposed agreement the NPCIL (Nuclear Power Corporation of India) will begin to import at least 120 tonnes annually of Kazakhstan’s uranium. The Kazakh news agency (Kazinform) adds that the “NPCIL is not putting all its eggs in the Kazakhstan basket, having recently signed agreements with France’s public Industrial AREVA and the Russian firm to import Uranium.” The Russian firm, TEVL, has also signed two agreements to supply India 2000 metric million tonnes of Uranium at a cost of $700 million. Given the growing needs of electricity in the country, the NPCIL plans to meet 20 to 25 per cent of the country’s total electricity requirements. To achieve that the NPCIL is expected to increase its capacity from the present 4120 mw to 22,000 mw in the next five years. To obtain this target, chairman and managing director of NPCIL S. K. Jain expects to import 10 additional reactors with a capacity of 1,000 mw each.

It is significant here to underline that although the agreement signed with Kazakhstan assures long term uranium supply, the pricing policy should be carefully addressed. In recent years, uranium prices like that of oil have also suffered from erratic market fluctuations. During late 2000 to May 2008, spot prices of uranium fluctuated by 1840 per cent, from $7 a pound to $136 and currently hovers around $74. By looking at the expected growth in nuclear reactors all over the world, it is widely believed that the current uranium prices would neither be at the current level nor stable. According to Fortune magazine (March 27, 2008), “…worldwide, 34 new reactors are under construction, and 280 are being planned or proposed. That has raised questions about whether uranium producers can find enough of the element to fuel this long-term growth. In 2006 producers met only 62 per cent of demand.” The main reasons for this fluctuation in uranium prices are the rush for clean energy as well as to diversify the sources of energy due to spikes in hydrocarbon prices in recent years.

Energy cooperation between Kazakhstan and India is not limited only to nuclear fuel. Kazakhstan has huge hydrocarbon reserves. It has approximately 40 billion barrels of oil reserves, which could well increase up to 100 billion barrels by 2015. Current annual production is 90 million tons, which is expected to increase more than 35 per cent by the end of 2012 to 140 million tons. Gas reserves in Kazakhstan are approximately 3 trillion cubic metres and expect to increase its annual gas output to roughly 70 billion cubic meters by 2015. The shelf lives of oil and gas is estimated to be around 50 years and 75 years respectively. During the visit, India and Kazakhstan signed hydrocarbon agreements raising the stake of OVL (ONGC Videsh Ltd.) and its partner OMEL’s (Mittal Energy Limited) stake in Satpayev oil field in the Caspian Sea from the present 10 per cent to 25 per cent. Rest of the 75 per cent will be retained by KazMunaiGas of Kazakhstan. It is estimated that three prospective oil fields, Satpayev, Eastern Satpayev and Karina, contain up to 253 million tons of recoverable deposits, which is equivalent to 1.85 billion barrels.

Economic Relations

Considering the potential, the current scale of economic interactions including trade and investment between the two countries is not big. However, there exists vast scope to expand and increase both the volume of trade as well as quantum of investment, a view shared by President Nazarbayev who said that “captains of Indian industry should not hesitate or be shy of taking advantage of the positive investment climate in Kazakhstan”. In fact, the potential for cooperation has largely remained untapped and therefore, the scope for bilateral commercial activity is huge. He also emphasized that both countries should “explore the possibilities of cooperation beyond hydrocarbons, oil and gas, and venture into areas like information technology, pharmaceuticals, metallurgy, agriculture, textiles, infrastructure, dairy sector and tourism.”

The volume of bilateral trade between India and Kazakhstan is however insignificant. It is characterized by two features. One, Kazakhstan is the largest trading partner of India among the Central Asian Republics, approximately accounting for more than 70 per cent of total trade between India and the CARs. Second, trade has recently registered a faster growth than earlier. Total trade between India and Kazakhstan has more than doubled, from $84.07 million in 2003-04 to $188.74 million in 2007-08. Kazakhstan’s main exports consist of mineral products, leather and raw materials while imports from India include tea, pharmaceuticals, chemicals, plastic, machinery and equipment. Balance of trade is in favour of Kazakhstan, although this is quite recent due to the contribution of an Indian company, ‘ISPAT’, operating there in collaboration with KARMAT. In recent years, we also find the mention of nuclear reactors, boilers, machinery and mechanical appliances and parts in Kazakhstan’s list of imports from India. ''In absolute terms, this is not a big amount for countries with fast expanding economies, but we see this as a potential for growth,'' the Kazakh Ambassador Kairat Umarov said. Looking at the composition of trade between the two countries Ambassador Umarov said “there is vast scope for cooperation in various fields, including manufacturing sectors, such as textiles, construction materials, leatherwear, plastics, pharmaceuticals, IT, oil and gas and tourism. Though trade turnover between the two countries has expanded three times in the last year alone, in overall terms, he said, it was still small.”

In the field of investment Kazakhstan offers huge scope. This was observed way back in 1955, when Prime Minister Jawaharlal Nehru visited Kazakhstan. He was fascinated by what he described as the “plenitude of resources” and noted that “almost every conceivable mineral is found there.” Currently, 280 companies are in business between Kazakhstan and India, including in the oil and natural gas sector. Indian investment in Kazakhstan has been about $38 million. Many Indian companies including Ispat, Punj Lloyd, OVL, Punjab National Bank, Mittal Steel etc. are already present in Kazakhstan. Kazakh companies including KazStroyService (infrastructure), Kaspian Shelf (oil exploration), TVL (retail equipment), STL (transportation and logistics) are also entering the Indian market.

Information technology and pharmaceuticals provides rich ground for Indian companies in Kazakhstan. At Almaty, India has helped the establishment of IT Park which was facilitated by 2002 agreement. The Pharmaceutical industry in Kazakhstan provides a market of $500 million. Though some Indian pharmaceutical companies like Kazakhstanapharama, a joint venture, are doing business in Almaty, this is an appropriate time for Indian pharmaceutical industries to venture there in a big way. Kazakhstan offers huge scope for India to invest in areas like textile, information technology, steel, food processing, bio-energy, solar power, construction and hydrocarbons sector at a huge scale. According to the Economical and Commercial Report for Kazakhstan (2007) , “The most promising sub-sectors are the following: offshore/onshore oil and gas drilling and production equipment; turbines, compressors and pumps for pipeline applications; measurement and process control equipment for pipeline applications; industrial automation, control and monitoring systems for refineries, gas processing and petrochemical plants, seismic processing and interpretation, petroleum software development, sulphur removal and disposal technologies, well stimulation and field abandonment services.

President Nazarbayev’s visit has been viewed as successful in improving bilateral relations. The President noted: ''We have institutionalised our ties. There are bilateral cooperation mechanisms pushing forward our ties in various fields like Inter-Government Commission, Foreign Office consultations, Joint Working Groups on IT, Oil and Gas, Textile, Transport, Military and Technical Cooperation, Combating Terrorism and Sub-Committee on Science and Technology.”

Looking at the wide scope for business between the two countries, the National Economic Chamber “Atameken Union” of Kazakhstan and the Confederation of Indian Industry (CII) of India signed an agreement for the development of Kazakh-Indian business cooperation. Under this, Almaty would host three events this year to explore, promote and expand bilateral contracts. The Chamber will organize a meeting of sellers and buyers of engineering products of India and also hold an exhibition on India in May and a tourist forum in June. Over 100 Kazakh business representatives were present during the recent CII-Atameken Union meeting in India. Azat Peruashev, President of the National Economic Chamber of Kazakhstan, said: “We hope to extend the political ties into greater economic cooperation, which at present stands at minuscule figures of 180 million dollars.”

Space and Military

Another significant agreement between India and Kazakhstan that was signed related to space research. The Indian Space Research Organisation (ISRO) and the National Space Agency of Kazakhstan have signed an agreement to help and co-operate with each other in space activities. Kazakhstan hosts the famous Baikonur Cosmodrome. Despite being a major centre for space research, Kazakhstan has more or less remained a passive partner of Russia. The current agreement signed between India and Kazakhstan is expected to assist the Kazakh space programme in a big way. Kazakhstan expects technology transfers from India in the space arena.

Kazakhstan has also shown a keen interest in strengthening military ties with India, particularly boosting its arms exports and aerospace collaboration. In its 2006 defence policy document Kazakhstan focused on the Indo-Pacific region, including India and Egypt as export markets. It is a fact that being part of the former USSR, Kazakhstan holds some military interest in India. The Indian Navy is currently equipped with hundreds of torpedoes that were produced in Kazakhstan during the Soviet era. Kazakh specialists in this field are clearly expecting to carve out and foster their own niche within the Indian naval arms market. It is believed that Kazakhstan and India have been carrying out some joint projects aimed at modernizing and repairing the torpedoes of the Indian Navy. Kazakhstan has also claimed that it has designed a new torpedo called Kazy. India and Kazakhstan have also established a forum for "early action" in servicing and possibly modernizing Kazakh military hardware because a majority of India's defence equipment is of Soviet origin.

Legislature and Protocols

Another feature of the visit was the signing of an extradition treaty and the Protocol on the accession of Kazakhstan to the WTO. India has not only promised to facilitate Kazakhstan’s accession to the WTO but also offered to provide training facilities to Kazakh officials to deal with WTO matters. Past precedents indicate that India may benefit from Kazakhstan’s global and regional presence. Kazakhstan has backed India’s claim for a UN Security Council Seat, supported India’s NSG waiver at Vienna and persuaded India to be a member of CICA (Conference of International and Confidence Building Measures in Asia). Kazakhstan is also going to chair in 2010 the 56-nation Organisation for Security and Cooperation in Europe (OSCE) and the OIC (Organisation of Islamic Countries) in 2011. This would naturally provide India a friend to carry its message, particularly to the OIC about terrorism.

Hurdles and way out

A main obstacle in developing India’s relations with Kazakhstan is the absence of a direct means of transportation. Researchers like P. Stobdan feel that “economic growth in the Asian region and emerging opportunities for inter-regional trade are creating demand for viable transport connectivity, land-linking arrangements and important transit services.” At best, this can be achieved by reviving and restoring the legendry Silk Route. We may also consider exploring some new routes which could directly connect India, China and Central Asia as suggested by Professor Stobdan. Here, Kazakhstan can play a key role in developing this route into a reality as it has good relations with both China as well as India without irking Russia and the US. This would further improve the chances of increasing cooperation between South Asia, Central Asia and China, keeping India at the centre.

In a surprise move, Pakistan has once gain spawned the water issue on a political fast-track against India.

On January 28, 2009, Pakistan President Asif Ali Zardari in an article in Washington Post described water as a major issue between Pakistan and India. While congratulating the new US President Barack Obama, Zardari pleaded the US to re-hyphenate Pakistan with India on a number of accounts including the water crisis which he thought was fraught with serious consequences not only for environmental catastrophe, but also for fuelling extremism and terrorism in South Asia. He applauded Obama’s desire to engage Pakistan and India to defuse the tensions in South Asia.

Why bring the water issue now? There could be two main reasons for it. Firstly, Pakistan is disturbed at being clubbed with Afghanistan as a troubled state, especially with Richard Holbrooke’s appointment as a special representative for Afghanistan and Pakistan. The direction by the Secretary of State Hillary Clinton emphasized on the importance of “an integrated strategy” that treats the problems of Afghanistan and Pakistan as a single whole is a disturbing thing for Islamabad. Clinton intends to give a sharp focus on Pakistan and Afghanistan by mobilizing US allies and friends from around the world to stir up the faltering war on terror.

In the op-ed piece Asif Ali Zardari urged Obama to expand special emissary Richard Holbrooke’s brief to include Kashmir and other disputes between India and Pakistan. He wrote “Much as the Palestinian issue remains the core obstacle to peace in the Middle East, the question of Kashmir must be addressed in some meaningful way to bring stability to this region.”

He reminded the US that the situation in Pakistan, Afghanistan and India is indeed critical, but said that its severity actually presents an opportunity for aggressive and innovative action. He wrote that “the special envoy will work with India and Pakistan not only to bring a just and reasonable resolution to the issues of Kashmir and Jammu but also to address critical economic and environmental concerns.”

Secondly, Pakistan wants to divert the world’s attention away from focus on terrorism in which Islamabad had landed itself up after 26/11 Mumbai attack. The world’s pressure on Pakistan to own the 26/11 responsibility has tarnished Pakistan’s international image as the real epicenter of terrorism.

By raising the water issue, Pakistan wants to convey the point that it is not its professed ideology and fanaticism but water resources that fuel the fires of discontent among its people and in turn breads extremism and terrorism. Pakistan’s own media reports suggest that the water issue vis-à-vis India are being raised by the agencies other than the Pakistan Indus Waters Commission. Pakistan’s position is that India is violating the Indus Waters Treaty’s provisions by reducing the flow in the Chenab river at the Maralla headwork having adverse impact on the loss of cropped areas in Lahore, Kasur, Okara, Sialkot, Hafizabad, Sheikhupura, Faisalabad and Jhang district.

Besides, Pakistan claimed that the flow would cause early depletion of water reserves at Mangla dam. Pakistan threatens to write letters to Muslim countries, the members of the Friends of Pakistan forum and Britain to draw their attention to the issue.

It appears that Pakistan is keen to make water as the next catalyst for conflict with India. This is notwithstanding the fact that India and Pakistan signed the Indus Water Treaty way back in 1960s, which has been adhered to by India without tempering it despite several wars between India and Pakistan. The Treaty is being cited as a unique example of water-sharing mechanism in the world.

Two things have emerged clearly from Pakistan’s renewed attempt to raise the water issue. Firstly, it is clear that Pakistan is unlikely to come to terms with India even if the Kashmir issue is brought to any satisfactory solution. Those who believe that Kashmir is the only dispute between India and Pakistan are highly mistaken. Pakistan has been February 2009 5 propagating throughout that the question of Kashmir is the only key to India – Pakistan relations.

Secondly, it is also now clear that Pakistan has actually been eyeing for Kashmir’s environmental resources rather than seriously thinking about the actual life and destiny of Kashmiri people. Islamabad’s plea to Ambassador Holbrooke was to address critical economic and environmental concerns, but the failure to do so, according to Zardari could ‘fuel the fires of discontent that lead to extremism and terrorism’ comes as a stern warning.

Pakistan wants to change the rule of the game. Is India ready for it?