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Kashmir Traders Link Line of Control Commerce to Prosperity, Peace

A Kashmiri driver waves as he leaves to Pakistan Administered Kashmir during cross-border trade at Salamabad, 107 km (66 miles) west of Srinagar (2008 file photo)
A Kashmiri driver waves as he leaves to Pakistan Administered Kashmir during cross-border trade at Salamabad, 107 km (66 miles) west of Srinagar (2008 file photo)

One of the key areas for confidence-building efforts between India and Pakistan is the removal of trade impediments across the line of control in disputed Kashmir.

June is peak season in the valley of Kashmir. Here in Srinagar, a sense of normalcy has replaced the turbulent upheaval of a year ago. Tourists are again flocking to the region's mountains and lakes for a break from scorching temperatures in the rest of India - and Kashmiri hosts are getting an opportunity to make some money.


Kashmiri traders, too, are eager to raise their standard of living - but they are frustrated at the difficulties in tapping a market literally right next door.

Pakistan and India have fought two wars over Kashmir, which they both claim in its entirety. They both have a credible nuclear arsenal aimed at deterring each other from starting a third conflict.

In 2008, as a confidence-building measure, the two sides began sending commercial trucks over the so-called "line of control" separating Pakistan-administered Kashmir from what India labels Jammu and Kashmir state.

Screeching halt

The Mumbai terror attacks of November that year, which India blames on Pakistan, brought cooperation in all areas between the two countries to a screeching halt.

Trade over the line of control became dormant, with vehicles now only allowed to cross two days a week.

Fruits and vegetables that might be sold across the line for a profit frequently end up in the garbage pile.

India and Pakistan are once again taking steps toward dialogue. Hilal Ahmed Turki, General Secretary of Line of Control commerce for a private trade association, says the time has come for them to remove the biggest impediments to trade within Kashmir.

"We demand that there be a banking mechanism put in place, that the trading partners be allowed to communicate, and that bans be lifted from all the approved trading items," Turki said.

Trade bans

Unpredictable trade bans are the biggest complaint among many Kashmiri exporters. Pakistan's imposition of a ban on chili peppers has created a mountain of backlogged inventory in this warehouse. Kashmiri traders who intended to fulfill orders on the other side of the line of control are suffering massive losses.

With no face-to-face meetings permitted, and only occasional one-way phone calls allowed, arranging transactions often amounts to guesswork.

With no agreement in place to clear transactions in cash, inter-Kashmiri trade happens on a barter system. If one trader cannot sell the goods he received in barter from his counterpart, he invites a third or fourth party into the deal, in an increasingly complex web of swaps.

"Obviously it's something India and Pakistan have to sort out as they talk to each other, but it seems clear to me at least they will eventually settle on clearing transactions in dollars," Turki said. "At the end of the day, though, we traders just want value for our goods."

Two currency solution

Shakeel Qalander was a senior commerce official in Jammu and Kashmir, and is now an entrepreneur. He thinks a two currency solution is more likely.

"I don't see any reason why the government of India is having any reservation, or the government of Pakistan is having any reservation, in putting the banking mechanism in place. The only thing, what has to be done by both sides, both governments, is to make these currencies, India and Pakistan currencies, tradable."

Current rules limit trade to just 21 items - mostly handicrafts and basic produce. Qalandar says it is time to remove those shackles from the market.

"We want that all the items produced and manufactured in either part of Kashmir should be made tradeable - as simple as anything," Qalandar said. "The services should also be included. Because what you want in this confidence-building measure is people-to-people contact, more and more people-to-people contact. And that will reduce the tension. It has reduced the tension."

For Qalandar and other proponents of intra-Kashmir trade, the numbers make a convincing argument for removing impediments.

"I think this trade is worth not less than two billion dollars a year," Qalandar said.

Many view that kind of interdependency as the strongest tool for creating a lasting Kashmiri peace.