After her recent visit to India and Pakistan, World Bank Chief Executive Officer Kristalina Georgieva reiterated that the Bank was keen on resolving the disagreements between the two nations over the interpretation of the Indus Waters Treaty (IWT) following the construction by India of two hydroelectric power plants. Though the two nations have had no fresh conflict over the sharing of river waters for more than five decades, differences cropped up after Pakistan opposed the construction of the Kishenganga (330 MW) and Ratle (850 MW) power plants by India on the Jhelum and Chenab in Jammu and Kashmir, over which Pakistan has unrestricted rights under the treaty.
Why did the Bank intervene?
Even before Partition, the Indus had created problems among the states of British India. The problems became international after the creation of two nations as the political boundary was drawn right across the Indus basin. The World Bank (then IBRD), under the presidency of Eugene Black, helped in 1952 to settle the dispute between the two nations on the sharing of the Indus river basin waters. He had said the escalation of the dispute would damage the economic development of the Indian subcontinent. After eight years of hard negotiations, Prime Minister Jawaharlal Nehru and President Ayub Khan signed the IWT on September 19, 1960. The Bank is also a signatory to the treaty. The IWT is a complex instrument, comprising 12 articles and eight annexures. It sets forth provisions of cooperation between the two countries in their use of the rivers, known as the Permanent Indus Commission (PIC).
Has there been any violation?
According to the IWT, India has control over three eastern rivers of the Indus basin — the Beas, the Ravi and the Sutlej — and Pakistan has control over the three western rivers — the Indus, the Chenab and the Jhelum. All six rivers flow from India to Pakistan. Among other uses, India is permitted to construct power facilities on these rivers subject to regulations laid down in the treaty. India had asked the bank for appointment of a neutral expert following Pakistan’s objections to two projects, while Pakistan demanded the formation of a court of arbitration, alleging that India had violated the treaty. In December 2016, the Bank announced a ‘pause’ and asked both parties to resolve the issue amicably by the end of January 2017.
What stand did the Bank take?
India welcomed the Bank’s neutral stand, while Pakistan sought intervention of the Bank after being unable to find an amicable solution to the dispute through the commission. Given that India has remained the Bank’s single largest borrower since its inception with cumulative borrowings from IBRD and IDA touching $103 billion, the bank did not perhaps want to upset it.
With buoyancy in foreign exchange reserves, the Bank needs India more than the other way round and this has created some anxiety in the Bank circles about the future direction of their relationship.
Why is the Bank playing a role again?
This is because India and Pakistan are important partners and clients of the Bank. In South Asia, Pakistan ($2,280 million) received the highest lending from the Bank after India ($3,845 million) during the fiscal 2016. Moreover, there are not too many borrowers with a credible record like India.
The Bank maintained its aid could be effectively used if both nations kept the peace and ensured better management of the waters, on which lakhs of farmers depend. As both nations have failed to resolve the dispute amicably, the Bank CEO has initiated a dialogue. Changing its stance, India has agreed to attend a meeting of the commission in Lahore next week. Like in the 1950s, Bank officials are again playing the role of mediator.
