Breaching the LOC (Line of Commerce)

Voice of America (VOA) report on Inter-Kashmir Commerce

Kashmir Traders: Line of Control Commerce Key to Prosperity, Peace

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.

Kashmiri traders 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 the 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.

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 only allowed to cross two days a week.

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

He says India wants 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.

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. 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.

There is also no agreement in place to clear transactions in cash, and so inter-Kashmiri trade is conducted 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.

Ahmed says it is obviously something India and Pakistan have to sort out as they talk to each other-but it seems clear to him at least they will eventually settle on clearing transactions in dollars. At the end of the day, though, he says, we traders just want value for our goods.

Shakeel Qalandar 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," said Qalandar. "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 tradable - as simple as anything. The services should also be included," said Qalandar. "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.