Make Indira-Bhutto 'agreement' formal

J N Raina

The Shimla Agreement has proved 'rewarding' for Pakistan, but 'unproductive for India. It tasted 'bitter' for us, but 'mellow' for Pakistan.

An 'informal' Agreement on Jammu and Kashmir between ZuIfikar Ali Bhutto and Mrs Indira Gandhi, according to which the then Cease-fire Line that emerged after the 1971 war the Pakistan--was to be converted into an international border, was never honoured.

Had that 'informal!' agreement been incorporated in the final Shimla Accord in July 1972, the prevailing relationship with our petulant neighbour would have been totally different.

"Bhutto achieved a diplomatic success, despite being the weaker part at the Shimla negotiations", says former Foreign Secretary' J N Dixit in his book 'India's Foreign Policy 1947-2003'. Bhutto had convinced Indira Gandhi to "accept a clause in the agreement which acknowledged Jammu and Kashmir as 'an issue at dispute', which had to be resolved bilaterally or by other mutually agreed means", says Dixit.

The trouble is that the 'informal Agreement' was never seriously discussed, or discussed at all, either with Bhutto, or with others. The former Pakistan Prime Minister had trying times at home, after the signing of the Shimla Accord, which largely went in favour of Pakistan.

Initially Bhutto did the follow up work on his offer, when the commanders drew the new line, dividing the positions of Indian and Pakistani troops. It was called the Line of Control (LoC), and significantly not the Line of Actual Control (LoAC). It was thought to be permanent, to evolve into a boundary at a later stage. But in 1976, Bhutto was 'enmeshed in domestic political controversies'. Later in 1977, his ' authoritarianism and intrigues' led to a military coup by Zia-uI-Haq. Soon after he was ousted from power and arrested on the charges of murder. Finally he was hanged on April 1, 1979.

His hanging sparked off large-scale violence in the Kashmir valley. Those owing allegiance to Jamait-i-Islami led by Syed Ali Shah Geelani were the main target of attack. Hundreds of their houses were destroyed in fire. The provocation was that the Jamait had distributed sweets to celebrate Bhutto's hanging.

That Bhutto had 'sincerely' agreed though informally, to convert the LoC into an international border, has been revealed by the former 'Prime Minister' of Pakistan-occupied Kashmir (PoK), Sardar Qayyum Khan. Bhutto was sincere, but- he faced impediments at home, says Khan. The PoK leader was strongly opposed to Bhutto's 'verbal' assurances to Indira Gandhi. The Khan had told him if the LoC was turned into an international border, 'the Indians would demand that a straight line be drawn between the two countries, and would then demand PoK as their own'.

'But I believe', said Khan, in an interview to the Asian Age, that Bhutlo actually wanted to go ahead with this, and even took steps of closing a Free Kashmir Office in the United States and also toppled my Government in PoK as the first step for this'. According to Khan Bhutto also 'created a party to help sell the idea of the international border to the people of Pakistan' .

Qayyum Khan sought to convince Bhutto Senior that the move would be totally unacceptable, 'but he actually believed that it could work and that the people would accept it...' Faced with a strong opposition from within, he believes, the then Pakistan Prime Minister was not able to honour his verbal agreement with India.

In another book India-Pakistan in War and Peace', Dixit, while referring to the 'informal Agreement', says it was agreed the Cease-fire Line be converted into the LoC, and the LoC into an international boundary; with Pakistan keeping territories it had and India retaining jurisdiction over areas under its control since 1947.

"Participants at the Shimla Summit have in later years confirmed that such an agreement was reached and that Bhutto had pleaded with Mrs Gandhi not to make his commitment a part of the formal Shimla Agreement for his own political survival and the survival of democracy in Pakistan. Mrs Gandhi and her advisers made the mistake of accepting this request," according to Dixit.

"More noteworthy are the unpublicised diplomatic initiatives taken by the Government of India to find a solution to the Kashmir issue on the basis of the Indira Gandhi-Z A Bhutto Agreement, after the revival of democracy in Pakistan in September 1988", says Dixit.

The then Foreign Secretary Muchkund Dubey was 'authorised' to revive the proposal, in discussions with the then Prime Minister Mrs Benazir Bhutto. Dubey made this suggestion to Mrs Bhutto, recalling her father's commitment to Mrs Gandhi, but her response was negative, that even if such a commitment was made, 'much water had flown down the Jhelum and Ganges since 1972'. She had told Dubey that circumstances had changed and India and Pakistan should discuss a solution to the Kashmir problem afresh ' in the context of the critical situation there'.

She was obviously referring to the armed secessionist movement' in Kashmir, propelled by Pakistan since 1989. This offer was again repeated during Prime Minister Nawaz Sharifs time in November 1991. He too was lukewarm, saying. As leader of the Pakistan Muslim League, he could not go by speculative reports regarding a commitment given by Bhutto more than two decades earlier' .

However, the fundamental reason for this intransigent pull back from the position taken by Zulfikar Ali Bhutto in 1972 was the assessment by the Pakistan power structure that Kashmir was ripe for separation from the Indian Republic, and that the Indian State did not have the political will or the stamina to sustain Jammu and Kashmir as an integral part of India', says Dixit.

The military operation launched by Pakistan across the LoC in Kargil in 1999 was an 'operational expression of this'. But Pakistan has failed to realize its dream. As a quirk of fate, both Nawaz Sharif and Ms Benazir Bhutto are in exile. Now they are considered persona non-grata in their own country--thanks to President Pervez Musharraf.

Be as it may, Ms Bhutto has since veered round to the view that converting the LoC into a permanent border is the only panacea. There are many in Pakistan who share her opinion. Former Jammu and Kashmir Chief Minister Dr Farooq Abdullah was in fact the first person who had broached the suggestion in 1997 about converting the LoC into the international border for permanent peace.

'PoK should be given away to Pakistan as a permanent solution--- India cannot take away what was their's and Pakistan cannot take away what is ours' , he had said as both India and Pakistan had gone nuclear. At that time there was lukewarm response to his statement in Pakistan, but in India, Field Marshal Manekshaw, the 1971 war hero had asserted, "We should firmly hold on to the territory on our side and leave the other part of the state -PoK-to Pakistan".

Mrs Bhutto, in a significant statement (in 2000) said that she was 'willing to accept the LoC as international boundary between India and Pakistan'. But she had also cautioned' such a move would trigger off a backlash from armed militants, who are waging jihad in Kashmir'.

Recently the 'Time' magazine sparked off a major controversy by reporting that Prime Minister Manmohan Singh was ready to accept 'adjustments' to the LoC in order to clinch a peace deal with Pakistan. But the report was immediately denied by the PM's office as rubbish. Lt Gen Vinay Shankar (Retd) has in an article taken serious exception to the 'Time' report that 'a senior official had conveyed to it that India will offer to 'adjust' the LoC-the de facto border dividing Kashmir, 'by a matter of miles eastward' .

"Territorial adjustments with equitable exchange of territory by both sides to make the border more manageable is understandable. But gifting territory would amount to a sell-out', he has said. He is of the opinion that it was vital to sustain the dialogue process but India cannot afford to compromise on its territorial integrity'.

The status of Kashmir cannot be changed as per the likes of Musharraf. It is not so simple as he thinks. Perhaps he is taking India for a ride. India has to deal with Pakistan from a position of strength, as in the past. Jehadiasm has become a global problem and the 'holy warriors' have to close their shop. Pakistan cannot sustain itself on the strength of jehadis.

(Syndicate Features)

Sunrise for the rupee, sunset for the dollar

By Dr Bharat Jhunjhunwala

The rise in the price of oil in 1973 was similar to that taking place presently. The price of oil in the sixties was around US$ 2 per barrel which was determined mostly by American oil companies. Arab countries nationalized the American oil companies in 1973 and increased the price of oil to US$ 11 per barrel overnight. Subsequently in 1981 the price was raised to about US$ 21 per barrel. The American economy was badly hit. But it bounced back and continues to be No 1 world economy till today.

The dollar had come under pressure for a short time. It was initially devalued because America had to pay higher amounts for the imports of oil. But that trouble proved to be short-lived. The dollars paid by America came back to be invested in that country. Countries like Saudi Arabia made huge profits from the high increased price of oil. In substantial measure they reinvested this income in America. Arab Sultans bought prime property in New York, U.S. Treasury Bonds and shares of American companies.

The bigger money paid by the American consumer for oil came back to the American stock exchanges. The net effect of the price increase on the American economy was reduced to a book entry. America debited US$ 1 million towards higher expenses of oil; and credited US$ 1 million towards inward capital receipts in the form of foreign investment.

In fact, the price rise was beneficial for the American economy. The dollar was rising. New technological innovations were being made in that country like Boeing 747 Jet Airplane, Apollo space flights, biotechnology, etc. Huge amount of foreign investment took place in companies like Boeing, Apple Computer, General Dynamics and Monsanto. This inward movement of foreign investment buoyed the American stock markets as well as the dollar.

This upward movement in the dollar attracted other foreign investors. Japanese, Chinese and Indian investors followed the Sultans in putting their money into the American economy. The money paid by America for oil came back to that country along with more money just as a small nozzle in the jet pump brings back with it large amount of water.

America became the biggest consumer in the world. American people had great confidence in the paper wealth of shares held by them. They borrowed heavily and imported goods from across the world for their consumption.

Fundamentally, the strength of the American economy despite the increase in the price of oil was due to the stream of technological innovations.

The price of oil is increasing once again presently. But the conditions are very different. Technological innovations appear to have reached a plateau in America. There has been no major innovation after the internet in the mid-nineties. India has made the supercomputer. Our companies like Ranbaxy and Dr Reddy are giving a tough fight to the American MNCs in drugs and pharmaceuticals. Companies like Infosys and Wipro are ranked among the top IT companies of the world. Many American MNCs are transferring their research and development outfits to India to benefit from the lower salaries of scientists and engineers in India. India will have a major role in bringing about the technological innovations in the future. The slowdown of technological innovations in America means that the American share markets will be flat and the inflow of world money into that economy will be arrested. One indication of this tendency is available by the declining levels of Foreign Direct Investment in America. According to the World Investment Report 2004 published by UNCTAD, America received FDI to the tune of US$ 314 billion in 2000. This declined to merely US$ 30 billion in 2003. America is no longer the preferred destination for the global investors. Thus, the Arab Sultans may now invest their petrodollars in some currency other than the dollar—maybe the Indian rupee.

The confidence of the American consumer is also shaky. One key issue in the American election was that of outsourcing. The live experience of the American people tells them that their jobs are going abroad and wages are under pressure. The American Airlines had asked its employees to accept a 20 percent cut in the salaries otherwise the company would go bankrupt. The workers rejected the offer and the Company declared itself bankrupt. The victory of George W Bush in the American elections does not cancel this fact. Reports point out that the American people were not happy with the economy but they have voted for Bush mainly because of his strong stance towards terrorism.

America continues to be the biggest consumer despite these difficulties. The consumption demand is coming, in large measure, from the housing sector. This demand is like that of the coffin. American people are unsettled about their future incomes and they want to have a roof over their heads as soon as possible. Instead of investing their money in shares they are investing it in houses. Such demand cannot sustain because it is not backed by a steady stream of income.

The impact of the present increase in the price of oil will have a different impact on the American economy than it had in 1973. Previously, the dollars going out as payments for oil were coming back to America in the form of foreign investment. This is not happening presently because technological innovations are at a standstill. The consumption by the American people too is unsustainable. There is a good chance that the present downtrend in the dollar will continue. Correspondingly the rupee will rise.

When heavy goods are put on the one end of the boat, the other end rises spontaneously. Similarly, the decline in dollar will lead to a rise in the rupee.

The increase in price of oil will have two opposing effects on Indian economy. One, the rupee will be stronger against the dollar which will be beneficial for the country though exporters may be hard pressed. On the other hand we will have to pay higher price for the imported oil which will be harmful for us. The final result will depend upon the level of decline of the dollar. My assessment is that the dollar will face a steep decline because America consumes large amounts of imported oil; and because we are about to takeover the stream of technological innovations of future.

We should plan for the sunrise of the rupee. The rise in the price of oil will be beneficial for us if we can turn the flow of petrodollars towards Mumbai. We should focus on strategies in this direction rather than on the loss of foreign exchange due to the increase in the price of oil.