Investor Presentaiton

Raising the Stakes in Jammu and Kashmir Crisis Group Asia Report N°310, 5 August 2020 Page 25 VI. Risks of Regional Conflict India's August 2019 moves have aggravated tensions with Pakistan at a time when the relationship was already strained. Relations between the two nuclear-armed neigh- bours had suffered after the deadly 14 February 2019 attack on Indian paramilitary forces in Kashmir's Pulwama district, claimed by the Pakistan-based Jaish-e-Moham- med. Rejecting Islamabad's assertion that it had banned the group, New Delhi warned that it would no longer tolerate Pakistan's support for jihadist proxies and promised a "befitting reply". 148 On 26 February, India's air force bombed what it claimed was a jihadist training camp in Balakot, its most significant violation of Pakistani airspace in nearly 50 years. The next day, Pakistan retaliated by conducting several airstrikes in Indian-administered Kashmir. The risks of that crisis spiralling out of control eventually receded with both sides stepping back from the brink. Yet tensions re- main high, and Indian and Pakistani forces regularly violate the 2003 ceasefire along Kashmir's Line of Control. After being re-elected in May, Modi's government had rejected Pakistani Prime Minister Imran Khan's offers to resume bilateral dialogue, frozen since the 2016 ter- ror attacks in Indian Punjab and Indian-administered Kashmir, which New Delhi had also attributed to Pakistan-based jihadists. Pakistan itself withdrew that offer after 5 August, calling on India to first end the Kashmir lockdown and reverse steps taken to change the disputed territory's boundaries. Islamabad downgraded diplo- matic ties with India, suspended trade, cut off road and rail links, and vowed to "ex- ercise all possible options" to counter New Delhi's "illegal step" in changing Jammu and Kashmir's territorial status. 149 Yet Pakistan does not have a strong hand. Islamabad faces considerable diplo- matic and economic pressure, including through the FATF - the global money laun- dering and terrorist financing watchdog - to decisively deal with UN-sanctioned en- tities on its soil, including the proxy groups operating in Indian-controlled Kashmir. This pressure, and the risk of an open military confrontation with India following the February 2019 Pulwama attack, has meant that Islamabad has largely limited itself to calling on India to reverse its August 2019 actions, including at forums such as the UN. 150 Its cause is hardly helped, however, by its long record of backing anti-India jihadists. Most Western powers, furthermore, see New Delhi as an important strate- gic and economic partner. The greatest risk is confrontation between the two nuclear-armed neighbours prompted by a major militant attack on Indian security personnel in Kashmir. Since the Modi government attributes all militant operations to Pakistan's jihadist proxies, 148 "Forces permitted to choose time and place for future action against terrorists: PM Modi on Pulwama", The Times of India, 15 February 2019. 149 Army chief Qamar Javed Bajwa, chairing a corps commanders meeting said: "Pakistan army firmly stands by Kashmiris in their just struggle to the very end. We are prepared and shall go to any extent to fulfil our obligations in this regard". "Military top brass condemns move to annex held Kashmir", Dawn, 7 August 2019; "Pakistan says it will exercise all possible options to counter 'ille- gal steps' taken by India in IoK", Dawn, 5 August 2019. 150 With Chinese support, the Kashmir issue was raised twice at closed-door Security Council con- sultations in the last year. Pakistan also highlighted it during the UN General Assembly in Septem- ber 2019.

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