This is what we were fearing when we last spoke that there is going to be an escalation and it has been quite a dastardly attack by Pakistan!Swaminathan Aiyar: Absolutely. It was expected and it came, and it was not just a small thing. It was a much bigger attack – even on some of our military bases – all the way from J&K, down to Bhuj and Kutch. Pakistan says they are not going to treat this as just a small measured thing. We are going to treat this as something where we can claim that we attacked and destroyed various things in India. We do not yet know what their official statement is going to be. However, there are reports that in response to Pakistan’s attack on these Indian targets, India itself has responded. There are reports that India has hit targets near Lahore, near Rawalpindi which is the military headquarters of Pakistan, and even Karachi.
There are reports of the Indian Navy having now taken a role in this attack. We have to wait for the government’s briefing a couple of hours from now to get details on this, but in effect, things are escalating more and more. There was first the Pakistani terrorist act in Pahalgam, then India responded, Pakistan then retaliated. India has escalated further according to the latest reports. And if that is true, it is a very major escalation and Pakistan will not take it lying down.
If we have really hit Lahore, Karachi, and Rawalpindi, then a), we have gone into the heart of Pakistan. Rawalpindi is a long way from the border. If we can hit that, then we have really made enormous progress. b)If we are going to be hitting Lahore, this is where the prime minister’s brother and wife are, and Karachi, of course, is their biggest city and if we have hit it and we have brought in our navy, there will be a demand within Pakistan to bring in Pakistan’s navy to try and bomb some targets within India.
I am afraid that while we were expressing hopes that there will be de-escalation, it appears just the other way around. It appears that we are right now ramping up. Both sides have ramped up. Neither side wants to go down. The United States is really not interested. Everybody is telling the two sides to cool down, and not to escalate. It will achieve nothing. After all, what will escalation achieve?
The two countries do not want to go out on an all-out war. If they bomb each other and do even more damage, you cause damage, you take lives. But the fundamental underlying problems are not going to change. We are not going to change the fact that Pakistan is going to continue to support various Indian collaborators; that is not going to go away and it would appear that like in the case of Ireland, there was a kind of war which went on for more than a 100 years, it is going on here. Mr Donald Trump has just said well, they are fighting, they have been fighting a long time. In fact, they have been fighting centuries, which is perhaps not a very accurate remark. Further, it gives an idea that the world just tells India and Pakistan, guys, cool it. Guys, cool it, you are going to achieve nothing through this escalation. De-escalate and stop. But the mood in the two countries right now, I am afraid, is extremely heated. So, let us see how much this heat heats up, how much damage it causes, and who and how we can down the temperatureIndia is not only striking with missiles and drones, and is planning a financial strike as well because we understand that India will put forward the position on Pakistan loan to the next IMF board meeting. Can this hit Pakistan hard given their financial situation and what implications can this have?Swaminathan Aiyar: At this point I am not in a position to say whether India’s intervention will stop that particular loan. The details of that I am not familiar with. Most of the time, if anything goes to the board, it goes to the board because there is already a consensus. So, stopping a thing once it has gone to the board is frankly very difficult. I do not know whether India will succeed. But I have to add that China will bail out Pakistan. Can you have a swap facility? China will do it. So, it is not as though Pakistan is alone. Pakistan has its Islamic friends including Turkey who have already sent some munitions and China is a solid strategic partner and China will not allow Pakistan to go down.
China has already rolled over about $2 billion of debt that Pakistan could not pay. It has been rolled over. So, Pakistan can take its time. So, I do not think on the financial side there is going to be any kind of victory for India or serious stoppage. Pakistan will carry on. This thing cannot be de-escalated via money issues, it would then be a diplomatic issue.
We have been talking about the repercussions for the economy if this were to escalate. The cue on one hand unfortunately is how this entire tariff situation is going to play out. It has been dictating world markets and not just equities but pretty much every asset class right, from the dollar to crude to precious metals and now this special situation. What are we staring at going forward because I can see the rupee also is headed in for a big decline?Swaminathan Aiyar: As of now, the markets are still assuming that this thing will be controlled and get over, there is some acceptance right now that this has escalated to a greater degree than we saw in 2016 or 2019. Even so, the markets seem to feel that this will die down because the markets do say who can gain? We can escalate from five to seven cities on one side and from 9 to 11 cities and then again and again. But since there is no such thing as victory that is going to be achieved by these tactics and since there is absolutely no sign of trying to move enormous quantities of infantry across the border, that is not the game.
Everything is being played fundamentally with missiles and with drones. In these particular circumstances, I am of the view that this will die down. It has caught us by surprise. We had not expected it to escalate this far. Even so, the expectation is these two countries have been good at deterring one another over the last 20-30 years. They have become nuclear powers. People were very afraid, there would be a nuclear war. There has been no war.
So, the general assumption here in Washington DC is that these are two mature countries who know how to hold their horses, that at the political side, on the media side, there will be lots of huffing and puffing, lots of threats to get even further saying blood must flow, etc, but at the end of it, these are responsible nuclear powers who will de-escalate. That is the feeling right now certainly in Washington.
Now, things could get worse. If Pakistan says that if the navy has attacked Karachi, let us attack Bombay High which is impossible to defend. You never know what unexpected things might happen. But as of now, the mood in Washington DC is that this thing will come under control. The two countries are mature people, and neither wants an all-out war. They will find some way to de-escalate first the rhetoric and then the actual war
Is a military solution possible?Swaminathan Aiyar: No, whatever happens, there is not going to be any military solution. It will ultimately be a political solution. The de-escalation is not a military decision. It is a political decision. We have damaged Pakistan. Pakistan has tried to damage us. On both sides, the local media are hailing. I mean, just as we are hailing what we have done, in Pakistan the media are claiming that they are doing extremely well. It is necessary for both sides to claim victory in some sense and then one can get together and de-escalate.
At this point of time, I do not think our attempt should be to have more and more attacks which will only result in further counterattacks. The emphasis right now should not be on saying how big an army we have. The truth is Pakistan will not be alone. If there is any chance of Pakistan seriously suffering against India, China will come in and then if you suddenly find Ladakh and Arunachal Pradesh are under attack, it will be very different.
If you then begin to measure the Chinese army against the Indian army, you will not get the kind of thing that you are getting right now. So, the aim at this point has to be not to crow as to how great and important we are. At this point of time, we have established what we can do. We have shown that we are a significant power. We have shown we can attack even without leaving Indian airspace which is the best way because it minimises casualties from our point of view. Having achieved this, we need to go for de-escalation. We should not be raising the temperature any further.
