December 1, 2005
The Kashmir problem is the most intractable part of the 50-year dispute between India and Pakistan. While scholars and statesman have long analyzed the political dimensions of the problem, the economic dimensions have received much less attention. This study is an effort to address this lack of economic content in thinking on Kashmir. Starting with an assessment of the current economic picture--in the regions administered by India and in those administered by Pakistan--it attempts to define how economics might help build peace. The study examines measures that could be taken in the near term, in the absence of major political change, to build peace constituencies and lay the groundwork for a peaceful future. And, it suggests measures that could reinforce a long-term settlement and leave a more prosperous Kashmir, integrated with the regional and world economies. Recommendations range from proposals for working together on environmental problems, to suggestions for facilitating exports from Kashmir, to an ambitious plan for a free trade area centered on Kashmir. Although economic interventions are not a substitute for fundamental political decisions, the economic tools and recommendations addressed herein may facilitate the political changes that people in the region so badly need.
Teresita C. Schaffer is director of the CSIS South Asia Program. Earlier, during a 30-year career with the U.S. Foreign Service, she was one of the State Department's principal experts on South Asia and served in Islamabad, New Delhi, Dhaka, and Sri Lanka.