South Asia's Nuclear Security Dilemma

India, Pakistan, and China

Lowell Dittmer

• Publisher: Routledge
• Year: 2015
• Print ISBN:
  9780765614186
• eBook ISBN:
  9781317459552
• Topic: Politics & International Relations
• Subtopic: National Security
• Index: Politics & International Relations

The nuclear test explosions in India and Pakistan in 1998, followed by the outbreak of hostilities over Kashmir in 1999, marked a frightening new turn in the ancient, bitter enmity between the two nations. Although the tension was eclipsed by the events of 9/11 and the subsequent American attacks on Afghanistan and Iraq, it has not disappeared, as evidenced by the 2001 attack in the Indian Parliament by Islamic fundamentalists out of Kashmir. By 2002, these two nuclear-armed neighbors seemed to be once again on the brink of war. This book outlines the strategic structure of the rivalry and the dynamic forces driving it, and investigates various possible solutions. The expert contributors focus on the India-Pakistan rivalry, but also consider the China factor in South Asia's nuclear security dilemma. Although essentially political-strategic in its approach, the book includes coverage of opposing military arsenals and the impact of local terrorism on the delicate balance of power.

Part I The Political Economy of Minimal Deterrence

1 The Political Economy of the India-Pakistan Nuclear Standoff

Lawrence Sáez

DOI: 10.4324/9781315700670-2

This chapter addresses several unexplored questions regarding economic security issues related to the 1998 nuclear tests of India and Pakistan as well as the implications of their continued nuclear standoff. India and Pakistan’s strategic choice to test nuclear weapons in 1998 can be inexorably traced to a series of critical historical developments in the internal political and economic systems of both countries. Some of these developments were exacerbated by various international political developments in the region, notably the implosion of the Soviet Union in 1991 and the decline in the salience, for the time being, of Afghanistan in world affairs. In 1991, the Indian subcontinent faced critical historical conjunctures, none of which augured well for the easing of tensions between India and Pakistan. For instance, India started to be governed by a string of weak minority governing coalitions. This period, marked by the threat of a debilitating balance of payments crisis in India and the uncertainty about the Gulf War, collided with equally indeterminate developments in Pakistan. During this important period of transition, Pakistan experienced several debilitating power struggles between President Ghulam Ishaq Khan and Pakistan’s democratically elected prime ministers, Benazir Bhutto and Nawaz Sharif. This period of internal political vulnerability in India and Pakistan impelled these two countries to project international strength, thus paving the way for India’s eventual decision to test nuclear weapons and for Pakistan’s subsequent decision to follow suit.

Recent developments in Indo-Pakistani relations stem from critical differences in their approaches to foreign policy. While Indian foreign policy has been driven by its aim to be perceived a major power, Pakistan’s foreign policy has been India-centric. For instance, during the Cold War, India sought to be a leader in the nonaligned movement while simultaneously anchoring its national security apparatus to the Soviet Union. In contrast, Pakistan’s foreign policy posture during the 1950s and beyond was closely aligned to various American-sponsored international alliances in an effort to demonstrate its dissimilarity from Indian nonalignment. Moreover, the asymmetrical significance of military institutions in India and Pakistan serves as a powerful institutional factor in their respective economies. We examine whether there is a correlation in India’s and Pakistan’s military expenditures. As such, this chapter examines in detail the impact of military expenditures on India’s and Pakistan’s economic growth as well as on fiscal policy in both countries.

The critical feature of Indo-Pakistani relations has been the continuing dispute over Kashmir. This dispute has often been portrayed as a bilateral issue between India and Pakistan. Here we explore its international dimensions. American involvement in Afghanistan during the Soviet intervention had the unexpected consequence of furthering the aims of Islamic fundamentalist groups in the region and the eventual spillover of conflict into Kashmir. Accordingly, this unexpected internationalization of the Kashmir conflict has proven to be an intractable proposition for India. For this reason we lament the missed historical opportunity for the normalization of the Kashmir issue when a series of crucial meetings between Indian and Pakistani leaders took place in the late 1980s. The impetus for a diplomatic resolution to the Kashmir conflict came to a standstill in the early 1990s, when both India and Pakistan were governed by governments that had a tenuous grasp on power. It is in this context, though, that the Bharatiya Janata Party’s brand of aggressive nationalism came to the fore, culminating in the party’s decision to test nuclear weapons weeks after it was first able to form a government in New Delhi.

The final section of this chapter delineates some of the budgetary constraints and evaluates the likely economic impact that a nuclear arms race would have on India and Pakistan. Using some quantitative indicators, we analyze the asymmetrical impact that 1998 U.S.-led economic sanctions had on India and Pakistan. Economic sanctions, as a tool of deterrent policy, had limited impact in South Asia. However, the economic sanctions disproportionately affected Pakistan’s ability to service its external debt. As such, we offer an assessment of the likely impact of a nuclear arms race on the region. We anticipate that the uneven macroeconomic burden could serve as a perverse economic incentive that could derail a cooling off of nuclear tensions between India and Pakistan. In light of these challenges, we ultimately offer a pessimistic perspective on the likelihood that would move both countries to normalize their economic and trade relations and have positive spillover effects on security.

Historical Trends

The future of the nuclear standoff between India and Pakistan stems from long-standing differences in their approach to foreign policy. Several authors have argued that India’s foreign policy under Nehru was guided by the desire to be a great power. During the Cold War, India sought to achieve this status by being a leader in the nonaligned movement. In strategic terms, it also later chose to seek enhanced military stature by purchasing military hardware from the Soviet Union. India’s search for regional power stature was not exclusively driven by ifs concern for Pakistan; instead, it viewed China as its chief regional competitor. The threat that China posed to India’s aspirations as a regional power were tested when China exploded a nuclear device in 1964, merely two years after China had defeated India in the 1962 Sino-Indian border war.

For its part, Pakistani leaders began to grow alarmed by the prospect of India developing a nuclear weapons capability. A sense of urgency was perceptible after Pakistan’s loss of East Pakistan during the 1971 Indo-Pakistan war. It was apparent that Pakistan could not match India on conventional terms. Given Pakistan’s weak economic and industrial endowment, Zulfikar Ali Bhutto, Pakistan’s first elected civilian prime minister, was doubtful that Pakistan would be able to defend against “an aggressor many times larger, stronger, and better equipped.”¹ Bhutto prophesized that “the economic strain created by the expansion of a standing force could be great, and it would be unwise to think in terms of competing with India in size of forces and quantity of equipment.”² For that reason, Bhutto began to alter Pakistani military policy in favor of acquiring nuclear weapons.

In his book The Myth of Independence Bhutto expressed these anxieties when he wrote that “If Pakistan restrains or suspends her nuclear programme, it would not only enable India to blackmail Pakistan with her nuclear advantage, but it would impose a crippling limitation on the development of Pakistan’s science and technology.”³ During Bhutto’s rule, Pakistan’s first civilian government, he maneuvered closer to China. While promoting Pakistan’s nuclear dual-use research program (exemplified by the uranium enrichment program developed at the Khan Research Laboratories in Kahuta in the mid-1970s), he adopted a policy of ambiguity with respect to international agreements on nuclear disarmament.

The differences in the foreign policy orientation of India and Pakistan had inevitable repercussions on how these countries decided to address their respective national security concerns. Because the motivations for the buildup of their military forces were distinctive, it is unlikely that a set of common trends can be identified in both India and Pakistan. Nevertheless, using the Hsia procedure, Robert Looney shows that during the 1958–78 period, there were strong connections between increases in Indian defense expenditures and a corresponding increase in Pakistan. Looney demonstrates that the response appeared to have a two-year lag.⁴ Ido Oren has suggested that both India and Pakistan have responded favorably to each other’s belligerent increases in military spending.⁵ A similar conclusion is reached in Rizwar Tahir and G.M. Sajjid’s econometric study of the direction of causation between military expenditures in India and Pakistan from 1960 to 1995. Using co-integrations tests (Dickey-Fuller) and error-correction modeling, they find a bidirectional causal relationship between military expenditures changes in both countries.⁶ Ahmad Faruqui also shows that Pakistani military expenditures are highly correlated (r² = 0.85) to changes in military expenditures in India.⁷ These econometric studies suggest that there is strong evidence of a two-state arms rivalry.

Various econometric studies of the linkage between defense expenditures in India and Pakistan have reached inconclusive judgments about links between levels of defense spending and economic growth. Some of these studies, though, have shown some interesting variations within the defense expenditure patterns of each country. For instance, Looney has pinpointed a changing pattern of defense expenditures over time. He shows that from 1958 to 1973, defense expenditures had a negative impact on economic growth in Pakistan. The reverse appeared to be the case for India during the same time period.⁸ As Michael Ward et al. demonstrate, not faced with Pakistan’s crippling debt service obligations, short-term military and nonmilitary government expenditures in India led to long-term positive effects on its economy.⁹

Defense expenditures in Pakistan have been closely linked to its external debt situation. Using Granger’s test of causality, Looney shows that an increase in defense expenditures from 1957 to 1987 preceded foreign economic debt.¹⁰ Ironically, the negative impact of defense expenditures on Pakistan’s economic growth appears to have reversed from 1975 to 1991. Looney demonstrates that from 1975 to 1991, military expenditures in Pakistan had a positive impact on economic growth—this economic growth added further resources to defense.¹¹ Nevertheless, Looney’s calculations do not consider a potential trade-off between defense expenditures and investment in private capital formation.

Other studies of India and Pakistan defense expenditures reveal trends that may signal disparities in optimal economic allocation. For instance, in an econometric study of the impact of military expenditures on fiscal policy, Jean-Claude Berthelemy and Remy Herrera find a negative impact of increased military expenditures on human capital expenditures.¹² Faruqui argues that since 1985 there have been increasing levels of defense spending and flat levels of expenditures on health and education (which account for less than one-half of what is spent on the military as a proportion of GDP). However, Faruqui shows that India’s military expenditures are far more capital intensive than those of Pakistan. He calculates that in 1998 India spent over $10,000 per soldier compared to Pakistan’s expenditures of $5,800.¹³

One of the reasons the econometric literature is so inconclusive is that India’s defense expenditures fluctuate. This is because of two factors. First is the irregular incidence of war (1962 with China, 1965 and 1971 with Pakistan). The other factor is that Indian defense expenditures are closely related to the implementation of the recommendations of the Pay Commission, which monitors the wages of central government employees. These recommendations are not typically implemented across time; instead, they are implemented in bulk.

Pakistani and American Involvement in Afghanistan: Its Influence on South Asia

Any analysis of Indian and Pakistani defense expenditures is complicated by both endogenous and exogenous policy variables. The former concern the incentives derived from the constitutional separation of powers, leading to irresolvable institutional conflicts and often to the breakdown of democracy in Pakistan. Exogenous policy variables pertain to the external conditions that have periodically affected South Asia, particularly with respect to American and Soviet involvement in Afghanistan.

Since its independence, Pakistan’s system of governance has been beset by a vicious triangular relationship between the president, the prime minister, and the army chief of staff. Pakistan’s first two constitutions (1956 and 1962) essentially provided a strong, dual executive with overlapping constitutional authority and a weak legislature. Pakistan’s third constitution (1973) established parliamentary supremacy and weakened the powers of the president. In contrast, India has been able to preserve parliamentary supremacy while keeping the armed forces under civilian control.

The preeminent influence of the military in Pakistani politics has also complicated the inherent institutional conflict between the president and the prime minister, particularly during the brief periods when Pakistan has enjoyed civilian rule. One critical example of the importance of the army chief of staff came about when Prime Minister Zulfikar Ali Bhutto was deposed by his army chief of staff, General Mohammad Zia ul-Haq, in February 1977.

Occupying the post of Chief Martial Law Administrator, Zia ul-Haq imposed martial law for an indetermi...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Table of Contents
• List of Tables and Figures
• Introduction: South Asia’s Nuclear Security Dilemma
• Part I The Political Economy of Minimal Deterrence
• Part II The Power Structure of the Region
• Notes
• About the Editor and Contributors
• Index