Even if India used its troops for a strike in Pakistan this week to call it a revenge on the terrorist strike in Kashmir last month, the government was also pursuing other forms of power projections.
On Friday, May 9th, the International Monetary Fund Executive Committee is expected to fill three blocks from the White House. Indian officials are suggesting to file a new lawsuit there. The fund should refuse to extend the $7 billion loan to Pakistan, bring the country to a stronger financial foothold and refuse to fund the services it desperately needs for its people. And while Indian officials won't confirm that, domestic media reports say other potential sources of Pakistani aid may also be in India's view.
Two weeks before the strike against Pakistan on Wednesday, India was already testing new ways to exacerbate its old enemy.
On April 23, India emerged from the River Sharing Treaty, which has been protecting Pakistan's fragile water supply since 1960. Pakistan called it an act of war.
India has also become a softer force. When tensions rose after the attacks of terrorists in Kashmir, India messed around with internet controls and cut off Pakistani musicians and cricketers from their audiences on Indian social media.
India has also announced that it will cut off all trade between the two countries. In fact, there wasn't much in the first place. India mainly exports sugar, medicines and other chemicals to Pakistan. Some Indian exporters have concluded contracts after saying they have not received legal notices from the government.
But before this burning, Pakistan had transported just $2 million worth of goods to India. The economic asymmetry between these unfortunate neighbors is more impressive than ever.
More financial forms of pressure occurs mostly behind closed doors. Local media outlets reported that Indian officials are working to persuade funds and similar agencies to punish Pakistan.
Sudipt Manl, chief economist at Asian Development Bank in New Delhi, said it would be “surprising if India didn't take a stance” on loans to Pakistan.
“These institutions have the arrival of corporate banks, but are basically very political institutions,” said Manl, who is now chairman of the Indian Centre for Development Research. The loan is to be approved for the merits of a particular project, but “at the end of the day it will determine which side the various members of the board are lined up.”
Manl remembers how the Asian Development Bank Bank cancelled loans to India, which had already been approved in 1998, in response to testing the Indian nuclear bomb. As they saw, the important US and important countries were angry at India for starting a nuclear race with Pakistan.
The same country has more sympathy for India these days, not just as a victim of terrorism. Its economy has grown to ten times the size of Pakistan, appealing to strategists who are craving something to replace China.
On the night of India's strike against Pakistan's target, India and the UK announced a free trade agreement that has been working for three years. India is working to seal dealings between the US and the European Union.
However, there is also a reason why Washington-based financial organisations are baffled to indulging in India in their efforts to separate Pakistan. Recognizing Pakistan's economic vulnerability, these institutions may be reluctant to plunge the country into deeper instability after years of loans and programmes aimed at improving debt and currency stability.
India contradicts reports that the Treasury Ministry is lobbying the Asian Development Bank itself to reconsider its lending to Pakistan. However, it did not deny similar reports of attempting to return Pakistan to the “gray list” maintained by the global money laundering and anti-terrorism task force. This list threatened Pakistan's ability to obtain financial support, and the country struggled for years to get off it before it finally succeeded in 2022.
TCA Raghavan, who served as India's high commissioner for Pakistan from 2013 to 2015, said that while the “Grey List” is strong, India's sharpest non-military tool in the conflict is its relationship with other countries.
“The formula has changed very dramatically.” In particular, the relationship between India and the Gulf monarchies in Europe and the United States, “these relationships have changed significantly over the last 10 or 15 years,” Raghavan said.
He was working on the Pakistan issue before 2008, when Pakistan-sponsored terrorists stormed Mumbai and killed 166 people. After that incident, Raghavan said “most countries had a very clear understanding.”
