Stung by what India sees as Pakistan's refusal to allow any concession to the outgoing government for normalizing trade relations, senior government sources here told TOI Islamabad's policy over the issue was being dictated by Pakistan's military establishment. They said the upcoming elections are now certain to mark the termination of the idea that trade can lead to peaceful relations between the 2 countries.
"The several recent flip flops made by the Nawaz Sharif government on the issue has greatly reduced the its credibility with Indian negotiators who have concluded that in addition to political and security policy, the Pakistan government does not even have the ability to go against the Pakistan military dictates on issues related to economic reforms," said a top government official, in a reaction to Sharif's comment Monday that MFN status to India has been delayed because of the forthcoming Lok Sabha elections.
In fact, the bureaucracy is feeling increasingly let down because it was always sceptical about going out of its way to better trade relations with Pakistan. With PM Manmohan Singh and his office showing an "extraordinary commitment" to improving trade relations, it allowed itself to be pushed and prodded.
After the 2 countries agreed to the September 2012 Road Map for improving trade, many thought Pakistan had at least temporarily moved away from its top-down approach in dealing with India. Things have now turned so bad that Indian interlocutors have lost interest in the idea that trade can provide the basis for constructing a lasting framework for "peaceful, friendly and cooperative" ties with the present Pakistan government. "It will take another 1-2 years before the new Government in New Delhi settles down and contemplates a long term visionary policy towards Pakistan," said the source, adding that even in the minds of the Pakistan business establishment there is a sense of a missed opportunity.
India believes that it is Pakistan PM advisor on foreign affairs Sartaz Aziz who has advised Sharif to not give any concession to the outgoing UPA government. According to the government, Islamabad has invoked the false idea of Pakistan-specific "nontariff barriers" that have been erected by India. Pakistan shared its list of 185 items of export interest to it, as officials said, India readily indicated it would provide SAFTA Tariff concessions on these tariff lines on an accelerated implementation schedule.
While Sharif had initially decided to move rapidly on the September 2012 Road Map, his government made a "U-turn'' late 2013 after arriving at the conclusion that trade normalization was too much of a concession to the outgoing Congress government. In the beginning of 2014, it again signalled it was ready to implement the road map.
"With much persistence, and false promises of announcing the opening of Wagah-Attari, Pakistan insisted on Commerce Secretary level discussions to work out the new accelerated time lines. However at the meeting (held on the margins of the SAARC Business Leaders Conference 15-16 January), Pakistan backtracked, returning to the position that this was too much of a concession to an outgoing Indian government," said an official, adding that commencing trade in electricity and gas with India to alleviate Pakistan's power problem was supposed to jump start this process.
India believes that the Sharif government has played right into the hands of its security establishment despite Pakistan's economic managers realizing that preferential access to the Indian market would greatly ease Pakistan's foreign exchange constraint, as well as provide much needed stimulus to its export industries and by implications its whole economy.
They have, officials said here, often advised their political masters that Pakistan should adopt the approach Sri Lanka has been using since the signing of the FTA with India - derive full economic benefits from the Free Trade Agreement, while pursuing political and security agendas separately.