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World Bank pauses arbitration in water dispute

December 14, 2016

WASHINGTON: The World Bank Group (WBG) has paused its arbitration in the water dispute between India and Pakistan, saying it is doing so to protect the Indus Waters Treaty.

WBG president Dr Jim Yong Kim announced this in letters sent to the finance ministers of India and Pakistan on Monday, emphasising that the bank was acting to safeguard the treaty. “I would hope that the two countries will come to an agreement by the end of January,” he said in a statement.

The treaty, signed in 1960, has prevented a war between the two countries despite ser­ious differences over water distribution. But in Nov­ember, Indian Prime Min­ister Narendra Modi threatened to block the flow of water into Pakistan — a thr­eat which, if impleme­nted, could lead to armed clashes.

As tensions escalated, India and Pakistan initiated separate processes to get the dispute resolved by the World Bank. New Delhi sought the appointment of a ‘neutral expert’ while Islamabad asked the bank to appoint the chairman of the Court of Arbitration.

“Pausing the process for now, the bank would hold off from appointing the chairman for the Court of Arbitration or the neutral expert — appointments that had been expected on Dec 12 as earlier communicated by the bank,” the World Bank said.

Risk to treaty

The bank said that both countries had asked it to resolve issues regarding two hydroelectric power plants that India is building along the Indus rivers system but were seeking different processes.

“Both processes initiated by the respective countries were advancing at the same time, creating a risk of contradictory outcomes that could potentially endanger the treaty,” the bank said.

“We are announcing this pause to protect the Indus Waters Treaty and to help India and Pakistan consider alternative approaches to resolving conflicting interests under the treaty and its application to two hydroelectric power plants,” Dr Kim said.

He said the pause was “an opportunity for the two countries to begin to resolve the issue in an amicable manner and in line with the spirit of the treaty rather than pursuing concurrent processes that could make the treaty unworkable over time.”

The World Bank — then the International Bank for Reconstruction and Development — brokered the Indus Waters Treaty and both India and Pakistan accepted it as its arbitrator.

The treaty gave India control over the three eastern rivers — the Beas, the Ravi and the Sutlej — and over the three western rivers — the Indus, the Chenab and the Jhelum — to Pakistan.

The current dispute revolves around the Kishanganga (330 megawatts) and Ratle (850 megawatts) hydroelectric plants. India is building the plants on the Kishanganga and Chenab Rivers. “Neither of the two plants are being financed by the World Bank Group,” the bank said.

Seen as one of the most successful international agreements, the Indus Waters Treaty sets out a mechanism for cooperation and information exchange between the two countries regarding their use of the rivers. The mechanism, known as the Permanent

Indus Commission, includes a commissioner from each of the two countries and sets out a process for resolving the so-called “questions”, “differences” and “disputes” that may arise between the parties.

In Islamabad, the finance ministry acknowledged receiving the World Bank letter and said that it had already briefed the ministry of water and power on the matter.

The water and power ministry has in turn asked the Pakistan’s Commissioner for Indus Waters Mirza Asif Baig to take up the matter of the two dams with India.

Last month, the World Bank urged India and Pakistan to accept mediation for setting up a mechanism to resolve the dispute over the two dams.

Published in Dawn December 14th, 2016