Friends, neighbours

paAs Pakistan scrambles to avoid financial bankruptcy, India needs to step forward with a package of its own. Reluctant to put itself under the rigours of IMF discipline, Pakistan is exploring other options. So far the results have been discouraging. China, Pakistan’s all-weather friend, has been reluctant to pump money into Pakistan’s coffers. Pakistan’s other trusted ally, Saudi Arabia, too has been hesitant to offer an oil facility that would help Islamabad conserve its rapidly declining hard currency reserves. Meanwhile the “Friends of Pakistan”, a group of nations formed at America’s instance, has made it clear that it will not simply throw cash on the table for the benefit of Pakistan. All the major donors would like to see a credible IMF-endorsed plan for Pakistan’s economic recovery.

When he met his Pakistani counterpart, Yousuf Raza Gilani, in Beijing last week, Prime Minister Manmohan Singh promised to support Islamabad’s attempts to secure international assistance at the IMF, when Pakistan finally gets there. The Indian gesture comes at a time when Pakistan is deeply disappointed that its friends are not chipping in when it needs them most. If India is serious about the oft-repeated proposition that it would like Pakistan’s civilian government to succeed, it must do a little more than extending support at the IMF.

When the “Friends of Pakistan” gather in Abu Dhabi next month, India must endorse the forum’s economic objectives. India could easily chip in with its own cash, but a highly sensitive Pakistan might be loath to accept it. What India can do, however, is to offer tariff concessions on potential exports from Pakistan. India which enjoys a growing trade surplus with Pakistan could also quickly dismantle the many tariff and non-tariff barriers that constrain imports from across the western border. India must also move on trade facilitation by implementing the recent bilateral agreement to expand overland commerce on the borders between the two Punjabs and between Rajasthan and Sindh. The Indo-Pak divide is as much psychological as it is political. This is a moment for India to extend the hand of economic friendship to Pakistan without being either intrusive or ostentatious.