pakistan’s

extremely low rate of 2%–4% over the past ten years. A combination of poor governance, the
deteriorating security situation, and declining foreign investment have contributed to its present
plight. Islamabad has nonetheless found it difficult to move forward on normalizing trade ties with
India. The Pakistan Army has acted as a major obstacle by preventing the civilian government
from granting MFN to India. 18
Promoting Energy Cooperation
Another major characteristic, and cause, of Pakistan’s stagnant economy has been the country’s
acute energy crisis. Power failures of up to twelve to eighteen hours a day in major urban centers
like Lahore and Islamabad sparked “energy riots” in 2012. According to some estimates, the energy
shortages have cost Pakistan 3%–4% of its GDP, with capacity utilization in some key industries
having fallen by nearly 50%. 19
Experts and policymakers have advocated energy cooperation between India and Pakistan.
In fact, soon ater Sharif assumed power, his government reportedly undertook a feasibility
study to explore the possibility of importing 1,000 megawatts (MW) of electricity from India. 20
Shahbaz Sharif, the chief minister of Pakistan’s Punjab Province, also expressed his willingness
to cooperate with India in setting up biogas and biomass power-generation plants in a meeting
with a delegation of Indian energy experts in Lahore in December 2013. 21 In March 2014 the
Pakistan government also sent a drat memorandum of understanding to India for a potential
power trade deal under which Pakistan would import 500 MW of power, which would eventually
increase to 1,200 MW. 22 A broad understanding has already been reached between the two
countries on the establishment of a power-transmission line between Lahore and Amritsar. The
Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is another venture that could
promote energy cooperation between India and Pakistan. The pipeline will transfer natural gas
from the Daulatabad oil fields of Turkmenistan to Fazilka in India via Afghanistan and Pakistan.
Both India and Pakistan will receive 1.3 billion cubic feet of gas per day and have already
signed gas sale and purchase agreements. 23 The groundbreaking ceremony for TAPI was held
in Turkmenistan in December 2015. However, the unstable security environment, along with
logistical and political problems, which have constantly prevented this project from even starting,
will continue to be a significant obstacle for the completion of this initiative.
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18 In 2011, Yousaf Raza Gilani, Pakistan’s prime minister at the time, was prevented by the Pakistan military from following through on his
promise of granting MFN to India. The military was also seen as being instrumental in Sharif ’s decision in March 2014 to delay conferring
MFN status to India until ater the conclusion of the Indian parliamentary elections. See Khalid Mustafa, “Trade Deal with India Hits Snag
Because of GHQ’s Silence,” News International (Pakistan), March 21, 2014, http://www.thenews.com.pk/Todays-News-13-29239-Tradedeal-with-India-hits-snag-because-of-GHQs-silence;
and Sachin Parashar, “Pak Army Stopped Nawaz Sharif Govt from Trade Deal: India,”
Times of India, March 26, 2014.
19 Annabel Symington, “Pakistan Opposition Take Aim at Energy Crisis Ahead of Elections,” Christian Science Monitor, February 1, 2013,
http://www.csmonitor.com/World/Asia-South-Central/2013/0201/Pakistan-opposition-take-aim-at-energy-crisis-ahead-of-elections; and
Shabbir H. Kazmi, “Pakistan’s Energy Crisis,” Diplomat, August 31, 2013, http://thediplomat.com/2013/08/pakistans-energy-crisis.
20 “New Pak Government May Consider Importing Electricity from India,” Hindu, May 21, 2013, http://www.thehindu.com/business/
Industry/new-pak-govt-may-consider-importing-electricity-from-india/article4736041.ece.
21 “Pakistan Keen to Cooperate with India on Energy Projects: Shahbaz Sharif,” Economic Times, December 25, 2013, http://articles.
economictimes.indiatimes.com/2013-12-25/news/45561787_1_energy-projects-indian-punjab-energy-crisis.
22 Zafar Bhutta, “Pakistan All Set to Import Electricity from India,” Express Tribune, March 20, 2014, http://tribune.com.pk/story/685056/
pakistan-all-set-to-import-electricity-from-india.
23 Daniel J. Graeber, “Kabul, Islamabad Pursue Gas Pipeline Connections,” United Press International, November 17, 2014, http://www.upi.
com/Business_News/Energy-Resources/2014/11/17/Kabul-Islamabad-pursue-gas-pipeline-connections/8531416231998.
SPECIAL REPORT u FEBRUARY 2016