Handshake freezeframed

They8217;re squinting hard at the road from Islamabad and it looks foggy. This week, it was the ECONOMIST8217;s turn to congratulate Vajpa...

They8217;re squinting hard at the road from Islamabad and it looks foggy. This week, it was the ECONOMIST8217;s turn to congratulate Vajpayee and Musharraf for their warm handclasp. But having complimented the Indian leader for the 8216;8216;degree of political courage8217;8217; to forsake Pakistan-bashing as electoral platform, Pakistan8217;s General for 8216;8216;taking up the offer8217;8217;, and the Americans for vigorously twisting arms 8216;8216;the General8217;s in particular8217;8217;, the magazine suggested that the subcontinent8217;s best hope is a peace process, spun out endlessly, without either resolution or breakdown. Like Cyprus, where there have been no hostilities, no resolution, for a quarter of a century now. So what are the chances of talks that drag on for years between India and Pakistan 8212; without a bloody toll on the side?

The magazine wasn8217;t hopeful. Because India-Pak relations are 8216;8216;extraordinarily sensitive to the actions of violent men8217;8217;. It identified two dangers: that Islamic terrorists sponsored by the ISI will not abide by the new script. And more, Musharraf will be targeted again, successfully.

TIME travelled back to the extraordinarily beautiful place where it all begins and reported an overhanging anxiety. It described the daily fear that has haunted Mohammad Sarfarz Khan for years. The 61-year-old lives in village Uroosa, bang in the war zone, and spends most of his time cowering in a gloomy bunker in a hillside as India and Pakistan exchange fire in the valley below. TIME found that, unknown to him, his family across the border has suffered a death, left Kashmir and settled in Rawalpindi. And that even as he hopes for a reunion now, they remain scarred by anger, anguish, distrust. While Khan is not angry anymore, said TIME, he wonders whether he will be able to cope with a wider world, beyond the bunker, if peace comes.

But in an interview to Britain8217;s FINANCIAL TIMES, Foreign Minister Yashwant Sinha declared that the peace process has gathered 8216;8216;a certain momentum8217;8217; and that it will go on 8216;8216;surefootedly8217;8217; and 8216;8216;without haste8217;8217; 8212; 8216;8216;unless something unthinkable happens8217;8217;. The paper spotlighted the foreign minister8217;s emphasis on the moderation of language both countries must abide by. This 8216;8216;newfound linguistic discipline8217;8217;, suggested the paper, makes the latest peace effort all the more unusual.

Agreeable two

Also in the FT, an editorial decoded the US decision to relax its controls on technology exports to India and pronounced it a milestone. The agreement opens the way to enhanced technological cooperation and lifts the ban on sales of sensitive civil nuclear and space programme equipment. For the FT, it 8216;8216;confirms Washington8217;s de facto recognition of India8217;s entry into the nuclear weapons club.8217;8217; It is a statement by Washington and New Delhi that 8216;8216;they intend to build a long-term strategic relationship8217;8217;. It is 8216;8216;a rebalancing8217;8217; of Washington8217;s alliances in South Asia. Further, the agreement helps Vajpayee to keep 8216;8216;powerful extremists8217;8217; in the BJP at bay as he pursues peace with Pakistan.

The FT also expressed reservations that the Indo-US agreement could encourage nuclear proliferation. Not surprisingly, reports in the US media warily emphasised India8217;s reciprocal promise to implement stricter controls over the spread of weapons and technology.

8216;Free trade but8217;

THE GUARDIAN reported that unions warned this week of a 8216;8216;stampede8217;8217; of financial services jobs leaving Britain after another two firms announced plans to outsource work to India. Elsewhere, there were predictions that 3.3 million jobs in the US could be lost as a result of jobs moving to lower-cost countries. As the discussion on outsourcing gets shriller in the US and British media, indications are India will figure prominently 8212; and unflatteringly 8212; in this year8217;s American presidential campaign.

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Last week in the NEW YORK TIMES, Charles Schumer, senior Democratic senator from New York, and Paul Craig Roberts, who was assistant secretary of the Treasury for economic policy in the Reagan administration, shared their joint 8216;8216;Second Thoughts on Free Trade8217;8217;. There has been a 8216;8216;seismic shift8217;8217; in the world economy, they said, and now American workers will face direct global competition at almost every job level. But these changes cannot be viewed through the classic prism of 8216;8216;free trade8217;8217;. Because the case for free trade is based on David Ricardo8217;s principle of 8216;8216;comparative advantage8217;8217; 8212; that each nation should specialise in what it does best and trade with others for other needs. But 8216;8216;comparative advantage8217;8217;, they said, is undermined if the factors of production can relocate to wherever they are most productive, to countries with abundant cheap labour, for instance. So, economists and policy makers beware. They must end the confusion between free flow of goods and free flow of factors of production. And America must reorient its policies to reflect the new realities.

This week in the WASHINGTON POST, columnist Michael Kinsley noted with apprehension that the joint byline in the NYT represents a growing common sense: the 8216;8216;free trade but8217;8217;. His rebuttal: if the factors of production become more productive, the whole world becomes richer. But there will certainly be an unequal distribution of the benefits of free trade. And the real difference between traditional trade in heavy earthbound objects and the new-style trade in brainpower, he pointed out scathingly, is that the losers in the latter case are more likely to be 8216;8216;people that US senators and fancy economic consultants actually know8217;8217;.

This debate will definitely go on.