India And Pakistan May Trade Blows, But Here’s Why They Won’t Start A Full-Scale War

Over the past 30 odd months, the world has been in a kind of ‘geopolitical war-matrix-ticker’, where every move has been scrutinised as a potential death-cry. The wave of populism and the riseof right-wing idealists in Europe, Brexit, the election of Donald Trump and his less-than- cordial relations with North Korea, the imposition of trade barriers by the US against China have all been termed as the ‘next big crisis’ for our world.

Although this state of tension and the way things have transpired and their potential impact can’t necessarily be bypassed, a warlike situation is honestly a hoax which may never transpire in our lifetime. To understand this we need to go no further than analysing the history of trade relationships which have continued to exist between belligerent nations.

India And Pakistan

India and Pakistan have been at each other’s throats ever since the two bitterly parted ways in 1947. Since then, the two countries have indulged in four wars and countless conflicts, inadvertently alerting the global hierarchy of its growing precedence across different parameters. But something that has grown steadfastly over all these years is the trade relations between them. Cascaded by political tension and rivalry, the bilateral trade relations have never reached their full potential, but they’ve always existed significantly with relation to Pakistan.

After partition, India accounted for almost 70% of Pakistan’s official trade exchanges. However, discordant political relations brought a halt to the bilateral trade between the two nation. The Indo-Pakistan War of 1965 led the US and other countries (friendly towards Pakistan) to withdraw foreign aid to India, enabling Pakistan to not look at India as a potential behemoth partner to do business with. The trend continued to evolve as the 1960s barely saw any trade relations being forged between India and Pakistan. One of the reasons why Pakistan recorded one its highest GDP growth percentages ever at 10.42%, despite waging and eventually losing the war of ’65, was due to the enduring foreign aid support it received from the US, who did it probably out of spite, and to chastise India for aligning itself with the USSR.

However, all of that changed in the 1970s due to a number of factors. The East Pakistan War of 1971 was too much for the US to handle and they retreated their stand of ‘smoothing-in’ foreign trade. Consequently, they cut that value down from $700 million (in military aid) between 1950-1964 to a mere $26 million between 1965-1971. Fresh out of military exhaustion with no foreign aid now to gulp over, its GDP plummeted to lowest ever total of 0.47%. A Newsweek report further states, “Meanwhile, economic aid kept flowing, totaling $2.55 billion over the 15 years. Everything came to a halt in 1979, however, when the Carter administration cut off all but food aid after discovering a uranium-enrichment facility in Pakistan.”

Despite the political hostilities in 1971, India and Pakistan signed their first-ever trade agreement in order to seemingly lift themselves off from the growing economic letdowns, despite just having crossed each other’s hairs in a brutal war. That move inherently helped increase the trade between two countries to almost $80 million whilst lifting Pakistan’s GDP number from a lowly 0.81% in 1972 to 7.06% the following year.

Earlier, during the first 8 months of the FY 2016-17 ,despite mounting tension along the border, trade between India and Pakistan continued to escalate with the latter increasing its exports to India. After growing by 14pc, exports from Pakistan to India amounted to $286 million in July-February.

Pakistan GDP growth from 1961-1979

The Two Koreas

The two Korean nations also share a history similar to the one between India and Pakistan. After savagely parting ways with each other in the 1950s, they grew up like two peas that never existed in the same pod.

While South Korea grew up to be a technological superpower, its adjacent bystander carried on a legacy of becoming one of the most brutal and hostile nations in modern history. However, despite their differences, South Korea remains one of the significant trade partners of North Korea. Legalised inter-Korean trade started on a limited scale after 1989. Inter-Korean trade and South Korean investment in North Korea expanded considerably under South Korea’s “Sunshine Policy” (1998-2008).

South Korea also provided considerable aid to North Korea while the Sunshine Policy was in place, and the two Koreas created two special economic zones during this period. Despite the debacle of 2010 when two South Korean nationals were killed in a bombardment by North Korea, the southerners continued to escalate their exports up north which reached its highest-ever peak in 2015.

Relevantly enough, earlier this year, at a historic inter-Korean summit, Kim Jong-Un made the incredible announcement of denuclearising all of its nuclear plans and pledged its allegiance towards more peaceful in talks in the future.

The two trade histories sets a perfect precedent for the world out there to not spills out words like ‘doomsday’ and ‘world war 3?’ based only on few incidents of foul play, whilst grossly ignoring or sabotaging the biggest factor that trumps all this chatter – economic resurgence.

In my opinion, that’s the basis of our existence and why we continue to liaison ourselves with countries despite crude historical contexts. That’s why the USA and the USSR, for decades, indulged in practices of financial and economic ‘trump-downs’ – ranging from technology, ammunition to space-probe missions – by realising that a vengeful armed warfare would potentially nullify all common grounds of satisfactory competition.

Countries today understand one of the most essential components of Game Theory – the ‘Nash Equilibrium’, which foretells a situation where both parties involved in a dispute indulge in proceedings which are beneficial not only for the individuals but the groups too. Hence, they continue to indulge in matters of incredible substance, despite the presence of external anomalies that continually act up and disrupt the flow of proceedings.


Featured image used for representative purposes only.