Economic ties & regional security

By Michael Krepon

CAN ECONOMIC transactions and cross-border infrastructure projects facilitate regional security? Yes and no. Take the case of Chile and Argentina, which nearly fought a war in 1978. Subsequently, these countries have successfully resolved over 20 territorial disputes. Now, Chilean Government pension funds are invested in Argentine power grids that were once, presumably, on the Chilean Air Forces list of targets in the event of war. In this case, economic interactions have clearly facilitated regional security.

In other instances, economic cooperation has not prevented war. In the late 19th century, Japan and China had developed extensive economic and cultural interactions. No less than one-fifth of Japan's trade was with the mainland. Nonetheless, Japan's soldiers carried out a military campaign against China in 1894. In this instance, war aims trumped economics.

The complex linkage between economics and regional security is especially relevant for Asia. In South Asia, India and Pakistan remain at loggerheads over Kashmir and the nuclear issue. Direct trade between these two countries is minimal. Might not greater economic cooperation facilitate movement on currently intractable problems? Plans are on to establish a natural gas pipeline originating in Iran, transiting across Pakistan, and terminating in India. At present, Washington and New Delhi are disinclined to support this project. Do pipelines have a role in curtailing enmity in South Asia?

Tensions across the Taiwan Strait have grown with the political drift of Taiwan away from the mainland, even though trade and investment flows are quite substantial. Are the considerable economic interactions now in place between Taipei and Beijing sufficient to prevent a damaging clash? Would increased trade and investment help in this regard?

Japan and China are rising powers in the Asia-Pacific region, with substantial economic and minimal defence interactions. In this case, economic confidence building has not yet paid dividends for regional security. Is this imbalance healthy, and can it be changed?

A recent Stimson Center study suggests the following preliminary answers to these important questions:

First, cross-border economic transactions may have many immediate and tangible benefits, but they do not necessarily translate into greater regional security. For positive spillover effects to be realised, states must clearly reassure their neighbours that regional ambitions will not be realised by coercive means. Put another way, a positive spillover from economic interactions to regional security is possible when national leaders either accept existing territorial boundaries - or at least agree not to change them by violent means.

In the success story of Argentina and Chile, the spillover effect of economic interactions on to the security domain is quite clear and convincing. But in this case, the non-violent resolution of all outstanding territorial disputes resulted primarily from high-level political commitments to do so, rather than from increased economic activity. Once national leaders set aside revisionist territorial ambitions, economic interactions clearly accelerated regional cooperation.

Second, substantial cross-border economic interactions are no safeguard against military campaigns to secure territorial claims or economic advantages. This was true in the historical China- Japan case noted above, and many presume it to be true today in the case of China's relations with Taiwan. In contrast, contested territorial claims between China and Japan are presently limited to the seabed and rock outcroppings in the East China Sea. Consequently, while the difficulties of seeking to translate Sino-Japanese economic cooperation into regional security cannot be underestimated, this goal appears within reach of creative and purposeful diplomacy. Economic interaction between Tokyo and Beijing has effectively promoted stable political relations, serving as a buffer through troubled periods, and paving the way for new diplomatic initiatives.

These conclusions suggest that, while economic cooperation between India and Pakistan would not prevent further clashes over Kashmir, they could nonetheless be helpful. In this deeply troubled case, there is only one example of successful cooperation - the Indus Waters Treaty - which is predicated on separate utilisation of river waters and joint commitments not to take actions disturbing their flows. Direct trade is minimal, and tensions remain high, reflecting Pakistan's rejection of the status quo in Kashmir.

During the past decade, it has not been possible to build on the Indus Waters Treaty, since economic projects requiring cooperation have been held hostage to the Kashmir dispute. In a significant potential departure, the Government of Pakistan has now expressed its support for the gas pipeline project. This project would provide India with energy essential for national growth, but it would also provide Pakistan's military with substantial revenues. Given Pakistan's revisionist ambitions, does the pipeline project make sense?

The Stimson Center's assessment, written by E. Sridharan of the University of Pennsylvania's Institute for the Advanced Study of India, concludes that the pipeline project deserves support. In addition to fuelling Indias economic growth, it would also help the long-suffering Pakistani national economy, while altering long-standing policy in Islamabad regarding cross-border economic cooperation.

Cooperation on a gas pipeline will not put an end to the Kashmir dispute or stop Pakistan's support for militancy in Kashmir. But it will help narrow the conflict by removing a major issue area - energy cooperation - from the arena of conflict, just as the Indus Waters Treaty greatly limited the scope of conflict regarding river waters.

Moreover, the Army leadership in Pakistan has pledged that the pipeline would not be disrupted. Indeed, if the pipeline were attacked, this would not only rob Pakistan of desperately needed revenue, it would also greatly damage its future prospects for foreign investment. And if Pakistan's Army can successfully protect the pipeline from militancy, how could it persuasively argue an inability to stop militancy elsewhere in the country?

The construction of a pipeline would require a change in longstanding U.S. policy to block projects that would provide economic benefit to Iran - resources that could facilitate Teheran's nuclear ambitions. A reconsideration of U.S. policy in this instance seems warranted, since the pipeline project could not only be useful in South Asia, but also in helping to ameliorate future tensions that could arise between Iran and Pakistan.

In addition, the pipeline project runs at cross-purposes with Indian policy, which seeks to isolate and contain Pakistan. During the Cold War, the U.S. sought to contain - but not isolate - the Soviet Union. Instead, Washington pursued a mixture of containment plus engagement to reduce nuclear dangers, to help transform the Soviet Union, and to keep the Cold War from becoming hot. If New Delhi persists in pursuing a containment plus isolation strategy against Pakistan, far more that the pipeline project would be placed at risk.

(The writer is president emeritus of the Henry L. Stimson Center.)

Send this article to Friends by E-Mail

Section  : Opinion
Previous : Wooing a military junta
Next     : Devolution in the U.K. - II