Even as US Secretary of State John Kerry foresees a new era in India- Pakistan relations, the two South Asian neighbors remain skeptical of each other. Both countries realize the need for dialogue yet they remain opposed as far as the agenda for such talks is concerned.  The term “cautious optimism” vis-à-vis relations with Pakistan best represents Indian sentiments. There is little interest in New Delhi right now for undertaking a major foreign policy initiative towards Pakistan. Given the domestic opposition it faces, the Congress-led government will not go out of its way to normalize relations with Pakistan.

Similarly, Prime Minister Sharif’s advisors as well as foreign policy-making institutions in Pakistan have advised him to proceed with caution as far as normalizing relations with India is concerned. According to official PML-N sources also there is no significant foreign policy initiative towards India on the cards in the near future. Although the government is clear that it wants to normalize its relations with India, Pakistan is beset with numerous domestic problems, which need to be taken care of before the country starts grappling with issues related to foreign policy. According to a senior PML-N leader,  “The electricity crisis has overshadowed everything else, it has even overshadowed diplomacy.”

In this backdrop a welcome development has been Pakistan’s willingness to import electricity from India. Both countries have in fact shown an interest to explore this option. Recently a power ministry delegation from India visited Pakistan to discuss the over all framework of the proposed arrangement. In a related development, Pakistan High Commissioner Salman Bashir called on the Indian Commerce and Industry Minister Anand Sharma to discuss the possibilities of economic cooperation between the two countries.

The possibility of economic relations governing political relations can theoretically work under normal circumstances. If relations between two countries are normal, the economic factor automatically assumes the dominant role. Although the India-Pakistan relationship is far from normal right now there is hope that the two countries can overcome existing obstacles and work towards building a peaceful relationship. The time may not be right for India and Pakistan to engage in a strategic dialogue but it sure is ripe for both nations to pave the way for such a dialogue in the future. Enhancing mutual trade for example would help lay the foundation for future dialogue when the opportunity does arise.

From the Pakistani side a first step in the right direction would be granting most favored nation (MFN) status to India. Doing so could imply challenges for Pakistani industrial sectors once trade is opened up under the MFN. Pakistani enterprises would of course need to enhance their competitiveness and productivity to compete in international markets. MFN is one of the fundamental principles of the multilateral trading system and as such an economic obligation on Pakistan. India conferred this status on Pakistan in 1996. Experts believe that delaying this matter any further could have the potential to diminish the spirit of any future dialogues between the two countries. Granting MFN status to India has misleading interpretations in Pakistan. Many in Pakistan believe it means granting India the status of “most favorite nation” whereas it simply means giving similar trade concessions as accorded to other WTO member states. If such an arrangement can be worked out in the initial phase, the next step could be the creation of joint ventures between the two countries.

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