Manmohan-Gilani Summit
‘Taking the politics out of economics’

While Prime Minister Manmohan Singh is having a series of bilateral meetings with his counterparts at the 17th SAARC summit including Sri Lanka, Afghanistan, Bangladesh, Nepal and Maldives, it is his summit meeting with Pakistan Prime Minister Syed Yousaf Raza Gilani early Thursday morning which is being awaited the most.

Most expect some clarity to emerge on Pakistan’s decision to grant India the Most Favoured Nation status for trade. Since its recent announcement, Pakistan has waffled over the actual status, claiming that what Gilani’s cabinet had given was an “in principle’ clearance while the modalities are still to be worked out. Foreign Minister SM Krishna’s meeting with Hina Rabbani Khar, his Pakistani counterpart, on the sidelines of the SAARC foreign minister’s meeting, indicated that the mood remained positive. Khar talked of the “trust deficit shrinking.” But clarity on the MFN status is likely to emerge only after the Manmohan Singh-Gilani summit meeting at the Shangrila resort where they are both staying.

While formal trade between India and Pakistan averages $ 2.5 billion annually, it is the informal route through the trading centres of Singapore and Dubai that is bigger and is estimated to be around $ 3.5 billion. If Pakistan grants India MFN status (India had already granted Pakistan such a status in 1995) then formal trade may shoot up to $ 6 billion. Pakistan’s Planning Commission estimates that trade will to grow to $ 10 billion soon once MFN status is given to India. Freeing up many trading items could see the two countries making value additions to each other products.

As an official jokingly said, “Pakistan, for instance, would be able to supply us molasses and we could make plenty of rum from it to export to other countries.” If liquor could make trade between the two countries grow quicker then why not to do so? As one official said, “We are now moving towards taking the politics out of economics.”