India is South Asia’s Natural Hegemon

Last week, the United States announced the partial lift of economic
sanctions imposed on India and Pakistan in retaliation for their
nuclear tests in May. US military contacts with both countries are set
to resume, as are business financing by the US Exim Bank and risk
insurance from the Overseas Private Investment Corporation. With both
India and Pakistan moving toward signing the Comprehensive Test Ban
Treaty, it appears that some of the outrage that greeted the tests has
subsided.

Yet, a closer look shows that India has little cause for cheer. The US
action is motivated by fear of an economic meltdown in Pakistan, not
by any newfound concern for India. Though restrictions on US support for
lending by international institutions remain in place, President
Clinton has approved a "onetime bailout" of Pakistan by the
International Monetary Fund. As if on cue, last week an IMF team rushed
to Islamabad to negotiate the terms of a deal.

The US claim that saving Pakistan from economic collapse is in India's
best interest shows a dangerous naïveté about the politics of the
region. Long term peace and stability in South Asia does not require a
solvent Pakistan but, rather, a re-evaluation of Pakistan's effort to
project military and diplomatic parity with India. India has 77
percent of South Asia's population, 75 percent of its economic output
and 77 percent of its territory. Add a vast reserve of technical
manpower and fifty years of democracy and it becomes self-evident why
India regards itself as the region's natural hegemon. Just as South
Africa dominates Southern Africa, Russia looms over the former republics
of the Soviet Union, and Brazil dwarfs the rest of South America, India
claims preeminence in South Asia. Until Pakistan accepts this, there
will be no shift toward lasting peace in the region.

Pakistan's decision to match India's five nuclear tests in May with
six of its own can be traced to the self-propagated myth of parity with
India. India's tests, and the chest-thumping that followed, gave
Pakistan a golden opportunity to appear mature and responsible. By
refusing to rise to the bait, it could have claimed the moral high
ground over India without in any way compromising its own deterrent
capacity. (That Pakistan had the bomb was never seriously in doubt.)
Moreover, for the first time since Soviet troops pulled out of
Afghanistan in 1989, Pakistan had leverage over the United States,
which was fearful of the collapse of the three decade old global
non-proliferation regime. But instead of trading restraint for
concrete economic and military assistance, Pakistan chose a
tit-for-tat strategy whose consequences it was scarcely in a position to
endure.

Thanks to its adversarial relationship with India, Pakistan is more an
army with a state than a state with an army. It spends an astronomical
6.5 percent of Gross Domestic Product on defense, more than twice the
world average of 3 percent. With an economy five times larger than
Pakistan's -- $1.5 trillion versus $300 billion, in purchasing power
parity terms-- India spends only 2.7 percent of GDP on defense and
still buys more than twice as much firepower. As India continues to
clock faster growth rates on a larger economic base, Pakistan is left
with the unhappy prospect of spending an ever larger share of GDP on
defense in an ultimately futile bid to keep pace.

In the 1980s, the presence of Soviet troops in Afghanistan ensured
that billions of dollars of Western aid poured into Pakistan. But with
the Cold War over, Pakistan no longer has the luxury of huge defense
budgets underwritten by outside powers. The stark guns versus butter
choice before it was made clear by the impact of the nuclear tests and
subsequent sanctions. All foreign currency accounts in Pakistan were
immediately frozen. Foreign exchange reserves plummeted to $600
million, barely enough to cover three weeks of imports. As Pakistan
lurched toward default on its $30 billion external debt, Moody's
Investor Services downgraded its sovereign rating to CAA, just one notch
above the lowest possible grade. On the political front, continuing
sectarian violence in Karachi has forced the government to suspend civil
liberties and call in the army. In a telling comment on the state of law
and order, last month the Pakistani government asked Crown Prince
Abdullah of Saudi Arabia not to visit the capital, Islamabad, with the
plea that his safety could not be guaranteed. Abdullah was instead
received in Lahore.

Across the border, despite sanctions and the Asian financial crisis,
Indian GDP is expected to grow at a healthy 6.5 percent this year.
Foreign reserves are steady at $25.1 billion. After sliding about six
percent soon after the nuclear tests, the Indian rupee has stabilized.
Analysts don't expect foreign investment to dry up any time soon. In
short, though India has its share of economic and political problems,
the bite of US-led sanctions hasn't quite matched their bark. At any
rate, India's decision to test nuclear weapons was not divorced from
its ability to bear the consequences.

A realistic self-appraisal would require Pakistan to align its
ambitions with its economic resources and its loss of strategic
importance in a unipolar world. To begin with, this would mean giving up
the expensive and bloody dream of acquiring strategic depth vis-à-vis
India by backing the Taliban's quest to conquer Afghanistan. It would
require closing down terrorist training camps and support for anti-India
insurgents in Jammu and Kashmir. It would require the extradition of
Dawood Ibrahim, a mafia don wanted by the government of India in
connection with a series of bomb blasts in Bombay in 1993. On the
diplomatic front, Pakistan must temper its reflexive anti-India stance.
A good start would be to stop opposing India's bid for a permanent seat
on the United Nations Security Council.

Now that Pakistan is a nuclear power, it ought to feel more secure
about its ability to defend itself. Perhaps it will finally see the
folly of a permanent confrontation with India, the equivalent of the
Netherlands facing off with Germany. To take an example closer to home,
Bangladesh, with a population approximately equal to Pakistan's, accepts
that closer economic and cultural ties with India are preferable to
confrontation.

By backing an IMF rescue of the Pakistani economy, the United States
encourages Pakistan not to take responsibility for its actions. If
Washington is sincere about finding a long term solution to
instability in South Asia, it ought to use its influence with the IMF to
ensure that financial assistance for Pakistan is contingent upon a less
adventurous foreign policy in Afghanistan and Jammu and Kashmir and
lower levels of defense spending. Until this happens, genuine peace in
South Asia will remain a chimera.