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The Neutral Expert appointed by the World Bank under the terms of the Indus Waters Treaty (IWT) has decided that he is “competent” to adjudicate on the differences between India and Pakistan regarding the design of two hydroelectric projects in Jammu and Kashmir, vindicating New Delhi’s long-held position.
“The decision upholds and vindicates India’s stand that all the seven questions that were referred to the Neutral Expert, in relation to the Kishenganga and the Ratle hydroelectric projects, are differences falling within his competence under the Treaty,” the Ministry of External Affairs said on Tuesday.
The IWT was signed by India and Pakistan on September 19, 1960 to determine the distribution of the waters of the Indus and its tributaries. It was signed in Karachi by then Prime Minister Jawaharlal Nehru and then Pakistan President Ayub Khan after nine years of negotiations arranged by the World Bank.
Under the IWT, India enjoys “unrestricted use” of the three “Eastern Rivers” (Beas, Ravi, Sutlej), whereas Pakistan controls the three “Western Rivers” (Indus, Chenab, Jhelum). This, in effect, gives India roughly 30% and Pakistan 70% of the water carried by the Indus River System. According to Article III (1) of the Treaty, “India is under obligation to let flow” waters of the Western Rivers to Pakistan.
Pakistan objects to the design features of two hydroelectric projects currently under construction in J&K — the Kishenganga HEP on Kishenganga, a tributary of the Jhelum, and the Ratle HEP on the Chenab. Although they are “run-of-the-river” projects, which generate electricity without obstructing the natural flow of the river, Pakistan has repeatedly alleged that these violate the IWT.
In 2015, Pakistan requested the appointment of a Neutral Expert to examine its technical objections to the projects. However, it unilaterally retracted this request a year later, and instead proposed adjudication by the Permanent Court of Arbitration (PCA).
India filed a separate request for the matter to be referred to a Neutral Expert. It refused to engage with the PCA mechanism, which it argues is in contravention of the IWT.
Article IX of the IWT provides for a graded three-level dispute settlement mechanism, in which disputes are first decided at the level of the Indus Commissioners of India and Pakistan, then escalated to the World Bank-appointed Neutral Expert, and only then to the PCA in The Hague.
Nonetheless, on Pakistan’s insistence, the World Bank on October 13, 2022 instituted two parallel processes — it appointed Michel Lino as the Neutral Expert while also beginning the PCA proceedings. New Delhi has boycotted the latter, while continuing to participate in what it calls “Treaty-consistent” Neutral Expert proceedings.
The Neutral Expert has held three meetings with the parties concerned. He visited the Kishenganga and Ratle projects last June.
During the Neutral Expert meetings, Pakistan submitted that the “Points of Difference” raised by India do not fall within “Part I of Annexure F” of the Treaty, effectively taking the issue outside the remit of the Neutral Expert. India, on the other hand, had argued that these fell “squarely and entirely” within the aforementioned part of the Treaty, making the Neutral Expert “duty-bound” to render a decision on their merits.
The Expert, Michel Lino, decided on the matter on January 7, before releasing a formal press note on Monday. “Having carefully considered and analysed the Parties’ submissions…the Neutral Expert…finds that he should proceed to render a decision on the merits of the Points of Difference,” the press note said.
This was the best outcome India could have hoped for at this stage. Lino will now hear the parties again before deciding on the merits of “Points of Differences”. Notably, the PCA in July 2023 also ruled that it was “competent” to consider the matter.
Citing Islamabad’s continued “intransigence” in implementing the IWT by raising repeated objections to the two projects, New Delhi in January 2023 issued notice to Pakistan seeking “modification” of the Treaty. This was the first such notice in the more than six decades of the Treaty’s existence.
India upped the ante last September, by issuing Islamabad another formal notice, this time seeking the “review and modification” of the IWT. The word “review”, according to experts, effectively signals New Delhi’s intent to revoke and renegotiate the Treaty, which will turn 65 this year.
Sources said India’s September 2024 notification highlights “fundamental and unforeseen changes in circumstances” which necessitate a need to revisit the Treaty. These include the the “change in population demographics, environmental issues and the need to accelerate development of clean energy to meet India’s emission targets, and the impact of persistent cross-border terrorism”.
Both notices were issued under Article XII (3) of the IWT, which says “the provisions of this Treaty may from time to time be modified by a duly ratified Treaty concluded for that purpose between the two Governments”.
