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.

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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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