Development and conflict
India-Pakistan issue on Indus Water Treaty and China Pakistan
Economic Corridor
Hassan Abbas
Peace and Conflict Studies
Bachelor Thesis
12 Credits
Spring term 2021
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Abstract
India and Pakistan are at war with each other for over 70 years. To date, the two countries
have four full scale wars. This thesis evaluates whether the dispute between Pakistan and
India is linked with the economic development of the rival country or there are other
reasons for it such as terrorism, border disputes, etc. In the analysis, special attention is
paid to tensions related to Kashmir which started in 1948 and are still there. Kashmir
plays a vital role in development of Pakistan in a broader context because The Indus
River, which is the lifeline to Pakistan, flows through the Jammu and Kashmir. Case
study method was employed, based on secondary data from the existing studies. This
thesis is based on theories of international politics to explore the Indus Water Treaty and
China Pakistan Economic Corridor in relation to the economic development of Pakistan.
The findings reveal that, contrary to the popular belief of the people of the two countries
that India and Pakistan are fighting over Kashmir’s territory, much of the problems are
related to economic issues. Indus Water Treaty and China Pakistan Economic Corridor
are helping Pakistan in coming out of the vicious circle of poverty and moving towards
development. Economic development in Pakistan is not beneficial for India, as Pakistan
and India compete in their export markets. So, India is creating hurdles in the economic
development of Pakistan. The violation of Indus Water Treaty by India and India’s
interferences in China Pakistan Economic Corridor are two such examples of it. The
China Pakistan Economic Corridor will increase foreign investment in Pakistan which
will lead to economic development of Pakistan. This may strengthen Pakistan’s export
sector and challenge India in its international export markets. Therefore, India is creating
hurdles for Pakistan. Moreover, efficient utilization of water may lead to an increase in
power generation in Pakistan which would help it in overcoming energy shortage
problem, especially electricity. If this problem will be resolved, industry and export
sector will be developed, and Pakistan may compete India in export markets. It was
concluded that major reason of conflicts between India and Pakistan are economic, not
political, geographical, or military.
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Key Words: development, conflict, Pakistan, India, Indus Water Treaty (IWT), China-
Pakistan Economic Corridor, case study
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Table of Contents
1 INTRODUCTION..................................................................................................... 6
1.1 Research background .................................................................................................. 6
1.2 Problem statement ...................................................................................................... 8
1.3 Research aim and questions ........................................................................................ 9
1.4 Relevance to Peace and Conflict Studies ................................................................... 10
1.5 Limitations of the study ............................................................................................ 11
2 REVIEW OF LITERATURE ................................................................................ 12
2.1 Economic background of conflicts between countries ............................................... 12
2.2 Dimensions of the economic development ................................................................ 13
2.2.1 Trade.................................................................................................................... 14
2.2.2 Investment ........................................................................................................... 14
2.2.3 Economic prosperity............................................................................................. 14
2.2.4 Sound institutions ................................................................................................. 15
2.2.5 Equity joint ventures ............................................................................................ 15
3 THEORETICAL FRAMEWORK ...................................................................... 126
3.1 Development theories ............................................................................................... 16
3.2 Rostow’s stages of economic development ............................................................... 17
3.3 Conflicts over economic development .................................................................... 199
3.4 Structural theory of conflict ...................................................................................... 20
3.5 An economic theory of war ....................................................................................... 20
3.6 Research gap ............................................................................................................ 21
4 RESEARCH METHODOLOGY .......................................................................... 23
4.1 Research design ........................................................................................................ 23
4.2 Designs of case study ............................................................................................... 24
4.3 Benefits of applying case study method .................................................................... 25
4.4 Data collection ......................................................................................................... 26
4.5 Ethical considerations ............................................................................................... 26
4.6 Delimitations of the study ......................................................................................... 27
5 FINDINGS AND ANALYSIS ................................................................................ 28
5.1 IWT – Stakes of India and Pakistan .......................................................................... 28
5.1.1 CPEC – stakes of India and Pakistan .................................................................... 31
5.2 Economic development as basis of conflict ............................................................... 36
6 CONCLUSIONS ..................................................................................................... 42
6.1 Future research suggestions ...................................................................................... 43
7 REFERENCES ........................................................................................................ 45
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List of Abbreviations
CPEC: China Pakistan Economic Corridor
EJV: equity joint ventures
FDI: Foreign Direct Investment
GDP: Gross domestic product
IWT: Indus Water Treaty
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1 INTRODUCTION
This chapter presents the background of research, problem statement, research aim, and
objectives along with an account of the relevance of the topic with Peace and Conflict
Studies, the significance of investigation, and limitations of the research presented in the
thesis.
1.1 Research background
The present world is facing a higher level of conflict as compared to the cold war
(Powelson, 2015). On one hand, countries like the USA and UK are engaged in war in
Iraq and Afghanistan, and on the other hand, insurgencies in Algeria, Burma, Syria, Iran,
Columbia, Myanmar are also at their peak possibly because they have not experienced
the involvement of international bodies. The involvement of international bodies, such as
United Nations, European Union, etc. substantially decreases control over domestic
operations and hence hinders the peace (Harris, 2002). Conflicts between India, Pakistan,
and China are also in limelight. Likewise, the USA and North Korean conflict are also at
their peak. Barbieri (1996) suggested that over the past century, humanity faced a crisis in
the form of conflict between countries, while countries have been fighting to be the
modern state of the present world. The underlying reasons were multi-faceted and include
economic, agricultural, climatic, religious, technological, etc.
Tanaka, Tago, and Gleditsch (2017) suggested that conflicts are rampant in the social and
economic interactions of the countries such that these countries compete with each other
to gain more economic and political benefits. In its general terms, a conflict is
disagreement between two or more entities (Barbieri, 1996). However, when it comes to
military or armed conflict, it is a situation in which two or more nations, states or
countries actively compete by using army and associated resources. Conflicts may lead to
loss of human life as well as damage to national infrastructure, culture, social value
system, and heritage. Kreutz (2010) suggested that conflicts are detrimental and very
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seldom lead to a win-win situation for the parties involved. Even at the end of the
conflict, considerable efforts are to be devoted to long-term and sustained peace between
the parties. Owing to these negative impacts of the conflicts and wars between/among
countries, all efforts should be made to avoid such conflicts and wars. Westing (1986)
suggested that natural and human-built resources had been among the chief reasons for
armed conflict. Countries try to control resources such as, forests, capital, gold, minerals,
libraries, etc. and if these resources go out of their controls, then they initiate a full-scale
war which may lead to a long-term regional conflict (Keshk, Pollins, & Reuveny, 2004).
An understanding of underlying reasons for such conflicts may prevent wars and long-
term conflicts. This may benefit both countries as they dedicate their military resources
for their economic development. On one side, countries may not have to spend money on
the development of militaries, on the other hand, countries may escape from the negative
impacts of the war.
The economic interdependence and regional conflict had been and are the focus of
scholarly debate. The traditional viewpoint, such as represented by Mansfield and Pollins
(2001), emphasized that economic prosperity in a country brings its neighbors closer to
each other and reduces conflict so that everyone can enjoy prosperity. This liberal
viewpoint emphasizes that the economic prosperity of a nation and its trade with other
countries brings peace and develops strong ties between nations as they are
interdependent. Many researchers emphasized that economic resources bring peace in the
country (Bazzi & Blattman, 2014; Chatagnier & Kavaklı, 2017; Gleick, 2014; Manski,
2017; Yanagizawa-Drott, 2014). However, Le Billon (2001) suggested that on one hand,
national resources help countries in financing their armies and defending countries from
intruders waging war on them, while on the other hand, such resources also increase the
vulnerability of countries to war because they enable countries to involve in economic
development rather than war. Contrary to the traditional and widely held premise that
abundant economic resources of a country bring in political stability and economic
prosperity, Collier (2000) argued that such resources may bring political instability and
an armed conflict between countries. However, very few studies were carried out to
check if economic prosperity in a country leads it to conflicts with other nations (Keshk
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et al., 2004; Ross, 1999). The thesis will purse the premise that as a country develops
economically, its economic and armed conflicts with other countries may increase. More
specifically, this thesis will argue that economic development in Pakistan as a source of
conflict between Pakistan and India.
1.2 Problem statement
The continent of Asia possesses an important place in the world. Its total population has
surpassed 4.436 billion (Worldometer, 2017) and it is the home of existing (China,
Russia, India, & Pakistan) and emerging nuclear states of the world (such as Iran,
Azerbaijan, and North Korea). Among these, the contention of China, India, and Pakistan
is unique as the level of conflict between these nuclear powers is high (India vs. China
and India vs. Pakistan). The bilateral relationship between India and Pakistan faced
considerable turmoil since their inception 1947. Burton and Wurfel (2016) highlighted
that despite significant efforts, a lot of tension could be observed on borders in the form
of full-scale wars between India and Pakistan in 1948, 1965, 1971 and 2001. The
Kashmir territory is the main source of conflict between India and Pakistan. The dispute
of Kashmir is a geographical conflict that is resulted in four full-scale armed wars (1947,
1965, 1971, and 1999). Moreover, both countries struggled to isolate each other on the
international front. At times, the scale of tension rose to a level that the world feared a
nuclear war between India and Pakistan. Among other issues, the issue of water coming
from Kashmir territory to Pakistan, the Indus Water Treaty (IWT), and the China
Pakistan Economic Corridor (CPEC) are ongoing.
In the 1960, World Bank moderated the dispute between India and Pakistan, and
the two countries signed the IWT on 19th September 1960. Since then, India and Pakistan
did not have a full-scale war on water. However, since then both countries have both
political and military disputes on other issues (e.g., Bangladesh and Kargil). Further, in
2013, implementation of CPE project started and during that times India tried its best to
destabilize using different tactics such as militancy and border-conflicts. Pak Observer
(2017) highlighted that CPEC is evidence of the friendship between Pakistan and China
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and will bring revolution in regional economies. It involves an investment of US$ 62
billion to be spent on the development of the infrastructure and energy sector of Pakistan.
It will open many new development avenues for Pakistan, rebalance geopolitics and geo-
economics. India, Pakistan, and China are putting their best to win their stakes out of
CPEC. Hostile relations between Pakistan and India are increasing chances of nuclear
war between the two countries so there is a need for the evaluation of impact of IWT and
CPEC on such chances of war. This thesis is designed to link the conflict with economic
development in both countries and evaluate if each of the countries causes/raises conflict
to resist economic development of its adversary. For this, this thesis investigates and
analyze whether the current tensions are related to Kashmir, or are there other reasons,
such as economic development, to it? Both India and Pakistan demand territorial rights to
Kashmir. Where India claims Kashmir to be its integral part, Pakistan maintains that
India had occupied Kashmir and people of Kashmir should be given the right of self-
determination so that they may join Pakistan or may separate from India and become an
independent state.
1.3 Research aim and questions
To eradicate conflict and bring peace between India and Pakistan, potential reasons for
conflict need to be analysed. The thesis focuses on IWT and CPEC and will identify,
describe and evaluate economic and political stakes of both India and Pakistan. More
specifically, this thesis will evaluate water and road infrastructure-related disputes
between Pakistan and India from different theoretical perspectives. Using theory of
development and the theory of relations bewteen development and conflict, this thesis
will present an evaluation of the way the tensions emerged and increased between these
two states.
This research aims to evaluate the role of IWT and CEPC as a source of initiating
and sustaining inter-state conflict between India and Pakistan. This aim will be reached
by answering the following research questions:
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1. What are the economic and political stakes of India and Pakistan in IWT and CPEC?
2. Is the economic development of Pakistan a source of initiating and sustaining conflicts
between Pakistan and India?
1.4 Relevance to Peace and Conflict Studies
Peace and conflict studies provide us the comprehensive knowledge to understand the
nature of conflicts and their social and cultural impacts. This study is relevant to peace
and conflict studies as it deals with the assessment of the nature of the Pakistan-India
conflict linked with the important sources of economic development such as water and
road infrastructure. Since, conflicts cause disaster to human beings, natural and animal
life of the countries, so it is important to understand the reasons and factors, which cause
conflict and the possible way through which such conflicts can be avoided.
Fresh water is an enormously limited and precious natural resource. Research has shown
that it had triggered wars, e.g., Mekong River conflict, Egypt – Sudan – Ethiopia conflict
over Nile sharing, water conflict in Oregon, Colombia River conflict, Jordan River
sharing conflict between Jordan, Israel, and Palestine (Swain, 2015). Undisputed water
distribution lays the potential foundations for enduring peace. UN Secretary-General Kofi
Annan has once said that fierce competition for fresh water may well become a source of
conflict and wars in the future (Carius, Dabelko, & Aaron, 2004:60). Furthermore,
referring to the case of IWT, water and development are connected particularly for upper
and lower riparian states system. Hettne (1995) argues that development and peace
should be considered two sides of a coin. Distribution of water can constructively
promote peace or trigger conflict.
The development of CPEC is also linked to peace and conflict studies as development of
road infrastructure from China to Gwadar deep sea port of Pakistan, would give better
access to China to the Arabian Sea and connect it with many countries of the world by
developing strong relationships that will consequently decrease conflicts. It would
enhance exports of China. CPEC would also enhance Pakistan's capacity through the
development of infrastructure, fulfilment of energy requirements, workforce
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development, and economic progress. CPEC is an economic project and is a subset of
One Belt One Road Initiative. The aim of this is to connect China with other countries
like Arabian states. Indian hostility and the disturbing peace of Pakistan are also
provoking to both Pakistan and China. It may hamper future relations among the three
countries.
1.5 Limitations of the study
Only secondary data is used for this research. Secondary data has limitations related to
currency, relevance, and authenticity. All attempts were made to use only secondary data
which was credible and relevant. Moreover, I included the information on the latest
happenings concerning the selected topic.
The subject of conflict and development theory is vast. If not impossible, it is genuinely
difficult to cover all aspects of conflict and development theories in one BA thesis, given
the amount of time and the word count limit. I therefore confined my interest to economic
development in Pakistan as a source of conflict between Pakistan and India. Furthermore,
the analysis is restricted to the economic development of Pakistan concerning water and
road infrastructure.
The analysis and findings of the research are prone to the researcher's biases. All attempts
were made to put forth a balanced analysis bringing perspectives of both India and
Pakistan by referring to statements given by the officials of both countries in independent
press. There are chances that official documents of both India and Pakistan may be biased
as both countries may tend to project their own viewpoint, so I avoided using official
documents of ministries of both India and Pakistan.
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2 REVIEW OF LITERATURE
The previous chapter presented the problem statement and the research aim . This chapter
offers a literature review relevant to this thesis and identifies a research gap.
2.1 Economic background of conflicts between countries
Economic reasons had been the source of conflict between countries. Collins (2016)
highlighted that Europe faced lots of turmoil as development in one country deprived
other countries of productive economic resources. The economic growth of one country
at the cost of another country became a source of conflict between European countries,
such as, e.g., France and Germany. Collins also observed that the European nations that
developed their road infrastructure and contracts with other nations for favored access to
resources and routes, had increased accumulation of wealth. Conversely, their trading
partners, instead of flourishing, became poorer (Collins, 2016, p. 176). It implies
economic prosperity in one country may be at the cost of another country.
Contradicting Collins and Wade (2012) suggested that considerable evidence asserts that
economic development in a state provides constructive outcomes for the trading partners
as well as for neighboring states to grow at a consistent rate because economic
development is not a zero-sum game but a positive-sum game. Countries obtain/develop
resources that may help them in controlling/deterring their rivals, but it does not mean to
always have superiority, for this, it requires that a country could be able to justify and
defend its position. This asserts that development in one country may attracts another
country to initiate a war with the former so that later, usually stronger, may control the
resources of the former country which has considerable economic potential.
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The US and Iraq conflict is a good example where US invaded Iraq to control the oil and
other economic resources of Iraq. The main motivation of this invasion was the economic
prosperity of the US which can be used to leverage across the world, both in economic
and political terms (Avant & Sigelman, 2010). Likewise, the conflict between North
Korea and the USA over the Korean nuclear program is also an example of a situation in
which a country (US) is interfering with another country (North Korea) without any
probable threat to the USA (Onuf, 2012). It can be implied that such interreference of US
in North Korean may have some hidden agenda, which could be economic or otherwise
(Snyder, 2013). This literature shows that inter-state conflicts disturbed their relationships
and hinder their economic development dependent on those relations. Onuf (2012)
suggested that when if country perceives that a rival country is economical progressing,
the first country may initiate conflict with its rival. Snyder (2013) added that scale of
conflict may increase to the level of full-scale war as conflicting parties will try to defend
their interest, capabilities, and existing and future positions. Even if it erupts at once, one
can identify the conflicting situation, which ignited the situation. These may be sufficient
for subsequent conflict behavior among the parties to the conflict. Moreover, Mitchell
(1989) asserted that at times countries have different expectations from an important
development project. The incongruence may be in the form of sacrificing material
benefits from the development project so countries may initiate full-scale war. Mitchell’s
work shows that such situation can be resolved if parties to the conflict can establish a
dialogue and share their concerns so that the issue can be resolved.
2.2 Dimensions of the economic development
Harrod (1960, p. 48) suggested that for developing a country, it is important to
understand the factors that serve as the basis for the economic development of the
country in terms of trade, economic ventures, investment, development of economic
institutions, and peace. This section will present a review of the literature on dimensions
of economic development.
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2.2.1 Trade
Nelson and Winter (1974) suggested that international trade is a fundamental factor of
economic growth and development of a country. Trade between two countries generates
economic activity which is beneficial for both countries. Exporting goods to other
countries provides an opportunity to the local producers to use their idle capacity and sell
excess production to those countries, which have demand and ability to purchase those
goods and services. Even the importing country gets benefit from trade, as its people will
obtain those goods and services from which they were previously deprived. Sial (2014)
suggested that even a country that does not buy or sell to another country but just
provides land for transporting goods between countries can still earn money in the form
of increased business activity as well as duties and taxes.
2.2.2 Investment
North (1994) regarded investment as an important driver of economic prosperity in the
country. He suggested that in an international scenario, investment comes in the form of
foreign direct investment (FDI) in the country. This money can be spent on the
development of infrastructure, institutions, technology, or people. The last few decades
bring lots of evidence where FDI transformed the economies. Two pertinent examples are
Malaysia and Singapore. Also Easterly and Levine (2001) suggested that such investment
in the resources of the country not only increases revenues of the economy but also
increases the production capacity of the economy as a whole. It paves the path towards
economic development and prosperity.
2.2.3 Economic prosperity
Mokyr (1992, p. 210) showed that improved factors’ productivity leads to economic
prosperity of a country. The creativity and innovation of the people and organizations in
the country become the basis of the development of unique products and services (Porter,
2001). These goods and services become the basis of the development of competitive
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advantage in the country. Such goods and services are sold to people in both local and
foreign markets and thus help the country to earn revenues and use these for fostering
economic development and prosperity.
2.2.4 Sound institutions
Nelson and Winter (1974, p. 71) suggested that the institutional base (banks, educational
institutions, judicial courts, parliament, army, stock markets, financial sector) of a
country provides a significant boost to its prosperity. It helps trade, investment,
technology, and economic activities to flourish and move to prosperity and development.
2.2.5 Equity joint ventures
Beamish and Banks (1987) highlighted the emergence of equity joint ventures (EJV) and
suggested that during the 1980s EJVs had sporadic growth. It is a form of a business
association in which two or more parties (at both firm and government level) start a
project by contributing resources to achieve common goals. Luo and Park (2004)
highlighted the case of multi-party EJVs in international projects and suggested that since
stakes of more than one party are involved, everyone tries to get the benefit of it. They
highlighted that there is a substantial positive impact on cooperation between partners on
performance as perceived by partners. Furthermore, Pan (1997) emphasized the case of
EJV of Japan and the USA in China and suggested that EJVs have become the most
common source of FDI in recent times. Owing to its importance, it has become an
important area of managerial attention. Harrigan (1988) highlighted that despite its
advantages, multi-government level EJVs have associated challenges. Park and Russo
(1996) asserted that EJVs might have to face the curse of competition from the non-
participating parties and there are times when the hurdles created by the non-participating
parties have more devastating impact as compared to the benefits arising from the
cooperation of the participating parties. They also asserted that this situation is devasting
as participating have more to lose and less to gain from such participation.
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3 THEORETICAL FRAMEWORK
This chapter presents the theoretical framework that I consider as relevant to the topic
being researched.
3.1 Development theories
Rapley (1997, p. 43) suggested that development theories deal with bringing change in
the society and economy and are developed from a variety of scientific disciplines
(including sociology, political science, economics, anthropology, etc.). These theories
focus on resolving problems of underdevelopment and structural transformation of
economies (Leftwich, 1996). Moreover, development theories involve analysis of social
changes and differences and implications of such disagreements over historical, cultural,
ecological, and economic aspects of societies (Kothari, 2004, p. 165). In the modern
sense, development implies intentional social change (Hettne, 1995, p. 49). A country
may start development projects to control its rivals (Pieterse, 2010, p. 216). For instance,
the development of dams by a country (upper riparian country) may deprive the
neighboring countries (lower riparian countries) of water which will hamper the
agriculture and industrial sectors of the lower riparian countries. Leys and Shaw (1996,
p. 52) presented a detailed account of the progression of development theories and
suggested that while most of the theories contributed one or more postulates, the primary
motive of these theories was the development of policies and methods through which
countries can improve their economic prosperity.
A major distinguishing feature of development theories is to include social and
political factors in theory formation. These theories focused on the rise of nations yet
little attention was given to the concept of development (Ekelund and Tollison, 1981, p.
27). The next notable contribution in development theory came in the form of ‘economic
nationalism’. It appeared in the 19th century and was related to development through
domestic production and industrialization (Stern & Wennerlind, 2013). USA and
Germany had been the major proponents and beneficiaries of economic nationalism. The
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focus of these theories remains on economic growth and structural transformation (Levi-
Faur, 1997). A significant contribution in this area came from the work of Rostow (1959,
p. 187) who put forth linear stages of economic growth. Rostow advanced the work of
Marx and modified Marx’s stages theory of development. Rostow emphasized that
utilizing both local and international resources may lead to economic development in the
country. Another significant contribution came from the work of Harrod (1960, p. 37)
who linked capital investment with economic growth. The theories of this time (1960s)
were criticised as they were more focused on capital accumulation. Moreover, these
theories did not focus on overcoming political, social, institutional, and international
factors, which may hinder the development of a country (Arndt, 1989). After 1960s, it
was the era of structural change theories. The focus after 1960s, remained on changing
the economic structures of developing countries. This involved reduction in reliance on
the agricultural sector and the development of infrastructure towards a more modern,
urbanized, and industrial manufacturing and service economy. Structural change theories
were criticised for being overly focused on the development of urban areas while
ignoring rural sectors of the economy (Snyder & Kick, 1979). Although these theories
have associated criticism, yet they are highly relevant for their application in the real
world situations.
3.2 Rostow’s stages of economic development
Rostow theory of economic development is the first major theory that will be used for
achieving research aim and answering research questions. Rostow (1959) presented the
theory of economic development of a country which is still valid in the present era. He
suggested that if a state spends money on training, education, and economic investment,
then it may get out of poverty and move towards prosperity. Such payment can be
arranged from local resources of the country or may also come in the foreign direct
investment in the country. There are five stages of economic development, commonly
referred to as the economic ladder of the country. The first stage is known as ‘traditional
societies’ in which subsistence dominates economies, people have limited wealth, and the
level of industrialization in such societies is also very low. The second stage of the
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Rostow model is known as ‘the preconditions for take-off’. In this stage, the country gets
investments in the form of financial aid, expertise, modern value system, and technology.
Hunter (2012) mentioned that these are used to advance science and technology which is
used to improve the agriculture sector of the country. Moreover, the country also
develops its infrastructure, which includes improving roads and cities. Likewise,
companies from developed countries also establish their factories in these countries.
Since these factors indicate, that country is on the verge of economic development, so
more and more foreign companies come into the country. The third stage of Rostow’s
model is ‘take off stage’ in which society starts reaping the benefits of economic
development. Moreover, a new urban class emerges in the country. This urbanized group
tends to take the risk and invest in the new venture, which brings more prosperity to the
economy (Hunter, 2012). Consequently, the country moves a step ahead and after
fulfilling local demands, it starts exporting the rest of the products and services to other
countries of the world. The economic activity trickles down on the population. This stage
is followed by ‘the drive to maturity’ in which the country experiences more economic
growth and investment in education. Likewise, the media of the country develops, and the
population growth rate is controlled. The quality of life of people in the country improves
a lot over the years. Finally, the last stage of the model is ‘the age of mass consumption’
in which the economy of the country grew to a full-blown level, and it matches the
economic activity of the developed country (Hunter, 2012).
Wucherpfennig and Deutsch (2009, p. 30) highlighted that Rostow’s work is inspired
from the work of Max Weber’s modernization theory. Both are considered as theories of
economic development and are criticized on several basis. For instance, the Rostow
model ignored country’s limits to growth. For instance, the development of projects such
as dams requires lots of money for the longer period of time and countries do not have
such funds. Then, these funds are provided by foreign donors or lenders. Bernstein (1971,
p. 185) highlighted that when such lending is made, there could be underlying motives.
For instance, one of the underlying motives of Western investment in the developing
countries is to have control of the developing countries.
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3.3 Conflicts over economic development
Different countries have different reasons for starting development projects. For instance,
Hettne (1995) suggested that development in the modern sense implies the intentional
social and economic change whereas Pieterse (2010) added that all development-related
activities are not related to development: there are other benefits such as taking control of
other countries. Highlighting the ways in economic development can be achieved, Hettne
(1995) highlighted that there are five major elements of nation-building projects that a
government may undertake. These include exclusive political and military control over a
particular territory, defence of this territory, independence of creating material welfare,
politically legitimization, and ability to organize culture.
Economic Development is not free from challenges. Stiglitz (1996) suggested that
change in the balance of economic and political power is a sufficient cause of conflict of
interest. When one party perceives that another party is engaged in development
activities, which may in the future, short-run and/or long run, shift the balance of the
power to the later party, then the first party initiates conflict. However, Stiglitz (1996)
further stated that the scale of conflict may increase to the level of full-scale war as
conflicting parties will try to defend their interest, capabilities, and existing and future
positions. Such conflict may or may not erupt at once. Mitchell (1989, p. 45) suggested
that there is a logical relationship between incongruent expectations from a development
project, and conflict and tension between the parties. It implies that when one party
perceives to be hurt by another party, it may consequently distract the relationship and
turn into a full-scale war. A good example of this is the case of trade war of USA and
China such USA feels that it is economically disadvantaged in its business relations with
China, so it is imposing different types of sanctions on Chinese products being exported
to USA and Chinese companies working in the USA (Liu & Woo, 2018). The problem
became so eminent that US Chief of the Army Staff called his Chinese counterpart to
assure him that US has no intentions to attack China.
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3.4 Structural theory of conflict
The structural theory of conflict is based on the conflict theory of Karl Marx, and it
attempts to explain that conflict between countries arise when two or more countries tend
to compete with each scarce resource (Dorpat, 1976). The main postulate of the structural
theory is the scarcity of resources which results in deprivation among the people which in
turns becomes the deprivation of the countries. To eradicate this deprivation. countries
initiate war so that they can bridge the gap between haves and have not. In the past, these
resources have been the precious metals such as gold and silver. However, in the
contemporary world, other resources such as land, capital, water, and other related
resources may also become the basis of conflict between the countries (Grabendorff,
1982). This theory outlines that the country that initiates war has certain conditions which
serves as the main influencing factors related to the war. These conditions include social
exclusion in the society, deprivation of masses which may be related to basic amenities of
life, class inequalities based on income, education, social class, etc., injustice among
different sectors of the society, political marginalization of people in the society, racial
profiling, and gender biasness along with different forms of economic exploitation, etc.
These factors indicate that people in the society are facing different challenges and there
must be some solution which may end such injustice. On a broad level, if the countries
experience economic development, then there are less chances of conflict between the
countries. Consequently, countries to develop them economically so that benefits of
economic prosperity may go to the people living in these countries. In this regard,
countries try to exploit local resources so that speed of economic development can be
expedited. In certain cases, if such resources are not available in the country, then
countries look outside the national boundaries and find such needed resources. For
instance, countries fight with each other for food, land, capital, gold, livestock, etc
(Coccia, 2019).
3.5 An economic theory of war
This theory asserts that economic reasons are among the main factors that lead to war
between two or more countries (Yared, 2010). If a state fears that its economic interests
21
are not safeguarded, then it would tend to protect these resources even if it must be at war
with another country. Generally, such motivation of war arises in the strong countries as
they may needed resources to initiate and sustain war and its related aspects (Hess &
Orphanides, 1995). Moreover, such war is generally initiated against a weaker state
which either has resources which are needed by the war-initiating country, or the weaker
country is threating economic resources of the strong country. Weaker countries are at
greater risk of exploitation as both war and deprivation of resources will break the
country (O'Neill, 1994). Relying on the work of Karl Marx, the economic theory of war
asserts that economic competition between the countries is the major source of conflict
between the countries. The countries try to create a situation in which they have both
short-term and long-term economic security. For this, countries may rage war with its
neighbors or with far-off countries of the world (Copeland, 2014).
3.6 Research gap
Since their inception in 1947, India and Pakistan seldom enjoyed good relations with
each other (Noor, 2007). India and Pakistan had four full-scale wars and share hostile
borders (Ashraf & Shah, 2021). The first war took place in 1948 which was just one after
the two countries got independence from the British and the latest full-scale war between
the two countries was fought in 2001 in the Kargil valley which is located in the Kashmir
territory which is under the control of India. In the last ten years, on several occasions,
both countries had been on the verge of starting a full-scale war with each other. India-
Pakistan conflict is related to the control of Indian-occupied Kashmir (Carter, Irani, &
Volkan, 2015; Ejaz, 2016; Lamb, 2002; Shoaib & Shafiq, 2015; Wirsing, 1998). In 2005,
India and Pakistan were about to settle the Kashmir conflict related to the control of the
territory, but India Government step back and it is still disputed. The two avenues where
Indian actions were quite evident were the water dispute between the two countries and
the development of the China-Pakistan Economic Corridor.
It was highlighted in the chapter 1.2, the majority of the literature on developing theories
arises from the work, which was carried out in the West (Barkema et al., 2011). It implies
22
that theories on economic development have been derived from Western culture because
Western areas of the world have experienced a speedy development as compared to
eastern areas (Barkema et al., 2015). Moreover, referring to the scale of CPEC, this
provides the researcher an opportunity to analyze the development as a source of conflict
in the context of equity joint ventures (EJV) projects. For instance, economic
development has been considered as vital with the presence of CPEC, while the Indus
water treaty may significantly impact the project in terms of hindering aspects to decrease
the performance of the CPEC (Abid & Ashfaq, 2015). Moreover, referring to Indus
Water Treaty, in the wake of the development of CPEC in the region, the issue became
alive again as it is expected that if the current situation would prevail, Pakistan would
soon face a water crisis which would become a bottleneck for not only Pakistan but also
partnering countries of CPEC (Altaf, Kugelman, & Hathaway, 2009; Awan & Khan,
2014; Masood, 2015). Referring to the issue of water, Pakistan is not alone; even India is
also facing similar problems (Biswas, 2016; Snyder, 2015; Vedwan, 2015).
The general belief in both countries, India and Pakistan, is that both countries are fighting
with each other on Kashmir issue. However, researcher, based on his observation and
experience as a citizen of Pakistan, believes that there are other factors that are causing
conflict between India and Pakistan. Therefore, there is a need for the evaluation of the
situation so that such factors, if there are any, could be investigated and the popular belief
can be refuted.
23
4 RESEARCH METHODOLOGY
This chapter presents the chosen research design and ethical considerations.
4.1 Research design
A research design is a robust mechanism that highlights the strategy followed by a study
to conduct research. Based on the Pakistan and India relationship, this thesis is
considering the case study method to evaluate the role of IWT and CEPC as a source of
initiating and sustaining inter-state conflict between India and Pakistan
The case study research method is one the major methods in Peace and Conflict
Studies. It permits the examination, investigation, and robust understanding of
multifaceted problems and disputes (Gulsecen & Kubat, 2006). In the academia more
generally, it is considered a vigorous investigation method mainly when the researcher
intends to conduct a study to an in-depth investigation of the issue under consideration
(Tsang, 2014). The exploration of the conflicts through case study can include the bi-
lateral and multi-lateral issues among the nations (Rose, 2017). The case study method
involves in-depth exploration of the reason for such issues, it discovers the historical
background of conflicts and focuses on the prevailing factors that can escalate or de-
escalate the conflict among the states (Gulsecen & Kubat, 2006).
One of the most important causes for the acknowledgment of the case study
method is that the researchers are getting more anxious and alarmed about the restrictions
of quantitative methods in providing holistic and in-depth explanations of the social and
behavioural problems in question. For instance, Tsang (2014) argued that using of case
study approach is a substantial way of overcoming the limitation of quantitative data.
However, case studies may include both qualitative and quantitative data to
explore the qualitative and quantitative aspects of an issue.. Through the case study, a
researcher can understand in detail the social and behavioral situations and the viewpoint
of the parties involved.
24
According to Gulsecen and Kubat (2006), the case study is such a research
method that empowers a researcher to thoroughly and meticulously inspect and observe
the data in an explicit empirical context. Case studies focus on exploring and
investigating the existing and present real-life occurrences and issues with the help of
comprehensive contextual investigation and examination of a restricted number of issues
or circumstances, and it also focuses on exploring the relationship between these issues
and circumstances. Yin (1984) explained the case study research method “as an empirical
inquiry that investigates a contemporary phenomenon within its real-life context; when
the boundaries between phenomenon and context are not evident; and in which multiple
sources of evidence are used”.
In some case studies, a detailed longitudinal investigation of a particular case or
incident is used. The longitudinal investigation offers an efficient and organized method
for the observation of the events, gathering the relevant data, analyzing the gathered
information, and finally reporting and commenting on the results. It can be said that a
case study is a distinctive way of perceiving any particular phenomenon (Yin, 1984). By
particular it means that merely a limited geographic area or a particular issue of concern
are observed and investigated in detail.
4.2 Designs of case study
Academics may embrace a single-case or multi-case design depending on the issue (Hyett
et al., 2014). The researcher may adopt the single-case design in cases where there are
very few occasions accessible for replication. For example, public research on the
impacts of the fall of Highland Towers in the 1990s in Kuala Lumpur or the impacts of
Tsunami in Acheh could be carried by using a single-case design, in which incidents are
restricted to a single occurrence. The disadvantage of a single-case study design,
however, is its incapacity to cover lots of participants, especially when the incidents are
unusual. One way to overcome this is to triangulate the research with other
methodologies to verify validity of the findings. A researcher may also develop a multi-
25
case structure which may include information related to events. Data for this can be
collected from various sources of data. The generalization of case studies results, either
through single or multiple designs, is based on theory. The case studies may be
descriptive in a literary form (Saunders et al., 2007).
4.3 Benefits of applying case study method
The use of case studies has a number of benefits. First of all, the critical evaluation of the
investigated cases can be made by comparing findings with the theoretical frameworks or
theories which consequntly aim to provide a robust understanding of the topic (Yin,
1984). For example, a case study may evaluate a phenomenon which may become the
basis of a particular way in which a nation behaves. With reference to the current
research, the investigator must examine the case in the environment or situation, like,
how India and Pakistan behave regarding their economic policies in the context of CPEC
and IWT, and what is the difference between the apparent behaviour of both India and
Pakistan? What is the response of the Indian government, when they see the economic
progress of Pakistan, and what is the response of the Pakistani government, while India
progresses economically? Moreover, the comprehensive qualitative reports frequently
generated in case studies may also help to examine the data in real-life settings, and also
help explain the peculiarities of real-life situations that might not be apprehended by
experimental research methods or survey research (Saunders et al., 2007). For example, a
case study research method of finding out the reasons for a particular behaviour or
response by a nation in a specific condition or situation can provide access not just to the
quantitative data about the techniques and the responses by any nation, but also to the
reasons for use of a particular approach used by nation (hostile or mitigating), and how
such strategies are interlinked to other strategies (Block, 1986; Hosenfeld, 1984). Though
Yin (1984) warns the researchers that they should not confuse the case study method with
the qualitative research in general, he notes that “case studies can be based entirely on
quantitative evidence.”
26
The case study method is used in this study because it implies a detailed scrutiny of the
phenomenon under observation, namely the reasons behind the hostility between India
and Pakistan, specifically, regarding the cases of the water issue (IWT) and CPEC. The
purpose of the study is to explain that the economic development leads to conflict
escalation by using China Pakistan Economic Corridor and Indus Water Treaty as these
two cases are to be analysed. The case study method allows me to investigate both of
these issues in detail and to answer the research questions posed above.
4.4 Data collection
This thesis is aiming to explore the economic conflict between Pakistan and India during
since 2000 which are related to IWT and CPEC based on the economic interests of the
two countries. For this purpose, data for the study have been gathered from the existing
literature and documents. While selecting data, the relevance, absence of biasness and
authoritative nature of the data were important considerations. For instance, there are
chances that official documents of both India and Pakistan may be biased as both
countries may tend to project their own viewpoint, so I avoided using official documents
of ministries of both India and Pakistan. Consequently, findings of this case study are
based on data collected from independent media. I acknowledge that media could also
indulge in biased reporting but there are fewer chances of it.
4.5 Ethical considerations
Ethical considerations are important to any study because sometimes research may
produce sensitive information that possible possibly harms stakeholders. Considering
this, the present thesis has substantially focused on ethical principles to ensure that the
data used in this case study information is valid, unbiased and authoritative and doesn’t
harm anyone associated with it. The topic of the study itself is sensitive as findings and
27
arguments made in this thesis may hurt people of India and Pakistan. Therefore, all of the
material used by the present study has been gathered from sources independent, unbiased
and authoritative published resources. No human or animal life was harmed for
conducting this research. Moreover, I produced this report myself without any support
from any other individual except for the regular supervision which is allowed by my
Malmo University.
4.6 Delimitations of the Study
The present thesis also contains limitations just like other studies. The present thesis
substantially focuses on the association of Pakistan and China based on economic
conflicts and considers that such economic conflicts rise to create conflict in the
association of countries toward CPEC and IWT. Therefore, it delimits the thesis to
consider variation in relationships based on economic conflicts. Furthermore, the present
study has utilized the secondary data and aiming to explore the association of the
countries based on the existing literature. It also becomes a delimitation of the study as
the association between countries can also be explored by using empirical data like the
economic history of the countries.
28
5 FINDINGS AND ANALYSIS
This chapter presents the findings and the related analysis, that is linked to the research
questions. The findings are interpreted against the background of the academic theoretical
framework, which were presented in chapter three.
5.1 IWT – stakes of India and Pakistan
The first research question of this study was to identify and critically evaluate the
economic and political stakes of India and Pakistan in IWT and CPEC. I am answering
this question by defining the stakes of both countries in an economic and political
context, as presented below.
India’s and Pakistan’s major development strategies are based on industrial development
and maintenance and improvement of the irrigation of their lands, the processes that
require water from the river Indus (Zawahri, 2009). Water is not only needed for
irrigation but it is also needed for the generation of cheap electricity in India and
Pakistan. Both countries have developed lots of water storage dams, which help them in
the generation of electricity (Sipahutar et al., 2013).
Both India and Pakistan are facing an electricity shortage and are struggling hard to make
both ends meet as electricity is needed for sustaining and growing their economies.
Further to this, around 65 % of Pakistan and the entire province of Punjab is dependent
on the Indus River. India’s violation of IWT would deprive Pakistan of its right on waters
which may hamper its irrigation and may also deprive millions of Pakistani people of
drinking water. If India will continue developing these dams, it will deprive Pakistan of
water and will cut its lifeline (Akhter, 2015). Biswas (1992) reported that the dispute of
water between India and Pakistan is not a new one. In the 1960s, World Bank brokered a
water-distribution treaty between India and Pakistan. IWT resulted in India gaining
control of three eastern rivers (Beas, Ravi, & Sutlej) and Pakistan had control of three
Western rivers (Indus, Chenab, and Jhelum) (Roy & Sinha, 2016). Even when the treaty
was signed by the countries in 1960, Pakistan had its reservations. Pakistan’s controlled
29
rivers’ water first flows into India so Pakistan (see figure 1) was concerned that in the
event of war, India would control water and may use it to cause droughts and famines in
Pakistan (Jamir, 2016).
Figure 1: Rivers coming from India to Pakistan
Source: Al Jazeera (2011)
At the same time, India was allowed to use Pakistan’s rivers water for transport, power
generation, and irrigation (20% of total water). Since that time Pakistan and India did not
have any water war yet had been lots of disagreements between the two countries on
violation of IWT (Ali, 2015). Moreover, World Bank (2017) highlighted that IWT
developed a mechanism for cooperation and information exchange between two
countries. For this, a commission was developed which has representation from both
countries.
The tensions during 2013, between India and Pakistan, were on the construction of
Kishenganga (330 megawatts) and Ratle (850 megawatts) hydroelectric power plants by
India (Dunya News, 2019). The two power plants are developed on river Jhelum (see
figure 2) and Chenab respectively. Although under the treaty, India was allowed to use up
to 20 % of the water of these rivers even for electricity generation yet India has to
conform to the technical requirements of the water generation plant. IWT provides such
guidelines. Although Pakistan has the World Bank to intervene in the situation India did
30
not stop the construction of these water plants and did not even change the design. Kokab
and Nawaz (2013) highlighted that in 2010, Pakistan appealed in The Hague’s Permanent
Court of Arbitration that design of Kishanganga is in violation of IWT as India will use
more than 20% water and will deprive Pakistan of water. This may lead to droughts in
Pakistan and may hamper its economic growth. India denied these allegations.
Figure 2: Kishenganga Dam dispute between India and Pakistan
Source: Sandrp (2013)
In December 2013, The International Court of Arbitration gave its decision, which
compelled India to maintain a 9 m3/s of water flow at all times so that Pakistan may not
deprive of water. During all these years (2010 to date), Pakistan continued asking India to
stop the development of Kishanganga. However, India never stopped. As a matter of fact,
at times, it is said that India blamed Pakistan for terrorist attacks in India and because of
these, suspended all types of talks with Pakistan on all issues include IWT (Al Jazeera,
2021). Today, India can reduce water flow to Pakistan causing lots of damage to its
economy. Pakistan has warned India that it will take appropriate unilateral actions as it
deemed necessary to recover its losses from Kishanganga (Siddiqui, 2021). It reiterated
that it closely monitored the situation even after India suspended talks in 2017 on the
implementation of IWT and has also a good understanding of the economic loss that it
has caused to India. As of August 2017, India once again has started building the
31
Krishanganga dam. The Dawn (2017) reported that the Indian Prime Minister said that
India may scrap IWT and demand a new water treaty. Pakistan’s advisor on foreign
affairs suggested that if that happens, then Pakistan has “all options” open to it and may
take any unilateral decision, which Pakistan may deem appropriate. The advisor
suggested that Indus water is not only important for the irrigation sector of Pakistan but
water is also needed for the generation of electricity which is the catalyst of the economic
development of the country (Mitchell, 1989).
5.1.1 CPEC – stakes of India and Pakistan
China Pakistan Economic Corridor (CEPC) is a collection of infrastructure projects
(roads, export processing zone, power generation plants, dams, etc.) to be developed
throughout Pakistan. Initially, it was estimated that the project will cost around US $ 46
billion but now it has surpassed US$ 62 billion (Ahuja, 2017). It is considered that CPEC
will bring economic prosperity to Pakistan, as it will revolutionize Pakistani
infrastructure and strengthen its economy through the construction of road networks,
energy projects, and special economic zones (Akber, 2015). It also involves the
movement of cargo items from China to Gwadar Port for onward maritime shipment to
Africa and West Asia. As part of the project, a large network of roads and railways are to
be built under the aegis of CPEC across the breadth of Pakistan. Markey and West (2016)
reported that the current road infrastructure of Pakistan is leading to a loss of 3.5% GDP
per annum. Courtesy of CPEC, northern areas of Pakistan, and other far off areas will be
linked with Gwadar and Karachi (see figure 3). China, a major contributor to the project,
will also be linked with Central Asian states. It also involves the development of a 1,100
km road between Karachi and Lahore. Moreover, it also involves the reconstruction and
overhauling of the Karakoram Highway between Rawalpindi and China which is yet to
be completed by 2025. In addition to this, CPEC also involved spending on railway
infrastructure including train travel at up to 160 km per hour be completed by 2025 (Roy,
2016).
32
Figure 4: CPEC routes in Pakistan
Source: Arranz and Hernandez (2018)
It will also involve the spending of US$ 11 billion on road infrastructure for the
improvement of road transport infrastructure between 2013- 2025. As part of this project,
US$ 33 billion will be spent on energy infrastructure (WSJ, 2020), and will help
Pakistani in overcoming an ongoing energy shortage of over 4,500 MW, which is also
resulting in an annual loss of 2.5% GDP to Pakistan. It is estimated that by 2018, 10,400
MW will be added to the national grid of the Pakistan (Khan, 2016). In addition to this,
US$ 2.5 billion will be spent on the development of natural gas and oil pipeline, which
will be used to transport liquefied natural gas to different parts of Pakistan. Natural gas
will be transported from Iran. Further to this, it is estimated that it will add up to 2.3
million jobs in Pakistan during the next 13 years. It is estimated that planned spending on
these projects is almost equal to total FDI in Pakistan since 1970 (Malik & Azam, 2012).
Ramachandran (2015) suggested that, since India is not enjoying friendly relations with
both Pakistan and China, so the benefits of CPEC to Pakistan and China will strengthen
both Pakistan and China that have non-congenial relations with India. As CPEC will
strengthen the economic position of Pakistan, it will also help Pakistan in strengthening
33
its position in international markets and compete with India in international markets.
Moreover, as of 2021, Pakistan is controlling Gwadar port; however, once CPEC will be
completed, China will be involved in managing the affairs of Gwadar port (see Figure 5)
This will create a situation where the Chinese will be only 300 km apart from the Indian
Navy. The presence of China and Pakistan together will challenge the supremacy of India
in the Arabian Sea which is not a desired situation for India.
Figure 5: Link between China and Gwadar seaport
Source: Business Standard (2017)
Apart from benefits coming to Pakistan, courtesy of CPEC, Chinese exports and imports
to and from Asian countries will be cheaper as the total distance will be reduced by
several thousand kilometers (up to 12,500 km) (Swain, 2016). It can be seen in figure 6,
given below.
34
Figure 6: Link between China and Other Countries
Source: Anser, Zhang and Kanwal (2018)
Joshi and Sharma (2017) suggested that after the start of the project, heads of different
Asian states including Russia showed their interest in joining this project. This gave an
even higher importance to Pakistan. Furthermore, China intends to get oil and gas from
Central Asian countries, which will help China in meeting its energy requirements for
improved economic growth. Once again, this will hurt Indian exports in international
markets. India’ is not happy for for Chinese involvement in nearby ports such as
Hambantota in Sri Lanka, Sittw in Myanmar, and Chittagong in Bangladesh (Abid and
Ashfaq, 2015). When China will share control of Gwadar, it will further weaken India’s
position. India is also concerned that because of Gwadar, China will expand its control
across the region. China’s border from Gwadar will be only 1500 km away. This is a
distance that Chinese army can travel in 24 hours. This implies that in the case of an
attack from India on Pakistan, Chinese help can arrive within 24 hours (I. Khan, Farooq,
& Gul, 2016).
The question of what are the economic and political stakes of India and Pakistan in IWT
and CPEC can then be answered as follows: The stakes were high for both India and
Pakistan, in the matter of the Indus Water Issue and China-Pakistan Economic Corridor.
In both cases, the economy of Pakistan was supposed to revive and accelerate, provided
the smooth functioning of both the Indus Water Treaty and the China-Pakistan Economic
35
Corridor. Both these projects provide the much-needed water and economic resources to
Pakistan, which are essential for the country’s economic prosperity. With regard to the
stakes of India, the material reveals that the economic prosperity of Pakistan is neither in
the geopolitical nor in the economic interest of India, and that is why the Indian
government gets involved in sabotaging such projects which ensures the economic
prosperity of Pakistan.
The findings of this section are consistent with the structural theory of conflict and
economic theory of war. As highlighted by Dorpat (1976), the war between two countries
may take place if both countries are competing for a scarce resource. In case of India and
Pakistan, such scarce resource is water which is needed for both agriculture sector and for
power-generation. Pakistan is an agriculture sector, and its economy has high reliance on
the agriculture produce of its own. It is used, not only for domestic consumption, but is
also sent abroad and Pakistan earns foreign exchange through such exports. In last 20
years, Pakistan is facing water shortage and it is unable to provide farmers water that they
may use for irrigation. This is detrimental for the agriculture sector as country may not be
able to achieve its food production targets. Consequently, country has to full its food
requirements through importing. Moreover, as highlighted by Grabendorff (1982), the
conflict between India and Pakistan is not on gold or silver, rather it is on water. The
scale of conflict has been so high that it is feared that if next war between India and
Pakistan would take place, it would be because of water conflict between the two
countries. Moreover, as highlighted above, the findings are also consistent with the
economic theory of war which suggest that if a state fears that its economic interests are
not safeguarded, then it would tend to protect these resources even if it must be at war
with another country. Referring to the case of IWT, both India and Pakistan feel that if
they agree with the stand-point of the conflicting party, they would lose in economic
terms so both country are not moving back from their stand-points even there is an actual
threat of a new full-scale war between the two countries.
36
5.2 Economic development as basis of conflict
To answer the question concerning the economic development of Pakistan as a source of
initiating and sustaining conflicts between Pakistan and India, this section will present the
main events and skirmishes followed by the announcement of CPEC in 2005 where
actual work started in 2013. The focus of this section will be on CPEC rather than on
IWT.
In order to come out of the vicious circle of poverty, Pakistan is trying to develop its
power sector, which is a bottleneck for the rest of the sectors of the industry as it needs
water. Pakistan is trying to develop its urban areas. Pakistani and Chinese governments’
investment in the energy sector is an indicator of such efforts (Haider & Haider, 2006).
Moreover, by the courtesy of CPEC, lots of economic zones will be opened in Pakistan
(Abid and Ashfaq, 2015). This will lead to the development of both urban and rural areas
of Pakistan. In line with international dependency theory, such development has both
local and international influences. On one side, Pakistan and China have made equity
joint ventures (EJV) in the form of CPEC and have started investment in Pakistani
infrastructure.
At the same time, India has started creating obstacles for CPEC. India has started
working with Iran for the development of Charbahr port (Iranian port) and it has asked
other central Asian and nearby countries to refrain from joining CPEC. India has made
strong ties with Afghanistan Government. In terms of area, Baluchistan is the largest
province of Pakistan and Gwadar port is situated in the Baluchistan. Indian Prime
Minister mentioned that although CPEC project is being be carried out in Pakistan, but it
is giving China a path to Indian waters which is not acceptable to India as it is
apprehended that after completion of CPEC, China will develop its naval bases in the
Indian sea which will be a threat to Indian sovereignty in the region (The Economic
Times, 2015) so India will continue rejecting CPEC execution in Pakistan. India has
started using its ties with the Afghanistan government and has worked through in gaining
support from certain political parties of Pakistan, which opposed CPEC (Dar, 2018).
These parties claim that once CPEC will be completed, Pakistan will become a colony of
37
China just like it had been a British colony. Moreover, it is claimed that India is spending
money on terrorist financing in Baluchistan so that the law and order situation of
Baluchistan may reach a level that foreign tourists and visitors refrain from coming to
Pakistan (Shahid, 2020). India is using its influence in Afghanistan and terrorists are
entering Baluchistan from Afghanistan (see appendix).
Figure 7: Baluchistan Map
Source: China Focus. (2020)
Both Pakistani and Chinese intelligence agencies are actively working on it and China
has given Pakistan lots of intelligence leads which indicated that the Indian intelligence
agency is planning terror attacks for sabotaging the Silk route and stumbling law and
order and security position in Pakistan (Khetran, 2017).
Luckham (1978) suggested that developing countries face different types of problems
prominent among these are institutional, political, and economic challenges. As part of its
conflict with Pakistan, India has been interfering in Pakistan. For instance, India has
made a considerable investment in the political parties and media of Pakistan, which
resisted the water conservation plan of Pakistan (Jacob, 2018). Moreover, BBC News,
38
(2019) highlighted that even though India is violating the requirements of IWT, India is
funding political parties especially in northern areas of Pakistan and the province of
Sindh (see Figure 7 above). In addition to this, India is also funding Pakistani media who
has launched a campaign against the development of the Kalabagh Dam in Pakistan
(Javaid and Iqbal, 2019). These political parties and media groups served as Indian
pulpits and instead of defending Pakistani stakes have started defending Indian stakes.
Media campaigns and political parties provoke local people by claiming that, if Kalabgh
Dam will be developed, then the Pakistani city of Nowshera will be drowned. People will
have to leave their homes and would have to be settled elsewhere, as was the case on the
northern side of Pakistan. On the Western side of Pakistan, India used another political
party and provoked the people of Sindh by claiming that if Kalabagh Dam would be
established, the people of Sindh would not have access to water, however, analysts reveal
that the real situation is quite the opposite (Khalid & Begum, 2020).
As already noted in chapter one, World Bank supported India at the time of making IWT
by allowing India to use 20% of the water of Pakistan’s rivers. According to Liebowitz
and Margolis (1995), India is not allowing Pakistan to develop and is creating conflicts
with Pakistan in different forms. To name a few, India has a history of political, military,
and economic conflicts with Pakistan. India has involved both local politicians,
businessmen, media groups and created resistance for CPEC as well as on water issues.
India and Pakistan has conflicts over IWT and CPEC and both countries are maintaining
their positions and are not willing to move back and end the conflict. For both IWT and
CPEC, India is the one who is initiating conflicts. India has deputed experts who are
giving false claims and sharing those with both people of Pakistan and the international
audience. The purpose is to sabotage the development of CPEC and create problems for
Pakistan on IWT related issues. These experts are not sharing the benefits of the
economic development of Pakistan and are sharing a distorted negative picture of the
situation to convince rest of the world that India is innocent and India’s would lose if
these projects would be completed as per the desires of the Pakistan. Furthermore, as
highlighted by Jones and Jackson (2016), Pakistan is currently in the ‘take-off’ as
suggested by Rostow as country has overcome the conditions of the previous stage of
economic development. Pakistani Government is spending on the development of roads
39
in the rich areas of Pakistan rather than spending money on the development of roads and
highways in poor parts, so that economic activity in the country can flourish. If IWT
settles in favour of Pakistan and the Kalabagh dam is constructed then Pakistan can get
one electricity unit for US$ 0.23 as opposed to the US$ 1.78, which is per unit energy
cost from many new power plants of Pakistan. This has increased energy costs in
Pakistan and thus enormously increased the overall cost of production. Consequently,
Pakistani products became expensive and therefore, less competitive in international
markets.
Furthermore, the less developed countries, such as Pakistan, have different forms of
imperfections. Consistent with Rostow's (1959) stages of economic development,
Pakistan is on the ‘take-off’ stage and needs economic resources. It is doing everything to
get such resources from abroad yet India is creating problems for Pakistan. It is asserted
that since India assumes that the development of Pakistan will be at its economic and
political cost, it is resisting such economic development in Pakistan (Khalid & Begum,
2020). Consistent with the work of Nelson and Winter (1974), by providing passage to
China, Pakistan will get lots of benefits from CPEC both directly as well as indirectly.
Consistent with the conflict theory of development of Karl Marx as highlighted by Wade
(2012), India perceives that the economic development of Pakistan and China will result
in a power shift, and India would lose its worth in the region and would suffer so India is
creating all possible sort of resistance for the project. The main rationale is that India
understands that water is a scarce resource and is vital for economic development of both
India and water. On one side, water is needed for the agriculture sectors of both countries,
on other hand, water is used for power generation such as electricity which is needed by
households and industries of both countries.
The question of the economic development of Pakistan a source of initiating and
sustaining conflicts between Pakistan and India can then be answered as follows:
CPEC is a major conflict between India and Pakistan. Have IWT being dealt fairly by
India and no disturbance from India may arise for CPEC, the economy of Pakistan will
revive and accelerate. Both these projects provide the much-needed water and economic
resources to Pakistan, which are essential for the economic prosperity of Pakistan. At
40
several times India tried to sabotage the smooth working of CPEC. Even the recent
camping during the 2019 Indian election, by sitting Prime Minister of India, Narendra
Modi, provides ample proof to substantiate the claim that the economic prosperity of
Pakistan, in general, and the CPEC project and Indus Water, in particular, are the major
factors for escalation the tension between both states (Bali, 2019). The material analysed
in the case study reveals that the economic prosperity of Pakistan is not in the
geopolitical interest of India, and that is why the Indian government gets involved in
sabotaging such the projects which are meant to ensure the economic prosperity of
Pakistan. CPEC emerges as particularly challenging in this regard.
The findings of this section are consistent with the structural theory of conflict and
economic theory of war. For instance, Pakistan feels that CPEC is highly important for its
economic development. The country is facing lots of economic challenges such as
inflation, high unemployment, poverty, etc. Pakistan needs foreign direct investment
which may come in the form of investment in different forms of CPEC project.
Moreover, CPEC is also important for China as it is part of One Belt One Road. So, both
Pakistan and China are not backing up from this project and want to make sure that no
disturbances may take place in the implementation of the CPEC project. On the other
hand, India is feeling that if CPEC will be completed in its fullest form, it would increase
the economic competitiveness of Pakistan and Pakistan will compete with India in
international markets as both Pakistan and India compete in several export markets such
as Europe, USA, and Gulf region. Moreover, findings of this research are also consistent
with the economic theory of war. As highlighted by Grabendorff (1982), if countries are
marginalized then there are more chances of war between the countries. Referring to the
case of India and Pakistan, both countries are marginalized and people in both countries
are facing different economic challenges such as unemployment, inflation, etc. so, for
both countries there is sufficient economic motivation for entering in a war with other
country so that it may defend its economic objectives. Moreover, findings of this research
are also consistent with the economic theory of war which asserts economic reasons are
among the main factors that lead to war between two or more countries (Yared, 2010). As
mentioned earlier, India and Pakistan their economic interests will not be safeguarded
with reference to the CPEC project so, if needed, they would not hesitate from a full-
41
scale war with each other. If such war takes place, India will have a strong position as it
has more resources and bigger size as compared to Pakistan. Moreover, Pakistan would
be on defensive side as CPEC is a project which will benefit Pakistan so a war means that
Pakistan will be deprived of benefits of CPEC, rather than India directly losing any
benefit that were coming to Pakistan.
42
6 CONCLUSIONS
This chapter briefly presents the conclusion of the study, and future research areas.
The findings of the research revealed that contrary to the popular belief that India and
Pakistan are fighting over Kashmir’s territory, much of the problems have been and
currently are related to economic issues. IWT and CPEC are helping Pakistan in coming
out of the vicious circle of poverty and set on the path of economic development.
However, Pakistan’s economic develops would not be beneficial for India as India might
lose its market share. Consequently, India is creating problems for Pakistan to hinder
Pakistan in developing its energy sector. A strong and efficient energy sector will help
Pakistan in reducing the cost of production and making its products competitive in
international markets. India is creating hurdles for Pakistan by violating the IWT.
Likewise, because of CPEC, lots of foreign investment will come to Pakistan which will
result in the development of the energy sector, road infrastructure, oil and gas pipeline,
railway lines and infrastructure, economic zones and would create millions of jobs. CPEC
is also beneficial for China. India is the archrival of Pakistan and India so it is trying to
create problems for both countries by doing all that it can to sabotage CPEC. In line with
structural theory, which asserts that a war between two countries may be initiated if the
two countries compete on scare resources. As analyzed for the first research question,
both India and Pakistan are competing with other for water, so Pakistan cannot afford
India’s violations of IWT. Moreover, in line with economic theory of war, IWT related
conflict has economic implications for both India and Pakistan as water is used for
several purposes such as agriculture and power generation in Pakistan. Moreover, with
reference to second research question, it was evident that conflict related to the CPEC is
also consistent with structural theory and economic theory of war. The foreign direct
investment which will come to Pakistan is vital for its economic development. Given the
poverty, inflation and unemployment condition of Pakistan, CPEC related investment is
highly needed so that Pakistan may obtain scarce and needed resources and develop itself
economically. India does not want this as a prosperous Pakistan would lead to a higher
competition in the export markets in which India is selling its export items.
43
Owing to the importance of India, Pakistan, and China and the ongoing conflict between
India and Pakistan over (IWT and CPEC, the related issues concerning economic
development of Pakistan are ongoing. This thesis presented an analysis to evaluate
whether the dispute between Pakistan and India is linked with the development of the
rival country.
In particular, this research aimed to evaluate the role of IWT and CEPC as a source of
initiating and sustaining inter-state conflict between India and Pakistan. In order to reach
this aim, it (1) identified and critically evaluated the economic and political stakes of
India and Pakistan in IWT and CPEC, and (2) identified economic development as a
source of initiating and sustaining inter-state conflict between the two countries. The
answers to the research questions provided in Chapter 5 allow for the conclusion that
economic development of Pakistan in general, and CPEC in particular, are the source of
initiating and sustaining conflict.
6.1 Future research suggestions
Based on the findings and limitations of the study, the following suggestions can be made
for the forthcoming researchers of this field.
The present study has used secondary data based on the economic development and
relations between Pakistan and India based on the IWT and CPEC. The future research
projects may collect primary data to better understand the stakes, the obstacles and the
role in conflicts, of the economic development of Pakistan based on other infrastructural
project and treaties.
This thesis has utilized Rostow’s stages of economic development, structural theory of
conflict and economic theory of war, focusing only on the economic development of
Pakistan. Hence, the future research may use this theory to explore the economic
development of Pakistan with the focus on Pakistan’s relationships with China.
Furthermore, the research interest could be broadened to include more sectors, such as
the banking sector, textile, energy, etc., and check whether similar findings emerge or
not. It is also suggested that similar case studies should be selected in other parts of the
world and be tested so that one may affirm that countries are not war with each other
44
because of religious, cultural, or social factors, rather it is the economic issues which is
motivating countries to rage a full-scale with another country.
45
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